Company activities in countries on the EU List can affect a company's reputation and may give rise to questions from contractual parties, investors, and business partners, and transactions with companies in countries on the EU List may be subject to reporting obligations (under e.g. DAC6) and preventive tax measures, such as limiting the deductibility of interest and application of withholding tax.
Countries are often included on the EU List because they have not engaged in constructive dialogue with the EU on designing better tax policies or because they have failed to implement tax reforms that they had otherwise committed to.
The Marshall Islands are one of the world's largest ship flag states. The Marshall Islands have been placed on the EU List due to concerns from the EU about whether the country which has zero or only nominal rate of corporate income tax attracts profits without real economic activity. In particular, the Marshall Islands is found to be lacking in the enforcement of economic substance requirements. The Marshall Islands have been listed already once, in 2018.
The EU List also includes other large ship flag states such as Panama and the Bahamas. The British Virgin Islands have now been placed on the EU List for failing to meet OECD's standards in respect of exchange of tax information.
The EU List is updated twice a year (next time in October 2023). The press release from the EU Council is available in the link below:
We are available if you have any questions about activities in countries that are on the EU's list of non-cooperative tax jurisdictions.