London-based withholding tax reclaim specialists GOAL and US tax administration consultancy The M Group have teamed up to deliver withholding tax reclamation services for US investors.
This service, which will be offered on an outsourced basis, aims to bring automated withholding tax reclamation to the 11 per cent of US institutional portfolios (approximately $2.1 trillion) that is invested in foreign securities. Withholding tax is reclaimable on dividends and income paid on US investors’ cross-border holdings – both direct investments and ADRs – amount s to over $1.5 billion annually, which makes the US market attractive for GOAL in revenue terms, even though US institutions tend to hold relatively small proportions of their portfolios in foreign assets.
“The reclamation process is arduous and highly complex, requiring in-depth and up-to-date knowledge on tax regimes and international treaties, “explains GOAL.” However, reclaim volumes on behalf of US investors are much lower than in Europe, where cross-border portfolio holdings are typically between 30 and 50 per cent. Investors and financial institutions – custodian banks, hedge funds, fund managers – will therefore welcome the introduction of a fully automated outsourced tax reclamation service, to recover the overwithheld tax that is rightfully theirs, especially in a climate of depressed equity capital values.”
“There is a growing demand in the US market for a truly effective outsourced tax reclaim service, with investors fully focused on the efficiency of their return on investments,” says Stephen Everard, Managing Director, GOAL.” The M Group’s reputation and track record make them an ideal partner.”
Mark Cox, CEO and President, The M Group (former Deputy Chief Information Officer for the IRS) added: “We have long been aware that many US securities investors have not received the full tax benefit that they deserve. Our partnership with GOAL is a key step forward to enabling those investors to receive efficient revenue and reclamation management.”