EUROPEAN COMMISSION Brussels, 31.5.2017 SWD(2017) 196 final COMMISSION STAFF WORKING DOCUMENT Impact Assessment Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2006/1/EC on the use of vehicles hired without drivers for the carriage of goods by road {COM(2017) 282 final}

{SWD(2017) 197 final}

{SWD(2017) 198 final}

{SWD(2017) 199 final}



TABLE OF CONTENTS 1. Introduction 2. Problem definition 2.1. Context 2.1.1 Legal background 2.1.2 Evaluation of Directive 2006/1/EC 2.2. What is the problem and why is it a problem? 2.3. What are the main problem drivers? 2.4. Who is affected by the problem, in what ways, and to what extent? Whose behaviour would have to change to improve the situation? 2.5. What is the EU dimension of the problem? 2.6. How would the problem evolve, all things being equal? 3. The right of the EU to act 3.1 Legal basis 3.2 Analysis of subsidiarity and added value of EU action 4. Objectives 4.1 general policy objectiive 4.2 Specific objectives 5. Options 5.1 Baseline scenario "No action at EU level"

5.1.1 Baseline legislative development 5.1.2 Baseline market development 5.2 Discarded policy options 5.3 Policy options assessed 5.3.1 Option 0: Issue guidelines and recommendations 5.3.2 Option 1: Targeted legislative amendments 5.3.3 Option 2: Same rules for hired vehicles as for owned vehicles 5.4 Are Small and Medium sized Enterprises targeted by the different options? 6. What are the impacts of the different policy options and who will be affected? 26 6.1 Economic impacts 26 6.1.1 Impact on the road transport market 26 6.1.2 Impact on the vehicle hire sector 29 6.1.3 Impact on authorities 30 6.1.4 SME Impact 32 6.2 Social impacts 32 6.2.1 Employment 32 6.2.2 Working conditions 33 6.2.3 Road safety 33 6.3 Environmental impacts 33 7. How do the options compare? 35

7.1 Effectiveness 35 7.2 Efficiency 35 7.3 Coherence with other mainstream EU policies 36 7.4 Proportionality and subsidiarity 37 7.5 Conclusion: Preferred policy option 38 8. How would actual impacts be monitored and evaluated? 40 Annex 1 42 Procedural information 42 Annex 2 45 Stakeholder consultation 45 Annex 3 52 Who is affected by the initiative and how 52 Annex 4 53 Modelling approach as well as Tables and graphs supporting the analysis 53 Annex 5 63 SME Test 63 Annex 6 64 The Road Initiatives - The 'Big Picture' 64





1.Introduction This impact assessment accompanies a legislative proposal that revises Directive 2006/1/EC on the use of vehicles hired without drivers for the carriage of goods by road (henceforth "the Directive"). The initiative is part of the Commission's Regulatory Fitness and Performance (REFIT) programme that aims at making EU laws simpler and less costly. It thus aims at clarifying the legal framework for the use of hired vehicles in the EU and at reducing the costs of transport operators using such vehicles in the internal market. This initiative is also part of a broader set of measures to overhaul the legislative framework governing the road transport market in the EU. Together with the other initiatives, it aims at making this legislative framework fit for the 2020s (and beyond) by addressing current concerns of stakeholders, removing shortcomings of the existing legislation and simplifying the legal provisions with a view to facilitating their implementation and enforcement. The Directive is closely related to the rules concerning access to the profession of road transport operator and those for access to the international road haulage market. All three legal acts together provide the legal framework in which road hauliers in the EU operate. Hired goods vehicles allow meeting one of the conditions for stable establishment of a transport operator (which is one of the requirements for access to the profession of road transport operator) and the holder of a Community licence is entitled to a certified copy of the licence also for each hired vehicle at its disposal (hired vehicles hence provide access to the international road haulage market) There are also direct cross-references between the legal acts. As the other two legal acts are subject to a parallel REFIT initiative, a suitable framework for the revision of the Directive is being provided. The implementation and enforcement of all three legal acts is in most cases subject to the same operation. Due to the interlinkages between the legal acts, their respective revision in one package of measures ensures coherence between the rules. Moreover, the adoption of the road initiatives in 2017 provides a window of opportunities to address the shortcomings of the Directive that have been identified in the ex-post evaluation and that are described in more detail in the following chapter.



2.Problem definition 2.1.Context The creation of the Single Market has allowed the European economy to prosper and to reap the benefits of economic integration. It has greatly increased the productivity and competitiveness of the European economy. However, the internal market is still far from being completed, in particular in services. This is not a "theological" issue: it is a practical one - there are still too many obstacles and barriers which hamper businesses and which burden them with unnecessary bureaucracy. Upgrading and deepening the Single Market is therefore one of the core priorities of the Commission. One area in which the Single Market has not yet been completed is the use of hired vehicles. Here, Member States can still restrict the use of hired vehicles in certain market segments and under certain conditions. A 'hired vehicle' means "any vehicle which, for remuneration and for a determined period, is put at the disposal of an undertaking which engages in the carriage of goods by road for hire and reward or for its own account on the basis of a contract with the undertaking which makes the vehicles available." Vehicle hiring can take a number of forms ranging from (predominantly short-term) "renting" to (predominantly long-term) "leasing" (in some cases of which the vehicle in question even appears on the balance sheet of the lessee). Goods vehicles are typically rented to meet temporary or seasonal demand peaks or to replace defective vehicles. The leasing of goods vehicles allows operators to better manage their cash flows as they do not have to pay the full purchase price upfront when acquiring a vehicle. Hiring and leasing of goods vehicles thus provides more flexibility to operators and allows them to lower their costs and increase their productivity. Increasing the efficiency and competitiveness of the road transport sector has been a priority of the common transport policy of the European Union for some time. Efficient transport is vital in making the European economy as a whole more competitive. It is therefore important to remove any unnecessary restrictions which prevent transport operators carrying goods either on own account or for hire and reward from operating efficiently across the EU. According to information provided by the leasing industry and official statistics, almost 10% of all goods vehicles in the EU are currently rented or leased (some 3.5 million out of a total of 36 million vehicles in 2014). The share of rented or leased vehicles is somewhat higher among heavy goods vehicles (those with a maximum mass above 3.5 tonnes): here, roughly 1 million out of 6 million vehicles (i.e. around 16%) are subject to a renting or leasing contract. Among light commercial vehicles (goods vehicles with a maximum mass up to 3.5 tonnes), the share of rented or leased vehicles is only half as high: 2.5 out of 30 million light commercial vehicles in the EU (i.e. some 8%) are estimated to be rented or leased. The leasing industry estimates that the share of rented or leased vehicles among newly registered heavy goods vehicles is at least 40%. At the beginning of their lifetime, many goods vehicles are subject to some rental or leasing scheme - some of which have been defined precisely to promote the introduction of new vehicles and new technologies in the market. After some years, most of them switch into ownership. Restricting the use of hired vehicles hence also hinders the market uptake of new vehicles and new technologies. 2.1.1Legal background The legislative framework governing the use of hired goods vehicles in the EU is provided by Directive 2006/1/EC, which is a codification of Council Directive 84/647/EEC as amended by Council Directive 90/398/EEC. Its provisions have hence not been changed for more than 25 years. The Directive applies to all goods vehicles, be they light commercial vehicles (LCVs; maximum mass up to 3.5 tonnes) or heavy goods vehicles (HGVs; >3.5 tonnes), motorised (rigid truck, road tractor) or non-motorised (trailer or semi-trailer) and to combinations of these (Article 1, lit (a)). It does not apply to passenger vehicles (e.g. buses and coaches). It also applies to all forms of hiring, from (predominantly short-term) renting to (predominantly long-term) leasing, as long as the vehicle is put at the disposal of the undertaking hiring it. The Directive provides a minimum level of liberalisation as regards the use of hired goods vehicles for both national and international transport operations. It requires Member States to ensure that their undertakings may use, for the carriage of goods by road, hired vehicles under the same conditions as vehicles owned by them as long as the hired vehicles are registered or put into circulation in compliance with the laws in their countries.

