Proposal for a Directive of the European Parliament and of the Council on services in the internal market [SEC(2004) 21]
Date: 2004-01-13
Institutions: European Commission
Subjects: EC Directive, domestic market, freedom to provide services, provision of services, right of establishment, services contract

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 5.3.2004 
COM(2004) 2 final/3 

2004/0001 (COD) 

Corrigendum 
Numérotation à l’intérieur de l’article 16 
Concerne uniquement EN. 

Proposal for a  

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on services in the internal market 

(presented by the Commission) 

[SEC(2004) 21] 

EN 

   EN 

 
 
 
  
TABLE OF CONTENTS 

SUMMARY ............................................................................................................................... 3 

1. 

2. 

3. 

a) 
b) 
c) 
d) 
e) 
4. 

5. 

6. 

a) 
b) 
c) 
7. 

a) 
b) 

c) 
d) 

e) 
f) 

g) 

h) 

i) 
j) 

NECESSITY AND OBJECTIVE ................................................................................ 5 

BACKGROUND.......................................................................................................... 6 

MAIN FEATURES OF THE DIRECTIVE................................................................. 8 

A framework Directive ................................................................................................ 8 
A combination of regulation techniques ...................................................................... 9 
Coordination of the processes of modernisation.......................................................... 9 
A dynamic approach .................................................................................................. 10 
A framework facilitating access to services............................................................... 12 
PREPARATORY WORK.......................................................................................... 12 

COHERENCE WITH OTHER COMMUNITY POLICIES ..................................... 13 

LEGAL ASPECTS..................................................................................................... 17 

Legal basis and choice of instrument ......................................................................... 17 
Subsidiarity ................................................................................................................ 18 
Proportionality ........................................................................................................... 19 
SPECIFIC QUESTIONS ........................................................................................... 19 

What activities are covered by the Directive (Articles 2 and 4)? .............................. 19 
Why should certain services or fields be excluded from the scope of the Directive 
(Article 2)? ................................................................................................................. 20 
What are "single points of contact" (Article 6)? ........................................................ 21 
What is the difference between the requirements to be eliminated (Article 14) and the 
requirements to be evaluated (Article 15)? ................................................................ 21 
What will the mutual evaluation procedure involve (Articles 9, 15, 30 and 41)? .........22 
How will the implementation of Articles 14, 15 and 16 of the Directive relate to the 
Commission's role as guardian of the Treaty, in particular as regards infringement 
procedures? ................................................................................................................ 22 
Are requirements that are listed in neither Article 14 nor in Article 15 considered to 
be in conformity with the freedom of establishment provided for in Article 43 of the 
Treaty? ....................................................................................................................... 23 
Why is there a section specifically devoted to the rights of recipients of services 
(Chapter III, Section 2)?............................................................................................. 23 
Why is the question of the posting of third country nationals covered (Article 25)? 24 
Why does the country of origin principle not apply to certain matters or activities 
(Article 17)? ............................................................................................................... 25 

2 

 
 
  
 
SUMMARY 

1. 

2. 

This proposal for a directive is part of the process of economic reform launched by 
the  Lisbon  European  Council  with  a  view  to  making  the  EU  the  most  competitive 
and dynamic knowledge-based economy in the world by 2010. Achieving this goal 
means  that  the  establishment  of  a  genuine  internal  market  in  services  is 
indispensable. It has not hitherto been possible to exploit the considerable potential 
for economic growth and job creation afforded by the services sector because of the 
many  obstacles1  hampering  the  development  of  service  activities  in  the  internal 
market.  This  proposal  forms  part  of  the  strategy  adopted  by  the  Commission  to 
eliminate these obstacles and follows on from the Report on the State of the Internal 
Market for Services2, which revealed their extent and significance. 

The objective of the proposal for a Directive is to provide a legal framework that will 
eliminate the obstacles to the freedom of establishment for service providers and the 
free movement of services between the Member States, giving both the providers and 
recipients  of  services  the  legal  certainty  they  need  in  order  to  exercise  these  two 
fundamental freedoms enshrined in the Treaty. The proposal covers a wide variety of 
economic service activities – with some exceptions, such as financial services – and 
applies only to service providers established in a Member State. 

3. 

In  order  to  eliminate  the  obstacles  to  the  freedom  of  establishment,  the  proposal 
provides for: 

– 

– 

– 

– 

simplification  measures, 

administrative 
the 
establishment  of  "single  points  of  contact",  at  which  service  providers  can 
complete  the  administrative  procedures  relevant  to  their  activities,  and  the 
obligation  to  make  it  possible  to  complete  these  procedures  by  electronic 
means; 

particularly 

involving 

certain principles which authorisation schemes applicable to service activities 
must  respect,  in  particular  relating  to  the  conditions  and  procedures  for  the 
granting of an authorisation; 

the prohibition of certain particularly restrictive legal requirements that may 
still be in force in certain Member States; 

the obligation to assess the compatibility of certain other legal requirements 
with  the  conditions  laid  down  in  the  Directive,  particularly  as  regards 
proportionality. 

4. 

In  order  to  eliminate  the  obstacles  to  the  free  movement  of  services,  the  proposal 
provides for: 

– 

the application of the country of origin principle, according to which a service 
provider is subject only to the law of the country in which he is established and 
Member States may not restrict services from a provider established in another 

1 

2 

"An Internal Market Strategy for Services", Communication from the Commission to the Council and 
the European Parliament, COM(2000) 888 final, 29.12.2000. 
Report from the Commission to the Council and the European Parliament on “The State of the Internal 
Market for Services", COM(2002) 441 final, 30.7.2002. 

3 

 
 
  
 
                                                 
Member State. This principle is accompanied by derogations which are either 
general, or temporary or which may be applied on a case-by-case basis; 

the right of recipients to use services from other Member States without being 
hindered by restrictive measures imposed by their country or by discriminatory 
behaviour on the part of public authorities or private operators. In the case of 
patients, the proposal clarifies the circumstances in which a Member State may 
make  reimbursement  of  the  cost  of  health  care  provided  in  another  Member 
State subject to authorisation; 

a mechanism to provide assistance to recipients who use a service provided by 
an operator established in another Member State; 

in the case of posting of workers in the context of the provision of services, the 
allocation of tasks between the Member State of origin and the Member State 
of destination and the supervision procedures applicable. 

– 

– 

– 

5. 

With  a  view  to  establishing  the  mutual  trust  between  Member  States  necessary  for 
eliminating these obstacles, the proposal provides for: 

– 

– 

– 

– 

harmonisation of legislation in order to guarantee equivalent protection of the 
general interest on vital questions, such as consumer protection, particularly as 
regards the service provider's obligations concerning information, professional 
insurance, multidisciplinary activities, settlement of disputes, and exchange of 
information on the quality of the service provider; 

stronger  mutual  assistance  between  national  authorities  with  a  view  to 
effective supervision of service activities on the basis of a clear distribution of 
roles between the Member States and obligations to cooperate; 

measures for promoting the quality of services, such as voluntary certification 
of  activities,  quality  charters  or  cooperation  between  the  chambers  of 
commerce and of crafts; 

encouraging  codes  of  conduct  drawn  up  by  interested  parties  at  Community 
level on certain questions, including in particular commercial communications 
by the regulated professions. 

6. 

With  a  view  to  taking  full  effect  by  2010,  the  proposal  is  based  on  a  dynamic 
approach involving phased implementation of some of its provisions, a commitment 
to  additional  harmonisation  on  certain  specific  matters  (cash-in-transit  services, 
gambling  and  judicial  recovery  of  debts),  the  guarantee  that  it  will  evolve  and  that 
any  need  for  new  initiatives  can  be  identified.  Moreover,  this  proposal  is  without 
prejudice to any legislative or other Community initiatives in the field of consumer 
protection. 

4 

 
 
  
 
EXPLANATORY MEMORANDUM 

1. 

NECESSITY AND OBJECTIVE 

Services  are  omnipresent  in  today's  economy,  generating  almost  70%  of  GNP  and 
jobs  and  offering  considerable  potential  for  growth  and  job  creation.  Realising  this 
potential  is  at  the  heart  of  the  process  of  economic  reform  launched  by  the  Lisbon 
European  Council  and  aimed  at  making  the  EU  the  most  competitive  and  dynamic 
knowledge-based economy in the world by 2010. It has not so far been possible to 
exploit  fully  the  growth  potential  of  services  because  of  the  many  obstacles 
hampering the development of services activities between the Member States. 

In its Report on "The  State  of  the  Internal Market for Services"1 ("the report"), the 
Commission listed these obstacles and concluded that "a decade after the envisaged 
completion  of  the  internal  market,  there  is  a  huge  gap  between  the  vision  of  an 
integrated  EU  economy  and  the  reality  as  experienced  by  European  citizens  and 
European service providers." These obstacles affect a wide range of services such as 
distributive  trades,  employment  agencies,  certification,  laboratories,  construction 
services, estate agencies, craft industries, tourism, the regulated professions etc. and 
SMEs, which are predominant in the services sector, are particularly hard-hit. SMEs 
are too often discouraged from exploiting the opportunities afforded by the internal 
market  because  they  do  not  have  the  means  to  evaluate,  and  protect  themselves 
against,  the  legal  risks  involved  in  cross-border  activity  or  to  cope  with  the 
administrative complexities. The report, and the impact assessment which relates to 
this  proposal,  show  the  economic  impact  of  this  dysfunction,  emphasising  that  it 
amounts  to  a  considerable  drag  on  the  EU  economy  and  its  potential  for  growth, 
competitiveness and job creation. 

These  obstacles  to  the  development  of  service  activities  between  Member  States 
occur in particular in two types of situation: 

– 

– 

when a service provider from one Member State wishes to establish himself in 
another Member State in order to provide his services. (For example, he may 
be  subject  to  over-burdensome  authorisation  schemes,  excessive  red  tape, 
discriminatory requirements, an economic test etc.); 

when a service provider wishes to provide a service from his Member State of 
origin into another Member State, particularly by moving to the other Member 
State  on  a  temporary  basis.  (For  example,  he  may  be  subject  to  a  legal 
obligation  to  establish  himself  in  the  other  Member  State,  need  to  obtain  an 
authorisation there, or be subject to the application of its rules on the conditions 
for the exercise of the activity in question or to disproportionate procedures in 
connection with the posting of workers). 

1 

COM(2002) 441 final, 30.7.2002. 

5 

 
 
  
 
                                                 
Accordingly, the aim of this proposal for a Directive is to establish a legal framework 
to  facilitate  the  exercise  of  freedom  of  establishment  for  service  providers  in  the 
Member States and the free movement of services between Member States. It aims to 
eliminate certain legal obstacles to the achievement of a genuine internal market in 
services  and  to  guarantee  service  providers  and  recipients  the  legal  certainty  they 
need in order to exercise these two fundamental freedoms enshrined in the Treaty in 
practice. 

2. 

