Parent - Subsidiary Directive 90/435/EEC

Last updated: 23-04-2012

On 23 July 1990 the Council of the European Union adopted the (original) Parent-Subsidiary Directive (Directive 90/435/EEC). This Directive was designed to eliminate tax implications in the distribution between a parent company and a subsidiary which are both located in different EU member states. As such, the Directive abolished withholding taxes on dividend payments between group companies residing in different EU member states and the Directive prevented double taxation of the parent companies on the profit of the subsidiaries.

On 22 December 2003 the Council of the European Union adopted an amended Directive (Directive 2003/123/EC). This amended Directive contained amongst others an updated list of companies that fall under the Directive and a further relaxation of the conditions for exemption dividends (the thresholds were adjusted).

In later years, also various amendments were included (for instance in 2006 provisions were included regarding Bulgaria and Romania).

On 30 November 2011 the Council of the Ministers of the European Union adopted the 'new' parent subsidiary directive (Directive 2011/96/EC), which will replace the Parent Subsidiary Directive and its several amendments). The text of the 2011 Directive is included here. parent subsidiary directive 2011.pdf

The Directive will enter into force 20 days after the publication, therefore on 20 December 2011. EU member states are expected to amend their national law promptly. In the 2011 Directive it is stated that the EU member states shall bring the Directive into force by transposing legislation as of 18 January 2012. However this is not a formal deadline.

If you want to learn more about the parent subsidiary directive, please feel free to contact us by e-mail or you can contact us via e-mail or call us at our office in Rotterdam + 31 (0) 10 2010466 or Amsterdam +31 (0) 20 5709440.  

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