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Taxation of Non-Resident Corporate Landlords - International Tax Review December 2022


A common trait among taxation systems across the globe is that, invariably, income derived from land or buildings will be taxed in the country where that land or those buildings are located. Due to the marked increase in the number of foreign landlords in Ireland over the last 20 years or so, rent will often be paid to a foreign corporate landlord, which will then find itself within the scope of the Irish tax system even if it has no other business in or connection to Ireland.

As the dust settles on corporation tax pay and file deadlines for companies with a year-end in 2021, thoughts will quickly turn to the preparation of 2022’s tax return. Due to changes introduced in Finance Act 2021, many non-resident corporate landlords will now be within the charge to Irish corporation tax for the first time.

Pursuant to s18 of Finance Act 2021, which introduced s25(2A) into the Taxes Consolidation Act 1997 (TCA 1997), non-resident corporate landlords (NRCLs) are now no longer subject to income tax and instead are subject to corporation tax at the rate of 25% on rental profits arising in Ireland on or after 1 January 2022.

The new s25(2A) TCA 1997 reads as follows:

"(a) Where a company not resident in the State is chargeable to tax under Case V of Schedule D in respect of any profits or gains, that company shall be chargeable to corporation tax on those profits or gains.

(b) Where a company not resident in the State disposes of an asset in respect of which the company was chargeable to tax under Case V of Schedule D on any profits or gains therefrom, or would have been but for an insufficiency of such profits or gains, the company shall, subject to section 649, not be chargeable to capital gains tax in respect of gains accruing to it on the disposal so that it is chargeable in respect of them to corporation tax.

(c) This subsection shall apply to profits and gains accruing on or after 1 January 2022."

This represents a significant shift from the previous approach to the taxation of NRCLs that do not trade via a branch or agency in Ireland.

Taxation of NRCLs Before 1 January 2022

NRCLs generating rental income from Irish property and that did not otherwise carry on a trade in the State through a branch or agency were previously subject to income tax at the standard rate of 20% on such rent receivable. This created something of a disparity between NRCLs and Irish-resident corporate landlords, who were subject to the higher corporation tax rate of 25%.

Due to the obvious difficulties that Revenue may have collecting tax from an entity with no presence in Ireland, special rules applied to the collection and payment of an NRCL’s tax liability. The income tax charge should have been collected in one of two ways:

  • The tenant was obliged to withhold income tax at the standard rate (20%) from rental payments and return this amount to Revenue. The tenant was then obliged to provide the NRCL with a Form R185, which evidenced the tax deducted and allowed the NRCL to claim an equivalent credit in its own income tax return for the year.
  • Alternatively, the NRCL could have appointed an Irish collection agent (typically, an estate agent or management company) to collect the rent, without any withholding by the tenant. The NRCL was assessable and chargeable to income tax in the name of the collection agent, which would register under a separate tax reference number. Tax returns would be filed and tax paid on the NRCL’s behalf. Revenue guidance provided that the collection agent “may” have retained a sufficient portion of the rents to satisfy the tax payable. In practice, rent collection agents would typically have looked to withhold a portion of the rent in any event or would have sought an indemnity to cover them for any potential liability for unpaid taxes.

Taxation of NRCLs from 1 January 2022 onwards

As discussed above, NRCLs are no longer subject to income tax on their rental profits and instead are subject to corporation tax at the rate of 25% on rental profits arising in Ireland on or after 1 January 2022. The new regime will operate as follows:

  • Under the new collection system, tenants are still obliged to withhold 20% of the rent payable in the absence of a collection agent being appointed by the NRCL. The NRCL can then claim a credit for the tax withheld, in line with the pre-1 January 2022 system. At a high level, Finance Bill 2022 proposes to amend section 1041 TCA 1997. The first part of the amendment to section 1041 TCA 1997 provides that the person making the payments (i.e. the tenant) will also be required to give certain information as required by the Revenue Commissioners concerning the landlord and the rental income in respect of which tax is being withheld.
  • Collection agents can still be appointed by NRCLs. Where a collection agent has been appointed, the rent is paid to the collection agent and there is no withholding obligation on the tenant’s part. The collection agent registers for corporation tax under a separate tax reference number and files the corporation tax return (and arranges payment) on behalf of the NRCL. Again, this is broadly in line with the previous regime. However, the Explanatory Memorandum to Finance Bill 2022 states "[t]he amendment to section 1041 also relieves" collection agents” of the obligation of being chargeable and assessable for the income of a non-resident landlord, if the collection agent deducts withholding tax from rental payments and remits that tax the Revenue Commissioners, and gives the Revenue Commissioners certain information related to the payments”. Based on the Explanatory Memorandum, it appears the intention of the proposed amendment is that a collection agent can “opt out” of being the chargeable and assessable person provided certain conditions are met. However, this does not seem to be the effect of the draft legislation as currently worded and clarity from Revenue may be required in this regard.The proposed amendment contained in the Finance Bill is subject to a ministerial commencement order and may also be subject to some further modification before the Bill is enacted.

