You have worked as a construction subcontractor in your own name and are now forming an Irish LTD. The main contractor already knows you, your site access is unchanged and the work may look identical. Can its accounts team simply put 'Limited' after your name and keep using the same RCT details?
Plan the change as a handover between two taxpayers, not a cosmetic invoice update. This guide focuses on construction subcontractors moving from sole trader to company, rather than all RCT industries or every business-transfer tax issue. It uses official guidance checked on 25 October 2026 and is preparation material, not a ruling on a particular contract or deduction rate.
The same tradesperson does not mean the same taxpayer
Revenue describes a company as a separate legal entity with its own Tax Reference Number, while a sole trader's personal tax affairs use the individual's PPSN. That distinction remains even where you are the LTD's only shareholder and director.
A familiar trading name, phone number or site supervisor can hide the change from a customer's accounts team. Make the new legal identity explicit. The company name on the contract, supplier record, invoice, tax registration and payment instruction should tell a consistent story.
Before the switch, ask the principal which documents its onboarding process needs and who will approve the change. A company certificate is useful identity evidence, but it does not establish the RCT rate or settle ownership of an old receivable.
Map the work before choosing a payment cutover date
Prepare a schedule by contract and work package: the contracting party, work already performed, unpaid certificates, retentions, variations, defects obligations and future work. Agree the commercial handover with the principal and obtain legal advice where contracts or liabilities need to move.
Suppose a fictional electrician agrees a 1 November transition. October work and a retention under the sole-trader contract do not automatically become company income because the cash arrives in November. Likewise, future work should not be invoiced by the individual merely because its old supplier account is easier to use.
Do not backdate a contract or reissue an old invoice solely to obtain a preferred tax outcome. Ask the advisers to document the actual arrangement, then have the principal follow the appropriate notification or correction process. Payment date alone is not a complete entity-allocation rule.
Give the principal the company's correct Revenue details
Revenue requires a subcontractor to supply its official recorded name, TRN and identity evidence. Check the company record rather than sending a mixture of the individual's name and the new LTD's number. The CRO company number and Revenue TRN perform different jobs.
Revenue's RCT overview provides for registration through ROS. Its subcontractor manual also describes automatic RCT registration and rate review in certain first-contract-notification cases. Coordinate the route with the accountant and principal; do not assume the incorporation filing has completed Revenue registration.
Check the resulting contract confirmation promptly. If the entity, dates, site or work details are wrong, contact the principal to correct them and Revenue where necessary. Use a known secure channel for identity documents, and verify changed bank instructions independently rather than relying only on an unexpected email.
Do not assume the sole trader's 0% rate transfers
The current RCT rates are 0%, 20% and 35%. Revenue determines the applicable rate; neither an incorporation agent nor the principal can promise that a new company will receive the sole trader's treatment.
Section 3.3 of Revenue's subcontractor manual describes a system rate of 20% for new tax registrations without a three-year compliance history, with scope for Revenue to consider a different outcome under the rules. This is not a guarantee that every new LTD will be paid at 20% or 0%.
The manual's company assessment also considers directors and specified owners or controllers, not just the company's short filing history. Incorporation is therefore not a clean slate for outstanding personal or connected-business compliance issues. Obtain a review of the actual record before budgeting on a lower deduction.
Check the payment authorisation, not an old screenshot
A principal notifies a relevant contract and must notify Revenue before making a payment. Revenue then issues the deduction authorisation showing the amount to withhold. A contract acknowledgement or an earlier rate letter is not a replacement for the authorisation for the payment being made.
Ask the principal to confirm that the intended payment is linked to the correct taxpayer and contract. If the company supplies part of a continuing project, the commercial handover and Revenue records need to agree; do not simply overwrite the history of the individual's work.
Match the authorisation details to the invoice or payment certificate and keep the deduction information supplied by the principal. Resolve an identity mismatch promptly: Revenue's manual describes 35% treatment where the supplied name and tax reference cannot be validated. Do not 'fix' that by borrowing another taxpayer's number.
Budget the first company payment on the authorised deduction
Assume an invented payment of EUR 10,000 for construction services where the VAT reverse charge applies, with no retention or other adjustment. If the authorisation requires 20% RCT, EUR 2,000 is withheld and EUR 8,000 reaches the company. At 35%, the figures are EUR 3,500 and EUR 6,500.
The table shows arithmetic, not a prediction of the company's rate. If a business needs EUR 9,000 for imminent wages and materials, even the EUR 8,000 receipt leaves a EUR 1,000 funding gap. Do not promise suppliers payment from the full invoice amount without modelling that difference.
| Authorised RCT rate | Cash from EUR 10,000 |
|---|---|
| 0% | EUR 10,000 |
| 20% | EUR 8,000 |
| 35% | EUR 6,500 |
Keep tax credits separate from available cash and profit
Revenue automatically credits RCT deducted to the subcontractor's tax record. Its published offset process links credits to declared liabilities, including CT1 or Form 11, VAT3 and employer liabilities, with separate steps for preliminary tax and specified arrangements. A credit is not necessarily an immediate bank refund.
