Tax Planning
Simplification Package 2026: How the Tax Omnibus and DAC Recast Will Reduce Costs for EU Businesses
The EU’s new tax simplification measures aim to cut compliance costs by around €8 billion per year—here's what you need to know to prepare your business.
By NomadicTax Research Team • 5-8 min read • September 3, 2026
## What’s in the 2026 Tax Simplification Package
On 24 June 2026, the European Commission announced a comprehensive **tax simplification package**, including the **Taxation Omnibus Directive** and the **Recast of the Directive on Administrative Cooperation (DAC)**. Expected to deliver around **€8 billion in annual cost savings** for businesses across the EU, that includes reducing compliance burdens and streamlining cross-border tax interactions. ([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))
Key reforms include:
- **Eliminating withholding taxes** on intra-EU payments of dividends, interest, and royalties between companies. The Parent-Subsidiary Directive’s scope will also extend to pension institutions. ([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))
- **Unified treatment of R&D capital**: Member States will adopt full and immediate expensing for investment in R&D-related tangible assets, boosting investment and simplifying tax incentives. ([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/document/download/bee8b767-1f9e-44aa-9910-faa8bc31a880_en?filename=190626_Tax+Simplification+Package_Factsheet_.pdf&utm_source=openai))
- **CFC rule harmonisation and overlap removal** with Pillar Two to reduce complexity. ([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))
- **Interest limitation rules** modernized with increased de minimis thresholds; low-risk external borrowing arrangements may be excluded. ([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))
- **Expanded Tax Merger Directive** to include all corporate reorganisations under EU company law for tax neutrality. Cross-border reorganisations to be 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))
- Under DAC recast, some reporting burdens cut substantially: for example, certain cross-border arrangements by large MNEs already under Pillar Two may no longer require redundant disclosures. ([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/document/download/bee8b767-1f9e-44aa-9910-faa8bc31a880_en?filename=190626_Tax+Simplification+Package_Factsheet_.pdf&utm_source=openai))
## What Businesses Should Do Now
1. **Map your cross-border payments** of dividends, interest, and royalties; plan for changes once withholding taxes are eliminated between Member States.
2. **Review your R&D investments** in tangible assets to ensure you’ll get full and immediate expensing. If applicable, accelerate or shift investment timing.
3. **Analyse your CFC structures** in light of harmonization with Pillar Two; the overlap removal could impact your tax exposure.
4. **Consider reorganisations**: Merger/division/asset transfer planning should be revisited to leverage the expanded Tax Merger Directive.
5. **Plan for new DAC reporting rules**: Watch for deadlines, threshold changes and filing centralization—especially for multinationals. Ensure internal systems can adapt to reduced but more precise reporting.
## Examples: How This Could Play Out
- A manufacturing group in Germany paying royalties to its French subsidiary currently withholds tax; soon, that withholding may vanish, improving cash flow.
- An SME engaged in R&D in Portugal investing in equipment might see improved depreciation/tax write-offs via immediate expensing once the rules come into force.
- A company with CFC entities in several low-tax jurisdictions might find that certain rules become more consistent, reducing surprises in audits.
## Timeline & Risk Management
- These proposals still require approval by the European Parliament and the Council. Timelines for implementation vary by directive.
- Some Member States may resist certain changes—watch for delaying tactics or transition rules.
- Keep abreast of harmonization to avoid non-compliance due to earlier national rules conflicting with new EU standards.
## Conclusion
The 2026 Simplification Package aims to modernize and streamline direct tax and reporting frameworks in the EU. For corporations, especially MNEs, this presents opportunities not just for cost savings but improved legal certainty. Proper preparation now can ensure your business is one of the beneficiaries once the reforms take effect.