1990L0435 — EN — 01.01.1995 — 001.001 — 1
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►B COUNCIL DIRECTIVE
of 23July 1990
on the common system of taxation applicable in the case of parent companies and subsidiaries of
different Member States
(90/435/EEC)
(OJ L 225, 22.9.1990, p. 6)
Amended by:
OfficialJournal
No page date
►A1 Act of Accession of Austria, Sweden and Finland C 241 21 29.8.1994
(adapted by CouncilDecision 95/1/EC, Euratom, ECSC) L 1 1 1.1.1995
Corrected by:
►C1 Corrigendum, OJ L 23, 29.1.1991, p. 35 (90/435)
►C2 Corrigendum, OJ L 16, 18.1.1997, p. 98 (90/435)
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COUNCIL DIRECTIVE
of 23July 1990
on the common system of taxation applicable in the case of parent
companies and subsidiaries of different Member States
(90/435/EEC)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic
Community, and in particular Article 100 thereof,
Having regard to the proposalof the Commission (1),
Having regard to the opinion of the European Parliament (2),
Having regard to the opinion of the Economic and SocialCommittee (3),
Whereas the grouping together of companies of different Member States
may be necessary in order to create within the Community conditionsanalogous to those of an internal market and in order thus to ensure theestablishment and effective functioning of the common market; whereassuch operations ought not to be hampered by restrictions, disadvantagesor distortions arising in particular from the tax provisions of theMember States; whereas it is therefore necessary to introduce withrespect to such grouping together of companies of different MemberStates, tax rules which are neutral from the point of view ofcompetition, in order to allow enterprises to adapt to the requirements ofthe common market, to increase their productivity and to improve theircompetitive strength at the international level;
Whereas such grouping together may result in the formation of groups
of parent companies and subsidiaries;
Whereas the existing tax provisions which govern the relations between
parent companies and subsidiaries of different Member States varyappreciably from one Member State to another and are generally lessadvantageous than those applicable to parent companies and subsidia-ries of the same Member State; whereas cooperation between compa-nies of different Member States is thereby disadvantaged in comparisonwith cooperation between companies of the same Member State;whereas it is necessary to eliminate this disadvantage by the introduc-tion of a common system in order to facilitate the grouping together ofcompanies;
Whereas where a parent company by virtue of its association with its
subsidiary receives distributed profits, the State of the parent companymust:
— either refrain from taxing such profits,— or tax such profits while authorizing the parent company to deduct
from the amount of tax due that fraction of the corporation tax paidby the subsidiary which relates to those profits;
Whereas it is furthermore necessary, in order to ensure fiscalneutral ity,
that the profits which a subsidiary distributes to its parent company beexempt from withholding tax; whereas, however, the Federal Republicof Germany and the Hellenic Republic, by reason of the particularnature of their corporate tax systems, and the Portuguese Republic, forbudgetary reasons, should be authorized to maintain temporarily a with-holding tax,
(1) OJ No C 39, 22. 3. 1969, p. 7 and Amendment transmitted on 5 July
1985.
(2) OJ No C 51, 29. 4. 1970, p. 6.
(3) OJ No C 100, 1. 8. 1969, p. 7.
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HAS ADOPTED THIS DIRECTIVE:
Article 1
1. Each Member State shall apply this Directive:
— to distributions of profits received by companies of that State which
come from their subsidiaries of other Member States,
— to distributions of profits by companies of that State to companies of
other Member States of which they are subsidiaries.
2. This Directive shall not preclude the application of domestic or
agreement-based provisions required for the prevention of fraud orabuse.
Article 2
For the purposes of this Directive ‘company of a Member State'shall
mean any company which:
(a) takes one of the forms listed in the Annex hereto;
(b) according to the tax laws of a Member State is considered to be
resident in that State for tax purposes and, under the terms of adouble taxation agreement concluded with a third State, is notconsidered to be resident for tax purposes outside the Community;
(c) moreover, is subject to one of the following taxes, without the
possibility of an option or of being exempt:
— impôt des sociétés/vennootschapsbelasting in Belgium,— selskabsskat in Denmark,— Körperschaftsteuer in the FederalRepubl ic of Germany,—φόρος εισοδήµατος νοµικών προσώπων κερδοσκοπικού
χαρακτήρα in Greece,
— impuesto sobre sociedades in Spain,— impôt sur les sociétés in France,— corporation tax in Ireland,— imposta sul reddito delle persone giuridiche in Italy,— impôt sur le revenu des collectivités in Luxembourg,— vennootschapsbelasting in the Netherlands,— imposto sobre o rendimento das pessoas colectivas in Portugal,— corporation tax in the United Kingdom,
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— Körperschaftsteuer in Austria,— yhteisöjen tulovero/inkomstskatten för samfund in Finland,— statlig inkomstskatt in Sweden,
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or to any other tax which may be substituted for any of the above
taxes.
Article 3
1. For the purposes of applying this Directive,
(a) the status of parent company shall be attributed at least to any
company of a Member State which fulfils the conditions set out inArticle 2 and has a minimum holding of 25 % in the capital of acompany of another Member State fulfilling the same conditions;
(b) ‘subsidiary' shal lmean that company the capitalof which incl udes
the holding referred to in (a).
2. By way of derogation from paragraph 1, Member States shall have
the option of:
— replacing, by means of bilateral agreement, the criterion of a holding
in the capitalby that of a hol ding of voting rights,
— not applying this Directive to companies of that Member State
which do not maintain for an uninterrupted period of at least twoyears holdings qualifying them as parent companies or to those oftheir companies in which a company of another Member State does
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not maintain such a holding for an uninterrupted period of at leasttwo years.
