Opinion of Advocate General Wathelet delivered on 27 September 2018

A. The AFMP

3. According to the preamble to the AFMP, the contracting parties ‘resolved to bring about the free movement of persons between them on the basis of the rules applying in the European [Union]’.

4. Article 1 of the AFMP provides that:

‘The objective of this Agreement, for the benefit of nationals of the Member States of the [European Union] and Switzerland, is:

1. to accord a right of entry, residence, access to work as employed persons, establishment on a self-employed basis and the right to stay in the territory of the Contracting Parties.

…’

5. Article 4 of the AFMP, headed ‘Right of residence and access to an economic activity’, states that the right of residence and access to an economic activity is to be guaranteed … in accordance with the provisions of Annex I.

6. Article 16 of the AFMP, headed ‘Reference to [EU] law’, provides that:

‘1.

In order to attain the objectives pursued by this Agreement, the Contracting Parties shall take all measures necessary to ensure that rights and obligations equivalent to those contained in the legal acts of the European [Union] to which reference is made are applied in relations between them.

2.

Insofar as the application of this Agreement involves concepts of [EU] law, account shall be taken of the relevant case-law of the Court of Justice of the European [Union] prior to the date of its signature. Case-law after that date shall be brought to Switzerland’s attention. To ensure that the Agreement works properly, the Joint Committee shall, at the request of either Contracting Party, determine the implications of such case-law.’

7. Article 21(2) and (3) of the AFMP, that article being headed ‘Relationship to bilateral agreements on double taxation’, provides:

‘2.

No provision of this Agreement may be interpreted in such a way as to prevent the Contracting Parties from distinguishing, when applying the relevant provisions of their fiscal legislation, between taxpayers whose situations are not comparable, especially as regards their place of residence.

3.

No provision of this Agreement shall prevent the Contracting Parties from adopting or applying measures to ensure the imposition, payment and effective recovery of taxes or to forestall tax evasion under their national tax legislation or agreements aimed at preventing double taxation between Switzerland, of the one part, and one or more Member States of the European [Union], of the other part, or any other tax arrangements.’

8. Annex I to the AFMP is devoted to free movement of persons.

9. Article 2 of Annex I to the AFMP, headed ‘Residence and economic activity’, provides:

‘1.

Without prejudice to the provisions for the transitional period, which are laid down in Article 10 of this Agreement and Chapter VII of this Annex, nationals of a Contracting Party shall have the right to reside and pursue an economic activity in the territory of the other Contracting Party under the procedures laid down in Chapters II to IV. ...’

10. Article 9(2) of Annex I to the AFMP, that article being headed ‘Equal treatment’, provides as follows:

‘An employed person and the members of his family … shall enjoy the same tax concessions and welfare benefits as national employed persons and members of their family.’

11. Chapter III of Annex I to the AFMP, which concerns self-employed persons, contains Articles 12 to 16 of that annex. Article 12 of that annex, headed ‘Rules regarding residence’, is worded as follows:

‘1.

A national of a Contracting Party wishing to become established in the territory of another Contracting Party in order to pursue a self-employed activity (hereinafter referred to as a “self-employed person”) shall receive a residence permit valid for a period of at least five years from its date of issue, provided that he produces evidence to the competent national authorities that he is established or wishes to become so.

…’

12. Article 15 of Annex I to the AFMP, headed ‘Equal treatment’, provides:

‘1.

As regards access to a self-employed activity and the pursuit thereof, a self-employed worker shall be afforded no less favourable treatment in the host country than that accorded to its own nationals.

2.

The provisions of Article 9 of this Annex shall apply mutatis mutandis to the self-employed persons referred to in this Chapter.’

B. The Agreement between the Swiss Confederation and the Federal Republic of Germany for the avoidance of double taxation with respect to taxes on income and capital

13. On 11 August 1971, the Swiss Confederation and the Federal Republic of Germany concluded an agreement for the avoidance of double taxation with respect to taxes on income and capital (‘the German-Swiss DTA’).⁽³⁾

14. Article 4 of the German-Swiss DTA provides:

‘1.

