International client tax calculation & reporting solution
As banks’ clients have many assets all over the world, their request for tax reports has increased. Clients are looking for highly sophisticated tax reporting from an increasing number of tax jurisdictions, and financial institutions need to meet their clients’ increasing demands. While providing on-shore related tax reports and bookings is a standard service for banks, producing off-shore reports can be a challenge.
EasyTax helps financial institutions in the calculation, the reporting and the booking of taxes for many different jurisdictions. Our standard software enables banks to produce country-specific off-shore tax reports. This enables them to provide their off-shore clients with a service to ease the burden of their tax filing duties and support private clients with their tax statement submissions. With regards to on-shore requirements, EasyTax generates real-time tax calculation results and bookings for more and more countries.
EasyTax is a standard solution for client tax reporting and has been in productive use at various clients such as private/wealth management banks, family offices and banking package providers, among others, for almost 20 years. More than 90 financial institutions worldwide already produce tax reports for their clients with EasyTax.
More and more banks are providing international customers with the appropriate tax reports to support private clients with their tax statement submissions. Although this need was initially driven by client requests, the current demand for high-quality tax reports is rapidly growing due to increased political pressure, newly established tax amnesties and initiatives such as the Automatic Exchange of Information (AEOI).
The off-shore module currently covers the following countries: Argentina, Austria, Australia, Belgium, Brazil, Chile, China, Denmark, Finland, France, Germany, Greece, India, Indonesia, Israel, Italy, Luxembourg, Mexico, Norway, Portugal, Russia, South Africa, Spain, Sweden, Switzerland (including the electronic format of the “eCH-0196 – E-Steuerauszug”*), The Netherlands, Turkey, United Kingdom, United States.
Based on our current findings, the following countries have been short listed for planning and development to meet a significant demand: India, Japan, Peru, and Taiwan.
Next to the country specific reports, EasyTax covers with highly parametrizable generic modules with different compensation logics (FiFO, LIFO, Average etc.) for “rest of the world”.
The on-shore reporting module includes on-shore tax calculation, booking and authority reporting capabilities. Based on the applicable tax law for a bank’s country of domicile, the module handles the required tax filing for the tax authorities and the client’s tax and facilitates a withdrawal of the calculated tax amount, with the bank acting as the paying agent.
The on-shore module covers the following countries: France and Spain (in full) and Australia, Luxembourg, Switzerland, The Netherlands, UK (client reporting solution only).
The EasyTax simulation suite offers tax simulation functionalities and helps bank clients to make even better investment decisions. The performance of investment portfolios is greatly influenced by taxes; a high pre-tax profit may be highly reduced by the specific income and capital-gain tax regimes of an investor’s home country. The simulation suite is structured in four levels.
For the first level 1, the country-specific simulation and in specific the full sale scenario simulation of all positions of the client, it covers the following countries: Australia, Austria, France, Israel, Mexico, Spain, South Africa, Portugal, United Kingdom. In addition, the full sale scenario simulation is also available for the EasyTax generic modules.
Level 2 to 4 with a graphical user interface for improved user handling, country specific add-ons and better connectivity to banks systems are currently in development.
EasyTax is a software for both off- and on-shore booked client calculation / booking and reporting. It is based on a classic three-tier architecture (data base, application server and web client) and supports MS SQL, Oracle and PostgreSQL. EasyTax can be performed on different application servers such as Wildfly (formerly named JBOSS), Weblogic, WebSphere, Tomcat and JAP and users can access EasyTax via the Internet Explorer and an extensive command line-based tool box.
EasyTax supports interfaces to core banking systems as well as to external tax data providers. Based on the delivered tax data and our Big4 tax concepts, the tax client reports can be quickly generated via the GUI (graphical user interface) or using the EasyTax tools - up to several thousands of tax reports per hour.
In financial institutions, asset positions might have to be moved between safekeeping accounts periodically depending on existing bank processes and customer needs such as changes to relationship/wealth managers, inter-department asset transfers or while providing tax amnesties when trusts are reorganized within family or account holder structures. In these situations, the transaction chain is interrupted. However, the acquisition cost and historical purchases of the transferred assets is in scope of the tax report in capital tax or holding period regimes. As the carrying acquisition costs differ between tax regimes and in jurisdictions that requires per lot allocation prices instead of averages, the tax operation teams have the responsibility and an enormous challenge incurring manual efforts to represent & explain the actual acquisition costs. While the loss of traceability during interbank asset transfer could be explained to customers, those that involve interbank processes are within the ownership of the institution itself.
MovePosition is a transaction model that is embedded to EasyTax to address the above challenge. It provides the ability to link the transaction chains from the old to the new portfolio and highlighting the taxable gains or income only when its relevant. Opposed to the TransferIn / TransferOut transaction types, which follow the accounting logic given by the respective jurisdiction (for example FIFO for Spain), MovePosition works differently – MovePosition moves all historical lots between the accounts under consideration how the lots were split among the recipients of the assets. With this approach correct carrying acquisition cost are used (as EasyTax does the accounting and adjustment of the carrying acquisition cost on all historical transaction is if they were in the same portfolio) and the original acquisition dates are preserved. This transaction type may only be used in cases where such an approach is allowed. This is typically the case when the transfer was triggered by a technical or administrative event and is not considered as a taxable event, such as a gift or change in beneficial ownership. In addition, there are some jurisdictions, for example Austria, which impose special handling of account transfers.
On the fly balance reconciliation & usage of position data for wealth statements, these two features are complementary. The on the fly balance reconciliation rely on the internal balance calculation of the calculation core and compares these calculations with results from the core banking system. In purpose to detect problems in the transaction history delivered to EasyTax leading to wrong balances. Usage of position data for wealth statements, which allows to deliver core banking position data to be directly shown in a wealth statement. In order to produce accurate wealth statements before transaction history is cleansed and Fully rely on balances instead on transactions for specific types of instruments.
For on-shore modules, electronic reporting is already at the core of EasyTax mandatory deliveries. For the off-shore countries electronic formats are now more and more entering the markets. As a first step for off-shore modules, EasyTax will support the electronic format of the Switzerland “eCH-0196 – E-Steuerauszug” starting with fiscal year 2019. This enables our banking clients to send electronic documents to their clients. Based on this, the bank clients can then directly upload their tax statement on the official pages of the tax authority.
Ansbacher (Bahamas) Limited's competitive advantage is dependent on our ability to deliver the very best in products and service solutions to our clients. Our relationship with BearingPoint and the use of its EasyTax solution is indicative of our commitment to high quality solutions that help to manage and protect our clients' wealth.
Sandro Lardi, Head Information Technology at Ansbacher (Bahamas) Limited, February 2018