The European Commission has introduced a major package of proposals intended to simplify direct taxation and reduce reporting burdens across the European Union.
Announced in June 2026, the package consists of two legislative proposals: a Direct Taxation Omnibus and a recast of the Directive on Administrative Cooperation, commonly known as the DAC.
For businesses operating across multiple EU jurisdictions, the proposals could affect withholding taxes, research and development investment, financing arrangements, cross-border reorganisations, tax-dispute resolution and regulatory reporting.
However, the measures are not yet final law. They must proceed through the EU legislative process, and their wording, scope and implementation timetable may change before adoption. Businesses should understand the proposals and prepare for their likely direction without treating them as current legal obligations.
Two proposals with different objectives
The Direct Taxation Omnibus focuses on simplifying substantive tax rules affecting business investment and cross-border activity. It addresses areas such as withholding taxes, R&D expenditure, Controlled Foreign Company rules, interest deductions, tax disputes and corporate reorganisations.
The DAC recast focuses on how tax information is collected, reported and exchanged between EU Member States. It would bring the existing administrative cooperation directives into a more coherent framework while removing some reporting obligations considered duplicative or of limited value.
According to the European Commission’s tax simplification package, the combined proposals could reduce business compliance costs by approximately €7.9 billion.
These projected savings depend on the proposals being adopted and implemented broadly as intended. The final impact on an individual company will depend on its legal structure, activities, financing, reporting profile and the Member States in which it operates.
Proposed removal of withholding taxes on intra-EU payments
One of the most significant Omnibus measures is the proposed abolition of withholding taxes on qualifying cross-border payments of dividends, interest and royalties between EU companies.
Withholding tax can create cash-flow costs and administrative work for cross-border groups. Even where a reduced rate or exemption is available under an EU directive or double-tax treaty, the recipient may need to complete forms, provide tax-residence evidence or claim a refund after tax has been deducted.
Removing qualifying withholding taxes could simplify intra-group payments and reduce delays associated with relief-at-source or refund procedures. It could also make cross-border investment and financing within the EU more efficient.
The proposal would also extend the scope of the Parent-Subsidiary Directive to qualifying pension institutions, allowing them to benefit from withholding tax exemptions on eligible dividends received from other Member States.
Businesses should not immediately change their current withholding treatment. Existing national legislation, EU directives and tax treaties continue to apply until the proposed measure is adopted, implemented and effective.
Groups should nevertheless identify material intra-EU dividend, interest and royalty flows. Understanding where withholding tax currently creates costs or refund delays will help management assess the proposal’s potential value.
Immediate expensing for qualifying R&D assets
The Omnibus proposes a common minimum standard for the tax treatment of investments in tangible assets connected with research and development.
Under the proposal, qualifying expenditure could benefit from full and immediate expensing rather than being deducted gradually through depreciation over several years. This could improve cash flow by bringing forward the tax benefit associated with eligible investment.
The measure is intended to support research, innovation and high-value business activity across the Single Market. Its practical benefit would depend on which assets qualify, how R&D activity is defined and how Member States incorporate the minimum standard into their tax systems.
Businesses considering laboratories, technical equipment, testing facilities or other R&D-related assets should continue applying the rules currently in force. They may, however, wish to improve how proposed investments are documented and classified.
Companies should be able to demonstrate the commercial purpose of an asset, its connection with qualifying R&D activity, the date it entered into use and the accounting treatment applied. Reliable documentation will remain important even if the deduction becomes more generous.
Changes to CFC and Pillar Two interaction
Controlled Foreign Company rules are designed to prevent groups from shifting certain income into low-taxed foreign entities. Pillar Two introduces a separate global minimum tax framework for large multinational and domestic groups.
Where both frameworks apply, businesses may face overlapping calculations, documentation and compliance requirements.
The Omnibus proposes to streamline the relationship between CFC rules and Pillar Two. It would remove overlapping requirements and introduce a more harmonised model for applying CFC provisions across the EU.
For affected groups, greater consistency could reduce uncertainty and duplicated analysis. However, simplification does not necessarily mean that CFC risks disappear. Groups would still need to understand entity-level income, effective taxation, ownership and the functions performed across jurisdictions.
Businesses subject to Pillar Two should map where CFC and minimum-tax calculations currently rely on the same information. They should also identify differences in definitions, data sources and reporting periods that create reconciliation difficulties.
Modernizing the interest-limitation rules
The Anti-Tax Avoidance Directive limits the deductibility of certain borrowing costs. Member States currently have options when implementing aspects of the rules, which can lead to different outcomes across the EU.
The Omnibus proposes to modernise these provisions by reducing implementation options and increasing the mandatory de minimis threshold. It would also exclude certain low-risk third-party borrowing and market-based financing arrangements where there is no significant tax-avoidance concern.
These changes could reduce compliance work for businesses with ordinary commercial financing. A more consistent approach could also make it easier for groups to forecast whether interest expense will be deductible in different Member States.
Companies should continue applying current national interest-limitation rules until any amendments take effect. In preparation, finance teams can maintain clear records separating intra-group borrowing, third-party lending, market financing and borrowing linked to specific investments.
Corpera’s accounting services can support businesses in maintaining reliable financing records and reconciling interest expense with the underlying agreements and general ledger.
Faster resolution of cross-border tax disputes
Cross-border tax disputes can arise when two jurisdictions take different positions on the same income, transaction or transfer-pricing arrangement. Delays in resolving these cases can create double taxation, uncertainty and substantial advisory costs.
