A tax loophole used by developers is costing the exchequer more than €250 million a year.

The loophole - which is used in 40% of all land deals - enables developers to avoid paying stamp duty through a series of financial manoeuvres when purchasing.

The technicality, Known as the "s.110" arrangement, is also used by local authorities. According to a Goodbody Economic Consultants report, s.110 arrangements have been used by as many as 16 public private partnership agreements between local authorities and private companies.

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However, a government decision to close the loophole was reversed by Finance Minister Brian Cowen who said that it could affect the property market negatively.

The Goodbody report also said that while the loophole cost the exchequer was €250m, removing it would push up the cost of road projects as schemes involving the NRA had taken advantage of it.

(VB/JM)