EU blacklist of non-cooperative tax jurisdictions updated

On 17 October 2023 Ecofin, being the EU Finance Ministers, updated the EU list of non-cooperative tax jurisdictions (“EU Blacklist”). It was decided to add Antigua and Barbuda, Belize and the Seychelles. At the same time, three jurisdictions were removed from the list: British Virgin Islands, Costa Rica and the Marshall Islands. Taking into account these amendments, the EU Blacklist consists of the following countries or territories: Antigua and Barbuda, Anguilla, Bahamas, Belize, Fiji, Guam, Palau, Panama, Russia, Samoa, Seychelles, Trinidad and Tobago, Turks and Caicos Islands, US Virgin Islands, US Samoa and Vanuatu.

Tax implications in the Netherlands
The amendments of the EU Blacklist do not have an immediate effect for Dutch corporate income taxpayers considering that the blacklist for Dutch tax purposes that applies during the calendar year 2023 has been determined in 2022. Any revisit of the Dutch blacklist takes place at the end of a running calendar year without retroactive effect.

Included in the blacklist that applies for Dutch tax purposes are (i) jurisdictions without a statutory profit tax and states with a statutory profit tax rate of less than 9% and (ii) non-cooperative jurisdictions placed on the EU Blacklist. Current jurisdictions on the Dutch blacklist are: Anguilla, Bahama’s, Bahrain, Barbados, Bermuda, British Virgin Islands, Fiji, Guernsey, Guam, Isle of Man, Jersey, Cayman Islands, Oman, Palau, Panama, Samoa, Trinidad and Tobago, Turkmenistan, Turks and Caicos Islands, the United Arab Emirates, the US Virgin Islands, US Samoa and Vanuatu.

The effects of being on the Dutch blacklist are:

1. the application of controlled foreign corporation rules (subject to certain conditions);
2. the non-eligibility for obtaining an advance tax ruling when in a transaction or corporate structure a Dutch blacklisted jurisdiction is involved;
3. the application of the 25.8% (2023) withholding tax on interest and royalties paid directly or indirectly to subsidiaries or permanent establishments. From 1 January 2024, a withholding tax will also apply to (dividend) distributions.

Notwithstanding the above it is noted however that the changes to the EU Blacklist shall have an immediate effect under Dutch law for mandatory disclosure purposes under DAC6 because of the explicit reference in hallmark C to the EU Blacklist.