Tax

On 20 February 2024 the EU published an update to its so-called “Blacklist” of jurisdictions that are not cooperative for tax purposes and “Grey List” of cooperative jurisdictions that have not yet fully met their commitments to comply with tax good governance criteria.

Whilst various jurisdictions have been removed from the lists, no new jurisdictions have been added to the Blacklist and the only jurisdictions added to the Grey List were those previously on the Blacklist (see further detail below).

Changes to the EU Blacklist

The Bahamas and Turks and Caicos Islands have both been removed from the Blacklist. They had previously been listed for facilitating offshore structures and arrangements aimed at attracting profits without real economic substance.

Belize and Seychelles have been removed from the Blacklist, having been added in October 2023 following a negative assessment by the OECD Global Forum regarding the exchange of information on request. These jurisdictions have been moved to the Grey List pending a supplementary review by the Global Forum.

The EU Blacklist now comprises American Samoa, Anguilla, Antigua and Barbuda, Fiji, Guam, Palau, Panama, the Russian Federation, Samoa, Trinidad and Tobago, the US Virgin Islands and Vanuatu.

Changes to the EU Grey List

Albania and Hong Kong have been removed from the Grey List, having fulfilled their commitments to amend what were previously identified as harmful tax regimes.

Aruba and Israel fulfilled their commitments relating to the automatic exchange of information and have therefore also been removed from the Grey List.

As mentioned above, Belize and Seychelles have been moved from the Blacklist to the Grey List.

Finally, Botswana and Dominica received positive ratings with respect to the exchange of information on request, and have thus been removed from the Grey List.

The EU Grey List now comprises Armenia, Belize, the British Virgin Islands, Costa Rica, Curaçao, Eswatini, Malaysia, Seychelles, Turkey and Vietnam.

Key action for private fund sponsors

As we have summarised previously, contractual undertakings relating to the EU Blacklist and EU Grey List (for example, undertakings not to invest through entities established in Blacklist or Grey List jurisdictions) may have been included in investor side letters and private fund sponsors should undertake a review of such provisions accordingly, although it may be unlikely that any such side letter provisions are impacted this time around since no new jurisdictions have been added to the Blacklist and Grey List in the latest update.

Additionally, given that certain EU countries have introduced measures targeting jurisdictions on the EU Blacklist, private fund sponsors should consider carefully any issues with using entities, or working with investors, in such jurisdictions.

The next update to the Blacklist and Grey List is due in October 2024.