EU adds three new jurisdictions to blacklist of non-cooperative tax jurisdictions

The EU has updated its blacklist of non-cooperative tax jurisdictions to include Antigua and Barbuda, Belize, and the Seychelles. In addition, the EU removed the Marshall Islands from the blacklist and moved the British Virgin Islands and Costa Rica from the blacklist to the “grey list”. Jurisdictions may be placed on the blacklist where they do not meet the EU’s criteria for tax good governance principles and, as a result, may face more stringent reporting rules and ineligibility for certain EU funding, among other measures.

The EU also made other amendments to its grey list that identifies jurisdictions that do not currently meet the criteria, but have committed to implement tax good governance principles. Specifically, in addition to the inclusion of British Virgin Islands and Costa Rica (moved from the blacklist), the EU removed Jordan, Montserrat, Qatar and Thailand from the grey list for fulfilling their previous commitments. In addition, Belize and Seychelles are no longer on the grey list now that they have been moved to the blacklist.

The next update of the EU list of non-cooperative tax jurisdictions is expected in February 2024.

The EU instituted a blacklist as part of its efforts to curtail tax avoidance and harmful tax practices. When determining whether a particular jurisdiction is listed, the EU assesses jurisdictions against three main criteria— tax transparency, fair taxation and implementation of OECD measures to prevent tax base erosion and profit shifting. The EU has also indicated that it is considering adding other criteria to further strengthen the listing process. The EU has revised its list several times since it was first published in 2017.

The EU also identifies grey list jurisdictions that do not yet comply with all of the EU’s criteria, but which have made sufficient commitments to implement tax good governance principles. These jurisdictions are required to follow-through on these commitments to avoid being moved to the blacklist.

Most EU countries have implemented administrative measures as well as one or more defensive tax measures targeted at non-cooperative jurisdictions on the EU blacklist, such as:

• Non-deductibility of costs
• Withholding tax measures
• Controlled foreign company rules
• Limitation of participation exemption on profit distribution.

The EU Mandatory Disclosure requirements also include a specific reporting rule for cross-border payments between associated enterprises where the recipient is resident in an EU-blacklisted jurisdiction. Additional disclosures will also be required for countries on the EU blacklist, or on the EU grey list for two consecutive years, under the EU public country-by-country reporting rules that generally apply for financial years starting on or after June 22, 2024.

Following the latest update, the EU’s blacklist now includes the following 16 jurisdictions:​​​​​​​​​​​​​​

• American Samoa
• Anguilla
• Belize
• Guam
• Panama
• Samoa
• Trinidad and Tobago
• The US Virgin Islands

• Antigua and Barbuda
• The Bahamas
• Fiji
• Palau
• The Russian Federation
• The Seychelles
• Turks and Caicos Islands
• Vanuatu

The EU’s grey list now includes the following 14 jurisdictions:

• Albania
• Aruba
• The British Virgin Islands
• Curaçao
• Eswatini
• Israel
• Türkiye

• Armenia
• Botswana
• Costa Rica
• Dominica
• Hong Kong (SAR)
• Malaysia
• Vietnam

For more information, contact your KPMG adviser.