Concept
On 24 June 2026 the Commission adopted two proposals that together form the EU tax simplification package. The first is a recast of the Directive on administrative cooperation in the field of taxation, COM(2026) 308 final, 2026/0168 (CNS): everything from DAC1 to DAC9 is consolidated into a single instrument, and reporting is cut back inside it. The second is the omnibus, COM(2026) 560 final, 2026/0163 (CNS), which amends six directives at once: the Interest and Royalties Directive (2003/49/EC), the Tax Merger Directive (2009/133/EC), the Parent-Subsidiary Directive (2011/96/EU), the Anti-Tax Avoidance Directive (2016/1164), the Dispute Resolution Mechanisms Directive (2017/1852) and FASTER (2025/50).
The direction of travel is unfamiliar. Since 2011 every successive revision of the Directive on administrative cooperation added a new reporting perimeter: financial accounts, tax rulings, country-by-country reporting, cross-border arrangements, digital platforms, crypto-assets, the top-up tax information return. The 2026 package moves the other way — it deletes hallmarks, raises thresholds and lengthens deadlines. The Commission estimates the combined compliance saving at around EUR 7.9 billion a year, of which roughly EUR 6.6 billion comes from the omnibus.
What applies, and from when
| Instrument | What it amends | Transposition | Application |
|---|---|---|---|
| Omnibus, COM(2026) 560 final | IRD, Tax Merger Directive, PSD, ATAD, Dispute Resolution Mechanisms Directive, FASTER | 31 December 2028 | 1 January 2029 |
| DAC recast, COM(2026) 308 final — first tranche | Arrangement reporting (hallmarks, deadlines, carve-out) and the goods threshold for platforms | [31 December 2027] | [1 January 2028] |
| DAC recast — second tranche | The remaining cooperation machinery, the single country-by-country notification, TIN verification | [31 December 2029] | [1 January 2030] |
The DAC recast dates appear in the proposal in square brackets — placeholders the Council will fill on adoption. The omnibus dates carry no brackets, and they are what gives the 2029 horizon that planning should be measured against.
Arrangement reporting: what the DAC recast changes
The carve-out for groups within the minimum tax perimeter
The Commission's reasoning is straightforward: where the 15% minimum effective rate under Directive 2022/2523 operates, aggressive tax planning is expected to be neutralised anyway, and groups within the Pillar Two perimeter already face close scrutiny from dedicated audit teams. The carve-out reaches around three thousand groups.
The mechanism narrows the definition of a cross-border arrangement rather than exempting the reporting person: an arrangement falls outside reporting where each of its participants belongs to a group within the scope of Directive 2022/2523 or, for third countries, the OECD Model Rules. Inside that condition sits the side-by-side fork: where the ultimate parent entity is located in a jurisdiction with a qualified side-by-side regime, the carve-out applies only if the participant is subject to a qualified domestic top-up tax for the tax period and no refund or direct or indirect financial benefit is granted in relation to that tax.
Hallmarks: what is deleted and what is rewritten
Category A is deleted in full. These are the three generic hallmarks — the confidentiality condition, the intermediary's fee tied to the tax advantage, and substantially standardised documentation. The Commission's stated reason is that their generic nature generates disproportionate reporting of little value to administrations. The definitions of "marketable arrangement" and "bespoke arrangement" go with them, and with those the quarterly update reports on marketable arrangements.
Hallmark C1 survives but changes its frame of reference. It currently points to jurisdictions assessed as non-cooperative by Member States collectively or within the framework of the OECD; the proposal replaces the reference to OECD work with a reference to the work of the Code of Conduct Group (business taxation) of the Council — the body that maintains the EU list of non-cooperative jurisdictions and assesses harmful regimes.
Hallmark D2 — a non-transparent legal or beneficial ownership chain using persons or structures that do not carry on a substantive economic activity supported by adequate staff, equipment, assets and premises — keeps its existing wording. What changes is who fills it with content: Article 52 of the proposal requires the Council, on a Commission proposal, to adopt within five years of the directive's entry into force an implementing act establishing the applicable criteria for points (a) and (b) of Hallmark D2. The proposal does not transplant ready-made substance criteria into the text and does not rewrite the gateway criteria of the withdrawn Unshell proposal into it — it creates the power to develop them.
Deadlines, intermediaries and legal professional privilege
The intermediary's reporting deadline moves from 30 to 90 days, and the starting point changes with it. Today the clock starts on the earliest of three events: the arrangement is made available for implementation, is ready for implementation, or the first step in its implementation has been made. The proposal keeps a single trigger — the first step in implementation — and defines it: a concrete measure, an initial verifiable act which materialises the intent and makes execution irreversible or legally binding, such as the signing of contracts that enable implementation. The separate 30-day period for intermediaries providing aid, assistance or advice is retained in the proposed text.
