RCT for Non-Resident Subcontractors in Ireland: A Practical Guide
If you are an overseas construction business taking on subcontracting work in Ireland, you may have Irish tax obligations even if your business is not resident in Ireland.
One of the main rules to understand is Relevant Contracts Tax (RCT).
RCT is a withholding tax that applies to certain payments made by principal contractors to subcontractors in the construction industry. For non-resident subcontractors, understanding how RCT works can help avoid unexpected deductions and ensure the correct tax treatment is applied.
In this guide, we explain how RCT applies to non-resident subcontractors and some of the wider Irish tax considerations that may arise.
Does RCT Apply to Non-Resident Subcontractors?
Yes. Revenue confirms that RCT applies to non-resident subcontractors where relevant work is being carried out in Ireland. If a principal contractor is paying a non-resident subcontractor for work that falls within RCT, the principal contractor should deduct RCT from the gross payment.
This applies even where the principal contractor is also non-resident.
RCT rates are currently 0%, 20% and 35%, depending on the subcontractor’s tax compliance position.
For a broader explanation of how RCT works, including the different rates and the general RCT process, see our guide to Understanding Relevant Contracts Tax (RCT) in Ireland.
What Should You Do Before Starting Construction Work in Ireland?
If your business is based outside Ireland and you are planning to take on construction work here, it is worth establishing your Irish tax position before the project begins.
Consider:
- Whether the work falls within RCT
- Whether you need to register for Irish taxes
- How RCT will be deducted from payments
- Whether the VAT reverse charge applies
- Whether you may be entitled to an RCT refund
- Whether you have employees who create Irish payroll obligations
- What records you need to maintain
Getting these points right at the beginning can help prevent problems later.
