Citco launches Withholding Tax Reclaims Analysis to help managers boost returns for investors

25 March 2024 - The Citco group of companies (Citco) has launched a new service as part of its fund administration offering designed to help fund managers review and assess potential withholding tax reclaims for their end investors.

Citco Withholding Tax Reclaims Analysis combines Citco data with automation and an understanding of the reclaims process to provide insights into the costs, benefits, and likelihood of success of reclaims in different jurisdictions globally.

Countries will generally impose withholding tax at source on dividends and/or interest received by nonresidents, but in some cases, nonresidents may be eligible for reduced rates of withholding tax because of tax treaties or government exemptions.

Typically, the only way for fund managers to obtain these reduced rates for their end investors is by applying for each jurisdiction’s specific reclaims process. This can be complex, uncertain, time consuming, resource intensive and requires the upkeep of extensive documentation.

The Withholding Tax Reclaims Analysis service streamlines this complicated process, utilizing technology and Citco’s expertise to provide an overview to funds which can assist fund managers with determining which tax reclaims to pursue on behalf of end investors. Any successful reclaims can ultimately be distributed to end investors, enhancing their overall performance.

Lev Shoykhet, Head of Tax, Citco Fund Services (USA) Inc., said: “Fund managers looking to differentiate themselves and increase investor returns are increasingly asking about the feasibility of withholding tax reclaims and allocating that money back to investors.

“Ultimately, overwithholding is money left on the table, and clients with ultimate beneficial owners in countries with treaty networks can now seek to reclaim this in a cost-effective way with the help of Citco’s new service.”