Directive on parent companies and subsidiaries

In 1992 Dutch legislation was amended in line with the EU directive on parent companies and subsidiaries. The relevant Act has a retroactive effect from 1 January 1992. The participation exemption has been extended in several respects. For example an investment in a company established in another EU member state can be regarded as a participation covered by the participation exemption. For this purpose a shareholding of at least 25% is required. The possession of at least 25% of the voting rights in a company can also be regarded as a participation under certain conditions, even if the shareholding is less than 5%. Under this Act dividend tax is not levied on dividend paid to a company established in another member state when the company has an interest of at least 25% in the company paying the dividend. This act was further amended in 1994 in order to give the exemption of dividend tax a wider application than the EU directive. If certain conditions are met then the exemption now becomes applicable when the shareholder has an interest of at least 10% in the company's capital, or holds at least 10% of the voting shares.