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The Tax Omnibus presents a critical opportunity to modernise the EU's tax rules in light of the evolving international framework, notably the implementation of Pillar 2. Many existing directives were designed in response to earlier Base Erosion and Profit Shifting (BEPS) measures and now impose duplicative, fragmented and resource-intensive requirements on businesses. These burdens undermine tax certainty, increase compliance costs and weaken the EU’s attractiveness as an investment destination.

The EU proposed the Foreign Subsidies Regulation (FSR) in 2021 to address foreign subsidies distorting the Single Market. Operating as a screening instrument behind merger control, it requires companies to notify the European Commission of foreign financial contributions (FFCs) they may receive when participating in public procurement or mergers and acquisitions activity. Preventing FFCs from distorting the Single Market is an important goal – and one that must be achieved without creating its own disruptions.

The evaluation of the Directive on Administrative Cooperation (DAC) 1-9 can help enhance tax transparency, improve the Single Market and boost Europe’s competitiveness by decluttering tax policy. By ensuring that DAC includes fixed standards and mandating greater transparency for DAC data, lawmakers can improve its functionality. Likewise, by exempting Pillar 2 companies (including those subject to the ‘side-by-side’ safe harbour) from DAC 6 and revisiting the administrative requirements and outcomes of reporting under DAC 6, the Anti-Tax Avoidance Directive (ATAD), the Pillar 2 Directive and the Public Country by Country Reporting (pCbCR) Directive, lawmakers can minimise additional costs for companies and tax authorities alike while maintaining the integrity of the tax system.