What is a non-resident landlord?
A non-resident landlord is someone who rents out property in Ireland, but is not a resident of Ireland. That income from renting out a property that qualifies as income is taxable. On July 1, the Non-Resident Landlord Withholding Tax (NLWT) was introduced.
Up until July 1, to pay tax on your Irish rental income, you had two options:
- You could have your tenant withhold 20% of the rent due and submit it
- You could engage a collection agent who will submit a tax return for you (under a specific collection agent tax number). This would mean that you would not have to have any rent withheld.
Upcoming Changes:
The Finance Act of 2022 introduced changes to the obligations of tenants and collection agents of non-resident landlords, including the introduction of a new system by Revenue. The new system provides that from 1 July 2023, collection agents who act for a non-resident landlord should deduct withholding tax (at the standard rate of 20%) from rental payments to non-resident landlords. This withholding tax must be paid by the collection agents to Revenue through Revenue’s new system within 21 days of the payment of rent. You as the non-resident landlord will file the tax return rather than the collection agent.
The NLWT:
Under the NLWT, a non-resident landlord is subject to an income tax return to Irish revenue. Those who rent out a property in Ireland but who do not reside here must declare the rental income to Revenue and pay a standard rate of 20% tax. This can be done through an Irish based collection agent (estate agent, solicitor, or person nominated to act on landlord’s behalf). The collection agent receives rent from tenants and files an annual tax return on behalf of the landlord.
As an alternative to using a collection agent, non-resident landlords can also ask their tenants to withhold 20% of their rent and submit the withheld tax to Revenue by completing a Form R185 once a year with their personal tax return. In this case, a non-resident landlord will also submit an income tax return at the end of the year.
What does this mean for you?
Collection agents:
- Collection agents will no longer be responsible for filing an Income Tax Return for the rental income received by the non-resident landlord.
- Will withhold and pay 20% of the rent to Revenue within 21 days of the rent payment.
- Make a rental notification (RN) through a new withholding tax platform in myAccount and ROS.
Non-resident landlords:
- You will get a credit for any income tax withheld by a collection agent and paid to Revenue.
- You will be responsible for filing the income Tax Return and not the collection agent.
- We can prepare your tax return as normal, but it will be under your name and PPS number rather than that of a collection agent as was the case previously.
Tenants:
- If tenants are not paying rent to either an Irish resident landlord or an Irish resident collection agent, they must withhold and remit 20% tax from the rental payments and input Rental Notifications via ROS.
How can we help?
It is crucial that tenants, collection agents and non-resident landlords are aware of their obligations as Revenue have indicated that they will be commencing a targeted non-compliance programme beginning in 2024.
Our team of experts can help ensure that you are meeting your tax filing and payment obligations. For more information on the new NLWT system or how we can assist you, please feel free to contact us.