CELEX: 61991CJ0106
Auditors
Requirement of a professional establishment within a Member State

Grounds
1 By order of 12 March 1991, received at the Court on 3 April 1991, the Conseil d' État, Luxembourg, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation of the provisions of the EEC Treaty relating to freedom of movement for persons.
2 Those questions arose in proceedings between Mr Ramrath and the Luxembourg Minister of Justice ("the Minister"), in the presence of the Institut des Réviseurs d' Entreprises.
3 The proceedings relate to the withdrawal by the Minister in 1989 of Mr Ramrath' s authorization to practise as an auditor.
4 The profession of auditor is regulated in Luxembourg by the Law of 28 June 1984 (Mémorial 1984, p. 1346). Article 3 of that Law provides that
"The statutory audit of the documents referred to in Article 1 may be carried out only by persons authorized by the Minister of Justice.
(1) Natural persons must, in order to obtain authorization, satisfy the following conditions:
(a) they must be nationals of a Member State of the European Community ...
(b) provide proof of professional qualifications and integrity ...
(c) have a professional establishment in Luxembourg.
(2) Legal persons must, in order to obtain authorization, satisfy the conditions stated in paragraph 1, subparagraphs (a) and (c), and the following conditions:
(a) natural persons who carry out the statutory audit of the documents referred to in Article 1 on behalf of a legal person must satisfy the conditions prescribed in paragraph 1 above and be able to bind the legal person;
...
(3) The Minister of Justice shall withdraw authorization from persons who no longer satisfy one of the conditions listed above ..."
5 Under Article 6 of the aforesaid Law,
"The profession of auditor is not compatible with any activity likely to impair the professional independence of the auditor. He may not be employed except by a person authorized under Article 3."
6 At Community level, authorization to practise as an auditor is dealt with in the Eighth Council Directive 84/253/EEC of 10 April 1984 based on Article 54(3)(g) of the Treaty on the approval of persons responsible for carrying out the statutory audits of accounting documents (OJ 1984 L 126, p. 20, hereinafter referred to as "the Eighth Directive").
7 Article 3 of the Eighth Directive reads as follows:
"The authorities of a Member State shall grant approval only to persons of good repute who are not carrying on any activity which is incompatible, under the law of that Member State, with the statutory auditing of the documents referred to ..."
8 Articles 23, 24, 25 and 26 of Section III ("Professional integrity and independence") of the Eighth Directive read as follows:
"Article 23
Member States shall prescribe that persons approved for the statutory auditing of the documents referred to in Article 1(1) shall carry out such audits with professional integrity.
Article 24
Member States shall prescribe that such persons shall not carry out statutory audits which they have required if such persons are not independent in accordance with the law of the Member State which requires the audit.
Article 25
Articles 23 and 24 shall also apply to natural persons who satisfy the conditions imposed in Articles 3 to 19 and carry out the statutory audit of the documents referred to in Article 1(1) on behalf of a firm of auditors.
Article 26
Member States shall ensure that approved persons are liable to appropriate sanctions when they do not carry out audits in accordance with Articles 23, 24 and 25."
9 On 11 February 1985 the Minister granted Mr Ramrath authorization to practise as an auditor. Mr Ramrath was employed at the time by Société Civile Treuarbeit, established in Luxembourg (hereinafter "Treuarbeit Luxembourg"), a legal person which was likewise authorized to practise in Luxembourg.
10 In 1988, Mr Ramrath stated that he was employed by Treuarbeit AG, a company established in Duesseldorf, Germany (hereinafter "Treuarbeit Duesseldorf"), and that his professional establishment was in Duesseldorf. Mr Ramrath explained that he and Treuarbeit Duesseldorf were both authorized by the German authorities to practise as auditors, adding that Treuarbeit Duesseldorf had agreed not to exert any influence on him when Treuarbeit Luxembourg asked him to carry out audits in Luxembourg. Treuarbeit Luxembourg later stated that when Mr Ramrath worked in Luxembourg, he was in fact employed by Treuarbeit Luxembourg for the duration of that work.
11 On 19 May 1989 the Minister withdrew Mr Ramrath' s authorization on two grounds: first, he had admitted, by implication, in stating that his professional address was in Duesseldorf, that he no longer had a professional establishment in Luxembourg within the meaning of Article 3(1)(c) of the Law of 28 June 1984, and secondly, as an employee of Treuarbeit Duesseldorf he no longer fulfilled the condition of professional independence laid down by Article 6 of that Law.
12 In support of his appeal against the Minister' s decision, Mr Ramrath argued before the Luxembourg Conseil d' État inter alia that he was the victim of discrimination: under the Law of 28 June 1984 it was consistent with professional independence for an auditor to be employed by a legal person authorized as such by the Luxembourg authorities, whereas it was not permitted for an auditor to be employed by a legal person authorized to practise as an auditor by the authorities of another Member State, even if the legislation of that State laid down similar requirements of independence with regard to economic agents.
