I am advised by Revenue that the obligation imposed on tenants (and other parties such as local authorities) to deduct and remit to Revenue withholding tax at the standard rate of income tax (currently 20%) from rental payments made directly to a landlord who lives outside the State, has been in operation for many years. However, since 1 July 2023, the system for remitting the deducted tax has changed. Tenants paying directly to a non-resident landlord can now use the new Non-Resident Landlord Withholding Tax (NLWT) system in Revenue Online Services (ROS) or MyAccount, rather than using a paper form, as was previously the case. Through this system, tenants will make rental notifications (RNs) when rent is paid and pay the 20% withheld from the rent to Revenue. Tenants of non-resident landlords are also now required to provide certain information to Revenue including the address of the property, the rental payment, and the name and address of the non-resident landlord.
Prior to 1 July 2023, where a rental payment was not made directly by a tenant to a non-resident landlord, that landlord’s “collection agent” was assessable and chargeable to tax for the income of the non-resident landlord. This meant that agents were required to file tax returns and pay the tax due on that income, and were permitted to retain part of the rents to pay the tax due. It is still open to collection agents to follow that practice. However, with effect from 1 July 2023, an alternative process is available. Collection agents can be relieved of the obligation of being assessable and chargeable for such income, provided they deduct and remit to Revenue withholding tax (also at 20%) from rental payments and provide information on the landlord and the tenancy. Collection agents will also complete the new RN and remit the withholding tax online.
The Deputy has asked what happens when a tenant of a non-resident landlord pays 80% of the rent to the non-resident landlord but fails to remit the 20% to Revenue. The tenant is liable for the withholding tax and the assessment, charging, collection and recovery provisions of the Taxes Consolidation Act 1997 (TCA) can be applied in the event of non-payment. This was the case prior to the introduction of the new system and has not changed. Where the collection agent opts to deduct and remit withholding tax from a rental payment to Revenue, the agent will similarly be liable for payment of the tax and the assessment, charging, collection and recovery provisions of the TCA will likewise apply.
The new NLWT system permits non-resident landlords to view rental notifications online and allows them to review the tax deducted by a tenant or collection agent from the rental payments against what has been remitted to Revenue. As the new NLWT system operates in real time, non-resident landlords and Revenue will get early notice of any failure by tenants or collection agents to remit the deducted tax in a timely manner. This will mean any payment issues can be addressed more promptly than was possible in the previous paper-based system.
