The fight against letterbox companies in the internal market

Publishers Abstract:
After the seminal judgment in Centros, it seemed that the fight against letterbox companies was lost. The judgment made it clear that it is possible for a company without any substantial activities in the Member State where it is incorporated to exercise the free movement rights when doing business in other Member States. After this judgment, the widespread use of letterbox companies was not countered by any coordinated effort of the EU; instead the Member States individually undertook to fight letterbox companies. However, it has become clear that letterbox companies sometimes interfere with the proper functioning of the internal market. As a result, the EU has recently adopted or proposed legislation aimed at diminishing the threat they pose. The article analyses these legislative measures, their background and impact.