Overview of the Simplification Package
On 24 June 2026, the European Commission proposed a tax simplification package with two pillars:
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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)
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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)
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) |
| 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) |
| 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) |
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)
- 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.