28 February 2023

New Additions To The EU List Of Non-Cooperative Jurisdictions For Tax Purposes: British Virgin Islands, Costa Rica, Marshall Islands And Russia

Kinanis LLC


Kinanis LLC is a Cyprus law firm offering services since 1983, combining exceptional expertise in law, tax and accounting. The firm has offices in Cyprus, Malta and a China desk and employs more than 80 lawyers, accountants and other professionals, providing clients full legal and accounting support on an everyday basis as well as customized solutions in today’s global financial and legal challenges.
The EU in an effort to promote fair tax competition and address harmful tax practices on 14 February 2023 decided to add British Virgin Islands, Costa Rica, Marshall Islands and Russia to the EU...
European Union Tax
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The EU in an effort to promote fair tax competition and address harmful tax practices on 14 February 2023 decided to add British Virgin Islands, Costa Rica, Marshall Islands and Russia to the EU list of non-cooperative jurisdictions for tax purposes.

The whole list includes the following jurisdictions:

  • American Samoa
  • Anguilla
  • Bahamas
  • British Virgin Islands
  • Costa Rica
  • Fiji
  • Guam
  • Marshall Islands
  • Palau
  • Panama
  • Russia
  • Samoa
  • Trinidad and Tobago
  • Turks and Caicos Islands
  • US Virgin Islands
  • Vanuatu


  • DAC6

The inclusion of the additional 4 companies in the EU List of non-cooperative jurisdictions will affect Cyprus companies in relation to their DAC6 reporting.

Cross-border arrangements with an associated enterprise with tax residence in the above-mentioned list will be considered reportable arrangements under hallmark C1bii – "Arrangements that involve deductible cross-border transactions between associated enterprises in cases where the recipient is resident for tax purposes in a jurisdiction which is assessed as non-cooperative by the EU or OECD."

The Main Benefit Test (MBT) is irrelevant to this hallmark therefore all cross-border arrangements that relate to tax deductible transactions (such payment of interest expense, payment for services received etc) will be considered as reportable and the report must be submitted within the strict deadlines of the law otherwise heave penalties apply.

  • Withholding Taxes on outbound Dividend, Interest and Royalty payments

Cyprus companies paying dividend, interest and royalties to companies who are either:

  • tax resident in a jurisdiction mentioned in the above list or
  • are registered in these jurisdictions and are not tax resident in a jurisdiction which is not in the above list.

will need to deduct appropriate withholding tax at source at the appropriate rates as indicated in the below table:

Payment Type





Provided that the recipient company holds directly, alone or together with associated companies (which are also resident or registered in a non-cooperative jurisdiction)

  • 50% or more of the voting rights, share capital or
  • ­right to receive profits of the Cyprus tax resident company that pays the dividend.

The above does not apply on dividend paid by a Cyprus tax resident company listed in a recognised stock exchange)



Does not apply to interest paid in relation to securities listed in a recognised stock exchange



The above rates will not apply for cases where a double tax treaty provides for reduced withholding tax rates.

The only jurisdiction that Cyprus has double tax treaty from the above list is Russia. Therefore, dividends, interest and royalties paid to Russian companies will be subject to the withholding tax rates of 15%,15%,0% respectively subject to the conditions stated in the double tax treaty between Cyprus and Russia

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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