Investors, including institutional investors, lost an estimated $17.39 billion globally through unclaimed withholding tax from overseas stocks and bonds, according to a report by the Goal Group.
The loss represents about a quarter of about $64.4 billion in total reclaimable tax globally in 2010, according to the report. U.S. investors gave up the most, about $3.16 billion, in unclaimed withholding tax, followed by U.K. investors, who left an aggregate of about $1.65 billion on the table. Japanese investors lost out on a total of about $1.33 billion during the same year.
In certain jurisdictions, earned income from overseas securities is automatically subject to a withholding tax, but a portion of that tax can be reclaimed. As more investors diversify their portfolios by investing in overseas securities, the issue of unclaimed withholding tax becomes more significant as a portion of total returns, said Stephen Everard, CEO of the Goal Group, which provides support services to the financial sector including tax-related solutions.
“There’s still a lot of reclaimable withholding tax that’s languishing in foreign jurisdictions,” Mr. Everard said in a telephone interview. “There’s really no excuse for it with the technology available today (for custodians to perform the task of reclaiming withholding tax). At the end of the day, it’s your money.”
Mr. Everard added: “Investors should be demanding that their interests are fully protected.”