17.12.2023
TaxTech Talk with Nicolas Oldag from DivTax | "Our ambitions go beyond individual users"
Intro
DivTax is a new TaxTech that aims to help private investors easily reclaim their non-German withholding taxes. Based in Hamburg, the team behind DivTax is currently ramping up its efforts to get its software up and running for a 2024 launch. We had the chance to talk to Nicolas, one of the three founders of DivTax.
Interview
Hi Nicolas, how would you describe DivTax in your own words and how long has it been in development?
DivTax is revolutionising the way investors reclaim withholding tax. Our platform provides a seamless, fully digital service that takes care of every step - from document acquisition, form completion and submission, to managing international correspondence. Our platform is designed to optimise dividend tax efficiency for every type of investor, turning hours of complicated paperwork into a streamlined process that takes minutes.
The concept of DivTax had been the subject of many in-depth discussions between my co-founders and our advisor for some time. It was towards the end of 2022 that we shifted gears from ideation to serious development. After receiving the grant from Investitionsbank Hamburg in the summer of 2023, we all committed ourselves to the project full-time. Over the past year, we've put our focus and skills into developing DivTax and I'm proud of what the team has achieved in such a short time.
Who is the founding team behind DivTax and what is their background?
We are three founders with complementary skill sets. Julius brings a strong expertise in financial issues, Linus has a background very focused on software development and I have seen many aspects of how to build companies in the financial space with a focus on financial and capital market intricacies.
To be honest, we are not TaxTech natives. But we can confidently say that we are now experts in the withholding tax niche, and thanks to the strong support of our first angel and legal advisor Dr. Hoenike (thanks for everything so far Mark!), other advisors and TaxTech founders, and many hours of digging into the wonderful world of withholding tax, we can confidently say that we are able to translate complex tax procedures into an accessible digital solution.
What made you start DivTax?
Julius and I crossed paths while studying entrepreneurship in Lisbon, where we discovered a shared ambition - to create a business that would not only be successful, but also solve real problems for a wide audience. By working together on projects, we realised that we worked exceptionally well together and kept our eyes open for opportunities.
A friend and advisor of us was facing a problem that millions of Germans face every year: he was spending hours and hours filing claims for multiple dividend stocks in his portfolio, year after year. This frustrated him so much that he started to think about a solution to the whole issue and eventually we got together and came up with the idea of DivTax. Personally, I really appreciate that our project was designed to solve a real user problem, which I have always considered important. The huge interest from investors has shown us that DivTax can make life easier for many investors. As someone who has been deeply involved in stock market related FinTechs for several years, both personally and professionally, I also find it interesting how little the market touches on tax topics like ours, while the recently emerging (and very important) upward trend in capital markets has created many new neo-brokers, AI-based investment assistants and social trading apps.
At what stage are you with DivTax in terms of developing your software and attracting clients to use it?
We have already received a lot of interest from the market. We are in the process of finalising the first country applications with a view to launching in the first countries early next year.
Even before our official launch, we are able to generate enough revenue to cover our monthly costs by manually servicing our first pilot customers - our first break-even point. We are very happy with this market validation and have learnt a lot about the different processes. On the B2B side, we are now in partnership discussions with interesting FinTechs and other financial players, so stay tuned.
How did you obtain the tax expertise for the product?
This project started at university, so we had a lot of great resources and experts to talk to about all the different types of withholding taxes. Julius and I immersed ourselves in the subject and our advisor Dr. Hoenike was also very helpful in understanding the complexities of foreign dividend taxation.
Last but not least, it was probably most important to engage with industry specialists, such as B2B withholding tax leader RAQUEST (thanks, Alex!). Their perspectives not only enriched our understanding, but also aligned it with business practice.
Did you learn something while developing your product that was counterintuitive?
In developing DivTax, I was struck by two things. Firstly, as someone who's been investing for years, I was struck by the significant amount of unclaimed financial potential in most portfolios. Although dividend statements clearly show the withholding tax deducted, it's surprising to see the total amount of money that can be reclaimed, which often goes unnoticed.
Secondly, the complexity of the reclaim process was unexpected. The manual and outdated procedures, which the EU has been trying to simplify for many years, are still in place. It's remarkable that, in our digital age, such an important financial operation remains so tied to old-fashioned, often paper-based systems.
