Non-resident Contractors
Relevant Contracts Tax
Relevant Contracts Tax (“RCT”) is a withholding tax whereby a person known as a “principal contractor” is obliged to retain tax from amounts payable to sub-contractors engaged to carry out “relevant operations” in Ireland. If relevant operations are carried out in Ireland, RCT applies to the contract regardless of the residence of the subcontractor. Non-resident Principals who subcontract work are obliged to operate RCT. Also non-resident subcontractors who carry out “relevant operations” in the construction, meat or forestry sectors in Ireland may be subject to this withholding tax.
The definition of “relevant operations” is very broad and include the following:
- Design and build contracts
- Contracts providing installation services, e.g. power supply, wind farms, heat, light, air-con, telecom systems
- Repair, demolition, site preparation and clearance services (including skip hire)
- Haulage services, crane and scaffolding hire
- Agency services related to the provision of labour
- Operations preparatory, integral to, or rendering complete the exploration, extraction or exploitation of natural resources (minerals, oil, gas)
- Processing, cutting and preserving wood
- Slaughter, processing, packaging, preservation, cold storage, haulage of cattle, sheep, pigs or fowl
While a non-resident Principal or subcontractor may not have an obligation to register for other taxes in Ireland, they may have to register and operate RCT. If you are considering undertaking work in the construction, meat and forestry sectors in Ireland, it is advisable that RCT is considered from the outset.
There are three rates for RCT; the 35% rate applies to subcontractors who are not yet registered with Revenue and for subcontractors who have outstanding compliance issues. The 20% deduction rate applies to subcontractors who are registered with Revenue and have an established compliance record. There is also a zero per cent rate which applies to subcontractors who satisfy certain Revenue requirements.
The Deloitte RCT team can advise on whether RCT applies to you along with advising and assisting both Principals and subcontractors with all aspects of RCT including compliance and processes required. The team can also assist with completing the RCT registration and obtaining the best RCT deduction rate.
