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Article 63 [Free Movement of Capital and Payment]

(ex-Article 56 TEC)

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Treaty on the Functioning of the European Union – A Commentary

Part of the book series: Springer Commentaries on International and European Law ((SCIEL))

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Abstract

The free movement of capital and payments, unlike the other economic freedoms are not only limited to the single market but liberalised globally. The current level of liberalisation of capital freedom was realised by legislative intervention and judicial activism. In the context of the liberalisation of cross border payments, the main focus of the EU is not only to make cross border payments for goods and services easier, cheaper and reliable but also enhance the level and quality of consumer protection.

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Notes

  1. 1.

    Seyad (1999).

  2. 2.

    Case 203/80, Casati (ECJ 11 November 1980) para 8.

  3. 3.

    Seyad (1996a).

  4. 4.

    On the belated judicial activism in the field of free movement of capital, see Flynn (2002).

  5. 5.

    O.J. (1959–1962), English Special Edition p. 49.

  6. 6.

    O.J. (1963–1964), English Special Edition p. 5.

  7. 7.

    Case 203/80, Casati (ECJ 11 November 1981). See on the case Louis (1982).

  8. 8.

    Council Directive 88/361/EEC for the implementation of Article 67 of the Treaty, O.J. L 178/5 (1988).

  9. 9.

    Namely Spain, Greece, Ireland and Portugal.

  10. 10.

    A similar provision is found in Article 5.1 of the first Directive.

  11. 11.

    Joined Cases C-358/93 and C-416/93, Aldo Bordessa (ECJ 23 February 1995) involved the interpretation of Directive 88/361; Case C-484/93, Svensson and Gustavsson (ECJ 14 November 1995) concerned Articles 67 and 71; Joined Cases C-163/94, C-165/94 and C-250/94, Sanz de Lera (ECJ 14 December 12.1995) dealt with Articles 73b, 73c (1) and 73d (1) (b) EC respectively.

  12. 12.

    Article 4(1) of Royal Decree 1819 of 20 December 1991 on Foreign Economic Transactions.

  13. 13.

    Greece, Ireland and Portugal were also authorised to continue to apply certain restrictions until the end of 1992.

  14. 14.

    Annex IV, List IV of the Directive.

  15. 15.

    Joined Cases C-358/93 and C-416/93, Aldo Bordessa (ECJ 23 February 1995) para 3.

  16. 16.

    Joined Cases C-358/93 and C-416/93, Aldo Bordessa (ECJ 23 February 1995) para 2.

  17. 17.

    Joined Cases C-163/94, C-165/94 and C-250/94, Sanz de Lera (ECJ 14 December 1995).

  18. 18.

    Seyad (2001).

  19. 19.

    Seyad (1996b).

  20. 20.

    After the Uruguay Round negotiations in December 1993, the financial services sector was kept as an integral part of the GATS.

  21. 21.

    The OECD Code of Liberalisation of Capital Movements and of Current Invisible Operations-Users Guide 2007 published by the OECD Secretariat.

  22. 22.

    Torre (1995) and Bond (1999).

  23. 23.

    Case 203/80, Casati (ECJ 11 November 1981) para 11.

  24. 24.

    Case C-446/04, FII Group Litigation (ECJ 12 December 2006) para 179.

  25. 25.

    Usher (1992).

  26. 26.

    Case 8/74, Dassonville (ECJ 11 July 1974) in relation to “restrictions” on the movement of goods.

  27. 27.

    Case 203/80, Casati (ECJ 11 November 1981) para 11.

  28. 28.

    Case 157/85, Brugnoni and Ruffinengo v Cassa di risparmio di Genova e Imperia (ECJ 24 June 1986) para 22.

  29. 29.

    Joined Cases C-24/12 and C-27/12, X and TBG (ECJ 5 June 2014).

  30. 30.

    The Agreement on the European Economic Area, which entered into force on 1 January 1994, brings together the EU Member States and three of the four EFTA States (Iceland, Norway, Liechtenstein, but not Switzerland) in a single market, referred to as the “Internal Market”.

  31. 31.

    Case C-452/01, Margarethe Ospelt and Schlössle Weissenberg Familienstiftung (ECJ 23 September 2003).

  32. 32.

    Case 7/78, Thompson (ECJ 23 November 1978).

  33. 33.

    Joined Cases 286/82 and 26/83, Luisi and Carbone (ECJ 31 January 1984).

  34. 34.

    Case 308/86, Lambert (ECJ 14 July 1988).

  35. 35.

    Case 308/86, Lambert (ECJ 14 July 1988) para 15.

  36. 36.

    Case C 410/96, Andre Ambry (ECJ 1 December 1998).

