Legal issue: The right of the body corporate to transfer its seat to another Member State without changing the applicable law.

Background of the case: Daily Mail was essentially a tax-law case. Daily Mail plc, a company incorporated in the UK, wanted to move its de facto head office (and thereby tax residence) to the Netherlands in order to avoid the UK tax of capital gains, while planning at the same time to remain a company subject to the UK company law. The UK Treasury Department refused to give consent to the transfer of company seat, such permission being necessary under the UK law. Following the refusal of the UK Treasury Department to allow the transfer of the de facto head office, Daily Mail challenged it in English courts. The High Court referred to the ECJ the question as to whether Articles 43 and 48 of the EC Treaty preclude a Member State from obstructing such transfer of the de facto head office from a Member State.

The decision: The ECJ concluded that this issue falls outside the scope of the Treaty provisions on the freedom of establishment. The Community law, properly construed, confers no right on a company incorporated under the legislation of a Member State and having its registered office there to transfer its central management and control to another Member State. So, this issue may be resolved differently one way or another by national laws.

Significance and implications: The decision creates the basis of the so-called ‘Daily Mail doctrine’ which stands until present day. In late 2008 the Daily Mail judgment was confirmed (arguably, with some amendment) by the Cartesio judgment.