In the example, the EUR 2,000 deduction is not a price discount and does not establish the company's final Corporation Tax bill. Give the accountant the full payment and deduction evidence rather than recording only EUR 8,000 of sales because that is the bank receipt.
Keep the individual's older RCT credits and the company's credits in separate reconciliations. Do not enter a sole-trader credit as an opening company tax asset without establishing the legal and Revenue treatment. Ask about outstanding returns, offsets or repayment claims before closing the old business's tax records.
Check whether the company is also a principal contractor
The LTD may receive payments as a subcontractor and engage other subcontractors itself. Those roles have different workflows. Being subject to a deduction on incoming work does not discharge the company's duties when it pays someone else under a relevant contract.
Revenue requires principals to register and operate the electronic notification, deduction-summary and payment process. If you subcontract part of the same project, use the project's Site Identifier Number as required. Identify who will handle notifications before the first outgoing payment, including during the bookkeeper's absence.
Also check employment status. RCT does not replace PAYE where the arrangement is employment. A worker's invoice, RCT entry or use of the word 'subcontractor' cannot settle the real relationship by itself. Review the facts using Revenue's current framework rather than selecting whichever system appears administratively easier.
Keep construction VAT separate from the RCT percentage
Where the construction reverse charge applies, Revenue says the principal pays the subcontractor on a VAT-exclusive basis, accounts for VAT on the full consideration including RCT withheld, and calculates RCT on the VAT-exclusive consideration. The tax withheld does not reduce that full VAT base.
That does not mean every job is reverse charged or that the new company can use the individual's VAT registration. Review customer type, contract and invoice treatment separately, especially where the business also works directly for homeowners or supplies different types of work.
Give the accountant both the construction contract and the proposed invoice format. A deduction-rate change is not a change in the VAT rate, and a zero RCT deduction is not a declaration that the supply is VAT-free.
Prepare one handover file for each taxpayer
Revenue's general guidance requires original tax records for six years and leaves responsibility with the business even where an accountant holds them. Retain the evidence needed for unresolved contracts, claims or enquiries; do not delete the sole-trader files when company software is opened.
A practical handover file should let someone trace a payment from the commercial arrangement through notification, authorisation, deduction and bank receipt. Keep the older and newer records distinguishable, with a written explanation of any genuine adjustment.
- A contract-by-contract list showing which entity performed or will perform the work.
- Unpaid invoices, certified amounts, retentions, variations and the agreed treatment of continuing jobs.
- The company's Revenue name, TRN, registration position and verified payment instructions.
- Contract confirmations, site identifiers and payment deduction details for the relevant entity.
- Separate RCT credit reconciliations, old returns and outstanding Revenue correspondence.
- A named person responsible for the first company payment check and any outgoing subcontractor notifications.
Respond to a rate problem using the current review route
If a rate is unexpected, check the recorded taxpayer and the reasons in ROS before assuming the principal made an arithmetic error. Revenue's current public guidance describes resolving compliance issues, allowing at least 72 hours afterwards before self-review, and using the RCT Rate Review enquiry route if the issue cannot be resolved in ROS.
That is not permission for the principal to ignore an existing authorisation, nor a promise that a review changes deductions already made. Read the determination and obtain advice on the appropriate review or challenge route; reconcile past credits separately.
Revenue also publishes a proposed eWHT model following a closed consultation. Do not apply proposed replacement rates or terminology to today's payments as though the proposal were already operative. This guide describes the current RCT guidance checked on 25 October 2026; confirm the live rules again when implementing the handover.
Agree formation and tax-support scope separately
StartCompany.ie can help with Irish LTD formation and provides a tax-services enquiry route. Use it to describe the existing sole trade, proposed company start date, main contractors, pending payments and whether the company will also hire subcontractors.
RCT-specific registration, rate-review assistance, ongoing notifications and historic-credit work are not listed as automatic inclusions in every published formation or tax service. Ask whether the required work can be provided, who will perform it, what deadlines are covered and the total payable before ordering.
A formation certificate is not confirmation that contracts have transferred, RCT registration is complete or a 0% deduction has been approved. Coordinate legal, accounting and principal-contractor onboarding alongside incorporation so the first company invoice is supported by an agreed operating arrangement.
StartCompany.ie service
Tax Services in Ireland
Official information and next steps
Official sources checked on 25 October 2026. Revenue's current public RCT pages are read alongside the linked subcontractor manual; proposed eWHT consultation material is not treated as an operative replacement system. This checklist is not a contract-transfer document, tax-rate determination or comprehensive business-transfer opinion.
- Revenue: sole traders and companies are separate taxpayers
- Revenue: Relevant Contracts Tax overview and registration
- Revenue: RCT subcontractor details, deductions and rate review
- Revenue: RCT subcontractor manual, including new registrations
- Revenue: contract and payment notifications for principals
- Revenue: principal-contractor obligations and employment status
- Revenue: credit for RCT deducted and offsets
- Revenue: RCT deductions and construction VAT reverse charge
- Revenue: business records and continuing responsibility
- Revenue: proposed eWHT model and closed consultation