On the 18th February 2020, the European Council (the 'EC') adopted a revised list of non-cooperative jurisdictions for tax purposes. In addition to the jurisdictions already blacklisted, the EC added the Cayman Islands, amongst others, as a non-cooperative tax jurisdiction, given that the EC determines it does not have appropriate measures in place relating to economic substance in the area of collective investment vehicles.
Whilst the EC's conclusion does not prohibit continued or new investment through the Cayman Islands, its blacklisting increases the compliance burden as well as perceived reputational risk for investors. Some investors may, therefore, find it more appropriate to focus their efforts and investments in reputable jurisdictions within the EU, which provide additional comfort pursuant to their mandatory obligations to comply with tax and regulatory measures imposed by European authorities on an ongoing basis. Malta itself offers a vast regulatory framework for investment structures, ranging from licensed entities to notified or registered vehicles, whilst providing tax efficiency as well as double taxation treaties concluded with over seventy jurisdictions around the globe.
The list, first published in December 2017, is aimed at tackling tax evasion and avoidance, unfair competition, and levelling the playing field between EU and non-EU countries.
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