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Social Services of General Interest in the EU pp 185–204Cite as

Freedom to Fund?: The Effects of the Internal Market Rules, with Particular Emphasis on Free Movement of Capital

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Part of the book series: Legal Issues of Services of General Interest ((LEGAL))

Abstract

Almost two decades after the introduction of free movement of capital as an internal market freedom directly comparable to those in place since the signature of the Treaty of Rome, it is timely to explore the impact which the free movement of capital can have on the mechanisms by which SSGIs are delivered. The provisions on free movement of capital constrain the choices which Member States can make where SSGI-providers are financed through the tax system, whether by relieving them of fiscal burdens imposed on other taxpayers or by inducing taxpayers to make contributions directly to them. At the other end of the financial cycle, they restrict the extent to which Member States can direct SSGI-providers to offer a wider or narrower range of services. While this study of how national rules on financing of, and spending by, SSGI-providers interact with the EU law focuses on the free movement of capital, it also examines the consequences of the rules regarding free movement of persons and freedom to provide services (whether on a permanent or temporary basis).

All views expressed are personal to the author.

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Notes

  1. 1.

    Those provisions were formerly 56–60 of the EC Treaty. For background, see Flynn 2002.

  2. 2.

    In the cases of Bulgaria, Estonia and Hungary, the relevant date is 31 December 1999.

  3. 3.

    The notion of capital is, in that context, opposed to that of ‘current payments’, which covers the entirety of those financial dealings relating to trade in goods and services between the residents of a country and those in the rest of the world.

  4. 4.

    CJEU, Case C-54/99 Association Église de Scientologie de Paris [2000] ECR I-1335, para 14.

  5. 5.

    CJEU, Case C-364/01 Barbier [2003] ECR I-15013, para 58. See also CJEU, Case C-256/06 Jäger [2008] ECR I-123, para 25; and CJEU, Case C-513/03 van Hilten-van der Heijden [2006] ECR I-1957, para 42.

  6. 6.

    CJEU, Joined Cases C-163, 165 and 250/94 Sanz de Lera [1995] ECR I-4821, para 18.

  7. 7.

    CJEU, Case C-439/97 Sandoz [1999] ECR I-7041, para 19.

  8. 8.

    CJEU, Case C-222/97 Trummer and Mayer [1999] ECR I-1661, paras 20 and 21.

  9. 9.

    CJEU, Case C-302/97 Konle [1999] ECR I-3099, para 22; CJEU, Joined Cases C-519/99 to C-524/99 and C-526/99 to C-540/99 Reisch [2002] ECR I-2157, para 30.

  10. 10.

    CJEU, Case C-222/97 Trummer and Mayer [1999] ECR I-1661, paras 20 and 21.

  11. 11.

    CJEU, Case C-452/01 Ospelt [2003] ECR I-9743, para 24.

  12. 12.

    CJEU, Case C-98/01 Commission v. United Kingdom [2003] ECR I-4641, paras 39–41.

  13. 13.

    CJEU, Case C-35/98 Verkooijen [2000] ECR I-4071, paras 27–30; CJEU, Case C-319/02 Maninen [2004] ECR I-7477.

  14. 14.

    CJEU, Case C-98/01 Commission v. United Kingdom [2003] ECR I-4641, para 43.

  15. 15.

    CJEU, Case C-35/98 Verkooijen [2000] ECR I-4071.

  16. 16.

    Ibid. para 34.

  17. 17.

    Ibid. para 35.

  18. 18.

    CJEU, Case C-101/05 A [2007] ECR I-11531.

  19. 19.

    CJEU, Case C-318/07 Persche [2009] ECR I-359.

  20. 20.

    Ibid. paras 25 and 29.

  21. 21.

    CJEU, Case C-364/01 Barbier [2003] ECR I-15013; CJEU, Case C-513/03 van Hilten-van der Heijden [2006] ECR I-1957; CJEU, Case C-11/07 Eckelkamp [2008] ECR I-6845; CJEU, Case C-43/07 Arens-Sikken [2008] ECR I-6887; CJEU, Case C-67/08 Block [2009] ECR I-883; CJEU, Case C-35/08 Grundstückgemeinschaft Busley v. Ciprian [2009] ECR I-9807; CJEU, Case C-510/08 Mattner [2010] ECR I-3553.

  22. 22.

    CJEU, Case C-318/07 Persche [2009] ECR I-359, para 38.

  23. 23.

    CJEU, Case C-318/07 Persche [2009] ECR I-359, paras 43 and 44.

  24. 24.

    CJEU, Case C-318/07 Persche [2009] ECR I-359, para 46.

  25. 25.

    CJEU, Case C-318/07 Persche [2009] ECR I-359, para 49.

  26. 26.

    CJEU, Case C-318/07 Persche [2009] ECR I-359, paras 52–60.

  27. 27.

    CJEU, Case C-318/07 Persche [2009] ECR I-359, paras 61–69.

  28. 28.

    CJEU, Case C-318/07 Persche [2009] ECR I-359, para 70.

  29. 29.

    CJEU, Case C-25/10 Missionswerk Werner Heuchelbach [decided on 10 February 2011, nyr].

  30. 30.

    CJEU, Case C-25/10 Missionswerk Werner Heuchelbach [decided on 10 February 2011, nyr], paras 16 and 17.

  31. 31.

    CJEU, Case C-25/10 Missionswerk Werner Heuchelbach [decided on 10 February 2011, nyr], paras 30 and 31.

  32. 32.

    CJEU, Case C-25/10 Missionswerk Werner Heuchelbach [decided on 10 February 2011, nyr], para 33.

  33. 33.

    CJEU, Case C-25/10 Missionswerk Werner Heuchelbach [decided on 10 February 2011, nyr], paras 35 and 36.

