13 Jul
Whitepapers

SDS WHITEPAPER: Tax Reporting Insights from European Tax Experts on TRACE.

The new SDS WHITEPAPER summarizes the key discussion topics of the international expert panel with representatives from BNY Mellon, BNP Paribas, and Deloitte on the occasion of an SDS webcast on the topic from May 2021. PLUS: Quintessence of an expert interview with Veroskatt (Tax Authority Finland).

TRACE, the OECD Treaty Relief and Compliance Enhancement Package, is a withholding tax treaty claim mechanism for non-resident portfolio investors. Finland was the first country in the world to adopt it.

TRACE was established to simplify the approach of claiming lower tax rates by leveraging the central role of intermediaries. By registering as an Authorised Intermediary (AI), financial institutions and custodians may take over the responsibility for the correct taxation for their clients and agree to exchange the relevant information with the competent authorities, allowing the financial institutions and custodians to benefit from the opportunity to simplify their clients‘ cross-border investments.

The TRACE model for withholding taxes of dividends paid to nominee-registered shares was implemented at the beginning of this year and the first reporting is due in January 2022. For financial institutions and custodians registering as AIs or considering doing so, there is still much to learn about the TRACE benefits and challenges, about the details of the implementation in Finland, and prospective future jurisdictions adopting this regime.

This SDS WHITEPAPER summarizes the key findings of the discussion on the following points:

  • The benefits of TRACE
  • The specifics in Finland
  • The challenges of implementation
  • The future of TRACE

generated during an SDS webcast in May 2021.

In addition, we provide a summary of an expert interview with Veroskatt (Tax Authority Finland) in the form of an e-paper in the download-section.

Get in touch
Susanna Scheffold
Head of Product Management
Hrvoje Kajzer
Senior Sales Manager