Renter having to collect tax for Revenue when landlord non-resident

Sulla Felix

Just wondering, since I see it posted here often enough, why is this the case? Well, I understand why, because Revenue want all the shiny shinies owed to them, but this has to be the only situation where the consumer of a commodity/service is obliged to pay tax directly to Revenue.
Imo it's an unfair burden, especially because I've never seen any kind of awareness campaign on the issue and I'm sure for as many people who know and send the money on to Revenue there's ten who don't know and landlord manages to evade the tax.

RATM

Only found out recently about this myself and my landlady is resident in Canada, in fact it is a scenario that will be cropping up more and more as people with property emigrate.

I suppose the reasoning is that Revenue want to tax it at source, much like the way they get businesses to do their own taxes and file them, it cuts down on the work they have to do themselves. The other consideration is that if the money goes to the landlord abroad then Revenue may never see it and be stuck going down the legal route of registering a judgement against someone in absentia. Which in itself could be difficult.

Agree with you that it is badly advertised, I normally have my ear to the ground on these things but only found out about it through an article in the Sunday Business Post a couple of weeks back. I can't remember any advertising or awareness campaign on the behalf of Revenue.

Anyway from the Revenue's website it says the tenant must deduct 20% of the rent. It also states that if the tenant doesn't do this then Revenue can pursue the tenant for the money instead. It sounds like a bit of an empty threat but I wouldn't go trying them, they do have extensive powers, even so far as to seize your bank account if necessary.

3DataModem

This only applies if you pay them directly. If you pay an agent you don't have to do this.

dearg lady

3DataModem wrote: »

This only applies if you pay them directly. If you pay an agent you don't have to do this.

If you pay an agent who is in Ireland you don't have to do this...just in case someone picks it up wrong...

sunnysoutheast

Somebody asked me about this a few days ago and I couldn't find a definitive answer, if the tenant withholds the 20% tax for a non-resident landlord what is the mechanism for them to actually pay the tax over to the Revenue? I know that there is a year-end form which covers the tax deducted which the tenant has to fill in for the landlord.

Presumably any landlord would require all deductions to be supported by a receipt for the 20% payment from the Revenue.

murphaph

sunnysoutheast wrote: »

Somebody asked me about this a few days ago and I couldn't find a definitive answer, if the tenant withholds the 20% tax for a non-resident landlord what is the mechanism for them to actually pay the tax over to the Revenue? I know that there is a year-end form which covers the tax deducted which the tenant has to fill in for the landlord.

Presumably any landlord would require all deductions to be supported by a receipt for the 20% payment from the Revenue.

The landlord requires nothing. The legal onus is entirely on the tenant to deduct and forward 20% to Revenue. The landlord just has to point the finger at the tenant and effectively say "he has your tax" and Revenue are obliged to chase the tenant, not the landlord, for the tax due.

It's a ridiculous burden on the tenant and none of them want anything to do with it. Landlords don't want it either. The law needs changing.

Milk & Honey

Sulla Felix wrote: »

but this has to be the only situation where the consumer of a commodity/service is obliged to pay tax directly to Revenue.
.

It is far from the only situation where the consumer of a commodity/service has to pay tax directly to the Revenue.
In the building industry main contractors have to withhold tax on money due to sub contractors and government bodies withold tax on professional fees.

sunnysoutheast

...thanks for the replies. I'd agree that the current system is not great but I'm really after the specific method(s) by which the tenant forwards the withheld 20% to the Revenue. The tax documentation states something along the lines of "...submit a return after the deduction is made..." which is vague.