Interaction with the New Interest Limitation Rule

The purpose of bringing NRCLs within the charge to the higher, 25%, corporation tax rate is not merely to subject resident and non-resident corporate landlords to the same headline rate of tax but also to provide a mechanism for NRCLs to be subject to new anti-avoidance rules relating to interest deductibility.

Previously, there had effectively been no restriction on an NRCL’s entitlement to deduct interest on borrowings employed in the purchase, improvement or repair of a rental property, subject to the interest meeting arm’s-length principles in certain circumstances.

The new corporation tax regime for NRCLs was implemented in part to ensure that NRCLs would be within the scope of the EU Anti-Tax Avoidance Directive (ATAD)1 interest limitation rule (ILR), which was transposed into Irish law by Finance Act 2021. Although a detailed analysis of the ILR is beyond the scope of this article,2 there are a number of points that NRCLs (and prospective NRCLs) should be aware of as these two intertwined regimes take shape.

The ILR applies to accounting periods beginning on or after 1 January 2022 and limits interest deductibility for a company that is within the charge to Irish corporation tax, including an NRCL, to 30% of EBITDA (earnings before interest, tax, depreciation and amortisation), subject to a number of exceptions. The most notable exceptions from an NRCL’s perspective are the following.

De minimus threshold

Where the net interest expense of a company is less than €3m in an accounting period (or, where the accounting period is less than 12 months, a pro-rated amount), the company will be exempted from the ILR. Therefore, depending on the quantum of the relevant interest expense, it may be worth considering the incorporation of a new entity for each property acquisition so that each entity might be considered independently.

Where the de minimus exemption will not be available and an NRCL is a member of a worldwide group (generally, a group with consolidated accounts), or a member of an Irish loss group under s411 TCA 1997, it may elect to be part of an “interest group”. The benefit of forming an interest group is that other group companies may have no or a minimal interest expense in the period and the 30% EBITDA limit can be assessed on a group basis.

Legacy debt

At a high level, debt the terms of which were agreed before 17 June 2016 is ignored for the purpose of the ILR (i.e. it is fully deductible). There are more detailed rules in relation to interest on principal sums not advanced before this date but for which there was a legal obligation on the lender to provide the said principal on the passing of certain milestones.

Long-term public infrastructure project exclusion

Interest incurred on borrowings to fund the provision, upgrade, operation or maintenance of certain long-term public development projects is exempted from the ILR (see s835AY(1) TCA 1997 under the definition of “large scale asset” for the full list of qualifying developments). Of particular note to NRCLs is the “strategic housing development” (SHD) within the meaning of Chapter 1 of Part 2 of the Planning and Development (Housing) and Residential Tenancies Act 2016 approved by:

  • an Bord Pleanála, under s9 of that Act, or
  • a local authority, under s170 of the Planning and Development Act 2000.

Where planning permission meets the above criteria, this can be a very beneficial exemption for NRCLs to the extent that they are involved in the provision, upgrade, operation or maintenance of SHD projects. The exemption operates by ignoring any income or expenses directly connected with a qualifying long-term infrastructure project (s835AZ TCA 1997).

The SHD planning process lapsed in February 2022 and was replaced by the "large-scale residential developments” (LRD) regime, defined in section 2 of the Planning and Development Act 2000, as amended. For this reason, Finance Bill 2022 has extended the definition of “large scale asset” to include LRDs.

Tax Deductibility of Expenses for NRCLs

General expenses

NRCLs should not assume that all company expenses relating to an Irish property will be deductible under Case V.3 The deductions available from Case V income under s97(2) TCA 1997, and also by way of concession pursuant to Revenue guidance, are limited to the following:

  • rent paid by the NRCL on the property (if any),
  • local authority rates (but not local property tax),
  • property insurance,
  • costs of maintenance and repair,
  • costs of management of the property,
  • accountancy fees to the extent that they are incurred in the preparation of a rent account,
  • qualifying costs between lettings and
  • certain limited pre-letting expenses.

