RCT (Relevant Contracts Tax) Explained for Subcontractors

If you work as a subcontractor in Irish construction, you've encountered RCT — Relevant Contracts Tax. It's the system where principal contractors deduct tax from your payments before you receive them. Here's how it works.

What Is RCT?

Relevant Contracts Tax is a withholding tax for the construction industry. When a principal contractor (the person who hired you) pays you for work, they deduct RCT at a set rate and send that directly to Revenue.

Think of it like PAYE for the self-employed. Revenue collects tax at source rather than waiting for you to file a return.

The Three RCT Rates

The rate deducted depends on your tax compliance history:

0% — Zero Rate

No deduction. You receive full payment. To qualify:

• Good compliance history with Revenue
• Tax affairs fully up to date
• Been in business for at least 3 years
• No outstanding returns or liabilities

20% — Standard Rate

Most subcontractors fall here. You're registered, tax affairs are generally compliant, but you haven't met all criteria for 0%.

35% — Higher Rate

Applied if:

• You're not registered for RCT
• Outstanding tax returns
• Poor compliance history
• Revenue can't verify your details

Important: RCT isn't extra tax. It's an advance payment against your income tax liability. When you file your annual return, RCT deducted is offset against tax owed.

Who Needs to Register?

You need to register for RCT if you're a subcontractor doing construction work for a principal contractor. This includes:

• Electricians, plumbers, carpenters, plasterers, painters
• Roofers, tilers, bricklayers
• Any tradesperson hired by a builder, developer, or main contractor

If you only work directly for homeowners (not through a contractor), RCT doesn't apply to those jobs.

How the Process Works

1. You complete work for a principal contractor
2. You submit your invoice with your RCT details
3. The contractor logs into ROS and notifies Revenue of the payment
4. Revenue confirms your rate (0%, 20%, or 35%)
5. The contractor pays you minus the RCT deduction
6. The contractor sends the deduction to Revenue on your behalf

Getting to 0% Rate

The 0% rate is the goal. Here's how to get there:

• File all tax returns on time (Income Tax, VAT, RCT, PRCR)
• Pay all tax liabilities when due
• Maintain a clean compliance record for 3+ years
• Keep your ROS profile up to date

Revenue reviews your status periodically. Maintain compliance and you'll move up; slip, and you'll move down.

Your Invoice Requirements

When invoicing a principal contractor, include:

• Your name/business name and address
• Tax reference number
• VAT number (if registered)
• Description of work completed
• Amount due (before RCT deduction)

Common RCT Mistakes

• Not registering: Results in automatic 35% rate
• Wrong details on invoice: Delays payment verification
• Forgetting to claim back: RCT deducted reduces your tax bill — make sure to include it in your annual return
• Missing returns: One late return can bump you from 0% to 20%

Tracking RCT Payments

Keep records of all RCT deductions. Your principal contractor should give you a deduction summary. At year-end, total deductions offset your tax liability.

Using invoice software helps — you can track which payments had RCT deducted and ensure nothing's missed when filing returns.