What has been your biggest challenge with DivTax so far that you can share?
Explaining what we do to people outside the early-stage bubble has been quite a task - jokes aside:
When you set up a company in the field of tax, and especially in German tax law with its extensive regulations, there are challenges. There is no doubt about that. Navigating this space requires not only an understanding of the complexities, but also the ability to innovate within them. Don't expect paved roads, get creative.
Our journey hasn't been straightforward, but by working with partners who have deep industry knowledge, we have successfully overcome significant regulatory hurdles.
These partnerships have been instrumental in shaping a regulatory framework that supports our vision of a holistic platform. We're now in a position where our product can offer a complete service without imposing additional tasks on our customers. This is a significant achievement for us and has been our main priority since day one. When you finally see the product working, all the ups and downs and long nights were worth it.
Who are your competitors?
There are services available in Germany to help investors reclaim their withholding tax, but at DivTax we've identified a gap: investors are still burdened with a lot of manual effort. This includes obtaining tax documents from the German authorities, receiving them back, sending them along with other documents to tax authorities abroad, not to mention the subsequent correspondence, which can be complex and time-consuming. We streamline the whole process.
In addition, while tax advisors and wealth managers offer similar services, we see this as more of a collaborative opportunity. Many have expressed interest in our platform, which we'll open to these clients in mid-2024. As banks also assist with tax reclaims, we have found that clients often need to take active steps. Given that the average German has accounts with several banks, our solution facilitates the seamless integration of these different accounts.
Our current focus is on refining our solution to deliver the highest value to our customers, which means we are more focused on what we do than what others do. We're confident in the strategic decisions we've made so far and the unique benefits our platform offers.
What are the next steps for DivTax?
As we approach the New Year, our team is hard at work preparing for the B2C launch of DivTax in the first countries. Linus, Julius and Julian have really done an extraordinary job building our platform from the ground up. It has been crazy for me to see how fast they are delivering new features.
The technical development has been a rewarding challenge and we're excited to see it in action, thanks to the encouraging interest we've received from the market and our discussions about potential partnerships.
Our ambitions go beyond individual users. We're exploring B2B opportunities and are currently in discussions with promising FinTechs and tax and wealth management professionals to explore potential synergies. The addition of B2B capabilities to our platform next year is an important step in this direction, providing tax advisors, wealth managers and family offices with a tool to streamline their withholding tax reclaim processes.
There are other developments in the pipeline, but we're holding back on the details for now. Rest assured, these efforts are aimed at enhancing the value that DivTax brings to both individual investors and corporate clients.
Do you have any advice for people who want to start their own TaxTech?
Taxes are complicated and largely manual, which presents significant opportunities for digitisation across various applications. If you are launching a tax technology company, especially in Germany, never underestimate the regulatory burden - it will almost certainly accompany your product in ways you may not anticipate. But if you're convinced that you've discovered an opportunity to make people's lives easier, great! Seize it with determination.
As a famous American once said: "Nothing in this world is certain, except death and taxes". If that's not convincing market validation, what is?
In my experience, the TaxTech community is incredibly supportive and welcoming - even if you're a new member, you're not alone. Get out there, talk to people and sooner or later you will be on the right track. We at DivTax are always super happy to hear from anyone, so don't hesitate to contact us directly. Whether you want to talk about DivTax, need help implementing your idea, or just want to philosophise about life, we will make time for you!
Thank you for your time, Nicolas. All the best for your future with DivTax!
You can contact the DivTax team here if you would like to get in touch.
🤖 | TL;DR
DivTax, founded by a team with diverse expertise in finance, software development, and financial company building, is a digital platform designed to streamline the complex process of reclaiming withholding tax for investors, turning a time-consuming task into a quick and efficient procedure
Since its conceptualisation in 2022 and subsequent development fuelled by a grant from Investitionsbank Hamburg in 2023, DivTax has focused on optimising tax efficiency and is poised to launch next year, already garnering interest from both individual investors and potential B2B partners
The founders emphasise the importance of understanding and navigating complex tax regulations, and advise aspiring TaxTech entrepreneurs to embrace the challenges and opportunities of digitising tax-related processes, while highlighting the supportive nature of the TaxTech community
Intro
DivTax is a new TaxTech that aims to help private investors easily reclaim their non-German withholding taxes. Based in Hamburg, the team behind DivTax is currently ramping up its efforts to get its software up and running for a 2024 launch. We had the chance to talk to Nicolas, one of the three founders of DivTax.
