The free movement of capital is a prerequisite for the free movement of services. The EEA Agreement provides a comprehensive and non-discriminatory framework for capital transfers, cross-border investments (whether direct or indirect) and loans. The aim is to eliminate exchange controls that affect capital transfers directly, as well as other indirect barriers to capital movements.
Domestic rules on capital movements apply equally to foreign and national residents in any one country. Investors and others who transfer capital frequently between countries enjoy consistent treatment. This, in the long term, leads to better allocation of resources and capital.
Under certain circumstances the signatories of the EEA Agreement are allowed to restrict the free movement of capital, for example when free capital transfers threaten the balance of payments or the domestic capital market in general. Under such exceptional circumstances national authorities may take preventive measures after discussing them with the other EEA countries.
The ability to provide a service in a Member State of the EEA should not be restricted on the basis of nationality. The free movement of services is closely linked to the free movement of people and the right of establishment. Services also play an important role in many stages of the production of goods. Freeing the movement of services is taking time due to the many legal and non-legal barriers restraining the provision of services across national borders.
Subcommittee II on the Free Movement of Capital and Services under the EFTA Standing Committee coordinates matters of financial services, transport, information and telecommunications services, audiovisual services, postal services and company law, as well as data protection. In addition, the Ad Hoc Working Group on Services in the Internal Market reports to Subcommittees II, III and IV.