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Brussels, 3 February 1997

Financial services: Germany referred to Court over investment trust restrictions

The European Commission has decided to refer Germany to the Court of Justice under EC Treaty infringement procedures (Article 169) because of restrictions imposed on investment trusts established in other Member States. The European Commission considers the restrictions violate EC Treaty rules on the freedom to provide services (Article 59) and the free movement of capital (Article 73b). The German legislation in question, the AuslandsInvestmentGesetz (AIG), imposes an absolute ban on marketing to the public of units in investment undertakings of the closed-end type (i.e. with no obligation to buy back units from the investor). Even though it applies to both domestic and foreign undertakings, the European Commission considers that it obstructs the activity of suppliers which are established in other Member States and which lawfully provide their services there. Moreover, holders in Germany of units in investment funds of the closed-end type do not enjoy the same tax advantages as holders of other investment fund units.

"Remaining obstacles to a Single Market in services, and in particular financial services, were highlighted in the Commission's Communication on the Impact and Effectiveness of the Single Market", commented Commissioner Mario MONTI.

"Such problems have an adverse effect not only on the development of a competitive EU financial services sector but also on all economic operators and citizens using financial services. I will vigorously pursue infringement cases against all Member States attempting to impose unjustified barriers to a Single Market in financial services".

The Commission considers the ban on marketing to the public of units in investment undertakings of the closed-end type and the tax discrimination both constitute restrictions of the freedom to provide services and the free movement of capital. These restrictions cannot, in the Commission's view, be justified on the grounds of an overriding public interest and are disproportionate.

The German authorities have failed to respond to a reasoned opinion (second stage of formal infringement proceedings under Article 169 of the EC Treaty) sent on 6 August 1996.

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