EU proposes tax overhaul to cut business costs by €8 billion a year

The European Commission unveiled a tax simplification package on Wednesday, 24 June 2026, aiming to reduce red tape and make Europe more attractive for business. According to the Commission, the package will save EU businesses approximately €8 billion per year, with €3.3 billion of that coming from reduced administrative burdens.

The package includes two legislative proposals. The largest measure eliminates withholding tax on all cross-border payments of dividends, interest, and royalties among EU companies. This single measure is expected to bring savings of around €5.3 billion annually. The second proposal introduces a common minimum standard for the tax treatment of research and development investments, aiming to make Europe more attractive for investment. The Commission estimates it could boost EU GDP by about 0.2% per year.

This initiative is part of broader efforts to enhance EU economic competitiveness, a top priority for Commission President Ursula von der Leyen. At the start of the current mandate, the Commission promised to reduce administrative burdens on businesses by 25% by 2029, and by at least 35% for small and medium-sized enterprises (SMEs), resulting in annual cost savings of at least €37.5 billion by 2029.

BusinessEurope, an association representing 42 national business federations across Europe, welcomed the proposals. Director General Markus J. Beyrer praised the removal of withholding taxes, the reduction of duplicate compliance checks for companies already subject to the global minimum tax, and exemptions freeing smaller companies from rules designed for large multinationals.

The proposals now move to the European Parliament and member states in the European Council for negotiations. Once both co-legislators adopt their positions, interinstitutional negotiations can begin to finalize a common text.