1. MARKET FREEDOMS II Smaragda Rigakou European Law
8/12/2014
National and Kapodistrian University of Athens
Law school
European Law
MARKET FREEDOMS II
Smaragda Rigakou

2. Free Movement of Capital
8/12/2014
Free Movement of Capital
a TFEU: All restrictions on the movement of capital between MS and between MS and third countries shall be prohibited.
Whatever impedes capital movement,
even not discriminatory
Prohibited by a. 63 TFEU
Market Freedoms II, Smaragda Rigakou
10/12/2018

3. Free Movement of Capital
Directive 88/361: Non- exhaustive list of restrictions on the free movement of capital:
prohibition on the creation of a mortgage in a foreign country;
restrictions on share dealings and golden shares;
restriction on the acquisition and disposal of property;
prior administrative authorization for investments in property;
measures that dissuade residences from obtaining loans or making investments in other MS;
etc.
Market Freedoms II, Smaragda Rigakou
10/12/2018

4. Free Movement of Capital
Maastricht Treaty completely revised the provisions on free movement of capital, with effect from 1st January Direct Taxation (e.g. income tax): within MS competence. MS can impose taxes However, the MS must exercise such competence constituently with the EU law and avoid discrimination on grounds of nationality
Market Freedoms II, Smaragda Rigakou
10/12/2018

5. Free Movement of Capital Exceptions
a.65 (1) TFEU: MS may apply tax provisions that distinguish between taxpayers who are not in the same position with regard to their place of residence or with regard to the place where their capital is invested
This cannot lead to arbitrary discrimination or disguised restrictions.
ECJ: If residents and not residents are in a comparable position
Any different taxation is discriminatory
Market Freedoms II, Smaragda Rigakou
10/12/2018

6. Free Movement of Capital Exceptions
a.65 (1)(b) TFEU: MS may adopt requisite measures:
to prevent infringements of national law and regulations, in particular in the field of taxation;
for prudential supervision of financial institutions;
regarding declarations of capital movements;
justified by public policy and public security.
Market Freedoms II, Smaragda Rigakou
10/12/2018

7. Free Movement of Capital Exceptions
Grounds of overriding public interest
ECJ open ended list
Burden of proof on the MS
Narrowly interpreted
Proportionality test
General presumption of tax evasion could not justify a measure compromising a Treaty Article
Market Freedoms II, Smaragda Rigakou
10/12/2018

8. Free Movement of Capital
Relevant case law:
C-35/08, Verkooijern: income tax exception/tax evasion reasons/purely economical not accepted by the ECJ
C-54/99, Scientology International: prior authorization for capital investments/public policy/accepted
C-503/99, Commission v Belgium: golden share in gas & electricity companies/public security/accepted
Market Freedoms II, Smaragda Rigakou
10/12/2018

9. Free Movement of Workers
Free movement of persons:
employed persons (workers)
self- employed persons (establishment)
Economic dimension:
labour as factor of production
optimal allocation of resources
maximize value of labour
Social dimension:
Equality of treatment/ European solidarity an ever closer Union of the peoples of Union, integration of peoples of Europe
Market Freedoms II, Smaragda Rigakou
10/12/2018

10. Free Movement of Workers
45 TFEU: Freedom of movement of workers should be secured within the Union Abolition of any discrimination based on nationality regarding employment, remuneration and rest working conditions Vertical and Horizontal Effect: The above obligations apply both to the MS and private actors (Case C-281/98, Angonese)
Market Freedoms II, Smaragda Rigakou
10/12/2018

11. Free Movement of Workers
Rights (subject to public policy, public security or public health limitations):
To accept offers of employment actually made
To move freely within the territory of MS
To stay in a MS for the purpose of employment
To remain in the MS after having be employed
The above rights shall not apply to employment in public service.
Market Freedoms II, Smaragda Rigakou
10/12/2018

12. Free Movement of Workers
Definition of worker: Any person who pursues employment & activities which are effective and genuine, to the exclusion of activities on such a small scale to be regarded as purely marginal and ancillary
Relationship of subordination (≠ self-employment)
Fundamental to the EU Broadly interpreted
Means towards the creation of internal market
Right of worker to raise his/her standard of living
Market Freedoms II, Smaragda Rigakou
10/12/2018

