diff --git a/man/tmpfiles.d.xml b/man/tmpfiles.d.xml
index 5d393f39840..bc6c8cdf432 100644
--- a/man/tmpfiles.d.xml
+++ b/man/tmpfiles.d.xml
@@ -282,11 +282,11 @@ L     /tmp/foobar -    -    -     -   /dev/null</programlisting>
         <varlistentry>
           <term><varname>C</varname></term>
           <listitem><para>Recursively copy a file or directory, if the
-          destination files or directories do not exist yet. Note that
-          this command will not descend into subdirectories if the
-          destination directory already exists. Instead, the entire
-          copy operation is skipped. If the argument is omitted, files
-          from the source directory
+          destination files or directories do not exist yet or the
+          destination directory is empty. Note that this command will not
+          descend into subdirectories if the destination directory already
+          exists and is not empty. Instead, the entire copy operation is
+          skipped. If the argument is omitted, files from the source directory
           <filename>/usr/share/factory/</filename> with the same name
           are copied. Does not follow symlinks.</para></listitem>
         </varlistentry>
diff --git a/src/basic/copy.c b/src/basic/copy.c
index 34e01ea1cf4..46e02a37593 100644
--- a/src/basic/copy.c
+++ b/src/basic/copy.c
@@ -24,6 +24,7 @@
 #include "macro.h"
 #include "missing.h"
 #include "mountpoint-util.h"
+#include "stat-util.h"
 #include "string-util.h"
 #include "strv.h"
 #include "time-util.h"
@@ -501,7 +502,7 @@ static int fd_copy_directory(
         _cleanup_close_ int fdf = -1, fdt = -1;
         _cleanup_closedir_ DIR *d = NULL;
         struct dirent *de;
-        bool created;
+        bool exists, created;
         int r;
 
         assert(st);
@@ -522,13 +523,26 @@ static int fd_copy_directory(
                 return -errno;
         fdf = -1;
 
-        r = mkdirat(dt, to, st->st_mode & 07777);
-        if (r >= 0)
-                created = true;
-        else if (errno == EEXIST && (copy_flags & COPY_MERGE))
+        exists = false;
+        if (copy_flags & COPY_MERGE_EMPTY) {
+                r = dir_is_empty_at(dt, to);
+                if (r < 0 && r != -ENOENT)
+                        return r;
+                else if (r == 1)
+                        exists = true;
+        }
+
+        if (exists)
                 created = false;
-        else
-                return -errno;
+        else {
+                r = mkdirat(dt, to, st->st_mode & 07777);
+                if (r >= 0)
+                        created = true;
+                else if (errno == EEXIST && (copy_flags & COPY_MERGE))
+                        created = false;
+                else
+                        return -errno;
+        }
 
         fdt = openat(dt, to, O_RDONLY|O_DIRECTORY|O_CLOEXEC|O_NOCTTY|O_NOFOLLOW);
         if (fdt < 0)
diff --git a/src/basic/copy.h b/src/basic/copy.h
index a41b44c70ab..f6770218819 100644
--- a/src/basic/copy.h
+++ b/src/basic/copy.h
@@ -9,10 +9,11 @@
 #include <sys/types.h>
 
 typedef enum CopyFlags {
-        COPY_REFLINK    = 1 << 0, /* Try to reflink */
-        COPY_MERGE      = 1 << 1, /* Merge existing trees with our new one to copy */
-        COPY_REPLACE    = 1 << 2, /* Replace an existing file if there's one */
-        COPY_SAME_MOUNT = 1 << 3, /* Don't descend recursively into other file systems, across mount point boundaries */
+        COPY_REFLINK     = 1 << 0, /* Try to reflink */
+        COPY_MERGE       = 1 << 1, /* Merge existing trees with our new one to copy */
+        COPY_REPLACE     = 1 << 2, /* Replace an existing file if there's one */
+        COPY_SAME_MOUNT  = 1 << 3, /* Don't descend recursively into other file systems, across mount point boundaries */
+        COPY_MERGE_EMPTY = 1 << 4, /* Merge an existing, empty directory with our new tree to copy */
 } CopyFlags;
 
 typedef int (*copy_progress_bytes_t)(uint64_t n_bytes, void *userdata);
diff --git a/src/basic/stat-util.c b/src/basic/stat-util.c
index 0af869cf652..ea2bbc368b1 100644
--- a/src/basic/stat-util.c
+++ b/src/basic/stat-util.c
@@ -67,13 +67,22 @@ int is_device_node(const char *path) {
         return !!(S_ISBLK(info.st_mode) || S_ISCHR(info.st_mode));
 }
 
