The German Federal Tax Court decided whether the German CFC rules also apply to foreign companies located outside the European Union. Whereas the German CFC legislation, in the case of companies located within the European Union, provides for an exemption if the foreign company can prove "real economic activity", such an exemption is not granted to companies located outside the European Union. The German Federal Tax Court believes that this may be contrary to the principle of free movement of capital. The Court therefore puts this question to the European Court of Justice.