Written answers
Thursday, 25 September 2025
Department of Finance
Tax Data
Pearse Doherty (Donegal, Sinn Fein)
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228. To ask the Minister for Finance the estimated revenue that would be raised on a short-term cash flow basis, by increasing the professional services withholding tax to 25% and 30% respectively. [50865/25]
Paschal Donohoe (Dublin Central, Fine Gael)
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Professional Services Withholding Tax (PSWT) is a deduction at the standard rate of income tax, currently 20%, from relevant payments made by accountable persons to specified persons in respect of certain professional services.
Accountable persons include Government Departments, commercial and non-commercial State agencies and bodies, local authorities, the HSE and authorised medical insurers.
A specified person, for the purposes of PSWT can include businesses undertaken through a company, sole trade or partnership. The range of professional services that come within the scope of PSWT is extensive and includes:
- services of a medical, dental, pharmaceutical, optical, aural or veterinary nature;
- services of an architectural, engineering, quantity surveying or surveying nature, and related services;
- services of accountancy, auditing or finance and services of financial, economic, marketing, advertising or other consultancies;
- services of a solicitor or barrister and other legal services; and
- geological services.
However it should be noted that PSWT is simply treated as a payment on account against the specified person’s final Income Tax or Corporation Tax liability for the year, with the amount of PSWT deducted credited against the tax liability for that year. 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 25% or 30% would therefore only increase the amount available for credit against the final tax liability of a specified person.
It is also important to note that as the PSWT applies to gross income, i.e. income before deduction of expenses, an increased withholding rate would most probably result in an increased number of refunds due to specified persons 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.
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