Non-resident landlord/collection agent - who pays?

brybutler

I'm a non-resident landlord and have appointed my mother as a collection agent.

When it comes to paying and filing my tax return, under who's name is that done? Is it mine as the landlord or hers as the agent? Obviously, I'm hoping I can do it so my poor mother doesn't have the burden.

Thanks for your time.

murphaph

brybutler wrote: »

I'm a non-resident landlord and have appointed my mother as a collection agent.

When it comes to paying and filing my tax return, under who's name is that done? Is it mine as the landlord or hers as the agent? Obviously, I'm hoping I can do it so my poor mother doesn't have the burden.

Thanks for your time.

You complete and file the return as you are still the chargeable person. The whole collection agent thing is a farce. You should register for ROS if you haven't done so as it doesn't make mistakes...unlike the Revenue staff who are responsible for processing the paper form 11.

brybutler

Excellent. Thanks for the quick answer.

Nekarsulm

I think as a non resident you must pay 20% of rent to Revenue up front, and then when your accounts are complied and calculated, you may be in a position whereby you get some of the monies returned, if you so qualify.

brybutler

Nekarsulm wrote: »

I think as a non resident you must pay 20% of rent to Revenue up front, and then when your accounts are complied and calculated, you may be in a position whereby you get some of the monies returned, if you so qualify.

Nope, you don't have to do that if you've assigned a resident collection agent (who can be a relative or whoever).

Thanks though.

Nekarsulm

Ah, must have changed in the last few years. Or perhaps it depends if the rent is being lodged into an Irish Bank account or foreign.

I was collecting rent for a friend who lived in UK, and would lodge it via interbank transfer to his Birmingham "Bank or Ireland" account.

Caused a truck load of problems with Revenue, Audits etc. Inspector from Revenue advised me about the 20% rule.

brybutler

As far as I know, the 20% rule applies when there is no collection agent. But it should be deducted by tenants and paid directly to Revenue. Then the landlord can claim back whatever they are entitled to, which is very messy.

But if you have a collection agent then none of that applies. That's how I understood it anyway from my afternoon of research today.

I can imagine how the foreign bank account would have messed things up alright (plus cost your friend a lot in bank transfer fees).

Marcusm

brybutler wrote: »

I'm a non-resident landlord and have appointed my mother as a collection agent.

When it comes to paying and filing my tax return, under who's name is that done? Is it mine as the landlord or hers as the agent? Obviously, I'm hoping I can do it so my poor mother doesn't have the burden.

Thanks for your time.

Technically the retrin should be filed by your mother "as agent" for you. A separate tax reference number should be obtained. It should not be included in her normal return. If you continue to file a personal tax return and include the income, it is likely that Revenue will be fully satisfied although they could insist on it being done the correct way.

Marcusm

Nekarsulm wrote: »

Ah, must have changed in the last few years. Or perhaps it depends if the rent is being lodged into an Irish Bank account or foreign.

I was collecting rent for a friend who lived in UK, and would lodge it via interbank transfer to his Birmingham "Bank or Ireland" account.

Caused a truck load of problems with Revenue, Audits etc. Inspector from Revenue advised me about the 20% rule.

It hasn't changed since the early 1970s and it is irrespective of whether it is paid into an Irish or a foreign account. Indeed it would not matter if it was paid in cash provided it was handed to the resident agent.

murphaph

Something Revenue could never satisfactorily answer to me was this:
If the agent is supposed to actually do your return, they can't just file a return for your rental income. They have to report all your taxable income in the state and indeed outside the state if you are to get all your tax credits (in some cases). It's beyond ridiculous to open a person up to have to hand all their financial details to an agent just because of a single rental income stream.

In the UK they have the same basic rule BUT if you are in possession of a valid tax clearance certificate you can opt out.

As Marcus says, they'll actually issue a fresh PPS to your mother for all this and you can do the returns on ROS from abroad using that PPS, she won't have to be bothered by all this nonsense in the end. Registering for ROS will be the best thing you ever do as a non-resident LL...believe me I wasted enough time trying to correct their mistakes when using the paper forms.

Marcusm

murphaph wrote: »

Something Revenue could never satisfactorily answer to me was this:
If the agent is supposed to actually do your return, they can't just file a return for your rental income. They have to report all your taxable income in the state and indeed outside the state if you are to get all your tax credits (in some cases). It's beyond ridiculous to open a person up to have to hand all their financial details to an agent just because of a single rental income stream.

