Tax Planning
How the EU’s Tax Simplification Package Transforms Tax Planning for Cross-Border Businesses
Discover how the June 2026 tax simplification proposals reshape planning strategies for companies operating across EU borders—from withholding taxes to DAC reforms.
By NomadicTax Research Team • 5-8 min read • August 17, 2026
## Background of the Simplification Package
On **24 June 2026**, the European Commission adopted a comprehensive tax simplification package. It includes two legislative proposals: the **Direct Taxation Omnibus Directive** and the **Recast of the Directive on Administrative Cooperation (DAC)**. Its aim is to modernize the EU’s direct tax rules, reduce compliance burdens, and improve competitiveness across the Internal Market. ([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 Changes for Tax Planning
**1. Abolition of Withholding Taxes**
The Omnibus Directive proposes to remove withholding taxes on cross-border payments—dividends, interest and royalties—between EU companies. For corporate groups operating in multiple Member States, this means eliminating what has been a significant friction in intra-EU financing. ([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. Streamlined DAC Reporting**
The recast simplifies the Directive on Administrative Cooperation by consolidating multiple amendments into one coherent legal instrument. Key design changes:
- Reporting obligations reduced for multinational groups already subject to the 15% global minimum tax under **Pillar 2**, saving about **€300 million/year**. ([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 certain obligations for other companies (including SMEs) for cross-border tax arrangements with limited value—expected to reduce reporting volumes by roughly **35%** and save €40 million annually. ([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 Planning Considerations
- **Revise Withholding Strategies**: Corporates should review how dividend-, interest-, and royalty-flowing entities were structured; plans involving intercompany financing across borders likely benefit immediately.
- **Align with Pillar 2**: Since DAC reforms reduce reporting for Pillar 2 covered groups, companies in scope need to assess letting Pillar 2 rules displace older DAC obligations.
- **Anticipate Directive Adoption**: These are **proposals**—though approved by Commission, not yet enacted. Legal uncertainty remains until Council & Parliament agree. Differences in national adoption timing will matter.
## Example Scenario
Suppose a Group headquartered in Netherlands with subsidiaries in Germany, Spain and Poland. Prior to Omnibus, Dutch company paying royalties to Spain could face withholding in Spain. After the abolition under Omnibus, substitution occurs—no withholding; smoother cash flow.
With DAC recast, group already reporting under Pillar 2 may no longer need to submit separate DAC6-type reports in some cases, reducing administrative cost.
## Action Steps
- Inventory your cross-border payments (dividends, interest, royalties) to detect where withholding tax currently applies.
- Check whether you're subject to Pillar 2 global minimum tax & ensure compliance, as simplified DAC obligations hinge on that scope.
- Monitor Member States' ratification and transposition to grasp when rules become effective in your jurisdictions.
- Maintain proper documentation and treaty analysis, in case transitional issues or grandfathering arise.
**Concluding Note:** This simplification package promises **€7.9 billion/year in savings** and improved legal clarity—but companies must act proactively to benefit. ([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))