eWHT 2025: What the Proposed Withholding Tax Reform Means for Irish SMEs & Startups And How to Prepare

Published: December 2025
Author: Amergin Consulting Ltd.
Target Audience: Business Owners, Finance Managers, and Small Business Seeking Financial Stability
Book a meeting: https://calendly.com/amergin-group_free/30min

If you run a small or medium business in Ireland, or you're launching a startup in Dublin or elsewhere, a new wave of change may be coming to how withholding tax works. In December 2025, the Revenue Commissioners and the Department of Finance announced a public consultation process to modernise and expand withholding tax regimes through a proposal called eWHT. Revenue+1

This is not just a technical tax update. If implemented, eWHT could reshape how contractors, self-employed professionals, platform workers, subcontractors, service providers, and even their clients handle payments, tax deductions, reporting and cashflow. For many SMEs and startups, this means both risk  of compliance burden and opportunity  simplified withholding, predictable pre-payments, and smoother operations.

Below is a detailed overview of what eWHT proposes, who it affects, what changes could come, and crucially how Amergin can support your business through the transition.

What is eWHT and Why Does It Matter

Withholding taxes like Professional Services Withholding Tax (PSWT) and Relevant Contracts Tax (RCT) have long been part of Ireland’s tax system. They require payers to deduct tax at source when paying certain services or contract work. Under current regimes, withholders must manually calculate, withhold, report, and remit tax. This often generates administrative burden, timing issues, compliance risk and cash-flow challenges for small businesses. Revenue+1

The proposed eWHT reform aims to modernise this system by digitising withholding tax entirely transforming it into a real-time, automated process embedded into business workflows. The vision is to mirror what was achieved for payroll in 2019 with PAYE modernisation. Revenue+1

The public consultation launched by Revenue and the Department of Finance seeks input from businesses, software providers, representative bodies and service providers on how the new model should work. Revenue+1

What eWHT Proposes: Key Features & Mechanisms

Under the eWHT proposal, the old PSWT, RCT and other withholding regimes would be replaced by: Revenue+2Revenue+2

  • A unified, digital withholding system, where payments to self-employed individuals, subcontractors, service providers or platform workers trigger withholding automatically.

  • Real-time data exchange via APIs: When a payer (referred to as a “Designated Withholder” or DW) sets up a payment, their system sends the payment notice to Revenue; Revenue then returns a deduction authorisation rate which is applied immediately. The payment to the provider goes out net of tax. Revenue+1

  • Personalised Deduction Rates (PDR) for self-employed individuals: Instead of flat withholding rates, Revenue would calculate and update a deduction rate based on the individual’s overall income, expenses, tax credits and other sources of income similar to how the PAYE system uses an employee’s rate band. Revenue+1

  • Flat-rate withholding for corporate or non-individual entities: For companies, partnerships or other non-individual entities receiving payments, a simpler withholding mechanism would apply. Revenue+1

  • Automatic credit toward tax obligations: Withheld amounts are credited against the recipient’s preliminary tax (or income tax) liability, potentially reducing  or eliminating advance payments or year-end tax bills. Revenue

  • Pre-populated tax returns and simpler compliance: Data submitted through the system can be used to auto-populate income tax returns, reducing paperwork, manual entries, and room for errors. Revenue+1

If implemented, eWHT aims to streamline withholding tax, reduce administrative burden, improve cashflow predictability, and ensure revenue collection is more accurate and timely. Importantly for small businesses and freelancers, it could make tax compliance much simpler especially for those who currently find PSWT / RCT complex, burdensome, or unpredictable.

Who Will Be Affected by eWHT

The proposed eWHT reform is broad. The following groups could see significant changes: Revenue+2Revenue+2

  • Businesses and individuals currently operating under PSWT (e.g., accountants, consultants, professional service providers)

  • Contractors and subcontractors in sectors covered by RCT (construction, forestry, meat-processing)

  • Workers and service providers operating through digital platforms (gig-economy, delivery, short-term letting, freelancing)

  • Self-employed individuals (sole traders, freelancers)

  • Companies or non-individual entities receiving payments for services, who may transition to the new flat-rate withholding

For many SMEs, this serves as the first time withholding tax will apply universally, even beyond traditional sectors like construction or professional services.

What eWHT Could Mean for SMEs & Startups in 2026

If you run a small business, even a micro-business, the proposed changes under eWHT could have real operational impact. Some potential implications:

  • Reduced compliance burden: Instead of juggling multiple withholding regimes (PSWT, RCT), a single unified eWHT system could simplify payments, accounting, and record-keeping.

  • Better cashflow management: For self-employed providers, the PDR-based withholding could smooth tax liabilities across the year, reducing surprise bills at year-end.

  • Predictability for clients and subcontractors: Businesses hiring contractors whether for construction, consultancy, or gig workers  can pay net-of-tax amounts with confidence and avoid manual withholding requirements.

  • Automated systems & integration: Using APIs and digital workflows means fewer manual steps, less risk of error, and easier compliance beneficial for fast-moving startups.

  • Transparency & audit readiness: All transactions, withholdings, and tax credits would be recorded in Revenue’s system, reducing risk of audit issues or disputes.

  • Planning advantage: SMEs that anticipate these changes can update their finance systems, budgeting and workflows now  minimizing disruption when eWHT (if passed) takes effect.