For the purposes of this Agreement, the expression “person who is a resident of a Contracting State” means any person who, under the law of that State, is there subject to unlimited tax liability.

…’

15. Article 13 of the German-Swiss DTA provides:

‘1.

Gains accruing from the disposal of immovable property, as defined in Article 6(2), shall be taxable in the Contracting State where that property is situated.

2.

Gains accruing from the disposal of movable property that forms part of the assets of a permanent establishment that an undertaking of a Contracting State has in the other Contracting State, or moveable property that is part of fixed facilities available to a resident of one of the Contracting States in the other Contracting State for the exercise of a profession, including such gains as accrue from the complete disposal of the permanent establishment (alone or with the whole undertaking) or of those fixed facilities, shall be taxable in that other State. …

3.

Gains from the disposal of any property other than that referred to in paragraphs 1 and 2 shall be taxable only in the Contracting State in which the transferor is resident.

4.

Notwithstanding the provisions of paragraph 3, gains from the full or partial disposal of a substantial shareholding in a company shall be taxable in the Contracting State in which the company is resident, if the transferor is a natural person, resident in the other Contracting State,

1. who, within the five years preceding the disposal, has been a resident of the first Contracting State for the purposes of Article 4 and

2. who is not subject to any capital gains tax in the other State.

There is a substantial holding where the transferor directly or indirectly owned more than a quarter of the company’s capital.

5.

If a Contracting State, on the departure of a natural person who is a resident of that State, taxes the capital gains accruing from a substantial shareholding in a company which is resident in that State, the other Contracting State, when taxing the gain accruing from the subsequent disposal of the shareholding in accordance with the provisions of paragraph 3, shall in order to calculate the amount of the gain on disposal deem the cost of acquisition to be the amount that the first State accepted as the disposal proceeds at the time of departure.’

16. According to Article 27 of the German-Swiss DTA:

‘1.

The competent authorities of the Contracting States shall exchange any information that may be reasonably required to apply the provisions of this Agreement or for the administration or enforcement of domestic legislation relating to taxes of any kind and description that are levied on behalf of the Contracting States or their “Länder”, cantons, districts, municipalities or groups of municipalities, in so far as the taxation imposed is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

…

3.

In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

1. to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

2. to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

3. to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.

4.

If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information-gathering powers to obtain the requested information, even if it does not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3, unless those limitations are liable to prevent a Contracting State from supplying information solely because it has no domestic interest in such information.

5.

In no case shall the provisions of paragraph 3 be construed so as to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because that information relates to ownership interests in a person. In order to obtain the information mentioned in this paragraph, notwithstanding paragraph 3 or any contrary provision of domestic law, the tax authorities of the Contracting State in which enforcement is sought shall have the procedural powers to allow them to obtain the information mentioned in this paragraph in so far as is necessary to fulfil their obligations under this paragraph.’

C. German law

17. In accordance with Paragraph 1(1) of the Einkommensteuergesetz (Law on income tax; BGB1. 2009 I S., p. 3366 and 3862; ‘the EStG’), natural persons who have their permanent or habitual residence in national territory are subject to unlimited income tax liability.

18. Under Paragraph 17(1) and (2) of the EStG:

‘1.

A gain from a disposal of shares in a company also constitutes income from a professional activity where the transferor has held, either directly or indirectly, at least a 1% share of the company’s capital within the preceding five years. …

2.

The difference, after deduction of the sale costs, between the sale price and the cost of acquisition is considered to be a capital gain within the meaning of subparagraph 1. …’

19. Paragraph 6 of the Außensteuergesetz (Law on foreign transaction tax; ‘the AStG’) provides:

‘1.

