RCT for subcontractors in Ireland: rates, invoices and getting your money

By Paddy Darcy, founder of Grafta · 6 min read · Last reviewed July 2026 · Always confirm current rates on revenue.ie

If you do construction work for another contractor — rather than directly for the homeowner — you're probably inside the RCT system, whether you know it or not. RCT decides how much of your invoice you actually receive, and the VAT rules flip completely. Here's the plain-English version.

What RCT is

Relevant Contracts Tax is a withholding system for the construction industry (it also covers forestry and meat processing). When a principal contractor pays a subcontractor for construction operations, the principal may have to hold back a slice of the payment and send it to Revenue on your behalf. It is not an extra tax — it's a deposit against your own income tax, credited to your Revenue account.

The three deduction rates

• 0% — you receive the full payment. Broadly for subcontractors with an established, fully up-to-date compliance record over the previous three years.
• 20% — the standard rate for registered subcontractors whose tax affairs are substantially in order.
• 35% — for subcontractors who aren't registered for RCT or whose compliance record has serious gaps. If you're getting 35% deducted, registering and tidying your filings is the single fastest pay rise available to you.

How the money actually flows

• Everything runs electronically through Revenue's eRCT system inside ROS — there are no paper cards or certs any more.
• Before the work starts, the principal notifies Revenue of the contract (a 'contract notification').
• Before EACH payment, the principal must notify Revenue of the payment; Revenue replies with a deduction authorisation telling them what rate to deduct from you.
• The principal pays you the net amount and must give you a copy of the deduction authorisation — keep every one.
• The deducted money lands as a credit on your Revenue record. You offset it against your income tax (or other taxes), and anything left over is refundable after your return is filed.

The VAT rule that catches everyone: reverse charge

For construction services covered by RCT, the normal VAT logic flips. You do NOT charge VAT on your invoice to the principal contractor — instead the principal accounts for the VAT themselves. This is the 'reverse charge'. Your invoice shows the amount for the work with no VAT added, plus a required line of wording.

Note the boundary: reverse charge applies to your invoices to a principal contractor under RCT. When you work directly for a homeowner or business as your own boss, normal VAT rules apply — 13.5% or 23%, two-thirds rule and all.

What you should do as a subbie

• Register for RCT as a subcontractor in ROS before starting work under a relevant contract (as well as being registered for income tax).
• Confirm the principal has your correct details — wrong details can mean the 35% rate by default.
• Keep every deduction authorisation copy, and reconcile them against what actually landed in your bank.
• Check your credits in ROS regularly and claim offsets/refunds when you file — deducted money doesn't come back by itself.
• Remember RCT deductions are not your final tax bill — you still file returns; the credit just pays down what you owe.

Common mistakes

• Not registering, and silently losing 35% of every payment when 20% or 0% was available.
• Adding VAT to invoices that should be reverse charge (and then having to credit-note and reissue).
• Treating the deduction as money gone, rather than a credit to claim.
• No paper trail — no deduction authorisations kept, no reconciliation, and a panic at filing time.