Germany-based steelmaker Salzgitter Group has remarked that, according to a ruling of the German Federal Finance Court published on January 13, 2016, dividend income generated by a borrower from a securities lending transaction can no longer be deemed tax exempt under certain circumstances. The ruling applies to all open tax years. Up until now, the tax authorities have treated this type of income as tax exempt. The company stated that it is therefore likely to be affected by this most recent legislation.
The revised legislation of the German Federal Finance Court will place a €15 million burden on the company’s pre-tax earnings and cause additional tax expenses of €26 million. However, Salzgitter stated that it is upholding its 2015 forecast of pre-tax earnings in the lower double-digit million-euro range.