LUISI AND CARBONE v MINISTERO DEL TESORO
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),
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,
THE COURT
composed of: J. Mertens de Wilmars, President, T. Koopmans, K. Bahlmann
and Y. Galmot, Presidents of Chambers, P. Pescatore, Lord Mackenzie
Stuart, G. Bosco, U. Everling and C. Kakouris, Judges,
Advocate General: G. F. Mancini
Registrar: P. Heim
gives the following
379
JUDGMENT OF 31. 1. 1984 — JOINED CASES 286/82 AND 26/83
JUDGMENT
Facts and Issues
The orders for reference, the course of
the procedure and the observations
submitted pursuant to Article 20 of the
Protocol on the Statute of the Court of
Justice of the EEC may be summarized
as follows:
I — Facts and written procedure
1. The facts of the main proceedings
may be summarized as follows :
(a) Case 286/82
In reports drawn up on 28 August 1979
and 12 December 1980, the Ufficio
Italiano dei Cambi [Italian Exchange
Office] placed on record the fact that
Graziana Luisi, the plaintiff in the main
proceedings, an Italian national residing
in Italy, had used abroad means of
payment to an exchange value of LIT
24 906 393 in 1975 and LIT 8 464 440 in
1976. It appears from those reports that
during 1975 and 1976 Mrs Luisi sought
and obtained sums from various Italian
banks in a number of foreign currencies,
in particular United States dollars, Swiss
francs, German marks and French francs.
Under the Italian legislation then applicable,
the export of foreign currency was
authorized up to an exchange value of
LIT 500 000 per year. The Ministero del
Tesoro imposed on Mrs Luisi for
infringements of that legislation two
separate fines equal to the difference
between the amount of currency
exported and the maximum permitted
limit.
Mrs Luisi contested the legality of the
orders imposing those fines before the
Genoa court and stated that she had
exported the currency in question in
particular for the purpose of various
periods spent as a tourist in the Federal
Republic of Germany and France. At
that time, she had also undergone
medical treatment of various kinds in
Germany. According to the plaintiff in
the main proceedings, the Italian
provisions limiting the exportation of
means of payment in foreign currency
for the purposes of tourism are
incompatible with the provisions of
Community law relating to the
movement of capital and current
payments.
(b) Case 26/83
In a report prepared on 6 September
1979 the Ufficio Italiano dei Cambi
placed on record the fact that in 1975
Giuseppe Carbone, the plaintiff in the
main proceedings, an Italian national
residing in Italy, had used means of
payment abroad to an exchange value of
LIT 13 801 310. It appears from that
report that during November 1975 Mr
Carbone purchased from about 20 Italian
banks American dollars, Swiss francs and
German marks together amounting to
the above-mentioned sum. Since he had
exceeded the maximum exchange value
380
LUISI AND CARBONE v MINISTERO DEL TESORO
of LIT 500 000 per year at that time
permitted by Italian law, a fine of LIT
13 301 310 was imposed on Mr Carbone
by order of the Minister of the Treasury
of 28 November 1981, being equal to the
amount of currency exported in excess of
the permitted maximum.
Mr Carbone brought an action before
the Tribunale di Genova against that
order of the Minister of the Treasury.
He stated that he had used the foreign
currency for a period of three months
spent as a tourist in the Federal Republic
of Germany and claimed that the Italian
provisions limiting the means of payment
in foreign currency for the purposes of
tourism were incompatible with Community
law and in particular with
Articles 3 (c), 5, 67, 68, 71 and 106 of
the EEC Treaty.
The contested Italian legislation
2. The relevant Italian rules are
contained in Decree Law No 476 of 6
June 1956 introducing new provisions
regarding exchange regulations and
creating a free market in foreign State
and bank notes (Gazzetta Ufficiale della
Repubblica Italiana No 137 of 6. 6.
1956) and various implementing decrees.
By virtue of the last paragraph of the
first article of that decree law, foreign
State and bank notes which are legal
tender and credit instruments used as a
means of payment between residents and
non-residents are regarded as foreign
currencies.
Article 8 of the decree law provides that
residents are obliged to surrender to the
Ufficio Italiano dei Cambi any foreign
currency which they hold.
The Bank of Italy and the credit undertakings
approved as agencies thereof may
issue foreign currency to residents going
abroad for the purposes of tourism,
business, education or medical treatment,
subject to compliance with the provisions
laid down by the Ministro per il
Commercio col Estero [Minister for
Foreign Trade] (Article 10 (a) of Decree
Law No 476).
Article 4 (a) of the Ministerial Decree of
6 June 1956 (Gazzetta Ufficiale della
Repubblica Italiana No 138 of 7. 6.
1956) provides that:
"The export of foreign State and bank
notes by residents for the purposes of
tourism, business, education and medical
treatment is permitted up to the amount
fixed by the Minister for Foreign
Trade."
That amount was initially fixed by
Article 12 of the Ministerial Decree of
26 October 1967 (Gazzetta Ufficiale
della Repubblica Italiana No 280 of 10.
11. 1967), which prescribed a limit of
LIT 1 000 000 per trip for travel for the
purposes of tourism, business, education
and medical treatment. The Ministerial
Decree of 21 March 1974 (Gazzetta
Ufficiale della Repubblica Italiana No 77
of 22. 3. 1974) subsequently authorized
residents to export, for the abovementioned
purposes, foreign State and
bank notes and credit instruments
denominated in foreign currency up to a
maximum exchange value of LIT
500 000 (Article 13 (a)).
The sole article of the Ministerial Decree
of 2 May 1974 (Gazzetta Ufficiale della
Repubblica Italiana No 114 of 3. 5.
381
JUDGMENT OF 31. 1. 1984 — JOINED CASES 286/82 AND 26/83
1974), amending the Ministerial Decree
of 21 March 1974, provides as follows:
"(a) The exportation by residents for
the purposes òf tourism, business,
education and medical treatment of
foreign State and bank notes and
credit instruments denominated in
foreign currency is permitted up to
a maximum exchange value of LIT
500 000 per annum. "
The Ministerial Decree of 22 December
1975 (Gazzetta Ufficiale della Repubblica
Italiana No 343 of 31. 12. 1975)
contains an identical provision in Article
13 authorizing the issue of foreign
currency to travellers going abroad for
the above-mentioned purposes, up to a
maximum exchange value of LIT
500 000 per annum.
By virtue of Article 13 of Decree Law
No 476, special authorizations for the
issue of foreign currency of an amount
exceeding the exchange value of LIT
500 000 may be applied for from the
Minister for Foreign Trade. The latter
may delegate his powers for that purpose
to the Ufficio Italiano dei Cambi.
Paragraph 3 of Circular No A/300 of 3
May 1974 issued by the Ufficio Italiano
dei Cambi authorized the issue of
foreign currency of an amount exceeding
LIT 500 000 only for travel for the
purpose of business, education or
medical treatment, and subject to prior
examination of the supporting docu-;
ments by the Ufficio Italiano dei Cambi
in each individual case.
