The Code of Conduct Group (business taxation) is the body of the Council of the European Union that prepares every revision of the EU tax list of non-cooperative jurisdictions: it screens third countries against agreed criteria, recommends listings and delistings and leaves the decision to the economy and finance ministers. Panama is in Annex I of that list, and the next revision is announced for October 2026.
The Council calendar records a single meeting of economy and finance ministers, the ECOFIN, in that month: 9 October 2026, in Luxembourg. The Group arrives with a new chair, elected on 22 September.
What the EU tax list triggers for a group with a subsidiary in Panama
While Panama remains in Annex I, the EU tax list triggers two mechanisms for a group with a Panamanian subsidiary: defensive measures that each Member State chooses within a common 2019 guidance, and the mandatory separate disclosure of Panama in the public country-by-country income tax report of large groups. Neither of the two is applied by the Code of Conduct Group.
The Council of the European Union page on the list sets out the four legislative measures of the 2019 guidance, committed to from 1 January 2021: non-deductibility of costs, controlled foreign company rules, withholding tax and limits on the participation exemption for dividends. All Member States apply at least one, and 18 apply at least two.
The same page counts 26 Member States with at least one administrative measure and 12 with at least two, and notes that reporting cross-border arrangements involving listed countries has been mandatory since 1 July 2020.
| Mechanism | Who applies it | Since | What varies |
|---|---|---|---|
| Four legislative measures of the 2019 guidance | Each Member State | 01/01/2021 | Which of the four each State adopts |
| Reporting of cross-border arrangements | Intermediaries and taxpayers in the Union | 01/07/2020 | National transposition |
| Public country-by-country report | Groups above 750 million euros | At the latest, financial years starting from 22/06/2024 | Annex in force on 1 March of the financial year |
The public country-by-country report and the 1 March date
Directive (EU) 2021/2101 requires groups with consolidated revenue above 750 million euros in each of the last two financial years to publish an income tax report and to disclose separately each jurisdiction in Annex I. The date that decides the separate disclosure is not the date of the Council revision but 1 March of the financial year reported on.
Article 48c, paragraph 5, of Directive (EU) 2021/2101 sets two rules. For Annex I, being listed on 1 March of the financial year is enough. For Annex II, a jurisdiction must be mentioned on 1 March of the financial year and also on 1 March of the preceding financial year.
Own reading of Article 48c, paragraph 5, applied to financial years that match the calendar year; the rule applies as transposed by each Member State, which this analysis does not review.
| Outcome of the October 2026 revision | Financial year 2026 | Financial year 2027, if the position holds on 1 March 2027 |
|---|---|---|
| Panama stays in Annex I | Separate disclosure | Separate disclosure |
| Panama moves to Annex II | Separate disclosure | No disclosure under the Annex II rule: on 1 March 2026 it was in Annex I, not in Annex II |
| Panama leaves both annexes | Separate disclosure | No separate disclosure under this Directive |
The 2026 column does not depend on October: the calendar on the same Council page records an update on 10 October 2025, before the one of 17 February 2026, which only added Turks and Caicos Islands and Viet Nam and removed three jurisdictions, without touching Panama.
Why Panama remains in Annex I: two reasons under different criteria
The conclusions of the Council of the European Union of 17 February 2026 give two reasons for keeping Panama in Annex I. The first is a foreign-source income exemption regime assessed as harmful, under criterion 2.1. The second is a transparency commitment to the OECD Global Forum, under criterion 1.2, with a deadline of 17 July 2026.
Annex I of the conclusions of 17 February 2026, document 5869/26, spells out the second reason: Panama committed to addressing the deficiencies identified by the Global Forum in exchange of information on request and to requesting and being granted an in-depth review by that Forum.
The two reasons close through different routes: the tax one, when the Code of Conduct Group considers the regime corrected; the transparency one, through a Global Forum rating that the Group takes as given. Of the ten jurisdictions in the February Annex I, Panama is the only one listed for a foreign-source income exemption regime.
The PA008 regime and what the Group’s guidance asks to correct it
Panama’s foreign-source income exemption regime appears in the documents of the Council of the European Union under the code PA008. The Code of Conduct Group assessed it as harmful in 2021, and its 2019 guidance describes two ways out: taxing foreign-source passive income, or making its exemption conditional on substance, anti-abuse rules and rules without discretion.
