Tax Planning
Preparing for Simplified Tax Reporting under DAC Recast & Direct Tax Omnibus
The EU is introducing sweeping simplification in direct taxation and administrative cooperation—cutting costs by over €1B/year while removing burdensome obligations for many businesses.
By NomadicTax Research Team • 6-7 min read • September 14, 2026
## Overview of the Simplification Package
On **24 June 2026**, the European Commission proposed a tax simplification package with two pillars:
1. **Direct Taxation Omnibus**: reforming corporate tax directives to remove withholding taxes on cross-border payments of dividends, interest and royalties within the EU, expanding tax-neutral treatments for reorganisations, and refining limitation of interest deductions. ([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))
2. **Recast of the Directive on Administrative Cooperation (DAC)**: consolidating nine existing DAC directives into a single framework, cutting duplication, simplifying rules, and reducing reporting volume by ~35% for certain cross-border tax arrangements. Estimated savings: **€1+ billion annually** 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?utm_source=openai))
## What’s Changing Specifically
| Current Rule | Proposed Change | Impact for Businesses |
|---|---|---|
| Withholding tax on intra-EU payments | Abolition between EU companies | Improves cash-flow, reduces compliance burden for financial and royalty flows cross-border. ([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)) |
| Multiple DAC obligations (DAC4, DAC9, etc.) | Single notification filing where possible, harmonised templates and deadlines | Fewer filings, less time coordinating data across entities. ([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)) |
| DAC6 hallmarks with limited added value | Removal of hallmarks in category A; clearer guidance on MBT (mandatory disclosure) | Less risk of over-reporting, more focused compliance. ([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)) |
## Preparedness Tips for Businesses
- **Map your current reporting obligations**: identify where you report under DAC6, DAC7, DAC4, DAC9 etc. Highlight filings that may become obsolete or consolidated.
- **Track transactions involving cross-border royalties, interest, dividends** to understand cash flow gains from withholding tax abolition.
- **Upgrade IT and data systems** in advance to match forthcoming harmonised formats and templates.
- **Engage with tax advisors or specialist teams** to interpret how the MBT (mandatory disclosure test) and thresholds will shift under recast.
## Case in point
A medium-sized EU company with subsidiaries in several member states currently files under DAC4 for country-by-country, under DAC9 for Pillar 2 purposes, under DAC7 if it operates platforms, etc. Under the recast, these could be merged into fewer filings, with streamlined data requirements and common deadlines—saving both time and cost.
## Timeline & Next Steps
- Legislative process ongoing: proposal now under review by European Parliament and Council. Adoption expected over **2026-2027**. ([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))
- Entities should monitor draft amendments and national implementation plans.
**Category:** Tax Planning
**taxHome:** EU
**Who benefits most:** Multinational companies, digital platforms, financial services, groups with complex tax structures across member states.