When investors receive income (dividends and interest) from cross-border investments like ADRs and foreign shares, that income is often taxed at a high “statutory” withholding rate, approaching 35% in some markets. Under Double Taxation Treaties (DTTs), investors may be eligible to receive a lower “treaty” rate. If so, they are entitled to recover the difference between the two rates.

Cross-border withholding tax recovery is a highly complex and labor-intensive process. It requires researching 3000+ outstanding treaties that govern hundreds of jurisdictions, all of which involve different documentation requirements and unique processes to recover over-withheld taxes. 

Founded in 1992, GlobeTax is the world’s leading provider of foreign withholding tax relief and recovery services. A niche expert on double taxation treaties, GlobeTax helps investors maximize portfolio returns by recovering all available entitlements. Clients include asset managers, broker dealers, CSDs, custodians, depositaries, hedge funds, high net worth individuals, institutional investors, issuers, and transfer agents.   

The IRS prohibits taxpayers from claiming over-withheld taxes as a foreign tax credit if recourse is available through a foreign tax treaty.

The IRS website states: “The amount of foreign tax that qualifies as a foreign tax credit is not necessarily the amount of tax withheld by the foreign country. If you are entitled to a reduced rate of foreign tax based on an income tax treaty between the United States and a foreign country, only that reduced tax qualifies for the credit. It is up to you whether you want to ask for a refund from the foreign country of the difference (excess) for which a foreign tax credit is not allowed.”

Investors who utilize foreign tax reclamation boost their portfolio performance by an average of 22 - 55 basis points per year, completely risk free.

Limited POAs allow GlobeTax to represent enrolled clients in foreign tax recovery, limiting the need for ongoing client involvement. With these documents, GlobeTax can complete and renew Certificates of Residency on behalf of investors, as well as submit foreign tax reclaim applications.

The POA, necessary for all clients, empowers GlobeTax as a corporate entity to file tax reclaims with foreign governments on clients' behalf. Without a POA, GlobeTax cannot file claims.

These documents represent the result of many years of discussion with relevant government authorities. As such, we cannot entertain any alteration as changes may negatively impact recovery of client funds.

Yes, the POAs must be notarized. Tax authorities—including the IRS—prohibit GlobeTax from lodging reclaims on behalf of beneficial owners without notarized POAs. Clients residing outside of the U.S. may pursue alternative means of notarization on a case-by-case basis. 

Non-Transparent: Entity claiming tax refund entitlement; has paid the tax to be recovered. Documentation is only needed at the entity level. Examples include charities, individuals, and IRAs. 

Transparent: Underlying investors have paid the tax to be recovered and can claim the entitlement. Documentation must be gathered at the beneficial owner/investor level. Examples include partnerships, master-feeder funds, LLCs, and trusts

Yes. While GlobeTax typically requests standard onboarding documents like Powers of Attorney for all entity types, supplemental documentation requirements vary considerably. For example, a charity must provide copies of their IRS Tax Determination Letter and Articles of Incorporation, in addition to the standard documents required by GlobeTax. 

Because trusts are treated as non-residents under U.S. income tax treaties, GlobeTax needs to ‘look through’ to obtain Certifications of Residencies for underlying investors, both U.S. and non-U.S.

Underlying beneficiary information is also required to file reclaims in certain markets. Therefore, GlobeTax requires a completed template disclosing investor name, tax ID number, physical mailing address, entity type, and percentage of ownership. This information is required on a per-year basis.

Due to the complex nature of tax reclamation, it takes, on average, between two - three years to receive a refund from a foreign tax authority or agent bank. Please note that this is an average and it may take longer or shorter, depending on the market.

GlobeTax's fees are entirely contingent-based. Until a tax reclaim is successfully paid by a foreign tax authority, there are no fees. After income is recovered, GlobeTax charges a percentage of the recovery as detailed in the document below:

Goldman Sachs Fees

To keep PWAs and clients informed on the status of their reclaims as well as payment, GlobeTax offers two reports:

1.  A quarterly "Status" report that details which stage of the reclaim process each individual transaction is in. This report is sent to Goldman Sachs for distribution.
2.  A "Payment Mapping" report sent to Goldman Sachs twice a months that provides a complete breakdown of recently paid items and the fees associated with them.