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Strategy and policy
Reforms and Investments

Exploring e-Withholding Taxes to future proof tax compliance in Ireland

Supporting reforms to ensure efficient and effective revenue administration and public financial management

Funding Programme
Year
  • 2024

Exploring e-Withholding Taxes to future proof tax compliance in Ireland

This project, supported by the European Commission, is aligned to the Irish Revenue’s strategic objective to integrate taxation into daily life and business processes and expand real-time engagement and reporting by taxpayers.  This project is expected to enhance tax compliance and modernise the tax administration system in Ireland, with the focus on platform and gig (workers engaged in freelance or side-hustle work) economies. This will be done through design of an e-withholding tax on the platform economy, while modernising current withholding taxes and reviewing the Third-Party Reporting Regime. The associated outcomes should over the longer-term contribute towards increased revenue collection, enhanced tax compliance, improved general business environment and decreased administrative burden for taxpayers.

Context

The project will be implemented in the context of the Package for Fair and Simple Taxation adopted by the European Commission on 15 July 2020, which sets out the path towards fairer, simpler, and modernised tax systems. Furthermore, the project is strongly linked to two separate initiatives included in the Package, the Action Plan for Fair and Simple Taxation Supporting the Recovery Strategy (2020 – 2024), and the Communication on Tax Good Governance in the EU and beyond. Revenue has led the way in the EU with the introduction of real-time payroll reporting (PAYE) in 2019 and now wishes to expand this principle across different areas of revenue administration, to non-payroll for both PAYE and self-employed persons, starting with the platform and gig economies.

Support delivered

The project commenced in July 2024 and is expected to be completed by April 2026 and will assist Revenue in the examination of:

  • existing withholding taxes, Professional Services Withholding Tax (PSWT) and Relevant Contracts Tax (RCT)
  • the expansion of withholding taxes to the platform economy
  • Revenue’s third-party reporting regime.

In addition support will be provided to the development and consideration of proposals for modernisation and expansion to include change management, communications, capacity building and training support.

The project is funded by the European Union via the Technical Support Instrument and implemented by EY in cooperation with SG Reform.

Expected results

Provided that recommendations will be followed up at institutional level, the supports under this project are expected to help Ireland establish the legal, technical, operational, and organisational conditions for Revenue to move further towards Tax Administration 3.0 and real time taxation of self-employed workers while fully utilising all relevant sources of third-party reporting. Over the longer-term, this is expected to contribute towards increased revenue collection, enhanced tax compliance, improved general business environment and decreased administrative burden for the taxpayers and Revenue stakeholders.

More about the project

You can read the documents related to the project here: