Dáil Éireann Debate, Monday - 11 September 2023
432. Deputy Ivana Bacik asked the Minister for Finance his views on the new requirements relating to non-resident landlord withholding tax; the rationale for placing the onus of managing the tax affairs of non-residential landlords on tenants, where no collection agent has been appointed; and if he will make a statement on the matter. [37433/23]
View answerThe changes made in Finance Act 2022 to the obligations of tenants and collection agents of non-resident landlords are intended to reduce the administrative burden on both tenants and collection agents and to simplify the process to comply with their tax obligations. I am advised by Revenue that it is also anticipated that the new system, which launched on 1 July 2023, should lead to better compliance and customer service in this area. The information provided as part of the new requirements will allow Revenue to identify the non-Irish resident landlord and correctly allocate a withholding tax payment to the relevant landlord. The information will also assist Revenue in pursuing any issue of non-compliance.
Tenants (and other parties such as local authorities) who make rental payments directly to non-resident landlords have been obliged for many years to deduct and remit to Revenue withholding tax at 20% from such payments. Finance Act 2022 made minor amendments to this existing system. Previously, such persons were required to remit the amount due to Revenue using a paper Form R185. The changes introduced by Finance Act 2022 did not alter the requirement for such persons to deduct tax.
They do, however, change the method by which the tax deducted is remitted to Revenue. They also require the provision of certain information regarding the landlord, the rental property, and the rental payment. As part of this new system, instead of completing a paper Form R185, tenants of non-resident landlords will complete rental notifications (‘RNs’) and remit the tax deducted online using ROS or MyAccount, using the new “non-resident landlord withholding tax” (NLWT) system.
Under the new system, the relevant tenant must make a monthly rental notification which accounts for any rental payment that they owe to their non-resident landlord. To reduce the administrative burden on the tenant, the system provides a facility to set up a repeat rental notification at monthly intervals including an instruction for remitting the NLWT to Revenue directly from the tenant’s bank account.
Although their tenant remits the tax to Revenue, the onus remains on the landlord to manage their own tax affairs, including the filing of an Irish income tax return. They are taxable on the rental profit arising from their Irish property; that is, their Irish rental income after deduction of allowable expenses, and the NLWT system incentivises them to file an income tax return so as to claim a credit against their Irish tax liability in respect of the relevant NLWT which was remitted to Revenue. They may also be entitled to a proportion of personal allowances, which can be used to further reduce their tax liability.
