Relevant Contracts Tax Introduction In order for the system of RCT to be applied there must be a principal contractor, a subcontractor and a relevant contract between them The principal contractor must withhold tax at 0%, 20% or 35% on payments made to a subcontractor under a relevant contract

Relevant Contracts Tax Principal Contractor A person engaged in construction A person engaged in the meat processing industry A person engaged in the forestry industry A local authority or public utility society A government minister acting in their official capacity

Relevant Contracts Tax Principal Contractor Any board established by statute A person carrying on a business involving the development of land A person who carries on any gas, water, electricity, hydraulic power, dock, canal or railway undertaking A person carrying on repair, installation or alteration of a telecommunication system

Relevant Contracts Tax A contract between a principal contractor and a subcontractor where the subcontractor; Carries out the relevant operations, or Is answerable for the carrying out of such operations by others, or Acts as an employment agency in arranging the labour of others, or Furnishes his/her labour or the labour of others in carrying out the operations

Relevant Contracts Tax Operation of scheme Principal provides Revenue with details of contract and subcontractor Electronically Subcontractor name and tax ref number Value of contract Declaration that its not a contract of employment

Relevant Contracts Tax Operation of scheme Immediately prior to a payment, the Principal must notify Revenue of the amount of payment Revenue informs Principal of the deduction to be made Called a deduction authorisation Specifies rate to be applied

Relevant Contracts Tax Operation of scheme Zero rate for fully tax compliant subcontractors 20% for substantially compliant subcontractors 35% for all others Revenue will maintain a record of the tax deducted and issue a quarterly statement to the subcontractor Principal must pay tax to Revenue by 23rd of following month, along with a return

Relevant Contracts Tax Operation of scheme Principal can be liable for penalty of €5,000 plus RCT at 35% for failing to deduct tax correctly Late filing of return is liable to interest at 0.0219% per day from 14th of month A subcontractor subject to 35% rate can apply for repayment from Revenue and once all tax liabilities are satisfied, Revenue will repay excess

Relevant Contracts Tax Operation of scheme Otherwise, RCT is applied as a deduction against income tax for the subcontractor, much like preliminary tax