Fiat’s headquarters move risks political pain image

Fiat CEO Sergio Marchionne, who just managed to take full control of Chrysler, is about to unveil his next trick: moving the Italian group’s 115-year-old headquarters out of Italy.

As sources close to the company point out, Marchionne has said a New York share listing is on the table, he is likely to base the new company in Europe under a tax-efficient UK domicile.

The CEO is treading carefully in the United States and Italy, whose governments have bailed out Chrysler and funded temporary layoffs at Fiat.

“I’ve seen weirder things happen,” Marchionne told reporters at the Detroit auto show earlier this month. “So I sincerely hope they don’t create obstacles.”

Fiat is taking full control of Chrysler after striking a $4.35 billion deal to buy the 41.5 percent it didn’t already own from a union retiree health care fund. The deal creates the world’s seventh-largest automaker with operations in 40 countries and brands including Alfa Romeo, Dodge, Ferrari, Jeep and Maserati. A neutral country base could help anchor the merger. Still, previous owner Daimler’s attempt to run Chrysler from Germany ended in failure and a $29 billion loss.

Registering the group in the Netherlands with a UK tax domicile – as Marchionne did with the spun-off CNH Industrial – could ultimately deprive the United States and Italy of tax revenue on some overseas earnings, experts say.

Britain has steadily cut its corporate tax rate — to a proposed 20 percent in 2015 — and reduced the tax burden on profit from foreign subsidiaries in low-tax jurisdictions. Marchionne, 61, a trained lawyer and tax accountant by training, is due to present his proposals to Fiat’s board on Wednesday.

Via Automotive News Europe