European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

Articles 49 and 56 TFEU further develop the general principle of  non-discrimination laid down in Article 18 TFEU, which prohibits any  discrimination on grounds of nationality. Article 61 adds that as long  as restrictions to the freedom to provide services are not eliminated, they apply without distinction on grounds of nationality or residence. Each Member State is not only required to ensure t …

Discriminatory or non-discriminatory measures

Articles 49 and 56 TFEU further develop the general principle of  non-discrimination laid down in Article 18 TFEU, which prohibits any  discrimination on grounds of nationality. Article 61 adds that as long  as restrictions to the freedom to provide services are not eliminated, they apply without distinction on grounds of nationality or residence. Each Member State is not only required to ensure that nationals of other Member States are treated in the same way as its nationals but also to avoid hindering the establishment in another Member State of one of its nationals or of a company incorporated under its legislation . It is for the Commission to bring evidence of the difference in treatment between residents and non-residents and it cannot rely on a purely theoretical calculation without establishing that this reflects the economic reality .

Any national provision which limits an activity covered by Articles 49 and 56 TFEU on the right of establishment and the freedom to provide services to the nationals of one Member State is incompatible with European law . 

The principle of equality of treatment prohibits not only overt discrimination based on nationality or on the location of the registered office, but also all forms of covert discrimination which, although based on criteria which appear to be neutral, lead to the same result . National legislation which lays down a distinction founded on residence is liable to act mainly to the detriment of nationals of other Member States, since non-residents are most frequently non-nationals . For the Court of Justice , the requirement of residence or an establishment in the host country is the very negation of the freedom to provide services. A difference in treatment between resident and non-resident taxpayers is contrary to the principle of free movement where there is no objective difference of situation such as to justify that difference in treatment . A national law is therefore discriminatory where it:

-  provides that application of a fixed levy is restricted to investment or life insurance contracts where the debtor is resident or established in the national territory ;

- confers exclusive powers to provide tax advice and assistance services solely to tax advice centres which can be created by residents only ;

- subjects to prior authorization the pursuit of the activity of granting of credits on a commercial basis on its territory by a company established in a non-member country and refuses such authorization where the company does not have its central administration or a branch in that territory ;

- makes the grant of a tax credit for investments subject to the condition that the investments are made in an establishment situated in the national territory where it is likely to discourage national undertakings from providing services in another Member State that require the use of capital goods situated in that other Member State, or makes that provision of cross-border services less attractive or more difficult than the provision of services in the national territory ;

- introduces a difference in treatment between dividends distributed by a resident subsidiary and those distributed by a non-resident subsidiary ;

 - obliges - for the operation of commercial balloon flights - a person resident or established in another Member State where he /she is already licensed, to have a place of residence in the national territory or to obtain a new license without due account being taken of the fact that the conditions of issue of the license are the same ;

- imposes an obligation on the recipient of services to withhold at source tax on the remuneration paid to non-resident service providers, whereas such a withholding tax at source is not levied on remuneration paid to resident service providers ; or providers of real estate intermediation services, where they have collected rents or consideration corresponding to the letting of real estate situated in the territory of the Member State, or have been involved in their collection, and where they reside or are established in the territory of a Member State other than the Member State of taxation, to appoint a tax representative residing or established in the territory of the Member State of taxation .

- prohibits undertakings providing accreditation services from deviating from the minimum tariff it has fixed thus depriving undertakings established in another Member State, fulfilling the conditions of the national legislation, of the possibility, by requesting fees lower than those set by the legislature, of competing more effectively with undertakings established on a stable basis in the Member State concerned ;

- requires any business established in the territory of the Member State in question to transmit to the tax authorities statements relating to payments for services purchased from service providers established in another Member State, on pain of an increase in corporation tax equal to 50 or 100% of the value of those services 

- deprives  a couple residing in one Member State and earning income both in that Member State and in another Member State of receiving a specific tax advantage that it would receive if the member of the couple earning the higher income did not earn his entire income in the other Member State ;

- obliges undertakings established in a Member State using workers employed and seconded by temporary employment agencies established in another Member State but operating in the first Member State through a branch, to withhold tax and to pay to the first Member State an advance payment on the income tax due by those workers, whereas the same obligation is not imposed on companies established in the first Member State ; 

-  permits a resident parent company to form a single tax entity with a resident sub-subsidiary where it holds that sub-subsidiary through one or more resident companies, but not where it holds that sub-subsidiary through non-resident companies which do not have a permanent establishment in that Member State .

The ban on having an establishment in more than one Member State or imposing limits to the choice between a principal and a secondary establishment also constitute prohibited discrimination per se. A Member State cannot subject the performance of services on its territory to the observance of all the conditions required for an establishment: requirements concerning residence on a permanent basis on the territory where the services are provided  or having the principal establishment on the territory of the Member State where the activity is exercised  are unlawful. A company must be free to choose the form of its establishment: agency, branch or subsidiary . 

