The warning follows news that Irish people are pouring millions of euro into apartments in Beijing in the expectation of 20% annual price growth as the Chinese capital gears up to host the Olympic games in 2008. Many are buying though local companies to escape a recent ban by authorities in the communist state on direct investment in property by foreigners, a move intended to take some of the heat out of the market.

"On paper, there are many advantages when buying through a company, because corporation tax is lower then income tax in most countries, " said Catherine O'Sullivan of Overseas Property Law, which advises people investing overseas. "Also companies never die, so in theory there shouldn't be issues with inheritance taxes."

But there are also considerable downsides, including the risk of getting caught for double taxation if the Revenue Commissioners decide that the company is actually managed and controlled from Ireland, O'Sullivan said. She added that any profits repatriated to Ireland would also trigger a tax charge here.

The trend towards using companies has accelerated by considerable Irish investment in Budapest in recent years. Under Hungarian law, foreigners with more than two properties in the country must hold their investment through a locally registered company.

"Many people have naively set up Hungarian companies but, unless the company has Hungarian directors and an address in the country, they could get caught for Irish corporation tax, " O'Sullivan said.

"You have to ensure the company is genuinely resident in Hungary, which means complying with local filing requirements."