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For Oral Answer on : 09/05/2023
Question Number(s): 107 Question Reference(s): 21436/23
Department: Finance
Asked by: David Stanton T.D.


To ask the Minister for Finance if he will consider the application of the relevant contracts tax instead of the application of the professional services withholding tax to high turnover contracts with a margin of less than 20% such as archaeological contracts; and if he will make a statement on the matter.


I am advised by Revenue that Professional Services Withholding Tax (PSWT) is a deduction at the standard rate of income tax, currently 20%, from relevant payments made by accountable persons to specified persons in respect of certain professional services. The tax deducted is a payment on account against the specified person’s final Income Tax or Corporation Tax liability for the year, with the amount of PSWT deducted credited against the tax liability for that year. A specified person can include businesses undertaken through a company, sole trade or partnership.

Accountable persons include Government Departments, State agencies and bodies, local authorities, colleges and authorised medical insurers.

The range of professional services that come within the scope of PSWT includes, but is not limited to:

  • Services of a medical, dental, pharmaceutical, optical, aural or veterinary nature.
  • Services of an architectural, engineering, quantity surveying or surveying nature, and related services.
  • Services of accountancy, auditing or finance and services of financial, economic, marketing, advertising or other consultancies.
  • Services of a solicitor or barrister and other legal services.
  • Geological services.

Relevant Contracts Tax (RCT) is a withholding tax that applies to certain payments made by principals to subcontractors in the construction, forestry and meat processing sectors. The RCT tax deducted is credited against the subcontractors Income Tax or Corporation Tax liability for that year.

The rate of deduction that is applied on payments to subcontractors can be zero, 20% or 35% and is determined by a number of factors including the tax compliance record of the subcontractors.

The circumstances requiring the engagement of an archaeological services provider, the type of work being carried out and to whom the services are being provided will determine whether it is appropriate to apply either RCT or PSWT to the payments for the services.

Site investigation operations, such as archaeological investigations, which have not been imposed by regulation and which involve a considerable degree of labour-intensive fieldwork would normally be considered to be a construction operation and they would therefore be subject to RCT. However, archaeology investigations that are ancillary to a construction project or that are imposed by regulation or where the fieldwork is a minor part of the investigation would not be considered to be a construction operation but would instead be regarded as a professional service and would therefore come within the scope of PSWT.

Where a principal contractor enters a relevant contract with a subcontractor, they are obliged to submit details of the contract to Revenue. Immediately before a principal makes a payment to a subcontractor, the principal must notify Revenue of their intention to do so. Revenue will respond with a deduction authorisation and notify the principal of the rate of deduction to be applied to the payment.

While some persons may operate as a principal for the purposes of RCT and an accountable person for PSWT, these withholding taxes in general apply to different sectors and the administrative process for each withholding tax is different. However, they both play an important role in ensuring the tax compliance of service providers and subcontractors that come within scope of each of the withholding taxes.