Tax Planning

Pillar Two & DAC Recast: Simplifying Reporting Obligations for Multinationals

The EU’s DAC Recast proposal aims to reduce overlapping reporting under DAC6, DAC7, DAC4 & DAC9 and exclude firms already under Pillar Two top-up tax rules—simplification that could cut billions in compliance costs.

By NomadicTax Research Team • 7 min read • August 12, 2026

## Background: Pillar Two Meets DACs The EU implemented the global minimum tax rules through the **Pillar Two Directive (Council Directive (EU) 2022/2523)** requiring multinational enterprise groups with revenues above €750 million globally to calculate a **top-up tax** and file **Top-up Tax Information Returns** under **DAC9**. ([reforms-investments.ec.europa.eu](https://reforms-investments.ec.europa.eu/publications-0/manual-mne-groups-global-minimum-tax-pillar-two-compliance-obligations_en?prefLang=mt&utm_source=openai)) The **Directive on Administrative Cooperation (DAC)** framework now includes multiple DAC-series directives: DAC1 through DAC9, each imposing different reporting obligations across various income types, cross-border arrangements, digital platforms etc. ## What the DAC Recast Proposal Does Announced 24 June 2026 within the EU tax simplification package, the proposal: - **Excludes** all companies already in scope of Pillar Two from reporting the same cross-border arrangements under **DAC6**. - **Refines** DAC6 reporting by removing certain categorisations (“hallmarks”) with limited value (Category A). - **Amends** DAC7 thresholds by removing the activity threshold and increasing monetary thresholds to €3,000 for digital platforms’ seller-income reporting. - **Introduces single notification obligations** combining DAC4 (country-by-country reporting) and DAC9 (top-up tax return) to avoid duplicate filing. - **Improves data quality**, especially by ensuring accurate taxpayer identification numbers (TINs), and removing life insurance products from DAC1 exchanges. ([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)) Estimates: These changes could reduce compliance costs by over **€1 billion annually**, including saving **€300 million** by excluding certain large groups under Pillar Two from overlapping DAC6 reporting, and another **€40 million** by reducing low-value cross-border reporting. Overall savings per the simplification package: ~€7.9 billion/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)) ## Implications for Multinational Enterprises - **Reduced duplication**: If your group already files top-up tax information under Pillar Two, you may not need to report the same arrangements under DAC6. - **Adjusted thresholds and scope**: Lower-value digital platform sellers now have higher thresholds; some hallmarks or obligations removed. - **Simplified processes**: Single notification combining earlier multiple filings, more coherent legal framework (codification of nine DACs). ## Practical Steps for Compliance Planning 1. **Map your current DAC obligations**: List all DAC requirements your firm fulfills (DAC6, DAC7, DAC4, DAC9, etc.) and whether you’re in Pillar Two scope. 2. **Check hallmarks under DAC6**: If some are being removed or refined, assess whether future obligations might reduce. 3. **Prepare for single notifications**: Coordinate internal workflows to align DAC4 & DAC9 filings using common templates and deadlines. 4. **Improve TIN collection & validation**: Ensure your systems collect valid taxpayer identification numbers across jurisdictions. 5. **Watch legislative adoption**: The DAC Recast is proposed; once adopted, member states must transpose into national law—monitor for changes and deadlines. ## Example Scenario A multinational group with €1 billion global revenue currently files Pillar Two top-up return and also full DAC6 reports, plus DAC7 platform income reports from two countries. After recast, overlap reduces: DAC6 may no longer apply for Pillar Two scope matters; DAC7 thresholds increase; DAC4 & DAC9 may be combined. That might drop your total reportable items by 30-50%, reduce admin hours significantly. ## Key Takeaway The EU’s DAC Recast proposal aims at **cutting “double reporting”**, narrowing scope on low-risk disclosures, and making administrative cooperation clearer. If your company is or will be in scope of Pillar Two, the proposed changes provide real relief—but timing, national implementation, and your group’s structure will determine how much you benefit.