Category Archives: Freedom of establishment

Towards the extension of the right of establishment and the free provision of services to purely internal situations : Judgment of the CJEU in Grand Chamber in the Case C-31/16

C-360/15 & C-31/16
PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Preliminary rulingX and Visser Vastgoed BeleggingenCourt of Justice Grand ChamberJ. L. da Cruz VilaçaM. M. SzpunarFreedom of establishment of service providers
KeywordsReference for a preliminary ruling — Services in the internal market — Directive 2006/123/EC — Scope — Concept of ‘service’ — Retail trade in goods — Chapter III — Freedom of establishment of service providers — Applicability in purely internal situations — Article 15 — Requirements to be evaluated — Territorial restriction — Zoning plan prohibiting the activity of retail trade in goods other than bulky goods in geographical zones situated outside the city centre — Protection of the urban environment
Significant pointsThis case mainly concerned the interpretation of Directive 2006/123/EC on services in the internal market (“Services Directive”). In this judgment, two Dutch courts (the Supreme Court and the Council of State) referred preliminary questions to the Court of Justice, which decided to join the cases.

In the second case (C-31/16), which we will focus on, the preliminary ruling stemmed from litigation in which an undertaking contested the decision of a municipal council which established a zoning plan, exclusively reserving a commercial area for bulky goods businesses and prohibited other retail businesses in that area.

The first question addressed by the Court was whether the activity of retail trade in goods such as shoes and clothing constitutes a ‘service’ for the purposes of the Services Directive. The latter generally defines a service as ‘any self-employed economic activity, normally provided for remuneration’. In this regard, the Court noted that the retail trade activity fulfills this definition and is not excluded by any other provision of the directive. In addition, the Court observed that Article 57 TFEU mentions activities of a commercial character as services, and that a recital of the Services Directive mentions that distributive trade is included in its scope. Therefore, it was held that the activity of retail trade falls within the scope of the concept of ‘service’ within the meaning of the Services Directive.

The second and most important question addressed by the Court was whether or not the provisions on the freedom of establishment of service providers of the Services Directive apply to a purely domestic situation or whether a cross-border element is required.

In answering this question, the Court looked at the wording of those provisions, their context and the objective pursued by that directive of creating an internal market for services as well as the Parliament's preparatory work of that directive, to rule, that these provisions also apply to a situation where all the relevant elements are confined to a single Member State. In particular, the Court asserted that the scope of the Services directive is capable of extending, in certain cases, beyond what is strictly laid down in the provisions of the FEU Treaty relating to freedom of establishment and the free movement of services, in order to ensure that the effet utile of the specific legal framework that the EU legislature intended to establish in adopting Directive 2006/123 is not undermined.

Finally, the Court addressed a question regarding the compatibility of the zoning plan with the provisions of the Services Directive on authorisation schemes and requirements. Firstly, the Court ruled out the application of the provisions on authorisation schemes to the zoning plan at hand as they do not provide a procedure to obtain a formal or implied decision from a competent authority but lay down instead rules of general application. The Court assessed the zoning plan with regard to Article 15 of the directive, relating to requirements for the provision of services to be evaluated by a Member State. Under this provision, a territorial restriction limiting access to a service activity or the exercise of a service activity is not prohibited, provided that the conditions of non-discrimination, necessity and proportionality are satisfied.

Even though it is for the referring court to assess whether these conditions are fulfilled, the Court observed that the objective of protecting the urban environment may constitute an overriding reason relating to the public interest that may justify a territorial restriction as the one at hand.
NoteworthyThe Court’s ruling, delivered in Grand Chamber (!) that the freedom of establishment of service providers as well as the freedom of provision of services also apply to purely domestic situations is of remarkable importance.

Such step towards further integration of the internal market in the matters of right of establishment and free provision of services can be compared from a conceptual standpoint to the Lancry case law (Case C-363/93) where the prohibition of customs duty was extended to an import of goods entering a region of a Member State from another part of the same State.

