Tax assistance from Westland Tax & Accountancy Ltd, Dublin, Ireland - Phone +353 (0) 86 8231823 for a no obligation meeting

Relevant Contract Tax (C45)

& C2 Applications

A subcontractor must make a C2 application to the Revenue Commissioners so that the contractor can make payments free of Relevant Contract Tax (RCT) withholding tax. Tax Assistance from Westland Tax & Accountancy Ltd., Dublin, Ireland
Relevant Contract Tax (RCT) is withholding tax applied to payments made to subcontractors in the construction, meat processing & forestry industries. The rates of withholding tax are 0%, 20% & 35%.

Budget 2011 changes to RCT

There have been major changes to RCT since 1st January 2012.

Quick guide to the operation of RCT.

All transactions with Revenue must be conducted electronically through ROS
Principals must register with ROS. (Revenue on line).
3 rates of tax. Subcontractors who satisfy the current criteria for C2 holders 0%. Registered subcontractors 20%. Unregistered subcontractors or subcontractors with serious compliance issues 35%
Principal contractors should ensure that they identify all subcontractors & must register each contract online. (We recommend obtaining PPS + copy of D/licence or passport + proof of address as standard. )
Contracts in place before 1st Jan 2012 must also be registered online.
Each separate contract must be notified,
Subsequent contracts with the same subcontractor must be notified unless they are an ongoing contract.
A contact is an ongoing contract if the terms do not change, the parties to the contract do not change and if moving sites the subcontractor does not have to submit a new tender.
Before making a payment a Principal contractors must notify Revenue online of the payment & will receive a notification advising the deduction to make.
Before completing their periodic RCT Return a principal can view his deduction summary online make any amendments if necessary & then file online.
The principle must give the Subcontractor a copy of the Revenue deduction Authorisation received from ROS. The current RCT certs should not be issued from 1st Jan 2011 for payments made after that date.
Subcontractors will automatically have the withholding tax credited against Tax liabilities outstanding or as they arise. Revenue will issue a statement of account to you & repayment will only be made after the end of the year & after all returns are filed & tax paid.
Existing RCT certs in hand- These can be reclaimed under the old rules up to 4 years from the end of the period they relate to

VAT & RCT

Since September 1st 2008 a subcontractor's supply of services to a Main Contractor is at 0% VAT. Instead of charging VAT the Subcontractor is obliged to include an endorsement on his invoice to the Main Contractor. The Main Contractor must self account for the VAT due. Essentially therefore no VAT changes hands.

The incorrect application of RCT can & does lead to serious problems resulting in serious penalties during Revenue Audits. You should always take professional advice.