Setting up a construction or contracting firm in Ireland involves more than finding work. You need to choose a business structure, register with Revenue for the right taxes, including Relevant Contracts Tax (RCT) if you work as a subcontractor or a principal contractor, hold the registrations your trade requires, put insurance in place and meet strict health and safety rules. This guide takes you through each step, from sole trader or company to opening a business bank account.
Choose How You Want to Work
There are basically two methods of running a building business in Ireland: as a self-employed person (the most popular option) or as a company (we suggest registering Ltd company to open construction business in Ireland). When it comes to making the right choice, consider the following aspects:
- Whether you’re planning to hire employees or not – sole traders can be employers either, however, it’s better to register as a Ltd company
- Whether you’re looking to expand – entrepreneurs anticipating growth should register as Limited companies and enjoy the perks of owning a company
- Evaluate risk potential: Sole proprietors are solely liable for tax compliance and the debts of their enterprise (they will be obliged to sell their assets to pay off their debtors if the business stops generating income). If a limited liability company fails to pay its debts, the director’s private capital is inviolable and cannot be used to collect the debt.
To help you make an informed decision, check out our detailed guide on the difference between sole trader and limited company.
Select Your Construction Service Type/Activity
Focus on a specific type of activity. There are 5 key sectors of construction market in Ireland supported by various government initiatives.
Residential construction includes construction of single-family housing and multi-family housing. The sector will be supported by the government’s National Development Plan (NDP) 2021–2030 aimed at delivering new affordable homes.
Institutional construction includes buildingeducational buildings, religious buildings, institutional buildings, healthcare buildings research facilities. The growth of the sector is supported by the execution of healthcare and educational projects announced in the 2022 Budget and NDP.
Energy and utility construction includes construction of electricity, power, gas, oil, telecommunications, sewage and water infrastructure. The growth of the sector is supported by the government’s Climate Action Plan.
Commercial construction includes the construction ofrestaurants, hotels, retail premises, office buildings, and other commercial buildings. The sector’s growth will be supported by the government’s financial assistance to tourism and culture-related businesses introduced in the 2022 Budget.
Infrastructure construction: rail infrastructure, road infrastructure, and other infrastructure projects. The sector will be supported by government initiatives to develop public transportation, roads, maritime transport, and regional airports reflected in NDP and 2022 Budget.
Get the NACE Code
NACE Code characterises the classification of your economic activity. Both limited liability businesses and sole traders are required to obtain and provide the NACE code, however, with specific differences to consider. Limited liability companies provide the NACE code both to CRO during company formation process and to the Revenue when registering for tax. Sole proprietorships only provide the NACE code when registering for income tax with the Revenue. They’re not required to make filings with NACE code to CRO unless they trade under a name other than their own. In this case, they must register a business name. The NACE code is required for statistical purposes.
Register for Taxes with the Revenue
Any business registered in Ireland must register for tax. This section highlights the most common taxation types for entrepreneurs looking to open construction businesses in Ireland.
Corporation Tax for Company Owners
A corporation tax is tax levied on a company’s taxable income (revenue minus operational, marketing, general and administrative expenses, cost of goods sold, and other expenses). The current rate of corporation tax in Ireland is 12.5%.
Income Tax for Self-employed
Income tax is a tax calculated on the income of self-employed individuals. Unlike corporation tax, all person’s income falls under income tax. Income tax is calculated at a progressive rate. The more you earn, the higher rate is applied to income.
Value Added Tax (VAT)
VAT is a tax levied on the price of a product or service at each stage of product manufacturing, distribution, and sale to the final consumer. As for the construction business, it is generally a subject to 13.5% VAT rate. However, there are exceptions, and sometimes the tax can go up to 23%.
PAYE/PRSI for Employers
PAYE (Pay As You Earn) and PRSI (Pay-Related Social Insurance) are additional taxes that have certain differences. PAYE is a tax that is calculated from employees’ salaries. PRSI is paid per employee and is positioned as insurance.
