Access to EU Interest & Royalties Directive

The Interest and Royalties (I+R) Directive is designed to eliminate withholding tax obstacles in the area of cross-border interest and royalty payments within a group of companies by abolishing:

  • withholding taxes on royalty payments arising in a Member State, and
  • withholding taxes on interest payments arising in a Member State

These interest and royalty payments shall be exempt from any taxes in that State provided that the beneficial owner of the payment is a company or permanent establishment in another Member State.

As under the Merger and the Parent-Subsidiary Directives, the benefits of the I+R Directive are only granted to companies which are

  • subject to corporate tax in the EU,
  • tax resident in an EU Member State and
  • of a type listed in the annex to the Directive.

The shareholding requirements in order for the directive to apply is 10% direct or indirect holding.

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