Time for a real reform to stop tax havens escaping the EU blacklist

Published: 15th February 2021

Tomorrow, Tuesday 16 February, European Union finance ministers will review the EU tax havens list, officially known as the EU list of non-cooperative jurisdictions for tax purposes. This is an assessment of non-EU countries according to the current blacklist criteria. This process started in 2017 and takes place twice a year. Currently, 12 countries are blacklisted and 10 are ‘grey-listed’.  

This year, Oxfam’s analysis finds that the EU tax havens list continues to fail in effectively identifying the countries which use harmful tax practices and help the richest dodge their tax bills. The list still gives a pass to all EU countries by not evaluating their tax practices. It also does not capture some of the world’s worst tax havens as it does not automatically blacklist zero or low tax rate jurisdictions.  

As a result, Oxfam’s 2021 analysis finds that:   

  • Only two out of 13 countries with a zero percent corporate tax rate are blacklisted.
  • Only one out of 18 countries with low corporate tax rates (<12.5%) are blacklisted.
  • In 2019, five EU member states - Cyprus, Ireland, Luxembourg, Malta and the Netherlands – continued to have economic indicators typical of tax havens (e.g. high levels of Foreign Direct Investment, intellectual property payments, interests, dividends). 
  • In 2019, Luxembourg had levels of Foreign Direct Investments coming in and out of the country 67 to 100 times bigger than its economic weight (GDP). Due to its dodgy tax practices, the country found itself at the centre of the recent #OpenLux investigation.

The EU has started this year to reform the overall blacklisting process, including the definition of harmful tax practices and the lists’ criteria. Based on the above findings, Oxfam makes the following recommendations to the Code of Conduct Group, in charge of the reform: 

  • Blacklist zero and low corporate tax jurisdictions: make zero and low corporate tax rates a standalone criterion of the EU tax haven list.
  • Include economic analysis to identify harmful tax regimes. Use levels of foreign direct investment and passive income as red flags for the identification of tax havens.
  • Properly screen EU countries: EU countries must be held to the same, if not higher, standards than non-EU countries.   

Based on our previous report and analysis, Oxfam also calls for the EU to increase the transparency of the screening process and to take into account the special circumstances of developing countries.  

Chiara Putaturo, Oxfam’s EU Policy Advisor on Tax and Inequalities, said: 

“This year, European governments have the opportunity to reform the EU blacklisting process. The current list captures hardly any real tax havens. There are 31 countries around the world with zero or low corporate tax rates, but only three of them are blacklisted. 

“The EU must look at what is happening in its own backyard – European countries are acting as tax havens. It is time the EU cleans up its act and end this looting of public resources. Letting big corporations pay little to no tax at the expense of ordinary people, especially during these hard times, is scandalous. The EU needs to broaden the definition of harmful tax practices, create a strong set of indicators and properly screen EU countries.” 

Notes to editors

  • Chiara Putaturo, Oxfam’s EU Policy Advisor on Tax and Inequalities, is available for comment. 
  • Download Oxfam's 2021 analysis.
  • Oxfam’s Report “Off the Hook” documents how the EU blacklisting process is not fit for purpose and helps to whitewash some of the world’s worst tax havens. Oxfam published an update of the analysis in 2020.
  • The tax rate of 12.5% reflects the minimum effective tax rate proposed in the last OECD-BEPS2 Pillar 2 Blueprint. Oxfam considers this rate too low to capture all tax dodging. 

Contact information

Jade Tenwick | EU Media lead | Brussels | jade.tenwick@oxfam.org | +32 473 56 22 60