Brussels remains firm on its path towards simplifying the legislative files it has on the table. This Wednesday was the turn of regulations related to taxation and energy products. From the offices of the community capital, they assure that the objective is to make Europe “a more attractive place to invest, innovate, and do business”, by reducing administrative burdens and eliminating regulatory obstacles that, according to the European Commission, have ended up reducing the competitiveness of the European economy.
On the one hand, the tax simplification package is structured around two proposals: a new Taxation Omnibus and a revision of the Administrative Cooperation Directive. On the other hand, Brussels proposes a profound update of the rules on energy labeling, with changes that will affect manufacturers, distributors, installers, and consumers alike.
The underlying idea is to modernize the Union's direct tax framework and generate annual savings for companies close to 8 billion euros. In parallel, European consumers and retailers of household appliances and other products subject to energy labeling will also benefit from more flexible and digitized regulations. “The EU energy label has already proven its worth, helping consumers make informed decisions and reduce energy consumption across Europe. The EU is simplifying the rules to make them easier to apply,” defends the European Commission.
Less tax bureaucracy and more investment incentives
The Community Executive argues that the European tax framework has become progressively more complex as a result of the accumulation of directives, reporting obligations, and the incorporation of international standards such as the global minimum tax agreed within the OECD.
To reverse this situation, Brussels proposes eliminating certain minimum participation requirements, currently set at 10% or 25%, depending on the case, to access certain tax exemptions. The objective is to facilitate the exemption from withholding tax at source on interest payments, royalties, and dividends between associated companies within the European Union.
Along with this, Member States will be prohibited from requiring prior authorizations to access these exemptions. Eligibility will become self-assessed by the taxpayer at the time of payment, subject to a subsequent control system by national tax authorities.
In practice, this represents a substantial change for thousands of European companies. Until now, to avoid certain tax withholdings when transferring funds between subsidiaries located in different Member States, companies had to request prior administrative authorization and wait, sometimes for months, for a formal response from the tax authorities.
With the new proposal, companies themselves will declare that they meet the legal requirements and can carry out the operation immediately. Subsequently, national administrations will retain the ability to verify compliance with the conditions and correct any irregularities.
EU sources emphasize that small and medium-sized enterprises often lack the sophisticated international structures used by some multinationals to optimize their tax burden. However, they end up bearing similar administrative procedures. Therefore, the proposal aims to relieve SMEs of some of these obligations so that they can concentrate resources on their growth and expansion.
Furthermore, Brussels intends to reduce interpretative differences between Member States by introducing harmonized models and common criteria, thereby minimizing legal conflicts arising from the divergent application of European tax rules.
Immediate Deduction to Boost Innovation
One of the most relevant aspects of the reform affects the modification of the Anti-Tax Evasion Directive (ATAD). The Commission proposes introducing a "full expensing" regime, or immediate full deduction, for certain investments linked to innovation. Specifically, capital expenditures for tangible assets such as machinery, equipment, or facilities used exclusively for research and development (R&D) activities may be fully deducted from the moment of investment.
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Taxpayers will have the option to choose between applying the deduction during the fiscal year in which the expense is incurred or distributing it over any of the four subsequent years. However, Brussels establishes a condition of permanence: the assets must be used for innovative activities for a minimum period of three years. If they cease to be used for these purposes before that period, the deduction will be revoked and the corresponding amount will be reincorporated into the company's taxable base.
The Commission considers that this mechanism will allow for the acceleration of technological projects and favor European industrial modernization in a context of growing international competition with the United States and China.
New limits on deductible interest
The package also introduces modifications regarding business financing. Brussels proposes setting a mandatory limit of 30% of earnings before interest for the entire European Union, restricting the ability of Member States to impose stricter conditions.
At the same time, financial costs derived from loans obtained from unrelated entities will be excluded from this limitation as long as they finance their own business activities and not intragroup operations aimed at tax optimization. The proposal also incorporates a mandatory threshold of three million euros in deductible interest, which must be applied uniformly in all Member States and updated annually in line with inflation.
Today, the @EU_Commission presents two new Omnibus #simplification packages.
— Valdis Dombrovskis (@VDombrovskis) June 24, 2026
📋 On taxation: less red tape for taxpayers.
⚡ On energy products: simpler rules for suppliers and dealers.
