EUROPEAN COMMISSION Brussels, 9.7.2021 SWD(2021) 185 final COMMISSION STAFF WORKING DOCUMENT Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions

on taking stock of and updating the reform recommendations for regulation in professional services of 2017 {COM(2021) 385 final}





COMMISSION STAFF WORKING DOCUMENT Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions

on taking stock of and updating the reform recommendations for regulation in professional services of 2017



Detailed information

on the assessment of regulation in professional services Table of Contents I. Introduction II. Economic background II.1. Economic importance of professional services and choice of professions for the assessment II.2. Prevalence of professional services regulation II.3. Selected services market performance and the impacts of regulatory constraints III. Summary of professional regulation per Member State IV. Methodology used for the construction of the restrictiveness indicator IV.1. Overview

IV.2. Data sources – Thorough review of national legislation validated by national authorities IV.3. Professional activities under review IV.4. Regulatory requirements analysed IV.5. Quantification of regulation – Scoring system IV.6. Comparability with the OECD PMR indicators for professional services



I. Introduction Four years have passed since the Commission put forward its reform recommendations for regulation in professional services to help Member States identify opportunities for reforming unnecessary or disproportionate restrictions. Now seems to be an appropriate time to, firstly, evaluate whether and how Member States have used this guidance, and, secondly, to provide updated recommendations based on this assessment. The Commission already announced its intention to update the recommendations in its enforcement action plan of March 2020 . The COVID-19 pandemic has only increased the urgency of boosting the EU economy by, among other measures, ensuring that the regulatory framework in which this economy operates is not more restrictive than what is really necessary to ensure the protection of genuine public interests. Professional services are typically among the most highly regulated sectors of our economy. Nonetheless, the type and level of regulation differs greatly between Member States. While regulatory diversity can be the result of tailor-made responses to local differences, it can also be a sign of solutions from the past that have never been thoroughly reassessed based on today’s reality. To ensure that any future professional regulation does pass this quality test, the European legislator adopted the Proportionality Test Directive, which requires Member States to thoroughly assess the proportionality of new national professional regulation before its adoption. For all existing regulation, the updated recommendations set out in the Communication aim to once again point Member States towards those areas where regulatory reform could be most beneficial. This staff working document provides the necessary background information for the recommendations made in the Communication. It first sets out the economic background by highlighting the economic importance of professional services, in particular, the ones chosen for the assessment, prevalence of professional regulation, and impacts of regulation on market performance (II). The next section gives a detailed description of the regulatory situation for the selected professions in each Member State (III). Part IV provides a detailed explanation of the methodology used for the restrictiveness indicator.



II. Economic background II.1. Economic importance of professional services and choice of professions for the assessment The role of professional services in the EU economy cannot be underestimated. Services play a major part in the economy not only by directly contributing to value added and employment, but also through the value chain interactions. They play an increasing role in the production of goods in the context of what has been termed as ‘servicification’ of the economy (i.e. the rising indirect contribution of services into the production of goods, either as inputs and activities within firms, or as outputs bundled with goods). Dynamic, resilient and well-functioning services markets can therefore provide a strong basis for the performance of the rest of the economy.

Business services, many of which are regulated professional services, contribute around 13% to EU gross value added and almost 14% to EU employment. In addition to their direct contribution, they provide important inputs to the rest of the economy, including manufacturing, both domestic and cross-border. Being mostly defined as knowledge-intensive, these services contribute significantly to innovation and research activities. As in the 2017 reform recommendations, the Communication and this staff working document focus on a number of economically important groups of professions, namely architects, civil engineers, accountants/tax advisers, lawyers, patent agents, real estate agents and tourist guides. These groups of professions were selected because of their economic importance, their role in the innovation activities and their vital contribution to economic ecosystems, as well as the potential gains from reforming the regulatory framework surrounding them. They belong to four key broader economic sectors: business services, construction, real estate and tourism. For example, architectural and engineering sectors directly account for 1.4% of total employment and 1% of gross value added in the EU. Their indirect contribution in terms of the key inputs to other economic sectors is even greater (for instance, around 5% of all inputs in construction come from these two sectors; they are crucial for the construction processes). Over 50% of European companies in the architectural and engineering sector are considered ‘innovative enterprises’. Legal and accounting sectors together contribute 3% to EU employment and the same percentage to EU gross value added, and also provide vital services to other economic sectors. As regards tourist guides, a profession still regulated in two thirds of Member States, tourism is one of the major economic activities in the EU with wide-ranging impacts on the rest of the economy, as well as on society and culture. Patent agents were chosen because of their vital role in innovation and development, for which intellectual property rights (IPRs) such as patents, trademarks and industrial designs are indispensable tools in many industries. Real estate activities form a major part of the economy as a whole and play an important role in most economic activities, with impacts on businesses and the broader public.



II.2. Prevalence of professional services regulation Based on an EU-wide survey, around 22 % of the European labour force, or over 47 million citizens, are directly affected by professional regulation . Indeed, many of the services professions are traditionally highly regulated. In market economies, regulation can be justified when it intends to correct market failures, caused, for instance, by the presence of significant ‘externalities’ or strong information asymmetries. Such corrections should ideally be achieved with the least restrictive means and at a minimum possible cost for market participants. At the same time, regulatory restrictiveness can often be pushed above the necessary minimum, for example by the vested interests of the relevant professional groups. Analysis of regulatory restrictiveness for the economically important professions in focus shows significant remaining barriers to entering and practising these professions, as well as wide differences in regulatory approaches between Member States. Such restrictions span different aspects of access to and exercise of professional services, ranging from reserved activities and protection of professional title to legal form, shareholding or insurance requirements. While the impacts of some of the specific restriction may seem insignificant, the cumulative restrictive effects of such requirements on the professional services markets can be substantial. A recent report ‘Business Journey on the Single Market: Practical Obstacles and Barriers’ places access to and exercise of regulated professions among the strong and persisting obstacles for businesses in the single market . At present, according to the information provided by the Member States in the regulated professions database, there are almost 6 000 regulated professions across the EU . As highlighted by Chart 1, around 40% of that total is accounted for by professionals in health and social services, followed by business services (around 14%), transport (10%), public services and education (9%) and construction (8%). This total number corresponds to an average of around 200 regulated professions per Member State. However, there are large variations between countries, ranging from Lithuania with 80 professions to Hungary with 554 . While these numbers say little about the intensity or proportionality of the regulation, they serve as a useful starting point for this analysis, illustrating the degree of divergence in national regulation of professional services. Chart 1. Distribution of regulated professions by economic sector, EU, March 2021: Source: EU regulated professions database. II.3. Selected services' market performance and the impacts of regulatory constraints An essential characteristic of well-functioning markets is the ease of market entry and exit, which can be estimated through the rates of company 'births' and 'deaths'. This section takes a closer look at these indicators for four business services sectors (legal, accounting, architectural and engineering) in the EU. For the four business services in focus, chart 2 demonstrates significant differences between the EU Member States. While such variations can be explained by a multitude of factors, such as consumer demand or relative profitability of the respective markets, they can give a first indication of how dynamic the national markets are. For instance, in the case of architectural services, while the EU average birth rate of firms has remained around 7-8% over 2012-2018, Greece and Austria display birth rates of 2.6% and 3.9% respectively, suggesting that new architectural firms may have difficulties entering the market.

