Global Tax Insights
Parent-Subsidiary Directive Undergoes ChangesJanuary 16, 2015
EU finance ministers have adjusted the Parent Subsidiary Directive with an anti-abuse rule and an automatic information exchange.
The Parent-Subsidiary directive has undergone a few changes, recently approved by EU finance ministers, which are directed at blocking tax abuse and supporting the automatic exchange of financial information.
Changes to Parent Subsidiary Directive
- Anti-abuse rule- The Directive aims to get rid of tax hurdles for profit distributions between parent companies and subsidiaries based in various member states. The Directive provides a tax exemption for dividends paid by subsidiary companies to their parent companies, which removes the risk of double taxation.
- Automatic information exchange- The Directive aims to expand legislation requiring tax authorities from each member state to automatically exchange information concerning financial assets.
Compliance with the new laws is necessary by December 31, 2015 at the latest. For a more detailed outline of the changes, read our article, “EU finance ministers approve anti-abuse clause in Parent-Subsidiary Directive”.