The Cayman Islands are the latest tax haven to be added to a European blacklist.

The European Union added them in February.

Being put on the blacklist has a number of consequences. They include increased audit risk for transactions where entities in blacklisted countries are used, inability to deduct payments to such entities and inability to use participation exemptions in European countries to shield earnings passing to European parent companies through entities in such tax havens.

Many US companies have offshore holding companies in the Cayman Islands. Other popular locations for such holding companies are Bermuda, the British Virgin Islands, Holland, Luxembourg, Ireland, Madeira, Switzerland and Singapore.

There are now 12 countries and territories on the EU blacklist: American Samoa, the Cayman Islands, Fiji, Guam, Oman, Palau, Panama, Samoa, Trinidad and Tobago, the US Virgin Islands, Vanuatu and the Seychelles.