The withholding tax system obliges Swiss banks to tax financial income from the assets of their non-Swiss customers according to the regulations of their respective countries and forward this tax base to those countries with a rightful claim.
In the winter of 2011 there were already indications that withholding tax treaties would be signed between Switzerland and several other countries. UBS searched, together with its long-term IT partner Netcetera, for a way to automate the complicated settlement procedure.
The crux of the “Withholding Tax” project was to map and standardize complex financial fulfillment processes – in this case the tax systems of several countries – into an IT solution so that all relevant transactions could be processed using the corresponding product. Along with the taxation of future income, it was necessary to implement a separate solution for one-time retroactive taxation.Despite high time pressure, a suitable software solution was ready for use in the bank in time for the ratification of the treaties between Switzerland and Austria or Great Britain, respectively.
In order to execute the “Withholding Tax” project, the team had to be able to analyze complex financial and tax law matters and implement corresponding software within a very short time. There were also several other challenges.Time pressure made serial implementation impossible. Even while the legal basis was still being worked out by the tax authorities of Germany, Great Britain and Switzerland, IT experts started building the extensions to the bank's IT systems. Furthermore, an additional agreement with Austria was ratified seven months before the tax treaties were due to take effect. Reliable specifications for the software solution were not available until a few weeks before the go-live date and therefore had to be incorporated in an extremely short time.
Already at the start of the project it was apparent that a conventional software test procedure was not feasible under the prevailing conditions (complexity, scope change, internationality, feature change, and time pressure). An innovative and unconventional approach was therefore necessary: the difficult to assess future financial and taxation needs had to be accurately translated into program code and integrated into an existing IT system using a forward-looking architecture and methods.
Thanks to Netcetera's innovative approach, UBS now has a software solution for the automatic calculation and settlement of withholding tax. The “Withholding Tax” project shows that even complex business processes can be standardized.For implementation, the different tax systems of Austria, Great Britain and Germany (negotiations for a treaty between Switzerland and Germany failed shortly before the go-live date) were broken down into roughly 50 standardized cases. Based on these components, all transactions relevant to taxation can be captured and presented in a tax settlement. The software solution is meshed into the existing UBS landscape and assures automatic processing for virtually all cases.
The “Withholding Tax” project is the largest single project ever executed by Netcetera, with as many as 40 people at various locations involved in the implementation as members of an international team. «The on-time implementation shows that we are able to carry out large projects quickly, even under constantly changing circumstances,» notes Wolfgang Habicht, Engineering Manager for the project at Netcetera, with pleasure.Especially high innovation was necessary with regard to the test procedure. In collaboration with UBS employees, Netcetera deviated from standard procedures and had the software tested in parallel with the development process. IT and tax experts at UBS worked simultaneously with Netcetera software developers on test cases. These automated tests created the basis for easy reproducibility of test cases. This method enabled reliable functional verification, fast change management for responding to any changes in the requirements, and real-time debugging. «We managed to complete the validated test process without any significant increase in test resources,» reports Thomas Zangerl, Co-Head of Software Engineering at Netcetera. «That more than pays for the effort needed to develop this innovative approach to test tooling and process innovation,» says Zangerl.
The work was substantially simplified by the long-term constructive business relationship with UBS. The bank adapted the overall project structure to Netcetera's planning architecture. «For us, that was an enormous show of confidence and an additional stimulus to implement the project on spec and on time,» comments Zangerl. And collaboration on the project continues hand in hand: Netcetera is providing third-level support for the bank and handling the implementation of additional, mostly regulatory, requirements.
Partnership since 1996
- From 2013: Collaboration on next-generation topics
- Since 2010: Assumed responsibility for maintenance and updating of all central client advisor workbenches
- 2007: Development of the workbench for financial intermediaries
- 2006: Participation in the development of the customer advisor workbench for companies
- 2004: Business analysis and participation in the implementation of the FinTop financial advisory platform
- 2002: Development of a personalized portal for customer advisors in the commercial customer business
- 2000: Web-based pricing application for all loans granted in Switzerland with direct refinancing
- 1999: Internal web application (ImmoBe) for the assessment of real estate based on the Wüest & Partner index
- 1997: Quotes Engine, a data integration platform that centralizes the XML web service and the CORBA service for market data throughout the bank