Panama and Vietnam: What Leaving the EU Tax Blacklist Means for Your Business

The decision to remove both countries has been made. According to the Council, Panama reformed the foreign-source income regime that had drawn its objections. Both Panama and Vietnam are due for a new review of their exchange of tax information. They remain in Annex II until those reviews are complete. They are off the blacklist, with the ongoing review still visible.¹

For German business owners, a second layer matters. Germany applies its Tax Haven Defense Act, the StAbwG, through the implementing regulation known as the StAbwV. A change to the EU list and its implementation in German tax rules are therefore separate events.²³

This distinction drives the entire analysis. For Panama, the opportunity is potential relief for a relationship actually covered by the German measures. For Vietnam, a better decision may start by removing a cost assumption that had no basis in the German regulation reviewed. Flick Gocke Schaumburg’s analysis also addresses these different starting points.²⁶

An internal procurement policy may refer directly to the EU list. A bank assesses a relationship under its own due diligence obligations and criteria. The same Council decision will therefore produce different outcomes in different places. Identify the original reason for rejection, and you can see where the new information might make a difference.

A short update on the EU list can easily miss this point: Even if a withholding burden disappears, the German customer does not necessarily save money. The outcome depends on whether the contract fixes a gross price or guarantees the recipient a net amount.

Take a simplified payment that falls entirely within Section 10. Assume withholding tax of 15% and a solidarity surcharge of 5.5% on that tax. Together, they equal 15.825% of the gross amount. This illustration leaves aside other taxes, relief, and contractual effects.⁸¹⁰¹⁷

The second line is easy to miscalculate. You do not simply add €15,825 to the guaranteed net amount. The required gross payment is €100,000 divided by 0.84175, or approximately €118,800. The difference reflects the assumed obligation to bear the tax. It is not a general savings promise for Panama contracts.

For negotiations, the distinction is straightforward. With a fixed gross price, the supplier benefits first. You can use that as a reason to discuss price, payment terms, scope, or a longer price commitment. It does not give you a statutory right to have the benefit passed on. Under a genuine net-payment agreement, the customer may benefit directly, provided the clause and the tax treatment support that outcome.

Tax relief benefits you only when it improves your own numbers. If the price still includes the previous tax burden, you have a concrete reason to renegotiate. The updated list does not rewrite the pricing clause.

Read the contract before comparing the next quote. Who bears the taxes? What happens if the law changes? Is there an adjustment clause? Are prices being renegotiated now? Those are practical points you can act on. Potential tax relief can become a better contract well before you need to consider rebuilding an entire corporate structure.

If you already do business with Panama, one question deserves priority: Which specific defensive measure has made the relationship more expensive? A blanket “Panama surcharge” in the budget will not answer it. The rules apply to different transactions, and their economic effects can fall on different parties.⁵

On a calendar-year basis, Panama’s listing date generally produced a phased start: Sections 9 and 10 from 2022, Section 11 from 2024, and Section 8 from 2025. That does not mean every invoice involving Panama has triggered every consequence since those dates. The individual transaction must first fall within the relevant provision.²³⁵

The broader relief depends on the German regulation. Section 3(3) StAbwG ties the end of the measures to the removal date specified there. If that date falls in calendar year 2026, nonapplication may begin on January 1, 2026, for a calendar-year taxpayer. For a non-calendar fiscal year, the start of that fiscal year governs. This creates an important possibility for the annual tax calculation: the German rule can reach back beyond the date of the EU announcement.³

At the source cutoff, Panama was still in the German regulation. Relief for 2026 is therefore a scenario to calculate, with a clear condition attached. A subsequent amendment must actually establish the relevant removal date. Any effect for 2026 also leaves the separate question of how an affected transaction in 2025 should have been treated.

Section 10 withholding has a narrower administrative route. Paragraph 33 of the German Federal Ministry of Finance’s guidance—the BMF guidance—provides a non-objection rule for not withholding and remitting tax when a jurisdiction has left Annex I but the German regulation has not yet caught up. Waiting only for the German amendment can mean overlooking this separate rule for payments.¹⁰

That distinction has practical value. Your tax advisor can assess a Panama payment due now against this rule while the broader StAbwG treatment still depends on the regulation. Other grounds for withholding, including certain payments for rights under Section 50a EStG, require separate review. Nor does the administrative withholding rule establish that the recipient is exempt from the underlying tax.⁸¹⁰¹²

My advice for business planning: Calculate the current legal position and the potential relief side by side. You can use both to negotiate prices and assess alternatives now. Future savings become a firm budget benefit only when the conditions for your transaction are established.

Vietnam entered Annex I in February 2026 and was removed in October. It does not appear in the German regulation reviewed. That period on the EU list alone therefore provides no basis for German StAbwG withholding or a denial of deductions involving Vietnam.¹²³

This opens two different opportunities for business owners. If you excluded a supplier because of an assumed German tax burden, correct that assumption. If your own company policy barred countries in Annex I, review the policy against Vietnam’s new status. Either route can bring a supplier back into consideration.

The business case then comes down to performance and total cost. Suppose your company needs 100,000 components a year. A Vietnamese supplier is €0.40 per component cheaper than your current source. That produces an initial €40,000 price advantage. In this example, requalifying the supplier costs €12,000, and additional inventory creates another €8,000 in financing costs. Before allowing for quality and supply-failure risks, €20,000 remains.

That €20,000 is more useful than the lower unit price. You can now judge whether delivery times, quality, and the additional capital tied up justify the benefit. The assumed costs are illustrative; different volumes or financing terms require a fresh calculation.

