European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

Article 63 TFEU prohibits all restrictions on the movement of capital and on payments between the Member States and also between the Member States and third countries. 
1) Member States
The prohibition on restrictions of the movement of capital applies to all national provisions having as their effect the restriction of movements of capital of investors who are nationals of a Member State due to t …

Scope ratione loci

Article 63 TFEU prohibits all restrictions on the movement of capital and on payments between the Member States and also between the Member States and third countries. 

The prohibition on restrictions of the movement of capital applies to all national provisions having as their effect the restriction of movements of capital of investors who are nationals of a Member State due to their country of residence, even where there are no other cross-border factors such as the transfer of residence to another Member State prior to the acquisition of property or the distribution of their capital between two Member States . The notion of Member State includes members of the EU and those party to the EEA. In effect, the rules relative to the free movement of capital as regards relations between States party to the EEA Agreement, are the same as those applicable to relation between the Member States, whether they are members of the EU or of EFTA . 

The rules on the free movement of capital do not apply to the purely domestic situations of a Member State. Where capital movements are confined to within a single Member State, Article 63 TFEU has no cause to be applied . On the other hand, where the constituent elements of the movement of capital also concern another Member State, the principle of free movement applies to the EU national in his country of origin .

According to the Court of Justice , the degree of legal integration that exists between Member States can justify that measures concerning economic activities having cross-border aspects which take place within the Union are not always comparable to that of economic activities involving relations between Member States and non-member countries . Non-member countries include non-EEA countries and overseas countries and territories .

Articles 64, 65 and 66 TFEU allow for the possibility of special restrictions, safeguard measures or necessary urgent measures on capital movements and payments with regard to third countries. Restrictions on the movement of capital to or from third countries involving direct investment  existing on 31 December 1993 , may also be maintained in application of Article 64(1) TFEU. This would be so for a less favorable treatment for tax purposes - for foreign-sourced dividends than for nationally-sourced dividends - already in existence on 31 December 1993 . Article 64(1) is interpreted strictly: the national measure must relate to capital movements that have a sufficiently close link with the provision of financial services . The concept of restrictions which exist on 31 December 1993 extends to new measures that are identical or are limited to reducing or eliminating an obstacle to the exercise of EU rights and freedoms in the earlier legislation . The legal provision relating to the restriction in question must have formed part of the legal order of the Member State concerned continuously since that date . Furthermore, Article 64(2) offers the possibility for the Council, acting by a qualified majority on a proposal from the Commission, to adopt measures on the movement of capital to or from third countries, where they involve direct investment - including investment in real estate -, establishment, the provision of financial services or the admission of securities to capital markets. Measures constituting a step back as regards the acquired liberalization of trade to and from third countries must, however, be adopted unanimously.

Case C-364/01 The heirs of M.H. Barbier v Inspector van de Belastingdienst Particulieren/Ondernemingen buitenland te Heerlen [2003] ECR I-15013, LawLex200900000528JBJ.

Includes Member States of the EEA Agreement, Members of EFTA: Case C-452/01 Ospelt v Schlössle Weissenberg Familienstiftung [2003] ECR I-9743, LawLex200900000884JBJ.

Case C-560/13 Finanzamt Ulm, Judgment of 21 may 2015, LawLex201500000647JBJ, finding that national legislation which provides for flat-rate taxation of the income of holders of units in a non-resident investment fund when the latter has not fulfilled certain statutory obligations constitutes a measure which relates to movement of capital involving the provision of financial services within the meaning of that article.

Case C-446/04 Test Claimants in the FII Group Litigation [2006] ECR I-11753, LawLex200900000863JBJ. 

Case C-101/05 Skatteverket [2007] ECR I-11531, LawLex200900000305JBJ.

Case C-364/01 Barbier [2003] ECR I-15013, LawLex200900000528JBJ; Case C-513/03 The heirs of Van Hilten-van der Heijden [2006] ECR I-1957, LawLex200900001020JBJ; Case C-256/06 Jäger v Finanzamt Kusel-Landstuhl [2008] ECR I-123, LawLex200900001001JBJ; Case C-250/08, Commission v Belgium [2011] ECR I-12341, LawLex201200000624JBJ.

Case C-43/07 Arens-Sikken [2008] ECR I-6887, LawLex200900002262JBJ, for a situation in which a person resident in Italy at the time of death leaves to persons resident in Italy or, as the case may be, in other Member States, an immovable property situated in the Netherlands and the subject of a transfer duty assessment; Case C-670/21 BA v Finanzamt X, Judgment of 12 October 2021, LawLex202400004488JBJ,  for a situation in which a Member State applies inheritance tax to estate assets located outside its territory, belonging to a person resident in its territory at the date of his death and reverting to an heir also resident in that Member State.

Case C-446/04 Test Claimants in the FII Group Litigation [2006] ECR I-11753, LawLex200900000863JBJ.

Case C-45/17 Frédéric Jahi, Judgment of 18 January 2018, LawLex201800000105JBJ: legislation of a Member State under which a national of that Member State who resides in a third country other than an EEA Member State or the Swiss Confederation and is affiliated to a social security scheme in that third country is subject, in that Member State, to levies on income from assets for the purpose of contributing to the social security scheme established by that Member State, whereas an EU national covered by a social security scheme of another Member State is exempted therefrom by reason of the principle that the legislation of a single Member State only is to apply in matters of social security, is not contrary to Union law.

Case C-384/09 Prunus SARL [2011] ECR I-3319, LawLex201100001094JBJ, classifying overseas countries and territories as non-member States.

The concept of direct investment is defined with reference to the nomenclature of capital movements set out in Annex I of Directive No 88/361 of 24 June1988 which still has a recognized indicative value; see especially Case C-163-94 Criminal proceedings against Sanz de Lera and others [1995] ECR I-4821, LawLex200900000644JBJ; Case C-446/04 Test Claimants in the FII Group Litigation [2006] ECR I-11753, LawLex200900000863JBJ.

31 December 1999 for Estonia and Hungary.

European Business Law

154. Scope ratione loci

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

154. Scope ratione loci

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise