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Relevant Contracts Tax (RCT) is a withholding tax that applies to payments from a principal contractor to a subcontractor in the construction, forestry and meat processing industries. The current rates are 0%, 20% and 35%, and the system is operated electronically through Revenue's ROS.
What is RCT?
RCT is a tax deducted from payments made under a 'relevant contract' — a contract to carry out, or supply labour for, certain work in construction, forestry or meat processing. The principal contractor is responsible for deducting the tax and paying it to Revenue, with the amount credited against the subcontractor's own tax bill.
Who does RCT apply to?
- Principal contractors — businesses that engage subcontractors to carry out relevant operations.
- Subcontractors — individuals or companies carrying out the work on behalf of a principal.
- It covers the construction, forestry and meat processing industries.
RCT rates
| Rate | When it applies |
|---|---|
| 0% | Subcontractors with a strong tax compliance record |
| 20% | The standard rate for registered, compliant subcontractors |
| 35% | Subcontractors not registered for tax, or with serious compliance issues |
How the eRCT system works
- The principal registers the contract with Revenue through ROS.
- Before each payment, the principal notifies Revenue of the payment details online.
- Revenue issues a deduction authorisation showing the correct RCT rate and the amount to deduct.
- The principal deducts RCT, pays it to Revenue, and the amount is credited to the subcontractor's tax record.
What principals and subcontractors need to know
Principals must register contracts, notify every payment and deduct the correct rate — failure to do so can lead to penalties and interest. Subcontractors should keep their tax affairs up to date, because their compliance record directly determines whether they are on the 0%, 20% or 35% rate.
Frequently asked questions
What are the RCT rates in Ireland?
The three RCT rates are 0%, 20% and 35%. The rate applied depends on the subcontractor's tax compliance record.
How do I know which rate to deduct?
When you notify Revenue of a payment through ROS, Revenue issues a deduction authorisation that tells you the exact rate and amount to deduct.
Can a subcontractor get the 0% rate?
Yes. Subcontractors with a strong record of tax compliance can qualify for the 0% rate, which means no RCT is deducted from their payments.
What happens to the RCT deducted from my payments?
The RCT deducted is credited to the subcontractor's tax record and can be offset against other tax liabilities or refunded, as appropriate.
RCT mistakes are common and can be costly for both principals and subcontractors. If you need help with RCT registration, rates or returns, talk to Bradán Accountants — we will keep you compliant and make sure you are not overpaying.
Sources
- Revenue.ie – Relevant Contracts Tax (RCT)
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