Tax Update - EU list of non-cooperative jurisdictions for tax purposes
23 February 2023
As per the decision of the EU Council dated 14 February 2023, British Virgin Islands, Costa Rica, Marshall Islands and Russia have been added to the EU list of non-cooperative jurisdictions for tax purposes, which now is composed of the following countries:
- American Samoa
- Anguilla
- Bahamas
- British Virgin Islands
- Costa Rica
- Fiji
- Guam
- Marshall Islands
- Palau
- Panama
- Russia
- Samoa
- Trinidad and Tobago
- Turks and Caicos Islands
- US Virgin Islands
- Vanuatu
The list will be updated again in October 2023.
Cyprus Withholding Taxes (WHT) on payments of dividends, interest and royalties.
As from 31 December 2022, Cyprus applies the following WHT on payments of dividends, interest and royalties towards entities incorporated, registered or that are tax resident in an EU non-cooperative jurisdiction:
- Dividends: 17% WHT provided that the foreign entity, alone or jointly with other associated entities, holds more than 50% of the share capital or voting rights of the paying company or is entitled to receive more than 50% of the profits of the payer company.
- Interest: 30% WHT
- Royalties: 10% WHT except for royalty payments made by individuals.
Dividend, interest and royalty payments made to entities incorporated in the above jurisdictions, but which are tax resident in other jurisdictions are exempt from the abovementioned WHT provisions.
Additionally dividend and interest payments on securities listed on a recognized stock exchange are exempt from WHT.
Entities incorporated and or tax resident in the above jurisdictions fall under Hallmark C(1)(b)(ii) the EU Mandatory Disclosure Rules (DAC6) irrespective of whether the main benefit test is met or not. This may impact the reporting obligations of arrangements with entities from British Virgin Islands, Costa Rica, Marshall Islands and Russia that were previously not-reportable.
Our Tax teams remain at your disposal for further discussion on how the above provisions may impact your business.
Angelos Petrou,
Director, Tax Department