diff --git a/src/render.rs b/src/render.rs
index 637dc36b7..cce54e8f7 100644
--- a/src/render.rs
+++ b/src/render.rs
@@ -52,10 +52,16 @@ pub struct RenderContextInner<'reg: 'rc, 'rc> {
     /// root template name
     root_template: Option<&'reg String>,
     disable_escape: bool,
-    // whether the previous text that we rendered ended on a newline
-    // necessary to make indenting decisions after the end of partials
+
+    // Indicates whether the previous text that we rendered ended on a newline.
+    // This is necessary to make indenting decisions after the end of partials.
     trailing_newline: bool,
-    // whether the previous text that we render should indent itself
+
+    // This should be set to true whenever any output is written.
+    // We need this to detect empty partials/helpers for indenting decisions.
+    content_produced: bool,
+
+    // The next text that we render should indent itself.
     indent_before_write: bool,
     indent_string: Option<Cow<'reg, str>>,
 }
@@ -72,6 +78,7 @@ impl<'reg: 'rc, 'rc> RenderContext<'reg, 'rc> {
             root_template,
             disable_escape: false,
             trailing_newline: false,
+            content_produced: false,
             indent_before_write: false,
             indent_string: None,
         });
@@ -304,6 +311,16 @@ impl<'reg: 'rc, 'rc> RenderContext<'reg, 'rc> {
         self.inner().trailing_newline
     }
 
+    #[inline]
+    pub fn set_content_produced(&mut self, content_produced: bool) {
+        self.inner_mut().content_produced = content_produced;
+    }
+
+    #[inline]
+    pub fn get_content_produced(&self) -> bool {
+        self.inner().content_produced
+    }
+
     #[inline]
     pub fn set_indent_before_write(&mut self, indent_before_write: bool) {
         self.inner_mut().indent_before_write = indent_before_write;
@@ -786,9 +803,21 @@ fn render_helper<'reg: 'rc, 'rc>(
         h.hash()
     );
     let mut call_indent_aware = |helper_def: &dyn HelperDef, rc: &mut RenderContext<'reg, 'rc>| {
-        rc.set_indent_before_write(ht.indent_before_write && rc.get_trailine_newline());
+        let indent_directive_before = rc.get_indent_before_write();
+        let content_produced_before = rc.get_content_produced();
+        rc.set_content_produced(false);
+        rc.set_indent_before_write(
+            indent_directive_before || (ht.indent_before_write && rc.get_trailine_newline()),
+        );
+
         helper_def.call(&h, registry, ctx, rc, out)?;
-        rc.set_indent_before_write(rc.get_trailine_newline());
+
+        if rc.get_content_produced() {
+            rc.set_indent_before_write(rc.get_trailine_newline());
+        } else {
+            rc.set_content_produced(content_produced_before);
+            rc.set_indent_before_write(indent_directive_before);
+        }
         Ok(())
     };
     if let Some(ref d) = rc.get_local_helper(h.name()) {
@@ -827,6 +856,7 @@ pub fn indent_aware_write(
     if v.is_empty() {
         return Ok(());
     }
+    rc.set_content_produced(true);
 
     if !v.starts_with(newline_matcher) && rc.get_indent_before_write() {
         if let Some(indent) = rc.get_indent_string() {
@@ -904,11 +934,23 @@ impl Renderable for TemplateElement {
             DecoratorExpression(_) | DecoratorBlock(_) => self.eval(registry, ctx, rc),
             PartialExpression(ref dt) | PartialBlock(ref dt) => {
                 let di = Decorator::try_from_template(dt, registry, ctx, rc)?;
+
+                let indent_directive_before = rc.get_indent_before_write();
+                let content_produced_before = rc.get_content_produced();
+
                 rc.set_indent_before_write(
                     dt.indent_before_write && (rc.get_trailine_newline() || dt.indent.is_some()),
                 );
+                rc.set_content_produced(false);
+
                 partial::expand_partial(&di, registry, ctx, rc, out)?;
-                rc.set_indent_before_write(rc.get_trailine_newline());
+
+                if rc.get_content_produced() {
+                    rc.set_indent_before_write(rc.get_trailine_newline());
+                } else {
+                    rc.set_content_produced(content_produced_before);
+                    rc.set_indent_before_write(indent_directive_before);
+                }
                 Ok(())
             }
             _ => Ok(()),
diff --git a/tests/whitespace.rs b/tests/whitespace.rs
index 70a2ffc57..de6233f7f 100644
--- a/tests/whitespace.rs
+++ b/tests/whitespace.rs
@@ -271,6 +271,36 @@ foo
     );
 }
 
+#[test]
+fn test_empty_inline_partials_and_helpers_retain_indent_directive() {
+    let input = r#"
+{{~#*inline "empty_partial"}}{{/inline}}
+
+{{~#*inline "indented_partial"}}
+{{>empty_partial}}{{#if true}}{{>empty_partial}}{{/if}}foo
+{{/inline}}
+    {{>indented_partial}}
+"#;
+    let output = "    foo\n";
+    let hbs = Handlebars::new();
+
+    assert_eq!(hbs.render_template(input, &()).unwrap(), output);
+}
+
+#[test]
+fn test_indent_directive_propagated_but_not_restored_if_content_was_written() {
+    let input = r#"
+{{~#*inline "indented_partial"}}
+{{#if true}}{{/if}}{{#if true}}foo{{/if}}foo
+{{/inline}}
+    {{>indented_partial}}
+"#;
+    let output = "    foofoo\n";
+    let hbs = Handlebars::new();
+
+    assert_eq!(hbs.render_template(input, &()).unwrap(), output);
+}
+
 //regression test for #611
 #[test]
 fn tag_before_eof_becomes_standalone_in_full_template() {