Professional Services Withholding Tax (PSWT) is one of the most misunderstood tax regimes in Ireland especially among small businesses, self-employed service providers, freelancers, contractors and even companies receiving payments from Government bodies, public authorities or prescribed persons.
If you provide professional services in Ireland and your client is a Government department, HSE, public body, local authority, higher-education institution, semi-state body, or any organisation listed as a “prescribed person,” you may be subject to PSWT.
And if you pay service providers as a prescribed person, you may have strict obligations to operate PSWT correctly.
With PSWT now operating through real-time electronic systems, and cross-referenced to income tax and corporation tax filings, Revenue has increased visibility into both payers and service providers. Mistakes are expensive. Non-compliance can lead to penalties. And poor understanding can cause serious cashflow strain.
Here is everything Irish SMEs and self-employed individuals need to know.
PSWT is a withholding tax deducted at source when a prescribed person pays for professional services such as:
consultancy
accountancy and financial advisory
legal services
medical and healthcare services
training and education
engineering, architecture, design
IT consultancy and digital services
PR, marketing, management services
and many other advisory-based services
Instead of paying the full invoice amount, the payer must deduct tax and remit it to Revenue. The professional receives the net amount.
Key facts:
PSWT is not a final tax.
It is credited against your income tax or corporation tax liability.
If too much PSWT is deducted, you may be due a refund.
All PSWT activity is tracked electronically by Revenue.
Source: Revenue Commissioners – Professional Services Withholding Tax (PSWT) guidance.
https://www.revenue.ie/en/self-assessment-and-self-employment/pswt/index.aspx
A PSWT deduction must be made by any qualifying “Prescribed Person”, including:
Government departments
HSE and healthcare bodies
Local authorities
Public bodies
Certain education institutions
Semi-state organisations
Publicly funded bodies listed by Revenue
If your organisation falls into these categories, you must deduct PSWT from payments for professional services even if the supplier is a company, partnership, sole trader or non-resident.
Failing to withhold PSWT correctly can lead to financial penalties and Revenue intervention.
Anyone providing professional services to a prescribed person may have PSWT applied, including:
doctors, nurses, clinicians
IT contractors, developers, tech consultants
accountants, auditors, payroll specialists
lawyers, mediators, legal advisors
engineers, architects, QS professionals
training providers, educators, coaches
marketing, PR and business consultants
management service providers
financial consultants
Even incorporated companies can be subject to PSWT not just sole traders.
PSWT is now a fully electronic regime.
This shows the amount withheld and credited to their Revenue account.
The current PSWT rate is 20% of the payment (in most cases).
The rate applies to the gross invoice amount excluding VAT.
The supplier receives the net payment.
The withheld tax becomes a credit that offsets their future tax bills.
income tax (Form 11 filers),
corporation tax (Form CT1 filers), or
can request refunds if over-deducted.
All PSWT deductions appear automatically in the supplier’s ROS PSWT credit viewer.
This is one of the biggest issues.
If 20% of your invoice is withheld, small service businesses may struggle with:
lower cash inflow
difficulty paying suppliers
trouble covering payroll
increased tax refunds instead of usable monthly cash
lumpy cashflow cycles
This issue is particularly acute for:
startups
freelancers
SMEs scaling their team
contractors in the public sector
medical and healthcare professionals
training providers reliant on HSE or public contracts
Cashflow planning becomes essential.
Amergin supports SMEs with forecasting cashflow impacts of PSWT, building reserve systems, and structuring invoices and finances around PSWT obligations.
Penalty: they may become liable for the full amount that should have been withheld.
PSWT applies to the amount before VAT.
This leaves money unclaimed and distorts tax liability.
Many contractors assume they automatically get refunds but timing depends on tax filings.
This delays crediting PSWT and complicates reconciliation.
All PSWT is now electronic; manual tracking leads to errors.
Can cause incorrect tax returns and delayed refunds.
Foreign businesses providing services to Irish prescribed persons are also subject to PSWT.
Revenue expects:
proper Irish tax registration
correct invoicing
compliance with withholding
awareness of double-tax treaties
Failure to manage PSWT can lead to unexpected withholding, delayed payments, or difficulty reclaiming credits.
Amergin regularly supports non-resident companies delivering projects in Ireland.
Service providers do not reclaim PSWT from the payer Revenue holds the credit.
You access it when filing your tax return:
PSWT reduces your Income Tax / USC / PRSI liability on Form 11.
PSWT offsets your Corporation Tax liability on Form CT1.
You may be entitled to a refund after filing.
All credits appear in ROS under:
"PSWT – Credit Viewer"
Revenue continues to modernise withholding regimes.
Recent changes include:
full digitisation of PSWT reporting
real-time visibility over payments
tighter matching of PSWT deductions to tax returns
increased monitoring of mismatched supplier data
scrutiny of VAT treatment alongside PSWT
alignment with RCT and upcoming eWHT functionality
This means businesses using contractors — or providing services to public bodies — must maintain cleaner books and real-time reporting.
Amergin supports both prescribed persons and service providers.
Setting up ROS access and tax registrations
Reviewing whether PSWT applies to your services
Reconciling PSWT credits and tax liabilities
Cashflow modelling to account for withheld tax
Preparing & filing Form 11 / CT1
Securing refunds where overpaid
Advising on whether incorporation changes PSWT exposure
Determining whether PSWT must be applied
Implementing correct digital PSWT workflows
Ensuring each payment is reported correctly
Avoiding penalties for under-withholding
Integrating PSWT into bookkeeping systems
Regular compliance review and risk minimisation
VAT + PSWT combined treatment
Cross-border advice for non-resident providers
Transition planning for future eWHT reforms
When PSWT becomes part of a structured system — not a manual afterthought — compliance becomes efficient and predictable.
Professional Services Withholding Tax can feel complicated, especially for growing SMEs, startups and service providers working with public bodies. But with the right processes, informed financial planning, and expert guidance, PSWT becomes simply another managed part of your compliance cycle.
Amergin helps Irish businesses turn statutory obligations into operational clarity enabling founders and finance teams to focus on growth, not paperwork.
If you want structured support on PSWT, tax filing, or understanding your obligations:
Amergin is ready to help you every step of the way.
Amergin Consulting Ltd. is a Dublin-based chartered accountancy and business advisory firm serving Ireland’s SMEs and growth companies across construction, technology, professional services, and renewable energy.
We specialise in Accounting, Payroll, Taxation, and CFO Services that help businesses build stronger foundations for profit and compliance.
Need help running a year-end tax review or planning your 2026 payroll changes?
Amergin Consulting’s finance and tax team can help you identify deductions, forecast cash flow, and ensure full compliance before the year closes.
Book your 30-minute consultation: https://calendly.com/amergin-group_free/30min
This article is for general informational purposes only and does not constitute financial or tax advice. While every effort has been made to ensure accuracy, Budget 2026 legislation may change upon enactment of the Finance Act 2025.
Public should seek professional advice tailored to their specific circumstances before acting on any points discussed.
Revenue Commissioners – Professional Services Withholding Tax (PSWT)
https://www.revenue.ie/en/self-assessment-and-self-employment/pswt/index.aspx