OFFERING MEMORANDUM Global Offering of up to ... - Nordex
OFFERING MEMORANDUM Global Offering of up to ... - Nordex
OFFERING MEMORANDUM Global Offering of up to ... - Nordex
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corporation income tax a special tax rate is applicable under certain preconditions. In the event that<br />
during the assessment period 2002 dividends are distributed which stem from earnings made in earlier<br />
years by the distributing company, which were burdened with a corporate income tax <strong>of</strong> 45% (EK 45),<br />
40% (EK 40) respectively, these dividend distributions are subject <strong>to</strong> a special tax rate <strong>of</strong> 45%, 40%<br />
respectively on part <strong>of</strong> the Company. Operating expenses <strong>of</strong> the Company related in financial terms <strong>to</strong><br />
such equity interests reduce with priority the Company’s income burdened with 25%; such operating<br />
expenses can generally not be deducted from the Company’s income burdened with 45%, 40%<br />
respectively. The special tax rate is also applicable for other distributions (for example ‘‘hidden<br />
distribution’’) <strong>to</strong> the Company in its assessment period 2002, which are not based on the resolution<br />
ordering the distribution <strong>of</strong> pr<strong>of</strong>its pursuant <strong>to</strong> the provisions <strong>of</strong> corporate law.<br />
If the Company receives in the assessment period 2002 domestic dividends subject <strong>to</strong> the special tax<br />
rate <strong>of</strong> 45%, 40% respectively the Company’s final balances <strong>of</strong> the so called EK 45, EK 40 respectively<br />
which have <strong>to</strong> be determined as <strong>of</strong> September 30, 2001 will be increased retroactively. On September<br />
30, 2001 all final balances <strong>of</strong> the Company’s equity (EK) will be determined – probably retroactively –<br />
and converted in<strong>to</strong> EK 02 and EK 40. Within this conversion corporation income tax credit could be lost.<br />
As <strong>of</strong> September 30, 2002 the remaining corporation income tax credit in the amount <strong>of</strong> 1/6 <strong>of</strong> the<br />
resolved EK 40 will be determined. If the Company distributes dividends <strong>to</strong> its shareholders <strong>up</strong> <strong>to</strong> the<br />
year 2017 the Company’s corporation income tax credit and the corporation income tax liability will be<br />
reduced <strong>to</strong> an amount <strong>of</strong> 1/6 <strong>of</strong> the respective dividend distribution. If during this period the Company<br />
receives dividend distributions, which led at the distributing company <strong>to</strong> a reduction <strong>of</strong> corporation<br />
income tax credit as set out above, the Company’s corporation income tax credit is increased by this<br />
amount. Corporation income tax credits which are not reduced until the year 2017 will be lost.<br />
Dividend distributions received by the Company from domestic corporations in 2002 for the year 2001<br />
are tax exempt, if the distributing corporation has a business year corresponding <strong>to</strong> the calendar year.<br />
If the distributing corporation has a fiscal year not corresponding <strong>to</strong> the calendar year, the dividend<br />
distributions executed for the fiscal year ending in 2001 will be tax exempt. Special rules apply in cases<br />
where the distributing domestic corporation builds an incomplete business year.<br />
From the assessment period 2002 dividend distributions received by the Company from foreign<br />
corporations are – subject <strong>to</strong> certain exceptions – tax exempt. However, 5% <strong>of</strong> the foreign dividends are<br />
deemed as non deductible business expense.<br />
Taxation <strong>of</strong> Dividends<br />
Shareholders Subject <strong>to</strong> Unlimited Tax Liability in Germany<br />
Dividend payments made by the Company before September 30, 2002 are subject <strong>to</strong> withholding tax at<br />
a rate <strong>of</strong> 25% <strong>of</strong> the dividend approved by the shareholders’ general meeting (‘‘cash dividend’’, that is<br />
the dividend less corporate income tax and withholding tax). For such distributions paid after Oc<strong>to</strong>ber<br />
1, 2002 the withholding tax is reduced <strong>to</strong> 20% <strong>of</strong> the cash dividend. A solidarity surcharge <strong>of</strong> 5.5% is<br />
levied in both cases, increasing the effective tax liability <strong>to</strong> 26.375% until September 30, 2002 or 21.1%<br />
after Oc<strong>to</strong>ber 1, 2002. Withholding tax and the solidarity surcharge are deducted from the tax liability<br />
as part <strong>of</strong> the assessment. Instead, individuals who hold the shares as part <strong>of</strong> private assets may also<br />
have part or all <strong>of</strong> their withholding tax reimbursed or exempted if they have submitted an application<br />
for exemption or a non-assessment certificate. Otherwise the withholding tax is levied, regardless if or<br />
<strong>to</strong> what extent the distribution is tax exempt on the level <strong>of</strong> the shareholder.<br />
Dividends distributed by <strong>Nordex</strong> <strong>up</strong> <strong>to</strong> September 30, 2002 <strong>to</strong> individuals who hold the shares as part <strong>of</strong><br />
private assets (private inves<strong>to</strong>rs) are fully subject <strong>to</strong> German income tax plus the solidarity surcharge. In<br />
the case <strong>of</strong> such dividend distributions by <strong>Nordex</strong>, the income from capital assets (gross dividend) <strong>of</strong><br />
private inves<strong>to</strong>rs consists <strong>of</strong> (i) the net amount actually received (net dividend) plus (ii) the possibly<br />
withholding tax withheld amounting <strong>to</strong> 25% <strong>of</strong> the cash dividend plus the solidarity surcharge <strong>of</strong> 5.5%<br />
on this amount (a <strong>to</strong>tal <strong>of</strong> 26.375% <strong>of</strong> the cash dividend) and (iii) the corporation income tax withheld<br />
by the company (corresponding <strong>to</strong> the corporation income tax credit). Up <strong>to</strong> September 30, 2002,<br />
private inves<strong>to</strong>rs can <strong>of</strong>fset the withholding tax withheld (plus solidarity surcharge) and the<br />
corporation income tax withheld by the company (excluding the solidarity surcharge paid by the<br />
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