Reclaims of foreign withholding taxes have become an absolute must for investment funds, but the practice has proven less common among insurance companies.
For years, investment funds have been successfully obtaining refunded foreign taxes on dividends and interest. While this might be due to the more visible net performance of investment funds compared to insurance companies, it’s also a sign of increased pressure from investors and other stakeholders. The hesitancy of insurance companies is even more surprising when we consider that investment funds only benefit from a limited number of double tax treaties while insurance companies have no access restrictions.
Aside from continuously low interest margins, more experienced custodians and clients requesting an extended scope of services, the facts make their reluctance even more confounding.