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Article 54 [Equality of Treatment of Companies and Firms]

(ex-Article 48 TEC)

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Treaty on the Functioning of the European Union – A Commentary

Part of the book series: Springer Commentaries on International and European Law ((SCIEL))

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Abstract

Article 54 TFEU complements the scope of applicationratione personae of Article 49 TFEU by including companies as beneficiaries of freedom of establishment. In modern economy, the economic impact of companies is bigger than that of natural persons. Freedom of establishment is conferred not only on natural persons holding EU nationality but also on legal persons. Article 54 TFEU adopts ex-Article 48 TEC without any substantial alterations and sets out the beneficiaries of the right to establishment. A company enjoys the freedom of establishment if it has been formed in accordance with the laws of one of the MSs and if its registered office, central administration, or principal place of business is within a MS of the EU. On the one hand, the prohibition of discrimination in Article 49 TFEU forbids discrimination against individuals on the basis of nationality. On the other hand, Article 49 TFEU forbids discrimination against companies on the basis of registered office, central administration, or principal place of business.

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Notes

  1. 1.

    Malamataris, in Christianos (2012), Article 54 TFEU para 1.

  2. 2.

    Chalmers et al. (2010), p. 861; Papadopoulos and Ortino, in Smit et al. (2013), Article 54 TFEU para 2–3; Kotzur, in Geiger et al. (2015), Article 54 AEUV para 1.

  3. 3.

    Chalmers et al. (2010), p. 861. For an interesting analysis of how the notion of “restriction” (which constitutes the first stage in examining whether there is a breach of internal market rules) is used in cases involving company law measures, see Sørensen (2014), pp. 178–188.

  4. 4.

    Malamataris, in Christianos (2012), Article 54 TFEU para 2.

  5. 5.

    Kotzur, in Geiger et al. (2015), Article 54 AEUV para 1.

  6. 6.

    Chalmers et al. (2010), p. 861.

  7. 7.

    Marenco (1991), pp. 113–114.

  8. 8.

    Case 270/83, Commission v France (ECJ 28 January 1986).

  9. 9.

    Case 270/83, Commission v France (ECJ 28 January 1986) para 17.

  10. 10.

    Case 270/83 Commission v France (ECJ 28 January 1986) para 19. This proposition was also discussed in Marks & Spencer. The ECJ stated that in tax law, the taxpayers’ residence may constitute a factor that might justify national rules involving different treatment for resident and non-resident taxpayers. However, residence is not always a proper factor for distinction. In effect, acceptance of the proposition that the Member State in which a company seeks to establish itself may freely apply to it a different treatment solely by reason of the fact that its registered office is situated in another Member State would deprive Article 49 TFEU of all meaning. Case C-446/03, Marks & Spencer plc v David Halsey (Her Majesty’s Inspector of Taxes) (ECJ 13 December 2005) para 37.

  11. 11.

    Marenco (1991), pp. 113–114.

  12. 12.

    Kotzur, in Geiger et al. (2015), Article 54 AEUV para 2.

  13. 13.

    Malamataris, in Christianos (2012), Article 54 TFEU para 4.

  14. 14.

    It was argued that companies without legal personality but with limited legal capacity do not fall within the scope of beneficiaries of freedom of establishment. Malamataris, in Christianos (2012), Article 54 TFEU para 4.

  15. 15.

    Kotzur, in Geiger et al. (2015), Article 54 AEUV para 2.

  16. 16.

    Malamataris, in Christianos (2012), Article 54 TFEU para 4.

  17. 17.

    Case 182/83, Robert Fearon & Company Limited v Irish Land Commission (ECJ 6 November 1984) para 8. Papadopoulos and Ortino, in Smit et al. (2013) Article 54 para 3. It is worth mentioning here a new corporate type adopted in USA and Canada, the Public Benefit Corporation. A Public Benefit Corporation must have a corporate purpose to create a material positive impact on society and the environment. In case of an adoption of a similar corporate type by an EU jurisdiction, it would be interesting to see its exact position in the framework of the fundamental freedom of establishment. Fomcenco (2014), p. 276.

