Luxembourg: The tax simplification omnibus is now open to public comment, and the holding structures and treasury centres clustered in the Grand Duchy are among the businesses with most at stake. The European Commission launched a consultation on 10 September 2026 on its proposal to amend six existing EU direct tax directives, inviting feedback in all EU languages through the Have Your Say portal until midnight Brussels time on 5 November 2026.
The package is the direct tax strand of the Commission’s broader drive to cut compliance burdens, and several of its changes are substantial. It would remove minimum holding requirements for withholding tax exemptions under both the Parent-Subsidiary Directive and the Interest and Royalties Directive, widening the range of intra-group payments that can flow across borders free of withholding tax. It would introduce a new EU-wide research and development allowance under the Anti-Tax Avoidance Directive, delete the imported hybrid mismatch rule, add a Pillar Two carve-out and an exemption for small and medium-sized enterprises from controlled foreign company rules, and make the 30 per cent EBITDA cap mandatory for the interest limitation rule.
Supporters present the omnibus as overdue housekeeping. The Commission itself has acknowledged that the gradual accumulation of EU tax legislation has increased reporting complexity for both national administrations and cross-border business. At a European Parliament subcommittee hearing on tax matters on 7 September, the Commission’s presentation of its Annual Taxation Report argued that competitiveness should be pursued by taxing better rather than simply taxing less. Speakers from the taxpayer community called for simpler, more predictable rules for smaller firms, while Bruegel’s Pascal Saint-Amans observed that EU tax policy is shifting its emphasis from fighting evasion towards growth.
Scepticism is equally visible. Several MEPs at the same hearing asked whether the omnibus could make avoidance easier, and how it would treat large digital multinationals. On 10 September the Parliament’s Economic and Monetary Affairs Committee adopted recommendations on corporate tax strategy, drafted by Hungarian MEP Kinga Kollár, that regret the weakening of the global minimum tax through the side-by-side arrangement agreed with the United States. The committee asked the Commission to publish an impact assessment of that arrangement, including possible revenue losses for member states, and to re-examine its BEFIT proposal in light of Pillar Two. The report goes to a plenary vote in October.
The tax simplification omnibus also sits alongside a contested debate over the EU Inc. or 28th regime. At a Council working party on 10 September, around 19 member states reportedly raised concerns about including tax provisions for employee stock options in a regulation that does not require unanimity, a reminder that direct taxation remains jealously guarded national territory. Amendments to the direct tax directives themselves need unanimous agreement in the Council, which gives every capital a veto over the final shape of the reform.
For advisers and in-house tax teams, the practical task over the next six weeks is to model how the removal of holding thresholds, the new R&D allowance and the mandatory interest cap would interact with existing national regimes. Those responses will feed the Commission’s case in Council, where the balance between simplification and protection of the tax base will decide how much of the tax simplification omnibus survives into law, and how quickly.