  37. 37.

    Article 4 of French Law No 92/645 of 13 July 1992 laying down the conditions for the exercise of activities relating to the organisation and sale of travel or holidays (JORF p. 9457).

  38. 38.

    Case C-302/97, Konle (ECJ 1 June 1999).

  39. 39.

    See Joined Cases C-46/93 and C-48/93, Brasserie du Pêcheur and Factortame (ECJ 5 March 1996); Case C-392/93, The Queen v H.M. Treasury, ex parte British Telecommunications (ECJ 26 March 1996); Joined Cases C-178/94 et al., Dillenkofer and Others v Germany (ECJ 8 October 1996); Joined Cases C-283/94 et al., Denkavit Internationaal (ECJ 17 October 1996).

  40. 40.

    Case C-302/97, Konle (ECJ 1 June 1999) para 59.

  41. 41.

    Case C-222/97, Trummer and Mayer (ECJ 16 March 1999).

  42. 42.

    Section 3(1) of the Decree on fixed-value rights of 16 November 1940, as amended by Section 4 of the Law on the Austrian schilling.

  43. 43.

    Seyad (1999), p. 110.

  44. 44.

    Case C-222/97, Trummer and Mayer (ECJ 16 March 1999) para 6–8.

  45. 45.

    Royal Decree of 4 October 1994.

  46. 46.

    Case C-222/97, Trummer and Mayer (ECJ 16 March 1999) para 26, and Case C-439/97, Sandoz (ECJ 14 October 1999) para 19; as to measures which make a direct foreign investment subject to prior authorization, see Joined Cases C-163/94, C-165/94 and C-250/94, Sanz de Lera (ECJ 14 December 1995) para 24–25, and Case C-54/99, Église de Scientologie (ECJ 14 March 2000) para 14.

  47. 47.

    Case C-484/93, Svensson and Gustavsson (ECJ 14 November 1995).

  48. 48.

    Case C-28/95, A. Leur-Bloem v Inspecteur der Belastingdienst/Ondernemingen Amsterdam, (ECJ 17 July 1997) para 44, the ECJ declared that a general presumption of tax evasion or tax fraud could not justify a fiscal measure, which compromises the objectives of a directive.

  49. 49.

    Case C-204/90, Bachmann v Belgian State (ECJ 28 January 1992). See also Case C-250/95, Futura Participations SA and Singer v Administration des contributions (ECJ 15 May 1997) where the ECJ accepted as an overriding requirement of general interest, the prohibition based on national law which was justified by the need to ensure the effectiveness of fiscal supervision.

  50. 50.

    Case 120/78, Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (ECJ 20 February 1979).

  51. 51.

    Case C-279/93, Roland Schumacker (ECJ 14 February 1995) where the ECJ said MS cannot deny tax benefits to ensure the coherent application of its tax laws.

  52. 52.

    Case C-54/99, Église de Scientologie (ECJ 14 March 2000).

  53. 53.

    The Law on Financial Relations with Foreign Countries in Regard to Foreign Investments in France (Law No 66-1008 of 28 December 1966 as amended by Law No 96-109 of 14 February 1996).

  54. 54.

    Case 41/74, Yvonne Van Duyn v Home Office (ECJ 4 December 1974).

  55. 55.

    Case C-54/99, Église de Scientologie (ECJ 14 March 2000) para 21.

  56. 56.

    Seyad (1997).

  57. 57.

    Putek (2004) and Rutabanzibwa (1996).

  58. 58.

    Case C-463/00, Commission v Spain (ECJ 13 May 2003).

  59. 59.

    Case C-112/05, Commission v Germany (ECJ 23 October 2007). See Sander (2008).

  60. 60.

    Some of these airports include Heathrow, Gatwick, Stansted, Edinburgh, Glasgow, etc.

  61. 61.

    Case C-98/01, Commission v United Kingdom (ECJ 13 May 2003).

  62. 62.

    Case C 503/99 Commission v Belgium (ECJ 4 June 2002).

  63. 63.

    Case C-483/99, Commission v France (ECJ 4 June 2002).

  64. 64.

    Case C-367/98, Commission v Portugal (ECJ 4 June 2002).

  65. 65.

    Case C-463/04, Federconsumatori and Others (ECJ 6 December 2007); Case C-174/04, Commission v Italy (ECJ 2 June 2005).

  66. 66.

    Case C-370/05, Festersen (ECJ 25 January 2007).

  67. 67.

    Seyad (2008a).

  68. 68.

    Joined Cases 286/82 and 26/83, Luisi and Carbone (ECJ 31 January 1984).

  69. 69.

