The European Commission has opened a consultation to simplify the EU corporate tax framework, aiming to cut red tape, reduce compliance burdens and improve internal market efficiency. Feedback is open until 16 March 2026.

The European Commission has opened a call for evidence to gather stakeholder input on a new initiative aimed at simplifying the EU’s legal framework for direct taxation on 16 February 2026 . The consultation seeks to reduce administrative burdens and improve the competitiveness of businesses operating across the EU.

The initiative forms part of the Commission’s broader effort to cut red tape and enhance the functioning of EU corporate tax legislation, including rules on parent companies and subsidiaries, interest and royalties, mergers, measures to prevent tax avoidance and dispute resolution mechanisms.

According to the Commission, the main objective is to simplify the existing EU legal direct taxation framework without undermining key policy goals such as eliminating double taxation, maintaining tax neutrality for cross-border corporate reorganisations, protecting the internal market against aggressive tax planning, and ensuring effective resolution of cross-border tax disputes.

The proposed policy options may involve legislative amendments in the following legal instruments:

  • The Controlled Foreign Company rule under the Anti-Tax Avoidance Directive – to eliminate overlaps with Pillar 2. In addition, there is a need to rectify the current fragmentation in the implementation of the rule by Member States, which is the result of the various available options to this effect.
  • The Interest Limitation Rules under the Anti-Tax Avoidance Directive – to address the procyclical effect of the rule, inflation effects, and consider the concerns of sectors that usually have high levels of legitimate leverage, as well as the needs of small and medium enterprises. This also includes considerations of streamlining the rules.
  • The scope of the Parent-Subsidiary Directive, the Interest Royalty Directive and the Tax Merger Directive – to improve the efficiency of these Directives and, by extension, of the internal market.
  • The procedural rules to obtain the benefits of the Parent-Subsidiary Directive and the Interest Royalty Directive, with the aim of reducing the administrative burden and compliance costs for businesses and consequently enhancing the overall current functioning of the Directives.
  • Very limited and targeted amendments to the Tax Dispute Resolution Mechanisms Directive, in particular the provisions regarding the admission phase, to remove ambiguities, ensure its consistent application across Member States and facilitate its use for taxpayers and tax administrations alike.

The Commission will consider all feedback received as it develops the proposal further. Submissions must adhere to the Commission’s feedback rules and will be published on its website.

Feedback will be accepted until  16 March 2026.