RCT and the VAT reverse charge for subcontractors in Ireland

By Randall Strickland · Updated 22 October 2026 · 3 min read

If you’re a subcontractor in the Irish construction industry, two things decide what you get paid: Relevant Contracts Tax (RCT), which the principal contractor may deduct, and the VAT reverse charge, which means you don’t charge VAT at all. Both are run by the principal through Revenue’s online systems. Here’s what you need to know as the one sending the invoice.

How RCT works

RCT applies when a principal contractor pays a subcontractor under a construction contract (it also covers forestry and meat processing). Before making each payment, the principal tells Revenue through eRCT, and Revenue sends back a deduction authorisation that sets the rate for that payment:

The principal pays you the payment less the RCT, and pays the RCT to Revenue. You don’t lose it: the RCT deducted is credited against your own tax, and you can see each deduction in your Revenue Online Service (ROS) account. Revenue reviews rates regularly, so a subcontractor who gets their tax up to date can move to a lower rate.

RCT comes off the payment before VAT, and under the reverse charge (below) there’s no VAT on the payment anyway.

The VAT reverse charge

Where RCT applies to construction services, the VAT reverse charge applies too. You don’t charge VAT; the principal contractor works out the VAT on what you charged and pays it to Revenue on their own VAT return.

Revenue’s guidance is that your invoice shows everything a normal VAT invoice would, except the VAT rate and the VAT amount, and includes your VAT number and the statement:

“VAT on this supply to be accounted for by the Principal Contractor.”

If you work directly for a homeowner or another customer who isn’t a principal contractor, RCT doesn’t apply, and you charge VAT the normal way (usually 13.5% for construction services).

A worked example

You invoice a principal contractor €20,000 for this month’s work. They hold 5% retention under the contract, and Revenue’s deduction authorisation says 20%.

Strictly, it’s the principal who deducts RCT, not you. Showing the expected deduction on your invoice simply means both sides agree on what will land in your account, and it makes chasing a short payment much easier.

How JobFigure handles it

Set your country to Ireland and JobFigure works in euros with Irish wording. In Company Profile add your VAT number and tick “I work as a subcontractor under RCT.” Each invoice then has a reverse charge box and an RCT rate (0%, 20% or 35%, matching the deduction authorisation), and prints the Revenue wording, any retention, the RCT deduction and the amount you’ll receive.

This is a plain-English summary, not tax advice. Revenue’s guidance on Relevant Contracts Tax and on the reverse charge for construction services has the full rules; check anything unusual with your accountant.

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