Revenue Note for Guidance

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Revenue Note for Guidance


Payments in Respect of Professional Services by Certain Persons and Payments to Subcontractors in Certain Industries


Payments in respect of professional services by certain persons


Chapter 1 of Part 18 provides for the deduction at source of tax at the standard rate of income tax from payments for “professional services” made to individuals and companies by Government Departments, local authorities, the Health Service Executive, commercial and non-commercial State bodies, etc. The withholding tax applies generally to fees and similar payments made by accountable persons but not to payments already covered by PAYE (Chapter 4 of Part 42), the subcontractors tax deduction scheme (Chapter 2 of this Part) or to payments by one accountable person to another accountable person in reimbursement of relevant payments. Payments to certain exempt accountable persons and charities are also included.

“professional services” covers a wide range of services including medical services, architectural and engineering services, financial services, legal services and geological services.

Non-residents come within the ambit of the scheme, but they are entitled to receive a full refund if the income, which has suffered the tax, is not chargeable to Irish tax.

Although tax has been withheld at source from professional fees, any fees represented by the payments must be taken into account in calculating the profits or gains of the recipient for tax purposes. The tax deducted, however, is available for set-off against the tax chargeable on those profits or gains and any excess of amounts deducted over the determined tax liability may be refunded to the taxpayer.

Provision is also included for interim refunds in certain cases (including cases of particular hardship).

520 Interpretation (Chapter 1)


This section is concerned with the definitions and construction of certain terms for the purposes of the Chapter.



(1) Some of the key definitions contained in this section are:

appropriate tax” is the amount of tax which must be deducted by an accountable person from a relevant payment. The amount deducted is an amount represented by applying the standard rate of income tax in force at the date of payment to the VAT exclusive amount of the payment.

basis period of assessment” in relation to a specified person (that is, a person in receipt of a payment to which this Chapter applies) means —

  • where that person carries on a trade or profession, the period on the profit or gains of which income tax for that year is finally computed (this will normally be a 12 month period of account ending in the tax year),
  • in any other case, the year of assessment.

Where 2 basis periods overlap, then subject to subsection (3) the period common to both is treated as falling into the second basis period. Where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, the interval is deemed to be part of the second basis period.

The reference to the overlapping of 2 basis periods covers the situation where 2 periods coincide or where one period is included in another. The reference to the period common to both is to be construed on this basis.

electronic means” has the same meaning as in section 917EA(1) which includes electrical, digital, magnetic, optical, electromagnetic, biometric, photonic means of transmission of data and other forms of related technology by means of which data is transmitted.

partnership trade or profession” is defined as a trade or profession carried on by two or more persons in partnership.

payment notification” has the meaning assigned to it by section 524(4).

payment notification reference” has the meaning assigned to it by section 524(6).

PSWT service” means such electronic system as is made available by the Revenue Commissioners to enable accountable persons to fulfil their obligations under section 524(4) and to facilitate electronic communication between the Revenue Commissioners, accountable persons, specified persons and others for the purpose of fulfilling those obligations and includes any enhancements or other change made to that system and any replacement system.

partnership trade or profession” is defined as a trade or profession carried on by two or more persons in partnership

The term “professional services” includes —

  • services of a medical, dental, pharmaceutical, optical, aural or veterinary nature,
  • services of an architectural, engineering, quantity surveying or surveying nature, and related services,
  • services of accountancy, auditing or finance and services of financial, economic, marketing, advertising or other consultancies,
  • services of a solicitor or barrister and other legal services,
  • geological services, and

relevant medical expenses” are expenses incurred in respect of services provided by a practitioner which are, or may be, the subject of a claim under a contract of insurance other than expenses —

  • which can normally only qualify for benefit under the contract on submission of a claim after the end of the subscription year and when the amounts involved in the claim exceed certain thresholds, or
  • which are incurred in respect of professional services provided by a practitioner outside the State.

relevant payment” is —

  • a payment by an accountable person in respect of professional services whether or not such services are provided to the accountable person making the payment, or
  • payments by a health insurer to a medical practitioner to discharge claims under contracts of insurance for relevant medical expenses.

Excluded are —

  • payments within the PAYE system (Chapter 4 of Part 42),
  • payments by principal contractors to subcontractors under the payments to subcontractors tax deduction scheme (Chapter 2 of this Part),
  • a payment which is made by one accountable person to another accountable person in reimbursement of a relevant payment, and
  • a payment by one accountable person to —
    • another accountable person whose income is exempt from corporation tax or is disregarded for the purposes of the Tax Acts, or
    • a (charitable) body which has been granted an exemption from tax for the purposes of section 207.

specified person” is the recipient of the relevant payment. In the case of a partnership which is in receipt of a relevant payment, each individual partner is a specified person.

Amount of a relevant payment

(2)(a) The amount of a relevant payment, which is subject to a deduction of tax, is the amount of the payment before the tax is deducted.

(2)(b) The appropriate tax referable to an accounting period or a basis period for a year of assessment is the appropriate tax deducted from all relevant payments which are taken into account in computing the specified individual’s profits or gains for that period.

(3) As a transitional arrangement to deal with the change to the calendar year basis of assessment from 2002, where a 12 month period ending between 1 January 2002 and 5 April 2002 is the basis period for both the short tax “year” 2001 and the tax year 2002, the period in question will be treated for Professional Services Withholding Tax (PSWT) purposes, as the basis period for the short tax “year” 2001 only. This ensures that the taxpayer will get credit for PSWT deducted in that 12 month period against income tax payable for the short tax “year” 2001. The credit is not deferred to the tax year 2002.

Relevant Date: Finance Act 2021