A year ago at this time, Frédéric Vasseur took charge of his new offices after top figures at Ferrari, John Elkann and Benedetto Vigna, decided to reorganize the Racing Department, replacing Mattia Binotto, who had not achieved the desired results in his administration. The task of the French executive was to restructure the team’s operations in various aspects: technical, logistical, sporting, and procedural.
This operation, much less marginal than one might imagine, is still a work in progress and forced the Scuderia to face a challenging 2023, which cannot be saved by the lone victory snatched from Red Bull in Singapore by Carlos Sainz. The late-season improvement does not alleviate the disappointment of finishing third in the Constructors’ Championship, representing a step back from 2022.
To accomplish the “Vasseur revolution,” more time is needed. Many areas have been reshaped, while others remain to be addressed. Completing this task requires a focus on a necessary recruitment campaign to strengthen key areas of the technical staff. However, in recent times, a difficulty may have arisen unrelated to Ferrari’s decision-making processes. The context may have become unfavorable due to certain political choices made by the Italian government. Let’s explore.
Ferrari: Abolition of the Growth Decree Limits Vasseur’s Momentum?
Without delving into too many fiscal technicalities and attempting to summarize, the so-called Growth Decree, particularly in its Article 5 designed for the “return of brains,” aimed to encourage the arrival in Italy of workers residing abroad through a facilitated tax regime (obviously for companies benefiting from the reduction in labor costs) starting from January 1, 2020. This provision was very useful in football, as players arriving in Italy enjoyed up to a 50% tax cut for income tax calculations. Significant money.
This condition clearly applies not only to the football world but to any worker who meets the criteria outlined in the law published in the Official Gazette at the beginning of 2020. Now, this fiscal framework has been modified with the abolition of the aforementioned benefits. The football environment is in turmoil due to the negative repercussions that make Serie A even less competitive than other national leagues that are moving at supersonic speeds, such as the Premier League.
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The discipline introduced by the Meloni government makes the return of workers to the Italian territory less advantageous from a purely fiscal point of view. The updated decree, in fact, reduces tax breaks for skills coming from abroad “without high qualification or specialization requirements,” a category that includes sports professionals. Therefore, football players.
Some have imagined, perhaps not conceptually wrong, that the government’s axe could also fall on motorsport. However, things should not be quite like that. An engineer and a mechanic with specific know-how are anything but professionals lacking “high qualification or specialization.”
An engineer, in professional terms, falls into categories that continue to benefit from the tax advantage. The provision, in outlining the subjective scope of its application to highly qualified or specialized workers, refers to Legislative Decree no. 108 of 2012. This decree, in turn, delimits this category to levels 1, 2, and 3 of the Professional Classifications. And level 3 includes all technical professions.
Speaking of income tax, it is also fair to say that the worker saves money, but in the case of dependent or assimilated income (the engineer-team work relationship falls into that income category), the company pays the taxes as a “substitute for tax.”
The alarm sounded in recent days, as highlighted, is to be considered unfounded. Or at least not excessively noisy because some professional figures that are not highly specialized could operate within the new regulatory framework. But these are not the targets the Prancing Horse is aiming for; Ferrari needs to introduce some personnel to enhance technical departments that require higher expertise.
However, problems could arise when Ferrari renews the contracts of Charles Leclerc and Carlos Sainz. The driver is a sportsman in the strict sense and not a technician, so today, he benefits from fiscal advantages only limited to fees agreed before December 31, 2023. The benefit could have been “extended” only in the case of a contract renewal by the aforementioned date.
Returning to the beginning of the writing, drivers are equated with footballers, and thus, Maranello will have to face this reality even though, as known, what concerns drivers is exempt from the spending cap constraints imposed by Formula 1. However, this can generate other types of difficulties for the historic Italian team, as we will see below.
Ferrari: Cost Cap and Geostrategic Issues Limit Vasseur’s Action
Beyond what has been reported above, an issue that needs to be deflated before it even arises, there are difficulties in Ferrari’s strengthening campaign due to two unrelated but synchronized factors: cost cap and the geostrategic distance from the heart of F1. On the first front, tax rules are very restrictive. Teams do not have significant amounts to invest in personnel. Teams the size of Ferrari have had to reduce their ranks or reallocate resources in other contexts. In this key, the WEC program should be seen as well, which also served to avoid cutting excess staff in a team that had to streamline its ranks.
With this operating scenario, it is clearly more complex to bring in personnel unless other personnel exits. The other age-old problem (second factor) that Maranello encounters in its progress is the reluctance of many men to leave the “Silicon Valley” of F1, that area in England where practically all teams are located, except for Ferrari, Haas, and partially, AlphaTauri, which has some antennas in the UK thanks to its connection with Red Bull. In this case, it is not about advantageous tax regimes, which in some measure they are, but about greater opportunities that an area with very high specialization offers in the supply chain.
Labor mobility and growth potential are much higher than in Italy, where there is also a highly motorized area but less inclined toward Formula One. Adrian Newey’s story is a perfect reflection of this dynamic. The king of motorsport technicians has repeatedly reported refusing Ferrari due to reluctance to work away from England.
Therefore, Fred Vasseur and Ferrari’s human resources managers should be marginally concerned about the new version of the Growth Decree, which does not produce the negative effects created by tax rules introduced by F1 with the consent of the teams. This is related to the historical allocation of skills in Great Britain. These are hurdles that Ferrari, even in the past, has managed to overcome and could overcome in the present and immediate future.
Source: Diego Catalano for FUnoanalisitecnica