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

Company, which is known as the ‘‘shadow burden’’) against their income tax liability (plus solidarity
surcharge). The purpose behind this corporation income tax imputation procedure is the prevention of
double taxation of corporations and shareholders as well as the taxation of dividends according to the
personal tax situation of shareholders with unlimited tax liability. The basis for determining the
solidarity surcharge to be paid by the shareholder is reduced by the amount of the corporation income
tax credit.
After October 1, 2002, only 50% of dividend payments by Nordex to private investors will be subject to
income tax (plus solidarity surcharge). At the corporation level, the distribution tax rate of 30% is no
longer applicable; at the shareholder level, the corporation income tax credit is not available anymore.
Private investors are entitled to a savings allowance of DM 3,000.00 p.a. in 2001, E1,550.00
respectively (DM 6,000.00 p.a. in 2001, E3,100.00 from 2001 respectively in the case of married couples
filing jointly). In addition, a blanket deduction for income-related expenses in the amount of DM 100.00
p.a., E51.00 p.a. from 2002 respectively (DM 200.00 p.a. in 2001, E102 p.a. from 2001 respectively in
the case of married couples filing jointly) is granted unless the expenses involved are demonstrated to
have actually exceeded that amount. From October 1, 2002 on only 50% of the expenses related in
financial terms to the Nordex dividends can be deducted, regardless in which assessment period the
expenses accrued.
If the Nordex shares are held as part of the operating assets of a commercial sole proprietor or a
commercial partnership, the gross dividend is subject to trade tax unless the taxpayer held at least 10%
of the Company’s share capital at the beginning of the relevant tax period. For the purposes of the
income tax levied on a sole proprietor, the dividend is up to September 30, 2002 fully, after October 1,
2002 only to 50% included in the calculation of income from trade. In the case of partnerships, the
dividend is included in the uniform and itemised declaration and is allocated to the partners from
there; the taxation of these partners depends on their legal form.
After October 1, 2002, shareholders not subject to corporation income tax can only deduct 50% of
operating expenses related in financial terms to the Nordex dividends, regardless in which assessment
period they accrue.
In the case of shareholders subject to corporation tax, the gross dividend is subject to trade tax until
September 30, 2002 unless the taxpayer held at least 10% of the Company’s share capital at the
beginning of the relevant tax period. After October 1, 2002, the dividends will be exempt from trade tax.
Up to September 30, 2002, dividends paid to shareholders subject to corporation income tax are taxable
may be subject to corporation income tax with a special tax rate. The above statements on the
calculation of income under the imputation procedure and on the special tax rate apply accordingly.
Nordex Dividends distributed to corporations will no longer be taxed after October 1, 2002. A minimum
equity interest or holding period is not specified. However, the dividends may be subject to a
supplementary tax. Operating expenses directly related to tax-free Nordex dividends in financial terms
may not be deducted as operating expenses.
Shareholders not Subject to Unlimited Tax Liability
Dividend payments made by the Company before September 30, 2002 are subject to withholding tax at
a rate of 25% of the dividend approved by the shareholders’ general meeting (‘‘cash dividend’’, that is
the dividend less corporate income tax and withholding tax). For such distributions paid after October
1, 2002 the withholding tax is reduced to 20% of the cash dividend. A solidarity surcharge of 5.5% is
levied in both cases, increasing the effective tax liability to 26.375% until September 30, 2002 or 21.1%
after October 1, 2002. Withholding tax and the solidarity surcharge are deducted from the tax liability
as part of an assessment. If a double taxation agreement applies, the investment income tax (plus
solidarity surcharge) on dividend distributions paid to shareholders not resident in Germany by
corporations domiciled in Germany may be reduced. To claim this benefit, the shareholder entitled to
the benefit or his agent must file an application with the German tax authorities (Bundesamt für
Finanzen, Friedhofstraße 1, D-53221 Bonn) pursuant to the double taxation agreement for a reduction
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