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ARTICLE · 06 NOVEMBER 2026

Tax Simplification Omnibus – Simplifying EU Tax Rules, Reducing Compliance Burdens

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The European Commission's Tax Simplification Omnibus proposes sweeping changes to EU direct tax rules, including the elimination of withholding taxes on intra-EU payments and controversial carve-outs from CFC rules for Pillar Two groups. While promising significant compliance relief for multinational enterprises, the proposals face political headwinds from Member States concerned about revenue impacts and misalignment with OECD standards.

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Caroline Austin
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Olivia Long
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The Tax Simplification Omnibus aims to simplify EU tax rules and reduce compliance burdens for businesses.

What is the Tax Simplification Omnibus?

The Tax Simplification Omnibus aims to simplify EU tax rules and reduce compliance burdens for businesses.

The draft Tax Simplification Omnibus (the “TSO”) was published on 24 June 2026 and will revise the Anti-Tax Avoidance Directive, the Interest and Royalties Directive, the Parent-Subsidiary Directive and the Mergers Directive (together, the “Existing Directives”).

What are the proposed key changes and their practical implications?

Improved treatment of intra-EU payments

The Existing Directives provide for interest, royalties and dividends to be paid between EU-resident counterparties free of withholding tax, provided that the payer and recipient satisfy an association threshold (25% for interest and royalties and 10% for dividends). The association threshold would be removed entirely under the TSO, which would be a welcome

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