Last Monday, shareholders approved the merger between car manufacturers Fiat-Chrysler and Peugeot. The company wants to be founded in the Netherlands, under the name Stellantis NV. Sounds great, but what are the results?

Dutch Chamber of Commerce number

Fiat has been established in the Netherlands for decades, at least on paper. But despite the number of Chambers of Commerce and car dealers as in every other country where the company is active, the presence of FCA NV’s ‘head office’ may be of little benefit to BV Nederland.

FCA NV, as the American-Italian company has been officially known since 2014, is tax resident in the UK, where its business headquarters are also located.

This has been agreed with the Dutch tax authorities, the FCA reported in the latest annual report.

This last point does not surprise Peter Kavelaars, professor of Fiscal Economics at Erasmus University. “Only if you are truly established here can you use the Dutch agreement. An empty shell is not enough.”

This will change once the merger with France’s Peugeot Groupe is completed on January 16. in the prospectus of the merged company.

Car giant with 14 brands

The merger created the world’s fourth largest car company, after Volkswagen, Toyota and Renault-Nissan. Name Stellantis refers to ‘stello’Latin verb that translates as ‘illuminate with stars’.

The combined company produces around 8.7 million cars per year and has a turnover of almost 170 billion euros. The new company hopes to achieve annual success with the merger saving around 3.7 billion euros. The new company employs around 400,000 people.

The Stellantis umbrella includes well-known brands such as Peugeot, Citroën, Fiat, Chrysler, Jeep, Dodge, Alfa Romeo and Maserati.

Headquarter

Stellantis wants the Netherlands as its corporate headquarters, both legally and fiscally. Big change compared to the old FCA.

It is uncertain whether this will happen, the company warned in the prospectus. This depends on where ‘effective management’ lies. And it is ‘very fact-sensitive’, in other words: it depends on where decisions are actually made.

Own office

“Just a mailbox here is not enough. They really should be here substance to make. This includes at least an office, although it doesn’t have to be large,” explains Kavelaars. “But people really need to be physically present, and not just someone watching.”

Therefore, guardianship offices are not enough, according to Kavelaars. “That is also being looked into, administrators really need to stay here and something needs to be done,” said the professor.

It’s unclear whether Stellantis is considering a head office or is moving staff. While the FCA did not respond substantively to questions from RTL Z, a spokesperson referred to the prospectus, in which the company makes explicit statements.

Also in the new company’s draft articles of association, which must be voted on by shareholders on Monday, no business address has been entered. Despite repeated requests, the company did not want to explain why the company was so eager to move its head office to the Netherlands.

“I am not currently in a position to provide you with more detailed information in response to your question,” a spokesperson emailed.

Dutch law is interesting

According to Kavelaars, this is mainly related to Dutch company law. “This is also very attractive in the Netherlands compared to other countries,” he said. “If they are involved in a merger, acquisition or reorganization, that is easier to do here than in other countries.”

Whether the company actually comes to the Netherlands or not: it won’t make a difference to employment, Kavelaars thinks. “They’re not going to open a factory here anyway, and having people in the office doesn’t do much economically,” Kavelaars said. “The work is in the car manufacturing sector: Fiat and Chrysler. But unfortunately it won’t come to the Netherlands.”

Apart from renting an office, there are also other things that need to be arranged on paper. Stellantis may also want new regulations from the Tax Authority, stipulating that Stellantis is subject to Dutch tax law.

It is not known whether such an agreement has been made. The Tax Authority never provides information about agreements with individual companies, a spokesman said.

New decision

In any case, the old decision must be reversed, Kavelaars explained. “And it is very likely that they are already sitting down with the tax authorities regarding the new policy,” he added. The fact that – if the company becomes tax resident in the Netherlands – the notorious dividend tax suddenly has to be paid will not change much, Kavelaars thinks.

After all, the bill lies with shareholders, as they have to pay the taxes imposed on dividends paid. Investors can then offset those taxes against their own tax returns.

Cash register for tax authorities

The biggest winner in this case may be the Dutch tax authorities. In 2019, FCA and PSA together distributed dividends of around 1.8 billion euros. More than 33 percent goes to major shareholders, who are not liable for dividend tax.

There is still 1.2 billion remaining, which in theory must be paid dividend tax of 15 percent. That equates to around 175 million euros.

This amount will probably be lower, as foreign shareholders are often subject to lower rates due to various tax treaties that have been entered into by the Netherlands.