News

ECB takes issue with Ireland's new tax on ATM withdrawals

The ECB is concerned that the move "may set a precedent for the possible future taxation on the channels to access euro banknotes."

December 11, 2015

To encourage citizens to use electronic payment methods rather than cash, Ireland's government plans to introduce a new stamp duty structure on Jan. 1 that removes the country's current levy on cash, credit cards and debit cards and replaces it with a tax that applies only to ATM withdrawals.

The new plan will require consumers to pay 0.12 euros (13 cents) per ATM transaction up to a maximum of 2.50–5 euros ($2.75–$5.49) depending on card type — the same amount as the current cap on combined payment methods.

The European Central Bank, which was not consulted about the plan, has stated its opposition to the cash tax. In an opinion piece on the ECB website, ECB President Mario Draghi wrote:

The ECB 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 would point out 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 ... the ECB is concerned that this may set a precedent for the possible future taxation on the channels to access euro banknotes.

Draghi goes on to urge the Irish government to reconsider the plan. No word yet as to whether legislators are willing to rethink their new policy.