European Parliament gave strong backing to the Parent Subsidiary Directive

European Parliament gave strong backing to the Parent Subsidiary Directive

On 02 April 2014 the European Parliament gave strong backing to the Commission's proposal to revise the Parent-Subsidiary Directive (Proposal) in the context of the fight against tax fraud and evasion and aggressive tax planning in the Europe.

In the nutshell, the essential amendments in the Proposal of the European Commission are:

  • to tackle hybrid financial mismatches within the scope of application of the Directive and
  • to introduce a general anti-abuse rule to protect the functioning of the Directive.

In addition, the European Parliament decided to strengthen some qualification requirements in the Parent-Subsidiary Directive:

  • First, it is proposed that in order to enjoy the tax exception at parent company level, the income should be taxed at 75% at subsidiary level.
  • Furthermore, to be qualified for the status of parent company, the entity should maintain a minimum holding of 15% (currently 10%) for an uninterrupted period of at least two years (currently one year).

The Proposal is still subject to the further legislative process. If the revised Directive is adopted by the Council, it should be implemented by the member states by 31 December 2014.

Further details of the Proposal of the European Commission are available from the our previous news on this matter which can be accessed using the link below:

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