Judgment;Abstract — ECLI:EU:C:2020:743
Date: 2020-09-22
Language of the case: French
Court formation: Grand Chamber
Subject matter: Right of establishment;Internal market - Principles;Freedom to provide services
Procedure: Reference for a preliminary ruling
Origin: France

Translation  C-724/18 — 1 
Case C-724/18 
Request for a preliminary ruling 
Date lodged: 
21 November 2018 
Referring court: 
Cour de cassation (France) 
Date of the decision to refer: 
15 November 2018 
Appellant in cassation: 
Cali Apartments SCI 
Respondents in cassation: 
Procureur général at the Cour d’appel de Paris (Court of Appeal, 
Paris, France) 
Ville de Paris 
  
... 
THE COUR DE CASSATION (Court of Cassation, France) ... has delivered the 
following judgment: 
Ruling on an appeal brought by Société Civile Immobilière Cali Apartments ... 
against the judgment delivered on 19 May 2017 by the Cour d’appel de Paris 
(Court of Appeal, Paris, France) ... in the dispute between: 
1. the Procureur général (Public Prosecutor) at the Cour d’appel de Paris (Court of 
Appeal, Paris) ... 
2. and the Ville de Paris (City of Paris, France), ... 
respondents in cassation; 
… 
EN 
REQUEST FOR A PRELIMINARY RULING OF 15. 11. 2018 — CASE C-724/18 
 
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... 
1 It follows from the judgment under appeal ... that the Procureur de la République 
(Public Prosecutor) lodged an application for interim measures on the basis of the 
sixth paragraph of Article L. 631-7 of the Code de la construction et de 
l’habitation (Construction and Housing Code), against the company ... Cali 
Apartments ..., owner of a studio located in Paris, with a view to the company 
being ordered to pay a fine and change the use of the property back to residential. 
The mayor of the City of Paris intervened voluntarily in the proceedings. 
2 The Cour d’appel (Court of Appeal) held that it was established that the studio, 
which had been offered for rent through a website, had been let, without prior 
authorisation, for sporadic, short periods to a transient clientele, which is contrary 
to the provisions of Article L. 631-7 of the Construction and Housing Code. It ... 
ordered Cali Apartments to pay a fine of EUR 15 000, ... and to change the use of 
the premises back to residential. 
3 Cali Apartments criticises the judgment for ordering it to pay a fine and change 
the use of the premises back to residential when, according to the first ground of 
appeal, in applying the sixth paragraph of Article L. 631-7 ... of the Construction 
and Housing Code, the Cour d’appel (Court of Appeal) has infringed the principle 
of the primacy of European Union law, in so far as it has not established that that 
restriction on the freedom to provide services was justified by an overriding 
reason relating to the public interest and that the objective pursued could not be 
attained by means of a less restrictive measure, as required by Article 9(b) and (c) 
of Directive 2006/123/EC of 12 December 2006 [on services in the internal 
market] ... .  
The admissibility of the first ground of appeal ...: 
4 ... 
5 ... [the ground of appeal is admissible] 
The ground of appeal: 
6 ... 
* Provisions of national law 
7 Under Article L. 324-1-1 of the Code du tourisme (Tourism Code), …: 
‘Any person letting furnished tourist accommodation, whether or not the 
accommodation is classified as such for the purposes of this Code, must have 
made a prior declaration thereof to the mayor of the municipality in which the 
accommodation is located.’ 
8 ...  
CALI APARTMENTS 
 
