Introduction to Taxation Interface to Sectras

The module supports taxation of all cash related income on liability account products like savings accounts and time deposits.

Taxation is a financial charge imposed upon an individual or legal entity by a governmental organisation. Taxes consist of direct or indirect taxes. Most countries charge a tax on individual’s income, as well as on corporate income.

Most countries have their own tax system in place. In Germany, the federal government levies taxes. The legal basis for taxation is established in the German Constitution (Grundgesetz), which lays out the basic principles governing tax law.

Sectras manages the tax requirements relating to German Withholding Tax, Church Tax and Solidarity Tax. Based on the inputs received, Sectras calculates the tax based on various factors and components. Sectras offers a standard interface for data exchange with the core banking system.

Three types of tax charges are applicable on the customer: withholding tax, solidarity tax and church tax. At the federal level, the government receives tax revenues from residents in the form of individual income tax, property sales taxes, and capital gains. The withholding tax is charged on all capital gains such as interest, dividends and realized price gains. WHT is paid directly and anonymously to the German tax office. Withholding tax is also levied on capital gains that taxpayers receive abroad. Apart from withholding tax there are solidarity surcharge and, if necessary, church tax are being charged on all capital gains.

Sectras (CPB)manages the tax requirements relating to German tax. Based on the inputs received from Temenos Transact, Sectras calculates the tax based on various factors and components. Sectras offers a standard interface for data exchange with the core banking system.

Taxation is achieved by interfacing Temenos Transact with the Sectras Tax Engine from CPB, which involves interface development between Temenos Transact and CPB (Sectras).

The communication between Temenos Transact and Sectras is asynchronous in nature and a combination of file based and queue based.

The following Interfaces are developed as a part of the German tax suite.

The Partner Static Data interface is used to share the Details of the customer, his address, the related partner groups and accounts information to Sectras. Static data interface is required to handover all data related to customer and account Information, to Sectras database on creation and on amendment, so that during any taxation business event like Interest capitalization, the appropriate business rules are triggered to arrive at the taxable amount.

The Cash Transaction interface is used to share the taxable business events like interest capitalization and account closure from Temenos Transact to Sectras and Sectras responding back with the taxation amount.

The EXT interface is used to share the taxable business events like interest capitalization and account closure from Temenos Transact to Sectras. In return, Sectras will send the taxation amount. The taxable transactions (interest capitalisation) is shared from Temenos Transact to Sectras as a fixed length CSV file.

The Securities Transactions interface allows banks to send all the transactions that take place in securities and the derivative domain to Sectras for tax calculations. Sectras is a tax engine that calculates the tax for various transactions and sends them back to Temenos Transact where they are stored in the DESCTX.SECTRAS.SCDX.TRANSACTIONS application.

The accounting interface is used for raising tax adjustment entries in Temenos Transact based on business events captured in the Sectras system. The ACCT interface is a CSV file that is shared from Sectras to Temenos Transact, using Apache Camel, the message is read from the queue, and the accounting entries are processed.

The Data Extract for Reconciliation interface provides the required data extracts from the corresponding Temenos Transact application of customer master data, income events, security positions and tax amounts for the bank to do the reconciliation.

This functionality provides the following benefits:

• Calculation of the German withholding tax (”Kapitalertragsteuer“), German solidarity surcharge (”Solidaritätszuschlag“) and German church tax (”Kirchensteuer“) as well as posting the mentioned taxes to the customer accounts and to the internal tax accounts.
• Provide the below German onshore tax reports to customers, which is legally required:
  • Yearly tax certificate (”Jahressteuerbescheinigung”).
  • Yearly statement of investment fund holdings (”Investmentanteil-Bestandsnachweis”).
• Provide the German tax related reports to external parties in Germany (Clearstream Taxbox, German federal tax administration BZSt (“Bundeszentralamt für Steuern”) or other German tax authorities).