Correlation between freedom of capital movement and freedom of establishment in European Union law

Abstract

The study highlights the correlation between freedom of movement of capital and freedom of establishment in the law of the European Union, taking into the account modern case law of the Court of Justice of the European Union (CJEU). The author analyses the case law of the CJEU in the context of determining the scope of application of freedom of movement of capital and freedom of establishment in certaincases, including decisions made in 2021 and 2022. The author identifies the factorswhich are taken into account by the CJEU when determining whether to give preference to the application of a particular freedom. The author also highlights the approaches which have developed in the international and European law science to address thisissue. The author establishes that, based on the analysed case law, the CJEU assesses the main purpose, objective and impact of a national measure on the exercise of freedom of movement of capital and/or freedom of establishment. The Court may favour one freedom over the other based on these factors or consider both freedoms equally when assessing the compatibility of the measure with EU law. It often turns out that restrictive national tax measures may violate one or both of these fundamental freedoms of the EU’s internal market.The author concludes that guided exclusively by the provisions of the EU founding treaties on freedom of movement of capital (Article 63 TFEU) and freedom of establishment (Article 49 TFEU), it is often impossible to establish for certain which freedom will be applied to a particular economic activity of individuals and legalentities. In accordance with the case law of the CJEU, when deciding on the applicationof a particular freedom, in particular, the following factors should be taken into account: the presence of a “definite influence” of an owner of capital share (investor);the type of restriction on the freedoms of the EU internal market imposed by the EUMember State on the activities of entities engaged in economic activity. However, according to the author, there appears to be a lack of consistency indetermining the application of the freedom of movement of capital and/or freedom of establishment, which may be eliminated with the adoption of more judgments by the CJEU in the future and their further scientifi c understanding Key words: EU law, international economic law, international treaties, freemovement of capital, freedom of establishment, investment, company law, Court of Justice of the European Union, European integration.