COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a COUNCIL DIRECTIVE amending Council Directives 2003/49/EC, 2009/133/EC, 2011/96/EU, (EU) 2016/1164, (EU) 2017/1852, (EU) 2025/50 as regards the simplification of the Union framework on direct taxation and supporting growth and competitiveness of the EU​
Date: 2026-06-24
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: European tax cooperation, approximation of laws, competitiveness, cross-border cooperation, direct tax, double taxation, economic growth, single market, tax law, tax system

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  EN 

   EUROPEAN COMMISSION  Brussels, 24.6.2026  SWD(2026) 562 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT  Accompanying the document Proposal for a COUNCIL DIRECTIVE  amending Council Directives 2003/49/EC, 2009/133/EC, 2011/96/EU, (EU) 2016/1164, (EU) 2017/1852, (EU) 2025/50 as regards the simplification of the Union framework on direct taxation and supporting growth and competitiveness of the EU  {COM(2026) 560 final} - {SEC(2026) 560 final} - {SWD(2026) 560 final} - {SWD(2026) 561 final}  
 
 
Executive Summary 

Impact Assessment Report Accompanying the Proposal for a Council Directive 
amending Council Directives 2003/49/EC, 2009/133/EC, 2011/96/EU, (EU) 2016/1164, 
(EU) 2017/1852, (EU) 2025/50 as regards the simplification of the Union framework on 
direct taxation and supporting growth and competitiveness of the EU 
A. Need for Action 
What is the problem and why is it a problem at EU level? 
The largest volume of direct tax legislation is  national, which implies that businesses which 
operate across borders in the EU face the need to comply with numerous corporate income tax 
systems.  EU  directives  come  to  the  fore  only  in  specific  fields  of  a  primarily  cross-border 
nature.  The  EU  direct  tax  acquis  is,  therefore,  limited  and,  where  it  exists,  represents  a 
significant achievement for the EU given the challenging political stakes which the adoption 
of EU tax directives is associated with. The fact that the EU rules often include several options 
for  implementation  is  an  illustration  of  this  difficulty.  It  results  in  substantial  differences 
across EU Member States and a fragmented tax landscape. In addition, the application of EU 
tax  law  across  the  internal  market  is  often  inconsistent.  At  the  same  time,  the  context  has 
significantly evolved since these legal acts were first introduced, rendering some of the older 
rules  outdated.  Altogether,  four  main  issues  arise:  (i)  tax  compliance  requirements  that  are 
disproportionate,  (ii)  legal  uncertainty  due  to  unclear  tax  rules  and  terms,  (iii)  different  tax 
treatment  depending  on  national  specificities,  (iv)  tax  barriers  on  cross-border  business 
activities.  

These issues contribute to the overall high  complexity, increased risks of disputes, and high 
tax compliance burdens for doing business in the  EU and impede the EU’s competitiveness. 
While in many other areas there is significant progress in EU law to ensure that businesses can 
operate in the internal market under common standards, tax remains a policy field intertwined 
between some EU harmonisation and vastly different national systems and thus a remarkable 
obstacle to broader alignment and efficient functioning.   

What should be achieved? 
The  general  objectives  of  the  initiative  are:  (i)  to  simplify  EU  tax  rules  to  boost  EU 
competitiveness, while (ii) maintaining high tax standards in the EU. 
To achieve such general objectives, the following specific objectives should first be attained: 
(i) to eliminate unnecessary EU tax compliance burdens; (ii) to introduce clear and predictable 
EU tax rules and terms; (iii) improve consistency in the application of EU tax directives; (iv) 
to reduce remaining tax-obstacles to cross-border investment and commercial activity.  

What is the value added of action at the EU level (subsidiarity)?  
The  Tax  Omnibus  aims  to  simplify  the  EU  tax  environment.  In  conjunction  with  the  DAC 
Recast, the Omnibus will bring coordinated and comprehensive action that is only possible at 
EU level, ensuring that both material tax rules and the exchange of information framework are 
up-to-date and fit for purpose. EU action in this area will bring clear added value by reducing 
red  tape,  lowering  obstacles  to  cross  border  operations,  and  engendering  efficiency  and 
effectiveness  in  applying  tax  rules.  By  amending  the  EU  direct  tax  acquis  with  the  aim  of 
simplification, the Omnibus  should make tax compliance in the EU  clearer, easier and more 
efficient. This will mean that for businesses, it will be less costly to operate or expand across 
borders  in  the  EU.  For tax  administrations,  simpler rules  and  streamlined  procedures  should 
ease their work related to tax controls and audits and, ultimately, lead to fewer disputes and a 
reduction in administrative costs.  

