Cecily Zamora
The European Union (EU) has been tackling tax evasion and avoidance through its list of non-cooperative jurisdictions, also known as the EU tax haven blacklist. This list was first established in 2017 and is updated twice a year to include countries that do not meet the EU's tax good governance criteria. The EU is committed to promoting fair taxation and global tax transparency, and its list is a tool to encourage positive changes in tax legislation and practices through cooperation. Despite criticism regarding the exclusion of major tax havens, the EU continues to update its list and impose defensive measures, such as the Tax Haven Defence Act, to curb unfair tax competition. The latest revisions to the blacklist were made in October 2024, and further updates are expected in the future.
| Characteristics | Values |
|---|---|
| Purpose | To tackle external risks of tax abuse and unfair tax competition |
| Date of Inception | 2017 |
| Frequency of Updates | Twice a year |
| Governing Body | Managed by the Code of Conduct Group for Business Taxation and monitored by the European Commission (EC) |
| Criteria for Listing | Jurisdictions that do not comply with all three EC criteria are flagged as tax havens by the EU |
| Number of Jurisdictions Currently Blacklisted | 11 |
| Examples of Blacklisted Jurisdictions | American Samoa, Belize, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, US Virgin Islands, Vanuatu |
| Examples of Excluded Jurisdictions | British Virgin Islands, Cayman Islands, Bermuda, Hong Kong, Singapore, Jersey |
| Legislative Action | Tax Haven Defence Act (StAbwG), Annual Tax Act 2024 |
| Sanctions | Defensive measures to be applied by EU Member States against blacklisted jurisdictions |
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What You'll Learn
The EU blacklist
Jurisdictions that do not comply with all three of the EC criteria are flagged as tax havens by the EU. The criteria are designed to evolve over time so that they are aligned with international tax good governance standards. The list is part of the EU's work to fight tax evasion and avoidance and is composed of countries that have failed to fulfil their commitments to comply with tax good governance criteria within a specific timeframe, and countries that have refused to do so.
On 27 March 2019, the European Parliament voted to accept a new report that likened Luxembourg, Malta, Ireland, the Netherlands, and Cyprus to "display [ing] traits of a tax haven and facilitate aggressive tax planning". Despite this vote, the EU Commission is not obliged to include these EU jurisdictions on the blacklist. On 17 October 2023, the European Union added Antigua and Barbuda, Belize and the Seychelles to its blacklist of tax havens. At the same time, they removed the British Virgin Islands, Costa Rica and the Marshall Islands from the list.
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Tax avoidance and evasion
The European Union (EU) has implemented various measures to tackle tax avoidance and evasion, including the EU list of non-cooperative jurisdictions for tax purposes, also known as the EU tax haven blacklist. This list was first established in 2017 and is updated regularly, with revisions occurring twice a year. The list identifies jurisdictions that fail to meet their commitments to comply with tax good governance criteria and aims to encourage positive changes in tax legislation and practices through cooperation. The EU also provides guidance on sanctions for member states to apply against blacklisted jurisdictions.
Tax avoidance refers to the use of legal instruments to minimise tax liability, such as shifting profits to low-tax countries or utilising complex financial structures. To combat this, the EU has introduced the Anti-Tax Avoidance Directive, which includes rules to address hybrid mismatch arrangements between the EU and third countries. These arrangements allow multinational corporations to exploit differences in tax treatments across countries, reducing their overall tax burden. The directive aims to prevent such practices and protect the tax bases of EU countries.
On the other hand, tax evasion involves illegal practices to avoid paying taxes, such as failing to declare profits or evading VAT. The EU addresses tax evasion through various means, including the EU tax haven blacklist and cooperation between member states. The blacklist identifies jurisdictions that facilitate aggressive tax planning and non-compliance with international tax standards.
The EU tax haven blacklist has faced criticism for allegedly excluding major tax havens and including only a small number of jurisdictions. Some MEPs and activists have argued that the list should be expanded to include countries like the British Virgin Islands, which was implicated in the Pandora Papers leak. Despite these criticisms, the EU continues to update and revise the blacklist, aiming to combat tax evasion and promote fair taxation practices globally.
In summary, the EU has implemented measures such as the EU tax haven blacklist and the Anti-Tax Avoidance Directive to tackle tax avoidance and evasion. While the blacklist has faced some criticism, the EU continues to revise and strengthen its approach to combating tax evasion and promoting tax transparency. These efforts are part of the EU's ongoing work to address external challenges to its member states' tax bases and encourage global cooperation in tax governance.
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Sanctions and defensive measures
The European Union (EU) has implemented various sanctions and defensive measures to tackle external risks of tax abuse and unfair tax competition. The EU list of non-cooperative tax jurisdictions, also known as the EU tax haven blacklist, is a key tool in this effort. This list, first established in 2017, is regularly updated and aims to encourage positive changes in tax legislation and practices through cooperation. Jurisdictions that do not meet all the EC criteria are flagged as tax havens.
In response to the EU's blacklist, member states have implemented different national tax defensive measures. Some countries, such as Austria, Croatia, Cyprus, and Germany, apply defensive measures specifically against countries on the EU List. Others, like Belgium, have their own national tax haven lists and apply measures accordingly. These measures can include withholding taxes, limiting deductions, and imposing special conditions on payments to these jurisdictions.
The Code of Conduct Group (Business Taxation) plays a crucial role in managing the EU list and coordinating the fight against harmful tax competition. They have provided guidance on sanctions and defensive measures to be applied by member states. By the end of 2021, an overview of the sanctions implemented was planned, with further coordination of defensive measures to be assessed in 2022.
