Tax Blacklists (EU, OECD, FATF): Which Countries Are Targeted and Why Paraguay Is Not Included in 2026
When you announce to your friends and family that you're expatriating to Paraguay for tax reasons, the reaction is often the same: "Paraguay? Isn't that a blacklisted tax haven?" This question reveals a massive confusion—fostered by the media and politicians—between countries with advantageous tax systems and blacklisted countries. The reality is simple: Paraguay is on no blacklist—neither the EU's, nor the OECD's, nor the FATF's. But to understand why, you first need to understand what these lists are, what criteria trigger inclusion, which countries are on them, and what distinguishes a cooperative territorial country (Paraguay) from an uncooperative tax haven (the exotic islands of the Panama Papers).
This guide demystifies international tax blacklists in 2026: how they work, the countries involved, the consequences of being on a list, and why Paraguay navigates comfortably outside all these lists—and why that's unlikely to change.
The three lists that matter
List 1: The European Union's list of non-cooperative jurisdictions
This is the most publicized and most significant list for French-speaking expatriates. The EU publishes two lists:
- Annex I — The "blacklist": jurisdictions that do not cooperate on tax transparency, facilitate tax evasion, or have tax regimes deemed "harmful" by the EU. Being on this list entails economic sanctions (restrictions on financial flows, additional costs for companies transacting with these jurisdictions, exclusion from certain European funding).
- Annex II — The "greylist": jurisdictions that do not yet meet all EU criteria but have committed to correcting the situation within an agreed timeframe. The greylist is a "purgatory"—better than the black but not yet fully compliant.
The EU's assessment criteria are threefold:
- Tax transparency: does the country automatically exchange tax information (CRS) and upon request? Does it apply OECD transparency standards (Global Forum on Transparency)?
- Fair taxation: does the country have "harmful tax practices"—i.e., regimes that attract foreign companies with preferential rates without economic substance? Criteria include: zero or near-zero corporate tax rate, ring-fencing (regime reserved for non-residents), lack of substance requirements, non-compliance with the BEPS standard.
- BEPS implementation: does the country apply the minimum BEPS standards (actions 5, 6, 13, 14)—transfer pricing, treaty abuse, country-by-country reporting, dispute resolution?
Countries on the EU blacklist in 2026
| Country | Main Reason | Since |
|---|---|---|
| American Samoa | Non-cooperation, no CRS | 2017 |
| Anguilla | Transparency non-compliance | Variable |
| Fiji | Unreformed harmful tax regimes | Variable |
| Guam | Non-cooperation, no CRS | 2017 |
| Palau | Non-compliance | Variable |
| Panama | Persistent transparency shortcomings (despite post-Panama Papers reforms) | Re-listed 2023 |
| Russia | Suspension of tax cooperation following the invasion of Ukraine | 2023 |
| Trinidad and Tobago | Persistent non-compliance | Variable |
| US Virgin Islands | Non-cooperation, no CRS | 2017 |
| Vanuatu | Risky citizenship by investment program + insufficient transparency | Variable |
Important note: the list evolves twice a year (February and October). Countries enter and exit based on their reforms. Panama, for example, was removed and then re-listed. The exact composition in 2026 may vary—check the latest update on the EU Council website.
Paraguay is NOT on the EU blacklist, nor on the greylist. Paraguay meets all three EU criteria: transparency (active CRS, exchange on request), fairness (no ring-fenced regimes, no preferential rates reserved for foreigners), and BEPS (Inclusive Framework member, minimum standards respected).
List 2: The OECD Global Forum on Tax Transparency
The Global Forum on Transparency and Exchange of Information for Tax Purposes assesses countries' compliance with OECD tax transparency standards. The assessment is conducted through "peer review" and results in a rating:
| Rating | Meaning | Consequence |
|---|---|---|
| Compliant | The country fully complies with the standards | No negative consequences. Recognized cooperation. |
| Largely Compliant | The country largely complies with the standards, with a few minor shortcomings | No significant negative consequences. Most developed countries are in this category. |
| Partially Compliant | The country has significant shortcomings but cooperates | Under surveillance. Pressure for reforms. Risk of EU greylist. |
| Non-Compliant | The country does not comply with the standards and does not cooperate | Potential blacklist. Possible economic sanctions. |
The Global Forum assesses two types of information exchange:
- Exchange on request (EOIR): does the country respond to information requests from other tax administrations? Paraguay participates in EOIR via the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAAC).
- Automatic exchange (AEOI): does the country automatically exchange banking data of its non-residents via the CRS? Paraguay exchanges via the CRS.
Paraguay is rated "Largely Compliant" by the Global Forum—the same rating as France, Germany, the United Kingdom, and Switzerland. This is the standard rating for cooperative countries. No problem.
