Article 1 
1. Each Member State shall apply this Directive: (a) to distributions of profits received by companies of that Member State which come from their subsidiaries of other Member States; (b) to distributions of profits by companies of that Member State to companies of other Member States of which they are subsidiaries; (c) to distributions of profits received by permanent establishments situated in that Member State of companies of other Member States which come from their subsidiaries of a Member State other than that where the permanent establishment is situated; (d) to distributions of profits by companies of that Member State to permanent establishments situated in another Member State of companies of the same Member State 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 or abuse.
Article 2 
For the purposes of this Directive the following definitions shall apply: (a) ‘company of a Member State’ means any company which: (i) takes one of the forms listed in Annex I, Part A; (ii) according to the tax laws of a Member State is considered to be resident in that Member State for tax purposes and, under the terms of a double taxation agreement concluded with a third State, is not considered to be resident for tax purposes outside the Union; (iii) moreover, is subject to one of the taxes listed in Annex I, Part B, without the possibility of an option or of being exempt, or to any other tax which may be substituted for any of those taxes; (b) ‘permanent establishment’ means a fixed place of business situated in a Member State through which the business of a company of another Member State is wholly or partly carried on in so far as the profits of that place of business are subject to tax in the Member State in which it is situated by virtue of the relevant bilateral tax treaty or, in the absence of such a treaty, by virtue of national law.
Amendment rationale: CONTEXT OF THE PROPOSAL The proposal for a Council Directive adapting certain directives in the field of taxation is necessitated by the upcoming accession of the Republic of Croatia to the European Union. The Treaty concerning the accession of the Republic of Croatia to the European Union[1] was signed by all Member States of the European Union and the Republic of Croatia at Brussels on 9 December 2011. Article 3 (3) of the Treaty of Accession provides that it shall enter into force on 1 July 2013 provided that all the instruments of ratification have been deposited before that date. Article 3(4) of the Treaty of Accession of the Republic of Croatia enables the institutions of the Union to adopt before accession measures referred to, inter alia, in Article 50 of the Act concerning the conditions of accession of the Republic of Croatia[2]. These measures shall enter into force only subject to and on the date of the entry into force of the Treaty of Accession. Article 50 of the Act of Accession provides that where acts of the institutions adopted prior to accession require adaptation by reason of accession, and the necessary adaptations have not been provided for in this Act or its Annexes, the Council or the Commission (if the original acts were adopted by the Commission) shall adopt the necessary acts. Point 2 of the Final Act[3] refers to the political agreement on a set of adaptations to be adopted by the institutions which was reached between the Member States and Croatia in the context of the approval of the Treaty of Accession; the High Contracting Parties of the Treaty of Accession invited the Council and the Commission to adopt these adaptations before accession in accordance with Article 50 of the Act of Accession, completed and updated where necessary to take account of the evolution of the law of the Union. The present proposal covers all Council directives which require technical adaptation by reason of the accession of Croatia in the field of taxation – corresponding to negotiation chapter 16. This is part of a series of proposals for Council directives by the Commission to the Council which regroup the technical adaptations to Council directives as well as to European Parliament and Council directives corresponding to negotiation chapters into separate proposals for different Council directives. This structure is designed to facilitate the transposition of the directives concerned by Member States into their respective legal orders. The package of proposals for legal acts which the Commission has transmitted to the Council is composed of this series of proposals for Council directives on the one hand, as well as of a proposal for a single Council regulation which covers the relevant European Parliament and Council regulations and decisions as well as the relevant Council regulations and decisions on the other hand. This is in line with the approach which was taken in the past in view of the accession of Bulgaria and Romania[4]. It is foreseen that all the legal acts included in this package will be published in the Official Journal of the European Union at the same date. The present proposal and the other proposals included in this package will take into account technical adaptations to the acquis which were published in the Official Journal of the European Union until 1 September 2012. The reasons for this are to provide sufficient time for the legislative processes involved on the one hand, and for the fulfilment of the ensuing transposition and notification obligations by Member States as regards directives on the other hand. Adaptations which may be necessary to the acquis published in the Official Journal of the European Union after 1 September 2012 will be foreseen in the relevant acts themselves or done at a later stage through the appropriate procedure. In addition, the Commission intends to informally provide a list of such legislation to Member States in early July 2013.
