New Irish RCT Scheme

01 March 2011

Changes to the Operation of Relevant Contracts Tax (RCT)

In the December 2010 budget the Minister for Finance announced significant reforms to the Relevant Contracts Tax (RCT) sheme to enhance its effectiveness , reduce opportunities for fraud and decrease the administrative burden on the Revenue. The Finance Act 2011 (enacted on 6 February 2011) enacted a new scheme of RCT into Irish Law which will replace the current scheme on a date yet to be decided.

The key elements of the Act are:

Replacement of the current RCT rates of 0% and 35% with a three rate withholding scheme:

• zero rate will apply on the same basis as currently applies to a C2 holder
• standard 20% rate for subcontractors registered for tax with a record of substantial compliance
• 35% rate which will be a default rate where both zero and 20% are not appropriate

Abolition of the monthly RCTDC repayment system and replacement with an offset system and annual repayment

Strengthening of the reporting system for RCT principals

Mandatory use of electronic payments and filing of returns

For further information see Revenue eBrief 12/11