Updates to the Administration of Ireland’s Non-Resident Landlord Withholding Tax (NLWT) and Implementation of the New NLWT System

Over the past few weeks, the Irish Revenue Commissioners (‘Revenue’) has sent in excess of 20,000 letters to non-resident landlords (‘NRL’) and their collection agents, informing them of the upcoming changes to the administration of withholding tax for NRLs. In these letters, Revenue has also detailed the information that landlords will be required to provide to their tenants or collection agents. 

Finance Act 2022 introduced changes to the administration of Irish withholding tax for NRLs. The Minister for Finance signed the Commencement Order in June, establishing a Non-Resident Landlord Withholding Tax (‘NLWT’) system.

This new system is live on Revenue’s Online Service (‘ROS’) since 1 July 2023. It enables tenants or collection agents to remit and record tax withheld on rental payments to Revenue via ROS. This withheld tax will then be automatically credited to the landlord via a pre-populated entry in their own tax return. An important change is that Revenue will no longer consider collection agents chargeable persons in respect of the rents due to the NRL in cases where they comply with all of the requirements of the new system. 

Common questions about the changes to the NLWT and the New System

What do the NLWT updates mean for collection agents?

• Collection agents will no longer be designated chargeable persons (i.e., they will no longer be required to register for or file an income tax return (Form 11) or corporation tax return (Form CT1) for the rental income due to the NRL).
• Collection agents will withhold and remit 20% of the gross rental payment to Revenue via the NLWT system on ROS by making a Rental Notification (‘RN’). They must submit the RN and pay the accompanying tax withheld to Revenue on or before the 1st day of the month following the month in which the rent is collected. 

What do the NLWT updates mean for tenants paying rent directly to an NRL?

• Tenants will no longer be designated chargeable persons and will not be responsible for accounting for the tax withheld (20%) in their own personal tax return.
• Tenants will withhold and remit 20% of the gross rental payment to Revenue via the NLWT system on ROS by making a Rental Notification (‘RN’). Tenants who do not submit financial statements (individual tenants) must submit a RN and pay the accompanying tax withheld to Revenue within 7 days of making the rental payment to the NRL.

What do the NLWT updates mean for NRLs?

• NRLs will be required to file an income tax return (Form 11) or corporation tax return (CT1) in respect of the rental income.
• A tax credit will be available to the NRL in respect of the tax that the collection agent/tenant withheld and remitted to Revenue through the new NLWT system.

Next Steps for NRLs, Collection Agents and Tenants?

If you are an NRL, collection agent or tenant paying rent directly to a NRL, you need to carefully consider these changes to determine whether you need to take any action to remain compliant under the new NLWT regime.

NRLs must now decide whether they want their tenants or a collection agent to withhold and remit 20% of the gross rents receivable and take action accordingly. In cases where a landlord must complete a new tax registration to comply with the new system, they should do so as soon as possible. 

Revenue have published a new Tax and Duty Manual which provides step by step guides on how to access the NLWT system as well as guidance on the type of information needed to complete RNs.  Revenue have confirmed that the NLWT links are accessible in ROS.

How Grant Thornton Can Help

If you are unsure how these changes affect you and what actions you should take as a NRL, collection agent or tenant, please contact a member of the Real Estate Tax Advisory team or your usual Grant Thornton contact for assistance.