B. Solutions  
What are the various options to achieve the objectives? Is there a preferred option or 
not? If not, why?  
The objectives can be achieved through an Omnibus directive amending most of the existing 
EU  direct  tax  acquis,  via  one  single  legal  act.  The  objectives  related  to  the  DAC  will  be 
achieved  in  a  separate  initiative,  the  DAC  Recast  proposal.  The  Tax  Omnibus  proposal  is 

 
 
analysed in the present impact assessment report.  

In  brief,  the  Tax  Omnibus  aims to  simplify, streamline  and clarify  existing  directives in the 
area  of  direct  taxation:  the  Interest  and  Royalties  Directive  (IRD)1,  the  Parent-Subsidiary 
Directive  (PSD)2,  the  Tax  Merger  Directive  (TMD)3,  the  Anti-Tax  Avoidance  Directive 
(ATAD)4,  and  the  Dispute  Resolution  Mechanisms  Directive  (DRM)5.  To  facilitate  the 
functioning of the IRD and PSD, the Omnibus will also amend the recent FASTER Directive6. 
The analysis of the impact assessment report is mainly based on the experience and challenges 
from  applying  these  Directives in  practice,  as  well  as  their  interaction  with  more  recent  EU 
and international tax developments, such as the newly adopted Pillar 2 Directive7.  

The  report  identifies  a  wide  range  of  policy  options.  When  it  comes  to  withholding  taxes 
under  the  IRD  and  PSD,  an  option  would  be  to  exempt  all  intra-EU  interest,  royalty  and 
dividend  payments  through  an  extension  of  these  directives,  coupled  with  the  removal  of 
upfront procedures for entitlement. In this regard, an alternative option would be to  align the 
scope and procedures of the IRD and PSD.  

For  Controlled  Foreign  Company  (CFC)  rules  in  the  ATAD,  it  is  envisaged  to  consider  a 
mandatory  application  of  Model  A,  a  carveout  for  Pillar  2  companies  or  taking  account  of 
Pillar 2 Qualified Domestic Minimum Top-up Taxes to determine whether a CFC tax charge 
is due and, if so, credit the top-up tax against the CFC liability. Additionally, the analysis also 
assesses a carveout for SMEs.  

For investments in research and development (R&D), the immediate expensing of the cost of 
assets  related  to  R&D  is  explored  against  the  status  quo,  whereby  R&D  expensing  would 
continue to be defined only at national level.  

The Interest Limitation Rule under the ATAD includes options for reform across its spectrum, 
with  the  main  aim  of  ensuring  fairness  and  mitigating  the  procyclical  effects  of  the  rule:  a 
carveout for SMEs, a mandatory application of the 30% EBITDA cap, mandatory application 
of  certain  currently  optional  variations,  a  carveout  for  low-risk  third-party  loans,  and  an 
exemption in case of profitability shocks.  

More  contained  options  for  modifications  involve  removing  the  rules  on  imported  hybrid 
mismatches;  aligning  the  TMD  with  the  Mobility  Directive  (cross-border  mergers  from  a 
company  law  perspective),  either  through  a  dynamic  reference  or  via  addition  of  new 
structuring transactions; and several targeted improvements to the DRM, to clarify procedural 
rules and allow the use of Council implementing acts.  

The  report  specifically  assesses  three  combinations  of  these  options.  Comprehensive 
Omnibus:  this  combination  takes  on  board  all  policy  options  and  where  relevant,  takes  the 
most ambitious alternatives for the main measures of this initiative  on the taxation of cross-
border  interest,  royalty  and  dividend  payments,  and  taxation  of  CFCs,  to  assess  the  most 
ambitious  potential  for  simplification.  Medium  Ambition  Omnibus:  this  approach 

1  Council  Directive  2003/49/EC  of  3  June  2003  on  a  common  system  of  taxation  applicable  to  interest  and 
royalty payments made between associated companies of different Member States. 
2 Council Directive 2011/96/EU of 30 November 2011 on the common system of taxation applicable in the case 
of parent companies and subsidiaries of different Member States. 
3 Council Directive 2009/133/EC of 19 October 2009 on the common system of taxation applicable to mergers, 
divisions,  partial  divisions,  transfers  of  assets  and  exchanges  of  shares  concerning  companies  of  different 
Member States and to the transfer of the registered office of an SE or SCE between Member States.  
4  Council  Directive  (EU)  2016/1164  of  12  July  2016  laying  down  rules  against  tax  avoidance  practices  that 
directly affect the functioning of the internal market.  
5 Council Directive (EU) 2017/1852 of 10 October 2017 on tax dispute resolution mechanisms in the European 
Union. 
6 Council Directive (EU) 2025/50 of 10 December 2024 on faster and safer relief of excess withholding taxes.  
7 Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for 
multinational enterprise groups and large-scale domestic groups in the Union. 

