VW Finds 1 Share Saves $1.1 Billion in Tax With Loophole
By Aaron Kirchfeld and Dorothee Tschampa - Jul 5, 2012 11:57 AM ET
For Volkswagen AG (VOW), what a difference a share makes.
By paying the purchase price of 4.46 billion euros ($5.58 billion) plus 1 VW share for the 50.1 percent stake in Porsche SE (PAH3)’s automotive business it doesn’t already own, the Wolfsburg, Germany-based carmaker is avoiding an additional tax bill of more than 900 million euros. The share payment allowed VW to classify the deal as a restructuring rather than a takeover, a tax-saving plan approved by German tax authorities.
The deal structure was in large part the brain child of Michael Schaden, a press-shy tax lawyer at Ernst & Young in Stuttgart, according to people familiar with the transaction. The Heidelberg-trained lawyer, who is also an approved attorney at law in New York, has been one of Porsche’s closest advisers for years, said the people, who asked not to be identified because they were not authorized to discuss it publicly.
The restructuring idea paved the way for VW to proceed with the transaction two years earlier than planned after reaching an agreement with German tax authorities, the carmaker said late yesterday. The transaction also ends a seven-year takeover saga that divided two of the most powerful families in Germany.
The proposal takes advantage of the so-called Umwandlungssteuergesetz, or reorganization tax act, VW said in its statement. The idea was developed in conjunction with about half a dozen Porsche and VW law firms and accountants including Freshfields Bruckhaus Deringer LLP and Flick Gocke Schaumburg, according to German legal trade publication Juve Verlag.
more:
http://www.bloomberg.com/news/2012-07-05/vw-finds-1-share-saves-1-1-billion-in-tax-with-loophole.html
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