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Freedom of establishment - Scope

9 important questions on Freedom of establishment - Scope

What is the general scope of freedom of establishment?

“[T]he concept of establishment ... involves the actual pursuit of an economic activity through a fixed establishment in another Member State for an indefinite period.” case C-221/89 Factortame, para 20

Both prohibition of restrictions and prohibitions of discrimination

What is the Gebhard formula regarding prohibition of restrictions and what are the prohibitions?

Establishment of agencies, branches, subsidiaries
also of mere letterbox companies, if establish according to the law of a MS
seat/registration requirement
right to leave

ECJ case 81/87, judgement of 27 Sept 1988, Daily Mail, paras 16-21, 23-34. What were the facts of the case?

According to British law, only companies with their central management and
control located in the UK can be charged corporation tax
For reasons of tax avoidance Daily Mail intended to move ist central management to the NL
Requirement: final taxation or consent of UK Treasury --> refused

ECJ case 81/87, judgement of 27 Sept 1988, Daily Mail, paras 16-21, 23-34. What was the decision of the ECJ?

“unlike natural persons, companies are creatures of the law and ... creatures
of national law. They exist only by virtue of the varying national legislation
which determines their incorporation and functioning.” (para 19)
Freedom of establishment “cannot be interpreted as conferring on companies
incorporated under the law of a Member State a right to transfer their central management and control and their central administration to another Member State while retaining their status as companies incorporated under the legislation of the first Member State” (para 24).

ECJ case C-210/06, judgement of 16 Dec 2008, Cartesio. What were the facts of the case?

Hungarian legal person wanted to move its seat to Italy, thereby maintaining its legal status.

Hungarian law: company must have its seat in Hungary. As a consequence, establishment of a new company in Italy would be required.

ECJ case C-210/06, judgement of 16 Dec 2008, Cartesio. What was the decision of the ECJ?

Right to move seat to another MS while retaining its status as a company under the law of the home MS is not encompassed by freedom of movement.

However, a legal person has the right (on the basis of the freedom of establishment) to convert itself into a legal person governed by the law of another MS without having to be wound- up or liquidated, where the law of the new MS allows for such a conversion.

ECJ case C-340/89, judgement of 7 May 1991, Vlassopoulou. What were the facts of the case?

Greek lawyer, admitted to Bar in Athens, PhD in Germany, worked in German law firm for several years

Request to be admitted to German bar
Refused for failure to meet requirements, namely: law studies at German university, 1st state exam, clerkship, 2nd state exam.

ECJ case C-340/89, judgement of 7 May 1991, Vlassopoulou. What was the decision of the ECJ?

In the absence of harmonisation of the conditions of access to a particular occupation, the MS are entitled to lay down the knowledge and qualifications needed

MS must compare certifications and other evidence of qualifications
with the respective national requirements
Provision of an objective examination procedure in accordance with the rule of law

What are the rules on taking-up on occupation within the scope of freedom of establishment?

Recognition of education and professional admissions
Examination of equivalence
Professional experience
Complementary exams
Dir 89/48/EC recognition of higher-education diplomas
Dir 2005/36/EC recognition of professional qualifications
Dir 2006/123/EC Services Dir
Dir 98/6 establishment of lawyers
Prohibited occupations (non-medical practitioners, tatooist)

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4. Free movement of persons

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Freedom of establishment - Scope

9 important questions on Freedom of establishment - Scope

What is the general scope of freedom of establishment?

What is the Gebhard formula regarding prohibition of restrictions and what are the prohibitions?

ECJ case 81/87, judgement of 27 Sept 1988, Daily Mail, paras 16-21, 23-34. What were the facts of the case?

ECJ case 81/87, judgement of 27 Sept 1988, Daily Mail, paras 16-21, 23-34. What was the decision of the ECJ?

ECJ case C-210/06, judgement of 16 Dec 2008, Cartesio. What were the facts of the case?

ECJ case C-210/06, judgement of 16 Dec 2008, Cartesio. What was the decision of the ECJ?

ECJ case C-340/89, judgement of 7 May 1991, Vlassopoulou. What were the facts of the case?

ECJ case C-340/89, judgement of 7 May 1991, Vlassopoulou. What was the decision of the ECJ?

What are the rules on taking-up on occupation within the scope of freedom of establishment?

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