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EU Commission publishes first steps in new list of non-cooperative jurisdictions

Monday, 19 September, 2016

The European Commission has issued a preliminary analysis of third countries that are to be assessed as potentially non-cooperative tax jurisdictions.


The process for establishing the 'Common EU list of third country jurisdictions for tax purposes' was announced in January this year, as part of a draft anti-avoidance directive. It is aimed at countries that the EU Commission considers 'refuse to play fair' by its definition of 'tax good governance standards'.

The Commission has started the process by applying a 'neutral scoreboard of indicators' (pre-assessment) to identify which countries the EU 'should start a dialogue with regarding tax good governance issues' and to help 'inform member states' choices when deciding which countries they should begin screening' – which will start next year.

The scoreboard presents information on every country under three indicators: economic ties to the EU, financial activity, and stability factors but it does not represent any judgment of third countries, nor is it a preliminary EU list.

Exemptions and indicators

All non-EU countries and tax jurisdictions in the world were analysed to determine their risk of facilitating tax avoidance. The original announcement in January stated that there would be no special exemptions for developing countries, but that appears to have been retracted. The Commission's preliminary 'scoreboard of indicators' explicitly excludes the 48 countries identified by the United Nations as the least developed. It also excludes the five jurisdictions that have a transparency agreement with the EU – i.e. Switzerland, Liechtenstein, Andorra, Monaco and San Marino – as well as the 28 EU member states themselves.

That leaves 160 jurisdictions on the initial screening list. The Commission has ranked these in two stages. The first stage is a measure of their 'economic relevance' based on the strength of their economic ties with the EU, their level of financial activity, and their political and social stability (selection indicators).

Once the most economically relevant jurisdictions were identified, the Commission did a basic assessment of the potential risk level of these jurisdictions facilitating tax avoidance. The risk indicators used were: transparency and exchange of information; the existence of preferential tax regimes; and the lack of corporate income tax or a zero corporate tax rate.

Member states will now decide which jurisdictions are to be 'screened'. After discussions with these countries, the Commission will recommend which countries should be listed. The aim is to being screening the selected countries next January, with a view to having a first EU list of non-cooperative tax jurisdictions before the end of 2017.

'A common EU list of non-cooperative jurisdictions will carry much more weight than the current patchwork of national lists when dealing with non-EU countries that refuse to comply with international tax good governance standards. An EU list will also prevent aggressive tax planners from abusing mismatches between the different national systems', says the EU Commission.

  • The OECD is also running a similar but independent blacklisting process using its own criteria.
  • In June 2015, the EU Commission published a so-called 'blacklist' of 30 'non-cooperative' jurisdictions which the Commission claims to not meet EU standards of transparency, exchange of information and fair tax competition. However, many were cautious of this list, which George Hodgson, Deputy Chief Executive of STEP called 'a curious piece of work'.



Submitted by William Ahern on Tue, 20/09/2016 - 01:08

The EU has a nerve running around the world judging individual tax systems against their criteria. They would be better off trying to do something about their bloated and inefficient bureaucracies . As they continue to lose influence in the world people will respond by saying " it's a compliment to be on your list" or simply "who cares?"