This general rule is however subject to some specific conditions which have to be met should the use of hired goods vehicles be allowed in international transport operations. Member States cannot forbid the use within their territory, for the purpose of traffic between Member States, of vehicles hired by undertakings established on the territory of another Member State provided the following four conditions are met: 1)the vehicle is registered or put into circulation in compliance with the laws of the Member State where the undertaking hiring it is established; 2)the contract relates solely to the hiring of a vehicle without a driver and is not accompanied by a service contract concluded with the same undertaking covering driving or accompanying personnel; 3)the hired vehicle is at the sole disposal of the undertaking using it during the period of the hire contract; and 4)the hired vehicle is driven by personnel of the undertaking using it. Proof of compliance with these four conditions is to be provided by means of a number of documents which have to be on board the vehicle. The Directive also allows Member States to exempt own-account transport operations (i.e. manufacturers, trading companies etc. carrying their own goods) with vehicles with a total permissible laden weight of more than 6 tonnes from the scope of the Directive (Article 3(2) of the Directive), i.e. Member States can forbid it, if they wish to do so. Member States are free to lay down less restrictive conditions for the use of hired goods vehicles (Article 4), which underlines the character of the Directive as providing a minimum level of liberalisation: Member States cannot forbid the use of hired goods vehicles when the conditions set out in the Directive are fulfilled. They may restrict it otherwise, but they don't have to. 2.1.2Evaluation of Directive 2006/1/EC In 2015, the Commission carried out an ex-post evaluation of Directive 2006/1/EC. It was supported by an external contractor that produced a study to this effect. The Commission Staff Working Document on the ex-post evaluation clearly establishes shortcomings of the Directive both in achieving its own objectives and in its coherence with today's policy priorities. These shortcomings are related to the discretion which the Directive gives Member States in restricting the use of hired vehicles. 2.2.What is the problem and why is it a problem? The following problems with the current Directive have been identified in the course of the evaluation and in earlier attempts to amend the Directive: 1. Own account operators in certain Member States cannot use hired goods vehicles and take advantage of the benefits associated with their use Article 3(2) of the Directive allows Member States to restrict the use of hired goods vehicles with a maximum mass above 6 tonnes for own account transport activities. According to information available to the Commission, four EU Member States currently make use of this possibility: Greece, Italy, Spain and Portugal. As a consequence, own account operators in these four countries cannot benefit from the increased flexibility and the higher productivity associated with the use of hired goods vehicles. The four Member States together account for 11.5% of total road haulage activity on own account in the EU. However, at 23%, their combined share in total road haulage activity for hire and reward in the EU is twice as high. As restrictions on the use of hired goods vehicles for own account transport activities negatively influence the development of the vehicle renting and leasing sector, they also have a negative impact on professional road haulage operators who may not benefit from the advantages of a fully developed and competitive vehicle renting and leasing sector (see also problem 2 below). Own-account operators in countries with restrictions regarding the use of hired heavy goods vehicles have two options: either they buy a vehicle to transport their own goods or they ask a professional haulage operator to carry the goods for hire and reward. Stimulating the demand for professional road haulage operators has traditionally been one of the justifications for the restrictions on the use of hired vehicles for own account operators. However, instead of outsourcing the transport activity to professional road haulage operators, many own account operators without access to hired goods vehicles use their own vehicles instead. Vehicles owned by own account operators tend to be underutilised. This appears to apply in particular to own account operators in Member States that restrict the use of hired goods vehicles: the share of empty runs during own account operations in Greece, Italy, Spain and Portugal is significantly above the corresponding share in Member States without such restrictions. As hired vehicles are generally newer, safer and less polluting than the average fleet, restricting their use for own account transport operations - which in Greece account for no less than 55% of total vehicle mileage in road freight transport - also has negative impacts on road safety, air quality and the fight against climate change. It is not surprising in this context that Member States with restrictions on the use of hired goods vehicles for own account transport operations are among those with the highest share of old and very old vehicles being used in road transport. As the four Member States may already now remove all their restrictions related to the use of hired goods vehicles by own account operators and hence create all the opportunities mentioned above, the question why they don't do so and how they justify the restrictions needs to be addressed. Next to the argument that it would stimulate the professional road haulage sector (see above), another aspect that has been brought to the Commission's attention is that the restrictions would prevent an increase in unfair competition by own account operators. It is argued that by being able to hire vehicles, their access to vehicles would be facilitated. Competition would be unfair because own account operators do not have to respect the same rules as professional operators for hire and reward. The Italian authorities indicated that this was already an issue in their country and they would not want to increase it.

It is however questionable whether these arguments are valid. The Commission has not heard from any authority of a Member State which allows the use of hired vehicles for own account operations that it would want to restrict it again because of too much unfair competition. There seems therefore to be no proven link between liberalisation and increased unfair competition. In fact, when own account operators are "forced" to buy their own vehicle (because they can't hire one) and that vehicle is then underutilised, they would have an incentive to engage in unfair competition with professional road hauliers, if only to increase the utilisation of the vehicle and thus make the purchase worthwhile. As mentioned above, many own account operators choose the option of buying their own vehicle instead of outsourcing the transport activity. It is therefore unclear how the restrictions could stimulate the professional road haulage sector. 2. Vehicle hiring markets in Member States with restrictions remain underdeveloped The evaluation of the Directive has revealed that the hired vehicle market is relatively underdeveloped in the four Member States which impose restrictions on the use of hired vehicles for own account operations. An indicator for relative underdevelopment is a comparison of the share of each Member State in EU GDP with the respective share in total turnover in the economic sector "renting and leasing of trucks" (NACE rev. 2 code: N 77.12). It shows clearly that in Italy, Greece and Portugal, the share in total EU turnover in the sector "renting and leasing of trucks" is significantly smaller than the respective share in EU GDP. Figure 1 - Share in EU GDP and in total EU turnover in the economic sector "renting and leasing of trucks" in 2014 Note: No data (on the share in EU turnover of sector N 77.12) available for CZ, EE, IE, ES, LU, MT and NL. Source: Eurostat structural business statistics. As Figure 1 above shows, the absence of restrictions on the use of hired vehicles for own account operations in itself appears not to be a sufficient condition for a strong development of the sector "renting and leasing of trucks" (as other factors appear to hold back the sector in countries such as Romania, Slovakia or Slovenia where there are no such restrictions). But the absence of restrictions appears to be a necessary condition for a strong development of the sector as no country with restrictions shows a strong performing truck-renting sector. Feedback received from leasing companies suggests that they do not consider entering these markets because of the restrictions. As a consequence, fewer companies are active in the vehicle leasing business in these Member States which in turn reduces competition in the sector. This leads to less choice and higher prices for those who are allowed to use hired goods vehicles. As a result, the competitiveness of transport operators who provide road haulage services for hire and reward risks being compromised - quite the opposite of the intention to stimulate the road haulage sector by restricting the use of hired goods vehicles for own account operators. It should be noted in this context that the four countries in question together account for almost a quarter (23%) of total road haulage activity for hire and reward in the EU and a similar share (24%) in employment in the road haulage sector. 3. Patchwork of restrictions and uncertainty concerning the use of hired goods vehicles in different Member States The Commission identified already in 1989 that allowing Member States to restrict the use of hired goods vehicles in certain market segments and under certain conditions resulted in "unequal application of the Directive" in the 12 Member States of the European Community. To reduce this unequal application of the Directive, it proposed to delete some provisions which allowed Member States to impose restrictions on the use of hired goods vehicles. Experience gathered from stakeholders also suggests that the differing rules related to the use of hired goods vehicles in the Member States of the EU is confusing for operators and may lead to fines in other Member States where the rules differ from the ones known by an operator from his Member State of establishment. The cross-border use of hired goods vehicles is guaranteed by the Directive if the vehicle has been hired in the Member State of establishment of the undertaking hiring it. However, if the vehicle has been hired in another Member State, then Member States may forbid their use for international transport operations on their territory. Spain has been reported in the past to have forbidden the use of hired vehicles if they had not been hired in the country where the undertaking using them was established. For instance, if an operator from Luxembourg had hired a vehicle in nearby Metz (France) and driven to Spain, he would have been fined for using it on Spanish territory. Table 1 - Summary of restrictions concerning the use of hired vehicles registered in another Member State Restriction Number of Member States List of Member States Use of vehicles hired in another Member State by national operators No restrictions 8 BG, ES, FR, CY, NL, SI, SK, UK Maximum period after which registration is required 7 AT, PL (1 month), LV, RO (3 months), BE, CZ (6 months), SE (12 months) National registration of (motor) vehicle required (usually within 20 days) 13 DK, DE, EE, IE, EL, HR, IT, LT, LU, HU, MT, PT, FI Use of vehicles hired in another Member State by operators established in that Member State Allowed 28 (allowed in all MS as provided for in Article 2(1) of the Directive) Use of vehicles hired in a third Member State by operators from another Member State Allowed (assuming Community licence in place) 18 BG, DE, EE, EL, FR, HR, IT, CY, LT, HU, MT, NL, AT, RO, SI, FI, SE, UK No information 10 BE, CZ, DK, IE, ES, LV, LU, PL, PT, SK Source: Ex-post evaluation of Directive 2006/1/EC - Final report. The main issue brought up in the public consultation was the patchwork of rules that apply to the use of hired goods vehicles in the EU. Two thirds of all respondents (11 out of 17) found the unclear implementation of the existing rules concerning the use of hired goods vehicles an important problem. Three quarters (19 out of 25) thought that the presence of different restrictions across EU Member States related to the use of hired goods vehicles above 6 tonnes by own account operators would create a complicated legal framework that caused uncertainty for firms and transport operators. No fewer than 84% of all respondents (21 out of 25) thought that the complicated legal framework related to the use of a goods vehicle that has been hired in another Member State was causing uncertainty for firms. In some Member States, the rules which apply to the use - on their territory - of vehicles hired by a national operator abroad differ from those that apply to the use of vehicles hired by a foreign operator outside his country of establishment. In the former case, the rules depend on the period that an operator may use a vehicle registered abroad before it has to be re-registered in his country of establishment. In the latter case, most Member States appear to require the certified copy of a valid Community licence (which is anyway required to be able to provide international road haulage services in the EU). 4. Undertakings active in the vehicle rental / leasing business and transport operators cannot make the most efficient use of their fleet (e.g. by moving vehicles around to respond to temporary demand peaks) Existing restrictions concerning the use of vehicles registered in another Member State can also be an obstacle to the flexibility of operations and the capacity to cope with seasonal fluctuations, both for vehicle hiring firms and for hauliers. For vehicle hiring firms, the main issue is that they cannot use their vehicles registered in one Member State to meet supply gaps and seasonal demand in other Member States. Establishment in another country just to meet seasonal demand peaks is not always an economically viable option. Yet, even if they were established in several Member States, they would have to keep additional spare capacity in each Member State in order to be able to meet seasonal variations. This point has been made by the leasing industry on several occasions, in the public consultation and during the stakeholder interviews.

