Non resident landlord - PRSI charge on income tax bill?

River

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153
Hi,
I'm a non resident landlord with an Irish property. I'm completing my income tax bill for 2014. Rental income is the only irish income I need to declare on the tax return.

For 2014, there is a PRSI charge appearing for the first time. I am being charged a minimum PRSI fee of 500 on top of the Income tax due.

Has anyone else experienced this and do you know if it is correct?

Thanks,
R
 

Celt07

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50
I've seen a similar situation recently whereby a non-resident landlord was charged €500 in PRSI for 2014. No PRSI had applied in previous years.

Based on the below link, it appears no PRSI should apply but can anybody confirm.


http://www.welfare.ie/en/Pages/Self-Employed-Contributions.aspx

3. Who does not pay Class S PRSI?
The following people do not pay PRSI at Class S:
  • non residents with unearned income.
 

T McGibney

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PRSI is not chargeable on non-residents. If you file a correct return via ROS you won't be charged PRSI. Otherwise, you'll need to get on to Revenue to have this resolved.
 

murphaph1

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I know this is an old thread but just in case anyone is googling...

€500 is actually nothing when you consider it buys you 1/40 of the state pension contributory (assuming you will meet the other requirements).

If a non resident landlord is not socially insured in another EU country or a country Ireland has a bilateral social security agreement with, then it is allowed to pay PRSI voluntarily on this income. Otherwise it is not allowed and the payments will likely go to waste when your social insurance record in the other country lands in the DSP and they realise you weren't entitled to make those payments (or at least be credited for them).

1/40th of the pension in today's money is 310 p.a. It's clear then that you get your contributions back in just over 18 months after hitting Irish retirement age!! After that it's free money. If you live ten years after retirement age your 500 is now worth 3100.

That's quite a good deal. I intend paying this on my rental income once I take early retirement here in Germany.
 

The Horseman

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I know this is an old thread but just in case anyone is googling...

€500 is actually nothing when you consider it buys you 1/40 of the state pension contributory (assuming you will meet the other requirements).

If a non resident landlord is not socially insured in another EU country or a country Ireland has a bilateral social security agreement with, then it is allowed to pay PRSI voluntarily on this income. Otherwise it is not allowed and the payments will likely go to waste when your social insurance record in the other country lands in the DSP and they realise you weren't entitled to make those payments (or at least be credited for them).

1/40th of the pension in today's money is 310 p.a. It's clear then that you get your contributions back in just over 18 months after hitting Irish retirement age!! After that it's free money. If you live ten years after retirement age your 500 is now worth 3100.

That's quite a good deal. I intend paying this on my rental income once I take early retirement here in Germany.
Unearned income does not qualify your PRSI for a State Pension. It is only earned income that gives you a State Pension and the other PRSI related benefits.
 

jpd

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Unearned income does not qualify your PRSI for a State Pension. It is only earned income that gives you a State Pension and the other PRSI related benefits.
Yes, it does if you are resident. Not sure about non-residents
 

murphaph1

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I'd like to see the legislation that says class S PRSI paid on unearned income results in different entitlements than class S PRSI paid on earned income.

I know that class S does not entitle one to jobseekers etc. but it definitely does qualify one for the state pension contributory and the widow's pension, possibly other things.
 

The Horseman

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I'd like to see the legislation that says class S PRSI paid on unearned income results in different entitlements than class S PRSI paid on earned income.

I know that class S does not entitle one to jobseekers etc. but it definitely does qualify one for the state pension contributory and the widow's pension, possibly other things.
Google class k prsi contributions.
 

murphaph1

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On the citizens information page it says:
Class K applies to public office holders with an income of over €5,200 a year. Public office holders with weekly income of €100 or less are recorded under Class M. Class K also applies to people who pay PRSI on unearned income. There are no social insurance payments for people insured under Class K.

But also:
Class S applies to self-employed people including certain company directors, people in business on their own account and people with income from investments and rents. It covers a limited number of social insurance payments.

So clear as mud but it does explicitly mention that class S applies to rental income.
 

RedOnion

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So clear as mud but it does explicitly mention that class S applies to rental income.
It's more complicated than this.
If you have other income, then the unearned income is subject to Class K PRSI, which doesn't give benefits.
But if rental income is your only income in the year (i.e. you're self employed as a landlord), it can be subject to Class S which does.
 

The Horseman

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So if you receive a private pension you have income other than unearned income from rent. So you would not receive a state pension based on prsi paid on unearned income.

If you don't agree with this then proceed as you see fit.
 

NoRegretsCoyote

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That's quite a good deal. I intend paying this on my rental income once I take early retirement here in Germany.
Are you allowed? Form SW74 says that Class S PRSI cannot be paid by

people classified by Revenue as non residents who hold solely unearned income
This would appear to be your case as all your other income is/will be in Germany.

Also further up the thread.
 

murphaph1

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Indeed it seems it's not allowed at class S however voluntary PRSI contributions at class A are allowed in my case (as I have the prerequisite 520 reckonable contributions already) once I cease socially insured employment here in Germany. I clarified that in writing with the DSP recently, though it's 6.6% of reckonable income instead of 4% of just my Irish rental income.

I may look at granting my missus and kids a limited interest in my property so they are entitled to collect the rents instead of me. Have to investigate any potential pitfalls in doing that.
 

anntionette

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Sorry to comment on a quite thread but a very interesting read - am i right in thinking from reading this thread that a full time resident landlord (where there full income comes from property) are considered self employed by the revenue? or anyone - banks/social welfare?
 

NoRegretsCoyote

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Sorry to comment on a quite thread but a very interesting read - am i right in thinking from reading this thread that a full time resident landlord (where there full income comes from property) are considered self employed by the revenue?
Yes. Same as if all your income comes from dividends on investments.

You pay Class S PRSI and accrue contributory pension entitlements.

As public policy I think this is daft, but them's the rules.
 

anntionette

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I’m very surprised. So someone returning their form 11 every year where all of their income is from property (However small). can claim the state pension. Having never Ever worked in the state. Wow.
 
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anntionette

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Actually from the gov.ie website it seems if you pay PRSi S class you are also entitled to job seekers benefit.??! Which is not means tested. how is this possible?
 
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