The European Commission presented a tax reform package on Wednesday that seeks to ease regulatory burdens for firms operating inside the single market. Officials say the measures - still subject to approval by EU governments - could lower business compliance costs by as much as €8 billion a year.
The proposals cover several areas of tax administration and data reporting. Central to the package is the planned elimination of withholding taxes applied to intra-EU payments of dividends, interest and royalties. The commission estimates that abolishing those withholding taxes alone would deliver around €5.3 billion in annual savings and related benefits.
Alongside the removal of withholding taxes, the package offers simpler financing rules and the elimination of duplicated reporting requirements. The commission has combined a tax simplification bill with refreshed rules on tax reporting and data sharing, which it projects will generate roughly €3.3 billion in yearly administrative savings and support cross-border investment within the bloc.
Overall reporting obligations would be reduced by about 25%, with a larger cut of about 35% applying to small and medium-sized enterprises. For online marketplaces, the proposal raises reporting thresholds so that more than 10 million private sellers - many trading second-hand goods - would no longer face reporting obligations.
The commission also proposes lifting some reporting requirements related to cross-border tax arrangements for large groups that fall under the EU's 15% corporate minimum tax regime.
Economy Commissioner Valdis Dombrovskis commented on the package in a statement, saying: "Europe needs simpler rules to deliver better results." The commission has included an eight-year transition period before the new measures take effect, acknowledging that several member states currently rely on withholding tax revenues.
Summary of the package
- Elimination of intra-EU withholding taxes on dividends, interest and royalties.
- Simplified financing rules and removal of duplicate reporting obligations.
- Combined tax simplification and updated tax reporting and data sharing rules with estimated annual administrative savings of around €3.3 billion.
- Overall reporting reductions of 25% and 35% for SMEs; higher thresholds for online platform reporting affecting over 10 million private sellers.
- An eight-year transition period before implementation; unanimous approval by all 27 EU member states required.
Context on adoption
The measures cannot be finalised without the unanimous backing of all 27 EU member states, since tax legislation requires full agreement. That approval process will determine whether the projected savings and the proposed timeline come to pass.