In the European Union, fundamental freedoms are laid down in the Treaty on the Functioning of the European Union, also known as the TFEU. Supplementary to these freedoms, this Treaty rules to prevent state aid. Meijburg & Co’s specialists are here to help you with these issues.
Treaty freedoms in the TFEU
In general, the TFEU prohibits all forms of discrimination on the basis of nationality. Six treaty freedoms have arisen from this principle. They are the following:
- Free movement of citizens within the European Union
- Free movement of goods
- Free movement of workers
- Freedom of establishment (the freedom to choose one’s residence)
- Free movement of services
- Free movement of capital
The purpose of these freedoms is the creation of an internal market. An internal market is a market without internal borders or import and export restrictions. This makes trade, provision of services and the movement of persons and companies between different EU countries easier.
What constitutes a breach of the TFEU?
Your business or organisation has to comply with the TFEU. In some cases, it is not entirely clear whether you are in compliance with or have breached this treaty. The answers to the following questions help to determine whether a breach has occurred:
- Has either an obstruction or discrimination (either direct or indirect) occurred, contrary to Community law?
- If so, are there objective grounds on which the controversial measure can be justified?
Are you not entirely able to resolve the issue yourself? Then our professionals are here to help you.
Rules on state aid
Not only does the TFEU contain rules regarding the freedom of movement, but it also includes provisions concerning state aid. The latter are intended to prevent member states providing prohibited state aid, including aid in respect of tax. That’s because such aid can disrupt the internal market. Without these rules, by means of state aid, member states could hand certain companies an unfair advantage over competitors from other member states. This distorts competition, which in turn disrupts the functioning of the internal market.
Increased interest in state aid due to rulings
In recent years, the European Commission has instigated many investigations into tax rulings. As a result, interest in state aid has greatly increased. The focus has been on advanced tax rulings that individual member states have issued to tax subjects. The European Commission has frequently found that such rulings constitute prohibited state aid. Many of these cases are still under litigation before the European Court of Justice.
But when can we say that there is real evidence of prohibited state aid? A number of cumulative criteria need to be met, such as selectivity. If, for example, a court ultimately finds that there is clear evidence of prohibited state aid, then the European Commission is entitled to demand back the illegal aid from the member state in question.
Do you have questions about treaty freedoms under the TFEU or state aid?
Do you have questions about the TFEU treaty freedoms regime? Or do you want to know more about tax rulings and state aid (either legal or illegal)? Meijburg & Co’s team of professionals is here to help. We are specialised in EU law. Feel free to contact us for more information.