13 By judgment of 12 March 1991 the Luxembourg Conseil d' État stayed the proceedings pending a preliminary ruling by the Court of Justice on the following questions:
"1. (a) Do Article 52 et seq., or any other provisions of the Treaty and the implementing rules, permit the competent authorities of a Member State to deem it incompatible with the exercise by a natural person of the profession of auditor in that Member State for that person to be established as an auditor in another Member State?
and if not,
(b) May a Member State impose, on a person authorized to carry on the profession of auditor in another Member State in which that person also has a business establishment, requirements with regard to a permanent infrastructure for the performance of his work, minimum conditions with regard to actual presence in that Member State and the conditions necessary for ensuring compliance with the rules of professional conduct?
2. Do Article 52 et seq. of the EEC Treaty, or any other provisions of the Treaty and the implementing rules, permit the competent authorities of a Member State to grant authorizations to practise as auditors only to employees of a person so authorized under its national legislation, to the exclusion of employees of a person authorized under the legislation of another Member State?"
14 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the course of the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.
15 It is important to note, first, that at this stage of the proceedings the national court has not finally determined Mr Ramrath' s position from the point of view of the provisions of Community law applicable to him. The national court' s findings of fact and the selected provisions of Community law referred to in its questions raise various possibilities in that respect, depending on whether Mr Ramrath falls within the provisions of Community law on the basis of a professional activity carried on by him, or of employment sought by him, or as an employee covered by the provisions of Community law by reason of his professional activity.
16 His position might therefore come within the chapter of the Treaty on workers, more particularly Article 48, or within the chapters on the right of establishment and on services, in particular Articles 52, 56 and 59.
17 Furthermore, a comparison of those different provisions shows that they are based on the same principles as regards both the entry into and residence in the territory of the Member States of persons covered by Community law and also the prohibition of all discrimination against them on grounds of nationality.
18 The questions submitted by the Luxembourg Conseil d' État must be answered in the light of those considerations.
The first question
19 In this question, the national court seeks essentially to ascertain whether the Treaty provisions on the right of establishment preclude a Member State from prohibiting a person from becoming established in its territory and practising as an auditor there on the grounds that that person is established and authorized to practise in another Member State.
20 In that respect, according to the settled case-law of the Court (see, for example, the judgments in Case 107/83 Ordre des Avocats au Barreau de Paris v Klopp [1984] ECR 2971, paragraph 19; Case 143/87 Stanton and L' Étoile 1905 v Inasti [1988] ECR 3877, paragraph 11; and Joined Cases 154 and 155/87 RSVZ v Wolf and Others [1988] ECR 3897, paragraph 11), the right of establishment also entails the right to set up and maintain, subject to observance of the rules of professional practice, more than one place of work within the Community.
21 It follows that the right of establishment precludes a Member State from requiring a person practising a profession to have no more than one place of business within the Community.
22 Consequently, the answer to the first question must be that the Treaty provisions on the right of establishment preclude a Member State from prohibiting a person from becoming established in its territory and practising as an auditor there on the grounds that that person is established and authorized to practise in another Member State.
The second and third questions
23 These questions ask in substance whether the Treaty provisions on the free movement of persons preclude a Member State from making practice as an auditor in its territory by a person who is already authorized to practise that profession in another Member State subject to conditions relating to permanent professional infrastructure, actual presence in that Member State, supervision of compliance with the rules of professional conduct or, in the case of an employee, the fact that his principal employer is authorized to practise as an auditor within that State' s territory.
24 It is unnecessary to consider whether an auditor who wishes to carry out audits in another Member State has the status of an employee, a self-employed person or a provider of services, this being for the national court to decide, if at all; however, all the Treaty provisions relating to freedom of movement for persons must be examined in order to determine whether they preclude the imposition of conditions such as those laid down by the Law of 28 June 1984.
25 The principle of freedom of movement for workers, stated in Article 48 of the Treaty, gives every national of a Member State the right to enter the territory of another Member State and to reside there for the purposes referred to in that article. The same principle also guarantees every employee the right to take up temporary employment in another Member State. He cannot be denied that right on the grounds that he is already in paid employment in his State of origin or that the work performed in the other Member State is part-time work.
26 Furthermore, the Court held in the abovementioned Stanton and Wolf judgments, paragraph 12 in each case, that the considerations set out above in connection with the answer to the first question concerning the right of establishment are also valid in the case of an employee who is established in one Member State and wishes, in addition, to work in a self-employed capacity in another Member State.
27 Finally, freedom to provide services within the meaning of Article 59 et seq. of the Treaty entails the abolition of all forms of discrimination against a person providing a service by reason inter alia of the fact that he is established in a Member State other than that in which the service is to be provided (see the judgment in Case 279/80 Webb [1981] ECR 3305, paragraph 14).
