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8 AWEMainta Diahuebs, 22 October 2020
Corona: Restriction on outgoing
capital transfers could be in
conflict with EU legislation
By: Richie Kock Attorneys <richie@rjk-attorneys.com>
or compensation for work performed, The EU Court of Justice decided that
payments on a loan, among others. Article 63 TFEU is directly applicable to
Current account transactions do not capital transfers from and to OCTs (HvJ
require a license, in principle. 5 mei 2011, Prunus Sàrl, C-384/09, V-N
• All other transactions, including 2011/32.24, p. 20).
Introduction capital transactions
In view of the coronavirus-crisis, the All other transactions, including capital Article 59 AOD:
Central Bank of Aruba restricted all transactions, require a license. A General Article 59, paragraphs 2, OAD states as
outgoing capital transactions as of Foreign Exchange License is granted follows:
March 17th, 2020 (the Restriction). The to residents to make transfers to and ‘With regard to transactions on the capital
Restriction has no clear end date. from their foreign bank account and account of balance of payments, the
The Restriction applies to, among others, intercompany accounts through a local Member States and the OCTs authorities
loans to non-residents, investments bank (Decree 2013/K.2). The Central shall impose no restrictions on the free
abroad, participation in a company abroad, Bank suspended the Decree 2013/K.2 movement of capital for direct investments
purchase of real estate from a non-resident until further notice. in companies formed in accordance
on Aruba or abroad, transfers of funds by with the laws of the host Member State,
a natural person from a local bank account The Treaty on the functioning of the country, or territory and shall ensure that
to a bank account abroad, transfers of European Union (TFEU) and the the assets formed by such investment and
funds from a local bank account to a Overseas Association Decision (OAD) any profit stemming therefrom can be
foreign intercompany account (FIA), and The Netherlands is a member of the realized and repatriated.’
miscellaneous outgoing capital transfers Treaty on the functioning of the European
a.o. gifts, donations, inheritance. Union (TFEU), which is one of two The Restriction could be in conflict
treaties forming the constitutional basis with Articles 63 paragraph 1 TFEU
Furthermore, outgoing payment of of the European Union. and 59 paragraph 2 OAD
dividends and outgoing transfer of profits Aruba, Curacao, and St. Maarten and Based on the above, I conclude that the
to a non-resident also fall under the BES are considered ‘overseas countries Restriction could be in conflict with
Restriction. and territories’ (OCTs) for which the Articles 63, paragraph 1, TFEU and 59,
Questions arise as to the lawfulness of the EU Council Decision 2013/755/EU paragraph 2, OAD, respectively, because
Restriction and the extent of the authority (Overseas Association Decision, OAD) the Restriction applies to outgoing
of the Central Bank to force restrictions applies. The OAD stimulates close capital transfers, including outgoing
upon Aruba residents. The Restriction economic relations between the OCTs transfers in regard to investments abroad
may be in conflict with EU legislation. and the EU. or participation in a company abroad, as
well as outgoing payment of dividends
Background: the Aruba Ordinance on Article 63 TFEU: and outgoing transfer of profits to a non-
Foreign Exchange Transactions and Article 63, paragraph 1, TFEU states as resident.
the General Foreign Exchange License follows:
(2013/K.2) ‘All limitations in capital transactions The OAD applies only between the EU
The Aruba Ordinance on Foreign Exchange between member states and between and the OCTs
Transactions (Landsverordening member states and third countries are In regard to the above, the following
deviezenverkeer) distinguishes between: forbidden.’ should be mentioned.
• Current account transactions The OAD applies only between the EU
Current account transactions consist Article 63 TFEU entails an absolute and the OCTs. Moreover, the OAD is
of payments related to the import and prohibition on any kind of restriction on not applicable between the Netherlands
export of goods, freight and insurance capital transactions between EU member and the Dutch Caribbean Islands,
costs related to international shipping, states and between EU member states which is regarded as an internal matter
payments of rent, payments of salary and third countries. (ECLI:NL:PHR:2011: BT1528).