Article 4
1. Where a parent company, by virtue of its association with its
subsidiary, receives distributed profits, the State of the parent companyshall, except when ►
C1the subsidiary ◄is liquidated, either:
— refrain from taxing such profits, or— tax such profits while authorizing the parent company to deduct
from the amount of tax due that fraction of the corporation tax paidby the subsidiary which relates to those profits and, if appropriate,the amount of the withholding tax levied by the Member State inwhich the subsidiary is resident, pursuant to the derogationsprovided for in Article 5, up to the limit of the amount of thecorresponding domestic tax.
2. However, each Member State shall retain the option of providing
that any charges relating to the holding and any losses resulting fromthe distribution of the profits of the subsidiary may not be deductedfrom the taxable profits of the parent company. Where the managementcosts relating to the holding in such a case are fixed as a flat rate, thefixed amount may not exceed 5 % of the profits distributed by thesubsidiary.
3. Paragraph 1 shall apply until the date of effective entry into force
of a common system of company taxation.
The Council shall at the appropriate time adopt the rules to apply after
the date referred to in the first subparagraph.
Article 5
1. Profits which a subsidiary ►
C1distributes ◄to its parent
company shall, at least where the latter holds a minimum of 25 % ofthe capitalof the subsidiary, be exempt from withhol ding tax.
2. Notwithstanding paragraph 1, the Hellenic Republic may, for so
long as it does not charge corporation tax on distributed profits, levy awithholding tax on profits distributed to parent companies of otherMember States. However, the rate of that withholding tax must notexceed the rate provided for in bilateral double-taxation agreements.
3. Notwithstanding paragraph 1, the FederalRepubl ic of Germany
may, for as long as it charges corporation tax on distributed profits at arate at least 11 points lower than the rate applicable to retained profits,and at the latest until mid-1996, impose a compensatory withholding taxo f5%o n profits distributed by its subsidiary companies.
4. Notwithstanding paragraph 1, the Portuguese Republic may levy a
withholding tax on profits distributed by its subsidiaries to parentcompanies of other Member States untila date not l ater than the end ofthe eighth year following the date of application of this Directive.
Subject to the existing bilateral agreements concluded between Portugal
and a Member State, the rate of this withholding tax may not exceed15 % during the first five years and 10 % during the last three years ofthat period.
Before the end of the eighth year the Council shall decide unanimously,
on a proposalfrom the Commission, on a possibl e extension of theprovisions of this paragraph.
Article 6
The Member State of a parent company may not charge withholding tax
on the profits which such a company receives from a subsidiary.
Article 7
1. The term ‘withholding tax'as used in this Directive shall not cover
an advance payment or prepayment (précompte) of corporation tax to
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the Member State of the subsidiary which is made in connection with adistribution of profits to its parent company.
2. This Directive shall not affect the application of domestic or
agreement-based provisions designed to eliminate or lessen economicdouble taxation of dividends, in particular provisions relating to thepayment of tax credits to the recipients of dividends.
Article 8
1. Member States shall bring into force the laws, regulations and
administrative provisions necessary for them to comply with thisDirective before 1 January 1992. They shall forthwith inform theCommission thereof.
2. Member States shall ensure that the texts of the main provisions of
domestic law which they adopt in the field covered by this Directive arecommunicated to the Commission.
Article 9
This Directive is addressed to the Member States.
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ANNEX
List of companies referred to in Article 2 (a)
(a) companies under Belgian law known as ‘société anonyme' / ‘naamloze
vennootschap', ‘société en commandite par actions ' / ‘commanditairevennootschap op aandelen', ‘société privée à responsabilité limitée' /‘besloten vennootschap met beperkte aansprakelijkheid'and those public lawbodies that operate under private law;
(b) companies under Danish law known as: ‘aktieselskab', ‘anpartsselskab';
(c) companies under German law known as: ‘Aktiengesellschaf', ‘Kommandit-
gesellschaft auf Aktien', ‘Gesellschaft mit beschränkter Haftung', ‘bergrecht-liche Gewerkschaft';
(d) companies under Greek law known as: ‘ ανώνυµη εταιρία ';
(e) companies under Spanish law known as: ‘sociedad anónima', ‘sociedad
comanditaria por acciones', ‘sociedad de responsabilidad limitada' and thosepublic law bodies which operate under private law;
(f) companies under French law known as ‘société anonyme', ‘société en
commandite par actions', ‘société à responsabilité limitée' and industrial andcommercial public establishments and undertakings;
(g) the companies in Irish law known as public companies limited by shares or
by guarantee, private companies limited by shares or by guarantee, bodiesregistered under the Industrialand Provident Societies Acts or buil dingsocieties registered under the Building Societies Acts;
(h) companies under Italian law known as ‘società per azion', ‘società in accom-
andita per azioni', ‘società a responsabilità limitata', and public and privateentities carrying on industrialand commercialactivities;
(i) companies under Luxembourg law known as ‘société anonyme', ‘société en
commandite par actions', ‘société à responsabilité limitée';
(j) companies under Dutch law known as: ‘naamloze vennootschap', ‘besloten
vennootschap met beperkte aansprakelijkheid';
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(k) commercialcompanies or civill aw companies having a commercialform
and cooperatives and public undertakings incorporated in accordance withPortuguese law;
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(l) companies incorporated under the law of the United Kingdom;
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m) companies under Austrian law known as ‘Aktiengesellschaft', ‘Gesellschaft
mit beschränkter Haftung';
n) companies under Finnish law known as ‘osakeyhtiö/aktiebolag', ‘osuuskunta/
andelslag', ‘säästöpankki/sparbank' et ‘vakuutusyhtiö/försäkringsbolag';
o) companies under Swedish law known as ‘aktiebolag', ‘bankaktiebolag',
‘försäkringsaktiebolag'.