The European Union has removed Panama from its list of non-cooperative jurisdictions for tax purposes. For the many families, entrepreneurs and investors with European ties who hold structures, assets or interests in the country, the decision raises an immediate question: to what extent does it change their wealth and tax position?
The question is a fair one. For more than six years, Panama’s presence on this list has shaped investment decisions, banking relationships and reporting obligations across several European countries. Its removal is a significant step forward, with tangible effects.
Its actual scope, however, depends on several factors: the tax residence of the individuals concerned, the national lists that remain in force in some Member States, and the degree of substance of each structure. This article examines what changes, what remains the same, and what is worth reviewing.
What the European Union decided, and what it did not
On 9 October 2026, the Council of the European Union removed Panama from Annex I of its list of non-cooperative jurisdictions for tax purposes, commonly known as the “EU tax blacklist”. Panama had been on the list since February 2020.
The list is reviewed twice a year. It assesses countries against three main criteria: tax transparency, fair tax competition and implementation of international standards against base erosion.
Two lists that are often confused
In practice, it helps to distinguish several lists that are frequently mixed up:
The EU tax list (Annex I). This is the one that has now changed. It mainly affects the defensive tax measures applied by Member States.
The EU list of high-risk third countries for anti-money laundering purposes. It is drawn up by the European Commission and determines the level of due diligence banks and obliged entities must apply. Panama has also been removed from it, through a separate process.
The FATF grey list. Panama exited it in October 2023, which paved the way for the other reviews.
Understanding which list produces which effect is the first step in assessing any structure correctly.
Why Panama was removed
The decision reflects several years of reform. European concerns focused mainly on the foreign-source income exemption regime and on the effectiveness of tax information exchange.
This is the context of the recent Law 526 of 2026, which introduces economic substance requirements for certain entities. The point matters. Panama was not removed because standards were relaxed, but because they were strengthened.
Practical consequences of the removal
Automatic defensive measures fall away or ease
While a country is on Annex I, Member States commit to applying at least one defensive measure. The most common include denying deductions for payments, stricter controlled foreign company rules, additional withholding taxes or limits on dividend exemptions.
In some countries these measures depend directly on the European list. Germany is one example: its legislation against non-cooperative jurisdictions refers to the EU list, so Panama’s removal should lead, once the relevant regulation is updated, to the withdrawal of those measures.
A different analysis for reporting obligations
The EU Directive on cross-border tax arrangements (DAC6) treats certain payments to entities resident in EU-listed jurisdictions as a reporting hallmark. With Panama’s removal, that specific hallmark no longer applies to new arrangements. Other hallmarks may remain relevant depending on the case.
Smoother relationships with banks and counterparties
Many banks, custodians and insurers build EU lists into their country risk matrices. A gradual improvement in how Panamanian structures are perceived is a reasonable expectation, both at account opening and in dealings with European counterparties.
Realism is still advisable. International banking due diligence standards are now structurally more demanding, regardless of any list. Removal improves the starting point, but does not by itself simplify an account opening process.
Reputation and positioning
For those who invest, settle or do business in Panama, the decision strengthens the country’s image as a jurisdiction aligned with international standards. This also shapes how residency and real estate investment in the country are perceived.
What does not change
National lists follow their own timetable
This is probably the most important point. Several European countries maintain their own lists of non-cooperative or low-tax jurisdictions, with different criteria and update schedules.
Spain and France, for instance, have historically included Panama on their national lists. Until those lists are amended, residents of those countries may still face specific presumptions, withholding taxes or reporting obligations. Removal from the EU list does not mean automatic removal from national lists.
Transparency remains fully in force
Automatic exchange of financial account information (CRS), beneficial ownership registers and reporting obligations in the holder’s country of residence apply exactly as before. A structure that was not properly reported is not regularised by a change of list.
Substance remains the key
Tax authorities increasingly look at where decisions are actually made, who manages the entity and what activity exists. A company without substance remains exposed to being treated as resident elsewhere or as transparent, whether or not Panama is on a list.
Three common situations
A Spanish tax resident with a Panamanian private interest foundation. Removal from the EU list does not, on its own, change their position. While Panama remains on the Spanish list, specific rules may still apply, and the foundation should continue to be analysed under Spanish tax law and its reporting requirements.
A Panamanian company invoicing services to a German company. This is a case where removal may have a direct effect, since some limits on deducting payments are tied to the EU list. Even so, the transaction must stand on its own: arm’s-length pricing, genuine activity and proper documentation.
A European family relocating to Panama while keeping investments in Europe. The change eases relationships with European financial institutions and improves perceptions of local structures. The key will still be coordinating the change of tax residence, any exit taxation in the country of origin and the organisation of the family’s wealth.
What is worth reviewing now
Rather than a reason to change structures, this news is a good opportunity to review them with perspective.
Identify which lists actually affect each family member, based on their country of tax residence, not just the EU list.
Check whether any costs or restrictions were specifically linked to Annex I and may now fall away, and from what date.
Review substance documentation for Panamanian entities in light of Law 526 of 2026.
Update information held by banks and custodians, which may revise their risk profiles in the coming months.
Avoid hasty decisions. The list is reviewed regularly. Panama’s history, removed in 2018 and listed again in 2020, is a reminder that a well-designed structure should not depend on a single rating.
Conclusion
Panama’s removal from the European Union’s list is a significant step forward. It acknowledges the reforms the country has made and can reduce costs and friction for companies, investors and families with European ties.
Its real impact, however, depends on each situation: the holders’ countries of residence, the applicable national lists, the nature of the structures and their degree of substance. The change touches tax, banking, legal structuring and succession planning at the same time. That is why it is best assessed in a coordinated way rather than as an isolated question.
If you would like to review how this change may affect your wealth or your family’s structures, our team would be glad to discuss your situation with you in confidence. Contact us.
This article is for information purposes only and does not constitute tax or legal advice. Each situation requires individual analysis.