  18. 18.

    Barnard (2010), p. 296.

  19. 19.

    Malamataris, in Christianos (2012), Article 54 TFEU para 5.

  20. 20.

    Craig and De Burca (2011), p. 780.

  21. 21.

    Kotzur, in Geiger et al. (2015), Article 54 AEUV para 3.

  22. 22.

    Kotzur, in Geiger et al. (2015), Article 54 AEUV para 3.

  23. 23.

    Case C-70/95, Sodemare and others v Regione Lombardia (ECJ 17 June 1997) para 25. Wyatt et al. (2011). p. 648.

  24. 24.

    Case C-212/97, Centros (ECJ 9 March 1999) para 20. See also Case 79/85, Segers (ECJ 10 July 1986) para 13, Case 270/83, Commission v France (ECJ 28 January 1986) para 18, Case C-330/91, Commerzbank (ECJ 13 July 1993) para 13, and Case C-264/96, ICI (ECJ 16 July 1998) para 20.

  25. 25.

    Case 182/83, Robert Fearon & Company Limited v Irish Land Commission (ECJ 6 November 1984) para 9, Case C-251/98, Baars (ECJ 13 April 2000) para 22, Case C-212/97, Centros (ECJ 9 March 1999) para 19.

  26. 26.

    Barnard (2010), p. 296.

  27. 27.

    Case C-231/05, Oy AA (ECJ 18 July 2007) para 20, Case C-251/98, Baars (ECJ 13 April 2000) para 21–22, Case C-208/00, Überseering (ECJ 5 November 2002) para 77. Barnard (2010), p. 297.

  28. 28.

    Case C-446/04, Test Claimants in the FII Group Litigation v Commissioners of Inland Revenue (ECJ 12 December 2006) para 118, Case C-231/05, Oy AA (ECJ 18 July 2007) para 23. Barnard (2010), p. 297.

  29. 29.

    Case C-221/89, Factortame (ECJ 25 July 1991), Case C-212/97, Centros (ECJ 9 March 1999). Kotzur, in Geiger et al. (2015), Article 54 AEUV para 9.

  30. 30.

    Kotzur, in Geiger et al. (2015) Article 54 AEUV para 7–8.

  31. 31.

    Case 205/84, Commission v Germany (ECJ 4 December 1986) para 21. Wyatt et al. (2011), p. 648.

  32. 32.

    Case 79/85, Segers (ECJ 10 July 1986) para 13–14. Wyatt et al. (2011), p. 648.

  33. 33.

    Case 270/83, Commission v France (ECJ 28 January 1986) para 22. Wyatt et al. (2011), p. 648.

  34. 34.

    Case C-337/08, X Holding BV v Staatssecretaris van Financiën (ECJ 25 February 2010).

  35. 35.

    Case C-231/05, Oy AA (ECJ 18 July 2007) para 40.

  36. 36.

    Case C-253/03, CLT-UFA (ECJ 23 February 2006) para 14.

  37. 37.

    Case C-307/97, Compagnie de Saint-Gobain, Zweigniederlassung Deutschland v Finanzamt Aachen-Innenstadt (ECJ 21 September 1999).

  38. 38.

    Wyatt et al. (2011), p. 649.

  39. 39.

    Case 270/83, Commission v France (ECJ 28 January 1986).

  40. 40.

    Case C-330/91, Commerzbank (ECJ 13 July 1993) para 13–14.

  41. 41.

    Barnard (2010), p. 333.

  42. 42.

    Cains (2010), p. 571.

  43. 43.

    Barnard (2010), p. 296.

  44. 44.

    Barnard (2010), p. 297.

  45. 45.

    Case C-414/06, Lidl Belgium GmbH & Co. KG v Finanzamt Heilbronn (ECJ 15 May 2008) para 15.

  46. 46.

    Case C-196/04, Cadbury Schweppes (ECJ 12 September 2006) para 54.

  47. 47.

    Barnard (2010), p. 297.

  48. 48.

