Michael McGrath (Cork South Central, Fianna Fail)
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Relevant Contracts Tax (RCT) is a withholding tax that is applied to certain payments made by principals to subcontractors in the construction, forestry and meat processing sectors. The tax deducted is a payment on account against the subcontractors final Income Tax or Corporation Tax liability for the year, with the amount of RCT deducted credited against the tax liability for that year. The rate of deduction to be applied to payments to subcontractors can be zero, 20% or 35% depending on the circumstances of the subcontractor.

I am advised by Revenue that the question of whether RCT will apply in the circumstances outlined in the Deputy’s question will depend on the specific arrangements that are in place between the Local Authority, the community centre and the building contractor.

There is insufficient information provided to give a definitive view in relation to the RCT position in this particular case. However, if the Deputy wishes to provide further specifics, for instance by way of an email to my Office, I’d be happy to examine these and provide further clarifications.

Alternatively, if any of the parties in this case require clarification in relation to specific transactions or arrangements and the application of RCT, they can contact Revenue and provide full details through myEnquiries.