Rethinking tax services
How KBC Securities Services transformed a legal requirement into a strategic asset for its customers.
For years, tax services were treated as a back office obligation. At KBC Securities Services, we take a different view: tax is also an opportunity to improve client outcomes. Through our Double Tax Treaty (DTT) service, we help eligible investors avoid double taxation on cross border income. Business Development Manager Tax Lotte Meert explains how.
Lotte, what exactly falls under ‘tax services’ at KBC Securities Services?
Lotte: “As a financial institution, we first of all have an obligation to report and withhold Belgian and international taxes. In addition, we offer a Double Tax Treaty (DTT) service, which enables eligible clients to benefit from reduced withholding tax rates on certain cross-border incomes. This means clients don’t have to pay the full foreign tax rates, and we take over the paperwork to reduce the administrative burden.”
How does Double Tax Treaty (DTT) service work exactly?
Lotte: “A double taxation treaty between Belgium and another country defines how, for example, cross-border dividends are taxed. Our DTT service ensures that the correct treaty procedures are applied so eligible clients can benefit from the reduced withholding tax rate.”
“There are two main approaches to DTT: ‘Relief at Source’ and ‘Reclaim’. In a Relief at Source model, the reduced treaty rate is applied immediately when the income is paid. In a Reclaim model, the full rate is withheld first, and the difference is refunded afterwards. Reclaims tend to be more administratively heavy and it can take a long time before the client is reimbursed. We work within each country’s framework to apply the correct procedure for the client.”
“To make that more concrete: take French dividends. The standard withholding tax can be 25%, but for eligible retail investors the treaty rate may be reduced to 12.8% when Relief at Source is applied through our DTT service.”
What are the tangible benefits of KBC’s DTT service?
Lotte: “We take the operational burden off clients by obtaining a Power of Attorney. Combined with a fiscal mandate, we are then able to retrieve the Tax Residence Certificate each year without further intervention by the client. And unless a country’s procedure requires a periodically renewed document by the client, we take all necessary steps to apply the reduced tax rates or reclaim process.”
“Where we truly add value is in our proactive approach. We continuously monitor treaty updates and procedural changes. When a tax treaty or the underlying procedure changes, we immediately assess the impact on our clients and take action if there is an opportunity to extend the scope of countries or the client relevancy. For our Wealth Managers, we provide an annual report showing the results achieved and where additional opportunities may still be untapped. Our clients appreciate that level of forward-looking guidance. It helps them benefit from treaty advantages they might not have spotted themselves.”
“In a recent benchmark study, we compared our tax services with specialized external providers. The conclusion was clear: those external providers could not offer additional value beyond what KBC Securities Services already provides today. The same analysis showed our service offering is more comprehensive than that of the majority of banks, with only two large banks showing a comparable scope.”
KBC currently offers the service mainly to Belgian residents. Are there plans to expand internationally?
Lotte: “Today our scope includes Belgian residents (Wealth Managers, Investment Funds, financial intermediaries, BPO) and Luxembourg domiciled Investment Funds. We are actively exploring extending the service for additional residencies based on both feasible opportunities and client demand. We recently started offering DTT services for two client residencies other than Belgium. But it requires careful evaluation. No two double tax treaties are the same. Procedures and documentation differ across countries. We prefer to grow where we can deliver real client value at scale.”
- “Demand for proactive, end-to-end support will grow as markets evolve and regulatory expectations increase.”
Lotte Meert, Business Development Manager
Meanwhile KBC is already rolling out its 'next level' DTT service. What does that entail?
Lotte: “Our services used to be offered as a fixed package. Previously, we set up the full list of supported countries for every client in a given segment. With the next level DTT service, we give clients more choice. They can now indicate the countries that matter to them. At year end, their Wealth Manager receives a clear overview of the benefits achieved under the service.”
“At the same time, we proactively flag additional opportunities for these clients. DTT next level makes the service more flexible, efficient and genuinely results-driven.”
Europe is preparing the ‘FASTER’ initiative. What does this mean for the future of tax services?
Lotte: “FASTER – ‘Faster and Safer Tax Relief of Excess Withholding Taxes’ – is a European directive aimed at simplifying the cross-border withholding tax process and accelerating refunds. For clients, the ambition is greater convenience. In case of reclaims, for example, the refund will have to be paid out much faster than it is today (‘Quick Refund’). However, it also brings new reporting obligations for financial institutions to help tax authorities verify transactions and prevent fraud. So, it’s simplification on one side, and additional responsibilities on the other.”
“As a European directive, FASTER will require transposition into national law, so the concrete implementation will differ between countries. Countries will still have the option to choose between Relief at Source and Quick Refund. Tax treaties won’t suddenly become identical.”
“We expect demand for proactive, end-to-end support to grow as markets evolve and regulatory expectations increase. KBC Securities Services is committed to being a strategic partner, not just a processor. We make complex rules understandable and manageable for clients.”
- “KBC Securities Services wants to be a strategic partner, not just a processor.”
Lotte Meert, Business Development Manager
