A Race to the Bottom: new EU ‘Tax Omnibus’ rolls back anti-tax abuse rules but maintains the broken and outdated tax system
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Civil Society actors warn that new measures announced today will undermine fair taxation by slashing anti-abuse rules and make a bad EU tax system even worse
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By sticking to the flawed transfer pricing system, the European Commission fails to propose any fundamental reforms that could have led to real simplification and improvements
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As the EU seems to have given up on modernising the archaic international tax rules, the negotiation of a new UN Tax Convention is the viable path towards a fair, coherent and effective system
Brussels, Wednesday 24 June 2026 - Today, the European Commission officially unveiled its highly anticipated "Tax Omnibus" package. Pitched under the banner of ‘administrative simplification’ and ‘competitiveness’, the measures in fact strip away anti-tax abuse mechanisms and slash taxes at source - prompting civil society organisations to raise the alarm. In addition to undermining corporate tax revenue collection in EU Member States, the proposal also risks opening new loopholes that can undermine effective taxation of wealth.
Measures in the package include new limitations on the so-called Controlled Foreign Corporation (CFC) rules, which are important for combating international corporate tax abuse. The package also suggests expanding the scope of directives that remove taxation at source for dividends, royalties and interest payments.
Tove Maria Ryding, Tax Co-ordinator at the European Network on Debt and Development (Eurodad) said: “Today, Brussels didn’t just stall on tax progress - it took a giant leap backwards on tax justice. What is termed 'simplification' is actually a capitulation to the interests of major multinational corporations. Our tax system has become the arena for competition between the US and the EU about who can hand out the largest packages of random, unchecked exemptions. This is a race to the bottom where everyday citizens and small companies lose.
“It was only a few years ago that Brussels was a place to debate the real fundamental reforms we need in the international tax system, including ways to replace the broken and outdated transfer pricing system with an approach that taxes corporations based on their consolidated profits. But now it looks as if the European Commission has made a complete u-turn in that discussion.
“While Brussels is busy inventing ways to dismantle its tax system to appease corporate giants, a large group of developing countries are insisting on moving forwards. The UN Tax Convention negotiations represent a historic opportunity to shift away from the rigged rules of the past. Instead of trying to match the US in a race to the bottom, EU Member States should focus their energy on the next negotiations at the UN Headquarters in New York in August, where we actually have a democratic chance to create a fair, coherent and transparent international tax system that serves public needs, not corporate greed."
As an immediate first step, Eurodad is calling for a comprehensive and transparent impact assessment of what these exemptions will actually cost public budgets in each of the EU Member States.
ENDS
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