Revised version (Article 2 ):
For the purposes of this Directive the following definitions shall apply: (a) ‘company of a Member State’ means any company which: (i) takes one of the forms listed in Annex I, Part A; (ii) according to the tax laws of a Member State is considered to be resident in that Member State for tax purposes and, under the terms of a double taxation agreement concluded with a third State, is not considered to be resident for tax purposes outside the Union; (iii) moreover, is subject to one of the taxes listed in Annex I, Part B, without the possibility of an option or of being exempt, or to any other tax which may be substituted for any of those taxes; (a) ‘company of a Member State’ means any company which: (i) takes one of the forms listed in Annex I, Part A; (ii) according to the tax laws of a Member State is considered to be resident in that Member State for tax purposes and, under the terms of a double taxation agreement concluded with a third State, is not considered to be resident for tax purposes outside the Union; (iii) moreover, is subject to one of the taxes listed in Annex I, Part B, without the possibility of an option or of being exempt, or to any other tax which may be substituted for any of those taxes; (b) ‘permanent establishment’ means a fixed place of business situated in a Member State through which the business of a company of another Member State is wholly or partly carried on in so far as the profits of that place of business are subject to tax in the Member State in which it is situated by virtue of the relevant bilateral tax treaty or, in the absence of such a treaty, by virtue of national law.
Article 3 
1. For the purposes of applying this Directive: (a) the status of parent company shall be attributed: (i) at least to a company of a Member State which fulfils the conditions set out in Article 2 and has a minimum holding of 10 % in the capital of a company of another Member State fulfilling the same conditions; (ii) under the same conditions, to a company of a Member State which has a minimum holding of 10 % in the capital of a company of the same Member State, held in whole or in part by a permanent establishment of the former company situated in another Member State; (b) ‘subsidiary’ means that company the capital of which includes the holding referred to in point (a). 2. By way of derogation from paragraph 1, Member States shall have the option of: (a) replacing, by means of bilateral agreement, the criterion of a holding in the capital by that of a holding of voting rights; (b) not applying this Directive to companies of that Member State, which do not maintain for an uninterrupted period of at least 2 years holdings qualifying them as parent companies, or to those of their companies in which a company of another Member State does not maintain such a holding for an uninterrupted period of at least 2 years.
Amendment rationale: CONTEXT OF THE PROPOSAL The proposal for a Council Directive adapting certain directives in the field of taxation is necessitated by the upcoming accession of the Republic of Croatia to the European Union. The Treaty concerning the accession of the Republic of Croatia to the European Union[1] was signed by all Member States of the European Union and the Republic of Croatia at Brussels on 9 December 2011. Article 3 (3) of the Treaty of Accession provides that it shall enter into force on 1 July 2013 provided that all the instruments of ratification have been deposited before that date. Article 3(4) of the Treaty of Accession of the Republic of Croatia enables the institutions of the Union to adopt before accession measures referred to, inter alia, in Article 50 of the Act concerning the conditions of accession of the Republic of Croatia[2]. These measures shall enter into force only subject to and on the date of the entry into force of the Treaty of Accession. Article 50 of the Act of Accession provides that where acts of the institutions adopted prior to accession require adaptation by reason of accession, and the necessary adaptations have not been provided for in this Act or its Annexes, the Council or the Commission (if the original acts were adopted by the Commission) shall adopt the necessary acts. Point 2 of the Final Act[3] refers to the political agreement on a set of adaptations to be adopted by the institutions which was reached between the Member States and Croatia in the context of the approval of the Treaty of Accession; the High Contracting Parties of the Treaty of Accession invited the Council and the Commission to adopt these adaptations before accession in accordance with Article 50 of the Act of Accession, completed and updated where necessary to take account of the evolution of the law of the Union. The present proposal covers all Council directives which require technical adaptation by reason of the accession of Croatia in the field of taxation – corresponding to negotiation chapter 16. This is part of a series of proposals for Council directives by the Commission to the Council which regroup the technical adaptations to Council directives as well as to European Parliament and Council directives corresponding to negotiation chapters into separate proposals for different Council directives. This structure is designed to facilitate the transposition of the directives concerned by Member States into their respective legal orders. The package of proposals for legal acts which the Commission has transmitted to the Council is composed of this series of proposals for Council directives on the one hand, as well as of a proposal for a single Council regulation which covers the relevant European Parliament and Council regulations and decisions as well as the relevant Council regulations and decisions on the other hand. This is in line with the approach which was taken in the past in view of the accession of Bulgaria and Romania[4]. It is foreseen that all the legal acts included in this package will be published in the Official Journal of the European Union at the same date. The present proposal and the other proposals included in this package will take into account technical adaptations to the acquis which were published in the Official Journal of the European Union until 1 September 2012. The reasons for this are to provide sufficient time for the legislative processes involved on the one hand, and for the fulfilment of the ensuing transposition and notification obligations by Member States as regards directives on the other hand. Adaptations which may be necessary to the acquis published in the Official Journal of the European Union after 1 September 2012 will be foreseen in the relevant acts themselves or done at a later stage through the appropriate procedure. In addition, the Commission intends to informally provide a list of such legislation to Member States in early July 2013.
