28th November 2025
Working in the Construction Sector in Ireland Under RCT Contracts – What You Need to Know
If you are working in Ireland’s construction sector as a self-employed (or subcontractor), you are likely to come across the Relevant Contracts Tax (RCT) system. Understanding how RCT operates is crucial to ensure compliance and to avoid unnecessary tax penalties.
What is RCT?
Relevant Contracts Tax is a withholding tax that applies to certain industries, including construction, forestry, and meat processing. Under RCT, a principal contractor must deduct tax from payments made to subcontractors and report these payments to Revenue. The tax rate can be 0%, 20%, or 35%, depending on the subcontractor’s compliance record and tax status with Revenue.
Registration and Compliance
Before starting work, subcontractors must register for RCT through Revenue’s online system (ROS). The principal must also notify Revenue of each contract before payments begin. All payment notifications, deductions, and remittance of RCT to Revenue are managed electronically, which makes timely reporting essential.
To qualify for the 0% rate, a subcontractor must have an up-to-date tax record for the last three years, including filed returns and paid liabilities. If Revenue identifies compliance issues, the subcontractor may be assigned a higher deduction rate, reducing immediate cash flow.
Payments and Deductions
When a payment is due, the principal submits details to Revenue and receives confirmation of the correct RCT deduction rate. The subcontractor can then view payment notifications through their ROS account. These deductions are credited against the subcontractor’s end-of-year tax liability.
Why it Matters
Working under RCT requires careful record-keeping and prompt filing of returns. Errors or missed notifications can result in penalties and delays in receiving tax credits. Anyone involved in building work should familiarise themselves with their RCT obligations and maintain consistent communication with their tax adviser to ensure smooth compliance.
Obligations for Principal Contractors:
- Register for RCT through Revenue’s Online Service (ROS).
- Notify Revenue of each new contract with a subcontractor before work begins.
- Submit details of all payments to Revenue before making them.
- Apply the correct deduction rate (0%, 20%, or 35%) as advised by Revenue.
- Provide subcontractors with a copy of the payment notification for their records.
Obligations for Subcontractors:
- Register for RCT through Revenue’s Online Service (ROS).
- Check an RCT rate and review all payments received by your Principal Contractor.
- Maintain accurate records of income, expenses, and RCT deductions.
- File annual tax returns and claim any RCT credits against your final liability (Note: if applicable).
Need Guidance?
If you are unsure about your RCT obligations or want to make sure your business is fully compliant, contact our team today for professional advice and support.
