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Chapter 4 - Free movement of capital
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December 2004

Background

The Treaty Establishing the European Community prohibits (Article 56) all restrictions on movement of capital between Member States but also between Member States and third countries. However the Member States can retain certain restrictions in relation with countries outside the EU. The definition of free movement of capital covers much more than payments and transfers of money over the borders. Other transactions allowing transfer of ownership of assets and liabilities are also part of the acquis in this chapter, for instance, investments in companies and real estate or portfolio investments. Furthermore the chapter covers the area of payment systems, mainly the two Directives on cross-border credit transfers and on settlement finality, as well as the Directives on prevention of money laundering.

Several candidate countries have requested, and been granted, transitional periods on foreigners right to investment freely in real estate. Particular attention is also given to the proper implementation and enforcement of the Directive on prevention of money laundering.

State of play

Together with the other Single Market chapters, free movement of Capital has been given priority in the negotiations during the first half of 2001. The Chapter has been closed with the ten new Member States in December 2002. The Chapter has also been closed with Bulgaria and Romania in December 2004.

Compliance with the acquis

The latest assessment of each candidate country’s compliance with the acquis under this chapter heading, can be found in the 2004 Regular Reports and in the Comprehensive Monitoring Reports, available at:
http://ec.europa.eu/enlargement/archives/key_documents/reports_2004_en.htm.

Country by country

Bulgaria

  • Chapter opened: autumn 2000
  • Status: closed in December 2004 (provisionally closed in July 2001)
  • Transitional arrangements agreed:
    • a five year transitional period for the acquisition of secondary residences, excluding EEA citizens who reside in the future member state from the scope;
    • a seven year transitional period for the acquisition of agricultural and forestry land, excluding self employed farmers from the scope.

Cyprus (New Member State)

  • Chapter opened: autumn 1999
  • Status: Closed December 2002 (provisionally closed spring 2001)
  • Transitional arrangements:
    • a five-year transitional period for the acquisition of secondary residences, excluding EEA citizens who reside in the future member state from the scope.

Czech Republic (New Member State)

  • Chapter opened: autumn 1999
  • Status: Closed December 2002 (provisionally closed spring 2001)
  • Transitional arrangements:
    • a five-year transitional period for the acquisition of secondary residences, excluding EEA citizens who reside in the future member state from the scope;
    • a seven-year transitional period for the acquisition of agricultural and forestry land, excluding self employed farmers from the scope. Possibility to extend this transitional period by three years if the Czech Republic invokes safeguard clause.

Estonia (New Member State)

  • Chapter opened: autumn 1999
  • Status: Closed December 2002 (provisionally closed spring 2000)
  • Transitional arrangements:
    • a seven-year transitional period for the acquisition of agricultural and forestry land, excluding self employed farmers who have been residing for 3 years and active in farming from the scope. Possibility to extend this transitional period by three years if Estonia invokes safeguard clause.

Hungary (New Member State)

  • Chapter opened: autumn 1999
  • Status: Closed December 2002 (provisionally closed spring 2001)
  • Transitional arrangements:
    • a five-year transitional period for the acquisition of secondary residences, excluding EEA citizens who have resided at least for 4 years in Hungary from the scope
    • a seven-year transitional period for the acquisition of agricultural and forestry land, excluding self employed farmers who have been residing for 3 years and active in farming from the scope. Possibility to extend this transitional period by three years if Hungary invokes safeguard clause.

Latvia (New Member State)

  • Chapter opened: autumn 2000
  • Status: Closed December 2002 (provisionally closed spring 2001)
  • Transitional arrangements
    • a seven year transitional period for the acquisition of agricultural and forestry land, excluding self employed farmers who have been residing for 3 years and active in farming from the scope. Possibility to extend this transitional period by three years if Latvia invokes safeguard clause.

Lithuania (New Member State)

  • Chapter opened: autumn 2000
  • Status: Closed December 2002 (provisionally closed spring 2001)
  • Transitional arrangements:
    • a seven year transitional period for the acquisition of agricultural and forestry land, excluding self employed farmers who have been residing for 3 years and active in farming from the scope. Possibility to extend this transitional period by three years if Lithuania invokes safeguard clause.

Malta (New Member State)

  • Chapter opened: autumn 2000
  • Status: Closed December 2002 (provisionally closed in December 2001)
  • Transitional arrangement:
    • special arrangement for the purchase of secondary residences, restricting the purchase of such property for all EU nationals that have not been resident on the island for at least 5 years.

Poland (New Member State)

  • Chapter opened: autumn 1999
  • Status: Closed December 2002 (provisionally closed in March 2002)
  • Transitional arrangement:
    • a 12-year transitional period for agricultural and forest land, excluding self employed farmers from EEA countries who have been leasing land for 3 or 7 years (depending on region) from the scope
    • a 5-year transitional period on secondary residences, excluding EEA citizens who have resided at least 4 years in Poland from the scope

Romania

  • Chapter opened: spring 2001
  • Status: closed in December 2004 (provisionally closed in June 2003)
  • Transitional arrangements:
    • a five-year transitional period for the acquisition of land for secondary residences, excluding EU and EEA citizens residing in Romania from the scope
    • a seven-year transitional period for the acquisition of agricultural and forestry land, excluding self employed farmers residing in Romania from the scope

Slovenia (New Member State)

  • Chapter opened: autumn 1999
  • Status: Closed December 2002 (provisionally closed spring 2001)
  • Transitional arrangements:
    • possibility to resort to the general economic safeguard clause for seven years in real estate.

Slovakia (New Member State)

  • Chapter opened: autumn 2000
  • Status: Closed December 2002 (provisionally closed spring 2001)
  • Transitional arrangements:
    • a seven-year transitional period for the acquisition of agricultural and forestry land, excluding self employed farmers who have been residing for 3 years and active in farming from the scope. Possibility to extend this transitional period by three years if Slovakia invokes safeguard clause.
- updated: 17/12/2004
 
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