1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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 % 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

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