European Law Monitor

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Freedom of Establishment

This is one of the fundamental provisions of EU and basically gives nationals of one Member State on the territory of another Member State the right to

  • Take up and pursue activities as self employed persons
  • Set up and manage companies under the conditions laid down for the nationals of the law of the country where such establishment is effected.
  • Nationals of any Member State established in the territory of any Member State may set up branches, agencies and subsidiaries.

The principal of freedom of establishment is far reaching, and in fulfilling this aim the EU has come out with a huge raft of legislation, particularly with regard to the mutual recognition of qualifications achieved in other Member States.

Over the years, a number of directives have been introduced specifying the mutual recognition requirements. In the 1970s and 80s this took the form of detailed harmonization affecting particular professions. However, in 1989, the Mutual Recognition Directive was passed. This related to diplomas issued at higher education level.

Mutual recognition of diplomas was further extended by Directive 92/51/EEC applicable to diplomas and similar qualifications. Under these Directives, individuals may still have to undertake transfer tests, particularly for professional practice. However, whilst the host Member State is not required to grant authorization to the applicant to pursue their profession, the competent authorities may not refuse permission only on the grounds of inadequate qualifications.