Ciarán Lynch (Cork South Central, Labour)
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Question 188: To ask the Tánaiste and Minister for Finance if he will confirm that where a landlord is resident outside the State, that a tenant is required to discharge the landlord's tax liability in respect of rental income by forwarding 20% of the rent due to the Revenue Commissioners; and if he will make a statement on the matter. [2178/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am informed by the Revenue Commissioners that where rents are paid directly to a person who is resident outside the State, the tenant is obliged to deduct income tax at the standard rate of 20% from the rental payment and to give the landlord a certificate of the tax deducted. Direct payments include a situation where rent is paid into a bank account in the name of the non-resident landlord. The tenant is then required to make a return and pay to Revenue the tax that he or she has deducted from the rent. The landlord is entitled to a credit for the tax deducted by the tenant against his or her final rental income tax liability and is obliged to pay any additional tax that may be due.

The tenant is not responsible for discharging the landlord's liability to tax on rental income. Instead, the withholding of tax on rental income by tenants of non-resident landlords is primarily a control measure. It is designed to promote greater compliance in this area having regard to the obvious risk factors associated with non-resident taxpayers. Where it applies, it provides in a very direct manner, valuable information for Revenue which might otherwise be difficult to obtain.

Where rent is paid to an Irish agent of a non-resident landlord, such as an Irish-based estate agent acting on behalf of the non-resident landlord, the tenant is not required to deduct income tax from the rent payable. In such cases, the non-resident landlord is chargeable to tax in the name of the Irish agent.