The terms and conditions of a bond almost always contain a proviso that regulates any burdens for the issuer arising from changes in taxation and, in this case, grants the issuer and, in most cases, the investor a right to call the bond. – Many bonds issued in Germany promised the investor payment of interest without any tax deduction. In 2009, capital gains tax was introduced in the form of withholding tax. This would now have meant that the issuer would have to pay so much more in interest that, after deduction of the withholding tax, the amount accruing to the bondholder would be equal to the coupon originally set. Almost without exception, the issuer’s corresponding payments were reduced by the tax without the bond being cancelled by the issuer. Numerous investors, however, exercised their right to call the bond in order to invest their money tax-free in other ways. – See End Investors, Redemption Protection.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/

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