EU: Panama and Viet Nam Removed From Non-Cooperative Tax List

On October 9, 2026, EU Finance Ministers agreed the latest revision of the EU list of non-cooperative tax jurisdictions, removing Panama and Viet Nam from Annex I and moving both to Annex II pending an in-depth Global Forum review of their exchange-of-information frameworks. The Council also flagged fresh concerns for Anguilla and noted Vanuatu's transparency progress, leaving eight jurisdictions on Annex I: American Samoa, Anguilla, Guam, Palau, Russia, Turks and Caicos, the US Virgin Islands and Vanuatu.

EU parent companies with subsidiaries, holdings or financing vehicles in Panama or Viet Nam, and the banks and insurers that screen those counterparties against Annex I, must update their defensive-measure screens so the two jurisdictions are no longer treated as non-cooperative, while keeping the eight remaining listed jurisdictions inside controlled-foreign-company (CFC), cost non-deductibility, withholding and participation-exemption tests. No taxpayer filing date accompanies the list change: the Council conclusions take effect on October 9, 2026, but each Member State sets its own defensive-measure mechanics, so tax teams should confirm the transition in every jurisdiction where they operate. A screen that still treats Panama or Viet Nam as listed, or that drops a jurisdiction that stayed listed, misstates the tax position.

Which jurisdictions moved, and which remain on Annex I?

The October 9, 2026 revision produces two delistings from Annex I and one deterioration. Panama and Viet Nam leave the non-cooperative list after delivering economic-substance and transparency reforms; both move to Annex II, the cooperative-jurisdiction watchlist, while the Global Forum assesses their exchange-of-information frameworks. Anguilla, by contrast, drew new concerns for not addressing its exchange-of-information framework and was invited to engage with the EU Code of Conduct Group. Vanuatu was recognised for tax-transparency progress but stays on Annex I for unresolved concerns in another area.

Annex II itself reshuffled: Belize left it after meeting the exchange-of-information-on-request standard, Montenegro fulfilled its commitment to a Global Forum in-depth review but remains under monitoring, and Brunei Darussalam was granted more time to align its fair-taxation framework. Annex II now lists ten jurisdictions: British Virgin Islands, Brunei Darussalam, Eswatini, Greenland, Jordan, Montenegro, Morocco, Panama, Türkiye and Viet Nam.

Who must update defensive-measure screens?

Three groups carry exposure. EU parent companies with subsidiaries, holdings or financing vehicles in Panama or Viet Nam must re-run their CFC, withholding and participation-exemption analyses with the two jurisdictions reclassified. EU banks and insurers that apply Annex I defensive-measure screens to counterparty risk must drop Panama and Viet Nam from the non-cooperative filter. EU groups with payments, holdings or permanent establishments in the eight jurisdictions that remain on Annex I must keep those inside every defensive test, because Member-State measures continue to apply to them unchanged.

The Council reviews the list twice a year, in February and October, and Member-State defensive measures track it. Because each Member State transposes the list into its own CFC, non-deductibility, withholding and documentation rules, a group should verify the reclassification in every jurisdiction where it files, not only at EU level.

What happens if a screen misstates the list?

Member-State defensive measures continue to apply to the eight jurisdictions that remain on Annex I, so dropping any of them from a screen is an error. Treating Panama or Viet Nam as still listed, conversely, over-applies defensive measures that the October 9, 2026 revision lifts, and can misstate CFC inclusion, withholding positions and participation-exemption eligibility in tax returns and transfer-pricing files. There is no single EU penalty: the cost surfaces as misstated tax positions in each Member State where the group operates, corrected through that jurisdiction's domestic procedure.

Continuous, per-jurisdiction monitoring surfaces this kind of list revision the moment the Council publishes it, before stale screens propagate into a filing cycle.

What to do next: confirm where the group holds Panama, Viet Nam or remaining-Annex I exposure, refresh every Annex I defensive-measure screen against the October 9, 2026 revision, and brief the tax and treasury teams in each Member State of operation so the reclassification flows into the next compliance cycle.