An alternative to keeping additional spare capacity would be de-registering the vehicles in the Member State where they happen to be registered and re-registering them in the Member State where they are needed. However, this would entail a significant administrative burden and costs estimated at around EUR 400 per vehicle. Particularly in the context of short-term rental for a few days or months, the de-registration and re-registration of vehicles is most probably not a viable option. From the point of view of transport operators, the presence of such restrictions means that they face limitations in their options of hiring vehicles from other Member States that may better meet their needs or that would cost less to hire abroad than in the Member State where they are established. The representatives of haulage operators that responded to the open public consultation considered that the restrictions represented important limitations to the flexibility of transport operations and the competitiveness of the sector. Right now, not much cross-border hiring activity has been reported by the stakeholders, although it would be allowed in some countries up to a certain period of time (e.g. in Belgium for up to 6 months). Only 11% (14 out of 130) of the respondents to the SME panel questionnaire indicated that they had experience in hiring a goods vehicle abroad. One of the reasons given for this low level of cross-border hiring is the legal uncertainty created by the patchwork of rules in the EU (see point 3 above). In case there were clear rules on the use of vehicles in the internal market which have been hired in another Member State, all 50% of the respondents who had a clear view indicated they would consider starting or increasing their use of such vehicles (the other half of respondents said they didn't know). In the absence of any clear data, it is very difficult to describe the magnitude of the problem. Demand for cross-border hiring is assumed to be short-term only - it would hence not affect (predominantly long-term) financial leasing, but only (predominantly short-term) vehicle renting and operational leasing. Assuming that 1% of all hired vehicles subject to vehicle renting and operational leasing contracts would be hired in another Member State once the use of such vehicles in the internal market was guaranteed by EU legislation (at least for a certain period of time), this would affect some 18,000 vehicles today and around 32,000 vehicles in 2030 (assuming an average annual growth rate of 3.8%, see below). If these vehicles were no longer required to undergo the de-registration and re-registration procedure costing EUR 400 per vehicle, it would save the operators some EUR 12.8 million in 2030. As with problem 1 identified above, the question comes up why not all Member States do already today allow the use of vehicles which have been hired in another Member State. The current Directive would allow any less restrictive rules. However, many Member States fear that by allowing the use of a vehicle hired (and registered) in another Member State, they would incentivise tax optimisation through large-scale out-flagging of the fleet of their operators to Member States with lower vehicle taxes. The vehicles would hence be registered in a lower-tax Member State and hired back by operators based in the higher-tax Member State. The fear of losing tax revenues has already been brought up in the discussions in the Council of a proposal that intended to liberalise the cross-border hiring market in 1995. In 2012, the Commission adopted a proposal for a regulation simplifying the transfer of motor vehicles registered in another Member State within the Single Market. It foresees among others that the use of a vehicle registered in another Member State shall not be restricted for up to 6 months before it has to be registered in the Member State where the holder of the registration certificate has moved his normal residence. The adoption of the regulation by the co-legislators is currently on hold. If it was adopted as such by the co-legislators, the use of a vehicle hired in another Member State should also be possible for up to 6 months. This would however likely only apply to the Member State where the undertaking hiring the vehicle is established. It would not guarantee the use of the hired vehicle in a third Member State. For that reason, an amendment of Directive 2006/1/EC may in such an event be even more necessary to provide legal clarity for operators aiming to use the hired vehicle across the EU. 2.3.What are the main problem drivers? As indicated in the problem tree (see Figure 4-1 in Annex 4), there are three underlying problem drivers: Problem driver 1: The use of hired vehicles with a maximum mass above 6 tonnes can be restricted for own account operations Problem driver 2: The use of goods vehicles that have been hired outside the Member State where the undertaking hiring it is established can be restricted. Problem driver 3: The rules related to the use of vehicles hired in another Member State differ from one Member State to another. Problem driver 1 directly affects problem n° 1 described above as own account operators in Member States with restrictions cannot use hired goods vehicles with a maximum mass above 6 tonnes and are thus prevented from benefitting from the advantages associated with the use of hired goods vehicles. It also affects problem n° 2 above as restrictions on the use of hired goods vehicles for own account operators reduce the potential market for the vehicle hiring/leasing sector. The market reduction thus imposed can be quite significant (up to 55% in Greece). Problem driver 1 also directly affects problem n° 3 above, as it allows Member States to impose their own restrictions, independent of other Member States. Problem driver 2 directly affects problem n° 4 above as Member States are not obliged to allow on their territory the use of goods vehicles which either domestic operators have hired in another Member State or which foreign operators have hired outside their own country. As the use of goods vehicles hired (and therefore registered) in another Member State can be forbidden, both vehicle hiring/leasing companies and transport operators cannot move their vehicles to where they are most needed. Instead they may have to keep spare vehicles in each Member State to cope with additional temporary demand. These vehicles risk not being used as efficiently as possible which lowers the productivity of the undertakings concerned. Problem driver 3, directly related to problem n° 3 above, is not uncommon whenever Member States are able to adopt their own rules. To the extent that the rules related to the use of goods vehicles that have been hired in another Member State (or for professional transport operators: goods vehicles hired in a Member State other than the one that has issued the Community licence) differ from one Member State to another, operators are faced with a patchwork of rules which creates uncertainty and generates additional compliance costs. 2.4.Who is affected by the problem, in what ways, and to what extent? Whose behaviour would have to change to improve the situation? The current restrictions on the use of hired vehicles have a direct or indirect impact on the following stakeholders: Own account operators (i.e. companies coming from a range of economic sectors that carry their own goods around) in the 4 Member States with restrictions that have no/limited access to a functioning and competitive market of hired goods vehicles and the relevant services and which, as a result, do not have the flexibility provided by hired goods vehicles and hence may face higher operating costs and a reduced capacity to renew their fleet. Road haulage operators for hire and reward are restricted in terms of their capacity to use vehicles registered in another Member State. Furthermore, to the extent that restrictions imposed on the hiring of goods vehicles for own account operations limit the overall development of the hired vehicles market, transport operators are also affected. Since the majority of road haulage enterprises are SMEs, limited access to the hired vehicles market may limit their capacity to respond to demand fluctuations, to improve their cash flow and to spread the additional cost of newer technologies over time. Furthermore, hire and reward operators involved in international transport operations that make use of hired vehicles may also be affected by the presence of different restrictions across the EU concerning the use of hired vehicles registered in another Member State. They face a legal patchwork which can create uncertainty and can lead to penalties in some Member States.

Vehicle hiring firms across the EU are restricted in accessing specific national markets. They cannot access and satisfy existing or dormant demand and cannot make the most efficient use of their vehicle fleet to meet seasonal variations. They also face a complicated legal framework with different restrictions in each Member State that require resources to ensure compliance. Around 6,500 enterprises are active in the renting and leasing of trucks in the EU, the majority of which are SMEs with only a few large multinational enterprises. Some 33,000 enterprises are active in renting and leasing of cars and light motor vehicles, part of which (those involved in the leasing of vans) may also be affected. National authorities are not particularly affected by the legislation in its current form since the monitoring and enforcement costs are generally limited across the EU. Loss of tax revenues from hired vehicles (acquisition and circulation taxes) was not identified as an important issue in the ex-post evaluation, but possible changes leading to increasing use of vehicles registered in another Member State may have implications on the level of national tax revenues. Indirectly, firms making use of transport services may also be affected to the extent that they cannot benefit from reduced costs of transport operations. However, the ex-post evaluation did not identify this as an important group affected by the existing restrictions. Finally, society in general is potentially affected by worse air quality due to an on average older vehicle fleet being used in Member States with restrictions (the fleet of hired goods vehicles tends to be newer, greener and cleaner than the overall fleet). This is likely to be marginal in terms of impact on air quality, but is worth acknowledging nonetheless. 2.5.What is the EU dimension of the problem? The problems mentioned above are mainly due to the possibility of Member States to adopt their own rules and restrictions with regard to the use of hired goods vehicles in specific market segments or, for international operations, in case some conditions are not met. In this context it is important to recall that the provision of road transport services is to a significant extent a transnational business; one third of all international road haulage activities in the EU are international transport activities. In the absence of harmonised rules at EU level, operators active in international road transport activities are faced with a patchwork of rules which hampers their ability to operate efficiently throughout the EU and makes their life more difficult than it needs to be. Providing a harmonised legal framework across the EU would contribute to solving the issues identified above. 2.6.How would the problem evolve, all things being equal? The Directive has not been changed for more than 25 years. Before it was last amended in 1990, 5 of the 12 Member States of the then European Community applied minimum hire periods and 6 of them exempted own account operations from the scope of the Directive. The 1990 amendment (Directive 90/398/EEC) abolished the possibility to impose minimum hire periods and limited the exemption of own account transport to the use of vehicles above 6 tonnes. Of the six Member States which restricted the use of hired goods vehicles for own account purposes in 1989, only two (Denmark and Germany) have meanwhile completely abolished these restrictions. The other four (Greece, Italy, Spain and Portugal) are still applying their restrictions to vehicles above 6 tonnes. In the absence of an EU initiative, the rules governing the use of hired vehicles in the Member States of the EU will likely not change any time soon. Transport operators and vehicle renting and leasing firms would continue to face diverging restrictions across Member States. Operators in the four Member States which still restrict the use of vehicles above 6 tonnes for own account operators would continue to be restricted in their economic freedom and would continue to be faced with a relatively underdeveloped vehicle renting and leasing market. Authorities from Italy and Portugal have made clear that they see no need to change the rules. In relation to the use of goods vehicles that have been hired in another Member State, there is again no indication that Member States will introduce changes to existing provisions in the absence of EU action. Possible changes may happen as a result of the proposal for a "Regulation simplifying the transfer of motor vehicles registered in another Member State within the Single Market" which foresees that "a Member State may only require the registration on its territory of a vehicle registered in another Member State if the holder of the registration certificate has his normal residence on its territory" and grants a 6-month grace period for doing so. It may provide for a similar grace period for the use of a vehicle hired abroad, at least in the Member State where the undertaking hiring it is established. However, the proposal faces strong opposition from some Member States in the Council and is currently on hold (see also point 4 of section 2.2 above).



