The European Commission looks set to close a 35-year-old tax loophole that allows owners of Irish stud farms to pay no tax on the fees they charge for the sexual services of their stallions.

The zero rating of income earned each time a broodmare is covered the so-called nomination fee has been in place since 1969 and has been a big attraction for Ireland's €330m (£227m, $427m) thoroughbred breeding industry, which produces around 10,000 foals a year or 40 per cent of all the thoroughbred foals in Europe.