Comparative analysis of profit distributions

The basic tax policy challenge in respect to distributed profits is how to avoid taxation of both the company and the shareholders, in particular, when dividends are paid by a company that is resident in a country different from that of the recipient shareholder (“cross-border dividends”).1 More specifically, dividends paid by a company that is resident in a European Union (EU) Member State to a recipient shareholder that is resident in another EU Member State are defined as “EU cross-border dividends”. Each EU country has to decide how (and to what extent) to avoid the double taxation caused by the overlapping of personal and corporate income taxes when profits are distributed to shareholders.