Tax Planning

How the EU’s Tax Simplification Omnibus Revolutionizes Cross-Border Taxation

The EU’s June 2026 Omnibus proposal promises sweeping changes: abolishing withholding taxes between member companies, simplifying DAC reporting, and reinforcing Pillar Two rules.

By NomadicTax Research Team • 5-8 min read • August 27, 2026

## What is the Omnibus and DAC Recast Package? In **June 2026**, the European Commission proposed a landmark tax simplification package comprising two core legislative changes: the **Direct Taxation Omnibus Directive**, and the **Recast of the Directive on Administrative Cooperation (DAC)**. These proposals are designed to reduce complexity, compliance burdens, and cross-border tax barriers 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)) ## Major Provisions and Their Impacts ### 1. Abolition of Withholding Taxes Between EU Companies One of the clearest signals from the Omnibus: dividends, interest, and royalty payments made **between companies in different EU Member States** will no longer be subject to withholding taxes. The Parent-Subsidiary and Interest & Royalty Directives are being updated to achieve this, including extending **withholding tax exemptions to pension institutions**. This shifts financial flows within the Single Market toward greater efficiency. ([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)) ### 2. Harmonizing Pillar Two & Controlled Foreign Company (CFC) Rules to prevent double rules and inconsistent application, the Omnibus aligns existing CFC regimes with the EU’s global minimum tax (Pillar Two) framework. Overlap is reduced, and clearer guidance is proposed for consistency. Businesses operating across borders should expect more predictable rules for low-tax jurisdictions. ([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)) ### 3. DAC Recast: Simplification of Reporting Obligations The DAC Recast initiative folds nine existing DAC directives into one clearer legal instrument. Key changes include: - Removing certain low-value or limited provenance hallmarks so that over **10 million private sellers** (for example, in second-hand goods or platforms) are removed from onerous DAC reporting. ([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/document/download/bee8b767-1f9e-44aa-9910-faa8bc31a880_en?filename=190626_Tax+Simplification+Package_Factsheet_.pdf&utm_source=openai)) - Creating a **single notification obligation** that covers both country-by-country reporting (DAC4) and top-up tax returns under Pillar Two (DAC9), streamlining administrative interactions. ([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/document/download/bee8b767-1f9e-44aa-9910-faa8bc31a880_en?filename=190626_Tax+Simplification+Package_Factsheet_.pdf&utm_source=openai)) ### 4. Removing Complexity in Deduction and Interest Limit Rules the Omnibus proposes to improve the usability of ATAD’s (Anti-Tax Avoidance Directive) interest limitation provisions by increasing the **mandatory de minimis threshold** and excluding low-risk third-party borrowing and market-based financing from its scope. This brings relief for many small and medium enterprises and certain financing arrangements. ([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)) ## Practical Steps for Businesses & Tax Planners - **Start assessing cross-border group payments**: If your company pays royalties, dividends, or interest to colleagues in other EU MS, planning ahead is crucial to take advantage of the upcoming abolition of withholding taxes. - **Review Pillar Two compliance**: Check whether your CFC rules are aligned and whether central filing options for top-up taxes might apply under the new single notification structure. - **Evaluate platform-based and cross-border digital activities**: Sellers/leasing/rental through platforms may benefit from reduced DAC7 burdens—consider whether your activities qualify for exemptions or simplified treatment. - **Consult local ATAD implementations**: As the EU simplifies interest limitation and CFC rules, national legislations may differ currently; align your financing decisions with future changes. ## Example Scenarios - A French parent company receiving royalties from its Irish subsidiary will likely see withholding tax eliminated under the new Omnibus framework. - A multinational group with €800 million revenue earning entities in several EU countries may only need **one notification** covering both country-by-country reporting and top-up tax returns, rather than separate filings. - An online marketplace with thousands of private sellers in multiple Member States may no longer need to gather or report certain transaction data under DAC7 for small-value sales. ## Timelines & What Remains Proposed vs Enacted As of late August 2026, these rules are **proposals** that have been adopted by the European Commission, but they must be negotiated with the European Parliament and Council, and then formally enacted and transposed into national law. Stakeholders should monitor adoption, but already prepare for change. **Stay updated** via official EU sources (e.g., EC Taxation & Customs Union, EUR-Lex).