Compliance
How the EU’s Omnibus & DAC Recast Proposals Slash Compliance Costs for Businesses
The European Commission’s recent tax simplification package promises billions in savings across the EU via abolition of withholding taxes and streamlined reporting rules under a recast DAC regime.
By NomadicTax Research Team • 5-8 min read • September 5, 2026
## Overview
In June 2026, the European Commission put forward a sweeping tax simplification package aimed at reducing administrative and compliance burdens for businesses across the EU. This package is built around two core proposals: the **Direct Taxation Omnibus Directive** and a **recast of the Directive on Administrative Cooperation (DAC)**. Together they promise cost savings of approximately **€7.9 billion annually** for businesses 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?utm_source=openai))
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## Key Measures to Watch
- **Abolishing withholding taxes** on cross-border payments of dividends, interest and royalties between EU companies. This removes long-standing barriers to capital flow among member states.([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**: consolidating DAC1 through DAC9 into a single legal instrument, clarifying reporting rules, and reducing low-value or redundant reporting obligations (especially under DAC6 and DAC7).([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))
- **Tailored thresholds and exemptions**: e.g. DAC7’s monetary threshold for digital platform income being raised to €3,000, removal of certain hallmarks, and excluding companies subject to Pillar 2 from some DAC6 reporting.([eur-lex.europa.eu](https://eur-lex.europa.eu/legal-content/DE/ALL/?uri=celex%3A52026PC0308&utm_source=openai))
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## Business & Tax Planning Implications
### Tax Planning
- Companies should monitor whether their group is fully subject to **Pillar 2 minimum effective taxation**, as that could relieve them of certain DAC6 obligations. ([eur-lex.europa.eu](https://eur-lex.europa.eu/legal-content/DE/ALL/?uri=celex%3A52026PC0308&utm_source=openai))
- Entities leveraging cross-border payments (e.g. royalties, interest, dividends) could immediately start planning for reduced withholding tax barriers in intra-EU structures.
### Compliance
- Businesses currently filing under DAC6, DAC7, DAC4/C9 should anticipate revised templates, combined filing deadlines, and modified or discarded hallmarks.
- SMEs and platforms should check thresholds: some will no longer need to report certain types of digital platform income or other low-value cross-border arrangements.
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## Practical Example
Imagine a digital platform-operator in Estonia with sellers throughout the EU. Under current DAC7 rules, they must report income earned by these sellers even for small amounts. Under the new proposal:
- The threshold increases to €3,000, meaning many part-time or incidental sellers won’t trigger reporting.
- The platform may use a single registration point and filing template for all seller information, rather than separate country-by-country obligations.
For multinational groups operating across several EU states, the consolidation of withholding tax rules and unified reporting under the recast DAC means a streamlined system, fewer withholding agents to engage, and less legal uncertainty when moving funds internally.
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## Actionable Steps for Businesses
1. **Map current DAC obligations**: Identify which versions of DAC apply (DAC6, DAC7, etc.), and quantify the cost in preparation, reporting and compliance.
2. **Monitor legislative developments**: The proposals are *proposed*, not yet enacted—watch parliamentary and council votes.
3. **Update internal thresholds & reporting systems**: Especially for digital platform operators and financial entities.
4. **Engage with national tax administrations**: Seek guidance on how new rules will be interpreted locally, including whether transitional reliefs or phased-in implementation will be available.
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## Future Outlook
If adopted, these reforms would substantially simplify cross-border EU business operations, particularly benefiting SMEs by reducing compliance costs by estimates of 25-35% in various reporting regimes. But until the Directives are voted through and adopted, the legal obligations today remain. Businesses should prepare but not assume the rules are in force yet.