GlobeTax - Hedge Funds

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Hedge Funds

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The Problem

The separation of hedge funds as entities from their underlying partners known as the "look-through" principle, a concept which creates a problem that has led many hedge funds to miss out entirely on recovering the excess withholding tax to which they are entitled. The foreign tax authorities have no knowledge of the underlying partners of the fund. As a result, they tax the whole hedge fund income at their (high) standard withholding rate. The members of the fund, however, may actually be entitled, because of their residency and status, to a much lower taxation rate.

If it's worth so much money, why don't the large Hedge Funds make sure they get it back?

Hedge funds don't maintain the experience, extensive expertise or the research to effectively file reclaims on behalf of their partners.

The prime broker generally has no knowledge of the underlying partners of its hedge fund clients (which is the way both the hedge fund and the partners generally want to keep it).

As such, they do not have the information necessary to calculate and file the reclaims. US hedge fund partners may only claim a foreign tax credit (deduction) for the portion of withholding that is "legally owed" to the foreign government. One can not deduct the amount that is eligible for recovery."

For IRS rules on foreign tax credits, click here.

The Solution

GlobeTax has developed a business model that allows tax reclaims to be filed for hedge funds partners, at no risk, while maintaining their privacy within the hedge fund.

You may be eligible to recover the difference between the withholding rate and the treaty rate and in some cases increase it with tax credits, often between 15% and 25% of the original gross income.
Statutes of Limitation on such income vary by market, but are often years, so your entitlement can be compounded backwards as well as forwards.
There is NO risk, NO downside. GlobeTax is the largest provider of withholding tax recovery in the world and already represents many Hedge Funds. We charge only once we have successfully recovered your tax.
GlobeTax is recommended by and works with all of the major prime brokerage firms. To maintain your confidentiality, we contract directly with the clients.
New corporate governance, compliance and legal pressures on funds are increasing to require fund managers to leverage every ounce of return - withholding tax is a material issue.