Expenses generally need to be incurred during a period of rental occupation and not before letting in order to be allowable deductions from Case V income. However, advertising costs and legal costs (usually those incurred in preparing leases) are generally allowable pre-letting expenses. Expenses incurred between lettings should also be allowable but only to the extent that the property is available for rental and is not vacant for a protracted period of time, for instance, in the context of refurbishment works.

If a property is vacant for at least 12 months and subsequently rented out as a residential property, expenses during that 12-month period that would otherwise have been allowable if incurred during a period of rental occupation are (up to the end of 2022) also deductible. Such expenses are allowable to a maximum of €5,000, and the allowance is clawed back if the landlord stops leasing the property as a residential property in the subsequent four-year period (s97A TCA 1997). As proposed under Finance Bill 2022, it is understood that from 1 January 2023 such expenses will be allowable against rental income on a property that had been vacant for six months with a cap of €10,000.

Under the new corporation tax regime for NRCLs, there may also now be scope for some “expenses of management” to be deductible under s83 TCA 1997, which may give broader scope for deductibility beyond the limits imposed under s97 TCA 1997.


Certain expenses incurred on a property renovation or refurbishment can constitute repairs and be treated as revenue expenses if not capitalised in the accounts. For such costs to be deductible as expenses (and so deductible in full in the year incurred), they must be incurred on an actual repair or a replacement on a like-for-like basis with the nearest modern equivalent. This is a complex area of tax law that needs to be carefully considered before classifying any renovation or refurbishment cost as a repair.

If, on review, the expenditure is not considered a repair, then renovation and refurbishment costs should be capitalised in the accounts such that the expenditure goes towards the base cost of the property and reduces the chargeable gain on a future disposal (currently charged at 33% under CGT rules). Capital allowances may also be available to the extent that the expenditure incurred relates to qualifying plant and machinery.

Capital allowances

Capital allowances should be available for offset against taxable profits based on the cost of qualifying plant and machinery (including fixtures and fittings) at 12.5% per annum over a minimum eight-year period. This can result in a significant cash-flow saving for the NRCL by reducing tax liabilities over a number of years.

If there is a significant gain on the sale of the property and the proceeds attributable to qualifying plant and machinery exceed their tax-written-down value, a balancing charge may arise. This may be managed in conjunction with a purchaser to agree on the attribution of proceeds and the value of plant and machinery on sale.

In the context of the acquisition of a property, capital allowances based on the value of integrated plant and machinery contained therein should be available based on a just and reasonable apportionment of the purchase price. This can result in significant value for plant and machinery attributable to capital allowances but would need to be validated and verified based on a reconstruction estimate for the building (undertaken by chartered surveyors/estimators), and the value of qualifying plant and machinery contained therein in the context of a bare site valuation.

Accelerated capital allowances (ACAs) on certain energy-efficient plant and machinery may also be available (100% deduction in year 1). However, in our experience, the practicalities of claiming ACAs tend to be somewhat undermined by trying to identify whether, at the time that the expenditure on the provision of a particular item of plant was incurred, it was in fact specified on the detailed list maintained by the Sustainable Energy Authority of Ireland (the “SEAI”), which is a prerequisite to its qualification for ACAs.

Carry-forward of excess capital allowances and losses

As NRCLs had previously been subjected to income tax on rental income earned, an NRCL may have had unused losses or capital allowances available to carry forward to 2022. Sections 308 and 399 TCA 1997, as amended by Finance Act 2021, provide, respectively, that where an NRCL has such unused losses or excess capital allowances at the end of the year of assessment ending on 31 December 2021, those losses or capital allowances may be claimed in the corporation tax return for the first accounting period ending after 1 January 2022.

Finance Act 2021 also addressed a potential issue in relation to a balancing charge or allowance arising after 1 January 2022 but in relation to which capital allowances were granted before 1 January 2022. Any balancing allowance or charge made to or on an NRCL in respect of a capital allowance made to the company in a chargeable period ending on or before 31 December 2021 is adjusted on a value basis (i.e. 20/25ths) such that the value of a balancing charge does not exceed the value of the capital allowance given and the value of any balancing allowance (in respect of the pre-2022 allowances) is given at the 20% tax rate. In other words, in terms of balancing allowances or charges, the NRCL should not benefit or suffer from the changeover from the 20% income tax rate to the 25% corporation tax rate.

New tax incentive to encourage small-scale landlords to undertake retrofitting works

As proposed in Finance Bill 2022, this measure is to provide for a tax deduction of up to €10,000 per property, against Case V rental income, for certain retrofitting expenses incurred by a landlord on rented residential properties, for a maximum of two rental properties. The expenses that qualify for deduction are those in respect of which the landlord has received a home energy grant from the SEAI. As such, the tax deduction is in addition to the SEAI grants. However, the tax deduction is conditional on the landlord having claimed an SEAI grant for the same retrofitting works.