Interview
Hi Nicolas, how would you describe DivTax in your own words and how long has it been in development?
DivTax is revolutionising the way investors reclaim withholding tax. Our platform provides a seamless, fully digital service that takes care of every step - from document acquisition, form completion and submission, to managing international correspondence. Our platform is designed to optimise dividend tax efficiency for every type of investor, turning hours of complicated paperwork into a streamlined process that takes minutes.
The concept of DivTax had been the subject of many in-depth discussions between my co-founders and our advisor for some time. It was towards the end of 2022 that we shifted gears from ideation to serious development. After receiving the grant from Investitionsbank Hamburg in the summer of 2023, we all committed ourselves to the project full-time. Over the past year, we've put our focus and skills into developing DivTax and I'm proud of what the team has achieved in such a short time.
Who is the founding team behind DivTax and what is their background?
We are three founders with complementary skill sets. Julius brings a strong expertise in financial issues, Linus has a background very focused on software development and I have seen many aspects of how to build companies in the financial space with a focus on financial and capital market intricacies.
To be honest, we are not TaxTech natives. But we can confidently say that we are now experts in the withholding tax niche, and thanks to the strong support of our first angel and legal advisor Dr. Hoenike (thanks for everything so far Mark!), other advisors and TaxTech founders, and many hours of digging into the wonderful world of withholding tax, we can confidently say that we are able to translate complex tax procedures into an accessible digital solution.
What made you start DivTax?
Julius and I crossed paths while studying entrepreneurship in Lisbon, where we discovered a shared ambition - to create a business that would not only be successful, but also solve real problems for a wide audience. By working together on projects, we realised that we worked exceptionally well together and kept our eyes open for opportunities.
A friend and advisor of us was facing a problem that millions of Germans face every year: he was spending hours and hours filing claims for multiple dividend stocks in his portfolio, year after year. This frustrated him so much that he started to think about a solution to the whole issue and eventually we got together and came up with the idea of DivTax. Personally, I really appreciate that our project was designed to solve a real user problem, which I have always considered important. The huge interest from investors has shown us that DivTax can make life easier for many investors. As someone who has been deeply involved in stock market related FinTechs for several years, both personally and professionally, I also find it interesting how little the market touches on tax topics like ours, while the recently emerging (and very important) upward trend in capital markets has created many new neo-brokers, AI-based investment assistants and social trading apps.
At what stage are you with DivTax in terms of developing your software and attracting clients to use it?
We have already received a lot of interest from the market. We are in the process of finalising the first country applications with a view to launching in the first countries early next year.
Even before our official launch, we are able to generate enough revenue to cover our monthly costs by manually servicing our first pilot customers - our first break-even point. We are very happy with this market validation and have learnt a lot about the different processes. On the B2B side, we are now in partnership discussions with interesting FinTechs and other financial players, so stay tuned.
How did you obtain the tax expertise for the product?
This project started at university, so we had a lot of great resources and experts to talk to about all the different types of withholding taxes. Julius and I immersed ourselves in the subject and our advisor Dr. Hoenike was also very helpful in understanding the complexities of foreign dividend taxation.
Last but not least, it was probably most important to engage with industry specialists, such as B2B withholding tax leader RAQUEST (thanks, Alex!). Their perspectives not only enriched our understanding, but also aligned it with business practice.
Did you learn something while developing your product that was counterintuitive?
In developing DivTax, I was struck by two things. Firstly, as someone who's been investing for years, I was struck by the significant amount of unclaimed financial potential in most portfolios. Although dividend statements clearly show the withholding tax deducted, it's surprising to see the total amount of money that can be reclaimed, which often goes unnoticed.
Secondly, the complexity of the reclaim process was unexpected. The manual and outdated procedures, which the EU has been trying to simplify for many years, are still in place. It's remarkable that, in our digital age, such an important financial operation remains so tied to old-fashioned, often paper-based systems.
