Cartesio: A Step Forward in Interpreting the EC Freedom to Emigrate
Tax Notes International, Vol. 54, No. 6, pp. 493-499, May 11, 2009
8 Pages Posted: 13 Sep 2009 Last revised: 13 Apr 2010
Date Written: September 13, 2009
The European Court of Justice decided in Cartesio (C-210/06) on 16 December 2008 that a company incorporated under the law of a member state is not allowed to transfer its seat to another member state while continuing to be registered in the first member state. However, the ECJ held that a company registered in a member state has the right to transfer its seat to another member state if the company will be converted into a company governed under the law of the other member state. In the latter case, although a home member state must not restrict the EC freedom of establishment, it may combat the abuse of the EC freedom of establishment. The restriction may open an avenue for member states to limit the right of companies to transfer their seat to another member state to combat tax avoidance as well. The ECJ judgment made in Cartesio concerns the problem of whether the EC freedom of establishment is broad enough to include the right of companies to transfer their real seats (their head office) or their legal and real seats (their registered office and head office) from one member state to another.
Keywords: EC freedom of establishment, inbound and outbound establishments
JEL Classification: K34
Suggested Citation: Suggested Citation