Panama and Vietnam removed from EU list of non-cooperative jurisdictions for tax purposes

Following this update, the EU blacklist comprises eight jurisdictions:

• American Samoa
• Anguilla
• Guam
• Palau
• Russia
• Turks and Caicos Islands
• US Virgin Islands
• Vanuatu

The EU blacklist takes the form of Annex I to conclusions adopted by the ECOFIN Council, and lists jurisdictions that have failed to meet agreed international tax standards. Alongside it, Annex II serves as a state of play document, capturing those jurisdictions that have committed to implement good tax governance standards but are not yet fully compliant.

Panama had been included in Annex I of the EU blacklist since February 2020 but has now reformed its harmful foreign-source income exemption regime. It has also been granted a new review by the OECD Global Forum regarding its compliance with international standards on the exchange of tax information on request.

Vietnam was included in Annex I in February 2026 after a Global Forum review revealed that the country did not meet the necessary standards for the exchange of tax information on request. After a series of reforms, it has also been granted a new review and will therefore be included in Annex II until that review has been carried out.

The revised list becomes official upon publication in the Official Journal of the EU. The next revision is due in February 2027.

Impact on Luxembourg investment structures

While Luxembourg tax law does not include specific withholding tax provisions for (deductible) payments to entities incorporated or resident in non-cooperative jurisdictions, inclusion on the EU blacklist may still trigger various consequences affecting investment structures in Luxembourg:

1. Non-tax deductibility of interest and royalties due to a related party established in a country or territory on the EU blacklist (under certain conditions), unless there are valid business reasons that reflect the economic reality.
2. Disclosure to the Luxembourg tax authorities of intragroup transactions with non-cooperative jurisdictions on the EU blacklist.
3. DAC 6 – Hallmark C1 related to “cross-border transactions”: tax-deductible cross-border payments made to an associated enterprise resident in a jurisdiction on the EU blacklist are within Hallmark C1(b)(ii), which is a standalone hallmark requiring reporting of cross-border arrangements regardless of the main benefit test. The arrangements should also be monitored to ensure they do not fall under Hallmark C1(b)(i): deductible cross-border payments made to an associated enterprise resident in a jurisdiction that does not impose corporate tax, or that imposes corporate tax at a rate of zero or almost zero.

See our newsflash for more detail on Luxembourg’s defensive measures against blacklisted jurisdictions.

Key takeaway

EU taxpayers carrying out transactions with related entities located in jurisdictions on the EU blacklist should assess the impact of the revised list on their operations, bearing in mind that the list is updated twice a year and must be monitored closely.