Construction Subcontracting — Ireland: Relevant Contracts Tax (Odoo Online)

What makes the RCT distinctive, and what most software gets wrong

Under Relevant Contracts Tax, the principal contractor does not check its subcontractor once and for all. Immediately before each payment, it notifies Revenue of its intention to pay and of the amount (s. 530C(1) TCA 1997); Revenue returns a deduction authorisation stating the rate to apply. And it has no right to withhold otherwise: “A principal […] shall deduct tax from the relevant payment concerned only in accordance with the terms of the deduction authorisation” — section 530F(1).

An authorization applies to one subcontractor and one payment, and nothing more. Regulation 6(3) of S.I. No. 576 of 2012 states that it is “valid only in respect of the subcontractor named on it and the relevant payment to which it relates”, and Regulation 6(2) sets its end: the first of four events — the payment being made, the due date of the return period in which it was issued, the filing of the return, or the cancellation of the payment notification.

The module derives two rules from this that block a payment: the calendar term, which it calculates, and uniqueness, which it checks. Reusing last month's authorization is not a minor oversight: it is paying without authorization.

No rate is cached, and here is why

Neither on the subcontractor record nor on the contract. Revenue is explicit: the acknowledgement of the contract notification shows the most recently notified rate “for information purposes only”, and “This rate must NOT be taken as the rate of RCT applicable to payments to be made under the contract concerned” (Tax and Duty Manual 18-02-04, § 4).

There is a reason: the rate changes between two payments, in three ways. A monthly bulk review, in cohorts determined by location and by whether or not the business is a company. A self-review that the subcontractor requests on ROS, “effective immediately.” And intervention by a Revenue officer, “up or down,” at any time.

Only one of the three rates is written into the law

Section 530E(1) sets “zero” in paragraph (a) and “35 per cent” in paragraph (c). But paragraph (b) sets no number: it refers to the “standard rate (within the meaning of section 3) in force at the time of payment.” The middle RCT rate is therefore not 20% by definition — it is the standard rate of income tax, which is 20% today because the table in section 15, as substituted by section 3 of the Finance Act 2024, says so “as respects the year of assessment 2025 and subsequent years.” Hard-coding 20% would produce wrong calculations the day the table changes. The rate is therefore a setting, and its help text states where it comes from.

The cost of the shortcut, stated right next to the button

On any Irish payment without a valid authorisation, the module shows what paying anyway would cost. The rate scale is not in section 530U — which deals with evidence in recovery proceedings — but in section 530F(2), as substituted by section 17(1)(b) of the Finance Act 2014: 35% of the payment if the subcontractor has not been the subject of any determination within the meaning of section 530I, 20% if there is one but neither 530G nor 530H applies, 10% if 530H applies, 3% if 530G applies.

The nuance is worth keeping: the schedule is read from the determination, not from the posted rate. And the penalty is calculated per instance, and cannot be credited to the subcontractor.

The RCT does not cover construction only

“‘relevant operations' means construction operations, forestry operations or meat processing operations” (s. 530(1) TCA 1997). Forestry and meat processing fall under the same regime, with the same rates and the same authorizations. The contract therefore records the nature of the operations.

The filing due date: fourteen days by default, twenty-three on conditions

Section 530(1) defines two due dates: “the day that is 14 days after the end of that return period,” or “23 days […] in a case where the return […] is made by electronic means […] and the remittance […] is made by such electronic means […] if the return and the remittance concerned are made by that day.” The twenty-three days are doubly conditional — electronic filing and electronic payment, both within the deadline. The module treats fourteen days as the safe deadline and grants twenty-three only if the company has explicitly checked the option.

What was not found

The threshold for switching to quarterly returns does not appear in any primary source consulted — not in the Tax and Duty Manuals of Part 18-02, nor in S.I. 576/2012, nor in section 530(1), nor in section 20 of the Finance Act 2011. What is confirmed is something else: the return period is the one notified by the Collector-General, and failing that it is a tax month. The frequency is therefore a setting on the authorization, with its caveat written in the field's help text — and certainly not a rule hard-coded on an unverified figure.

The text of the Finance Act 2025 could not be consulted: irishstatutebook.ie returns 404 on every 2025 path tried. The absence of any change to RCT is nonetheless strongly corroborated by Tax and Duty Manual 18-02-11, revised in March 2026, which still states rates of zero, 20% and 35%.

What the module does not do

No connection to ROS: notifications are made on the Revenue portal, and what is recorded here is the dated determination, with its reference. The module does not file the monthly return — Revenue pre-populates it and it is deemed filed if not amended (s. 530K(2)).

The Construction Contracts Act 2013 is an entirely separate regime — private contract law, payment terms, suspension, adjudication — with no interaction with Revenue or with deductions. It is not covered here, and the module does not suggest otherwise.

Sources

Taxes Consolidation Act 1997, Chapter 2 of Part 18; S.I. No. 576 of 2012; Finance Act 2011 s. 20; Finance Act 2014 s. 17; Finance Act 2024 s. 3; Revenue Tax and Duty Manuals, Parts 18-02-01, 18-02-04, 18-02-05 and 18-02-11. Consulted on September 14, 2026.