British Virgin Islands, Costa Rica, Marshall Islands and Russia Included in the EU List of Non-Cooperative Jurisdictions for Tax Purposes
On 14 February 2023, the Council of the European Union announced its decision to add the British Virgin Islands, Costa Rica, Marshall Islands and Russia to the EU list of non-cooperative jurisdictions for tax purposes.
The EU list of non-cooperative jurisdictions for tax purposes now consists of;
- American Samoa
- British Virgin Islands
- Costa Rica
- Marshall Islands
- Trinidad and Tobago
- Turks and Caicos Islands
- US Virgin Islands
The Council of Europe expects all the above-listed countries to improve their legal framework and to work towards compliance with international standards in taxation.
Cyprus – Tax implications
Withholding Taxes (WHT) on Dividends, Interests, Royalties as well as DAC6
Affected companies are;
- companies registered/incorporated in the blacklisted jurisdictions
- companies registered/incorporated in the blacklisted jurisdictions and that are not tax residents of any other jurisdiction
Cyprus does not apply WHT dividends paid to non-residents, however, from 31 December 2022 above mentioned affected company categories will be subject to 17% WHT on dividends if the company holds more than 50% of the share capital or voting rights of the Cyprus resident company issuing the dividend or the company is entitled to receive more than 50% of the profits generated by the Cyprus resident company.
Royalties: 10% WHT applicable to royalty income gained from rights granted for use outside Cyprus.
DAC6 – the mandatory disclosure and exchange of information on reportable cross-border tax arrangements: Transactions involving deductible cross-border payments between associated enterprises may be reportable under the DAC6 Law if the recipient is resident in a county that is on the EU Black List.
Companies should revise their structures and transactions to assess the impact of the new EU Black List on their operations.
For further information and clarifications please contact us via email at firstname.lastname@example.org or via telephone at +357 22262108