Pearse Doherty (Donegal, Sinn Fein)
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182. To ask the Minister for Finance if he will engage with the Minister for housing to ensure that HAP can resume the practice of issuing a tax certificate for a 20% deduction to meet the requirements of the non-resident landlord withholding tax for landlords based in the North of Ireland renting a property in the South to a HAP tenant rather than requiring them to engage a private tax collection agent; and if he will make a statement on the matter. [36787/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy is aware, the Minister for Housing, Local Government and Heritage has policy responsibility for the Housing Assistance Payment (HAP).

Revenue have advised me that a 20% withholding tax still applies where income is paid directly to a non-Irish resident, although the system for remitting withholding tax from rent changed in 2023. Revenue have confirmed to me that it does not specifically require a non-Irish resident person to appoint an Irish resident collection agent, but a collection agent can opt to deduct and remit 20% withholding tax from rent payments to a non-resident.

It is my understanding that a landlord can opt to have a HAP paid to an agent (sometimes called a “collection agent”) rather than receiving the payment directly. Where that is the case, the HAP is paid in full to the collection agent, and the collection agent can use the Non-resident Landlord Withholding Tax (NLWT) system to complete an “rental notification” (RN), remit 20% of the payment to Revenue and pay the balance to the non-Irish resident landlord, with the landlord required to file an Irish tax return as above.

Alternatively, where the collection agent does not opt to deduct the withholding tax, the collection agent is chargeable and assessable to tax in respect of the income of the non-Irish resident landlord by virtue of section 1034 of the Taxes Consolidation Act 1997 (TCA), which means the agent is required to file a tax return and pay the tax due on such income. When making the return, the collection agent can claim whatever allowances and reliefs the non-resident person is entitled to, and section 1046(2) TCA provides that a collection agent can retain money from the income to pay the tax due.

Where a HAP is instead made directly to a non-Irish resident, the person making the payment (in the case of the HAP, the local authority or the HAP Shared Services Centre) is required by section 238 TCA to deduct 20% of the payment and remit it to Revenue, and pay the balance to the non-resident person (including a person who is resident in Northern Ireland). Previously, the payment to the non-resident person was accompanied by a Form R185, which recorded the amount remitted to Revenue. However, since the introduction of the NLWT system on 1 July 2023, the person making the payment completes a RN and remits the tax online via Revenue Online Services (ROS) or MyAccount. The non-Irish resident landlord is required to file an Irish tax return to declare the rental income and can claim credit for the tax withheld against their tax liability. The landlord can also claim allowable expenses in calculating their taxable income in the normal way.