The EU tax simplification package is the Commission’s attempt to turn corporate tax compliance from a cost centre into a competitiveness tool. Adopted on 24 June 2026, it bundles a direct taxation omnibus with a recast of the Directive on Administrative Cooperation, and Brussels says it will save business almost €8 billion a year. The Commission opened a public consultation on the direct tax part on 10 September, and it stays open until 5 November 2026.
The direct tax part of the EU tax simplification package amends five existing corporate tax laws: the Interest and Royalties Directive, the Tax Merger Directive, the Parent-Subsidiary Directive, the Anti-Tax Avoidance Directive and the Tax Dispute Resolution Mechanisms Directive. It would end withholding taxes on cross-border dividends, interest and royalties between EU companies. It would also extend the Parent-Subsidiary Directive to pension institutions and widen the Tax Merger Directive to cover more kinds of corporate reorganisation.
Two further changes matter for multinationals. The proposal would harmonise the controlled foreign company regime and align it with the Pillar Two global minimum tax. It would also modernise the interest limitation rules in the Anti-Tax Avoidance Directive and strengthen the machinery for resolving tax disputes between member states.
The second half of the EU tax simplification package deals with tax reporting. The recast consolidates nine existing directives on administrative cooperation into a single legal instrument. According to the Commission, it saves more than €1 billion a year in compliance costs and cuts reporting volumes by 35%.
The detail shows where the EU tax simplification package finds its savings. Removing cross-border arrangement reporting for roughly 3,000 multinational groups that already fall under Pillar Two is worth about €300 million a year. A single notification for country-by-country and top-up tax reporting saves over €260 million annually, while a higher online sales reporting threshold frees more than 10 million sellers from obligations and saves digital platforms €678 million.
Commissioners Wopke Hoekstra and Valdis Dombrovskis have framed the proposals as part of a wider simplification drive. Dombrovskis said the measures cut administrative costs by €3.3 billion a year within the almost €8 billion total, and he put the savings from the whole simplification agenda above €18 billion. The wider goal is a cut of at least 25% in administrative burdens for businesses, and 35% for small firms, by 2029.
The political test for the EU tax simplification package comes next, because tax legislation needs unanimity in the Council. Parliament is only consulted on these files, so its opinion carries political weight but no veto. Member states that guard their tax bases may resist ending withholding taxes, since those levies still bring in revenue and give governments leverage in treaty negotiations.
Business groups will watch the consultation closely, because the headline figure rests on assumptions about how many firms use each provision. Smaller companies gain from the EU tax simplification package only if national tax authorities implement the changes consistently, and uneven transposition could erode the promised savings. Tax advisers also note that harmonising the controlled foreign company rules could raise costs for groups that currently benefit from lighter national regimes.
For companies planning ahead in 2026, the practical message is to respond to the consultation before 5 November and model the effect of the changes on their reporting calendar. Finance ministers will then decide whether the EU tax simplification package keeps its ambition or loses it in negotiation. The outcome will show whether Europe can cut tax red tape without weakening its defences against avoidance.