In the case of a natural person who has been subject to unlimited tax liability for at least ten years in total under Paragraph 1(1) of the [EStG] and where that person’s unlimited liability ends with the transfer of his permanent or habitual residence, Paragraph 17 of the [EStG] shall be applicable to the shares referred to in the first sentence of Paragraph 17(1) of the [EStG] when the unlimited liability comes to an end, including in the absence of disposal, if the requirements of that provision concerning those shares are also met at that time.

…

4.

Subject to [Paragraph 6](5) of the [AStG], the income tax due under [Paragraph 6](1) of the [AStG] must, upon request, be deferred and paid in instalments at regular intervals over a maximum period of five years from the due date of first payment, subject to the provision of a bank guarantee, in so far as immediate recovery would have consequences which would be difficult for the taxpayer to bear. The deferral arrangement shall end if, during the deferral period, the shares are sold or covertly transferred to a company, as provided for in Paragraph 17(1) of the [EStG], or if one of the situations referred to in Paragraph 17(4) of the [EStG] arises. …

5.

If the taxpayer referred to in the first sentence of [Paragraph 6](1)of [the AStG] is a national of a Member State of the European Union or of another State to which the Agreement on the European Economic Area applies …, and, after the end of the unlimited tax liability, he is subject to tax in one of those States (host State) comparable to German income tax liability, the tax payable under [Paragraph 6](1) of [the AStG] shall be deferred without interest and without the provision of a bank guarantee. This measure is subject to the condition that administrative support and mutual assistance in the recovery of tax between the Federal Republic of Germany and that State are guaranteed. …

The deferral shall end in the following cases:

1. if the taxpayer or his legal successor within the meaning of the third sentence of subparagraph 1, sells the shares or covertly transfers them to a company, in accordance with the first sentence of Article 17(1) of the [EStG], or if one of the situations referred to in Paragraph 17(4) of the [EStG] arises;

2. if the shares are transferred to a person not subject to unlimited tax liability, who is not subject to tax comparable to unlimited German income tax liability in a Member State of the European Union or in a State which is party to the EEA agreement;

3. if the shares are subject to a levy or another transaction which, under national law, means that the going-concern value or market value are taken into account;

4. if the taxpayer or his legal successor within the meaning of the third sentence of subparagraph 1, is no longer subject to tax liability within the meaning of the first sentence because he has transferred his domicile or habitual residence.’

A. Summary of the arguments of the parties

30. Mr Wächtler considers that the AFMP grants him a right of establishment comparable to that guaranteed within the European Union by Article 49 TFEU. On that basis, he disputes the compatibility of the taxation of latent, unrealised capital gains, without the possibility of deferral, with the case-law of the Court in that regard.

31. In a similar vein, the Commission considers that Mr Wächtler is self-employed within the meaning of Article 12 of Annex I to the AFMP and that, therefore, taxing him constitutes a disproportionate restriction on the right of establishment conferred on him by that provision.

32. By contrast, the German Government, supported by the Spanish and Austrian Governments, considers that the AFMP extends the freedom of establishment, established by the FEU Treaty, to relations between the European Union and the Swiss Confederation only in part and within the bounds of the specific terms of the AFMP.

33. In that regard, the German Government is of the opinion that Mr Wächtler’s establishment and management of a Swiss company do not fall within the scope of the AFMP, since that activity does not constitute a self-employed activity within the meaning of Article 12 of Annex I to the AFMP.

34. Moreover, according to the German Government, the tax at issue in the case in the main proceedings has not infringed the rights which the AFMP confers on Mr Wächtler as an employed worker.

B. The scope ratione personae of the AFMP: is Mr Wächtler employed or self-employed?

35. Article 1(a) of the AFMP accords to nationals of the EU and Switzerland a right of entry, residence, access to work as employed persons, establishment on a self-employed basis and the right to stay in the territory of the contracting parties.

36. It should therefore be established whether Mr Wächtler comes within the scope ratione personae of the AFMP as an employed person or a self-employed person.⁽⁴⁾

37. According to the referring court, his professional activity should be classified as employment, since, as managing director of his company, Mr Wächtler receives remuneration.