While the EU's blacklist and defensive measures are steps in the right direction, they have faced criticism. MEPs and activists have argued that major tax havens are excluded from the list, rendering it ineffective. The Pandora Papers, for instance, revealed the continued use of tax havens by the super-rich, yet some of these jurisdictions were not included on the EU's blacklist. As a result, there have been calls for a reset of the blacklist and the implementation of more effective sanctions.
To enhance the effectiveness of their efforts, the EU and its member states should continue to coordinate their defensive measures. Additionally, the EU should consider the feedback and suggestions of MEPs and activists to ensure that the blacklist accurately reflects the landscape of tax havens and that sanctions act as a strong deterrent.
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Tax good governance
The Platform for Tax Good Governance was established by the European Commission in 2013. The Platform brings together non-government and government stakeholders and creates a framework for consultation and exchange of views. It enables a structured dialogue and exchange of expertise, allowing for a more coordinated and effective EU approach against tax evasion and avoidance. The Platform consists of tax professionals and expert representatives of businesses and civil society organisations. Members of the Platform include the tax authorities of all EU countries and organisations representing business, civil society and tax practitioners. The Platform meets a few times a year and is chaired by the Director-General for Taxation and Customs Union or a representative thereof.
The Platform for Tax Good Governance assists the Commission in initiatives to improve tax governance. It is a tool for promoting tax good governance internationally and formally updates the overview of third country jurisdictions listed by Member States for tax purposes. The Platform encourages third countries to apply minimum standards of good governance in tax matters. It also provides a forum for discussing General Anti-Abuse Rules (GAAR) and measures to tackle tax avoidance in EU legislation governing financing and investment.
The EU has established a list of non-cooperative jurisdictions for tax purposes, which is part of its work to fight tax evasion and avoidance. The list includes countries that have failed to fulfil their commitments to comply with tax good governance criteria within a specific timeframe, as well as countries that have refused to do so. The list is updated regularly and is used by Member States to tackle external risks of tax abuse and unfair tax competition. The EU is committed to promoting and strengthening tax good governance mechanisms, fair taxation and global tax transparency to tackle tax fraud, evasion and avoidance.
The list of non-cooperative jurisdictions is not intended to name and shame countries but to encourage positive change in their tax legislation and practices through cooperation. Jurisdictions that do not yet comply with all international tax standards but have committed to implementing reforms are included in a state of play document. Once a jurisdiction meets all its commitments, its name is removed from the list. The list is managed by the Code of Conduct Group for Business Taxation and monitored by the European Commission (EC). The list was first established in 2017 and is updated twice a year.
The EU's approach to tackling tax havens and letterbox companies has been criticised as inadequate by MEPs and activists. They argue that the EU blacklist excludes major tax havens and focuses on blacklisting poor countries that do not sign up to the global tax agreement. The Pandora Papers, a vast data leak, revealed that the super-rich continue to use tax havens to avoid paying taxes while ordinary people are asked to foot the bill for the Covid-19 recovery. MEPs have called for a crackdown on tax havens and for full international transparency about the real owners of letterbox companies and real estate.
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Monitoring and screening
The European Union (EU) has been working to tackle tax evasion and avoidance, both within the EU and internationally, since the adoption of the EU tax haven blacklist in 2017. This tool, officially called the EU list of non-cooperative tax jurisdictions, is used by member states to address external risks of tax abuse and unfair tax competition. The list is managed by the Code of Conduct Group for Business Taxation and monitored by the European Commission (EC).
The EU list of non-cooperative tax jurisdictions is the result of a dynamic monitoring process that follows a set of procedural guidelines agreed upon in February 2018. The Code of Conduct Group (Business Taxation), a special group established by the Council, carries out the preparatory work for the list by screening countries based on criteria established by the Council. These criteria are designed to evolve over time to align with international tax good governance standards developed in forums such as the Organisation for Economic Co-operation and Development (OECD) and its initiatives, including the Global Forum on transparency and exchange of information for tax purposes, the forum on harmful tax practices, and the inclusive framework on base erosion and profit shifting.
The monitoring process involves screening countries to determine if they comply with the established criteria. The countries that do not meet the criteria are then included in the list of non-cooperative tax jurisdictions. The list is updated regularly, with revisions released approximately twice a year. Jurisdictions that make commitments to improve their tax governance frameworks are monitored to ensure they implement the necessary changes within the given timeframe.
The EU's monitoring and screening process aims to encourage positive change in tax legislation and practices through cooperation rather than naming and shaming countries. While the European Parliament has no say in approving the blacklist, the EU works with its international partners through dialogue, outreach, and cooperation to promote tax transparency, fair taxation, and the implementation of anti-BEPS minimum standards.
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Frequently asked questions
The EU tax haven blacklist, officially the EU list of non-cooperative jurisdictions for tax purposes, is a tool of the European Union that lists tax havens. It was first established in 2017 and is updated twice a year.
The EU tax haven law, also known as the Tax Haven Defence Act (StAbwG), came into effect in 2025. The law imposes additional restrictions on countries that have been blacklisted by the EU as non-cooperative jurisdictions for tax purposes.
The EU tax haven blacklist is updated twice a year. The latest revision took place in February 2024, and the next revision is due in October 2024.
The EU blacklist has implications for the application of the Tax Haven Defence Act (StAbwG) for the countries concerned. It also results in defensive measures, such as increased tax obligations and documentation requirements, for transactions with non-cooperative jurisdictions.
