The credit union movement has won its campaign to avoid paying corporation tax. The issue arose after a complaint, believed to have come from the Irish Bankers' Federation (IBF), was made to the Competition Directorate of the EU Commission. It argued that the favourable tax treatment accorded to the credit union movement amounted to a State aid.

Both the Government and the credit union movement rejected the complaint on the grounds that the league was not a financial institution but a mutual, owned by members and run to a large extent by volunteers.

A spokeswoman for the Department of Enterprise, Trade and Employment said that although it had not yet received official notification, it understood that the Commission had not upheld the complaint. However, the general taxation of credit union accounts has yet to be decided after the Minister for Finance, Mr McCreevey, was forced to withdraw proposals introduced in the 1998 Finance Act after a political furore over the issue.

The report of a working group which was later set up to examine the issue has been with Mr McCreevy since October 1998. But he has shown no signs of re-visiting a subject which has obviously left its scars, given his recent comments to the Dail about receiving "stabs in the back" following his dealings with the league.

However, credit union movement sources say although they are not expecting anything to be announced in the Budget regarding taxing credit union savings, they hope the issue might be addressed in the next Finance Act.