Although this deduction is aimed primarily at small-scale domestic landlords, NRCLs should take note of the potential for further tax savings where the relevant conditions are satisfied.

Practical Considerations for NRCLs

Filing of tax returns

Normal corporation tax payment and filing rules apply to NRCLs for accounting periods commencing on or after 1 January 2022. It is also understood that iXBRL filing requirements will be the same for NRCLs as for any other Irish company. Where accounts are not prepared under Irish GAAP or IFRS, NRCLs should use the taxonomy that has the most overlap with their local GAAP as is feasible and should fully tag the file insofar as is possible using that taxonomy. This may cause difficulty in practice, and further guidance from Revenue may be required as the administration of the regime takes shape.

It should be noted that s25(2A) TCA 1997 applies to “profits and gains accruing on or after 1 January 2022”. This should not be confused with “accounting periods beginning on or after 1 January 2022”. For example, an NRCL with an accounting period beginning on 1 April 2022 cannot choose to pay tax at 20% for the first three months of the year and 25% for the remaining nine months.

For Irish tax purposes, regardless of an NRCL’s accounting year-end, a new accounting period will begin for all NRCLs on 1 January 2022 as they will come within the charge to Irish corporation tax for the first time (assuming that an NRCL does not already operate a branch or agency in Ireland). Those NRCLs that do not operate a 31 December year-end will likely have at least two corporation tax returns to file for 2022.

Preliminary tax

Revenue guidance confirms that where a company has paid preliminary tax in respect of the year of assessment ending 31 December 2022 under income tax, the Collector-General’s Division should be contacted to arrange the transfer of the payment from preliminary income tax to preliminary corporation tax. It is important that NRCLs and their advisers take this positive action, as payments will not automatically be transferred.

Under s959AN(4) TCA 1997, an NRCL coming within the charge to Irish corporation tax for the first time by virtue of s25(2A) TCA 1997 should not have to pay preliminary tax for that first accounting period if its corporation tax liability for that first period does not exceed €200,000 (or a proportionate amount if the accounting period is less than 12 months).

Where the corporation tax liability for the first period is more than €200,000 (or a proportionate amount if the accounting period is less than 12 months), the NRCL should pay preliminary tax on the basis of its being a large company. Large companies pay preliminary tax in two instalments. Where the NRCL pays and files via the Revenue Online Service (ROS), the first instalment is due on the 23rd day of the sixth month of the relevant accounting period and is calculated as follows:

  • 50% of the corporation tax and income tax liability (combined) for the previous accounting period or
  • 45% of the tax liability for the current accounting period.

The second instalment is due on the 23rd day of the eleventh month of the period (when pay and file is via ROS) and must bring the total amount of preliminary tax paid for the period up to either:

  • 100% of the corporation tax and income tax liability (combined) for the previous accounting period or
  • 90% of the tax liability for the current accounting period.

The NRCL must pay 90% of the preliminary tax in one instalment if the accounting period is less than seven months.

Filing third-party returns

A Form 46G must be filed each year in respect of payments in excess of €6,000 (annually) made by Irish companies carrying on a trade to any Irish-resident third parties for services rendered. Although NRCLs do not for all intents and purposes carry on a trade in Ireland, it is not clear from Revenue guidance at this stage whether NRCLs will be required to file a Form 46G (Companies) return. To the extent that it is required, this return should be filed within nine months of the end of an accounting period.

Rent collection agents

Revenue guidance has confirmed that where a collection agent is registered for income tax in respect of tax due by an NRCL, by virtue of s1034 TCA 1997 that agent must now register for corporation tax under the same tax reference number. Collection agents must be proactive in this respect, as the transfer of tax numbers across to corporation tax will not be undertaken by Revenue. This may lead to the unusual scenario whereby a non-incorporated entity is required to register for corporation tax in Ireland, albeit specifically as a collection agent on behalf of the NRCL.


NRCLs must now register for corporation tax with effect from 1 January 2022. As a corollary to this, the income tax registration should be cancelled as of 31 December 2021. Revenue notes that any cancellation should be considered on a case-by-case basis, depending on any other activities that the NRCL may have in Ireland. From a practical perspective, the income tax registration should be cancelled only after the income tax return for 2021 has been filed and the NRCL is satisfied that all correspondence with Revenue in relation to same has concluded.

