Withholding tax reclaims are often slowed by factors outside an investor’s control. Yet, understanding when refunds should arrive is a severely underused investment tool for improving financial planning and control.
In my previous contribution, I focused on why filing earlier can unlock better outcomes. The next piece of the puzzle: what happens after a claim is submitted? In standardized recovery processes, refund timelines are often one of the least visible aspects, even though they have a direct impact on portfolio cash flow and planning.
Most funds have little insight into when their refunds will arrive. Without that visibility, it becomes more difficult to model inflows, plan resourcing or answer investor questions with some certainty.
Why timelines are unpredictable
Each market has its own rules and behaviors. Some authorities process claims within a few months, while others take years; some are infamous for barely paying at all. Tax authority responsiveness shifts over time and complex claims can invite additional scrutiny or long silences. Even when applications are submitted correctly and within deadlines, outcomes can be hard to forecast.
Due to this, timeline tracking is often excluded from recovery planning altogether or performed only on a cursory basis. It’s seen as too uncertain to measure and, therefore, not worth trying to understand or model.
This is further compounded by inconsistent escalation procedures and bottlenecks within intermediary chains. Shifting resource levels at tax offices, changes in procedural interpretation and political or regulatory developments can all further destabilize expectations.
Why it matters more than ever
Refunds represent capital. When timelines are unclear, that capital becomes harder to manage. I have seen funds struggle to build reliable cash flow models or provide updates to stakeholders, simply because the timing of reclaims is barely monitored.
This lack of clarity also adds pressure. Without knowing when claims will be refunded, planning becomes reactive. Time is wasted chasing status updates instead of resolving real issues.
Knowing if a refund is likely to be received within a year or only after two or more makes a material difference to planning and performance. The difference between a one- or three-year recovery affect everything from re-investment strategies to liquidity buffers.
Tracking timelines adds value
The good news is that timelines can be tracked. Solutions do exist. The secret is having large, accurate and robust datasets across the widest variety of reclaim combinations e.g. investment jurisdiction, beneficial owner type, claim mechanism etc. With the right technology , you can then benchmark expected refund timelines and flag overdue events based on prior experience.
While no model predicts every outcome, this approach gives a much clearer view of expected outcomes. It supports better forecasting, improves investor reporting and creates stronger internal alignment. It also helps you spot delays earlier and be proactive when needed.
From opacity to oversight
The idea that refund timing is not reasonably ascertainable should be challenged. Predictable patterns do exist – I’ve seen them. With the right expertise and purpose-built technology to track them, even partial insight can fundamentally change the way in which recoveries are managed.
In withholding tax - as in most other areas of investment management - seeing what lies ahead puts you at a distinct advantage.
Reuben John is managing director, DACH, UK & IE, at WTax. The firm is a member of Investment Officer’s panel of experts.