38. I do not agree with that premiss. On the contrary, like the Austrian Government and the Commission, I take the view that, despite the payment of remuneration in return for the management services he provides, Mr Wächtler is not in a relationship of subordination which characterises employment relationships.⁽⁵⁾

39. As is apparent from the request for a preliminary ruling, Mr Wächtler is a self-employed entrepreneur in the field of IT consultancy. The fact that he decided to structure his economic activity by establishing a company and receiving remuneration for managing that company does not alter the fact that he is a 50% shareholder in that company and does not have a relationship of subordination to it.⁽⁶⁾

40. Moreover, the German legislation at issue in the case in the main proceedings, on the basis of which the German tax authority taxed the unrealised capital gains with respect to his shareholding in his company, does not concern him as an employed person, but as a shareholder in that company.

41. However, according to the German Government, supported by the Spanish and Austrian Governments, the management of shareholdings in a company is not covered by the concept of ‘self-employed activity’ within the meaning of Article 12(1) of Annex I to the AFMP.

42. That government relies, in this connection, on points 67 to 71 of the Opinion of Advocate General Mengozzi, in Picart (C‑355/16, EU:C:2017:610 ), who takes the view that, as is apparent from the second paragraph of Article 49 TFEU, since the activity of setting up and managing undertakings is different from the pursuit of activities as a self-employed person, it does not follow from the context and the purpose of the AFMP that the contracting parties intended to confer on the concept of ‘self-employed’ person a meaning other than its ordinary meaning, namely a person pursuing a self-employed economic activity.⁽⁷⁾

43. In my opinion, that argument is ineffective, since the activity pursued by Mr Wächtler in Switzerland is not a shareholding-management activity such as that pursued by Mr Christian Picart. Unlike the latter, Mr Wächtler is not an investor or a mere silent shareholder, but a self-employed entrepreneur whose economic activity consists of the provision of IT consultancy services through a company.

44. That assessment is borne out by an interpretation of the AFMP in accordance with the rule of customary international law reflected by Article 31 of the Vienna Convention on the Law of Treaties,⁽⁸⁾ which is binding on the EU institutions and is part of the EU legal order.⁽⁹⁾ According to that rule, an international agreement must be interpreted in good faith in accordance with the ordinary meaning to be given to its terms in their context and in the light of its object and purpose.⁽¹⁰⁾ Moreover, according to that provision, a special meaning is to be given to a term if it is established that the parties so intended.⁽¹¹⁾

45. Although Article 12(1) of Annex I to the AFMP states that a self-employed person is ‘a national of a Contracting Party wishing to become established in the territory of another Contracting Party in order to pursue a self-employed activity’, it is apparent from the preamble and from Articles 1(a) and 16(2) of the AFMP that the latter ‘is intended to achieve, in favour of EU nationals and those of the Swiss Confederation, the free movement of persons on the territory of the Contracting Parties to that agreement based on the rules applying in the European Union, the terms of which must be interpreted in accordance with the case-law of the Court of Justice’.⁽¹²⁾

46. As regards Article 49 TFEU, and before the AFMP was signed, the Court held that the expression ‘activity as a self-employed person’ had to be understood to include the activities of a natural person acting as director of a company of which he is the sole shareholder or a director of a company in which he does not own any shares.⁽¹³⁾ I see no reason to depart from that approach as regards the activities of Mr Wächtler, who is the director of MWK-Consulting and holds 50% of its shares.

47. Moreover, an interpretation to the contrary, to the effect that Mr Wächtler is not ‘self-employed’ and is therefore excluded from the scope of the AFMP, is incompatible with the object and purpose of the AFMP and is not a good faith interpretation since it renders the AFMP redundant.

