Brussels, 10/01/2011 (Agence Europe) - On 4 January, the European Commission brought forward a proposal to recast Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different member states.
The directive, the key aim of which is to exonerate from tax deduction at source any dividends and profits paid by subsidiaries to parent companies and avoid double taxation of parent companies and subsidiaries operating in different member states, has been revised and amended several times (by Directives 2003/123/EC and 2006/98/EC). It affects all companies which are liable to company tax, including also new legal entities listed in the new appendix to Directive 2003/123/EC, such as cooperatives, mutual companies, companies without capital stock, savings banks and provident funds and associations involved in commercial activities.
The recast has become necessary as a result of the substantial amendments brought over the years (for example, with regard to the minimum level of holdings of parent companies in subsidiaries, progressively dropped from 20% to 10%), the need to adapt it to case law and additional amendments that will have to be made.
The proposal was presented to the Parliament and Council last week. For further information: ec.europa.eu/taxation_customs/resources/documents/common/legislation/proposals/taxation/com(2010) 784_en.pdf (F.G./transl.rt)