Chart 2. Average birth and death rates of firms in the EU, 2016-2018: Chart 2a: Architectural activities. Chart 2b: Engineering activities and related technical consultancy. Chart 2c: Accounting, bookkeeping and auditing activities; tax consultancy. Chart 2d: Legal activities. Source: Elaboration by LE Europe based on Eurostat data. Chart 3. HHI across the EU Member States (upper and lower bound), 2018: Chart 3a: Architectural activities. Chart 3b: Engineering activities and related technical consultancy. Chart 3c: Accounting, bookkeeping and auditing activities; tax consultancy. Chart 3d: Legal activities. Source: Elaboration by LE Europe based on Orbis data. Note: HHI is based on the top 50 firms. Some observations were excluded due to insufficient data coverage in the Orbis database. The degree of competition in a market is often measured by looking at 'market concentration', which is a numerical measure representing the number of firms active in the market and their respective output shares. While several different measures can be used, one of the most commonly used ones is the Herfindahl–Hirschman Index (HHI), calculated as the sum of squared market shares of the firms active in a market. Higher HHI indicates a higher concentration of firms in a market, which corresponds to a lower degree of competition. Being a data-intensive indicator, HHI can suffer from data availability issues, and like the other measures of market performance, it can be influenced by many different factors. However, in conjunction with other relevant indicators, it can be useful for assessing competition in a given market. Chart 3 presents this indicator for the four business services under investigation across the EU Member States. Again, a significant cross-country variation can be observed, which could be attributable, among other factors, to the strength of regulatory barriers to market entry and the exercise of a profession. The above indicators and their significant cross-country variations suggest that for the four business services assessed, there remains a significant potential for improvement in terms of competition and market performance in a number of Member States. Regulatory barriers to market entry and the excercise of a profession may play a role in this process. Abundant empirical evidence confirms that excessive market regulation can have significant negative impacts on the economic performance of the sectors concerned, while opening markets to competition can boost productivity, innovation and entrepreneurship, ultimately leading to better economic outcomes and consumer welfare. Multiple empirical studies in the field conclusively demonstrate positive impacts of removing unnecessarily restrictive regulation on market performance, professional mobility and broader economic outcomes. For instance, a recent study demonstrates a potential gain in GDP of over EUR 14 billion and an increase in employment of over 50 000 people in 12 EU Member States over 3 years, resulting from the implementation of the Commission’s 2017 reform recommendations in only four business services sectors (legal, accounting, architectural and engineering), a significant gain given the almost negligible public cost of these reforms. An empirical study on the effects of regulation on service quality, analysing the impact of the regulatory environment on six professional services markets, concludes that in a number of cases less restrictive regulation resulted in improved market outcomes such as availability of services and prices. At the same time, no conclusive evidence was found that an increase in competition has negative effects on the quality of services provided or on consumer satisfaction and well-being . Similarly, evidence shows that while broader factors undoubtedly play a role, restrictions stemming from professional regulation are perceived by European businesses as potential obstacles to the adoption of digital automation solutions. A study for the European Commission has looked at the state of play and trends of digital automation in the legal, accounting, architectural and engineering sectors in 12 EU Member States . In particular, a survey of service providers across these EU countries demonstrated that while the existing digital technologies are associated with multiple benefits, their level of adoption still falls significantly below potential. Among the top barriers to the introduction of digital technologies, businesses mentioned their high costs and the shortage of relevant skills. Cumbersome administrative procedures and regulatory constraints were also listed as key obstacles. Regulation was shown to significantly affect digital innovation activities, both directly and indirectly, for several reasons including reduced competition, limitations to company size and obstacles to accessing finance. The study also confirmed negative effects of restrictive professional regulation on firm-level productivity and broader economic outcomes such as gross value added, income and employment.





III. Summary of professional regulation per Member State



AUSTRIA

_______________________ I. Overview By 1 February 2021, Austria had submitted information about 204 regulated professions. This is a slight decrease compared with previously submitted figures. While some new professions have been added, others have been deregulated (like employment placement agencies), and certain database entries have been corrected or consolidated. For instance, a number of professions related to general trade law (‘Gewerbeordnung’) have been merged into one profession (e.g. shoemaker and orthopaedic shoemaker). Of the regulated professions, 10.3% concern business services, 9.8% the construction sector and 0.5% the real estate sector. According to an EU-wide survey, 22% of Austria’s labour force can be considered to be working in regulated professions. This is slightly higher than the EU average (21%). Austria regularly updates the database on regulated professions. This database provides citizens and administrative authorities from other Member States with valuable information about the regulation of professions in a given Member State. However, the information for Austria is currently incomplete for a number of professions, mainly because some newly adopted reforms have not yet been reported in the database. In its national action plan from 2016, Austria announced changes for a limited number of professions. The reforms on patent agents and engineers were introduced in 2017 and in 2019 respectively (for more details, see the sections on the individual professions below). Since 2016, annual country-specific recommendations have been addressed to Austria, that consistently underline the need to reduce regulatory and administrative barriers in the services sector, in particular in the area of professional services. In 2016, the recommendation was to reduce administrative and regulatory barriers for investments, such as restrictive authorisation requirements, restrictions on legal form and shareholding, and impediments to setting up interdisciplinary companies, in particular in the area of services. In 2017, the recommendation was to reduce administrative and regulatory barriers, to ease market entry and to facilitate company growth in order to encourage investment in the services sector. In 2018 and 2019, it was recommended to support productivity growth by stimulating digitalisation of businesses and company growth and by reducing regulatory barriers in the service sector. II. Situation on the analysed professions Regulatory restrictiveness in Austria is higher than the EU average for all the professions analysed, except for tourist guides, and is highest for lawyers. Chart 1: Regulatory restrictiveness, Austria, 2021.

Architects, engineers, lawyers and patent agents are considered as ‘liberal professions’ in Austria and subject to specific legislation. This specific legislation for liberal professions also applies to tax advisers, while other accounting professions fall under different legislation. Tourist guides’ and real estate agents’ services are considered to be commercial activities, and are therefore covered by the general trade law (‘Gewerbeordnung’). In 2017, based on the restrictiveness indicator and its detailed analysis of the legislation, the Commission made specific recommendations for each of the regulated professions analysed. The following description of the situation for the different professions focuses on changes since the analysis published in 2017. However, to provide a complete and understandable picture, the description also restates part of the information described in 2017. Architects/engineers In 2017, the Commission made the following recommendations for the professions of architects and engineers: ·reconsider the wide scope of reserved activities; ·consider the impact of shareholding and the company form restrictions in place in addition to other requirements; ·assess the proportionality of the restrictions on multidisciplinary activities. A reform of the law covering both professions entered into force in July 2019. In addition, on 29 July 2019, the European Court of Justice (ECJ) gave its ruling in case C‑209/18 on requirements for engineers and architects, among other professions. The ECJ found that the (old) law on engineers/architects infringed European law: (a) by establishing a seat requirement; (b) by establishing restrictive conditions for shareholders; and (c) by limiting multidisciplinary activities of engineers/architects. Despite the reform in 2019, key elements of the law remained unchanged, in particular on the scope of the reserved activities. Both professions benefit from reserved activities and a title protection. The reserved activities include ‘drawing up public documents’ which is the only activity exclusively reserved to architects and engineers in their respective field of activity. All other reserved activities in the field of architecture and engineering are shared with various other professions, e.g. with a master builder or commercial engineer (‘Baumeister / Ingenieurbüro’) in line with the general trade law (‘Gewerbeordnung’). However, the scope of activities and conditions for accessing the profession differ significantly between these two groups. To ensure the independence and objectivity of architects and engineers there is a strict separation between the planning and the execution of activities. Whereas architects/engineers are limited to planning, consulting, coordination and supervising activities, the master builder has no such limitation and can plan/supervise and build at the same time. The required duration of study/professional training for architects and engineers remains 5 years of education plus 3 years of prior professional experience. Membership with the professional association is mandatory. It is also necessary to pass a specific state exam to get an authorisation to practise, which is valid throughout the country. Professional indemnity insurance is not obligatory. The professional chamber organises collective insurance coverage on a voluntary basis. On legal form and shareholding requirements, changes to the law entered into force on 1 July 2019. Whereas previously only certain company forms were available to architectural/engineering firms, the new law allows any legal company form. The rule that more than 50% of the shares have to be held by one or more natural persons authorised to exercise the profession of civil engineer (‘Ziviltechniker’) has not been changed. The remaining shares may be owned either by other architectural or civil engineering (‘Ziviltechniker’) firms, by any other natural person, or, and this is new, by companies which are established in another Member State, an EEA country or Switzerland, and that actively and legally provide architectural/engineering services. However, companies established in other countries cannot provide these services. The strict rules on decision-making, imposing that decisions cannot be taken against the partners authorised to carry out the activity, have been maintained.

