Compliance
Global Compliance Simplified: EU’s Tax Reporting Cuts & DAC Reforms for Multinationals
The EU’s June 2026 tax simplification package under its DAC and taxation omnibus reforms vastly reduces low-value reporting and is poised to save businesses well over €7 billion annually – here’s how to prepare.
By NomadicTax Research Team • 5-8 min read • August 31, 2026
## Overview of EU’s DAC Reforms & Omnibus Directive
On 24 June 2026, the European Commission proposed a tax simplification package that includes two legislative proposals: the **Taxation Omnibus Directive** and the **Recast Directive on Administrative Cooperation (DAC)**. These aim to modernize EU direct tax rules and slash the reporting burdens on multinational enterprises.([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)) The package is expected to generate savings of around **€7.9 billion annually** for businesses across the EU. ([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 Changes in Reporting & Reporting Entities
- **Abolition of withholding taxes** on cross-border payments (dividends, interest, royalties) among EU companies. This eliminates a long-standing source of cross-jurisdiction friction.([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))
- **Removal of reporting requirements** under DAC for MNEs already under the 15% global minimum tax under Pillar Two. About 3,000 groups are expected to benefit from this and avoid duplicate reporting burdens.([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))
- **Adjustment of DAC7 thresholds**: increasing monetary thresholds and removing activity thresholds to reduce low-value digital sales reporting. Millions of private sellers will be exempt.([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/document/download/a654ad8e-606b-4ad5-a8ff-3309554224d7_en?filename=Executive+Summary+of+Impact+Assessment_DAC_Proposal+for+a+Council+Directive+-+Taxation%E2%80%99.pdf&utm_source=openai))
- **Streamlined notification obligations** for Country-by-Country (CbC) reporting (DAC4) and top-up tax information returns (DAC9): a single notification, harmonized deadlines, and common templates.([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/document/download/a654ad8e-606b-4ad5-a8ff-3309554224d7_en?filename=Executive+Summary+of+Impact+Assessment_DAC_Proposal+for+a+Council+Directive+-+Taxation%E2%80%99.pdf&utm_source=openai))
## Action Points for Multinationals & Advisory Teams
- Review your current reporting obligations under DAC4, DAC6, DAC7, and DAC9. Determine whether entities are already covered by Pillar Two IIR or Safe-Harbour status.
- Inventory internal systems reporting thresholds—monetary thresholds and activity thresholds—to leverage exemptions once adopted.
- Develop common templates and documentation anticipating harmonized notification and central filing obligations. Think ahead to how data flows may consolidate.
- Engage with local EU tax counsel to consider filing hubs or central reporting points if that becomes permitted or required.
## Transitional Period & What’s Still Proposed vs. Enacted
- These proposals are **legislative** and still need EU Council-Parliament adoption. They are **not yet law**.([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 reductions in DAC reporting come swiftly once safe-harbour status is recognized, but full harmonization may take until 2027-2029 via phased implementation.
## Example Timeline
A German-based group with multiple EU subsidiaries notices they pay withholding taxes on royalty payments to an Irish subsidiary. Once the Direct Taxation Omnibus Directive passes, those payments within the EU may no longer be subject to withholding—unlocking savings. Similarly, entities under Pillar Two IIR in jurisdictions with transitional qualification may swing from dual reporting to a reduced DAC reporting burden, simplifying compliance cycle.
## Tips for Preparation
- Maintain clean data for financial flows between EU entities—dividends, interests, royalties—that might benefit from withholding tax removal.
- Track when your jurisdictions complete their transitional safe-harbour qualifications. Use OECD central records and EU updates.
- Prepare internal treasury or tax accounting teams for changes in cash flow, reporting deadlines, and tax cash-flow forecasting.
- Monitor legislative developments: voting, enactment, and national transposition in each Member State.
**Conclusion:** The EU’s reforms represent a significant shift toward simpler global tax compliance. While not yet enacted, multinationals should strategize now to benefit from exemptions, avoid duplication, and align entity flows with upcoming simplifications.