Professional Services Withholding Tax
A withholding tax, at the rate of 20 per cent, is deductible at source from payments for “professional services” made to individuals and companies by “accountable persons” (Government Departments, local authorities, health boards, State bodies, etc.). The tax applies generally to fees and similar payments made by listed accountable persons but does not apply to payments already covered by PAYE or the construction industry tax deduction scheme. The tax also applies to payments made by health insurers under contracts of insurance to cover fees for services provided by medical practitioners in certain circumstances. The tax is charged on payments net of value-added tax.
Who is liable?
Any person (including a company) receiving a payment from an accountable person in respect of professional services is liable for the tax. A wide range of professional services is included. Non-residents come within the ambit of the scheme but they are entitled to a full refund if the income is not chargeable to Irish tax.
Offsets & Refunds
Notwithstanding the deduction of tax at the standard rate, any fees represented by the payments have to be taken into account in calculating the profits or gains of the recipient for tax purposes.
The tax deducted will, however, be available for set-off against the tax chargeable on those profits or gains and any excess of amounts deducted over the determined tax will be refunded to the taxpayer. Provision is included for interim refunds of the withholding tax in certain circumstances.
Form F35 – is the annual return made by an accountable person declaring their
PSWT liability for the tax year. It is accompanied by a schedule giving details of the
total relevant payments made to, and the total PSWT deducted from, each
specified person in the tax year.
Remeber that the annual F35 return which should be made by accountable persons declaring their Professional Service Withholding Tax (PSWT) liability for the 2011 year, is due by 15 February 2012.