According to the ECJ, the Belgian practice of limiting the amount of carried forward dividend received deduction (DRD), upon a tax neutral merger, is compatible with the EU Parent-Subsidiary Directive (2011/96). This is the first case regarding the Belgian participation exemption that has been decided in favour of the Belgian tax authorities. As questions remain on other aspects of the Belgian tax legislation, this might not be the ECJ’s final word on the DRD.