Freedom of establishment

 

The principle of freedom of establishment enables an economic operator (whether a person or a company) to carry on an economic activity in a stable and continuous way in one or more EEA States.

The freedom of establishment is one of the fundamental freedoms. It requires that there be no restrictions to the establishment of nationals of EEA States in the territory of any other EEA State.  It allows EEA nationals to set up undertakings, and take up and pursue self-employed activities in the territory of other EEA States on the same conditions as nationals of those States. Companies established in the EEA may set up agencies, branches or subsidiaries in other EEA States.

The freedom of establishment has some features in common with the freedom to provide services but the application of these two fundamental freedoms is mutually exclusive. The free movement of services applies to the temporary activities in another EEA State. The right of establishment, however, applies when self-employed persons and companies permanently move to and establish themselves in another EEA State or set up subsidiaries, branches and agencies there.

There are certain exceptions from the freedom of establishment in the EEA Agreement, in particular with regard to activities which are connected with the exercise of official authority. Different treatment of foreign nationals can also be accepted on grounds of public policy, public security and public health. In general, all other restrictions of the freedom of establishment have to be objectively justified in accordance with the case law of the Court of Justice.

The rules on the right of establishment are contained in: 

  • Article 31-34 of the EEA Agreement (Basic principles)
  • Annex VII (PDF)  to the EEA Agreement (Recognition of professional qualifications)
  • Annex VIII (PDF) to the EEA Agreement (Self employed persons, students, pensioners and economically non-active persons)
  • Annex IX (PDF) to the EEA Agreement (Financial services)
  • Annex XI (PDF)  (Electronic communication, audiovisual services and information society)

A guide to the case law (PDF) of the Court of Justice on the freedom of establishment (dating from 01/01/2001), European Commission


 

 




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