Time to transform tax reporting?

in Tax, 23.05.2017

In times of international tax transparency, being tax compliant has become more relevant than ever before. Consequently banks are focusing on tax reporting for individual clients. KPMG’s latest survey analyses how Swiss private banks answer the demand for tax reports requested by their foreign private clients.

Foreign private clients of Swiss financial service providers often face complex tax declaration requirements in their country of domicile. Today’s environment requires bank clients to report their income and – if relevant – their assets to their local tax authorities correctly and efficiently. With the Automatic Exchange of Information, the termination of the EU taxation of savings agreement and the end of withholding tax agreements with Austria and the UK, the financial services industry is on the beginning of a new era. Banks now need an ever-growing skillset of country-specific tax expertise to keep up with clients’ requests. Key for banks today, is to ensure tax compliance without massive investment in systems and people.

KPMG Switzerland’s recent survey of Swiss private banks analyzes how private banks are keeping up with these developments, providing valuable benchmarking data and detailed insights, including:

European focus and growing demand

Most country-specific tax reports are currently being requested for countries within Europe, with particularly high demand for Switzerland’s direct neighbors Germany, Italy, France and Austria beside other countries such as the UK and Belgium. However, 65% of private banks surveyed confirmed that tax reports are increasingly being requested for new countries beyond the current scope.

Most important criteria

When asked which criteria should be prioritized when compiling tax reports for foreign clients, 99% mentioned highest quality, granting it the highest priority. Timely delivery, client support and relationship manager support were also ranked among the top 5 criteria.

Challenges and the possibility of outsourcing

Many banks face problems when creating tax reports for their clients – 55% stated they had encountered issues in the past. Accordingly, the outsourcing of all or some of the said service to other service providers is considered to be a viable solution to deal with the cost-component of tax report compilation for 77% of the financial institutions questioned.


Although production costs currently vary significantly due to a range of influencing factors, tax reports can usually be acquired at a flat rate. 42% of banks pass the cost burden on in full to the client, while other financial institutions charge only a portion of the costs to the client (23%) or even cover the costs themselves fully (12%). Thus there exist a variety of possibilities to come up for the costs incurred.

How will tax reporting in 2020 look like?

Readers may ask, how will the future of tax reporting look like? High quality will drive future demand for tax reporting services which are more and more provided by external specialists (outsourcing) and clients will increasingly request tax reports that meet their country’s specific legal requirements. While banks will be expected to provide the tax reports in electronic form to its bank clients in some years, a combination of services such as tax reclaims and tax reporting will also reduce costs for the banks and make for an even more efficient service.



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