The final assessment of the PA008 regime, document 14226/21, records that the Group meeting of 21 September 2021 recommended including that reason in Annex I and that the ECOFIN endorsed it on 5 October 2021. It cites 1,586 companies registered in Panama with 100% of their income abroad, 27% of the total income reported by all companies.
| Code criterion | What it examines | Mark in the 2021 table |
|---|---|---|
| 1a and 2a | Advantage reserved for transactions with non-residents | Harmful |
| 1b and 2b | De facto ring-fencing | Question mark; the text proposes harmful |
| 3 | Real economic activity | Harmful |
| 4 | Permanent establishment and OECD principles | Harmful |
| 5 | Transparency | Not harmful |
The Group’s guidance on foreign-source income exemption regimes, document 12284/1/19 REV 1, accepts exemption as a means against double taxation; where passive income is exempt, it asks for adequate substance, robust anti-abuse rules and no administrative discretion, plus a permanent establishment definition aligned with the OECD Model Tax Convention.
Executive Decree N° 32 of 2 September 2026, in Gaceta Oficial N° 30603-B, regulates the substance that Law 526 of 2026 requires from entities of multinational groups with foreign-source passive income. No public Council document consulted yet contains an assessment of that reform.
Who decides on the EU tax list: proposal, adoption and application
On the EU tax list, the Code of Conduct Group proposes and the Council decides. The Group brings together high-level representatives of the Member States and the Commission, screens third countries and submits a report; the ECOFIN ministers approve Annex I through conclusions, and each State decides which defensive measures it applies.
The Group’s page on the Council website, reviewed on 23 September 2026, places its origin in the resolution of 1 December 1997. It is chaired by a representative of a Member State for two years; Cezary Krysiak was elected on 22 September 2026, with immediate effect.
The Group does not rate exchange of information, the Global Forum’s task; it neither adopts the list nor applies defensive measures. It produces reports to the Council; the February 2026 one has no section on Panama.
Nota sobre las fuentes: an erratum, a page date and an undocumented commitment
The sources of the Council of the European Union agree in substance on the Code of Conduct Group and on Panama’s entry, but three points do not match or have no public record. None of them changes the date of the revision or the text of the February 2026 Annex I; each is left as it appears in its document.
Report 5822/26 places the meeting of the subgroup on external issues on 15 January 2026 and the Group meeting on 28 January 2025, both to prepare the February 2026 revision. The year of the second does not fit; it is not corrected here.
The Council page on the list shows the list of 17 February 2026, but its footer gives a last review of 17 February 2025; the counts of 18 and 26 Member States are cited without a cut-off date of their own.
The conclusions set 17 July 2026 for the Global Forum commitment, and the European Commission’s table of tax deficiencies gives no deadline. No public document consulted says whether Panama met it.
What to watch around the ECOFIN of 9 October 2026
Three documents will show whether the EU tax list changes for Panama in October 2026, a month with an expected revision and a single ECOFIN meeting, on day 9: the agenda, the conclusions that result from it and their publication in the Official Journal. A fourth date, 1 March 2027, sets which annex counts for the public country-by-country report for financial year 2027.
The page of the ECOFIN meeting of 9 October 2026 publishes the agenda highlights a week before; on 23 September they were not there. After that, the calendar records ECOFIN meetings on 9 and 10 November and 11 December 2026.
In the conclusions, what can be observed is Panama’s entry: whether it keeps the exemption regime reason, whether it retains the already expired Global Forum commitment, or whether Panama moves to Annex II with a new deadline. The list becomes official upon publication in the Official Journal, not at the meeting.
In Panama, the operative date does not depend on the Council: Executive Decree N° 32 applies to fiscal periods starting on or after 1 January 2027, with the Ministry of Economy and Finance as the competent authority.
Fuentes
Annex I and Panama’s entry come from the conclusions of the Council of the European Union of 17 February 2026; the PA008 regime, from its 2021 assessment; the routes to correction, from the Group’s 2019 guidance; the Group’s chair, from its page as of 23 September 2026; the defensive measures, from the Council page on the list; the 1 March rule, from Directive (EU) 2021/2101; and the Panamanian reform, from Gaceta Oficial N° 30603-B. The scenario table is an own reading. A date in report 5822/26 and the review date of the list page do not match, and the Global Forum commitment has no public record; nothing was filled in by inference, and Panama’s entry is read in the October conclusions, not in a summary, this one included.
General analysis of rules in force. It does not constitute legal, tax, immigration or financial advice.
