Important Update for Non-Resident Landlords: Changes in Revenue’s Treatment
If you’re a non-resident landlord, you may have recently received correspondence from Revenue. We want to bring your attention to some significant changes in Revenue’s treatment of non-resident landlords, which will be implemented from 1st July 2023.
While your overall exposure to Irish Income Tax remains the same, there are crucial adjustments in how this tax will be collected by Revenue and the approach to meeting your filing obligations.
As a non-resident landlord, you now have two options:
- Appoint an Irish Collection Agent
An Irish collection agent can be a variety of entities, including estate agents, management companies, solicitors, or even a trusted family member. The collection agent will handle rent payments from your tenants without any deductions and forward the payment to you. Previously, this option allowed non-resident landlords to receive payments without Irish income tax withheld.
- Tenant Withholding
Alternatively, if you choose not to appoint an Irish collection agent, your tenants are required to withhold 20% of each rent payment and remit it directly to Revenue.
Under the previous scheme, if you elected to appoint an Irish collection agent, the Income Tax assessment would be in the name of the agent. However, the tax charged would be the same as if you were filing your tax return in your own right. This means you would be assessed for tax on the rental profit after claiming any allowable deductions. You would also be liable to the same interest, penalties, and surcharges in cases where you fail to meet your tax obligations. However, the Income Tax Return would be filed under an Income Tax number appointed to the collection agent, and the collection agent would be deemed as the accountable person.
Following the amendment in the Finance Act 2022, collection agents acting on behalf of non-resident landlords may elect to deduct withholding tax (currently at 20%). If the collection agent chooses to withhold tax, it must be remitted to Revenue through the new online system being implemented and the collection agent will no longer be considered the chargeable person in respect of the rent. Where this applies, you, as a non-resident landlord will file your Income Tax Return under your own name and tax number. Where the collection agent does not elect to withhold tax, they would continue to be the accountable person.
For non-resident landlords who have not appointed an Irish collection agent, your tenants will continue withholding tax at 20%. However, tenants will have access to the new online system to remit this tax. This new system ensures that the tax remitted by the tenants will be credited against your charge to Irish Income Tax.
In summary, following the changes introduced in the Finance Act 2022, one of the following three circumstances will arise for non-resident landlords:
| Collection Agent Appointed –
Doesn’t elect to deduct tax |
Collection Agent Appointed –
Elects to deduct tax |
No Collection Agent Appointed –
Tenant to deduct tax* |
|
| % Rent Paid to Landlord | 100% | 80% | 80% |
| % Rent paid to Revenue | -% | 20% | 20% |
| PPSN the tax returns are filed under | PPSN assigned to Collection Agent By Revenue for the Landlord | Landlord’s PPSN | Landlord’s PPSN |
*The landlord is obligated to inform the tenants that they are a non-resident landlord and of the tenant’s obligation to withhold tax on rent payments.
