EU Expands List of Non-Compliant Tax Jurisdictions to Include Russia, BVI, Costa Rica, and Marshall Islands

20/02/2023

The EU Council revised its list of non-cooperative jurisdictions for tax purposes on 14 February 2023, adding Russia, the British Virgin Islands (BVI), Costa Rica and the Marshall Islands.

The list includes countries which have either not engaged in a constructive dialogue with the EU on tax governance or have failed to deliver on their commitments to implement the necessary reforms. Those reforms should aim to comply with a set of objective tax good governance criteria, which include tax transparency, fair taxation and implementation of international standards designed to prevent tax base erosion and profit shifting.

The list now consists of 16 jurisdictions. In addition to the for jurisdictions mentioned above, it includes American Samoa, Anguilla, Bahamas, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, Turks and Caicos Islands, US Virgin Islands and Vanuatu.

The official EU Council Press Release, which outlines the reasoning of the decision can be found here.

Cyprus resident taxpayers having transactions or operations with parties located in a jurisdiction included in the EU list of non-cooperative jurisdictions for tax purposes need to consider the following implications:

• As per EU Mandatory Disclosure Rules (DAC6) arrangements that involve deductible cross-border payments made between associated enterprises where the recipient is resident in a jurisdiction included in the EU list of non-cooperative jurisdictions for tax purposes, are reportable, irrespective of whether the main benefit test is met or not.
• Dividends, interest and royalty payments made by companies that are tax resident in Cyprus to companies located in a jurisdiction included in the EU list of non-cooperative jurisdictions for tax purposes, may be subject to a withholding tax in Cyprus (subject to conditions). You can refer to our previous newsfeed on this for more details.