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Compliance Simplified: Anticipating the DAC Recast and Omnibus Changes

The EU’s upcoming Recast of the Directive on Administrative Cooperation (DAC) and the Direct Taxation Omnibus will simplify reporting obligations, enhance cross-border tax transparency & reduce compliance costs.

By NomadicTax Research Team · 5-8 min read

What’s Changing Under the DAC Recast & Direct Taxation Omnibus

In June 2026, the European Commission announced a Tax Simplification Package, consisting of two key legislative proposals: the DAC Recast and the Direct Taxation Omnibus. These aim to streamline administrative obligations, enhance the internal market’s competitiveness, and make enforcement more effective—all while preserving the EU’s strong stance against tax fraud and avoidance. (taxation-customs.ec.europa.eu)

Core changes include:

Implications for EU Entities

  • Companies selling online platforms goods will likely be exempted from DAC7 reporting if they are small or sell second-hand items under new thresholds. This could mean millions of private sellers are out of scope. (taxation-customs.ec.europa.eu)
  • Multinational groups need to coordinate across jurisdictions to ensure consistent filing for both country-by-country and top-up tax reports. Divergent deadlines/templates induce risk. (taxation-customs.ec.europa.eu)
  • CFC rules will be clearer: with refined hallmarks, and with better alignment with Pillar Two rules, compliance burdens should reduce. Entities with operations in low ETR jurisdictions must review thresholds. (taxation-customs.ec.europa.eu)

Action Steps to Prepare

  • Audit current reporting obligations: Map what DAC6, DAC7, DAC4, DAC9 each require in your jurisdictions. Identify hallmarks under DAC6 that may be removed or refined—those are strong candidates for review.
  • Check your entity structure and sources of income: Withholding tax removal under the Parent-Subsidiary Directive for pension funds could open planning opportunities. If your group has a pension institution, ensure eligibility and timing.
  • Implement systems for unified filing: The proposals point toward a single notification template and harmonised deadlines for DAC4 and DAC9. Early alignment of IT and reporting calendars will save significant costs.
  • Stay updated on national transposition laws: While proposals were made in June 2026, actual national laws need to be passed. Timing will vary—some Member States may delay. Use this window to anticipate and adjust.

Example Scenario

Suppose you run an EU-wide platform enabling sales of handmade second-hand art from private sellers. Currently, you may need to report via DAC7 if online revenues exceed low thresholds. Under the Recast, with thresholds increased and second-hand goods possibly excluded, many private sellers will be removed from reporting requirements—dramatically simplifying your compliance obligations.

Or consider a pension fund in Belgium: dividends received from subsidised EU-subsidiaries may now be exempt from withholding tax under the extended Parent-Subsidiary Directive—offering tax savings if you align cross-border investment structures proactively.

Risk Factors to Monitor

  • Transition periods and grandfathering clauses: Many proposed rules will begin after securing agreement in Parliament and Council, and after national laws are adopted.
  • Member State divergence: Some may apply stricter rules despite harmonisation proposals, especially around CFC and withholding tax.
  • EU political dynamics: Resistance in certain States to withholding tax removal or expensing for R&D could delay outcomes or lead to opt-outs.

By taking these compliance-oriented steps now, businesses across the EU can reduce costs, minimise risk, and be ready to make the most of the simplification package once enacted.

Sources

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