A large French private banking group selects BearingPoint’s EasyTax as 871(m) solution for tax calculation

A large French private banking group decided on BearingPoint’s software solutions to fulfil its tax calculation and reporting obligations to the US Internal Revenue Service (IRS) under Section 871(m).

Section 871(m) is a regulation which subjects US dividends paid to non-US residents to withholding tax, when paid or accrued within non-US derivatives which are closely linked to US equity. Potentially liable to withholding are both principal and intermediaries of such derivatives.

A large French banking group, acting both as a principal and as an intermediary of section 871(m)-liable derivatives, relies on the EasyTax solution for the calculation/withholding part of the 871(m) regulation. As a principal, the banking group has applied for a Qualified Derivatives Dealer (QDD) status. As an intermediary, it remains a secondary withholding agent on third-party derivatives.

Already a user of BearingPoint’s FiTAX solution for the reporting to fiscal authorities (QI, FATCA, AEOI…), the French group, by using EasyTax on the client side, will benefit from a one-stop shop solution:

• Derivative classification based on both the bank’s and a financial data provider’s data input (EasyTax),
• US tax calculation for QDD and intermediaries (EasyTax)
• Fiscal reporting for Form 1042-S covering 871(m) transactions, Forms 1042 incl. section 4 attachment (FiTAX).

Thanks to EasyTax’ deep experience in dealing with tax calculation and booking, combined with FiTAX team’s expertise on IRS regulations, we can respond to new regulations very quickly by offering appropriate solutions. On the client side as well as on tax authorities side, banks can benefit from BearingPoint’s already established team network and experience.

Ronald Frey, Partner at BearingPoint

In addition to the regulatory reports produced by FiTAX, EasyTax offers support in monitoring of 871m in-scope securities, reporting, and data extraction features.