The Cayman Islands were removed from the EU list of non-cooperative jurisdictions for tax purposes by a written procedure updating that list on 6 October 2020. The EU finance ministers added Cayman to the EU blacklist on 18 February 2020 it being reported at that time that the Cayman Islands has been listed because it "does not have appropriate measures in place relating to economic substance in the area of collective investment vehicles".
The Cayman Islands passed additional collective investment vehicle legislation, the Private Funds Law, 2020 and the Mutual Funds (Amendment) Law 2020, on 7 February 2020 in order to address the EU's concerns regarding the Cayman Island's collective investment vehicle regulation. The Private Funds Law, 2020 (as amended) resulted in the registration of 12,328 private funds with the Cayman Islands Monetary Authority as at the 7 August 2020 registration deadline under that law and the additional legislation has now allowed the removal of the Cayman Islands from the EU blacklist.
Whilst there were no automatic sanctions imposed on blacklisted non-cooperative tax jurisdictions the EU has encouraged its Member States to apply one or more legislative measures on transactions with non-cooperative tax jurisdictions from 1 January 2021.
The removal of the Cayman Islands from the blacklist ahead of this date is very welcome and a testament to the commitment of the Cayman Islands Government to maintaining a high level of international co-operation with the jurisdictions that rely on its financial services businesses.
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