An alternative to a complete switch may matter even more. An initial, limited order can test whether the promised quality and delivery capability hold up in your own operation. For suitable products and sufficiently qualified suppliers, splitting volumes can preserve a second source. Include existing minimum-purchase commitments and other obligations in the calculation.

Returning to a supplier will not recover money already spent on the previous switch. What matters is the additional cost and the obligations you take on from today. Keeping those separate protects against two poor decisions: clinging to the old exclusion out of frustration, or moving everything back too quickly in the excitement over delisting.

I would put Vietnam back in the comparison on the strength of what it can contribute to the business. Can the partner deliver better, reduce a dependency, or open a market? If so, it deserves another assessment. If the existing arrangement wins on total value, keep it. You still gain something: a credible additional option for the next negotiation.

For some business owners, the question goes beyond a supplier. Vietnam is also a possible place to spend part of their lives, stay for longer periods, or establish a business presence. The EU decision can be a reason to revisit a plan you put aside. It cannot tell you whether daily life there will work for you.

I visited Da Nang in 2025. To me, the city had a calmer pace. That is my personal impression from a trip, not a claim about what life there will be like for everyone. If you are looking for a less hectic daily routine, that feeling can be a good starting point for exploring further.

The real test is the move from a travel impression to your own working week. Imagine you have already signed a year-long lease. The beach is close, and the costs work. But calls with European clients regularly stretch into the Vietnamese evening. Your family wants to have dinner together, and you are still on the phone. In this scenario, a less expensive lifestyle has cost you the very family time you wanted to gain. The long lease makes changing course expensive, too.

A place has to work on an ordinary Tuesday. Use a carefully planned stay to test the actual weekly rhythm before making a long commitment: client hours, family life, medical care, and the work you intend to do locally. If those fit together, a good travel memory becomes a serious location option. If they do not, you can keep visiting and choose somewhere else as your main home.

Vietnam’s cost of living can be attractive. A blanket claim that it is “cheaper than Thailand” would do little to help your decision, though. Numbeo’s mid-2026 comparison places Da Nang below Chiang Mai on general living costs but above it on the rent index. That difference alone shows why a national average cannot replace your own budget.²⁴

Use the home you would actually rent, your healthcare needs, travel, schooling or childcare, and the way your family works. An inexpensive restaurant meal is welcome. The financial viability of a location depends on the large recurring expenses and the cost of maintaining your connection to Europe.

We have a practical way to help with this next step. No Borders Founder can introduce you to a German-speaking lawyer who has lived in Vietnam for many years. That becomes particularly valuable when general interest turns into specific questions about residence, work, or a local business presence. You and the lawyer agree on whether to proceed with a legal engagement and what it will cover.

Our role is to connect what you want from Vietnam with the questions that need answering locally. Start with a realistic picture of how you would live and work there. That gives the legal assessment and the next steps a much clearer starting point.

If you hold an interest in a Panama company, the comparison may involve far more money than a single invoice. The removal of an additional StAbwG consequence can change the tax treatment of income from that holding or income attributed under CFC rules. Whether relief applies, and to what extent, also depends on the general rules and the particular recipient. Section 8b of Germany’s Corporate Income Tax Act, the KStG, applies to corporate taxpayers, for example. It does not establish a blanket tax exemption for an individual.⁷⁹¹³

For the owner, the final question is: How much money will be available, and when, for the next decision? A favorable tax calculation, a valid resolution authorizing a distribution, and a bank transfer that can actually be executed are three separate requirements.

Imagine a family that owns a business and plans to use a distribution to buy property. The calculation looks better than it did in the summer. But the purchase contract requires a firm down payment before the distribution has been approved and the payment route arranged. The family may now have to draw on its personal reserves or renegotiate with the seller. Even if the tax calculation proves correct, that money is unavailable for other plans in the meantime.

Work backward from the date you need the money. What net amount must be available? When can the company distribute it? What documents does the bank need on the transaction, the beneficial owner, and the source of funds? Removal from a tax list does not cancel a bank’s general due diligence obligations.¹⁵ It also says nothing about other anti-money-laundering, sanctions, or risk lists.

A supplier or location with a better tax position must first earn back the cost of switching. Suppose the existing arrangement costs €420,000 a year. A Panama alternative, once its tax treatment is established, would cost €400,000, with a one-time switching cost of €40,000. The first year would therefore cost €440,000. With costs held constant and no other differences, the €20,000 annual advantage would recover the switching cost only after two years.

If you expect to need the contract for only a year, the calculation favors staying put. If you plan a long relationship and Panama offers additional operational benefits, switching may make sense. Notice periods, contractual commitments, and performance risks can change the result again. The example is a decision aid, not a claim about market prices.

The additional option has value even if you do not switch immediately. You can obtain a competing quote, reduce a dependency, or prepare for the next contract cycle. Having a choice gives you room to act. You do not have to exercise every new option immediately.

Start with one concrete question. The more precisely you define it, the more likely the answer is to be useful in running your business.

For tax advisors and other professionals, there is a further question: How far can the company legitimately carry your answer into its next decision? Advice on withholding for an October 2026 payment is not blanket clearance for a new contract in 2027. If the business treats it that way, you may have to help correct a contract it has already committed to. The client loses time and wonders why your initially clear answer no longer holds.

Specify the transaction, the period, and the exact question you answered. That keeps precise advice in context when it reaches the next decision-maker—and protects trust in your work.

The documentation required also depends on the individual facts. Under paragraph 84 of the BMF guidance as amended on April 27, 2026, the special records under Section 12 StAbwG must be assessed for the relevant transaction when at least one measure under Sections 8 through 11 applies. The general duty to cooperate on foreign matters under Section 90 AO continues alongside it.¹¹¹⁴ That calls for a focused request, rather than a blanket demand for every document connected to a country.