Entity Setup
Entity Setup Strategies: Picking the Right Structure Post-Omnibus Directive
With sweeping changes under the tax simplification package—particularly around withholding, CFCs, and cross-border reorganisations—choosing the right EU-based structure has never been more strategic.
By NomadicTax Research Team • 5-8 min read • September 9, 2026
## Why Your Business Structure Matters More Than Ever
The Omnibus Directive (proposed 24 June 2026) expands tax neutrality for corporate reorganisations and abolishes many withholding taxes between EU companies. Combined with harmonisation of **Controlled Foreign Company (CFC)** rules and improvements to ATAD interest limitations, this opens new room for optimising cross-border entity design. ([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?prefLang=fi&utm_source=openai))
## Entity Types & Strategic Use Cases
| Entity | Typical Use | Advantages under Proposed Changes |
|---|---|---|
| **European Company (SE)** or branch/subsidiary across EU | Operating in multiple Member States | Withholding taxes abolished on intra-EU profits, dividends and royalties, internal funding and repatriation become more efficient. |
| **Holding company or fund** (for IP, royalties) | Houses IP assets, licensing | With CFC harmonisation and Pillar Two interaction clarified, structuring of IP and licensing income may fit into lower tax and reporting exposure. |
| **Single member SME structured as a company** | To separate personal and business risk | Under DAC simplification, SMEs under thresholds (e.g. DAC7) may face fewer reporting obligations; interest deduction limitations may now be more favourable for low-risk financing. |
## Key Structuring Considerations
- **Permanent establishment risk**: Ensure your business doesn’t create PE unintentionally when operating in several jurisdictions—this triggers local taxation. |
- **Choice of jurisdiction**: Some Member States might delay transposition of Omnibus or DAC; early implementation variations can be used advantageously. |
- **Financing structure**: With ATAD interest limitation changes, distinguish between internal group debt vs third-party debt, or market-based financing to benefit from exclusion. |
- **IP licensing & subgroup CFC exposure**: Under clarified rules, locating IP in jurisdictions with robust IP credits and aligning with global minimum tax rules may reduce leakage. |
## Example Scenario
A digital agency with clients across the EU sets up a holding company in the Netherlands, subsidiaries in Spain and Poland. Under the Omnibus, **dividends paid from Spain to the Dutch holding** may no longer be subject to withholding tax. If the Dutch holding meets Pillar Two exclusion, it may cut down on DAC6 disclosures. If financing comes from third-party loan (market-based), the interest deduction cap under ATAD may not bite. |
## Action Steps for Entity Setup in 2026-2027
1. Map your business model and income flows to assess where withholding taxes apply now—and where the Omnibus would change that.
2. Identify local jurisdictions’ transposition status to anticipate transitional periods or delays.
3. Incorporate structure with **exit tax** & ATAD provisions in mind, especially for cross-border assets like IP or real estate.
4. Use external financing or intra-group financing in line with ATAD exclusions.
5. Regularly review whether your structure places you under Pillar Two or requires DAC reporting, and adapt early.
Choosing the right entity facing EU-wide reforms is an opportunity—not just compliance. The tax simplification agenda under the Omnibus and DAC recast makes restructuring less costly, reporting lighter, and cross-border movement smoother—if you act now.