13. Free Movement of Workers
Part- time workers?
Trainees?
Objective criteria:
services of economic value;
under the directions of another person;
remuneration.
ECJ: does not accept the argument re “abuse” of rights.
Market Freedoms II, Smaragda Rigakou
10/12/2018

14. Free Movement of Workers
Job seekers? Actively seeking work not “workers” but covered under the protective scope of a. 45 TFEU.
ECJ’s purposive approach wider scope
Rights enumerated in 45TFEU- not exhaustive
The ECJ interprets and adopts the scope of 45 TFEU in accordance with the EU’s changing social, economic and political climate
ECJ ruled that Mr. Ioannidis (Case C-285/04 ) was entitled to tideover allowance in Belgium for transition from education to the employment market
Market Freedoms II, Smaragda Rigakou
10/12/2018

15. Free Movement of Workers
Discrimination:
Direct
Indirect: Conditions of eligibility if more easily satisfied by nationals, when “intrinsically liable to affect migrant workers”
e.g. military time in the MS
linguistic knowledge
double-burden regulatory requirements (certifications)
Access to employment market
by state of origin
by state of destination
Market Freedoms II, Smaragda Rigakou
10/12/2018

16. Free Movement of Workers
Wholly internal situations/reverse discrimination
No connecting factor to the EU law National workers cannot claim rights in their MS
EU protection when employed and resided in another MS and under discrimination when returning to home MS
Art. 21 TFEU freedom of movement conferred to all European citizens!
Market Freedoms II, Smaragda Rigakou
10/12/2018

17. Free Movement of Workers Defenses- Exemptions
No acceptance of justifications based purely on economic grounds, e.g. technical difficulties for tax collection
Limitations on grounds of public policy, public security or public health
Public service exception:
Derogation confined to restricting admission to non-nationals into the public service does not permit discrimination in conditions/measures once they are admitted
Armed forces, police, judiciary/tax authorities: Exercise power conferred by public law and safeguard the general interest of the MS
functional approach/purposive interpretation not nurses, teachers etc
Market Freedoms II, Smaragda Rigakou
10/12/2018

18. Free Movement of Workers Directive 2004/38
Directive 2004/38 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States
Right of entry;
residence up to 3 months (unconditional);
residence for workers and their families;
the right of permanent residence to EU citizens and their families who have resided lawfully for a continuous period of 5 years in the host MS;
condition of exercise: equal treatment;
family members, registered relationships, durable relationships.
Regulation 492/2011: free movement of workers substantive & social rights
Political discomfort in the sensitive area of migration Tensions with MS Case C-127/08, Metock: Abolition of obstacles to the free movement of persons
Market Freedoms II, Smaragda Rigakou
10/12/2018

19. Freedom of Establishment & Freedom to Provide Services
8/12/2014
Freedom of Establishment & Freedom to Provide Services
Two freedoms on self employed persons (legal/natural) who move on a permanent [establishment] or temporary basis [services] between MS
Treaty: a TFEU & TFEU
Case law
Secondary legislation:
Insurance, Financial services, Electronic Commerce, Telecommunications, Broadcasting, GEI services (sector specific legislation for both freedoms)
Recognition of professional qualifications (means for the enjoyment of the rights)
Services Directive
Market Freedoms II, Smaragda Rigakou
10/12/2018

20. Freedom of Establishment & Freedom to Provide Services
a TFEU: Establishment Actual pursuit of an economic activity through a fix establishment in another MS for an indefinite period.
a TFEU: Services Cross-border element
Provider is not in the MS where the service is provided, or
recipient has traveled to receive services in another MS, or
none moving, but service by telecommunication / electronically.
Market Freedoms II, Smaragda Rigakou
10/12/2018