  34. 34.

    Equivalent issues were raised in infringement proceedings brought by the Commission against Austria in which Austria was alleged to be in breach of Article 63 TFEU because donations to training, research and educational institutions are tax deductible under its national law only in the case of institutions established within that Member State: CJEU, Case C-10/10 Commission v. Austria [decided on 16 June 2011, nyr]. In its judgment of 16 June 2011, the Court upheld the Commission's action.

  35. 35.

    CJEU, Case C-386/04 Centro di Musicologia Walter Stauffer [2006] ECR I-8203.

  36. 36.

    CJEU, Case C-386/04 Centro di Musicologia Walter Stauffer [2006] ECR I-8203, para 24.

  37. 37.

    CJEU, Case C-386/04 Centro di Musicologia Walter Stauffer [2006] ECR I-8203, paras 37 and 38.

  38. 38.

    That position had been taken in respect of an exemption laid down in the 6th VAT Directive (Council Directive 77/388/EEC of 17 May 1977 on the Harmonisation of the Laws of the Member States Relating to Turnover Taxes—Common System of Value-added Tax: Uniform Basis of Assessment, OJ 1977 L 145) for the supply of goods and services closely linked to the protection of children and young people by bodies recognised as charitable by the Member State concerned: CJEU, Case C-415/05 Kinderopvang Enschede [2006] ECR I-1385, para 23.

  39. 39.

    CJEU, Case C-386/04 Centro di Musicologia Walter Stauffer [2006] ECR I-8203, para 40.

  40. 40.

    CJEU, Case C-386/04 Centro di Musicologia Walter Stauffer [2006] ECR I-8203, paras 47–50.

  41. 41.

    CJEU, Case C-386/04 Centro di Musicologia Walter Stauffer [2006] ECR I-8203, paras 52–57.

  42. 42.

    CJEU, Case C-386/04 Centro di Musicologia Walter Stauffer [2006] ECR I-8203, para 59.

  43. 43.

    CJEU, Case C-386/04 Centro di Musicologia Walter Stauffer [2006] ECR I-8203, para 61.

  44. 44.

    CJEU, Case C-76/05 Schwarz and Gootjes-Schwarz [2007] ECR I-6849.

  45. 45.

    CJEU, Case C-76/05 Schwarz and Gootjes-Schwarz [2007] ECR I-6849, paras 35 and 47.

  46. 46.

    CJEU, Case C–56/09 Zanotti [2010] ECR I-4517.

  47. 47.

    CJEU, Case C-544/07 Rüffler [2009] ECR I-3389.

  48. 48.

    Ibid. paras 69 and 70.

  49. 49.

    Ibid. para 71.

  50. 50.

    CJEU, Case C-567/07 Woningstichtung Sint Servatius [2009] ECR I-9021.

  51. 51.

    Ibid. paras 22–24.

  52. 52.

    Ibid. para 28.

  53. 53.

    Ibid. para 30.

  54. 54.

    Ibid. para 34.

  55. 55.

    Equivalent issues are raised in pending infringement proceedings brought by the Commission against Poland in which Poland is alleged to be in breach of Article 63 TFEU because pension funds established in that Member State cannot invest more than 5% of their assets outside the country: CJEU, Case C-271/09 Commission v. Poland, pending. In his Opinion on the case of 14 April 2011, AG Jääskinen recommends that the Commission's action be upheld.

  56. 56.

    CJEU, Case C-179/90 Merci [1991] ECR I-5889.

  57. 57.

    CJEU, Case C-18/88 RTT v. GB-Inno-Atab [1991] ECR I-5973.

  58. 58.

    CJEU, Case C-463/00 Commission v. Spain [2003] ECR I-4581.

  59. 59.

    In the pending proceedings in CJEU, Case C-271/09 Commission v. Poland, the Member State invokes Article 106(2) TFEU but AG Jääskinen recommends that the defence be rejected. First, Poland regards the pension funds as emanations of the State and not as undertakings and so they cannot avail of Article 106(2) TFEU. Second, if they are undertakings, while their provision of pensions may be a service of general interest, their investments made to fund those pensions are no different from those of any entity providing financial services under a strict prudential regime, such as life insurance firms. Nothing in that latter activity requires a policy of national preference when investing funds.

References

  • Flynn L (2002) Coming of age: the free movement of capital case law 1993–2002, CMLRev 39 1

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Authors and Affiliations

  1. Member of the Legal Service of the European Commission, Brussels, Belgium

    Leo Flynn

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  1. Leo Flynn
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Correspondence to Leo Flynn .

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Editors and Affiliations

  1. , Faculty of Law, University of Copenhagen, Studiestræde 6, Copenhagen K, 1455, Denmark

    Ulla Neergaard

  2. , School of Law, University of Leicester, University Road, Leicester, LE1 7RH, United Kingdom

    Erika Szyszczak

  3. , Faculty of Law, Radboud University, Comeniuslaan 4, Nijmegen, 6525 HP, Netherlands

    Johan Willem van de Gronden

  4. , Fachbereich Rechtswissenschaft, Universität Erlangen-Nürnberg, Schillerstraße 1, Erlangen, 91054, Germany

    Markus Krajewski

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© 2013 T.M.C. ASSER PRESS, The Hague, The Netherlands, and the editors

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Flynn, L. (2013). Freedom to Fund?: The Effects of the Internal Market Rules, with Particular Emphasis on Free Movement of Capital. In: Neergaard, U., Szyszczak, E., van de Gronden, J., Krajewski, M. (eds) Social Services of General Interest in the EU. Legal Issues of Services of General Interest. T.M.C. Asser Press, The Hague, The Netherlands. https://doi.org/10.1007/978-90-6704-876-7_8

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