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

The free movement of capital is one of the four fundamental freedoms contained in the EU Treaty along with the free movement of goods, persons and services. It enables European citizens to carry out a variety of operations abroad such as opening a bank account, purchasing shares in undertakings in other Member States, investing in the place offering the best returns and the acquisition of real est …

Principle of free movement

The free movement of capital is one of the four fundamental freedoms contained in the EU Treaty along with the free movement of goods, persons and services. It enables European citizens to carry out a variety of operations abroad such as opening a bank account, purchasing shares in undertakings in other Member States, investing in the place offering the best returns and the acquisition of real estate.

The system under which the free movement of capital functioned was for a long time distinct from the other freedoms due to exchange controls in the majority of Member States, which could prevent financial operations without prior authorization. Full liberalization of capital movements happened in 1988 with Directive No 88/361, which abolished the restrictions on movements of capital taking place between persons resident in Member States and laid down that transfers in respect of capital movements be made on the same exchange rate conditions as those governing payments relating to current transactions . The Member States however retained the right to take measures to prevent infringements of their laws and regulations in the field of taxation and the prudential supervision of financial institutions or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information . In 1992, the Maastricht Treaty completely overhauled the provision, repealing Directive No 88/361, the wording of which largely inspired the drafting of the TFEU. 

The free movement of capital has retained its particularity since it is governed by the primary law sources (TFEU, protocols, declarations, acts of accession), with the exception of a few interpretative communications of the Commission.

Article 63 TFEU lays down two prohibitions: on the restriction of the movement of capital and of payments between Member States and between Member States and third countries. The provision lays down a clear and unconditional prohibition for which no implementing measure is needed and confers rights on individuals which they may rely on before the courts and which render national rules contrary to them inoperative . 

The principle of free movement of capital does not, however, rule out the supervision of movements of capital, a role which falls to the Member States and/or the European Union .

Article 1 of Directive No 88/361 of 24 June 1988 for the implementation of Article 67 of the Treaty. Article 63 TFEU now prohibits all restrictions on the free movement of capital.

Article 4 of Directive No 88/361 of 24 June 1988 for the implementation of Article 67 of the Treaty, provision transposed to Article 65 TFEU.

Case C-163/94 Criminal proceedings against Sanz de Lera and others [1995] ECR I-4821, LawLex200900000644JBJ.

E.g. in the event of serious difficulties for the functioning of the economic and monetary union, the Council may adopt safeguard measures.

European Business Law

151. Principle of free movement

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151. Principle of free movement

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Les décisions de justice citées dans ce paragraphe :

Sous parties

Les notions juridiques connexes

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