RCT is the withholding of tax that applies to certain payments made by principal contractors to subcontractors, in the construction industry. The rates of tax are 0%, 20% and 35%.

RCT applies when a principal contractor hires a subcontractor to carry out construction work under a relevant contract.

VAT reverse charge

VAT is normally charged by the person supplying the goods or services. However, under RCT, the person receiving the goods or services, i.e. the principal contractor, calculates VAT and pays it directly to Revenue. The principal contractor accounts for VAT as if they had supplied the service. This is known as VAT reverse charge.

Who is a principal contractor?

You are a principal contractor if you use a subcontractor to carry out activities on behalf of your business.

Principal contractors must register with Revenue.

You can record RCT in Sage Accounts if you're a principal contractor. Read more >

Who is a subcontractor?

You are a subcontractor if you enter into a relevant contract with a principal contractor in the construction industry. This contract is not a contract of employment.

You must give the principal contractor the details they need to register the relevant contract with Revenue.

Once the principal contractor notifies Revenue of the contract, Revenue sends you the details in a contract confirmation letter. This also confirms your RCT rate of tax deduction.

Revenue automatically credit your tax record with any RCT that the principal contractor deducts. You can use this RCT credit against other tax due once you have filed your tax returns.

You can record RCT in Sage Accounts if you're a subcontractor. Read more >