Six Things You Need to Know Now About The EU Common Blacklist.


One: As part of its tax avoidance agenda, the EU has proposed a new approach to deal with third countries that refuse to comply with tax good governance standards. The aim is to replace the current medley of national lists with a single EU list of third countries, which would result from a fair and objective screening and dialogue process with the third countries concerned.

Two:The European Parliament, many Member States and stakeholders have expressed strong support for a common EU listing process. If the EU acts as a united block in dealing with problematic third country tax jurisdictions, it will have a much stronger impact than the current patchwork of national approaches. It would also prevent aggressive tax planners from abusing mismatches between the different national systems.

Three: A single EU approach towards screening and listing third countries – based on clear, coherent and objective criteria – would also be easier for businesses to deal with and would eliminate administrative burdens caused by divergent national approaches. For the EU’s international partners, who sometimes struggle to understand Member States’ divergent national listing conditions, a common EU approach would create more clarity and legal certainty on what the EU expects when it comes to fair taxation.

Four:  The common EU list is intended as a “last resort” option. It would be a tool to deal with third countries that refuse to respect tax good governance principles, when all other attempts to engage with these countries have failed. The EU approach  sets out a clear, fair and objective EU process for listing third countries, based on three steps:

Step 1: The Commission will identify a set of third countries that may need to be screened by the EU. This will be done through a neutral scoreboard of indicators, which will determine the potential risk level of each third country’s tax system in facilitating tax avoidance. The Commission will present the findings of the Scoreboard to Member State experts in the Code of Conduct Group in Council.

Step 2:On the basis of the Scoreboard results, Member States should decide which third countries should be formally screened by the EU. This screening of the third countries’ tax good governance standards will be carried out by the Commission and the Code of Conduct Group. There will be a dialogue process with the third country in question, respecting the need to avoid reputational damage, through which it can react to any concerns raised or discuss deeper cooperation with the EU on tax matters.

Step 3:After the assessment process, the Commission will recommend to Member States which third countries should be put on a common EU list, and why. Member States should take the final decision on the third countries to be listed. The conditions for de-listing will be clearly communicated to each listed third country and the list will be reviewed on a regular basis.

 Five:The Commission work on the Scoreboard indicators and the pre-assessment (Step 1) is ongoing. It aims to present the first Scoreboard results to Member States in the second half of 2016. The Code of Conduct Group will decide which countries to screen and the criteria to be used. Member States want the common EU list to be ready by 2017.

Six: The EU External strategy states that Member States should apply common counter-measures against third countries on the EU list. These sanctions should be an incentive for the third country to improve its tax system and also protect Member States’ tax bases in the meantime. Member States will need to discuss and agree on the nature of these sanctions, based on their own national experiences and taking into account other defence measures (like those contained in the anti-tax avoidance Directive) in place in the EU.



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