BACKGROUND 

This proposal for  a Directive  forms part  of a  political process launched in  2000  by 
the European Council: 

In  March  2000,  the  Lisbon  European  Council  adopted  a  programme  of  economic 
reform aimed at making the EU the most competitive and dynamic knowledge-based 
economy  in  the  world  by  2010.  In  this  context,  the  EU  Heads  of  State  and 
Government  invited  the  Commission  and  the  Member  States  to  devise  a  strategy 
aimed at eliminating the obstacles to the free movement of services2. 

In  December 2000,  in  response  to  the  call  launched  at  the  Lisbon  Summit,  the 
Commission set out "An Internal Market Strategy for Services"3, which received the 
full  support  of  the  Member  States4,  the  European  Parliament5,  the  Economic  and 
Social Committee6 and the Committee of the Regions7. The aim of this strategy is to 
enable  services  to  move  across  national  borders  within  the  European  Union  just  as 
easily  as  within  a  single  Member  State.  Above  all  it  is  based  on  a  horizontal 
approach across all economic sectors involving services and on a two-stage process, 
the first involving identification of the difficulties hampering the smooth functioning 
of  the  internal  market  in  services,  and  the  second  involving  the  development  of 
appropriate solutions to the problems identified, and in particular a horizontal legal 
instrument. 

In  July 2002,  the  Commission  presented  its  report  on  "The  State  of  the  Internal 
Market for Services", which marked the completion of the first phase in the strategy 
and  provided  as  exhaustive  a  list  as  possible  of  barriers  that  exist  in  the  internal 
market for services. This report also analyses the common features of these barriers 
and makes an initial evaluation of their economic impact8. 

2 

3 

4 

5 

6 

7 

8 

Presidency Conclusions, Lisbon European Council, 24.3.2000, paragraph 17. The need to take action in 
these fields was also highlighted at the Stockholm and Barcelona Summits in 2001 and 2002. 
"An  Internal Market  Strategy  for Services"  Communication from  the Commission  to  the  Council and 
the European Parliament. COM(2000) 888 final, 29.12.2000. 
2336th  Council  meeting  on  the  Internal  Market,  Consumer  Affairs  and  Tourism  of  12 March 2001, 
6926/01 (Presse 103) para. 17. 
European Parliament Resolution on the Commission Communication "An Internal Market Strategy for 
Services" A5-0310/2001, 4.10.2001. 
Opinion  of  the  Economic  and  Social  Committee  on  the  Commission  Communication  "An  Internal 
Market Strategy for Services" (additional opinion), CES 1472/2001 final, 28.11.2001. 
Opinion  of  the  Committee  of  the  Regions  on  the  Commission  Communication  "An  Internal  Market 
Strategy for Services", CDR 134/2001 final, 27.06.2001. 
This  report  took  up,  in  certain  respects,  in  the  case  of  services,  the  idea  provided  for  in  the  former 
Article 100b EC of an inventory of national measures. 

6 

 
 
  
 
                                                 
In  November 2002,  the  conclusions  of  the  Council  on  the  Commission's  report9, 
acknowledged "that a decade after the envisaged completion of the internal market, 
considerable  work  still  needs  to  be  done  in  order  to  make  the  internal  market  for 
services a reality" and emphasised "that very high political priority should be given 
to  the  removal  of  both  legislative  and  non-legislative  barriers  to  services  in  the 
internal  market,  as  part  of  the  overall  goal  set by  the  Lisbon  European  Council  to 
make the European Union the most dynamic and competitive economy in the world 
by  2010".  The  Council  urged  the  Commission  to  accelerate  work  on  the  initiatives 
foreseen  in  the  second  stage  of  the  strategy,  and  in  particular  on  the  legislative 
instrument. 

In February 2003, the European Parliament also welcomed the Commission's report, 
emphasising that it "insists that the Competitiveness Council reaffirm Member States' 
commitment  to  the  country  of  origin  and  mutual  recognition  principles,  as  the 
essential basis for completing the internal market in goods and services"10 and also 
that it "welcomes the proposals for a horizontal instrument to ensure free movement 
of  services  in  the  form  of  mutual  recognition,  with  automatic  recognition  being 
encouraged  as  far  as  possible,  administrative  cooperation  and,  where  strictly 
necessary, harmonisation"11. 

In March 2003, with the aim of reinforcing the economic dimension of the Lisbon 
strategy, the Spring European Council called for the strengthening of the horizontal 
role of the Competitiveness Council in order to increase competitiveness and growth 
in the  framework  of  an integrated approach to competitiveness to be set out by the 
Commission. The establishment of a clear and balanced legal framework to facilitate 
the free movement of services in the internal market is one of the elements necessary 
for the success of the new integrated competitiveness strategy. 

In  May  2003,  according  to  its  "Internal  Market  Strategy"12,  the  Commission 
announced that "the Commission will make a proposal for a Directive on services in 
the internal market before the end of 2003. This Directive will establish a clear and 
balanced  legal  framework  aiming  to  facilitate  the  conditions  for  establishment  and 
cross-border  service  provision.  It  will  be  based  on  a  mix  of  mutual  recognition, 
administrative 
strictly  necessary  and 
encouragement of European codes of conduct/professional rules". 

cooperation,  harmonisation  where 

9 

10 

11 
12 

Conclusion  on  obstacles  to  the  provision  of  services  in  the  internal  market  at  the  2462nd  Council 
meeting  on  Competitiveness  (Internal  Market,  Industry,  Research),  Brussels,  14 November 2002, 
13839/02 (Presse 344). 
European Parliament Resolution of 13 February 2003 on the Communication from the Commission to 
the Council, the European Parliament, the Economic and Social Committee and the Committee of the 
Regions: “2002 Review of the Internal Market Strategy – Delivering the promise” (COM(2002) 171 - 
C5-0283/2002 - 2002/2143(COS)). A5-0026/2003; point 35. 
Point 36. 
"Internal Market Strategy - Priorities 2003-2006" Communication from the Commission to the Council, 
the  European  Parliament,  the  European  Economic  and  Social  Committee  and  the  Committee  of  the 
Regions, COM(2003) 238 of 7.5.2003. 

7 

 
 
  
 
                                                 
In October 2003, the European Council identified the internal market as a key area 
for  improving  the  competitiveness  of  the  European  economy  and  thus  creating 
conditions  conducive  to  growth  and  employment.  It  "calls  on  the  Commission  to 
present any further proposals necessary to complete the internal market and to fully 
exploit  its  potential,  to  stimulate  entrepreneurship  and  to  create  a  true  internal 
market in services, while having due regard to the need to safeguard the supply and 
trading of services of general interest”13. 

3. 

a) 

MAIN FEATURES OF THE DIRECTIVE 

A framework Directive 

The Directive will establish a general legal framework applicable, subject to certain 
exceptions, to all economic activities involving services. This horizontal approach is 
justified  by  the  fact  that,  as  explained  in  the  report14,  the  legal  obstacles  to  the 
achievement  of  a  genuine  internal  market  in  services  are  often  common  to  a  large 
number of different activities and have many features in common. 

Since the proposal is for a framework Directive, it does not aim to lay down detailed 
rules  or  to  harmonise  all  the  rules  in  the  Member  States  applicable  to  service 
activities.  This  would  have  led  to  over-regulation  and  a  standardisation  of  the 
specific features of the national systems for regulating services. Instead, the proposal 
deals  exclusively  with  questions  that  are  vital  for  the  smooth  functioning  of  the 
internal  market  in  services  by  giving  priority  to  targeted  harmonisation  of  specific 
points, to the imposition of obligations to achieve clear results without prejudging the 
legal techniques by which they will be brought about, and to the clarification of the 
respective roles of the Member State of origin and the Member State of destination 
of a service. The proposal also refers to Commission implementing measures on the 
way that certain provisions are applied. 

While  establishing  a  general  legal  framework,  the  proposal  recognises  the  specific 
characteristics of each profession or field of activity. More particularly, it recognises 
the  specific  nature  of  the  regulated  professions  and  the  particular  role  of 
self-regulation.  For  example,  the  proposal  provides  (Article  17)  for  a  number  of 
derogations  from  the  country  of  origin  principle  that  are  directly  linked  to  the 
specific  characteristics  of  certain  activities;  it  also  contains  specific  provisions  on 
certain  activities  such  as  professional  insurance  and  guarantees  (Article 27), 
commercial  communications  by 
(Article 29)  or 
multidisciplinary activities (Article 30); finally, it relies also on alternative methods 
of regulation specific to certain activities, such as codes of conduct for the regulated 
professions (Article 39). 

regulated  professions 

the 

Moreover, this proposal is without prejudice to any legislative or other Community 
initiatives in the field of consumer protection. 

13 
14 

Presidency Conclusions, Brussels European Council, 16-17.10.2003, para 16. 
COM(2002) 441 op cit, part II. 

8 

 
 
  
 
                                                 
b) 

A combination of regulatory techniques 

The proposal for a Directive is based on a combination of techniques for regulating 
service activities, including in particular: 

– 

– 

– 

– 

– 

the country of origin principle, according to which service providers are subject 
only to the law of the country in which they are established and Member States 
may not restrict services provided by operators established in another Member 
State.  It  therefore  enables  operators  to  provide  services  in  one  or  more  other 
Member  States  without  being  subject  to  those  Member  States'  rules.  This 
principle  also  means  that  the  Member  State  of  origin  is  responsible  for  the 
effective  supervision  of  service  providers  established  on  its  territory  even  if 
they provide services into other Member States; 

interest 

in  certain  fields, 

derogations  from  the  country  of  origin  principle,  in  particular  in  Article  17, 
necessary  in  order  to  take  account  of  differences  in  the  level  of  protection  of 
the  extent  of  Community-level 
the  general 
harmonisation, the degree of administrative cooperation, or certain Community 
instruments. Some of these derogations will apply for a transitional period up 
to 2010, and are intended to allow time for additional harmonisation on certain 
specific  questions.  Finally,  derogations  on  a  case-by-case  basis  are  possible, 
subject to certain substantive conditions and procedures; 

the  establishment  of  obligations  of  mutual  assistance  between  national 
authorities,  which  is  vital  for  ensuring  the  high  level  of  mutual  trust  between 
Member  States  on  which  the  country  of  origin  principle  is  based.  In  order  to 
ensure that supervision is effective, the proposal provides for a high degree of 
administrative cooperation between authorities by organising the allocation of 
supervisory tasks, exchange of information and mutual assistance; 

targeted  harmonisation  to  ensure  protection  of  the  general  interest  in  certain 
essential fields where too wide a divergence in the level of protection, notably 
in  the  field  of  consumer  protection,  would  undermine  the  mutual  trust  that  is 
vital  to  the  acceptance  of  the  country  of  origin  principle  and  could  justify,  in 
accordance  with  the  case-law  of  the  Court  of  Justice,  measures  restricting 
freedom  of  movement.  Harmonisation  is  also  provided  for  as  far  as  the 
simplification of administrative procedures and the elimination of certain types 
of requirement are concerned; 

alternative  methods  of  regulation  that  are  important  for  the  regulation  of 
service  activities.  The  proposal  fully  recognises  their  role  and  encourages  the 
parties  concerned  to  draw  up,  at  Community  level,  codes  of  conduct  on 
particular issues. 

c) 

Coordination of the processes of modernisation 

The  proposal  for  a  Directive  aims  to  coordinate,  at  Community  level,  the 
modernisation  of  national  systems  for  regulating  service  activities  with  a  view  to 
eliminating  the  legal  obstacles  to  the  achievement  of  a  genuine  internal  market  in 
services.  The  report  emphasises  the  resistance  to  modernisation  of  the  various 
national legal frameworks and notes that "The fundamental principles of the Treaty, 
the  importance  attached  to  them  by  the  Court,  and  the  follow-up  to  the  ambitious 

9 

 
 
  
 
programmes  of  1962  and  1985,  have  not  always  resulted  in  the  adjustment  of 
national legislation which might have been expected".15 

Adapting  legislation  case  by  case  and  Member  State  by  Member  State  following 
infringement  procedures  by  the  Commission,  would  be  an  inefficient  way  of 
responding to this need for modernisation, as it would be entirely reactive and would 
lack a shared political will to move towards a common objective16. The adjustment 
of  legislation  by  all  the  Member  States  according  to  common  principles  and  a 
common timetable will instead make it possible to benefit on a European scale from 
the resulting economic growth, to avoid distortions of competition between Member 
States  that  make  their  adjustments  at  different  rates,  and  to  encourage  improved 
mobilisation  around  this  objective,  also  in  terms  of  allocation  of  national  and 
Community administrative resources. 