At the material time, the export of
foreign currency in excess of the limit
laid down in the general authorization or
in any special authorization obtained by
a resident attracted a penalty under
administrative law consisting in the
payment of a sum of up to five times the
value of the currency involved in the
infringement (Article 15 of Decree Law
No 476). Penalties under criminal law
were subsequently introduced by Decree
Law No 31 of 4 March 1976 (Gazzetta
Ufficiale della Repubblica Italiana No 60
of 5. 3. 1976).
The exchange control legislation was·
further amended by a Ministerial Decree
of 12 March 1981 (Supplement to "•
Gazzetta Ufficiale della Repubblica
Italiana No 82 of 24. 3. 1981). That
decree raised the limit under the general
authorization for travel for the purpose
of tourism and business to the exchange
value of LIT 1 000 000 per annum; the
possibility of special authorizations for a
higher amount was confined to business
travel. In implementation of that decree,
as amended by the Ministerial Decree of
14 July 1982 (Supplement to Gazzetta
Ufficiale della Repubblica Italiana No
207 of 29. 7. 1982), Circular No 1/11
of the Ufficio Italiano dei Cambi of
9 May 1983 (Gazzetta Ufficiale della
Repubblica Italiana No 137 of 20. 5.
1983) then laid down that the maximum
annual allowance for residents wishing to
go abroad for the purpose of tourism
was to be the exchange value of LIT
1 600 000, of which LIT 100 000 might
be in the form of foreign State and bank
notes and the remainder in the form of
various other means of payment. For
residents going abroad for the purposes
of business, medical treatment of
education, the same circular authorized
the issue of foreign currency within the
limits of the actual and proven needs of
the persons concerned, which were to be
verified by the approved banks.
382
LUISI AND CARBONE v MINISTERO DEL TESORO
The Community provisions
3. In the proceedings before the
national court the plaintiffs relied on the
one hand upon Articles 67 and 68 of the
Treaty relating to the movement of
capital and, on the other, upon Article
106 of the Treaty concerning payments
relating to the movement of goods,
services and capital, and also transfers of
capital and earnings.
Article 106 (3) provides as follows:
"Member States undertake not to
introduce between themselves any new
restrictions on transfers connected with
the invisible transactions listed in Annex
III to this Treaty.
The progressive abolition of existing
restrictions shall be effected in accordance
with the provisions of Articles 63 to
65, in so far as such abolition is not
governed by the provisions contained in
paragraphs (1) and (2) or by the Chapter
relating to the free movement of
capital."
The following appear among the
invisible transactions listed in Annex III
to the Treaty:
Business travel;
Tourism;
Travel for private reasons (education) ;
Travel for private reasons (health);
Travel for private reasons (family).
The Council has adopted two directives
for the implementation of Article 67 of
the Treaty. The first is dated 11 May
1960 (Official Journal, English Special
Edition 1959-1962, p. 49) and the
second, which supplements and amends
the first, is dated 18 December 1962
(Official Journal, English Special Edition
1963-1964, p. 5). The two directives
contain in Annex I a complete list of the
capital movements covered by Article 67
of the Treaty. Annex I divides capital
movements into four categories which
are set out in Lists A, B, C and D.
Article 7 of the first Directive imposes
upon Member States the obligation to
notify the Commission of any
amendment of the provisions governing
the transactions appearing in List D
which includes, ¡titer alia, the physical
import and export of financial assets.
The Council has also adopted two
directives in implementation of Article
106 of the Treaty. The first is Directive
63/340 of 31 May 1963, which is
based on Articles 63 and 106 (2) and is
intended to ensure the abolition of all
prohibitions on or obstacles to payments
for services where the only restrictions
on the exchange of services are those
governing such payments (Official
Journal, English Special Edition 1963-
1964, p. 31). Article 3 of that Directive
provides as follows:
"This directive shall apply to the services
specified in Articles 59 and 60 of the
Treaty.
It shall not, however, apply to services in
connection with transport or to foreign
exchange allowances for tourists."
The second directive is No 63/474 of 30
July 1963, which is based on Articles 63
and 106 (3) and liberalizes transfers in
respect of invisible transactions not
connected with the movement of goods,
services, capital or persons (Official
Journal, English Special Edition 1963-
1964, p. 45). The invisible transactions
listed in the annex to that directive do
not include expenses incurred in
connection with travel for the purposes
of tourism, business, education or
medical treatment.
383
JUDGMENT OF 31. 1. 1984 — JOINED CASES 286/82 AND 26/83
Procedure
4. As is apparent from the order
making the reference in Case 286/82,
the Tribunale di Genoa considers that, in
view of the judgment of the Court of 11
November 1981 in Case 203/80 Casati
[1981] ECR 2595, the Community
provisions relating to the movement of
capital do not entail compulsory
abolition of restrictions imposed by
Member States regarding the physical
export of foreign currency. It considers
however that the transactions carried out
in this case fall under the headings of
tourism, business, education or health
which are among the invisible
transactions referred to in the first
subparagraph of Article 106 (3) of the
Treaty and appear in the list in Annex III
to the Treaty. Consequently, the national
court wishes to know whether
Community nationals have the benefit of
the rights which Member States are
obliged to respect pursuant to the
"standstill" provisions contained in the
first subparagraph of Article 106 (3).
Since in the judgment cited above the
Court of Justice did not give a ruling on
the interpretation of that provision in
relation to Article 67 et seq. of the
Treaty relating to the movement of
capital, the national court, by order of
12 July 1982, decided pursuant to Article
177 of the Treaty to stay the proceedings
and to submit 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?"
5. In the statement of grounds in the
order making the reference in Case
26/83, the Tribunale di Genova points
out that pursuant to Article 106 (1) of
the Treaty, the liberalization of the
provision of services under Article 59 of
the Treaty ought to entail the abolition
of any control relating to payments
connected with those services. In this
case, the foreign currency (German
marks) is said to have been used for
tourist purposes within the territory of a
Member State of the Community and in
particular for services provided in the
hotel sector or in closely related sectors.
Considering that it was therefore
necessary to interpret the concept of
movement of services within the meaning
of Article 106 (1), and in particular to
determine whether transfers of currency
relating to the provision of various
services should be described as "current
payments" or as "movement of capital",
384
LUISI AND CARBONE v MINISTERO DEL TESORO
the national court, by order of 22
November 1982, decided pursuant to
Article 177 of the EEC Treaty to stay
the proceedings until the Court of Justice
had given a preliminary ruling on the
following question:
"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?"
The orders making the references were
received at the Court Registry on
27 October 1982 (Case 286/82) and
21 February 1983 (Case 26/83).
6. By order of 8 June 1983 the Court
joined the two cases for the purposes of
the oral procedure and judgment.
In accordance with Article 20 of the
Protocol on the Statute of the Court of
Justice of the EEC, written observations
were submitted :
In Case 286/82 by Graziana Luisi, the
plaintiff in the main proceedings, represented
by Giuseppe Conte and
Gualtiero Timossi, of the Genoa Bar,
and by the Government of the French
Republic, represented for that purpose
by Jean-Paul Costes, who is attached to
the Prime Minister's Secretariat-General,
acting as Agent,
In Case 26/83 by Giuseppe Carbone,
the plaintiff in the main proceedings,
represented by Giuseppe Conte and
Gualtiero Timossi, of the Genoa Bar,
and by the Government of the Kingdom
of the Netherlands, represented by E.F.
