Council Directive 2003/49/ECShow full title

Article 6 Transitional rules for Greece, Spain and Portugal

1. Greece and Portugal shall be authorised not to apply the provisions of Article 1 until the date of application referred to in Article 17(2) and (3) of Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments(1). During a transitional period of eight years starting on the aforementioned date, the rate of tax on payments of interest or royalties made to an associated company of another Member State or to a permanent establishment situated in another Member State of an associated company of a Member State must not exceed 10 % during the first four years and 5 % during the final four years.

Spain shall be authorised, for royalty payments only, not to apply the provisions of Article 1 until the date of application referred to in Article 17(2) and (3) of Directive 2003/48/EC. During a transitional period of six years starting on the aforementioned date, the rate of tax on payments of royalties made to an associated company of another Member State or to a permanent establishment situated in another Member State of an associated company of a Member State must not exceed 10 %.

These transitional rules shall, however, remain subject to the continued application of any rate of tax lower than those referred to in the first and second subparagraphs provided by bilateral agreements concluded between Greece, Spain or Portugal and other Member States. Before the end of any of the transitional periods mentioned in this paragraph the Council may decide unanimously, on a proposal from the Commission, on a possible extension of the said transitional periods.

2. Where a company of a Member State, or a permanent establishment situated in that Member State of a company of a Member State:

• receives interest or royalties from an associated company of Greece or Portugal,

• receives royalties from an associated company of Spain,

• receives interest or royalties from a permanent establishment situated in Greece or Portugal of an associated company of a Member State, or

• receives royalties from a permanent establishment situated in Spain of an associated company of a Member State,

the first Member State shall allow an amount equal to the tax paid in Greece, Spain or Portugal in accordance with paragraph 1 on that income as a deduction from the tax on the income of the company or permanent establishment which received that income.

3. The deduction provided for in paragraph 2 need not exceed the lower of:

(a) the tax payable in Greece, Spain or Portugal on such income on the basis of paragraph 1, or

(b) that part of the tax on the income of the company or permanent establishment which received the interest or royalties, as computed before the deduction is given, which is attributable to those payments under the domestic law of the Member State of which it is a company or in which the permanent establishment is situated.

(1)

See page 38 of this Official Journal.