EUR 3000000000 debt issuance programme, 10 ... - Volksbank AG

8. TAXATION
This section on taxation contains a brief summary of the Issuer’s understanding with regard to certain important
principles which are of significance in connection with the Securities. This summary does not purport to
exhaustively describe all possible tax aspects and does not deal with specific situations which may be of relevance
for individual potential investors. It is based on the currently valid tax legislation, case law and regulations
of the tax authorities, as well as their respective interpretation, all of which may be amended from time
to time. Such amendments may possibly also be effected with retroactive effect and may negatively impact on
the tax consequences described. It is recommended that potential purchasers of the Securities consult with
their legal and tax advisors as to the tax consequences of the purchase, holding or sale of the Securities. Tax
risks resulting from the Securities shall in any case be borne by the purchaser.
8.1 Austria
Investors should be aware that this overview cannot be used as a substitute for individual tax advice and is
not intended to be definitive. There can be no guarantee that the Austrian tax authorities will adopt the same
interpretation of the matters set out below as the Issuer and due to changes in the settled practice of Austrian
tax authorities or Austrian case law, the tax treatment of alternative investments may, even retroactively, vary
and lead to different results than those set out herein. There is no specific Austrian case law or other binding
legal guideline available on the tax treatment of the Securities.
8.1.1 Tax Treatment of Austrian Tax Resident Investors
8.1.1.1 Private Investor
Pursuant to § 124b(85) of the Austrian Income Tax Act (Einkommensteuergesetz; “EStG”), income received
from index certificates and similarly structured products that are issued on or after 1 March 2004 is qualified
as investment income (§ 27 EStG) for Austrian income tax purposes. According to the settled practice of Austrian
tax authorities § 124b Z 85 EStG may as well be applied to certificates under which the investor has a
right for repayment of the investment and the amount of such repayment depends on the performance of single
equities or commodities which, at their entirety, do not amount to an index (Ministry of Finance, Einkommensteuerrichtlinien
2000; “EStR 2000” para 6198a).
Any difference between the issue price and the repurchase price of the certificate at maturity due to the development
of the reference-index is treated as interest (§ 27(2)(2) EStG) for Austrian income tax purposes.
Equally, any positive difference due to the development of the reference index that is realised upon the alienation
of a certificate prior to maturity is treated as investment income.
Interest received by an investor resident in Austria for tax purposes is subject to Austrian income tax. In case
of a private investor, income tax is levied at the time the interest is received, i.e. according to the settled practice
of Austrian tax authorities at the end of the calculation period or upon the alienation of the Securities with
respect to any difference amount realised at maturity or alienation. A private investor is not taxed on the increase
in value of the Security due to the positive development of the reference-index or the price of the Security
at the stock exchange prior to maturity or alienation.
If a Security is held by a private investor resident in Austria for tax purposes and interest is paid by an Austrian
coupon-paying agent (generally the Austrian depository), withholding tax at a rate of 25% is triggered.
For a private individual investor such withholding tax is final provided that the Security is both legally and
actually publicly offered (Ministry of Finance, EStR 2000 para 7799). If such an investor’s applicable average
income tax rate is below 25%, the investor may file an income tax return including the interest income and
apply for assessment of his income tax liability based on his income tax return. In the absence of an Austrian
coupon-paying agent the investor must file an income tax return and include the interest received. Income tax
will be levied at a special rate of 25% (§ 37(8) EStG; Ministry of Finance, EStR 2000 para 7377a). A deduction
of expenses that are directly economically connected to the Securities, if the income received thereunder
is subject to flat and final withholding tax or to the special income tax rate of 25%, is not available.