Jacobs deputizing for the SecretaryGeneral
in the Ministry of Foreign
Affairs, acting as Agent,
And in both cases by the Government
of the Federal Republic of Germany,
represented by Martin Seidel, acting as
Agent, by the Government of the
Kingdom of Belgium, represented by W.
Collins (in Case 286/82) and by E. de
Beer de Laer (in Case 26/83), acting as
Agents, by the Government of the Italian
Republic, represented by the Avvocato
dello Stato, Marcello Conti, acting as
Agent, and by the Commission of the
European Communities, represented by
385
JUDGMENT OF 31. 1. 1984 — JOINED CASES 286/82 AND 26/83
Guido Berardis, a member of its Legal
Department, acting as Agent.
Upon hearing the report of the JudgeRapporteur
and the views of the
Advocate General, the Court decided to
open the oral procedure without any
preparatory inquiry. However, it called
upon the parties to the preparatory
proceedings to express their views at the
hearing as to how "business travel"
referred to in Annex III to the Treaty
should be defined.
II — Written observations submitted
to the C o u r t
As regards the physical export of
currency for the purposes of tourism
considered in the light of the Treaty, the
observations lodged in these proceedings
reveal three general views, namely: in the
first place, the view that the operations
in question are capital movements falling
within Article 67 of the Treaty; secondly,
the view that they are invisible transactions
within the meaning of Article 106
(3) of the Treaty; and, thirdly, the view
that they are payments connected with
services as provided for in Article 106
(1)·
Preliminary comments
The Italian Government expresses doubts
in the first place as to whether the
plaintiffs in the main proceedings
actually used all the currency to which
these two cases refer for the purposes of
tourism in Community countries. It
points out that the plaintiffs did not
furnish specific evidence in that regard in
the main proceedings. The large sums
withdrawn within relatively short periods
in each of the actions before the national
court by far exceed the requirements of
a tourist, even for a prolonged stay
abroad. Moreover, a part of the funds
was in currencies of non-member
countries. In that regard, the Italian
Government points out that under Italian
exchange legislation the mere possession
of foreign currency by a resident and the
failure to surrender it to the Ufficio
Italiano dei Cambi within the prescribed
time limits constitute an unlawful act.
Although it is not for the Court of
Justice to verify the facts of the main
proceedings, it is nevertheless relevant to
confirm to the national court that the
Community provisions relating to capital
movement and to payments and transfers
connected with invisible transactions do
not relate to mere possession of foreign
currency by residents of a Member State
and likewise do not extend to the export
of foreign currency by residents travelling
to non-member countries.
The Italian Government's observations
are based on the view that the subjectmatter
of the dispute is limited to the
issue and exportation of foreign currency
not intended for specific purposes but
simply necessary for travellers going
abroad in order to satisfy such needs of a
general nature as may arise during the
trip.
Observations supporting the applicability
of Article 67
The French and Italian Governments
consider that the exportation of currency
for tourist purposes constitutes a
movement of capital falling within
386
LUISI AND CARBONE v MINISTERO DEL TESORO
Article 67. In support of their view they
state that exportation of that kind is
nothing more than a way of providing a
person with means of payment in a given
country. When a traveller crosses the
frontier, the ultimate use of such means
of payment is still undecided. In fact, at
the export stage, the means of payment
in question are not earmarked for a
specific payment in consideration of a
particular service; currency is merely
being transferred from one Member
State to another. All the conditions
necessary for the transaction in question
to be classified as movement of capital,
as provided for in Article 67, are therefore
satisfied. Moreover, the physical
export of financial assets appears in List
D in Annex 1 to the Directive of 11 May
1960, the first Council directive for the
implementation of Article 67 of the
Treaty. The transactions appearing in
that list are classified as capital
movements for which no obligation as to
liberalization has been imposed on the
Member States.
The Italian Government adds that that
view is confirmed by the fact that private
travel for tourist purposes does not
appear among the invisible transactions
listed in the annex to Council Directive
63/474 liberalizing transfers in respect of
invisible transactions not connected with
current payments or capital movements.
Apparently, the Council considered that
transfers connected with tourist trips fall
within the category of capital
movements, at least in so far as they do
not constitute payment for. the provision
of specified services.
The Italian Government considers that
by virtue of the judgment of 11
November 1981 in Case 203/80) Casati
[1981] ECR 2592, the first paragraph
of Article 71 does not impose upon
the Member States any "standstill"
obligation which may be relied upon by
individuals with regard to restrictions on
the export of currency by travellers.
Similarly, Article 67 (1) does not entail
the automatic abolition of all such
restrictions upon the expiry of the
transitional period. In fact, liberalization
of that kind should be carried into effect
by means of the procedure provided for
in Article 69.
In those circumstances, the applicability
of the provisions of Article 106 (3) to
exports of currency for tourist purposes
is irrelevant, even though tourism
appears among the invisible transactions
referred to in Annex III of the Treaty.
In that connection, the Italian Government
maintains that Article 106 (3) is of
a purely subsidiary character in so far as
it applies to the invisible transactions
listed in Annex III to the Treaty only in
cases where they arc not governed by
other provisions of the Treaty. As may
indeed be seen from the second subparagraph
of paragraph (3) transfers
connected with certain invisible
transactions referred to in Annex III in
fact constitute current payments falling
under Article 106 (1) und (2) or capital
movements as provided for in Article 67
of the Treaty. The reference to Articles
63 and 65 with regard to progressive
abolition of the restrictions on transfers
connected with invisible transactions is
meaningless except with regard to
transfers which are classifiable neither
as current payments nor as capital
movements. That situation is explained
by the fact that the list in Annex III to
the Treaty reproduces in full Annex B to
the Code for the Liberalization of
Invisible Transactions of the Organization
for European Cooperation and
387
JUDGMENT OF 31. 1. 1984 — JOINED CASES 286/82 AND 26/83
Development, which was not drafted in
such a manner as to take account of the
conceptual system embodied in the EEC
Treaty, particularly as regards definition
of the concept of services in Articles 59
and 60 of the Treaty.
The Italian Government points out in
that regard that, according to the usual
classification of international payments, a
distinction is made between, on the one
hand, capital movements and, on the
other, current payments. Current payments
consist in the transfer of currency
for which immediate consideration is
given, namely the transfer of goods or
the provision of services. In the first case
there is a current payment connected
with a commercial transaction and in the
second a current payment connected
with an invisible transaction, both cases
falling in principle within the scope of
Article 106 (1) and (2) of the Treaty.
However, certain transactions listed in
Annex III to the Treaty, such as banking
charges, representation expenses and
charges for documentation do not fall
within the concept of services as
provided for in Articles 59 and 60 of the
Treaty. In fact, the term "services . . .
normally provided for remuneration"
necessarily presupposes the existence or a
specific relationship between the provider
of a given service and a person established
in another Member State to
whom the service is rendered, whereas
the operations referred to above are
more concerned with general expenses
not connected with a specific relationship.
Transfers connected with such operations,
a complete list of which is given
in the annex to the above-mentioned
Directive 63/474, fall precisely within
the residual field of application of Article
106 (3).
