82It should be noted that the Court held, in paragraphs 67 and 68 of the judgment of 12 September 2006, Cadbury Schweppes and Cadbury Schweppes Overseas (C‑196/04, EU:C:2006:544), that the establishment of a company in a Member State is a ‘wholly artificial arrangement’ when it is demonstrated, based on objective factors which are ascertainable by third parties, that that company is a fictitious establishment in so far as it does not carry out any genuine economic activity in the territory of the host Member State, account being taken, in particular, of the extent to which that company physically exists in terms of premises, staff and equipment. The Court inferred that such fictitious establishments, in particular those that have the characteristics of a ‘letterbox’ or ‘front’ subsidiary, can be subject to a specific tax regime for the purpose of preventing tax evasion and avoidance, and that the Treaty provisions on that freedom do not preclude such a regime.
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