21. Freedom of Establishment & Freedom to Provide Services
The Treaty provisions governing free movement of services are residual, in that they apply only insofar as the provisions concerning capital, persons or goods do not apply.
When issues concern goods and when services?
Cases:155/73 Sacchi, C-390/99 Canal Satélite C-405/98 Gourmet, C-97/98 Jägerkiöld
Several freedoms often affected by a single national measure
Cases: C-150/04 Commision v Denmark C-522/04 Commision v Belgium
Market Freedoms II, Smaragda Rigakou
10/12/2018

22. Freedom of Establishment & Freedom to Provide Services
Like the other freedoms
non-discriminatory measures are also caught
public policy, security, health, range of public-interest justifications
Principle of equal treatment
in employed capacity (workers)
in an self-employed capacity (services/ establishment)
Workers v. temporary service providers, Case C-49/98
Establishment v. services, Case C-55/94, Gebhard
Market Freedoms II, Smaragda Rigakou
10/12/2018

23. Freedom of Establishment & Freedom to Provide Services
Temporary provision of services v. sufficiently connected with establishment
Pursue activity on temporary basis v.
activity carried-on on stable & continuous basis
Periodicity, continuity, regularity duration
Irrespective of equipment, sort of infrastructure, office, chambers, consulting room.
Market Freedoms II, Smaragda Rigakou
10/12/2018

24. Freedom of Establishment & Freedom to Provide Services
Application of the relevant articles to private parties/ trade unions
not only for state measures
Collective nature of private power Viking and Laval
51TFEU: Official authority exemption
narrowly interpreted
power of coercion over citizens ≈ public service derogation for workers
52&62TFEU: Public policy/ public security/ public health exemptions
Services Directive for companies ≈ Directive 2004/32 for natural persons
Market Freedoms II, Smaragda Rigakou
10/12/2018

25. Right of Establishment
49 TFEU: Restrictions on the freedom of establishment shall be prohibited
“Establishment”: agencies, branches, subsidiaries, self-employed persons & undertakings
Treaty under the same conditions laid down for nationals
prohibition of discrimination
ECJ wider application
any unjustified obstacles even non discriminatory could hinder the freedom of establishment
Market Freedoms II, Smaragda Rigakou
10/12/2018

26. Right of Establishment
SCOPE of 49 TFEU: Non-discriminatory restrictions
equal treatment & access to market
Same Principles that underpin all Treaty Provisions e.g. certain indistinctly applicable national rules on social-security exemptions for the self-employed
Opening of professions (esp. legal profession)
Equivalence to the corresponding national qualifications*
*Case 340/89, Vlassopoulou: a.49 TFEU “imposes a precise obligation on national authorities to examine qualifications, compare knowledge and skills”
Market Freedoms II, Smaragda Rigakou
10/12/2018

27. Right of Establishment Companies
Public or private law legal persons
Non-profit excluded
(like non remunerated worker and non-remuneration of services)
Formed in accordance with MS laws
Registered office in MS established in MS
Principle place of business in EU
Right of (secondary) establishment ONLY IF
Principal place of business
within EU
Central / Registered office
Market Freedoms II, Smaragda Rigakou
10/12/2018

28. Right of Establishment Restrictions
Case C-55/94,Gebhard: “National measures that hinder or make less attractive the exercise of the fundamental freedoms”
4 conditions for the ECJ to accept such measures:
Applied in a non-discriminatory manner
Justified by imperative requirements of general interest
Suitable for securing the attainment of the objective which they pursue
Proportionate: not go beyond what is necessary in order to attain it
Market Freedoms II, Smaragda Rigakou
10/12/2018

29. Right of Establishment Restrictions
If sufficient hindrance → mandatory/ imperative requirements
If discriminatory (directly or deliberately) only 52 TFEU as exception
Taxation Rules (e.g. preventing tax avoidance/ double benefits)
Corporate seat (just like residence)
connecting factor with certain legal systems
may justify differential tax treatment
Reverse discrimination / wholly internal situations Nationals against own MS if they wish to leave or when acquiring qualifications having taken advantage of the right of movement
But
If they have never exercised EU freedom to move
disadvantaged by comparison with other EU nationals
Market Freedoms II, Smaragda Rigakou
10/12/2018

