Ireland to become central cog in Fitch’s European operations

Fitch Ratings, one of the global "big three" credit ratings agencies, is shifting control of much of its European operations to Ireland. Ownership of Fitch in Italy, Spain, France, Germany and Poland will move into a new Dublin unit.

The company says it is not planning to open an Irish office and it insisted the move has nothing to do with Brexit planning, citing “operating efficiency” as the reason for the move. Company documents filed as part of the restructuring also include detailed accounts of the tax implications of the move.

Fitch will execute the reorganisation by merging its main company in each of the five European markets into a new Dublin company, Fitch Ratings Ireland, which it established almost a year ago in preparation for the restructuring. The mergers will require High Court approval in Dublin.

Documents filed by Fitch in Dublin suggest the reorganisation will take place in March 2020. It appears that control of the Spanish entity will move to Dublin first, followed 10 days later by the other four countries.

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The five companies employ about 340 people. But although control of the companies will move to Dublin, it appears that none of the staff will relocate to Ireland. The documents suggest that Fitch Ratings Ireland will establish “local branches” in each of the five European countries, and staff will shift to those.

The documents invariably describe the rationale for the changes as being “to rationalise the economic and legal organisation of the business”.

The filings related to the merger with the French entity, in particular, outline what tax rules apply to the merger, suggesting that there may be a tax advantage for Fitch in making the move. The Polish filings specifically confirm that income tax will now become due in Dublin.

"All of our EU-27 ratings will continue to be usable for regulatory purposes in the European Union following the reorganisation of our [European] operating structure," said Fitch.

“The creation of the Irish company relates to structural changes to our existing EU legal entities to improve their operating efficiency... This reorganisation is not related to Brexit or part of our Brexit plan, and we have no plans to open an office in Dublin.”

In response to queries, Fitch suggested the Irish unit may also take control of Fitch’s operations in Sweden, as well as the other five countries, but this has yet to be reflected in official filings.

Fitch Ratings Ireland will be regulated by the Paris-based European Securities & Markets Authority.