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European Union investigating FCA tax deals

by Bill Cawthon on

The Wall Street Journal reports that the European Union is looking into tax arrangements that a number of companies, including Fiat Chrysler Automobiles, have made with the Grand Duchy of Luxembourg.

Luxembourg is a tiny country about half the size of Rhode Island surrounded by Belgium, Germany and France.  It’s home to the richest population in the world, on a per capita basis. It’s also a tax haven for some 50,000 holding companies.

Once a steelmaking country, Luxembourg’s primary industry these days is tax breaks.

Luxembourg has a federal agency called Sociétés 6 that specializes in approving confidential tax arrangements for the companies, helping them get rates as low as 0.4% on certain types of income.

Investigators say the activities of Sociétés 6 violate European Union rules that prohibit state aid to private companies.

The probe that includes FCA came out of one that targeted

While Luxembourg has the most aggressive program, it isn’t the only target for the EU’s tax police: Ireland recently scaled back its tax considerations and the Netherlands has now come under scrutiny, as well. FCA is incorporated in the Netherlands, but so far the investigation has focused on the structure of Starbucks’ European roasting operation.

At stake are billions of dollars in taxes. American companies are estimated to shelter more than a trillion dollars overseas to avoid U.S. taxes.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.

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