Apologies for a slight delay – I got caught up with another client.

Anyway you are absolutely right in your statement. The exemption on the EU the Interest and Royalties Directive applies if (1) a 25% shareholding in the income payer (2) for a minimum holding period of two years.

I also understand that if at the time the interest or royalty payment is made, the two-year holding period has not yet been satisfied, the withholding tax exemption can still apply if the shares continue to be held for sufficient time to enable the two-year holding period to be satisfied. In these circumstances, however, the withholding tax must be paid and, once the two-year holding period is satisfied, the tax paid can be reclaimed.

I understand there are some proposals to:

- Change the scope of the Directive by extending the list of companies to which it applies;

- Reduce the shareholding requirements to establish that companies are associated, from a 25% direct holding to a 10% direct or indirect holding;

I hope this answers your questions. Please don't forget to click accept. Thanks in advance and positive feedback is greatly appreciated.