07 Nov

Focussing on regulatory and operational tax challenges for investment funds.

The key topics of the 2022 Operational Tax for Investment Firms were: Stay ahead of present and future regulatory developments, Look ahead to pre-empt international regulatory change, Learn how to tackle the increasing burden of tax reporting and compliance, Hear from 20+ leading industry speakers including experts from SDS. This event was an opportunity to meet the SDS team consisting of Hrvoje Kajzer and Susanne Rauscher-Nwokedi on site and to gain further insights into discussed topics and into SDS' market-proven international regulatory reporting platform SDS IREG.

This event was aimed at investment firms and the fund industry and provided deeper insights into and prompted discussions about fund structures and the future UK funds regime, trying to predict future tax developments and digging deeper into the practical benefits and potential disadvantages of new investment vehicle classifications.

International regulatory and substance requirement developments were explored. OECD Pillar Two requirements and exemptions for firms in larger consolidated group structures constituted the main discussion topics. Authorities’ greater focus on shell companies was also debated and it was concluded that there are still many uncertainties regarding the expected approaches of different authorities to this topic. There was a lively discussion about the difference between the taxes of the UK and those of Luxembourg, especially in terms of complexity. With regard to that aspect, the debate showed clearly that Luxembourg, with its straightforward and very simple tax rules, was favoured by most participants.

Managing changes to tax risk and governance was a big issue at this conference, as it is at many other tax conferences, too. How to anticipate regime changes and implement a forward-looking process was identified as one of the biggest challenges of the industry these days. Embedding proposed frameworks into current processes and monitoring tax risk profiles while aligning them with those of the whole company – paired with the question how to shape the tax team and skill set to cope with stricter compliance obligations – was seen as an extremely challenging and time-consuming task in all organisations.

An international outlook on withholding tax developments was discussed in one of the most interactive panel discussions with participation of Susanne Rauscher-Nwokedi from SDS. The analysis of a future harmonisation of the EU withholding tax regime – followed by an exploration of European Commission proposals and potential challenges of implementation – raised a discussion about the need for such a harmonised regime. The main question was how to capitalise on EU withholding tax reclaims. A broader debate was sparked on TRACE and its implementation successes and problems. It is obviously still necessary to convince the various actors on the market that a harmonised EU withholding tax regime is for the benefit of all stakeholders – individual investors, the financial industry as well as tax authorities.

The industry is seriously concerned about how to cope with an increased number of audits and authority scrutiny since authority investigations are becoming more frequent and more detailed. Thus, finding solutions to compliance issues and control failures by raising risk awareness of capital gains and transaction taxes has become of paramount importance for the industry.

There is a consensus in the industry that for emerging challenges related to tax data and documentation, technological support is inevitable and invaluable. Coping with increased scrutiny and the question how the automation of tax processes and the increasing reliance on technology can be beneficial are the predominant issues the industry is dealing with. Establishing internal consistency and transparency of data in order to cope with additional reporting and compliance requirements is the prerequisite to ensure internal data verification and consistency.

During the last conference session, which was organised as a “fireside chat”, panellists looked ahead to regulatory developments that financial institutions should be aware of and discussed amendments and the expansion of tax information exchange regimes, including the Common Reporting Standard (CRS), solutions to potential challenges of the Crypto-Asset Reporting Framework (CARF) and developments in Blockchain. At the end, the panellists expressed their wish for the establishment of the UK to become an attractive prospect for investment funds following Brexit.


This conference gathered high-profile industry experts from the fund industry and gave a broad overview of the current and expected developments and challenges the fund industry is already facing and will have to deal with in the future. Currently, the industry is facing a lot of uncertainty and its perspectives are strongly dependent on finding a way to cope with a higher number of audits and more authority scrutiny. One of the ways is the increased use of technology for collecting and validating data and preparing it for reporting in an automated way by means of standardised applications and intelligent data processing including the utilisation of artificial intelligence (AI). All attendees agree that this is anything but a simple task and will tie up many resources that will be missing for operative work.

Observation by:
Hrvoje Kajzer

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Hrvoje Kajzer
Sales Account Manager