• EC Directive 90/435
• Legal services

EC Parent/Subsidiary Directive

European holding companies in receipt of overseas dividend income will, subject to certain conditions, be entitled to relief at source from foreign withholding taxes applicable to that income. This may be either under a double tax treaty or the EC Parent/Subsidiary Directive. Both parent and subsidiary must be incorporated under the laws of a Member State, be regarded as residents under the laws of a Member State, and be subject to tax. Holding companies need to take account of anti-abuse measures of relevant member States when planning to claim benefits under the Directive, such as minimum participating requirements and qualification periods.

Control of the parent within the EU?

In some instances the parent company may not be controlled by persons resident outside the European Union. Some Member States have enacted such legislation as an anti-treaty shopping provision. Further planning or share capital arrangements may be necessary.

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