Navigating the EU List of Non-Cooperative Jurisdictions: What Businesses Need to Know

Navigating the EU List of Non-Cooperative Jurisdictions: What Businesses Need to Know

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In the ever-evolving world of international business, staying in the loop with regulatory changes is key. One significant update to keep an eye on – is the European Union’s List of Non-Cooperative Jurisdictions for Tax Purposes. With the latest revision, there are some notable developments that could affect businesses globally.

Understanding the EU List:

The EU list identifies jurisdictions that are deemed non-compliant with international tax standards and transparency criteria. The aim is to promote good governance and combat tax evasion, ensuring a level playing field for all stakeholders.

Recent Updates:

The most recent update to the EU list includes additions, removals, and assessments of various jurisdictions. Notably, several countries have been added to the list due to concerns regarding their tax practices and lack of cooperation with EU standards.

In the most recent update, the status of four jurisdictions – the Bahamas, Belize, Seychelles, and Turks and Caicos Islands – has been altered, resulting in their removal from the EU list of non-cooperative jurisdictions for tax purposes (Annex I).

This revision brings the total count of countries on the list to 12:

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

Implications for Malta Registered Companies:

For businesses operating across borders, keeping an eye on the EU list is essential. Inclusion on the list can have significant repercussions, including enhanced due diligence requirements, reputational risks, and potential regulatory scrutiny. We’re willing to bet you’d rather avoid all that hassle! However, let’s dive into the specifics to ensure your company stays trouble-free.

Having a link with a non-cooperative jurisdiction could result in:

  1. Participation Exemption Denial
    If your Malta Co. is holding a participating interest in a company resident in a country listed in the EU’s non-cooperative jurisdictions may face denial of the participation exemption on dividend income.
  2. Reporting Obligations under DAC6
    Under Hallmark C1 of DAC6, there may be reporting obligations triggered when there are cross-border payments between associated enterprises, particularly if the recipient is tax resident in a jurisdiction included in the EU list of non-cooperative jurisdictions.
  3. Disclosure Obligations
    Malta Company with connections to any jurisdiction listed in the EU’s non- cooperative jurisdictions list is required to disclose relevant information in their tax return (TRA110).
  4. Reputational Risks
    Association with jurisdictions on the EU list can impact a company’s reputation and stakeholder perceptions. Proactive measures to address any concerns and demonstrate commitment to compliance are essential.

The EU List of Non-Cooperative Jurisdictions for Tax Purposes underscores the importance of transparency, accountability, and adherence to international standards in today’s interconnected world. Businesses must stay informed, assess their exposure, and take appropriate actions to mitigate risks and maintain compliance in an ever-changing regulatory environment. Would like to learn more? Our team is always ready to answer any questions you may have.

Contact us now!

1st Step Solution LTD, established in 2001, an authorized corporate service provider regulated by Malta Financial Services Authorities.

Click here to view the June newsletter