The Revenue Appeals Commissioner has ruled that debt management services should not be subject to VAT.

The Commissioner found in favour of debt management company Money Village which brought a case against Revenue.

Under European and UK law, debt management and related services are subject to zero VAT.

The ruling raises questions as to whether clients of debt management providers will be entitled to a rebate from revenue if they paid VAT on debt management.

Money Village says it did not charge its clients for VAT.

The company was established in 2010 as the first debt management service in Ireland and it is now the country's biggest debt management company, handling over €40m in debt.

Eugene McDarby, the company's chief executive, praised the decision of the Revenue Appeals Commissioner.

"It makes absolutely no sense to further saddle people in debt with yet even more taxation, and that is precisely what Revenue were doing here. This was a stealth tax on already stressed people," Mr McDarby said. 

"We in this industry are here to help people resolve their debt problems, and we are absolutely delighted that the Revenue Appeals Commissioner has made a common sense ruling, which favours the already indebted consumer," he added.