How does RCT work for a subcontractor?
In the eRCT system:
- There are three rates in the eRCT system 0%, 20%, 35%. A subcontractor’s rate is dependent on their compliance record.
- Revenue will automatically put credit for any tax deducted onto the subcontractor's tax record.
- Interim repayments are not made, instead an offset system is linked to the tax liabilities of subcontractors (i.e. no repayments of RCT will be made during the year).
- The subcontractor will receive details from Revenue of contracts notified by principal contractors on the new system. The subcontractor will also be notified by Revenue when his/her RCT rate is amended.
- While principal contractors are obliged to engage with Revenue electronically in the new system, subcontractors, who are not also principal contractors, can interact with Revenue as normal. However, if subcontractors are registered for the Revenue Online Service (ROS), they will be able to see their own records through ROS and benefit from the online 24/7 self service channels.
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.
Electronic RCT system - Frequently asked questions (FAQ’s) for subcontractors
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, 35KB) - Updated 26th July 2012
ROS enhancement to allow users to save multiple partially saved RCT Documents (PDF, 18KB)
RCT rates in the new system (PDF, 14KB)
Information for Subcontractors on the new RCT system
Contact details for queries on RCT can be found on our contact area page – please select your region for to find your contact details.
Subcontractor or employee?
When you take on work in the construction, forestry or meat processing industries, you should ensure that you have been correctly classified as an employee or a self-employed subcontractor.
Determining the correct employment status of a worker
Are you aware that...
- Any tax deducted from payments made by the Principal to you will be available for credit against your income tax and PRSI liability; however, remember you must still make a return of your income to the Revenue Commissioners. Any credit for tax deducted may be affected by the general 4-year time limit for repayments - further details are provided in eBrief No. 31/2008.
- If you should have registered for VAT but failed to do so, you will be liable to pay any VAT due together with interest and penalties as appropriate.
- 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.
- 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.
- Further information on the VAT Reverse Charge. Subcontractors are advised to visit the Guide to VAT to ascertain their VAT obligations.