Relevant Contracts Tax (RCT)

RCT for subcontractors

Who is a subcontractor?

You are a subcontractor if you enter into a relevant contract with a principal contractor in the construction, forestry or meat processing industries. This contract is not a contract of employment.

You must give the principal contractor the details they need to register the relevant contract with Revenue. These details must include the name you have recorded with us and your tax reference number. You should also provide proof of identity, which can include:

  • a copy of your passport
  • a copy of your driving licence
  • details of your tax registration.

Once the principal contractor notifies Revenue of the contract, we will send you the details in a contract confirmation letter. This will also confirm your RCT rate of tax deduction. If any details regarding the contract are incorrect, contact the principal contractor to correct them. If they cannot correct the details, contact us directly.

Site Identifier Number (SIN)

When a principal contractor submits a contract notification, they receive a SIN for the site or project. We will notify you of the SIN on your contract confirmation letter. If you in turn subcontract out some of the work, you should use this SIN when you notify the contract to us. This means that all contracts, by all contractors on the same site or project, will use the same SIN.

RCT tax rates

The RCT tax rate will depend on your compliance record with Revenue. The three tax rates in the RCT system for subcontractors apply as follows:

  • an up-to-date tax compliance record: 0%
  • a substantially up-to-date tax compliance record: 20%
  • a poor tax compliance record, or for those who have not registered with Revenue: 35%.

After a principal contractor notifies Revenue of a payment, they will receive a deduction authorisation from us. If the principal is to deduct tax, they should give you a copy of this. It will show:

  • the gross payment they will make to you
  • the net payment they will make to you
  • the RCT deduction rate
  • the amount of RCT they will deduct.

We will automatically credit your tax record with any RCT that the principal has deducted. You can use this RCT credit against other tax due once you have filed your tax returns.

Please note we do not automatically offset against Preliminary Tax. There is a facility in the Revenue Online Service (ROS) that allows subcontractors or their agents to offset RCT credits against Preliminary Tax.

When a RCT credit is used against other taxes due, you will receive a statement of account. You will be able to view this, and all your RCT transactions, on ROS.

Why has my deduction rate changed?

Revenue currently carries out a RCT Bulk Rate Review (BRR) twice a year. The BRR assesses the current compliance position of each subcontractor in the eRCT system. A determination of their RCT Deduction rate, of 0%, 20%, or 35%, is then made.

In advance of each BRR, subcontractors are contacted. They are advised that their deduction rate may be subject to an increase to 20% or 35%.

Subcontractors who have moved to a higher rate of RCT can check the reasons why such a determination was made. This can be done using the RCT self-service options in ROS. Once the compliance issues have been resolved, subcontractors can self-review their RCT rate in ROS and receive a new rate determination. See the RCT for subcontractors manual for more information.

Next: Penalties for principal contractors