Non-resident landlords who own property in Ireland are subject to Irish tax on rental income generated from their properties. The process for paying this tax involves specific steps and considerations:
1. Obligation to Pay Irish Tax
- Rental income from property in Ireland is subject to Irish income tax, regardless of the landlord’s residency status.
2. Appointment of a Collection Agent
- A non-resident landlord must appoint a collection agent, usually the tenant or a property management company, to manage the rental income.
- The collection agent is responsible for withholding 20% of the gross rent and remitting this amount directly to the Irish Revenue Commissioners as an advance payment of the landlord’s income tax.
3. Filing a Tax Return
- The non-resident landlord is still required to file an annual tax return with the Irish Revenue Commissioners. The return should include all rental income and expenses related to the property.
- The landlord can claim deductions for allowable expenses, such as mortgage interest, repairs, and management fees, which can reduce the taxable rental income.
- The 20% tax withheld by the collection agent is credited against the landlord’s final tax liability. If the withheld tax exceeds the liability, a refund may be due.
4. Tax Credits and Deductions
- Non-resident landlords may be eligible for certain tax credits and deductions that are available to resident landlords.
- For example, interest on loans used to purchase or improve the property can be deducted, along with costs like repairs, insurance, and property management fees.
5. Double Taxation Treaties
- Ireland has double taxation treaties with many countries. These treaties can help avoid double taxation, ensuring the landlord does not pay tax on the same income in both Ireland and their country of residence.
- The tax paid in Ireland may be credited against tax liabilities in the landlord’s country of residence, depending on the specific terms of the relevant treaty.
6. Revenue Online Service (ROS)
- Non-resident landlords can use the Revenue Online Service (ROS) to manage their tax affairs, including filing tax returns and making payments.
7. Professional Advice
- Due to the complexity of international tax obligations, it is often advisable for non-resident landlords to seek professional tax advice to ensure compliance with Irish tax laws and to optimize their tax position.
By following these steps and ensuring compliance with Irish tax regulations, non-resident landlords can manage their tax obligations effectively.