Südzucker International Finance B. V. Südzucker AG ... - Xetra

to income tax plus solidarity surcharge thereon as well as trade tax, where applicable. The 30%withholding tax plus solidarity surcharge applies in this case if the Bonds are German AdministeredBonds. If the Shares are delivered to the Bondholder, the fair market value for the Shares at the timeof the exchange is considered to be the acquisition costs for the Shares.Provided the Bonds qualify as regular convertible bonds and further provided the Bonds are held by aprivate individual as private assets for more than one year, there are arguments that the AdditionalAmount may be regarded as tax-exempt capital gain; however, it cannot be excluded that theAdditional Amount may nevertheless be treated as taxable deemed interest by the fiscal authorities.Expenses related to the income from the Bonds; special tax exemption.The Bondholder may deduct expenses related to the income from the Bonds. Where no higherexpenses related to income from capital investment are shown, the Bondholder is entitled for astandard deduction (Werbungskosten-Pauschbetrag) of5 51 p.a. (5 102 p. a. in the case of marriedcouples filing joint returns), if the Bonds are not held as business assets. In addition, Bondholderswho do not hold the Bonds as business assets are entitled to an annual special tax exemption(Sparerfreibetrag) for all capital investment income of 5 1,550 p.a. (5 3,100 p.a. in the case of marriedcouples filing joint returns). Income from the Bonds is free of withholding tax up to these limitsif an exemption order (Freistellungsauftrag) has been filed with the deposit bank. The sameapplies if the shareholder provides the deposit bank with a non-assessment certificate(Nichtveranlagungsbescheinigung) issued by the relevant tax office. The standard deduction and thespecial exemption apply to all investment income from capital investments (net of related expenses)received during the year including dividend income.Taxation of the Bonds (Bondholders not resident in Germany)Individuals or corporate Bondholders, who are not tax resident in Germany are in general not subjectto German income tax with their interest income from the Bonds unless the Bonds are held asbusiness assets of a permanent establishment or a fixed base maintained in Germany in which casesimilar tax consequences as in case of Bondholders resident in Germany would apply. Capital gainsderived from a sale or redemption of the Bonds or from the exercise of the conversion right, in casethe Bonds are traded as financial innovations will in general be subject to German personal orcorporate income tax plus solidarity surcharge thereon if(i) the Bonds are held as business assets of a German permanent establishment or fixed base of theBondholder in which case also trade tax may apply, or(ii) if the Bondholder (or, in case of a transfer without consideration, his or her predecessor) at anytime during the five years preceding the disposition held an interest (including among otherthings, shares and convertible bonds or convertible notes) of 1% or more in the issued sharecapital of Südzucker AG Mannheim/Ochsenfurt.Most tax treaties to which Germany is a party provide for a complete exemption from Germantaxation in the case of (ii).Taxation of the Shares received in Conversion of the Bonds (Shareholders resident in Germany)Dividend taxationOnly half of the dividends received by a German-resident individual are subject to income tax (plussolidarity surcharge of 5.5% thereon) (so-called half income system). Accordingly, only one half ofthe expenses attributable to the shareholding are deductible. If an individual holds the Shares asassets of a German commercial business of such shareholder, the dividend is subject to trade tax,unless the shareholder holds 10% or more of the share capital of Südzucker AG Mannheim/Ochsenfurt since the beginning of the calendar year. For corporate shareholders such dividendincome is in general free of corporate income tax and, if the shareholder held 10% or more of theshare capital of Südzucker AG Mannheim/Ochsenfurt since the beginning of the calendar year, ingeneral also free of trade tax. In this case, however, expenses directly economically related to the72