In so far as they are capital movements,
exports of currency by travellers for the
purposes of tourism do not therefore fall
within the residual category of transfers
connected with the invisible transactions
listed in Annex III, referred to by Article
106 (3). If, in consequence, the abolition
of existing restrictions provided for
in the second subparagraph of that
paragraph does not apply with regard to
such exports, the same conclusion must
therefore be drawn with regard to the
"standstill" clause in the first subparagraph
thereof. In fact, the "standstill"
clause and the rule requiring progressive
abolition of existing restrictions constitute
an indivisible whole, so that the
limitation of the field of application to
residual transfers, even if expressed
merely in the context of the second
subparagraph, can refer only to
paragraph (3) in its entirety.
The Italian Government goes on to
submit that transfers of foreign currency
connected with tourist travel likewise
cannot be regarded as payments
connected with the provision of services
within the meaning of Article 106 (1)
and (2). It refers to the opinion of Mr
Advocate General Trabucchi in Case
118/75 Watson [1976] ECR 1201 in
support of its view that the essential
component of "services" within the
meaning of Articles 59 and 60 of the
Treaty lies in the existence of a specific
relationship, which is clearly defined, at
least as regards its essential elements
such as the persons involved and the
nature and duration of the service. That
component, 'namely the appropriation of
the exported currency to a specific
service, is lacking in the case of the
tourist, who is merely a potential user of
services and other unspecified facilities.
The transfer of currency by a tourist
does not constitute a payment within the
meaning of Article 106 but merely a
means of ensuring that he has funds
388
LUISI AND CARBONE v MINISTERO DEL TESORO
available to him in the country of
destination. As the ultimate use of such
funds remains to be determined they may
be used for widely differing purposes
and in connection with sectors wholly
unrelated to the field of services. In
such circumstances, the conclusion is
inescapable that a transfer of that kind
for which the consideration is not
identified is classifiable as a movement of
capital within the meaning of Article 67
et seq. of the Treaty.
Thus, the case of a tourist of the kind
with which these proceedings are
concerned is clearly different from that
of a national of a Member State going to
see a particular doctor in another
Member State in order to receive
medical treatment or indeed that of a
student who registers for a specific
course of study in another Member
State. In both the latter cases services are
indeed provided within the meaning of
Articles 59 and 60 of the Treaty. The
payments connected with such specific
services should be liberalized, provided
that the correct procedures are followed,
in particular banking procedures, so that
the outflow of currency can be tied with
certainty and in a verifiable manner to
the transaction in question.
In that respect, the Italian Government
states that even if transfers of currency
for tourist purposes were to be regarded
as liberalized payments within the
meaning of Article 106 (1), it would still
be undeniable that the Member States
are entitled to "verify the nature and
genuineness of transfers of funds and of
payments and to take all necessary
measures in order to prevent contravention
of their laws and regulations, in
particular as regards the issue of foreign
currency to tourists" (cf. General Programme
for the Abolition of Restrictions
on Freedom to Provide Services, Title
III, last paragraph; confirmed by Article
2 of Directive 63/340, Article 2 (1) of
Directive 63/374 and Article 5 of the
Directive of 11 May 1960).
Consequently, even a system whereby
every export of currency is subjected to
specific controls would in principle be
allowed under Community law. A
fortiori, the same applies to the introduction,
on the pattern of the Italian
legislation, of a general and automatic
authorization for the export of currency
on the occasion of a trip abroad, up to a
specified amount. Determination of the
amount of such an allowance, reflecting
the normal requirements of an average
tourist, is a matter which can be left only
to the discretion of the national
legislature. Likewise, the obligation to
apply for a specific authorization to
exceed the allowance and the imposition
of appropriate penalties are not contrary
to Community law.
The Italian Government emphasizes in
that regard that such a system in no way
affects the right of residents to go
abroad for tourist purposes. It merely
389
JUDGMENT OF 31. 1. 1984 — JOINED CASES 286/82 AND 26/83
lays down precautionary control
measures intended to tackle the difficult
problem of making a specific distinction
between exports of currency for genuine
tourist needs and exports connected with
speculative transactions of a wholly
different nature.
In view of the discretionary powers
enjoyed by the Member States in that
respect, the Italian Government also
considers that private citizens are not
entitled to rely on individual rights based
on Article 106 (1). It adds that if Article
106 (3) did apply to transfers of currency
for the purposes of tourism, the second
subparagraph of that paragraph is not in
any case directly applicable, since that
provision does not specify any precise
timing for the progressive abolition of
existing restriction. Moreover, to date no
Council directive has provided for such
abolition with regard to tourism. The
"standstill" clause in the first subparagraph
of paragraph (3) is not relevant to
this case since no new restriction has
been introduced nor have any existing
restrictions been made more severe by
comparison with the Italian legislation in
force on 1 January 1958.
The French Government considers that
tourism falls within the scope of the
services provided for in the Treaty. By
virtue of Article 106 (1) and (2), the
restrictions on payments connected with
the tourist trade should therefore have
been abolished at the end of the
transitional period. However, since
exports of State and bank notes
constitute capital movements within the
meaning of Article 67 of the Treaty,
each Member State, in the exercise of
the freedom it retains to impose
restrictiQns on capital movements, has
perceived an economic and practical
need to establish a reasonable threshold
for the permissibility of the free
movement of notes for tourist purposes.
Movements of notes are thus seen as
authorized capital movements which are
nevertheless subject to a specific limit,
below which they are deemed to be
earmarked for tourist payments.
The French Government points out in
that regard that the Code for the Liberalization
of Invisible Transactions of the
Organization for European Cooperation
and Development provides that resident
travellers are authorized to purchase and
export bank notes of the Member States
which they visit up to the amount of 700
special drawing rights per trip per
person. In the Community, similar
systems of allowances are provided for
by means of tax and customs rules. Just
like national allowances in respect of
capital, those systems reflect on the one
hand a concern to facilitate trade and,
on the other, the need for controls
intended to prevent certain kinds of
fraud. The Member States have
abundant information available to serve
as a basis for determination of the
amount of the allowance, such as the
prices charged by tour operators for
stays abroad. It is also possible for them
to accord different treatment to travellers
according to the purpose of their trip
(business, health or leisure) or to grant
special facilities on the basis of supporting
documents. Moreover, an
amount, which rises commensurately
with the price of the trip, is normally
paid without the use of notes, namely by
means of bank transfers from the
country of origin or by payments to
travel agencies in the country of
residence.
In the view of the French Government,
since the end of the transitional period,
Article 106 (3) adds nothing to the
provisions of paragraph (1) of that
article, except in so far as it extends the
obligation as to liberalization so as
to include payments connected with
transactions which do not fall within the
scope of the free movement of goods,
services and capital.
390
LUISI AND CARBONE v MINISTERO DEI. TESORO
It considers, in conclusion, that the
Member States are free to regulate
physical exports of bank notes and
therefore to recognize that such exports
may, within a specified limit, be intended
for the payment of tourist expenses. Of
course, they retain the right to change
that limit and to take measures to ensure
that such facilities are not used as a
vehicle for capital movements.
