## Facts

- Austrian trade law required certain companies to register and appoint a qualified trade manager.
- The designated manager was required to reside in Austria, purportedly to ensure effective day-to-day management and easy service of administrative measures.
- Clean Car Autoservice GesmbH, established in Vienna, appointed a German national living in Germany as its manager and sought registration for a motor-vehicle maintenance business.
- The Vienna authority refused registration because the proposed manager was not resident in Austria.
- Clean Car challenged the refusal, arguing the residence requirement violated EU free-movement and non-discrimination rules.
- The Austrian Supreme Administrative Court stayed the case and referred questions to the ECJ for a preliminary ruling on Article 48 EC (now Article 45 TFEU).

## Issues

1. Whether an employer established in a Member State may rely on Article 48 EC’s equal-treatment rule to employ workers who are nationals of other Member States.
2. Whether Article 48 EC precludes national legislation requiring an undertaking’s manager to reside in the national territory where the requirement restricts appointment of non-resident EU nationals.

## Decision

- The ECJ held that the equal-treatment rule in Article 48 EC may be relied upon by an employer seeking to employ nationals of other Member States.
- The ECJ held that Article 48 EC precludes legislation requiring an undertaking to appoint as manager a person resident in the State.
- The Court characterized the residence requirement as indirect discrimination on grounds of nationality because it operates mainly to the detriment of other Member States’ nationals.
- The justifications advanced (effective management; service and enforcement of administrative measures) did not make the measure necessary or proportionate because less restrictive mechanisms could achieve those aims.
- The case was returned to the referring Austrian court to apply the ECJ’s interpretation in resolving the registration dispute.

## Legal Principles

- Article 48 EC’s equal-treatment protection in the free movement of workers may be invoked by employers as a corollary to workers’ rights to be engaged without discrimination.
- A residence condition, though facially neutral, constitutes indirect nationality discrimination when it burdens non-nationals more heavily in practice.
- Indirectly discriminatory measures may be upheld only if justified by objective considerations independent of nationality and proportionate to legitimate aims.
- Administrative objectives such as ensuring effective managerial performance and facilitating service/enforcement generally must be pursued by less restrictive means than a blanket residence requirement.

## Conclusion

The ECJ confirmed that employers can invoke free-movement equality rules to hire EU workers and invalidated a national requirement that a trade manager reside in the host State because it amounted to unjustified and disproportionate indirect discrimination based on nationality.


Clean Car Autoservice GesmbH v. Landeshauptmann von Wien, Case C-350/96, 1998 E.C.R. I-2521 (ECJ 1998)