In the UK they have the same basic rule BUT if you are in possession of a valid tax clearance certificate you can opt out.

As Marcus says, they'll actually issue a fresh PPS to your mother for all this and you can do the returns on ROS from abroad using that PPS, she won't have to be bothered by all this nonsense in the end. Registering for ROS will be the best thing you ever do as a non-resident LL...believe me I wasted enough time trying to correct their mistakes when using the paper forms.

You seem to have spoken with the wrong person in Revenue. The agent has to include only the income which they receive. They have no other obligation. IN such circumstances, it might be conceivable, should they use professional agents, to have a number of properties with individual sources of income and separate returns.

murphaph

That's interesting. How does it work on practice if I have both rental income and earned income originating in Ireland?

I mean I pay tax on my total earnings so how is it all reconciled when different people are sending in returns but ultimately there's only one set of tax credits and thresholds against which tax due is calculated?

Marcusm

murphaph wrote: »

That's interesting. How does it work on practice if I have both rental income and earned income originating in Ireland?

I mean I pay tax on my total earnings so how is it all reconciled when different people are sending in returns but ultimately there's only one set of tax credits and thresholds against which tax due is calculated?

There would not generally be any credits etc allocated to the agent's tax return (although this can be done where it's the only source and only return). You would also include the income in your income tax return and set the income tax paid by the agent as income tax suffered by deduction from income received.

If you are truly non resident (?Germany), the issue of paying tax on earned income should not arise unless it's an Irish office (eg directorship), an employment exercised in Ireland or a trade carried on through an Irish establishment but I think we have communicated on that previously.

murphaph

So the agent's return would have to be done and dusted and then the actual chargeable person puts in their return. Where on the Form 11 does the chargeable person enter the tax paid by the agent? There is a section for a non-resident landlord to enter (one) amount of tax withheld by a single tenant. ROS also only has a single box for this, which assumes that all non-resident landlords only have a single tenant! (a stupid assumption it's fair to say). What I don't find on the Form 11 is a box to enter tax deducted by Revenue in another (agent's) return. Could you say which box that would be? There's only one box I can see that looks like it might work: "INCOME FROM SOURCES NOT SHOWN ELSEWHERE", but that can't be correct as the rental income is shown elsewhere on the Form 11.

Also, according to a Revenue circular, the agent's return SHOULD be submitted as if it was being submitted by the LL himself, including all claims for reliefs due. This exposes the LL to what I was alluding to above: his Irish based agent (who might just be a letting agent) gets to see all the reliefs the LL claims for and also his foreign income (I enter my German salary and rental income as I am entitled to a portion of my tax credits as an EU citizen residing in another EU state-the apportionment is based on (Irish income / worldwide income) * reliefs available. The circular (which is what Revenue staff use to decide how to proceed) does not make any mention of the agent only filing a simple "rent only" return. It wouldn't surprise me if what you say is allowed, BUT Revenue don't even tell their own staff if it actually is:

Landlord:
The landlord is assessable in the name of the Irish agent (section 1034
TCA 1997). The agent should be set up under a new PPS number.

While the assessment is in the name of the Irish agent, the tax to be
charged is the amount which would be charged if the non-resident
landlord was assessed in his or her own right. Accordingly, as well as
assessing only the profit rent, relief should be given for any personal
tax credits to which the non-resident landlord is entitled. As above,
Tax Instructions 45.1.1 and 45.1.3 refer.

The Revenue staff are clearly being instructed by the higher ups that the agent should do the return as if they were the LL himself, which means needinga ccess to information the LL probably doesn't want a third party to have, especially not an estate agent just handling a letting or two for them.

As I say, I've asked them before can I have the agent deduct the tax @20% and then issue me with something like an R185 (this is what the tenant would issue the LL with and in fact I have one property let under the RAS scheme and the local authority deducts 20% and forwards to Revenue, issuing me an R185 instead) and they say no (it even says that in bold in that circular) and they have said "no. The agent must complete the return as if he were the LL."

What you say sounds like it should be allowed, but the Form 11 (nor the Revenue staff) doesn't seem to allow it in practice. There's also the issue of PRSI. Some people are not liable for PRSI at all, so would the agent pay PRSI on behalf of the LL and then the exempt LL has to claim it back from The DSP? It's clearly a total bloody mess.

