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06.10.2015

New WohnbauAnleihe bond of Bank Austria Wohnbaubank qualifying for tax allowance for business profits

  • "1 bis 4 Prozent Gewinnfreibetrag-Stufenzins-Wandelschuldverschreibung" (stepped-coupon convertible bond)

Small and medium-sized enterprises (SMEs) and independent professionals in Austria have been able since 2006 to benefit from a tax allowance for invested business profits if they make investments qualifying for the tax allowance in the relevant fiscal year. Under the Austrian Tax Amendments Act 2014, WohnbauAnleihe bonds are the only securities product qualifying for the investment-based tax allowance for business profits.
Bank Austria Wohnbaubank has launched a new WohnbauAnleihe bond custom-built for SMEs and independent professionals to benefit from the 2015 tax allowance for business profits. The term of the new "1 bis 4 Prozent Gewinnfreibetrag-Stufenzins-Wandelschuldverschreibung 2015 – 2025/6" is 10 years. The interest rate is fixed for the entire term. Interest will be paid annually on a fixed date – for the first time in October 2016. The average return over the entire term of the WohnbauAnleihe bond will be 1.85 per cent annually.

The WohnbauAnleihe bonds are denominated in units of EUR 100 with a minimum investment of EUR 1,000. Capital will be repaid at 100 per cent of the nominal value at the end of the term, provided that a bondholder has not converted the bonds held by him/her.

The Gewinnfreibetrag-WohnbauAnleihe bonds must be held as fixed assets for at least four years. While business investors cannot take advantage of the capital yields tax benefit, the legal changes mean that additional funding will be available for housing construction.

An investment in WohnbauAnleihe bonds offers tax benefits
These new WohnbauAnleihe bonds can also be purchased by private investors. For private investors, interest earned on WohnbauAnleihe bonds is not subject to Austrian capital yields tax (Kapitalertragsteuer – KESt) up to an amount of 4 per cent annually. These favourable conditions result in a higher net return compared with fully taxable bonds. Capital gains on a sale or redemption are taxed at 25 per cent (27.5 per cent, with effect from 1 January 2016). In addition, WohnbauAnleihe bonds are covered by final taxation; in other words, interest income from them is not subject to income tax.

If investors require their money before maturity, the convertible bonds can be sold at the prevailing market price. However, it should be noted that the WohnbauAnleihe bonds are subject to price fluctuations during their term. If the investment is not held until the end of the term, the investor may recover less than the nominal value.

Details of the bond issue:

"1 bis 4 Prozent Gewinnfreibetrag-Stufenzins-Wandelschuldverschreibung 2015–2025/6"

Issuer:

Bank Austria Wohnbaubank AG

First value date:

7 October 2015, thereafter plus accrued interest

ISIN:

AT000B126073

Term:

10 years, 7 October 2015 – 6 October 2025

Return/coupon:

(based on the nominal value of 100%)

If held to maturity, the average return will be 1.85% p.a.

1st to 5th year:                  1.0 % p.a.

6th year:                              1.5 % p.a.

7th year:                              2.0 % p.a.

8th year:                              2.5 % p.a.

9th year:                              3.5 % p.a.

10th year:                            4.0 % p.a.

Exempt from Austrian capital yields tax on presentation of a declaration of personal assets.

Interest payments:

Due and payable on 7 October of each year, for the first time on
7 October 2016.

Repayment/redemption:

On 7 October 2025 at the nominal value, provided that the investor has not converted the bonds held by him/her.

Denomination:

Nominal value of EUR 100 (minimum investment: EUR 1,000)

Issue price:

Your relationship manager will be able to provide you with information on the current issue price. The initial issue price, which includes a front-end load (sales charge) of 1.2 %, was set at 101.90 %.

 

Conversion right:

Convertible bonds with a nominal value of EUR 1,000 may be converted into 1 bearer participation certificate of the issuer. This corresponds to a nominal conversion ratio of 1 for 10.

Conversion dates:

Annually on 1 January, for the first time on 1 January 2017.

Ordinary cancellation:

Not possible

Taxation:

-       Interest exempt from Austrian capitals yields tax for Austrian private investors.

-       Interest subject to 25 % Austrian capital yields tax for business investors (27.5 %, with effect from 1 January 2016)

-       Capital gains on a sale are taxed at 25 per cent Austrian capital yields tax (27.5 %, with effect from 1 January 2016).

-       The purchase of WohnbauAnleihe bonds qualifies for the investment-based tax allowance for business profits.

-       For natural persons residing in a member state of the European Union other than Austria, all interest income from these securities is subject to 35 % EU withholding tax.

-       For natural persons residing in non-EU countries, who have limited tax liability in Austria, interest income will be taxed at 25 % Austrian capital yields tax (27.5 %, with effect from
1 January 2016). Private investors are excluded.

 

Please note that the tax treatment depends on the investor’s personal circumstances, and that the tax advantages described may cease to apply in whole or in part as a result of future changes in the relevant laws.

This information regarding the above WohnbauAnleihe bonds is intended solely for informational purposes and does not represent investment advice or an investment or product recommendation. Neither is it an offer or invitation to buy or sell the bond described herein, or a solicitation to make such an offer. It is intended solely as introductory information and is not a substitute for advice provided on the basis of the investor’s individual circumstances and knowledge. Every capital investment involves risks, and the value of the bond can fluctuate during its term. The WohnbauAnleihe bond will be redeemed at the nominal value on the redemption date according to the terms and conditions of the bond. The bond may be sold before maturity at the prevailing market price. The prevailing market price may be lower than the issue price, which means that the investor may fail to recover the full invested amount.

This press release is not a prospectus as defined by the Austrian Capital Market Act (Kapitalmarktgesetz – KMG). This WohnbauAnleihe bond is issued under a Base Prospectus dated 26 August 2015, which was published pursuant to Section 7 of the KMG on 27 August 2015 in accordance with Section 10 (3) of the KMG. The Base Prospectus and the Final Terms are available free of charge at the registered office of Bank Austria Wohnbaubank AG, Lassallestrasse 1, A-1020 Vienna, and can also be obtained at any branch of UniCredit Bank Austria AG. An electronic version is available on the Internet at http://wohnbaubank.bankaustria.at

Enquiries:
UniCredit Bank Austria Media Relations Austria
Matthias Raftl, tel.: +43 (0) 5 05 05 52809;
e-mail: matthias.raftl@unicreditgroup.at