In order to transpose the Directive, Member States must: 

– 

– 

– 

– 

simplify  the  administrative  procedures  and  formalities  to  which  service 
activities are subject (Sections 1 and 2 of Chapter II), particularly by means of 
single points of contact (Article 6), the use of electronic procedures (Article 8) 
and simplification of the authorisation procedures for access to and the exercise 
of service activities (Articles 10–13); it should be noted that the obligations to 
communicate  information  (Article  7)  and  to  make  available  electronic 
procedures  (Article  8)  do  not  prevent  Member  States  from  maintaining  other 
procedures and methods of communication in parallel;  

eliminate from their legislation a number of requirements listed in the Directive 
that  hamper  access  to  and  the  exercise  of  service  activities  (Articles 14, 
21, 29); 

guarantee in their legislation the free movement of services from other Member 
States  and  consequently  adapt  any  rules  that  would  hamper  such  movement 
(Articles 16, 20, 23 and 25); 

evaluate the justification and proportionality of a number of requirements listed 
in the Directive which, where they exist in their regulations, may significantly 
restrict  the  development  of  service  activities  (Articles 9, 15 and 30).  This 
evaluation should  lead  to the  elimination  of  unjustified  requirements and will 
be the subject of mutual evaluation that could conclude, where appropriate, that 
other Community-level initiatives are necessary. 

d) 

A dynamic approach 

Given  the  scale  of  the  obstacles  identified  in  the  report,  the  task  of  establishing  a 
genuine area with no internal borders for services will take time. The modernisation 
of certain rules applied by the Member States will require fundamental changes (for 
example,  single  points  of  contact  and  the  use  of  electronic  procedures),  additional 
harmonisation specific to certain activities, and take due account of the development 
of  Community  integration  in  other  fields.  In  order  to  avoid  a  static  approach  that 
tackles  a  single  problem  and  leaves  the  others  unresolved,  the  proposal  for  a 

15 
16 

COM(2002) 441 op cit. part II, Section C 2. 
See impact assessment, paragraph 6.3.2. 

10 

 
 
  
 
                                                 
Directive adopts a phased approach aimed at achieving a genuine internal market for 
services by 2010. The proposal therefore provides for: 

– 

– 

– 

– 

– 

phased implementation of certain of its provisions (Articles 6–8) 

additional  harmonisation  on  certain  specific  questions,  i.e.  cash-in-transit 
services,  gambling,  and  recovery  of  debts  by  judicial  means  (Article 40(1)), 
which are the subject of temporary derogations from the principle of country of 
origin  (Article 18).  Moreover,  the  need  for  further  harmonisation  could  be 
identified,  in  particular  in  the  areas  of  consumer  protection  and  cross-border 
contracts (Article 40(2)d); 

extension of the scope of application of the country of origin principle as rules 
come to be harmonised in certain fields (Articles 17 point 21 and 19(2)) 

the possibility for the Commission to take implementing measures on the way 
that certain provisions will be put in place (Article 42) 

identification  of  the  need  for  new  initiatives,  particularly  through  mutual 
evaluation (Article 40(2)) 

The dynamics of the proposal can be summarised as follows: 

1 January 2010 

End of transitional 
derogations from the 
principle of country of 
origin (Article 18(2)) 
for: 

-  cash-in-transit, 

-  judicial recovery of 

debts. 

1 year after 
adoption 
(scheduled: 2005) 

Deadline for 
transposition 
(scheduled: 2007) 

Not later than 
31 December 2008 

Commission proposals 
for additional 
harmonisation 
(Article 40) on: 

-  cash-in-transit, 

-  gambling, 

-  judicial recovery of 

debts. 

-  Single points of 

contact (Article 6) 

-  Right to information 

(Article 7) 

-  Procedures by 

electronic means 
(Article 8) 

Mutual evaluation: 

-  summary report by 
the Commission, 
accompanied where 
appropriate by 
proposals for 
additional initiatives 
(Article 41). 

Elimination of 
prohibited requirements 
(Article 14) 

Elimination of 
restrictions to free 
movement (Chapter III) 
except in the case of 
transitional derogations 
(Article 18) or those 
referred to in Article 17 

-  Harmonisation of 
authorisation 
schemes 
(Articles 10–13) 

-  Harmonisation of the 
quality of services 
(Chapter IV) 

-  Mutual assistance 

(Chapter V) 

Mutual evaluation: 

-  report by each MS on 

the evaluation of 
requirements in its 
own legal system 
(Articles 9, 15 and 
30), 

-  each MS reacts to the 
reports by the other 
MS within six 
months. 

No specific 
deadlines; 
according to needs 

As Community-level 
harmonisation 
progresses 

The scope of 
derogations from the 
country of origin 
principle as regards 
contracts concluded by 
consumers and 
derogations on a case-
by-case basis 
(Article 19) is limited 
to the non-harmonised 
area. 

Implementing measures 
(comitology) 
(Article 42) 

-  procedures by 

electronic means 

-  assistance for 
recipients 

-  information on 

service providers and 
their services 

-  professional 

insurance and 
guarantees, 

-  mutual assistance 

-  mutual evaluation. 

Identification of the 
need for new initiatives 
(Article 40(2)) as a 
result of: 

-  experience of 

derogations on a 
case-by-case basis, 

-  lack of codes of 

conduct. 

Revision of the acquis 
in the area of consumer 
protection and the 
follow-up to the 
Commission Action 
Plan on contract law. 

11 

 
 
  
 
 
 
 
e) 

A framework facilitating access to services 

The  report  emphasised  that  the  users  of  services,  and  in  particular  consumers,  are, 
together  with  SMEs,  the  main  victims  of  the  lack  of  a  genuine  internal  market  in 
services:  they  generally  cannot  benefit  from  a  wide  variety  of  competitively  priced 
services  and  thus  the  better  quality  of  life  that  they  might  expect  from  an  area 
without internal borders. 

By  creating  the  conditions  and  legal  certainty  necessary  for  the  development  of 
service  activities  between  Member  States,  and  in  so  doing  extending  the  range  of 
services available, the Directive will be of direct benefit to the recipients of services. 
It  will  also  guarantee  better  quality  in  the  services  on  offer  by  enabling  at 
Community level an increase in the efficiency of the supervision of service activities. 
The proposal also: 

– 

– 

– 

– 

provides for the right of recipients to use the services of providers established 
in  other  Member  States  without  being  hampered  or  dissuaded  by  restrictive 
measures  applied  by  their  country  of  residence  (Article 20)  or  discriminatory 
behaviour  by  public  authorities  or  private  operators  (Article 21).  For  the 
recipients  of  health  services,  the  proposal  clarifies,  in  accordance  with  the 
case-law  of  the  Court  of  Justice,  the  circumstances  in  which  a  Member  State 
may make assumption of the costs of health care provided in another Member 
State subject to prior authorisation; 

guarantees specific assistance for a recipient in his own Member State, in the 
form  of  information  on  legislation  in  the  other  Member  States,  the  available 
means of redress, and associations or organisations offering practical assistance 
(Article 22); 

strengthens considerably the right of recipients to information on services so as 
to  enable  them  to  make  fully-informed  choices.  At  present,  some  service 
activities  are  already  subject  to  transparency  requirements  under  Community 
rules,  but  many  others  are  not  because  of  the  lack  of  provisions  that  are 
applicable to all service activities (Articles 26, 27, 28, 30, 31 and 32); 

strengthens  the  protection  of  recipients  by  providing  for  requirements 
regarding the quality of service providers – particularly the obligation to take 
out professional insurance in the case of services involving a particular health, 
safety  or  financial  risk  for  the  recipient  (Article 27)  –  the  provisions  on 
multidisciplinary  activities  (Article 30)  and 
the  settlement  of  disputes 
(Article 32). 

4. 

PREPARATORY WORK 

This proposal is the result of numerous analyses, surveys and consultations with the 
Member  States,  the  European  Parliament  and  other  stakeholders  that  have  taken 
place  since  the  launching  of  the  Internal  Market  Strategy  for  Services  in 
December 2000  and  which  are  described  in  the  impact  assessment.  The  Economic 
and Social Committee and the Committee of the Regions have also made substantial 
contributions to the Strategy. 

12 

 
 
  
 
5. 

COHERENCE WITH OTHER COMMUNITY POLICIES 

An internal market in services will not be established by means of a legal instrument 
alone  but  will  require  accompanying  measures.  In  legal  terms,  the  proposal  is 
consistent  with  other  Community  instruments:  where  a  service  activity  is  already 
covered by one or more Community instruments, the Directive and these instruments 
will apply cumulatively, the requirements of the one applying in addition to those of 
the  others.  Where  there  might  have  been  questions  of  compatibility  in  connection 
with a given Article, the latter provides for derogations (in Article 17, for example) 
or appropriate clauses describing the relationship between the Directive and the other 
Community  instruments,  in  order  to  ensure  consistency.  Moreover,  this  proposal  is 
without  prejudice  to  any  legislative  or  other  Community  initiatives  in  the  field  of 
consumer protection. 

There is a range of other complementary Community initiatives under way. 

– 

– 

– 

The competitiveness of business-related services. In parallel with this proposal 
for  a  Directive  on  services  in  the  internal  market,  the  Commission  has 
presented a Communication on the competitiveness of business-related services 
and their contribution to the performance of European enterprises17, in which it 
emphasises the importance of business services for the competitiveness of the 
EU and announces a series of supporting measures, including in particular the 
creation  of  a  European  Forum  for  business-related  services.  Whereas  the 
Directive  deals  with  the  removal  of  legal  and  administrative  barriers,  the 
competitiveness  of  the  services  sector  depends  also  on  a  number  of 
complementary economic measures set out in the Communication on business-
related services. 

