For companies operating across the EU, current tax policy developments warrant close attention—not only because of the measures under discussion, but because they signal a broader shift in how tax policy is expected to support EU objectives in practice. For general counsel, the relevance lies in how these developments may affect legal certainty, compliance risk and strategic planning across the business.
A push for simplification
The European Commission is advancing a regulatory simplification agenda, with a tax omnibus package expected by the end of June 2026. This reflects growing recognition that accumulated complexity in EU corporate tax law risks undermining both compliance and competitiveness. Two proposals are anticipated.
The first would introduce simplification measures across core elements of EU corporate taxation, including the Interest and Royalties Directive, Parent‑Subsidiary Directive, Tax Merger Directive, ATAD and the Tax Dispute Resolution Mechanisms Directive. The focus is expected to be on clarifying legal concepts, reducing overlaps and streamlining compliance obligations—particularly around interaction issues such as those between ATAD’s controlled foreign company rules and the Pillar Two minimum tax framework.
The second proposal would consolidate the Directive on Administrative Cooperation (DAC) into a single legal instrument. Since 2011, DAC has been amended eight times. While these amendments have strengthened transparency and enforcement, they have also added complexity. Consolidation is intended to restore coherence, including by integrating elements of the former “Unshell” (ATAD III) proposal into the DAC framework.
For GCs, the key question will be whether these initiatives translate into meaningful reductions in compliance burden and litigation risk, rather than purely technical re‑drafting.
Legislative realism: feasibility over ambition
In parallel, the Commission has adopted a more selective approach to tax legislation. In 2025, it announced plans to withdraw a number of proposals—such as those on a financial transaction tax, Unshell, DEBRA and EU transfer pricing rules—where unanimity among Member States appeared unattainable.
While politically contentious, this shift signals a more pragmatic policy stance. For general counsel, this may improve predictability by reducing prolonged uncertainty around initiatives that lack a realistic path to adoption.
Digital taxation: strategic uncertainty remains
Digital taxation has returned to the forefront following renewed uncertainty around Pillar One at OECD level. EU institutions have reiterated their preference for a multilateral solution, while making clear that unilateral EU action remains an option if progress stalls.
Any revival of EU‑level digital services taxation would present material legal, commercial and geopolitical considerations, including internal market fragmentation risks and broader EU‑US relations. GCs should be alert to renewed momentum in this area during 2026.
Financing EU ambitions
Tax policy debates are also closely linked to negotiations on the EU’s next Multiannual Financial Framework (2028–2034). As the EU prepares to begin repayment of NextGeneration EU borrowing from 2028, discussions on budget priorities are increasingly tied to how EU ambitions should be financed.
Proposals for new EU “own resources”, including revenues linked to ETS, CBAM and a potential corporate‑based contribution, raise questions around competitiveness, revenue allocation and legal design—issues likely to attract close scrutiny from businesses and their legal teams.
What this means for GCs
Taken together, these developments point to a shift towards pragmatism and political feasibility in EU tax policymaking, without eliminating uncertainty. General counsel will play a key role in assessing how simplification initiatives interact with existing compliance frameworks, and in anticipating areas—such as digital taxation and EU financing—where new legal and strategic risks may emerge.
Early engagement with both the policy direction and the underlying legal detail will be essential to support informed decision‑making at board level in an increasingly interconnected law and tax environment.
