Exor pays $845 million to settle dispute with Italy tax agency

(Reuters) -Exor has paid 746 million euros ($845 million) to settle a dispute linked to the transfer of its legal headquarters to the Netherlands in 2016, the holding company of Italy’s Agnelli family said on Friday.

Exor said the amount, which includes interest for 104 million euros, had been paid in full on Friday. The effect of the settlement will be reflected in the company’s 2021 accounts, it added.

Exor’s controlling company Giovanni Agnelli B.V. will also pay the tax authority 203 million euros, including interest of 28 million euros, over the same dispute.

Italy-based Exor Spa applied the Participation Exemption (PEX) regulations when it merged with its Dutch subsidiary Exor Holding N.V. to create today’s Exor in 2016.

Under this scheme, 95% of any capital gains relating to the value of its holdings was exempt and therefore excluded from the holding company’s taxable income for the determination of the Exit Tax, the company said in a statement.

However, with a subsequent ruling, the tax authority argued that the PEX should not apply to cases in which a holding company transfers its fiscal domicile abroad without maintaining a permanent establishment in Italy, as in the case of Exor.

“Exor underlines that with respect to the claim relating to the PEX, the Italian Tax Authorities have levied no penalties,” it said.

“The settlement agreement does not and should not be interpreted as a recognition, or even partial acceptance by Exor of the subsequent interpretations advanced by the Italian Tax Authorities,” it added.

Giovanni Agnelli B.V. said in a separate statement that it acted correctly and did not violate any rules.

“Given that the issue is a complex matter of interpretation, and with the sole objective of avoiding the time and costs of a major tax dispute, the company has decided to enter into today’s agreement,” Giovanni Agnelli B.V. said.

($1 = 0.8830 euros)

(Reporting by Giulio PiovaccariEditing by Keith Weir)