    A parallel could be drawn with the adoption on 1 July 1990 of Directive 88/361/EEC to liberalise the free movement of capital without simultaneously putting in place adequate measures to deal with related problems such as tax evasion and money laundering.

  70. 70.

    The potential savings linked to the use of efficient payment services would have been enormous. According to the European Commission statistics, there are some EUR 231 billion annual cash and non-cash transactions in the Community with a total value of EUR 52 trillion. The annual cost of making payments between the various national systems amounts to 2–3% of gross domestic product.

  71. 71.

    Commission Recommendation 97/489/EC concerning transactions by electronic payment instruments and in particular the relationship between issuer and holder, O.J. L 208/52 (1997). It has substantially revised and extended Commission Recommendation 87/598/EEC on a European Code of Conduct relating to electronic payment, O.J. L 365/72 (1987).

  72. 72.

    Parliament/Council Directive 97/5/EC on cross-border credit transfers, O.J. L 43/25 (1997).

  73. 73.

    Parliament/Council Directive 2007/64/EC on payment services in the internal market, O.J. L 319/1 (2007).

  74. 74.

    Parliament/Council Regulation (EC) No 924/2009 on cross-border payments in the Community, O.J. L 266/11 (2009).

  75. 75.

    Parliament/Council Directive (EU) 2015/2366 on payment services in the internal market, O.J. L 337/35 (2015).

  76. 76.

    Parliament/Council Regulation (EC) No 2560/2001 on cross-border payments in euro, O.J. L 344/1 (2001).

  77. 77.

    Commission Communication pursuant to Article 9 of Regulation (EC) 2560/2001, O.J. C 165 (2002). On 28 June 2002 the Commission received notification of the Swedish authorities’ decision to extend the application of the Regulation to the Swedish Crown.

  78. 78.

    Seyad (2008b).

  79. 79.

    Article 4.3 reads together with the Annex. It sets out an exhaustive list of payment services ranging from cash deposits and withdrawals, execution of payments transactions including transfer of funds, issuing of payment cards which allow user to transfer funds, transfer of funds where electronic money is issued by provider, remittance services where cash, e-money is accepted by provider from user, execution of payment transactions by any means at a distance such as mobile telephones, other digital or IT devices, etc.

  80. 80.

    It excludes pure cash transfer from payer to payee, change of foreign to local currency-vice versa-i.e. cash to cash operations, where funds are not held as cash deposit on payment account, paper cheques, traveler’s cheque, paper-based vouchers and promissory notes.

  81. 81.

    They are credit institutions and post office giro institutions licensed in terms of Article 2.3 of Directive 2000/12/EC; electronic money institutions licensed in terms of Directive 2000/46/EC; payment institutions in terms of Article 6 of the Directive.

  82. 82.

    Title 11 of the Directive deals exclusively with payment institutions.

  83. 83.

    Parliament/Council Directive 2000/12/EC relating to the taking up and pursuit of the business of credit institutions, O.J. L 126/1 (2000).

  84. 84.

    The EPC was launched in June 2002 by 38 banks and banking associations, the three European Credit Sector Associations and the Euro Banking Association with the support of the Commission and the ECB.

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Author information

Authors and Affiliations

  1. University of Stockholm, Stockholm, Sweden

    Sideek Mohamed Seyad

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  1. Sideek Mohamed Seyad
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Editor information

Editors and Affiliations

  1. Faculty for Economics, Law and Social Science, University of Erfurt, Erfurt, Germany

    Hermann-Josef Blanke

  2. Università degli Studi di Teramo, Teramo, Italy

    Stelio Mangiameli

List of Cases

List of Cases

  • ECJ 11.07.1974, 8/74, Dassonville, ECLI:EU:C:1974:82 [cit. in para 38]

  • ECJ 04.12.1974, 41/74, Yvonne van Duyn v Home Office, ECLI:EU:C:1974:133 [cit. in para 65]

  • ECJ 23.11.1978, 7/78, Thompson, ECLI:EU:C:1978:209 [cit. in para 46]

  • ECJ 20.02.1979, 120/78, Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein, ECLI:EU:C:1979:42 [cit. in para 63]

  • ECJ 11.11.1981, 203/80, Casati, ECLI:EU:C:1981:261 [cit. in para 8]

  • ECJ 31.01.1984, 286/82 and 26/83, Luisi and Carbone, ECLI:EU:C:1984:35 [cit. in para 47–48]

  • ECJ 24.06.1986, 157/85, Brugnoni and Ruffinengo v Cassa di risparmio di Genova e Imperia, ECLI:EU:C:1986:258 [cit. in para 39]

