Ferrari is mulling transferring its fiscal headquarters outside Italy to reduce its corporate taxes as it gets ready for eventual spinoff from Fiat Chrysler Automobiles, people privy with the matter told Bloomberg. Ferrari may follow the example set by Fiat Chrysler – registering in the Netherlands, listing on the New York Stock Exchange and having its fiscal base in London for tax reasons.
The sources remarked that Ferrari is still considering being based in Italy. They remarked that even if the super car maker transfers its fiscal residency to other countries, it wouldn't affect its manufacturing and engineering operations in Maranello, Italy.
A final decision on the matter will be made in the next few months. Should Ferrari follow the footsteps of its parent, it would be a big blow for Italy, which economy has been on the low side for years. Spinning off Ferrari is part of a plan by Fiat Chrysler chief executive Sergio Marchionne to generate $5 billion to be used for reducing its debt and financing the carmaker’s industrial plan.
Fiat Chrysler is also selling at least 87 million shares and a $2.5 billion mandatory convertible bond to raise more funds. According to Fiat, the financing move will bolster its cash coffers by $3.7 billion. The corporate tax rate in the United Kingdom is bound to drop from 21 percent to 20 percent next year from 21 percent, benefitting companies based in the country.
On the other hand, the corporate tax rate in Italy is 31.4 percent. No thanks to usually restricting policies, Italy’s economy has stagnated over the past 14 years and contracted 10 of the last 11 quarters. Unemployment rates in the country are close to breaking new records.