-int dir_is_empty(const char *path) {
-        _cleanup_closedir_ DIR *d;
+int dir_is_empty_at(int dir_fd, const char *path) {
+        _cleanup_close_ int fd = -1;
+        _cleanup_closedir_ DIR *d = NULL;
         struct dirent *de;
 
-        d = opendir(path);
+        if (path)
+                fd = openat(dir_fd, path, O_RDONLY|O_DIRECTORY|O_CLOEXEC);
+        else
+                fd = fcntl(fd, F_DUPFD_CLOEXEC, 3);
+        if (fd < 0)
+                return -errno;
+
+        d = fdopendir(fd);
         if (!d)
                 return -errno;
+        fd = -1;
 
         FOREACH_DIRENT(de, d, return -errno)
                 return 0;
diff --git a/src/basic/stat-util.h b/src/basic/stat-util.h
index 0a08e642b54..74fb7251b38 100644
--- a/src/basic/stat-util.h
+++ b/src/basic/stat-util.h
@@ -15,7 +15,10 @@ int is_dir(const char *path, bool follow);
 int is_dir_fd(int fd);
 int is_device_node(const char *path);
 
-int dir_is_empty(const char *path);
+int dir_is_empty_at(int dir_fd, const char *path);
+static inline int dir_is_empty(const char *path) {
+        return dir_is_empty_at(AT_FDCWD, path);
+}
 
 static inline int dir_is_populated(const char *path) {
         int r;
diff --git a/src/tmpfiles/tmpfiles.c b/src/tmpfiles/tmpfiles.c
index 19225f8cfd7..03a9e1d1f02 100644
--- a/src/tmpfiles/tmpfiles.c
+++ b/src/tmpfiles/tmpfiles.c
@@ -1463,7 +1463,7 @@ static int copy_files(Item *i) {
                          dfd, bn,
                          i->uid_set ? i->uid : UID_INVALID,
                          i->gid_set ? i->gid : GID_INVALID,
-                         COPY_REFLINK);
+                         COPY_REFLINK | COPY_MERGE_EMPTY);
         if (r < 0) {
                 struct stat a, b;
 
diff --git a/test/TEST-22-TMPFILES/test-02.sh b/test/TEST-22-TMPFILES/test-02.sh
index fe8b9032983..d1bf1ea04b9 100755
--- a/test/TEST-22-TMPFILES/test-02.sh
+++ b/test/TEST-22-TMPFILES/test-02.sh
@@ -6,8 +6,8 @@
 set -e
 set -x
 
-rm -fr /tmp/{d,D,e}
-mkdir  /tmp/{d,D,e}
+rm -fr /tmp/{C,d,D,e}
+mkdir  /tmp/{C,d,D,e}
 
 #
 # 'd'
@@ -93,3 +93,30 @@ test $(stat -c %U:%G:%a /tmp/e/3/d2) = "daemon:daemon:755"
 
 test -f /tmp/e/3/f1
 test $(stat -c %U:%G:%a /tmp/e/3/f1) = "root:root:644"
+
+#
+# 'C'
+#
+
+mkdir /tmp/C/{1,2,3}-origin
+touch /tmp/C/{1,2,3}-origin/f1
+chmod 755 /tmp/C/{1,2,3}-origin/f1
+
+mkdir /tmp/C/{2,3}
+touch /tmp/C/3/f1
+
+systemd-tmpfiles --create - <<EOF
+C     /tmp/C/1    0755 daemon daemon - /tmp/C/1-origin
+C     /tmp/C/2    0755 daemon daemon - /tmp/C/2-origin
+EOF
+
+test -d /tmp/C/1
+test $(stat -c %U:%G:%a /tmp/C/1/f1) = "daemon:daemon:755"
+test -d /tmp/C/2
+test $(stat -c %U:%G:%a /tmp/C/2/f1) = "daemon:daemon:755"
+
+! systemd-tmpfiles --create - <<EOF
+C     /tmp/C/3    0755 daemon daemon - /tmp/C/3-origin
+EOF
+
+test $(stat -c %U:%G:%a /tmp/C/3/f1) = "root:root:644"