EU tax simplification package: streamlining EU tax rules

On 24th June 2026, the European Commission adopted a tax simplification package aimed at reducing compliance burdens, improving legal certainty and strengthening the EU’s competitiveness as a destination for investment and cross-border business.

The package forms part of the EU’s wider simplification agenda and consists of two legislative proposals, the Direct Taxation Omnibus and a recast of the Directive on Administrative Cooperation (“DAC”). These measures are intended to modernise and simplify existing tax rules while maintaining safeguards against tax avoidance and evasion.

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The direct taxation omnibus

The Direct Taxation Omnibus proposes targeted amendments to several existing EU direct tax directives. The key proposed changes include:

• ‍Simplified withholding tax relief: the proposal would significantly simplify the withholding tax framework under the Parent-Subsidiary Directive (“PSD”) and the Interest and Royalties Directive (“IRD”), including the removal of minimum holding requirements and, ultimately, the exemption of qualifying intra-EU dividends, interest and royalties from withholding tax.‍
• Modernisation of the Tax Merger Directive: the scope of the directive would be widened to cover newer forms of corporate reorganisations and cross-border conversions.‍
• Revisions to Anti-Tax Avoidance Directive (“ATAD”) rules, including:
  
  • a new EU-wide R&D allowance;
  • streamlined interest limitation rules
  • targeted relief from Controlled Foreign Company (“CFC”) obligations for certain groups already within the scope of the Global Minimum Tax Framework (“Pillar Two”); and
  • the removal of imported hybrid mismatch provisions.

• Enhancements to the Dispute Resolution Mechanism Directive: the proposal would facilitate quicker and more efficient resolution of cross-border tax disputes.

Overall, the proposal seeks to reduce complexity, remove outdated provisions and better align EU tax legislation with recent international tax developments.

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DAC recast

The second proposal consolidates the existing directives into a single legislative instrument. At the same time, it introduces several simplification measures including:

• ‍DAC6 reforms: including an exemption from certain reporting obligations for groups subject to the Pillar Two framework, the removal of certain hallmarks, and an extension of reporting deadlines from 30 to 90 days.‍
• DAC7 simplifications: the proposal increases the monetary reporting threshold for sales of goods from €2,000 to €3,000 and removes the activity threshold.‍
• Single notification process: a simplified notification process for groups subject to both DAC4, relating to Country-by-Country Reporting (“CbCR”), and DAC9, relating to Pillar Two reporting.‍
• EU-wide TIN verification: the introduction of an EU-wide Tax Identification Number verification system to improve data quality and facilitate information exchange between Member States.

Taken together, the recast seeks to make administrative cooperation across the EU more consistent, efficient, and data driven.

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What happens next?

The proposals will now be submitted to the European Parliament for consultation and to the Council of the European Union for adoption.

For businesses operating across borders within the EU, the package is one to watch. Although the timeline of the adoption remains uncertain, businesses should monitor developments and assess the potential impact on their tax compliance and reporting obligations.