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

Participating Member State, although certain Participating Member States are entitled to apply a withholding
tax system during a transitional period. The transitional period commenced July 1, 2005 and will terminate at
the end of the first full fiscal year after the EU and certain non-EU states reach an agreement on the exchange
of such information. The EU Savings Directive came into effect July 1, 2005.
According to the Luxembourg law of June 21, 2005 that implemented the EU Savings Directive, and certain
bilateral agreements entered into by Luxembourg, during the transitional period, a Luxembourg Paying Agent
may be required to withhold taxes on interest payments to Residual Entities or to Actual Owners (as defined
below) who reside in an EU Member State or relevant dependant and associated territories at a rate of 20%
(the rate will increase to 35% on July 1, 2011), unless the Actual Owner has opted for the alternative procedure
proposed by the Luxembourg Paying Agent (exchange of information or a tax certificate).
For the purpose of the previous two paragraphs, the terms Paying Agent, Interest and Actual Owner
shall mean respectively agent payeur, intérêt and bénéficiaire économique as these terms are defined in
the law of June 21, 2005, and Residual Entity shall refer to the entities described in article 4.2 of the same
law.
Holders of the Securities should consult their own tax advisers regarding the implications of the EU Savings
Directive in their particular circumstances. Pursuant to the law of December 23, 2005 that became effective
on January 1, 2006, Luxembourg introduced a withholding tax of 10% for interest payments made to Luxembourg
individual residents by a Luxembourg paying agent (as this term is defined in the law of December 23,
2005). For a Security Holder, who is an individual who is a resident of Luxembourg acting in the course of
managing his private wealth, the 10% withholding tax is a final flat tax.
8.5.2 Taxes on Income and Capital Gains
A holder of the Securities who derives income from such Securities or who realises a gain on the disposal or
redemption thereof will not be subject to Luxembourg taxation on such income or capital gains unless:
(a) such holder is, or is deemed to be, resident in Luxembourg for the purposes of the relevant provisions;
or
(b) such income or gain is attributable to an enterprise or part thereof which is carried on through a permanent
establishment, a permanent representative or a fixed base of business in Luxembourg.
8.5.3 Net Wealth Tax
Luxembourg net wealth tax will not be levied on a holder of the Securities unless:
(a) such holder is, or is deemed to be, resident in Luxembourg for the purpose of the relevant provisions;
or
(b) such Securities are attributable to an enterprise or part thereof which is carried on through a permanent
establishment, a permanent representative or a fixed base of business in Luxembourg.
With the law of December 23, 2005, the net wealth tax has been abolished for resident and non-resident individuals
with effect from 1, January 2006.
8.5.4 Inheritance and Gift Tax
Where the Securities are transferred for no consideration, note in particular that:
(a) no Luxembourg inheritance tax is levied on the transfer of the Securities upon death of a holder of the
Securities in cases where the deceased holder was not a resident of Luxembourg for inheritance tax
purposes; and
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