The EU List of Non-Cooperative Jurisdictions for Tax Purposes

The EU list of non-cooperative jurisdictions (Annex I to the Council conclusions) is revised each February and October on the recommendation of the Code of Conduct Group. A jurisdiction is listed where it fails the EU criteria of tax transparency, fair taxation and implementation of the OECD anti-BEPS minimum standards and has not committed to remedy the deficiency. Jurisdictions that have committed to reform within a set period appear in Annex II, the "grey list", which carries no defensive measures.

On 17 February 2026 the Council added the Turks and Caicos Islands and Viet Nam and removed Fiji, Samoa and Trinidad and Tobago. Annex I now comprises American Samoa, Anguilla, Guam, Palau, Panama, the Russian Federation, the Turks and Caicos Islands, the United States Virgin Islands, Vanuatu and Viet Nam. Annex II comprises Belize, the British Virgin Islands, Brunei Darussalam, Eswatini, Greenland, Jordan, Montenegro, Morocco and Türkiye. The next revision is due in October 2026.

Cyprus applies defensive measures to payments made by a Cyprus company to an associated company incorporated, registered or tax resident in a listed jurisdiction and not tax resident elsewhere. Two conditions determine whether a payment is caught. First, the jurisdiction must appear in Annex I both at the time of payment and in the preceding calendar year: a newly listed jurisdiction is therefore caught only from the following calendar year, while a delisted jurisdiction falls out immediately. Payments to Fiji, Samoa and Trinidad and Tobago ceased to be caught on 17 February 2026; payments to Viet Nam and the Turks and Caicos Islands will be caught from 1 January 2027 if they remain listed. Second, the recipient must, alone or with associated persons, hold more than 50% of the capital, voting rights or profit rights of the payer. Payments to a permanent establishment in a listed jurisdiction are caught irrespective of where the head office is.

Where those conditions are met:

• dividends and interest bear Special Contribution for the Defence at 17%, withheld at source, subject to exceptions for companies and securities listed on a recognised stock exchange;
• royalties bear income tax at 10%, withheld at source;
• from 1 January 2026, no unilateral credit is given for tax paid by a permanent establishment in a listed jurisdiction, and interest on the acquisition of a wholly owned subsidiary there is not deductible.

The tax withheld is paid over by the end of the following month. A payer that does not withhold on a payment to an associated non-resident company must keep documentation of the recipient's residence and status for six years, and an anti-conduit rule disregards entities interposed outside Annex I without valid commercial reasons. The measures do not override double tax treaties; where a treaty denies Cyprus the right to tax, the treaty prevails and the Republic must seek renegotiation within three years. Russia is the only listed jurisdiction with a Cyprus treaty; Cyprus continues to honour it despite Russia's unilateral suspension in 2023, so Cyprus tax on dividends and interest to Russian residents is capped at 15% and royalties remain untaxed, subject to the anti-conduit rule and to sanctions.

Separately, from 1 January 2026 Cyprus applies a parallel regime to "low-tax jurisdictions" (corporate tax rate below 7.5%): 5% on dividends to a related company there, and non-deductibility of interest and royalties paid to it. Anguilla and Vanuatu fall in both categories; the measures for listed jurisdictions then prevail.

Deductible payments to an associated recipient in a listed jurisdiction are a reportable hallmark under DAC6 without regard to the main benefit test; EU external funding may not be channelled through entities in listed jurisdictions; and the list is a high-risk indicator in customer due diligence by Cyprus banks and obliged entities. Groups with entities in a listed jurisdiction should review their payment flows and the residence of each recipient before each revision of the list.

This note is intended to provide general information on the subject and does not constitute legal advice. For further information and for advice on specific circumstances please contact us.