The Parent Subsidiary Directive

This paper is intended as a chapter in a book on EU taxation. The target audience is business school students who have a few, general notions of accounting, tax and law. It explains the parent subsidiary directive and the EU's efforts to avoid the problems associated with international double taxation of dividends between parents and subsidiaries operating within the EU, in order to reduce the cost of doing business. It uses simple fictitious numerical examples as well as actual legal cases to clarify the accounting, taxation and legal notions. It is understood that this paper may not be very comprehensible to those who have not read another paper on double taxation which covers both international double taxation and double taxation of dividends, if they do not already have notions of these. This other paper is also being placed on the SSRN site under the heading: Double Taxation Avoidance: International and Dividends [http://ssrn.com/abstract=940927]