Eleven EU member countries have said they wish to move ahead with introducing a financial transactions tax.
The nations - which include France and Germany - intend to use the tax to help raise funds to tackle the debt crisis.
The tax has the backing of the European Commission. The other countries that wish to introduce it are Italy, Spain, Austria, Belgium, Greece, Portugal, Slovakia, Slovenia and Estonia.
Yet the tax is opposed by other nations, such as the UK, where the government feels it would damage the City of London. The US has also expressed its opposition to the idea.
EU lawyers have now issued a 14-page legal opinion saying the move would be illegal, since it would exceed member states' tax powers.
The idea of such a tax - often described as a Tobin tax or "Robin Hood" tax - was first outlined 40 years ago.