Relevant Contracts Tax (RCT)

RCT for principal contractors

Who is a principal contractor?

Relevant Contracts Tax (RCT) is a tax deduction at source system that applies to payments made under relevant contracts.

You are a principal contractor if you use a subcontractor to carry out activities on behalf of your business. This applies to the following industries:

  • construction
  • meat processing
  • and
  • forestry.

You are also a principal contractor if you:

  • are connected to a company involved in any of the above activities
  • are a local authority, public utility society or housing association
  • are a Government Minister
  • are a board or body established under statute
  • are a board or body established under royal charter and funded mainly by the Oireachtas
  • carry on any gas, water or electricity work
  • carry on any hydraulic power, dock, canal or railway work
  • or
  • carry out the installation, alteration or repair of telecommunications systems.

Principal contractors must register with Revenue.

You are not a principal contractor if the only construction work that you are involved in is on buildings or land, that are either:

  • for your own use
  • or
  • for the use of your employees.

If you are a principal contractor, you must make all transactions with Revenue electronically through the Revenue Online Service (ROS). You should:

  • notify us of all relevant contracts
  • notify us of payment details
  • provide details to the subcontractor of the tax you will be deducting
  • submit a deduction summary, which is a monthly or quarterly return
  • and
  • pay us the RCT deducted from payments made to subcontractors.

Subcontractor or employee?

As a principal contractor, you must decide whether your contract is with an employee or a self-employed person. Deciding what category a worker falls into depends on:

  • what work they do
  • how their work is managed
  • and
  • the terms and conditions under which you hired them.

You might incorrectly register a contract of employment as a relevant contract for RCT. If this happens, you will have to pay the Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) that you should have deducted. You may also have to pay interest or penalties. 

The following checklists give an overview for deciding if a worker is an employee or a subcontractor.

A worker is normally an employee if they:

  • are directed by someone on how, when and where to work
  • have set working hours
  • have no personal financial risk relating to the work
  • receive a fixed wage
  • supply labour only
  • cannot subcontract the work
  • are covered under the employer's insurance
  • and
  • work for only one person or business. 

A worker is normally self employed if they:

  • control how, when and where the work is done
  • control their working hours
  • are exposed to financial risk
  • control costs and pricing
  • can hire other people to complete the job
  • provide their insurance cover
  • own their business
  • and
  • can provide the same services to more than one person or business at the same time.

These checklists are guidelines to help you decide. You can find further information in the Code of Practice on Determining Employment Status.

Next: Notifications for principal contractors