Starting from 1st July 2023, significant legislative changes will impact non-resident landlords (“NRL”), collection agents of NRLs and tenants of NRLs. There will be a new Non-Resident Landlord Withholding Tax (“NLWT”) system. These changes aim to enhance tax compliance and simplify rental income reporting in Ireland.
To streamline the process, collection agents and tenants will be required to input “Rental Notifications” (“RNs”) via the Revenue Online System every time a rental payment is made.
Tenants: Tenants will no longer be designated chargeable persons under the new system. A tenant paying rent directly to a NRL will engage with the new NLWT system, accessed through ROS or MyAccount. They will be obliged to make RNs when rent is paid to NRLs and as part of this, they will withhold and remit 20% of the rental payments to Revenue. The withheld payment and RN are to be submitted within 21 days of paying the rent to the NRL. Where the NRL engages with a collection agent, then the tenant will simply pay rent to the collection agent. The tenant will then have no further role.
Collection Agents: A more significant change introduced by the new system is in relation to collection agents. Under the new NLWT system, collection agents will no longer be designated chargeable persons. In other words, they will no longer be required to register or file an income tax return or corporation tax return for the rental income due to the NRL. The collection agent will collect rent from properties and withhold and remit 20% of the rent payments to Revenue via the NLWT system on ROS by making a RN. The RN must then be submitted and the accompanying tax withheld must be paid to Revenue on or before the 1st day of the month following the month in which the rent is collected.
Non-Resident Landlords: As a result of these changes, there could also be significant cashflow implications for NRLs. Under the NLWT system, the NRL must now submit an Income Tax Return (Form 11) or a corporation tax return (CT1) for all income, not just rental income. The NLWT system will pre-populate the amount of tax withheld as a credit in the landlord’s tax return. The withheld sum will eventually be available to the NRL as a credit when they submit their annual return.
Non-resident landlords, tenants and collection agents paying rent directly to a NRL should carefully consider these changes to determine whether any action is required to ensure they are acting in compliance with the new system.
A useful Tax and Duty Manual has been published which provides guidelines on how to access the NLWT system and provides details on what information is required when completing RNs.
Des Lynch Leanne Hill
Partner Trainee Solicitor