INFORMATION MEMORANDUM DATED 9 JULY 2009 ...

levy, generalising the Value Added Tax monthly refund system and introducing other
amendments to the tax legal system, as well as Royal Decree 1065/2007, of 27 July, approving
the General Regulations of the tax inspection and management procedures and developing the
common rules of the procedures to apply taxes;
(b)
(c)
(d)
for individuals resident for tax purposes in Spain who are Individual Income Tax ("IIT") tax
payers, Law 35/2006, of 28 November, on the IIT and on the partial amendment of the
Corporate Income Tax Law, Non-Resident Income Tax Law and Wealth Tax Law (the "IIT
Law"), and Royal Decree 439/2007, of 30 March promulgating the IIT Regulations, along with
Law 19/1991, of 6 June on Wealth Tax and Law 29/1987, of 18 December on Inheritance and
Gift Tax.
for legal entities resident for tax purposes in Spain which are Corporate Income Tax ("CIT")
taxpayers, Royal Legislative Decree 4/2004, of 5 March, promulgating the Consolidated Text of
the CIT Law, and Royal Decree 1777/2004, of 30 July, promulgating the CIT Regulations (the
"CIT Regulations"); and
for individuals and entities who are not resident for tax purposes in Spain which are
Non-Resident Income Tax ("NRIT") taxpayers, Royal Legislative Decree 5/2004, of 5 March,
promulgating the Consolidated Text of the NRIT Law, and Royal Decree 1776/2004, of 30 July,
promulgating the NRIT Regulations, along with Law 19/1991, of 6 June, on Wealth Tax and
Law 29/1987, of 18 December, on Inheritance and Gift Tax.
Whatever the nature and residence of the Beneficial Owner, the acquisition and transfer of the Notes
will be exempt from indirect taxes in Spain, for example, exempt from Transfer Tax and Stamp Duty,
in accordance with the consolidated text of such tax promulgated by Royal Legislative Decree 1/1993,
of 24 September, and exempt from Value Added Tax, in accordance with Law 37/1992, of 28
December, regulating such tax.
1. Individuals with Tax Residence in Spain
(a)
Individual Income Tax (Impuesto sobre la Renta de las Personas Físicas)
Both interest periodically received and income deriving from the transfer, redemption
or repayment of the Notes constitute a return on investment obtained from the transfer
of own capital to third parties in accordance with the provisions of Section 25.2 of the
IIT Law, and must be included in the IIT savings taxable base of each investor and
taxed at the flat rate of 18 per cent.
Both types of income are subject to a withholding on account of IIT at the rate of 18
per cent. The individual holder may credit the withholding against his or her final IIT
liability for the relevant tax year.
(b)
Wealth Tax (Impuesto sobre el Patrimonio)
Law 4/2008 has amended Law 19/1991 introducing a credit of 100 per cent. over the
tax due and removing the obligation to file Wealth Tax declaration as from 1 January
2008.
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