RELEVANT CONTRACTS

TAX
ВЫПОЛНИЛ:
АЙРАПЕТЯН АРМЕН, НП-11
 Presentation Contents
1. Introduction
2. What is a relevant contract?
3. Principal contractors & relevant payment
4. What are relevant operations?
5. e-RCT Compliance System 2012
6. Benefits of e-RCT to customers
7. RCT system administration
8. RCT & other Irish taxes
 Introduction
• What is Relevant Contracts Tax?
TAXES CONSOLIDATION ACT 1997
oSection 530;
oSections 530A-530V (2012);
oSection 531.

A withholding tax that applies to certain payments by principal contractors to subcontractors. Where a
principal contractor in those sectors makes a “relevant payment” to a subcontractor, RCT must be operated.
RCT is a tax withholding system, which applies in certain industries. The RCT system has similar logic as
PAYE/PRSI system where Employer deduct tax from Employee’s gross salary and pay him only net pay. In RCT
system there is “Principal Contractor” (who represents Employer in PAYE system) who deduct tax from
payments to “Sub-Contractor” (who represents Employee in PAYE system).
 What is a relevant contract?
• Relevant contract means: a contract (not being a contract of employment)
whereby a person (in this Chapter referred to as ‘the contractor’) is liable
to another person (in this Chapter referred to as ‘the principal’):
(a) to carry out relevant operations,
(b) to be answerable for the carrying out of such operations by others,
whether under a contract with the contractor or under other
arrangements made or to be made by the contractor, or
(c) to furnish the contractor’s own labour or the labour of others in the
carrying out of relevant operations or to arrange for the labour of others
to be furnished for the carrying out of such operations…”.
 Principal contractor& Relevant payment
Principal Relevant contract
Subcontractor
contractor
• connected to a company involved in
any of RCT’s sector affected activities;
• local authority, public utility society or
housing association; Relevant payment
• Government Minister; payment made under a contract for
• board or body established under relevant operations. Where a principal
statute; contractor makes a “relevant” payment
• board or body established under royal to a subcontractor, RCT must be
charter and funded mainly by the operated, tax deducted if appropriate
Oireachtas; and remitted to Revenue. The whole
• carry on any gas, water or electricity contract is subject to RCT if any part of
that contract is subject to RCT.
work;
• carry on any hydraulic power, dock,
canal or railway work;
• carry out the installation, alteration or
repair of telecommunications systems. RCT’s sector affected:
1. Construction
2. Forestry
3. Meat Proceeding
 What are relevant operations?
Construction operations Forestry operations Meat processing operations

1. constructing, altering, repairing, 1. thinning, lopping, felling or 1. slaughtering certain animals and
extending or demolishing (buildings planting trees in woods, forests or poultry
or structures, works that are part of other plantations 2. catching domestic fowl, turkeys,
the land), 2. maintaining woods, forests and guinea-fowl, ducks or geese
2. installing, altering or repairing plantations 3. cutting, boning, sorting,
security, lighting, heating, air 3. preparing land for planting (this packaging, rewrapping or branding
conditioning, soundproofing systems includes woods or forests that have certain slaughtered animals and
and etc, been harvested) poultry (and any other similar
3. cleaning buildings internally and 4. hauling thinned, lopped or felled processes)
externally in the course of their trees 4. preserving or rendering the
construction, alteration or repair 5. processing wood in sawmills or carcasses of slaughtered animals and
(not including normal maintenance), similar premises poultry
4. works which are an essential part 6. transporting someone else's 5. loading, unloading and hauling
of, are in preparation for, or are materials or machinery for use in any carcasses at any premises where the
completing other construction work, of the activities listed above (known above activities take place
5. works that form an essential part as haulage for hire). 6. grading, transporting and
of, are in preparation for, or determining the sex of day-old chicks
complete works such as drilling for 7. transporting someone else's
minerals, oil, natural gas or other animals, poultry, materials,
natural resources, machinery or other goods connected
6. transporting someone else's to any of the activities listed above
materials or machinery for use in any (known as haulage for hire).
of the activities listed above (known
as haulage for hire).
Your Date Here

Your Footer Here 6

 e-RCT Compliance System 2012
Reasons:
1. Too much paper in the previous system
2. Standard RCT rate (35%) too high
3. Phased rollout of Mandatory e-filing
4. Customer confidence in Revenue Online Service (ROS)

• Mandatory electronic communication with Revenue for all principals

• No paper RCT forms in new system 0% 20% 35%
• Three RCT rates: 0%, 20%, 35%. fully good tax
compliant complianc complianc
e record e issues
 Benefits of e-RCT to customers
• Eliminate most RCT forms and reduce administrative burden
• Eliminate errors/delays associated with paper systems
• Automatic updating of Revenue’s records for Principals and
Subcontractors
• Transactions can be viewed immediately through Revenue Online
Service
• Pre-populate the periodic Withholding Summary/Return
• Clarity on RCT rate to apply to Subcontractor
• Improve cash flow for Subcontractors
 RCT system administration
1 4 Withholding* 5
Withholding*
Authorisation: Summary/ Return:
Registering for ROS Rate of tax to be deducted File RCT Return online
Copy of deduction
authorization to
Amend notified
subcontractor payments

2 3 6
Contract Payment Payment of RCT
Notification: Notification: due:
Contract details Intention to make a Pay RCT by 23rd of the
Subcontractor’s payment indication of due date (monthly or
identity the gross amount quarterly)

* ‘deduction’ in the statutory wording
 RCT & other Irish taxes
Principal contractor Subcontractor
Relevant payments –
Self-Employed Employee Company
expenditures
Deduct RCT from relevant
payments RCT No RCT RCT

Reverse charge rule: As prepayment tax for Income PAYE*** As

must calculate and account tax PRSI prepayment tax for
for the VAT on construction + USC Corporation tax
services received from sub- PRSI*
contractors USC** Employer
VAT on construction
VAT on construction services: services:
«VAT on this supply to be «VAT on this supply to be
accounted for by the principal accounted for by the
contractor» principal contractor»

*Pay Related Social Insurance

**Universal Social Charge
***Pay as you earn
Thank you for your attention!