Tax Planning
How the EU Tax Simplification Omnibus Proposal Could Transform Tax Planning
Exploring the EU Commission’s Omnibus Directive and DAC Incooperation recast, with tips on how companies can proactively adapt their tax planning to navigate expected changes.
By NomadicTax Research Team • 5-8 min read • August 19, 2026
## What’s Changing Under the Simplification Package
On **24 June 2026**, the European Commission proposed a **Tax Simplification Package** consisting of two legislative proposals: the **Direct Taxation Omnibus Directive** and a **Recast of the Directive on Administrative Cooperation (DAC)**. These aim to modernise direct tax rules, reduce reporting burdens, and make EU member states more competitive. ([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))
### Selected Highlights
- **Abolition of withholding taxes on cross-border dividends, interest and royalties between EU companies**.
- Extension of the **Parent-Subsidiary Directive** to include pension institutions.
- Introduction of **full and immediate expensing** for R&D-related tangible assets across all Member States.
- Streamlined interaction between **CFC (Controlled Foreign Company) rules** and Pillar Two, reducing overlap.
- Revisions to **interest limitation provisions** under ATAD to simplify and raise de minimis thresholds.
- DAC recast: consolidates nine existing DAC directives into a more coherent legal instrument, cuts reporting on certain cross-border arrangements by approx. **35%**, saving around **€7.9 billion/year** EU-wide. ([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))
## Implications for Tax Planning
1. **Cash flow benefits & investment incentives**: Immediate expensing for R&D assets boosts investment attractiveness and enhances return calculations. Plan CapEx schedules accordingly.
2. **Dividend and interest distribution strategies** will change: no more withholding between EU companies—this alters optimal funding and dividend flow structures.
3. **Interaction with CFC and Pillar Two**: If your structure includes low-taxed subsidiaries, the proposed Omnibus changes may reduce the risk of overlapping compliance obligations or double “minimum taxes.”
4. **Planning DAC obligations**: With reduced reporting requirements, certain cross-border arrangements that offered limited information-value may be de-prioritised or phased out.
## Practical Guidance & Adaptation Steps
- Conduct an internal review of your cross-border holdings: identify where withholding taxes currently apply and how their removal will affect your cashflows.
- Revise financial models to incorporate immediate expensing of R&D and assess whether past capital allocations need adjustment.
- Map current CFC exposure and Pillar Two top-up tax risk to optimize structure for overlapping rules.
- Re-evaluate your cross-border arrangements to ensure only those with substantial impact are maintained, given elimination of low-value reporting.
## Example Scenario
A tech firm with subsidiaries in **Germany, Ireland, and Cyprus**, investing heavily in R&D assets. Under the Omnibus proposals:
- They can immediately expense their capital equipment in Ireland if qualifying.
- Dividends from the German entity to the Irish entity would flow without withholding.
- Their Cyprus unit may no longer need to report certain cross-border arrangements under DAC that prove low-value or information-poor.
**Takeaway**: These proposals, once enacted, shift the focus to **efficiency**, **clarity**, and **investment-friendly structures**. Companies should start scenario-planning now to take full advantage when the new rules arrive.