Background to eWHT

As announced by the Minister for Finance, Mr Paschal Donohoe TD, in his Budget speech on 7 October 2025:

“Withholding taxes are an important feature of our tax system and I wish to explore opportunities to modernise, digitalise and further expand the scope of them as we continue to adapt and respond to new and developing business models. A joint Department of Finance and Revenue public consultation will be launched soon.”

The Department of Finance and Revenue are now commencing that consultation process on the modernisation and expansion of withholding taxes. We are seeking the input of businesses, taxpayers, tax agents, software providers, business associations, representative bodies and other stakeholders. Input is sought from stakeholders on:

  • the modernisation of PSWT and RCT
  • expansion of a withholding tax to the platform economy
  • the introduction of Personalised Deduction Rates (PDR) in a new modernised withholding tax regime for self-employed workers.

The closing date for submissions to this consultation is 17:00 30 January 2026.

Ireland’s withholding tax system as it applies to the self-employed, corporates, partnerships and other entities needs modernisation. Digital technology offers the possibility of redesigning the administration of withholding taxes and aligning compliance obligations with normal business processes. For business, this reduces compliance costs and yields efficiencies. For Revenue, this enables the seamless collection of the right tax at the right time and focuses resources on non-compliance.

Additionally, Ireland’s economy is undergoing transformation, marked by rapid growth of the “sharing” and “gig” economy and platform-based services. Digital platforms are reshaping how goods and services are exchanged, especially in sectors such as travel, transport, retail, and delivery. This is creating new demands on tax administrations and systems to keep pace with this evolving landscape. As more taxpayers earn income through platforms, tax administrations must modernise systems to achieve effective tax compliance in these sectors.

PAYE modernisation in 2019 transformed the PAYE system and embedded real-time reporting of payroll into employers’ natural business systems. It is intended to extend this approach to taxpayers subject to withholding tax.

In 2024 Revenue commenced a project to examine:

  • 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.

This project is supported by European Union funding under the Technical Support Instrument. To date this project has conducted:

This comprehensive analysis was framed within the context of the OECD (2020), Tax Administration 3.0: The Digital Transformation of Tax Administration, OECD, Paris. The Tax Administration 3.0 describes a vision for how tax authorities operate efficiently in an increasingly digital and data-driven world. Taxation processes increasingly take place in real-time using the natural systems used by taxpayers. This allows taxation to become more seamless and frictionless over time. Natural systems are the set of interconnected elements through which taxpayers engage with:

  • their customers
  • other businesses
  • third parties
  • accounting, software, and technology solutions.

With regards to the modernisation of tax administration in the “platform” sector, the OECD shared its recommendations for consideration in:

Several countries are already advancing their tax systems in this area. This is being done through the application of withholding tax or reporting obligations on platform operators.

PSWT and RCT are the two primary withholding taxes, outside of the PAYE system, which are in place in Ireland. While both have had some modernisation changes in the past 15 years, neither are designed using the principles of Tax Administration 3.0, i.e., there isn’t a seamless link between business systems and Revenue systems to allow for reporting and withholding. While both have proven effective to date, eWHT presents the opportunity to both modernise and integrate these regimes. Benefits will arise as taxpayers will pay the right tax at the right time and the compliance burden will be reduced.

Objectives of eWHT

PAYE deduction and reporting does not apply to services provided by self-employed persons. Therefore, there is limited taxation at source and limited real time reporting of their income. Self-employed workers are required to save as they go in order to pay lump sum payments once a year for their tax and preliminary tax liabilities. This requires increased financial planning, estimation of taxes due and understanding and engagement with the pay and file process at tax return filing time. Therefore, when compared to a PAYE worker, a self-employed worker can experience:

  • more significant administrative burden
  • inefficiencies
  • high cognitive load
  • tax uncertainty
  • increased possibility of error
  • significant challenges with tax compliance.

The application of withholding tax at the time of the payment will simplify the compliance and administrative process for taxpayers. It will support taxpayers and improve their tax compliance. Modernisation of tax administration makes the tax system more efficient, transparent, and supportive of economic growth of businesses.

The general objectives of this modernisation proposal with regards to the administration of tax are as follows:

  • Enhance efficiency and effectiveness for taxpayer’s in meeting their tax obligations. This will be done through a simplification of processes and a reduction in administrative burden. Introduce automation and digital tools for faster, more accurate submission of details.
  • Improve taxpayer services by offering user-friendly digital solutions, guidance, and support. Build trust and foster a co-operative relationship with taxpayers.
  • Improve compliance by making it easier and less costly for taxpayers to comply with their obligations.
  • Support economic growth and competitiveness through system design that compliments and integrates with business systems.
  • Collect the right tax at the right time while reducing errors and omissions.
  • Strengthen data management and analytics. Further digitalise processes and systems to track, analyse, and cross-check taxpayer data. This supports and enables evidence-based policy-making and better risk management.
  • Further the adoption of the recommendations in Chapter 17 of the Report of the Commission on Taxation and Welfare. The chapter discusses how digital transformation is fundamental to the successful modernisation of tax administration processes.
  • Align with Connecting Government 2030: A Digital and ICT Strategy for Ireland’s Public Service. Redesigning and rebuilding government services to provide a user-friendly and accessible experience for individuals and businesses.
  • Align with international standards by adopting practices consistent with global norms. Facilitate information exchange to combat tax evasion/avoidance across borders. Align with DAC7, OECD and global initiatives.
  • Deliver a single, scalable, and future proofed system that enables real-time reporting, simplified compliance, and accurate tax collection. Systems should be capable of expansion to additional suitable service providers in the future.
  • Deliver a system that lays the foundation for further enhancements and improvements in the administration of withholding taxes.

Furthermore, the modernisation proposal seeks to support the goal in the Programme for Government to “Simplify and modernise our regulatory framework to ensure Ireland remains competitive within the EU and globally, facilitating continued investment" by reducing the compliance burden on business.

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