A pedestrian passes the main entrance to the Ferrari headquarters and automobile plant in Maranello, Italy. Ferrari shifting its corporate headquarters outside Italy would represent a symbolic blow for the country, which is struggling to end a cycle of recessions.
Bloomberg
Milan
Ferrari is considering moving its fiscal residence outside Italy to save on corporate taxes as the supercar maker prepares for its spinoff from Fiat Chrysler Automobiles, people familiar with the matter said.
The manufacturer, which uses the colors of the Italian flag in its logo, may follow in the footsteps of its parent Fiat Chrysler, which is registered in the Netherlands, listed on the New York Stock Exchange and based in London for tax reasons, said the people, who asked not to be identified because the discussions are private.
Other options including keeping its Italian residency are still on the table, and a shift in its fiscal base wouldn’t affect its manufacturing and engineering operations in Maranello, about 190km (118 miles) south of Milan, the people said. A final decision will be made in coming months, the people said. Fiat Chrysler representatives declined to comment.
Ferrari shifting its corporate headquarters outside Italy would represent a symbolic blow for the country, which is struggling to end a cycle of recessions. Prime Minister Matteo Renzi is attempting to push through labour and tax reforms to make the Italian economy more competitive.
Those efforts have already come too late for Fiat Chrysler and CNH Industrial, the truck and tractor maker spun off from Fiat in 2011. Both companies have already moved their headquarters to the UK from Italy.
“A move away from Italy by an icon like Ferrari shows that this country is unfit for companies and its fiscal system is clearly not competitive,” said Ugo Arrigo, professor of public finance at Milan Bicocca University.
The spinoff of Ferrari is part of Fiat Chrysler’s efforts to raise about $5bn to cut debt. Chief Executive Officer Sergio Marchionne is meeting investors in the US this week as the company prepares to sell a $2.5bn mandatory convertible bond and at least 87mn shares.
The financing, which is backed by distributing 80% of Ferrari stock to Fiat Chrysler investors, will boost cash by $3.7bn, the company said in a filing last week.
Fiat Chrysler and CNH benefit from the UK’s corporate tax rate declining to 20% next year from 21%. Income from patents will eventually be as low as 10%, offering potential for additional relief.
By comparison, Italy’s corporate rate is 31.4%. The country is ranked 56th in the World Bank’s Doing business ranking, just after Turkey and Hungary. The UK is 8th.
Hampered by stifling policies, the Italian economy is struggling to emerge from its longest recession on record after contracting in 11 of the last 13 quarters.
Unemployment rates are near record levels, and thousands of Italians have left the country in search of a better future. Last year, the number of emigrants from Italy rose 19% to 126,000, according to statistics agency Istat.
Fiat Chrysler plans to list 10% of Ferrari by the third quarter of next year. The maker of the 458 Italia will trade in the US and possibly a European stock exchange, according to the company. Milan is being considered as the secondary listing, with New York the main market, the people said.
London-based Fiat Chrysler hasn’t commented on Ferrari’s fiscal residence, but Marchionne, who is also Ferrari’s chairman, insists the company’s roots will remain tied to its traditional home regardless of financial decisions.
Ferrari “is Italian as it has always been,” he said last month at a Fiat event at a test track in Balocco, Italy. “Capital markets are capital markets.”