Observations supporting the applicability
of Article 106 (3)
In the view of the German and Belgian
Governments, the restrictions imposed by
a Member State on the export of
currency by a resident going abroad for
the purposes of tourism, business, education
and medical treatment are not
restrictions on capital movements, but
fall within the field of application of
Article 106 (3) of the Treaty. Those
activities in fact appear in the list of
invisible transactions in Annex III to the
Treaty, even though the "standstill"
obligation laid down in the first subparagraph
thereof applies to exports of means
of payment relating thereto.
Both governments share the opinion of
the Italian Government to the effect that,
by virtue of the second subparagraph
thereof, Article 106 (3) is merely residual
in character as regards payments connected
with transactions falling within
the four fundamental freedoms of the
common market.
In that respect, the German Government
states that the "standstill" clause in the
first subparagraph of paragraph (3) is not
intended to depart from the principle
that the payments referred to in Article
106 (1) are of a subordinate nature. By
virtue of the latter provision, the
freedom in respect of payments must be
interpreted as representing part of one
of the four principal freedoms. It is
therefore guaranteed only to the extent
to which those principal freedoms are
achieved. Consequently, the "standstill"
clause in the first subparagraph of
paragraph (3) can only relate to transfers
connected with invisible transactions
unrelated to the movement of goods,
services, capital and persons (cf. Annex I
to Directive 63/474). As a result, in the
case of payments connected with
invisible transactions falling within any
of the four principal freedoms, the
"standstill" clause gives way to other
provisions of the Treaty. Therefore, a
restriction on payments connected with
an invisible transaction, which at the
same time is a movement of capital, must
be considered solely in the light of
Article 67 et seq. of the Treaty.
The export of currency by a resident
going abroad for the purposes of
tourism, business, education or medical
treatment constitutes an economic fact
which may be associated in part with the
free movement of goods (business trips)
and in part with the free provision of
services (tourism, educational trips or
medical treatment). By reason of the
complete liberalization achieved in these
fields since the expiry of the transitional
period, the question whether the restrictions
are "existing" or "new" will
not affect any assessment of the
compatibility of any restrictions with the
Treaty. Only in so far as the exportation
in question is used otherwise than for the
declared purposes may it be regarded as
a capital movement which must be
assessed according to the provisions of
Article 67.
391
JUDGMENT OF 31. 1, 1984 — JOINED CASES 286/82 AND 26/83
In so far as the amounts exported are
within the prescribed limits, individuals
may claim before the national court, by
virtue of the provisions of the first
subparagraph of Article 106 (3) in
conjunction with Articles 30, 31 or 59 of
the Treaty, that the introduction of
restrictions on payments detracts from
fulfilment of a Community obligation
which the national courts are obliged to
respect. However, no such possibility
exists in respect of the excess amount,
which constitutes a movement of capital.
It is for the national court to consider to
what extent the amount of currency
exported is appropriate to the declared
purposes.
The Belgian Government considers that
payments for the purposes of tourism
and travel for business, educational or
health reasons are not connected with
the movement of services but must be
liberalized by virtue of Article 106 (3). It
recognizes however that it is possible to
consider such payments to be connected
with invisible transactions falling within
the scope of the movement of services
which are liberalized by virtue of Article
106 (1). Both interpretations moreover
lead to the same conclusion as regards
the rights of individuals. In both cases it
is no longer possible since the end of the
transitional period to impose restrictions,
even if they existed previously. In fact,
in the event of paragraph (3) being
applicable, the reference contained in the
second subparagraph thereof to Articles
63 to 65 is meaningless after the end of
the transitional period, at which time the
second subparagraph became directly
applicable.
The direct effect of Article 106 (3)
prevents Member States from limiting
the amounts of payments made for the
purposes in question in this case. It does
not however preclude the adoption of
control measures intended, for example,
to limit the physical exportation of notes
and credit instruments to reasonable
amounts in accordance with practice in
the fields of tourism, changes of family
residence and so forth. For larger
amounts, it is possible to require
payment to be made through banks.
Such measures should not go further
than is strictly necessary and the control
procedures should not be designed to
restrict the freedom which the Treaty
seeks to ensure (cf. the judgment of 11.
11. 1981, cited above).
Observations supporting the applicability
of Article 106 (1)
Mrs Luisi, the plaintiff in the main
proceedings in Case 286/82, Mr
Carbone, the plaintiff in the main
proceedings in Case 26/83, the
Government of the Kingdom of the
Netherlands and the Commission take the
view that, by virtue of Article 106 (1) of
the Treaty, transfers of foreign currency
made by residents of a Member State to
another Member State intended to cover
expenses incurred in respect of tourism
must be regarded as liberalized in the
same way as the services to which they
relate. In Case 286/82, Mrs Luisi and the
Commission adopt a similar position
with regard to transfers of currency for
the purpose of business, education and
medical treatment.
392
LUISI AND CARBONE v MINISTERO DEL TESORO
All four observe that tourist travel is not
classifiable within the category of capital
movements but, conversely, relates to the
free movement of services. In support
of that view, they put forward the
arguments set out below.
It is apparent in the first place from the
General Programme for the abolition of
restrictions on freedom to provide
services (Journal Officiel 1962, p. 32)
that at that time the Council already held
the view that tourism was classifiable
under the heading of provision of
services. In fact, restrictions affecting
tourism were included among the
restrictions to be abolished. Moreover,
Directive 64/221 of 25 February 1964
(Official Journal, English Special Edition
1963-1964, p. 117) and Directive 73/148
of 21 May 1973 (Official Journal, L 172,
p. 14) refer expressly to nationals of a
Member State who reside in or wish to
go to' another Member State as the
recipients of services.
Subsequently, the above-mentioned parties,
the Netherlands Government and
the Commission point out that Directive
63/340 of 31 May 1963 on the abolition
of all prohibitions on or obstacles to
payments for services under Article 106
(2) (Official Journal, English Special
Edition 1963-1964, p. 31) expressly
provides that it does not apply to foreign
exchange allowances for tourists. The
word "however" in Article 3 which
precedes the list of the only services to
which the directive is not to apply shows
without any doubt that the Community
legislature included tourism in the categories
of services defined by Articles 59
and 60 of the Treaty. Mr Carbone points
out in that regard that "tourist and hotel
services" are expressly included amongst
the "services" listed in the Italian
Ministerial Decree of 12 March 1981
(Gazetta Ufficiale No 82 of 24. 3. 1981,
supplement, paragraph 52).
In the third place, a tourist who goes
from one Member State to another for
the purpose of holidays there is a
recipient of services which are subject, as
such, to the provisions of the Treaty
relating to the free provision of services,
in the same way as the provider of the
said services. Different treatment must
not be accorded to two cases which are
wholly similar: the case where the
provider of the service goes to the
recipient thereof and the more frequent
case where the recipient of the service
goes to the provider of the service. The
effect of any other view would be to
exclude from the field of application of
the Treaty an activity of considerable
economic significance such as tourism.
In that connection, the Government of
the Netherlands points out that tourism
comprises at least two important
elements which constitute services. In the
first place, there are travel agencies, tour
operators and the other intermediaries in
that field, which have given tourism a
considerable boost in the past decades.
The provision of services of that kind
would be seriously jeopardized if it were
no longer possible or were possible only
to a limited extent to make the payments
or transfers from one Member State to
another required for the travel facilities
purchased from those intermediaries.
