Lauren Silberman, Postdoctoral Researcher, Paris-East Créteil University (UPEC)
In her political guidelines for the next European Commission 2024-2029, Ursula von der Leyen highlighted the need for a “new European Prosperity Plan to make business easier and deepen our Single Market”. In order to achieve this objective, the simplification, consolidation and codification of legislation relating to company taxation within the Union are indispensable. , marks the starting point for work in this direction. In the context of this dynamic, ten omnibus measures have been proposed by the Commission. They aim to “stimulate competitiveness” by developing a system that is favourable to businesses operating within the single market and thus “strengthen Europe’s sovereignty”.
Following its conclusions of April 2024, stressing the need for a “new pact for European competitiveness, anchored in a fully integrated single market” to strengthen the “strategic sovereignty” of the Union, the Council approved, on March 11, 2025, conclusions establishing a decluttering and simplification program in tax matters with a view to contributing to the competitiveness of the EU. Four principles have been adopted by the Council: (1) reduction of the reporting, administrative and regulatory burden on Member States’ administrations and taxpayers; (2) removal of outdated and overlapping tax rules and, where appropriate; (3) increasing the clarity of tax legislation; and (4) the streamlining and improvement of the application of rules, procedures and reporting obligations in tax matters.
As outlined in its 2026 work program, efforts to reduce administrative barriers are being maintained and extended to the European tax law in the field of direct taxation. EU tax law in the field of direct taxation includes the Directives on the elimination of double taxation and the neutrality of cross-border transactions (Directive 2011/96/EU of the Council, known as ‘mother-daughter’; Council Directive 2009/133/EC on mergers; and Council Directive 2003/49/EC on interest-royalties), to the fight against tax fraud and evasion (Council Directive (EU) 2016/1164 the “Anti-Tax-Avoidance Directive”, or “ATAD”), to mechanisms for resolving tax disputes (Council Directive 2017/1852) and to the global minimum tax (Directive (EU) 2022/2523 of the Council of December 14, 2022) which is however not concerned by this project.
The main objective of this omnibus package is to simplify the implementation of existing direct taxation measures in the EU in order to “stimulate competitiveness and improve the functioning of the EU legislative framework for corporate taxation” by reducing administrative costs and reporting obligations. For this, the revision of the various directives on direct taxation by an “omnibus directive” is envisaged. Between 16 February 2026 and 30 March 2026, all concerned parties were invited to share their views.
The call for “evidence” made by the Commission thus proposes updating the directives on mergers, parent-subsidiary companies, interests-fees, ATAD, and on tax dispute resolution mechanisms in order to take into account the evolution of Union tax legislation on direct taxation, and thus the overlap between the rule on controlled foreign companies under the ATAD Directive with “Pillar 2” and to harmonize the implementation of this measure. The ATAD measure (article 7) provides the inclusion of some non-distributed incomes of the controlled foreign companies in the member state of the taxpayer’s tax base, and the “Pillar 2” provides allocation rules that may lead to a multiple taxation of the same income.
It will also concern the interest limitation rule under the ATAD Directive, in order to remedy its pro-cyclical effect and the effects of inflation, and to take into account both the concerns of sectors that generally have high levels of legitimate leverage and the needs of small and medium-sized enterprises. The scope of application of the parent-subsidiary directives, interest and royalties, and mergers will potentially be revised, as well as the procedural requirements for benefiting from the advantages provided by the parent-subsidiary directive and the interest and royalties directive, with the aim of reducing administrative burdens and compliance costs for businesses, thereby improving the current overall functioning of the Directives. Finally, very limited and targeted amendments to the Directive on tax dispute settlement mechanisms, in particular the provisions relating to the admission phase, in order to remove ambiguities, to ensure its consistent application in all Member States and to facilitate its use for both taxpayers and tax administrations are envisaged.
This prerogative contributes to the overall consistency of the tax measures adopted by the Union in the field of direct taxation. It should be viewed as an effort to simplify the legislative corpus in this matter.
