Updates to the EU black and grey lists
On 20 February 2024, the Council of the EU removed Seychelles, Belize, Bahamas and Turks and Caicos Islands from the list of non-cooperative jurisdictions for tax purposes. As a result of the changes, the following 12 countries and territories remain on the EU blacklist:
| American Samoa Anguilla Antigua and Barbuda Fiji Guam Palau | Panama Russia Samoa Trinidad and Tobago US Virgin Islands Vanuatu |
Belize and Seychelles were included in the blacklist in October 2023 after the negative assessment by the OECD Global Forum regarding the exchange of tax information upon request. Currently, pending a new round of assessment, these countries have been moved to a “grey list”, which includes jurisdictions that have committed to remedy the identified deficiencies. There are currently ten jurisdictions on the EU grey list:
| Armenia Belize British Virgin Islands Costa Rica Curacao | Eswatini Malaysia Seychelles Türkiye Vietnam |
For what purpose does the EU maintain a list of non-cooperative jurisdictions?
The EU blacklist includes the countries (not necessarily tax havens) which have not entered into a constructive dialogue with the European Union on tax issues or have not fulfilled their obligations to implement the necessary reforms. The list has been maintained since late 2017 and is updated twice a year (usually in February and October) based on monitoring of the respective countries.
To be removed from the blacklist, a country must implement the reforms to ensure:
- Tax transparency (which implies efficient international exchange of tax information);
- Fair taxation (including the absence of harmful tax practices or preferential regimes);
- Implementation of international standards against tax base erosion and profit shifting.
What are the tax consequences of the EU blacklist?
If a particular jurisdiction is included in the blacklist, EU countries may, at their discretion, apply defensive measures to their national companies interacting with entities from such jurisdiction. These measures may include:
- Increased audit risks for taxpayers who use structures involving the listed jurisdictions or benefit from tax regimes existing there;
- Non-deductibility of costs related to such jurisdictions;
- Applying an increased withholding tax on payments to residents of the listed countries;
- Applying controlled foreign companies (CFC) rules;
- Limitation of tax benefits for parent and subsidiary companies (participation exemption);
- Reversal of the burden of proof;
- Special documentation requirements;
- Mandatory disclosure of cross-border arrangements by intermediaries (tax consultants).
