Explainer · Cyprus tax

Two lists, two sets of rules: the EU blacklist and the Cyprus low-tax list

Many people assume that if a jurisdiction is not on the EU blacklist, a Cyprus company can pay it freely. That is not how Cyprus works. Cyprus applies two separate lists, and the British Virgin Islands, Cayman or Jersey can trigger Cyprus rules without being blacklisted by the EU.

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Sources: Council of the EU, European Commission, Official Journal of the EU, Cyprus Tax Department, Cyprus Ministry of Finance
Verified: 22 October 2026
Next review: 30 November 2026, or earlier if the Official Journal or the Cyprus Tax Department publishes an update

Facts

1. The EU list of non-cooperative jurisdictions (Annex I)

On 9 October 2026 the Council of the EU adopted the revised list. Annex I now contains 8 jurisdictions: American Samoa, Anguilla, Guam, Palau, Russia, the Turks and Caicos Islands, the US Virgin Islands and Vanuatu.

Panama and Viet Nam were removed from Annex I on the same day and moved to Annex II, pending a new review by the OECD Global Forum. Panama had been on Annex I since February 2020; the Council notes that it reformed its foreign-source income exemption regime.

The British Virgin Islands are in Annex II, not in Annex I. Annex II lists cooperative jurisdictions that have made commitments still being monitored.

The Council conclusions with the revised list (doc. 13854/26) were published in the Official Journal of the EU on 16 October 2026 as C/2026/5413. The previous version was published on 6 March 2026 (C/2026/1465).

2. The Cyprus list of low-tax jurisdictions (Circular 1/2026)

The Cyprus Tax Department determined, by Circular 1/2026, the low-tax jurisdictions for the tax year 2026 under Article 2 of the Income Tax Law and Article 2 of the Special Contribution for Defence Law. There are 11: Anguilla, Bahamas, Bahrain, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey, Turks and Caicos Islands and Vanuatu.

Anguilla and Vanuatu were also on the EU list in its October 2025 version. For as long as they remain on the EU list in 2026, the Cyprus rules for EU-listed jurisdictions apply to them instead of the low-tax rules.

Panama is not on the Cyprus low-tax list.

3. What each list triggers in Cyprus

Low-tax list. Dividends paid by a Cyprus company to a related company in a listed jurisdiction carry 5% Special Defence Contribution withheld at source. Interest and royalties paid to such a company are not deductible for the Cyprus payer.

EU list. Dividends paid to a related company registered or resident in an EU-listed jurisdiction carry 17% Special Defence Contribution withheld at source. Interest and royalties are subject to withholding tax under Article 21A of the Income Tax Law and Article 3B of the Special Contribution for Defence Law.

For Cyprus purposes in 2026, the EU list that counts is the version of October 2025, as long as the jurisdiction remains listed during 2026. That is why the Circular treats Anguilla and Vanuatu under the EU-list rules and the Turks and Caicos Islands, added to Annex I only in 2026, under the low-tax rules.

Jurisdiction	EU Annex I (9 Oct 2026)	Cyprus low-tax list 2026	Cyprus rules in 2026
American Samoa	Yes	No	EU-list rules
Anguilla	Yes	Yes	EU-list rules
Guam	Yes	No	EU-list rules
Palau	Yes	No	EU-list rules
Russia	Yes	No	EU-list rules
US Virgin Islands	Yes	No	EU-list rules
Vanuatu	Yes	Yes	EU-list rules
Turks and Caicos Islands	Yes	Yes	Low-tax rules in 2026
British Virgin Islands	No	Yes	Low-tax rules
Bahamas	No	Yes	Low-tax rules
Bahrain	No	Yes	Low-tax rules
Bermuda	No	Yes	Low-tax rules
Cayman Islands	No	Yes	Low-tax rules
Guernsey	No	Yes	Low-tax rules
Isle of Man	No	Yes	Low-tax rules
Jersey	No	Yes	Low-tax rules
Panama	No	No	EU-list rules while listed in 2026; removed 9 Oct 2026

ENCC analysis

What follows is our reading of the facts above. It is not tax advice; confirm any payment with your Cyprus tax adviser.

BVI is the classic surprise. A BVI company is not EU-blacklisted, yet for a Cyprus company it is a low-tax jurisdiction: 5% withheld on dividends to a related BVI company and no deduction for interest or royalties paid to it. A BVI holding above a Cyprus company deserves a fresh look in 2026.

Panama is moving in the right direction. Its removal from Annex I, after a real reform, is good news for anyone with Panamanian structures. When the removal takes effect for Cyprus withholding depends on the publication in the Official Journal; until your adviser confirms that date, treat 2026 payments to a related Panamanian company as still in scope.

Turks and Caicos sits on both lists. In 2026 Cyprus applies the low-tax rules. If it is still on the EU list in the October 2026 version, the stricter EU-list rules are likely to apply from 2027.

Individuals are a different topic. These measures concern payments to companies. For a Cyprus tax resident individual with non-dom status the rule stays simple: no SDC on dividends.

Both lists move. The EU reviews its list twice a year and Cyprus publishes its low-tax list every year. A structure that was clean in January can be in scope in October.

Questions we hear often

Is Cyprus on any blacklist?

No. Cyprus is an EU member state and is not on the EU list of non-cooperative jurisdictions.

Is the BVI on the EU blacklist?

No. On 9 October 2026 the British Virgin Islands are in Annex II, not in Annex I. They are, however, on the Cyprus low-tax list for 2026.

Is Panama still blacklisted?

No. The Council removed Panama from Annex I on 9 October 2026 and moved it to Annex II. Panama is not on the Cyprus low-tax list.

Do these rules affect my personal dividends as a non-dom?

Not directly. The defensive measures target payments to companies. A Cyprus tax resident individual with non-dom status pays no SDC on dividends.

Official sources

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