Professional  qualifications.  This  proposal  for  a  Directive  complements  the 
proposal  for  a  Directive  on  the  recognition  of  professional  qualifications18, 
given that it deals with questions other than professional qualifications such as 
professional  insurance,  commercial  communications  and  multidisciplinary 
activities.  The  two  proposals  are  fully  compatible  since,  where  freedom  of 
establishment  is  concerned,  they  are  aimed  at  facilitating  establishment  for 
service providers and, where freedom of movement for services is concerned, 
they are based on the country of origin principle. 

Posting of workers. The employment and working conditions applicable in the 
event of posting of workers are set out in Directive 96/71/EC19, which provides 
for the application of certain rules of the country to whose territory a worker is 
posted.  For  the  sake  of  consistency  with  that  directive,  Article  17  of  this 
proposal  for  a  Directive  contains  a  derogation  from  the  country  of  origin 
principle  where  these  rules  are  concerned.  In  order  to  facilitate  the  free 
movement of services and the application of Directive 96/71/EC, the proposal 
clarifies the allocation of tasks between the country of origin and the Member 
State of posting, and the administrative supervisory procedures (Article 24). 

17 
18 

19 

COM(2003) 747. 
Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on  the  recognition  of 
professional qualifications, COM(2002) 119 final, 7.3.2002. 
Directive  96/71/EC  of  the  European  Parliament  and  of  the  Council  of  16 December 1996  concerning 
the posting of workers in the framework of the provision of services. 

13 

 
 
  
 
                                                 
– 

– 

– 

Reimbursement of costs of health care. The proposal for a Directive deals with 
the  specific  question  of  the  compatibility  of  prior  authorisation  systems  for 
assumption of the costs of health care provided in another Member State with 
the principle of freedom of movement for services. Article 23 of the proposal 
incorporates  the  distinction  between  hospital  and  non-hospital  care  that  has 
been clearly established by the consolidated case-law of the Court of Justice20. 
As regards the circumstances in which such prior authorisation is justified, the 
proposal clarifies the specific conditions for authorisation, in accordance with 
the  case-law  of  the  Court  of  Justice.  Broader  issues  have  been  raised  in  the 
high level reflection process on patient mobility and health care developments 
in  the  European  Union,  including  patients’  rights,  entitlements  and  duties; 
facilitating  cooperation  between  health  systems;  providing  appropriate 
information  for  patients,  professionals  and  policymakers;  ensuring  access  and 
quality in cross-border care; the impact of enlargement; and in general how to 
improve  legal  certainty  and  reconcile  national  objectives  with  European 
obligations in this area. The Commission will issue a Communication in spring 
2004 setting out a comprehensive strategy for addressing patient mobility and 
health care with proposals responding to the recommendations of the reflection 
process. 

Safety  of  services.  The  Commission  has  presented  a  report  on  the  safety  of 
services  for  consumers21,  which  emphasises  the  substantial  lack  of  data  and 
information on the risks and safety of services. It also notes that it is impossible 
to identify specific gaps in Member State systems or significant differences in 
the level of protection, and that there is a lack of barriers to trade resulting from 
different  national  requirements  that  could  justify  harmonisation  of  national 
rules  on  the  safety  of  services.  The  report  concludes  that  the  priority  for 
Community  action  must  be  to  improve  the  collection  of  key  data  in  this  area 
and  set  up  a  system  for  exchange  of  information  on  policy  and  regulatory 
developments. If it appears that there is a need to do so, measures establishing 
procedures for the definition of European standards will be adopted. The report 
foresees  the  establishment  of  a  suitable  Community  framework  to  this  effect. 
These  analyses  are,  therefore,  complementary  to  and  consistent  with  this 
proposal  for  a  Directive,  which,  moreover,  provides  for  the  possibility  of 
derogations  on  a  case-by-case  basis  aimed  at  guaranteeing  the  safety  of 
services (Article 19). The Council, in its resolution of 1 December 2003 on the 
safety of services22, has warmly welcomed the Commission’s report. 

Services of general interest. The Commission has launched a broad debate on 
the  role  of  the  European  Union  in  promoting  the  provision  of  high  quality 
services  of  general  interest  on  the  basis  of  a  Green  Paper  on  services  of 
general interest23. This proposal for a Directive does not go into this question 
as such or the question of opening up these services to competition. It covers 
all services that correspond to an economic activity within the meaning of the 
case-law of the Court relating to Article 49 of the Treaty. It does not, therefore, 

20 

21 
22 
23 

See  "Report  on  the  application  of  internal  market  rules  to  health  services:  implementation  by  the 
Member  States  of  the  Court’s  jurisprudence",  Commission  Staff  Working  Paper,  SEC(2003)  900, 
28.7.2003. 
Report on the safety of services for consumers, COM(2003) 313 final of 6.6.2003. 
OJ C 299, 10.12.2003, p. 1. 
COM(2003) 270 final, 21.5.2003. 

14 

 
 
  
 
                                                 
cover  non-economic  services  of  general  interest  but  only  services  of  general 
economic  interest.  It  should  be  noted  that,  in  this  proposal,  certain  activities 
that may be linked to services of general economic interest are subject, in so far 
as this is justified by their specific nature, to derogations from the country of 
origin principle. These include, in particular, postal services and electricity, gas 
and  water  distribution  services.  Neither  does  the  proposal  cover  electronic 
communications as far as matters covered by the legislative package adopted in 
2002 are concerned nor transport services to the extent that they are regulated 
by  other  Community  instruments  based  on  Article  71  or  Article  80(2)  of  the 
Treaty.  Even  in  the  fields  covered  by  the  Directive,  it  does  not  affect  the 
freedom  of  the  Member  States  to  define  what  they  consider  to  be  services  of 
general interest and how they should function. In particular, the Directive does 
not  affect  the  freedom  of  the  Member  States  to  organise  public  service 
broadcasting  in  accordance  with  protocol  32  of  the  Treaty  on  public  service 
broadcasting in the Member States. 

– 

GATS  negotiations.  The  proposal  for  a  Directive  is  an  internal  market 
instrument  and  therefore  concerns  only  service  providers  established  in  a 
Member State, including, as laid down in Article 48 of the Treaty, companies 
or firms formed in accordance with the law of a Member State and having their 
registered  office,  central  administration  or  principal  place  of  business  within 
the Community. It does not cover external aspects and, in particular, does not 
cover: 

– 

– 

– 

the  case  of  operators  from  third  countries  who  wish  to  establish  in  a 
Member State (first establishment in the EU); 

the case of operators from third countries who wish to provide services in 
the EU; 

the  case  of  branches  of  companies  from  third  countries  in  a  Member 
State (in the sense of Article 48 of the Treaty) who, not being companies 
formed  in  accordance  with  the  legislation  of  a  Member  State,  may  not 
benefit from this Directive. 

International  trade  in  services  is  covered  by  international  negotiations, 
particularly  in  the  framework  of  GATS.  In  this  connection,  it  should  be 
emphasised  that  the  EU  is  a  very  open  market  compared  with  many  trading 
partners.  The  proposal  does  not  affect  these  negotiations,  which  are  aimed  at 
facilitating trade in services and which reinforce the need for the EU swiftly to 
establish a genuine internal market in services to ensure the competitiveness of 
European businesses and strengthen Europe's negotiating position. 

– 

eEurope: the eEurope Initiative and eEurope 2005 Action Plan aim to develop 
modern public services and a dynamic environment for electronic commerce in 
the EU. eGovernment is one of the key elements in implementation of eEurope 
and  it  also  plays  an  important  role  in  realising  the  Lisbon  strategy.  The 
proposal  is  thus  coherent  with  the  objective  of  the  eGovernment  initiative 
because it aims at simplifying administrative procedures. 

15 

 
 
  
 
– 

– 

– 

– 

Unfair  commercial  practices.  The  proposed  Directive  on  unfair  business-to-
consumer  commercial  practices24  regulates  those  commercial  practices  which 
cause  harm  to  consumers'  economic  interests.  That  proposal  does  not  cover 
broader regulation of economic activities such as conditions of establishment. 
It  aims  to  reduce  internal  market  barriers  which  arise  from  a  fragmented 
approach to the regulation of traders' behaviour in relation to their consumers, 
such as misleading or aggressive sales tactics.  

Cooperation  between  national  authorities  responsible  for  the  application  of 
consumer  law.  The  proposal  of  the  Commission  for  a  Regulation25  on 
cooperation  in  the  area  of  consumer  protection  establishes  a  network  of 
competent  authorities  responsible  for 
in 
cross-border  situations.  The  proposal  ensures  that  each  Member  State,  on 
request, effectively protects all EU consumers from rogue traders operating in 
its  territory.  In  order  to  ensure  effective  and  efficient  enforcement  in  cross-
border cases, the Regulation harmonises certain powers and procedures within 
the  Member  States.  It  also  eliminates  barriers  within  Member  States  to 
protecting foreign consumers. The provisions on cooperation in this Directive, 
which  do  not  address  the  same  problems,  will  be  complemented  by  the 
Regulation in respect of consumer protection.  

the  protection  of  consumers 

Revision  of  the acquis in respect of consumer protection.  This  proposal  for  a 
Directive  is  coherent  with  the  revision  of  the  acquis  in  respect  of  consumer 
protection, including the move towards full harmonisation, notably in the area 
of contract law. 

The  “notification”  Directive  98/34/EC.  In  the  case  of  a  draft  national  law 
containing a requirement listed in Article 15(2) of this proposal for a Directive, 
which applies specifically to an information society service and therefore falls 
within  the  field  of  application  of  Directive  98/34/EC  as  amended  by 
Directive 98/48/EC,  the  notification  of  such  a  draft  in  accordance  with 
Directive  98/34/EC  as  amended  by  Directive  98/48/EC  would  also  comply 
with Article 15(6) of this Directive. Furthermore, the Commission is currently 
examining 
field  of  application  of 
Directive 98/34/EC to services other than information society services. In this 
case,  the  notification  procedure  provided  for  in  that  Directive  would,  for  the 
services  concerned,  replace  the  notification  laid  down  in  Article  15(6)  of  this 
Directive. 

the  possibility  of  extending 

the 

– 

Private international law. The Commission has presented two initiatives in the 
area of rules on conflict of laws:  

24 

25 

Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  concerning  unfair 
business-to-consumer  commercial  practices 
the  Internal  Market  and  amending  directives 
84/450/EEC,  97/7/EC  and  98/27/EC  (the  Unfair  Commercial  Practices  Directive).  COM(2003)  356 
final of 18.6.2003 
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  cooperation  between 
national  authorities  responsible  for  the  enforcement  of  consumer  protection  laws  ("the  Regulation  on 
consumer protection cooperation") COM(2003) 443 final of 18.7.2003 

in 

16 

 
 
  
 
                                                 
– 

– 

the  proposal  for  a  Regulation  on  the  law  applicable  to  non-contractual 
obligations26 which aims to establish common rules on conflicts of law in 
order  to  determine  the  applicable  law  in  non-contractual  matters  (the 
applicable  law  could  be  that  of  a  third  country).  In  order  to  ensure 
coherence  with  instruments,  such  as,  for  example,  this  proposal  for  a 
Directive, which are adopted in the framework of internal market policy 
and  which  apply  the  country  of  origin  principle,  the  proposal  for  a 
Regulation provides (in Article 23(2)) for a specific derogation to ensure 
the application of this principle; 

the Green Paper on the conversion of the Rome Convention of 1980 on 
the  law  applicable  to  contractual  obligations  into  a  Community 
instrument27. The Commission states explicitly in this Green Paper “that 
it  is  clear  to  the  Commission  that  such  an  instrument  must  leave  intact 
internal market principles contained in the Treaty or in secondary law”. 