Doctors and practitioners established in a Member State cannot be required to cancel their enrolment or registration in that State in order to be able to practice in another State as a principal in a practice or as a locum , nor can operators of other Member States be obliged to have their principal establishment in the Member State concerned to operate there , undertakings engaged in the provision of temporary labor to maintain their registered office or a branch office on the territory of the Member State where the service is provided , or lawyers established in a Member State to establish chambers or a principal or branch office in another Member State in the exercise of their to freedom to provide services . On the other hand, national regulations may reserve the benefit of tax and social advantages solely for employees of undertakings in the construction sector carrying out their activities on the territory of that Member State and who are in a situation comparable to that of undertakings in the construction sector whose employees are posted to other Member States, provided that the application of such national regulations is capable of guaranteeing, in a consistent and systematic manner, the attainment of the objective pursued and does not go beyond what is necessary to attain that objective .

Measures which are indistinctly applicable to national providers of services and to those of other Member States, that are non-discriminatory on grounds of nationality or residence, may constitute restrictions to the freedom of establishment or the freedom to provide services where they are liable to prohibit or impede the exercise of those freedoms or render them less attractive .

Making the exercise of an activity subject to the possession of a particular professional qualification  or to the payment of a charge , a prior authorization procedure  or restricting it to legal persons  or to employed workers only , all constitute practices liable to incur prohibition .

Case 81/87 The Queen v Treasury and Commissioners of Inland Revenue, ex parte Daily Mail and General Trust PLC [1988] ECR 5483, LawLex200900002331JBJ.

Case C-105/08 Commission v Portugal [2010] not yet published in the ECR, LawLex201100000632JBJ.

Case C-287/10 Tankreederei I [2010] ECR I-14233, LawLex201100000470JBJ. See also Case C-9/11 Waypoint Aviation, Judgment of 13 October 2011, LawLex201200000128JBJ, for a national provision which applies a less favorable tax regime to income from a loan financing the acquisition of an asset, where the right to use that asset is transferred to a company established in another Member  State, than to income from a loan financing the acquisition of an asset used by a company established in the national territory.

The parent company receiving a tax credit which is equal to half of the sums paid in the form of dividends by a resident subsidiary, whilst such a tax credit is not granted in respect of dividends distributed by a non-resident subsidiary: Case C-310/09 Accor SA [2011] ECR I-8115, LawLex201200000645JBJ; see also Case C-407/22  Manitou BF SA, Judgment of 11 May 2023, LawLex202300006585JBJ, national legislation relating to a tax integration scheme may not grant a resident parent company which has opted for tax integration with resident companies the benefit of neutralizing the add-back of a proportion of costs and expenses fixed at a flat rate of 5% of the net amount of dividends received by it, of its subsidiaries located in other Member States, which, if they had been resident, would have been objectively eligible if they so elected, whereas such neutralization is refused to a resident parent company which has not opted for such tax integration despite the existence of capital links with other resident undertakings permitting it.

Case C-382/08 Neukirchinger [2011] ECR I-139, LawLex201100000451JBJ.

Case C-498/10 X NV v Staatssecretaris van Financiën, Judgment of 18 October 2012, LawLex201200002242JBJ.

Case C-83/21 Airbnb Ireland UC plc, Judgment of 22 December 2022, LawLex202300000345JBJ.

Case C-327/12 Ministero dello Sviluppo economico, Judgment of 12 December 2013, LawLex201300001798JBJ, nevertheless acknowledging that the imposing of minimum prices can be justified in the interests of consumer protection.

Cases C-52/21 and C-53/21 Pharmacie populaire – La Sauvegarde SCRL and others, Judgment of 24 February 2022, LawLex202500006921JBJ.

Case C-303/12 Imfeld, Judgment of 12 December 2013, LawLex201300001790JBJ.

Case C-53/13 Strojírny Prostejov, Judgment of 19 June 2014, LawLex201400002120JBJ.

Case  C-39/13 Inspecteur van de Belastingdienst-Noord-kantoor Groningen, Judgment of 12 June 2014, LawLex201400002073JBJ.

Case 13/76 Dona v Mantero [1976] ECR 1333, LawLex200900001530JBJ; Case C-221/89 The Queen v Secretary of State for Transport, ex parte Factortame [1991] ECR I-3905, LawLex200900002069JBJ.

Case 33/74 Van Binsbergen v Bedrijfsvereniging voor de Metaalnijverheid [1974] ECR 1299, LawLex200900001962JBJ.

Case 39/75 Coenen v Sociaal Economische Raad [1975] ECR 1547, LawLex200900001975JBJ.

