The European Commission has formally requested Ireland to amend what the Commission believes to be discriminatory tax treatment in relation to the tax exemption on Savings Certificates and certain Government, State-issued and State-guaranteed securities.

Some of the more commonly available tax exempt products which may be affected by the Commission's request are as follows:

Savings Certificates: The accumulated interest payable on saving certificates issued by the Minister for Finance is not liable to tax so long as the amount of such certificates does not exceed an authorised threshold.

An Post Savings Certificates: A bonus or interest payable to an individual under An Post savings schemes is disregarded for income tax purposes provided the amounts acquired by an individual do not exceed a limit.

Government issued securities: Any securities which the Minister for Finance has the power to issue may be issued on the basis that neither the capital nor the interest on such security is liable to tax so long as the beneficial owner of the security is not ordinarily resident in Ireland.

The Commission views tax exemption on such Government/State-guaranteed investment products as discriminatory because interest on similar foreign certificates and securities is not tax exempt. Such provisions are viewed as incompatible with the free movement of capital, as guaranteed by Article 56 of the EC Treaty and Article 40 of the EEA agreement.

The request takes the form of a Reasoned Opinion (second step of the infringement procedure provided for in article 226 of the EC Treaty). If there is no satisfactory reaction to the Reasoned Opinion within two months, the Commission may decide to refer the matter to the European Court of Justice.