Mark Woodhouse, Senior Manager, International Tax, Forvis Mazars: As detailed by the then Minister for Finance, Mr Paschal Donohoe TD, in his Budget speech on 7 October 2025, a joint Department of Finance and Revenue public consultation has been launched to look at the modernisation and expansion of withholding taxes. This will look at the modernisation of PSWT and RCT, the expansion of a withholding tax to the platform economy and the introduction of Personalised Deduction Rates (PDR) in a new withholding tax regime for self-employed workers.

The aim of the updates is twofold: to reduce compliance costs and provide efficiencies for businesses, and to enable seamless tax collection by Revenue.

When it comes to RCT and PSWT, most businesses find the compliance requirements associated with these to be manual and time-consuming, and if dealing with both systems, must engage with two different withholding and reporting systems. eWHT proposes a move towards real-time taxation, “right tax at the right time” for businesses subject to withholding, including businesses providing services via an online platform. Revenue will engage with software providers to develop a real-time data exchange process between Revenue’s systems and taxpayers’ systems, ensuring that tax withheld will be automatically credited against preliminary tax liabilities of the taxpayer. This information will also be prepopulated in tax returns.

A new lower flat rate of withholding will apply to corporate and non-corporate entities (non-individuals). A Personalised Deduction Rate (PDR) will be calculated by Revenue for self-employed individuals. The PDR will be applied to each payment and will ensure that the amounts withheld on each payment are more reflective of the actual tax liability due on that payment. The aim of introducing the PDR is to improve cash flow management and to give self-employed individuals a simplified way to meet their preliminary tax obligations, rather than a large payment being due on filing the prior year income tax return. The deadline for submissions is 30 January.

Deirdre Barnicle, Partner, McCann FitzGerald: The proposed changes in relation to eWHT aim to simplify the tax obligations of self-employed persons. Normally, self-employed persons must save throughout the year so that, when they estimate their preliminary tax obligations at year end, they are in a position to pay the liability due. The current system imposes a significant burden on self-employed persons; the process is time-consuming, creates uncertainty and can cause cash flow problems where the estimated liability has been incorrectly calculated.

Under the proposed system, new technologies will allow data to flow between Revenue, Specified Persons (i.e. providers of services in construction, forestry, and meat processing, currently subject to RCT; providers of professional services to accountable persons, currently subject to PSWT; and providers of services via an online platform), and Designated Withholders (i.e. current principal contractors for RCT; accountable persons for PSWT; and platform operators). Revenue will calculate a Personalised Deduction Rate (PDR) for self-employed persons, which will be applied each time a payment is made to those persons. Self-employed individuals can provide data to Revenue on a voluntary basis to improve the accuracy of the PDR calculation; again, this exchange of data will take place by way of the new technologies employed by Revenue. The tax withheld throughout the year will then be credited against the preliminary tax liabilities of the taxpayer, and the income tax returns of self-employed individuals will be pre-populated based on all of the data provided to Revenue. In addition, it is proposed that a lower flat rate of withholding will apply to corporate and non-corporate entities.

The proposed changes would emulate the ease experienced by PAYE workers for self-employed persons. In the same way that Revenue’s systems are linked to those of employers, Revenue would now be linked with the business systems of RCT principal contractors and PSWT accountable persons. The PDR, which is similar to the Revenue Payroll Notification in the PAYE system, will ensure that a more accurate tax liability is calculated on each payment; self-employed persons should find the end of the tax year less stressful and burdensome as a result, because there is less likelihood for over or underpayments of preliminary tax. The automatic prepayment system should also reduce the administrative burden for self-employed persons, by making it more certain that the correct amount of tax is paid at the right time.

Paraic Burke, Head of Tax, PwC Ireland: It is positive that there is a recognition that the current Professional Services Withholding Tax (PSWT) and Relevant Contracts Tax (RCT) withholding tax systems are in need of change and modernisation. However, any modernisation needs to address significant current issues with the schemes. Unless designed with a proper consideration of business operations, further reform may risk imposing material cash-flow strain, constraining supply, and raising compliance costs. This could in effect put viable companies out of business due to cash flow impacts, and add unmanageable compliance burdens which are likely to deter participation in the Irish market.

Strong caution is warranted against expanding scope of the taxes as part of this modernisation, as this would risk bringing many more taxpayers into scope of withholding, which is not warranted in our backdrop of strong tax compliance nationally. Assumptions outlined in the consultation that technology will deliver seamless compliance are potentially unrealistic, particularly for smaller businesses, and for businesses who use bespoke or non-Irish financial systems. Crucially, the current RCT penalty regime needs review and modernisation, as it is unworkable and unjustly punitive, exacerbating risk aversion and discouraging voluntary self-correction.

RCT and PSWT currently produce poor cash-flow outcomes and in our experience are deterring foreign specialist suppliers from Irish opportunities, particularly in the renewables and construction sectors. Inconsistent interpretations by Revenue have also led to significant confusion, impacting activity in essential sectors such as housing delivery.

Modernisation should prioritise de minimis thresholds, carve-outs and 0% rates including for entities not ultimately taxable in Ireland, as well as rapid in-year refund mechanisms to neutralise cash impact. A phased implementation to allow taxpayers to address changes to business systems and processes will be key, with manual filing options retained as well as automation options introduced. It is imperative that Revenue and the Department of Finance maintain strong and ongoing engagement with businesses to ensure there are no unforeseen negative impacts of the eWHT reforms.

With respect to the third element of the e-WHT consultation, the key focus appears to be a proposal for the introduction of a brand new WHT obligation which would arise on payments to self-employed individuals providing services via a digital platform.

The obligation to operationalise and collect the WHT would fall on the platform operators. Whilst it is appreciated that the policy intent of the proposal might be one of simplification for self-employed workers, in reality, this proposal raises a number of practical issues and would appear to introduce added complexity and an increased compliance burden for in-scope businesses. The increase in obligations for platform companies, coupled with the associated tax risk with this proposal, could mean that platform companies see the risks and obligations of operating in the Irish market as outweighing the benefits.

This article appeared in the January 2026 edition of the Irish Tax Monitor.