Fiat Chrysler
Tax authorities in Italy have said that Fiat underestimated the value of Chrysler by around €5.1-billion following the Italian automotive giant's phased acquisition of the US company in 2014.
The audit, which looks at transactions for the last five years, could mean that the company that formed from the merger, Fiat Chrysler Automobiles (FCA), may have to pay back taxes for €1.35-billion.
FCA said in its third-quarter report that the tax authorities had issued to the company a final audit report in October this year “which, if confirmed in the final audit assessment, could result in a material proposed tax adjustment related to the October 12, 2014 merger of Fiat SpA into FCA NV.”
It said the issuance of a final audit report starts a 60-day negotiation period, which ends with the issuance of a final audit assessment expected to be received by the end of December 2019.
“The company believes that its tax position with respect to the merger is fully supported by both the facts and applicable tax law and will vigorously defend its position,” it said in the third-quarter report.
“At this time, we cannot predict whether any settlement may be reached or if no settlement is reached, the outcome of any litigation. As such, we are unable to reliably evaluate the likelihood that a loss will be incurred or estimate a range of possible loss,” Fiat said.
News of the tax probe comes at a delicate time for Fiat Chrysler, which is finalising talks with PSA, the maker of Peugeot and Citroen, over a planned €45-billion merger to create the world’s fourth-largest automaker.
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