The freedom of establishment in the EU also applies to companies (partnerships and corporations alike). This allows companies within the EU to move their registered office or branches without restrictions. This gives companies room for manoeuvre in terms of relocations and branches. In addition to the personal protection area (who is protected?), there is also the objective protection area (what is protected?) of the freedom of establishment. This explains which types and forms of establishment can exist and how they are expressed.

According to Art. 49 para. 1 S. 1 TFEU, the freedom of establishment develops its protective effect for nationals of a Member State and thus initially benefits only natural persons.[352] Companies have no nationality in the strict sense.[353] However, the scope of the freedom of establishment for companies arises from art. 54 TFEU, which provides that companies governed by civil law, commercial companies (including oHG, KG), cooperatives and other legal entities (including GmbH and AG) are treated as natural persons if they are constituted under the law of a Member State and have their registered office, central administration or principal place of business in a Member State.

Establishment under the rules of a Member State establishes a legal link between the company and the European Union. The prerequisite is therefore that the company has been effectively incorporated under the law of incorporation of the respective Member State.[355] The ECJ also requires that the company continues to exist under the law of the founding state.[356] However, this alone would not prevent the company from giving up the points of contact with the founding state after an effective establishment – for example by transfer of seat or removal[357]. Therefore, Art. 54 TFEU, in addition to the legal component, also implies a territorial link with the European Union, in that the company must have its registered office, central administration or principal place of business in the European Union. The head office is located where the entrepreneurial management is located and the daily decisions necessary for the management of the company are made.[359] Where the actual business focus is located and the main human and material resources are concentrated, the company has its head office.[360] The statutory seat is ultimately determined by the formal seat of the company as defined in the statutes.[361]

It is irrelevant whether the shareholders, members or shareholders themselves fall within the scope of the freedom of establishment.[362] This allows third-country nationals to obtain indirect protection of freedom of establishment through the establishment of an EU company.

Freedom of establishment requires self-employment and thus economic activity. In principle, this includes any economic activity in an independent or entrepreneurial form. In particular, both any commercial activity and the exercise of a free profession constitute gainful employment.[363] The prerequisite – and thus the criterion of demarcation from the free movement of workers – is that the activity is carried out independently and, consequently, in a form that is not dependent or subject to instructions.

Whereas the freedom to provide services only protects temporary activity in another Member State, the freedom of establishment includes ‘the effective exercise of an economic activity by means of a fixed establishment in another Member State for an indefinite period’[364].

SEGMENT006 therefore covers permanent permanent facilities such as offices, warehouses or manufacturing buildings[365] in a Member State where an entrepreneur pursues his self-employed activity.

2.2 Forms of establishment

By art. 49 TFEU also protects two forms of establishment:

2.2.1. Primary form of establishment

The primary establishment derives from Article 49 (1) S. 1 TFEU and protects the main establishment of nationals of a Member State in another Member State. On the other hand, where the nationals have previously maintained a residence[367], whether they have previously developed an entrepreneurial activity at all and whether the (new) main establishment in the other Member State is created by relocation, establishment or acquisition.[368] The only requirement is that a permanent and main entrepreneurial activity is created in the target Member State.[369] If a German national establishes or acquires an enterprise in another Member State, he can therefore invoke the primary freedom of establishment even if he is domiciled in a third country and has not previously pursued an entrepreneurial activity.[370] In connection with Art. 54 TFEU, the primary freedom of establishment in principle also protects companies which focus their business activities and thus their principal place of business in another

Relocate Member State.[371]

The secondary freedom of establishment derives from Art. 49 para 1 p. 2 TFEU and protects the establishment of agencies, branches and subsidiaries of Union citizens resident in the Union. Unlike the main establishment, agencies, branches and subsidiaries are only protected if the Union citizen already has his main establishment within the territory of the European Union.[372] For example, if German citizens are resident in the third country, the branch in the European Union would not be protected by the freedom of establishment, as there would be a lack of EU residence.[373] In addition to agencies, branches and subsidiaries of natural persons, agencies, branches and subsidiaries of companies as defined in Art. 54 TFEU is protected by the secondary freedom of establishment if the company – in addition to the one referred to in Art. 54 para. 1 TFEU-required Union linkage – in addition to fulfilling the EU residency.[374]

2.3.

Freedom of establishment only protects cross-border situations.[375] The criterion is interpreted very broadly by the ECJ and covers not only the usual sitting of a Union citizen in another Member State[376] but also return cases[377] and removal cases[378].

The German branch of a company resident in the Federal Republic of Germany is therefore not favoured by the freedom of establishment. In such purely domestic cases without a cross-border element, there is discrimination against nationals outside the scope of the freedom of establishment.[379] However, if this company is now acquired by an EU citizen resident in another Member State, this does not remedy possible discrimination against the German establishment, but the subsidiary is now included in the scope of the secondary freedom of establishment, since an EU citizen resident in one EU Member State has an economic activity in another Member State through a subsidiary.[380] However, the protective effect of the freedom of establishment then develops only at the level of the foreign shareholder.