48. On the one hand, by making a distinction between employed persons,⁽¹⁴⁾ self-employed persons,⁽¹⁵⁾ persons providing services⁽¹⁶⁾ and persons not pursuing an economic activity⁽¹⁷⁾ and, on the other, by placing people into each of those broad categories,⁽¹⁸⁾ the AFMP seeks to include all the categories of natural persons covered by the right of free movement of persons and freedom of establishment under EU law. Refusing to recognise Mr Wächtler as a self-employed person excludes him from the four categories of persons covered by the AFMP.

49. That interpretation is borne out by the AFMP negotiation documents submitted by the Commission at the Court’s request.

50. As far as the Swiss Confederation is concerned, it is clear from its draft agreement of 21 April 1995 that the agreement applies to all gainful activities and accords to nationals of each contracting party the right to pursue such activities on the territory of the other contracting party. Those gainful activities were divided only into those of employed persons and those of self-employed persons, although at the start of the negotiations, the Swiss approach was more detailed, distinguishing between seasonal workers, frontier workers, other employed persons, self-employed persons, service providers and non-working persons; a distinction which the European Union accepted only as a ‘reflection point’.⁽¹⁹⁾

51. On 31 October 1994, on behalf of the European Union and its Member States, the Council adopted a negotiating mandate for a bilateral agreement with Switzerland on the free movement of persons, which stated that that agreement was to provide for the enforcement of the acquis communautaire in full in the relevant field, including, inter alia, the free movement of workers and the right of establishment.

52. Indeed, during the negotiations, the terms ‘activité lucrative’ (‘gainful activity’) were gradually replaced by the terms ‘activité économique salariée et non salariée’ (‘work as employed and self-employed persons’)⁽²⁰⁾ before the adoption of the terms ‘activité économique salariée’ (‘work as employed persons’) and ‘droit d’établissement en tant qu’indépendant’ (‘right of … establishment on a self-employed basis’) in Article 1(a) of the AFMP.

53. Moreover, the original definition of a self-employed person as ‘a national of a Contracting Party wishing to become established in the territory of another Contracting Party in order to pursue une activité indépendante’⁽²¹⁾ was replaced by the definition ‘a national of a Contracting Party wishing to become established in the territory of another Contracting Party in order to pursue uneactivité non salariée’,⁽²²⁾ which was ultimately used in Article 12(1) of Annex I to the AFMP.

54. In my opinion, those factors show that, although the parties defined activity pursued by indépendants as an activité non salariée, their common purpose was to cover all economic or gainful activities, with the exception of the provision of services, pursued by a natural person not covered by the concept of ‘salarié’ (employed person), which is why the wording ‘activité indépendante’ was replaced with the wording ‘activité non salariée’. In that sense, even an investor is covered by the scope of application of the AFMP as a person pursuing a self-employed activity.

55. It is therefore hardly surprising that, when submitting the AFMP to the Swiss Federal Assembly, the Federal Council described the content of that agreement concerning self-employed persons by reference to EU law, in the following terms:

‘The principles of the free movement of persons — as already applied in the [European Union] — will, in principle, also apply in Switzerland upon expiry of the transitional period …

The free movement of persons — already defined in Articles 48 [et seq.] [of the] EEC [Treaty] — applies both to employed persons and self-employed persons; in other words, all EU nationals may freely choose their place of work and residence in the European Union and enjoy the same rights in the European Union as EU nationals. The right of residence is, however, subject to the pursuit of a gainful activity on an employed or self-employed basis …

…

In the acquis communautaire, self-employed persons who establish themselves in a Member State or supply cross-border services are also entitled to freedom of movement. Freedom of establishment includes the right to take up and pursue a gainful activity on a self-employed basis, to create and to manage undertakings under the conditions laid down for its own nationals by the law of the country where such establishment is effected. Both employed persons and self-employed persons have a right to family reunification.

...’⁽²³⁾

56. Finally, if the contracting parties wanted to exclude certain self-employed persons from the scope of the AFMP based on the activities they pursued or their organisation, I think that, given the broad view they adopted at the start of the negotiations, the documents presented by the Commission would have revealed that, at some point, a more restrictive approach was adopted. However, the documents submitted give no such impression.

