Pearse Doherty (Donegal, Sinn Fein)
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563. To ask the Minister for Finance the estimated revenue raised in the first year by increasing non-resident landlord withholding tax to 40%; the estimated revenue raised in the first year by increasing non-resident landlord withholding tax to 40% and removing all exemption to the withholding tax; and if he will make a statement on the matter. [46614/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that the non-resident landlord withholding tax (NLWT) system was introduced in Finance Act 2022 to reduce the administrative burden on both tenants and collection agents and to simplify the process of complying with their tax obligations. The information provided as part of the NLWT requirements allows Revenue to identify the non-Irish resident landlord and correctly allocate a withholding tax payment to that relevant landlord. The information also assists Revenue in the pursuit of non-compliance.

NLWT is deducted from the gross rental income payable to a landlord who lives outside the State. This withholding tax is then remitted to Revenue and is available as a payment on account of tax to be credited against the final tax liability of the non-resident landlord. A non-resident landlord is taxable on rental profits arising from the property; that is, rental income after deduction of allowable expenses. When a non-resident landlord files an Income Tax Return (Form 11) or Corporation Tax return (CT1), they can claim the NLWT deducted against their Irish tax liability. In some cases, a non-resident landlord may be entitled to a refund of tax if their tax liability is less than the amount of NLWT withheld.

There is no exemption from the NLWT system where the tenant pays directly to a non-resident landlord. However, where there is a collection agent acting on behalf of the non-resident landlord, they can remain assessable and chargeable to tax for the income of that person, which means the agent is required to file a tax return and pay the tax due on that income. NLWT does not apply in these circumstances.

As NLWT is simply treated as a payment on account, any increase in the rate changes the timing of collection rather than the overall tax yield of Income or Corporation Tax. An increase of the withholding tax rate to 40% would therefore only increase the amount available for credit against the final tax liability of a non-resident landlord. It is also worth noting that as the NLWT applies to gross rental income, i.e. income before deduction of rental expenses, an increased withholding rate could possibly result in an increased number of refunds due to non-resident landlords where the withheld amount is in excess of their final tax liability, thereby potentially increasing the administrative burden of the withholding tax on the taxpayer.