Together: €3.4 billion in annual administrative savings across 🇪🇺
My statement ➡️… pic.twitter.com/lm7TiMcEhC
Likewise, if a company experiences a drop of more than 50% in its profit compared to the previous year, it may fully deduct its financial expenses during that tax period. The Commission's forecasts indicate that all the measures together will generate savings of over 6,000 million euros annually in regulatory compliance costs, resources that are currently allocated to legal, tax, and accounting advisory services.
The reform also aims to speed up the resolution of cross-border tax disputes. When disputes arise between tax administrations of different countries, citizens and companies will have faster, more homogeneous, and transparent procedures to reach a solution.
The digital revolution of energy labels
Beyond taxation, Brussels has put forward a profound reform of energy labeling rules. The Commission wants to transform a system originally conceived for physical media into a tool fully integrated into the European digital ecosystem.
Has any consumer ever truly understood the meaning of the colored labels, from A to G, that appear on appliances, tires, or air conditioning equipment? The Community Executive believes that much of this information ends up being underutilized and that the current format no longer meets market needs. Therefore, the proposal eliminates the general obligation to include a printed label inside the packaging of each product. Instead, it will rely on digital systems based on QR codes and the European platform EPREL, the community database of energy products.
By scanning the code, consumers will be able to access constantly updated information on energy efficiency, consumption, maintenance, availability of spare parts, repair possibilities, and recycling options at the end of the product's useful life.
The Commission defines this approach as a "digital by default" strategy, although accompanied by safeguards to ensure access to information for all users. Specific delegated acts for each product category will determine which information must be kept in physical format and which can be supplied exclusively by digital means.
Integration with the Digital Product Passport
One of the most relevant technical elements of the reform is its integration with the future Digital Product Passport (DPP) provided for in the Ecodesign for Sustainable Products Regulation (ESPR). The objective is to prevent manufacturers and importers from having to register the same information multiple times in different European systems. The proposal introduces the "once-only" principle, so that products registered in EPREL will not have to be fully re-registered in the Digital Passport infrastructure.
In addition, an interconnection will be created between the two registers. The administrative information stored in EPREL will be linked to the specific data of each product contained in the DPP, creating a unique digital ecosystem for tracking products marketed in the European market. Identity verification will also be harmonized through electronic systems recognized by the eIDAS framework, significantly reducing technical burdens for manufacturers and suppliers.
The reform also tightens the supervision mechanisms for manufacturers established outside the European Union. Authorized representatives acting on behalf of non-EU companies will be required to upload a signed copy of their mandate to EPREL as a prerequisite for registering any model. This mandate must include detailed information on the contact details of the parties involved, the delegated functions, the brands and models covered by the authorization, and the duration of the agreement. According to Brussels, this measure will strengthen traceability and facilitate market surveillance by national authorities.
The proposal also redefines responsibilities within the supply chain to close legal loopholes detected in recent years. From now on, installers of kitchens, air conditioning systems, or plumbing will be technically considered distributors when they market a product as part of an integrated service.
This means that they will have to include the corresponding energy label in their commercial offers, quotes, and contracts before the customer finalizes the purchase. A similar obligation will fall on specialized tire workshops, which will have to display energy efficiency labels to end-users in the same way as any traditional commercial establishment.
On the contrary, car dealerships will no longer be required to display tire labels on new vehicles, as the Commission considers that consumers rarely directly select these components and that their impact is already reflected in the vehicle's emissions and consumption data.
A more flexible system for manufacturers and distributors
The Commission also wants to correct some of the practical problems generated during energy rescaling processes, when efficiency categories are updated to reflect higher levels of demand.
Until now, manufacturers had to simultaneously supply old and new labels during transition periods. The proposal eliminates this obligation, allowing greater logistical flexibility. Likewise, distributors will be able to continue marketing products with the previous label for a period of up to 12 months after the new classification comes into force. The previous period of just 14 working days is thus abandoned, considered by a large part of the sector as unfeasible from an operational point of view.
In the specific area of tires, Brussels also plans to strengthen the compliance system. The Commission will be able to update parameters such as noise, grip or energy consumption through delegated acts, aligning this regime with the rest of the European labeling system. In addition, the current test protocols will be replaced by more complete and rigorous test reports, which must technically support the values declared by manufacturers and importers.
With this new legislative package, the European Commission seeks to combine two objectives that have often proven difficult to balance in community policy: reducing the bureaucratic burden for businesses and citizens without renouncing the regulatory standards that characterize the European single market. Both in tax matters and in the energy field, Brussels is committed to replacing complex administrative procedures with digital systems, subsequent controls and harmonized frameworks that, according to the Community Executive, will allow increasing European competitiveness without weakening supervision and transparency guarantees.