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Contractor guide
Contracting in Ireland means dealing with Revenue: VAT once you pass the threshold, Relevant Contracts Tax on construction work and Professional Services Withholding Tax when a public body pays you. Here is what each one means for your day rate and your cash flow.
| Scheme | Who it applies to | What happens |
|---|---|---|
| VAT | Sole traders and companies supplying services above €42,500 a year | You charge VAT on your invoices, usually at 23%, and file VAT returns |
| RCT (Relevant Contracts Tax) | Subcontractors in construction, forestry and meat processing | The principal contractor deducts 0%, 20% or 35% from each payment, depending on your standing with Revenue |
| PSWT (Professional Services Withholding Tax) | Professional services paid by government departments, local authorities, the HSE and other accountable persons | 20% is withheld from each payment and credited against your income or corporation tax |
| Self assessment | Sole traders and company directors | Preliminary tax during the year and a return (Form 11) after it, filed through ROS |
As a sole trader you register for income tax as self employed; as a company you register the company for corporation tax and, if it pays you a salary, as an employer. Registration for VAT follows once you pass the threshold, or earlier if you choose to register voluntarily. Most contractors manage all of this online through the Revenue Online Service (ROS), often with an accountant acting as agent.
RCT is a withholding tax for construction, forestry and meat processing. If you work as a subcontractor on a construction site, including data centre and pharma plant builds, the principal contractor must register the contract with Revenue and deduct tax at the rate Revenue sets for you: 0% if you are fully tax compliant, 20% if you are registered but not fully compliant, and 35% if you are not registered. Keep your tax affairs up to date to stay at 0%.
When a public body pays you for professional services, such as consultancy, engineering, IT or accountancy, it withholds 20% and pays it to Revenue on your behalf. The tax is not lost: you get a Form F45 for each payment and claim the total as a credit in your tax return. Factor the delay into your cash flow when you work for the public sector.
Ireland has no separate tax regime for contractors working through their own company, but Revenue and the Department of Social Protection can look at whether a contractor is in reality an employee. They use the Code of Practice for Determining Employment Status and the five question framework set out by the Supreme Court in 2023. Long engagements with one client, set hours and close supervision point towards employment.
This guide gives general information based on public sources. Tax rules and thresholds change: check your situation with a chartered accountant or tax adviser, or with Revenue.
Compare limited company, umbrella and sole traderWhat is RCT and does it apply to me?
Relevant Contracts Tax applies when a principal contractor pays a subcontractor for work in construction, forestry or meat processing. The principal notifies Revenue of each payment through eRCT and Revenue tells it to deduct 0%, 20% or 35%, depending on the subcontractor's tax compliance record. Most IT, pharma and finance contracts are not in scope, but construction and data centre build contracts often are.
What is PSWT?
Professional Services Withholding Tax is deducted at 20% by accountable persons, such as government departments, local authorities, the HSE and other public bodies, when they pay for professional services. You receive a certificate (Form F45) for the tax withheld and claim it as a credit against your income tax or corporation tax.
When do I pay income tax as a self employed contractor?
Self employed contractors and company directors pay preliminary tax for the current year and file a return for the previous year by 31 October, with a later date when you file and pay online through ROS.
Do I charge VAT on a contract day rate?
If you are registered for VAT, yes: day rates are quoted excluding VAT and you add VAT to your invoice, usually at the standard rate of 23%. Registration is required once your turnover from services is likely to exceed €42,500 in a 12 month period.
How does Revenue decide if I am really self employed?
Revenue applies the Code of Practice for Determining Employment Status, together with the framework set out by the Supreme Court in 2023: is there an exchange of work for pay, do you provide your own services, how much control does the client have, and what does the overall relationship look like. The label in the contract is not enough on its own.
