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

The free movement of capital may conflict with the free movement of persons and services. In this case it is established case law  that the purpose of the legislation must be taken into account. Where that purpose does not in itself allow a determination of whether that law falls predominantly within the scope of freedom of establishment or the free movement of capital, the facts of the case in point must be taken into account. The rules concerning the freedom of establishment (Article 49 TFEU) prevail where any possible restrictive effects to the free movement of capital (Article 63 TFEU) constitute an unavoidable consequence of any restriction on freedom of establishment . This is the case where the national measure concerns the holding of a share by a national of a Member State giving him definite influence over a company's decisions and allowing him to determine its activities . On the other hand, where a company with a definite influence is established in a non-Member State, Article 49 TFEU is inapplicable unlike Article 63 which also prohibits restrictions between Member States and third countries . The free movement of capital is also the only freedom concerned with regard to national legislation relative to the acquisition by a company of real property in another Member State, where it is not established that it owns that property as part of the pursuit of its activities or even that it itself manages its immovable assets .

The provisions relative to the freedom to provide services do not apply in a subsidiary manner to those governing the free movement of capital . If a national measure concerns both the freedom to provide services and the free movement of capital, the Court of Justice will in principle examine the measure in dispute in relation to only one of those two freedoms if it appears that one of them is entirely secondary in relation to the other and may be considered together with it . Although they are closely related, those provisions cover different situations each with a scope of application particular to it , even if it is possible for a national law to hinder the exercise of both freedoms simultaneously . The regulations of a Member State imposing a tax on transactions involving financial derivative instruments fall within the scope of the freedom to provide services which is secondary to the free movement of capital where the legal conditions of the tax in question which covers financial transactions,  applies irrespective of whether or not such a transaction involves the provision of services . 

Case C-436/08 Haribo Lakritzen Hans Riegel et Österreichische Salinen [2011] ECR I-305, LawLex201100000455JBJ; Case C-310/09 Accor [2011] ECR I-8115, LawLex201200000645JBJ; Case C-35/11 Test Claimants in the FII Group Litigation, Judgment of 13 November 2012, LawLex201200002313JBJ; Case C-686/13 X AB c. Skatteverket, Judgment of 10 June 2015, LawLex201500000729JBJ.

Case C-483/99 Commission v France [2002] ECR I-4781, LawLex200900000972JBJ; Case C-268/03 De Baeck v Belgium [2004] ECR I-5961, LawLex200900000972JBJ; Case C-470-04 N v Inspecteur van de Belastingdienst Oost/kantoor Almelo [2006] ECR I-7409, LawLex200900000947JBJ; Case C-196/04 Cadbury Schweppes v Commissioners of Inland Revenue [2006] ECR I-7995, LawLex200900001052JBJ: taxation of the profits of subsidiaries established in another Member State in which a resident company has a controlling holding; Case C-374/04 Test Claimants in Class IV of the ACT Group Litigation v Commissioners of Inland Revenue [2006] ECR I-11673, LawLex200900000582JBJ; Case C-524/04 Test Claimants in the Thin Cap Group Litigation v Commissioners of Inland Revenue [2007] ECR I-2107, LawLex200900001030JBJ: for the possibility of a non-resident company to deduct for tax purposes, interest on loan finance granted by the parent company.

See especially, for a 100% holding: Case C-251/98 Baars v Inspecteur der Belastingen Particulieren-Ondernemingen Gorinchem [2000] ECR I-2787, LawLex200700001617JBJ; Case C-446/04 Test Claimants in the FII Group Litigation v Commissioners of Inland Revenue [2006] ECR I-11753, LawLex200900000863JBJ; Case C-31/11 Scheunemann, Judgment 19 July 2012, LawLex201200002225JBJ, for national legislation providing for tax treatment of successions which include shareholdings in undertakings; Case C-472/22 NO, Judgment of 16 November 2023, LawLex202400004412JBJ, for a national regulation, which aims to support national undertakings and stimulate economic activity in the Member State concerned by halving the tax burden on capital gains implemented by taxpayers whose tax residence is in that State. 

See, for a national measure primarily affecting freedom of establishment: Case C-492/04 Lasertec v Finanzamt Emmendingen [2007] ECR I-3775, LawLex200900000985JBJ.

Case C-451/05 Européenne et Luxembourgeoise d'investissements v Directeur général des impôts [2007] ECR I-8251, LawLex200900000882JBJ.

See Case 15/78 Société Générale Alsacienne de Banque v Walter Koestler [1978] ECR 1971, LawLex200900001562JBJ.

Case C-725/18 Anton van Zantbeek VOF, Judgment of 30 January 2020, LawLex202000001636JBJ, finding that although the disputed tax is capable of affecting the free movement of capital insofar as it relates to stock exchange transactions, it applies only if a professional intermediary is involved in the transaction such that the aspect of the freedom to provide services prevails over that of the free movement of capital.

Thus, the transfer of currency for the purposes of tourism travel for the purposes of business, education and medical treatment are characterized as current payments falling under the freedom to provide services and not the free movement of capital, even where they are effected by means of the physical transfer of bank notes, Case 286/82 Luisi and Carbone v Ministero del Tesoro [1984] ECR 377, LawLex200900001498JBJ.

Case C-452/04 Fidium Finanz v Bundesanstalt für Finanzdienstleistungsaufsicht [2006] ECR I-9521, LawLex200900000885JBJ, for a system by which the cross-border commercial grant of credit is subject to authorization; Case C-565/18 Société Générale SA, Judgment of 30 April 2020, LawLex202500006922JBJ: the regulations of a Member State which make subject to tax transactions involving derivative financial instruments thus fall within the scope of the freedom of movement of capital insofar as the financial transactions involving movements of capital are taxed, and within the freedom to provide services, inasmuch as the latter may affect financial services relating to securities issued by undertakings established in that Member State and offered in another Member State.

Case C-565/18 Société Générale SA, Judgment of 30 April 2020, LawLex202500006922JBJ.

153. Relation to other Treaty provisions