Tax Planning
Tax Simplification in the EU: How the New Omnibus Package Affects Multinational Corporations
The EU’s 2026 tax simplification package brings sweeping reforms to withholding tax, ATAD interest limitation, CFC rules, and DAC reporting – game-changers for multinationals with cross-border operations.
By NomadicTax Research Team • 5-8 min read • August 25, 2026
## Overview
In June 2026, the European Commission introduced a major **Tax Simplification Package** comprising two legislative proposals: the *Direct Taxation Omnibus* and a **recast of the Directive on Administrative Cooperation (DAC)**. These reforms aim to streamline EU direct tax law, reduce compliance burdens, and preserve fairness. ([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 Changes with Practical Impacts
| Area | What’s Changing | What This Means for Multinationals |
|---|---|---|
| Withholding Taxes | Elimination of withholding taxes on dividends, interest, and royalties between EU companies; pension institutions also benefit via the Parent-Subsidiary Directive. | Reduces tax cost and friction in intra-EU group payments; improves cash flow and investment returns. |
| ATAD Interest Limitation Rules | Removal of certain implementation options; raised **de minimis** threshold; exclusion of low-risk third-party borrowing and market-based financing arrangements. | Companies can use more flexible financing without triggering strict ATAD limits. |
| CFC Rules & Pillar Two Alignment | Harmonised CFC model; overlapping requirements reduced; clearer alignment with Global Minimum Tax (GMT) rules (Pillar 2). | Simplifies global compliance; reduces legal risk of double-counting or overlapping rules. |
| DAC Reporting Obligations | Reporting on cross-border tax arrangements is removed for ~3,000 MNEs already subject to the 15% minimum tax; reporting reduced ~35% for others in limited-value cases; streamlined country-by-country and top-up tax notification consolidated. | Significant annual savings (hundreds of millions of euros); less duplicative burdens. |
## Example Scenarios
1. **EU-based tech MNE** paying royalties to its subsidiary in another EU state will no longer suffer withholding tax – easing reuse of profits within the group.
2. **An investment firm** with R&D infrastructure across multiple Member States can now expect full and immediate expensing of R&D-related tangible assets in all those states, improving investment decisions.
3. **Mid-sized firm** previously disclosing many cross-border tax arrangements under DAC will now likely have fewer disclosures if already under Pillar 2, cutting preparation time and legal fees.
## Actionable Steps for Businesses
- **Review financing structures**, particularly third-party debt and inter-group loans, to see where ATAD rules may be eased.
- **Reassess group operations in low-tax jurisdictions** in light of revamped CFC rules and Pillar 2 minimum tax to avoid unexpected top-up obligations.
- **Update compliance calendars** to account for the consolidated reporting obligations and eliminate redundant filings under DAC.
- **Engage with tax advisors** now to assess how immediate expensing for tangible R&D assets can be utilized in upcoming budgets or investment plans.
## Bottom Line
The EU’s 2026 tax simplification drive isn't just regulatory window-dressing. It marks a concrete shift toward a more competition-friendly tax environment. For multinationals, the new rules promise savings, fewer obligations, and greater certainty—but only if you adapt proactively.