The Omnibus proposes improvements to EU tax-dispute resolution mechanisms by addressing procedural issues that can delay or prevent cases from being settled.
A more effective process could give businesses greater certainty when competent authorities in different Member States disagree. It may also reduce the time for which companies must carry uncertain tax provisions in their accounts.
Businesses should still focus on preventing disputes through clear contracts, consistent tax filings, defensible transfer-pricing documentation and evidence of the commercial rationale for cross-border arrangements.
Where a dispute arises, records should be organised early. Relevant returns, assessments, correspondence, agreements, calculations and evidence of tax paid should be retained in a form that can be reviewed across jurisdictions.
Wider tax-neutral treatment for corporate reorganisations
The Tax Merger Directive currently supports tax-neutral treatment for certain qualifying cross-border reorganisations.
The Omnibus proposes expanding the directive to cover all forms of corporate reorganisation recognised under EU company law. This could make it easier to carry out qualifying mergers, divisions, asset transfers and other restructuring transactions without triggering an immediate tax charge solely because of the reorganisation.
The proposal may be particularly relevant to groups consolidating operations, separating business divisions, entering new markets or simplifying legal structures.
Tax neutrality does not mean that a reorganisation can proceed without analysis. Companies would still need to consider commercial substance, valuation, shareholder consequences, accounting treatment, transfer taxes, employee matters and national implementation requirements.
Businesses reviewing their international structure can use Corpera’s corporate administration services to support entity governance, documentation and ongoing compliance across the corporate lifecycle.
Consolidating the Directive on Administrative Cooperation
The DAC framework has been amended repeatedly to introduce reporting and information-exchange requirements covering different areas of taxation.
The proposed recast would consolidate nine existing directives into a single, more coherent legal instrument. The objective is to improve clarity for businesses and tax administrations while removing requirements that duplicate information already available through other reporting frameworks.
Consolidation may make the framework easier to navigate, but it will not eliminate the need for businesses to understand which reporting rules apply to their activities.
Groups should maintain an inventory of their obligations under the DAC framework, including the entities involved, information required, responsible teams and applicable deadlines.
Reduced reporting for certain cross-border arrangements
The DAC recast proposes removing reporting obligations for certain cross-border tax arrangements involving approximately 3,000 multinational groups already subject to the 15% global minimum tax under Pillar Two.
It would also remove selected reporting requirements for other companies, including SMEs, where the arrangements concerned have provided limited value to tax administrations.
The Commission estimates that these changes could reduce the overall volume of relevant reporting by approximately 35%.
This does not mean that DAC6 or cross-border arrangement reporting would disappear. Businesses would still need to determine which arrangements remain reportable under the final rules.
Groups should avoid dismantling existing reporting controls before legislation is adopted. Instead, they can document which reports overlap with Pillar Two or other disclosures and identify where simplification may eventually be possible.
Higher reporting threshold for online sales
The DAC recast also proposes increasing the threshold for reporting online sales of goods through digital platforms.
The measure is intended to remove reporting obligations affecting more than 10 million sellers, particularly private individuals selling second-hand goods. This could reduce administrative work for platforms processing large numbers of low-value or occasional sellers.
Digital platforms would still need reliable methods for identifying sellers, monitoring transaction activity and determining when reporting thresholds are exceeded.
Businesses should wait for the final threshold, definitions and implementation rules before changing seller-onboarding or reporting systems.
Single notifications and improved taxpayer identification
The recast proposes a single notification obligation for country-by-country reporting and the central filing of top-up tax information returns. This is intended to remove duplicated notifications submitted in multiple Member States.
It would also introduce a taxpayer-identification verification tool to help tax administrations match reported information with the correct taxpayer.
For multinational groups, centralised notification could reduce repetitive filings. However, the underlying entity and tax-identification data would need to be accurate and consistent.
Groups should review legal names, tax numbers, ownership data, accounting periods and filing responsibilities across their entity registers. Poor master data can undermine the benefit of a simplified reporting system.
What businesses should do before adoption
The proposals will be submitted to the European Parliament for consultation and to the Council for adoption. The final text may be amended, and implementation may require further action by Member States.
Businesses should therefore focus on proportionate, low-risk preparation:
- Identify which proposed measures could materially affect the group.
- Map significant intra-EU dividends, interest and royalty payments.
- Review planned R&D investment and supporting documentation.
- Identify overlap between CFC, Pillar Two and DAC reporting processes.
- Document third-party and intra-group financing arrangements.
- Maintain complete records for cross-border disputes and reorganisations.
- Review entity and tax-identification data across the group.
- Monitor the legislative process and national implementation plans.
- Avoid changing current tax treatment before new rules become effective.
Corpera’s Tax and VAT services can help businesses distinguish between current obligations and proposed changes, assess potential impact and prepare for implementation.
For groups considering investment, restructuring or international expansion, Corpera’s business advisory services can support commercial and compliance planning across jurisdictions.
The 2026 package signals a meaningful attempt to reduce unnecessary tax administration while maintaining transparency and anti-avoidance safeguards. Its eventual value will depend on the final legislation and its consistent implementation across Member States.
Businesses requiring support in evaluating the proposals can contact Corpera to discuss their structure and priorities.
This article is provided for general information and discusses legislative proposals that may change before adoption. It does not constitute personalised tax or legal advice.
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