Opinion of the Advocate General — ECLI:EU:C:2001:263
Date: 2001-05-10
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Approximation of laws
Procedure: Reference for a preliminary ruling
Origin: Greece

Summary of the Judgment 
Approximation of laws — Common system of taxation applicable in the case of parent 
companies and subsidiaries of different Member States — Directive 90/435 — Exemp­
tion, in the Member State of the subsidiary, from withholding tax on profits distributed to 
the parent company — Withholding tax — Concept — Present case 
(Council Directive 90/435, Art. 5(1)) 
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SUMMARY — CASE C-294/99 
There is a withholding tax, within the 
meaning of Article 5(1) of Directive 90/435 
on the common system of taxation applic­
able in the case of parent companies and 
subsidiaries of different Member States — 
which provides that profits distributed by a 
subsidiary to its parent company holding a 
minimum of 25% of the capital of the 
subsidiary are to be exempt from with­
holding tax •— where national legislation 
provides that, in the event of distribution of 
profits by a subsidiary (a public limited 
company or equivalent company) to its 
parent company, in order to determine the 
taxable income of the subsidiary its total 
net profits, including income which has 
been subject to special taxation entailing 
extinction of tax liability and non-taxable 
income, must be reincorporated into the 
basic taxable amount, when income falling 
within those two categories would not be 
taxable on the basis of the national legisla­
tion if they remained with the subsidiary 
and were not distributed to the parent 
company. 
That is so because the chargeable event for 
taxation of that kind is the payment of 
dividends and the amount of tax is directly 
related to the size of the distribution. 
(see paras 28 and 33 and operative part) 
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