If you are a non resident landlord you must file annual income tax returns in Ireland in respect of your Irish rental income. You are considered to be a non-resident landlord if you own rental property in Ireland but are not currently living in Ireland.
If you are a non-resident landlord, then you are required to appoint an Irish tax resident body/individual who will undertake all obligations in relation to your Irish tax affairs. This Irish resident body/individual can be either :
- Your tenant: the tenant withholds 20% of the gross rent and pays this directly to Revenue. This means that 80% of the rent is paid to the non-resident landlord and 20% is paid to Revenue by the tenant. At the end of the tax year, the tenant completes a Form R185 and gives it to you to claim credit for the tax deducted in your annual income tax return.
- A collection agent: the collection agent must be resident in Ireland. The tenant can pay 100% of the rent to the agent and the agent may then choose to withhold an amount to cover the taxes from any payment to the non-resident landlord. The agent is then ultimately responsible to use the amount withheld to discharge the tax liability arising on the rent and file annual income tax returns with Revenue.
An Income Tax Return for a non-resident landlord can no longer be filed without one of the above in place.
With a tenant withholding 20%, unless you have a close relationship with the tenant this may not be the recommended option as you are putting yourself at risk that the tenant may not remit the relevant deductions to Revenue on your behalf.
With an Irish Collection agent, a Collection Agent is someone resident in Ireland – it can be a personal contact you trust, such as a family member or friend, or a professional service provider i.e. letting agent.
There is a proposed further amendment to the above contained in section 81 of the Finance Bill 2022. This section extends the responsibilities of a tenant renting from a non resident landlord. In addition to withholding 20% income tax, the tenant will have a requirement under this amendment to provide information to Revenue in relation to the landlord, including the name and address of the landlord, Eircode of the property being rented, LPT identification number of property and amount and dates of payments.
Also under this section the collection agent will not be chargeable to income tax on behalf of the non resident landlord where the agent makes a payment of withholding tax to Revenue and provides Revenue with the necessary information in relation to the landlord.
This section is conditional on a Ministerial Order.