Listing of tax havens by the EU

14-05-2018

Broadly speaking, 'tax havens' provide taxpayers, both legal and natural persons, with opportunities for tax avoidance, while their secrecy and opacity also serves to hide the origin of the proceeds of illegal and criminal activities. One might ask why establishing a list of tax havens or high-risk countries is useful. Drawing up such lists started with action to stop harmful tax practices arising from the discrepancy between the global reach of financial flows and the geographically limited scope of jurisdictions, matching or inside national borders. However tax havens are referred to, they all have one thing in common: they make it possible to escape taxation. Distinctive characteristics of tax havens include low or zero taxation, fictitious residences (with no bearing on reality) and tax secrecy. The last two are key methods for hiding ultimate beneficial owners. In the EU, the process of adopting a common list of non-cooperative tax jurisdictions, which is also central to determining whether a third country presents a high risk in relation to money-laundering, was initiated as part of efforts to further good tax governance, and its external dimension. On 5 December 2017, the Council adopted a first common list resulting from the assessment of third countries against distinctive criteria. Pursuing the assessment process, the Council has updated the list on the basis of commitments received, while also reviewing countries that had not yet been assessed. This briefing updates and develops an earlier one, from December 2017 'Understanding the rationale for compiling 'tax haven' lists', PE 614.633.

Broadly speaking, 'tax havens' provide taxpayers, both legal and natural persons, with opportunities for tax avoidance, while their secrecy and opacity also serves to hide the origin of the proceeds of illegal and criminal activities. One might ask why establishing a list of tax havens or high-risk countries is useful. Drawing up such lists started with action to stop harmful tax practices arising from the discrepancy between the global reach of financial flows and the geographically limited scope of jurisdictions, matching or inside national borders. However tax havens are referred to, they all have one thing in common: they make it possible to escape taxation. Distinctive characteristics of tax havens include low or zero taxation, fictitious residences (with no bearing on reality) and tax secrecy. The last two are key methods for hiding ultimate beneficial owners. In the EU, the process of adopting a common list of non-cooperative tax jurisdictions, which is also central to determining whether a third country presents a high risk in relation to money-laundering, was initiated as part of efforts to further good tax governance, and its external dimension. On 5 December 2017, the Council adopted a first common list resulting from the assessment of third countries against distinctive criteria. Pursuing the assessment process, the Council has updated the list on the basis of commitments received, while also reviewing countries that had not yet been assessed. This briefing updates and develops an earlier one, from December 2017 'Understanding the rationale for compiling 'tax haven' lists', PE 614.633.