Taxtec Reports Japanese Investors Are Forgoing 43 Basis Points In Returns Due To Unreclaimed WHT

• Japanese investment in European stocks remains strong.
• Yet in ~20% of cases, withheld tax on dividends from those shares is not being reclaimed, according to long-term TaxTec research.
• A new TaxTec study reveals basis point impact where Japanese investors' withholding tax is not reclaimed on European securities.

TaxTec reports that long-range research has identified a significant shortfall in withholding tax (WHT) reclamation by Japanese investors. As of 2024–25, just under 20% of reclaimable WHT worldwide remains unreclaimed, an amount estimated by TaxTec at approximately USD 16 billion.

In many cases, the proportion of withheld tax on European dividends that can be reclaimed by Japanese investors is substantial. The reasons, historically, for non-reclamation have been that the process is extremely complex and bureaucratic. However, the emergence of automated and AI-enabled services to reclaim WHT has rendered that argument null and void.

To provide a benchmark for Japanese investors and their service providers to broadly assess the impact of unreclaimed WHT on European holdings, TaxTec conducted research using the MSCI Europe Index as a proxy for Japanese investors' European equity portfolios.

Using TaxTec's proprietary data and insight, this latest analysis assessed the structure of a 'typical' European fund/portfolio for reclaimable WHT. The assessment took into account the specific domicile of each component equity, its weighting within the index, and the detailed withholding and reclaim rates in each case.

Findings show that when WHT is not reclaimed, Japanese investors forgo approximately 43 basis points of rightful returns. Considering the trailing dividend profile of European equities, effective tax reclamation represents more than 10% of total dividend returns.

Users can find the complete report, How Much Are Japanese Investors Losing?, here .

About TaxTec

Founded in 2023, TaxTec is revolutionizing tax recovery for institutional investors and their agents. Utilizing the latest AI-enabled digital technology, a highly automated global tax recovery proposition, and a client-centric service model maximizes reclaim opportunities for the clients across all major markets. TaxTec clients recover more tax at a lower cost, enhancing investment returns.

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