Compliance
Compliance in a Simplifying World: EU’s Tax Omnibus & DAC Recast
The EU has adopted major simplification measures via its Omnibus Directive and DAC recast—but with new rules for cross-border compliance that all global players should watch.
By NomadicTax Research Team • 5-8 min read • September 14, 2026
## What Are the Tax Simplification Package & DAC Recast?
- On 24 June 2026, the European Commission introduced a package including the **Direct Taxation Omnibus Directive** (removing cross-border withholding taxes, simplifying direct tax rules) and a **Recast of the Directive on Administrative Cooperation (DAC)** to modernize tax admin and AML / fraud cooperation across EU states. ([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/news/european-commission-proposes-landmark-tax-simplification-package-streamline-compliance-and-boost-2026-06-24_en?utm_source=openai))
- Expected savings and compliance cost reductions are **EUR 7.9 billion** for businesses. ([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/news/european-commission-proposes-landmark-tax-simplification-package-streamline-compliance-and-boost-2026-06-24_en?utm_source=openai))
## What Global Businesses & Individuals Need to Know
- **Withholding Tax Abolition**: Cross-border payments of dividends, interest, royalties among EU companies will **no longer be subject to withholding tax**, removing friction in intra-EU investment flows.
- **Stronger Admin Cooperation**: The DAC recast tightens information exchange, enforces standardized forms and timing, and reduces opportunities for base erosion. Non-EU entities working with or in the EU may face greater scrutiny.
## Actionable Insights for Compliance
1. **Review EU treaties and double tax relief structures**: If you hold subsidiaries or investments in EU states, make sure documentation supports the claims for no withholding.
2. **Update internal reporting systems**: Standardized DAC forms, stricter timelines, and cross-border company data may mean better digital tools or audits.
3. **Ensure VAT / GST compliance across borders**: If you're supplying digital services or licensing royalties into the EU, understand how these changes interact with VAT regimes and eliminated withholding.
## Example Scenario
You are a U.S. tech company licensing software to an EU company. Historically, royalties would have withheld tax in many EU member states. Post-Omnibus, as long as both are EU entities (even via subsidiaries), withholding should disappear—**if treaty-compatible**. But you'll need to ensure the recipient EU entity is properly registered and all documentation is in order to apply the abolition correctly.
Compliance is often thought of as costly. But simplification—like that from the EU—can reduce costs. Still, it raises the stakes on correct documentation and residency/trickle-down of benefits under treaties and cooperation directives. Always keep records, stay aware of changes, and get advice when operating across multiple tax jurisdictions.