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October 6, 2021

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

Executive summary

On 5 October 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, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu. Anguilla, Dominica, and Seychelles were removed.

With respect to Annex II of the EU list (the so-called “gray” list) and the state of play of pending commitments, the Council decided to add six jurisdictions (Costa Rica, Hong Kong, Malaysia, North Macedonia, Qatar, and Uruguay) and to remove three jurisdictions (Australia, Eswatini and Maldives) from Annex II. Anguilla, Barbados, Botswana, Costa Rica, Dominica, Hong Kong, Jamaica, Jordan, Malaysia, North Macedonia, Qatar, Seychelles, Thailand, Turkey, and Uruguay are now the 15 jurisdictions listed on Annex II.

The Council will continue to review and update the EU List biannually, with the next update due in February 2022.

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 includes jurisdictions that fail to meet the EU’s criteria by the required deadline, and Annex II 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 (the 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 (COCG). 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 COCG.

The Commission has also adopted the first countermeasures against 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 without being confronted with countermeasures.

Moreover, the Council released in 2019 additional guidance on defensive measures towards non-cooperative jurisdictions. On the same date it also released guidance on the assessment of jurisdictions with 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).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 drafting of legislation of such defensive measures.

Revised EU List

On 5 October 2021, the Council held an Economic and Financial 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 removing Anguilla, Dominica, and Seychelles. According to the Council press release on the revised EU List, all three jurisdictions had previously been placed on the list because they did not meet the EU’s tax transparency criteria of being ranked as at least ‘largely compliant’ by the Organisation for Economic Co-operation and Development (OECD) Global Forum on Transparency and Exchange of Information regarding the exchange of information on request. The delisting was preceded by the Forum’s decision to grant these jurisdictions a supplementary review on this matter. As noted above, the revised Annex I of the EU List now includes nine jurisdictions: American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu.

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 Australia, Eswatini and Maldives from Annex II as they have fulfilled all their commitments. Costa Rica, Hong Kong, Malaysia, North Macedonia, Qatar, and Uruguay have been added to Annex II as:

  • Costa Rica, Hong Kong, Malaysia, Qatar, and Uruguay committed to amend or abolish their harmful foreign-source income exemption (FSIE) regimes by 31 December 2022. On 19 May 2021, the Group agreed to send letters to jurisdictions from which the COCG would seek commitments to repeal or amend their harmful FSIE regimes. In reply, the jurisdictions sent a letter to the COCG Chair with their commitment and the COCG recommended to include them in Annex II. For example, Hong Kong committed in its letter to amend its tax system in line with the guidance by 31 December 2022 such that the amended system will take effect on 1 January 2023 with no grandfathering arrangement.
  • North Macedonia and Qatar also committed to amend or abolish preferential tax regimes in the scope of the OECD Forum on Harmful Tax Practices before 31 December 2022.

Turkey remained in Annex II and was not included in Annex I despite failing to make the EU’s requested changes and repeatedly missing deadlines to start exchanging tax information with EU Member States. In February 2021, the EU Ministers had warned that Turkey would be added to Annex I with one of the next updates if it did not fulfill its commitments by the agreed deadlines.4 The conclusions of 5 October 2021 mention that even though progress has been made since the previous update, further steps need to be taken. Following the Council meeting, a statement by Austria, Cyprus, Denmark and Greece became available. While these Member States accept the Council conclusions, they also expressed the expectation that “Turkey will carry out the effective exchange of financial account information for fiscal years 2020 and onwards with all Member States in accordance with the Common Reporting Standard.”

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 February 2022.

In its 15 July 2020 Communication, the Commission made concrete proposals for enhancing tax good governance within and outside the EU. The proposals included, among others, an announcement of 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 for a process which would lead to a revision of the Code of Conduct mandate.6

For now, Member States have concluded that they will pause their discussions and “continue to discuss the scope of the mandate as soon as there are relevant developments at (the) international level.” These developments at an international level refer to the OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) negotiations on international tax reform (BEPS 2.0). 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.


With its listing process, the EU continues to exercise pressure on third states to enhance transparency and to remove harmful elements from their tax systems. It is expected that the jurisdictions that have made commitments in relation to their foreign-exempt income regimes will also take account of the broader negotiations on global minimum taxation triggered by the BEPS 2.0 project.

Businesses 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.

The lists will also have implications for the public Country-by-Country reporting as under these rules information should be disclosed on a country-by-country basis, and thus be disaggregated, for all 27 EU Member States and all jurisdictions included in the Annex I and Annex II of the EU List.7 Also, companies cannot delay the publication of commercially sensitive information for a period of up to five years if the information relates to jurisdictions listed on Annex I and Annex II of the EU List.

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, Rotterdam

Ernst & Young Belastingadviseurs LLP, Amsterdam

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, EU Member States adopt revised list of non-cooperative jurisdictions for tax purposes, dated 24 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 EY Global Tax Alert, EU Member States adopt public CbCR Directive, dated 28 September 2021.

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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