The European Commission has threatened to take Ireland to the European Court of Justice over an exit tax it imposes on companies which cease to be tax resident in Ireland.
Under Irish law, a company is taxed on 'unrealised' capital gains when it transfers its offices to another member state.
Transfers within Ireland are not taxed the same way.
The commission argues that this is discriminatory and would hinder companies in their right under EU treaties to freedom of establishment.
The commission sent formal notice to the Government in November 2009, and has issued today's follow-up in the form of a reasoned opinion.
This means that if there is no satisfactory response from the Government within two months, then the commission may refer Ireland to the European Court of Justice.
Portugal, the Netherlands, Spain and Denmark have already been referred to the ECJ on the same issue.