The practical meaning of the judgment in the Case C-31/16 must not be underestimated. More economic operators could be entailed to challenge measures restricting their activity in purely internal situations, such as territorial restrictions. Put in another words, it is not excluded that most of the case law of the ECJ regarding the right of establishment and the free provision of services could become of relevance in purely national disputes involving measures from public bodies affecting access to market and/or the way economic operators can carry out their activities, … provided that the activities and the matter of law at stake fall within the ambit of the Services Directive. In this respect, it can be recalled that the Services Directive does not apply notably to financial services and the field of taxation.

CJEU judges that freedom to provide services prevents national legislation from imposing bans on online advertising for oral and dental care services

PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Reference for preliminary rulingCriminal proceedings
Luc Vanderborght
CJEU3rd Ch.L. Bay LarsenY. BotFreedom to provide services
KeywordsNational legislation prohibiting, in absolute terms, advertising for oral and dental care services — Article 56 TFUE — Freedom to provide services — Protection of public health — Proportionality — Directive 2000/31/EC — Information society service — Advertising via an internet site — Member of a regulated profession — Professional rules — Directive 2005/29/EC — Unfair trading practices — National provisions relating to health — National provisions governing regulated professions
Significant pointsBy its judgment of 4 May 2017, the Court of Justice of the European Union (CJEU) stated that national legislation imposing a general and absolute prohibition of any advertising relating to the provision of oral and dental care services, notably through any online advertising, is contrary to EU law.

The present case concerned a Belgian qualified dental practitioner (Mr Luc Vanderborght) who advertised his dental services to patients including patients from other Member States between March 2003 and January 2014. These advertisements consisted in (i) a billboard outside his practice, (ii) advertisements published on a website and (iii) advertisements in local newspapers.

The Belgian professional association of dentists filed a complaint against Mr Vanderborght arguing that he had violated Belgian law, which prohibits in absolute terms any advertising relating to oral and dental care. The Court of First Instance of Brussels, before which the case was brought, decided to refer preliminary questions to the CJEU.

The CJEU considered that the Belgian legislation at issue is compliant with Directive 2005/29 (the Unfair Commercial Practices Directive) which does not call into question the national rules relating to the health and safety aspects of products or the specific provisions governing regulated professions (para. 28 and 30). However, it stated that Directive 2000/31 (Directive on electronic commerce) and Article 56 TFEU (freedom to provide services) preclude the Belgian general and absolute prohibition of respectively online and off-line advertising.

1. Directive 2000/31 (para. 50)

The aim of Article 8(1) of Directive 2000/31 is to grant members of a regulated profession the opportunity to use information society services (such as online advertising) in order to promote their activities. However such commercial communications have to be compliant with professional rules regarding the independence, dignity and honour of the profession of dentist, as well as its professional secrecy and fairness towards clients and other members of the profession. Nevertheless, in order to respect the practical effect of EU legislation, these professional rules cannot impose a general and absolute prohibition of any form of online advertising (websites) intended for the promotion of the performed activity (para. 43 and 44).

2. Article 56 TFEU (para. 76)

The protection of public health and the dignity of the profession of dentist, being overriding reasons in the public interest (para. 67 and 68), are capable of justifying a restriction on the freedom to provide services. However, in the present case, the objectives could be attained through the use of less restrictive measures (para. 75). Being disproportionate to the legitimate objective, the general and absolute prohibition had to be declared incompatible with EU law.
Noteworthy1. The Vanderborght case is in line with the general trend of the CJEU to quash general and absolute prohibitions on advertising as being disproportionate to a legitimate objective.

2. However, it is also a remarkable illustration of this case law to the extent that it relates to advertising in favour of (para) health care services. Contrary to the CJEU milestone judgment “Société fiduciaire nationale d’expertise comptable” of 5 April 2011 (C-119/09), which relied upon Directive 2006/123 to preclude national legislation which totally prohibited any canvassing, in the present case this directive was not considered at all. Indeed, Article 2(2)(f) of the relevant directive, as supported by recital 22, excludes healthcare services from its scope. In any case, it remains still questionable if dental care services (including those for aesthetic reasons) are included in the designation “healthcare services” and fall or not within the ambit of the Directive 2006/123.

