CONTENT: 1. Introduction – 2. The Parent-Subsidiary Directive 2011/96/EU – 3. Amendment to the Directive – 4. Conclusions
1. Introduction
On 20 June, 2014 the European Union’s Economic and Financial Affairs Council (ECOFIN)i reached an agreement on amending the Parent-Subsidiary Directive 2011/96/EUii (hereinafter PSD) to prevent the double non-taxation of distributed profits deriving from hybrid loan arrangementsiii.
The amendment is aimed at neutralizing the effects that may arise due to a different qualification of such loans between EU Member States, resulting in a double non-taxation and unintended tax benefits for corporate groups.
Member States will have until 31 December, 2015 to transpose this revised rule into their national tax systems.
2. The Parent-Subsidiary Directive 2011/96/EU
Since 1990iv the Parent-Subsidiary Directive was designed to eliminate any tax obstacle in the area of profit distributions among companies of the same group but located in different EU Member States by:
