The tax shock, which brokers claim will trigger an exodus of foreign investors, is the second major blow to the booming trade in CFDs, which are estimated to account for as much as 40% of trading volumes.

Under a new Brussels edict due to take effect next year, the Mifid directive, stockbrokers must advise clients of the considerable risks involved in trading the investments. If clients subsequently suffer losses, such as those incurred by investors who bet the wrong way on Elan last year, they may be able to pin part of the blame on their stockbrokers.

The 50m tax hit arises from the Revenue's determination to chase back-payment of stamp duty since CFDs became a feature of the Irish stock market in recent years.

Trading has boomed during this time as wealthy investors gambled on a rising stock market.

It will be impossible to collect the tax from the investors involved, although stockbrokers claim that they should not be made to carry the liability either. "We don't write CFDs, the primary broker does, so it's by no means clear where the hit lies, if indeed there is a hit, " said one top stockbroker. "This has got some way to run yet and I hope the Revenue sees this is unworkable."

He said the Revenue risked shooting itself in the foot because stamp duty on CFDs would spark a flight of investors and companies from Dublin, leading to less liquidity on the exchange and therefore less taxes for the Exchequer.A spokesman for the Irish Stock Exchange said it would be making representation on the issue to the Revenue and the Department of Finance over the coming days.