Clive

Apparently they need to contact the local Revenue office to make arrangements:

From: http://www.revenue.ie/en/tax/it/credits/rent-credit.html#section10

Non - Resident Landlords

Where rent is paid to a landlord who is not resident in the State, certain obligations may arise for the tenant. If the landlord has an agent in the State to whom the rent is paid then no obligations arise. If however rent is paid directly to the landlord (this includes payment directly into a bank account held by the landlord) then the following actions must be taken. The tenant must deduct 20% of the rent due from the amount paid over to the landlord. This 20% must then be remitted to Revenue. The local Revenue Office should be contacted to make the appropriate arrangements for the collection of this charge. The remaining 80% of the rent due should be paid over to the landlord. At the end of the year the tenant should furnish the landlord with a completed R185 - Certificate of Income Tax Deducted (PDF, 47KB) . This form gives details of the amount of the rent that was paid over to Revenue. The landlord can then claim this amount as a credit on their annual Tax Return.

goat2

if the tenant pays up the full amount to a bank account of an owner living overseas, and does not deduct the twenty percent,
who takes the fall.

Milk & Honey

goat2 wrote: »

if the tenant pays up the full amount to a bank account of an owner living overseas, and does not deduct the twenty percent,
who takes the fall.

If the landlord doesn't pay then the tenant has to.

goat2

but if the tenant has being paying in full all along, can the revenue come after them for more,
since they were not the people who earned the money,

Marcusm

goat2 wrote: »

it is about time that this has been brought in

It may not be publicised very well but it has been law in Ireland for over 40 years.

Actually, rather than being a burden on tenants, it gives them a cash flow advantage as they can retain 20% of the rent for an average of 6 months longer.

goat2

i had never heard it until now

tonyfillony

If I pay my rent into an irish bank account for my landlord how am I supposed to know they are abroad?

djimi

tonyfillony wrote: »

If I pay my rent into an irish bank account for my landlord how am I supposed to know they are abroad?

The landlords contact details are supposed to be written on the lease, which would show that they are living abroad.

Agree though; its a moronic law. A landlords tax situation is their own business. Using renters as an easy way of collecting a tax that might be otherwise difficult to get hold of is out of line in my opinion.

Marcusm

tonyfillony wrote: »

If I pay my rent into an irish bank account for my landlord how am I supposed to know they are abroad?

If you deal directly with the landlord, it's not that hard to find out whether he/she is abroad when problems arise, i.e. leaks, broken white goods etc.

Provided you truly don't know, the Revenue internal guidance means that you will not be pursued for the back tax provided that you provide the Revenue with the relevant information (name, address etc and other contact details for landlord) and, if you are still a tenant, begin to withhold the tax.

gmisk

Sulla Felix wrote: »

Just wondering, since I see it posted here often enough, why is this the case? Well, I understand why, because Revenue want all the shiny shinies owed to them, but this has to be the only situation where the consumer of a commodity/service is obliged to pay tax directly to Revenue.
Imo it's an unfair burden, especially because I've never seen any kind of awareness campaign on the issue and I'm sure for as many people who know and send the money on to Revenue there's ten who don't know and landlord manages to evade the tax.

I have a non resident landlord...so I get approximately 25euro a week deducted at source to pay this (So pay 400 at end of month as opposed to 500)

Rasmus

Anyone one know if there is a way for a non resident landlord to pay their tax on rent without involving the tenant?
I had a non-resident LL a few years back and they said it was taken care of.

murphaph

Rasmus wrote: »

Anyone one know if there is a way for a non resident landlord to pay their tax on rent without involving the tenant?
I had a non-resident LL a few years back and they said it was taken care of.

If the LL has an agent in Ireland managing the property for him, then it is ok.

The agent requests a new PPS from Revenue just for the returns for the non-resident LL and makes the returns on the LLs behalf using this PPS.

Edit: "agent" could be family member doing the LL a favour.

quietsailor

gmisk wrote: »

I have a non resident landlord...so I get approximately 25euro a week deducted at source to pay this (So pay 400 at end of month as opposed to 500)

Be very careful with that calculation as you could end up paying the Revenue too much money at the end of the year, I know you said approximately but still;

€500 per month X 12 months = €6000 per year taxable income
20% of €6000 = €1200 owed in tax

€25 per week X 52 weeks = €1300 paid ie you end up paying €100 extra .... what a nice tenant you are to pay an extra €100 of the LL's tax bill :eek: