Executive summary

On 10 October 2025, the Council of the European Union (the Council) held an Economic and Financial Affairs Council (ECOFIN) meeting in which Finance Ministers approved the Council Conclusions on the "EU list of non-cooperative jurisdictions for tax purposes" (EU List).

No changes were made to Annex I. Vietnam was removed from Annex II; Greenland, Jordan, Morocco and Montenegro were added.

The Council will continue to review and update the EU List biannually, with the next update due in February 2026.

Detailed discussion

Background

The EU started working on the list of noncooperative jurisdictions for tax purposes in 2016. On 5 December 2017, the Council published the first EU List of noncooperative jurisdictions for tax purposes, comprised of two annexes. Annex I includes jurisdictions that fail to meet the EU's criteria by the required deadline, and Annex II includes jurisdictions that have made sufficient commitments to reform their tax policies but remain subject to close monitoring while executing their commitments. Once a jurisdiction has executed all of its commitments, it is removed from Annex II.

The initial Annex I list included 17 jurisdictions that were deemed to have failed to meet relevant criteria established by the European Commission (the Commission). Since the release of the EU List, there have been multiple changes to its composition based on recommendations made by the Code of Conduct Group for Business Taxation (COCG). These changes may occur if, for example, the EU COCG identifies new jurisdictions or regimes or reassesses jurisdictions already on the EU List. A delisting for both Annex I and Annex II is considered justified if an expert assessment establishes that the jurisdiction now meets all the conditions posed by the COCG.

The Commission also instituted the first countermeasures against listed noncooperative tax jurisdictions by adopting a Communication in March 2018 that set new requirements targeting tax avoidance in EU legislation governing, in particular, financing and investment operations. The requirements aim to ensure that EU external development and investment funds cannot be channeled or transited through entities in jurisdictions listed in Annex I without being confronted with countermeasures.

Moreover, in 2019, the Council released additional guidance on defensive measures toward noncooperative jurisdictions. Concurrently, it also released guidance on assessing jurisdictions with notional interest deduction regimes and the treatment of partnerships under criterion 2.2 (existence of tax regimes that facilitate offshore structures that attract profits without real economic activity). In accordance with the guidance on defensive measures mentioned above, EU Member States are required, as of 1 January 2021, to use Annex I in applying at least one of four specific legislative measures:

1. Nondeductibility of costs incurred in a listed jurisdiction
2. Controlled-foreign-company (CFC) rules
3. Withholding tax measures
4. Limitation of the participation exemption on shareholder dividends

Many Member States have already adopted or drafted legislation for these defensive measures.

In October 2023, the COCG published its multiannual work package (2023—2028), which mentions that the group could explore how to facilitate the proper functioning of the Pillar Two rules by making use of the EU listing process. The COCG will also continue to discuss the new beneficial ownership criterion (criterion 1.4) and the extension of the geographical scope of its EU list screening process, which now encompasses approximately 95 non-EU jurisdictions.

Next steps

The Council will periodically review and update the EU List, taking into consideration the evolving deadlines for jurisdictions to deliver on their commitments and the evolution of the listing criteria that the EU uses to establish the EU List. Until 2019, the EU List was regularly updated without a fixed schedule to reflect the reforms undertaken by third countries. However, beginning in 2020, Member States agreed that the EU List will be updated no more than twice a year to ensure (i) a more stable listing process, (ii) business certainty and (iii) that Member States can effectively apply defensive measures against listed jurisdictions. Accordingly, the next revision to the EU List is expected in February 2026.

Implications

With its listing process, the EU continues to exert pressure on third states to enhance transparency and remove harmful elements from their tax systems. Businesses with activities in jurisdictions listed as noncooperative should understand the implications of a jurisdiction being included in the EU List, including:

• Reporting obligations arising from the mandatory disclosure rules (MDR) contained in Directive 2011/16/EU as amended by Council Directive (EU) 2018/822 (MDR Directive or DAC6) require, in part, the disclosure of cross-border arrangements that involve cross-border deductible payments when the recipient of the payment is tax-resident in a jurisdiction included on the EU List of noncooperative jurisdictions for tax purposes.
• EU Member States may consider applying one or more defensive measures, including tax and non-tax measures, to prevent the erosion of their tax bases. These may include measures such as nondeducibility of costs, enhanced CFC rules or withholding tax measures, among others.

The lists will also have implications for public country-by-country reporting (CbCR), under which information should be disclosed on a country-by-country (CbC) basis and thus be disaggregated for all EU Member States and all jurisdictions included in the EU List (on the first of March of the financial year for which the report should be drawn up) and the state-of-play overview (on the first of March of the financial year for which the report should be drawn up for two years consecutively). Further, CbC data that relates to those third jurisdictions must be published without delay; therefore, MNE groups cannot use the safeguard clause included in the public CbCR rules to delay the publication for data concerning those jurisdictions.

As the work of the EU COCG is a dynamic process, companies should continue to closely monitor developments, including other Member States' introduction of defensive measures toward noncooperative jurisdictions.

Annex: Jurisdiction status as of 10 October 2025