Revenue from Residential Land Tax Falls Short at €49m

The first year of the Residential Zoned Land Tax (RZLT) has yielded a total revenue of just over €49 million, significantly below expectations. The RZLT, which targets land zoned for housing but currently lying idle, had a total liability of €120.4 million, indicating that less than half of the due amount was collected. These preliminary figures were published by the Revenue Irish Tax and Customs office.

Introduced in 2022, the RZLT aims to encourage landowners to develop residential properties on land that is serviced with essential infrastructure such as water, electricity, and sewage. The tax is set at a rate of 3% of the land’s market value. Despite the low revenue collected, government officials assert that the primary goal of the RZLT is to promote the use of serviced land for housing rather than to generate significant tax income.

Challenges in Compliance and Exemptions

Out of 2,469 landowners who registered for the tax, only 2,171 filed returns. Additionally, 583 deferrals were granted, indicating a level of non-compliance. The tax has faced pushback, particularly from farmers, who are concerned about its implications. In 2025, there were 172 claims for exemptions, with landowners needing to apply for rezoning if they believed they qualified.

Paschal Donohoe, the former finance minister, announced in his budget speech last October that landowners would have the opportunity to apply for exemptions again this year. Local authorities are expected to release the annual RZLT maps by January 31, delineating which sites are liable for the tax.

Despite the backlash, Revenue emphasizes that the RZLT is part of a broader strategy to ensure that land is utilized effectively. Farmers and agricultural organizations have been vocal in their requests for actively farmed land to be permanently removed from the RZLT’s scope.

Revenue Performance and Compliance Rates

For the tax year, Revenue reported that 18,653 taxpayers are currently in Phased Payment Arrangements (PPAs), with outstanding liabilities totaling €2.4 billion. The organization stated, “Revenue works alongside compliant taxpayers experiencing temporary difficulties, who continue submitting returns, engage early, and agree PPAs to maintain compliance.” Impressively, 95% of the 12,700 arrangements for repaying Covid-19 warehoused debt were honored, averaging monthly payments of €23 million.

Revenue’s overall compliance rates remained robust last year, with a 99% compliance rate for large and medium cases, and 92% for others. The agency processed nearly 1.5 million repayments to PAYE workers, amounting to €1.2 billion in refunds.

In terms of operational capacity, Revenue employed 6,980 staff and incurred running costs of €680 million. The digital services division processed over 87 million transactions, while staff handled approximately 1.8 million phone calls and 1.85 million emails and letters throughout the year.

As the landscape of the RZLT evolves, the focus remains on increasing compliance and ensuring that land designated for housing is put to use.