Jim McCabe, chairman of the National Off Licence Association (Noffla), said opening up overseas operations might be the only way to prevent their businesses being decimated by a ruling which would pave the way for Irish people to buy cheap cigarettes and booze by phone or over the internet from other EU nations.

The European Court of Justice is expected to issue judgement this week in a case brought by a group of Dutch citizens seeking the return of duty levied by the authorities in the Netherlands on a shipment of wine delivered to them from France .

EU law requires that excise duty is paid at the rate applied in the country where alcoholic beverages are purchased. No further duty is paid when the products are brought in to another EU state provided that the person who purchased the goods physically accompanies them.

The ECJ's Advocate General, Francis Jacob, has already expressed an opinion that EU citizens should be allowed to order wine, beer, spirits or cigarettes in one member state and have them delivered to another without paying duty in their home country.

The ECJ does not have to follow Jacob when it delivers its decision this week but in practice it is very rare for the court to differ from the advocate general's opinion.

The consequences of such a ruling for Ireland, which has some of the highest rates of duty in the EU, would be significant.

Irish citizens could save up to 2 per bottle of wine and 9 for spirits such as whiskey by ordering them from lowduty states such as France instead of buying them in Ireland, diverting money both from the state coffers and from retailers.

"We would be very concerned if this happened, " said McCabe. Noffla members are already talking about setting up operations elsewhere in the EU to win back some of the anticipated loss in revenue that would result from the ECJ ruling.

"There's nothing to stop me from having a shop over in France , " he said.