EU parent-subsidiary regime: withholding tax exemption threshold lowered to 20%, then 15% and 10%

Article 44 of the 2004 Amending Finance Act transposes Directive 2003/123/EC amending the parent-subsidiary directive. It amends Article 119 ter of the General Tax Code, which exempts from withholding tax dividends paid by a French subsidiary to its parent company in another Member State. The required shareholding falls to 20% for dividends paid in 2005 and 2006, 15% in 2007 and 2008, then 10% from 2009. The exemption is extended to permanent establishments in France or another Member State, and the definition of parent company is widened to companies and bodies subject to corporate tax at the standard rate. The rules apply to dividends paid from 1 January 2005.