Tagged: OCT

Overseas Tax Holiday to Dutch Caribbean under the Free Movement of Capital spoiled by CJEU in TBG Limited-case

By Wessel Geursen

The free movement of capital provision of Art. 63 TFEU applies ratione loci ‘worldwide’: to both capital movements within EU’s internal market and to movements from the internal market to third countries (and vice versa). Or perhaps almost worldwide, since the question arises whether the free movement of capital also applies to the British, Danish, Dutch and French Overseas Countries and Territories (OCTs), which are not part of the internal market but associated with the EU?

In 2011, the CJEU decided in Case C-384/09 Prunus that Art. 63 TFEU also applied to the OCTs as if they were third countries; they are not third countries, since they áre part of the EU Member States (such as the Caribbean island of Curacao which is part of the Kingdom of the Netherlands, both constitutionally as under public international law; under EU-law, Curacao is an OCT).

Now, only three years later, the CJEU has decided otherwise in joined cases C-24/12 and C-27/12 X BV and TBG Limited. It came to the conclusion that not Art. 63 TFEU applies to the OCTs, but that a special capital movement provision which is contained in the OCT Association Decision applies in relation to the OCTs. This latter provision liberalises – in my view – ‘less’ than Art. 63 TFEU, since it ‘only’ applies to ‘direct investments in companies’, whereas Art. 63 TFEU also applies to (at least) 12 other categories of capital movements, such as investments in immovable property.[1]

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EU-Competition Law in the Overseas: some recent French precedents

Parts of the territory of some EU-Member States are situated overseas. Does EU-Competition law apply there? Some recent French precedents answer this question. According to Art. 52 TEU the EU-treaties apply to the 27 Member States mentioned therefore. EU-law applies, in principle, to the whole territory of those Member States including the overseas parts of their territory. In Art. 355 TFEU, the territorial scope of the EU-treaties is further specified. There are more or less three ‘categories’ or ‘degrees’ of territorial scope with regard to the overseas (for a more extensive and general description see Kochenov’s article).

  1. First, the Outermost Regions, where EU-law applies, with the possibility for temporary exceptions to the acquis of the EU; although the term ‘temporary’ is perhaps not the right word, since the derogations are constantly extended. The Outermost Regions consist of the French départements d’outre-mer, the Spanish Canary Islands and the Portuguese Azores and Madeira.
  2. Secondly, the Overseas Countries and Territories (OCT) , where EU-law applies, with the possibility for more permanent exceptions to the acquis of the Union. On the OCTs a special regime of EU-law is applicable: the association regime (of Part IV of the TFEU). The OCTs are listed in Annex II to the TFEU and consist of Danish Greenland, the French territoires and collectivités d’outre-mer, the Caribbean part of the Netherlands and most of 12 British Overseas Territories.
  3. And thirdly, custom made regimes for specific parts of some Member States, such as the Channel Islands and Åland Islands. In addition some custom made regimes can be found in the accessions treaties, such as Gibraltar and the Spanish territories Ceuta and Mellila, which are situated on the African continent.

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