On February 18, 2020, the ECOFIN group included the Cayman Islands in the EU’s list of non-cooperative third country jurisdictions (the “EU Blacklist”). This action may (i) affect the tax treatment of income streams sourced in or flowing to the Cayman Islands; as well as (ii) trigger ad hoc reporting obligations.
In addition, because of the implications of the Cayman Islands’ demotion to the EU Blacklist in the various EU Member States and, in any event, given the expected reputational impact, it is possible that the Cayman Islands’ blacklisting may dissuade the use of Cayman Islands entities. If the Cayman Islands do not take measures to put an end to the blacklisting, the blacklisting may also encourage established businesses having material interactions with the European Union to assess the potential consequences of such blacklisting and to eventually consider moving to non-blacklisted jurisdictions. If the Cayman Islands take all the necessary measures to put an end to the blacklisting, they could be removed from the EU Blacklist in the next update which is expected in October 2020.
This note provides some background on the EU Blacklist, discusses the implication of the EU Blacklist inclusion and then takes a more in-depth look at the impact on some of the European major economies (France, Germany, Italy and the United Kingdom).
Please click here to read the full alert memorandum.