However as with any change there are potential challenges. Businesses will need to ensure their accounting and payment systems can integrate via API, staff may need to adapt to new processes, and cashflow planning will shift as withholding becomes more dynamic than periodic.

How Amergin Consulting Ltd. Can Help You Prepare

At Amergin, we believe eWHT presents both a challenge and an opportunity for SMEs and startups. We’re ready to support clients through this transitional period:

1. Compliance Readiness & Structure Assessment
We’ll review your current operations — whether you’re a service provider, subcontractor, platform worker or client hiring contractors to assess how eWHT could affect you. We’ll help you adapt internal processes, payment systems and accounting workflows to ensure smooth withholding, reporting, and reconciliation.

2. Integration of Withholding into Business Systems
If eWHT becomes mandatory, API-driven withholding will likely require changes to invoicing, payment, accounting, and payroll software. We’ll help you map out the required system changes, choose or configure appropriate software, and ensure your bookkeeping and compliance remain seamless.

3. Cashflow & Tax Planning under PDR Withholding
For self-employed workers and small businesses, the shift to personalised deduction rates will change cashflow dynamics. Amergin will assist you in forecasting cashflow under eWHT, adjusting budgets, setting aside reserves, and aligning payments to ensure stability.

4. Contractor and Subcontractor Management
If you subcontract work — in construction, services, or via platforms we’ll help ensure that contracts, payment terms, and withholding responsibilities (Designated Withholder vs Specified Person) are clearly defined and compliant under the new rules.

5. Transition Support & Risk Mitigation
As the public consultation is ongoing until 30 January 2026, final eWHT legislation and rules are not yet certain. Amergin can help you monitor developments, submit feedback (if you wish), and adapt your systems once the final regime is confirmed. This puts you ahead of competitors who wait until the last minute to respond.

6. Strategic Advisory: Growth, Hiring, Outsourcing
Withholding tax changes will influence decisions around hiring freelancers, outsourcing, contracting, or shifting between employee vs contractor models. We can provide strategic advice to help you plan workforce and supplier structures in a way that balances cost, compliance and flexibility.

Action Steps for SMEs & Startups What You Should Do Now

  1. Check if your business currently uses PSWT, RCT or works with contractors/subcontractors.

  2. Assess your accounting and payment systems are they digital, capable of API-driven workflows, or heavily manual?

  3. If you are self-employed or use freelance contractors, start forecasting cashflow under potential PDR withholding.

  4. Consult with your tax advisor or a firm like Amergin to model the impact of eWHT on your operations, profits and cashflow.

  5. If you are a stakeholder, consider submitting feedback to the eWHT public consultation before 30 January 2026 (through the official “eWHT Consultation Hub” on Revenue.ie). Revenue+1

  6. Begin updating or planning to update your invoicing, payroll, and bookkeeping systems now — to avoid last-minute rush when eWHT becomes live.

What Should You Watch Out For The Potential Challenges

  • System complexity and tech cost: Changing payment and accounting systems to integrate with Revenue’s API may require investment and learning.

  • Cashflow timing: Withholding at source may reduce lump-sum tax bills, but also reduce net payments to contractors — which could affect their cashflow and willingness to work.

  • Legal and structural clarity: Contractual arrangements may need revision. Roles (Designated Withholder vs Specified Person) must be clearly defined in agreements.

  • Transition uncertainty: The consultation is ongoing until 30 January 2026. Final rules, rates and regulations may evolve so some uncertainty remains.

  • Administrative burden during transition: During the changeover, companies may have to manage old and new regimes simultaneously, or face updating legacy contracts and systems.

Conclusion: eWHT Is More Than a Tax Reform It’s a Potential Game-Changer for SMEs

The eWHT consultation marks one of the most important proposed changes to withholding tax in Ireland in decades. By digitising, expanding and modernising withholding tax, Revenue and the Department of Finance aim to streamline compliance, improve transparency and adapt to the reality of modern business including platform work, gig economy, subcontracting and services-based operations. Revenue+1

For SMEs and startups, this reform isn’t just technical: it could reshape how you manage payments, cashflow, contracts, compliance and growth. With careful planning, the transition to eWHT can bring real benefits: predictable withholding, fewer surprises at year-end, integrated bookkeeping, and simpler compliance.

At Amergin, we believe in preparing early. We help businesses assess their exposure, adapt systems, forecast cashflow under new regimes, and ensure they remain compliant while scaling.

If you want support understanding how eWHT might affect your business or to help you get systems ready well before the change  Amergin is ready to help. Reach out and let’s make sure you’re not just reacting, but leading.

About Amergin Consulting Ltd.

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

Disclaimer

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.

Sources

  • Revenue & Department of Finance — Revenue and Department of Finance launch eWHT Public Consultation, 05 December 2025. Revenue+1

  • Revenue — eWHT – Joint Public Consultation hub, explanatory pages on proposed withholding tax modernisation. Revenue+1

  • Revenue — PSWT Accountable Persons / RCT Principals under eWHT guidance summaries. Revenue+1

  • Reform-Support / EU — Exploring e-Withholding Taxes to Future Proof Tax Compliance in Ireland, context for OECD Tax Administration 3.0 alignment. Reform Support
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