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Internal Market: Commission inquiries into prohibition on purchase of UK Premium Bonds in Ireland

European Commission - IP/07/1511   17/10/2007

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IP/07/1511

Brussels, 17 October 2007

Internal Market: Commission inquiries into prohibition on purchase of UK Premium Bonds in Ireland

The European Commission has decided to send an official request for information to Ireland on its rules that bar Irish residents from purchasing United Kingdom Premium Bonds, which are state-backed investment products where, instead of interest payments, investors have the chance to win tax-free prizes. They are comparable with a similar Irish product known as 'Prize Bonds'. Under Irish law, residents are not allowed to take part in lotteries run in other countries. The Commission disputes the classification of UK premium bonds as a lottery, and also wishes to verify whether the measure in question is compatible with the free movement of capital (Article 56 EC Treaty) and with the free movement of services (Article 49 EC Treaty). The letter of formal notice is the first step in an infringement procedure under Article 226 of the EC Treaty. The Irish Government has two months in which to respond. The Commission hopes that the answer it receives will lead to an early and satisfactory resolution of the matter.

The restriction in question stems from Section 34(1) of the Gaming and Lotteries Act 1956, which stipulates that Irish residents may not take part in lotteries outside of Ireland. The Commission disputes the classification of these bonds as lotteries, as both UK Premium Bonds and the Irish equivalent ('Prize Bonds') are marketed and sold as risk-free, state guaranteed investments.

Restrictions on the free movement of capital are prohibited under Article 56(1) of the EC Treaty, while Article 49 requires the elimination of restrictions on freedom to provide services. The European Court of Justice has consistently held that all measures which prohibit, impede or render less attractive the exercise of such freedoms must be regarded as constituting such restrictions (C-439/99 of 15 January 2002). The Court has also held that the fundamental principles of freedom to provide services necessarily include the rights of recipients of services (C-255/04 and C-262/02).
For further information on the UK and Irish products see the respective websites of both at
www.nsandi.com
and

www.prizebonds.ie.
The latest information on infringement proceedings concerning all Member States can be found at:

http://ec.europa.eu/community_law/index_en.htm


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