Overview
A large U.S. state entity managing public retirement system and educational funds faced significant challenges in withholding tax recovery. With an understaffed team focused on core investment and beneficiary obligations, reclaiming excess withholding tax was not a strategic priority. However, unclaimed tax represented lost capital that could directly contribute to funding public education initiatives and state-level projects.
By partnering with WTax, the fund streamlined its tax recovery process, unlocking an additional $10 million in recoveries. A large portion of this came from highly complex Swiss reclaims, requiring specialized expertise and knowledge of the required investor documentation
Additionally, WTax ensured all relevant exemptions were applied across all relevant markets, maximizing the benefits of the organization’s tax-exempt status.
Client Challenges
Administrative burden
The internal team lacked the capacity to manage extensive paperwork and respond to tax office queries and documentation requests.
Complexity of international tax recovery
Swiss reclaims, in particular, required an in-depth understanding of withholding tax filing requirements.
Tax-exempt organizations still suffer foreign withholding tax
Unbeknownst to them, the client was missing opportunities to apply withholding tax exemptions and fully benefit from its tax-exempt status.
Lost funding for public initiatives
Every unrecovered tax reclaim meant less funding for essential public programs, including retirement security and educational investments.
Delays in recoveries
In their current process, reclaims were filed close to the statute of limitation resulting in delays in reinvesting reclaim proceeds
The WTax Solution
By outsourcing withholding tax recovery to WTax, the fund eliminated administrative inefficiencies and significantly increased its reclaim success rate.
Fully Managed Tax Recovery Process
- WTax took over the entire withholding tax reclaim process, ensuring compliance with each jurisdiction’s regulations and documentation requirements.
- The fund no longer had to manage time-consuming interactions with tax authorities and intermediaries, freeing up internal resources.
Maximizing Recoveries Through Swiss Reclaims and Tax-Exempt Status
- WTax secured additional recoveries by applying all relevant exemptions and reclaims in all investment markets, ensuring the fund fully leveraged its tax-exempt status.
- A significant portion of the recoveries came from Swiss reclaims, which required specialized knowledge of investor documentation and tax office processes.
- By expertly navigating complex jurisdictional requirements, WTax unlocked substantial tax refunds that had previously gone unclaimed.
Results & Impact
1. $10 million in additional withholding tax recoveries secured, directly contributing to public projects, reinforcing the fund’s role in supporting education and state initiatives.
2. Improved financial position and long-term sustainability, with optimized tax recovery enhancing the fund’s ability to meet future obligations.
3. Significant administrative burden removed, allowing internal teams to focus on core investment management and beneficiary obligations.
4. Strengthened fiduciary responsibility, ensuring the fund effectively managed its assets and maximized available financial resources.
For public funds, unclaimed withholding tax represents lost funding that could support critical state projects and educational initiatives. Without specialized expertise, managing complex international tax recovery processes can be overwhelming and inefficient.
By partnering with WTax, this U.S. state entity maximized its recoveries, minimized administrative strain, and redirected recovered funds to public benefit programs.
