64Such a difference in treatment has the effect of discouraging United Kingdomresident companies from investing their capital in companies established in another Member State. In addition, it also has a restrictive effect as regards companies established in other Member States in that it constitutes an obstacle to their raising of capital in the United Kingdom. In so far as income arising from foreign-sourced capital is treated less favourably from a tax point of view than dividends paid by companies established in the United Kingdom, shares in companies established in other Member States are less attractive to United Kingdom-resident investors than those of companies having their seat in that Member State (see Verkooijen, paragraphs 34 and 35; Lenz, paragraphs 20 and 21; and Manninen, paragraphs 22 and 23).
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