Tax Planning

How EU’s Tax Simplification Package Transforms Cross-Border Investment

The EU’s 24 June 2026 Tax Simplification Package promises sweeping reforms to the direct tax framework and reporting systems—especially for cross-border dividends, R&D investment, and multinational groups under DAC and ATAD.

By NomadicTax Research Team • 5-8 min read • September 2, 2026

## Key Reforms Introduced in the Tax Simplification Package In late June 2026, the European Commission adopted a landmark package aiming to **reduce compliance costs** and **simplify tax rules** across Member States. It consists primarily of two legislative proposals: the **Direct Taxation Omnibus Directive** and the **Recast of the Directive on Administrative Cooperation (DAC)**.([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)) ### Direct Taxation Omnibus - **Withholding tax removal**: Cross-border payments of dividends, interest, and royalties among EU companies will no longer be subject to withholding tax—lowering friction for internal 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?utm_source=openai)) - **Parent-Subsidiary expansion**: Pension institutions will become eligible for withholding tax exemption under the Parent-Subsidiary Directive.([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)) - **R&D investment standardisation**: A minimum standard for tax treatment of **R&D-related tangible assets** is introduced—allowing full and immediate expensing in all Member States. This intends to make EU more attractive for research and innovation.([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)) - **ATAD adjustments**: Interest limitation rules under ATAD are modernised with mandatory de minimis thresholds and removal of optional options to reduce burdens. Controlled Foreign Company (CFC) rules and the Pillar Two framework are aligned to avoid overlapping 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?utm_source=openai)) ### DAC Recast - **Codification**: The nine existing DAC directives are consolidated into a single coherent legal instrument, improving legal clarity.([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/document/download/c28b0f36-6013-4e6f-b0d1-43b770888f1d_en?filename=Subsidiary+Grid_DAC_Proposal+for+a+Council+Directive+-+Taxation.pdf&utm_source=openai)) - **Streamlined reporting**: • A single notification obligation is introduced for Country-by-Country Reporting (DAC4) and the top-up tax returns (DAC9).([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)) • Reporting thresholds for online sales (DAC7) are raised—removing obligations for over 10 million private sellers, particularly those dealing in second-hand goods.([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)) - **DAC6 hallmarks reviewed**: Category A hallmarks with limited value are removed; guidance will be issued on applying the Main Benefit Test (MBT) to remaining hallmarks. Companies under Pillar Two may be excluded from DAC6 reporting.([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)) - **TIN verification & exchanges improved**: Centralised systems for Tax Identification Number verification, and enhancing completeness in DAC1 exchanges.([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)) ## Implications for Businesses & Tax Planning - **Cross-border groups**: Should see **lower withholding costs** when paying dividends or royalties across Member States. Planning for corporate structure may shift to use pension institutions where applicable. - **R&D intensive firms**: Can benefit from full expensing of tangible R&D assets—investors may prefer jurisdictions moving swiftly to implement this standard. - **Reporting burdens reduced**: SMEs and private sellers may be relieved from onerous DAC7 or DAC6 reporting requirements under the new thresholds and exclusions. - **Alignment under Pillar Two & CFC rules** simplifies governance for multinationals operating in many Member States. ## Actionable Steps for Tax Professionals 1. **Audit current reporting status**: Identify whether your company is subject to DAC6, DAC7, DAC4 or DAC9 obligations and how thresholds will shift under the proposal. 2. **Update documentation**: Ensure contracts and company policies reflect potential changes in withholding tax treatment. 3. **Monitor national implementation**: Because directives require transposition, keep an eye on how individual Member States legislate these changes and possible transitional provisions. 4. **Project cash flow impacts**: The removal of withholding taxes and ability to expense R&D assets can affect both timing and amount of tax payments—update forecasts. ## Looking Ahead: Timeline & Status - As of **June 2026**, the proposals are **adopted** by the Commission but are still pending legislative adoption by the European Parliament and Council.([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)) - Once enacted and transposed, many measures will become **effective across all EU-Member States**, giving businesses time to prepare. These reforms represent a major shift in EU tax policy—simplifying the landscape, reducing administrative burden, and supporting cross-border investment and innovation in the internal market.