Vorarlberger Landes- und Hypothekenbank Aktiengesellschaft

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Insofar as the Notes have not been publicly offered or interest payments in respect to the Notes are made
to a corporate investor that holds the Notes as a business asset, the withholding tax is not final, but
credited against the tax liability of the respective year.
Such corporate investors may generally avoid withholding tax on investment income by way of a particular
notification procedure.
Any interest payments in respect of Notes to Austrian private-law foundations ("Privatstiftung") are subject
to a special interim corporate income tax at a rate of 12.5%. Such interim corporate income tax may be
credited against the income tax levied on distributions made by the private-law foundation to its
beneficiaries.
Regarding the implications of the EU Savings Tax Directive in the Republic of Austria see further below.
b. Capital gains
According to Austrian tax law capital gains are subject to taxation if they relate to Notes that were held as
business assets.
Capital gains realised by individuals (and certain types of corporate entities, e.g., a private-law foundation)
that hold the Notes as a private investment are only taxed if the capital gains relate to Notes that were not
held for more than one year or if the capital gains realised in respect of the Notes are treated as
investment income due to the particular terms and conditions of the Notes (e.g., Equity Linked Notes,
Index Linked Notes, or Zero Coupon Notes). Capital losses incurred by individuals that hold the Notes as a
private investment may only off-set taxable capital gains realized in respect of private investments.
c. Some specific rules regarding various types of Notes
Fixed/Floating Rate Notes
In case of a redemption or an early buy-back (by the Issuer) of privately held Notes that carry interest, any
difference between issuing price and a higher redemption (early buy-back) price will be tax free, provided
the Notes were held for more than one year and the difference does not exceed a certain percentage (e.g.,
in respect of Notes with a term of at least five years 2%). If the difference exceeds the respective
percentage, it is taxed as income from the investment of capital.
Supplementary Capital Notes
Even though Supplementary Capital Notes are similar to jouissance rights or other equity-like financial
instruments, they are taxed like debt securities due to explicit regulatory provisions. Upon redemption a
positive difference between the redemption price and the issue price is taxed as described in the previous
paragraph.
Zero Coupon Notes
If the amount realized upon a redemption (or a buy-back) of Zero Coupon Notes held by an individual (and
certain types of corporate entities, e.g., private-law foundations) exceeds the issue price, the portion of the
amount realized attributable to the difference between (i) the intrinsic value of the Notes (based on the rate
of return of the Notes, Innerer Wert) and (ii) the issue price is treated as income from capital investment
and, therefore, taxed like interest income. If the amount realized in this context exceeds the intrinsic value
of the Notes, such excess is treated as a capital gain and taxed accordingly. The same applies in case of
a disposition of Zero Coupon Notes that are held by an individual (and certain types of corporate entities,
e.g., private-law foundations).
Dual Currency Notes
Any capital gain on fluctuations of foreign currencies will be realized only upon conversion to euro.
Step-Up and Step-Down Notes
Capital gains (or capital losses) relating to Step-Up and Step-Down Notes held by individuals might, to a
certain extent, be treated as income from the investment of capital (or as expenses) rather than as capital
gains (or capital losses). The amount of such income from the investment of capital (or the amount of the
expenses) is determined based on a formula that reflects the rate of return of the specific Note. Step-Down
Notes may even be treated like Zero Coupon Notes depending on the value fluctuations of the respective
Notes.
Structured Notes