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'Services' Directive

In order to create a real internal services market, the 'Services' Directive aims to facilitate freedom of establishment for providers in other Member States and the freedom of provision of services between Member States. It also aims to increase the choice offered to recipients and improve the quality of services both for consumers and businesses using these services.

ACT

Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market [Official Journal L 376 of 27 December 2006].

SUMMARY

This Directive establishes a general legal framework promoting the exercise of the freedom of establishment for service providers and the free movement of services, while maintaining a high quality of services.

It is based on the following four pillars:

  • to ease freedom of establishment for providers and the freedom of provision of services in the EU;
  • to strengthen rights of recipients of services as users of the latter;
  • to promote the quality of services;
  • to establish effective administrative cooperation among the Member States.

Scope

The Directive establishes a general legal framework for any service provided for economic return (with the exception of excluded sectors) while taking the specific nature of certain activities or professions into account.

This Directive covers a wide group of service activities which represent around 40 % of the EU’s GDP and employment. It covers services such as:

  • construction and craft industries;
  • retail trade;
  • the majority of regulated professions (lawyers, architects, engineers and accountants, for example);
  • business services (office maintenance, management consultancy and publicity for example);
  • tourism;
  • real estate services;
  • private education.

Several types of services are excluded from the scope of this Directive, in particular:

  • financial services;
  • telecommunication networks;
  • transport;
  • healthcare services;
  • gambling activities;
  • certain social services.

The Directive is to apply in the following two cases:

  • During the permanent establishment of undertakings, specifically when a particular entrepreneur or undertaking wishes to set up a permanent establishment (a company or branch) in its own country or in another EU country;
  • During cross-border service provision, specifically when an undertaking already established in an EU country wishes to provide services in another EU country, without creating a permanent establishment or when a consumer resident in an EU country wishes to be provided with a service from a supplier in another EU country.

In addition, the Directive also enables the recipients of services, consumers and undertakings in particular, to have greater choice and better access to services in the EU in that:

  • beneficiaries are better informed about service providers, after-sales guarantees and compensation;
  • the Directive prohibits any discrimination based on nationality or the residence of the service beneficiary.

Administrative simplification

The Directive requires Member States to simplify all the procedures used in creating and establishing a service activity. Formal requirements such as the obligation to submit original documents, certified translations or certified copies must be removed, except for certain cases. From December 2009, undertakings and individuals must be able to carry out all the necessary formalities on-line using Points of Single Contact.

Points of single contact are e-government portals set up by the national administration of each EU country. They may be used by service providers to:

  • obtain detailed information on the entrepreneurship abroad or in their country of origin;
  • carry out administrative formalities on-line concerning creating an undertaking;
  • carry out administrative formalities on-line concerning the provision of cross-border services.

Removing legal and administrative barriers to the development of service activities

To ease freedom of establishment, the Directive:

  • includes the obligation to evaluate the compatibility of the authorisation schemes in light of the principles of non-discrimination and proportionality and to maintain certain principles regarding the conditions and procedures of authorisation applicable to service activities;
  • repeals certain legal requirements that remain in the legislation of some Member States and that are no longer justifiable, such as requirements on nationality;
  • contains the obligation to evaluate the compatibility of a certain number of other legal requirements in light of the principles of non-discrimination and proportionality.

Easing the freedom to provide temporary cross-border services

To improve the free provision of services, the Directive stipulates that the Member States must guarantee freedom of access to the service activity and the freedom to exercise such activity throughout their territory. The Member State to which the service provider moves to become established may only enforce its own requirements inasmuch as these are non-discriminatory, proportional and justified for reasons of public order, public safety, public health or environmental protection.

The Directive also provides for a certain number of significant derogations from the principle, as regards, for example, professional qualifications, secondment and services of general economic interest.

Strengthening consumer rights as service users

Within the framework of protecting the rights of recipients, the Directive:

  • affirms the right of recipients to use the services of other Member States;
  • establishes the right of recipients to obtain information on the rules applicable to providers, whatever their location may be, and on the services offered by a service provider.

Ensuring service quality

In this area, the Directive aims to:

  • strengthen the quality of services by encouraging, for example, voluntary certification of activities or drawing up quality charters;
  • encourage European codes of conduct to be drawn up, in particular by professional bodies or associations.

Establishing effective administrative cooperation among the Member States

In order to facilitate the establishment and free movement of services throughout the European Union, the Directive:

  • lays down a legal obligation requiring the Member States to cooperate with the relevant authorities of other Member States in order to ensure efficient control of service activities in the Union while avoiding a multiplication of monitoring. An alert mechanism between Member States is also to be established;
  • constitutes the basis for developing an electronic system for the exchange of information between Member States, which is vital for establishing effective administrative cooperation between them.

Background

Services are the engine of the European economy. They represent around 70 % of employment and the European GDP, and it is in this sector that 9 out of 10 new jobs are created. Within the 'Lisbon Strategy', the Commission has responded to the European Council's invitation to design a policy aiming to remove obstacles to free circulation of goods and services and the freedom of establishment of service provision. This Directive responds to the view that the single market for services no longer provides all the advantages which we have the right to expect. Despite the omnipresence of services in the European economy, services still only represent around one fifth of the total intra-EU trade. The Services Directive was adopted by the Parliament and the Council in December 2006. Member States had a transposition deadline of three years to implement its provisions at national level. The deadline for transposition expired on 28 December 2009.

REFERENCES

Act Entry into force - Date of expiry Deadline for transposition in the Member States Official Journal

Directive 2006/123/EC

28.12.2006

28.12.2009

OJ L 376/68, 27.12.2006

RELATED ACTS

Commission Decision 2011/130/EU of 25 February 2011 establishing minimum requirements for the cross-border processing of documents signed electronically by competent authorities under Directive 2006/123/EC of the European Parliament and of the Council on services in the internal market [OJ L 53 of 26.2.2011].
This Directive aims at facilitating the verification of electronic signatures when they are used in:

  • originals;
  • certified copies;
  • certified translations.

Member States are required to put in place technical arrangements which enable them to process documents submitted by service providers using points of single contact and which are signed electronically using an XML, CMS or PDF signature.

Communication from the Commission of 27 January 2011: Towards a better functioning Single Market for services – building on the results of the mutual evaluation process of the Services Directive [COM(2011) 20 final – Not published in the Official Journal].

Last updated: 26.04.2011

See also

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