Tax insights - February 2024

On 26 February 2024, the updated list of non-cooperative jurisdictions for tax purposes came into effect with its publication in the Official Journal of the European Union.

On 20 February 2024, the General Affairs Council adopted conclusions on the EU list of non-cooperative jurisdictions (Annex I) and the state of play with respect to commitments taken by cooperative jurisdictions to implement tax good governance principles (Annex II – so called “grey list”).

Following this latest revision, the EU list of non-cooperative jurisdictions (Annex I) therefore includes the following twelve jurisdictions: American Samoa, Anguilla, Antigua and Barbuda, Fiji, Guam, Palau, Panama, the Russian Federation, Samoa, Trinidad and Tobago, the US Virgin Islands and Vanuatu.

For more details on the above as well as background information, please refer to Euro Tax Flash Issue 538 prepared by KPMG EU Tax Centre.

Next steps

The next update is expected to take place in October 2024.

For more information on the evolution of the EU list of non-cooperative jurisdictions (Annex I) indicating also the effective date when such jurisdictions were added and removed, please refer to our alert here.

KPMG in Cyprus comment

It is important for taxpayers to monitor the evolution of the list in light of defensive measures that are being applied by EU Member States against listed jurisdictions.

In addition, the EU list of non-cooperative jurisdictions has a direct impact on EU public CbCR obligations that generally apply in relation to financial years starting on or after 22 June 2024.

Cyprus defensive measures

With effect from 31 December 2022, Cyprus applies withholding tax (WHT) on certain outbound payments of dividends, interest, and royalties if the recipient is a company featured in the EU list of non-cooperative jurisdictions (Annex I).

For more information as regards Cyprus’ defensive measures, please refer to our alert here.

Cyprus EU mandatory disclosure rules (DAC6) considerations

The EU list of non-cooperative jurisdictions (Annex I) is also relevant for the purposes of the EU mandatory disclosure rules under DAC6, where recipients of cross-border payments are resident for tax purposes in a jurisdiction that is included in Annex I. Under Hallmark C1b(ii) of DAC6, such payments may trigger a reporting obligation irrespective of whether the transaction is aimed at generating a tax benefit (i.e. the main benefit test does not apply).

Should you like to further discuss the content and potential impact of the above to your business, please contact one of our trusted advisors from the Tax Department at KPMG in Cyprus.

George Markides
Board Member
Head of Tax Services
KPMG Limited

Costas Markides
Board Member
International Tax Services
KPMG Limited

Katia Papanicolaou
Board Member     
Direct Tax Services        
KPMG Limited    

Stelios Stylianou
Board Member
Direct Tax Services
KPMG Limited

Michael Halios
Board Member
International Tax Services
KPMG Limited

Michalis Loizides
Board Member
Tax Services
KPMG Limited