Section 124 Credit cards and charge cards

Summary

This section imposes a stamp duty of €30 (for year ending 1 April 2008 and subsequent years – previously €40) on credit card accounts and charge cards.

The duty is payable by a bank in respect of each credit card account maintained by that bank at any time during the 12 month period ending on 1 April in a year. For the 12 month period ending on 1 April 2006 and each subsequent 12 month period, “replacement accounts” are excluded from this charge.

The duty is payable by a promoter (see subsection (2)(a)) in respect of every charge card issued or renewed by that promoter at any time during the 12 month period ending on 1 April in a year. For the 12 month period ending on 1 April 2006 and each subsequent 12 month period, certain “replacement cards” issued on “replacement accounts” are excluded from this charge (see subsection (2)(d)).

Banks and promoters are required to submit details of chargeable and non-chargeable credit card accounts and chargeable and non-chargeable charge cards to the Revenue Commissioners and to accompany those details with the payment of the duty in respect of the chargeable credit card accounts and charge cards. Banks and promoters may pass on the charge to their customers.

The section may be looked at as comprising 3 parts i.e.

• subsection (1) relating to the duty on accounts maintained by banks in respect of credit cards;
• subsection (2) relating to the duty on charge cards; and
• the remaining subsections dealing with matters common to both credit card accounts and charge cards.

Because the duty is a stamp duty other appropriate provisions of this Act apply, in particular:

• section 14(3) which enables the Revenue Commissioners to mitigate penalties payable in respect of late payment of duty,
• section 126B which enables an appeal against an assessment to duty (the internal review procedures set out in Statement of Practice SP-GEN/2/99 (Revised January 2005) also apply), and
• section 152 which enables the Revenue Commissioners to refund duty in certain circumstances – but see also section 159A as regards the time limit for making a refund claim and section 159B as regards interest that may be payable on such refunds.

Details

(1) Subsection (1) deals with credit cards which are issued to individuals.

“account”, “account holder”, “bank” and “credit card” are self-explanatory.

“letter of closure” means a letter, in such form as the Revenue Commissioners may specify, issued during a relevant period by a bank to an account holder in relation to an account which has been closed during that period confirming that the account holder has accounted for the amount of stamp duty—

• which the bank is required to pay in respect of the account for the relevant period, or
• which another bank (i.e. a different bank ) is required to pay for the relevant period in respect of another account which has been closed during that period.

“relevant period” means a 12 month period ending on 1 April in any year commencing with the 12 month period ending on 1 April 2006.

“replacement account” means an account that is opened and maintained by a bank in the name of an account holder during a relevant period—

• where an account in the name of the account holder was, during the relevant period, closed by the bank (which can include a branch of the same bank), or
• where the account holder has, during the relevant period, furnished to the bank a letter of closure issued by another bank (i.e. a different bank) in relation to an account in the name of the account holder which was closed during that period.

(1)(a) To be within the charge the card must be issued to an individual who has an address in the State. A card issued by a foreign bank to such an individual comes within the charge while a card issued by any bank to a person outside the State does not. Cards issued to enable cash only to be obtained are outside the charge².

(1)(b) A bank must furnish a statement to the Revenue Commissioners within 3 months of 1 April each year showing the number of accounts maintained by the bank at any time during the 12 month period ending on 1 April in the relevant year. For the 12 month period ending 1 April 2006 and each subsequent 12 month period, details of chargeable accounts and non-chargeable “replacement accounts” should be shown on the statement.

(1)(c), (d) Each account that is not a “replacement account” is chargeable with a stamp duty of €30.

(1)(e), (f) A bank may not issue a letter of closure to an account holder during a relevant period for an account that has been closed during that period unless the bank has received a stamp duty of €30 from the account holder for the account for that period or has received a letter of closure from the account holder in relation to another account closed with a different bank during the same period. A letter of closure may only be used once to treat an account as a replacement account.

(1)(g) A bank may only issue one letter of closure in respect of an account and may only issue a duplicate letter to an account holder, to whom the original letter of closure issued, where the bank is satisfied that the original letter of closure has been lost or destroyed. Any duplicate must state that it is a duplicate of an original letter of closure.

(2) Subsection (2) deals with charge cards which are issued to individuals having an address in the State. A charge card issued by a foreign bank to such an individual comes within the charge while a charge card issued by any promoter to a person outside the State does not³. Cards issued to enable cash only to be obtained are within the charge.

