Rental income, non-residence, & remittance

[DB74]

If a non-resident works abroad, owns a property in Ireland and is non-resident, my understanding is that they pay tax on the rental profits (if any) at the standard rate and also they are not liable for PRSI.

However if the rent doesn't cover the mortgage, is the shortfall on the mortgage therefore taxable under the remittance basis.

 

[Breninio]

If the individual is resident & non domciled the remittance basis applies. Alternatively if he is resident but non-ordinarily resident for a year the remittance basis will apply. I dont think either situation applies here so neither does the remittance basis.

 

[DBRAN]

Hi DB74

It does not matter whether you are resident in Ireland or not. If you are in receipt of profits on rental income on property which is situated in the state you are liable to Irish income tax in full on that rental income (as with all Irish Sourced income) not just the standard rate. Nor does the remittance basis apply. You may also have a liability to foreign tax on this income and depending on whether there is a double tax agreement in place you may get a credit for the Irish tax paid.

I am not sure about the PRSI aspect of your question but I would suspect that you would indeed also be liable to PRSI (see tax Bulitin 42 on Revenue.ie).

Also if the tenant is paying rent directly to the non resident landlord they must deduct tax at the standard rate on the gross rent paid and pay it over to the revenue using form R185. In this regard paying into a bank account controlled by a non resident landlord will triger the requirement to deduct the tax at source. The landlord is entitled to a credit for this tax deducted.

If the rental income is being dealt with by an agent then the agent must register as a collecting agent for a non resident landlord with revenue.The agent will becomes a chargable person for the tax on those rental profits and is responsible for filing a tax return on this income. The agent is not entitled to deduct tax at source using form R185, but may retain some of the rental income to pay the tax and costs involved.

A collecting agent may be a third party but could also be a brother, sister etc.

Hope this helps

dbran

 

[DB74]

I meant if the person is non-resident & non-domicilied where the remittance basis applies AFAIK.

I'm pretty sure that there is no PRSI payable in this case - according to this link, non-residents with unearned income are exempt from paying Class S PRSI

http://www.welfare.ie/EN/Topics/PRSI/Pages/selfemployed.aspx

I am more concerned with a situation whereby if, say the rental property lies idle for a couple of months between tenancies and the non-resident has to send money over to an Irish bank to pay the mortgage due to the absence of rental income, then the money sent to Ireland to pay the mortgage is now taxable under the remittance basis.

 

[DBRAN]

If the property is situated in Ireland it is never on a remittance basis for the purposes of irish income tax

Check out [broken link removed]

and par 2.6 therein

 

[Breninio]

DRAN, I think you are missing DB74's question. It is not whether any rental profit on an Irish property is subject to Irish tax (which is a given). It is whether remittances of income into Ireland by a non resident ("NR") and non domiciled individual ("ND") who is ordinarily resident ("OR") in Ireland to pay the mortgage give rise to an Irish income tax liability. This is a good question. My initial reaction is no and I have only ever seen an Irish resident/ND individual or an Irish resident but not OR individual subjected to tax on the remittance basis. But thinking about it now I am wondering is there a legislative basis to say that it doesnt't apply where the indididual is NR, OR and ND as in DB74's case. I know there is legislation to say that a NR but OR individual is subect to tax as if resident with the execption of employment income/trade income where all the duties are performed abroad and other foreign income up to a limit. Also under Double Taxation Treaties most non-Irish income sources will only be taxable in the country of residence. This will cover most cases so that remittance basis wont apply in Ireland. But say there was an NR/OR/ND individual, resident in a non treaty country with non earned income over the relevant limit who sends the money to Ireland. Would the remittance basis apply? Hmmm, interesting (or maybe not!). Don't have my legislation with me right now but must have a look at it.