3.The right of the EU to act 3.1Legal basis The legal basis for this initiative is Title VI (Transport) of the Treaty on the Functioning of the EU (TFEU), in particular Article 91 TFEU. It states, inter alia, that the European Parliament and the Council shall lay down common rules applicable to international transport to or from the territory of a Member State, or passing across the territory of one or more Member States, as well as the conditions under which non-resident carriers may operate transport services within a Member State. In accordance with Article 100 TFEU, the provisions of Title VI apply among others to road transport. 3.2Analysis of subsidiarity and added value of EU action Road transport is increasingly international. The share of international road freight transport activity in total road freight transport activity in what is now the EU-28 has gone up from around 28% in 2000 to almost 36% in 2014. The EU can provide a harmonised legal framework in the increasingly integrated internal road transport market. Without EU intervention, Member States would not provide the level playing field that is needed in the internal market. The existing patchwork of national rules can only be overcome through EU action. A harmonised legal framework will reduce compliance and enforcement costs across the EU. As the Directive currently allows Member States to restrict the use of hired vehicles under certain conditions, reducing the scope of Member States to impose restrictions on the use of hired vehicles requires amending the Directive which can only be done at EU level.

Although own account operations are mainly national (in terms of tonne-km, only about one eighth of all own account activities in the EU are international), opening up the own account market for the use of hired goods vehicles could have effects across economic sectors and across borders as more vehicle leasing companies, some from abroad, will be attracted to the new market, and as national transport operators for hire and reward will benefit from more choice and greater competition in the vehicle leasing market. In an integrated road transport market, changes to the framework conditions under which road hauliers operate in one market are bound to have an impact on road hauliers in other markets. The creation of a level playing field in the EU requires a harmonisation of the framework conditions across Member States. This can only be done at EU level.



4.Objectives 4.1general policy objectiive The general objective (GO) of the revision of the Directive is to support the further integration of - and the creation of a level playing field in - the EU road transport market in line with the political priority of the Commission for the period 2014-2019 to create a fairer and deeper internal market with a strengthened industrial base. This should increase the efficiency and competitiveness of the road haulage sector which ultimately will translate into a more competitive European economy, more jobs and higher economic growth. 4.2Specific objectives Specific objective 1 (SO1): Ensure equal access to the market for hired vehicles for transport operators across the EU This specific objective directly addresses problems number 1 and 2 identified in section 1.2. Access to the market for hired vehicles currently depends on the Member State where the transport undertaking is established. For instance, if it wants to carry its own goods in Greece, Italy, Spain and Portugal, the undertaking cannot hire a goods vehicle for that purpose. If it is established in a small Member State, it may not be able to use vehicles hired in a neighbouring bigger Member State with a much larger market for hired vehicles. Specific objective 2 (SO2): Ensure harmonised regulatory framework across the EU As long as Member States are free to restrict the use of hired vehicles, and be it only under certain conditions, the legislative framework differs from one country to another and thus creates a patchwork of rules. This objective hence directly addresses Problem No 3. A harmonised regulatory framework puts all players in the same position and reduces uncertainty among market actors thus also addressing Problem No. 4. Specific objective 3 (SO 3): Enable transport operators to perform their transport activities in the most efficient way possible The use of hired vehicles as opposed to the use of vehicles owned by operators can contribute to a better allocation of resources as operators do not have to spend their capital on vehicles which may then be underused and as hired vehicles tend to have a higher utilisation rate than vehicles owned by operators. In addition the use of hired vehicles can lower costs of operators as hired vehicles are on average younger and better maintained, hence more reliable and more fuel efficient. Hiring vehicles - if needed across borders - allows operators to flexibly adapt their fleet to short-term needs of the market such as temporary or seasonal demand peaks. This SO aims at addressing all four problems identified in section 1.2. Specific objective 4 (SO4): Reduce the negative externalities of road transport from heavy goods vehicles Road transport generates a number of negative effects both on society (e.g. accidents, fatalities) and the environment (e.g. air pollution, GHG emissions) which the EU wants to reduce: it has adopted numerous legislative acts to make road vehicles cleaner and safer. Promoting the use of the cleanest and safest vehicles can contribute to achieving this objective. It also supports the objectives of the Energy Union, in particular the European strategy for low-emission mobility.

5.Options This section addresses the possible options for meeting the objectives defined in section 3 above and tackling the problems identified in section 1. Based on a study carried out by external consultants as well as on the stakeholder consultation, the Commission first identified a list of policy measures which have the potential to address the problem drivers described above. In the course of the impact assessment process, the Commission refined this analysis and has looked into different forms of intervention by considering which issues have a potential of being solved either through soft law measures or through hard law measures. As a consequence, a couple of options were discarded (see section 5.2). 5.1Baseline scenario "No action at EU level" This option does not entail any action at EU level. This option would hence imply no costs or other impacts to be assessed. However, it would not address the problems identified above unless they would disappear by themselves. This is not expected to happen for the reasons given. Nevertheless, to understand the impact of the other policy options, which are assessed against the baseline, it is important to look at what the situation would be like if nothing was done. 5.1.1Baseline legislative development

By definition, the baseline assumes that Directive 2006/1/EC will remain unchanged. Other legislative acts which may have an impact on the use of hired vehicles such as the three Regulations forming the 2009 road package may be changed but the provisions related to hired vehicles or making explicit reference to Directive 2006/1/EC are expected not to be touched. Among others, these provisions make sure that hired vehicles are treated in the same way as vehicles owned by operators when it comes to complying with one of the conditions for stable and effective establishment as a transport operator and regarding the issuance of certified copies of the Community licence in both road freight and road passenger transport. The baseline also assumes that the Proposal for a Regulation on simplifying the transfer of motor vehicles registered in another Member State within the Single Market is withdrawn and the current fragmented legislation at national level persists. The proposed Regulation aims at removing the obligation of re-registration of vehicles for a period of up to 6 months when the holder of the registration certificate moves his normal residence to another Member State. It could have implications in a situation where an operator hires a vehicle for up to 6 months in another Member State. Given the lack of progress in the Council, it is unlikely that the proposal will ever be adopted. In the (unlikely) event that the Regulation was adopted by the co-legislators, Member States would have to allow the use of vehicles registered abroad for up to 6 months. This would then contradict with the provisions of the Directive which allows Member States to restrict the use of vehicles that have not been hired in the Member State where the undertaking hiring it is established. In other words, it would make an amendment of the Directive even more urgent. 5.1.2Baseline market development This section looks at the expected evolution of the market for hired vehicles until 2030 without changes to the Directive. When developing the baseline, it is important that all types of vehicles potentially affected by changes to the Directive are covered. The Directive applies to "motor vehicle[s], trailer[s], semi-trailer[s], or combination[s] of vehicles intended exclusively for the carriage of goods". As the Directive does not specify a weight limit, all goods vehicles are covered, be they light (light commercial vehicles, vans, with a maximum mass up to 3.5 tonnes) or heavy (heavy goods vehicles with a maximum mass above 3.5 tonnes), motorised (rigid trucks and road tractors) or non-motorised (trailers and semi-trailers). Trailers and semi-trailers can already be freely hired and used all across the EU without restrictions (facilitated by Regulation (EC) No 1072/2009), so there is no need to include them in the baseline. There is a variety of vehicle renting and leasing forms (see Table 2 below). While they are all covered by the Directive, not all of them are relevant for the baseline as some are not affected by the proposed changes to the Directive. As financial leasing is exempted from the restrictions on own account transport in all four Member States with such restrictions and as it is long-term (>1 year), it will not be affected by Options 1a (which abolishes the restrictions for own-account operations), 1b (which allows the use by an operator from one Member of a vehicle hired in another Member State for 3-4 months) and 1c (which combines both 1a and 1b). It is not relevant for Option 2 either. By contrast, vehicles subject to renting and operating leasing are clearly relevant for the development of the baseline. Table 2: Typology of typical leasing and rental contract types and whether they are affected by the proposed changed to the Directive Type of truck lease/rental Vehicle on lessee's balance sheet? Contract term Vehicle registra-tion Pre-mature termi-nation? Vehicle insurance Purchase option? Affected by proposed changes in Directive? Financial leasing Yes Transport operator No Option Yes No Financial leasing with services Yes Transport operator No Option Yes No Rental with BuyBack without services No Transport operator No Option No Yes Rental with services No Transport operator No Option Yes Yes Full service operating leasing No Transport operator No Option Yes Yes Pool rental (all inclusive*, no split) No 1 day - 36 months Supplier / rental company Yes Standard No Yes Note: * excluding driver and fuel. Source: Ricardo (2017). The base year estimate for the number of hired commercial vehicles in renting and operating leasing has been derived using vehicle stock data from Eurostat and national statistical offices (available for all Member States), data on the stock of leased vehicles from a selection of Member States provided by Leaseurope and an extrapolation to the Member States where no information on the leased vehicle stock was available. This extrapolation was based on the share of leased vehicles in the total vehicle stock. As this share is higher in mature markets than in developing markets, the 28 EU Member States were divided in 11 mature markets (BE, DK, DE, FR, IT, LU, NL, AT, FI, SE and UK) and in 17 developing markets (BG, CY, CZ, EE, IE, EL, ES, HR, LV, LT,HU, MT, PL, PT, RO, SI and SK). As a rule, Western and Northern European markets are considered to be mature, while Southern and Eastern European markets still have some significant growth potential. The result of this exercise for the whole EU is given in Table 3 below. Table 3 - Amount of hired (i.e. both rented and leased) goods vehicles in the EU-28 in 2014 Type of vehicle Total stock of goods vehicles in EU-28 Of which total hiring (i.e. renting & leasing) Share in total stock (%) Of which renting and operating leasing Share in total hiring (%) Share in total stock (%) Light commercial vehicles (LCVs) (<3.5 tonnes) 29.8 million 2.5 million 8.4% 1.42 million 56.7% 4.7% Heavy goods vehicles (HGVs) (>3.5 tonnes) 6.1 million 1.0 million 15.6% 0.33 million 34.8% 5.4% Total 35.9 million 3.5 million 9.6% 1.75 million 50.7% 4.9% Source: Leaseurope, Eurostat, national statistical offices. Data on overall commercial vehicle leasing (including all types of leasing and renting) in 17 EU Member States and Switzerland, provided by Leaseurope suggest that the number of new leasing contracts has grown at an average annual rate of 3.8% between 2010 and 2015, following a steep fall by around a quarter between 2008 and 2009 in the wake of the financial crisis. Although they could not be cross-checked by information from independent sources, the Leaseurope data for the years 2010 to 2015 are assumed to be reliable. In the absence of any more comprehensive data and estimates, it is assumed that the various types of leasing and renting have grown at the same robust rate since 2010 and will continue to do so in the future. The assumed annual average growth rate of 3.8% will lead to an overall increase in the hired vehicle market by 75% until 2030. With the size of the vehicle hiring market growing, more players are expected to enter the market which should increase competition and keep hiring rates in check. This in turn should strengthen the growth potential of the market. While 3.8% is assumed to be the average growth rate across the EU, the growth rate has been assumed to be lower in the 'mature markets' and higher in the 'developing markets'. Developing markets have been divided once more into slow-growing markets (CY, EL, ES and PT) and fast-growing markets (the other developing markets identified above). This distinction is relevant for the calculation of the assumed development trajectories for the different market types. Fast-growing markets are expected to converge with mature markets more quickly than slow-growing markets. Figure 2: Market growth trajectories Note: In most cases, 2016 is assumed to be year 1; by 2030 year 15 is reached.

