EU adopts...

A second public ‘grey’ list, or ‘watchlist’, of 47 jurisdictions that have committed to changing their tax rules to abide by EU standards on transparency and cooperation was also adopted. It includes Switzerland, Turkey and Hong Kong.

Morocco and Cape Verde were moved from the blacklist to the watchlist at a late hour after making last-minute commitments to tax reforms, officials said. The lists will be updated regularly. Blacklisted countries may no longer be used by EU institutions for international financial operations, and transactions involving them could be subject to closer scrutiny.

These penalties may have little effect in persuading the wealthiest tax havens to change course, however.

“Stronger countermeasures would have been preferable,” EU Commission Vice-president Valdis Dombrovskis told a news conference after the meeting. Some states, like Luxembourg and Malta, opposed stricter sanctions, officials said. The ministers ruled out imposing a withholding tax on transactions to tax havens as well as other financial sanctions. Britain had shown reticence over the process, EU officials said. No British overseas territories such as the Cayman Islands or Bermuda, nor the Channel Islands were put on the blacklist, in what was seen as a diplomatic victory for London. They were put on the grey list instead.

Bermuda was at the centre of the most recent large disclosure of offshore financial documents, the Paradise Papers.

Eight Caribbean islands recently hit by hurricanes, including Anguilla and the Bahamas, were given until March to comply with EU standards before a decision is made on their listing. EU states have not been screened and will not be on the list. The commission said none of the 28 members of the bloc can be classified as a tax haven, as all have agreed to respect EU tax standards.

But anti-poverty and fair tax groups said that if screened against EU criteria, countries like Luxembourg, Malta, the Netherlands and Ireland would all be on the EU list.

“The list cannot just comprise third countries but must also contain EU jurisdictions,” the German conservative vice-chair of the European Parliament’s economic affairs committee, Markus Ferber, said in a statement on Tuesday.