Revised version (Article 3 ):
1. For the purposes of applying this Directive: (a) the status of parent company shall be attributed: (i) at least to a company of a Member State which fulfils the conditions set out in Article 2 and has a minimum holding of 10 % in the capital of a company of another Member State fulfilling the same conditions; (ii) under the same conditions, to a company of a Member State which has a minimum holding of 10 % in the capital of a company of the same Member State, held in whole or in part by a permanent establishment of the former company situated in another Member State; (a) the status of parent company shall be attributed: (i) at least to a company of a Member State which fulfils the conditions set out in Article 2 and has a minimum holding of 10 % in the capital of a company of another Member State fulfilling the same conditions; (ii) under the same conditions, to a company of a Member State which has a minimum holding of 10 % in the capital of a company of the same Member State, held in whole or in part by a permanent establishment of the former company situated in another Member State; (b) ‘subsidiary’ means that company the capital of which includes the holding referred to in point (a). 2. By way of derogation from paragraph 1, Member States shall have the option of: (a) replacing, by means of bilateral agreement, the criterion of a holding in the capital by that of a holding of voting rights; (b) not applying this Directive to companies of that Member State, which do not maintain for an uninterrupted period of at least 2 years holdings qualifying them as parent companies, or to those of their companies in which a company of another Member State does not maintain such a holding for an uninterrupted period of at least 2 years.
Article 4 
1. Where a parent company or its permanent establishment, by virtue of the association of the parent company with its subsidiary, receives distributed profits, the Member State of the parent company and the Member State of its permanent establishment shall, except when the subsidiary is liquidated, either: (a) refrain from taxing such profits; or (b) tax such profits while authorising the parent company and the permanent establishment to deduct from the amount of tax due that fraction of the corporation tax related to those profits and paid by the subsidiary and any lower-tier subsidiary, subject to the condition that at each tier a company and its lower-tier subsidiary fall within the definitions laid down in Article 2 and meet the requirements provided for in Article 3, up to the limit of the amount of the corresponding tax due. 2. Nothing in this Directive shall prevent the Member State of the parent company from considering a subsidiary to be fiscally transparent on the basis of that Member State’s assessment of the legal characteristics of that subsidiary arising from the law under which it is constituted and therefore from taxing the parent company on its share of the profits of its subsidiary as and when those profits arise. In this case the Member State of the parent company shall refrain from taxing the distributed profits of the subsidiary. When assessing the parent company’s share of the profits of its subsidiary as they arise the Member State of the parent company shall either exempt those profits or authorise the parent company to deduct from the amount of tax due that fraction of the corporation tax related to the parent company’s share of profits and paid by its subsidiary and any lower-tier subsidiary, subject to the condition that at each tier a company and its lower-tier subsidiary fall within the definitions laid down in Article 2 and meet the requirements provided for in Article 3, up to the limit of the amount of the corresponding tax due. 3. Each Member State shall retain the option of providing that any charges relating to the holding and any losses resulting from the distribution of the profits of the subsidiary may not be deducted from the taxable profits of the parent company. Where the management costs relating to the holding in such a case are fixed as a flat rate, the fixed amount may not exceed 5 % of the profits distributed by the subsidiary. 4. Paragraphs 1 and 2 shall apply until the date of effective entry into force of a common system of company taxation. 5. The Council, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, shall, at the appropriate time, adopt the rules to apply as from the date of effective entry into force of a common system of company taxation.
Article 5 
Profits which a subsidiary distributes to its parent company shall be exempt from withholding tax.
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 the Member State of the subsidiary which is made in connection with a distribution 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 economic double taxation of dividends, in particular provisions relating to the payment of tax credits to the recipients of dividends.
Article 8 
1. Member States shall bring into force the laws, regulations, and administrative provisions necessary to comply with this Directive as from 18 January 2012. They shall forthwith inform the Commission thereof. When Member States adopt these measures, they shall contain a reference to this Directive or shall be accompanied by such reference on the occasion of their official publication. The methods of making such reference shall be laid down by Member States. 2. Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive together with a correlation table between them and this Directive.
Article 9 
Directive 90/435/EEC, as amended by the acts listed in Annex II, Part A, is repealed, without prejudice to the obligations of the Member States relating to the time limits for transposition into national law of the Directives set out in Annex II, Part B. References to the repealed Directive shall be construed as references to this Directive and shall be read in accordance with the correlation table in Annex III.
Article 10 
This Directive shall enter into force on the 20th day following its publication in the Official Journal of the European Union .
Article 11 
This Directive is addressed to the Member States.