In the case of cross-border establishment and/or acquisition of permanent establishments, both the freedom of establishment and the freedom of movement of capital apply in principle. It must be clarified whether both freedoms can be applied in parallel or whether one freedom takes precedence over the other. This contribution therefore addresses the competitive relationship between the freedom of establishment and the free movement of capital.
In principle, both the freedom of establishment and the free movement of capital protect the establishment and acquisition of permanent establishments as well as partnerships and corporations in other (member) states. In the case of holdings in foreign companies, this regularly opens up the scope of protection of both fundamental freedoms, which raises the question of whether both freedoms apply in parallel or whether priority should be given to one of the two freedoms.
The protective effects of the freedom of establishment and the free movement of capital are largely identical.[392] They differ only in that the freedom of establishment is limited to EU matters while the freedom of movement of capital is also applicable to third-country matters.[393] According to the established case-law of the ECJ, where a national standard restricts both the freedom of establishment and the free movement of capital, the provision in question must be examined only with regard to the infringement of one of the two freedoms, if the other freedom is of secondary importance in the light of the preceding case and can be attributed to the former freedom.[394] The following applies:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.