European Union tax haven blacklist
The European Union tax haven blacklist, officially the EU list of non-cooperative tax jurisdictions, is a tool of the European Union that lists tax havens. It is used by the Member States to tackle external risks of tax abuse and unfair tax competition. It was adopted for the first time in 2017 as a response to tax avoidance in the EU, screening 92 countries. The screening processes does not include EU countries.
It is managed by the Code of Conduct Group for Business Taxation and monitored by the European Commission. The most recent revision was released on 27 February 2020, and from 2020, the list will be updated twice a year.
Criteria for listing and history
Criteria
Jurisdictions that do not comply with all three of these EC criteria are flagged as tax havens by the EU:- Transparency
- Fair Tax Competition
- BEPS implementation
History
A number of countries have not yet been screened: In 2019 Russia, Mexico and Argentina are scheduled to be screened. Other countries are planned to be brought into the scope from 2020 onwards.
On 27 March 2019, the European Parliament voted by 505 in favour to 63 against of accepting a new report that likened Luxembourg, Malta, Ireland and the Netherlands, and Cyprus to "display traits of a tax haven and facilitate aggressive tax planning". However, despite this vote, the EU Commission is not obliged to include these EU jurisdictions on the blacklist.
List
Current listed jurisdictions
As of 27 February 2020, there are 12 non-cooperative jurisdictions on the blacklist:| Non-cooperative jurisdictions | Type of jurisdiction | Reasons for blacklisting |
| American Samoa | Unincorporated and unorganized U.S. territory | American Samoa does not apply any automatic exchange of financial information, has not signed and ratified, including through the jurisdiction they are dependent on, the OECD Multilateral Convention on Mutual Administrative Assistance as amended, did not commit to apply the BEPS minimum standards and did not commit to addressing these issues. |
| Cayman Islands | Autonomous British Overseas Territories | Cayman Islands does not have appropriate measures in place relating to economic substance in the area of collective investment vehicles. |
| Fiji | Country | Fiji is not a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended, has harmful preferential tax regimes, has not become a member of the Inclusive Framework on BEPS or implemented OECD anti-BEPS minimum standard, and has not resolved these issues yet. |
| Guam | Unincorporated and organized U.S. territory | Guam does not apply any automatic exchange of financial information, has not signed and ratified, including through the jurisdiction they are dependent on, the OECD Multilateral Convention on Mutual Administrative Assistance as amended, did not commit to apply the BEPS minimum standards and did not commit to addressing these issues. |
| Oman | Country | Oman does not apply any automatic exchange of financial information, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended, and has not resolved these issues yet. |
| Palau | Country | Palau does not apply any automatic exchange of financial information, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended, and has not resolved these issues yet. |
| Panama | Country | Panama does not have a rating of at least “Largely Compliant” by the Global Forum on Transparency and Exchange of Information for Tax Purposes for Exchange of Information on Request and has not resolved this issue yet. |
| Samoa | Country | Samoa has a harmful preferential tax regime and did not commit to addressing this issue. Furthermore, Samoa committed to comply with criterion 3.1 by the end of 2018 but has not resolved this issue yet. |
| Seychelles | Country | Seychelles has harmful preferential tax regimes and has not resolved these issues yet. |
| Trinidad and Tobago | Country | Trinidad and Tobago does not apply any automatic exchange of financial information, has a “Non-Compliant” rating by the Global Forum on Transparency and Exchange of Information for Tax Purposes for Exchange of Information on Request, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended, has harmful preferential tax regimes, and has not resolved these issues yet. |
| US Virgin Islands | Unincorporated and organized U.S. territory | US Virgin Islands does not apply any automatic exchange of financial information, has not signed and ratified, including through the jurisdiction they are dependent on, the OECD Multilateral Convention on Mutual Administrative Assistance as amended, has harmful preferential tax regimes, did not commit to apply the BEPS minimum standards and did not commit to addressing these issues. |
| Vanuatu | Country | Vanuatu does not have a rating of at least “Largely Compliant” by the Global Forum on Transparency and Exchange of Information for Tax Purposes for Exchange of Information on Request, facilitates offshore structures and arrangements aimed at attracting profits without real economic substance and has not resolved these issues yet. |
Sanctions
On December 16, 2019, the EU Code of Conduct Group , under the Economic and Financial Affairs Council, published a new guidance on sanctions to be applied by EU Member States against blacklisted 'non-cooperative' jurisdictions by the end of 2020. These sanctions were immediately backed by the Finnish Presidency of the Council of the European Union called such sanctions as "defensive-measures" that are recommended to EU Member States to take against blacklisted jurisdictions.These defensive-measures entail:
- denying deduction of costs and payments that otherwise would be deductible, when these costs and payments are treated as directed to entities or persons in blacklisted jurisdictions;
- including in the taxpayer company's tax base the income of an entity resident or a permanent establishment situated in a blacklisted jurisdiction, in accordance with the Anti-Tax Avoidance Directive rules for controlled foreign companies;
- applying a withholding tax at a higher rate on payments such as interest, royalties, service fee or remuneration, when these payments are treated as received in blacklisted jurisdictions; and
- for those Member States with rules that permit excluding or deducting dividends or other profits received from foreign subsidiaries, denying or limiting these 'participation exemptions' if the dividends or other profits are treated as received from a blacklisted jurisdiction.
By the end of 2021, an overview of sanctions applied by Member States will take place, and as of 2022, the CCG will assess the need for further coordination of defensive measures.