VW-Porsche Merger Moves Step Closer (with closure on stock option taxation)- WSJ.com - 21 Nov 2010

By HARRIET TORRY And KATHARINA BECKER

FRANKFURT—The merger of German auto makers Volkswagen AG and Porsche Automobil Holding
SE moved a step closer Friday after Porsche said it will make disputed
tax and interest payments of about €626 million ($856.7 million) on
stock-option transactions.

Porsche had previously contested the tax payment on the stock
options, as the company considered the transactions as tax-free profits
and tax-deductible losses, as detailed in Porsche's fiscal 2010 annual
report. However, Porsche earmarked €1.35 billion in provisions pending
the outcome of the dispute, which will now be dissolved in order to make
the payment.

Following the €626 million payment, the remaining provision of €719
million will be dissolved with an effect on profit, but neutral in terms
of liquidity, Porsche said Friday. The dissolution of the provisions
won't lead to a further tax expense, the company added.

Last month, Porsche said...

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