45While not challenging the fact that public debt securities issued by States may benefit from preferential treatment, the Commission considers that a lower rate of taxation applying only to regularised assets which are securities of the Portuguese State constitutes a restriction on the free movement of capital prohibited by Article 56 EC, in so far as taxpayers who might benefit from the RERF are deterred from keeping their regularised assets in forms other than Portuguese State securities. A national tax provision capable of deterring taxpayers from making investments in other Member States constitutes a restriction on the free movement of capital within the meaning of Article 56 EC, with reference to the judgment in Case C-436/00 X and Y [2002] ECR I-10829, paragraph 70. The Commission argues that such a restriction cannot be justified on the basis of Article 58(1) EC.
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