Source: Ricardo (2017). As a result, under the assumed growth trajectories, the EU28 average share of light commercial vehicles held under rental / operating leasing contracts increases from some 5% in 2016 to around 8% in 2030. For heavy goods vehicles, the EU28 average share of vehicles under rental / operating leasing contracts increases from close to 6% in 2016 to about 9% in 2030. This means that the stock of light commercial vehicles under rental / operating leasing contracts will increase from some 1.5 million in 2016 to 2.6 million in 2030 while the stock of heavy goods vehicles under rental / operating leasing contracts is expected to grow from some 370,000 in 2016 to around 600,000 by 2030. 5.2Discarded policy options Extension of the scope of the Directive to the use of vehicles hired with drivers The extension of the scope of the Directive to the use of vehicles hired with drivers has been suggested by some Member States in the discussions in the Council in 1995 on the Commission proposal for a Council Directive on the use of vehicles hired without drivers for the carriage of goods by road (COM(95) 2 final). This option has been discarded as it would go beyond what is necessary to address the problems and to achieve the objectives identified above. Moreover, it would not be politically feasible in the current economic climate. There are risks that the liberalisation of the use of vehicles hired with a driver could in certain cases open the way to circumvent the social legislation related to road transport workers in a Member State. The extension would introduce a legally complex activity. Outsourcing the transport activity to a professional transport operator for hire and reward would be a less complex alternative. Complete liberalisation of the use of hired vehicles A complete liberalisation of the use of hired vehicles in the sense of allowing their use for all forms of carriage of goods (and passengers) by road at all times and everywhere in the internal market, without any restrictions related to the place of registration or the time period for renting would require over-riding all Member State legislation on vehicle registration rules. It would be a disproportionate measure as it would go beyond what is needed to solve the problems and to achieve the objectives identified above. Moreover, it would be politically unfeasible as Member States would fear losing revenues from vehicle taxation. Extension of the scope of the Directive to the use of hired buses and coaches The idea of providing similar rules as those that exist for the use of hired goods vehicles to the use of hired buses and coaches goes back to the Commission's 1992 White Paper. It was taken up by the Commission in the amended proposal for a Council Directive on the use of vehicles hired without drivers for the carriage of goods by road in 1996 where it said in a recital that it would envisage "submitting a proposal for liberalizing the use of vehicles hired without drivers for the transport of passengers in other Member States". However, no such proposal has been submitted to this day. When the initiative was launched to amend the Directive in 2016, the extension of the scope of the Directive to the use of hired buses and coaches was originally considered as one conceivable policy option. The consultation of stakeholders, of the public and of the SME panel, however, concluded that neither appeared there to be a problem (the sector was managing quite well without EU rules) nor was there a market for the hiring of buses and coaches without drivers. Whenever bus and coach operators are in need of additional buses and coaches, they usually subcontract to other bus and coach operators. Also in case of a breakdown of a vehicle abroad, operators usually contact partner companies and ask them to help out (usually hiring both coach and driver) until a replacement vehicle is available. It has therefore been decided to discard this option. In view of the recent and expected growth in the international transport of passengers by bus and coach in the wake of the recent liberalisation of the long-distance coach market in Germany and France and of the upcoming initiative of the Commission that foresees among others the EU-wide opening of long-distance coach services, it may be appropriate to monitor the evolution of the market for hired buses and coaches in the coming years. 5.3Policy options assessed The following policy options have been retained for analysis; their economic, social and environmental impacts will be discussed in detail in chapter 6. 5.3.1Option 0: Issue guidelines and recommendations This non-regulatory option foresees the issuance of recommendations and guidelines to clarify the application of the Directive and to promote a common approach in terms of the restrictions applied at national level concerning the use of hired goods vehicles for own account operations and of those registered in another Member State. 5.3.2Option 1: Targeted legislative amendments This option foresees specific surgical changes to the existing Directive with a view to reducing the scope for Member States to restrict the use of hired vehicles. There are three sub-options:

Option 1a: Allowing the use of hired goods vehicles for own account operators throughout the EU; this way, own account operators in the countries which currently still impose restrictions would be able to benefit from the advantages associated with the use of hired vehicles. Problems n° 1 and n° 2 identified above would be addressed; Option 1b: Allowing the use of goods vehicles which an operator established in one Member State has hired in another Member State for a certain period of time (3-4 months) e.g. to meet temporary or seasonal demand peaks. This option would help addressing problems n°3 and n° 4 identified above. For a certain period of time (3-4 months), the use of vehicles hired in another Member State would no longer be subject to a patchwork of restrictions in the EU and firms could move their fleets across borders to meet short-term and seasonal demand peaks, thus increasing the flexibility and productivity of their operations. The period "3-4 months" has been chosen as it would allow meeting most of the temporary or seasonal demand peaks and if needed also the replacement of defective vehicles. It would hence provide sufficient flexibility to operators while at the same time enabling Member States to still have some control over the fleet which their operators use. It should be borne in mind in this context that the open public consultation was inconclusive on the question of the optimum duration of temporarily allowing the use of vehicles registered in another Member State. Moreover, national legislation does not indicate a common duration either. It is understood that while Member States have to allow the use of vehicles hired abroad under this Option for at least 3-4 months, they may impose a maximum hiring period, as long as that period is not shorter than the minimum hiring period of 3-4 months foreseen in the amended Directive. It is assumed that the rules in the Member State where the operator is established regarding the re-registration of a vehicle that has been hired (and is therefore registered) in another Member State are the only ones that restrict the use of a vehicle hired abroad. As Option 1b only foresees the use of vehicles registered in another Member State on a temporary basis and for no more than 3-4 months, it is assumed that all Member States which have a re-registration deadline that is longer than 3 months or that have no such deadline are not affected by Option 1b. According to information provided to the Commission in the course of 2014 in the context of the legislative proposal for a Regulation simplifying the transfer of motor vehicles registered in another Member State within the Single Market (COM(2012) 164 final), 11 Member States appear not to be affected by Option 1b either because they have no deadline for the re-registration of a vehicle that has been hired abroad (BG, ES, FR, CY, NL, SI, SK and UK) or because their deadline is longer than 3 months (BE and CZ (6 months) and SE (1 year)). The other 17 Member States are however assumed to be affected (see Table 4 below). Table 4 - Overview of maximum length of use by residents in a Member State of vehicles registered in another Member State Re-registration deadline Vehicle owner/holder is resident Vehicle rented by resident Immediately (up to 20 days) BG, DK, DE, EE, EL, HR, CY, LV, LT, MT, FI, SE, UK DK, DE, EE, IE, EL, HR, IT, LT, LU, HU, MT, PT, FI 30-60 days IE, ES, FR, HU, AT, PL, PT AT, PL 3 months RO LV, RO 4 months NL - 6 months BE, LU, SI BE, CZ 1 year IT SE No deadline SK BG, ES, FR, CY, NL, SI, SK, UK No information CZ - Note: Member States in bold have more restrictive re-registration rules for vehicles rented by operators than for vehicles owned by operators. Source: Ricardo (2017) based on information given in a Non-paper which the Commission produced in 2014 at the request of COREPER during the discussions about the Commission proposal for a Regulation simplifying the transfer of motor vehicles registered in another Member State within the Single Market, COM(2012)164 final of 4.4.2012. Several stakeholders (national authorities and transport operators alike, but also union representatives) have highlighted possible negative consequences of this Option as it would make the enforcement of other rules governing the road haulage sector (in particular the market access rules) more difficult. Moreover, it would open the door to tax optimisation as operators could base most of their fleet wherever the vehicle taxation rates are lowest and then hire them back. This risk should be mitigated through a number of measures. First of all, national authorities will continue to know what vehicles are at the disposal of their transport undertakings. For instance, the information to be provided in the national electronic registers will in the future also include the number plate of each vehicle at the disposal of the undertakings. Then, national authorities, who have to issue certified copies of the Community licence to their road haulage operators for each vehicle at their disposal, may also indicate the number plate of the vehicle on the certified true copy. Finally, limiting the opening of the cross-border hiring market to 4 months in itself should prevent large-scale out-flagging of the fleet and tax optimisation. The authorities of the Member States just would have to make sure that a cross-border hiring contract is not renewed all the time. Option 1c: This option is a combination of Option 1a and Option 1b. It would allow both the use of hired goods vehicles for own account operators throughout the EU and the use of goods vehicles hired in another Member State for a period of 3-4 months. 5.3.3Option 2: Same rules for hired vehicles as for owned vehicles Under Option 2, the legal framework for the use of hired vehicles is the same as the one for the use of vehicles owned by operators. It does not matter whether a vehicle is owned or hired. This also means that the same rules (e.g. in terms of registration requirements) apply to a vehicle hired in another Member State as those that apply to a vehicle bought in another Member State. Option 1a is hence fully included in Option 2. All restrictions on the use of hired vehicles for own account transport operations are lifted. However, as regards the use of vehicles which have been hired in another Member State, some Member States apply less restrictive rules for instance when it comes to the requirement for re-registration of the vehicle in the Member State where the operator is established. In such cases, it is considered disproportionate to request Member States to apply exactly the same rules to the use of hired vehicles as they do to the use of vehicles owned by operators. Member States should not have to apply more restrictive rules to the use of hired vehicles than they do right now. In such cases, it would be sufficient that the use of hired vehicles is not discriminated against or is not subject to more restrictive rules than those that apply to the use of vehicles owned by operators. As Table 4 above shows, the requirements for re-registration of a vehicle from one Member State that is used by an operator established in (or a resident of) another Member State differ from Member State to Member State. Only in Ireland, Italy, Luxembourg and Portugal (in bold in the table), do vehicles hired abroad need to be registered earlier than vehicles which have been bought abroad by a resident. In most other Member States, vehicles that have been hired abroad are subject to less restrictive re-registration rules than vehicles purchased by residents abroad. 5.4Are Small and Medium sized Enterprises targeted by the different options? Almost all enterprises active in the road haulage sector and in the sector "renting and leasing of motor vehicles" are SMEs. According to Eurostat, more than 99% of all enterprises mainly active in either of the two sectors employ fewer than 50 persons. Road hauliers and vehicle leasing companies are among the sectors most affected by the initiative. Own account operators are from a number of different economic sectors; while it is impossible to say how many of them are SMEs, the option of liberalising the use of hired vehicles for own account operators should be particularly beneficial for own account operators that are SMEs as they stand to benefit most from the advantages associated with the use of hired vehicles as opposed to vehicles owned by them (more flexibility, higher productivity, less capital tied up in assets etc.).



