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February 24, 2021

EU Member States adopt revised list of non-cooperative jurisdictions for tax purposes

Executive summary

On 22 February 2021, the Council of the European Union (the Council) updated the European Union (EU) list of non-cooperative jurisdictions for tax purposes (the EU List). Annex I (the so-called “black” list) of the EU List now includes American Samoa, Anguilla, Dominica, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, the US Virgin Islands and Vanuatu. This follows from the removal of Barbados and addition of Dominica. As regards Annex II of the EU list (the so-called “gray” list) and the state of play of pending commitments, the Council decided to extend several deadlines for these commitments. Also, the Council decided to remove three jurisdictions (Morocco, Namibia and Saint Lucia) and to add Jamaica to Annex II. Australia, Barbados, Botswana, Eswatini, Jamaica, Jordan, Maldives, Thailand and Turkey are the nine jurisdictions listed on Annex II.

The Council will continue to review and update the EU List biannually, with the next update due in October 2021.

Detailed discussion


The EU started working on the list of non-cooperative jurisdictions for tax purposes in 2016. On 5 December 2017, the Council published the first EU list of non-cooperative jurisdictions for tax purposes, comprised of two annexes. Annex I (the so-called “black” list) includes jurisdictions that fail to meet the EU’s criteria by the required deadline, and Annex II (the so-called “gray” list) includes jurisdictions that have made sufficient commitments to reform their tax policies but remain subject to close monitoring while they are executing on their commitments. Once a jurisdiction has executed on all of its commitments, it is removed from Annex II. The initial list of Annex I included 17 jurisdictions that were deemed to have failed to meet relevant criteria established by the European Commission.1 Since the release of the EU List, there have been multiple changes to its composition based on recommendations made by the Code of Conduct Group for Business Taxation. Such changes may occur if for example new jurisdictions or regimes are identified and analyzed by the EU Code of Conduct Group, or if jurisdictions already on the EU List are re-assessed. A de-listing for both Annex I and Annex II is considered justified in light of an expert assessment if it is established that the jurisdiction now meets all the conditions posed by the EU Code of Conduct Group.

The European Commission has also adopted the first countermeasures on listed non-cooperative tax jurisdictions by the adoption of a Communication in March 2018 that sets new requirements against tax avoidance in EU legislation governing, in particular, financing and investment operations.2 The said Communication aims to ensure that EU external development and investment funds cannot be channeled or transited through entities in jurisdictions listed on Annex I. Moreover, the Council released in 2019 additional guidance on defensive measures towards non-cooperative jurisdictions, but also on notional interest deduction regimes and the treatment of partnerships under criterion 2.2 (existence of tax regimes that facilitate offshore structures which attract profits without real economic activity) for screening jurisdictions.3 In accordance with the guidance on defensive measures mentioned above, Member States are committed, as of 1 January 2021, to use Annex I in the application of at least one of four specific legislative measures:

  • Non-deductibility of costs incurred in a listed jurisdiction

  • Controlled foreign company rules

  • Withholding tax measures

  • Limitation of the participation exemption on shareholder dividends

Many Member States have already moved forward with the adoption or draft legislation of such defensive measures, with Luxembourg, the Netherlands and Germany being recent examples.4

Revised EU List

On 22 February 2021, the Council held a foreign affairs meeting during which the Ministers adopted the conclusions on the revisions of the EU List (the conclusions).

The Council adopted a revised Annex I of the EU List by adding Dominica and by removing Barbados, after Barbados passed the necessary reforms to improve its tax policy framework. As noted above, the revised Annex I of the EU List now includes 12 jurisdictions: American Samoa, Anguilla, Dominica, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, the US Virgin Islands and Vanuatu.

According to the Council press release on the revised EU List, Dominica has been included in Annex I as it received a ”partially compliant” rating from the Global Forum and has not yet resolved this issue. Barbados was added to Annex I in October 2020 after it received a ”partially compliant” rating from the Global Forum. It has now been granted a supplementary review by the Global Forum and has therefore been moved to Annex II pending the outcome of this review.

The Council also amended the list of jurisdictions included on Annex II of the EU List which covers jurisdictions that have made sufficient commitments to reform their tax policies, but which remain subject to close monitoring while they are executing on these commitments. Accordingly, the Council decided to remove Morocco, Namibia and Saint Lucia from Annex II as they have fulfilled all their commitments. Jamaica has been added as it has committed to amend or abolish its harmful tax regime (special economic zone regime) by the end of 2022. The Council also decided to extend several deadlines of pending commitments with regards to Annex II. Australia and Jordan have been granted an extension of the deadline for fulfilling their commitments while the assessment of their reforms by the Organisation for Economic Co-operation and Development (OECD) Forum on Harmful Tax Practices is pending. Maldives has been given four additional months to ratify the OECD Multilateral Convention on Mutual Administrative Assistance.

