Jul 8

2026

EU Tax Simplification Package 2026: How the new Tax Omnibus Directive cuts cross-border red tape

On 24 June 2026, the European Commission adopted its Tax Simplification Package, made up of 2 legislative proposals: the Direct Taxation Omnibus and a recast of the Directive on Administrative Cooperation, known as DAC. The Commission estimates the package could reduce business compliance costs by about €7.9 billion a year, often rounded to €8 billion. It still needs approval through the EU legislative process, so the rules are proposals, not law. For groups operating across the UK to Ireland border, the detail matters, and our look at how the EU’s wider simplification drive affects UK businesses sets the scene.

What the Tax Omnibus Directive actually changes

The Direct Taxation Omnibus amends existing EU tax directives rather than creating a separate new regime. Its main measure is the abolition of withholding taxes on cross-border payments of dividends, interest and royalties between EU companies. The proposal also extends the Parent-Subsidiary Directive to pension institutions, simplifies the interaction between controlled foreign company rules and Pillar Two, updates interest limitation rules, strengthens dispute resolution and widens the Tax Merger Directive to more corporate reorganisations.

Withholding tax is a familiar cash flow drag for anyone who has dealt with it, as our piece on RCT and cash flow for UK contractors in Ireland shows. You can read the European Commission’s announcement in full.

Why it matters if you trade across the Irish border

The key point is that the UK is outside the EU. These proposed exemptions apply to payments between EU companies, not automatically to payments between a UK parent and an EU subsidiary. UK-to-Ireland flows still need to be checked against the relevant domestic law, treaty position and group structure.

An Irish company in your group may benefit on its dealings with other EU entities, while the UK leg of the same structure may not. If you run an Irish subsidiary alongside a UK company, that split is worth mapping now. Our note on UK tax rules when your income spans several countries and our cross-border accounting and tax team can help you see where the benefit lands and where it does not.

The Irish presidency angle

The package arrived just before Ireland took over the rotating presidency of the Council of the European Union on 1 July 2026. Ireland’s presidency programme identifies the Tax Simplification Omnibus and the DAC recast as files intended to reduce complexity and compliance burdens.

That does not mean quick agreement is guaranteed. Direct tax measures are politically sensitive because they can affect national tax revenues, and the Omnibus proposal is based on Article 115 of the Treaty on the Functioning of the European Union, which involves a special legislative procedure. The draft currently says Member States would need to adopt national rules by 31 December 2028, with most provisions applying from 1 January 2029, although some measures have later start dates.

Our review of Ireland’s rising tax receipts and what cross-border businesses should watch puts that context in place.

Reporting, restructuring and the practical read

Beyond withholding tax, the DAC recast trims reporting. It removes certain DAC6 reporting obligations for about 3,000 groups already under the 15% global minimum tax, reduces other DAC6 reporting volumes by 35%, and raises the online sales reporting threshold for goods. It also introduces a single notification process for country-by-country reporting and top-up tax information returns.

The same direction can be seen in the UK through our Making Tax Digital explainer. If a reorganisation or treaty timing gap creates pressure, early recovery and restructuring advice helps. And because anti-abuse rules remain in place, clean records still matter if a dispute or forensic accounting review follows.

Plan around it before it becomes law

If your group has entities on both sides of the border, the sensible move is to review your dividend, interest and royalty flows now. Work out which flows may sit inside EU exemptions and which still depend on treaties or domestic law. Our SME business solutions and cross-border specialists at SCC Chartered Accountants can map your structure and keep your planning grounded while the proposal works its way through Brussels.