By Davide Anghileri, University of Lausanne
The European Union’s Economic and Financial Affairs Council (ECOFIN) updated the EU’s blacklist of non-cooperative jurisdictions in taxation matters, adding three countries and deleting three others, during its meeting held in Brussels today. In addition, the British Virgin Islands, Anguilla, Antigua and Barbuda, and Dominica have become the newest additions to the EU’s “grey” list.
The ECOFIN today also agreed on a Commission proposal aimed at achieving greater transparency for tax planning schemes through a system of mandatory reporting by intermediaries.
With these measures, the EU intends to enhance tax transparency worldwide as it believes that this is the key to combatting tax avoidance and tax evasion, said Vladislav Goranov, minister for finance of Bulgaria, which currently holds the Council presidency.
Caribbean jurisdictions & EU blacklist
As expected on account of press leaks and an earlier EU notice, the Council added the Bahamas, Saint Kitts and Nevis, and the US Virgin Islands to its blacklist and removed three countries, Bahrain, the Marshall Islands, and Saint Lucia.
The three Caribbean jurisdictions added and several others had not been previously assessed for compliance with EU tax cooperation standards because they were badly hit by the hurricanes in summer 2017. Hence, the screening of their tax systems had been put on hold until early 2018.
In the light of the responses received, the Council included the three island nations to its list of non-cooperative jurisdictions (Annex I of the December conclusions) while Anguilla, Antigua and Barbuda, the British Virgin Islands and Dominica were added to Annex II of the December conclusions, the EU’s so-called “grey list.”
The grey list is comprised of countries that do not meet the EU requirements but that have pledged to change their rules. The grey-list countries will be subject to close EU monitoring.
With respect to the Turks and Caicos Islands, the assessment is not yet complete; the EU expects to receive clarifications by 31 March.
The Council said it removed Bahrain, the Marshall Islands, and Saint Lucia from the list of non-cooperative jurisdictions because these jurisdictions made commitments to reform their tax policies after being placed on the blacklist on 5 December 2017. These three jurisdictions are moved from the blacklist, in Annex I of the December conclusions, to the grey list, in Annex II.
Therefore, nine jurisdictions remain on the blacklist: American Samoa, Bahamas, Guam, Namibia, Palau, Samoa, Saint Kitts and Nevis, Trinidad and Tobago, and the US Virgin Islands.
Intermediary reporting
The Council agreed also on a draft directive that requires intermediaries that design, market, organise or make available for implementation or manage the implementation of a reportable cross-border arrangement or tax planning schemes to report schemes that are considered potentially aggressive.
The member states will be required to automatically exchange with other EU nations the information they receive from intermediaries through a centralised database.
The aim is to achieve greater transparency of tax planning schemes and have more instruments to counteract harmful arrangements to protect the tax bases from erosion as tax planning structures become ever more sophisticated.
The directive establishes hallmarks to identify the types of schemes to be reported to the tax authorities. Some of these are generic, while others are specific and related to cross-border transactions, automatic exchange of information, beneficial ownership, or transfer pricing arrangements.
The directive states that the requirement to report a scheme does not imply that it is harmful, only that it merits scrutiny.
The new reporting requirements would be applied from 1 July 2020. Member states would be obliged to exchange information every three months, namely, within one month after the end of the quarter in which the information was filed. The first automatic exchange of information would thus be completed by 31 October 2020.
The Council will adopt the directive without further discussion once the text has been finalised in all official languages. Member States will have until 31 December 2019 to transpose it into national laws and regulations.
The directive requires unanimity within the Council, after consulting the European Parliament. The Parliament voted in favour of the measure its opinion of 1 March.
Editor’s note: this article was corrected 4/11/2018 to reflect the correct date for the transposition of the directive into law.
Davide Anghileri
Davide Anghileri is a PhD candidate at the University of Lausanne, where he is writing his thesis on the attribution of profits to PEs. He researches transfer pricing issues and lectures for the Master of Advanced Studies in International Taxation and Executive Program on Transfer Pricing.
Anghileri, a Contributing Editor at MNE Tax, previously worked as a policy advisor to the Swiss government on BEPS issues.
Davide can be reached at [email protected].
Latest posts by Davide Anghileri (see all)
- Swiss government approves new law governing tax treaties - November 11, 2020
- EU states’ compliance with tax avoidance directives assessed in Commission report - August 26, 2020
- Italy clarifies VAT reporting obligations of online marketplaces - June 16, 2020
- EU blacklist: Cayman Islands added with other three jurisdictions - February 18, 2020
- Italy adopts digital services tax, notional interest deduction - January 8, 2020
Be the first to comment