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ECOFIN agrees on an EU black list of non-cooperative jurisdictions for tax purposes

On 5 December 2017 the Economic and Financial Affairs Council of the EU (ECOFIN) reached an agreement on the 2017 EU list of non-cooperative jurisdictions for tax purposes and confirmed that these tax jurisdictions will remain on this list until they meet the required criteria.

In January 2016 the EU Commission proposed a common approach to third country jurisdictions on tax good governance matters. The aim was to replace the currently existing national lists of non-cooperating jurisdictions with a single EU listing system. The listing process followed a three step approach comprising a pre-assessment of countries, an extensive screening phase and, finally, the listing of non-cooperative jurisdictions.

As a result of the screening process, ECOFIN placed seventeen countries on the EU list of non-cooperative jurisdictions and recommended the list to be revised at least once a year. Listed jurisdictions are encouraged to make the required changes and to engage in discussions with the Code of Conduct Group that will be monitoring the criteria and commitments made. On 23 January 2018 ECOFIN removed eight countries from the black list. The black list as at today includes the following nine countries:

  1. America Samoa
  2. Bahrain
  3. Guam
  4. Marshall Islands
  5. Namibia
  6. Palau
  7. Saint Lucia
  8. Samoa
  9. Trinidad and Tobago

In response to the publication of the blacklist, EU Member States are expected to apply at least one of the following administrative measures:

  • stricter monitoring of certain transactions,
  • increased tax audit risks for taxpayers benefiting from the disputed regimes, or
  • increased tax audit risks for taxpayers using structures or arrangements involving blacklisted jurisdictions.

ECOFIN recommended to the EU Member States to take certain tax defensive measures in accordance with their national legislation and with EU and international law, such as for example the non-deductibility of costs, withholding tax provisions, controlled foreign company rules and the limitation of the participation exemption, etc.

At EU level, the EU Commission stated that existing defensive measures will be applied, such as limiting access to EU funding, or stricter reporting requirements for multinationals that have a presence in blacklisted jurisdictions, but encouraged EU Member States to also implement effective sanctions. 

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