These instruments could, however, play an important role not only for the activities 
which  are  not  covered  by  this  Directive  but  also  for  the  questions  which  are  the 
object  of  derogations  to  the  country  of  origin  principle,  notably  the  derogation  in 
relation  to  contracts  concluded  by  consumers,  as  well  as  the  derogation  relating  to 
the non-contractual liability of the provider in the case of an accident occurring in the 
context  of  his  activity  which  affects  a  person  in  a  Member  State  which  a  provider 
visits. 

Finally, it should be noted that the question of determining the jurisdiction of courts 
is not dealt with by this Directive, but by Regulation (EC) 44/2001 of the Council of 
22  December  2000  concerning  jurisdiction  and  the  recognition  and  enforcement  of 
judgments in civil and commercial matters or other Community instruments such as 
the Directive 96/71/EC. 

LEGAL ASPECTS 

Legal base and choice of instrument 

The proposal for a Directive is based on Articles 47(2) and 55 of the Treaty28, as well 
as on Articles 71 and 80(2) of the Treaty for matters concerning transport that are not 
regulated by other Community instruments based on the latter two articles. This legal 
base is justified by both its objective and its content: 

– 

objective: Directives adopted under Article 47(2) must aim "to make it easier 
for persons to take up and pursue activities as self-employed persons", which is 
precisely the aim of this proposal; 

Proposal  for  a  European  Parliament  and  Council  Regulation  on  the  law  applicable  to  non-contractual 
obligations (“Rome II”). COM(2003) 427 final. 
A Green Paper on the conversion of the Rome Convention of 1980 on the law applicable to contractual 
obligations 
final, 
14 January 2003. 
Article 55 refers to Article 47(2), making it applicable to the free movement of services. 

its  modernisation,  COM(2002)  654 

into  a  Community 

instrument  and 

17 

6. 

a) 

26 

27 

28 

 
 
  
 
                                                 
– 

content: the content of the proposal is clearly directed at effectively eliminating 
obstacles to the freedom of establishment and the free movement of services by 
means  of  provisions  that  prohibit  certain  requirements  and  guarantee  the  free 
movement  of  services.  Other  provisions  harmonise  certain  questions  in  a 
targeted  manner,  or  ensure  administrative  cooperation  to  the  extent  necessary 
for eliminating these obstacles. 

As for the choice of instrument, Article 47(2) specifies the use of a Directive. 

b) 

Subsidiarity 

The proposal for a Directive is aimed at eliminating legal obstacles to the freedom of 
establishment for service providers and the free movement of services. The obstacles 
in  question  have  been  clearly  identified  on  the  basis  of  complaints,  petitions  and 
questions  from  the  European  Parliament,  consultation  of  interested  parties,  and 
studies or analyses. 

This aim cannot be achieved by unilateral action on the part of the Member States. In 
accordance with the case-law of the Court of Justice, some of these obstacles may be 
justified in the absence of a Community instrument and therefore, if they are to be 
eliminated,  necessitate  prior  coordination  of  national  schemes,  including  through 
administrative cooperation. Other obstacles are already incompatible with Articles 43 
and 49 of the Treaty but have not yet been eliminated by the Member States on their 
own initiative and would require case-by-case treatment by means of large numbers 
of infringement procedures, which, as already emphasised, would be as ineffective as 
it would be unmanageable. 

Furthermore, the concern to keep to a minimum interference with the characteristics 
of national regimes has justified certain legislative choices: 

– 

– 

– 

the proposal does not result in detailed and systematic harmonisation of all the 
national rules applicable to services; it limits itself to the essential aspects that 
must  be  coordinated  in  order  to  guarantee  freedom  of  establishment  and  the 
free movement of services; 

the  application  of  the  country  of  origin  principle  will  make  it  possible  to 
achieve  the  objective  of  guaranteeing  the  free  movement  of  services  whilst 
allowing  the  various  national  regimes  to  co-exist  with  all  their  distinctive 
characteristics.  These  regimes  may  not  be  used  to  restrict  the  provision  of 
services by an operator established in another Member State; 

the  proposal  avoids  interference  with  the  institutional  organisation  of  the 
regulation  of  services  in  the  Member  States.  For  example,  it  merely  specifies 
the functions of the single points of contact without imposing any institutional 
characteristics,  (type  of  body  –  administrative,  chamber  of  commerce, 
professional body etc.); similarly, in its definition of "competent authority", the 
proposal  (Article 4(8))  takes  account  of  the  fact  that  the  competent  authority 
for  a  given  activity  may,  depending  on  the  Member  State,  be  a  professional 
body,  a  government  authority  or  a  professional  association,  but  does  not 
impose one or the other. 

18 

 
 
  
 
c) 

Proportionality 

The  principle  of  proportionality  referred  to  in  Article 5  of  the  Treaty  is  the  factor 
underlying several legislative choices in the proposal for a Directive: 

– 

– 

– 

– 

the  choice  between  types  of  regulation:  harmonisation  is  proposed  only  as  a 
last resort for matters for which neither administrative cooperation nor reliance 
on  the  adoption  of  codes  of  conduct  by  the  interested  parties  at  Community 
level are sufficient; harmonisation is proposed in areas where it is proved to be 
necessary, such as consumer protection; 

the  content  of  the  harmonisation:  the  proposal  gives  as  much  priority  as 
possible  to  the  service  provider’s  obligations  as  regards  information  so  that 
recipients can make an informed choice; 

the balance between the various regulatory methods: the Directive proposes a 
balance between, on the one hand, the scope of the country of origin principle 
and, on the other, the extent of harmonisation, administrative cooperation and 
reliance on codes of conduct, as well as the number and scope of derogations to 
the country of origin principle. The balance proposed represents a selective and 
flexible approach that takes full account of all the interests concerned; 

the concern to provide a suitable framework for SMEs: the provisions on single 
points of contact, electronic procedures, information and assistance for service 
providers, the country of origin principle, the simplification of procedures for 
the posting of workers, and the voluntary measures in connection with quality 
policy etc. all stem directly from a wish to make it easier for SMEs to exercise 
the freedoms of the internal market. 

All  these  legislative  choices  make  it  possible  to  propose  a  balanced  instrument 
containing provisions that do not go beyond what is necessary for achieving the aim 
of establishing a genuine internal market in services. 

7. 

a) 

SPECIFIC QUESTIONS 

What activities are covered by the Directive (Articles 2 and 4)? 

Article 2  defines  the  scope  of  the  Directive  ("services  supplied  by  providers 
established  in  a  Member  State")  and  Article 4(1)  defines  a  "service"  ("any 
self-employed  economic  activity,  as  provided  for  by  Article  50  of  the  Treaty, 
consisting of the provision of a service against consideration"). 

testing,  maintenance, 

This  definition  covers  a  very  wide  range  of  activities  including,  for  example, 
management  consultancy,  certification  and 
facilities 
management  and  security,  advertising  services,  recruitment  services,  including  the 
services  of  temporary  employment  agencies,  services  provided  by  commercial 
agents, legal or tax consultancy, property services, such as those provided by estate 
agencies,  construction 
trades, 
organisation of trade fairs and exhibitions, car-hire, security services, tourist services, 
including travel agencies and tourist guides, audiovisual services, sports centres and 
amusement  parks,  leisure  services,  health  services  and  personal  domestic  services, 
such as assistance for old people. 

services,  architectural 

services,  distributive 

19 

 
 
  
 
The definition of "service" provided for in this proposal is based on the case-law of 
the  Court  of  Justice29,  according  to  which  "services"  mean  any  self-employed 
economic  activity  normally  performed  for  remuneration,  which  need  not,  however, 
be paid by those for whom the service is performed. The essential characteristic of 
remuneration  lies  in  the  fact  that  it  constitutes  consideration  for  the  service  in 
question, irrespective of how this consideration is financed. Consequently, a service 
is any activity through which a provider participates in the economy, irrespective of 
his legal status or aims, or the field of action concerned. 

Thus the following are covered: 

– 

– 

services provided to consumers, to businesses or to both; 

services provided by an operator who has travelled to the Member State of the 
recipient,  services  provided  at  a  distance  (via  the  Internet,  for  example), 
services provided in the country of origin following travel by the recipient, or 
services provided in another Member State to which both the provider and the 
recipient have travelled (tourist guides, for example); 

– 

services for which a fee is charged or which are free to the final recipient. 

However,  the  definition  does  not  cover  non-economic  activities,  nor  activities 
performed by the State for no consideration as part of its social, cultural, education 
and judicial functions where there is no element of remuneration. 

b) 

Why  should  certain  services  or  fields  be  excluded  from  the  scope  of  the 
Directive (Article 2)? 

The Directive does not apply to financial services because these activities are already 
covered by a comprehensive policy – the Financial Services Action Plan30, which is 
currently  being  implemented  and  is  aimed,  like  this  proposal  for  a  Directive,  at 
establishing  a  genuine  internal  market  in  services.  For  the  same  reasons,  the 
Directive does not apply to electronic communications services and networks as far 
as  the  questions  governed  by  the  Directives  in  the  "telecom  package"  adopted  in 
2002  are  concerned  (Directives 2002/19/EC,  2002/20/EC,  2002/21/CE,  2002/22/EC 
and 2002/58/EC of the European Parliament and of the Council). Given that transport 
services are already covered by a set of Community instruments dealing with specific 
issues in this field, it is appropriate to exclude transport services from the scope of 
application of this Directive to the extent that they are regulated by other Community 
instruments based on Articles 71 and 80(2) of the Treaty. 

The Directive does not apply in the field of taxation, which has its own legal base. 
However, in accordance with the case-law of the Court, certain tax measures that are 
not  covered  by  a  Community  instrument  may  constitute  restrictions  contrary  to 
Articles 4331  (freedom  of  establishment)  and  4932  of  the  Treaty  (free  movement  of 

29 

30 
31 
32 

Judgments  of:  26 April  1988,  Bond  van  Adverteerders,  Case  352/85,  point  16;  27 September 1988, 
Humbel,  263/86,  point  17;  11 April 2000,  Deliège,  C-51/96  and  C-191/97,  point  56;  12 July 2001, 
Smits and Peerbooms, Case C-157/99, point 57. 
“Implementing the framework for financial markets: action plan”, COM(1999) 232, 11.5.1999. 
For example, Judgment of 12 March 1994, Halliburton, Case C-1/93. 
For example, Judgment of 29 November 2001, de Coster, Case C-17/00. 

