Tax-transparent funds : more basis points for Danish pension funds

The Danish National Tax Board has decided to allow institutional investors to take full advantage of the double taxation treaties. Globe Refund informs that the common contractual funds, a tax-transparent fund structure, offers sustainability and the cost efficiency of a passive approach to investing. According to the firm, investors in CCFs get the same withholding tax rates as if they had invested directly in equities, with the added features of investing via a pooled fund, such as tighter governance, better risk management, economies of scale and engagement. Common contractual funds will allow Danish pension funds investing in a world equity index fund to achieve an uplift of 20 basis points to 50 basis points, depending on the strategy, compared with investing in a non-tax-transparent vehicle. The launches of CCFs comes as institutional investors continue to grapple with regulatory change and face increasing demands to reduce bottom-line costs and improve top-line performance. Choosing the right investment vehicle is one way to leverage all existing double taxation treaty (DTT) opportunities and we are pleased to advise tax-efficient CCFs to Danish investors. A concrete example : a Danish pension fund invests through an Irish UCITS Plc in Swiss shares. It’s impossible to reclaim the 20% of WHT because of this non-tax transparent vehicle. With a CCF, the Danish pension fund identity can be disclosed, so the Swiss tax authorities will accept the refund. If the fund have 10% of Swiss shares in its portfolio, it’s a bonus of 5 basis points per year compared to a non-tax transparent vehicle.   As a withholding tax reclaim specialist, Globe Refund informs the investors about the right choice of investment vehicles in order to minimize the impact of the withholding tax and to improve investments performance. Contact us for more information.   Stanislas Conte, CEO