EU list of non-cooperative jurisdictions – Courtesy of EY

On 18th February 2020 the EU Council adopted revised conclusions on the EU list of non-cooperative jurisdictions.
The list, which was set up in 2017 after revelations of widespread tax evasion and avoidance schemes, is now amended to include 4 more countries (namely Panama, the Seychelles, the Cayman Islands and Palau) extending the number of non-cooperative jurisdictions from 8 to 12.

The list includes jurisdictions that have either not engaged in a constructive dialogue with the EU on tax governance or failed to deliver on their commitments to implement reforms to comply with the EU’s criteria on time.

In November 2019 the EU Council invited member states to apply in relation to blacklisted jurisdictions at least one of the following four specific legislative measures:
• Denying deduction of costs and payments to blacklisted jurisdictions;
• Application of controlled foreign companies (CFC) rules to the income of an entity resident or a permanent establishment situated in a blacklisted jurisdiction;
• Applying a withholding tax at a higher rate on payments made to blacklisted jurisdictions;
• Limitation of the participation exemption on profit distribution from blacklisted jurisdiction.

As a response to the above request, Cyprus is considering introducing withholding tax on payments made to entities registered in non-cooperative jurisdictions at the following rates:

• 30% on interest;
• 17% on dividends;
• 10% on royalties.

Read the complete tax alert here.

For our global tax alerts, please click on the links below:

ECOFIN publishes revised list of non-cooperative jurisdictions for tax purposes and adopts two reforms of existing VAT rules
Panama included on EU list of non-cooperative jurisdictions for tax purposes