Direct commission payments by finance companies to the car salespeople who sell finance deals with the vehicle have been outlawed by the Revenue Commissioners.
Finance firms have been instructed that commission payments on car finance deals can no longer be paid directly to forecourt salespeople. The Revenue has instructed that all commission payments must now be paid directly to the dealership involved. Rewards to the individual salespeople will then be a matter for the dealership and must be recorded in the remuneration of the salespeople involved and PAYE and PRSI taxes must be deducted at source.
Car leasing deals are offered by most main financial institutions, often through arrangements with dealerships which mean the finance deal is offered in the car salesroom as part of the sales pitch. In recent months the Revenue is understood to have examined the direct payments being made by car lessors to sales people at garages who persuade customers to finance their purchase through a leasing deal.
The Revenue spokesman declined to say why the examination arose but said the new rules were decided after discussions with the accountants representing the Irish Finance Houses Association which represents the leasing firms. He said the rules would "streamline" the collection of tax from sales people and "reroute payments" made through the self-employed system.
GE Woodchester, one of the largest car finance operations, which covers about 1,000 dealerships, confirmed the change and said it "did not have a problem with this issue". An IFHA spokesman was not available for comment. A number of finance company sources said they had received the Revenue instruction through the IFHA. Finance houses rejected any suggestion that this method of payment could have left room for possible under-the-counter payments in some cases.
"We are responsible for all the payments we make and we have to report details of our payments each year to the Revenue. We set out what we pay in commission and to whom in form 46G," he said.
In some cases in the competitive car leasing market the arrangements between dealers and finance firms meant the dealership and the salesperson were entitled to commission and in those cases two payments would have been made.