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THE STATE OF THE EUROPEAN UNION
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required to identify the beneficial owner, or do
not transmit it to other territories.
The situation is further complicated when
“offshore service providers” offer nested struc-
tures to clients seeking anonymity. These involve
using various “legally favourable” jurisdictions,
with a trust sitting at the top of a structure of
shell companies and other legal entities. This
creates additional layers of opacity which re-
duce the risk of detection by the tax authorities.
The favoured instrument for this kind of
strategy is the trust, a device that derives from
Anglo-Saxon legal systems and offers the ad-
vantage of consisting in a simple contract be-
tween three parties which lacks a separate legal
personality. This means that, in some jurisdic-
tions, trusts are exempt from the registration
and accounting obligations that apply to com-
panies and foundations. As a result, it is some-
times difficult even to identity their existence,
let alone the type of agreement reached by the
parties to the contract or trust deed.
Automatic exchange of information and the
new European list of tax havens
In December 2017 the EU published a blacklist
and a grey list of “non-cooperative” countries,
after a process that took more than a year to
complete. Both lists are the result of the applica-
tion, to a group of pre-selected jurisdictions, of
three criteria approved at ECOFIN November
2016: transparency, fair taxation and the imple-
mentation of BEPS minimum standards.
Transparency
The transparency criterion is based entirely on
an up-to-date analysis of OECD studies of AEOI.
For the jurisdiction to avoid inclusion on the
blacklist, this criterion requires that it be com-
mitted to implementing the CRS, either by rati-
fying the Convention on Mutual Administrative
Assistance in Tax Matters or by signing bilateral
agreements for the automatic exchange of in-
formation with all Member States.
In its current form, the transparency criterion
sets a low bar, as it is sufficient for jurisdictions
to have entered into a “formal commitment” to
implement the CRS to avoid inclusion on the
blacklist. From 2018, this criterion will be sig-
nificantly strengthened, with the requirement
that the jurisdiction be evaluated as “largely
compliant” in the peer review process conduct-
ed by the Global Tax Forum of the OECD.
In this respect, the EU criterion leaves very
little room for discretion as it is based entirely on
the monitoring process and reports conducted
by the OECD. It is sufficient to check the data
published by the OECD to see which countries
the jurisdiction has decided to exchange infor-
mation with in order to know whether it com-
plies with the EU requirement. This evaluation
will include a consideration of whether the ter-
ritories supply information to all members of the
Global Forum or only do so on a selective basis
to a limited number of jurisdictions.
Transparency regarding beneficial owners and
establishment of centralized public registers of
companies and trusts
As part of this transparency criterion, the
ECOFIN agreement establishes a further condi-
tion, with effect from June 2019, requiring the
jurisdiction to ensure the availability of informa-
tion on beneficial ownership.
The importance of this for effective AEOI
was noted in the previous section. The first ele-
ment of the OECD CRS – the obligation on banks