Expected simplifications in the EU Tax Omnibus

The European Commission is set to publish its Tax Omnibus proposal soon, as part of a broader initiative to simplify corporate income taxation and reduce administrative burdens across the EU.

Rather than introducing a whole new regime, the Tax Omnibus is intended to streamline and align several existing EU directives.

Ahead of the expected publication of the Tax Omnibus on 24 June 2026, our experts discuss a number of themes that are likely to be included. To date, no official draft has been published. Our expectations are based on various public sources claiming knowledge of the Omnibus. The actual contents may differ from the general expectations.

Streamlining of existing corporate income tax directives

The proposal is expected to revise EU directives such as ATAD, the Parent‑Subsidiary Directive, the Interest and Royalties Directive and the Merger Directive. It follows a request for feedback from interested parties by the European Commission in February 2026 and prior targeted consultations.

In practice, this is expected to lead to clearer and more uniform definitions. For example, the concept of a ‘beneficial owner’ in the Interest and Royalties Directive is sometimes interpreted differently between member states, leading to disputes. Similarly, elements of the Merger Directive could be clarified further, simplifying cross‑border reorganisations.

From a Dutch tax perspective, potential changes to the treatment of dividend withholding taxes under the Parent-Subsidiary Directive have led to surprise. If true, these leaked changes might lead to new considerations for investors at the personal income tax level.  

Reducing overlap with Pillar Two and anti‑avoidance rules

Another key focus is likely to be the interaction between ATAD and Pillar Two. A practical example concerns the treatment of certain Controlled Foreign Companies: the CFC rules. Under the current rules and guidance, overlap may occur between the CFC rules and Pillar Two rules regarding the same low‑taxed income. The Omnibus could reduce or eliminate such duplication, for instance by carving out entities already subject to effective minimum taxation.

Likewise, hybrid mismatch rules are under scrutiny. Where Pillar Two already aims to neutralise certain outcomes, maintaining parallel anti‑hybrid provisions may be seen as unnecessarily burdensome. We may see simplification in the near future.

Finally, it is expected that new measures to support research and development (R&D) will be introduced. This may take the form of an EU-wide minimum level of deductibility for R&D expenses, ensuring full tax-deductibility of certain R&D costs. It remains to be seen how exactly this will take form.

Changes to interest limitation (earnings stripping) rules

The ATAD earnings stripping rule has been widely criticised for its rigidity and inconsistent national implementation. In the Netherlands, it has been under fire for having been implemented particularly strictly, with rigorous effects for sectors such as real estate.

The Omnibus is expected to revisit these rules. Potential changes could may include:

• streamlining the rules within the EU;

• sector‑specific refinements for industries such as real estate which are disproportionately affected;

• addressing the needs of small and medium enterprises; and

• carry‑forward or carry‑back adjustments to better reflect volatility in earnings. 

Reducing compliance burdens and improving certainty

A central policy objective is to reduce administrative burdens by at least 25%. Concrete improvements may include streamlining the documentation requirements for various forms of legislation, and more consistent dispute resolution procedures under the Tax Dispute Resolution Mechanisms Directive. Businesses currently facing double taxation disputes may for example soon benefit from faster and more predictable resolution timelines.

In addition, simplification could include removing redundant reporting where similar information is captured in multiple ways.

Legal force and implementation timeline

The Omnibus is expected to take the form of a directive, eventually requiring unanimous approval by all Member States. As a result, final adoption is unlikely to occur before 2027.

The process of transposition by individual member states often allows for a transition period, in order to align national rules and update administrative practices. It remains to be seen from what date the directive could apply, assuming unanimous approval can be reached.

Would you like to know more about how these developments may affect your business? Reach out to our experts for further guidance.

The legislation and regulations in this area may be subject to change. We recommend that you discuss the potential impact of this with your Baker Tilly advisor.