The survey concluded that the parent subsidiary directive relating to cross-border dividends between EU Member States has been generally successfully implemented throughout the Union.
FEE identified that the lack of an EU-wide tax system penalises unfairly companies operating across borders and receiving dividends from EU subsidiaries. Disallowance of part of the business expenses of the foreign company effectively results in an unjust increase in taxation. In a business situation where operations were solely in one country, business expenses would normally be tax deductible in full. The practice of disallowing a portion of expenses relating to the creation of dividend income does therefore very clearly lead to additional taxation. It is not possible, under current EU tax legislation, to operate a European-wide tax group, other than in rather exceptional circumstances under French law, so no relief is available under a consolidated European style tax system.