EU Tax Omnibus: Potential Impact on International Tax and Supply Chains

The European Commission is continuing its efforts to simplify tax legislation and strengthen the competitiveness of the European Union. Following the recommendations of the Draghi Report, several tax initiatives have already been withdrawn, including Unshell, DEBRA, the Financial Transaction Tax and the proposed Transfer Pricing Directive.

On 24 June, the Commission is expected to publish the EU Tax Omnibus package alongside a revised Directive on Administrative Cooperation (DAC). The objective is to reduce regulatory complexity, lower compliance costs and support economic growth across the Single Market.

For multinational groups, however, simplification does not necessarily mean less impact. The expected changes could affect how cross-border dividends, interest, royalties and financing arrangements are treated within the EU. Depending on the final legislative text, businesses may need to reassess existing structures, financing models and supply chain arrangements.

Although the details have not yet been formally published, current indications already provide insight into the measures that may be included. In this article, we explore the expected changes, their potential impact on international supply chains and the key considerations for businesses preparing for the new framework.

This article was written by Rafi Mardroos and Mario van den Broek of RSM Netherlands' International Tax and Supply Chain Management teams.

Key developments to watch

The EU Tax Omnibus is expected to amend several existing tax directives, including the Interest and Royalties Directive (IRD), the Parent-Subsidiary Directive (PSD), the Merger Directive, the Anti-Tax Avoidance Directive (ATAD) and the Tax Dispute Resolution Mechanisms Directive. In parallel, the European Commission is expected to propose a revised DAC framework. Several of the anticipated measures could have a direct impact on multinational groups.

Streamlining anti-abuse provisions

Today, a single cross-border transaction may be subject to multiple anti-abuse provisions, including the PSD General Anti-Abuse Rule, ATAD provisions, beneficial ownership requirements and treaty-based Principal Purpose Tests. This can create complexity and uncertainty for businesses operating across multiple jurisdictions.

The Omnibus package may seek to reduce overlap between these provisions. An important question will be whether the changes focus primarily on administrative simplification or whether they also alter the substantive requirements that businesses must meet to access treaty and directive benefits.

Interaction between CFC rules and Pillar Two

Current expectations suggest that groups already subject to Pillar Two taxation may no longer be required to apply certain Controlled Foreign Company (CFC) rules under ATAD. If implemented, this could reduce instances of overlapping taxation and simplify compliance for larger multinational groups. The exact scope of any exemption will be important, particularly for businesses operating close to the EUR 750 million Pillar Two threshold.

Encouraging research and development

Early reports regarding the Omnibus package indicate that additional incentives for research and development activities may be introduced. These could include enhanced deductions or allowances designed to strengthen the EU's position as an attractive location for innovation and intellectual property development.

Over the past decade, several jurisdictions have introduced measures to attract high-value R&D activities. As a result, many multinational groups have restructured intellectual property and innovation functions across borders. New EU incentives could influence future investment decisions and potentially encourage the expansion of R&D activities within the European Union.

Greater flexibility for business financing

Another anticipated measure relates to the ATAD earnings stripping rules. Current discussions suggest that third-party financing may receive different treatment under the interest limitation framework.

If confirmed, this could improve access to external financing and reduce restrictions on commercially driven funding arrangements. Businesses with capital-intensive operations or significant investment plans should closely monitor these developments once the final text is published.

Expected impact at a glance

Illustrative example: the impact on a mid-market multinational

Consider a mid-market industrial group with consolidated revenue just below the EUR 750 million Pillar Two threshold. The group operates through a Dutch intermediate holding company that licenses intellectual property to operating entities and provides intra-group financing across the business. Under the current framework, the company benefits from relief under the Interest and Royalties Directive and the Parent-Subsidiary Directive, while managing its CFC obligations under existing Dutch corporate income tax rules. The EU Tax Omnibus could change this position.

If the package introduces more stringent beneficial ownership requirements, structures that currently qualify for treaty or directive benefits may face additional scrutiny. This could result in withholding taxes on royalty or interest payments that were previously exempt, increasing the overall tax burden across the group.

