Judgment_paragraph 71 · X v Ministerraad (C-68/15)

71To that end, Article 4(1) of the Parent-Subsidiary Directive leaves it to the Member States to choose between two systems, namely between an exemption system and an imputation system (see, to that effect, judgment of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 44). In accordance with recitals 7 and 9 of that directive, that provision stipulates that where a parent company or its permanent establishment, by virtue of the association of the parent company with its subsidiary, receives distributed profits, the Member State of the parent company and the Member State of its permanent establishment are, except when the subsidiary is liquidated, either to refrain from taxing such profits or to tax them while authorising the parent company and the permanent establishment to deduct from the amount of tax due that fraction of the tax relating to those profits and paid by the subsidiary and any lower-tier subsidiary.