Case 96/85 Commission v France [1986] ECR 1475, LawLex200900002241JBJ. See also, Case C-162/99 Commission v Italy [2001] ECR I-541, LawLex200900000642JBJ, concerning national legislation which provides the removal from the register of the professional association in the event of transfer of the dentist's residence abroad but does not prohibit the dentist established in the State in question from opening a second surgery in another Member State.

Case C-101/94 Commission v Italy [1996] ECR I-2691, LawLex200900000307JBJ.

Case C-279/00 Commission v Italy [2002] ECR I-1425, LawLex200900001370JBJ.

Case C-145/99 Commission v Italy [2002] ECR I-2235, LawLex200900000574JBJ.

Case C-387/22 Nord Vest Pro Sani Pro SRL, Judgment of 26 September 2024, LawLex202400008496JBJ.

Case C-76/90 Säger v Dennemeyer [1991] ECR I-4221, LawLex200900001170JBJ; Case C-81/09 Idryma Typou, Judgment of 21 October 2010, LawLex201100000453JBJ.

Case C-76/90 Säger v Dennemeyer [1991] ECR I-4221, LawLex200900001170JBJ.

Case 62/81 Seco v EVI [1982] ECR 223, LawLex200900002157JBJ.

Case C-430/99 Sea-Land Service and Nedlloyd Lijnen [2002] ECR I-5235, LawLex200900000792JBJ, considering that although no discrimination may result from the legislation of a Member State which makes a difference in treatment between two categories of means of transport insofar they are not in situations objectively comparable, the requirement of payment of a tariff for only one category is liable to impede or render less attractive the provision of those services.

Case C-205/99 Analir and others [2001] ECR I-1271, LawLex200900001110JBJ, considering that the application of a prior administrative authorization system for the exercise of a provision of marine cabotage services is justified only if there is a real public service need; Case C-222/95 SCI Parodi v Banque de Bary [1997] ECR I-3899, LawLex200900001290JBJ, considering that a national law which imposes on a credit institution, already authorized in another Member State, to obtain authorization to grant a mortgage loan to a person residing in its territory, restricts the freedom of establishment.

Case C-171/02 Commission v Portugal [2004] ECR I-5645, LawLex200900000713JBJ, which indicates that a national rule which requires foreign operators wishing to engage in private security services within the Member State to be constituted as a legal person rules out any possibility for a transfrontier service provider who is a natural person to provide such services or to establish there.

Case C-398/95 Syndesmos ton en Elladi Touristikon kai Taxidiotikon Grafeion v Ypourgos Ergasias [1997] ECR I-3091, LawLex200900000676JBJ, which considers that national rules which automatically characterize as an employment relationship the provision of services by a tourist guide is a restriction to the freedom to provide services even if they apply without distinction to national guides and to guides from other Member States, insofar as they deprive the latter of the possibility of working in the first Member State as self-employed persons.

The limitation of access to the provision of certain services through the requirement of specific professional qualifications concerns regulated professions mainly. A general directive settles the question: Directive No 2005/36 of 7 September 2005 on the recognition of professional qualifications, OJ L 255 of 30 September 2005, 22-142.

Case C-107/94 Asscher v Staatssecretaris van Financiën [1996] ECR I-3089, LawLex200900000342JBJ; Case C-224/97 Ciola [1999] ECR I-2517, LawLex200700001809JBJ.

Case 39/75 Coenen v Sociaal Economische Raad [1975] ECR 1547, LawLex200900001975JBJ; Case C-493/99 Commission v Germany [2001] ECR I-8163, LawLex200900000987JBJ.

Case C-170/05 Denkavit Internationaal and Denkavit France [2006] ECR I-11949, LawLex200900000707JBJ; Case C-253/09 Commission v Hungary,  1 December 2011, LawLex201200000632JBJ; in respect of national legislation under which a general deduction in relation to a tax on deposits made by customers of credit institutions operating in the territory of a given region within a Member State is granted only to credit institutions whose registered office is located in the territory of that region: Case C-712/19 Novo Banco SA, Judgment of 25 February 2021, LawLex202300003676JBJ; for national legislation which provides that a company established  in one Member State is not permitted to deduct interest payments made  to a company belonging to the same group, established in another Member  State, on the ground that the principal reason for the debt linking them appears to be the obtaining of a substantial tax benefit, whereas such a  tax benefit would not have been deemed to exist if both companies had  been established in the first Member State, as in that situation they would have been covered by the provisions on intra-group financial  transfers: Case C-484/19 Lexel AB, Judgment of 20 January 2021, LawLex202100004415JBJ.

Case C-334/02 Commission v France [2004] ECR I-2229, LawLex200900000376JBJ.

Case C-451/03 Servizi Ausiliari Dottori Commercialisti [2006] ECR I-2941, LawLex200700001475JBJ.

Case C-452/04 Fidium Finanz [2006] ECR I-9521, LawLex200900000885JBJ.

European Business Law

91. Discriminatory or non-discriminatory measures

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91. Discriminatory or non-discriminatory measures

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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