Capital Gains on Disposal

Before the introduction of s25(2A)(b) TCA 1997, NRCLs that do not trade via a branch or agency in Ireland were subject to CGT payment and filing requirements on disposals of Irish land and buildings. In general, the capital gain on a disposal of Irish land by an NRCL is now subject to corporation tax. As capital gains are re-grossed in calculating the corporation tax liability, the effective rate on such chargeable gains will remain 33%. However, the payment and filing obligations are now rolled into the corporation tax pay and file regime.

This change does not apply to disposals of development land by an NRCL, which remain subject to CGT pay and file requirements (i.e. a Form CG1 will need to be filed and any liability paid in accordance with the CGT regime).

Other Considerations for NRCLs and Irish Real Estate Owners

Away from corporation tax, NRCLs (indeed all real estate owners) should be aware of some other recent developments in the taxation of Irish real estate, particularly in the area of stamp duty.

Stamp duty

To discourage the bulk purchasing of dwelling-houses in Ireland, Finance Act 2020 introduced s31E Stamp Duties Consolidation Act 1999 (SDCA 1999). Where a person (being an individual or a corporate entity) acquires 10 or more dwelling-houses (not including apartments) in a consecutive 12-month period, a 10% stamp duty charge is retrospectively applied to those purchases (whereas the residential rate is usually between 1% and 2%). This 10% charge can arise even where a person acquires shares in a company (which typically incurs 1% stamp duty) such that the person acquires control of a company that derives some value from relevant residential units.

There is a refund mechanism available where houses are leased to a local authority or an approved housing body for the purposes of providing social housing. A clawback of this refund can arise where the lease is terminated within 10 years.

Another notable change in recent times came by virtue of s31C SDCA 1999, which was inserted by Finance Act 2017. This is an anti-avoidance provision to prevent indirect sales of non-residential land being charged to stamp duty at 1% (usually via a share sale).

This anti-avoidance provision applies where:

  • the greater part of the value of the transferring company is derived from Irish non-residential land;
  • the non-residential land is held as trading stock or was acquired/developed with the sole or main object of realising a gain on disposal; and
  • the transfer of shares in the company results in a change in control over the underlying land.

Local property tax

An owner of residential property is generally liable to local property tax (LPT), based on the valuation of individual units. Where property is leased on the open market for more than 20 years, the tenant will typically be liable for the LPT. However, where property is leased to a local authority or an approved housing body, this will generally cause the LPT liability and filing obligations to switch from the local authority/approved housing body to the property owner – something that NRCLs should be aware of. A failure to discharge LPT on time can inadvertently cause significant surcharges to arise under other tax heads (e.g. corporation tax).

Residential zoned land tax

Section 80 of Finance Act 2021 inserted a new Part 22A into TCA 1997. Residential zoned land tax (RZLT) will be an annual 3% tax charge on the market value of certain sites that are zoned as suitable for residential development and that are serviced. Although the tax will not be charged until 2024 at the earliest, it will apply to land that, on or after 1 January 2022, is zoned as being suitable for residential development and it is reasonable to consider may have access to, or be connected to, the infrastructure and facilities necessary for residential development to take place. Existing residential property is exempted from the tax (although such property will be included on the maps prepared by local authorities). Landowners should consider the potential impact of this tax now and the potential mechanisms for its deferral if they wish to mitigate the annual charge in the future.


Obviously, NRCLs will be subject to increased tax with the transition from income tax at 20% to corporation tax at 25% on net rental profits for accounting periods commencing on or after 1 January 2022. However, there may be some scope for additional deductibility of expenses to mitigate some of this increased tax liability. There are a number of uncertainties concerning the application of the new regime, in respect of which additional clarity from Revenue would be welcomed in order to assist collection agents, NRCLs and practitioners in complying with the new regime going forward.

Those provisions contained in Finance Bill 2022 and referenced herein will need to be fully considered upon the publication of Finance Act 2022.

1 Council Directive (EU) 2016/1164 of 12 July 2016 as amended by Council Directive (EU) 2017/952 of 29 May 2017 (collectively known as the Anti-Tax Avoidance Directive, or ATAD).
2 See Emma Arlow, “Interest Limitation Rules: Key Provisions and Areas To Watch”, Irish Tax Review, 35/1 (2022).
3 For a more detailed analysis of the Case V computation, see Paul Dunlea, “Back to Basics: Case V Income – Rules of the Road”, Irish Tax Review, 33/3 (2020).


This article was first published in Irish Tax Review Issue 4, 2022.

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