TaxTec, Proxymity, and Label Introduce Comprehensive MiKaDiv Solution

TaxTec, Proxymity and Label Unite for MiKaDiv Compliance Solution

TaxTec, Proxymity, and Label have formed a strategic alliance to launch what they describe as the industry’s first fully integrated solution for MiKaDiv compliance. This partnership combines expertise from three specialized technology providers to effectively meet the regulatory requirements related to data origination, validation, and reporting, covering the entire custody chain in one cohesive ecosystem.

Transformation of Withholding Tax Compliance in Europe

MiKaDiv signifies a revolutionary change in the approach to withholding tax compliance across Europe. Unlike previous regulatory frameworks, it mandates that financial institutions establish connectivity, validate, and report data across the entire custody chain in a structured, auditable manner. This new regulation enforces comprehensive data connectivity that encompasses issuers, intermediaries, and investors, as well as validation involving multiple participants and standardized reporting outputs.

Challenges Posed by Existing Operational Models

According to the three firms, many institutions are currently ill-equipped to comply with MiKaDiv’s intricate demands. The existing operational models are often marked by fragmented data residing across custodians, brokers, and internal systems, a heavy dependence on manual reconciliation, and reporting processes that are misaligned with upstream data flows. This disjointed approach can lead to operational inefficiencies, increased regulatory risks, and a lack of scalability.

The Risks of Focused Solutions

The collaborators warn against concentrating solely on point solutions that target just the reporting aspect of compliance. They emphasize that MiKaDiv demands a comprehensive lifecycle approach to data and infrastructure. Ignoring this full scope may introduce additional risks rather than mitigate them, as partial solutions fail to address the underlying challenges.

Integrated Contributions from Each Partner

In this collaboration, each firm adds a unique capability to the comprehensive solution stack. Proxymity supplies direct connectivity to issuer and investor data, laying the foundation for upstream data. TaxTec’s platform facilitates aggregation and normalization across various custodians and intermediaries while incorporating workflow orchestration, governance, and audit functionality. Meanwhile, Label’s technology generates MiKaDiv-compliant schema outputs and prepares regulatory reports that align with evolving standards.

Unified Vision from Leadership

Leaders from all three companies express a shared commitment to the partnership’s objectives. TaxTec CEO Stephen Everard highlights the fundamental gap that MiKaDiv reveals in withholding tax management, stating that the collaboration addresses this gap at its core by providing a fully connected infrastructure that spans data, workflows, and reporting. Proxymity CEO Dean Little adds that this partnership expands their data-enabled services into tax compliance, facilitating seamless connections among issuers, intermediaries, and investors.

A Comprehensive Solution for Future Regulatory Standards

This collaboration aims to deliver true end-to-end data lineage for institutions, thereby eliminating the need for manual reconciliation, enabling pre-submission data validation, and ensuring full auditability throughout the process. The partners envision a solution that interlinks issuers and submissions, integrates processes rather than relying on manual interventions, and validates data across the entire lifecycle while being adaptable to future regulatory changes.

Beyond MiKaDiv, the firms believe that the infrastructure established through this partnership will lay the groundwork for additional regulatory initiatives, such as FASTER and TRACE. These efforts are designed to standardize withholding tax relief procedures and enhance information exchange between market participants and tax authorities.