What has been your biggest challenge with DivTax so far that you can share?
Explaining what we do to people outside the early-stage bubble has been quite a task - jokes aside:
When you set up a company in the field of tax, and especially in German tax law with its extensive regulations, there are challenges. There is no doubt about that. Navigating this space requires not only an understanding of the complexities, but also the ability to innovate within them. Don't expect paved roads, get creative.
Our journey hasn't been straightforward, but by working with partners who have deep industry knowledge, we have successfully overcome significant regulatory hurdles.
These partnerships have been instrumental in shaping a regulatory framework that supports our vision of a holistic platform. We're now in a position where our product can offer a complete service without imposing additional tasks on our customers. This is a significant achievement for us and has been our main priority since day one. When you finally see the product working, all the ups and downs and long nights were worth it.
Who are your competitors?
There are services available in Germany to help investors reclaim their withholding tax, but at DivTax we've identified a gap: investors are still burdened with a lot of manual effort. This includes obtaining tax documents from the German authorities, receiving them back, sending them along with other documents to tax authorities abroad, not to mention the subsequent correspondence, which can be complex and time-consuming. We streamline the whole process.
In addition, while tax advisors and wealth managers offer similar services, we see this as more of a collaborative opportunity. Many have expressed interest in our platform, which we'll open to these clients in mid-2024. As banks also assist with tax reclaims, we have found that clients often need to take active steps. Given that the average German has accounts with several banks, our solution facilitates the seamless integration of these different accounts.
Our current focus is on refining our solution to deliver the highest value to our customers, which means we are more focused on what we do than what others do. We're confident in the strategic decisions we've made so far and the unique benefits our platform offers.
What are the next steps for DivTax?
As we approach the New Year, our team is hard at work preparing for the B2C launch of DivTax in the first countries. Linus, Julius and Julian have really done an extraordinary job building our platform from the ground up. It has been crazy for me to see how fast they are delivering new features.
The technical development has been a rewarding challenge and we're excited to see it in action, thanks to the encouraging interest we've received from the market and our discussions about potential partnerships.
Our ambitions go beyond individual users. We're exploring B2B opportunities and are currently in discussions with promising FinTechs and tax and wealth management professionals to explore potential synergies. The addition of B2B capabilities to our platform next year is an important step in this direction, providing tax advisors, wealth managers and family offices with a tool to streamline their withholding tax reclaim processes.
There are other developments in the pipeline, but we're holding back on the details for now. Rest assured, these efforts are aimed at enhancing the value that DivTax brings to both individual investors and corporate clients.
Do you have any advice for people who want to start their own TaxTech?
Taxes are complicated and largely manual, which presents significant opportunities for digitisation across various applications. If you are launching a tax technology company, especially in Germany, never underestimate the regulatory burden - it will almost certainly accompany your product in ways you may not anticipate. But if you're convinced that you've discovered an opportunity to make people's lives easier, great! Seize it with determination.
As a famous American once said: "Nothing in this world is certain, except death and taxes". If that's not convincing market validation, what is?
In my experience, the TaxTech community is incredibly supportive and welcoming - even if you're a new member, you're not alone. Get out there, talk to people and sooner or later you will be on the right track. We at DivTax are always super happy to hear from anyone, so don't hesitate to contact us directly. Whether you want to talk about DivTax, need help implementing your idea, or just want to philosophise about life, we will make time for you!
Thank you for your time, Nicolas. All the best for your future with DivTax!
You can contact the DivTax team here if you would like to get in touch.
🤖 | TL;DR
DivTax, founded by a team with diverse expertise in finance, software development, and financial company building, is a digital platform designed to streamline the complex process of reclaiming withholding tax for investors, turning a time-consuming task into a quick and efficient procedure
Since its conceptualisation in 2022 and subsequent development fuelled by a grant from Investitionsbank Hamburg in 2023, DivTax has focused on optimising tax efficiency and is poised to launch next year, already garnering interest from both individual investors and potential B2B partners
The founders emphasise the importance of understanding and navigating complex tax regulations, and advise aspiring TaxTech entrepreneurs to embrace the challenges and opportunities of digitising tax-related processes, while highlighting the supportive nature of the TaxTech community