Nokia 2004 Annual Report Download - page 111

convention between the United States and Finland, signed September 21, 1989, referred to as the
Treaty, and that are entitled to the benefits of the Treaty under the ‘‘Limitation on Benefits’’
provisions contained in the Treaty, are referred to as ‘‘US Holders.’’ Beneficial owners that are
citizens or residents of the United States, corporations created in or organized under US law, and
estates or trusts (to the extent their income is subject to US tax either directly or in the hands of
beneficiaries) generally will be considered to be residents of the United States under the Treaty.
Special rules apply to US Holders that are also residents of Finland and to citizens or residents of
the United States that do not maintain a substantial presence, permanent home, or habitual abode
in the United States. For purposes of this discussion, it is assumed that the Depositary and its
custodian will perform all actions as required by the deposit agreement with the Depositary and
other related agreements between the Depositary and Nokia.
If a partnership holds ADSs (including for this purpose any entity treated as a partnership for US
federal income tax purposes), the tax treatment of a partner will depend upon the status of the
partner and activities of the partnership. If a US holder is a partner in a partnership that holds
ADSs, the holder is urged to consult its own tax advisor regarding the specific tax consequences of
owning and disposing of its ADSs.
Because this summary is not exhaustive of all possible tax considerations—such as situations
involving financial institutions, banks, tax-exempt entities, US expatriates, real estate investment
trusts, persons that are dealers in securities, persons who own (directly, indirectly or by
attribution) 10% or more of the share capital or voting stock of Nokia, persons who acquired their
ADSs pursuant to the exercise of employee stock options or otherwise as compensation, or whose
functional currency is not the US dollar, who may be subject to special rules that are not discussed
herein—holders of shares or ADSs that are US Holders are advised to satisfy themselves as to the
overall United States federal, state and local tax consequences, as well as to the overall Finnish
and other applicable non-US tax consequences, of their ownership of ADSs and the underlying
shares by consulting their own tax advisors. This summary does not discuss the treatment of ADSs
that are held in connection with a permanent establishment or fixed base in Finland.
For the purposes of both the Treaty and the United States Internal Revenue Code of 1986, as
amended, referred to as the Code, US Holders of ADSs will be treated as the owners of the
underlying shares that are represented by those ADSs. Accordingly, the following discussion,except
where otherwise expressly noted, applies equally to US Holders of ADSs on the one hand and of
shares on the other.
The holders of ADSs will, for Finnish tax purposes, be treated as the owners of the shares that are
represented by the ADSs. The Finnish tax consequences to the holders of shares, as discussed
below, also apply to the holders of ADSs.
US Taxation of Cash Dividends
For US federal income tax purposes, the gross amount of dividends paid to US Holders of shares or
ADSs, including any related Finnish withholding tax, generally will be included in gross income as
foreign source dividend income. Dividends will not be eligible for the dividends received deduction
allowed to corporations under Section 243 of the Code. The amount includable in income
(including any Finnish withholding tax) will equal the US dollar value of the payment, determined
at the time such payment is received by the Depositary (in the case of ADSs) or by the US Holder
(in the case of shares), regardless of whether the payment is in fact converted into US dollars.
Generally, any gain or loss resulting from currency exchange rate fluctuations during the period
between the time such payment is received and the date the dividend payment is converted into
US dollars will be treated as ordinary income or loss to a US Holder.
110