Tenants who pay rent to a landlord based outside Ireland will have to supply information on their landlords and their rental income under a new online system being launched by Revenue on July 1.
Under the Finance Act 2022, a tenant paying rent into a non-resident landlord's Irish or foreign bank account will be required to file a rental notification on the platform within 21 days of paying the rent.
It has always been an administratively heavy system when it comes to accounting for tax on the rents paid to non-resident landlords in order to protect the tax base so that there is no tax leakage out of the Exchequer.
Crona Clohisey, Tax and Public Policy Lead with Chartered Accountants Ireland, said, "For a tenant prior to this change, they have always had to withhold 20% of the rent and pay that over to Revenue, so if you are paying €1,000 in rent, €200 of that has to go over to Revenue.
"But what historically has been happening is that the tenant has been withholding that tax and they have been adjusting their own PAYE tax credits or accounting for it in their own tax returns on a once off basis," she said.
"From Saturday what they now have to do is log on to ROS or MyAccount and file a monthly rental notification so every time they pay a rental payment to a non-resident landlord, they now need to effectively file a rental notification to tell Revenue that they have made that payment and also withhold the 20% tax," she added.
The rental notification has gone from being a once off requirement to a monthly requirement, "and quite an onerous requirement on a tenant to have to do that, particularly in cases where a lot of tenants may not know if their landlord isn't resident in the country, and they may not be aware of the responsibility that they may have had in the past and now still continue to do under this change".
A landlord must comply with their own self assessment - income tax or corporate tax returns - and as a safety measure they are required under law to either ask their tenant to withhold 20% or appoint a collection agent to collect the rents for them.
Critics of the new system say a lot of the information that Revenue requires tenants to provide is already in Local Property Tax returns
"There is a certain amount of information already available, and actually one of the requirements that a tenant is to provide on this rental notification is the Local Property Tax number of the landlord, so there is quite a lot of pieces of information that need to be returned including the landlord's address, the tax reference number and the Local Property Tax," Ms Clohisey said.
"This is another system, I suppose, of Revenue collecting information and ensuring the tax base is protected," she added.
The new system will lead to a positive change for agents working on behalf of non-resident landlords.
"Prior to this change, a landlord's agent would have been responsible for collecting the rents, paying over the tax but they were also the chargeable person - they were on the hook essentially for the landlord's tax on that rental income," she explained.
"Now that obligation has been removed, but they do have to withhold 20% of the rent and pay that over to Revenue so they also have to do these monthly returns, but the key part for them is that they are no longer liable for the tax, it is no longer their responsibility to file a tax return on behalf of the landlord," she added.
Revenue's new Non-Resident Landlord Withholding tax platform goes live on July 1.
