OFFERING MEMORANDUM Global Offering of up to ... - Nordex

Taxation
The following section provides an overview of selected tax regulations in the Federal Republic of
Germany. The discussion does not claim to present a comprehensive explanation of all the information
which could be required before any purchase decision is made regarding the shares on offer. The
explanations are based on the taxation provisions effective in Germany at the time this Offering
Memorandum went to print. These may be subject to revision; any changes may also have a retroactive
effect under certain circumstances. The discussion relates solely to income tax (excluding church tax),
corporation tax, the solidarity surcharge, trade tax, and inheritance and gift tax and does not address
all aspects of these types of taxation. It does not address the individual tax situation of each investor.
Prospective investors are therefore strongly advised to consult a tax adviser regarding the tax
consequences in their particular case of acquiring, holding or transferring shares.
In 2000, the German Parliament passed the Steuersenkungsgesetz (Tax Reduction Act) to reduce tax
rates and reform corporate taxation. The reform lowers the corporation tax rate homogeneously to
25% plus a solidarity surcharge of 5.5% starting in the 2001 assessment period. The corporation tax
imputation procedure will be replaced for private individuals by what is known as the
Halbeinkünfteverfahren. According to this, only 50% of dividend payments and taxable capital gains
from the disposal of shares held as part of private assets should be subject to income tax. Corporations
are insofar exempted from taxation. The Tax Reduction Act becomes effective from January, 1 2001
generally. However, as Nordex has a business year deviating from the calendar year (October, 1 to
September, 30) and the Company will not switch over to a calendar year as business year via an
incomplete business year the provisions of the Tax Reduction Act will be applicable later on (see below).
Taxation of Company Profits
Aktiengesellschaften (German public companies) domiciled in the Federal Republic of Germany are
subject to both trade tax and corporation income tax and a solidarity surcharge (Solidaritätszuschlag)
with their profits. Trade tax may be deducted as an operating expense when calculating the amount of
income subject to corporation tax.
The assessment basis for trade tax is the trading profit, which is determined according to the
Körperschaftssteuergesetz (KStG – German Corporation Income Tax Act) from the taxable income
adjusted for certain additions and deductions. The trade tax liability is derived by applying a percentage
rate to the trading result; this percentage rate depends on the effective assessment rate determined by
municipalities for the areas they cover. If an Aktiengesellschaft maintains operating establishments in
various municipalities, the total trade tax liability is determined by the rates applicable in each of these
municipalities. Dependent on the municipality the range for the trade tax burden is generally between
12% and 21% of the trading profit.
The income of Nordex that is subject to corporation income tax is calculated on the basis of the
Company’s trade balance accounts, taking into account special income tax and corporation income tax
regulations.
Including September, 30 2001 (assessment period 2001) the corporation income tax rate for Nordex is
40% for retained and 30% for distributed earnings. A solidarity surcharge in the amount of 5.5% is
charged on the corporate income tax owed. There are exceptions to this rule for the Company’s tax
exempt foreign income and contributions by shareholders that increase the Company’s net worth (so
called EK 04 respectively steuerliches Einlagekonto). Given the fact that the solidarity surcharge is not
deductible, the corporate income tax and solidarity surcharge result in an effective tax burden (after
trade tax), assuming full distribution, of 31.94%.
From October 1, 2001 on (assessment period 2002) the corporate income tax rate for Nordex will be
homogeneously 25%. A solidarity surcharge of 5.5% will be charged on the corporation income tax
assessed. Including the non deductibility of the solidarity surcharge, this results in an effective tax
liability on the Company’s income (after trade tax) of 26.375%. Taking into account that the solidarity
surcharge is not deductible the effective burden of the income amounts to 26.375% (after trade tax). If
the Company receives dividend distributions from other companies which are unlimitedly subject to
100