KPMG backs EU tax package aimed at cutting compliance costs

The European Commission adopted a two-part tax simplification package that could cut annual compliance costs by about €7.9 billion to €8 billion while sending tax teams back into withholding-tax reviews, reporting maps and transaction structures.

The package, adopted on June 23, 2026, combines a Direct Taxation Omnibus with a recast of the Directive on Administrative Cooperation, better known as DAC. About €3.25 billion of the projected savings would come from recurring administrative burden costs, part of a wider effort to make the EU tax framework more competitive and reduce friction for business across the Internal Market.

For direct tax teams, the biggest changes sit inside the omnibus. The proposal would exempt cross-border dividends, interest and royalties paid between EU companies from withholding tax, introduce a common minimum standard for immediate expensing of certain R&D-related tangible assets, modernize interest limitation rules and remove overlaps between controlled foreign company rules and Pillar Two. It would also expand the Tax Merger Directive to cover more forms of reorganizations.

The DAC recast is aimed at reporting. The directive is the EU framework for mutual assistance and secure administrative cooperation among national tax authorities, and the new version would cut some reporting obligations for multinational groups already dealing with Pillar Two. It would also raise the reporting threshold in online sales, a change that could remove reporting obligations for more than 10 million private sellers, and add a verification tool for taxpayer identification numbers.

The omnibus was due in the second quarter of 2026 and likely in June, after the Commission launched a call for evidence on February 16, 2026. That earlier consultation drew feedback on administrative costs, burdensome procedures, outdated or overlapping rules and differences in interpretation across member states. The broader simplification agenda also aims to cut administrative burdens by 25% for all businesses and 35% for SMEs.