Concerning restrictions on multidisciplinary activities, the scope of architectural or civil engineering firms is limited to providing architectural/engineering (‘Ziviltechniker’) services. This therefore limits the possibility of joint exercise with other professions. In this respect, the ECJ found in its previously mentioned ruling that ‘Austria has not put forward any specific arguments to show that other less restrictive measures, such as the adoption of rules on the internal organisation of a multidisciplinary company suggested in argument by the Commission, would not be suitable for ensuring the impartiality, independence and integrity of [an architect/engineer] carrying on his activity within such a company. It cannot therefore be accepted that the prohibition of forming such companies (…) is ‘necessary’ to that end within the meaning of Article 25(1)(a) or (b) of Directive 2006/123.’ According to the information available to the Commission, the law has not yet been modified to take account of the Court judgment. The new law is expected to be adopted in May 2021. Based on the information available, there are no additional certification or attestation schemes for architects and engineers to gain access to specific professional activities that would be subject to additional qualification requirements in Austria. Accountants/tax advisers In 2017, the Commission made the following recommendation on accountants/tax advisers to all Member States that regulate the profession: ·reconsider reserving simple tasks such as payroll activities or preparation of tax declarations to highly qualified professional. The law on accountancy covers three professions: senior accountant (‘Bilanzbuchhalter’), accountant (‘Buchhalter’) and payroll accountant (‘Personalverrechner’). Self-employed service providers in these professions have a number of reserved activities. To become self-employed an official appointment is necessary. Depending on the profession, this requires 1.5 or 3 years of professional experience. Membership with the professional chamber is mandatory, as is professional indemnity insurance. Continuous professional development is also required, of 15 or 30 units per year, depending on the profession. The competent authority can impose sanctions of up to EUR 5 000 if this obligation is repeatedly breached. Reserved activities differ between the professions mentioned above. They include payroll services, representation and assistance before regional administrative authorities, bookkeeping, drawing up financial statements and tax advice on VAT returns. Most of these services are also shared with tax advisers, auditors and partly with lawyers. Changes to the law on accountancy came into force in 2017, mainly because of the transposition of the anti-money laundering directive, but also to align with the new law on tax advisers and auditors. The profession of tax adviser (‘Steuerberater’), a liberal profession, is regulated by a reserve of activities and a title protection. The number of reserved activities is rather large, as it includes the services that can be provided by the other three accounting professions. Tax advisers have extensive powers to represent clients before authorities and administrative courts as well as to provide legal advice and perform functions equivalent to lawyers in these areas. However, none of the reserved activities are exclusive, but rather shared with accounting professionals or other liberal professions. To qualify for a professional licence, candidates must complete a university degree (minimum 180 ECTS), undertake a three-year traineeship, and pass a professional exam. Note that admission to the professional exam is already possible after 1.5 years of practical experience as a trainee. While there are no specific restrictions or rules on legal form and shareholding for accountants, only a limited number of legal forms are available for tax advisers. Shareholders must either be professionals or members of the family and must hold the majority of the shares. Professionals from other Member States cannot hold more than 25% of the shares or of the voting rights. The very precise rule on joint exercise only being possible with other liberal professions, accountants, management and technical consultants, was relaxed under the 2017 reform, and cooperation with other self-employed professionals for specific tasks and contracts is now permitted. Professional indemnity insurance is still mandatory. The 2017 reform of the law governing tax advisers and auditors did not change the above mentioned rules substantially, except for one. It introduced a new obligation on continuous professional development (CPD), prescribing a minimum of 120 hours to be followed within 3 years, and at least 30 hours a year. Fulfilment of this obligation must be notified to the professional chamber. A regulation governing the professional body gives more detail on this obligation. The professional chamber has set up its own ‘academy’ which is responsible for the education and the CPD of the professionals. However there are no restrictions on the use of advanced training courses from other advanced training institutes, provided they are technically suitable. There are no restrictions for tax advisers on advertising and marketing. On tariffs, exclusive success fees (‘Erfolgshonorar’) are forbidden, as is the acceptance of a commission (‘Provision’). Lawyers In 2017, the Commission made the following recommendations for lawyers to all Member States that regulate the profession: ·Clarify the scope of the reserves so as to facilitate the provision of legal consultancy services by lawyers or other service providers, in particular for online services. ·Assess legal form and shareholding requirements, incompatibility rules and multidisciplinary restrictions, in particular taking into account the proportionality of these restrictions in relation to the core principles, such as the independence of the profession and to the corresponding supervisory arrangements. In addition, consideration should be provided to the cumulative effect of such requirements to the extent that their effects might be accentuated in case of extensive reserves of activities (e.g. where legal advice is also part of the reserved activities).

A reform in 2020 took account of one of these recommendations by opening up the legal forms a law company can take. Like all the other liberal professions, lawyers benefit from reserved activities and a title protection. A lawyer’s right of representation extends to all courts and authorities and confers on them the power to represent parties on a professional basis, both in and out of court, for all public and private matters. This power is reserved to lawyers. Qualifying as a lawyer requires 4 years of legal studies in Austrian law, at least 3 years of experience as a trainee lawyer, and passing the bar exam. Membership with the bar is mandatory, as is continuous professional development (CPD). The latter consists of a general, activity- and risk-based CPD under the responsibility of the respective lawyer, rather than a purely point-based CPD based on specific hours. On legal form and shareholding requirements, since the 2020 reform all legal forms are permitted (except for public limited liability company). Lawyers must hold at least 50% of the firm’s shares. The other shares can be held by only a few categories of people specified under the law, such as close relatives. The qualified registered lawyers must hold the majority in the company capital, and they must have a decisive influence on the decision-making process, which means a simple or a contractually determined qualified majority (usually up to 75%) for shareholders’ resolutions in favour of the professionals. To preserve independence and professional secrecy and to avoid conflicts of interest, setting up multidisciplinary companies is not permitted. However, certain forms of cooperation between lawyers and other liberal professionals are possible if the profession’s client-focused core values are safeguarded. There are also specific rules on incompatibilities with certain professions (e.g. notaries), as well as general rules on incompatibilities. Professional liability insurance is mandatory. Rules on tariffs cover recommended fees, notably the reimbursement of legal fees by the unsuccessful party. Lawyers are allowed to advertise as long as the information provided is true and factual and in line with the basic values of the legal profession. Patent agents In 2017, the Commission made the following recommendations for the profession of patent agents: ·reconsider the various layers of regulatory measures, for instance requiring multiple years of professional experience or professional training in addition to basic training requirements and try to offer alternative ways to obtain the qualification; ·assess the scope of reserves of activities for patent/trademark agents; ·assess the proportionality of prohibition of joint exercise of the profession of patent/trademark patent with other professions; ·assess the proportionality of the shareholding requirements. A reform of the law on patent agents entered into force in May 2019, which partially addressed the recommendations. On 29 July 2019, the ECJ gave its ruling in case C-209/18 on patent agents.The Court found that a seat requirement, rules on shareholding and multidisciplinary rules violate Articles 14, 15 and 25 respectively of the Services Directive. According to the information available to the Commission, the necessary modifications were adopted in May 2021. Patent agents benefit from reserved activities and a title protection. Reserved activities include counselling and representation before the Patent Office or other administrative authority, drawing up legal documents in intellectual property matters and representing clients before the courts in intellectual property matters (for patent attorneys only before the Higher Regional Court of Vienna). All these activities are shared with lawyers and notaries. Since the 2019 reform, qualifying as a patent agent requires studies of at least 270 ECTS, of which at least 210 have to be in a technical subject or natural science, and 60 have to be on Austrian law. This corresponds to 4.5 years of study as compared to the 5 years required before the 2019 reform. Prior professional practice is still obligatory, but the length has been slightly shortened. The length still depends on the type of professional practice (e.g. 4 years (instead of 5) in the office of a patent attorney or 6.5 years (instead of 7.5) in the field of intellectual property rights). Membership with the professional association remains mandatory. A candidate must apply for entry on the list of patent attorneys, which can be refused. Candidates also have to swear an oath. On legal form and shareholding requirements, as with other liberal professions, only certain company forms are allowed, such as private limited liability company (GmbH). The rules on shareholding were changed in 2019. While previously only patent attorneys and their close relatives (wife, children) or retired patent attorneys could be a shareholder, since the reform a company with limited liability can become a shareholder if the company is the sole partner with liability in a ‘patent agent partnership (‘Patentsanwalts-Partnerschaft’) in the form of a limited partnership (‘Kommanditgesellschaft’). In addition, rules on voting rights have been abolished. The rule that a patent attorney may only be part of one company and therefore cannot practise together with other professionals has been relaxed. A patent attorney can now be a partner in more than one patent agent partnership, but partnerships with other professions are still not possible. Professional liability insurance is obligatory. There is no restriction on tariffs, and advertising is permitted as long as it is factual and respects the ethics of the profession. Certain forms of advertising are explicitly prohibited, including self-promotion, aggressive advertising, comparative advertising and misleading advertising. A patent agent also has to ensure that third parties, in particular the media, do not generate advertising that can be considered incompatible with the ethics of the profession.

Real estate agents In 2017, the Commission made the following recommendations for the real estate agent profession: ·take into consideration the possibility of opening to other professionals the activities currently exclusively reserved to estate agents; ·evaluate to what extent the duration of mandatory qualification requirements is indispensable in view of the tasks pursued by estate agents and the objectives of regulation. The Commission is unaware of any reform or other initiative that has taken account of or assessed its recommendations. The real estate agent profession is one of three professions in the real estate sector and can be practised independently of the other two (real estate manager and real estate developer). It is regulated by way of reserved activities, which include: brokering sales and exchanges of plots of land, legal estates, apartments, business premises, prefabricated houses and firms; brokering lease contracts (and similar contracts) for real estate; selling real estate including hire purchase; brokering participation in property funds; and advice and support for all these transactions. Real estate agents can also represent clients before public authorities/courts (as long as it is not reserved for lawyers) and conduct public auctions of properties. Some reserved activities are shared, notably with lawyers and notaries. In general, qualifying as a real estate agent requires between one and three years of training (depending on the pre-professional education). As for other regulated professions covered by the trade law, only the self-employed and managers require a qualification. There are four alternative pathways to qualifying as a real estate agent, namely: (i) specific university studies plus one 1 year of professional experience or (ii) ‘Fachhochschule’ studies plus 1 year of professional experience, (iii) an apprenticeship or secondary school diploma plus 2 years of professional experience and passing an exam; or (iv) other academic studies plus 1 year of professional experience and passing an exam. Passing the specific exam for real estate agents requires general knowledge of regulations such as tax law and labour law, as well as specific subjects relevant to the profession. Registration with the chamber of commerce (‘Wirtschaftskammer’) is mandatory for real estate agents, as well as anyone wishing to set up a business. Professional insurance is required, as is proof that the person has no convictions for violations of tax law. The guidelines on conduct and professional practice includes a chapter on maximum prices for different services. There are also rules on advertising, including on unfair customer enticement (‘unlautere Kundenabwerbung’). Austria considers that it is also necessary to regulate this profession given that agents can act as trustees representing the interests of their clients, and thus prevent extensive and costly disputes in court. Tourist guides In 2017, the Commission made the following recommendations for the tourist guide profession: ·consider the justification and proportionality of regulation of the profession; ·consider introducing a more precise definition of the reserved activities in view of the very wide or undefined scope of reserved activities. Based on the information available to the Commission, Austria has not undertaken any reform or (proportionality) assessment on the above-mentioned recommendations. Tourist guides benefit from reserved activities. In the absence of a reform, they are wide-ranging in scope, covering accompanying tourists/visitors and explaining: (i) Austria’s historic treasures and artistic and cultural heritage ; (ii) the social and political situation in national and international contexts; and (iii) sporting and social events. However, some of these activities are shared with non-regulated professionals (‘Reisebetreuer’), e.g. guides that provide commentary in tour buses and taxis. Qualifying as a tourist guide requires the completion of at least 250 training units. Various institutes provide specific training courses, but other studies can also be recognised for the purposes of the professional exam. Registration with the chamber of commerce is mandatory for tourist guides, as well as anyone who wishes to set up a business.





