Both within the EU and at the international level, the EU is working to promote and strengthen tax good governance mechanisms, fair taxation, and global tax transparency in order to tackle tax fraud, evasion and avoidance.
Given the global nature of unfair tax competition, this also means addressing external challenges to EU countries’ tax bases.
The aim of the EU list of non-cooperative jurisdictions, which is published as an annex to conclusions adopted by the Ecofin Council, (Annex I) is not 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 (Annex II).
Once a jurisdiction meets all its commitments, its name is removed from the annex.
EU listing criteria
To be considered cooperative for tax purposes, jurisdictions are screened on a number of criteria:
Tax transparency
- jurisdictions should exchange tax data with all EU member states through automatic exchange of tax information (AEOI), either through the common reporting system (CRS) established by the OECD or through equivalent arrangements
- jurisdictions should also be able to exchange tax information on request (EOIR)
- jurisdictions should be party to the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters, or have a network of exchange arrangements in place that covers all EU member states
- the aspect of beneficial ownership will be incorporated at a later stage
Fair taxation
- jurisdictions should not have harmful preferential tax measures
- jurisdictions should not facilitate offshore structures or arrangements seeking to attract profits without any real economic activity
Anti-BEPS measures
- jurisdictions should commit to implementing the OECD anti-BEPS minimum standards, which concern harmful tax measures, treaty shopping, country-by-country reporting and dispute resolution
- jurisdictions should receive positive peer-review assessments for the effective implementation of the anti-BEPS minimum standard on country-by-country reporting
Non-tax area defensive measures
Regarding non-tax areas, the Council invited EU institutions and member states to take the EU list into account in:
- foreign policy
- development cooperation
- economic relations with third countries
Furthermore, certain EU funding rules now explicitly refer to the list. Funds from several EU instruments cannot be channelled through entities in listed countries, including the:
- European Fund for Sustainable Development (EFSD)
- European Fund for Strategic Investments (EFSI)
- External Lending Mandate (ELM)
- General framework for securitisation
In its conclusions of 12 March 2019, the Council welcomed the fact that the list “is being taken into account by the European Commission in the implementation of EU financing and investment operations”.
