The freedom of establishment and the freedom to provide services are both central EU principles governing the single market for services. These principles entitle EU entrepreneurs to establish a business in any EU country or to temporarily supply services across borders, to other EU countries, without setting up an establishment there – e.g. by moving across borders, via the internet, etc.
As businesses still face complex, long and legally uncertain administrative procedures when trying to access or deliver services in other EU countries, the EU adopted a law, the Services Directive, to create a clearer and simpler framework for business. The Directive had to be fully implemented by all EU countries by the end of 2009.
In the Directive, the EU introduced a set of rules in order to simplify the setting-up of a service activity and the cross-border provision of services. The Services Directive also enhances the rights of service recipients.
Setting up a business
Every EU country had to simplify its procedures and formalities related to service activities. They had to set up points of single contact, e-government portals through which businesses can get all relevant information and complete administrative procedures online.
EU countries were also obliged to abolish unnecessary or disproportionate authorisation schemes, remove discriminatory requirements based on nationality or residence, and eliminate particularly restrictive requirements such as "economic needs" tests (requiring businesses to carry out market studies to prove to the authorities that there is a demand for their services).
Cross-border service provision
The Services Directive sets out the freedom to provide services principle: EU countries are not allowed to impose discriminatory, unnecessary or disproportionate national requirements on foreign service providers, e.g. to obtain an authorisation or set up a certain type of infrastructure.
Certain requirements can still be imposed under very limited circumstances if they are necessary for one of the following reasons: public policy, public security, the protection of public health, or protection of the environment. Furthermore, there are certain general derogations to the freedom to provide services clause, including the posting of workers abroad and the recognition of professional qualifications.
For those administrative requirements that can still be imposed, enterprises will be able to obtain relevant information and complete formalities through points of single contact.
Rights of service recipients
The Directive also enhances the rights of service recipients: consumers and businesses should be able to use the services of providers based in other EU countries without needing prior authorisation or facing discriminatory requirements based on the recipient's nationality or place of residence.
National authorities are required to provide general information and assistance on consumers' rights and redress procedures.
Services covered by the Directive
The Services Directive applies, among others, to the following services:
- most regulated professions (e.g. legal and fiscal advisers, architects, engineers, accountants, surveyors);
- construction services;
- business-related services (e.g. office maintenance, management consultancy, the organisation of events, recovery of debts, advertising and recruitment services);
- distributive trades, including retail and wholesale of goods and services;
- services in the field of tourism (e.g. services of travel agencies);
- leisure services (e.g. services provided by sports centres and amusement parks);
- services in the area of installation and maintenance of equipment;
- information services (e.g. web portals, news agency activities, publishing, computer programming activities);
- accommodation and food services (e.g. hotels, restaurants, catering services);
- services in the area of training and education;
- rental, including car rental and leasing services;
- real estate services;
- certification and testing services;
- household support services (e.g. cleaning services, private nannies or gardening services).
The Services Directive does not apply to the following services:
- activities comprehensively regulated by the EU: financial services, electronic communications, transport services;
- healthcare services, temporary work agencies, private security services, audiovisual services, gambling activities, certain social services, notaries and bailiffs (appointed by an official act of government).
In any event, national rules and regulations relating to these excluded services have to comply with other rules of EU law, in particular with the freedom of establishment and the freedom to provide services as guaranteed in the Treaty on the functioning of the EU.
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