Turkey, which is currently listed on Annex II, was not moved to Annex I of the EU List despite failing to make material progress in the effective implementation of the automatic exchange of information with all EU Member States. In its conclusions, the Council requested Turkey to solve all open issues regarding the effective exchange of information with all Member States within the following deadlines:

  • Turkey should fully commit on a high political level by 31 May 2021 to effectively activate its automatic information exchange relationship with the six remaining Member States by 30 June 2021.

  • For all 27 Member States, the information for fiscal year 2019 has to be sent no later than by 1 September 2021 and the information for fiscal years 2020 and 2021 has to be sent according to the OECD calendar for the automatic exchange of information and in any case no later than by, respectively, 30 September 2021 and 30 September 2022.

If Turkey fails to comply with any of the five above-stated deadlines, the conditions for Turkey to be listed on Annex I with one of the next updates would be met.

Next steps

The Council will continue to periodically review and update the EU List, taking into consideration the evolving deadlines for jurisdictions to deliver on their commitments and the evolution of the listing criteria that the EU uses to establish the EU List. Up until 2019, the EU List was regularly updated without a set schedule, to reflect the reforms undertaken by third countries. However, from 2020, Member States have agreed that the EU List will be updated no more than twice a year, to ensure a more stable listing process, business certainty and so that Member States can effectively apply defensive measures against listed jurisdictions. The next revision to the EU List is expected in October 2021.

In its 15 July 2020 Communication, the European Commission made concrete proposals for enhancing tax good governance in the EU as well as externally. The proposals included, among others, a reform of the Code of Conduct mandate as well as a review of the EU List to ensure that it is still effective and able to address today’s challenges.5 Also, in November 2020, the Council approved conclusions on fair and effective taxation with which the Council expressed its support on the discussion regarding the revision of the Code of Conduct mandate.6 For now, Member States have concluded they will pause their discussions and “continue to discuss the scope of the mandate as soon as there are relevant developments at international level.” In any case, the Member States will continue their negotiations no later than by the beginning of 2022. The aim for these negotiations is to result in changes in the criteria used for the EU Listing, which could result in the inclusion of minimum tax notions in the criteria.


Companies with activities in jurisdictions listed as non-cooperative are advised to understand the implications of a jurisdiction being included on Annex I, including:

  • Reporting obligations which arise from the mandatory disclosure rules (MDR) contained in Directive 2011/16/EU as amended by Council Directive (EU) 2018/822 (MDR Directive or DAC6), which inter alia require the disclosure of cross-border arrangements that involve deductible cross-border payments when the recipient of the payment is tax resident in a jurisdiction included on the EU List of non-cooperative jurisdictions for tax purposes.

  • Member States may consider applying one or more defensive measures, including both taxation measures and measures outside the field of taxation, aimed at preventing the erosion of their tax bases. These may include measures such as non-deductibility of costs, enhanced controlled foreign company rules or withholding tax measures, among others.[vii]

As the work on the EU List is a dynamic process, companies should continue to monitor developments closely, including the introduction of defensive measures towards non-cooperative jurisdictions by other Member States.


For additional information with respect to this Alert, please contact the following:

EY Société d’Avocats, Paris

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Munich

Ernst & Young Belastingadviseurs LLP, Amsterdam

Ernst & Young Belastingadviseurs LLP, Rotterdam

Ernst & Young LLP (United States), Global Tax Desk Network, New York



  1. See EY Global Tax Alert, Council of the European Union publishes list of uncooperative jurisdictions for tax purposes, dated 6 December 2017.

  2. See EY Global Tax Alert, European Commission adopts first counter-measures on listed non-cooperative tax jurisdictions, dated 22 March 2018.

  3. See EY Global Tax alert, EU Code of Conduct Group issues update report, including new guidance, dated 12 December 2019.

  4. See EY Global Tax Alert, Luxembourg implements defensive measures related to EU-listed non-cooperative jurisdictions, dated 17 February 2021.

  5. See EY Global Tax Alert, European Commission publishes communication on intensifying the work on tax transparency and harmful tax competition by means of advocating Tax Good Governance in the EU and beyond, dated 20 July 2020.

  6. See EY Global Tax Alert, EU Finance Ministers consider tax priorities and expansion of DAC obligations, dated 7 December 2020.

  7. See for information on available defensive measures.


The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


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