There is a fintech out there that gives you peace of mind about the pesky things in life that always seems to fall by the wayside. 

There are two kinds of tax refunds that many end up giving a pass on. The first is the grand European VAT refund rigmarole. You always mean well, and you get to the airport early to get the cash in hand because you don’t want to wait four to six weeks for the sum to eventually turn up on your credit card.

But it is Charles de Gaulle, and you find yourself waiting in line behind dozens of patient tourists carrying untold numbers of Hermes, Chanel, and Louis Vuitton gift bags. If the travelers are from Asia, the unopened packages are often for friends and distant relatives - and they need the cash back. Everything gets too complicated otherwise. You give up as you didn’t get there that early.

Then there is withholding tax. That vague, obtuse tax levied by some countries and not others, usually on interest and dividends to anyone not captured as residents in the local tax system.

Fintech for Refunds

But as any overseas investor can tell you, getting that those kinds of refunds can frequently prompt you to tear your hair out.

Yet, the sums are significant, even material. Withholding tax rates can range from anywhere between 10 percent in Mexico to 35 percent in Switzerland. Even worse, a study by Janus Henderson estimates that no one bothers to reclaim 20 percent of all the withholding taxes on equity dividends globally, an estimated $20 billion annually.

Why is that? Part of the reason is that few banks or wealth managers provide any kind of refund service to clients. That means figuring out the mechanism is up to the hapless investor themselves. They rarely have the time, or the patience, to comb through unstintingly dreary reads of double taxation treaties to see how much they can get back. It is all a very big ask if you have, say, more than four or five stocks or funds in your portfolio.

But, thankfully, as with everything else in finance, there is a fintech for that. A company based in Germany called Divizend thinks it has the ideal solution to the whole conundrum.

Rethinking Everything

According to the company co-founder and CEO Thomas Rappold, the company has looked at the entire issue back to front and rethought everything «holistically» from the ground up.

That has put them in a position to provide clients with tools that help them submit automated applications to tax authorities around the world completely error-free using an intuitive interface that is easy for anyone to understand.

Importantly, the client can use it for different jurisdictions while loading up all their securities accounts into one place.

Direct Extraction

To do that, the company has a so-called reclaim analyzer that shows the client what kind of refunds he or she can expect to get. The investments can be directly uploaded through a linked native interface from the client’s bank although they can also upload PDF files directly or enter them manually - after which the necessary information is extracted.

Subsequently, everything gets put on a common dashboard that the client has access to. He or she can also choose to include the relationship manager, the investment administrator, or even family office representatives, if relevant.

That is then followed by a third step where the client or his team of administrators completes Divizend’s online claim filing. After that, the system provides real-time updates on whether the expected refund has come in or not while always providing a status on the total amount of refunds their portfolio can potentially claim. According to Rappold, the whole process saves significant time and money for everyone involved, while also making sure that no refunds get lost.

Soon in Asia

The Divizend service is currently available in many jurisdictions in Europe and North America.

Plans are afoot to offer it soon in Asia as well and it was recently selected by the 2023 FinTech Innovation Lab Asia Pacific annual accelerator program run by Accenture in Hong Kong. It was also nominated as one of the top fintechs at the Swiss 2023 fintech awards, the winners of which will be announced on 13 June.

But for Rappold, the most important thing is to give investors peace of mind that they are not leaving anything by the wayside. He uses the product extensively himself - and he fully vouches for the addition of «zen» to the name of the company he co-founded.