International tax services: Financial services

Overview

The International Tax Services - Financial Services (ITS-FS) group assists financial services organizations, especially large and mid-size private equity & hedge funds, sovereign investment funds, pension funds, venture capital funds, and family offices to navigate the ever-changing and increasingly complex international tax environment, stringent capital requirements, risk management considerations, management of operational tax risks, tax implications of investing in different jurisdictions, and enhanced reporting requirements. 

The ITS-FS group is dynamic, diverse, and highly experienced in helping financial services organizations with their international tax structuring whilst taking into account the challenges of a continuously changing tax world - both locally and globally. The ITS-FS group has a dedicated global team of experienced specialist groups in banking and capital markets, insurance industry, and asset management.  

International Tax View

International Tax View (“ITV”) is one of many tools found in a suite of services offered to the financial services industry by PwC.

International Tax View (“ITV”)

ITV is a comprehensive database of withholding and capital gains tax rates for over 130 jurisdictions that includes detailed commentary of the domestic tax treatment of income derived from 14 asset classes. In addition, it also provides withholding and refund procedures, domestic filing obligations and commentary on the country’s approach to obtaining double tax treaty relief for over 44 specific fund vehicles.

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Automated Tax Risk Scoping (“ATRS”)

ATRS automates the process of assessing capital gains tax risk in global investment portfolios at the financial instrument level. ATRS uses data from International Tax View to analyze investment portfolios line-by-line by applying tax calculation logic, including:

  • Application of an array of tax reductions and exemptions based on ownership threshold exemptions, likely double tax treaty exemptions, non-land rich exemptions and other domestic rules (e.g. listed security exemptions, EU exemptions);
  • “Flags” where the country/asset combination might have controversial tax treatments;
  • “Dashboard” - providing an aggregate view of the potential tax exposures and can be filtered by country, investment tier, investment platform, financial instrument, or by fund name;
  • A “Details” view providing the potential tax rate and determinations applied to each financial instrument, with the look and feel of a spreadsheet; and
  • Tax Calculations that are exportable in pdf reports and spreadsheets.

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Withholding Tax Reclaims services

PwC assists its clients in filing refund claims for taxes over-withheld on cross-border investment income in multiple jurisdictions across the globe, either based on tax treaties or EU law (‘Fokus Bank claims’).

We provide services to help our clients review the withholding tax rates used by their custodian banks, and identify and reclaim taxes over-withheld in the past.

 

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Multilateral instrument

The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (“Multilateral instrument” or “MLI”) is intended to supplement and modify over 1,300 covered double tax agreements.

The PwC MLI Tracker Tool is another visualization tool showing the MLI’s potential impact on the existing tax treaties.

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Hotline

PwC also offers clients the possibility to contract a “hotline” service for an additional fee, allowing for easier and direct correspondence with PwC’s Operational Tax team. Under this service, and for a fixed quarterly fee, the client team can directly contact, at any time, our dedicated team who will reach out to overseas firms, as needed.

This service is meant to cover more specific international tax questions that may arise for global investors on liquid trading type of investments and that are not included in the International Tax View database. PwC’s Operational Tax team utilizes the required resources to quickly and accurately find and convey an answer.

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• Banking and capital markets: The core area of focus for the banking and capital markets team is on structural realignment due to regulatory changes, business transformation, attribute management, monitoring of financial services transaction taxes, and compliance and regulatory matters in the financial services industry. 

 Insurance: Within the insurance industry, our team of ITS partners assist U.S. and non-U.S. multinational insurance companies with their investment and treasury management functions and global structural and profit alignment. 

• Asset management: The asset management team focuses on a broad range of international structuring issues, most of which entails managing the level of tax risk for hedge funds, private equity, real estate, and sovereign investment funds and enhancing post-tax returns for investors by reducing tax leakages. 

ITS-FS provides sophisticated strategies and solutions to give financial institutions a competitive edge over peers in their respective industries.  Each experienced specialist group within ITS-FS invests time in understanding complex industry related issues at the fund, portfolio company, and management company levels across many jurisdictions and provides tailored consulting services to assist clients with international structuring which best suits each investment's and investor’s needs.

As a leading Asset Management practice, ITS-FS has extensive expertise and can work with you to manage key issues such as:

• U.S. and foreign tax issues arising in international investment structures

• Complex tax treaty analysis

• Investment structuring for tax exempt entities

• OECD/Base Erosion and Profit Shifting (BEPS) developments and possible impacts on financial industry

• Tax Reporting

• Alternative Investment Fund Managers Directive

• Reporting to Investors

• Controls and Governance

For more information on the comprehensive customs compliance services we offer, please contact one of our professionals:

Contact an ITS-FS regional team member

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Jason Becker

US Leader - International Tax Financial Services, PwC US

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