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

or a refund of the amount by which the rate of the regular withholding tax withheld or to be withheld
exceeds the maximum permissible rate under the relevant double taxation agreement.
Subject to the application of Council Directive No.90/435/EEC dated July 23, 1990 (known as the
‘‘Parent-Subsidiary Directive ‘‘) a partial or complete exemption – e.g. by way of a refund -may be made
on application by corporations which are resident for tax purposes in another state of the EU. For the
Parent-Subsidiary Directive to apply, the parent company must have under certain circumstances in
particular its tax domicile in another member state of the European Union, its equity interest in the
German subsidiary must have existed for an uninterrupted period of at least twelve months and it must
amount to at least one quarter (or one-tenth in special cases) of the nominal capital.
Shareholders who are not assessed for taxation in Germany are not entitled to any crediting of the
corporation income tax paid by the corporation and the withholding tax withheld.
Dividends distributed by the Company on shares, which are held by an appointed permanent
representative in Germany or which are part of the assets of an operating establishment or a fixed
place in Germany, which is run by a foreign legal person are subject to German corporate income tax
with a regular rate of 25% plus 5.5% solidarity surcharge thereon until September 30, 2002. The
transfer of profits from the operating establishment or the fixed place to the foreign parent company is
exempt from withholding tax. Shareholders as individuals are subject to German income tax with the
earnings received from the permanent establishment or fixed place with their individual income tax
rate, but at least with 25% plus solidarity surcharge thereon. If the creditable taxes exceed the
corporate income tax plus solidarity surcharge on the earnings of the operating establishment, the
respective exceeding amount will be refunded.
Dividend distributions to foreign corporations holding the shares as business assets in a permanent
establishment or fixed place of business in Germany or via an appointed permanent representative in
Germany are -subject to certain exceptions- generally exempt from corporate income tax, trade tax and
solidarity surcharge from October 1, 2002. Expenses directly related to such dividends in financial terms
may not be deducted as operating expenses.
From October 1, 2002 dividends distributed by the Company to holders not subject to corporation
income tax are subject to the semi-income method.
Taxation of Capital Gains
Shareholders Subject to Unlimited Tax Liability in Germany
Capital gains from the disposal of Nordex shares held as part of private assets by natural persons with
unlimited tax liability are only subject to income tax if (i) the shares are sold within one year of being
acquired or if after the expiration of this period (ii) the shares arise from contributions pursuant to
section 21 Reorganisation Tax Act (Umwandlungsteuergesetz) or (iii) the shareholder directly or
indirectly held or holds a significant equity interest. Up to September 30, 2002, a significant equity
interest exists if the shareholder (in case of a gratuitous acquisition also his legal predecessor) held at
any time within the last five years a direct or indirect interest of at least 10% in the share capital. After
October 1, 2002, a significant equity interest exists if at any time within the five years prior to the
disposal a direct or indirect interest of at least 1% existed or exists.
Up to September 30, 2002, taxable capital gains from the disposal are subject to full income tax (plus
solidarity surcharge). In line with the Halbeinkünfteverfahren, 50% of these capital gains will be subject
to income tax (plus solidarity surcharge) after October 1, 2002. Only half of the expenses related to the
capital gains from disposal of Nordex shares in financial terms may be deducted, regardless in which
assessment period the expenses accrue.
Losses from the disposal of shares incurred by a private investor may be of little or no relevance to
taxation. Losses incurred by shareholders who are individuals from a disposal that occurs within one
year after the acquisition of the shares can only be offset against the capital gains that the shareholder
received in the same calendar year from other private taxable sales transactions according to section
23 Income Tax Act (Einkommensteuergesetz). Losses that are not offset reduce the shareholder’s
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