20 

 
 
  
 
                                                 
services),  particularly  where  they  have  a  discriminatory  effect.  This  is  why 
Articles 14  (prohibited  requirements  in  connection  with  freedom  of  establishment) 
and 16 (principle of country of origin in connection with free movement of services) 
of  the  proposal  for  a  Directive  apply  to  tax  measures  that  are  not  covered  by  a 
Community instrument. 

Finally, it should be noted that the Directive does not apply to activities covered by 
Article 45 of the Treaty. This provides expressly that the chapter on the freedom of 
establishment and that on services (by virtue of Article 55 of the Treaty) do not apply 
to those activities which are directly and specifically connected with the exercise of 
official authority. 

c) 

What are "single points of contact" (Article 6)? 

The concept of "single points of contact" does not involve each Member State setting 
up a single, physical, centralised agency for its entire territory. The point of contact is 
“single” only as far as the individual service provider is concerned. It means that a 
service provider must be able to complete all the formalities and procedures required 
for  the  exercise  of  service  activities,  particularly  those  relating  to  authorisations, 
through one and the same body. He must not be obliged to visit a number of different 
bodies,  organisations,  offices  etc.  but  must  be  able  to  complete  all  the  necessary 
formalities via a single interlocutor. 

The number of single points of contact in each Member State, and their institutional 
nature, will vary depending on the internal organisation of the Member State and in 
particular  the  regional  or  local  competencies  or  the  activities  concerned.  Single 
points  of  contact  may  be  the  authorities  that  are  directly  competent  –  for  issuing 
authorisation, for example – or bodies that merely function as intermediaries between 
the service providers and the directly competent authorities. 

d) 

What  is  the  difference  between  the  requirements  to  be  eliminated  (Article 14) 
and the requirements to be evaluated (Article 15)? 

The report lists a large number of legal obstacles resulting from requirements in the 
legal  systems  of  the  Member  States  that  prevent,  hamper  or  discourage  the 
establishment of service providers in certain Member States. With a view to making 
it  easier  to  exercise  the  freedom  of  establishment,  the  proposal  provides  for  two 
different solutions depending on the type of requirement in question: 

– 

– 

on  the  one  hand,  the  proposal  prohibits  certain  requirements,  listed  in 
Article 14  ("prohibited  requirements"),  which,  particularly  in  the  light  of  the 
case-law of the Court of Justice, are manifestly incompatible with the freedom 
of  establishment,  particularly  where  they  have  a  discriminatory  effect.  The 
prohibition  of  these  requirements  will  mean  that,  during  the  transposition 
period,  each  Member  State  will  have  to  examine  systematically  whether  they 
exist in its legal system and, if so, eliminate them; 

on  the  other  hand,  the  proposal  requires  the  Member  States  to  examine  a 
number  of  other  requirements,  listed  in  Article 15  ("requirements  to  be 
evaluated"), that have major restrictive effects on the freedom of establishment 
and  have  been  reported  by  interested  parties,  but  may  be  justified  in  certain 
cases  depending  on  the  precise  content  of  the  rules  in  question  and  the 

21 

 
 
  
 
circumstances  in  which  they  apply.  For  this  category  of  requirements, 
therefore, during the transposition period, Member States will have to conduct 
a  "screening"  of  their  legislation  –  in  other  words,  they  will  have  to  examine 
whether requirements of this kind exist in their legal systems, evaluate them in 
the light of the conditions laid down in the Directive (objectively justifiable by 
an overriding reason relating to the general interest and satisfying the principle 
of proportionality), and eliminate them if these conditions are not met. A report 
on the implementation of this Article must be drawn up not later than at the end 
of the transposition period. 

e) 

What will the mutual evaluation procedure involve (Articles 9, 15, 30 and 41)? 

The proposal for a Directive provides for the mutual evaluation of the application of 
Article 9(1),  which  sets  out  the  conditions  under  which  a  service  activity  may  be 
subject  to  an  authorisation  scheme33,  Article 15,  which  lists  a  number  of 
requirements  to  be  evaluated,  and  Article 30,  which  specifies  the  conditions  under 
which multidisciplinary activities may be limited. 

The procedure consists of several phases: 

– 

– 

during the transposition period, Member States must first conduct a "screening" 
of  their  legislation  in  order  to  ascertain  whether  requirements  of  the  kind 
referred to in these three Articles exist in their legal systems, evaluate them in 
the light of the conditions laid down in the Articles in question, and eliminate 
or modify them if these conditions are not met, 

by the end of the transposition period at the latest, Member States must draw 
up a report on the implementation of these three Articles. Each report will be 
submitted to the other Member States and interested parties, including national 
consumer  associations. Member States will  then have  six months in  which to 
submit  their  observations  on  each  of  the  reports  by  the  other  Member  States 
and  during  the  same  period  the  Commission  will  consult  interested  parties. 
This “peer review” procedure will enable exchange between Member States of 
best practice in the area of the modernising the regulation of services, 

– 

by  31 December 2008  at  the  latest,  the  Commission  will  draw  up  a  synthesis 
report, accompanied where appropriate by proposals for further initiatives. 

A  procedure  of  this  kind  will  make  it  possible  to  keep  track  of  the  process  of 
modernisation  and  reform  of  the  regulatory  schemes  governing  services  and  to 
identify any need for additional action at Community level. 

How will the implementation of Articles 14, 15 and 16 of the Directive relate to 
the  Commission's  role  as  guardian  of  the  Treaty,  in  particular  as  regards 
infringement procedures? 

The  list  of  prohibited  requirements  (Article 14),  requirements  to  be  evaluated 
(Article 15) and restrictions prohibited under Article 16 obviously do not prevent the 
Commission  from  launching,  without  waiting  until  the  Directive  has  been  fully 

This does not concern authorisation schemes imposed or permitted by Community law (Article 9(3)), 
notably those in the field of the environment. 

22 

f) 

33 

 
 
  
 
                                                 
transposed,  infringement  procedures  against  any  measures  contrary  to  the  Treaty 
taken by Member States that it becomes aware of, particularly following a complaint. 
The  obligations  provided  for  in  Articles 14,  15  and  16  of  the  Directive  and  the 
procedures provided for in Article 226 of the Treaty have different aims. While the 
latter concern individual cases resulting from specific circumstances and measures in 
a particular Member State, the former are on the other hand aimed at ensuring, in a 
general and systematic fashion, that the legal systems correspond to the requirements 
of a genuine internal market in services in which the freedom of establishment and 
free movement of services are facilitated. 

g) 

Are  requirements  that  are  listed  neither  in  Article 14  nor  in  Article 15 
considered to be in conformity with the freedom of establishment provided for 
in Article 43 of the Treaty? 

Unlike  Article 16(3)  of  the  proposal,  which  lays  down  the  principle  of  prohibiting 
restrictions  on  the  free  movement  of  services  and  gives  a  few  examples  purely  for 
illustrative  purposes,  Article 14  contains  a  list  of  requirements  concerning  freedom 
of  establishment  that  must  be  eliminated  and  Article  15  contains  a  list  of 
requirements  relating  to  establishment  which  must  be  evaluated.  The  requirements 
listed  are  those  that  have  been  identified,  particularly  in  the  report,  as  having 
considerable  restrictive  effects  and  which  must,  therefore,  be  the  subject  of  a 
systematic and general modernisation process. Articles 14 and 15 do not, therefore, 
concern  all  the  types  of  restriction  that  are  incompatible  with  Article 43  of  the 
Treaty, and hence the absence of certain requirements from these lists does not mean 
that the requirements in question are presumed to be in conformity with the Treaty. 
Consequently,  these  lists  in  no  way  affect  the  Commission's  scope  for  opening 
infringement  procedures  for  failure  to  respect  Article 43  of  the  Treaty,  as  the 
Member  States  are  still  obliged  to  ensure  that  their  legislation  is  compatible  with 
Community law in all respects. 

h) 

Why is there a section specifically devoted to the rights of recipients of services 
(Chapter III Section 2)? 

The  Commission  receives  large  numbers  of  complaints  from  users,  particularly 
consumers, who, even though they wish to benefit from cross-border services and are 
prepared  to  bear  the  cost  of  such  transactions,  come  up  against  various  types  of 
obstacles.  In  particular,  consumers  are  often  confronted  with  the  application  of 
higher  tariffs  or  with  refusals  to  offer  services  simply  on  the  grounds  that  they  are 
nationals  of  a  particular  Member  State  or  are  resident  in  a  particular  country. 
Problems of this kind, which result not only from acts by public authorities but also 
from  the  behaviour  of  private  operators,  have  been  reported  in  several  areas 
including,  for  example,  participation  in  sporting  or  cultural  events,  access  to 
monuments,  museums  and  tourist  sites,  promotional  offers,  use  of  leisure  facilities, 
entrance to amusement parks etc. 

The persistence of discrimination of this kind restricts or eliminates the possibility of 
cross-border  transactions  and  makes  European  citizens  more  acutely  aware  of  the 
lack of a genuine internal market in services. This inconsistency with the idea of an 
area without internal borders is particularly felt by recipients now that technological 
developments  provide  the  opportunity  to  overcome  geographical  distances  and 
natural  barriers  by  making  it  possible  for  services  that  had  hitherto  been  strictly 
national to be provided across borders. 

23 

 
 
  
 
The  principle  of  non-discrimination  in  the  internal  market  implies  that  access  by 
recipients – particularly consumers – to services offered to the public should not be 
denied  or  rendered  more  difficult  simply  because  of  the  formal  criterion  of  the 
recipient's nationality or place of residence. Consequently, the Directive lays down, 
to varying degrees, obligations for Member States and service providers. 

For the Member States, the proposal stipulates: 

– 

– 

(Article 20)  that  Member  States  may  not  impose  restrictions  on  recipients  on 
the  use  of  services  provided  by  operators  established  in  a  different  Member 
State, and 

(Article 21(1)), that neither the Member State of origin of the service provider 
nor  the  Member  State  of  destination  may  apply  discriminatory  measures  to 
recipients  based  on  nationality  or  place  of  residence  as  such.  This  does  not 
apply to cases where tariffs vary on the basis of other objective criteria such as 
a direct link with contributions paid by certain recipients. 

For  service  providers,  the  proposal  in  Article 21(2)  prohibits  them,  in  their  general 
conditions relating to access to their services, from providing for refusal of access, or 
subjecting access to less favourable conditions, on grounds of the nationality or place 
of residence of the recipient. This does not prevent service providers from refusing to 
provide services or applying different tariffs and conditions if they can demonstrate 
that  this  is  directly  justified  by  objective  reasons,  such  as  actual  additional  costs 
resulting from the distances involved or the technical aspects of the service. 

i) 

Why  is  the  question  of  the  posting  of  third  country  nationals  covered 
(Article 25)? 

