Tax Omnibus and DAC Recast: key points for Luxembourg

On 24 June 2026, the European Commission published the Tax Omnibus proposal (COM(2026) 560) and the DAC Recast (COM(2026) 308), aiming to reduce administrative burdens and compliance costs in order to strengthen European competitiveness.

These two initiatives provide not only for simplification measures but also introduce a new incentive for R&D expenses, as well as new or adjusted anti-avoidance measures, as detailed below.

The Tax Omnibus aims to amend six European Union (EU) directives: the Interest and Royalties Directive (IRD), the Parent-Subsidiary Directive (PSD), the Tax Merger Directive (TMD), the Anti-Tax Avoidance Directive (ATAD), the Dispute Resolution Mechanism Directive (DRM), and the Directive for a Faster And Safer Relief of Excess Withholding Taxes (FASTER).

On the other hand, the DAC Recast aims to amend the Directive on Administrative Cooperation (DAC), in particular with regard to DAC6, DAC7 and DAC4/DAC9.

The tables below are not exhaustive but rather summarize the most relevant measures for Luxembourg taxpayers.

Tax Omnibus

Key measures

For a comprehensive overview, please refer to the Euro Tax Flash from KPMG’s EU Tax Center.

DAC recast

For a comprehensive overview, please refer to the Euro Tax Flash from KPMG’s EU Tax Center.

What’s next?

Both proposals follow the special legislative procedure under Article 115 TFEU, which requires unanimous approval by the EU Council, following non-binding opinions by the European Parliament and any relevant Committees.

On this basis, while the impact of both proposals will need to be carefully monitored, their provisions may still be subject to in-depth discussions in Council working groups and could undergo substantial changes.

Regarding the Tax Omnibus, the European Commission envisages a general application date of 1 January 2029, with two deferred blocks:

1 January 2037

the IRD and PSD changes.
1 January 2032

the mandatory ILR safe harbor with HICP indexation.

As for the DAC Recast, the main measures should apply as follows:

DAC6 & DAC7

as from 1 January 2028.
DAC4 / Pillar 2

as from 1 January 2030.

We recommend that stakeholders map their existing Luxembourg structures and begin assessing the potential adverse tax implications and opportunities brought by this new tax directive. While the legislative process is at an early stage and most measures will not apply immediately, certain provisions will require action ahead of their entry into force. It is therefore never too early to assess the evolving landscape.