6.What are the impacts of the different policy options and who will be affected?

6.1Economic impacts The impacts of each policy option have been calculated relative to the baseline trajectory described in section 5.1.2 above. It has been assumed that all policy options start to gradually take effect from 2020 onwards. In 2020, 25% of the policy impact is assumed to be felt, in 2021, 50% is felt, 75% in 2022 and the full policy impact (100%) from 2023 onwards. The impacts presented usually refer to the situation in 2030. 6.1.1Impact on the road transport market As described in the modelling approach in Annex 4, the main cost savings for transport operators comes from the fact that hired vehicles can help increase their productivity. As hired vehicles tend to have higher utilisation rates than vehicles owned by the operators, in particular if they are only needed to cover short-term or seasonal demand peaks, overall fewer vehicles are needed to provide the same amount of transport services. It is assumed that the utilisation rate is 11.1% higher, so only 9 hired vehicles are needed to replace 10 vehicles owned by the operators (10% reduction in vehicle stock). 1)Impact on transport operators of Option 0 Issuing recommendations and guidelines as foreseen under Option 0 is not expected to have any impact on the use of hired vehicles. As the existing legal framework is not being changed, the current restrictions will remain in place and operators are not expected to change their behaviour. Virtually all stakeholders who have been interviewed share this view. 2)Impact on transport operators of Option 1a Under this option, the restrictions on the use of hired goods vehicles with a maximum mass above 6 tonnes for own account operations are removed. As currently only Greece, Italy, Spain and Portugal apply such restrictions, the impact of Option 1a is limited to these four Member States. The share of own account operations in total vehicle mileage is used as the basis for estimating the growth in hired vehicles under this option. While in the baseline, no vehicles would be hired for own account purposes, it is assumed that under Option 1a the market penetration of hired vehicles in the own account segment will be about the same as it is in the segment for hire and reward. The model predicts around 35,000 additional hired vehicles in the four Member States together in 2030 compared with the baseline scenario. Table 5 - Estimate of the number of hired HGV under Option 1a based on own account mileage share and baseline number of hired vehicles Member State (MS) Share of own account operations in total vkm Number of hired HGVs in baseline in 2030 Number of hired HGVs under Option 1a in 2030 Additional hired vehicles above baseline through Option 1a Italy 12% 81,143 92,114 10,971 Spain 11% 37,847 42,735 4,888 Portugal 22% 5,911 7,585 1,674 Greece 55% 14,496 31,923 17,427 Total (4 MS) - 139,397 174,357 34,960 Source: Ricardo (2017). As each hired vehicle is assumed to replace 1.1 vehicles owned by operators (due to the on average higher utilisation rate of hired vehicles), 38,500 HGV are being replaced in 2030 under Option 1a. Since each HGV replaced produces annual savings for transport operators of some €825 (see Table 4-1 in Annex 4), total annual savings amount to almost €32 million. Under the sensitivity case of a 5% fuel saving from hired vehicles (see modelling approach in Annex 4), total cost savings of Option 1a increase to €75 million, as each vehicle replaced leads to an additional €1,100 worth of annual fuel savings (i.e. a total of €43 million of fuel savings). 3)Impact on transport operators of Option 1b Option 1b allows the use of goods vehicles that have been hired in another Member State for 3-4 months. It applies to both light commercial vehicles (<3.5 tonnes) and heavy goods vehicles (>3.5 tonnes). While stakeholders said they would welcome harmonised rules for temporary cross-border hiring, they have not been able to quantify the potential benefits this would bring to them. Moreover, no hard data could be gathered on the number of vehicles hired in another Member State. Anecdotal evidence suggests that the practice of hiring goods vehicles in another Member State is rather uncommon. Again, the modelling provides some clues on the possible economic impact of harmonised rules for cross-border hiring. Such harmonised rules are expected to lead to an even better utilisation of the pool of hired vehicles, as the same pool can be shared by a larger number of operators. It has been assumed that the reduction rate of the size of the fleet owned by operators by hired vehicles increases from 10% to 11% due to harmonised rules on cross-border hiring. As this will lead to some cost savings, which in a highly competitive market environment are passed on to customers, a 1% increase in demand is expected (lower prices = more demand). The overall number of hired vehicles hence remains the same as in the baseline, but the higher utilisation rate due to a harmonised framework for cross-border hiring means that a greater number of owned vehicles can be displaced (see Figure 3 below). Figure 3: Illustration of the approach for quantifying the impacts of Option 1b Source: Ricardo (2017). As 10% more vehicles are assumed to be replaced by hired vehicles under Option 1b, there is a 10% increase in net savings per vehicle replaced. In the case of light commercial vehicles (<3.5 tonnes), this adds up to total cost savings of around €50 x 900,000 vehicles = €45 million over the baseline in 2030. In the case of heavy goods vehicles (> 3.5 tonnes), it adds up to total cost savings of around €83 x 350,000 vehicles = €29 million over the baseline in 2030. In total, Option 1b should bring annual cost savings of around €74 million by 2030 for transport operators. Under the 5% fuel saving scenario, each light commercial vehicle replaced is expected to save some €500 in fuel cost per year and each heavy goods vehicle is expected to save some €1,100 per year in fuel. As the number of additional vehicles replaced above the baseline is 9,000 light commercial vehicles and 4,000 heavy goods vehicles, fuel savings amount to €4.5 million for light commercial vehicles and €4.4 million for heavy goods vehicles, i.e. a total of €9 million. Including the fuel cost savings, total cost savings of Option 1b can thus be assumed to be €83 million per year.

