Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords

1 . FREEDOM TO PROVIDE SERVICES - PROVISIONS OF THE TREATY - SCOPE - RECIPIENTS OF SERVICES

( EEC TREATY , ARTS 59 AND 60 )

2 . BALANCE OF PAYMENTS - LIBERALIZATION OF PAYMENTS - CURRENT PAYMENTS AND MOVEMENTS OF CAPITAL - CONCEPTS - PHYSICAL TRANSFER OF BANK NOTES - CLASSIFICATION

( EEC TREATY , ARTS 67 AND 106 )

3 . BALANCE OF PAYMENTS - LIBERALIZATION OF PAYMENTS - CURRENCY COVERED THEREBY

( EEC TREATY , ART . 106 )

4 . BALANCE OF PAYMENTS - LIBERALIZATION OF PAYMENTS - TRANSFERS OF FOREIGN CURRENCY IN CONNECTION WITH THE PROVISION OF SERVICES - RESTRICTIONS - ABOLITION - CONTROLS BY MEMBER STATES - WHETHER PERMISSIBLE - LIMITS

( EEC TREATY , ART . 106 )

Summary

1 . THE FREEDOM TO PROVIDE SERVICES INCLUDES THE FREEDOM , FOR THE RECIPIENTS OF SERVICES , TO GO TO ANOTHER MEMBER STATE IN ORDER TO RECEIVE A SERVICE THERE , WITHOUT BEING OBSTRUCTED BY RESTRICTIONS , EVEN IN RELATION TO PAYMENTS . TOURISTS , PER- SONS RECEIVING MEDICAL TREATMENT AND PERSONS TRAVELLING FOR THE PURPOSES OF EDUCATION OR BUSINESS ARE TO BE REGARDED AS RECIPIENTS OF SERVICES .

2.THE GENERAL SCHEME OF THE TREATY SHOWS , AND A COMPARISON BETWEEN ARTICLES 67 AND 106 CONFIRMS , THAT THE CURRENT PAYMENTS COVERED BY ARTICLE 106 ARE TRANSFERS OF FOREIGN EXCHANGE WHICH CONSTITUTE THE CONSIDERATION WITHIN THE CONTEXT OF AN UNDERLYING TRANSACTION , WHILST THE MOVEMENTS OF CAPITAL COVERED BY ARTICLE 67 ARE FINANCIAL OPERATIONS ESSENTIALLY CONCERNED WITH THE INVESTMENT OF THE FUNDS IN QUESTION RATHER THAN REMUNERATION FOR A SERVICE . FOR THAT REASON MOVEMENTS OF CAPITAL MAY THEMSELVES GIVE RISE TO CURRENT PAY- MENTS , AS IS IMPLIED BY ARTICLES 67 ( 2 ) AND 106 ( 1 ).

THE PHYSICAL TRANSFER OF BANK NOTES MAY NOT THEREFORE BE CLASSIFIED AS A MOVEMENT OF CAPITAL WHERE THE TRANSFER IN QUESTION CORRESPONDS TO AN OBLIGATION TO PAY ARISING FROM A TRANSACTION INVOLVING THE MOVEMENT OF GOODS OR SERVICES .

3.ARTICLE 106 COMPELS MEMBER STATES TO AUTHORIZE THE PAYMENTS REFERRED TO IN THAT PROVISION IN THE CURRENCY OF THE MEMBER STATE IN WHICH THE CREDITOR OR BENEFICIARY RESIDES . PAYMENTS MADE IN THE CURRENCY OF A THIRD COUNTRY ARE NOT THEREFORE COVERED BY THAT PROVISION .

4.ARTICLE 106 OF THE TREATY MUST BE INTERPRETED AS MEANING THAT :

TRANSFERS IN CONNECTION WITH TOURISM OR TRAVEL FOR THE PURPOSES OF BUSINESS , EDUCATION OR MEDICAL TREATMENT CONSTITUTE PAYMENTS AND NOT MOVEMENTS OF CAPITAL , EVEN WHERE THEY ARE EFFECTED BY MEANS OF THE PHYSICAL TRANSFER OF BANK NOTES ;

ANY RESTRICTIONS ON SUCH PAYMENTS ARE ABOLISHED AS FROM THE END OF THE TRANSITIONAL PERIOD ;

MEMBER STATES RETAIN THE POWER TO VERIFY THAT TRANSFERS OF FOREIGN CURRENCY PURPORTEDLY INTENDED FOR LIBERALIZED PAYMENTS ARE NOT IN REALITY USED FOR UNAUTHORIZED MOVEMENTS OF CAPITAL ;