57. Therefore, I take the view that Mr Wächtler comes within the scope of the AFMP as a self-employed person.

C. Whether there is a restriction on the right of establishment conferred on self-employed persons by the AFMP

58. Under Article 1(a) of the AFMP, one of the objectives is to accord a right of establishment on a self-employed basis to nationals of the Member States and Switzerland. Article 4 of the AFMP provides that the detailed rules governing the exercise of that right are set out in Annex I to that agreement.

59. The first subparagraph of Article 2(1) of Annex I to the AFMP confers on the nationals of a contracting party the right to reside and pursue an economic activity in the territory of the other contracting party under the procedures laid down in Chapter III, as regards self-employed persons.

60. Article 15 of Annex I to the AFMP provides that, as regards access to a self-employed activity and the pursuit thereof, a self-employed worker is to be afforded no less favourable treatment in the host country than that afforded to its own nationals, and that the provisions of Article 9 of that annex concerning employed workers are to apply mutatis mutandis to self-employed persons. Under paragraph 2 of that article, a self-employed person is to enjoy, in the host country, the same tax advantages as self-employed persons pursuing their activity in that country and residing there.⁽²⁴⁾

61. The question is therefore whether the AFMP prohibits, in principle, any restriction on the freedom of establishment of self-employed persons, including restrictions imposed by the country of origin, despite the fact that the substantive provisions thereof, in particular Articles 9(2) and Article 15(1) of Annex I expressly mention only the host country.

62. It should be noted from the outset that, as the Court has pointed out, it is clear from the preamble and from Articles 1(a) and 16(2) of the AFMP that ‘the latter is intended to achieve, in favour of EU nationals and those of the Swiss Confederation, the free movement of persons on the territory of the Contracting Parties to that agreement based on the rules applying in the European Union, the terms of which must be interpreted in accordance with the case-law of the Court of Justice’.⁽²⁵⁾

63. Therefore, while the interpretation given to the provisions of EU law concerning the internal market of the European Union cannot automatically be applied to the interpretation of the AFMP, that is without prejudice to the express provisions to that effect laid down by the agreement itself,⁽²⁶⁾ such as Article 16(2), according to which the concept of the ‘right of establishment’, which is referred to in Article 1(a) of the AFMP, is to be interpreted in accordance with the Court’s existing case-law at the time that agreement was signed.

64. As early as 1988, the Court had held, in relation to the provisions of the EEC Treaty guaranteeing freedom of establishment, that ‘even though those provisions are directed mainly to ensuring that foreign nationals and companies are treated in the host Member State in the same way as nationals of that State, they also prohibit the Member State of origin from hindering the establishment in another Member State of one of its nationals ...’.⁽²⁷⁾

65. In giving the AFMP the objective, inter alia, of guaranteeing the right of establishment as a self-employed person, the contracting parties were well aware that that right conferred rights which could be relied on both in the host State and against the country of origin, and did not expressly provide that the rights conferred by that agreement could be relied on only in the host country.

66. In that regard, if the AFMP is interpreted in conformity with Article 31 of the Vienna Convention on the Law of Treaties, namely, in good faith and taking into account not only the ordinary meaning to be given to its terms in their context, but also its object and purpose, this leads to the conclusion that the country of origin cannot adopt restrictive measures which deter the exercise of the right of establishment. Indeed, such measures would clearly undermine ‘the whole spirit’⁽²⁸⁾ of the AFMP.

67. Indeed, ‘[the free movement of persons established by the AFMP] would be impeded if a national of a Contracting Party were to be placed at a disadvantage in his country of origin solely for having exercised his right of movement’.⁽²⁹⁾ If that applies to a person returning to his country of origin after having exercised that right, it applies a fortiori to a person who wishes to exercise that right in order to become established in another State, but is prevented from doing so by his State of origin.

