Free Movement of Capital

Question 1

Definition

Answer 1

EU entities can move money, invest, and buy property across MS without restrictions

Question 2

Article 63 TFEU

(Legal basis)

Answer 2

Prohibits restrictions on movement of capital between:

MS~MS
MS~third country

Question 3

Article 64-66 TFEU

(Legal basis)

Answer 3

Exceptions to Art. 63
- Third country capital movements like FDI and tax evasion can be restricted
- Public policy and security
- Times of economic crisis

Question 4

Protected capital movements

Answer 4

Purchase of real estate

Stocks and bonds

Direct investment (FDI)

Loans and credits

Bank deposits

Question 5

Protected payments

Answer 5

Any transfer of money to settle one’s obligations

Ex: tuition fees, inheritance, alimony

Question 6

Commission v. Portugal case

Answer 6

Measures like golden shares (state held special rights in privatized companies) can be considered restrictions on free movement of capital

Question 7

Restrictions to free movement of capital

What + example

Answer 7

National rules impeding capital from entering or leaving a MS

Ex: requiring prior authorization for investments

Question 8

Justifications for restrictions

Answer 8

Public policy (Art. 65(1) TFEU)

Taxation (if non discriminatory and proportional/necessary)

Anti-money laundering and financial supervision

Question 9

Sanz de Lera case

Answer 9

Prior authorization for exporting currency is a breach of this freedom as it slows down capital movement

Question 10

Haribo case

Answer 10

Discriminatory tax treatment on dividends to foreign shareholders is a violation as it prevents capital movement

Question 11

Third country capital movements

Answer 11

MS can restrict FDI in sensitive sectors like energy and defense

Public policy justifications more common than in MS~MS cases