3 
... 
9 In addition, depending on the nature and location of the premises to let, the lessor 
may be subject to the provisions of the Construction and Housing Code governing 
change of use of residential premises. 
10 As provided in Article L. 631-7 of the Construction and Housing Code, in 
municipalities with more than 200 000 inhabitants and in the municipalities of 
Hauts-de-Seine, Seine-Saint-Denis and Val-de-Marne, change of use of residential 
premises is subject to prior authorisation under the conditions set out in Article 
L. 631-7-1 of that code. Law No 2014-366 of 24 March 2014 on access to housing 
and the regeneration of urban planning added a final paragraph to that provision 
which states that the repeated letting of furnished accommodation for residential 
use for short periods to a transient clientele which does not take up residence there 
constitutes a change of use under that provision. 
11 Article L. 631-7-1 of the Construction and Housing Code lays down the procedure 
for obtaining the authorisation provided for in Article L. 631-7: 
‘Prior authorisation for change of use shall be granted by the mayor of the 
municipality in which the property is located, ... . It may be subject to an offset 
requirement in the form of the concurrent conversion of non-residential premises 
into housing. 
Authorisation for change of use shall be granted on an individual basis. It shall 
cease to have effect upon the definitive termination, for any reason, of the 
beneficiary’s professional practice. However, where authorisation is subject to an 
offset requirement, it is the premises, and not the individual, which are granted 
that status. The premises offered as an offset shall be listed in the authorisation 
which is published in the property file or entered in the land register. 
... 
For the application of Article L. 631-7, a decision adopted by the municipal 
council sets the conditions for granting authorisations and determining the offset 
requirements by quartier (neighbourhood) and, where appropriate, by 
arrondissement (district), in the light of social diversity objectives, according to, 
inter alia, the characteristics of the markets for residential premises and the need 
to avoid exacerbating the housing shortage. ... ’. 
12 A temporary authorisation scheme may also be established by the municipal 
council, under Article L. 631-7-1 A of the same code, which provides that a 
decision adopted by the municipal council can establish a temporary authorisation 
scheme for change of use, allowing natural persons to let residential premises for 
short periods to a transient clientele which does not take up residence there. The 
decision sets the conditions for the granting of that temporary authorisation by the 
mayor of the municipality in which the premises are located... . It also determines 
the criteria for that temporary authorisation, which may relate to the duration of 
REQUEST FOR A PRELIMINARY RULING OF 15. 11. 2018 — CASE C-724/18 
 
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the rental contracts, the physical characteristics of the premises and the location of 
the premises, according to, inter alia, the characteristics of the markets for 
residential premises and the need to avoid exacerbating the housing shortage. 
Those criteria may vary according to the number of authorisations granted to the 
same owner. 
13 According to Article L. 631-7-1A of the Construction and Housing Code, it is not, 
however, necessary to obtain an authorisation for change of use if the premises 
constitute the lessor’s main residence for the purposes of Article 2 of the Law of 
6 July 1989; that is to say, if the dwelling is occupied for at least eight months per 
year, except owing to professional obligations, health reasons or force majeure, by 
the [lessor] or his/her spouse or by a dependant. 
14 Article L. 651-2 of the Construction and Housing Code lays down the penalties 
and measures applicable in the event of non-compliance with those provisions: 
‘Any person who infringes the provisions of Article L. 631-7, or who fails to 
comply with the conditions or requirements under that article shall be liable to 
pay fine of EUR 25 000.’ 
...  
… 
* Directive 2006/123/EC of the European Parliament and of the Council of 
12 December 2006 on services in the internal market 
* Article 2 of the Directive 
15 The ... purpose of the ‘Services’ Directive is to establish general provisions 
facilitating the exercise of the freedom of establishment for service providers and 
the free movement of services, while maintaining a high quality of services. 
16 In accordance with Article 2(1) of that directive, it is applicable to services 
supplied by providers established in a Member State. According to Article 4, 
‘service’ means any self-employed economic activity, normally provided for 
remuneration by a provider. A provider is any natural person who is a national of 
a Member State, or any legal person as referred to in Article 48 of the Treaty and 
established in a Member State, who offers or provides a service. According to 
[recital] 34 of the Directive, remuneration constitutes consideration for the service 
in question. 
17 Articles 1 and 2 of the Directive lay down a number of matters and activities 
which are excluded from its scope of application. 
18 The activity of the short-term letting of furnished accommodation is not among 
the excluded activities. 
CALI APARTMENTS 
 
