Compliance
Navigating DAC Recast & Taxation Omnibus: What EU Businesses Must Prepare For
A landmark package aims to simplify EU direct taxation and administrative cooperation rules—bolstering compliance while easing burdens with €8 billion in estimated annual savings.
By NomadicTax Research Team • 5-8 min read • August 11, 2026
## What’s Changing with the New Tax Simplification Package?
In **June 2026**, the European Commission introduced a twin-proposal package: the **Taxation Omnibus Directive** and the **Recast Directive on Administrative Cooperation (DAC Recast)**. These reforms are targeted at simplifying EU direct taxation, refining compliance obligations, and removing outdated provisions across key directives such as ATAD and DAC. **The goal?** Reduce administrative costs by nearly **€8 billion per year**, including over **€3 billion in annual administrative relief**.([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 Proposals to Note
- **Withholding Taxes Removed:** Proposal to abolish withholding taxes on **cross-border payments** between EU companies (dividends, interest, royalties), supporting freer capital flow.([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))
- **Eligibility & Reporting Thresholds Adjusted:** Refinements to DAC6 hallmarks, raising monetary thresholds for DAC7, and aligning DAC4 & DAC9 filing requirements for multinational groups.([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))
- **Administrative Tools Improved:** Measures include better TIN verification, streamlined templates, and single central filings for certain cross-border reports.([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))
## Practical Impacts for Businesses
- **Multinationals** preparing for Pillar 2 compliance should monitor DAC6 changes—if excluded from certain reporting, that can simplify their compliance burden significantly.([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))
- **SMEs** may see relief via higher thresholds under DAC7, along with less demanding reporting standards and guidance under the recast DAC.([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))
## Actionable Steps to Take Now
1. **Map your current tax reports** under DAC4, DAC6, DAC7, and DAC9 to anticipate which ones may change.
2. **Monitor timelines**, as drafts require approval (Parliament & Council) — early implementation planning is critical.
3. **Update compliance systems** especially for TIN verification and cross-border reporting templates to stay aligned with upcoming regulatory templates.
4. **Engage with tax advisors** to recalibrate cash-flow projections tied to cross-border revenues and withholding tax exposure.
## Example Scenario
A mid-sized German exporter routinely pays royalties to a related company in EU member state Lithuania. Currently, withholding tax applies. Under the new Omnibus proposal, that tax would be eliminated, improving cash flow. Simultaneously, reports like DAC6 may see reduced obligations if hallmarks of limited value are removed, trimming the burden of disclosure.
## Final Thoughts
These reforms mark a shift towards simplification and coherence in the EU tax regime. While preserving standards to counter tax avoidance, the reforms promise tangible efficiency gains. Businesses that lean into the changes early—reviewing reporting obligations, updating systems and internal processes—stand to benefit the most from the transition.