Legal professional privilege is rewritten in line with recent CJEU case law. The waiver moves from a Member State option to an obligation, but the protected circle narrows: privilege applies only to lawyers and other professionals who, like lawyers, are authorised under national law to ensure legal representation. A lawyer practising under one of the professional titles referred to in Article 1(2)(a) of Directive 98/5/EC is not obliged to notify another intermediary who is not their client; notifying their own client of that client's obligation, without delay, remains required. Other professionals authorised to ensure legal representation but not practising under such a title are not granted the privilege, and the existence of the consultation is brought to the attention of the notified intermediary and ultimately of the tax authorities.
Platforms and duplicate notifications
The reporting threshold for sales of goods through platforms rises from EUR 2 000 to EUR 3 000, and the activity threshold (fewer than 30 relevant activities in the reporting period) is removed altogether. The stated motive is support for the circular economy in second-hand goods; on the Commission's figures the change reaches more than ten million sellers.
The second technical item is notifications. Today every entity in a group subject to country-by-country reporting and to central filing of the top-up tax information return notifies its tax authority twice, on different timelines. The proposal lets the group file one notification per group for both purposes, on a single common template, on the country-by-country timeline — the last day of the group's fiscal year.
The omnibus: substantive rules
ATAD: interest, CFCs, hybrids
The rules on imported hybrid mismatches are removed. The Commission accepts that their application has proved particularly complex for taxpayers and administrations alike; the rest of Article 9 stays.
The interest limitation rule ceases to be a minimum standard and becomes a single figure: 30% of EBITDA across all Member States, with no room for a Member State to set a lower threshold. The EUR 3 million safe harbour becomes mandatory within the first three years of the directive's entry into force and gains automatic annual indexation to inflation; the option to exclude standalone entities is removed as redundant. Alongside these: a carve-out for loans granted by non-associated enterprises, conditional on their funding the borrowing taxpayer's own activities rather than on-lending within the group; a safeguard against procyclicality, so that no limitation applies in a year in which the taxpayer's EBITDA falls by 50%; and the group escape rule and the carry-forward mechanism become mandatory.
The controlled foreign company rules are narrowed from both ends. The first exemption is for taxpayers within the Pillar Two perimeter: the objective and effects of CFC rules significantly overlap with the income inclusion rule, and all EU-located companies obtain the carve-out for their low-taxed subsidiaries. The exception mirrors the one in the DAC recast: a group headquartered in a jurisdiction operating a qualified side-by-side regime, whose low-taxed controlled foreign subsidiary is not subject to a qualified domestic top-up tax or, where it is, receives a refund or another financial benefit in relation to that tax. The second exemption is for small and medium-sized groups: in roughly ten years of ATAD, administrations have had almost no CFC cases involving them. Model B is deleted, leaving Model A as the only available approach. The general anti-abuse rule moves the other way and is broadened, so that its wording covers all direct taxes companies are subject to, including withholding taxes and top-up taxes under Directive 2022/2523.
A separate block writes an R&D allowance into ATAD: qualifying capital expenditure is deducted either immediately or over any of the four subsequent tax periods, with a requirement to use the asset for R&D for at least three years and with withdrawal and balancing-charge rules on disposal.
Interest, royalties and dividends
The Interest and Royalties Directive and the Parent-Subsidiary Directive are amended symmetrically, both towards a wider exemption from withholding tax. The minimum holding requirement is removed from the concept of "associated company" in the first and from the concept of "parent company" in the second: the exemption stops depending on the level of participation. The PSD additionally derogates from the subject-to-tax condition for pension funds irrespective of legal form, while the option to deny deduction of charges relating to the holding is confined to cases of a relevant holding of 10%.
Procedure changes harder than substance. Member States lose the power to require prior authorisation or an administrative procedure to verify the conditions of the exemption at the time of payment: eligibility is self-assessed by the taxpayer and checked ex post, with anti-abuse rules and beneficial ownership rules preserved. Where the payer objectively cannot verify eligibility at the time of payment, two routes operate: fast-track FASTER procedures for publicly traded securities, and standard domestic refund procedures within a reasonable time for everything else. A safeguard against double non-taxation sits alongside: where the recipient is established in a jurisdiction that levies no corporate income tax or applies a zero rate to interest and royalty flows, and the source Member State does not withhold either, that State must either levy withholding tax or deny deductibility — except where the recipient is subject to a qualified domestic top-up tax with no refunds or benefits, or belongs to a group within the minimum tax perimeter.
The Tax Merger Directive is aligned with EU company law: the simplified merger and the division by separation from Directive 2017/1132 as amended by Directive 2019/2121 are brought within its definitions, and a new chapter extends tax neutrality to cross-border operations that include a transfer of a company's office.
