Council of the European Union 30 November 2011, Council Directive 2011/96/EU of 30 November 2011 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (recast)

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Council Directive 2011/96/EU (recast) establishes a common system of taxation for profit distributions between parent companies and subsidiaries resident in different EU Member States, with the primary objective of eliminating withholding taxes on such distributions and preventing double taxation at the parent company level. Key provisions require Member States either to exempt distributed profits received by a parent company from taxation or to allow a tax credit for corporation tax paid by the subsidiary, while profits distributed by a subsidiary to its parent company are exempt from withholding tax; a minimum capital holding threshold of 10% is required for parent company status, and Member States retain the option to deny deduction of holding-related charges exceeding 5% of distributed profits. The Directive repeals and replaces Directive 90/435/EEC, with Member States required to transpose its provisions into national law by 18 January 2012, and expressly preserves Member States' ability to apply domestic or treaty-based anti-fraud and anti-abuse provisions.AI