BELGIUM

_______________________ I. Overview By 2 March 2021 Belgium had submitted information about 158 regulated professions. This is an increase compared with previously submitted figures. It seems that most of these new entries are the result of the ongoing Belgian effort to complete the information in the database, including for those professions that have been regulated based on EU law. Of those professions, 11.4% concern business services, 7% the construction sector and 0.6% the real estate sector. According to an EU wide survey , 17% of Belgium’s labour force can be considered to be working in regulated professions. This is below the EU average (21%) Belgium is now regularly updating the database on regulated professions. This database provides citizens and administrative authorities from other Member States with valuable information about the regulation of professions in a given Member State. The information on regulated professions in Belgium is currently still incomplete for a number of professions, partly because of reforms that have not yet been reported in the database. In its national action plan from 2016, Belgium announced changes for a limited number of professions, not including any of the seven professions covered in the present analysis. Since 2016, annual country-specific recommendations on professional services have been addressed to Belgium, in particular: (i) to reduce the regulatory and administrative burden; and (ii) incentivise entrepreneurship and competition. II. Situation on the analysed professions Regulatory restrictiveness in Belgium is higher than the EU average for most of the professions analysed, except for civil engineers and patent agents. Regulatory restrictiveness is the highest for lawyers. Chart 1: Regulatory restrictiveness, Belgium, 2021. As a federal state, Belgium has allocated the power to regulate access to – and exercise of – professions to different policy levels. Following the sixth state reform in 2014, the power to regulate several professions, primarily the crafts professions, was transferred to the regional level. Regulation of most so-called intellectual professions has remained within the exclusive remit of the federal level (although the regions are responsible for certain aspects like the organisation of education). These intellecutal professions include architects, accountants/tax advisors, lawyers, patent agents and real-estate agents. However, the regulation of tourist guides is a power held by each of the three regions. Since 2017, the professions of accountant/tax advisor and patent agents have been subject to reforms that are described in detail in the respective chapters below. In addition, the Belgian government commissioned a study to analyse the rules applicable to the exercise of an intellectual profession within a company, and to evaluate whether these rules fulfill the criteria of necessity and proportionality. Among other issues, the study looked at the professions of architects, accountants and real-estate agents, and was finalised in 2018. It concluded that the requirement for a minimum level of share ownership by professionals should be limited to 50%+1, and the same percentage should also be applied to professionals represented in the decision-making bodies (i.e. board of directors), instead of the current percentages of 60% and 100% for certain professions like architects and real estate agents. The study also suggested changing the rules on corporate purpose and participation in other companies to make clear that the exercise of related activities is allowed. Finally, the study advised that the rules on incompatible activities should be made more precise. Following this study, certain changes were made to the rules describing incompatible activities for accountants. After the study was released, additional reforms were also announced for architects, but no concrete amendments have yet been proposed. Belgium has recently commissioned another study to: (i) develop on the findings in the 2018 study; and (ii) analyse in more depth the economic situation in those professions.

The following description of the situation for the different professions focuses on changes since the analysis published in 2017. However, to provide a complete and understandable picture, the description also restates part of the information provided in 2017. Architects In 2017, the Commission made the following recommendation for the architectural profession: ·consider the impact of the shareholding and company form restrictions in place in addition to the other requirements. However, Belgium has not revised its shareholding and voting rights requirements. This is despite: (i) the Commission’s recommendation; and (ii) an internal study that advised limiting the requirement for a minimum level of share ownership by professionals (and limiting the minimum percentage of professionals represented in decision-making bodies) to 50%+1. However, Belgium did abolish the obligation to obtain a visum from the professional body to submit building plans to local authorities for Flanders and the Brussels Capital Region. The Law on the protection of the profession of architects dates from 1939. It regulates the profession through a protected title and a reserve of activities. This reserve of activities includes the drawing-up of plans and the monitoring of the execution of construction works that require a permit. The education required to become an architect is composed of 5 years of study and 2 years of traineeship without the need to pass a state examination. There is a mandatory obligation for architects to register with the professional Chamber. Currently, the Law does not impose any continuous professional development requirement. The use of most corporate forms is allowed, with the exception of public limited liability companies whose shares can be traded on the stock market. Nevertheless, a distinction should be made between professional and ‘ordinary’ architect-companies. In a professional company, the company itself can exercise the architectural profession and professionals can benefit from limited liability (these companies can take the form of a limited liability company, a public limited company, and a cooperative society). In ‘ordinary’ architecture companies, the professionals remain fully liable. In a professional company, 60% of the shares and voting rights need to be held by architects; the remaining shares need to be held by natural or legal persons that exercise a non-incompatible profession and that have been reported to the professional association. In an ‘ordinary’ architecture company, only the majority of the shares and voting rights need to be in the hands of professionals. In addition, in a professional company, all managers, directors and members of the board must be natural persons and architects (100%). Belgium justifies these restrictions by the need to protect consumers and the safety of third parties. The law specifically bans the possibility of jointly exercising the profession of architect and building contractor. In addition, the law provides that the activity and object of a professional company should be limited to services that are related to the profession of architect and that are not incompatible with this profession. However, it seems that the concept of ‘services related to the profession of architect’ have been interpreted quite broadly, and the law has not posed a significant barrier to the possibility of setting up multidisciplinary practices offering different professional services. Architects are required to take out professional indemnity insurance and an equivalence assessment is required for insurance coverage taken out in other Member States. Advertising by architects is restricted in the sense that it needs to be conducted in a ‘discreet’ and ‘independent manner’, avoiding any ‘intrusive publicity’. Based on the information available, there are no additional certification or attestation schemes for architects concerning access to specific professional activities that would be subject to additional qualification requirements in Belgium. Engineers In 2017, the Commission did not make any recommendations to Belgium on the profession of civil engineers. Since then, there has been no reform or other initiative the Commission is aware of concerning the regulation of this profession. Civil engineers must follow the same procedures as architects if they work as/under the professional title of architect. Construction engineers in Belgium are burgerlijk ingenieur/ingénieur civil’ and ‘industrieel ingenieur/ingénieur industriel’ and benefit from a protected title without specific reserves of activities. The professional title is granted after having obtained a university degree, e.g. after 5 years (300 ECTS) of education for the ‘burgerlijk ingenieur/ingénieur civil’, 5 years for the ‘ingénieur industriel’ in the French-speaking community, and after 4 years (240 ECTS) of university education for the ‘industrieel ingenieur’ in the Dutch-speaking community. No other requirements on access to or exercise of the profession have been identified. Based on the information available, there are no additional certification or attestation schemes for engineers concerning access to specific professional activities that would be subject to additional qualification requirements in Belgium. Belgium maintains its position that the protected titles are only “academic titles”. This means that professionals from other Member States seeking to use the protected titles will not be able to benefit from the rights and procedures for recognition of professional qualifications set out in Directive 2005/36/EC.

