The State's first cash-dispensing machine in a pub is an unauthorised development and will need planning permission, Killarney Town Council has said.
ATMs, whether internal or external, were not listed as "exempted development" in the planning regulations, said Mr Michael O'Leary, the Killarney town clerk.
The council is to write to the owners of McSorleys bar on College Street to inform them they need permission.
The installation of a cash-dispensing machine in the bar and nightclub shortly before Christmas represented an unauthorised development, he said, and represented a change of use.
The presence of a cash machine in a bar popular with young adults has led to controversy. Cllr Sheila Dickson (FF) called for its removal, saying it would exacerbate the drink-culture problem among young people.
The owner, Mr Jim Bowler, said the machine, installed by Easycash Ltd, facilitated customers, particularly young girls, who did not like to leave the premises alone at night to go to an ATM in another street.
The executive was not getting involved in the controversy, Mr O'Leary stressed. The matter was a straightforward planning matter as far as he was concerned.
He said there were two options open to McSorleys - to look for planning or to look for a formal declaration from the council saying it was not exempt. In the latter case they would have to take the matter to An Bord Pleanála, which would then rule.
"But as far as the planning department in Killarney Town Council is concerned, the bar needs planning permission for the unit," Mr O'Leary said.
ATMs were always included in planning applications for new developments, he said. Tesco, on the outskirts of town, had recently applied to the council to change its external cash-dispensing machine, he said.
The council had consulted the list of exempted developments, which include satellite dishes, external and internal, the construction of a porch, and so on.
"ATMs are not listed as exempt, therefore we take the view they require planning."