The ECJ has handed down its decision in Prunus, reaching the same conclusion that Advocate-General Villalon did in December last year.
This case concerned whether a British Virgin Isles (BVI) company could claim an exemption from a French tax on immovable property, where a French company could claim that same exemption. The BVI company sought to rely on EU rights on the basis that it was the national of an overseas territory of the UK and therefore an EU national.
The ECJ found that residents of the overseas countries and territories (OCTs) of EU Member States cannot claim establishment rights as EU nationals. Part 4 of TFEU (relating to OCTs) contains provisions which operate to override the general treaty rules where there is conflict.
This meant that the BVI company could only rely on the free movement of capital as it applied to third countries. As such the standstill clause in Article 64(1) operated, so that the legislation - having been in place prior to 1994 - was not a breach of Article 63.
This decision resolves a long standing question whether the rights existing within the EU could be extended in a tax context to territories such as the BVI, the Cayman Islands, the Dutch Antilles etc. Perhaps the outcome to this academic conundrum was not unexpected.