Österreichische Volksbanken-Aktiengesellschaft ... - Volksbank AG

Gains realized in respect of warrants are not subject to Austrian taxation, unless the warrants
form part of the business property of a permanent establishment, including a permanent representative,
or a fixed base maintained in Austria by the holder of a warrant. If the non-resident of
Austria is subject to Austrian taxation with income from the warrant, a tax regime similar to that
explained above at "Tax Residents" applies.
Neither Austrian withholding tax nor EU withholding tax does apply to income resulting from
warrants.
Austrian inheritance and gift tax
Pursuant to the Austrian Inheritance and Gift Tax Act (Erbschafts- und Schenkungssteuergesetz),
transfers of assets inter vivos and inter mortuos are taxable. Sec. 15(1)(17) of the Austrian
Inheritance and Gift Tax Act provides for a tax exemption in the case of a transfer of bonds
inter mortuos insofar as the bonds were legally and factually offered to an indefinite number of
persons and insofar as the interest resulting from the bonds is subject to final taxation or to the
special tax rate of 25 per cent. (Sec. 37 (8) of the Austrian Income Tax Act).
No inheritance or gift taxes with respect to any Note (including warrants) will arise under the
laws of Austria, if, in the case of inheritance tax, neither the decedent nor the beneficiary, or, in
the case of gift tax, neither the donor nor the donee, is a resident of Austria and such Note (including
warrant) is not attributable to an Austrian trade or business for which a permanent establishment
is maintained in Austria.
On 7 March 2007 the Austrian Constitutional Court abolished the inheritance tax on constitutional
grounds effective as of 1 August 2008. It is not expected that a new inheritance tax will
be adopted by the Austrian legislation. On 8 March 2007 the Austrian Constitutional Court initiated
proceedings scrutinizing also the gift tax based on similar grounds as the inheritance tax.
It is expected that the gift tax will also be abolished. No estimation can be made as of now with
respect to the date the gift tax may be abolished and whether a new gift tax will be adopted by
Austrian legislation.
Taxation in the Federal Republic of Germany
German (corporate) income taxation regarding the Notes (except warrants)
Tax Residents
Payments of interest on the Notes to persons who are tax residents of Germany (i.e., persons
whose residence, habitual abode, statutory seat, or place of effective management and control is
located in Germany) are subject to German personal or corporate income tax (plus 5.5 per cent.
solidarity surcharge (Solidaritätszuschlag) thereon). Such interest may also be subject to trade
tax if the Notes form part of the property of a German trade or business.
Upon the disposition of a Note carrying interest, a holder of the Note will also have to include in
his taxable income any consideration invoiced separately for such portion of the interest of the
current interest payment period which is attributable to the period up to the disposition of the
Note ("Accrued Interest"). Accrued Interest paid upon the acquisition of the Notes may be declared
as negative income if the Note is held as a non-business asset.
If for the determination of the issue price of the Note the issue amount is reduced by a discount
(Disagio), or if the redemption amount is increased (as, for example, in the case of a discounted
Note or a Note with accrued interest added), the difference between the redemption amount and
the issue price of the Note ("Original Issue Discount") realized when a Note held as a nonbusiness
asset is redeemed to its initial subscriber will be taxable investment income, however,
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