The establishment of a list of non-cooperative tax jurisdictions (tax havens) is a tool for securing a level playing field, and is part of the Commission's communication on an external strategy presented in the 2016 anti-tax avoidance package, which was already included in the June 2015 action plan on corporate taxation (see specific carriages). A common EU system for assessing, screening and listing third tax jurisdictions allows identifying those that are playing a particular role in tax avoidance and evasion, which can be used in base erosion and shifting profit practices.

A three-step process is defined in the external strategy communication which consists of:

• a neutral scoreboard of indicators (tool for helping to determine the potential risk level of each third country);
• a screening of third countries' tax good governance standards carried out by the Commission and the Code of Conduct Group, and
• a recommendation by the Commission to Member States on adding the identified jurisdictions to a common EU list of problematic tax jurisdictions.

On 15 September 2016, the Commission issued its 'scoreboard of indicators' for the screening of third countries.

In the Council, the Code of Conduct Group has worked on the preparation of the EU list, assessing indicators to be used to identify relevant third countries to be prioritised for screening, the criteria for assessing third countries' compliance and exploring possible common EU defensive measures.

The Council adopted conclusions on criteria and process leading to the establishment of the EU list of non-cooperative jurisdictions for tax purposes on 8 November 2016 in which it welcomed the preparatory work done by both the European Commission and the Code of Conduct Group. The conclusions entrust the Code of Conduct Group with the finalisation of its work on selection of the jurisdictions for screening on the basis of the European Commission's Scoreboard, and it establishes the steps preparing for the endorsement by the Council by the end of 2017 of the EU list of non-cooperative jurisdictions. The Council conclusions also approved the criteria set for assessing third-country tax jurisdictions (detailing requirements in term of ‘Tax transparency criteria’,’ Fair taxation’, ‘Implementation of anti-BEPS measures’ and foreseeing the definition of the duration of the reasonable timeframe referred to in the latters by the Code of Conduct Group). The conclusions also foresees that the list be regularly updated.

A total of 213 countries were pre-assessed, 92 countries were screened in the process of setting up the lists, 20 of which were found to meet the criteria, while 72 were asked to address deficiencies.

At the time of the adoption of the first version of the list (5 December 2017) these 72 countries were allotted in three lists:

• a list of 17 countries outside the EU that were found to be non-cooperative in tax matters,
• a list of eight countries for which the assessment will be made by the end of 2018, due to the fact that they were hit by a hurricane in September 2017, and
• a list of 48 countries which made commitments to remedy identified deficiencies, the implementation of which is monitored to assess the actual enforcement of the remedying actions that were communicated to the group before the adoption of the list.

The list was meant to be updated. The conclusions include a list of countermeasures as well as 'Guidelines for further process concerning the EU list of non-cooperative jurisdictions for tax. The update of the lists is published by the Council on its website.

References:

• Council, Conclusions on criteria and process leading to the establishment of the EU list of non-cooperative jurisdictions for tax purposes, 14166/16, 8 November 2016
• Council, Council conclusions on 'The EU list of non-cooperative jurisdictions for tax purposes', 5 December 2017
• Commission, Questions and Answers on the EU list of non-cooperative tax jurisdictions, 5 December 2017
• Council, The EU list of non-cooperative jurisdictions for tax purposes - State of play of the cooperation with the EU with respect to commitments taken to implement tax good governance principles, 16 February 2018
• Council, The EU list of non-cooperative jurisdictions for tax purposes -Compilation of letters seeking commitment, 6 March 2018
• Council, Taxation: EU list of non-cooperative jurisdictions, webpage

Further reading:

• European Parliament EPRS, Listing of tax havens by the EU, Briefing, October 2019
• European Parliament EPRS, Understanding the rationale for compiling 'tax haven' lists, Briefing, December 2017

Author: Cécile Remeur, Members' Research Service, legislative-train@europarl.europa.eu