Tax Planning

Navigating the EU’s Tax Simplification Omnibus for Direct Taxation

A detailed breakdown of the EU’s recent Omnibus proposal simplifying withholding taxes, CFC rules and DAC obligations—and how businesses can prepare.

By NomadicTax Research Team • 5‐8 min read • August 31, 2026

## What is the EU Tax Simplification Omnibus? The European Commission on **24 June 2026** adopted a sweeping **Tax Simplification Package** which includes two legislative proposals: the **Direct Taxation Omnibus** and the **Recast of the Directive on Administrative Cooperation (DAC)**. These aim to modernise EU direct tax rules, reduce administrative burden, and improve competitiveness across the Single 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?utm_source=openai)) ## Key Measures and Impacts - **Abolition of withholding taxes** on cross‐border payments (dividends, interest, royalties) between EU companies, unlocking cross‐border 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?utm_source=openai)) - **Extension of the Parent‐Subsidiary Directive** to include pension institutions, enabling them to benefit from withholding tax exemptions on dividends. ([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)) - **Full and immediate expensing** rules for R&D‐related tangible assets in all Member States to incentivise innovation. ([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)) - **Simplification in the ATAD interest limitation rules**, including removing implementation options and increasing the mandatory de minimis threshold to ease compliance. ([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)) - Streamlined **DAC reporting obligations**: * Companies under the EU Minimum Tax / Pillar Two may be excluded from **DAC6** reporting. ([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)) * Removing hallmarks in **DAC6** considered low value; refining just what must be disclosed. ([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)) * Simplification for **DAC7**, via threshold adjustments (e.g. removing the activity threshold, increasing monetary threshold to ~€3,000) for platforms reporting income. ([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)) * Harmonising notifications under **DAC4 and DAC9**, with one template and one deadline. ([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)) * Improving data quality by verifying Tax Identification Numbers (TINs) centrally. ([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)) ## What’s the Timeline? These are **proposals**, not yet laws—they still require approval by the European Parliament and the Council. The changes are expected to **take effect gradually**, following those approvals. ([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)) Implementation will likely lag across Member States, especially for measures needing domestic law changes (e.g. ATAD amendments), or technical infrastructure (DAC tools). ## How Businesses Should Prepare Now - Review existing cross‐border payment structures to anticipate where withholding tax changes could deliver savings. - For pension funds, assess whether they fall under the revised Parent‐Subsidiary Directive scope, and what compliance steps will follow. - Monitor national legislation related to **ATAD interest limitation rules**—estimated thresholds and allowed carve‐outs will matter. - DAC reporting: categorize your arrangements under DAC6/DAC7 now to see whether they may be excluded or simplified under the new rules. - Ensure systems are in place to capture correct TINs, country‐by‐country and top‐up reporting (DAC9), and country‐by‐country reporting (DAC4). ## Practical Example *An EU tech company based in Ireland that currently pays withholding tax on royalty payments to a parent company in Germany may see those payments become tax‐free once the Omnibus rules abolish withholding taxes among EU members.* ## Watch Out For - Final thresholds under DAC7 and DAC6 may differ from proposal—keep up with legislative texts. - Member States may resist loss of revenue from withholding taxes and could delay implementing changes. - Pillar Two interactions—CFC rules standardization aims to reduce overlap, but detailed guidance will be needed to avoid double compliance. **Bottom line:** If you operate across borders inside the EU—particularly in digital services, R&D, or cross‐border payments—this Omnibus could reshape your planning. Prepare now, follow the legislative process, adjust systems, and consider where simplifications will fall in your favour.