    Case C-386/04, Centro di Musicologia Walter Stauffer v Finanzamt München für Körperschaften (ECJ 14 September 2006) para 19.

  49. 49.

    See also Case C-451/05, ELISA (ECJ 11 October 2007) para 65–67. Barnard (2010), p. 297.

  50. 50.

    Kotzur, in Geiger et al. (2015), Article 54 AEUV para 10. See also Grundmann (2012), pp. 587–630.

  51. 51.

    Case 81/87, Daily Mail (27 September 1988).

  52. 52.

    Craig and De Burca (2011), p. 780.

  53. 53.

    Case 81/87, Daily Mail (27 September 1988) para 24.

  54. 54.

    Case 81/87, Daily Mail (27 September 1988) para 19.

  55. 55.

    Case 81/87, Daily Mail (27 September 1988) para 20.

  56. 56.

    Case 81/87, Daily Mail (27 September 1988) para 21.

  57. 57.

    Steiner and Woods (2009), p. 522.

  58. 58.

    Case C-210/06, Cartesio (ECJ 16 December 2008). For an analysis of this ruling, see Cerioni (2010), pp. 311–337 and Szydło (2009), pp. 703–722.

  59. 59.

    Steiner and Woods (2009), p. 522. More specifically, the ECJ held that a MS has the power to define both the connecting factor required of a company if it is to be regarded as incorporated under the law of that MS and, as such, capable of enjoying the right of establishment, and that required if the company is to be able subsequently to maintain that status. That power includes the possibility for that MS not to permit a company governed by its law to retain that status if the company intends to reorganise itself in another MS by moving its seat to the territory of the latter, thereby breaking the connecting factor required under the national law of the MS of incorporation. Case C-210/06, Cartesio (ECJ 16 December 2008) para 110.

  60. 60.

    Case C-210/06, Cartesio (ECJ 16 December 2008) para 109.

  61. 61.

    Case C-378/10, VALE (ECJ 12 July 2012) para 28–29.

  62. 62.

    The ECJ found that Articles 49 TFEU and 54 TFEU must be interpreted as precluding national legislation which enables companies established under national law to convert, but does not allow, in a general manner, companies governed by the law of another MS to convert to companies governed by national law by incorporating such a company. Case C-378/10, VALE (ECJ 12 July 2012) para 41.

  63. 63.

    Case C-378/10, VALE (ECJ 12 July 2012) para 30–31.

  64. 64.

    Case C-106/16, Polbud (ECJ 25 October 2017) para 3–18.

  65. 65.

    Case C-106/16, Polbud (ECJ 25 October 2017) operative part.

  66. 66.

    Case C-106/16, Polbud (ECJ 25 October 2017) operative part.

  67. 67.

    Chalmers et al. (2010), p. 864.

  68. 68.

    Case C-212/97, Centros (ECJ 9 March 1999). For an analysis of this ruling, see Roth (2000), pp. 147–155; Behrens (2000), pp. 125–146; Ebke (2001), pp. 623–660. One topical question raised in Danish company law is whether a host country can legally require a foreign company to think up an independent name for its branch in the host country: Werlauff (2014), pp. 165–171.

  69. 69.

    Kaczorowska (2011), p. 721.

  70. 70.

    Case C-167/01, Inspire Art Ltd (ECJ 30 September 2003).

  71. 71.

    Case C-208/00, Überseering (ECJ 5 November 2002). Roth (2003), pp. 177–208.

  72. 72.

    Case C-411/03, SEVIC (ECJ 13 December 2005).

  73. 73.

    Case C-446/03, Marks & Spencer (ECJ 13 December 2005).

  74. 74.

    Kaczorowska (2011), p. 720.

  75. 75.

    Directive 2019/2121 of 27 November 2019 as regards cross-border conversions, mergers and divisions O.J. L. 321/44 (2019). Parliament/Council Directive 2017/1132 relating to certain aspects of company law, O.J. L 169/46 (2017).

  76. 76.

    See also: Brasseur and Vermeylen, in Vermeylen and Vande Velde (2012), pp. 80–83.

