German stock exchange operator Deutsche Boerse, has announced that it will make substantial savings on tax as a result of moving its office from central Frankfurt to the nearby suburb of Eschborn.
Deutsche Boerse announced on Friday that the relocation, along with the takeover of International Securities Exchange ISE and the effects of the corporate tax reform in Germany, are expected to result in a tax rate of between 25% and 27% in 2010. The company expects to achieve a tax rate of under 30% already for 2008, compared with the previous estimate of 31% to 33%.
The decision to relocate was taken by the Executive Board of Deutsche Boerse AG on Friday. As a result of the planned move, the exchange's Board believes that it will be able to achieve a significant improvement in future earnings despite the costs incurred, particularly in connection with the relocations and the planning work for the new building.
“The reduction in the tax rate constitutes a further structural measure aimed at strengthening our international competitiveness. It is part of a strategy to improve our market position, which has already optimized our capital structure and improved our cost efficiency. This optimization goes hand in hand with the obvious advantages a new cutting-edge building can offer staff,” stated CEO Reto Francioni.
The lease agreement for the current office building in the Hausen district of Frankfurt, which Deutsche Boerse has occupied since 2000, will expire in 2010. A modern new building is to be built in nearby Eschborn, a suburb of Frankfurt in the Main-Taunus district, by summer 2010, which Deutsche Boerse will then rent. As early as the second quarter of 2008, around 1,000 staff are to move temporarily to an existing building in Eschborn.
The company’s registered office will remain in Frankfurt, as will the trading floor of the Frankfurt Stock Exchange, located in the Alte Boerse in Frankfurt City Centre.
Deutsche Boerse Group has around 3,000 staff worldwide, the majority of whom are based in Germany and Luxembourg.
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