List 3: The FATF (Financial Action Task Force) list
The FATF is the international body for combating money laundering and terrorist financing. The FATF publishes two lists:
- Blacklist (Call for Action): high-risk countries subject to countermeasures (enhanced surveillance, banking restrictions). In 2026: Iran, North Korea, Myanmar.
- Greylist (Increased Monitoring): countries under increased surveillance that have committed to addressing their anti-money laundering deficiencies. The greylist is broader and fluctuates (15-25 countries at any given time).
FATF criteria concern anti-money laundering (AML) and counter-terrorist financing (CFT), not directly taxation. But FATF lists have an indirect tax impact: international banks refuse or complicate transactions with FATF-listed countries (reinforced KYC compliance, higher fees, refusal to open accounts).
Paraguay has been on the FATF greylist in the past (for deficiencies in its anti-money laundering framework) but has been removed after significant reforms. In 2026, Paraguay is neither on the FATF blacklist nor on the greylist. The Paraguayan anti-money laundering framework (SEPRELAD — Secretaría de Prevención de Lavado de Dinero o Bienes) has been strengthened in accordance with FATF recommendations.
Why countries end up on blacklists
The 5 behaviors that trigger inclusion
- Absolute banking secrecy: the country refuses to communicate banking information to foreign tax administrations (no CRS, no EOIR). This was historically the case for Switzerland (before 2014), Liechtenstein, and Luxembourg. All have reformed. Today, the only countries still refusing are micro-states and isolated territories (Vanuatu, American Samoa).
- Tax ring-fencing: the country offers an advantageous tax regime reserved for non-residents or foreign companies, while applying a normal regime to local residents and companies. This is considered "unfair tax competition" by the EU. Paraguay does NOT do ring-fencing: territoriality applies to ALL residents (Paraguayan and foreign), not just expatriates.
- Zero rate without substance: the country offers a 0% corporate tax rate without requiring economic substance (no staff, no office, no real activity). "Letterbox companies" proliferate. This was historically the case for BVI, Cayman, and Jersey—all have adopted Economic Substance Laws since 2019.
- Judicial non-cooperation: the country refuses to cooperate with international investigations into tax fraud, money laundering, and corruption. It protects fraudsters instead of handing them over.
- Risky CBI programs: the country sells passports (Citizenship by Investment—CBI) without sufficient due diligence, allowing criminals to obtain a new identity. Vanuatu, certain Caribbean countries (Saint Kitts and Nevis, Dominica) are under pressure for this reason.
Why Paraguay meets NONE of these criteria
| Blacklist Criteria | Paraguay | Status |
|---|---|---|
| Banking secrecy | Paraguay automatically exchanges information via the CRS and responds to information requests (EOIR/MAAC). | ✅ Compliant |
| Ring-fencing | Territoriality applies to ALL residents (Paraguayan and foreign). No regime reserved for non-residents. | ✅ Compliant |
| Zero rate without substance | Paraguay does not offer a 0% corporate tax rate. IRACIS is 10% for companies. The 0% concerns FOREIGN income of individuals (territoriality)—not a preferential rate for companies. | ✅ Compliant |
| Judicial cooperation | Paraguay cooperates via the Multilateral Convention on Administrative Assistance (MAAC) and bilateral judicial assistance agreements. | ✅ Compliant |
| Risky CBI | Paraguay does NOT have a Citizenship by Investment program. Nationality is obtained after 3 years of effective residence. Standard due diligence. | ✅ Compliant |
| BEPS Inclusive Framework Member | Yes. Paraguay is a member of the Inclusive Framework and respects minimum BEPS standards. | ✅ Compliant |
| Global Forum Member | Yes. Rated "Largely Compliant" (same level as France, Germany, UK). | ✅ Compliant |
Paraguay ticks all the boxes for international compliance. It is transparent (CRS), cooperative (MAAC, FATF), a member of international frameworks (BEPS, Global Forum), and does not offer ring-fenced regimes or zero rates for companies. Territoriality for individuals is NOT a blacklist criterion—it is a tax system recognized by the OECD and applied by dozens of countries (Hong Kong, Singapore, Panama, Costa Rica).