Relevant Contracts Tax (RCT)
RCT is a withholding tax on payments from a principal contractor to a subcontractor in construction, forestry and meat processing, run online through Revenue’s eRCT system. The principal contractor deducts tax at 0%, 20% or 35%, depending on the subcontractor’s registration and tax compliance record. A subcontractor should be registered with Revenue before work starts, as an unregistered subcontractor faces the 35% rate. For the details, see our RCT registration and RCT return services.
Get the Permissions and Registrations Required
Which registrations you need depends on your trade. The main ones are:
Construction Industry Register Ireland (CIRI)
CIRI is the register of competent builders and contractors. It was placed on a statutory footing by the Regulation of Providers of Building Works Act 2022, and many clients and public bodies already ask for CIRI registration. Check the current registration requirements with CIRI before you tender.
Safe Pass
Anyone working on a construction site in Ireland must hold a valid Safe Pass card, issued after a one-day health and safety course run under SOLAS. Make sure you and every worker you send to site have a current card.
Architects: RIAI Register
The Royal Institute of the Architects of Ireland keeps the statutory register of architects. Only people on the register can use the title architect.
Safe Electric Program
The operation of heating and electrical work in Ireland is regulated by the Register of Electrical Contractors of Ireland (RECI). If an individual or a company intends to carry out electrical work in a domestic setting, they are legally required to register with the Safe Electric program by RECI.
Engineers Ireland
Engineers in Ireland can obtain recognition of their qualifications with Engineers of Ireland. This is an authoritative body that regulates the work of local engineers providing them with not only licences needed to carry out the work but also inspiring engineers to expand their careers at home and abroad.
Gas Installers: RGII
Domestic gas work, including installing, servicing and repairing gas appliances, may only be carried out by a Registered Gas Installer listed with the Register of Gas Installers of Ireland (RGII).
Obtain Insurance
Construction business is associated with plenty of risks and potential hazards. These are malfunctioning equipment, on-the-job damage or death of construction workers, vandalism, theft, and damage to your tools and equipment, etc. If you don’t have the right insurance in place, one wrong move can lead to devastating financial losses to your business. Let’s have a look at a few most common insurance types that one must obtain to open construction business in Ireland.
- Public Liability Insurance protects from liability if a third person (other than employees) gets an injury, loss or damage as a result of your activity;
- Employers Liability Insurance protects from liability if any of your employees sustains damage or dies during the work;
- Plant, Machinery, and Equipment Insurance provides cover for any loss of equipment or damage to them during the performance of work
- Personal Accident Insurance protects from loff of income or benefits if you or your employee sustain injury that prevents you from doing your work.
Health & Safety
Construction work in Ireland is governed by the Safety, Health and Welfare at Work Act 2005 and the Safety, Health and Welfare at Work (Construction) Regulations 2013, enforced by the Health and Safety Authority (HSA). In practice this means:
- preparing a written safety statement based on a risk assessment of your work;
- on projects where these roles apply, working with the Project Supervisor for the Design Process (PSDP) and the Project Supervisor for the Construction Stage (PSCS) appointed by the client;
- making sure workers hold Safe Pass and any skills cards their tasks require;
- reporting serious accidents to the HSA.
The Construction Industry Federation’s health and safety service offers training and guidance for members.
Open Bank Account for Your Enterprise
A separate business bank account keeps business income and expenses apart from your own money, makes RCT, VAT and payroll records easier to keep, and is usually needed before you can borrow or lease equipment. If you need help, see our business bank account opening service.
Key Takeaways on How to Open Construction Business in Ireland
This blog post provides a concise step-by-step guide to help entrepreneurs open a successful construction business in Ireland. We cover important aspects such as choosing the right business model, selecting a construction service type, registering for taxes, obtaining necessary permissions and licenses, securing insurance, prioritizing health and safety, and opening a business bank account. By following these steps, aspiring construction business owners can navigate the legal landscape and increase their chances of success in Ireland’s thriving construction sector.
Related guide: licensed and ready to take on work? The next step is winning customers. See this practical guide on how to get more leads as a tradesman in Ireland, comparing lead sources with real cost data.
