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The DAC Recast & Taxation Omnibus: Simplifying EU Reporting and Reducing Burdens
EU is codifying all DAC changes and eliminating redundant reports—learn how MNEs (especially those under Pillar 2) will benefit, and what steps they must take.
By NomadicTax Research Team • 5-8 min read • August 22, 2026
## What Is the DAC Recast and Tax-Omnibus Package?
On **24 June 2026**, the European Commission proposed two landmark legislative changes: the **Direct Taxation Omnibus** and the **Recast of the Directive on Administrative Cooperation (DAC)**. These are aimed at reducing compliance burdens, clarifying the legal framework for tax cooperation, and supporting cross-border investment.([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)) The combined proposals are expected to save **€7.9 billion annually**, including €3.3 billion in administrative cost reductions 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?prefLang=fi&utm_source=openai))
## Major Reforms & Effect on Businesses
- **Codification of DAC1-DAC9** into a single coherent legal instrument—greater legal certainty and simpler framework.([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/taxation/tax-transparency-cooperation/administrative-co-operation-and-mutual-assistance/directive-administrative-cooperation-dac_en?utm_source=openai))
- **Abolition of withholding taxes** on cross-border payments of dividends, interest, and royalties between EU companies—level playing field for intra-EU investments.([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))
- **Reporting obligations trimmed**:
• Reporting on cross-border tax arrangements (DAC6) cut for companies already under Pillar 2, for example.([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))
• Overall reporting pushed down by ~35%, saving ~€40 million annually.([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))
- **Higher thresholds for online sales**: Many private sellers and small platforms will no longer need to report certain sales particularly of second-hand or low-value goods.([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))
## Example Applications
- A multinational enterprise (MNE) subject to Pillar 2: instead of multiple top-up tax filings in every Member State, may only file centrally under DAC9-aligned rules.
- A small online seller in Poland selling used goods via platforms: formerly obligated under DAC7/DAC6; new thresholds may remove obligation.
- EU companies paying royalties to another EU company: no withholding tax after implementation—reduces cash flow friction.
## Compliance Action Plan
1. **Track legislative progress**: the proposals are not yet enacted. Expect timelines for adoption and transposition; watch the Council and Parliament debates.
2. **Audit current reporting landscape**: identify which DAC reporting obligations your business complies with now—DAC6 (arrangements), DAC7 (platforms), DAC9 (top-up tax returns), etc.
3. **Evaluate if Pillar 2 applies**: if so, many DAC6 obligations may be scaled back.
4. **Update internal reporting & IT systems** to match forthcoming harmonisation. Ensure data quality (especially TINs etc.) for cross-border information exchanged.
5. **Review intra-EU cross-border flows** of interest, dividends & royalties: plan for elimination of withholding tax impacts post-Omnibus.
## Risks & Challenges
- **Member States transposition delay**: national legal changes often lag EU directives.
- **Legal alignment**: ensuring that national implementing laws match the EU-wide standard without unintended gaps.
- **SMEs & platforms** might struggle initially with new reporting thresholds or lost obligations—they must assess whether alleviation applies.
- **Maintaining anti-avoidance tools**: simplification shouldn’t weaken mechanisms detecting tax abuse.
## When & What to Expect Next
- The **DAC Recast Proposal** was unveiled on 24 June 2026; now moves through the EU legislative process.
- Member States will need to transpose the resulting directive once adopted—likely in 2027.
- Businesses should prepare now—review contracts, reporting capacities, cross-border payment flows—and monitor deadlines closely.
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These reforms could reshape reporting requirements, ease cross-border trade within the EU, and impact everything from large multinationals under Pillar 2 to small platform sellers. Whether you’re planning structuring, operations, or expansion, understanding DAC recast and the Omnibus will be essential. For guidance, advisory sources like KPMG and EY offer detailed breakdowns when draft texts come out.