Porsche finds way around $1.9B tax bill tied to VW deal
Previously, the two companies planned to create a holding company to control the remaining share until 2014, at which time it could be transferred to VW without paying a tax. Beyond the two-year wait just to close the deal, that plan also meant that VW couldn't fully integrate Porsche into its operations and so be forced to deal with Porsche for two years at an inefficient, arm's-length distance.
Th new plan, still awaiting final approval from the state authorities, is simple. The Porsche Holding SE empire, which isn't small, owns Dr. Ing. h.c. F. Porsche AG, the unit that makes the sports cars. If VW purchases the unit outright from the holding company, the purchase is taxed. Instead, VW plans to give Porsche Holding SE the €4.5 billion purchase price as well as one voting share of VW stock. By 'giving' Porsche Holding a stake in VW, even if it is just one single share, it turns an outright purchase into a corporate restructuring. A tax-free corporate restructuring, specifically. What's German for "Voilà!"?
According to a story in Reuters, Porsche Holding has been given legally binding notice from the state that is will not need to pay any taxes on such a transaction. VW said it's still looking at its options for ingesting the 50.1-percent stake, but it looks like the end of that deal just got a lot closer. Now about that $2.6 billion investor lawsuit...
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