Tax Planning
Tax Simplification Omnibus & DAC Recast: Strategies for Tax Planning in the EU
The EU’s June 2026 Tax Simplification Package proposes sweeping changes—from abolishing withholding taxes to enhancing Pillar Two coherence—that promise planning opportunities for MNEs and SMEs alike.
By NomadicTax Research Team • 5-8 min read • September 5, 2026
## Overview of the Tax Simplification Package
In **June 2026**, the European Commission introduced a two-part package comprising the **Direct Taxation Omnibus (Omnibus Directive)** and the **Recast of the Directive on Administrative Cooperation (DAC)**. These proposals are still under consultation but aim to achieve €7.9-8.0 billion per year in savings 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))
## Key tax-planning features to watch
| Measure | What changes | Who benefits | Timing / Status |
|---|---|---|---|
| Abolition of withholding taxes on cross-border payments (dividends, interest, royalties) between EU companies | Cross-border financing becomes cheaper; no deduction or gross-up for withholding | Multinational Groups headquartered in the EU, group treasuries, internal financing strategies | Proposed in Omnibus; needs adoption by Parliament & Council. ([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))|
| Extended Parent-Subsidiary Directive for pension institutions | Pension funds may receive dividends without withholding deductions; flow-through benefits | Pension institutions in large-capital EU states | As above. ([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))|
| Full and immediate expensing for R&D-related tangible assets | Accelerated deduction of qualifying investment costs; improves cash flow and ROI calculations | Companies investing heavily in R&D facilities and machinery | Under proposal. ([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))|
| Streamlined interaction between CFC rules and Pillar Two Global Minimum Tax (GMT) | Reduce overlapping compliance; clearer guidance on effective tax rate (ETR) computations | Multinational Enterprises with entities in low and high tax jurisdictions | Under proposal. ([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))|
## Actionable tax-planning recommendations
- **Assess your withholding exposure**: If you operate across EU Member States, evaluate implications of withholding tax removal. Consider restructuring intragroup payments to take advantage.
- **R&D asset investment timing**: If proposals adopted, accelerating investment into tangible R&D assets could maximize benefits under full expensing.
- **Review CFC and GMT structure**: Anticipate harmonised CFC rules; ensure your group’s low tax jurisdictions and incentive regimes still comply.
- **Pension and Institutional Investor strategies**: Pension funds should watch extension of exempt flows; could alter investment and capital repatriation strategies.
## What’s still unknown
- **Implementation date**: Proposals need to be adopted and then transposed by member states. No binding effective date yet published.
- **Interaction with national tax law**: Some member states may resist full expensing or loss of withholding tax revenues; transitional rules may apply.
- **Pillar Two safe harbours and overlap**: Specific definitions, thresholds, or exclusions may vary in final text.
## Practical example: SME vs MNE
- An **SME** exporting machinery to other EU Member States could see VAT and indirect cross-border tax savings if withholding taxes are abolished.
- A **Multinational Enterprise (MNE)** using low-tax jurisdictions and benefiting from certain incentives will need to evaluate how the harmonised CFC and Pillar Two rules shift effective tax burdens of cross-border structures. Use this phase to benchmark and possibly re-design group structure before changes become law.
## What to do now
- Monitor legislative progress: Parliament and Council readings, transitional rules.
- Conduct internal impact assessment: cash-flow, tax leakage, incremental compliance costs.
- Engage tax advisors: to map current structure to proposed changes, especially for withholding, CFC, and R&D expensing.
- Adjust forecasts: budgets, investment plans, and withholding obligations in your jurisdictions based on status of proposals.
The Tax Simplification Package offers a rare opportunity for forward-looking tax planning. Early alignment and strategy can deliver material savings and position firms for regulatory certainty.