Österreichische Volksbanken-Aktiengesellschaft ... - Volksbank AG

of the underlying is only taxable if the underlying was acquired within one year before the put
warrant was exercised. In this case the acquisition costs for a put warrant are deductible as income-related
expenses.
If warrants are settled in cash warrants are treated as derivatives ("Termingeschäfte"). The capital
gain is only taxable if the warrants are exercised within one year after the acquisition of the
warrants. The acquisition costs for the warrants are deductible as income-related expenses.
Losses may only be offset to the amount of the capital gains received by the tax payer in the
same calendar year or under certain conditions against taxable private capital gains arising in the
previous tax year or subsequent tax years.
In case the beneficiary holds warrants in his business assets gains deriving from the sale of warrants
are subject to German income or corporate tax and trade tax irrespective of whether warrants
are settled physically or in cash. Losses resulting from derivative transactions can only be
offset against gains resulting from other derivative transactions, except the transaction belongs
to the common business of a bank or a financial institution or it is intended to hedge common
business activities and is not directed to the hedge of stock transactions creating fully or partly
tax exempt capital gains.
Non Residents
Non Residents are not subject to German taxation with their capital gains deriving from the
disposition or settlement of warrants, unless (i) warrants form part of the business property of a
permanent establishment, including a permanent representative, or a fixed base maintained in
Germany by the holder of a warrants or (ii) the income otherwise constitutes German source
income (such as income from the letting and leasing of certain German-situs property).
Flat tax for capital income according to the proposed business tax reform
The German legislator according to recent draft bills intends to introduce a flat tax system with
regard to capital income and capital gains of individuals holding the investments as private assets
with effect as of 2009 (alternatively 2008). Hereafter, income tax will be fixed at a rate of
25% unless the taxpayer elects to be taxed at his individual tax rate. Income-related expenses
will be generally disregarded when determining the capital income. Furthermore, the twelve
months holding period currently applying to e.g. securities held by private investors and providing
for tax exemption of capital gains is repealed.
The flat rate, however, will not cover investment income earned in a business being further on
subject to income tax at ordinary rates.
Inheritance and Gift Tax
Pursuant to the German Inheritance and Gift Tax Act (Erbschaft- und Schenkungsteuergesetz),
transfers of assets inter vivos and inter mortuos are generally taxable with a tax rate between 7
and 50 per cent. depending on the total amount of the transferred assets and the degree of the
relationship between the transferor and the transferee. In case of a taxable transfer several kinds
of allowances exist.
No inheritance or gift taxes with respect to any Note (incl warrants) will arise under the laws of
Germany, 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 Germany and such Note (incl
warrant) is not attributable to a German trade or business for which a permanent establishment
is maintained, or a permanent representative has been appointed, in Germany. Exceptions from
this rule apply to certain German citizens who previously maintained a residence in Germany.
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