Accountants/Tax advisors In 2017, the Commission made the following recommendations for accountants/tax advisors: ·re-assess the incompatibility rules prohibiting the simultaneous exercise of any other economic activity for all types of accountancy professions, especially for professions where the conflict of interest could be prevented on a case-by-case basis (see infringement 2015/4216 concerning total bans on joint exercise); ·assess the proportionality of the shareholding requirements. Belgium has fully addressed these recommendations by means of amendments to the code of ethics as well as a new law that fundamentally changes the organisation of the profession and removes legal-form and shareholding requirements. On 30 September 2020, a new law on accountants and tax advisors entered into force (hereafter “the new Accountant and Tax Advisor law”. This law replaces the four professions of ‘comptable agréé/erkend boekhouder’, ‘comptable-fiscaliste agréé/erkend boekhouder-fiscalist’, ‘conseil fiscal/belastingconsulent’ and ‘Expert-comptable/accountant’ by two new professions: ‘gecertificeerd accountant/expert-comptable certifié’ (certified accountant) and ‘gecertificeerd belastingadviseur/conseiller fiscal certifié’ (certified tax advisor. The objective of the reform is to increase the quality of the services and the flexibility of the applicable regulation. It should be noted that the ‘old’ professions and titles of ‘comptable agréé/erkend boekhouder’ and ‘comptable-fiscaliste agréé/erkend boekhouder-fiscalist’ have been replaced by the transitional titles of ‘accountant/comptable’ and ‘comptable-fiscaliste/fiscaal accountant’ (tax-accountant) for those persons who held that title on 30 September 2020. It is however no longer possible to acquire these professional titles for new entrants to the profession. The new profession of certified accountant is regulated by way of a protected title and a reserve of activities that includes bookkeeping/drawing up of financial statements, as well as some specific expert and attestation tasks. All of these actvities are shared with auditors. Certified tax advisors, for their part, are only regulated by way of protected title. As was the case under the old law, for both professions of certified accountant and certified tax advisor, the required education is: (i) 3 years of university or post-secondary study; (ii) a mandatory traineeship of 3 years; and (iii) two separate state exams (an entry exam at the start and a competency exam at the end of the traineeship). An exemption from the three-year traineeship requirement as well as the entry exam is possible for those who can prove 7 years of relevant professional experience. All professionals still need to register with the relevant professional body and follow continuous professional development activities as determined by this body. On the specific rules on incompatible activities and joint exercise that were applicable to the former professions of ‘comptable agréé/erkend boekhouder’ and ‘Comptable-fiscaliste agréé/Erkend boekhouder-fiscalist’ (currently ‘accountant/comptable’ and ‘comptable-fiscaliste/fiscaal accountant’), the Court of Justice of the European Union (CJEU) held in its judgment in case C-384/18 of 27 February 2020 that by ‘prohibiting the exercise of accounting activities in conjunction with the activities of an insurance broker or agent, or of an estate agent, or with any banking or financial services activity, and by permitting [the Chambers] to prohibit the exercise of accounting activities in conjunction with any artisanal, commercial or agricultural activity, the Kingdom of Belgium has failed to fulfil its obligations under Article 25 of Directive 2006/123/EC […] and Article 49 TFEU’. The CJEU considered that Belgium had failed to demonstrate by means of ‘precise evidence’ that an ex ante ban was ‘the only measure capable of attaining the desired objectives’ and that ‘none of the measures less restrictive of the freedom to provide services’ suggested by the Commission would be sufficiently effective to attain those objectives. More specifically, the CJEU said that Belgium had failed to show why an ex post review by the professional chambers would not be sufficient to reach the objective of guaranteeing the independence and impartiality of accountants and of ensuring that they comply with their obligation to maintain strict professional secrecy. Although Belgium already amended the codes of ethics for these professions during the infringement procedure, these amendments did not suffice. Hence, the ‘accountant/comptable’ and ‘comptable-fiscaliste/fiscaal accountant’ (formerly ‘comptable agréé/erkend boekhouder’ and ‘comptable-fiscaliste agréé/erkend boekhouder-fiscalist’) are now allowed to exercise multidisciplinary activities in so far as these do not jeopardise their independence, impartiality and professional secrecy. There will only be an a posteriori check by the professional association. On the professions of certified accountant and certified tax advisor, the new law only provides for a general conflict-of-interest rule. Although the law provides for the possibility of adopting more specific rules on incompatible activities, no new code of ethics governing these two professions has yet been adopted. However, it is unclearto what extent the previous code applicable to the former ‘accountants’, would also apply to the current profession of certified accountant. In addition, for legal persons, Belgium requires the corporate goal and activity to be limited to the activities covered by the profession or to activities that are not incompatible with that profession. Legal persons are allowed to participate in other companies if these companies do not exercise activities that are considered incompatible with the legal person’s profession. The new law on accountants and tax advisors removes any remaining requirements on legal form and shareholding for both professions. However, it upholds the requirement that the majority of the voting rights in a professional company of accountants/tax advisors must be held by the professionals working in that company. There is still a mandatory obligation for accountants/tax advisors to hold indemnity insurance, and the insurance contract must be approved by the professional body. In addition, the professional must take an oath before he or she can be registered. Finally, the code of ethics applicable to the former ‘accountants’ will apply to the current certified accountant insofar as it is not contradictory to the the new Accountant and Tax Advisor law or other legislation. This code would seem to considerably restrict the type of advertising allowed by such ‘accountants’. Lawyers In 2017, the Commission made the following recommendations for the lawyers. ·The Commission said Belgium should introduce more transparency and review the proportionality-of-access rules for lawyers wishing to practise before the relevant supreme courts, and in particular clarify the rules applicable to European lawyers; ·The Commission said (this was also a recommendation to all MS) that Belgium should assess legal form and shareholding requirements, incompatibility rules and multidisciplinary restrictions, in particular taking into account the proportionality of these restrictions in relation to the core principles, such as the independence of the profession and to the corresponding supervisory arrangements. In addition, consideration should be provided to the cumulative effect of such requirements to the extent that their effects might be accentuated in case of extensive reserves of activities (e.g. where legal advice is also part of the reserved activities). There has been no reform or other initiative the Commission is aware of which has taken into account or assessed the recommendations made by the Commission.

The legal profession in Belgium includes the professions of ‘avocat/advockaat/rechtsanwalt’ and ‘avocat devant la Cour de Cassation/advocaat bij het Hof van Cassatie’. The profession is regulated by way of a protected title and a reserve of activities for: (i) the representation of clients in court; (ii) insolvency practice as ‘curator’/‘curateur’; (iii) representation before the Patent Office (shared with patent agents); and (iv) since 2018, mediation in the form of ‘collaboratieve onderhandelingen’/‘droit collaboratif’ between the parties and their respective lawyers without the need to involve a neutral third party. The general education requirement for lawyers is 5 years of study complemented by 3 years of training and passing the bar exam. An ‘avocat devant la Cour de Cassation’/‘Advocaat bij het Hof van Cassatie’ is required additionally to have a professional experience of 10 years as a registered lawyer, and must follow an additional training of 4 years, which is completed by passing an additional bar exam. All lawyers are obliged to register with the bar. The number of licences granted to ‘avocat devant la Cour de Cassation’/‘Advocaat bij het Hof van Cassatie’ appears to be restricted (currently there are 20). These lawyers are appointed by the King upon proposal by the Supreme Court. Lawyers are required to follow continuous professional training by way of a credit-system determined on a yearly basis (an average of 20 hours a year ). The use of all company forms is allowed, on the condition that all shares are in the hands of qualified lawyer(s), and with the limitation that shares cannot be traded on the stock exchange. Irrespective of the legal form chosen, all shares and voting rights are reserved to lawyers. Belgian law explicitly prohibits lawyers from combining the exercise of the profession of lawyer with certain specific professions such as judge, notary and bailiff, but also with all ‘trade or industry’ activities. All other professions or activities are allowed on condition that they do not endanger the independence of the lawyer or the dignity of the bar. However, it seems that at least the Flemish bar has been more flexible towards exercising trade activities in combination with the profession of lawyer. Nevertheless, in all language communities, lawyers are allowed to organise certain forms of cooperation with other professions, but are not allowed to do this in the form of a limited liability company. Lawyers are required to take out professional indemnity insurance (a minimum coverage is subscribed to by the bar for all its affiliated members and included in the membership fees). Lawyers are free to determine their fees but are not allowed to work on the basis of contingency fees exclusively related to the outcome of the dispute. The client must be informed of the lawyer’s tarrifs beforehand. If the lawyer’s fees exceed the limits of fair moderation, the bar association (‘Conseil de l’Ordre’) has the authority to reduce it. The lawyer’s fees may also be challenged before the judge. Belgian lawyers are allowed to advertise, yet certain restrictions are imposed by the bars. For example, the Flemish bar has ruled that advertising on prices cannot solely refer to minimum and basic prices. According to the rules of the French-speaking bar and the German-speaking bar advertising: (i) can only be about ‘objective elements that can be verified by the bar’; (ii) cannot refer to success rates/number of cases treated/turn-over; (iii) cannot advertise prices of such a low level that these would not suffice for a qualitative service, etc. Patent agents In 2017, the Commission did not address any recommendations to Belgium for the profession of patent agents. In the meantime, Belgium has adopted a new law on patent agents (Law of 8 July 2018) which will introduce additional requirements, such as title protection, mandatory insurance, and requirements for continuous professional development. Although parts of this new law entered into force on the 1 December 2020, this is not the case for the provisions covering the additional requirements described above. Patent agents are regulated by way of a reserve of activity for counselling and representing clients before the patent authority. This activity is shared with lawyers. The education required is 4 years of study, a mandatory traineeship of 3 years under the supervision of an accredited patent agent (or as an employee representing his or her employer in patent matters before the Belgian Office for Intellectual Property) and the successful completion of a state exam. Patent agents must become a member of their professional association, pay membership fees, and comply with the rules of the code of ethics. Once the relevant legal provisions of the Law of 8 July 2018 enter into force, patent agents will also be required to follow continuous professional development activities and to subscribe to mandatory professional indemnity insurance. The title of ‘octrooigemachtigde’/‘mandataire en brevets’/‘Patentanwalt’ will become protected. Real-estate agents In 2017, the Commission made the following recommendations for real-estate agents:

