44As regard dividends paid to a parent company resident in a Member State by a company resident in another Member State in which that parent company holds a minimum of 25 % of the capital, Article 4(1) of Directive 90/435 expressly leaves it open to Member States to choose between an exemption system and an imputation system. The directive provides that where such a parent company receives distributed profits from its subsidiary, the State of the parent company is, except when the latter is liquidated, either to refrain from taxing such profits or to tax them while authorising that company to deduct from the amount of tax due that fraction of the corporation tax paid by the subsidiary which relates to those profits and, if appropriate, the amount of the withholding tax levied by the Member State in which the subsidiary is resident, up to the limit of the amount of the corresponding domestic tax.
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