BNP Paribas’ Securities Services business is extending its relationship with RAQUEST to implement MiKaDiv reporting across its custody operations. The agreement illustrates the coordination required as Germany’s withholding-tax reporting regime brings new data requirements to institutions occupying several positions in the custody chain.
Announced on 10 November, the implementation builds on BNP Paribas’ use of RAQUEST’s STTI Gateway. That interface transmits reclaim applications to European tax authorities offering digital refund processes. The additional suite extends the relationship into withholding-tax reporting ahead of MiKaDiv’s introduction on 1 January 2027.The deal comes amid uneven industry readiness, according to Roman von der Höh, Managing Director of RAQUEST Switzerland in a recent conversation with RegTech Insight. German withholding-tax agents are generally implementing and testing, he says. Some international banks are still weighing internal development against buying software, while smaller institutions can lack awareness of the requirements.
Banks already handling German tax reclaims tend to understand the certificate process and maintain contact with their custodians. Those unfamiliar with that workflow have further to go.
Von der Höh recommends starting with an assessment of clients, products and custody relationships. He describes three operational roles: German withholding-tax agents, intermediaries aggregating and checking information, and foreign banks with visibility of underlying clients. Institutions can occupy several positions, including regional banks providing custody services to smaller banks.
As he puts it, “identifying your role and your potential impact is key in the beginning.”
BNP Paribas’ implementation demonstrates those overlapping responsibilities. As a German sub-custodian, it will report directly to the Bundeszentralamt für Steuern (BZSt), Germany’s Federal Central Tax Office, on clients’ behalf. Its global custody and other European sub-custody activities require exchanges of reports and responses with multiple custodians and international and domestic central securities depositories.
It will also provide indirect reporting for intermediary clients benefiting from tax reclaim and relief at source. Requests from intermediaries in the payment chain will be validated, processed and incorporated into upstream reporting. According to the announcement, BNP Paribas is bringing these requirements together within one suite across the Securities Services business line.
Each role determines which data an institution must obtain and where it depends on others. Reporting combines beneficial-owner information, dividend-payment details, transaction histories and information about financial arrangements such as securities lending, repos and hedging. Those records can sit across custody, payments and client-information systems, with different teams controlling access and quality.Banks may need to ask clients for information about transactions conducted through another institution with tax implications like securities-lending or hedging arrangements. Where holdings involve funds, companies or other legal structures, banks must also establish which entity, or person qualifies as the beneficial owner for tax purposes.
“What we have already seen is some of the data points are not even in the systems of banks because you never had to ask for that before,” says von der Höh.
Institutions may need additional client questions and signed documentation before reporting begins. Planning must cover who requests information, how it is assessed and how it reaches the reporting process. Buying software still leaves interfaces, data collection and operating procedures to establish.
Timing depends on roles and services. Von der Höh distinguishes readiness to collect data from readiness to submit reports. Banks supporting relevant 2027 payments need to plan data gathering from the beginning of the year, even where reporting follows later.
He expects reclaim demand during 2027, particularly among pension funds and insurers concerned about cash flow. Institutions offering relief at source may face earlier operational demands than those processing reclaims the following year. These expectations need assessing alongside statutory deadlines and custodian requirements when setting milestones.
The dependencies require clear programme ownership. Von der Höh advocates one person with overall responsibility, supported by Compliance, Legal, IT, Operations and client-facing teams. A responsibility matrix should establish who performs each task and who needs consulting or informing. That includes responsibility for missing information, client follow-up and reporting corrections.
“You don’t know who’s responsible anymore, but you need to get all the stakeholders on board,” he says of dispersed accountability.
Teams responsible for individual applications must support data flows extending beyond their departments. Securing resources requires an internal case explaining the reporting obligation and its consequences for investor services. Von der Höh also argues that institutions should examine whether they help clients recover excess withholding tax.
BNP Paribas connects its investment to preparations for the EU’s FASTER Directive. Mariangela Fumagalli, Head of Asset Servicing Product and Custody Regulatory Solutions, Securities Services, BNP Paribas, says in the announcement: “By integrating RAQUEST’s MiKaDiv suite, we further digitalise and industrialise our tax reporting, as a first step towards the implementation of the EU FASTER Directive in 2030”.
Von der Höh sees opportunities to reuse MiKaDiv data, governance and service planning, while allowing for additional requirements. He highlights electronic tax-residence certificates, certified financial intermediaries and more standardised relief procedures as important developments.
Reporting architecture also matters. MiKaDiv depends on information passing through the custody chain, while FASTER provides for different reporting approaches. Describing MiKaDiv’s dependency, he says: “So everyone in the chain needs to report. Otherwise, the chain breaks.”
For banks preparing their programmes, BNP Paribas’ approach illustrates how reporting roles and existing reclaim infrastructure can inform technology choices. Establishing data responsibilities and workflows now can also provide foundations for subsequent FASTER implementation.
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