  77. 77.

    Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE), O.J. L 294/1 (2001).

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Authors and Affiliations

  1. University of Cyprus, Nicosia, Cyprus

    Thomas Papadopoulos

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  1. Thomas Papadopoulos
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Editors and Affiliations

  1. Faculty for Economics, Law and Social Science, University of Erfurt, Erfurt, Germany

    Hermann-Josef Blanke

  2. Università degli Studi di Teramo, Teramo, Italy

    Stelio Mangiameli

List of Cases

List of Cases

1.1 ECJ

  • ECJ 06.11.1984, 182/83, Robert Fearon & Company Limited v Irish Land Commission, ECLI:EU:C:1984:335 [cit. in para 4, 7]

  • ECJ 28.01.1986, 270/83, Commission v France, ECLI:EU:C:1986:37 [cit. in para 2, 6, 9, and 10]

  • ECJ 10.07.1986, 79/85, Segers, ECLI:EU:C:1986:308 [cit. in para 6–9]

  • ECJ 04.12.1986, 205/84, Commission v Germany, ECLI:EU:C:1986:463 [cit. in para 9]

  • ECJ 27.09.1988, 81/87, Daily Mail, ECLI:EU:C:1988:456 [cit. in para 15–16]

  • ECJ 25.07.1991, C-221/89, Factortame, ECLI:EU:C:1991:320 [cit. in para 7]

  • ECJ 13.07.1993, C-330/91, Commerzbank, ECLI:EU:C:1993:303 [cit. in para 6 and 10]

  • ECJ 17.06.1997, C-70/95, Sodemare and Others v Regione Lombardia, ECLI:EU:C:1997:301 [cit. in para 4, 5, and 9]

  • ECJ 16.07.1998, C-264/96, ICI, ECLI:EU:C:1998:370 [cit. in para 6]

  • ECJ 09.03.1999, C-212/97, Centros, ECLI:EU:C:1999:126 [cit. in para 6, 7, 18, and 19]

  • ECJ 21.09.1999, C-307/97, Compagnie de Saint-Gobain, Zweigniederlassung Deutschland v Finanzamt Aachen-Innenstadt, ECLI:EU:C:1999:438 [cit. in para 9]

  • ECJ 13.04.2000, C-251/98, Baars, ECLI:EU:C:2000:205 [cit. in para 7]

  • ECJ 05.11.2002, C-208/00, Überseering, ECLI:EU:C:2002:632 [cit. in para 7 and 19]

  • ECJ 30.09.2003, C-167/01, Inspire Art Ltd, ECLI:EU:C:2003:512 [cit. in para 19]

  • ECJ 13.12.2005, C-446/03, Marks & Spencer, ECLI:EU:C:2005:763 [cit. in para 2 and 19]

  • ECJ 13.12.2005, C-411/03, SEVIC, ECLI:EU:C:2005:762 [cit. in para 19]

  • ECJ 23.02.2006, C-253/03, CLT-UFA, ECLI:EU:C:2006:129 [cit. in para 9]

  • ECJ 12.09.2006, C-196/04, Cadbury Schweppes, ECLI:EU:C:2006:544 [cit. in para 13]

  • ECJ 14.09.2006, C-386/04, Centro di Musicologia Walter Stauffer v Finanzamt München für Körperschaften, ECLI:EU:C:2006:568 [cit. in para 13]

  • ECJ 12.12.2006, C-446/04, Test Claimants in the FII Group Litigation v Commissioners of Inland Revenue, ECLI:EU:C:2006:774 [cit. in para 7]

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  • ECJ 25.10.2017, C-106/16, Polbud, ECLI:EU:C:2017:804 [cit. in para 17]

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Papadopoulos, T. (2021). Article 54 [Equality of Treatment of Companies and Firms]. In: Blanke, HJ., Mangiameli, S. (eds) Treaty on the Functioning of the European Union – A Commentary. Springer Commentaries on International and European Law. Springer, Cham. https://doi.org/10.1007/978-3-030-43511-0_55

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