The tax simplification package that the European Commission adopted on 24 June 2026 is now in the hands of finance ministers, and it can only become law if every member state agrees. Both proposals rest on Article 115 of the Treaty on the Functioning of the European Union, a special legislative procedure that requires unanimity in the Council and gives the European Parliament only a consultative role. The Commission estimates that businesses would save about €7.9 billion a year in compliance costs.

The package has two parts. The first is a recast of the Directive on Administrative Cooperation that folds nine existing directives into a single instrument. The second is a direct taxation omnibus that amends the Interest and Royalties Directive, the Parent-Subsidiary Directive, the Tax Merger Directive, the Anti-Tax Avoidance Directive and the rules on resolving tax disputes. The Commission says the recast alone would cut compliance costs by more than €1 billion a year.

The recast removes reporting on cross-border arrangements for about 3,000 multinational groups already covered by the 15 percent Pillar Two minimum tax, saving roughly €300 million a year. It raises the threshold for reporting online sales of goods from €2,000 to €3,000, which would lift obligations from more than ten million sellers and save platforms €678 million. It also replaces two separate filings, country-by-country reporting and the top-up tax information return, with a single group notification. Intermediaries would get 90 days rather than 30 to report an arrangement.

The omnibus in the tax simplification package is the harder sell. It sets a uniform interest limitation of 30 percent of EBITDA and makes a €3 million safe harbour mandatory from 2032. It also removes minimum holding requirements in the Interest and Royalties and Parent-Subsidiary Directives and ends the need for prior authorisation for withholding tax relief, with eligibility checked afterwards. Several of its main changes would apply only from 2029, and the deepest ones from 2037, so the package asks capitals to agree rules whose benefits arrive over a decade.

History is the main obstacle for the tax simplification package. Earlier unanimity files such as the Unshell proposal, the DEBRA proposal and the transfer pricing directive stalled, and all three were listed for withdrawal in the Commission Work Programme 2026. Commissioner Wopke Hoekstra has said the package supports a simplification agenda that has already delivered more than €18 billion in savings, almost half the mandate goal, while Valdis Dombrovskis has stressed that the tax simplification package keeps tax transparency and fairness intact.

The practical question for negotiators is whether to treat the two proposals as one bargain or to split them. Reporting reductions in the recast are easier for most governments to accept than limits on national interest deduction rules or the loss of authorisation checks on withholding tax. Any split would shrink the headline savings.

The coming months will show whether the tax simplification package follows the stalled files or becomes the rare tax measure to clear the Council. The deadline that matters is the first application date, and the dates in the text remain placeholders until ministers settle them.