Freedom of establishment Art 49 Flashcards
Two different types of free movement are covered by Article 49 TFEU.
What are they?
- free movement of self employed persons
2. covers free movement of companies
Which case did the Court lay down the following test for freedom of establishment Art 49?
Jany
In Jany the Court laid down the following test for freedom of establishment Art 49:
- Self-employed persons are working outside a relationship of subordination
- They are working under their own responsibility
- They are paid directly and in full for their activities
After Jany, the Court in Gebbard also provided a useful definition of the concept of establishment:
what was this (3)
- A Union citizen that participates on a stable and continuous basis in the economic life of another Member State
- The Union citizen profits from participating in the economic life of another Member State
- The Union citizen contributes to economic and social interpenetration within the Union in the sphere of activities as self-employed persons
Although Gebbard is not as clear as Jany what does it help to distinguish?
freedom of establishment from freedom of services under Art 56
- A Union citizen that participates on a stable and continuous basis in the economic life of another Member State
- The Union citizen profits from participating in the economic life of another Member State
- The Union citizen contributes to economic and social interpenetration within the Union in the sphere of activities as self-employed persons
Which case?
Gebbard
What is the main difference between establishment and services?
services are provided on a temporary basis, while establishment means that the self-employed person participates in the economic life of another Member State on a stable and continuous basis.
if a self-employed barrister occasionally appears in cases in another Member State, this kind of activity would be covered by Article 56 TFEU – free movement of services
However if the barrister opened his own set of chambers what would cover this?
freedom of establishment Art 49 TFEU
Which case established that it is possible to be established in more than one MS
Klopp
Art 49 is only applicable to cases with a cross-border element.
What are the 3 different ways for companies to come within the scope of Article 49 TFEU:?
- Starting a company in another Member State
- Moving the seat of a company from one Member State to another Member State
- Starting a subsidiary or branch in another Member State
Which case made it clear that Article 49 TFEU has vertical direct effect and can be relied on against the State?
Reyners
The following types of restrictions in getting access to the market for self-employed persons and companies are prohibited:
what are they?
1) direct discrimination on the ground of nationality (Reyners)
2) Indirect discrimination: common in the context of recognition of professional qualifications
3) obstacles to free movement: national rules making establishment more difficult or less attractive (e.g licence requirements
(Wouters)
obstacles to free movement are prohibited under Art 49. This was clarified in Wouters. What happened in this case?
a Dutch rule which prohibited lawyers and accountants from co-operating in the same partnership.
this was an obstacle
access to the market for self-employed activities and companies has now – to a significant extent – been harmonised in which directive?
Services Directive
Under which article are the justifications for Art 49 TFEU found?
Art 51 and 52 TFEU
what is the rule for justifications under Art 49?
the orthodox rules apply, directly discriminatory rules can only be justified on the basis of the Treaty derogations in Articles 51 and 52 TFEU.
indirectly discriminatory rules and obstacles to free movement benefit from the open category of case law-based “public interest requirements” or “objective justifications”.
what are the 3 standard treaty derogations under Art 52
- Public policy
- Public security
- Public health
What does Art 51 TFEU state?
provides that Article 49 TFEU does not apply to activities which are connected to “the exercise of public authority”.
(equivalent to Art 45(4) TFEU)
Art 51 TFEUprovides that Article 49 TFEU does not apply to activities which are connected to “the exercise of public authority”.what provision is this equivalent to
Art 45 (4) TFEU
restrictions of Article 49 TFEU have to comply with the proportionality test.
What must MS show?
that the restriction is suitable and necessary
Why might the COJ be strict in its application of the proportionality test?
if it suspects that there might be economic reasons for the imposition of restrictions. We have already seen before that purely economic justifications are not allowed.
What does Art 54 state?
that companies or firms in accordance with the law of a MS and having registered their office,, central administration or principle place of business within the Union shall, be trated in the same way as natural persons who are nationals of Members States
that companies or firms in accordance with the law of a MS and having registered their office,, central administration or principle place of business within the Union shall, be trated in the same way as natural persons who are nationals of Members States
which article?
art 54
The EU does not posses the competence to harmonise the requirements for companies to be considered companies under national law.
There are two approaches MS take to decide if a company is a company
what are they?
the “incorporation theory” and the “real seat theory”.
what is the incorporation theory?
Under the incorporation theory, the decisive question is in which Member State the company is incorporated or registered
(where is its registered office)
what is the real seat theory?
Under the real seat theory, the decisive question is where the company has its “real seat” – i.e. where it is doing most of its business.
Member States that adhere to the incorporation theory only require companies to be registered in that Member State. They do not care very much about where the company is actually doing most of its business.
What about real seat theory?
d. Member States that rely on the real seat theory will only accept companies if they are doing most of their business in that Member State.
Why are MS with an approach based on the incorporation theory are often more attractive to companies from other Member States?
as companies can avoid certain tax requirements or rules on insolvency
What can Art 49 TFEU be used as a tool for by companies?
can be used as a tool to avoid certain aspects of national company law (for example, taxation requirements or rules on insolvency).
What are the 3 main cases in Art 54: corporate mobility
Dailey Mail
Centros
Uberseering
What happened in case of Centros
Art 54
Danish citizens set up a company in the UK and then established a branch in Denmark to avoid the application of these Danish rules. They had no intention of doing business in the UK.
Denmark argued that this was an abuse of EU law. The Court disagreed: this was allowed under Article 49 TFEU. The Danish refusal to register the branch constituted a restriction of Article 49 TFEU.
what did the ruling in Centros mean in practise?
this allowed for the creation of letter box companies
Danish citizens set up a company in the UK and then established a branch in Denmark to avoid the application of these Danish rules. They had no intention of doing business in the UK.
Denmark argued that this was an abuse of EU law. The Court disagreed: this was allowed under Article 49 TFEU. The Danish refusal to register the branch constituted a restriction of Article 49 TFEU.
which case?
Centros
What happened in case of Uberseeing?
Art 54
a Dutch company transferred its centre of administration to Germany.
When Überseering wanted to bring a case for breach of contract against a Germany company before the German courts, it did not have standing to bring a case because, under German law, it did not have its real seat in the country where it was registered. As it was registered in Dutch it did not have standing in German courts
What case effectively put an end to the real seat theory and showed Court support for incorporation theory?
Uberseeing
a Dutch company transferred its centre of administration to Germany.
When the company wanted to bring a case for breach of contract against a Germany company before the German courts, it did not have standing to bring a case because, under German law, it did not have its real seat in the country where it was registered. As it was registered in Dutch it did not have standing in German courts
which case
UBerseeing
