EU: Tax simplification package adopted by European Commission
Designed to simplify EU tax rules, coordinate with Pillar Two rules, and reduce compliance burdens for businesses
The European Commission (EC) on June 23, 2026, adopted a tax simplification package comprised of two proposals—the Direct Taxation Omnibus and the Recast of the Directive on Administrative Cooperation (DAC)—designed to simplify EU tax rules and reduce compliance burdens for businesses.
The Direct Taxation Omnibus would:
- Exempt all cross-border payments of dividends, interest, and royalties between companies in the EU from withholding tax
- Introduce a common minimum standard of full and immediate expensing of investments in research and development (R&D)-related tangible assets
- Modernize the interest limitation rule in the Anti-Tax Avoidance Directive (ATAD) by eliminating implementation options, making the de minimis threshold mandatory, and excluding low-risk third-party borrowing and market-based financing arrangements from the scope of the rules
- Remove overlapping provisions between the controlled foreign company (CFC) rules and the Pillar Two rules
- Expand the Tax Merger Directive to cover all forms of corporate reorganizations recognized under EU company law
Read a June 2026 report prepared by KPMG’s EU Tax Centre
The DAC Recast would:
- Remove reporting obligations for multinational enterprise (MNE) groups subject to the Pillar Two rules, and for all other EU businesses for certain cross-border tax arrangements that provide limited added value for tax administrations
- Increase the reporting threshold for the online sales of goods, removing reporting obligations on over 10 million private sellers
- Introduce a new verification tool for taxpayer identification numbers
Read a June 2026 report prepared by KPMG’s EU Tax Centre
The package is intended to modernize the EU's direct tax framework and strengthen the competitiveness of the single market, while maintaining existing protections against tax fraud, evasion, and avoidance. The package is expected to save EU businesses around €8 billion annually, of which €3.3 billion is in administrative costs.
Next steps
The package will now be submitted to the European Parliament for consultation and the EU Council for adoption.
Read the EC release and the related EU Taxation and Customs Union release