4)Impact on transport operators of Option 1c Option 1c is the sum of Option 1a and Option 1b. As both Options are independent of each other, their effects can be added up. Total cost savings (including fuel savings) for transport operators from Option 1c are hence expected to be €158 million (€75 million from Option 1a and €83 million from Option 1b) in 2030. 5)Impacts on transport operators of Option 2 Option 2 ensures that the legal framework for the use of hired vehicles is not more restrictive than the rules that apply to the use of vehicles owned by operators. Option 2 fully covers Option 1a. In addition, less restrictive re-registration rules would be required in the four Member States Ireland, Italy, Luxembourg and Portugal where currently the re-registration requirements for vehicles hired abroad are stricter (i.e. the grace period before re-registration is required is shorter) than for vehicles purchased abroad. Cost savings associated with less stringent rules on cross-border hiring of light commercial vehicles in Ireland, Italy, Luxembourg and Portugal are expected to amount to €17 million per year, the corresponding figure for heavy goods vehicles being €10 million. In addition, the €32 million saving from Option 1a also applies, bringing the total cost savings for heavy goods vehicles to €42 million. Including the 5% fuel saving assumption, cost savings for transport operators amount to €19 million in the case of light commercial vehicles and €86 million in the case of heavy goods vehicles. Total operational cost savings from Option 2 hence amount to €105 million. 6)Summary of economic impact for transport operators The evolution of the cost savings over time from the use of hired heavy goods vehicles and hired light commercial vehicles is given in Figures 4-4 and 4-5 respectively in Annex 4. In a microeconomic perspective, the assumed reduction in fixed operating costs by 10% translates into cost savings of around 1.5% of the average overall cost (i.e. fixed and flexible operating cost) per vehicle as fixed costs have a share of around 15% in total vehicle operating costs (incl. fixed costs as well as costs for driver, fuel, tyres etc.). Even if only 50% of these savings accrue to transport operators, they still reduce their costs by 0.75% when moving from the use of owned vehicles to the use of hired vehicles. Together with the assumed 5% savings in fuel costs which, depending on the vehicle type, can be up to one third of overall vehicle costs, total cost savings of more than 2% appear achievable. In a highly competitive environment, a 2% cost saving is quite important. However, in a macroeconomic perspective, when the potential cost savings are put in perspective of the total costs of road haulage operators across the EU, they appear admittedly rather small. Even the maximum total annual cost savings calculated for Option 1c in 2030 (€158 million) are no more than 0.06% of the total costs of the road haulage sector in the EU today (which are estimated to be around €280 billion). However, the majority of cost savings will be made in the Member States which currently most restrict the use of hired goods vehicles. In Greece, for instance, the potential cost savings are expected to be equivalent to around 1.7% of the total costs in the road haulage sector today, mainly due to its important own account transport segment. Greek own account operators should therefore be among those benefitting most from a liberalisation of the use of hired goods vehicles. In addition, Options 1b (and 1c) should bring greater advantages to border regions across the EU and to small Member States as their operators are more likely to make use of cross-border hiring. With costs in the road haulage sector as a whole going down by at most 0.06% (in Option 1c), and assuming a price elasticity of -1, the resulting increase in transport demand across the EU will also be no more than +0.06%. Box: How realistic is it that the calculated impacts will actually materialise? The impacts have been modelled under rather conservative assumptions regarding the benefits of hired vehicles (efficiency gains of more than 10% have been suggested; fuel savings going up to 7%) and regarding the vehicles affected in particular by Option 1b where the calculated impact is rather small (and may turn out to be much bigger). By contrast, the assumed size of the vehicle leasing market in the baseline in 2030 (75% bigger than in 2015; average annual growth of +3.8%) which also affects the impact of the individual policy options, is admittedly on the upper end of projections. Overall, however, the impacts presented here are considered to be reasonable and fairly realistic. 6.1.2Impact on the vehicle hire sector While the growth in the road haulage sector from the removal of barriers for the use of hired vehicles is expected to be relatively small (see above), the same cannot be said of the impact on the vehicle hire sector. Under Option 1a, the number of HGVs replaced by hired vehicles in 2030 is 6.4% higher than in the baseline, under Option 1b, it is 0.7% larger than in the baseline. Under the combined Option 1c, the market is 7.2% larger compared to the baseline. Figure 4-6 in Annex 4 shows this difference over baseline in absolute terms. The maximum number of HGVs replaced by hired vehicles reaches just over 43,000 in 2030 (in Option 1c). Average annual non-fuel vehicle costs are around €17,000 per HGV (see Figure 4-3 in Annex 4) which can be assumed to roughly correspond to the turnover per vehicle in the HGV hiring sector. Under Option 1a, the extra number of HGVs replaced in 2030 is 38,500 (see above) thus resulting in some extra €650 million turnover. Under Option 1b, an additional 4,000 HGV and some 9,000 LCV are replaced by hired vehicles in 2030. At an operating cost of €17,000 per HGV and of €10,000 per LCV, this translates into extra revenues of €158 million. Assuming a 10% profit rate in the industry, expected profits in the vehicle hire sector may therefore increase by €65 million, €16 million and around €81 million under Options 1a, 1b and 1c respectively. Option 2 combines the growth in the vehicle hire market from Option 1a and the growth of Option 1b in Ireland, Italy, Luxembourg and Portugal. At €72 million additional gross profits by 2030, its impact is between Option 1a and Option 1c. At a more general level, removing restrictions on the use of hired goods vehicles significantly improves market conditions for vehicle rental and leasing companies. The vehicle rental and operating leasing market in Member States with restrictions is relatively underdeveloped (see Figure 1 above). Removing the restrictions is bound to help develop these markets which will benefit from the arrival of new companies providing vehicle rental services which in turn increases competition and the supply of vehicles for hire or rent. In this sense, in particular Option 1a is expected to shake up the vehicle rental and leasing sector in the four Member States which currently restrict the use of hired heavy goods vehicles for own account purposes. Option 1b allows the vehicle rental sector to offer its services across borders for up to 3-4 months. This should improve the productivity of the fleet of the vehicle hiring and leasing sector - above all in the 17 Member States which will have to adapt their re-registration rules for vehicles hired abroad to the new Directive. Option 1c combines the benefits of Option 1a and Option 1b. Option 2 combines the benefits of Option 1a with only a few of the benefits from Option 1b. Its impact is hence smaller than that of Option 1c. 6.1.3Impact on authorities

Administrative burden on authorities Options 0, 1a and 2 are not expected to create any tangible additional administrative burden for national authorities. However, the authorities of some Member States (DK, IT) have raised the issue that the liberalisation of cross-border hire in Option 1b (and hence also 1c) may make enforcement of market access and social rules more complicated as the registration plate of the vehicle does not indicate the place of establishment of the operator. The Greek authorities believe that a register of hired vehicles would be required to be able to ensure that cross-border hiring is only done on a temporary basis and not in a permanent way to minimise tax burdens or to obscure illegal business practices. The Swedish authorities, who already now appear to allow foreign-registered trucks to be used in Sweden for up to one year, do not have a specific register. For the roughly 60 foreign trucks currently in use by Swedish operators, the creation of a dedicated register is arguably not worthwhile. However, if the use of goods vehicles hired in another Member State was allowed across the EU, thus eliminating legal uncertainty, the number of such vehicles may increase significantly. The economic analysis of Option 1b above suggests that by 2030 around 4,000 more heavy goods vehicles and 9,000 more light commercial vehicles would be replaced due to the legal certainty provided by this Option that a vehicle hired in another Member State can be used for up to 3-4 months without any restrictions. The creation and operation of a dedicated register would create additional costs of around €500,000 per year EU-wide. Alternatives have been suggested by the European Transport Workers' Federation (ETF). They include the indication of the vehicle number plate in the national electronic registers of road transport undertakings (which are connected through ERRU, the European Register for Road Transport Undertakings) and/or the allocation of a temporary number plate by the authorities of the Member State where the operator hiring the vehicle is established. These alternatives are likely less expensive than the creation of a new register. However, own account operators are not covered by the national registers and issuing temporary number plates could still create some administrative burden. Own account operators are less likely to hire vehicles in another Member State and Member States have to issue a certified copy of the Community licence to professional transport operators for each vehicle at their disposal. Through this system, they already now have some control over what is happening in their countries. A dedicated register for hired vehicles seems therefore unnecessary. Some additional enforcement costs to effectively control the use of vehicles hired in another Member State will likely be required though. Budgetary consequences All policy options (except for Option 0) are expected to have an impact on Member States' tax revenues. The harmonisation of rules on the use of vehicles hired in another Member State (in particular Option 1b, but also 1c and 2) may incentivise operators to hire vehicles registered in Member States with low taxation levels. While such cross-border hiring should in principle only be possible on a temporary basis, e.g. to cover seasonal demand peaks, unscrupulous operators may opt for a more permanent use of vehicles hired abroad (or for constant renewals of short-term hiring contracts). It was not possible to estimate the tax losses and gains due to increased cross-border hiring activities. In any case, effective enforcement measures should prevent such behaviour. Overall vehicle tax revenues could go down slightly as altogether fewer vehicles are needed when the use of hired vehicles is being intensified, due to the higher utilisation rate on average of hired vehicles compared with non-hired vehicles. However, the cost savings achieved through the use of hired vehicles and the associated increase in productivity may translate into a higher profitability of the sector, which should lead to increases in corporate tax revenues. This can be expected under all policy options except Option 0. Option 1c is expected to lead to losses in vehicle tax revenues of €11 million but gains in corporate tax revenues of €38 million, leading to a net increase in tax revenues of €27 million in 2030. Option 1a will bring additional tax revenues to all four South European countries which apply restrictions on the use of hired heavy goods vehicles for own account operations. 6.1.4SME Impact Option 0 will not help SMEs as the guidelines and recommendations are not legally binding and as they may be interpreted differently, potentially causing even more confusion. Option 1a gives many SMEs in Greece, Italy, Spain and Portugal, who carry goods on own account, the possibility to use hired vehicles. Some concerns were expressed, that SMEs in the road haulage sector could potentially suffer from increased competition from own account operators. But on the other hand, the draft measure will allow them to save costs and to put their capital in more lucrative investments instead of spending it on vehicles which would then likely be underutilised. SMEs should particularly benefit from this option as their access to capital is usually more restricted than the one for bigger companies. Option 1b increases the flexibility of SMEs and of bigger companies - shifting vehicles around to meet seasonal or temporary demand peaks in another Member State may benefit bigger companies more but SMEs also benefit from the greater choice in renting a vehicle that Option 1b offers them. The impact of Options 1c and 2 on SMEs is expected to be similar to the combined impact of Options 1a and 1b in the case of Option 1c and somewhat weaker as regards the cross-border hiring in Option 2. 6.2Social impacts In this section, the impact of the various options on employment, working conditions and road safety are being assessed. 6.2.1Employment Opening up hitherto closed markets for the use of hired vehicles is bound to create additional business in the vehicle leasing sector. The impact on employment has been calculated using the average number of vehicles per employee in the commercial vehicle renting and leasing industry (16.45). Assuming that a 1% increase in activity leads to a similar level of increase in employment, a total of 2,900 additional jobs are expected to be created in the vehicle leasing sector by 2030 under Option 1c, an increase by 1.7% in the sector "renting and leasing of motor vehicles" and by 11.1% in the subsector "renting and leasing of trucks". The 2,100 extra jobs under Option 1a are only created in the four Member States with restrictions (Greece, Italy, Spain and Portugal). This means that also under Option 1c, over 70% of all additional jobs are created in these four Member States. Option 1b leads to the creation of 800 extra jobs in the vehicle renting and leasing business in the 17 Member States with more restrictive re-registration requirements for vehicles registered abroad. Additional jobs may also be created in the 11 Member States which do not have to change the re-registration rules, as the clear legal framework allowing the EU-wide use of vehicles hired in another Member State may incentivise operators also in these countries to more intensely tap into foreign markets. These potential additional jobs have not been quantified though. The intensified use of hired goods vehicles is expected to lead to some job creation also in the road haulage sector. Again, assuming a 1% increase in activity leads to a 1% increase in employment, Option 1c is expected to create up to 1,700 new jobs by 2030. All other options are expected to create fewer additional jobs than Option 1c. Employment in both sectors combined is hence expected to increase by up to 4,600. 6.2.2Working conditions A few stakeholders, including a representative of the drivers (ETF), raised concerns over a possible deterioration in working conditions due to the increased competitive pressure as an indirect effect of the initiative. The Italian authorities reported that Option 1a may lead to an expansion of the provision of illegal transport services for hire and reward by own account operators as their access to vehicles would be facilitated. As own account operators do not face the same regulatory framework as operators for hire and reward, the increased level of unfair competition would negatively affect the working conditions in the sector. This concern has however not been raised by anyone in a Member State without restrictions for own account operators and no evidence was provided. It may hence be unfounded. Option 1b allows for the use of vehicles hired in another Member State. Representatives of workers consider that this will render the enforcement of the social and market access rules in road transport more difficult as the direct linkage between the vehicle and the driver is weakened. A trade union representative (ETF) suggested that this impact may be mitigated by requiring the vehicle number plate to be indicated in the national electronic registers of road transport undertakings and /or the allocation of special temporary number plates for the period of the cross-border hire. While there are fears of indirect negative impacts of the increased use of hired vehicles, some direct positive impacts should come from the use of a hired vehicle fleet that is more modern and more comfortable than older vehicles.

