C-81/87

2. In that regard, the legislation of the Member States is very diverse, and that situation is aggravated by differences in the 4. Let me point out that the right of estab- content of the relevant concepts. In order to lishment, as laid down in Articles 52 to 58 overcome the resulting difficulties recourse of the Treaty, applies to 'companies or firms must be had to harmonization at formed in accordance with the law of a Community level or agreements concluded Member State and having their registered by the Member States. In any event, the office, central administration or principal function of the Court of Justice is to place of business within the Community'. 3 interpret Community law as it now stands. The right of establishment can manifest Thus the context of the case in which the itself in two different ways. 4 On the one Queen's Bench Division of the High Court hand, subsidiaries, branches or agencies may has referred questions to the Court for a be set up. That is known as secondary preliminary ruling, as it appears from the establishment. The Court, in its judgment of file, calls for certain general observations in 4 December 1986 (Commission v Federal order to attempt to reply to the questions. 1 — J. Schapira, G. le Tallec and J. B. Blaise: Droit européen des Those questions raise delicate problems affaires, PUF, Thémis, 1984, p. 534. concerning the interpretation of the 2 — See, for example, J. Renauld: Droit européen des sociétés, Brussels, Bruylant el Vander, 1969, p. 2.08; M. Colomès: Community provisions in regard to the right Le droit de l'établissement et des investissements dans la CEE, of establishment which have not until now Paris, J. Delmas, 1971, p. 78; F. Burrows: Free movement in European Community law, Oxford, Clarendon Press, 1987, been considered by the Court. What is p. 187. involved in this case is the claim by a 3 — Article 58, first paragraph. company to exercise the right of estab- 4 — See, for example, J. Temple Lang: 'The right of estab- lishment of companies and free movement of capiul in the lishment and, in particular, the conditions to European Economic Community', in W. R. Lafave and P. Hey (ed): International Trade, Investment and Organ- ization, University of Illinois Press, 1967, p. 302, in * Translated from the French. particular p. 303.

Establishment may also take the form of the setting-up of a new company or the transfer 6. The parties to the main proceedings take of the central management and control of entirely opposite views on the question the company, often regarded as its real head whether the transfer of the management of office. That is called 'primary estab- a company constitutes 'establishment' within lishment'. It has been said in that regard the meaning of the Treaty. According to that 'central management and control is not Daily Mail and General Trust, such a a legal concept but an economic one' 7and transfer comes within the scope of the right that it 'is located where the company organs of establishment. Arguing on the basis of take the decisions that are essential for the Articles 52 to 58 of the Treaty and the company's operations'. 8 General Programme for the abolition of restrictions on freedom of establishment, 15 5. The concept of establishment itself is the applicant in the main proceedings essentially an economic one. 9 It always considers that the location in a Member implies a genuine economic link. 10 The State of the central management and transfer of the central management and control of a company is sufficient to permit control of a company, understood by the existence of a 'real and continuous reference to 'criteria which are more link' 16 with the economy of that State to be economic than legal', 11 is covered by the presumed, and thus constitutes 'estab- right of establishment in so far as it is lishment' within the meaning of the Treaty. necessary to determine in concrete terms Conversely, the United Kingdom takes the 'the economic centre of gravity of the view that a change of residence by a undertaking'. 12 Thus 'the concept of cen- company does not constitute establishment. tral management and control. . . corre- It does not necessarily imply a change in the sponds . . . not merely to the physical company's economic activities, especially location of the principal administrative since a company wishing to conduct services but also, and perhaps principally, to economic activity in another Member State the place from which the company is can do so through secondary establishments. Finally, the Commission is of the opinion 5 — Case 205/84 [1986] ECR 3755. 6 — Paragraph 21. that it is for national law to determine 7 — M. Schwartz: Le droit d'établissement des sociétés commer- whether a company may transfer its ciales dans le traité instituant la Communauté économique residence without being wound up. It européenne, Geneva, Editions médecine et hygiène, 1963, p. 61. considers that Article 52 applies where 8 — U. Everling: The riebt of establishment in the Common national legislation permits a company to Market, Commerce Clearing House, 1964, p. 75. 9 — J. Renauld, op. cit., pp. 2.19 and 2.35. 10 — R. W. Harding: 'Freedom of establishment and the rights 13 — Ibid., p. 2.31. of companies', Current legal problems, 1963, p. 162, at 14 — B. Goldman and A. Lyon-Caen: Droit commercial européen, p. 163. Fourth Edition, Dalloz, 1983, p. 357. 11 — J. Renauld, op. cit., p. 2.43. 15 — OJ, English Special Edition, Second Series, IX, p. 7. 12 — Ibid., p. 2.44. 16 — Expression borrowed from the general programme, Title I.

transfer its residence without losing its even decisive. It might be necessary to take nationality. account of the residence of the principal managers, the place at which general meetings are held, the place at which 7. In my view, the problem should be administrative and accounting documents expressed in different terms. The concept of are kept and the place at which the central management is difficult to pin down. company's principal financial activities are Even where it designates the place at which carried on, in particular, the place at which the board of directors meets, it is not it operates a bank account. That list cannot

Such circumstances 8. In order to determine whether the may, in certain cases, constitute an indi- transfer of the central management and cation that what is involved is not genuine control of a company constitutes estab- establishment, in particular when the effect lishment within the meaning of the Treaty it of the transfer of the central management is is therefore necessary to take into to cause the company to cease to be subject consideration a range of factors. The place to legislation which would otherwise apply at which the management of the company to it. I believe that that conclusion can be meets is undoubtedly one of the foremost of drawn from the judgments of the Court in those factors, as is the place, normally the Van Binsbergen 20 and Knoors. 21 As a same, at which general policy decisions are general rule it appears that the national

THE QUEEN v TREASURY A N D COMMISSIONERS OF INLAND REVENUE, EX PARTE DAILY MAIL A N D GENERAL TRUST PLC

court may assess whether, in a specific case future activities if it had remained subject to and having regard to the circumstances, the tax laws of that State. there is a suggestion of abuse of a right or circumvention of the law and whether it should decide not to apply Community law.

14. The guidelines which I propose should 12. N o prior authorization may be required enable the Court to reply to the first and for the exercise of a fundamental freedom third questions referred to it by the Queen's laid down in the Treaty. Similarly, a Bench Division of the High Court. They Member State cannot prevent a company make a reply to the fourth question from exercising its right of establishment on unnecessary. The remaining question does the ground that such exercise entails a loss of revenue in respect of taxes which would 22 — J. Renauld, op. cit., p. 2.47. have been due on the basis of the company's 23 — This expression comes from J.-M. Rivier, op. cit., p. 15.

OPINION OF MR DARMON — CASE 81/87

not require any long discussion. Although nationals of Member States, they clearly the first paragraph of Article 58 provides cannot be placed entirely on the same that companies or firms are, for the footing; along with the United Kingdom purposes of the provisions of the Treaty on and the Commission, therefore, I consider freedom of establishment, to be treated in that Council Directive 73/148/EEC does the same way as natural persons who are not apply to legal persons.

15. Consequently, I propose that the Court should rule that:

(1) The transfer to another Member State of the central management of acompany may constitute a form of exercise of the right of establishment, subject to the assessment by the national court of any elements of fact showing whether or not such a transfer reflects a genuine integration of the said company into the economic life of the host Member State;