The VAT reverse charge system applies to principal contractors and sub-contractors involved in construction operations to which Relevant Contracts Tax (RCT) applies (but excluding haulage for hire). The charge the sub-contractor makes to a principal contractor does not include VAT. Instead the principal contractor calculates the VAT (current rate 13.5%) on the amount charged by the sub-contractor and pays the VAT directly to the Revenue Commissioners through the VAT return. The invoice received from the subcontractor should contain the following statement “VAT on this supply to be accounted for by the Principal Contractor”.
*The following services are liable to VAT at 23% where they are supplied for the purposes of carrying out a relevant operation.
- Supply and erection of scaffolding
- Supply of a crane with an operator
- Supply and erection of temporary fencing
- Hire of site labour through an agency