(2)(a) “account”, “account holder”, “charge card”, “company charge card” and “supplementary card” are self-explanatory. Because they are excluded from the definition of “charge card” in-house cards are not within the charge to duty. “In-house” means something which pertains to the internal affairs of a business as opposed to that business’s relations with persons external to itself. An “in-house” card may only be used to purchase goods and services of the person issuing the card. An example of a card which is not an “in-house” card is a card which may be used to buy petrol at a petrol station but which may also be used to buy goods from the shop on the forecourt even though that shop is not owned by the person who owns the petrol station.

“letter of closure” means a letter, in such form as the Revenue Commissioners may specify, issued during a relevant period by a promoter to an account holder in respect of an account which has been closed during the period—

• confirming that the account holder has accounted for stamp duty on the charge cards in respect of which the promoter is liable for the relevant period and stating the number of such charge cards, and
• confirming, where it is the case, that the account holder has, during the relevant period, accounted for stamp duty on the charge cards in respect of which another promoter (i.e. a different promoter) is liable for the relevant period and stating the number of such charge cards.

“relevant period” means a 12 month period ending on 1 April in any year commencing with the 12 month period ending on 1 April 2006.

“replacement account” means an account which is opened and maintained by a promoter in the name of an account holder during a relevant period—

• where an account in the name of the account holder was previously closed by the promoter (which can include a branch of the same promoter) during the same period, or
• where the account holder has furnished to the promoter, during the relevant period, a letter of closure issued by another promoter (i.e. a different promoter) in relation to an account in the name of the account holder which was closed in that period.

“replacement card” means a charge card in relation to a replacement account.

(2) Subsection (2) also deals with company charge cards and supplementary cards which are issued to persons other than individuals or to employees of such persons. The persons concerned must have an address in the State.

(2)(b), (c) A promoter must within 3 months of 1 April in any year deliver a statement to the Revenue Commissioners showing the number of charge cards, company charge cards and supplementary cards issued or renewed by him or her and expressed to be valid at any time during the twelve month period ending on 1 April in the relevant year. For the 12 month period ending on 1 April 2006 and each subsequent 12 month period, details of chargeable cards and non-chargeable “replacement cards” should be shown on the statement. Each charge card and only excess replacement charge cards (see subsection (2)(d)) are chargeable with a stamp duty of €30.

(2)(d) Where a replacement account replaces an account maintained by the same promoter, and where the number of charge cards issued on the replacement account exceeds the number of charge cards on the original account, only each excess replacement card is chargeable to stamp duty. Similarly, where a replacement account replaces an account maintained by another promoter, and where the number of charge cards issued on the replacement account exceeds the aggregate number of charge cards stated in the letter of closure in relation to that other account, only each excess replacement card is chargeable to stamp duty.

(2)(e) A promoter may only issue a letter of closure during a relevant period for an account that has been closed during that period, if the account holder has accounted for the amount of stamp duty which the promoter is required to pay, in respect of the charge cards to which the account relates, for that period.

(2)(f) A letter of closure may only be used once to treat an account as a replacement account.

(2)(g) A promoter may only issue one original letter of closure in respect of an account and may only issue a duplicate letter to an account holder to whom the original letter issued where the promoter is satisfied that the original letter of closure has been lost or destroyed. Any duplicate letter must state that it is a duplicate of the original letter of closure.

(3) – (7) The remaining subsections are common to all cards, whether credit, charge or company or supplementary charge cards.

(3) The Revenue Commissioners may obtain from banks and promoters whatever information they need to ensure that the correct amount of duty is paid.

(4) The bank or promoter must pay the duty at the same time as the relevant statement is delivered.

(5) Interest at the rate of 0.0219 per cent per day (see section 159D) is chargeable, in addition to the duty, if the statement is not delivered by the due date or if duty is paid late. In addition, if the duty is not paid within 3 months from the due date a penalty of €380 for each day the duty remains unpaid after the 3 month period will also be payable for each day the duty remains unpaid.

(5A) A bank or promoter must retain the original letter of closure or any duplicate letter of closure received from a credit card account holder or charge card holder for a period of 4 years from the date of receipt of such letter.

(5B) In the case of an account which is maintained in the name of more than one person, a letter of closure may only be issued to one person named on that account.

(6) This subsection enables the Revenue Commissioners to enforce delivery of the statement.

(7) A bank or promoter may pass on the duty and any interest payable to its customers.

Relevant Date: Finance Act 2014