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Free movement

 



Free movement of capital

Free movement of persons

Free movement of goods

Harmonised area

Non-harmonised area


Free movement of capital.

The free movement of capital is one of the four freedoms of the common market enshrined in the European Treaty. All restrictions on movement of capital between Member States and, to some extent, between Member States and third countries, are prohibited.

The definition of free movement of capital covers cross-border payments and transfers of money, other transactions allowing transfer of ownership of assets and liabilities (investments in companies and real estate or portfolio investments), payment systems (governed by two Directives on cross-border credit transfers and on settlement finality, as well as Directives on money laundering prevention ).

 In its rulings, the European Court of Justice continues to identify measures that constitute restrictions on the movement of capital, such as national prohibitions on foreign currency mortgages, discriminatory restrictions on the acquisition and disposal of real estate or measures dissuading Member States' residents from obtaining loans or making investments in other Member States.

Poland was granted two transition periods for maintaining its national legislation with respect to real estate acquisitions: a five-year transition period for acquisition of second homes by foreigners, and a 12-year period for purchase of agricultural land and forests.

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Free movement of persons.

The Acquis Communautaire with respect to the free movement of persons principle covers four areas:

  • Mutual recognition of professional qualifications - the EU intends to eliminate obstacles to the performance of regulated professions, accepting the principle that a person fully qualified to practice a regulated profession in one Member State should be entitled to do so anywhere within the European Community
  • Citizens' rights - covering voting rights (i.e. rights of all EU citizens to participate actively in the EU's political life through European and municipal elections) and right of residence (originally only foreseen for workers, but subsequently extended to cover non-active persons)
  • Free movement of workers - Member States are obliged to ensure that all their legal provisions - such as those relating to criteria on citizenship, residence or linguistic ability - conformity with the Acquis Communautaire
  • Co-ordination of social security schemes - governed by regulations and thus directly applicable to the Member States. The principles ensure that those who exercise their right to freedom of movement throughout the EU should not be penalised with regards their social security protection

Poland has been deemed to have achieved a high level of alignment with the Acquis Communautaire and administrative capacity is developing satisfactorily.

Measures relating to free movement of workers from Poland to the old Member States were agreed prior to Accession. The transition arrangements, based on the 2+3+2 scheme are:

  • A two-year period during which national measures will be applied by old Member States to new Member States (depending on how liberal these national measures are, they may result in full labour market access)
  • After reviewing the first period, the transitional arrangement may be extended for a further three years (it will be up to individual Member States as whether to prolong it or not)
  • The transition period should come to an end after five years but may be prolonged for a further two years by those Member States suffering serious labour market disturbances, or where there is a threat of such destabilisation

The transition arrangements include other important aspects, such as a standstill clause, whereby old Member State cannot restrict their labour markets further than at the time of the signing of the Accession Treaty. Also, the Member States must give preference to acceding country nationals of the new Member States over non-EU citizens.

The above scheme does not apply in the case of the UK, Sweden and Ireland, which allowed full access by Polish nationals to their labour market after 1 May 2004.

Under the transition arrangements the rights of nationals from new Member States who are already legally resident and employed in a Member State are protected. The rights of family members are also taken into account consistent with the practice in the case of previous accessions.


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Free movement of goods.

To ensure the free movement of goods within the EU, measures were adopted governing basic technical standards, product certification and metrological definitions. There are goods for which common harmonised standards have been introduced (on the basis of Directives, rules, etc) and goods for which there are no harmonised standards.  As a result, the Acquis Communautaire with respect to the free movement of goods is divided into harmonised and non-harmonised areas.

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Harmonised area

EU-wide harmonisation of standards requires adoption of legislation covering conformity assessment bodies, accreditation bodies, standardisation, and market surveillance. These administrative structures provide the framework for the new approach to European product law, based on the principle of self-certification and the presumption of conformity with harmonised standards. This approach moves away from prior authorisation to a series of control and surveillance procedures.

At the same time, a number of old approach directives remain in force covering  product groups such as pharmaceuticals, foodstuffs and motor vehicles. These directives require the creation of certification and authorisation structures to administer EU legislation.

The golden rule is that the that in the case of products where there are no specific harmonisation regulations, the principle of free movement of goods applies.

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Non-harmonised area

The principle is that if goods may be legally sold on the market of one Member State, then they may be also sold in all other Member State. There is a number of exceptions to this principle, mainly in areas concerning public health or consumer protection. As concerns Poland, the EU has accepted two transitional arrangements, until 31 December 2008, for the renewal of marketing authorisation for pharmaceuticals; licenses for medical devices issued under the current Polish legislation will remain valid until 31 December 2005.

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(Last update: March 2006)

Prepared for the Polish Information and Foreign Investment Agency by:

Law firm Gide Loyrette Nouel

Authors: Piotr Łupiński - legal advisor, Hanna Ławrynowicz - legal advisor

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