UPDATE OF THE NON-COOPERATIVE JURISDICTIONS

17.02.2023

The list of non-cooperative jurisdictions for tax purposes has been updated on 14 February 2023 by the Council.

Four jurisdictions have been added:

  1. The British Virgin Islands
  2. Costa Rica
  3. The Marshall Islands
  4. Russia

The list now comprises a total of 16 jurisdictions.

Practical implications include, for EU taxpayers who engage in (intra)group transactions with parties who are residents in these jurisdictions, for instance:

  • Reporting implications:
    • DAC6 implications (mainly hallmark C1(b)(ii) concerning cross-border deductible payments made a party established in such non-cooperative jurisdiction), especially since the main benefit test does not apply to this hallmark
    • The (Luxembourg) taxpayer needs to report relevant intragroup transactions concerning a (or more) non-cooperative jurisdiction in its tax return
  • Interest and royalties’ payments made by a EU taxpayer to a related party located in one of these jurisdictions, except if the EU taxpayer can evidence that the transaction is made for valid business reasons reflecting the economic reality (applicable as of 1 January 2024)

The EU press release can be found here.

For practical questions, please feel free to reach out to us !