CONTROLS INTRODUCED FOR THAT PURPOSE MAY NOT HAVE THE EFFECT OF LIMITING PAYMENTS AND TRANSFERS IN CONNECTION WITH THE PROVISION OF SERVICES TO A SPECIFIC AMOUNT FOR EACH TRANSACTION OR FOR A GIVEN PERIOD , OR OF RENDERING ILLUSORY THE FREEDOMS RECOGNIZED BY THE TREATY OR OF SUBJECTING THE EXERCISE THEREOF TO THE DISCRETION OF THE ADMINISTRATIVE AUTHORITIES ;

SUCH CONTROLS MAY INVOLVE THE FIXING OF FLAT-RATE LIMITS BELOW WHICH NO VERIFICATION IS CARRIED OUT , WHEREAS IN THE CASE OF EXPENDITURE EXCEEDING THOSE LIMITS PROOF IS REQUIRED THAT THE AMOUNTS TRANSFERRED HAVE ACTUALLY BEEN USED IN CONNECTION WITH THE PROVISION OF SERVICES , PROVIDED HOWEVER THAT THE FLAT-RATE LIMITS SO DETERMINED ARE NOT SUCH AS TO AFFECT THE NORMAL PATTERN OF THE PROVISION OF SERVICES .

Parties

IN JOINED CASES 286/82 AND 26/83

REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE TRIBUNALE DI GENOVA ( DISTRICT COURT , GENOA ) FOR A PRELIMINARY RULING IN THE PROCEEDINGS PENDING BEFORE THAT COURT BETWEEN

GRAZIANA LUISI

AND

MINISTERO DEL TESORO ( MINISTRY OF THE TREASURY ) ( CASE 286/82 ),

AND BETWEEN

GIUSEPPE CARBONE

AND

MINISTERO DEL TESORO ( CASE 26/83 ),

Subject of the case

ON THE INTERPRETATION OF ARTICLES 67 , 68 AND 106 OF THE EEC TREATY IN ORDER TO ENABLE THE COURT MAKING THE REFERENCE TO GIVE ITS DECISION AS TO THE COMPATIBILITY WITH THOSE ARTICLES OF CERTAIN PROVISIONS OF ITALIAN LEGISLATION RELATING TO TRANSFERS OF FOREIGN CURRENCY ,

Grounds

1 BY ORDERS OF 12 JULY AND 22 NOVEMBER 1982 , WHICH WERE RECEIVED AT THE COURT ON 27 OCTOBER 1982 AND 21 FEBRUARY 1983 RESPECTIVELY , THE TRIBUNALE DI GENOVA ( DISTRICT COURT , GENOA ) REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY A NUMBER OF QUESTIONS ON THE INTERPRETATION OF ARTICLE 106 OF THE TREATY IN ORDER TO ENABLE IT TO DECIDE WHETHER THE ITALIAN LEGISLATION RELATING TO TRANSFERS OF FOREIGN CURRENCY IS COMPATIBLE WITH THAT ARTICLE .

2 THE QUESTIONS AROSE IN PROCEEDINGS INSTITUTED BY TWO ITALIAN RESIDENTS AGAINST DECISIONS OF THE MINISTRO DEL TESORO ( MINISTER FOR THE TREASURY ) IMPOSING FINES UPON THEM FOR PURCHASING VARIOUS FOREIGN CURRENCIES FOR USE ABROAD IN AN AMOUNT WHOSE EXCHANGE VALUE IN ITALIAN LIRE EXCEEDED THE MAXIMUM PERMITTED BY ITALIAN LAW , WHICH AT THAT TIME WAS LIT 500 000 PER ANNUM FOR THE EXPORT OF FOREIGN CURRENCY BY RESIDENTS FOR THE PURPOSES OF TOURISM , BUSINESS , EDUCATION AND MEDICAL TREATMENT .

3 BEFORE THE NATIONAL COURT THE PLAINTIFFS CONTESTED THE VALIDITY OF THE PROVISIONS OF ITALIAN LEGISLATION ON WHICH THE FINES WERE BASED , ON THE GROUND THAT THOSE PROVISIONS WERE INCOMPATIBLE WITH COMMUNITY LAW . IN CASE 286/82 THE PLAINTIFF IN THE MAIN PROCEEDINGS , MRS LUISI , STATED THAT SHE HAD EXPORTED THE CURRENCY IN QUESTION FOR THE PURPOSE OF VARIOUS VISITS TO FRANCE AND THE FEDERAL REPUBLIC OF GERMANY AS A TOURIST AND IN ORDER TO RECEIVE MEDICAL TREATMENT IN THE LATTER COUNTRY . IN CASE 26/83 THE PLAINTIFF IN THE MAIN PROCEEDINGS , MR CARBONE , STATED THAT THE FOREIGN CURRENCY PURCHASED BY HIM HAD BEEN USED FOR A STAY OF THREE MONTHS IN THE FEDERAL REPUBLIC OF GERMANY AS A TOURIST . BOTH PLAINTIFFS SUBMITTED THAT THE RESTRICTIONS ON THE EXPORT OF MEANS OF PAYMENT IN FOREIGN CURRENCY FOR THE PURPOSE OF TOURISM OR MEDICAL TREATMENT WERE CONTRARY TO THE PROVISIONS OF THE EEC TREATY RELATING TO CURRENT PAYMENTS AND THE MOVEMENT OF CAPITAL .

