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

ecognise foreign currency gain or loss in respect of the dividend income. If the euro are converted
after the date on which they are received, any gain or loss that a U.S. Holder recognises on the
conversion will be U.S. source ordinary income or loss.
Effect of German Withholding Taxes. As discussed in ‘‘Taxation’’, under current law payments of
dividends by the Company to foreign investors are subject to German withholding taxes including a
solidarity surcharge that is levied on the amount of tax withheld. The rate of withholding tax applicable
to U.S. Holders that are eligible for benefits under the Treaty is reduced to a maximum of 15%. As
discussed under ‘‘Taxation,’’ U.S. Holders eligible for benefits under the Treaty can apply for a refund of
any taxes withheld in excess of this amount. For U.S. federal income tax purposes, U.S. Holders will be
treated as having received the amount of German taxes withheld by the Company, and as then having
paid over the withheld taxes to the German taxing authorities. As a result of this rule, the amount of
dividend income included in gross income for U.S. federal income tax purposes by a U.S. Holder with
respect to a payment of dividends may be greater than the amount of cash actually received (or
receivable) by the U.S. Holder from the Company with respect to the payment.
Under the current German tax regime (see ‘‘Taxation—Taxation of Dividends—Shareholders not Subject
to Unlimited Tax Liability’’), a U.S. Holder may claim an additional refund equal to 5% of the dividend
paid. For United States federal income tax purposes, the additional refund is treated as an additional
dividend equal to 5.88% of the amount of the dividend actually paid. The withholding tax deemed to
have been paid is equal to 15% of the sum of the dividend paid to the U.S. Holder and the 5.88%
additional dividend. After September 30, 2002, Germany will not pay a tax credit to shareholders.
Therefore, U.S. Holders will not be able to claim the additional tax refund equal to 5% of the dividend
paid and will not be required to include the additional dividend equal to 5.88% of the amount of the
dividend actually paid in their income.
Subject to certain limitations, a U.S. Holder will generally be entitled to a credit against its U.S. federal
income tax liability, or a deduction in computing its U.S. federal taxable income, for German income
taxes withheld by the Company. U.S. Holders that are eligible for benefits under the Treaty will not be
entitled to a foreign tax credit for the amount of any German taxes withheld in excess of the 15%
maximum rate, and with respect to which the holder can obtain a refund from the German taxing
authorities. For purposes of the foreign tax credit limitation, foreign source income is classified into
one of several ‘‘baskets’’, and the credit for foreign taxes on income in any basket is limited to U.S.
federal income tax allocable to that income. Dividends paid by the Company generally will constitute
foreign source income in the ‘‘passive income’’ basket or, in the case of certain holders, the ‘‘financial
services income’’ basket. In certain circumstances, a U.S. Holder may be unable to claim foreign tax
credits (and may instead be allowed deductions) for foreign taxes imposed on a dividend if the U.S.
Holder (i) has not held the Offered Shares for at least 16 days in the 30-day period beginning 15 days
before the ex dividend date, or (ii) holds the Offered Shares in arrangements in which the U.S. Holder’s
expected profit, after non-U.S. taxes, is insubstantial. U.S. Holders that are accrual basis taxpayers must
translate German taxes into U.S. dollars at a rate equal to the average exchange rate for the taxable
year in which the taxes accrue, while all U.S. Holders must translate taxable dividend income into U.S.
dollars at the spot rate on the date received. This difference in exchange rates may reduce the U.S.
dollar value of the credits for German taxes relative to the U.S. Holder’s U.S. federal income tax liability
attributable to a dividend. Prospective purchasers should consult their tax advisers concerning the
foreign tax credit implications of the payment of German taxes.
Sale or other Disposition
Upon a sale or other disposition of Offered Shares, a U.S. Holder generally will recognise capital gain or
loss for U.S. federal income tax purposes equal to the difference, if any, between the amount realised
on the sale or other disposition and the U.S. Holder’s adjusted tax basis in the Offered Shares. This
capital gain or loss will be long-term capital gain or loss if the U.S. Holder’s holding period in the
Offered Shares exceeds one year. Any gain or loss will generally be U.S. source, except that losses will
be treated as foreign source to the extent the U.S. Holder received dividends that were includible in the
financial services income basket during the 24-month period prior to the sale.
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