5 
19 Moreover, it follows from the case-law of the Court of Justice of the European 
Union [judgment of 30 January 2018, X and Visser, C-60/15 and C-31/16, 
EU:C:2018:44, paragraph 110 and the operative part] that the provisions of 
Chapter III of the Directive, concerning freedom of establishment of service 
providers, apply to a situation where all the relevant elements are confined to a 
single Member State. It follows that the absence of any foreign aspect does not 
prevent the Directive from applying. 
20 A rental contract involves the supply of an asset for consideration. 
21 Therefore, the first question is whether the repeated short-term letting, including 
on a non-professional basis, of furnished accommodation for residential use not 
constituting the lessor’s main dwelling to a transient clientele, which does not take 
up residence there, against consideration, constitutes a service provided by a 
service provider established in a Member State for the purposes of Article 2 of the 
Directive, and thus falls within its scope of application. 
22 If so, the question then arises as to whether national legislation such as that 
provided for in Article L. 631-7 of the Construction and Housing Code, which is 
additional to the declaration scheme provided for in Article L. 324-1-1 of the 
Tourism Code in respect of the letting of furnished tourist accommodation, 
constitutes an authorisation scheme for the abovementioned activity for the 
purposes of Articles 9 to 13 of Directive 2006/123 ..., in so far as it makes the 
change of use of the premises offered for rent subject to authorisation in certain 
geographical areas, or whether it is merely a requirement subject to the provisions 
of Articles 14 and 15. 
* Article 9 of the Directive 
23 While the national legislation constitutes an authorisation scheme for the purposes 
of the Directive, it should be recalled that, under Article 9 of that directive, 
Member States are not to make access to a service activity or the exercise thereof 
subject to an authorisation scheme unless the following conditions are satisfied: 
a) the authorisation scheme does not discriminate against the provider in question; 
b) the need for an authorisation scheme is justified by an overriding reason 
relating to the public interest; 
c) the objective pursued cannot be attained by means of a less restrictive measure, 
in particular because an a posteriori inspection would take place too late to be 
genuinely effective. 
24 Cali Apartments considers, in the first place, that the authorisation scheme 
introduced by the legislature is not justified by an overriding reason relating to the 
public interest. 
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25 Article 4 of the Directive defines ‘overriding reasons relating to the public 
interest’ as reasons recognised as such in the case-law of the Court of Justice. 
26 The Law of 24 March 2014 ‘on housing and the regeneration of urban planning’, 
which introduced the sixth paragraph of Article L. 631-7 of the Construction and 
Housing Code, had the objective of ‘responding to the deterioration of conditions 
for access to housing and the exacerbation of tensions on the property markets, in 
particular by addressing market failures, protecting owners and renters and 
increasing the supply of housing while maintaining balanced land-use, since 
housing is a basic necessity and the right to decent housing is and objective 
protected by the Constitution’ (the Government’s explanatory memorandum to the 
draft law).  
27 According to decision No 2014-691 DC of 20 March 2014 of the Conseil 
constitutionnel (Constitutional Council) ruling on the constitutionality of the sixth 
paragraph of Article L. 631-7, deriving from the Law of 24 March 2014, the 
legislature was pursuing an objective of general interest by introducing that 
provision, since its intention was to set out the scope of application of a 
mechanism for tackling the shortage of rental housing and to define certain 
exceptions in favour of renters. 
28 One of the criteria set by Article L. 631-7-1 of the Construction and Housing 
Code for determining the conditions for granting authorisations is the social 
diversity objective, according to, inter alia, the characteristics of the markets for 
residential premises and the need to avoid exacerbating the housing shortage. 
29 The question therefore arises as to whether the objective pursued by the 
legislature, relating in particular to the need to tackle the shortage of rental 
housing, constitutes an overriding reason relating to the public interest for the 
purposes of the case-law of the Court of Justice of the European Union, 
particularly in so far as it could constitute a social policy objective recognised as 
such by the Court. 
30 Cali Apartments also submits that the authorisation scheme introduced by the 
sixth paragraph of Article L. 631-7 of the Construction and Housing Code, is not 
proportionate to the objective pursued in that less restrictive measures could have 
been adopted to tackle the shortage of rental housing, such as, for example, 
limiting the number of nights for which a short-term let may be offered for rent or 
making short-term letting subject to a specific tax. 
31 According to the abovementioned decision of 20 March 2014 of the Conseil 
constitutionnel (Constitutional Council), the provisions of the sixth paragraph of 
Article L. 631-7 are consistent with the objective of tackling the housing shortage. 
32 Moreover, it should be noted that the scope of application of the authorisation 
scheme for change of use, provided for in the sixth paragraph of Article L. 631-7 
of the Construction and Housing Code, is limited: 
CALI APARTMENTS 
 
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– it is obligatory only in municipalities with more than 200 000 inhabitants and in 
the municipalities of Paris’ three neighbouring departments; 
– it concerns only lets which satisfy certain conditions: the property must be 
furnished accommodation for residential use; the property must be let 
repeatedly and for short periods to a transient clientele which does not take up 
residence there; 
– it does not apply to dwellings which constitute the lessor’s main residence, that 
is to say, dwellings which the lessor occupies for at least eight months per year; 
– a temporary authorisation scheme is provided for in Article L. 631-7-1 A of the 
Construction and Housing Code.  
33 The question arises as to whether the objective pursued justifies such an 
authorisation scheme, thus defined, for change of use. 
* Article 10 of the Directive 
34 Under Article 10 of the Directive, concerning the conditions for the granting of 
authorisation: 
1. Authorisation schemes are to be based on criteria which preclude the 
competent authorities from exercising their power of assessment in an arbitrary 
manner. 
2. The criteria referred to in paragraph 1 are to be: 
a) non-discriminatory; 
b) justified by an overriding reason relating to the public interest; 
c) proportionate to that public interest objective; 
d) clear and unambiguous; 
e) objective; 
f) made public in advance; 
g) transparent and accessible. 
35 Under Article L. 631-7 of the Construction and Housing Code, an authorisation 
for change of use may be required where furnished accommodation is repeatedly 
let for short periods to a transient clientele which does not take up residence there. 
Cali Apartments submits that those criteria are neither clear nor objective. 
36 The question arises as to whether those criteria are sufficiently clear and objective, 
within the meaning of Article 10, in so far as they do not refer to thresholds, but 
REQUEST FOR A PRELIMINARY RULING OF 15. 11. 2018 — CASE C-724/18 
 