3. In this regard, the Vanderborght case constitutes an important judicial precedent against the general and absolute prohibition of any advertising. On the one hand, plaintiffs can invoke the Directive 2000/31 on electronic commerce in respect of online advertising. This legal basis issued from secondary legislation is of fundamental importance given to the foreseeable expansion of electronic commerce in the future. On the other hand, they can invoke the provisions of the Treaty regarding the freedoms of circulation which can provide them more rights than some Directives like the Directive 2006/123.

Article 49 TFEU – Transfer of losses sustained by a non-resident subsidiary







Judge Rapporteur

Advocate General


Infingement proceedings – Failure to fulfil obligations

European Commission


United kingdom of Great Britain and Northern Ireland


Grand Chamber

 M. K. Lenaerts

J. Kokott

Freedom of establishment


 Article 49 TFEU — Article 31 of the EEA Agreement — Corporation tax — Groups of companies — Group relief — Transfer of losses sustained by a non-resident subsidiary — Conditions — Date to be used for determining whether the losses of the non-resident subsidiary are definitive.

Significant points

The Commission submits that Section 119(4) of the Corporation Tax Act 2010 (CTA 2010), as amended after the Mark & Spencer CJEU’s judgment, does not meet the requirements entailed for the Member State concerned by paragraphs 55 and 56 of this judgment in so far as, under that provision, the determination that it is impossible for losses sustained by a subsidiary established in another Member State, or in a non-member State party to the EEA Agreement, to be taken into account in the future must be made ‘as at the time immediately after the end’ of the accounting period in which the losses were sustained. According to the Commission, that provision has the effect of making it virtually impossible for a resident parent company to obtain cross-border group relief and as a result constitutes a disproportionate obstacle to the freedom of establishment.According to the Commission, Section 119(4) allows the resident parent company to take such losses into account in only two situations: (i) where the legislation of the Member State of residence of the subsidiary concerned makes no provision for losses to be carried forward and (ii) where the subsidiary is put into liquidation before the end of the accounting period in which the loss was sustained.The Court stated that the first of those situations referred to by the Commission is irrelevant for the purposes of assessing the proportionality of Section 119(4) of the CTA 2010. It is settled law that losses sustained by a non-resident subsidiary cannot be characterised as definitive, as described in paragraph 55 of the judgment in Marks & Spencer, by dint of the fact that the Member State in which the subsidiary is resident precludes all possibility of losses being carried forward. In such a situation, the Member State in which the parent company is resident may not allow cross-border group relief without thereby infringing Article 49 TFEU.As regards the second situation referred to, the Court stated that the Commission has not established the truth of its assertion that Section 119(4) of the CTA 2010 requires the non-resident subsidiary to be put into liquidation before the end of the accounting period in which the losses are sustained in order for its resident parent company to be able to obtain cross-border group relief. In addition, it is clear from the wording of that provision that it does not, on any view, impose any requirement for the subsidiary concerned to be wound up before the end of the accounting period in which the losses are sustained.The Commission submits that losses sustained before 1 April 2006 are excluded from cross-border group relief, contrary to Article 49 TFEU and Article 31 of the EEA Agreement, inasmuch as the provisions laid down in the CTA 2010 concerning that relief apply only to losses sustained after 1 April 2006, the date on which the Finance Act 2006 entered into force.

Again, the Court stated that the Commission has not established the existence of situations in which cross-border group relief for losses sustained before 1 April 2006 was not granted.

Consequently, the Court dismissed the action in its entirety.


According to the judgment in Marks & Spencer, cross-border group relief is not required in principle by European Union law. Nevertheless, an exception applies in the case where losses incurred by a foreign subsidiary within the framework of foreign taxation cannot be taken into account either for past or for future tax years.

The Advocate General seems to plead for the abandonment of the Marks & Spencer exception due to its contradictions in relation to the Court’s other case-law on tax matters, which provides for a clear demarcation of the fiscal powers of the Member States. The Marks & Spencer exception does not either satisfy the requirement of legal certainty, but makes investment conditions unforeseeable and liable to give rise to disputes