Pension fund investors have recovered more than EUR three million in the first few months of a new automated withholding tax (WHT) recovery platform, Protocol, following its North American launch earlier this year. The web-based platform is the brainchild of fintech start-up Taxology, and is being rolled out in phases around the globe, geared primarily at pension funds and pension asset managers to help them reclaim millions in recoverable withholding tax.

In Europe alone, investors lose out on an estimated EUR 8.4 billion per year in recoverable withholding tax, partly due to complex compliance procedures and high costs, according to a 2017 report by the European Commission.

Annual investment performance could be boosted by as much as 50 basis points from withholding tax claims, but many investors believe the labour-intensive, complicated, and costly process behind it is simply not worth the benefit. In Europe, this is further aggravated by the fact that no two withholding tax relief procedures are the same; each country has its own procedure, relief forms, statute of limitations, and its own take on what supporting documentation should be submitted.

Jeroen van der Wal
Managing director and founder of Taxology, the developers behind Protocol.

Van der Wal added that there have been many efforts to rectify this problem, but to date Little has been resolved and investors continue to lose out on billions each year, due to the strictness and complicated nature of reclaiming WHT.

Some of these efforts to harmonise withholding tax recovery procedures were from bodies such as the Organisation for Economic Co-operation and Development (OECD) and the European Commission’s Tax Barriers Business Advisory Group (TBAG). Van der Wal added,

We launched Protocol, which bypasses all traditional reclaim barriers by automating the identification of relief entitlement, as well as the preparation and filing of claims, following the applicable procedure in each source country.

Protocol is an intuitive, secure, Cloud-based platform, which reduces the cost per WHT claim by taking pension fund investors (or their advisors) through a three-step process from inputting pool participation data where required and importing dividend data, to submitting a claim. Because it is automated, WHT claims can be completed in a matter of minutes instead of days or weeks.

Other features include claim expiration date warnings, data analysis (for claim quality assurance), a real-time claims status overview, team task assignment, and an activity log book.

Our current focus is on pension funds and pension asset managers, as they hold the lion share of cross border portfolio investment However, we apply a very modular development of the platform, which makes it relatively easy to expand its scope of application to other institutional investors like banks, insurance companies, sovereign wealth funds or charities.

Protocol is currently being rolled out globally after its North American and European launch earlier this year, with the next launch phase slated for Japan. For more information on Taxology and Protocol visit taxology-global.com

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