The state savings bank Spuerkeess is in the process of rolling out an electronic tax preparation service, which it said would save retail clients a fair chunk of time and stress. It hopes the time savings will persuade customers to stick with its online banking platform and even buy additional financial products from the bank.
The “” service soft launched several months ago and Spuerkeess plans to start a formal marketing push on 15 September. The bank aims to reach late tax filers this autumn and build momentum heading into the peak tax filing season in March.
How it works
Mytax consists of a pair of tools, Christophe Medinger, deputy head of business unit digitalisation at Spuerkeess, said in an interview. “The first tool lets you organise all your files around taxes,” Medinger stated. The benefit for online banking clients is that “this section is already filled with everything we know about the customer that’s useful for their tax declaration.”
That includes loan and investment documents, tax deductible charitable donations and “all the transactions that might be relevant for their tax declaration,” he said. “For example, if the client uses a creche that’s accredited by the Luxembourg government, we give them a list of transactions with the creche. So they know that’s the amount I have to deduct from my taxes.”
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The second tool “is a wizard that lets you fill out your tax declaration. It’s pre-filled with all the information we know about the customer: names, addresses, banking account numbers, stuff like that. And then this wizard asks questions and reacts to the answers provided at each step by the user.
“So if they say they own a house, the wizard will ask them about the loan for this house.” If the client has a mortgage with Spuerkeess, the information is “pre-filled in this wizard, so they just have to confirm the numbers.” Users will need to enter all non-Spuerkeess information themselves, such as shareholdings and insurance policies held with other financial firms.
Less than half an hour
According to Medinger: “The client, in like 15 to 20 minutes, if they’ve answered all the questions, gets a report telling them what is their fiscal situation. So they know how much they have to pay back, or in other case, can get back when they file their taxes.”
The report will likewise outline “the different possibilities to declare their taxes,” showing, for instance, the difference a couple would see filing joint or separate tax declarations. “We give them all the options and we calculate which option is the most beneficial from a financial point of view.”
Users can add or scan documents and then load them into the tax app throughout the year, which he said would speed up the preparation process. “The idea is to get everybody to use it once” so that basic data and recurring details are saved. For repeat users, “it’s really a piece of cake.” He claimed that “the second year you do your tax declaration, if nothing big has changed in your life, you really do it in 5 minutes.”
It’s meant to be accessible
At the end of a session, clients can print out a PDF and send it to the Luxembourg tax office, or the app can facilitate an electronic filing of the tax declaration and accompanying documentation via the government’s Myguichet portal.
The online tax filing service costs €40. “It’s meant to be accessible.” That compares, Medinger said, with paying a tax advisor €200-€400, or even “up to €2,000, depending on your situation.”
Fintech partnership & internal development
Despite its low price-point, the system can handle quite complex tax situations, he asserted. “It’s quite complete.” After several months of initial testing, no one has failed to complete their filing. Spuerkeess tapped the fintech outfit Vireo, which had an existing and well established tax wizard, which the bank then integrated into its app.
It took about a year for the bank to develop Mytax. The idea was first suggested during a hackathon in 2019, but the project was delayed during the pandemic. Then there were detailed internal conversations (at “a very traditional bank like Spuerkeess”) about moving into “a territory that’s not ours. We are a bank. Providing a digital tax service to our customers is not something that the bank does, usually. So there was a lot of convincing. The whole team had to convince compliance and legal and executives to say it’s safe, it’s a good idea and we can do it.”
We tried to find a case where we use our data analytics to give something back to the customer
In addition to integrating Vireo’s tax preparation wizard, Medinger’s team worked on the process for automatically adding client data and supporting documentation to the process, and developing the “model that calculates if a transaction is fiscally relevant or not.”
Medinger was keen to point out during the interview that banks typically use data analytics for marketing and client research purposes. “But here, we did it the other way around. We tried to find a case where we use our data analytics to give something back to the customer,” leading to the automatic form-filling functionality.
No complaints from tax authorities
The bank has not received any official comment from Luxembourg Inland Revenue (ACD) on the app. At least, “I didn’t get any negative feedback and so I think that’s good. Because if something didn’t work, we would have heard about it, that’s for sure.”
One user had to resubmit his filing, after he incorrectly inputted figures for a property transaction. (Medinger said the tax service will generally correct small errors on forms themselves without contacting taxpayers, but in this case the notarial certificate was missing from the original submission and the numbers were clearly wrong.)
Limited to current customers, for now
At the moment, the service is only available to Spuerkeess online banking clients. Medinger said the bank would consider extending the service to non-clients in the future, based on “how people react to it” in the coming months. However, users would have to input more data manually and still have to create an online account with the bank.
Part of upselling strategy
At €40, the service is not meant to be a major profit-spinner. The goal is to tempt Spuerkeess clients to select the bank when purchasing financial products like a home savings plan or private pension scheme, since they know it will ultimately save time on tax preparation. “The idea is to keep them in our online banking and say ‘I’d rather use online banking at Spuerkeess, because then I know that I don’t have to keep track of transactions” and dig up all those statements and tax certificates each spring.
This article was published for the Paperjam + Delano Finance newsletter, the weekly source for financial news in Luxembourg. .