A non-resident landlord is liable to Irish income tax and USC on the gross rents less any allowable expenses in arriving at rental profit. How the tax is collected, and the tax filing obligations, is dependent on whether the tenant pays the rent:

1. Directly to the landlord or
2. To a collection agent

Rent paid directly to the landlord

A tenant is obliged to withhold tax at the standard rate (currently 20%) from the rents paid directly to a non-resident landlord.  The tenant should give the landlord a Form R185 to show that the tax has been accounted for to Revenue. Credit for the actual tax deducted from the rent by the tenant will be given to the landlord by way of claim on their annual tax return which they are obliged to submit declaring rental income. The landlord is entitled to claim a repayment of the tax to the extent that their Irish income tax liability is less than the tax deducted.  

Rent paid to a Collection Agent

A non-resident landlord can nominate a collection agent (typically an estate agent but it can be any individual resident in Ireland willing to take on the responsibility) so that withholding tax does not have to be deducted by the tenant. The landlord is assessable and chargeable to income tax in the name of the Irish collection agent who should be set up under a new PPS number for the collection activity.  The obligation to submit an annual income tax return detailing the rental income falls on the collection agent who is also responsible for paying any tax liability due on the rents. While the assessment is in the name of the Irish collection agent, the tax to be charged is the amount which would be charged if the non-resident landlord was assessed in her or his own right.   

Income Tax Return Disclosure Required

The 2020 Form 11 (income tax return) included an additional question for non-residents. Where a taxpayer is non-resident and in receipt of Irish rental income, they must now confirm whether the tax return form is being completed by a collection agent or that tax was withheld by the tenant. This question is mandatory and only one option can be selected. For the 2020 Form 11 only, where the return was completed by a non-resident landlord who did not have a collection agent acting on his or her behalf, the second box could be ticked, even if the tenant did not withhold any tax. This was a suggested workaround to enable the filing of the 2020 Form 11. However, going forward, Revenue have confirmed that this “work-around” will not be extended and every non-resident landlord must have tax withheld by the tenant on rent paid or appoint a collection agent.   Blog by Carol Fitzpatrick