On 24 February 2022 the European Council confirmed that ten countries, including Bermuda and the British Virgin Islands ("BVI"), will be included in Annex II of its list of non-cooperative jurisdictions for tax purposes (sometimes referred to as the EU Tax Grey List).
Annex II is a list of jurisdictions that have made sufficient commitments to reform their tax policies but remain subject to close monitoring while they are executing on their commitments. It is expected that countries that have met their commitments will be removed from Annex II at the next opportunity later in 2022.
Note that this is to be distinguished from the European Commission's recent delegated regulation proposing to update the existing EU AML List to add the Cayman Islands (please click here to read our advisory on that issue in full).
No direct penalties or sanctions will be imposed by any EU member states on entities or institutions in listed jurisdictions as a result of their inclusion in Annex II. As such, there should be no impact for our clients or Bermuda or BVI entities with respect to doing business in Bermuda or BVI. In particular, it will not give rise to any impediments or repercussions for European investors investing in Bermuda or BVI based structures.
The Annex II list is different to the EU's Annex I list (also known as the EU Tax Blacklist), which Bermuda and BVI are not on.
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.