28 It follows that Articles 48 and 59 of the Treaty are intended to facilitate the pursuit by Community nationals of occupational activities of all kinds throughout the Community, and preclude national legislation which might place Community nationals at a disadvantage when they wish to extend their activities beyond the territory of a single Member State (see the Stanton and Wolf judgments, cited above, paragraph 13 in each case).
29 However, in view of the special nature of certain professional activities, the imposition of specific requirements pursuant to the rules governing such activities cannot be considered incompatible with the Treaty. Nevertheless, as one of the fundamental principles of the Treaty, freedom of movement for persons may be restricted only by rules which are justified in the general interest and are applied to all persons and undertakings pursuing those activities in the territory of the State in question, in so far as that interest is not already safeguarded by the rules to which a Community national is subject in the Member State where he is established (see the judgment in Case C-180/89 Commission v Italy [1991] ECR I-709, paragraph 17).
30 In addition, such requirements must be objectively justified by the need to ensure that professional rules of conduct are complied with and that the interests which such rules are designed to safeguard are protected (ibid, paragraph 17).
31 It follows that such requirements may be regarded as compatible with the provisions on the free movement of persons only if it is shown that there are, with regard to the activity in question, compelling reasons in the general interest which justify restrictions on freedom of movement, that that interest is not already safeguarded by the rules of the State where the Community national is established, and that the same result cannot be achieved by less restrictive rules.
32 Accordingly, it must be examined whether the conditions imposed by the Member State in which the statutory audit of accounting documents is carried out, and relating to permanent professional infrastructure, actual presence in the territory of that Member State, compliance with the rules governing the profession of auditor or the employee status of an auditor authorized by the authorities of that State, are objectively necessary.
33 In the Minister' s view, it follows from the recitals in the preamble to the Eighth Directive and from Articles 3, 23, 24, 25 and 26 thereof that it is for each Member State to determine the criteria of independence and integrity for auditors. In that respect, supervision of compliance with the rules of professional practice by an auditor within a Member State' s territory presupposes that the auditor is under an obligation to have a permanent infrastructure and minimum presence within that State. Moreover, compliance with those rules by an employed auditor could be guaranteed only through his employer. Supervision by the authorities of compliance with such rules would be possible only at the level of the employer, who would therefore have to be approved by those authorities.
34 On this point, the provisions of the Eighth Directive leave to Member States inter alia the task of assessing in accordance with national law the independence and integrity of auditors practising within their territory.
35 A Member State may carry out that task by requiring compliance with rules of professional practice, justified by the public interest, relating to the integrity and independence of auditors and applying to all persons practising as auditors within the territory of that State. In that respect, requirements relating to the existence of infrastructure within the national territory and the auditor' s actual presence appear to be justified in order to safeguard that interest.
36 Such requirements are no longer objectively necessary, however, where the statutory audit of the accounting documents is carried out by an auditor who, while established and authorized to practise in another Member State, is temporarily in the service of a natural or legal person authorized to practise as an auditor by the authorities of the Member State in which that audit is carried out. In those circumstances, it is through that person that the Member State can ensure compliance with the rules by an auditor who from time to time carries out audits in its territory.
37 It follows from all those considerations that the answer to the second and third questions of the Luxembourg Conseil d' État must be that Articles 48 and 59 of the Treaty do not preclude a Member State from making practice as an auditor within its territory by a person who is already authorized to practise as an auditor in another Member State subject to conditions which are objectively necessary for ensuring compliance with the rules of professional practice and which relate to a permanent infrastructure for carrying out the work, actual presence in that Member State and supervision of compliance with the rules of professional conduct, unless compliance with such rules and conditions is already ensured through an auditor, whether a natural or legal person, who is established and authorized in that State' s territory and in whose service the person who intends to practise as an auditor is employed for the duration of the work.
Decision on costs
Costs
38 The costs incurred by the Luxembourg Government and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.
Operative part
On those grounds,
THE COURT (Sixth Chamber),
in answer to the questions referred to it by the Conseil d' État, Luxembourg, by order of 12 March 1991, hereby rules:
1. The Treaty provisions on the right of establishment preclude a Member State from prohibiting a person from becoming established on its territory and practising as an auditor there on the grounds that that person is established and authorized to practise in another Member State.
2. Articles 48 and 59 of the Treaty do not preclude a Member State from making practice as an auditor within its territory by a person who is already authorized to practise as an auditor in another Member State subject to conditions which are objectively necessary for ensuring compliance with the rules of professional practice and which relate to a permanent infrastructure for carrying out the work, actual presence in that Member State and supervision of compliance with the rules of professional conduct, unless compliance with such rules and conditions is already ensured through an auditor, whether a natural or legal person, who is established and authorized in that State' s territory and in whose service the person who intends to practise as an auditor is employed for the duration of the work.