Commission of the European Communities v Portuguese Republic.
Date: 2004-04-29
24. As regards the definition of the respective scopes of the principles of freedom to provide services and freedom of establishment, it should be noted that the key element is whether or not the economic operator is established in the Member State in which it offers the services in question (see Case C-55/94 Gebhard  [1995] ECR I-4165, paragraph 22). Where it is established (in a principal or secondary establishment) in the Member State in which it offers the service (Member State of destination or host Member State), it falls within the scope of the principle of freedom of establishment, as defined in Article 43 EC. On the other hand, where the economic operator is not established in that Member State of destination, it is a transfrontier service provider covered by the principle of freedom to provide services laid down in Article 49 EC.
25. In this context, the concept of establishment means that the operator offers its services on a stable and continuous basis from an established professional base in the Member State of destination (see Gebhard , paragraphs 25 and 28, and Case 205/84 Commission v Germany [1986] ECR 3755, paragraph 21). On the other hand, all services that are not offered on a stable and continuous basis from an established professional base in the Member State of destination constitute provision of services within the meaning of Article 49 EC.
26. The Court has thus found that services within the meaning of Article 49 EC may likewise be constituted by services which a business established in a Member State supplies with a greater or lesser degree of frequency or regularity, even over an extended period, to persons established in one or more other Member States, for example the giving of advice or information for remuneration. It observed that no provision of the Treaty affords a means of determining, in an abstract manner, the duration or frequency beyond which the supply of a service or of a certain type of service in another Member State can no longer be regarded as the provision of services within the meaning of the Treaty (Case C-215/01 Schnitzer  [2003] ECR I-0000, paragraphs 30 and 31).
33. In this respect it need only be stated that, in connection with rules similar to the Portuguese rules criticised by the Commission, and faced with similar defence arguments to those submitted by the Portuguese Government, the Court has ruled that the condition that a security firm must have its place of business in the Member State of destination directly negates the freedom to provide services in so far as it makes it impossible for undertakings established in other Member States to provide services in that State (Case C-355/98 Commission v Belgium [2000] ECR I-1221, paragraphs 27 to 30).
41. In this respect it should be noted that the condition requiring private security operators to be constituted as a legal person could hamper the activities of transfrontier service providers established in Member States other than the Portuguese Republic, where they lawfully provide similar services, and therefore constitutes a restriction within the meaning of Article 49 EC. Such a condition rules out any possibility for a transfrontier service provider that is a natural person to provide services in Portugal.
42. In addition, such a condition constitutes a restriction within the meaning of Article 43 EC, since it prevents Community operators that are natural persons from setting up a secondary establishment in Portugal (see, to that effect, Case 107/83 Klopp [1984] ECR 2971, paragraph 19, and Case 143/87 Stanton  [1988] ECR 3877, paragraph 11).
43. Such a condition cannot be justified on the ground of protection of creditors. Since there are means of attaining that objective which restrict freedom to provide services and freedom of establishment to a lesser degree, such as setting up a guarantee or taking out an insurance contract, that condition must be regarded as disproportionate.
44. In those circumstances, the second ground of complaint is well founded.
Third ground of complaint: incompatibility with Articles 43 EC and 49 EC of the condition requiring the economic operator to have a minimum share capital
Arguments of the parties
53. In this respect it should be noted that the condition requiring the economic operator to have a minimum share capital might hamper the activities of transfrontier service providers established in Member States other than the Portuguese Republic, where they lawfully provide similar services, and therefore constitutes a restriction within the meaning of Article 49 EC. Transfrontier service providers with a share capital lower than the minimum amount required by the Portuguese rules are prevented from providing their services in Portugal.
54. In addition, such a condition constitutes a restriction within the meaning of Article 43 EC (see Case C-167/01 Inspire Art  [2003] ECR I-0000, paragraphs 100 and 101). It prevents a Community operator whose share capital is lower than the minimum amount required by the Portuguese rules from setting up a subsidiary or branch in Portugal.
55. Such a condition cannot be justified on the ground of protection of creditors, in so far as there are means of attaining that objective which restrict the freedom to provide services and freedom of establishment to a lesser degree, such as setting up a guarantee or taking out an insurance contract.
56. The desire to prevent any attempt to circumvent the national rules cannot justify that condition either. The fact that a national of a Member State who wishes to set up a company chooses to form it in the Member State whose rules of company law seem to him the least restrictive and to set up branches in other Member States cannot, in itself, constitute an abuse of the right of establishment (see Case C-212/97 Centros [1999] ECR I-1459, paragraph 27).
57. In those circumstances, the third ground of complaint is well founded.
Fourth ground of complaint: incompatibility with Article 49 EC of the condition requiring the economic operator to obtain an authorisation from the Portuguese authorities, without account being taken of the evidence or guarantees already presented in the Member State of origin
Arguments of the parties
60. In this respect it need only be stated that, in connection with rules similar to the Portuguese rules criticised by the Commission, and faced with defence arguments similar to those submitted by the Portuguese Government, the Court has ruled that national legislation which makes the provision of certain services on national territory by an undertaking established in another Member State subject to the issue of an administrative authorisation constitutes a restriction on the freedom to provide services within the meaning of Article 49 EC. Such a restriction cannot be justified since, by excluding consideration of the obligations to which the transfrontier service provider is already subject in the Member State in which it is established, it goes in any event beyond what is necessary to attain the objective sought, namely to ensure close supervision of those activities ( Commission v Belgium , paragraphs 35 to 38).
66. The condition requiring employees of a private security operator to hold a professional certificate issued by the Portuguese authorities constitutes a restr iction within the meaning of Article 39 EC and 49 EC in so far as it does not take account of controls or verifications already carried out in the Member State of origin.