68. Consequently, the principle of equal treatment, laid down in several provisions of the AFMP, including in particular Article 9(2) of Annex I, to which reference is made in Article 15(2) of that annex, may also be relied on by a self-employed person who is a national of a contracting party with regard to his State of origin.⁽³⁰⁾

69. It is therefore necessary to ascertain whether, by exercising his right of establishment in Switzerland as a self-employed person, Mr Wächtler suffered a tax disadvantage by comparison with other resident German nationals who are self-employed and own shares in Swiss companies, but, unlike Mr Wächtler, have not transferred their domicile outside German territory, or have transferred it to another EU Member State or to a State to which the EEA Agreement applies.

70. The case-law of the Court on the taxation of unrealised capital gains where the taxpayer transfers his domicile outside his country of residence post-dates the signature of the AFMP.⁽³¹⁾

71. Article 16(2) of the AFMP provides that the Court’s case-law after the date of signature is to be brought to Switzerland’s attention and that the Joint Committee is to determine the implications of such case-law. However, the latter has not taken any action in the light of that case-law.

72. I concur with the view of the Commission that, in so far as the AFMP makes reference to concepts of EU law, it is necessary to take into account the relevant case-law of the Court which post-dates the signature of that agreement if that case-law does not depart from the principles laid down in the case-law already in existence at the date of signature of the AFMP.

73. In my view, the judgment of 11 March 2004, de Lasteyrie du Saillant (C‑9/02, EU:C:2004:138 ) satisfies that condition.

74. Indeed, nothing in that judgment indicates a change in the case-law of the Court but, on the contrary, as the Commission maintains in paragraph 40 of its written observations, that judgment is based on principles laid down in the Court’s case-law prior to 1999. Moreover, the French Republic, defendant in the main proceedings, did not contest the applicability of freedom of establishment in respect of the country of origin, or even the existence of a restriction, but focused its analysis on the possible justifications for the restriction on that freedom.⁽³²⁾ Furthermore, the case was assigned to a Chamber of three judges, which indicates that the significance of the issue was not such as to require the attention of an extended composition. Finally, in his Opinion,⁽³³⁾ Advocate General Mischo had reached the same conclusion as the Court, which also suggests that the solution provided by the Court was not surprising.

75. Although the Court’s subsequent case-law on the taxation of unrealised capital gains⁽³⁴⁾ has been more open in terms of justification, it has not changed as regards the finding of the existence of a restriction on a fundamental freedom of movement.

76. In the present case, there are two differences in treatment affecting German taxpayers who own shares in Swiss companies and who transfer their domicile to Switzerland; one relating to German taxpayers who own such shares but maintain their domicile in Germany, and the second relating to German taxpayers who also own such shares but transfer their domicile to another Member State or to a State to which the EEA Agreement applies.

77. In the first case, capital gains are taxable only once they have been realised, namely, upon the disposal of the assets.⁽³⁵⁾ However, that difference in treatment is not the subject of the question referred for a preliminary ruling. On the contrary, the national court focuses on the second case, in which the payment of capital gains tax is deferred until the disposal of the assets, without interest and without the provision of a bank guarantee, provided that the taxpayer is, in the host State, subject to tax comparable to German income tax, and that administrative support and mutual assistance in tax recovery matters between the Federal Republic of Germany and that State are guaranteed,⁽³⁶⁾ whereas that deferral is not possible where there has been a transfer of residence to a State other than those referred to in Paragraph 6(5) of the AStG, which, at the very least, gives rise to a cash flow disadvantage.⁽³⁷⁾

78. In that context, national legislation, such as the German legislation at issue in the case in the main proceedings, which provides for the immediate taxation of capital gains which have not yet been realised at the time of the transfer of residence, has a deterrent effect on taxpayers who wish to become established in Switzerland, and thus constitutes a restriction on the freedom of establishment conferred on them by the AFMP.⁽³⁸⁾

D. Whether the restriction on the right of establishment conferred on self-employed persons by the AFMP is justified