WTax
John Savage speaks to Daniel Ginsburg, CEO of WTax, about the custody markets, the company’s future and regulation in the industry
What inspired the creation of WTax and sets you apart from other withholding tax recovery firms?
WTax was founded with a singular vision: to revolutionise the landscape of withholding tax recovery by offering comprehensive, end-to-end solutions that optimise recovery processes for all parties involved. What sets us apart is our unwavering commitment to maximising recovery yields while minimising the administrative burden on our clients.
As part of the VAT IT Group with 40 wholly-owned offices globally, we leverage extensive industry expertise and relationships with over 150 custodian banks to provide an unparalleled service.
By focusing on operational efficiency and utilising innovative technologies, we ensure that our clients receive the highest level of service and yield enhancements ranging from 40 per cent to 60 per cent, surpassing industry standards.
How would you advise investors looking to maximise their withholding tax reclaims?
Take a proactive approach. This involves staying informed about all available relief and reclaim opportunities for their investment vehicles, including understanding withholding tax reduction entitlements and eligibility criteria.
It’s essential to conduct regular reviews of income data to ensure accurate withholding tax levies and to identify missed relief opportunities. Vigilance is crucial as investors should prioritise timely filing of all documentation before specified deadlines, whether for upfront relief or retrospective reclaims.
Capitalising on technology and expertise by partnering with a specialist like WTax also allows investors to maximise their withholding tax recoveries effectively.
WTax has relationships with more than 150 custodian banks globally. How do you leverage these relationships to maximise refund success rates for your clients?
We view our relationship with custodian banks as a partnership, where we work together to minimise withholding tax leakage for mutual clients. Through engagement with various teams within the custodian banks and adherence to their best practices, we streamline the reclaim process by facilitating direct communication and data exchange. Doing so ensures timely access to crucial information and documentation required for reclaim submissions.
The smoother our process with custodians, the smoother reclaims are for mutual clients and therefore we continuously nurture these relationships. Our proactive, collaborative approach within the custodian bank network minimises delays and errors, ultimately enhancing refund success rates for our clients.
What does the future hold for WTax? Are there any new services or technologies in development that you can share with us?
The future of WTax will be characterised by continuous innovation and adaptation to meet evolving client needs. Looking ahead, we are investing in the development of cutting-edge technologies to further streamline the reclaim process and improve operational efficiency. This includes the constant refinement of our proprietary client portal to help expedite refund timelines, eliminate human error and empower our clients to continue receiving immediate tracking and reporting capabilities.
As a tax-technology company, we are adept at navigating the complexities of the withholding tax landscape. This was demonstrated by our successful preparation for the introduction of the German E-filing portal (Ester), which ensured that our tax service in the market was uninterrupted through the transition. As EU member states continue to show support for the EU Directive, FASTER, they will be required to manage their withholding tax relief system for cross-border investments via relief-at-source or quick reclaim mechanisms.
This may bring added reporting requirements along the intermediary chain and the tax relief system will become increasingly deadline and detail-focused. Agile technology is crucial for navigating these developments. WTax is strategically positioned to address these challenges effectively. We prioritise speed to market and are prepared to develop and implement new tax relief solutions when necessary.
Additionally, we are expanding our service offerings to cover new markets and recovery mechanisms, with a particular focus on emerging economies and complex investment vehicles. By staying at the forefront of technological innovation and market trends, we remain committed to delivering value to our clients.
What are some of the most complex withholding tax challenges your clients face and how does your company help them navigate these challenges?
Our clients often face challenges related to extensive administrative burdens, limited jurisdictional coverage and complex paperwork requirements. WTax alleviates these challenges by providing fully outsourced solutions.
One of the primary challenges our clients also encounter is the escalating burden of proof imposed on beneficial owners concerning relief and reclaim entitlement. Tax authorities are continuously raising documentation requirements to ensure they have sufficient support for any claims for reduced rates.