·evaluate to what extent the duration of mandatory qualification requirements is indispensable in view of the tasks pursued by estate agents and the objectives of regulation; ·consider the possibility of alternative pathways to access the profession; ·evaluate the need for shareholding and voting rights restriction. There has been no reform or other initiative the Commission is aware of which has taken into account or assessed the recommendations made by the Commission. Real-estate agents are regulated by way of a protected title and reserve of activity. The intermediation in real-estate transactions is an activity shared with notaries, while ‘syndic’ management of properties can also be carried out by other professionals such as lawyers. There seem to be two pathways to obtain the professional qualification: (i) a three-year general bachelor’s degree of any kind; or (ii) a three-year special ‘entrepreneurial training’, which can be followed by attending evening classes twice a week. Both degrees still need to be complemented with a mandatory traineeship lasting a minimum of 200 days and a mandatory exam organised by the professional association. Real-estate agents are required to: (i) be registered with the professional body; (ii) follow continuous professional development (for a minimum of 10 hours per year and up to 20 hours if the real estate agent wants to combine the activities of ‘bemiddelaar’ (real-estate broker) with ‘syndicus’ (property manager)); and (iii) be covered by professional indemnity insurance. There are no restrictions on the use of corporate forms. However, setting up of a ‘full’ limited liability company is only possible in the form of a so-called professional real-estate company, where the company itself is allowed to exercise the profession. In such professional companies, 60% of the shares and voting rights need to be held by qualified professionals; the remaining shares need to be held by natural or legal persons that exercise a non-incompatible profession and that have been reported to the professional association. In addition, all managers, directors, members of the management committee and, more generally, independent agents acting in the name and on behalf of the legal entity, must be natural persons authorised to exercise the profession of real-estate agent. In a professional real-estate company of this sort, the joint exercise of professional activities is restricted by the requirement that the -goal’ of the company needs to be limited to ‘those activities that are part of the real-estate profession and are not incompatible with it’. It seems that the professional association assesses the ‘goal’ of these companies without any precise criteria, and refuses the setting-up of certain companies if the additional activities are considered to be incompatible with the real-estate profession. No such limitations on shareholding or joint exercise are present if real-estate agents choose an ‘ordinary’ real-estate company form. However, in such ‘ordinary’ real-estate companies, professionals cannot limit their liability to the same extent. More generally, real-estate agents are also subject to a general obligation to avoid conflicts of interest. Tourist guides Because tourist guides were not regulated in Belgium at the time, no recommendations were formulated in 2017. At the end of 2016, the Walloon Region in Belgium amended its Code on Tourism and introduced title protection for different types of tourist guides. The regulation came into force in July 2017. These titles are the ‘guide conférencier’, ‘guide régional’, ‘guide accompagnateur en randonnée’, ‘guide grand tourisme’, ‘guide local ou thématique’, ‘guide nature-aventure’, and ‘guide découverte de la nature’. There are no reserved activities associated with these protected titles. Education requirements differ according to the specific title sought. For instance, to use the title of ‘guide conférencier’, a Master title is required, whereas to become a ‘guide régional’ only a two-year education programme of ‘guide touristique – guide régional’ is required. In addition, there is a minimum requirement of 3 years of prior professional experience, with a minimum of 5 ‘performances’ per year in the categoru and the language(s) for which recognition is sought. The territorial validity of these titles is limited to the Walloon region. No specific mutual-recognition regime has been laid down for tourist guides from the other regions, given that these regions do not regulate the profession. Tourist guides seeking title protection need to prove their knowledge of the language(s) in which they want to guide. In addition, when working, they need to visibly wear a specific badge. Finally, according to the code of ethics, tourist guides who have chosen to join a professional association are not allowed to make personal advertising beyond the advertising provided by the group to which he/she belongs.



BULGARIA _______________________ I. Overview By 1 February 2021, Bulgaria had submitted information about 109 regulated professions. Among those professions, 6.4% concern business services and 10.1% the construction sector.

According to an EU-wide survey , 21% of Bulgaria’s labour force can be considered to be working in regulated professions. This corresponds exactly to the EU average (21%). Bulgaria is regularly updating the database of regulated professions. As of 1 January 2021, 97% of the general information on regulated professions had been filled in. About 3% of the professions still need to be assessed as to the proportionality of their regulation. II. Situation on the analysed professions Regulatory restrictiveness in Bulgaria is higher than the EU average for the professions of architect, civil engineer, lawyer and tourist guide. It is lower for the professions of accountant/tax adviser, patent agent and real estate agent (the latter not being regulated). Among the professions analysed, restrictiveness is the highest for lawyers. Chart 1: Regulatory restrictiveness, Bulgaria, 2021 The following description of the situation for the different professions focuses on changes since the analysis published in 2017. However, to provide a complete and understandable picture, the description also restates part of the information described in 2017. Architects/engineers In 2017, the Commission did not address any recommendations to Bulgaria for the professions of architect and engineer. There have been no significant reforms regarding the regulation of either profession since 2017. Both professions are covered by the same law and are regulated by way of reserve of activities and title protection. For professional companies, only the use of the title ‘design office’ is protected. This title can be used subject to shareholding requirements (minimum 50% of the capital held by professionals), but professional activity is not reserved for companies holding such titles. Thus, the service can be provided by qualified professionals in a company without restriction as regards its legal form or shareholding requirements. Under the Spatial Planning Act, the activities reserved for architects broadly fall into the following activity categories: (i) architectural design and planning, feasibility studies; (ii) examination of design and related documentation; (iii) preparation/submission/signing of technical control and compliance documentation; (iv) construction/cost/management, monitoring of construction/execution; (v) urban/territorial planning/design; and (vi) landscape architecture. Architects share these activities with engineers and with other qualified persons with limited capacity (such as urban planners, landscape architects, etc.) Under the Law on spatial planning, the activities reserved for engineers broadly fall into the following activity categories: (i) design and planning, feasibility studies; (ii) representation for obtaining permits (signature of designs); (iii) tender and contract administration; (iv) project management, including monitoring of execution and construction cost management; and (v) management of construction maintenance (including inspection). Engineers share these activities with architects and with other qualified professionals with more limited capacity (such as urban planners, landscape architects, etc.). The training requirements for full capacity to exercise either of the professions comprise 7 years in total and include a master’s degree and a state exam, as well as 2 years of experience with a fully qualified professional. A second pathway requires a bachelor’s degree and 4 years of relevant experience. There is a legal obligation for the professional chambers to provide continuous professional development courses to interested architects/engineers, but it is not compulsory for them to follow that training.

For both professions, membership in the relevant professional organisation is compulsory under the Law on the Chamber of Architects and Investment Design Engineers. As regards incompatibility, there is a general conflict of interest rule for working on projects. Under the Law on the Chamber of Architects and Investment Design Engineers, the same person cannot participate in the construction process as both designer and constructor. Professional liability insurance is mandatory under the Law on spatial planning. Fees/tariffs that professionals and/or professional firms charge for their services are regulated by the profession itself, by way of binding minimum or fixed fees/tariffs for some activities. Based on information available, there are no additional certification or attestation schemes for architects or engineers concerning access to specific professional activities that would be subject to additional qualification requirements in Bulgaria. Accountants/tax advisers In 2017, the Commission did not address any recommendations to Bulgaria for the profession of accountant/tax adviser. The profession is regulated in Bulgaria by way of reserved activities; the title ‘accountant’ as such does not exist. Article 17 of the Law on accountancy reserves for professionals holding particular qualifications the activity of drawing up consolidated, annual and interim financial statements of enterprises (with the exception of consolidated statements of microenterprises). This activity is shared with auditors. The Law on accountancy establishes 5 pathways to obtain the required qualification, with a total duration of 7 to 8 years depending on the pathway. The main pathway consists in a master’s degree in accounting and economics, and professional experience of 2 years in accounting, external or internal auditing and financial inspection or tax audits. Additional authorisation requirements or restrictions to exercise the profession have not been identified. Lawyers In 2017, the Commission issued the following recommendations for the profession of lawyer in Bulgaria: ·re-assess the necessity of reserving to lawyers legal advice and representation of citizens before administrative authorities under the new draft law; ·(recommendation to all Member States) assess legal form and shareholding requirements, incompatibility rules and multidisciplinary restrictions, in particular taking into account the proportionality of these restrictions in relation to the core principles, such as the independence of the profession, and to the corresponding supervisory arrangements. In addition, consideration should be given to the cumulative effect of such requirements to the extent that their effects might be accentuated in the case of extensive reserves of activities (e.g. where legal advice is also part of the reserved activities). There has been no reform or other initiative in Bulgaria the Commission is aware of that has taken into account or assessed its recommendations. The legal profession in Bulgaria is regulated by way of reserves of activities and protected title. The activities reserved for lawyers consist of representation of clients in court (shared with in house lawyers). In addition, lawyers may certify copies of documents or authenticate signatures (activity shared with notaries). Legal advice is not reserved for lawyers. A number of lawyers offer online consultations through their websites. The scope of the activities reserved for lawyers concerning the registration of companies had been reduced prior to the 2017 reform recommendations. The activity is open to other professionals, such as accountants, but also to non-professionals. The registration of companies in the Commercial Register is supervised by the Registry Agency and is no longer done by the courts. As a consequence, the registration fees charged by other professionals such as accountants for the registration of companies have been significantly lowered.

