TAX001 - XTRM Global tax reporting overview

XTRM Advantages: Global Payments, Simplified Tax

Third-Party Settlement Organization (TPSO): XTRM acts as the central hub for all transactions, ensuring compliance and simplifying tax reporting for both you and your partners.

• Clear Payment Source: Payments are processed through XTRM, providing a transparent record for tax purposes.

• No Withholding Tax at Source: Recipients are responsible for reporting their income, removing the need for complex withholding tax calculations.

• Beneficiary Responsibility: We supply recipients with the necessary data to report their earnings to local tax authorities, including downloadable reports such as 1099-Ks (US) and equivalent documents.

• Remitter Reporting Support: We provide reporting tools for remitting companies to comply with local tax regulations and may handle reporting on your behalf in specific cases.

• Seamless Data Collection: XTRM electronically captures all relevant tax data, simplifying the filing process for all parties involved.

How XTRM manages taxes

Understanding how we manage taxes is important to understand how XTRM is classified in the payments industry.

1. XTRM as a Third-Party Settlement Organization (TPSO)

• Role: XTRM functions between the remitter (paying company) and the beneficiary (receiving individual or company). As a TPSO, we are responsible to make payments to participating payees in a third-party payment network. for making payments within a third-party payment network.

• Characteristics:

  • financial services are exempt from VAT (Value Added Tax)
  • the existence of a central organization with whom a substantial number of providers of goods and services (who are unrelated to the central organization) have established accounts
  • an agreement between the central organization and the providers to settle transactions between the providers and purchasers
  • the establishment of standards and mechanisms for settling such transactions, and
  • the guarantee of payment in the settlement of such transactions

2. Payments processed through XTRM

• Payments to beneficiaries are identified as originating from XTRM, regardless of whether the funds came from a third-party remitter.

3. No withholding tax at source

• The recipients of payments are typically not be employed directly by your company but even if they are, recipients must report their income to their local tax authorities. Withholding tax is not required. Recipients declare "Other income" and use data from reports like 1099-K (USA) or equivalent documents to notify their tax authorities of all applicable payments.

4. Beneficiary reporting responsibilities

• Beneficiaries must report all income to their local tax authorities using the data and documents provided by XTRM. For example, in the US, individuals and companies can download their 1099-K and other relevant reports from their XTRM account.

5. Remitter reporting (paying companies)

• XTRM provides the necessary reporting for remitting companies to comply with IRS requirements. Reporting obligations vary by country and local regulations. We may handle reporting on behalf of remitting companies in some cases, based on local rules and payment thresholds.

6. Data collection for tax reporting

• We electronically capture all necessary data to assist companies and individuals with filing their taxes for all payments sent and received correctly. This includes collecting W9 and W8-BEN forms or their international equivalents and providing electronic access to 1099-Ks (USA) and other transaction reports.

Note, the Identity profile must be at 100% complete IDL (Identity Level) to access and download the document. More Info 

Company account:

Individual account:

7. What is advanced tax reporting in the PLUS and PRO accounts

If you would like to give your customers a better and more automated experience for tax management, a PLUS or PRO account will enable automated creation, management and sending of country specific formatted Tax documents (e.g. 1099-K in the USA) to your beneficiaries.