Then, during their holidays, tourists have
recourse above all to the service sector.
Mention may be made in that respect
of transport, hotels and restaurants,
393
JUDGMENT OF 31. 1. 1984 — JOINED CASES 286/82 AND 26/83
camping sites and so on. In that
connection, the type of services in
question may be described as extending
beyond frontiers, involving travel on the
part of the recipient, that is to say the
tourist. If it were considered that only
the provider of services were covered by
the Treaty, numerous people involved in
trade would never be able to benefit
from the advantages accruing from
establishment of the common market.
Mrs Luisi adds that the restrictions on
means of payment, in so far as they limit
the mobility of tourists, are also
incompatible with the second article of
the Fourth Additional Protocol to the
European Convention on Human Rights,
which safeguards the right of persons to
leave their country, even for a short
time, and to move freely within the
territory of another State. That right is
protected by Community law.
Finally, Mr Carbone, Mrs Luisi and the
Commission state that the physical export
of currencies can only be regarded as a
capital movement when it constitutes an
end in itself and does not therefore serve
as consideration or a means of payment
for an underlying operation or activity.
In the case of tourism, the means of
payment employed by travellers going
abroad are, on the contrary, used for
current payments, connected with the
provision of services of which travellers
avail themselves in another Member
State. Mr Carbone also observes that it
cannot be said that tourism is not a
service by reason of the fact that, in so
far as it is offered to consumers as a
whole, it is indeterminate. Moreover, the
tourist is not always merely a potential
consumer: before leaving his own
country he may for example make a
reservation at a hotel of his choice.
According to the Netherlands Government,
an inherent feature of tourism is
the fact that when a tourist crosses the
frontier into his country of destination,
no services have yet been provided. The
tourist carries money to pay for the
services which will actually be rendered
to him in the near future. For that
reason, it is not a mere transfer of
money across a frontier but the export,
for a specific purpose, of the money
necessary for the services which will
ensure that the tourist has facilities for
his holidays.
Against that background, it is clear that
the transfer of foreign currency to
another Member State for the purposes
of tourism is not governed by Article 67
et seq. of the Treaty or by the directives
relating to capital movements, but rather
by Article 106.
According to Mrs Luisi and the
Commission, the provisions of Article 106
also apply to persons travelling to
another Member State for the purpose of
medical treatment or to follow specific
courses, against payment. The Commission
points out that business travel is
a less easily classifiable type of activity by
reason of its very varied nature. It
considers that in" general those involved
are providers of services who either visit
the recipients or provide services in a
Member State other than that in which
they are established (as for example an
advocate who in another Member State
defends the interests of a client who
resides in his own country or a freelance
journalist who submits reports
from abroad to a newspaper in his own
country).
394
LUISI AND CARBONE v MINISTERO DEL TESORO
Mrs Luisi, Mr Carbone, the Government
of the Netherlands and the Commission
also express the view that payments
relating to the provision of services must
be liberalized as from the end of the
transitional period. Comprising as it does
transactions connected with the free
movement of services, tourist travel has
the benefit of such liberalization, by
virtue of Article 106 (1) of the Treaty.
Mrs Luisi and the Commission express
the same view regarding travel for the
purposes of business, education and
medical treatment.
The Commission points out that at the
time of its accession Greece had to apply
for an express derogation in order to
maintain restrictions, subject to certain
conditions and until 31 December 1985,
on transfers connected with tourism.
That derogation, which appears in
Article 54 of the Act of Accession, is
justified only if it is recognized that such
transfers are actually liberalized in
relations between the Member States.
Mr Carbone, Mrs Luisi, the Netherlands
Government and the Commission
therefore consider that an individual may
rely upon Article 106 (1) in proceedings
before a national court.
They consider that the first subparagraph
of Article 106 (3) embodies an absolute
obligation for Member States not to
introduce, as between them, any new
restrictions on transfers relating to travel
for the purposes of tourism, business,
education and medical treatment, which
activities appear among the invisible
transactions listed in Annex III to the
EEC Treaty. Since that provision is clear
in its scope and is mandatory no doubt
can arise regarding its direct applicability.
In that connection, Mrs Luisi and
Mr Carbone allege that the restrictions
introduced by the Italian Government in
1974 and 1975 with a view to limiting
the amount of foreign currency used
abroad each year represent a change by
comparison with the previous situation.
Before 1974 it was permissible to use the
exchange value of the maximum authorized
amount for each trip, regardless
of the number of trips made by the
resident during the course of a year.
Under the Italian legislation now in
force, an Italian national who has spent
the whole permitted amount during a
single tourist trip to a Member State is
not allowed to return for a further stay,
at least until the next year. Such a
situation is manifestly incompatible with
the first subparagraph of Article 106 (3).
In its reply to the requests for a preliminary
ruling, the Court should
therefore rule that in the first place
people subject to Community law are
entitled to go to another Member State
for tourist purposes whenever they wish
without the exercise of that right being
hindered by reason of an annual limit on
expenditure.
The Commission also points out that the
second part of the questions submitted
derives from an imperfect understanding
of the problem. The reference to the
chapter relating to the movement of
capital in the second subparagraph of
Article 106 (3) in no way changes the
fact that a transfer of currency for the
purpose of tourism is classified as a
current payment within the meaning of
Article 106 nor does it entail the result
that such a transfer is classified as a
capital movement within the meaning of
395
JUDGMENT OF 31. 1. 1984 — JOINED CASES 286/82 AND 26/83
Article 67, with all the consequences
thereof with regard to liberalization. The
concepts adopted in that respect by the
Treaty are based on a clear distinction
between capital movements (Article 67)
and current payments (Article 106).
In the light of the foregoing considerations,
Mr Carbone, Mrs Luisi and
the Commission consider that the
Member States are obliged to give
authority for payments relating to
tourism and travel for the purposes of
business, education or medical treatment,
pursuant to Article 106 (1) and to the
reference contained in the second
subparagraph of Article 106 (3). That
does not mean that all control measures,
although applied within a completely
liberalized sector, are prohibited.
Referring to the judgment of the Court
in Case 203/80 Casati, cited above, Mrs
Luisi and Mr Carbone state that those
measures must not go further than is
strictly necessary, nor must they be
designed to restrict the freedom which
the Treaty seeks to ensure. That
situation arises however if, as in this
case, the controls are carried out on a
discretionary basis and if the national
legislation limits the amount of payments
connected with operations or activities
which are liberalized under Community
law.
Mr Carbone also draws the Court's
attention to another factor. Even if
it is admitted that the maintenance
of exchange controls, particularly for
tourist purposes, is in itself compatible
with the freedom to provide services,
Community law nevertheless imposes
precise limits on the exercise of those
controls. Those limits are reached where
the effect of such controls is to render
illusory the freedom to provide services
safeguarded by the Treaty. Such a
situation arises in particular where the
controls in question allow the reintroduction
of discretionary powers on the
part of the administration which are
capable of hindering the actual provision
of services. It is a discretionary power of
precisely that kind which characterizes
the Italian legislation with which these
proceedings are concerned.
Finally, the Commission points out that
the use of bank notes by tourists is the
most usual method of payment since
it offers virtually total freedom of
movement in the country visited.
