Dáil Éireann Debate, Thursday - 20 April 2023
197. Deputy Éamon Ó Cuív asked the Minister for Finance the reason non-resident landlords must arrange for a collection agent to undertake to make annual tax returns and account to the Revenue Commissioners on their behalf; if he intends changing this to allow the landlord themselves fulfil these obligations without an agent; and if he will make a statement on the matter. [18763/23]
View answerI am advised by Revenue that non-resident landlords are not obliged to arrange for a collection agent to undertake to make annual tax returns to the Revenue Commissioners on their behalf. Revenue can, however, deem a person resident in the State to be a collection agent for a non-resident person. The purpose of this provision is to ensure that the correct tax is collected from non-resident individuals with Irish source income.
Where a non-resident landlord has a collection agent, the tenant (or other person paying rent, such as a local authority) may make rent payments to that agent, rather than directly to the landlord. In these circumstances the non-resident landlord is assessable and chargeable to income tax in the name of the Irish collection agent (section 1034 Taxes Consolidation Act (TCA)). The Irish collection agent is currently not entitled to deduct withholding tax from the rent and should not issue a Form R185 to the landlord. However, the collection agent may retain a sufficient portion of the rents to satisfy the tax payable on the rents (section 1046(2) TCA). This should be paid to Revenue when filing the tax return. While the assessment is in the name of the Irish collection agent, the tax to be charged is the amount which would be charged if the non-resident landlord was assessed in her own right. This means what is assessed to tax is the rental profit, after claiming any allowable deductions. The non-Irish resident landlord may also be entitled to personal credits, even when chargeable and assessable in the name of the collection agent.
Where the tenant or other person paying the rent makes rent payments directly to the non-resident landlord, the person paying the rent is obliged to deduct income tax at the standard rate (currently 20%) from the payments and remit that amount to Revenue (sections 238(2) and 1041 TCA 1997) using Form R185. The non-resident landlord can claim credit for the tax withheld by the tenant when declaring the income on their income tax return. The non-resident landlord is also entitled to claim relief for expenses allowed in arriving at the rental profit and may be entitled to a portion of personal allowances.
Finance Act 2022 introduced a new process for collection agents of non-resident landlords. The new process will relieve collection agents of the obligation of being chargeable and assessable for the income of a non-resident landlord, if the collection agent deducts withholding tax from rental payments, remits that tax to Revenue and gives Revenue certain information related to the payments (including the address of the property, the rental payment, and the name and address of the non-resident landlord). These new provisions also require tenants and other persons who pay rent directly to a non-resident landlord to provide certain information required by Revenue concerning the landlord and the rental income on which tax is being withheld. The new provisions are not yet operational as they are subject to a commencement order.
