Tax Planning
EU’s New Tax Simplification Package: What Global Entities Should Know
The European Commission’s June 2026 simplification package presents sweeping changes affecting withholding taxes, cross-border reorganisations, and reporting burdens—vital for foreign investors and multinationals.
By NomadicTax Research Team • 5-8 min read • August 27, 2026
## Overview of the EU Simplification Package
On 24 June 2026, the European Commission adopted **two major legislative proposals** under its Tax Simplification Package aimed at boosting cross-border competitiveness within the EU. These are:
- The **Direct Taxation Omnibus Directive**, modernising EU direct tax rules;
- The **Recast Directive on Administrative Cooperation (DAC)**, consolidating and streamlining existing tax administrative obligations. ([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))
Savings are estimated at approximately **€7.9 billion annually**, through reduced compliance burdens, simpler processes, and removing barriers to cross-border investment. ([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))
## Key Measures Impacting Global Entities
| Measure | What’s Changing | Impacts for Global Operations |
|---------|------------------|-------------------------------|
| **Abolition of withholding taxes** on cross-border dividends, interest, royalties between EU companies | Payments between companies in different EU Member States will no longer face withholding tax—under the Omnibus rules. | Simplifies financing operations, reduces cost of EU-based intercompany debt or royalty flows. Non-EU entities may still be affected depending on tax treaties. |
| **Elimination or reduction of cross-border tax reports** | Recast DAC removes certain reporting on cross-border arrangements for MNEs already under Pillar Two. | Cuts duplication. If your company already files top-up tax or country-by-country reports, fewer parallel disclosures. |
| **Clarification of EU company reorganisation recognised under company law** | Tax Merger Directive expanded to cover all forms of corporate reorganisations under EU company law. | Easier mergers, spin-offs, cross-border restructurings inside the EU. Less friction. |
## Timeline & Status
- Proposals adopted in **June 2026** are now under legislative process and require approval by the Council and European Parliament before being enacted. ([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))
- Some changes (especially in DAC recast) will affect reporting obligations already in place or coming soon. Stakeholders need to monitor draft texts.
## What Should Global Entities Do Now?
- Review your EU corporate structure: are you making cross-border intercompany interest, dividend, royalty payments? Consider how treaty provisions will interact with new withholding tax abolition.
- Compare current DAC obligations for your group; if under Pillar Two and country-by-country reporting, identify where overlaps might be cut.
- For corporate reorganisations inside EU, review whether those operations are recognised already under company law or will benefit from expanded definitions.
- Consult tax counsel in critical jurisdictions to assess transitional rules and effective dates.
## Example Case
A Canadian multinational active in France, Germany, and Spain with EU subsidiaries: currently, payments of royalties and interest between subsidiaries incur withholding taxes. Once the Omnibus Directive passes, those could be removed, improving cash flows and simplifying tax treaty interactions.
Also, where the group is in scope for Pillar Two, filings for top-up tax might be simplified under the new DAC recast provisions.
This package highlights the EU’s bucket of policy tools aiming at smoother, cheaper cross-border tax compliance and better investment flows across the Single Market.