Therefore, Member States may not
prevent their nationals from having at
their disposal, for tourist travel, such
quantities of bank notes as they may
need. However, they retain the right to
verify the nature and genuineness of
transfers of currency. Such verifications
may take different forms, but the
measures adopted must not amount to a
de facto prohibition of payments or lead
to an arbitrary limitation of transactions.
The Commission adds that it is only with
regard to the protective measures
provided for in Articles 108 and 109 of
the Treaty that restrictions concerning
both liberalized capital and current
payments are permitted. However, the
Italian Republic has never been authorized
under those provisions to adopt
or maintain the restrictive measures
referred to in this case.
In conclusion, the Commission proposes
that the questions submitted by the
Tribunale di Genova be answered as
follows :
"1. Transfers of currency in any form
whatsoever by residents of one
Member State to another Member
State for the purpose of tourism, or
396
LUISI AND CARBONE v MINISTERO DEL TESORO
travel for the purpose of business,
education or medical treatment are
forms of payment relating to the
provision of services governed by
Article 59 of the Treaty. Such
operations fall within the provisions
of Article 106 of the Treaty and are
not capital movements within the
meaning of the first Council
Directive of 11 May 1960 for the
implementation of Article 67 of the
Treaty.
2. The provisions of Article 106 confer
upon individuals the right to transfer
currency from the Member State in
which they reside to another
Member State for the purpose of
tourism, and travel for the purposes
of business, education and medical
treatment. The Member States are
under an obligation not to adopt any
measure restricting the exercise of
that right, unless it is duly authorized
in accordance with Article
108 of the Treaty."
Ill — Oral procedure
At the sitting on 12 July 1983 oral
argument was presented by the plaintiffs
in both actions before the national court,
represented by Giuseppe Conte of the
Genoa Bar, the Government of the
Italian Republic, represented by Marcello
Conti, Avvocato dello Stato, the
Government of the Federal Republic of
Germany, represented by Martin Seidel,
the Government of the French Republic,
represented by Alexandre Carnelutti,
and the Commission of the European
Communities, represented by Guido
Berardis.
The Advocate General delivered his
opinion at the sitting on 15 November
1983.
Decision
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
397
JUDGMENT OF 31. 1. 19S4 — JOINED CASES 286/82 AND 26/83
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:
398
LUISI AND CARBONE v MINISTERO DEI. TESORO
"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
399
JUDGMENT OF 31. 1. 1984 — JOINED CASES 286/82 AND 26/83
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.
400
LUISI AND CARBONE v MINISTERO DEI. TESORO
(a) " S e r v i c e s " and "invisible t r a n s a c t i o n s "
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 for
remuneration, in so far as they are not governed by the provisions relating to
freedom of movement for goods, capital and persons. Within the context of
Title III of Part Two of the Treaty ('Tree movement of persons, services and
capital"), the free movement of persons includes the movement of workers
within the Community and freedom of establishment within the territory of
the Member States.
10 By virtue of Article 59 of the Treaty, restrictions on freedom to provide such
services are to be abolished in respect of nationals of Member States who are
established in a Member State other than that of the person for whom the
service is intended. In order to enable services to be provided, the person
providing the service may go to the Member State where the person for
whom it is provided, is established or else the latter may go to the State in
which the person providing the service is established. Whilst the former case
is expressly mentioned in the third paragraph of Article 60, which permits the
person providing the service to pursue his activity temporarily in the Member
State where the service is provided, the latter case is the necessary corollary
thereof, which fulfils the objective of liberalizing all gainful activity not
covered by the free movement of goods, persons and capital.
n For the implementation of those provisions, Title II of the General
Programme for the Abolition of Restrictions on Freedom to Provide Services
(Official Journal, English Special Edition, Second Series IX, p. 3), which was
drawn up by the Council pursuant to Article 63 of the Treaty on 18
December 1961, envisages inter alia the repeal of provisions laid down by
law, regulation or administrative action which in any Member State govern,
for economic purposes, the entiy, exit and residence of nationals of Member
States, where such provisions are not justified on grounds of public policy,
public security or public health and are liable to hinder the provision of
services by such persons.
i2 According to Article 1 thereof, Council Directive 64/221/EEC of
25 February 1964 on the coordination of special measures concerning the
movement and residence of foreign nationals which are justified on grounds
of public policy, public security or public health (Official Journal, English
401
JUDGMENT OF 31. 1. 1984 — JOINED CASES 286/82 AND 26/83
Special Edition 1963-1964, p. 117) applies inter alia to any national of a
Member State who travels to another Member State "as a recipient of
services". Council Directive 73/148/EEC of 21 May 1973 on the abolition
of restrictions on movement and residence within the Community for
nationals of Member States with regard to establishment and the provision of
services (Official Journal 1973, L 172, p. 14) grants both the provider and
the recipient of a service a right of residence co-terminous with the period
during which the service is provided.
1 3 By basing the General Programme for the Abolition of Restrictions on the
Freedom to provide Services partly on Article 106 of the Treaty, its authors
showed that they were aware of the effect of the liberalization of services on
the liberalization of payments. In fact, the first paragraph of that article
provides that any payments connected with the movement of goods or
services are to be liberalized to the extent to which the movement of goods
and services has been liberalized between Member States.
H Among the restrictions on the freedom to provide services which must be •
abolished, the General Programme mentions, in section C of Title III,
impediments to payments for services, particularly where, according to
section D of Title III and in conformity with Article 106 (2), the provision of
such services is limited only by restrictions in respect of the payments
therefor. By virtue of section B of Title V of the General Programme, those
restrictions were to be abolished before the end of the first stage of the
transitional period, subject to a proviso permitting limits on "foreign
currency allowances for tourists" to be retained during that period. Those
provisions were implementd by Council Directive 63/340/EEC of 31 May
1963 on the abolition of all prohibitions on or obstacles to payments for
services where the only restrictions on exchange of services are those
governing such payments (Official Journal, English Special Edition 1963-
1964, p. 31). Article 3 of that directive also refers to foreign exchange
allowances for tourists.
is However, both the General Programme and the aforesaid directive reserve
the right for Member States to verify the nature and genuineness of transfers
of funds and of payments and to take all necessary measures in order to
prevent contravention of their laws and regulations, "in particular as regards
the issue of foreign currency to tourists".
402
LUISI AND CARBONE v MINISTERO DEL TESORO
i6 It follows that 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 and that tourists, persons receiving medical treatment and persons
travelling for the purpose of education or business are to be regarded as
recipients of services.
i7 Article 106 (3) provides for the progressive abolition of restrictions on
transfers connected with the "invisible transactions" listed in Annex III to the
Treaty. As the national court correctly stated, that list includes, inter alia,
business travel, tourism, private travel for the purpose of education and
private travel on health grounds.
is However, since that paragraph is merely subordinate to paragraphs (1) and
(2) of Article 106, as is apparent from the second subparagraph thereof, it
cannot be applied to the four types of transaction in question.
