The ECB has criticised the Budget move to put a stamp duty charge on individual ATM transactions, warning that it could affect the legal tender status of euro banknotes. However the Department of Finance has said it regards the decision as a “ domestic taxation issue” and said it had no plans to reconsider it, as the ECB asked it to do.

In an opinion published on its website, the ECB said that the measure included in the Finance Bill - to put a tax of 12 cent on ATM transactions up to a maximum of €2.50 a year for a single function card – makes the use of euro banknotes more expensive than electronic methods of payment, “thus putting legal tender at a disadvantage.”

It said 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.” Notwithstanding the reasons for the change and the low level of the charges, the ECB said it was concerned it could set a precedent “for possible future taxation on the channels to access euro banknotes.” It called on the Government to reconsider the measures.

National competency

However the Department of Finance said the issue was one of domestic taxation “over which there is national competency under EU treaties.”

As such, consultation on the moves with the ECB was not required, it said. National sovereignity over taxation is a “ very important matter and one which we vigorously protect,” it added. It said the intention remained to enact the measure into law in the Finance Bill.

The move was taken in the Budget to encourage people to use cards more for payments, in line with the National Payments Plan which aims to reduce reliance on cash. The annual charge will be limited to €2.50 on a single use credit or debit card and €5.00 on a dual use charge.