On 18 February, the Council extended the list of non-cooperative jurisdictions for tax purposes to the Cayman Islands, Palau, Panama and the Seychelles. Taking into account the eight jurisdictions already listed (American Samoa, Fiji, Guam, Oman, Samoa, Trinidad and Tobago, the US Virgin Islands and Vanuatu), the list now includes twelve countries and territories.
While Palau and Panama are listed due to issues relating to exchange of information, the Cayman Islands and Seychelles find themselves included because of “fair taxation” issues. The Cayman Islands are listed due to failing to have “appropriate measures in place relating to economic substance in the area of collective investment vehicles” while the Seychelles “[have] harmful preferential tax regimes and [have] not resolved these issues yet”.
As a result, certain defensive measures can now be applied by the EU and its Member States vis-à-vis the listed jurisdictions, both in tax and non-tax related areas.
In the tax field, Member States have committed to reinforced monitoring of certain transactions, or increased audit risks for taxpayers benefiting from the harmful tax regimes or using structures or arrangements in the listed jurisdictions, or to applying both measures. Although a set of additional optional measures was already in place, in November 2019 the Council invited Member States to apply the following specific legislative measures to the countries and territories on the list: non-deductibility of costs, controlled foreign company (CFC) rules, withholding-tax measures and limitation of the participation exemption on profit distribution. Member States can still apply additional measures within the spheres of their competence or maintain broader lists of non-cooperative jurisdictions at a national level.
Non-tax measures relate to, for example, restricted access to the European Fund for Sustainable Development, the European Fund for Strategic Investments and the general framework for securitisation.
The next review of the list will reveal the state of play for the jurisdictions currently under the Council’s radar, as well as the eight new jurisdictions included in the geographical scope of the monitoring exercise for 2020 (Azerbaijan, Guyana, Kazakhstan, Kuwait, Lebanon, Moldova, New Zealand and Ukraine).
An extended version of this text was previously published on EU Law Live
...... certain defensive measures can now be applied by the EU and its Member States vis-à-vis the listed jurisdictions, both in tax and non-tax related areas.