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Secondary legislation with impact on the free movement of capital

The CJEU has established (e.g. case C-101/05, Skatteverket v A, §21) that the Treaty principle of free movement of capital has direct effect, i.e. it does not need any implementing legislation at Member States’ level. Art. 63 TFEU directly confers rights on individuals which they can rely on before national courts. However, some secondary legislation nevertheless has an impact on the Treaty freedom, e.g.:

  • Directive 88/361/EEC for the implementation of Article 67 of the Treaty. Although the TFEU does not define the term 'movements of capital', the CJEU has held that Directive 88/361/EEC and the nomenclature annexed to it can be used to define that term (see e.g. in case C-112/05, §18: "In the absence of a Treaty definition of ‘movement of capital’…, the Court has previously recognised the nomenclature set out in Annex I to Council Directive 88/361/EEC for the implementation of Article 67 of the Treaty [article repealed by the Treaty of Amsterdam] as having indicative value."). Transactions representing capital movements are listed in Annex I of the Directive.
  • Exceptional circumstances with regards to Member States' balance of payments can have an impact on the free flow of capital: Member States which have not adopted the Euro and which are experiencing, or are seriously threatened with, difficulties in their current payments or capital movements can benefit from a medium-term financial assistance. At present, Council Regulation (EC) n° 332/2002 governs the medium-term financial assistance for Member States' balance of payments up to a maximum of EUR 12 billion. In the past, Community loans for balance of payments support were granted by way of Council Decisions based on Council Regulation (EEC) n° 397/1975/EEC, Council Regulation (EEC) n° 682/1981 and Council Regulation (EEC) n° 1969/1988. See also MEMO/01/67 Choose translations of the previous link .

  • The principle of free movement of capital does not exclude that Member States and/or the European Union have a monitoring role on capital movements. Protection of citizens against misuse of the financial system and against activities for money laundering purposes is necessary. Controls of cash entering or leaving the Community are regulated by Regulation (EC) n° 1889/2005.