The  report  has  shown  that  service  providers  who,  in  the  context  of  providing  a 
service,  post  a  worker  who  is  a  third  country  national  from  one  Member  State  to 
another often encounter legal obstacles, including in particular the obligation for the 
worker  in  question  to  have  a  visa  or  work  permit  issued  by  the  authorities  of  the 
Member State to which he is posted. The report has also shown that these difficulties 
affect a whole range of service activities, including those in high-tech sectors that are 
suffering from a lack of specialised workers. 

If these obstacles are to be eliminated, it is vital that the Member State of posting has 
a number of guarantees regarding the legality of the postings and supervision by the 
Member State of origin. With a view to giving the Member State of origin this kind 
of responsibility, it will under Article 25 of the proposal be obliged, on the one hand, 
to  ensure  that  service  providers  post  workers  only  if  they  meet  the  residence  and 
lawful-employment requirements laid down in their national legislation,  and  on the 
other  hand  to  readmit  the  worker  to  their  territory.  In  view  of  these  guarantees, 
Member  States  of  posting  may  not  lay  down  requirements  that  conflict  with  the 
country of origin principle, such as an obligation to have an entry, exit, residence or 
work permit, except in the cases provided for in Article 25(2). 

24 

 
 
  
 
j) 

Why  does  the  country  of  origin  principle  not  apply  to  certain  matters  or 
activities (Article 17)?  

The derogations to the country of origin principle have been determined according to 
two types of consideration. 

(1)  The  Community acquis. Certain  derogations are provided for in order to take 
into  account  the  fact  that  existing  Community  instruments  apply  the  rule 
according  to  which  cross-border  service  provision  may  be  subject  to  the 
legislation  of  the  country  of  destination.  Concerning  a  rule  contrary  to 
Article 16  of  the  Directive,  derogations  are  necessary  in  order  to  ensure 
coherence  with  this  acquis.  Such  derogations  concern  Directive  96/71/EC 
(posting  of  workers),  Regulation  (EEC)  No  1408/71  (social  security), 
Regulation  (EEC)  No  259/93  (transport  of  waste)  and  certain  instruments  on 
the free movement of persons and the recognition of qualifications. 

In  other  fields,  the  free  movement  of  services  is  already  the  subject  of  a 
framework formed by Community instruments which adopt a specific approach 
compared  with  that  taken  in  this  Directive  and  which  justify  a  derogation,  in 
particular those dealing with protection of personal data34. 

(2)  The  level  of  disparity  between  national  regimes.  For  certain  activities  or 
matters, too wide a divergence in national approaches or an insufficient level of 
Community integration may exist and prevent the application of the country of 
origin  principle.  As  far  as  possible,  the  Directive  harmonises,  or  provides  for 
strengthened  administrative  cooperation,  in  order  to  establish  the  mutual 
confidence  necessary  for  the  application  of  the  country  of  origin  principle. 
However,  in  certain  cases,  it  is  not  possible  at  this  stage  to  achieve  such 
harmonisation  in  this  Directive  or  to  establish  such  cooperation  and  it  is 
therefore necessary to allow for a derogation. These cases concern derogations 
relating to certain activities such as notarial acts, postal services, electricity, gas 
and  water  distribution  services  as  well  as  those  relating  to  certain  questions 
such  as  intellectual  property,  total  prohibitions  justified  by  reasons  of  public 
policy,  public  security  or  public  health,  rules  linked  to  the  specific 
characteristics of the place where the service is provided justified by reasons of 
public  policy,  public  security  or  the  protection  of  public  health  or  the 
environment, authorisations schemes relating to the reimbursement of the costs 
of  hospital  care,  registration  of  vehicles  leased  in  another  Member  State  or 
derogations on contractual matters or extra-contractual liability. 

34 

The  Directive  on  the  protection  of  personal  data  (which  also  applies  the  country  of  origin  principle) 
does not use the same criterion to define the country of origin: it uses the criterion of the establishment 
of  the  “controller”,  while  this  proposal  uses  the  establishment  of  the  “provider”.  A  derogation  is 
therefore necessary to avoid any conflict which could lead to the designation of two different countries 
of origin according to each of the Directives. 

25 

 
 
  
 
 
                                                 
Summary 
Chapter I. General provisions.............................................................................................................44 
Article 1. Subject-matter 
Article 2. Scope 
Article 3. Relationship with other provisions of Community law 
Article 4. Definitions 

Chapter II. Freedom of establishment for service providers ...........................................................46 
Section 1. Administrative simplification................................................................................................46 
Article 5. Simplification of procedures  
Article 6. Single points of contact 
Article 7. Right to information  
Article 8. Procedures by electronic means 
Section 2. Authorisations .......................................................................................................................49 
Article 9. Authorisation schemes 
Article 10. Conditions for the granting of authorisation 
Article 11. Duration of authorisation 
Article 12. Selection from among several candidates 
Article 13. Authorisation procedures 
Section 3. Requirements prohibited or subject to evaluation .................................................................52 
Article 14. Prohibited requirements  
Article 15. Requirements to be evaluated 

Chapter III. Free movement of services .............................................................................................55 
Section 1.Country of origin principle and derogations ..........................................................................55 
Article 16. Country of origin principle 
Article 17. General derogations from the country of origin principle 
Article 18. Transitional derogations from the country of origin principle 
Article 19. Case-by-case derogations from the country of origin principle 
Section 2. Rights of recipients of services..............................................................................................59 
Article 20. Prohibited restrictions 
Article 21. Non-discrimination 
Article 22. Assistance for recipients 
Article 23. Assumption of health care costs 
Section 3. Posting of workers.................................................................................................................61 
Article 24. Specific provisions on the posting of workers 
Article 25. Posting of third country nationals 

Chapter IV. Quality of services...........................................................................................................63 
Article 26. Information on providers and their services 
Article 27. Professional insurance and guarantees  
Article 28. After-sales guarantees 
Article 29. Commercial communications by the regulated professions  
Article 30. Multidisciplinary activities 
Article 31. Policy on quality of services 
Article 32. Settlement of disputes  
Article 33. Information on the good repute of providers 

Chapter V. Supervision........................................................................................................................68 
Article 34. Effectiveness of supervision 
Article 35. Mutual assistance 
Article 36. Mutual assistance in the event of the temporary movement of the provider  
Article 37. Mutual assistance in the event of case-by-case derogations from the country of origin principle 
Article 38. Implementing measures 

Chapter VI. Convergence programme ...............................................................................................71 
Article 39. Codes of conduct at Community level 
Article 40. Additional harmonisation 
Article 41. Mutual evaluation 
Article 42. Committee 
Article 43. Report 
Article 44. Amendment of Directive 1998/27/EC 

Chapter VII. Final provisions .............................................................................................................73 

26 

 
 
  
 
2004/0001 (COD) 

Proposal for a  

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

of […] 

on services in the internal market  

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular the first 
and third sentence of Article 47(2) and Articles 55, 71 and 80(2) thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the European Economic and Social Committee2, 

Having regard to the opinion of the Committee of the Regions3, 

Acting in accordance with the procedure referred to in Article 251 of the Treaty4, 

Whereas: 

(1) 

(2) 

The  European  Union  is  seeking  to  forge  ever  closer  links  between  the  States  and 
peoples  of  Europe  and  to  ensure  economic  and  social  progress.  In  accordance  with 
Article  14(2)  of  the  Treaty,  the  internal  market  comprises  an  area  without  internal 
frontiers in which the free movement of services and the freedom of establishment are 
ensured. The elimination of obstacles to the development of service activities between 
Member  States  is  essential  in  order  to  strengthen  the  integration  of  the  peoples  of 
Europe and to promote balanced and sustainable economic and social progress. 

The report from the Commission on "The State of the Internal Market for Services"5 
drew up an inventory  of a large number of barriers which  are  preventing or slowing 
down  the  development  of  services  between  Member  States,  in  particular  those 
provided  by  small  and  medium-sized  enterprises  (SMEs),  which  are  predominant  in 
the field of services. The report concludes that a decade after the envisaged completion 
of  the  internal  market,  there  is  still  a  huge  gap  between  the  vision  of  an  integrated 
European  Union  economy  and  the  reality  as  experienced  by  European  citizens  and 
service providers. The barriers listed affect a wide variety of service activities across 
all  stages  of  the  service  provider’s  activity  and  have  a  number  of  common  features, 
including, in particular, the fact that they often arise from administrative burdens, the 

1 
2 
3 
4 
5 

OJ C 
OJ C 
OJ C 
OJ C 
COM(2002) 441 final. 

27 

 
 
  
 
                                                 
(3) 

(4) 

(5) 

(6) 

legal  uncertainty  associated  with  cross-border  activity  and  the  lack  of  mutual  trust 
between Member States.  

Since services constitute the engine of economic growth and account for 70% of GDP 
and employment in the majority of Member States, this fragmentation of the internal 
market  has  a  negative  impact  on  the  entire  European  economy,  in  particular  on  the 
competitiveness  of  SMEs,  and  prevents  consumers  from  gaining  access  to  a  greater 
variety  of  competitively  priced  services.  The  European  Parliament  and  the  Council 
have emphasised that the removal of legal barriers to the establishment  of  a genuine 
internal  market  is  a  matter  of  priority  for  achieving  the  goal  set  by  the  Lisbon 
European Council of making the European Union the most competitive and dynamic 
knowledge-based economy in the world by 2010. Removing those barriers is essential 
in  order  to  revive  the  European  economy,  particularly  in  terms  of  employment  and 
investment. 

It is therefore necessary to remove barriers to the freedom of establishment for service 
providers in Member States and barriers to the freedom to provide services as between 
Member States and to guarantee providers and recipients the legal certainty necessary 
for the exercise in practice of those two fundamental freedoms of the Treaty. Since the 
barriers  in  the  internal  market  for  services  affect  operators  who  wish  to  become 
established in other Member States as well as those who provide a service in another 
Member  State  without  being  established  there,  it  is  necessary  to  enable  service 
providers  to  develop  their  service  activities  within  the  internal  market  either  by 
becoming established in a Member State or by making use of the freedom to provide 
services.  Service  providers  should  be  able  to  choose  between  those  two  freedoms, 
depending on their strategy for growth in each Member State. 

Those barriers cannot be removed solely by relying on direct application of Articles 43 
and 49 of the Treaty, since, on the one hand, addressing them on a case-by-case basis 
through  infringement  procedures  against  the  Member  States  concerned  would, 
especially  following  enlargement,  be  extremely  complicated  for  national  and 
Community institutions, and,  on the  other hand, the lifting of many barriers  requires 
prior coordination of national legal schemes, including the setting up of administrative 
cooperation.  As  the  European  Parliament  and  the  Council  have  recognised,  a 
Community  legislative  instrument  makes  it  possible  to  achieve  a  genuine  internal 
market for services.  