Additionally, complex investment vehicles like 81-100 Group Trusts are under heightened scrutiny, leading to extensive document requests for underlying investors. This poses significant administrative hurdles and raises concerns regarding investor disclosure and privacy considerations.
Furthermore, the rapidly evolving withholding tax landscape adds another layer of complexity. Clients often struggle to stay updated on regulatory changes, turning to external advisors for assistance. At WTax, we address these challenges by providing comprehensive solutions tailored to our clients’ needs.
Through our technology-driven processes and proactive approach, we navigate complex regulatory environments, streamline document collection and keep our clients informed of critical developments, ensuring optimal withholding tax recovery outcomes.
How does WTax measure success and what are some notable achievements you’ve had in recent years?
At WTax, we employ various metrics to gauge our success and ensure we provide exceptional value to our clients, including increased recovery yields, enhanced operational efficiency and minimised tax leakage. Some notable achievements include our average recovery yield enhancement per client ranging from 40 per cent to 60 per cent, our fully outsourced end-to-end solution with minimal client involvement and our commitment to constant innovation and problem-solving.
Additionally, we focus on unlocking new recovery mechanisms and markets, with recent successes in East Asian markets and securing recoveries for typically ‘complex’ investment vehicles like 81-100 group trusts.
Moreover, we prioritise the time it takes to recover withholding tax for our clients, striving to expedite the process and ensure funds can be reinvested promptly.
We’ve seen significant success in speeding up our clients’ recoveries compared to their historical reclaim processes.
Alongside these quantitative measures, we also consider softer indicators of success such as client satisfaction, tax authority relationship development and external party relationship scores.
By consistently monitoring and improving these metrics, we ensure that our clients receive premium service and exceptional results.
WTax’s business has been impacted by several landmark European Court of Justice cases related to withholding taxes. How has this litigation affected the tax landscape and the services you provide?
Our continual monitoring of landmark European Court of Justice cases has helped expand opportunities for our clients’ withholding tax recovery. Over the past few decades, pension funds and investment funds have been challenging discriminatory regulations on dividend withholding taxes across various EU member states.
These cases have set legal precedents that may benefit investors globally and our expertise in navigating legal complexities allows WTax to maximise the refund opportunities these create.
These developments have also led to significant changes in national laws, such as allowing non-resident entities to benefit from reduced withholding tax rates (as seen in France) or abolishing discriminatory laws altogether (as seen in Germany and Denmark). Though some challenges still exist, the overall impact of these cases has been positive for investment funds and pension funds worldwide. WTax has seen an increase in refunds from various tax authorities that previously posed challenges.
These claims generally remain highly technical, requiring a deep understanding of the relevant legislation and specific individual circumstances. In some countries further litigation may be required to secure successful refunds. WTax stays at the forefront of developments in withholding tax law to ensure our clients receive the most favourable outcomes.
How do you stay up-to-date on the latest changes and ensure your team has the necessary expertise?
WTax remains proactive in staying abreast of regulatory changes and industry developments through continuous training, industry conferences and collaboration with industry experts.
Investing in ongoing education and professional development for our team is a key strategy to navigate complex regulatory landscapes effectively and provide top-notch service to our clients.
Moreover, WTax maintains an in-house tax technical research team comprising experienced lawyers and certified public accountants. This team monitors global tax and regulatory changes daily, identifying any developments that could impact tax relief opportunities for investors.
We use a horizon-scanning approach to anticipate upcoming changes which enable us to develop new products tailored to specific client needs or market opportunities and modify existing services affected by regulatory changes.
We can also implement necessary system developments to support upcoming changes and adjust processes to accommodate regulatory updates.
We also engage in advocacy efforts by lobbying across the industry, EU Commission and with local tax authorities to address challenging or unfavourable proposed changes.
To ensure comprehensive coverage, we combine various practices such as subscribing to and monitoring third-party tax platforms like IBFD and Tax Notes, as well as actively engaging with relevant industry bodies and tax authorities through international conferences and one-on-one meetings.