Dispute resolution
The main change is the point of exit into arbitration. Today the taxpayer waits out the two-year mutual agreement period; the amendment to Article 4 requires the competent authorities to inform the taxpayer without delay once it is clear that no agreement can be reached, so the arbitration phase opens earlier. Alongside: the concept of "simultaneous submission" is replaced with a 30-calendar-day window; where several persons are affected, each may file in its State of residence or one may file for all; and an alternative dispute resolution commission may be set up for questions of admissibility as well.
What this means for planning today
The 2029 horizon reads literally: a structure being assembled in late 2026 will reach the new regime in working order, which makes it too early to build assumptions about future simplification into it and unwise to ignore them. Three practical consequences.
- Existing obligations are performed in full. The 30-day reporting deadline, all five hallmark categories including Category A, the current platform thresholds, the imported mismatch rules, national interest thresholds and prior authorisation under the IRD and PSD are law, and until the Council adopts, none of it is repealed.
- Substance remains the point where a decision is taken today. Hallmark D2 survives, and its criteria will be written by the Council in an implementing act only after the directive enters into force. A structure that passes the "staff, equipment, assets and premises" test now is more likely to be refined by that detail than broken by it; a structure that fails the test will be finished off by it.
- Calculations sensitive to interest deductibility and to CFC rules are worth running in two scenarios. The single 30% figure and the mandatory EUR 3 million favour those currently sitting under a stricter national threshold; the CFC exemptions for groups within the minimum tax perimeter and for small and medium-sized groups change the model at the top and the bottom of the scale but not in the middle.
Procedure works against this horizon. Unanimity in the Council on tax is the barrier that stopped Unshell, DEBRA and the transfer pricing directive: all three remained proposals and were listed for withdrawal in the Commission Work Programme 2026 of 21 October 2025. No element of the package should be treated as settled before a text adopted by the Council and published in the Official Journal.
Risks
Q/A
Can Category A hallmarks be dropped from reporting now?
No. Category A is deleted by a Commission proposal of 24 June 2026 that the Council has not adopted. Under the first tranche of the recast, transposition is set for 31 December 2027 and application for 1 January 2028, and both dates appear in the text in square brackets as placeholders. Until national law introduces the new version, all five categories of Annex IV and the 30-day deadline apply.
Our group is within the Pillar Two perimeter. Does arrangement reporting fall away?
Only where every condition of the carve-out is met. An arrangement falls outside reporting where each of its participants belongs to a group within the scope of Directive 2022/2523 or, for third countries, the OECD Model Rules. Where the ultimate parent entity sits in a jurisdiction with a qualified side-by-side regime, the participant must additionally be subject to a qualified domestic top-up tax and receive no refund or direct or indirect financial benefit in relation to it. The Commission itself calls the carve-out narrow and targeted: any benefit that lowers taxation below 15% switches it off.
Does the proposal transplant the withdrawn Unshell substance criteria into Hallmark D2?
No. The text of Hallmark D2 is unchanged — a non-transparent ownership chain using structures that do not carry on a substantive economic activity supported by adequate staff, equipment, assets and premises. Article 52 of the proposal empowers the Council, on a Commission proposal, to adopt within five years of entry into force an implementing act establishing the criteria for points (a) and (b) of that hallmark. What those criteria will contain is not known today.
What happens to a national interest limitation threshold below 30%?
Under the omnibus the 30% of EBITDA figure becomes uniform across all Member States, and a Member State can no longer set a lower threshold. The EUR 3 million safe harbour becomes mandatory within the first three years of the directive's entry into force and is indexed to inflation annually; the option to exclude standalone entities is removed. The omnibus is to be transposed by 31 December 2028 and applied from 1 January 2029, and until then national rules stand as they are.
With the holding threshold gone from the Interest and Royalties Directive, does withholding disappear entirely?
The minimum holding requirement is removed from the concept of "associated company" and the exemption stops depending on the level of participation, but a safeguard is placed next to it. Where the recipient is established in a jurisdiction that levies no corporate income tax or applies a zero rate to interest and royalties, and the source State does not withhold either, that State must either levy withholding tax or deny deductibility of the payment. The safeguard does not bite where the recipient is subject to a qualified domestic top-up tax with no refunds or related benefits, or belongs to a group within the minimum tax perimeter.
When do prior authorisation procedures for source relief disappear?
On the text of the omnibus, from 1 January 2029: Member States lose the power to require prior authorisation or an administrative procedure to verify the conditions of the exemption at the time of payment, eligibility being self-assessed and checked ex post. For publicly traded securities, where the payer does not know the investor, the omnibus extends the scope of FASTER — but the FASTER procedures themselves apply only from 1 January 2030. In all other cases excess tax is refunded through standard domestic procedures within a reasonable time.