There are ongoing discussions on a new draft law since 2015. The new law would introduce a wide range of activities exclusively reserved for lawyers. These would include giving oral and written consultations and statements on issues of law, preparation of complaints, and the drafting of notary acts and testaments. However, until now no decision has been taken by the legislator. The level of qualification required is a master’s degree in law, successful completion of a Bar exam and 2 years of relevant professional experience. Candidates holding an educational and scientific degree of ‘Doctor of laws’, as well as individuals who have a legal service record of more than 5 years, may register with the Supreme Bar Council without passing an examination. Professional liability insurance is mandatory. Only a limited number of legal forms are possible, whereas shareholding requirements provide for 100% capital ownership for lawyers. Ordinance No 1 of 9 July 2004 of the Supreme Bar Council sets minimum binding fees for lawyers. Lawyers are allowed to develop a website and have business cards for informative purposes but all forms of advertising are prohibited, as specified in the Code of Conduct for lawyers. Patent agents In 2017, the Commission did not address any recommendations to Bulgaria for the profession of patent agent. Several reforms have taken place since the beginning of 2017: an ordinance on patent agents entered into force on 9 September 2017 reforming the profession. The Law on patent and utility models was updated in 2019 and 2020, somewhat liberalising the exercise of the profession. The profession of industrial property representative continues to be regulated in Bulgaria by way of reserved activities and protected title. However, since 2019/2020, the activity of filing patents is no longer exclusively reserved for industrial property representatives. Inventors can also file a patent before the Patent Office in person, unless they are not established in Bulgaria; in the latter case they need to act through a lawyer or an industrial property representative. The total duration of the education required is 5 years (master’s degree in law, technical disciplines or intellectual property). In addition, patent agents need to prove professional experience of 2 years and pass the specific state exam organised by the Patent Office. Membership of a professional association is not required, but there is an obligation to enrol in the Register of Industrial Property Representatives. Incompatibility rules exclude involvement in trade and in salaried activities, and make being a patent agent incompatible with the status of civil servant. The profession can be exercised individually or in partnership with any other profession or trade and in any available company form. Real estate agents The profession is not regulated in Bulgaria. Tourist guides In 2017, the Commission made the following recommendations for the profession of tourist guide: ·(recommendation to all regulating Member States) consider the justification and proportionality of regulation of the profession. ·consider introducing a more precise definition of the reserved activities in view of the very wide or undefined scope of reserved activities

On 11 June 2019, the profession of tourist guide, which was regulated by way of title protection and reserves of activities, was reformed. The scope of the reserved activities since the reform is only described negatively, i.e. by listing exclusions where the regulation does not apply. The new Ordinance states that it does not apply to persons carrying out tourist guide activities as employees of and in museums, art galleries, protected natural sites, archaeological sites and excavations. Nor does it apply to mountain guides and therefore to activities in caves, diving, hunting and fishing activities, bodies for water sports, mountain and river attractions, hunting and birdwatching. It is understood from this that outside these exceptions, the activities reserved for tourist guides are broad and cover any means of accompanying and guiding tourists and providing explanations. Service providers from other Member States are only allowed to provide services for trips starting and ending outside Bulgaria, as long as the activity is provided inside the vehicles they travel in. Although there are several routes to obtain qualification as tourist guide, the educational requirement comprises in general 5 years (master’s degree) and passing a specific state exam organised by the Ministry of Tourism. Since 2019, it is compulsory to take practical training of at least 4 weeks with a tourist guide registered in the Register for Licensed Tourist Guides or with a registered tour operator or with an organisation working in the field of tourism. There is still a general obligation to follow continuous professional development courses, but there are no specific requirements as regards the content, duration and penalties for non-compliance. Registration in a state register remains compulsory, but membership in a professional association is still voluntary.



CROATIA

_______________________ I.Overview By 2 March 2021, Croatia had submitted information about 263 regulated professions. This is a very small increase compared with previously submitted figures. While a couple of professions have been deregulated (e.g. tourist guides) Croatia has also added new entries to the database on regulated professions, including professions that have been regulated as required by EU law. Of those professions, 11.4% concern business services, 7.6% the construction sector and 0.4% the real estate sector. According to an EU-wide survey , 31% of Croatia's labour force can be considered to be working in regulated professions. This is significantly higher than the EU average (21%). Croatia is now regularly updating the database on regulated professions. This database provides citizens and administrative authorities from other Member States with valuable information about the regulation of professions in a given Member State. The information on regulated professions in Croatia is currently still incomplete for a number of professions, partly because recent reforms have not yet been reported in the database. In its national action plan from 2016, Croatia announced a series of measures to be carried out between 2016 and 2018. Though some of these seem to have been implemented, the regulation on tourist guides was not relaxed as had been planned. Since 2016, annual country-specific recommendations on professional services have been addressed to Croatia, in particular to remove regulatory restrictions hampering access to and the practise of regulated professions, and increase competition in professional services. II. Situation on the analysed professions Regulatory restrictiveness in Croatia is higher than the EU average for all the professions analysed, except for patent agents, and is highest for lawyers. Chart 1: Regulatory restrictiveness, Croatia, 2021. Starting from a comparatively very restrictive regulatory environment for professional services, Croatia has over the years embarked upon several reform efforts, with mixed success.

Most recently, Croatia requested the World Bank together with the European Commission to analyse the restrictions in place for regulated professions and to identify possibilities for reform, as part of the 2019-2024 World Bank Group (WBG) Country Partnership Framework (CPF) for the Republic of Croatia. After a stocktaking exercise, 24 high-impact professions were selected for in-depth analysis, including architects, civil engineers, tax advisers, lawyers, and tourist guides. The report identified 42 unnecessary restrictions that it considered most harmful to competition and suggested 45 reform measures to address them in the short to medium term. In the long term, the report strongly recommended a systematic review of regulations. Following this report, Croatia committed to adopting and implementing two action plans on services market liberalisation. The first action plan, adopted in late 2019, announces 20 reform measures for seven professions (lawyers, travel agency managers, tourist guides, architects, pharmacists, physical therapists and energy certifiers). The level of ambition of the proposed reforms is significantly below what was recommended in the World Bank report. While the measures were expected to be implemented by the end of 2020, several of them are still pending. The second action plan was adopted in late april 2021 and announces reforms for six professions (lawyers, notaries, tax advisors, auditors, surveyors and pilots). As will be discussed under the headings on specific professions below, since 2017 Croatia has adopted some, mostly small, reforms for architects and civil engineers (removal of one exclusive right for architects, abolishment of mandatory Chamber membership for construction site managers and removal of a residency requirement for architects), tax advisers (residency requirement abolished, legal form opened up, no licensing of accountants), lawyers (amendment to advertising restrictions). For tourist guides, the amendments actually created more restrictions by extending the obligation to take county-specific exams to cross-border service providers. Based on an in-depth analysis of the current situation, the level of restrictiveness in Croatia is found to be higher than the EU weighted average for all professions except patent agents. Of the professions analysed, the level of restrictiveness is still found to be highest for lawyers. Based on the restrictiveness indicator, which was established in 2017, and on its detailed analysis of the legislation, the Commission made specific recommendations for six of the seven regulated professions analysed. The following description of the situation for the different professions focuses on changes since the analysis published in 2017. However, to provide a complete and understandable picture, the description also restates part of the information described in 2017. Architects/Civil engineers In 2017, the Commission made the following recommendation for the architectural profession: ·reconsider the wide scope of reserved activities. The Commission also recommended that all Member States with a fragmented system for the architectural profession or multiple certification requirements should reflect on how their system affects the free movement of professionals and whether the potential obstacles are justified. The Commission did not make any recommendation to Croatia on civil engineers. Since 2017, Croatia has undertaken some reforms of the architecture and engineering professions, and has announced additional reforms as a follow-up to the World Bank review that was finalised in 2020. Concretely, the activity of interior design is no longer reserved for architects and obligatory chamber membership for site managers has been abolished. In addition, the total ban on advertising for civil engineers has been removed. Finally, the residency requirement for architects was removed. The construction process in Croatia is characterised by the obligatory involvement of a wide range of professions, each with their own exclusive rights. These include the 'core' professions of certified architects and certified civil engineers, but also mechanical engineers, electrical engineers, geodetic engineers as well as certified architect-urban planners. All these professions are regulated by way of reserved activities and title protection. This analysis focuses on certified architects and civil engineers but will refer to these parallel professions to the extent relevant for assessing regulatory restrictiveness. Reserved activities and qualification requirements Both certified architects and certified civil engineers are covered by the same laws. Both professions require a graduate degree in architecture or engineering of 5 years, a minimum of 2 years professional experience and passing a professional exam. This seems to be the only pathway available to enter those professions. Fully qualified architects from other Member States who benefit from automatic recognition in line with Directive 2005/36/EC can carry the protected titles, be entered into the relevant professional registers and exercise all reserved activities/roles (including those for which additional requirements are imposed) without the need to prove such professional experience and/or to pass the state exam. The legislation reserves a large number of activities for both professions in the areas of design, checking of permit applications and construction supervision, most of which do not appear to be shared even between engineers and architects. Indeed, although both architects and civil engineers have a role in, for example, design and planning, their responsibilities are limited to their respective domains, with only small overlaps. Moreover, engineering activities in construction are further subdivided between civil, mechanical, and electrical engineers, each with exclusive rights in their area of responsibility (e.g. electrical installations for electrical engineers) with only limited overlaps (e.g. water and sewage installations for buildings can be designed by certified architects, certified civil engineers and certified mechanical engineers). Although for simple family houses, the involvement of an architect or civil engineer will suffice, most construction projects will require contributions from professionals from at least three of these fields. This division of tasks in the construction process is made even more complex by the presence of specific certification schemes for performing the role of design auditor, project manager, site manager or works manager.

