UAE, Switzerland, Mauritius and Marshall Islands are Among Countries No Longer Considered Tax Havens by the European Union

In 2017, the European Union established a “blacklist” and a “gray list” of countries and territories which its finance ministers identified as havens for tax avoidance schemes. Blacklisted countries face stricter transactional controls than other nations, while gray list countries and territories are those that have made a demonstrated (but unmet) commitment to comply with EU standards – and that risk being blacklisted if they do not move forward with reform.

Around 40 Countries and Territories Remain Blacklisted or Grey-Listed as Offshore Tax Havens After Removal of UAE, Switzerland and Other Nations

According to a recent Reuters report, the United Arab Emirates (UAE) and the Marshall Islands have recently been removed from the EU’s tax haven blacklist. Reuters also reports that Switzerland, the Mauritius, the Marshall Islands, Albania, Costa Rica and Serbia have been removed from the grey list. Around 30 countries remain grey-listed, while the remaining blacklisted countries and territories include:

• American Samoa
• Belize
• Fiji
• Guam
• Oman
• Samoa
• Trinidad and Tobago
• S. Virgin Islands
• Vanuatu

While the move to de-blacklist the UAE and the Marshall Islands reflects these countries’ decision to cooperate with the EU on tax-related matters, critics of the decision argue that they have not done nearly enough to warrant being placed on a level playing field with countries that do more to prevent corporations and individuals from avoiding taxes. As quoted by Reuters, an Oxfam representative called the move a “whitewash,” and said that, “[d]espite recent reforms, both countries will continue to offer sweet treats to tax-dodging companies.”

What Does it Take for a Country to Be Blacklisted as a Tax Haven?

As the Reuters report explains, while the EU considers offering tax-free banking and investment opportunities to be “a sign of being a tax haven,” charging no tax does not automatically trigger blacklist status. As in the case of the UAE, for example, the EU’s issue was that the country allowed companies to incorporate without engaging in any domestic economic activity. The UAE still does not charge a corporate tax; but, according to Reuters, it has taken other steps to appease the EU.

Do U.S. Taxpayers Need to Be Concerned if They Have Assets in a Blacklisted or Grey-Listed Country? Contact a Washington DC International Tax Attorney to Find Out

For U.S. corporate and individual taxpayers, what are the implications of a country or territory being blacklisted or grey-listed by the EU? From a tax liability perspective, the answer is ultimately, “Not much.” There are many ways to legally reduce a company’s or individual’s domestic and international tax burden, and these include lawfully taking advantage of the benefits offered by so-called tax havens around the world. That said, all U.S. taxpayers with overseas holdings need to be aware of their tax reporting and payment obligations, including specifically those imposed by the Foreign Account Tax Compliance Act (FATCA).

Speak With a Washington DC International Tax Attorney at Thorn Law Group Today

If you have questions about FATCA compliance or any other international tax matter, Washington DC international tax attorney Kevin E. Thorn, managing partner at Thorn Law Group, can help. For a confidential initial consultation, call 202-349-4033 or inquire online now.