On 20 February 2024, the European Council removed Bahamas, Belize, Seychelles and Turks & Caicos Islands from the EU list of non-cooperative jurisdictions for tax purposes.

For more information regarding the Council’s decision, you may click here.

The next revision of the list is scheduled for October 2024.

Updated list of non-cooperative jurisdictions as at 20 February 2024

  • American Samoa
  • Anguilla
  • Antigua and Barbuda
  • Fiji
  • Guam
  • Palau
  • Panama
  • Russia
  • Samoa
  • Trinidad and Tobago
  • US Virgin Islands
  • Vanuatu

Cyprus tax implications

While Cyprus does not generally impose withholding taxes on payments to non-Cypriot residents, certain payments to companies in jurisdictions included on the EU list of non-cooperative jurisdictions are subject to withholding tax; specifically, 17% on payments of dividends by non-quoted companies, 17% on payments of interest (excluding payments by individuals), and 10% on payments of royalties (excluding payments by individuals).

The removal of the aforementioned jurisdictions from the list effectively means that payments of dividends, interest and royalties from companies in EU countries (including Cyprus) to these jurisdictions should now be effected without tax being withheld at source.

On the other hand, such payments to any jurisdiction included on the EU ‘blacklist’ shall be subject to withholding tax at the aforementioned rates. For such cases, it may be considered to either halt the actual payment (e.g. until there is a positive development) and/ or to change the jurisdiction of the beneficial shareholder of the Cypriot company to an alternative jurisdiction, for example via redomiciliation or via transfer of shares.

Important DAC6 implications

Reporting obligations under DAC6 may arise, specifically with regards to the Hallmark concerning deductible cross-border payments, where the recipient is tax resident in a jurisdiction included on this EU list. Cypriot entities engaged in activities with any of jurisdictions included in the list would be well-advised to consider potential DAC6 reporting implications (click here for more details).

Brief background

The EU Council set of criteria were established back in 2017 and are used to evaluate jurisdictions on fair taxes, tax transparency, and the application of international norms intended to prevent profit shifting and erosion of the tax base. When appropriate, the EU Head of the Code of Conduct group engages in procedural and political discussions with relevant international organizations and authorities.

The countries listed in this EU list of non-cooperative tax jurisdictions are those that have either not participated in a productive discussion with the EU over tax governance or have not fulfilled their obligations to carry out the required changes.

For more information or assistance you may contact us directly.