The confusion between "tax haven" and "territorial country"
The fundamental difference
The media and the public systematically confuse two radically different concepts:
| Criterion | Tax Haven (strict sense) | Territorial Country (like Paraguay) |
|---|---|---|
| Principle | The country attracts foreign capital by offering banking secrecy, opaque companies, and near-0% rates without substance. | The country applies a tax system where only local income is taxed. Foreign income is exempt. Nothing is hidden. |
| Transparency | Opacity: no CRS, no information exchange, bearer shares, inaccessible registers. | Transparency: active CRS, automatic exchange, accessible registers, international cooperation. |
| Who benefits | Fraudsters who want to hide assets and income from their original tax authority. | Legitimate residents who live in the country and whose foreign income is legally exempt. |
| Substance required | None (or nominal)—letterbox companies are the norm. | Yes—effective residency is necessary to benefit from territoriality. |
| Legality of optimization | Grey area to illegal (concealment, artificial arrangements, non-declaration). | 100% legal (effective residency in a sovereign country that applies its own tax law). |
| Examples | BVI (historical), Cayman Islands (historical), Panama (partially), Vanuatu | Paraguay, Hong Kong, Singapore, Costa Rica, Guatemala |
| Blacklist Position | Often listed (or under permanent pressure to reform) | Not listed (compliant with international standards) |
Territoriality is not a tax haven. It is an alternative tax system—as legitimate as worldwide taxation. The OECD itself recognizes territoriality as a valid tax system. Hong Kong and Singapore apply territoriality (or quasi-territoriality) and are among the most respected financial centers in the world. No one calls Hong Kong a "tax haven" in professional circles—even if the effective tax rate on foreign income there is 0%.
The media narrative vs. legal reality
The French media discourse is particularly confused on this subject:
- What the media says: "The rich flee to tax havens to avoid paying taxes." → Paraguay is equated with the Cayman Islands in the collective imagination.
- What the law says: Paraguay is a sovereign country that applies a territorial tax system recognized by the OECD. Expatriating there legally (effective residency, local declaration, CRS transparency) is neither fraud, nor evasion, nor money laundering. It is the exercise of a fundamental right: freedom of movement and establishment.
- What jurisprudence says: the French Constitutional Council has confirmed that tax expatriation is a right—the taxpayer is not a prisoner of their country. The EU Court of Justice (Centros ruling, 1999; Cadbury Schweppes ruling, 2006) confirmed the right to choose the most advantageous jurisdiction—as long as the arrangement has real economic substance.
The consequences of being on a blacklist (and why it indirectly concerns you)
Sanctions for listed countries
- Banking restrictions: European banks apply enhanced due diligence (EDD) for transactions with listed countries. Result: more difficult account opening, slower transfers, higher fees, and sometimes outright refusal of transactions.
- Additional tax costs: some European countries apply defensive measures against listed jurisdictions: non-deductibility of payments to these jurisdictions, increased withholding tax, presumption of fraud for transactions with these countries.
- Exclusion from funding: companies in listed countries may be excluded from European funding (European Investment Bank, structural funds, cooperation programs).
- Reputation: being associated with a listed country is a reputational stigma—banks, business partners, and authorities look more closely.
Why it concerns you even if Paraguay is not listed
You might think: "Paraguay is not on the lists, so it doesn't concern me." That's true—but there are indirect implications to be aware of:
- If you have structures in listed countries: for example, if you have a company in the BVI (intermittently EU grey-listed), transactions between this company and your European accounts will be subject to increased scrutiny. The solution is simple: do NOT have structures in listed countries. A US LLC (not listed) + a PY SRL (not listed) + Mercury Bank (USA, not listed) = no blacklisting complications.
- Panama is listed: This is relevant because Panama is sometimes presented as an alternative to Paraguay (territoriality). But Panama has been on the EU blacklist since 2023 (re-listed after being removed). Result: transactions with Panama are more scrutinized, opening European bank accounts with a Panamanian address is more difficult, and Panama's image is tarnished. This is a comparative advantage for Paraguay: the same territorial tax system, but without the blacklisting stigma.
- Banks' perception: Even if Paraguay is not listed, some European banks have more restrictive internal policies for "exotic" countries (no official blacklist but internal compliance lists). Paraguay may fall into this zone of caution for some conservative banks. In practice, this results in additional questions when opening an account (where do the funds come from? what is your activity?) but NOT a systematic refusal. With a complete file (cédula, lease, US LLC invoices, Mercury statements), European banks accept Paraguayan residents.
Paraguay vs. International Pressure: A Resilience Analysis
Why Paraguay Resists Pressure
Several structural factors protect Paraguay from international pressure to change its territoriality:
- Not a target for Pillar 2: Paraguay does not host multinational corporations with over €750M in revenue. Pillar 2 of BEPS 2.0 has no reason to apply to Paraguay. No pressure to implement a minimum corporate tax (see our BEPS 2.0 guide).
- Real, not financial, economy: Paraguay is not an offshore financial center (unlike BVI, Cayman, or Luxembourg). Its economy is based on agriculture, livestock, and trade — not financial services. Anti-offshore pressures do not target countries with real economies.
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