Marcusm

murphaph wrote: »

So the agent's return would have to be done and dusted and then the actual chargeable person puts in their return. Where on the Form 11 does the chargeable person enter the tax paid by the agent? There is a section for a non-resident landlord to enter (one) amount of tax withheld by a single tenant. ROS also only has a single box for this, which assumes that all non-resident landlords only have a single tenant! (a stupid assumption it's fair to say). What I don't find on the Form 11 is a box to enter tax deducted by Revenue in another (agent's) return. Could you say which box that would be? There's only one box I can see that looks like it might work: "INCOME FROM SOURCES NOT SHOWN ELSEWHERE", but that can't be correct as the rental income is shown elsewhere on the Form 11.

Also, according to a Revenue circular, the agent's return SHOULD be submitted as if it was being submitted by the LL himself, including all claims for reliefs due. This exposes the LL to what I was alluding to above: his Irish based agent (who might just be a letting agent) gets to see all the reliefs the LL claims for and also his foreign income (I enter my German salary and rental income as I am entitled to a portion of my tax credits as an EU citizen residing in another EU state-the apportionment is based on (Irish income / worldwide income) * reliefs available. The circular (which is what Revenue staff use to decide how to proceed) does not make any mention of the agent only filing a simple "rent only" return. It wouldn't surprise me if what you say is allowed, BUT Revenue don't even tell their own staff if it actually is:



The Revenue staff are clearly being instructed by the higher ups that the agent should do the return as if they were the LL himself, which means needinga ccess to information the LL probably doesn't want a third party to have, especially not an estate agent just handling a letting or two for them.

As I say, I've asked them before can I have the agent deduct the tax @20% and then issue me with something like an R185 (this is what the tenant would issue the LL with and in fact I have one property let under the RAS scheme and the local authority deducts 20% and forwards to Revenue, issuing me an R185 instead) and they say no (it even says that in bold in that circular) and they have said "no. The agent must complete the return as if he were the LL."

What you say sounds like it should be allowed, but the Form 11 (nor the Revenue staff) doesn't seem to allow it in practice. There's also the issue of PRSI. Some people are not liable for PRSI at all, so would the agent pay PRSI on behalf of the LL and then the exempt LL has to claim it back from The DSP? It's clearly a total bloody mess.

Neither the form nor especially Revenue instructions will take account of all possible permutations. When you say the return must be "done and dusted", it must be calculated but that would be the case anyway to ensure the preliminary tax is correct. Youa re absolutely right that Revenue would suggest that the agent should take account of additional reliefs but this is only to short circuit matters for themselves such that an agent doesn't simply file a return failing to take account of tax credits (or in the past personal allowances and reliefs). I suspect that you are one of a handful of people who file returns wheret here is a collection agent for the rent and where there are other sources of taxable income. While it might arise for people in partnerhips (I know of some non residents re farms and retail businesses in this position), most non residents will not have Irish income which is not otherwise excepted under relevant double taxation agreements (interest, dividends etc).

IN relation to the tax "suffered" by the agent, I would suggest, 934(h) being tax paid directly to the Collector General although this would require a note as it would not tie up with your preliminary atx amount. It further hows that the return does not cater for all circumstances as it likewise doesn't cover distributions from Irish trusts or other circumstances other than encashment tax) where someone else is responsible for paying your tax.

It sounds like you are happy filing a single return and I would not suggest anything different.

murphaph

Yeah I just wish I could file according to the rules without it being a nightmare.

Even reducing it to a simple scenario which is very common:
Person works in another EU state and rents out their former home in Ireland...

That person also cannot use the standard form or ROS to file their return if they've used an agent who just filed their rental income. That is simply crazy.

You mentioned adding a note to the return. I have bitter experience of Revenue simply ignoring such notes and blindly entering the data from the Form 11 into their system and always including an error. I never had a single paper return processed without error. There was always to and fro to clear up their data entry mistakes. At least with ROS I get assessed correctly every time. I just wish it was officially sanctioned. I have to have a valid tax clearance cert at all times so I should be allowed to officially opt out of the agent thing as is allowed in the UK.

Marcusm

murphaph wrote: »

Yeah I just wish I could file according to the rules without it being a nightmare.

Even reducing it to a simple scenario which is very common:
Person works in another EU state and rents out their former home in Ireland...

