ECB warns plans for charge on Irish ATM withdrawals could be illegal

It is worried the plans are tantamount to putting a tax on cash withdrawals

ATM, withdraws, charges, tax, cash withdrawals, ECB, banks

File photo of money being taken out of a cash machine | Image: Lynne Cameron / PA Wire/Press Association Images

The European Central Bank (ECB)  says plans for charging stamp duty on ATM withdrawals in Ireland could be illegal.

It is worried that the plans to charge 12c for each withdrawal are tantamount to putting a tax on cash withdrawals.

It is also worried that the move could pave the way for other taxes on accessing cash, and also make cash transactions more expensive than electronic ones.

However the move is still being progressed, and was included in the Finance Bill as it passed the Seanad this morning.

Section 64 of Finance Bill 2015 includes a charge of 12c on all ATM withdrawals, subject to an annual ceiling of €2.50 - or €5 in the case of combined ATM and debit cards.

In exchange, the usual stamp duty on those cards is being abolished.

The ECB says it "understands the objective of encouraging the greater use of electronic methods of payment in Ireland".

"This should not, however, lead to legislation making the use of Euro banknotes more expensive than electronic methods of payment, thus putting legal tender at a disadvantage".

The ECB also says that since the stamp duty charge is a form of taxation on the withdrawal of cash from ATMs, it could affect the legal tender status of Euro banknotes.

"Moreover, notwithstanding the public reason for the stamp duty charge and the low level of charges imposed by the draft law, the ECB is concerned that this may set a precedent for the possible future taxation on the channels to access Euro banknotes," it adds.

At present, charges on ATM withdraws are charged by individual banks.