Cash incentives paid to owners of British-bred racehorses resulted in a €2.1 million loss to the Irish bloodstock industry last year, according to figures released in the UK.

The British Horseracing Board (BHB), the UK's racing body, last year introduced a premium prize money scheme designed to boost demand for British-bred thoroughbreds.

Under it, the owners of British-bred horses that win races in the UK, qualify for up to 75 per cent more prize money than the owners of non British-bred horses. The horse has to be produced by a UK-based stallion and mare, it has to be foaled (born) in the UK and it has to race there.

At a conference, the chairman of the UK Thoroughbred Breeders' Association (TBA), Philip Freedman, said that in 2004 the scheme had resulted in a 15 per cent fall in the number of British mares visiting Irish-based stallions and a corresponding reduction in the nomination or stud fees paid to stallion owners in the Republic.

"It is estimated to have led to £1.5 million (€2.1 million) being spent on nominations in Britain rather than Ireland," he said.

This year Irish stallion owners, including Coolmore Stud in Co Tipperary, the National Stud, and the Aga Khan-owned Giltown Stud, cut their nomination fees by at least 20 per cent.

Following complaints from British politicians, the EU Commission is investigating the tax exemption allowed in the Republic for profits from stallion fees.