Update for Non-Resident Landlords witholding Tax
Over the past few weeks, Revenue have sent more than 20,000 letters to non-resident landlords and their collection agents, informing them of the upcoming changes to the administration of withholding tax for non-resident landlords.
Revenue have confirmed that the online Non-resident Landlord Withholding Tax (NLWT) system will be available from 1 July 2023.
This will enable tenants or collection agents to remit and record tax withheld on rental payments to Revenue via ROS. Tax withheld will then be automatically credited to the landlord via a pre-populated entry in their own tax return.
Prior to this system being introduced, a tenant or other person (such as a local authority, for example) paying rent to a non-resident landlord was required to deduct 20% from rent payments and remit that amount to Revenue, with a copy of Form R185. Alternatively, the non-resident landlord could appoint a collection agent who was chargeable and assessable in their own name for the rental profits of the non-resident landlord. While this position was unchanged for many years, tenants who were directly paying non-Irish resident landlords were often unaware of their responsibilities in this regard and in some cases may not have been aware that their landlord was not Irish resident. Additionally, many estate agents had expressed dissatisfaction with having to file tax returns for the income of non-Irish resident landlords.
The main changes arising from the new system are as follows:
Collection agents will no longer be chargeable or assessable for the rental income due to the non-resident landlord.
Collection agents will withhold and remit 20% of the gross rental payment to Revenue via the NLWT system on ROS by making a Rental Notification (‘RN’). They must submit the RN and pay the accompanying tax withheld to Revenue within 21 days of making the rental payment to the non-resident landlord.
Tenants will no longer be designated chargeable persons and will not be responsible for accounting for the tax withheld (20%) in their own personal tax return.
Tenants will withhold and remit 20% of the gross rental payment to Revenue via the NLWT system on ROS by making a Rental Notification (‘RN’). They must submit the RN and pay the accompanying tax withheld to Revenue within 21 days of making the rental payment to the non-resident landlord
If you are a non-resident landlord, collection agent or tenant paying rent directly to a non-resident landlord, you need to carefully consider these changes to determine whether you need to take any action to remain compliant under the new NLWT regime.
Should you require more information you can check the Revenue website or contact our tax specialist Padraig at pambrose@nkc.ie.