Tax Planning

Planning Tax Strategy Around the EU’s New Tax Simplification Package

EU businesses should proactively adapt tax strategies due to major proposed changes targeting direct taxation and administrative cooperation that promise billions in compliance savings.

By NomadicTax Research Team • 6 min read • August 18, 2026

## Background of the Simplification Package On **24 June 2026**, the European Commission adopted a landmark **Tax Simplification Package**, consisting of two legislative proposals: 1. A **Direct Taxation Omnibus** to modernise rules like ATAD and remove withholding taxes across EU cross-border payments; and 2. A **Recast of the Directive on Administrative Cooperation (DAC Recast)**, consolidating DAC rules and streamlining reporting obligations. ([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)) These reforms are projected to reduce compliance costs by ~**€8 billion annually**, including €3.3 billion just in reduced administrative burdens for businesses. ([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 Tax Planning Moves Should Businesses Consider? | Area | What’s Changing | Planning Implications | |---|---|---| | **Withholding Taxes Removal** | Cross-border payments of dividends, interest and royalties between EU companies will no longer incur withholding tax. Pension institutions also included under Parent-Subsidiary 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)) | Businesses should review cross-border financing and investment structures to maximise tax efficiency under the new exemption rules. Adjust intra-group capital flows or dividend distribution timing accordingly. | | **Full Expensing for R&D Tangible Assets** | A **common minimum standard** will allow *full and immediate expensing* for R&D-related tangible fixed assets. ([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)) | Entities investing in labs, equipment or prototypes should accelerate their capital expenditure plans to benefit early, particularly SMEs planning growth. | | **CFC Rules and Pillar Two Alignment** | The Omnibus simplifies overlap between Controlled Foreign Company rules and **global minimum tax (Pillar Two)** frameworks to reduce double requirements. ([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)) | Multinationals should reassess foreign entities—reducing redundant reporting, avoiding over-compliance costs. Likely adjusting where profits accumulate. | | **Interest Limitation under ATAD** | Eliminates certain implementation options and raises the mandatory de minimis threshold. Excludes low-risk third-party borrowing and market-based financing. ([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)) | Businesses with heavy debt financing should check if their arrangements qualify for exclusion or higher thresholds. Interest overhangs or legacy financing could be optimized. | ## Compliance Timeline and Risks - These proposals must still be **adopted by the European Parliament and Council**. Only after adoption do they become binding. ([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)) - Current tax-efficient structures based on existing Directives (ATAD, Parent-Subsidiary, etc.) may become suboptimal; transition risks involve early planning versus waiting for final wording. - Misinterpreting proposed rules (e.g. scope of “low-risk borrowing” or the threshold for full expensing) can lead to unexpected tax exposure or lost opportunities. --- ## Actionable Steps for Businesses 1. **Perform a gap analysis** against current intercompany finance and investment flows—seeing where withholding taxes still apply and where they will be removed. 2. **Model R&D capex**: if you have planned investments, simulate full expensing under different timelines to understand cash flow benefits. 3. **Review entities in low-tax jurisdictions** or applying CFC rules: map overlaps with upcoming Pillar Two obligations to simplify compliance. 4. **Engage with tax authorities or advisors** ahead of final adoption to anticipate divergences in implementation across member states and possible compliance costs. 5. **Remain flexible**: design structures that can adapt depending on whether the simplification proposals retain particular thresholds or exemptions in final EU law. --- ## Example Scenario Suppose a German-based company has an Irish subsidiary paying royalties to an EU parent; currently, they pay a withholding tax in Ireland. After the Omnibus comes into force, that payment could become exempt under the Parent-Subsidiary Directive extension, improving cash flows and simplifying tax filings. Similarly, an R&D lab in Spain investing in advanced equipment can immediately expense those purchases once full expensing is adopted, potentially saving tens of thousands in corporate tax and improving investment returns. --- ## Summary The EU’s tax landscape is shifting rapidly: the tax simplification package offers **opportunities** in improved cross border investment, R&D spending, and debt financing. However, **timing**, **interpretation**, and **structure** matter. Businesses that stay ahead—model effects, adapt structures, and anticipate implementation details—stand to reap real benefits under the upcoming reform.