6.2.3Road safety The majority of stakeholders - authorities, hauliers associations, vehicle renting / leasing companies - indicated that the impact on road safety is either neutral or slightly positive. Hired vehicles are on average newer, hence they tend to be equipped with more modern safety technology such as brake assist systems. As hired vehicles are generally also better maintained (according to information provided by the leasing industry), they are more reliable and less likely to break down. Overall, this should make the roads somewhat safer. Some stakeholders (transport operators) saw a potential safety risk in the fact that drivers are usually not fully familiar with the hired vehicle. Others (a trade union representative) feared that cross-border hiring may reduce the safety level of vehicles. Finally, an organisation representing public enterprises in Austria feared that cross-border hiring would increase the competitive pressure on undertakings which would put drivers under increased strain. Road safety may suffer as a result. It should be stressed though that the risks and fears mentioned here could not be substantiated and no supporting evidence has been provided or found. 6.3Environmental impacts CO2 is the main greenhouse gas (GHG) emitted by road transport vehicles. It is directly proportionate to (fossil) fuel consumption. Almost all goods vehicles run on diesel, so their emissions contribute to climate change. The CO2 emissions of trucks have not gone down a lot in the past. The focus in technological development was on exhaust treatment to lower pollutant emissions. This in turn required more energy which, together with a trend towards more powerful vehicles, kept fuel consumption and hence CO2 emissions at a relatively high level. However, latest developments in vehicle technology appear to have led to a decrease in specific fuel consumption, hence a decrease in CO2 emissions. EURO VI vehicles have been found to consume about 4% less fuel than EURO V vehicles. As EURO VI vehicles have been introduced 4 years after EURO V vehicles, the recent development in fuel economies is equivalent to a 1% reduction of CO2 emissions per year. This trend is expected to continue over the modelled time horizon, not least because of the introduction of aerodynamic devices and more aerodynamic cabins in the wake of Directive (EU) 2015/719. As regards the CO2 emissions of light commercial vehicles (vans), test cycles suggest a drop of emissions by around 2.2% per year for new vans brought on the market between 2012 and 2015. To meet the 2020 target of 147 g CO2 per km, CO2 emissions per km will have to go down by 2.7% per year. For the modelling, a 3% year-on-year reduction in CO2 emissions of light commercial vehicles is assumed. Pollutant emissions (NOx, PM etc.) are assumed to go down by the same rate as CO2 emissions over the modelled time horizon (2016-2030). They have already gone down quite significantly over the past 15 years with the introduction of ever more stringent EURO emission standards. As reductions of the emission limits on a similar scale are not expected in the future, a more modest annual rate of reduction of 1% in the emission of major pollutants is assumed. The reduction of pollutant emissions of light commercial vehicles is expected to slow to 3% per year from 2020 onwards from slightly higher levels until then. Although hired vehicles are normally younger than the average fleet and hence more fuel efficient, ultimately, lifetime vehicle mileage and emissions should be roughly equal between hired and non-hired vehicles. The key difference is that hired vehicles are used more intensively over the first few years of their life, thus running a greater share of their lifetime mileage in early years and reaching their lifetime vehicle mileage sooner than non-hired vehicles. The intensified utilisation of hired vehicles means more frequent fleet renewal. All other things equal, if rented vehicles are utilised over a 5-year use period, their average age is 2.5 years. If these rented vehicles are utilised 11% more intensively than the vehicles they replace in a company fleet (as was assumed in the quantification of economic impacts), this means replacing a fleet that is 11% larger and used 11% longer. The average age of the replaced fleet would hence be 0.28 years (just over 3 months) above that of the rental fleet. Given that an annual reduction by 1% is assumed for NOx, PM and CO2 emissions from heavy duty vehicles (i.e. heavy goods vehicles and buses and coaches), a reduction in average fleet age by 0.28 years will mean reductions of 0.28% amongst these emission categories for the share of transport activity replaced by hired vehicles. For light commercial vehicles, where improvements in NOx and CO2 emissions of 3% annually are assumed, hired vehicle emissions will be 0.83% lower than average vehicle emissions. Feeding the model with all these assumptions and adding the assumed 5% fuel efficiency gains of leased/rented vehicles over non-rented vehicles, the overall impact of the policy options on CO2 and pollutant emissions can be calculated. As shown in Table 4-4 in Annex 4, the result is a reduction of the emissions over the baseline by 0.04% at most (option 1c; LCV and HGV combined). Although this small relative reduction may not be impressive, it still helps in the fight for cleaner air and against climate change, at almost no cost.

7.How do the options compare? 7.1Effectiveness In terms of the extent to which the policy options achieve the objectives identified above, Option 0 (issuing recommendations and guidelines) is only marginally more effective than the baseline (do nothing). All stakeholders agree that guidelines and recommendations will not help remove existing restrictions on the use of hired vehicles. A guidance document may help operators to better understand the legal framework but it will not lead to legislative changes. Moreover, as it is not legally binding, and as it may be interpreted differently, it may lead to even more confusion. Options 1a and 1b are two complementary options each of which contributes to the creation of a level playing field in the EU road transport market. The two options target a different segment of the market for hired vehicles (Option 1a: own account operators using heavy goods vehicles in Greece, Italy, Spain and Portugal; Option 1b: transport operators using light commercial vehicles and/or heavy goods vehicles and vehicle leasing/renting companies in particular in the 17 Member States where current re-registration rules for vehicles hired abroad would not allow the use of such a vehicle for 3-4 months without re-registration). The combined Option 1c brings together the benefits of Option 1a and 1b. The increased effectiveness arises both from the removal of the restrictions on the use of hired vehicles for own account operations in the Member States concerned and from increased flexibility through the possible use of vehicles hired in another Member State for 3-4 months to meet temporary or seasonal demand. Option 2 is not as effective as Option 1c, as it leaves Member States the freedom to choose their own rules regarding the use of vehicles hired in another Member State as long as they treat them the same way as vehicles purchased abroad. It hence fails to create a level playing field and does not fully address the current regulatory patchwork. Only four Member States (Ireland, Italy, Luxembourg and Portugal) would need to change their legislation with regard to the requirements for re-registration of vehicles hired abroad. It is hence less effective than Option 1c where all Member States would introduce the same minimum period (3-4 months) regarding the use of vehicles hired abroad. 7.2Efficiency The regulatory costs of each option are relatively small. The production and dissemination of guidelines and recommendations under Option 0 would create some minor costs in terms of administration. Option 1a will remove current restrictions on the use of hired heavy goods vehicles for own account operators. The enforcement authorities in Greece, Italy, Spain and Portugal will no longer have to enforce the restrictions which should ease their regulatory burden and reduce their enforcement costs. The Italian authorities believe however that allowing the use of hired goods vehicles for own account operators may create other problems as it could incentivise own account operators to provide more illegal transport operations for hire and reward without being subject to the same rules on access to the profession or to the market as professional transport operators for hire and reward. The need to combat this kind of unfair competition reduces the overall cost savings for the administration. For own account transport operators in the four Member States, however, the compliance costs would disappear. Overall, Option 1a should result in a reduction of regulatory costs.

Option 1b (hence also Option 1c) allows the use of goods vehicles hired in another Member State for a period of 3-4 months. In order to prevent operators from abusing this possibility to hire goods vehicles in another