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are based on the concepts of ‘repetition’, ‘short [periods]’ and ‘transient clientele 
which does not take up residence there’. 
37 Article L. 631-71 of the Construction and Housing Code lays down the procedure 
for obtaining an authorisation. 
38 Cali Apartments submits that since the conditions for granting authorisations and 
determining the offset requirements by quartier (neighbourhood) and, where 
appropriate, by arrondissement (district) are set by each municipal council, rather 
than being laid down by law, the requirements for publicity, transparency and 
accessibility provided for in Article 10 are not fulfilled. 
39 In accordance with Article L. 2121-25 of the Code général des collectivités 
territoriales (General Local Authorities Code), the minutes of the municipal 
council meetings are displayed in the town hall and are available online on the 
website of the municipality.  
40 Article L. 631-7-1 of the Construction and Housing Code provides that the 
conditions for granting authorisations are to be set in the light of social diversity 
objectives, according to, in particular, the characteristics of the markets for 
residential premises and the need to avoid exacerbating the housing shortage. Cali 
Apartments submits that those criteria do not fulfil the requirements for clarity and 
objectivity laid down in Article 10. 
41 The question arises as to whether those criteria fulfil the requirements for clarity 
and objectivity laid down in Article 10. 
42 Since the issues raised in the ground of appeal are relevant to the outcome of the 
appeal, referral to the Court of Justice of the European Union is required. 
43 It is therefore necessary to stay the appeal proceedings pending a ruling by the 
Court of Justice. 
ON THOSE GROUNDS: 
The following questions are referred to the Court of Justice of the European Union 
for a preliminary ruling: 
1. Having regard to the definition of the purpose and scope of application of 
Directive 2006/123/EC of 12 December 2006, as set out in Articles 1 and 2 
thereof, does that directive apply to the repeated letting for short periods, against 
consideration, including on a non-professional basis, of furnished accommodation 
for residential use, not constituting the lessor’s main residence, to a transient 
clientele which does not take up residence there, particularly in the light of the 
concepts of ‘providers’ and ‘services’? 
2. If the above question is answered in the affirmative, does national legislation 
such as that provided for in Article L. 631-7 of the Code de la construction et de 
CALI APARTMENTS 
 
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l’habitation (Construction and Housing Code) constitute an authorisation scheme 
for the abovementioned activity for the purposes of Articles 9 to 13 of Directive 
2006/123 of 12 December 2006, or solely a requirement subject to the provisions 
of Articles 14 and 15? 
In the event that Articles 9 to 13 of Directive 2006/123/EC of 12 December 2006 
are applicable: 
3. Should Article 9(b) of that directive be interpreted as meaning that the objective 
of tackling the shortage of rental housing constitutes an overriding reason relating 
to the public interest capable of justifying a national measure which requires 
authorisation to be obtained, in certain geographical areas, for the repeated letting 
of furnished accommodation for residential use for short periods to a transient 
clientele which does not take up residence there? 
4. If so, is such a measure proportionate to the objective pursued? 
5. Does Article 10(2)(d) and (e) of the Directive preclude a national measure 
which requires authorisation to be obtained for the ‘repeated’ letting of furnished 
accommodation for residential use for ‘short periods’ to a ‘transient clientele 
which does not take up residence there’? 
6. Does Article 10(2)(d) to (g) of the Directive preclude an authorisation scheme 
whereby the conditions for granting authorisation are set, by decision of the 
municipal council, in the light of social diversity objectives, according to, inter 
alia, the characteristics of the markets for residential premises and the need to 
avoid exacerbating the housing shortage? 
...  
GROUNDS ANNEXED to the present judgment [the two grounds examined are 
set out to a sufficient standard in the grounds of the judgment] 
…