4 IN ITS FIRST ORDER , DATED 12 JULY 1982 ( CASE 286/82 ), THE TRIBUNALE DI GENOVA STATED THAT THE TRANSACTIONS FOR WHICH ITALIAN LAW IMPOSED A CEILING ON TRANSFERS OF FOREIGN CURRENCY , NAMELY TOURISM AND TRAVEL FOR THE PURPOSES OF BUSINESS , EDUCATION AND MEDICAL TREATMENT , FELL WITHIN THE INVISIBLE TRANSACTIONS LISTED IN ANNEX III TO THE TREATY . PAYMENTS MADE IN CONNECTION WITH SUCH TRANSACTIONS THEREFORE FELL WITHIN THE FIRST SUBPARAGRAPH OF ARTICLE 106 ( 3 ) OF THE TREATY , WHICH REQUIRED MEMBER STATES TO REFRAIN FROM INTRODUCING ANY NEW RESTRICTIONS BETWEEN THEMSELVES , NOTWITHSTANDING WHICH THE CONTESTED ITALIAN LEGISLATION WAS ADOPTED IN 1974 . IT APPEARED APPROPRIATE , HOWEVER , TO DETERMINE THE EXACT SCOPE OF THAT PROVISION IN RELATION TO THOSE GOVERNING MOVEMENTS OF CAPITAL , IN PARTICULAR AS REGARDS THE EXTENT TO WHICH THE LATTER PROVISIONS APPLY TO PHYSICAL TRANSFERS OF BANK NOTES .

5 SEEKING INFORMATION ON THAT POINT , THE TRIBUNALE SUBMITTED THE FOLLOWING QUESTION TO THE COURT FOR A PRELIMINARY RULING :

' ' IN THE CASE OF EXPORTATION BY RESIDENTS TRAVELLING ABROAD FOR THE PURPOSE OF TOURISM , BUSINESS , EDUCATION OR MEDICAL TREATMENT OF FOREIGN STATE AND BANK NOTES AND CREDIT INSTRUMENTS IN FOREIGN CURRENCY , DO PERSONS SUBJECT TO COMMUNITY LAW HAVE THE BENEFIT OF RIGHTS WHICH MEMBER STATES ARE OBLIGED TO RESPECT BY VIRTUE OF THE ' STANDSTILL ' PROVISIONS CONTAINED IN THE FIRST SUBPARAGRAPH OF ARTICLE 106 ( 3 ) OF THE EEC TREATY , REGARD BEING HAD TO THE FACT THAT THE TRANSACTION IN QUESTION IS ONE OF THE INVISIBLE TRANSACTIONS LISTED IN ANNEX III TO THE SAID TREATY?

OR , BY VIRTUE OF THE REFERENCE MADE IN THE SECOND SUBPARAGRAPH OF ARTICLE 106 ( 3 ) OF THE TREATY , DO THE ABOVEMENTIONED CIRCUMSTANCES , WHICH , FROM AN OBJECTIVE POINT OF VIEW , CONSTITUTE A TRANSFER OF CURRENCY IN CASH , FALL WITHIN THE DEFINITION OF THE MOVEMENTS OF CAPITAL WHICH , PURSUANT TO THE PROVISIONS OF ARTICLES 67 AND 68 OF THE TREATY AND THE RELATED DIRECTIVES ADOPTED BY THE COUNCIL ON 11 MAY 1960 AND 18 DECEMBER 1962 , ARE NOT SUBJECT TO COMPULSORY LIBERALIZATION , WITH THE RESULT THAT CONTROL MEASURES AND PENALTIES IMPOSED BY A MEMBER STATE , IN THIS CASE ADMINISTRATIVE PENALTIES , ARE LAWFUL?

