ENDE
Announcement

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

Tax | Germany

Reference

Code
D15032
Service level
CEU Legacy
Last Updated
28.09.2015

TAX HELP DESK FRANKFURT

E:

tax@clearstream.com

T:

+49-(0) 69-2 11-1 3821

F:

+49-(0) 69-2 11-61 3821

In the settlement of corporate actions

  • Reorganisation/exchange offer Westgrund AG, Berlin, by ADLER Real Estate AG, Frankfurt am Main (DE000A14KCW5) and
  • Reorganisation/exchange offer GAGFAH SA, Luxembourg, by Deutsche Annington Immobilien SE (now Vonovia SE), Bochum (LU1152862774)

uncertainty exists concerning the tax treatment/fiscal evaluation of the cash components within the German banking industry.

This specifically concerns whether an exchange of shares with cash settlement pursuant to § 20 paragraph 4a sentence 1, 2 of the Income Tax Law (Einkommensteuergesetz, EStG) exists for the two corporate actions and whether capital gains tax is to be deducted pursuant to § 44 paragraph 1 No. 3 letter a) or b) of the EStG in the case of payment of the cash settlement to a foreign credit institution, regardless of whether by Clearstream Banking1 or by a financial institution acting as an intermediary.

Concerning the reorganisation/exchange offer event related to Westgrund AG (DE000A14KCW5), CBF decided, after consultation with a few German custodian banks and re-examination of the assessment of the German credit institutions, to cancel the original gross payout and settled the cash component by deducting the capital gains tax with the note "Barausschüttung aufgrund Steuerneutraler Tausch im Sinne des § 20 Abs. 4a Satz 1 EStG und somit steuerpflichtig nach § 20 Abs. 1 Satz 1 EStG" (Cash distribution due to tax neutral exchange within in the meaning of § 20 paragraph 4a sentence 1 of the Income Tax Law and therefore taxable pursuant to § 20 paragraph 1 sentence 1 of the Income Tax Law).

The banking associations will request a general statement from the tax authorities with the aim of achieving market-uniform treatment of all credit institutions.

The reorganisation/exchange offer event related to GAGFAH SA (LU1152862774) will be untouched further pending this statement.

Once the statement of the tax authorities has been given, there might be once again a correction  in respect of Westgrund AG. Individual tax vouchers  will not be issued for Westgrund AG until the tax authorities have given their decision.

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1. This Announcement is published by Clearstream Banking AG, 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.