Payments to Non-Cooperative Jurisdictions? Beware of potential tax implications.
As of 17 October 2023 the EU List of Non-Cooperative jurisdictions, the so called EU Blacklist, has been updated with 3 countries namely Antigua and Barbuda, Belize and Seychelles. At the same time 3 countries were removed from the list: British Virgin Islands, Costa Rica and Marshall Islands.
The full list now consists of 16 countries as shown in the below link:
Why does this matter?
Taxpayers should closely monitor the implications of any transactions with EU Blacklisted countries as this may trigger withholding tax and reporting obligations.
More specifically, as of 31 December 2022, Cyprus applies withholding taxes on any outbound payments of royalties, interest and dividends to companies which are on the list of EU-Non Cooperative jurisdictions.
In addition, arrangements which involve deductible cross-border payments to the black-listed jurisdictions may trigger mandatory disclosure rules. I.e. reporting obligations to the Cyprus tax authorities.
How can we help?
Our professional team remains available to assess the impact of the above measures on your organization, answer questions and offer advice where necessary.