Italy 'claims FCA undervalued Chrysler by 5.6 bn'

(ANSA) - Rome, December 5 - Bloomberg reported Thursday that Italian tax authorities have claimed Fiat Chrysler Automobiles underestimated the value of its American business by 5.1 billion euros ($5.6 billion) following its phased acquisition of Chrysler several years ago, presenting the carmaker with a potentially hefty bill as it prepares to merge with French rival PSA Group.
    Bloomberg said the dispute relates to the company structure created in October 2014 following Fiat SpA's purchase of the remainder of its Chrysler unit, according to company filings and an October 22 audit report seen by Bloomberg.
    The purchases stretched over five years and culminated in the full takeover of the once-bankrupt owner of brands such as Dodge, Ram and Jeep, Bloomberg said.
    Fiat Chrysler is now registered in the Netherlands with a tax residence in the U.K. - not Turin, Fiat's home for more than a century. The move triggered the so-called exit tax that Italy collects on capital gains realized when companies move assets outside the country, according to the audit report.
    Italy had a corporate tax rate of about 27.5% at the time, suggesting the amount at risk for Fiat Chrysler could approach $1.5 billion, though negotiations could significantly reduce any levy.
    "We strongly disagree with this preliminary report, and we are confident we will successfully make the case for a material reduction in the assessment," a Fiat Chrysler spokesman said in an email to Bloomberg.
    "It's also important to note that any remaining taxable gain assessed would be offset by carry forward tax losses with no material cash outflow or impact on earnings." Premier Giuseppe Conte said recently that Fiat Chrysler's plan to merge with PSA Peugeot to create the world's fourth-biggest carmaking group must not have a negative impact in terms of jobs in Italy.
    "The government cannot remain indifferent to such an important industrial project," Conte said during a visit to FCA's plant in Melfi.
    "This project must not compromise plants and employment in Italy in any way, including for suppliers".
    Conte said the Melfi plant was "an example of a country that overcomes complex phases".
    He reiterated that the government would show "the utmost commitment to saving jobs".
    The 2020 budget would contain "concrete measures to relaunch the automotive sector" in Italy, the premier said.
    He also said the government was working on rejigging a measure on the fringe benefits attached to company cars.
    The budget would also include a 10% 'green' tax break for production to be converted along ecological lines, Conte said.