Income tax treatment of Westgrund AG and GAGFAH S.A. reorganisation/exchange offers – Update

In addition to our Announcement D15032 dated 28 September 2015 concerning the income tax treatment of the reorganisation/exchange offers for Westgrund AG and GAGFAH S.A., Clearstream Banking¹ would like to inform its customers that the Federal Ministry of Finance (BMF) in Berlin has issued an initial assessment to the banking associations.

The BMF intends in this regard, to proceed on the assumption in both cases that the cash component is substantively subject to tax in accordance with § 20 paragraph 4a sentence 2 in conjunction with § 20 paragraph 1 number 1 of the Income Tax Law (Einkommensteuergesetz, EStG) and is also subject to deduction of capital gains tax for any payment to creditors who have limited tax liability.

The federal states have until 12 November 2015 to submit their views on the BMF’s proposal. Provided that the federal states do not have a dissenting opinion on the BMF’s assessment, the BMF will then respond to the banking sector’s query in the way described above.

Clearstream Banking will then have to then cancel the original gross dividend in the GAGFAH S.A. (LU1152862774) security and clear it again, taking into account the tax deduction. Clearstream Banking’s customers will be informed about this separately at least one week in advance.

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1. This Announcement is published by Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.