Compliance
How the EU’s Tax Simplification Package Will Change Your Business Reporting
An in-depth guide to the European Commission’s recent Direct Taxation Omnibus and DAC recast proposals, and what they mean for cross-border businesses in terms of compliance costs, reporting duties, and withholding taxes.
By NomadicTax Research Team • 5-8 min read • August 24, 2026
## What is the Tax Simplification Package?
- On **24 June 2026**, the European Commission adopted a sweeping tax simplification package including two major legislative proposals: the **Direct Taxation Omnibus Directive** and the **Recast of the Directive on Administrative Cooperation (DAC)**. These proposals are designed to modernise the EU’s direct tax framework and streamline reporting and administrative processes. ([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))
- The aim is to reduce compliance burdens for businesses, boost competitiveness, and save approximately **€7.9 billion** per year in business compliance costs. ([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))
## Key Changes to Watch
### Withholding Taxes on Cross-Border Payments
- A central feature is the **abolition of withholding taxes** on cross-border payments of dividends, interest, and royalties between EU companies. This is expected to remove a major barrier to intra-EU 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?prefLang=fi&utm_source=openai))
### DAC Framework Overhaul
- Reporting under **DAC6** will be refined: companies subject to the global minimum tax (Pillar 2) may be **excluded** from certain reporting requirements, and some DAC6 hallmarks with low added value may be removed. ([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))
- Combined filings and harmonised templates will be introduced for **DAC4 (Country-by-Country Reporting)** and **DAC9 (top-up tax information return)**. One uniform notification obligation, common deadlines, and a central filing system are in view. ([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))
- DAC7 thresholds will be adjusted—the monetary threshold increased, and in some cases, activity thresholds removed. This lessens obligations for small platforms and borderline cases. ([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))
## Impacts for Businesses: Examples & Insights
### Scenario A: SME with Cross-Border Investments
If your company pays royalty payments to a sister company in another EU state, under the current regime, you may withhold tax or process refunds. When the Omnibus Directive is enshrined, such withholding should be **abolished**, simplifying cash flows and administrative work.
### Scenario B: Multinational Group under Pillar 2
Such groups often face numerous reporting obligations under different DAC directives. The new package allows for **single notifications** for DAC4 and DAC9, saving repeated filings and lowering expenses. ([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))
### Scenario C: Digital Platforms and Small Sellers
Platforms facilitating sales of goods by small or private sellers (e.g. second-hand goods) will see fewer reporting burdens—thresholds will change, removing many sellers from scope and easing compliance demands. ([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))
## What’s Next: Timeline & Action Points
| Stage | Expected Timeline | What Businesses Should Do |
|---|---|---|
| Proposal adoption by Parliament & Council | Still pending; ongoing through rest of 2026 | Track legislative progress; prepare for transitional rules |
| Transposition into Member States’ laws | Likely 2027–2028 | Review national implementation; examine how ‘exclusions’ are recognised locally |
| Becoming effective | Varied dates depending on directive & measure | Update internal reporting processes; adjust contracts for cross-border payments |
## Actionable Advice
- Consult with tax counsel to understand how **Pillar 2 global minimum tax** interacts with DAC exclusions.
- Revisit withholding tax exposure in contractual relationships—are you withholding unnecessarily once the directive is in force?
- Audit current reporting systems for DAC6, DAC4, DAC9 to see where data overlaps, then streamline.
- Monitor national legislations—Member States may interpret thresholds or exclusions differently; maintain consistent documentation especially regarding beneficial ownership and TIN verification.
## Takeaway
The Commission’s tax simplification package is one of the most ambitious changes in EU tax policy in recent years. For businesses operating across borders in the EU, these measures promise significant relief from repetitive reporting, withholding tax traps, and administrative overheads. Those who act early—assessing their current exposure, updating systems, and staying on top of legislative adoption—stand to benefit the most.