 
 
 
encompasses policy options, but includes the less ambitious alternatives for withholding taxes 
under  the  IRD  and the  PSD,  and  CFC  in  ATAD  while it  keeps  status  quo  concerning  R&D 
expensing.  Limited  Ambition  Omnibus:  this  version  is  targeting  existing  measures  in  a 
simpler and more straight-forward way, such as reducing the implementation options for the 
Interest  Limitation  Rule  and  extending  the  scope  of  the  TMD,  to  generate  simplification 
results through the easiest and most accessible options.  

What are different stakeholders’ views? Who supports which option?  
Stakeholders  fully  supported  the  initiative  to  simplify  existing  EU  tax  rules.  There  was 
particularly  strong  support  among  private  stakeholders,  i.e.  EU  businesses  and  industry 
representatives as well as tax professionals, who identified the need for simplification across 
all  existing  directives  and  beyond  as  detailed  in  Annex  2.  EU  Member  States  unanimously 
welcomed  the  initiative,  as  evidenced  by  the  Council  Conclusions  of  March  2025,  and 
encouraged  the  Commission  to  adopt  an  ambitious  proposal;  while  convergence  on  the 
specific policy options will also need to be further attained during Council negotiations.  

C. Impacts of the preferred option  
What are the benefits of the preferred option? 
The impact assessment sets out the potential cost savings for businesses and the economy in 
the  EU  as  a  result  of  potential  reductions  of  current  tax  compliance  costs,  as  well  as  the 
broader,  longer-term  macro-economic  impact.  The  preferred  option  is  the  Comprehensive 
Omnibus. This option is roughly estimated to reduce compliance and financial costs by about 
EUR 6.6 billion per year, out of which recurrent costs related to cutting down administrative 
burden  is  roughly  EUR  2  billion  per  year  (a  breakdown  of  these  numbers  can  be  found  in 
Annex 3 to the impact assessment report), and some of its individual measures are estimated 
to  increase  EU  GDP  by  roughly  0.04%  (exemption  from  withholding  tax)  and  0.2% 
(immediate expensing of certain R&D assets) in the long run.  

What are the costs of the preferred option?  
The impact assessment report attempts to describe some of the possible costs. The purpose of 
the  Tax Omnibus proposal is to reduce existing recurrent costs, by simplifying EU tax rules 
where  possible.  Accordingly,  as  outlined  in  Chapter  6  and  Annex  3,  the  initiative  is  not 
expected  to  bring  any  significant  costs  for  businesses  and  tax  administrations,  and  are  thus 
estimated as none, marginal, or not relevant.  

What are the impacts on SMEs and competitiveness?  
SMEs: the Omnibus includes measures in favour of SMEs, such as an explicit carve-out from 
the CFC rules and a de facto carve-out from the interest limitation rule of the ATAD. These 
are estimated to bring additional cost savings of around EUR 90 and at least EUR 69 million 
per year, respectively. In addition, SMEs will also benefit from the general cost savings which 
are  expected  to  arise  from  the  other  simplification  measures.  In  this  way,  the  Omnibus  will 
support the Commission objective to prioritise burden reduction for SMEs (35%, compared to 
25% generally).  

Competitiveness:  the  Omnibus  is  estimated  to  have  an  overall  positive  effect  on 
competitiveness, by lowering compliance and administrative costs, improving legal certainty 
and  removing  some  continued  tax  barriers  for  cross-border  business  activity  in  the  internal 
market. These effects are expected to boost investment decisions and enhance the EU business 
environment, supporting overall growth and competitiveness.  

Will there be significant impacts on national budgets and administrations?  
Most  of  the  policy  options  are  not  expected  to  have  significant  impact  on  national  budgets. 
Where relevant, the impact assessment report estimates the overall impact of policy options on 
tax revenues, and the outcome should be limited or neutral, especially when compared to the 
related investment and GDP growth benefits.  

Additionally, administrations are meant to benefit from simplifications. Tax authorities should 
face very limited adaptation costs to adjust to new procedures, especially IT procedures, since 

 
 
the envisaged measures generally either simply eliminating existing requirements or extending 
the use of procedures and templates already introduced via the FASTER directive.  

Will there be other significant impacts?  
The impact assessment also considers whether the initiative may have environmental or social 
impacts, or an impact on fundamental rights. No particular and direct environmental impact is 
expected. It is also not expected that there would be a significant social impact, although freed 
resources may positively influence employment to some extent. The initiative should also not 
interfere  with  the  protection  of  fundamental  rights,  which  are  guaranteed,  and  personal  data 
will be protected.  

Proportionality?  
The  preferred  option  does  not  go  beyond  what  is  necessary  to  achieve  the  objectives  and 
focuses on elements where the added value of EU action goes beyond what can be achieved 
by Member States alone. 

D. Follow up  
When will the policy be reviewed? 
The  first  evaluation  should  take  place  not  earlier  than  five  years  after  the  new  rules  start  to 
apply.