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We present this multijurisdictional country survey that compiles comprehensive information on the implementation of the amendments to the Parent Subsidiary Directive (PSD) in EU Member States. The survey considers the effect of the general anti-abuse rule (GAAR) on intra-EU dividend distributions. We created this survey in close cooperation with our affiliate law firms in order to cover the most relevant EU Member States.

This survey does not address the impact of the amendments on hybrid loan arrangements.


Since 1990, the PSD has provided a relatively straightforward system to eliminate tax on the distribution of profits between companies located in different EU Member States. In its original form, the PSD allowed for the application of domestic or treaty based anti-abuse rules by EU Member States. However, it did not define the term ‘abuse’ nor its consequences. With the introduction of a GAAR, the PSD contains both a definition of abuse and an instruction to the EU Member States not to grant the benefits of the PSD in cases of abuse.

The GAAR had to be implemented by the 28 EU Member States in order to have a generic EU-wide anti-abuse rule. However, since the GAAR is designed as a ‘de minimis’ standard, EU Member States were entitled to adopt stricter domestic rules. The survey demonstrates that EU Member States have implemented the GAAR very differently in domestic legislation.

The great variety of GAAR interpretations will unavoidably result in more uncertainty for taxpayers operating in multiple EU Member States. The implementation of the PSD in the domestic legislation of the EU Member States may not be in breach of EU law (e.g. the freedoms under the EU Treaty). However, there is not much guidance in this respect and the question will be to what extent EU Member States will comply with the EU law framework when challenging structures that are allegedly abusive.

Under EU case law, it is clear that wholly artificial arrangements that do not reflect economic reality, with a view to avoid tax that would normally be due on the profits generated by activities carried out in the national territory, should be considered abusive. On this basis the EU Court of Justice should be able to provide the domestic courts with guidance in determining whether certain structures can be considered abusive or not.

Taxpayers will face significant uncertainty because the domestic courts of the 28 EU Member States will have different views on the meaning of abuse under the GAAR in the PSD. In this respect, taxpayers are left to rely on the domestic courts without the being able to appeal directly to the EU Court of Justice.


The survey shows that EU Member States have different approaches to the implementation of the GAAR in domestic legislation and this will have an impact on all corporate structures of multinational companies operating in the EU.

The European offices of Baker McKenzie and our affiliated law firms in Denmark, Finland, Ireland, Norway, and Portugal would be pleased to assist you in assessing how your company is affected by these rules.

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