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Finding a way through red tape

Fund management

Germany, France, Italy and Switzerland have been revealed as the biggest hoarders of securities withholding tax over the past year according to new figures released to Euromoney. These countries held on to $875 million owed to foreign investors.

Globally, tax authorities owe investors $6 billion from the past year alone, according to the research of Goal, a software company that works on ways to help custodians reclaim the tax. These four countries account for 15% of the total, says Goal, which has broken down the global figure into individual countries for the first time. It puts together its numbers based on information from exchanges, data providers, ratings agencies, industry associations as well as its own proprietary information and data.

Switzerland is by far the largest offender, hanging on to $458 million. The fact that the least amount of tax is reclaimed from Switzerland is not surprising given the secrecy surrounding many foreign investments.

Italy is second, with $185 million unclaimed, but for different reasons. Italy is historically difficult to reclaim from. The average time frame for refunds is six to seven years, according to Goal, in some cases even longer. Andrew Rand, regional head of the network management group at Brown Brothers Harriman, says: "[At the end of 2002] BBH received funds dating back to a tax reclaim [from Italy] that we filed in 1988 - so 14 years later."

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