On 18 February 2020, the EU Council adopted revised conclusions on the EU list of non-cooperative jurisdictions for tax purposes. In addition to the eight jurisdictions that were already listed, the EU Council made official the addition of the following jurisdictions in the list, due to their failure to implement the tax reforms to which they have committed by the agreed deadline, that was by the end of 2019:
1) Cayman Islands
2) Palau
3) Panama
4) Seychelles
WHY DOES THE EU PRODUCE A BLACKLIST?
The EU blacklist was established in December 2017 and is based on a continuous and dynamic process of:
establishing criteria in line with international tax standards;
screening countries against these criteria;
engaging with countries which do not comply;
listing and de-listing countries as they commit or take action to comply;
monitoring developments to ensure jurisdictions do not backtrack on previous reforms.
The EU list of non-cooperative jurisdictions consists of countries that either failed to deliver on their commitments to comply with the required tax good governance criteria, or did not commit to do so at all and include, inter alia, Fiji, Oman, Samoa, Guam, Trinidad and Tobago, US Virgin Islands and Vanuatu.
WHAT SANCTIONS WILL APPLY TO THE BLACKLISTED COUNTRIES?
The sanctions that apply at a national level against EU blacklisted countries include the following:
increased monitoring and audits;
withholding taxes;
special documentation requirements;
anti-abuse provisions;
difficulties accessing EU funding programmes;
additional compliance measures by European companies doing business in those jurisdictions.
The EU’s public Country-by-Country reporting proposal also includes stricter reporting requirements for multinationals with activities in jurisdictions which appear on the blacklist.
WHAT COMES NEXT?
The Council will continue to perform regular reviews and keep updating the list in the coming years, taking into account the forthcoming deadlines for jurisdictions to deliver on their commitments as well as the evolution of the listing criteria that the EU uses for the establishment of the list. Alongside, the EU Council invited all Member States to apply legislative defensive measures in taxation vis-à-vis the listed jurisdictions as of 1 January 2021, with the purpose to encourage those jurisdictions’ compliance with the Code of Conduct screening criteria on fair taxation and transparency.
The author of the article is Eliana Konnari.
Eliana is a Compliance Office Assistant at Royal Pine & Associates.
* This publication has been prepared as a general guide and for information purposes only. It does not purport to be comprehensive or to render legal advice.
Comments