No substantial income tax effects at level of German tax resident shareholders should be triggered by the Luxembourg capital increase from share premium account. With respect to a capital increase from share premium account without the issuance of new shares, however, there is no clear guidance from German tax authorities available. Moreover, also no clear tax literature opinion or court rulings exist.
In the past, German depositary banks levied withholding tax or adjusted acquisition cost in case of foreign capital measures to which no clear legal situation applied, even if the income tax neutrality of the foreign capital measure was later confirmed by German tax authorities.
Currently, SAF-HOLLAND S.A. is in coordination with German tax authorities, in order to receive confirmation of the tax neutrality of the capital increase from share premium account in advance. Based on this confirmation, depositary banks can then refrain from withholding withholding taxes or adjusting acquisition costs.
Notwithstanding the foregoing, the assessment of the tax consequences requires a consideration of the individual circumstances of the shareholder. It is therefore recommended that shareholders consult their own tax advisors with respect to their individual tax situation.