On January 1st, 1992, two EC directives concerning direct taxes in the fields of corporation tax and capital gains came into force: the parent/subsidiary directive and the cross-border merger directive. Although it is true to say that member states have been slow in enacting national legislation, it is absolutely necessary for companies to be mindful of the planning opportunities offered by harmonization. These directives are part of the current EC tax harmonizations programme, which includes measures on proposals for the offset of losses and withholding tax exemption on intra-EC interest and royalty payments plus the establishment of an arbitration procedure (transfer pricing). In the general forum of direct tax harmonization, these instruments reflect the current direction of the commission with its announcement in April 1990 that future harmonization efforts in the direct tax area would concentrate on eliminating elements of company taxation which may give rise to double taxation and hinder EC cross-border expansion. With further changes planned for 1993 and the importance of tax planning, this text will provide companies with valuable information, covering the implications on direct tax harmonization. This study is an analysis of the developing EC corporate tax system, the relevance of developments in the EC's approach to harmonization of the corporate tax system of EEC member states and specifically on directives already in force or about to come into effect. The text includes essential material relating to the instruments, including the EEC English language texts, and an analysis of the meaning of the instruments.