RCT for Non-resident contractors
Electronic RCT System
Revised procedures for Tax Clearance in respect of Public Service Contracts, Grants, Subsidies and similar type payments (Department of Finance Circulars 43/2006 and 44/2006) (PDF, 30KB) - Updated 26th July 2012
Relevant Contracts Tax applies to payments made by a principal contractor to a subcontractor under a relevant contract (this is a contract to carry out, or supply labour for the performance of relevant operations in the construction, forestry or meat processing industry). Payments to subcontractors in respect of a relevant contract are generally made under deduction of tax, but payments can also be made gross where the subcontractor satisfies certain conditions.
RCT applies to both resident and non-resident contractors operating in the construction, forestry or meat processing industry.
Non-resident contractors should familiarise themselves with their tax obligations (PDF, 217KB).
Refund of RCT deducted
Claims for refund of RCT can be applied for throughout the year by applicants who do not have an obligation to be registered for Corporation Tax or Income Tax in the State. All applicants must be registered for RCT tax.
Where a subcontractor has suffered a deduction of tax on payments made by a principal, the principal is obliged to provide a copy or details of the Deduction Authorisation/Payment Notification Acknowledgement to the subcontractor. If the payment date is prior to 1 January 2012 a certificate of deduction (Form RCTDC) should be provided by the principal to the subcontractor. Subcontractors can apply to have the tax deducted, repaid or offset. Claims for repayment or offset by non-resident subcontractors should be submitted to:
International Claims Section,
Office of the Revenue Commissioners,
Collector General’s Division,
Telephone: +353 (0) 67 63356
Fax: +353 (0) 67 33822
Individual applicants must complete a claim Form IC 1 (PDF, 179KB) . Company applicants must complete a claim Form IC 3 (185KB) . These forms are also available from International Claims Section upon request.
The completed claim form must be certified by the Tax /Revenue authorities of the country of residence for tax purposes in the tax year in which the income was earned. While certification currently covers a period of three years, please note that Revenue can request certification in respect of a claim at any time.
A questionnaire must also be completed in respect of each contract undertaken by the non-resident subcontractor. With regard to ongoing contracts, a copy of the original Questionnaire must be submitted with all follow on claims. Details of the claims, as per Question 3 of the Questionnaire, should be furnished on a separate sheet. Download the Questionnaire – Relevant Contracts Tax (PDF, 197KB).
In relation to Partnerships, it should be noted that refunds are not made to Partnerships but instead are made to each partner based on his/her ratio within the partnership. Each partner must be registered for RCT, using his/her PPSN. Each partner must also complete an IC1 and RCT Questionnaire. However, the Deduction Authorisation/Payment Notification Acknowledgement must be in the name of the Partnership.
To qualify for payments without deduction of tax, the subcontractor must have applied for and received a zero rate and the principal contractor making the payment must input a Payment Notification on behalf of the subcontractor.
Revenue may impose a limit on the amount of the payments that a principal contractor may make without deduction of tax on Payment Notifications for certain subcontractors. Where RCT is deducted from the payment, the subcontractor should be given a completed Deduction Authorisation.
To qualify for zero rate, the qualifying criteria apply equally to resident and non-resident subcontractors. In the case of an applicant who has been resident outside of the State at some time during the qualifying period, they must have complied with all of the comparable obligations imposed by the laws of the country in which they were resident.
Impact of the VAT Reverse Charge on Construction Services that are subject to RCT
Following the introduction of the VAT Reverse Charge on 1 September 2008, resident subcontractors providing construction services (that are subject to RCT) to principal contractors will still be required to register for VAT, subject to the normal VAT rules. However, these subcontractors will no longer be obliged to charge and account for VAT on construction services (except haulage for hire) supplied to principal contractors.
From 1 September 2008, non-resident subcontractors who provide construction services to principal contractors that are within the scope of RCT (as defined in Section 530 of the Taxes Consolidation Act, 1997 but excluding haulage for hire), are not required to register for VAT. Such subcontractors may however register for VAT, in order to claim credit for input VAT incurred. Further information for subcontractors (PDF, 44KB).
Where the VAT Reverse Charge applies, principal contractors must account for the VAT as if they had supplied the service.
The VAT Reverse Charge does not impact on the VAT obligations of resident and non-resident subcontractors performing relevant operations in the meat processing or forestry industries or those involved in haulage for hire within the construction industry – these subcontractors will continue to be obliged to register for, charge and account for VAT, subject to the normal VAT rules.