Investors may believe their withholding tax (WHT) obligations are fully addressed. However, in practice, standard recovery approaches often concentrate on jurisdictions with more straightforward procedures, potentially overlooking opportunities in regions with more complex requirements.
Taiwan and South Korea are two such examples. Both apply high WHT rates to dividends (21 percent and 22 percent, respectively), and both offer partial treaty relief to Luxembourg-based funds. Yet, few standard recovery services support relief and/or full reclaims in these markets, so the overpaid taxes are forfeited.
Extended expiration period in Taiwan
In April 2025, Taiwan extended its Statute of Limitations from WHT reclaims from five years to ten years. This change applies retroactively to income received on or after 11 April 2020, if the original five-year window has not already expired. It is a significant shift, effectively doubling the time available to submit claims.
Under the Taiwan-Luxembourg DTA, qualifying investors may reclaim up to 6 percent of dividend income i.e. reducing the WHTrate from 21 percent to 15 percent. Across large positions spanning multiple years, I’ve seen substantial amounts add up for investors.
However, the reclaim process in Taiwan remains complex. Required documentation must be notarized, apostilled abroad and authenticated by Taiwan’s authorities. Claims must also be filed with the regional tax office corresponding to the financial issuer, rather than a central tax authority. A local tax agent is typically needed to manage account setup, submission and fund repatriation.
Barriers in South Korea
South Korea presents a similar challenge, with treaty entitlements often going unclaimed due to administrative complexity. Luxembourg-resident investors may reclaim up to 7 percent of the 22 percent dividend WHT under the applicable DTA.
That said, filing is far from straightforward. Reclaims must be submitted to the district tax office responsible for the withholding agent, meaning submissions can be split across multiple authorities. All communication must be in Korean and tax authorities often scrutinize foreign structures carefully. Investors are generally expected to appoint a local advisor to explain the structure and support the claim.
Why the chance to reduce tax is missed
For the reasons mentioned above, I’ve regularly seen these markets excluded from mainstream recovery plans—which tend to focus on markets in which recovery processes are standardized and there’s more opportunity for automation—even though the value is reclaimable.
Beyond the standard approach
Investors willing to engage with more complex markets can unlock meaningful recoveries. Doing so typically requires specialized support that goes beyond standard processes. I’ve worked with many fund managers that were surprised by how much value was still recoverable once we looked more closely at these so-called “difficult” markets.
For funds with exposure to emerging and newly-emerged markets, now is the time to reassess. Taiwan’s extended timeline has created a second chance to recover tax that would otherwise have been lost, and the opportunity in South Korea remains well within reach.
Reuben John is managing director, DACH, UK & IE, at WTax. The firm is a member of Investment Officer’s panel of experts.
