Updated List of Non-cooperative Jurisdictions
The Council of the European Union updated their list of non-cooperative jurisdictions in February 2023; this list has been expanded to include the Russian Federation (in addition to other three countries) after it had been found that Russia failed to meet its commitment to address harmful aspects of a special tax regime for international holding companies.
The updated list of states included in the EU list of jurisdictions that fail to cooperate in tax affairs was published in Financial Newsletter No. 3/2023 and in a document titled Council’s Conclusions on the Revised EU List of Non-cooperative Jurisdictions for Tax Purposes dated 14 February 2023.
Inclusion of the Russian Federation in the list of non-cooperative jurisdictions can have broader tax implications from the perspective of Czech taxpayers; please find a short description thereof below.
CFC Rules
This measure was implemented in local legislation effective as of 1 January 2021. Based on the relevant measure, revenues of a Russian subsidiary will be included in the tax base of the Czech parent company (i.e. they will be taxed in the Czech Republic); this applies in the case where the Czech company holds investments greater than 50% (direct/indirect) in the Russian corporation.
DAC 6
The Russian Federation’s inclusion also has implications for the duty of notification on cross-border arrangements. If the Czech company carries tax deductible expenses against a Russian affiliate (or any corporation included in the list, as appropriate), it has to report the transaction (arrangement) (without a need to comply with the major test, which is the existence of a tax advantage).
If you need more information about this topic, please feel free to contact us.
Michaela Kozminská
kozminska@edmutilitas.cz![\"michaela-kozminska-23\"](\"/data/editor/michaela-kozminska-23.jpg\")