' '

6 IN ITS SECOND ORDER , DATED 22 NOVEMBER 1982 ( CASE 26/83 ), THE TRIBUNALE CONSIDERED ONLY TRANSFERS OF FOREIGN CURRENCY FOR THE PURPOSE OF TOURISM . IT RAISED THE QUESTION WHETHER TOURISM , ALTHOUGH CONSTITUTING AN INVISIBLE TRANSACTION WITHIN THE MEANING OF ARTICLE 106 ( 3 ) OF THE TREATY , SHOULD NOT AT THE SAME TIME BE REGARDED AS FALLING WITHIN THE SCOPE OF THE MOVEMENT OF SERVICES AND THEREFORE BE GOVERNED BY THE PROVISIONS OF ARTICLE 106 ( 1 ) ON THE LIBERALIZATION OF PAYMENTS CONNECTED WITH THE PROVISION OF SERVICES .

7 THE TRIBUNALE THEREFORE SUBMITTED A FURTHER QUESTION TO THE COURT :

' ' IN THE CASE OF EXPORTATION , BY RESIDENT TRAVELLERS GOING ABROAD FOR THE PURPOSE OF TOURISM , OF FOREIGN BANK NOTES , OR CREDIT INSTRUMENTS IN FOREIGN CURRENCY , DO COMMUNITY NATIONALS BENEFIT FROM RIGHTS WHICH THE MEMBER STATES ARE BOUND TO RESPECT BY VIRTUE OF THE DIRECTLY APPLICABLE PROVISION CONTAINED IN ARTICLE 106 ( 1 ) OF THE EEC TREATY , ON THE ASSUMPTION THAT TOURISM IS TO BE REGARDED AS FALLING WITHIN THE SCOPE OF THE MOVEMENT OF SERVICES AND THAT TRANSFERS OF CURRENCY TO COVER TOURIST EXPENSES ARE TO BE TREATED AS CURRENT PAYMENTS WHICH MUST THEREFORE BE DEEMED TO BE LIBERALIZED IN THE SAME WAY AS THE SERVICES WITH WHICH THEY ARE CONNECTED ;

OR , IF THE TRANSACTION IN QUESTION FALLS WITHIN THE CATEGORY OF INVISIBLE TRANSACTIONS LISTED IN ANNEX III TO THE EEC TREATY AND , BY VIRTUE OF THE REFERENCE MADE BY THE SECOND SUBPARAGRAPH OF ARTICLE 106 ( 3 ), THE TRANSACTION CONSTITUTES A TRANSFER OF CASH , DOES IT FALL WITHIN THE CATEGORY OF MOVEMENTS OF CAPITAL WHICH UNDER THE PROVISIONS OF ARTICLES 67 AND 68 OF THE TREATY AND OF THE RELEVANT DIRECTIVES ADOPTED BY THE COUNCIL ON 11 MAY 1960 AND 18 DECEMBER 1962 , NEED NOT NECESSARILY BE LIBERALIZED , WITH THE RESULT THAT IN THAT SPHERE MEMBER STATES MAY IMPOSE CONTROLS AND PENALTIES OF AN ADMINISTRATIVE NATURE?

' '

8 IT IS APPARENT FROM THE WORDING OF THE QUESTIONS SUBMITTED FOR A PRELIMINARY RULING AND FROM THE STATEMENT OF REASONS CONTAINED IN THE TWO ORDERS FOR REFERENCE THAT THE PROBLEMS OF INTERPRETATION OF COMMUNITY LAW ARISING IN THESE CASES ARE :

( A ) WHETHER TOURISM AND TRAVEL FOR THE PURPOSES OF BUSINESS , EDUCATION AND MEDICAL TREATMENT FALL WITHIN THE SCOPE OF SERVICES , OR OF INVISIBLE TRANSACTIONS WITHIN THE MEANING OF ARTICLE 106 ( 3 ) OF THE TREATY , OR OF BOTH THOSE CATEGORIES AT ONCE ;

( B)WHETHER THE TRANSFER OF FOREIGN CURRENCY FOR THOSE FOUR PURPOSES MUST BE REGARDED AS A CURRENT PAYMENT OR AS A MOVEMENT OF CAPITAL , IN PARTICULAR WHEN BANK NOTES ARE TRANSFERRED PHYSICALLY ;

( C)WHAT DEGREE OF LIBERALIZATION OF PAYMENTS RELATING TO THOSE FOUR PURPOSES IS PROVIDED FOR IN ARTICLE 106 OF THE TREATY ;

( D)WHAT CONTROL MEASURES REGARDING TRANSFERS OF FOREIGN CURRENCY MEMBER STATES ARE ENTITLED TO TAKE IN RELATION TO THE PAYMENTS SO LIBERALIZED .

( A ) ' ' SERVICES ' ' AND ' ' INVISIBLE TRANSACTIONS ' '

9 ACCORDING TO ARTICLE 60 OF THE TREATY , SERVICES ARE DEEMED TO BE ' ' SERVICES ' ' WITHIN THE MEANING OF THE TREATY WHERE THEY ARE NORMALLY PROVIDED