On 21 February 2023, the updated list of non-cooperative jurisdictions for tax purposes came into effect with its publication in the Official Journal of the European Union.
On 14 February 2023, the ECOFIN Council adopted conclusions on the EU list of non-cooperative jurisdictions (Annex I) and the state of play with respect to commitments taken by cooperative jurisdictions to implement tax good governance principles (Annex II – so called "grey list").
Following this latest revision, the EU list of non-cooperative jurisdictions (Annex I) therefore includes the following sixteen jurisdictions (additions indicated inboldfor ease of reference): American Samoa, Anguilla, the Bahamas,British Virgin Islands,Costa Rica, Fiji, Guam,Marshall Islands, Palau, Panama,Russian Federation, Samoa, Trinidad and Tobago, Turks and Caicos Islands, US Virgin Islands, Vanuatu.
For more details on the above as well as background information, please refer to Euro Tax Flash Issue 506prepared by KPMG EU Tax Centre.
The next update is expected to take place in October 2023.
For more information on the evolution of the EU list of non-cooperative jurisdictions (Annex I) indicating also the effective date when such jurisdictions were added and removed, please refer to our alerthere.
KPMG in Cyprus comment
It is important for taxpayers to monitor the evolution of the list in light of defensive measures that are being applied by EU Member States against listed jurisdictions.
In addition, the EU list of non-cooperative jurisdictions has a direct impact on EU public CbCR obligations that generally apply in relation to financial years starting on or after 22 June 2024.
Cyprus defensive measures
With effect from 31 December 2022, Cyprus applies withholding tax (WHT) on certain outbound payments of dividends, interest, and royalties if the recipient is a company featured in the EU list of non-cooperative jurisdictions (Annex I).
For more information as regards Cyprus' defensive measures, please refer to our alert here.
Cyprus EU mandatory disclosure rules (DAC6) considerations
The EU list of non-cooperative jurisdictions (Annex I) is also relevant for the purposes of the EU mandatory disclosure rules under DAC6, where recipients of cross-border payments are resident for tax purposes in a jurisdiction that is included in Annex I. Under Hallmark C1b(ii) of DAC6, such payments may trigger a reporting obligation irrespective of whether the transaction is aimed at generating a tax benefit (i.e. the main benefit test does not apply).
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.