SUBCONTRACTORS Relevant Contract tax

Member Firm

Association of Chartered Certified Accountants

The term Subcontractor is significant from a tax point of view.  In  this regard it brings extra responsibilities to those operating in the construction, meat processing and forestry industries.  In the area of tax, a subcontractor is effectively operating in a realtime environment since 1 January, 2012.  When issuing a sales invoice, VAT is not charged to the main contractor, instead it should state that VAT is accounted for by the main contractor.  A subcontractor is required to register for VAT if turnover exceeds €37,500 in any 12 month period.   In receiving payment from the main contractor, tax may be deducted from payment at the rate of 35%, 20% or preferably 0%.  It may be a surprise that Local Property Tax (LPT) compliance of the Subcontractor may have a bearing on the rate, i.e. 35%, 20% or 0% communicated to the main contractor by Revenue.  J P Egan & Company will advise and assist.