Freedom of Establishment and Location of the Company: Notes to the Brazilian Law

AuthorHugo de Brito Machado Segundo
Pages166-181
Studi Tributari Europei 1/2017
© Copyright Seast All rights reserved
166#
Freedom of Establishment and Location of the Company: Notes
to the Brazilian Law*
Hugo de Brito Machado Segundo1
Table of Contents
1. Introduction 2. Freedom of establishment and business location. Rationale
and relevance 3. Freedom of establishment in MERCOSUR 4. Freedom of
election of the tax domicile 5. Freedom of establishment in the Brazilian
territory 6. Conclusion
#
1. Introduction
Major issue in Tax Law concerns the freedom of establishment of the taxpayer
and its influence on the location of the company, reason why I am grateful to
Professor Adriano Di Pietro and to all those part of the Scuola Europea di Alti
Studi Tributari for their invitation to address this subject with focus on the
Brazilian practice in the event to be held in Bologna to compare the dynamics
of Latin American countries to that one of the European Union.
In Brazil, the subject matter of freedom of establishment is not very often
discussed, at least not so much as in countries that are part of a community
or bloc of international law which endorses such freedom, as consequence to
the principles of free trade/free movement of goods, free competition, equal
treatment and non-discrimination. Nevertheless, this issue, considered in the
Brazilian case, is approachable in three different manners. The first of these
concerns MERCOSUR and the freedom of establishment within the bloc. The
second relates to the freedom of the taxpayer to choose their tax domicile,
where they will establish their relations with the tax administration services.
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* How to quote this article: H. DE BRITO MACHADO SEGUNDO, Freedom of establishment and
location of the company: notes to the Brazilian law, in Studi Tributari Europei, 2017, n. 1 ,
(ste.unibo.it), pp. 166-181, DOI: 10.6092/issn.2036-3583/8774.
1 Hugo Brido Machado Segundo, Professor at the Faculty of Law of the Federal University of
Ceará (UFC), Coordinator of the Postgraduate Program (Masters/PhD) of the UFC.##
Studi Tributari Europei 1/2017
© Copyright Seast All rights reserved
167#
And, finally, the third, and perhaps more relevant focus, is related to the
freedom of establishment and the location of the company within the Brazilian
territory. In the following lines, these three aspects will be briefly examined.
2. Freedom of establishment and business location. Rationale and
relevance
The principle of freedom of establishment and free choice of company location
is a consequence to the principle that ensures the free exercise of economic
activities, unfolding or branching from the general freedom as a distinctive
feature of the human being, protected to a greater or lesser extent by a
number of legal frameworks. In fact, one may even say that freedom is the
very condition of existence to the rule of law2, which is universally applicable
within a certain jurisdiction3.
However, this is not all. Freedom of establishment also stems from the
principle of free competition and equal treatment, as well as non-
discrimination, the latter ones being the reason why all economic agents that
find themselves under the same system of norms (Constitution or Treaty4)
must have equal freedom to carry out economic activities in any part of the
corresponding territory.
Thus, as consequence to freedom of establishment, a State, or a Union of
States where there are rules of international or Community law agreed
between them must not interfere in the choice of those engaged in
economic activities, impelling them, directly or indirectly, to establish
themselves in places different from those they would choose if there was no
such interference. The purpose is to avoid the creation of barriers to trade
and to the practice of economic activities within the community or the Union
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2 It is precisely because freedom consists in the possibility of the human being expanding and
realizing its potentialities, which are infinite, that nothing apart from the promotion of liberties,
including other peoples, justifies the sacrifice of freedom. Hence the poem of William Cowper
quoted by Amartya Sen: "Freedom has a thousand charms to show / That slaves, ho we'er
contented, never know." SEN, Amartya. Desenvolvimento como liberdade. Translated by Laura
Teixeira Motta. São Paulo: Companhia das Letras, 2000, p. 337
3 Arnaldo Vasconcelos teaches "if freedom is n ot shared, there will be no possible exercise of
freedom. It exists only on the condition of being limited to each, for the benefit of all. Absolute
freedom is also the absolute impossibility of its exercise. It follows that, since freedom is a
relational term, no one can be free alone. "VASCONCELOS, Arnaldo. Direito e força: uma visão
pluridimensional da coação jurídica. Sao Paulo: Dialética, 2001, p. 54.
4 This is the case of art. 49 of the Treaty on European Union.

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