Dáil Éireann Debate, Tuesday - 2 October 2018
184. Deputy Michael McGrath asked the Minister for Finance the position regarding the application of withholding tax on peer to peer lending; the responsibilities of the SME receiving the lending and of the peer to peer lender in this regard; his views on whether there is merit in providing an exemption from withholding tax for peer to peer loans; and if he will make a statement on the matter. [39993/18]
View answerI am advised by Revenue that they have published guidance on the withholding tax obligations that arise in peer to peer lending. That guidance is published in Tax and Duty Manual 08-03-05 and is available on the Revenue website via the following link: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-08/08-03-05.pdfThe purpose of the withholding tax is to facilitate tax compliance by providing a mechanism through which tax arising on the interest earned by the person lending the amounts to the company is collected. Where an individual makes a loan to a company, interest withholding will arise in respect of the interest element of loan repayments made by that company. The interest earned should then be declared by the individual lender, who may claim a credit for the tax withheld.
The provisions as described in the Tax and Duty Manual apply in situations where individuals make loans to companies in general, they are not specific to peer-to-peer lending platforms.
I am aware that representations have been made for differentiated treatment in respect of loans made via peer-to-peer lending platforms, in view of the multi-lender nature of loans via such platforms. However I would also note that peer-to-peer lending is as yet an unregulated activity in Ireland, and any consideration of withholding taxes will be informed also by broader policy considerations for the sector.
