The European Commission presented on June 24, 2026, a package of tax reforms that could save €8 billion annually for companies. The flagship measure is the elimination of withholding taxes on dividends, interest, and fees among EU companies.
The European Commission has put forward the largest review of the EU's tax framework in over a decade. The package, presented on June 24, 2026, aims to simplify the regulatory framework, reduce compliance costs, and eliminate tax frictions that hinder cross-border activity. The goal is clear: to ensure that taxation is no longer an obstacle to the internal market.
The end of withholding taxes between EU companies
The major innovation of the Tax Omnibus package is the removal of withholding taxes on cross-border payments of dividends, interest, and fees between EU companies. The proposal eliminates the minimum participation thresholds that currently condition exemptions under the Parent-Subsidiary Directive and the Interest and Royalties Directive.
Thus, distributions of dividends among EU companies will be able to benefit from the withholding exemption regardless of the percentage of participation. The measure also extends the scope of the Parent-Subsidiary Directive to pension funds, which could facilitate cross-border institutional investment.
The concept of “associated company” in the Interest and Royalties Directive is removed, including the 25% participation threshold. Payments of interest and fees between EU companies will be exempt regardless of the level of participation. The European Commission estimates that this measure will generate savings and benefits of around €5.3 billion annually for EU taxpayers.
The simplification is accompanied by safeguards against double non-taxation. Member States must deny the exemption or deduction when the recipient is in a jurisdiction with no corporate tax or a zero rate, unless a qualified domestic minimum tax applies or the group falls within the scope of Pillar Two.
The ex ante controls required by some Member States to apply these exemptions will be removed, without prejudice to ex post reviews. The list of entities eligible for benefits under both directives will also be updated, and the Commission will be empowered to expand it.
ATAD: greater harmonisation and coordination with Pillar Two
The package takes the opportunity to resolve accumulated tensions with Pillar Two and harmonise rules implemented unevenly by Member States. It proposes to standardise the interest limitation rule, making the 30% EBITDA threshold and the de minimis threshold of €3 million mandatory.
The group exception will become mandatory, allowing for greater deductibility when the entity's debt is aligned with that of the group. Genuine third-party loans are excluded: borrowing costs with unrelated parties will fall outside the rule, unless used to lend to other group companies or to finance capital contributions. Typical centralised financing models for groups will remain within the scope of the limitation rule.
Additionally, a common general anti-abuse rule (GAAR) will be introduced for the entire EU, strengthening the fight against tax avoidance. Rules on controlled foreign companies (CFC) will also be harmonised, and lists of non-cooperative countries will be updated.
Administrative cooperation: a recast of DAC rules
The second major initiative is the recast of the rules on administrative cooperation in tax matters (DAC Recast), which consolidates successive reforms since 2011 into a single text. The procedures for exchanging information between tax administrations are simplified, reducing burdens for companies and improving efficiency in the fight against tax fraud.
The Commission estimates that the set of measures will generate annual savings of around €8 billion for European companies, of which €3.3 billion corresponds to lower administrative costs. The political message is significant: Brussels wants taxation to cease being an obstacle to the internal market.
For Spanish companies, the reform represents an opportunity to reduce bureaucracy and compliance costs in cross-border operations. The elimination of withholding taxes will facilitate intra-group financing and investment in other EU countries. Multinational groups with subsidiaries in several Member States will be the main beneficiaries, but SMEs engaging in cross-border operations will also notice the simplification.
The proposal will need to be negotiated in the EU Council and the European Parliament. The process could take several months or even years, although the Commission hopes that the urgency of the competitiveness agenda will accelerate timelines. The entry into force of the most ambitious measures, such as the elimination of withholding taxes, is not expected before 2028 or 2029.
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