  • ECJ 14.07.1988, 308/86, Lambert, ECLI:EU:C:1988:405 [cit. in para 49]

  • ECJ 28.01.1992, C-204/90, Bachmann v Belgian State, ECLI:EU:C:1992:35 [cit. in para 39]

  • ECJ 14.02.1995, C-279/93, Roland Schumacker, ECLI:EU:C:1995:31 [cit. in para 63]

  • ECJ 23.02.1995, C-358/93 and C-416/93, Aldo Bordessa et.al., ECLI:EU:C:1995:54 [cit. in para 17–21]

  • ECJ 14.11.1995, C-484/93, Svensson and Gustavsson, ECLI:EU:C:1995:379 [cit. in para 61]

  • ECJ 14.12.1995, C-163/94 et al., Sanz de Lera, ECLI:EU:C:1995:451 cit. in para 23–26]

  • ECJ 05.03.1996, C-46/93 and C-48/93, Brasserie du Pêcheur and Factortame, ECLI:EU:C:1996:79 [cit. in para 55]

  • ECJ 26.03.1996, C-392/93, The Queen v H.M. Treasury, ex parte British Telecommunications, ECLI:EU:C:1996:131 [cit. in para 55]

  • ECJ 08.10.1996, C-178/94 et al., Dillenkofer and Others v Germany, ECLI:EU:C:1996:375 [cit. in para 55]

  • ECJ 17.10.1996, C-283/94 et al., Denkavit Internationaal and Others v Bundesamt für Finanzen, ECLI:EU:C:1996:387 [cit. in para 55]

  • ECJ 15.05.1997, C-250/95, Futura Participations SA and Singer v Administration des Contributions, ECLI:EU:C:1997:239 [cit. in para 63]

  • ECJ 17.07.1997, C-28/95, A. Leur-Bloem v Inspecteur der Belastingdienst/Ondernemingen Amsterdam, ECLI:EU:C:1997:369 [cit. in para 62]

  • ECJ 01.12.1998, C-410/96, Ambry, ECLI:EU:C:1998:578 [cit. in para 52]

  • ECJ 16.03.1999, C-222/97, Trummer and Mayer, ECLI:EU:C:1999:143 [cit. in para 56–59]

  • ECJ 01.06.1999, C-302/97, Konle, ECLI:EU:C:1999:271 [cit. in para 53–55]

  • ECJ 14.10.1999, C-439/97, Sandoz, ECLI:EU:C:1999:499 [cit. in para 61]

  • ECJ 14.03.2000, C-54/99, Église de Scientologie, ECLI:EU:C:2000:124 [cit. in para 61]

  • ECJ 04.06.2002, C-367/98, Commission v Portugal, ECLI:EU:C:2002:326 [cit. in para 83–84]

  • ECJ 04.06.2002, C-483/99, Commission v France, ECLI:EU:C:2002:327 [cit. in para 81–82]

  • ECJ 04.06.2002, C-503/99, Commission v Belgium, ECLI:EU:C:2002:328 [cit. in para 60–63]

  • ECJ 13.05. 2003, C-463/00, Commission v Spain, ECLI:EU:C:2003:272 [cit. in para 70–72]

  • ECJ 13.05.2003, C-98/01, Commission v United Kingdom, ECLI:EU:C:2003:273 [cit. in para 76–77]

  • ECJ 23.09. 2003, C-452/01, Margarethe Ospelt and Schlössle Weissenberg Familienstiftung, ECLI:EU:C:2003:493 [cit. in para 43]

  • ECJ 02.06.2005, C-174/04, Commission v Italy, ECLI:EU:C:2005:350 [cit. in para 85]

  • ECJ 12.12.2006, C-446/04, FII Group Litigation, ECLI:EU:C:2006:774 [cit. in para 33]

  • ECJ 25.01.2007, C-370/05, Festersen, ECLI:EU:C:2007:59 [cit. in para 88]

  • ECJ 23.10.2007, C-112/05, Commission v Germany, ECLI:EU:C:2007:623 [cit. in para 73–75]

  • ECJ 06.12.2007, C-463/04, Federconsumatori and Others, ECLI:EU:C:2007:752 [cit. in para 85–86]

  • ECJ 05.06.2014, C-24/12 and C-72/12, X and TBG, ECLI:EU:C:2014:1385 [cit. in para 41]

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Seyad, S.M. (2021). Article 63 [Free Movement of Capital and Payment]. In: Blanke, HJ., Mangiameli, S. (eds) Treaty on the Functioning of the European Union – A Commentary. Springer Commentaries on International and European Law. Springer, Cham. https://doi.org/10.1007/978-3-030-43511-0_64

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