The European Union issued the “Directive on the Common System of Taxation Applicable in the Case of Parent Companies and Subsidiaries of Different Member States” or the “EU Parent-Subsidiary Directive”. It has subsequently amended several times in future years.
The EU Parent-Subsidiary Directive, in general, has the sole aim of achieving a standard system of taxation within the European Union. Furthermore, this will apply to parent companies and subsidiary companies based in different EU member states. It has the aim to eliminate double taxation on profit distributions between associated companies in the various EU Member States.