RCT is a withholding tax that applies to certain payments by principal contractors to subcontractors in the construction, forestry and meat-processing industries.
Am I a subcontractor?
You are a subcontractor if you enter into a relevant contract (not a contract of employment) with a principal contractor.
You will have to supply the principal contractor with a number of details that are required in order to register the relevant contract with Revenue.
You'll need to provide your name and tax reference number as well as some documents which act as proof of identity. Examples of these include:
- a copy of your passport
- a copy of your driving license
- details of your tax registration
RCT tax rates
The RCT tax rates differ depending on your compliance record with Revenue. The three tax rates in the RCT system for subcontractors are:
0% - for an up-to-date tax compliance record
20% - a substantially up-to-date tax compliance record
35% - a poor tax compliance record, or for those who have not registered with Revenue
RCT credit
Where a principal contractor deducts tax from a payment to a subcontractor, the tax will be treated as a payment on account by the subcontractor of income tax for the basis year in which the tax was deducted. Any tax deducted is also available for offset by Revenue against any other tax liabilities of the subcontractor.
In effect, this means that you are entitled to claim the RCT deducted as a credit against your Income Tax (IT) or against other tax due once you have filed your tax returns.
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