Updated EU list of non-cooperative jurisdictions and tax implications

On the 17th of October 2023, the Council of the European Union undertook a significant update to the EU List of non-cooperative jurisdictions for tax purposes (EU List). This development is of paramount importance for businesses and tax professionals to be aware of.

?Key Changes:

?1.??? Additions to the EU List:

• Antigua and Barbuda
• Belize
• Seychelles

2.??? Removals from the EU List:

• British Virgin Islands
• Costa Rica
• Marshall Islands

?

With these modifications, the updated EU list comprises the following 16 jurisdictions:

• American Samoa
• Anguilla
• Antigua and Barbuda
• Bahamas
• Belize
• Fiji
• Guam
• Palau
• Panama
• Russia
• Samoa
• Seychelles
• Trinidad and Tobago
• Turks and Caicos Islands
• US Virgin Islands
• Vanuatu

?

Implications for Taxpayers:

Beyond mere compliance concerns, the inclusion of these jurisdictions prompts several implications:

• Enhanced Due Diligence: The inclusion of these jurisdictions necessitates enhanced due diligence.
• Reporting under DAC6: The EU Directive on Cross-Border Tax Arrangements DAC6 could see potential reporting implications for cross-border arrangements involving these jurisdictions.
• Withholding Tax: As of 31 December 2022, Cyprus has introduced withholding tax on payments such as dividends, interest, and royalties directed to entities in jurisdictions featured in the EU List.

?

A subsequent bi-annual review of this list is scheduled for February 2024.

?

DAC6 Reporting Details:

The below hallmarks could be affected due to the recent inclusions:

1. C.1.b.(ii): Reportable arrangements here include deductible cross-border payments between associated enterprises, mainly when the beneficiary is a tax resident in a jurisdiction recognized as non-cooperative by the Council of the European Union.
2. D.1: Potential reportability arises if there's the utilization of a jurisdiction present in the EU list, especially if its use could compromise the reporting for agreements pertaining to the automatic exchange of information.

?

How Can We Help?

Navigating these changes can be complex. If your enterprise is affected by the inclusion of certain jurisdictions in the EU list, our experienced team is here to help. We offer:

• Expertise in re-domiciliation of companies from these jurisdictions.
• Comprehensive legal support.
• Accounting and audit services.

?

By staying ahead of these changes, you can ensure compliance and strategic alignment with evolving tax norms in the EU. For more information, contact Charles Savva at [email protected] or [email protected].