(b) " C u r r e n t p a y m e n t s " and "movements of capital"
i9 The national court has pointed out that the physical transfer of bank notes is
included in List D in the annexes to the two directives which the Council
adopted pursuant to Article 69 of the Treaty in relation to the movement of
capital (Official Journal, English Special Edition 1959-1962, p. 49, and 1963-
1964, p. 5). List D enumerates the movements of capital for which the
directives do not require the Member States to adopt any liberalizing
measure. The question therefore arises whether the reference in that list to
the physical transfer of bank notes implies that such a transfer itself
constitutes a movement of capital.
20 The Treaty does not specify what is to be understood by the movement of
capital. However, in the annexes to the two above-mentioned directives a list
is given of the various movements of capital, together with a nomenclature.
Although the physical transfer of financial assets, in particular bank notes, is
included in that list, that does not mean that any such transfer must in all
circumstances be regarded as a movement of capital.
403
JUDGMENT OF 31. 1. 1984 — JOINED CASES 286/82 AND 26/83
2i The general scheme of the Treaty shows, and a comparison between Articles
67 and 106 confirms, that current payments are transfers of foreign exchange
which constitute the consideration within the context of an underlying
transaction, whilst movements of capital 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 payments, as is implied by Articles 67 (2) and 106 (1).
22 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.
23 Consequently, payments in connection with tourism or travel for the
purposes of business, education or medical treatment cannot be classified as
movements of capital, even where they are effected by means of the physical
transfer of bank notes.
(c) T h e extent to which the payments referred to in Article 106
of the T r e a t y have been liberalized
24 As regards the movement of services, Article 106 (1) provides that payments .
relating thereto must be liberalized to the extent to which the movement of
services itself has been liberalized between Member States in accordance with
the Treaty. By virtue of Article 59 of the Treaty, restrictions on the freedom
to provide services within the Community were to be abolished during the
transitional period. As from the end of that period, any restrictions on
payments relating to the provision of services must therefore be abolished.
25 Consequently, payments relating to tourism and travel for the purposes of
business, education or medical treatment have been liberalized since the end
of the transitional period.
26 This interpretation finds confirmation in Article 54 of the Act of Accession
of 1979, by virtue of which the Hellenic Republic is authorized to maintain
404
LUISI AND CARBONE v MINISTERO DEL TESORO
restrictions on transfers relating to tourism, but only within certain limits and
only until 31 December 1985. That article implies that without that derogation
the transfers in question would have had to be liberalized
immediately.
(d) Control measures in respect of transfers of foreign currency
27 The last aspect of the problem raised in these cases concerns the question
whether, and if so to what extent, Member States have retained the power to
subject liberalized transfers and payments to control measures applicable to
the transfer of foreign currency.
28 In that respect, it should be noted in the first place that the liberalization of
payments provided for in 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.
29 It should also be noted that Article 2 of Directive 63/340, cited above, states
that the liberalization measures provided for in the directive do not limit the
right of Member States to "verify the nature and genuineness of payments".
This proviso appears to be inspired by the fact that, at that time, payments
relating to the movements of goods and services and movements of capital
were not yet fully liberalized.
30 However, even though the transitional period has ended that liberalization
has not yet been fully accomplished. The Council directives provided for in
Article 69 of the Treaty with a view to attaining the free movement of capital
have not yet in fact abolished all the restrictions in that area, whilst Article
67, which provides for that freedom, must, as the Court held in its judgment
of 11 November 1981 (Case 203/80 Casati [1981] ECR 2595), be interpreted
as meaning that even after the expiry of the transitional period restrictions on
the export of foreign currency may not be regarded as having been
abolished, irrespective of the terms of the directives adopted pursuant to
Article 69.
405
JUDGMENT OF 31. 1. 1984 — JOINED CASES 286/82 AND 26/83
3i In those circumstances, Member States have retained the power to impose
controls on transfers of foreign currency in order to verify that transfers do
not in fact constitute movements of capital, which have not been liberalized.
That power is particularly important since it is bound up with the
responsibility which Member States have in relation to monetary matters
under Articles 104 and 107 of the Treaty, a responsibility which implies that
appropriate measures may be adopted in order to prevent the flight of capital
or other speculation of that kind against their currencies.
32 Articles 108 and 109 of the Treaty provide for the measures to be taken and
the procedures to be followed where a Member State is in difficulties or is
seriously threatened with difficulties as regards its balance of payments.
However, those provisions, which are to remain operative even after the free
movement of capital has been fully achieved relate only to periods of crisis.
33 In the absence of any crisis and until the free movement of capital has been
fully achieved, it must therefore be acknowledged that Member States are
empowered to verify that transfers of foreign currency purportedly intended
for liberalized payments are not diverted from that purpose and used for
unauthorized movements of capital. In that connection, Member States are
entitled to verify the nature and genuineness of the transactions or transfers
in question.
34 Controls introduced for that purpose must, however, be kept within the
limits imposed by Community law, in particular those deriving from the
freedom to provide services and to make payments relating thereto.
Consequently, they 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, since in that case they would interfere
with the freedoms recognized by the Treaty. For the same reason, such
controls may not be applied in such a manner as to render those freedoms
illusory or to subject the exercise thereof to the discretion of the
administrative authorities.
35 These findings do not preclude a Member State from fixing flat-rate limits
below which no verification is carried out and from requiring proof, in the
406
LUISI AND CARBONE v MINISTERO DEL TESORO
case of expenditure exceeding those limits, 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.
36 It is for the national court to determine in each individual case whether the
controls on transfers of foreign currency which are at issue in proceedings
before it are in conformity with the limits thus defined.
37 On the basis of all the foregoing considerations, it may be stated in reply to
the questions submitted for a preliminary ruling that 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 affected 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 flatrate
limits so determined are not such as to affect the normal pattern of the
provision of services.
407
JUDGMENT OF 31. 1. 1984 — JOINED CASES 286/82 AND 26/83
Costs
38 The costs incurred by the Belgian Government, the Government of the
Federal Republic of Germany, the French Government, the Italian
Government, the Netherlands Government and the Commission, which have
submitted observations to the Court, are not recoverable; as these
proceedings are, Ín so far as the parties to the main proceedings are
concerned, in the nature of a step in the actions pending before the national
court, the decision on costs is a matter for that court.
On those grounds,
THE COURT,
in reply to the questions submitted to it by the Tribunale di Genova by
orders of 12 July and 22 November 1982, hereby rules:
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 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;
408
LUISI AND CARBONE v MINISTERO DEL TESORO
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 arc not such as to affect the
normal pattern of the provision of services.
Mertens de Wilmars Koopmans Bahlmann Galmot
Pescatore Mackenzie Stuart Bosco Everling Kakouris
Delivered in open court in Luxembourg on 31 January 1984.
J. A. Pompe
Deputy Registrar
J. Mertens de Wilmars
President
OPINION OF MR ADVOCATE GENERAL MANCINI
DELIVERED ON 15 NOVEMBER 1983 '
Mr President
Members of the Court,
1. Two cases have been referred to the
Court for a preliminary ruling relating to
the exportation within the Community of
foreign currency intended to pay for
services in connection with tourism,
health, education and business travel. In
essence the issue to be decided is
whether and how those matters are
governed by Community law. The Court
is therefore called upon to interpret the
provisions of the EEC Treaty regarding
liberalization of current payments for
seivices which involve travel by the
recipient of the service from the country
in which he resides to the country in
which the service is provided.
1 — Translated from the Italian.
409