Important tax information about Aktia Bank plc's A share received as merger payment in 2009

Acquisition price

The acquisition price of Aktia plc's A share received as merger payment in 2009 is €0.00*. A private person (subject to general tax liability in Finland) can, however, apply a default acquisition cost (20%/40%).

Acquisition date

The acquisition date of Aktia Bank plc's A share received as merger payment in 2009 is 1 January 2009*.

Trade

Since 29 September 2009, Aktia Bank plc's A share is subject to public trade on NASDAQ OMX Helsinki (Helsinki stock exchange).

Following from the general rule, the buyer of securities shall by law pay 1.6% as transfer tax (not levied if the amount is less than €10).

Transfer of Aktia Bank plc's A share is not subject to transfer tax as the share is subject to public trade and the transaction is conducted via a securities broker operating in Finland. In short, purchases executed in a trading venue are exempt from transfer tax (exception to the general rule).

If the transaction is not conducted in a trading venue but directly between buyer and seller, the buyer shall pay the transfer tax (within two months), unless otherwise agreed. There is a separate form for reporting transfer tax on www.vero.fi.

Sales profit

Taxable capital income is the profit received from selling or exchanging property (transfer/sales profit).

NB! Small transfer profit

Receipts of transfer profits by physical persons or death estates are exempt from tax if the sum total of the transfer prices during the tax year does not exceed €1,000.

Dividends

Receipts of dividend paid to a private person (subject to general tax liability in Finland) by a company whose shares, at the time of the decision of dividend payment, is subject to public trade are regarded as 70% taxable capital income and 30% tax-exempt income. Regarding Aktia plc, this applies to dividends paid since spring 2010.

Receipts of dividend by a private person (subject to general tax liability in Finland) from non-listed companies are regarded as tax-exempt income up to the amount that equals the arithmetical nine-per cent annual return on the value of the share. Receipts of dividends exceeding €60,000 (before 1 January 2012: €90,000) are treated as follows: 70% of the receipts of dividend are taxable capital income and 30% is tax-exempt income. Receipts of dividends above the nine-per cent annual return level will be regarded as earned income, where 70% of the receipts of dividend are taxable income and 30% is tax-exempt income. Regarding Aktia plc, this applies to dividends paid in spring 2009.

Return of capital

In April 2013, Aktia plc distributed a return of capital of €0.14 per share.

The same taxation rules apply on return of capital as on transfer of profit (sales profit): the acquisition price of the share is subtracted from the return of capital. Return of capital cannot cause loss.

As the actual acquisition price of the shares received as merger payment in 2009 was €0.00, the return of capital generates a profit for the shareholder. With the default acquisition price of 20% (when holding the shares for less than 10 years), the owner can subtract €0.028 (20% of €0.14) from the return of capital (€0.14 per share), resulting in a profit of €0.112 per share.

Example: In 2009, a shareholder received 100 A shares as merger payment. The return of capital for the shares amounted to €14 (100 * 0.14), giving a profit of €11.20. If the shareholder receives a return of capital in 2013 and sells shares in funds, securities and similar assets for the maximum total amount of €1,000, the remaining profit from the return on capital and other transfer profits are regarded as tax-exempt income.

Tax rate

The tax rate applicable to capital income is 30%; the tax rate is, however, graduated so that the rate applicable to the surplus amount of €50,000 is 32% (before 1 January 2012: 28%).

Merger with Aktia Bank plc

The merger of Aktia plc and Aktia Bank plc was completed on 1 July 2013. In conjunction with the merger, Aktia plc's A and R shares were delisted from the Helsinki exchange and replaced by listing Aktia Bank plc's A and R shares on the exchange. As merger payment, the shareholders of Aktia plc received shares in the new parent company Aktia Bank plc to an amount corresponding to their shares in Aktia plc. The above information on taxation thus applies to Aktia Bank plc's A and R shares.

The information is based on current legislation and is not intended to serve as tax advice. The information is of a general nature and must not be regarded as exhaustive. Changes in taxation are possible. In spring 2013, the Government proposed amendments that may be revised before the final bill is passed to Parliament.

Updated: April 2014

* Source: Merger prospectus (p. 114)