Non-Resident Landlord withholding Tax
The notes below should be read in conjunction with our earlier circular from May 2023.
The “Non-Resident Landlord Withholding Tax” (NLWT) system is now “live”. Detailed Revenue guidance notes are available here. The NLWT platform can be accessed by selecting “Manage non-resident landlord withholding tax” from your main ROS services page.
There are certain actions that need to be taken under the new system for tenants, collection agents and non-resident landlords.
Tenants of a Non-Resident Landlord
Tenants are now obliged to:
- Access the NLWT platform; to do this, they will need to already be registered for ROS or MyAccount.
- Input the rental notification – see paragraph 3.2 of the attached Revenue guidance notes.
- Submit certain information to Revenue – see paragraph 3.4 of the attached Revenue guidance notes.
- Withhold 20% tax from rents paid to the non-resident landlord.
- Pay that tax to Revenue, through ROS/MyAccount.
- Give a Form R185 to the non-resident landlord, which shows both the gross rent and the tax withheld. A link to this form is here.
There are penalties for non-compliance.
There was always an obligation on tenants of non-resident landlords to withhold 20% tax. While this was never the focus of much Revenue scrutiny up to now, we would expect that Revenue would be more diligent in ensuring compliance from now on.
Collection agents are no longer “chargeable persons” and therefore do not have to submit tax returns as collection agent. Collection agents can therefore de-register for tax with effect from 1 July 2023.
From 1 July 2023, if a collection agent pays rent to a non-resident landlord, their obligations are quite similar to a tenant, as outlined above.
For collection agents, who may be dealing with many non-resident landlords, there are provisions for bulk input of rental notifications and managing these rental notifications. Please refer to the detailed guidance notes from Revenue in this regard.
The non-resident landlord is now obliged to submit an income tax return annually (from 1 July 2023). For many non-resident landlords, who were already submitting tax returns in any event (even though this was not strictly correct), nothing will change in this regard.
It is to be expected that many more tenants will now begin deducting 20% withholding tax. Where this happens:
- The tenant should have provided the landlord with a Form R185, which will show both the gross rent and the tax withheld.
- The tenant should also have input the tax deducted on the NLWT platform.
- The non-resident landlord should include the gross rents in their tax return.
- The non-resident landlord should take a credit for the tax withheld.
As these changes are being introduced during the middle of the 2023 tax year, there will have to be two separate systems operating during this tax year. The old system will operate up to 30 June 2023 and the new system will operate from 1 July. There will undoubtedly be teething problems as a result of this.
Should you have any queries in relation to this new system, please call your usual PSC contact.