Relevant Contracts Tax (RCT) applies to payments made by a principal contractor to a subcontractor under a relevant contract i.e. a contract for the carrying out of, or the supply of labour for the carrying out of, relevant operations in the construction, meat processing and forestry industries. Tax is deducted by a principal contractor on payments to a subcontractor as advised by Revenue.
The scheme applies only where the relevant operations are performed under a relevant contract with a principal as defined in the RCT legislation.
The definition for principal contractors includes “any board or body established by or under statute … and funded wholly or mainly out of funds provided by the Oireachtas”. As such, school Boards of Management are principal contractors for the purposes of RCT.
RCT is a withholding tax system whereby a principal contractor deducts tax at 0%, 20% or 35% from payments to subcontractors as advised by Revenue on the ROS system.