Sprintax counting the dividends of its US expansion
Compliance specialist Spritax, initially founded to assist Irish students with their US J-1 summer work visas, has grown rapidly in recent years, driven by a demand from schools and universities for a simplified tax withholding process for their international students and staff.
Sprintax was initially founded to assist the tens of thousands of Irish students who flock to the US on J-1 summer work visas.
Every J-1 participant has a tax filing requirement in US law, and in 2014 Sprintax was established to help those students — in addition to the more than 1 million other people who travel to the US to study and work temporarily.
The company has grown rapidly in recent years, driven by a demand from schools and universities for a simplified tax withholding process for their international students and staff.
“We were born out of the CluneTech Group, which boasts over 25 years of experience in tax reclaim across multiple jurisdictions,” explains Enda Kelleher, vice president Sprintax. “With Sprintax we’ve identified a niche within that market, people who are earning income in a country but are not yet considered a tax resident of the state, namely non-residents.
"They are a cohort who are traditionally underserved when it comes to tax reclaim. The process was complicated and costly, ultimately deterring folks from claiming back what they were entitled to. Our first challenge was to help individuals with their own tax return, which we do with Sprintax Returns.”
The next challenge was to help the organisations that are conversely grappling with paying personnel from multiple different countries, each of which bringing its own tax legislation, exemptions, and considerations.
“Enter Sprintax Calculus, our multi-jurisdiction tax determination software which helps payroll offices easily navigate non-resident tax compliance and withholding. Our next market and the one we're most excited about is Sprintax Dividends, which addresses investors who have been subject to a cross-border withholding tax on a dividend received (DWT).”
Enda explains that Sprintax operates in an environment that was traditionally very slow-moving, cumbersome, confusing, and paper-based.
“We have successfully evolved the process, taking it online, with a smart technology platform that integrates directly with the various tax authorities. We have found that COVID accelerated an openness to a new process, so when we asked if we could push the boundaries and offer a better experience through software automation, they were more open to it than they ever had been before.
"This gave us the license to build that into our various platforms, further streamlining the process for the individual. So as a team, we are constantly challenging ourselves to 'find a better way'. Our development team is always great at translating what we would love as a UX, into the end product. I'd also have to give a lot of credit to our customers, many of our best ideas have come from customer requests, that we then research, test, and adopt.”
The opportunity with Sprintax Dividends is twofold, he says. “Firstly, there are a huge number of multinational organisations across the planet, with global workforces participating in employee share schemes. Ordinary employees over time become accidental international investors, as their shares vest. The second audience is your textbook investor. We noticed that during COVID a lot of our customers were using spare cash to trade.
"Many were first-time traders, and also trading internationally, hence getting caught for dividend withholding tax. Established investors are also not keen on losing out to DWT either but know that the reclaim process can be difficult. Reclaiming DWT is a niche in already unfamiliar territory, with the added complexity in many scenarios of language barriers, we are finding that customers are more than happy when we offer some assistance, with a simple, software solution that's intuitive and affordable.”
It is estimated by S&P that globally $200bn of DWT is withheld each year, with a large percentage of that unclaimed.
“We are making the reclaim process more accessible, to reduce that percentage. We want to put people's own money back in their own pockets.”
Sprintax has expanded its workforce over recent years, with further expansion on the horizon.
“We have added a number of resources across sales, marketing, development, and specialist tax areas. This will continue into 2024 and 2025 as we look to expand the business further. This growth will be in the US, Ireland, and in Europe.”
As the company grows, Sprintax software is constantly being refined and upgraded to cope with client needs.
“We started with one platform and now we have three. Just recently we had a webinar with approx 500 clients and prospects in attendance, providing updates on non-resident tax withholding and reporting. These sessions have a habit of adding to our development roadmap. We've built a passionate community of advocates who have seen our offering grow and improve based on their feedback and suggestions.”
Covid also gave Sprintax the opportunity to innovate further and as tax authorities began to accept electronic signatures and electronic filing, the firm was right on cue in terms of making them available to customers.
Enda sees the prospect of another — Enda former Taoiseach Enda Kenny — joining the board as bringing further experience to Sprintax.
“It's fantastic! The reputation and experience he brings to us is world-class. It's also an indirect complement to the existing team, what we have built, and our ambition, that someone with Enda's profile and experience would like to be part of our growth. I'm more than happy to now be known internally as Enda 2,” he adds.
Looking to the future, Enda Kelleher is optimistic for 2024, and the opportunities for the company into the future.
“I'm an optimist by nature and my wife jokes my glass is not half full, it's overflowing. However, I'm always realistic and will look at facts, trends, data, and patterns to inform or curb my enthusiasm as required. That said, I believe it will be a groundbreaking year for Sprintax. Our Returns and Calculus products are strong but the area we will see the biggest growth will be in Sprintax Dividends. It's an underserved global market which is ripe for disruption, and we've got the people and product to do that.”
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