The European Commission has proposed numerous changes to the EU’s taxation rules, in what Brussels described as its most sweeping attempt so far to slash red tape.

The so-called taxation “omnibus” – which would amend multiple EU directives – includes proposals to eliminate all withholding tax payments for firms shifting money between subsidiaries within the EU, harmonise EU and global corporate tax rules, and boost research and development (R&D) investment by allowing companies to immediately expense tangible assets used for R&D.

It comes as part of a broader push by the EU to “simplify” companies’ regulatory burden – including for green, digital, and agriculture rules – as Brussels strives to boost its investment climate and catch up with China and the US.

“Europe needs simpler rules to deliver better results,” said Valdis Dombrovskis, EU commissioner for economy, adding that the measures “will radically improve clarity and legal certainty for businesses and tax administrations”.

The tax measures, which must still be approved by EU member states, would save companies €8 billion annually, including €3.3 billion in administrative costs, Dombrovskis noted.

This would bring the total savings from the Commission’s omnibus packages thus far to €18 billion – almost half the €37.5 billion originally targeted by Ursula von der Leyen’s Commission when it began its five-year mandate in 2024.

An EU official described the tax measures – which were announced alongside a separate omnibus on energy product legislation – as Brussels’ “biggest” omnibus so far.

The official added that the proposal relating to withholding tax exemptions – which they described as the “biggest ticket” item among the proposed changes – sought to deliver on the promises of decades-old directives, which attempted to eliminate withholding taxes paid by companies distributing dividends, interest, and royalties to their parent firms or subsidiaries.

“What we want to do primarily is to deliver on our very own pledge,” the official said, adding that half of the bloc’s 27 member states currently charge withholding taxes that the previous directives aimed to prohibit.

“You need to go via very difficult and complex and heavy refund procedures that can take up to two years to get the money back,” the official added. “If you’re not supposed to have a withholding tax, let’s not have a withholding tax in the first place.”