30. Right of Establishment Restrictions
Case C-438/05, Viking: vessel under Finish flag to be reflagged with Esthonian registration for lower wage costs Finnish union union of fishmen decided to take collective actions to refrain from entering into negotiations with Viking ECJ: MS still free to lay down condition in areas which fall outside the scope of EU competence… but … when exercising that competence the MS must nevertheless comply with EU law (maneuvre).
Market Freedoms II, Smaragda Rigakou
10/12/2018

31. Right of Establishment
Right to strike
Fundamental right which forms integral part of the general principles of EU law
They may be subject to restrictions since they are protected in accordance with EU law
Such rights must be reconciled with the requirements relating to rights protected under the Treaty and in accordance with the principle of proportionality
Although of fundamental nature the social right does not render inapplicable art. 49 TFEU and the relevant freedom
Market Freedoms II, Smaragda Rigakou
10/12/2018

32. Free Movement of Services
If permanent establishment in the host MS not freedom of services
nature of economic activities difficult to distinguish e.g. construction services might take years
Abuse/ evasion theory
Persons who direct most or all of their services at the territory of a particular MS, but maintain their place of establishment outside that MS in order to evade professional rules
may be treated as established in host MS not covered by 56 TFEU but by 49 TFEU.
The person shall have an establishment (i.e. a permanent economic base) within the EU so as to enjoy the freedom.
Market Freedoms II, Smaragda Rigakou
10/12/2018

33. Free Movement of Services
Residual the Treaty Articles on free movement of services apply only insofar as the provisions concerning capital, persons or goods do not apply Banking & Insurance services connected with capital movement To be dealt in line with Treaty provisions on movement of capital
Market Freedoms II, Smaragda Rigakou
10/12/2018

34. Free Movement of Services
Scope
Inter-state element (provider/ recipient/ cross-border)
Freedom to receive services as well (tourists, medical treatment, education business)
Commercial nature of services provided for remuneration (not necessarily from the recipient).
Distinction between publicly v. privately remunerated services
Illegal activities (e.g. Abortion, gambling, prostitution, marketing of cannabis)
If the economic activity lawful in some/one MS remunerated activity it constitutes a service within 56 TFEU
However, the MS Free to regulate and restrict such services
proportionately and without discrimination (to be treated as exception)
Market Freedoms II, Smaragda Rigakou
10/12/2018

35. Free Movement of Services Justifying Restrictions
Goods mandatory requirements
Services imperative requirements [generic item: objective justifications]
legitimate public interest compatible with EU aims
[not if purely economic aim]
applied without discrimination
proportionate: suitable/ appropriate for achieving aims, least restrictive means
applied in a consistent manner (esp. in “gambling cases”)
Proportionality / necessity double burden
Market Freedoms II, Smaragda Rigakou
10/12/2018

36. Free Movement of Services Justifying Restrictions
Non-discriminatory restrictions
Case C-384/93, Alpine Investments: affect access to the market
Not only discrimination/protectionism single EU market
Impediment of inter-state market
In principle caught by EU law
Advocate General Jacobs
Services should be treated by analogy with goods
Mutual recognition: if undertaking complies with MS legislation
may provide services in another MS unless justified restrictions
Market Freedoms II, Smaragda Rigakou
10/12/2018

37. Case Study
Mr. Gebhard is a German national and authorized to practise as “Rechtsanwahlt”, i.e. a German lawyer. He resides in Italy, income taxed in Italy and professional activity in Italy the last 10 years. The Milan Bar Council prohibited him to use the title “avvocato”. He applied to be a member of the Bar based on a Directive about the recognition of higher education diplomas and 10 years practice in Italy. The Milan Bar Council imposed the sanction of suspension from pursuing his professional activity. Mr Gebhard appealed against the decision. National Courts referred preliminary questions to the ECJ. Mr Gebhard argues that he is entitled to the freedom to provide services in Italy. The Milan Bar Council argues that he has office in Milan, which is a fix establishment, but cannot enjoy the right of establishment since he is not a member of the Bar. Such a situation of a EU national who moves to pursue activity is governed by the free movement of workers, the right of establishment or the freedom to provide services? What should ECJ’s ruling be?
Market Freedoms II, Smaragda Rigakou
10/12/2018