The inclusion of Turkey on the European ‘black’ list of non-cooperative jurisdictions for tax purposes is once more causing trouble for Member States Although the subject is on the agenda of the European Finance Ministers next week (see other news), there was still no unanimous agreement in the Council of the EU on Friday 12 February.
“Turkey has told us that it still has a lot of technical problems”, explained a European source on Friday. So although the country has made efforts, it has not been able to meet, in the strict sense, its commitment for the end of 2020.
In February 2020, Turkey had in fact already escaped the EU’s ‘black’ list because the EU wanted to avoid new tensions with Ankara (see EUROPE 12428/2).
After intense discussions, the Ecofin Council had agreed to give it additional time, until 31 December 2020, to put its system for the automatic exchange of information on bank accounts in order. The country had omitted certain EU countries from its exchange, notably those with the most Turkish nationals, namely Austria, Belgium, Germany, the Netherlands, and France, as well as Cyprus, but for political reasons.
One year later, the same question arises and there are, according to the same source, two groups of countries that are opposed to each other. A first group, composed of France, Greece, Austria, Denmark and Cyprus, considers that, as it has not respected its commitment, Turkey should be placed on the ‘black’ list.
These countries would be open to the idea of granting Turkey additional time once again but on condition that the EU Council conclusions revising the list include very strict conditions, with a series of precise deadlines and a commitment on the part of the country at a high political level. The idea would be to have something “tangible” with Turkey so that this situation does not recur a third time, explained the same source.
The second group of countries, revolving around Germany, would like to see an approach that is“more diplomatic” and involving “softer language”. In concrete terms, it would prefer to keep Turkey for a certain period of time in the ‘grey’ list of countries that have made commitments.
“These countries want to take into account interests that go beyond taxation” explained our source. They are particularly concerned that excessively strict language could undermine the current dialogue between the EU and Turkey.
The EU Council’s Code of Conduct for Business Taxation Working Group is expected to meet again on Monday 15 February to try to reach an agreement before the Ecofin Council. If this fails, it may meet later and conclusions may be adopted by written procedure. As long as the agreement is reached in February, in order to respect the rule of revising the list every six months, this possible delay should not cause too many problems, our source considered.
Dominica comes in, Barbados exits
As to the rest of the list, Dominica, which has not received a sufficiently high rating from the OECD’s ‘Global Forum on Transparency and Exchange of Information for Tax Purposes’ on exchange of information on request, will return to the ‘black’ list.
On the other hand, Barbados, which was included in the list in October 2020 (see EUROPE 12571/18) for the same reason as Dominica, will now be removed from the list and placed on the ‘grey’ list of countries that have made commitments.
This new revision will in any case be watched very closely, after the recent revelations from the OpenLux survey which have rekindled criticism of the EU’s ‘black’ list (see EUROPE 12653/1). All the more so as the last update of the list had already led to strong criticism due to the withdrawal of the Cayman Islands (see EUROPE 12575/8). (Original version in French by Marion Fontana)