On 14 February 2023, the EU Council decided to add four new countries to the EU list of non-cooperative jurisdictions for tax purposes. They include the British Virgin Islands, Costa Rica, the Marshall Islands and Russia.
In total, the list of non-cooperative jurisdictions now includes 16 countries and territories:
- American Samoa
- British Virgin Islands
- Costa Rica
- Marshall Islands
- Trinidad and Tobago
- Turks and Caicos Islands
- US Virgin Islands
A press release from the EU Council gives reasons for including each of the four new countries on the list:
British Virgin Islands have been listed due to their insufficient compliance with the OECD standards on exchanging information on request.
Costa Rica is included because it has yet to fulfil its commitment to abolish or amend the harmful aspects of its foreign source income exemption regime.
The reasons for listing the Marshall Islands are concerns that this jurisdiction with a zero or only nominal corporate tax rate is attracting profits without real economic activity. In particular, the Council noted the insufficient implementation of economic substance requirements.
Russia has been included in the list because it “had not fulfilled its commitment to address the harmful aspects of a special regime for international holding companies” and suspended its dialogue with the EU on tax matters in 2022.
The inclusion of countries in the EU list entails various restrictions on the interaction of the EU companies with companies and persons from the listed countries. For example, any dividend, interest and royalty payments made from Cyprus to these jurisdictions will be subject to 17%, 30% and 10% Cyprus withholding taxes accordingly.