At the same time, if CFC relief is linked to Pillar Two eligibility, groups below the EUR 750 million threshold may not benefit from the simplifications available to larger multinational enterprises. As a result, some mid-market businesses could face higher compliance requirements than their larger competitors.

While the final outcome will depend on the legislative text, the example illustrates a broader point: tax developments increasingly influence decisions relating to legal entity structures, financing arrangements and supply chain design.

Tax implications beyond the tax function

Although the Omnibus package is primarily a tax initiative, its impact extends beyond the tax department. Several of the expected measures intersect with broader business considerations, including compliance, trade and sustainability.

Tax and AML compliance

One area to monitor is the interaction between tax rules and anti-money laundering (AML) requirements. The Omnibus package may introduce a more explicit beneficial ownership framework for accessing tax benefits. At the same time, the EU is expanding its AML framework through the Anti-Money Laundering Authority (AMLA) and enhanced transparency requirements relating to Ultimate Beneficial Owners (UBOs).

While both frameworks focus on ownership and control, the definitions and evidentiary requirements may not always align. This creates the possibility that a structure meeting tax requirements could still attract scrutiny from an AML perspective, or vice versa.The proposed DAC revisions could further increase information sharing between tax authorities and AML bodies, reinforcing the importance of robust governance and documentation.

Tax and international trade

Supply chain decisions increasingly influence tax outcomes. Many tax provisions, including CFC and beneficial ownership rules, rely on the concept of economic substance. Decisions to relocate functions, establish regional hubs or nearshore operations can therefore affect not only operational efficiency but also the availability of tax benefits.

The DAC revisions may also affect how businesses assess jurisdictions considered non-cooperative for tax purposes. In addition, multinational groups must continue to balance customs valuation requirements with transfer pricing policies, as both affect the treatment of cross-border transactions. As supply chains evolve, businesses should ensure that tax, customs and operational considerations remain aligned.

Tax and ESG reporting

Tax decisions can also have sustainability implications. For example, the valuation applied to cross-border transactions may influence customs duties, transfer pricing outcomes and the emissions data reported under the Carbon Border Adjustment Mechanism (CBAM).

Importantly, while the Omnibus package aims to simplify parts of the direct tax framework, several significant compliance obligations remain unchanged. CBAM, public Country-by-Country Reporting, DAC reporting obligations and sustainability regulations such as the Corporate Sustainability Reporting Directive (CSRD) will continue to require substantial attention from businesses. As a result, organisations should not view the Omnibus as a broad reduction in compliance requirements, but rather as a targeted revision of specific tax rules.

Why an integrated approach is essential

The expected changes highlight the growing interdependence between tax, supply chain management, compliance, finance and sustainability. A decision that appears operational in nature, such as establishing a new regional hub or restructuring financing arrangements, can have significant tax implications. Equally, a tax-driven decision may affect customs duties, reporting obligations or sustainability metrics.

For this reason, organisations increasingly benefit from an integrated approach in which tax considerations are assessed alongside commercial and operational objectives from the outset.

Such an approach is particularly important given that the legislative process is still ongoing. The final scope of the Omnibus package remains subject to publication and further political discussion within the European Union. Businesses should therefore avoid making assumptions based solely on preliminary reports and instead prepare to assess the final measures once they become available.

What businesses should do now

Although the final legislative text has not yet been published, organisations can already take steps to assess their potential exposure.

Key questions to consider include:

• Are existing holding, financing or intellectual property structures dependent on benefits provided under the IRD or PSD?
• Could changes to beneficial ownership requirements affect access to treaty or directive relief?
• How would a revised interaction between CFC rules and Pillar Two impact the group?
• Do current supply chain structures provide sufficient economic substance to support the intended tax treatment?
• Are tax, customs, compliance and sustainability teams aligned when evaluating future business decisions?

Early assessment can help businesses identify risks and opportunities before the new rules take effect.

How RSM can help

The EU Tax Omnibus package has the potential to influence international tax structures, financing arrangements and supply chain models across a wide range of industries. RSM combines expertise in International Tax, Supply Chain Management, Customs and Regulatory Compliance to help organisations assess the impact of regulatory developments and make informed business decisions.

If you would like to discuss the potential implications of the EU Tax Omnibus package or the proposed DAC revisions for your organisation, please contact one of our specialists.