The Czech Chamber of Deputies’ Committee on European Affairs has issued a Reasoned Opinion on the EU Taxation Omnibus Directive, citing subsidiarity concerns over the proposed EU-wide R&D tax incentive scheme, opposing wider withholding tax exemptions, and calling for protection of Czech partnerships and stricter limits on the Commission’s delegated powers.
The Committee on European Affairs of the Czech Chamber of Deputies adopted Resolution No. 106 during its 13th session on 17 September 2026, issuing a formal Reasoned Opinion on the European Commission’s proposal for a Taxation Omnibus Directive (COM(2026) 560 final / Council Code 11141/26).
This proposal seeks to amend six EU direct taxation directives: the Interest and Royalties Directive (2003/49/EC), the Merger Directive (2009/133/EC), the Parent-Subsidiary Directive (2011/96/EU), the Anti-Tax Avoidance Directive ((EU) 2016/1164), Directive (EU) 2017/1852, and Directive (EU) 2025/50.
While opposing several core policy items, the Committee explicitly recommended supporting elements of the proposal that achieve authentic tax simplification and reduce administrative burdens:
- Repeal of rules on imported mismatches.
- Extension of the general anti-abuse rule (GAAR).
- Mandatory carryover of interest to subsequent tax periods.
- Mandatory adoption of Model A for Controlled Foreign Company (CFC) rules.
- Extension of the Merger Taxation Directive to cover cooperatives under Czech law.
The detailed elaboration of the main objections is as follows:
EU-wide R&D tax incentive scheme & subsidiarity violation
The Committee formally declared that the proposed EU-wide regime for research and development tax incentives violates the principle of subsidiarity under Article 5(3) of the Treaty on European Union (TEU) and Protocol No. 2. It outlined five distinct grounds for this breach:
- Failure of proof: The European Commission did not demonstrate that the objectives cannot be satisfactorily met by Member States individually.
- Existing tailored regimes: Member States already maintain national R&D tax incentives aligned with their specific economic, budgetary, and innovation strategies.
- No internal market barrier: Diversity across national R&D tax regimes does not automatically constitute a barrier requiring EU-level harmonisation.
- Lack of qualitative/quantitative evidence: The Commission provided insufficient indicators showing that EU-level action would produce superior outcomes due to scale or effects.
- Administrative & fiscal encroachment: A parallel EU-wide scheme risks duplicating record-keeping obligations, raising administrative costs, and infringing upon national fiscal autonomy.
Removal of minimum equity participation requirements
The Committee supported the Czech Government’s opposition to removing minimum equity participation thresholds under the Interest and Royalties Directive (2003/49/EC) and the Parent-Subsidiary Directive (2011/96/EU). It found that extending withholding tax exemptions goes beyond tax simplification and lacks an adequate assessment of the impact on individual Member States, a concern also raised by the EU Regulatory Scrutiny Board.
The Committee therefore called for these provisions to be removed and for any changes with significant fiscal consequences to be discussed through the ECOFIN Council’s Working Group on Tax Questions.
Protection of Czech partnerships (v.o.s. and k.s.)
The Committee instructed the Czech Government to negotiate for the continued inclusion of Czech general partnerships (v.o.s.) and limited partnerships (k.s.) in the Czech section of the Interest and Royalties Directive Annex. It also requested the Government to assess and quantify the proposal’s expected fiscal impact on the Czech state budget and local and regional budgets through tax allocation, with ongoing reporting to the Committee.
Strict limits on delegated powers & standard legislative procedures
The Committee recommended limiting the Commission’s delegated powers to technical and administrative updates of legal forms in directive annexes. It stressed that any substantive changes or new delegation powers must follow the standard legislative process, including ex-ante impact assessments and transparent public and expert consultations.
Resolution No. 106 empowered the Committee Chairman to forward the resolution and Reasoned Opinion to the Speaker of the Chamber of Deputies for immediate transmission to the European Parliament, the Council of the EU, and the European Commission under the official EU subsidiarity control framework.
