Landeskreditbank Baden-Württemberg - L-Bank

Capital gains resulting from the disposition or redemption of Debt Securities (or, as the case may be, from
the payment at maturity of the Debt Securities) realized by Private German Investors are generally taxable if the
capital gain is realized within one year after the acquisition of the Debt Securities. Capital losses realized by
Private German Investors may only be offset against capital gains resulting from a disposition of Debt Securities
or from other private transactions within the same calendar year and, subject to various limitations, in the
preceding year or in subsequent years.
Capital gains realized by Private German Investors are only taxable if the aggregate amount derived from all
taxable private transactions equals or exceeds an amount of € 512 in one calendar year.
Capital gains derived by Private German Investors from the disposition or redemption of Debt Securities are
not subject to German income tax if the Debt Securities are sold or redeemed more than one year after their
acquisition.
Irrespective of a holding period, any capital gain resulting from the disposition or redemption of Debt
Securities (or, as the case may be, from the payment at maturity of the Debt Securities) are subject to income or
corporate income tax, including trade tax, if such Debt Securities are held as business assets of a German Holder.
Special Rules for Financial Innovations
To the extent Debt Securities are classified as financial innovations (“Financial Innovations”;
Finanzinnovationen), special provisions apply to the disposition or redemption, or upon maturity, of the Debt
Securities. In particular, any debt instrument may classify as a Financial Innovation if it provides for a floating
interest rate, an issue discount or an optional redemption right.
In case Debt Securities are classified as Financial Innovations, capital gains arising upon the disposition or
redemption, or upon maturity, of the Debt Securities realized by a German Private Investor (including capital
gains so derived by a secondary or subsequent purchaser who is a German Private Investor) are fully subject to
income tax, provided no yield to maturity (Emissionsrendite) can be established. In case a yield to maturity can
be established, only the extent of the capital gain attributable to such yield to maturity during the period the
respective German Private Investor held the Debt Security is subject to income tax.
The amount taxed due to the classification of a Debt Security as a Financial Innovation is subject to 30%
withholding tax (plus a solidarity surcharge of 5.5% thereon) if the Debt Securities are kept or administered in a
custodial account by the same German Disbursing Agent since the acquisition of the Debt Securities. If the Debt
Securities have not been so kept in a custodial account by the same German Disbursing Agent, withholding tax
will be imposed at the same rate on 30% of the proceeds received upon a disposition or redemption, or upon the
maturity, of the Debt Securities. As described above, such withholding tax might be credited or refunded upon
application.
Non-German Residents
Income derived from the Debt Securities by persons who are not tax residents of Germany (“Non-German
Holders”) is in general exempt from German income or corporate income taxation, and no withholding tax must
be withheld (even if the Debt Securities are kept with a German Disbursing Agent), provided the Debt Securities
are not (i) held as German business assets by the Non-German Holder or (ii) presented for payment at the offices
of a German branch of a German or foreign bank or financial services institution in an over-the-countertransaction
(Tafelgeschäft).
If the Debt Securities are held as German business assets by a Non-German Holder, such holder is subject to
a tax treatment similar to that described above under the caption “German Residents.”
If the Debt Securities are involved in an over-the-counter-transaction, as described above, income derived
therefrom will be subject to withholding tax.
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