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FCA owes taxes after EU ruling — but not as much as thought

by Bill Cawthon on

Margarete Vestager, the European Union’s competition commissioner has ruled that the tax deal that Fiat had with Luxembourg was state aid and therefore illegal.

The BBC quoted Commissioner Vestager as saying: “All companies, big or small, multinational or not, should pay their fair share of tax.”

Marchionne-EU-Luxembourg-Web

The commission said that so-called “transfer pricing arrangements” between subsidiaries let Fiat pay taxes on “underestimated profits.” Correct taxes could have been 20 times higher, according to their findings.

According to the BBC report, the actual taxes that must be paid are far lower than earlier estimates, ranging from $22.7 million to about $34 million. This puts the back taxes into the same range as Starbuck’s, one of the other companies pursued in this first investigation.

Thanks to Mike L’Alouette for the tip!

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 just-auto.com, 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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