Design auditors are authorised to check and certify the stability of a particular construction. Only civil engineers with 10 years of work experience in a relevant field can be entered into the registry for design auditors. For large public construction projects, Croatian law requires that a project manager be appointed. This should be a professional with a graduate degree in architecture, urban planning, civil engineering, electrical engineering or mechanical engineering and with at least 8 years experience as well as an international project management certificate. Site managers can manage other, less complex construction projects. Depending on the level and substance of their degree (graduate/master’s or bachelor’s in fields of architecture or engineering), professionals will need 3-5 years of professional experience and to have passed a professional exam. Works managers are authorised to manage construction works in their area of specialisation (architecture, civil/electrical/mechanical engineering). Depending on whether they hold a master’s degree in one of those fields or only a bachelor’s degree in engineering, they are required to have either 2 or 3 years professional experience in those respective professions and to have passed the relevant professional exam. Finally, certified architect-urban planners have the exclusive right to develop draft spatial plans, spatial status reports and engage in landscape architecture. Based on the information available, other than those mentioned above, there are no additional certification or attestation schemes for architects and civil engineers to gain access to specific professional activities that would be subject to additional qualification requirements in Croatia. Mandatory registration and chamber membership Certified architects and civil engineers, need to register and become members of the professional chamber of architects or civil engineers. Mechanical engineers, electrical engineers and geodetic engineers have their own chambers. Certified architect-urban planners need to become members of the architects’ chamber. If professionals want to get the licence to perform the tasks of design auditors they must also apply to be entered into the relevant specialist registry in their respective chamber. For site managers and works managers mandatory membership was abolished at the end of 2019. Other requirements Both certified architects and civil engineers are obliged to follow a minimum of 10 hours of continuous professional development per year. There are no corporate form requirements and both professions can establish themselves as sole practitioners, in a joint practice office or as a legal person registered for this activity (including limited liability companies). Regarding incompatibilities between certain activities and the joint exercise of professions, besides a general conflict of interest rule, the only specific limitation is that a company/individual professional who undertakes the 'project management' cannot be involved in the actual execution and supervision of that same project. In addition, indemnity insurance is compulsory for both professions, and a mutual recognition clause on insurances from other EEA countries is in place. For architects, the chamber has recently abolished a residency requirement. Both for architects and civil engineers, the chambers provide non-binding recommended prices by offering guidance on the necessary man-hours and recommended hourly rates for specific tasks. Accountants/tax advisors In 2017, the Commission made the following recommendations for accountants/tax advisors: ·re-assess the proportionality of the extended scope of the activities, reserved to tax advisors as part of the upcoming reform, in particular as regards the necessity to reserve activities, such as drawing up tax returns; ·consider the possibility to share the activity of tax counselling with other professionals in the sector, in line with Case C-451/03; ·remove the restrictions requiring residence on the national territory; ·take fully into consideration professional qualifications obtained abroad in line with the Professional Qualifications Directive. Since then Croatia has amended its Act on tax advisory services by removing the residency requirement and abolishing the legal form restriction that prevented tax advisors from establishing a limited liability company. It also refrained from extending the scope of reserved activities as was initially planned under that reform. While the law provided for the licensing of accountants by the beginning of 2019, Croatia abandoned this plan and chose to continue not to regulate accountants. It does however regulate tax advisors, by way of reserves of activities and a protected title. Activities reserved for tax advisors include providing tax advice (partially shared with auditors), representing clients before administrative bodies (shared with lawyers), acting as court-appointed experts and providing valuation services. There are two pathways to obtaining the required qualifications. The first is a master’s diploma in economy or law, minimum 5 years professional experience and passing a state exam. The second is a 4-5 year specialist university graduate degree related to taxes, minimum 7 years professional experience and passing a state exam. The exam is particularly expensive, at around EUR 950. Chamber membership is compulsory, and subject to an annual fee. Linked to this chamber membership is a continuous professional development obligation of minimum 120 hours/3 years. While there are no numerical or territorial restrictions for tax advisor licences, the stringent access requirements seem to act as a significant deterrant as there are currently only about 70 licensed tax advisers for the whole of Croatia. It seems that most providers of tax advice do so without applying for a licence, which suggests either that the exclusive rights are interpreted quite leniently or that enforcement is very limited.

Following the reform of the Act on tax advisory services in early 2017, tax advisors are now also allowed to set up a limited liability company to provide their services. The majority of the shares and voting rights in such companies need to be held by licensed tax advisors, and the majority of the management board should be tax advisors. Since this reform, tax advisors can also work for a multidisciplinary company that also provides services other than tax advice, as long as the shareholding, voting rights and management board requirements are fulfilled. Furthermore, under the amended act tax advisors are no longer prohibited from engaging in other types of professional activity. The indemnity insurance is compulsory for professionals, and any evidence of insurance from other EEA countries is accepted. Other authorisation requirements include a certain level of knowledge of the Croatian language and on tax laws. Lawyers In 2017, the Commission made the following recommendations for lawyers: ·review the provision according to which a lawyer who is not practising for more than 6 months would be deprived of the right to exercise the profession ·clarify the scope of the reserves so as to facilitate the provision of legal consultancy services by lawyers or other service providers, in particular for online services. The Commission also addressed the following recommendation to all Member States: ·assess legal form and shareholding requirements, incompatibility rules and multidisciplinary restrictions, in particular taking into account the proportionality of these restrictions in relation to the core principles, such as the independence of the profession and to the corresponding supervisory arrangements. In addition, consideration should be provided to the cumulative effect of such requirements to the extent that their effects might be accentuated in case of extensive reserves of activities (e.g. where legal advice is also part of the reserved activities). Since 2017, Croatia has made only minor changes to its legal provisions and ethical rules governing lawyers. There was an amendement to the Ordinance on commercial communications but it did not create a genuine possibility for lawyers to advertise their services. However, following an infringement proceeding, Croatia is in the process of adopting a reform on access to and the practise of the law profession and law firms. Lawyers are regulated by way of reserved activities and title protection. The three main reserved activities are giving legal advice (shared with law professors and to a certain extent tax advisors and patent agents); representing clients in front of courts (exclusive); and drafting various legal documents or actions. Other shared reserved activities are representation before administrative bodies, insolvency practice and mediation. The education requirement is a five-year master’s degree in law, a three-year traineeship and passing a state examination. It is then compulsory to register with the Croatian Bar Association, which requires an enrolment fee and subsequent monthly membership fees. Lawyers need to follow the Code of Ethics, which includes an obligation on continuous professional development (to renew, expand and perfect their legal and general knowledge) but with no sanction or control mechanism. The Croatian law which states that if a lawyer does not practise law for more than 6 months without a good reason, they may lose their practising rights, is in the process of being repealed. Lawyers can only set up individual practices, joint legal offices or law firms (these can be public societies without limited liability, or limited liability companies). They cannot operate as any other legal person. Shares have to be held by attorneys only. Lawyers that have an individual practices can only establish one office in the territory of Croatia. There is a complete ban on joint exercise with non-lawyers. Furthermore, a lawyer cannot perform any activity which is incompatible with maintaining their good reputation and/or independence, or enter into any employment other than in a law firm However, there are restrictions on EU lawyers' abilities to set up law firms in Croatia. Possibilities for lawyers and law firms to set up offices in Croatia are part of the upcoming reform. Lawyers must obtain professional indemnity insurance, and Croatian law also recognises insurances obtained in other Member States. Other authorisation requirements include proof of medical fitness; a self-signed statement that the professional has the necessary equipment and office space; taking an oath, buying an 'office seal' (special stamp), active knowledge of the Croatian language, being 'worthy to practise law', etc. Regarding remuneration, all lawyer’s services are subject to binding minimum and maximum tariffs. Although the Ordinance on commercial communications was amended, the prohibition