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, — to distributions of profits received by permanent establishments situated in that 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, — to distributions of profits by companies of that 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 
1. r 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 a double taxation agreement concluded with a third State, is not considered 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 Federal Republic 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, — Körperschaftsteuer in Austria, — yhteisöjen tulovero/inkomstskatten för samfund in Finland, — statlig inkomstskatt in Sweden, — Daň z příjmů právnických osob in the Czech Republic, — Tulumaks in Estonia, — Φόρος Εισοδήματος in Cyprus, — uzņēmumu ienākuma nodoklis in Latvia, — Pelno mokestis in Lithuania, — Társasági adó, osztalékadó in Hungary, — Taxxa fuq l-income in Malta, — Podatek dochodowy od osób prawnych in Poland, — Davek od dobička pravnih oseb in Slovenia, — daň z príjmov právnických osôb in Slovakia, — корпоративен данък in Bulgaria, — impozit pe profit in Romania, or to any other tax which may be substituted for any of the above taxes. (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 Federal Republic 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, — Körperschaftsteuer in Austria, — yhteisöjen tulovero/inkomstskatten för samfund in Finland, — statlig inkomstskatt in Sweden, — Daň z příjmů právnických osob in the Czech Republic, — Tulumaks in Estonia, — Φόρος Εισοδήματος in Cyprus, — uzņēmumu ienākuma nodoklis in Latvia, — Pelno mokestis in Lithuania, — Társasági adó, osztalékadó in Hungary, — Taxxa fuq l-income in Malta, — Podatek dochodowy od osób prawnych in Poland, — Davek od dobička pravnih oseb in Slovenia, — daň z príjmov právnických osôb in Slovakia, — корпоративен данък in Bulgaria, — impozit pe profit in Romania, or to any other tax which may be substituted for any of the above taxes. 2. For the purposes of this Directive the term ‘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 
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 in Article 2 and has a minimum holding of 20 % in the capital of a company of another Member State fulfilling the same conditions; such status shall also be attributed, under the same conditions, to a company of a Member State which has a minimum holding of 20 % 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; from 1 January 2007 the minimum holding percentage shall be 15 %; from 1 January 2009 the minimum holding percentage shall be 10 %; (a) the status of parent company shall be attributed at least to any company of a Member State which fulfils the conditions set out in Article 2 and has a minimum holding of 20 % in the capital of a company of another Member State fulfilling the same conditions; such status shall also be attributed, under the same conditions, to a company of a Member State which has a minimum holding of 20 % 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; from 1 January 2007 the minimum holding percentage shall be 15 %; from 1 January 2009 the minimum holding percentage shall be 10 %; (b) ‘subsidiary’ shall mean that company the capital of which includes 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 capital by that of a holding of voting rights, — not applying this Directive to companies of that Member State which do not maintain for an uninterrupted period of at least two 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 two 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 State of the parent company and the State of its permanent establishment shall, except when the subsidiary is liquidated, either: — refrain from taxing such profits, or — 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 meet the requirements provided for in Articles 2 and 3, up to the limit of the amount of the corresponding tax due. 1 a. Nothing in this Directive shall prevent the State of the parent company from considering a subsidiary to be fiscally transparent on the basis of that 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 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 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 meet the requirements provided for in Articles 2 and 3, up to the limit of the amount of the corresponding tax due. 2. However, 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. 3. Paragraphs 1 and 1a 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 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 for them to comply with this Directive before 1 January 1992. They shall forthwith inform the Commission 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 are communicated to the Commission.
Article 9 
This Directive is addressed to the Member States.