Compliance
Tax Simplification Package: What EU Businesses Need to Know Now
The European Commission’s Tax Simplification Package of June 2026 introduces sweeping changes across DAC, cross-border taxation, and investment rules, aiming to cut compliance costs by nearly €8 billion. Here’s what businesses should be preparing for now.
By NomadicTax Research Team • 5-8 min read • August 21, 2026
## Overview of the Tax Simplification Package (June 24, 2026)
In June 2026, the European Commission adopted a tax simplification package, featuring two major proposals: the **Direct Taxation Omnibus Directive** and the **Recast of the Directive on Administrative Cooperation (DAC)**. These aim to modernise the EU’s direct tax framework, reduce unnecessary burdens, and strengthen competitiveness. ([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))
The package is estimated to generate around **€7.9 billion per year** in savings for businesses, with about **€3.3 billion** in reduced administrative (recurring) costs. ([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))
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## Key Policy Changes Businesses Should Oversee
| Area | What’s Changing | Why It Matters – Practical Impacts |
|---|---|---|
| **Withholding Taxes on Intra-EU Payments** | EU is proposing to abolish withholding taxes on cross-border payments of dividends, interest, and royalties between EU companies. Pension institutions will also benefit under Parent-Subsidiary Directive expansion. ([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)) | EU multinationals can expect smoother cash flows and fewer withholding tax issues. Pension funds investing cross-border will also see lighter withholding burdens. |
| **Immediate Expensing for R&D-Related Tangible Assets** | Common minimum standard proposed: Member States would allow **full and immediate expensing** of qualifying R&D tangible assets. ([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)) | Businesses investing in innovation can accelerate depreciation deductions, improving after-tax returns. Companies should evaluate investment planning to take advantage when enacted. |
| **CFC Rules and Pillar Two Harmonisation** | Simplified rules, removal of overlapping requirements etc. ([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)) | Better consistency across member states; less risk of conflicting tax outcomes. Multinationals with controlled foreign entities need to watch for changes. |
| **Interest Limitation and ATAD Updates** | Mandatory de minimis thresholds increased; exclusions for low-risk third-party borrowing and market-based finance arrangements. ([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)) | Companies with lean capital structures or financing via markets may find exemptions. Need to assess if financing patterns qualify. |
| **DAC Recast: Admin Cooperation & Reporting** |
- Reporting obligations cut for some multinational groups under Pillar Two.
- Cross-border tax arrangements with limited added value: some eliminated.
- Thresholds raised for digital platforms and online second-hand goods sellers.
- Single filing for country-by-country reports and top-up tax returns. ([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)) | These reduce reporting costs significantly. Companies should audit existing reporting processes; platforms and SMEs should check if new thresholds apply to them. |
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## What This Means for Different Stakeholders
- **SMEs & Platforms**: Many small businesses will benefit from reduced reporting obligations under DAC-recast and higher thresholds in ViDA (see below). Platforms dealing in second-hand goods, short-term rentals, or ride-sharing should review new definitions.
- **Multinational Enterprises**: Changes to CFC and Pillar Two interactions, abolishing withholding taxes, and simplified DAC rules are especially relevant. Must track when reforms pass into law.
- **Pension Funds & Institutional Investors**: Expansion of withholding tax relief means repositioning investments across the EU to more optimal jurisdictions may become more attractive.
- **Tax Administrations**: Will need to update systems for DAC recast, automate single notifications, set up new thresholds etc. Clear guidance will follow adoption.
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## Key Dates & Timeline for Implementation
- **Proposal published**: 24 June 2026. ([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))
- **Legislative process**: These are **proposals**; need adoption by the European Parliament and Council. Status: **Proposed**, not yet enacted.
- **ViDA (VAT in the Digital Age) package context**: Already adopted; certain ViDA measures (OSS/IOSS changes, e-invoicing etc.) already in progressive implementation. Major ViDA reforms span to 2035. ([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/taxation/vat/vat-digital-age-vida_en?prefLang=da&utm_source=openai))
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## Action Plan for Businesses & Tax Professionals Now
1. **Gap Analysis**: Map current cross-border dividend/interest/royalty flows to identify exposures to withholding taxes.
2. **Review R&D investments**: Ensure tangible-asset investments align with upcoming expensing rules.
3. **Audit reporting & compliance processes** under DAC: country-by-country reporting, notifications, etc.
4. **Monitor legislative progress**: Track when proposals are adopted, effective dates.
5. **Engage in consultation**: Member States and businesses will have formal stages; submissions can shape final rules.
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By understanding these developments now, companies can plan ahead to minimize tax costs, streamline operations, and reduce administrative burdens once reforms are in force.