On 24 June 2026, the European Commission adopted a package of direct tax simplification proposals covering two draft Council directives. Although the package points towards significant changes in corporate taxation, none of the proposed measures is currently in force.

The package includes two draft directives

The first proposal is the Direct Tax Omnibus Directive, published as COM(2026) 560 final. The second concerns a recast of the Directive on Administrative Cooperation in the field of taxation, commonly known as DAC, and was published as COM(2026) 308 final.

Both proposals have been submitted for consultation with the European Parliament and for further consideration by the Council of the European Union.

The Omnibus proposal covers WHT and debt financing rules

The Omnibus proposal includes several areas relevant to corporate taxpayers.

In the area of withholding tax, it proposes removing minimum shareholding thresholds that currently condition the application of exemptions for dividends, interest and royalties paid between EU companies.

The proposal also provides for harmonisation of the limitation on borrowing costs under the ATAD framework, as well as relief from certain controlled foreign company obligations for entities already subject to the global minimum tax rules under Pillar 2.

It also includes proposals relating to research and development expenditure and procedures for resolving tax disputes between Member States.

DAC is to be consolidated and simplified

The second proposal aims to recast the DAC framework by consolidating nine existing versions of the directive into a single legal act.

The proposed changes include reduced reporting obligations for entities subject to Pillar 2, including in relation to tax arrangements, higher reporting thresholds for digital platforms, and the introduction of a common EU system for verifying tax identification numbers.

The legislative process is only beginning

For corporate taxpayers, the key point is that none of these changes applies yet in its proposed form.

In particular, the Omnibus proposal requires unanimous approval by all EU Member States. This means that the final scope of the rules and the implementation timetable may still change significantly during the negotiations.

Cross-border groups should monitor the legislative process

Although implementation may still be some years away, multinational groups should already follow the development of the proposals.

Particular attention should be paid to areas where the changes could affect intragroup financing structures, dividend policies, withholding tax settlements and reporting obligations.

The key conclusion is straightforward: the European Commission has set out the direction of travel for direct taxation, but the final scope, timing and content of the rules remain open.

Please contact us if your organisation requires support in assessing the potential impact of the proposed changes on its corporate tax position and group structure.