Compliance
Navigating the EU’s Tax Simplification Package: What Businesses Need to Know
A major EU package promises to reduce compliance costs by around €8 billion annually by overhauling DAC and direct tax rules—find out what this means for cross-border business.
By NomadicTax Research Team • 5-8 min read • August 10, 2026
## Background
In **June 2026**, the European Commission adopted a **Tax Simplification Package** aimed at making the EU tax framework more streamlined, especially for businesses with cross-border operations. The package comprises two major legislative proposals: the **Direct Taxation Omnibus Directive** and a **Recast of the Directive on Administrative Cooperation (DAC)**. ([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 being simplified
Here are the key changes:
- **Abolition of withholding taxes**: Cross-border payments of dividends, interest, and royalties between EU companies will no longer be subject to withholding taxes under the Omnibus directive. ([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))
- **Streamlined DAC reporting**: The recast removes or reduces reporting obligations where the benefit is limited or where other compliance regimes already apply (e.g., Pillar 2 minimum tax). Reporting under DAC6, DAC7, DAC4, and DAC9 is simplified. ([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))
- **Thresholds and hallmarks revisited**: Certain low-value or low-risk reporting requirements are eliminated. Monetary thresholds for cross-border arrangements will be adjusted. Guidance on hallmarks in DAC6 will be refined. ([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))
## Who benefits most
| Stakeholder | Benefit |
|-------------|---------|
| **SMEs** and sellers of second-hand goods | Fewer reporting requirements; seen in DAC recast impacts. ([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)) |
| **Multinational enterprise (MNE) groups under Pillar 2** | Some DAC obligations (e.g. DAC6 reporting and certain hallmarks) are removed for companies already under Pillar 2. ([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)) |
| **Cross-border investors** | No more withholding on dividends, interest, royalties boosts cash-flow and simplifies investment. |
## Actionable Steps for Businesses
1. **Map your current compliance obligations under DAC**: Understand which DAC instruments apply (DAC1, 4, 6, 7, 9), and review your exposure to revised hallmarks or thresholds. If you’re under Pillar 2, check which obligations are removed or changed.
2. **Review withholding tax exposure**: If your business pays or receives dividends, interest or royalties cross-border in EU, assess withholding rates in national law and coordinate with the Omnibus timetable.
3. **Watch for national implementation**: These are EU directives and proposals. Member States must transpose or adapt their laws accordingly. Transitional periods and deadlines matter.
4. **Update internal reporting systems and tax risk policies**: The revisions will reduce some requirements but may place increased emphasis on accuracy, transparency, and timely reporting. Make sure your tools and processes are compliant.
## Example
Suppose a German SME selling digital second-hand goods across the EU: under DAC recast, some reporting obligations that formerly applied—especially for low monetary thresholds—may be removed, lowering your legal-administrative costs. Meanwhile, if you receive royalty payments from another EU member state, under the Omnibus directive, these may soon be exempted from withholding tax, improving net income.
## Outlook and Timeline
- The proposals are now in legislative process. Member States and the Council will debate and vote.
- Potential implementation dates are expected in **late 2026 or early 2027**, depending on the rate of adoption in each Member State.
- Businesses should monitor national transposition as delays or variations are common.
**Bottom line:** If your business operates across EU borders, especially in digital, finance, or investment sectors, the Tax Simplification Package could deliver tangible relief—but staying ahead of changes will require careful legal and operational work.