I This document constitutes the base prospectus of ... - Volksbank AG

If interest is realised upon alienation of the Security prior to maturity or the end of the calculation period the
seller will be taxed on a fraction of the interest accrued at the time the Security is alienated.
Specific rules apply to leveraged products (Turbo-Certificates). If a leveraged product has a leverage of at
least five (i.e., the initial investment amounts to 20% or less of the value of the underlying at the time the
leveraged product is issued), the positive income from such product is qualified as capital gain rather than
investment income. In case of a private investor, capital gains are subject to Austrian income tax only if the
leveraged product is sold within one year after its acquisition (so called speculative transaction). After a holding
period of one year, the capital gain would not be subject to Austrian income tax.
Interest received under Cash-or-Share Notes is generally subject to 25% withholding tax. To the extent the
interest received clearly exceeds the applicable market rate, the interest is considered as a compensation for
the risk relating to the right of the Issuer to settle the Cash-or-Share Note either in cash or by delivery of the
underlying shares. This portion of the interest is directly connected to any losses incurred because of the delivery
of shares and, therefore, may be netted against such losses. To the extent the interest is covered by the
losses, the interest is not subject to the 25% withholding tax. For withholding tax that had already been deducted,
a withholding tax credit is available, capped, however, at the amount of interest of the last coupon
payment period (Ministry of Finance, EStR 2000 para 6198).
8.1.1.2 Business Investor
Income from a Security held as a business asset constitutes business income.
A corporation subject to unlimited corporate income tax liability in Austria receiving such income will be
subject to Austrian corporate income tax at a rate of 25%.
Flat and final withholding tax at a rate of 25% is triggered if the Security is held by an individual investor
resident in Austria for tax purposes and the interest is paid by an Austrian coupon-paying agent. In the absence
of an Austrian coupon-paying agent, income tax at a special flat rate of 25% will be due. 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.
8.1.2 No Qualification as Units in a Non-Austrian Investment Fund
According to Austrian tax authorities, Securities, the repurchase price of which exclusively depends on the
performance of a reference underlying (i.e. index products) that are directly held by the Investor, are not considered
units in a non-Austrian investment fund (§ 42(1) of the Austrian Investment Fund Act; Investmentfondsgesetz)
irrespective of whether the referenced underlying is a recognised or individual, static or dynamic
index (Ministry of Finance, Investmentfondsrichtlinien 2008, para. 267).
8.1.3 Tax Treatment of non-Austrian Tax Resident Investors
8.1.3.1 Austrian Tax Liability of non-Austrian Resident Investors
Pursuant to § 98(5) EStG, interest received under the Securities by a non-resident investor for tax purposes are
basically not subject to Austrian (corporate) income tax.
If interest is paid by an Austrian coupon-paying agent, 25% withholding tax is triggered unless the non-
Austrian resident investor proves his non-resident status for tax purposes to the Austrian coupon-paying agent
by presenting an official picture identification card. In addition, Austrian citizens or citizens of an Austrian
neighbouring state have to provide a written declaration that they neither have a domicile nor their habitual
place of abode in Austria. Further, the securities under which the interest is paid must be deposited with an
Austrian bank (Ministry of Finance, EStR 2000 Rz 7775 et seq). If the investor is not an individual, the coupon-paying
agent is discharged from its withholding obligation either (i) if the investor provides the coupon
paying agent with an exemption declaration, the exemption declaration with the investors tax identification
number stated on it is forwarded to the competent tax office via the coupon-paying agent and the securities are
deposited with an Austrian credit institution or (ii) if the non-resident corporation proves its non-resident
status for tax purposes to the Austrian coupon-paying agent by presenting an official picture identification
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