Relevant Contracts Tax (RCT)

RCT applies where a principal contractor makes a payment to a subcontractor in respect of relevant operations [construction, forestry or meat processing operations]. Relevant operations are defined in the legislation but the legislation is silent as to where the relevant operations are performed. On a strict reading, a principal contractor would be required to operate RCT in respect of relevant operations performed by a subcontractor whether or not the subcontractor is carrying on business in the State and whether or not the relevant operations are carried on in the State.

In future, Revenue will accept that RCT does not apply where relevant operations are performed wholly abroad. RCT will be regarded as applying where the relevant operations are performed or partly performed in the State. For this purpose, the State is taken to include the territory of Ireland, its territorial waters and any area outside the territorial waters of Ireland over which Ireland has exploration or exploitation rights.

Contracts are sometimes performed partly in the State and partly outside. Where the performance abroad is merely incidental to the performance in the State, RCT will be regarded as applying to the full contract.

In all other cases, RCT need only be applied to the part of the contract that is performed in the State. Where there is a single price for the entire contract, payments may be apportioned on a basis agreed in advance with the Inspector of Taxes. For example, payment for construction of a gas pipeline to the UK might be apportioned on the basis of the respective lengths of the pipeline in the State and in the UK.