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

Restrictions of the free movement of capital may be justified in certain circumstances. The Treaty gives the Member States the residual power to distinguish between taxpayers who are not in objectively comparable situations, to take all requisite measures to prevent infringements of national provided that such measures do not constitute a disguised restriction or a means of arbitrary discrimination (Article 65 TFEU). As well as those legal exceptions, there are also derogations from the case law arising from overriding requirements of public interest. A non-discriminatory and proportionate restrictive measure which is based on public interest grounds may be a justification for a restriction of the free movement of capital. In addition, the Court of Justice has implicitly extended to freedom of movement of capital, the abuse of law theory which it had already established for the free movement of goods and persons. The need to prevent tax fraud can thus be used to justify a restriction on the free movement of capital .

Case C-364/01 The heirs of M.H. Barbier [2003] ECR I-15013, LawLex200900000528JBJ, holding that a European citizen cannot be deprived of the right to rely on the provisions of the Treaty on the ground that he is profiting from tax advantages which are legally provided by the rules in force in a Member State other than his State of residence. The restriction can only be justified if the sale of the property had the unlawful object of evading the law.

157. Legal exceptions and derogations upheld by the courts