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PR(04)40 - The EFTA Surveillance Authority delivers four reasoned opinions to Liechtenstein in the field of Financial Services


On 2 December 2004, the EFTA Surveillance Authority delivered a reasoned opinion to Liechtenstein regarding national provisions limiting the investment possibilities of institutions providing occupational benefits in Liechtenstein.  The Authority has also recently delivered another three reasoned opinions in the field of financial services, one concerning discriminatory provisions in the Saving Bonus Act and two concerning non-notification of national measures implementing the amending Directives concerning UCITS (Undertakings for Collective Investment in Transferable Securities).

Investment limitations for institutions providing occupational benefits
Institutions responsible for providing occupational benefits in Liechtenstein are subject to investment limitations laid down by the Ordinance to the Act on Occupational benefits of 19 October 1988.  According to these rules, lower thresholds apply to investments in other EEA States compared to investments in equivalent objects seated or located in Liechtenstein (and Switzerland).

In the Authority’s view, this differential treatment is liable to dissuade the mentioned institutions from investing their assets in other EEA States. The provision is also capable of having the effect of impeding companies (or other investment objects) in other EEA States from raising capital from Liechtenstein institutions. The provision must, therefore, be considered to constitute a restriction on the free movement of capital. As the difference in treatment follows directly from the place of residence of the parties or on the place where the capital is invested, it also constitutes discrimination within the meaning of Article 40 of the EEA Agreement.

The Liechtenstein government has pointed out that a separate provision in the Ordinance allows the competent Liechtenstein Authority to deviate from the mentioned investment rules, and that as demands for deviations are generously granted, the system cannot be considered to constitute a restriction on capital movements.

The Authority recalls in its reasoned opinion that the possibility to grant exemptions cannot, as such, justify a restrictive rule. In any event, the fact remains that the requirement of prior approval applies at a lower threshold to investments abroad, thus constituting differential treatment of domestic and cross-border investments. Hence, even if requiring prior approval in order to deviate from general thresholds on investments would pursue a legitimate aim, which has not been demonstrated in this case, the requirement of prior approval is not applied in a non-discriminatory way.

In its reasoned opinion, the Authority, therefore, maintains that the investment rules and limitations applicable to institutions providing occupational benefits are contrary to article 28 EEA and Article 40 of the EEA Agreement and to Article 1 of the Capital Movements Directive.

The Saving Bonus Act
The Saving Bonus Act in Liechtenstein establishes a saving bonus scheme, according to which individuals fulfilling certain criteria who follow a defined saving scheme for a specified period of time may receive a bonus, in the form of an amount added to the accrued savings (“Prämie”), from the Liechtenstein State.  According to Article 1 of the Savings Bonus Act, only Liechtenstein nationals residing in Liechtenstein are eligible to benefit from the system. A non-Liechtenstein EEA national, who is resident in Liechtenstein is not entitled to join such a saving scheme and, subsequently, receive a bonus. Furthermore, savings must be deposited with a Liechtenstein financial institution. This rule makes it impossible for non-Liechtenstein financial institutions to provide this particular kind of saving product on the Liechtenstein market.

The Liechtenstein Government has not submitted any justification grounds for the discriminatory system. Instead it has argued that the national provisions do not affect trade in the EEA to an appreciable extent, and that, in any case, the restrictive effects are too uncertain and indirect to hinder the exercise of fundamental freedoms.

In its reasoned opinion, delivered on 17 November 2004, the Authority concluded that the nationality requirement is contrary to the general principle of non-discrimination enshrined in Article 4 of the EEA-Agreement. In relation to non-Liechtenstein persons who are resident in Liechtenstein and covered by the EEA definition of workers, it is, furthermore, contrary to Article 28 of the EEA Agreement and article 28 EEA and Council Regulation 1612/68/EEC, which provides that a worker may not, in the territory of another EEA State, be treated differently from national workers in respect of social and tax advantages. The nationality requirement is also contrary to Article 31 of the EEA Agreement, as regards self-employed persons. Finally, the requirement that saving bonus accounts may only be operated by Liechtenstein financial institutions is contrary to Article 36 of the EEA Agreement. 

Amending Directives regarding UCITS
On 27 October 2004, the Authority delivered two reasoned opinions to Liechtenstein due to its failure to adopt and to inform the Authority of the national measures necessary to comply with Directives 2001/107/EC and 2001/108/EC regarding amendments to the UCITS Directive (Directive 85/611/EEC). While Directive 2001/107/EC aims at regulating management companies and simplified prospectuses, Directive 2001/108/EC introduces amendments with regard to investments of UCITS.

Liechtenstein was obliged to take the measures necessary to ensure compliance with these Directives by 13 August 2003.

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For further information please contact Mr. Per Andreas Bjørgan, Senior Officer Legal Services and Executive Affairs, telephone (+32) (0) 2286 1836. 

1 December 2004

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