The Finance Act 2022 introduced changes effective from July 1 2023 to the obligations of collection agents and tenants of non-resident landlords.
Collection Agents
The changes provide that collection agents who act for a non-resident landlord will no longer need to be a chargeable entity and can now deduct withholding tax (at the current standard rate of 20%) from rental payments to the non-resident landlord.
Collection agents must make a Rental Notification (RN) through a new withholding tax platform and will be able to issue Rental Notifications (RNs) in bulk. This RN and accompanying payment for tax deducted must be submitted to Revenue within 21 days of paying the rent to the non-resident landlord.
As collection agents will no longer be chargeable entities in respect of the rent if they comply with the new requirements, they will not be responsible for filing an Income Tax Return or CT1 return for the rental income.
Alternatively a collection agent can be a chargeable entity and therefore not deduct withholding tax. This will result in the agent filing an Income Tax Return or CT1 return and being liable for the tax due.
Tenants
If a collection agent is not appointed, tenants who pay rent directly to a non-resident landlord must withhold 20% of the rental payment and file a RN.
This RN and accompanying payment for tax deducted must also be submitted to Revenue within 21 days of paying the rent to the non-resident landlord.
Tenants will no longer be designated chargeable and so will not be responsible for accounting for the withholding figure of 20% in their annual Income Tax Return.
Landlords will be able to claim the withheld tax in their annual Income Tax Return or CT1 return.