That person also cannot use the standard form or ROS to file their return if they've used an agent who just filed their rental income. That is simply crazy.

You mentioned adding a note to the return. I have bitter experience of Revenue simply ignoring such notes and blindly entering the data from the Form 11 into their system and always including an error. I never had a single paper return processed without error. There was always to and fro to clear up their data entry mistakes. At least with ROS I get assessed correctly every time. I just wish it was officially sanctioned. I have to have a valid tax clearance cert at all times so I should be allowed to officially opt out of the agent thing as is allowed in the UK.

The UK Non resident Landlord's Scheme permits the rent to be paid gross to a non resident landlord who is compliant and has a certificate to this effect. I agree that Ireland could introduce a similar scheme. Alternatively, You could just let the tenant pay you directly and withhold the tax!

murphaph

Yeah, unfortunately it's not even that easy as I have property I own outright and also property I own jointly, so the tenants in those jointly owned units (they are light industrial) would have to (theoretically) withhold 10%...I honestly don't know how that would work in practice...but I suspect not very well. Even if I could get all my tenants to withhold tax (and most tenants don't want to have anything to do with this) the ROS wouldn't be an option as it rigidly follows the paper based version of the Form 11 and only has one box for the tenant's PPS/Tax registration number....while the paper form (that they don't really want people using) is obviously physically limited in how many boxes it can include. there's no reason ROS (their preferred option for filing) couldn't allow you to enter multiple tenants' PPS numbers against tax deducted, but it doesn't, so you're back to paper filing and hoping against hope that they both read your explanatory note and enter the data correctly. So I'm forced back to a single return done in my own name. At least I know for sure this way that I am paying all the tax I'm liable for.

lcwill

I am in your position - living in another EU country and renting out an apartment in Dublin.

I have a letting agent who manages the property and collects rent.

The rent is transferred to my Irish bank account net of his fees and other costs (I.e fixing something in the apartment).

I have not appointed an agent but I do pay an accountant to prepare and file my tax return (I am also registered on ROS) paying the 20% on taxable rental income after deducting expenses and allowances. Costs me E180 incl. VAT every year but its well worth it (and its deductible).

I also thought I would have to nominate an agent or get the tenant to pay the 20% tax direct but that is all a huge hassle for everyone involved. The accountant, letting agent and various online forums all confirmed that the Revenue don't really care at the end of the day as long as they get the money they are owed and this is my experience so far.

The Revenue know I live overseas, they know I get rental income in Ireland and they know I dont have an agent but get the rent and pay the tax myself and so far they havent raised any problems.

brybutler

Thanks for all the answers.

This is the reply I finally got from Revenue:

As a non resident landlord with a collection agent, you should have been allocated a collection agent PPS number, which is separate to your PPS no and your mother’s PPS No.

The return should be filed under this number and filed under <your mother’s name> collection agent for <Landlord name>.

Eldarion

brybutler wrote: »

Thanks for all the answers.

This is the reply I finally got from Revenue:

As a non resident landlord with a collection agent, you should have been allocated a collection agent PPS number, which is separate to your PPS no and your mother’s PPS No.

The return should be filed under this number and filed under <your mother’s name> collection agent for <Landlord name>.

Thanks for this, I've seen this question quite a few times in different places, it's good to know the official line finally.

pokaface

Just spent some time looking into the collection agent thing and got some clarifications from revenue which definetely seems to be the easiest option if there is a fairly internet savvy (can setup a ROS account, no problem with internet banking) contact based in Ireland that can help. I hope these steps help somebody else the head scratching I went through

Steps for an Irish based PAYE taxpayer to get setup as a collection agent for a non-resident landlord:

1. Potential Collection Agent fills in and submits this form: https://www.revenue.ie/en/property/documents/income-tax-reg-form-for-collection-agents.pdf
2. Collection agent receives correspondence confirming they are a collection agent and a second tax number (different from their own PPS number) registered in the landlords name for which they are setup as the collection agent.
3. Landlord advises the tenant to pay rent to the collection agent going forward.
4. At end of year the collection agent files the tax return based on the rental profit received on behalf of the landlord and is responsible for paying this income. Once the collection agent tax number is setup, they can register for ROS at www.ROS.ie. Once registered, they will be able to file they tax return via Form11 online.
5. The collection agent transfers rental income to the landlord at a frequency they both agree to.