This Directive establishes a general legal framework which benefits a wide variety of 
services  while  taking  into  account  the  distinctive  features  of  each  type  of  activity  or 
profession  and  its  system  of  regulation.  That  framework  is  based  on  a  dynamic  and 
selective approach consisting in the removal, as a matter of priority, of barriers which 
may  be  dismantled  quickly  and,  for  the  others,  the  launching  of  a  process  of 
evaluation,  consultation  and  complementary  harmonisation  of  specific  issues,  which 
will  make  possible  the  progressive  and  coordinated  modernisation  of  national 
regulatory  systems  for  service  activities  which  is  vital  in  order  to  achieve  a  genuine 
internal market for services by 2010. Provision should be made for a balanced mix of 
measures involving targeted harmonisation, administrative cooperation, the country of 
origin principle and encouragement of the development of codes of conduct on certain 
issues.  That  coordination of national legislative regimes  should ensure a  high degree 
of  Community  legal  integration  and  a  high  level  of  protection  of  general  interest 
objectives,  especially  of  consumer  protection,  which  is  vital  in  order  to  establish 
mutual trust between Member States.  

28 

 
 
  
 
(7) 

(8) 

(9) 

(10) 

(11) 

It  is  necessary  to  recognise  the  importance  of  the  roles  of  professional  bodies  and 
professional associations in the regulation of service activities and the development of 
professional rules. 

This  Directive  is  consistent  with  other  current  Community  initiatives  concerning 
services, particularly those relating to the competitiveness of business-related services, 
the  safety  of  services6,  and  work  on  patient  mobility  and  the  development  of  health 
care  in  the  Community.  It  is  also  consistent  with  current  initiatives  concerning  the 
internal market, such as the proposal for a Regulation of the European Parliament and 
of  the  Council  on  sales  promotions  in  the  internal  market7,  and  those  concerning 
consumer  protection,  such  as  the  proposal  for  a  Directive  on  unfair  commercial 
practices8  and  the  proposal  for  a  Regulation  of  the  European  Parliament  and  of  the 
Council  on  cooperation  between  national  authorities  responsible  for  the  enforcement 
of consumer protection laws ("the Regulation on consumer protection cooperation")9. 

Financial  services  should  be  excluded  from  the  scope  of  this  Directive  since  those 
activities are currently the subject of a specific action plan aimed, as is this Directive, 
at achieving a  genuine internal  market for services.  Financial services are defined in 
Directive  2002/65/EC  of 
the  Council  of 
23 September 2002 concerning the distance marketing of consumer financial services 
and amending Council Directive 90/619/EEC and Directives 97/7/EC and 98/27/EC10. 
That  Directive  defines  a  financial  service  as  any  service  of  a  banking,  credit, 
insurance, personal pension, investment or payment nature. 

the  European  Parliament  and  of 

In  view  of  the  adoption  in  2002  of  a  package  of  legislative  instruments  relating  to 
electronic  communications  networks  and  services,  as  well  as  to  associated  resources 
and services, which has established a regulatory framework to facilitate access to those 
activities  within  the  internal  market,  notably  through  the  elimination  of  most 
individual authorisation schemes, it is necessary to exclude issues dealt with by those 
instruments from the scope of this Directive. 

In view of the fact that the Treaty provides specific legal bases for taxation matters and 
for the Community instruments already adopted in that field, it is necessary to exclude 
the field of taxation from the scope of this Directive, with the exception, however, of 
the provisions concerning prohibited requirements and the free movement of services. 
Harmonisation  in  the  field  of  taxation  has  been  achieved  notably  through  Council 
Directive  77/388/EEC  of  17  May  1977  on  the  harmonisation  of  the  laws  of  the 
Member  States  relating  to  turnover  taxes  -  Common  system  of  value  added  tax: 
uniform basis of assessment11, Council Directive 90/434/EEC of 23 July 1990 on the 
common  system  of  taxation  applicable  to  mergers,  divisions,  transfers  of  assets  and 
exchanges  of  shares  concerning  companies  of  different  Member  States12,  Council 
Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable 

6 
7 
8 
9 
10 
11 

12 

COM(2003) 313 final; OJ C 299, 10.12.2003, p. 1. 
COM(2002) 585 final. 
COM(2003) 356 final. 
COM(2003) 443 final. 
OJ L 271, 9.10.2002, p. 16. 
OJ L 145, 13.6.1977, p. 1. Directive as last amended by Directive 2003/92/EC (OJ L 260, 11.10.2003, 
p. 8). 
OJ L 225, 20.8.1990, p. 1. 

29 

 
 
  
 
                                                 
in  the  case  of  parent  companies  and  subsidiaries  of  different  Member  States13  and 
Council  Directive  2003/49/EC  of  3  June  2003  on  a  common  system  of  taxation 
applicable  to  interest  and  royalty  payments  made  between  associated  companies  of 
different  Member  States14.  The  present  Directive  does  not  aim  to  introduce  specific 
new  rules  or  systems  in  the  field  of  taxation.  Its  sole  objective  is  to  remove 
restrictions,  certain  of  which  are  fiscal  in  nature,  and  in  particular  those  which  are 
discriminatory,  on  freedom  of  establishment  and  the  free  movement  of  services,  in 
accordance  with  the  case-law  of  the  Court  of  Justice  of  the  European  Communities, 
hereinafter “the Court of Justice”, with respect to Articles 43 and 49 of the Treaty. The 
field of value added tax (VAT) is the subject of harmonisation at Community level, in 
accordance  with  which  service  providers  carrying  out  cross-border  activities  may  be 
subject to obligations other than those of the country in which they are established. It 
is  nevertheless  desirable  to  establish  a  system  of  “one-stop  shops”  for  service 
providers, in order to enable all their obligations to be fulfilled by means of a single 
electronic portal to the tax authorities in their home Member State. 

(12)  Since  transport  services  are  already  covered  by  a  set  of  Community  instruments 
specific to that field, they should be excluded from the scope of this Directive to the 
extent  that  they  are  regulated  by  other  Community  instruments  adopted  under 
Articles 71 and 80(2) of the Treaty. However, this Directive applies to services that are 
not  regulated  by  specific  instruments  concerning  transport,  such  as  cash  in  transit  or 
the transport of mortal remains. 

the  regulated  professions,  postal  services, 

(13)  There  is  already  a  considerable  body  of  Community  law  on  service  activities, 
especially 
television  broadcasting, 
information  society  services  and  services  relating  to  travel,  holidays  and  package 
tours. Service activities are also covered by other instruments which do not deal with a 
specific  category  of  services,  such  as  those  relating  to  consumer  protection.  This 
Directive  builds  on,  and  thus  complements,  the  Community acquis.  Where  a  service 
activity is already covered by one or more Community instruments, this Directive and 
those  instruments  will  all  apply,  the  requirements  laid  down  by  one  adding  to  those 
laid  down  by  the  others.  Accordingly,  appropriate  provisions  should  be  laid  down, 
including provision for derogations, in order to prevent incompatibilities and to ensure 
consistency as between all those Community instruments. 

(14)  The  concept  of  service  covers  a  wide  variety  of  ever-changing  activities,  including 
business services such as management consultancy, certification and testing; facilities 
management,  including  office  maintenance  and  security;  advertising;  recruitment 
services, including employment agencies; and the services of commercial agents. That 
concept  also  covers  services  provided  both  to  businesses  and  to  consumers,  such  as 
legal  or  fiscal  advice;  real  estate  services  such  as  estate  agencies;  construction, 
including  the  services  of  architects;  transport;  distributive  trades;  the  organisation  of 
trade fairs; car rental; travel agencies; and security services. It also covers  consumer 
services,  such  as  those  in  the  field  of  tourism,  including  tour  guides;  audio-visual 
services; leisure services, sports centres and amusement parks; health and health care 
services; and household support services, such as help for the elderly. Those activities 
may  involve  services  requiring  the  proximity  of  provider  and  recipient,  services 

13 
14 

OJ L 225, 20.8.1990 p. 6. 
OJ L 157, 26.6.2003 p. 49. 

30 

 
 
  
 
                                                 
requiring travel by the recipient or the provider and services which may be provided at 
a distance, including via the Internet. 

(15)  As the Court of Justice has consistently held with regard to Articles 49 et seq of the 
Treaty,  the  concept  of  service  covers  any  economic  activity  normally  provided  for 
remuneration, without the service having to be paid for by those benefiting from it and 
regardless  of  the  financing  arrangements  for  the  remuneration  received  in  return,  by 
way  of  consideration.  Any  service  whereby  a  provider  participates  in  the  economy, 
irrespective of his legal status or aims, or the field of action concerned, thus constitutes 
a service. 

(16)  The characteristic of remuneration is absent in the case of activities performed, for no 
consideration,  by  the  State  in  fulfilment  of  its  social,  cultural,  educational  and  legal 
obligations.  These  activities  are  not  covered  by  the  definition  in  Article  50  of  the 
Treaty and do not therefore fall within the scope of this Directive. 

(17)  This  Directive  does  not  concern  the  application  of  Articles  28  to  30  of  the  Treaty 
relating  to  the  free  movement  of  goods.  The  restrictions  prohibited  pursuant  to  the 
country  of  origin  principle  cover  the  requirements  applicable  to  access  to  service 
activities or to the exercise thereof and not those applicable to goods as such. 

(18)  The concept of provider covers any natural person who is a national of a Member State 
or any legal person who is engaged in a service activity there, in exercise either of the 
freedom  of  establishment  or  of  the  freedom  to  provide  services.  The  concept  of 
provider  is  thus  not  limited  solely  to  cross-border  service  provision  within  the 
framework  of  the  freedom  to  provide  services  but  also  covers  cases  in  which  an 
operator establishes itself in a Member State in order to develop its service activities 
there. On the other hand, the concept of a provider does not cover the case of branches 
in a Member State of companies from third countries because, under Article 48 of the 
Treaty, the freedom of establishment and free movement of services may benefit only 
companies constituted in accordance with the laws of a Member State and having their 
registered  office,  central  administration  or  principal  place  of  business  within  the 
Community. 

(19)  Where an operator travels to another Member State to exercise a service activity there, 
a  distinction  should  be  made  between  situations  covered  by  the  freedom  of 
establishment  and  those  covered,  due  to  the  temporary  nature  of  the  activities 
concerned,  by  the  free  movement  of  services.  The  Court  of  Justice  has  consistently 
held that the temporary nature of the activities in question must be determined in the 
light not only of the duration of the provision of the service, but also of its regularity, 
periodical nature or continuity. In any case, the fact that the activity is temporary does 
not  mean  that  the  service  provider  may  not  equip  himself  with  some  forms  of 
infrastructure  in  the  host  Member  State,  such  as  an  office,  chambers  or  consulting 
rooms, in so far as such infrastructure is necessary for the purposes of providing the 
service in question. 

(20)  The concept of authorisation scheme covers, inter alia, the administrative procedures 
for granting authorisations, licences, approvals or concessions, and also the obligation, 
in  order  to  be  eligible  to  exercise  the  activity,  to  be  registered  as  a  member  of  a 
profession or entered in a register, roll or database, to be officially appointed to a body 
or  to  obtain  a  card  attesting  to  membership  of  a  particular  profession.  Authorisation 
may be granted not only by a formal decision but also by an implicit decision arising, 

31 

 
 
  
 
for  example,  from  the  silence  of  the  competent  authority  or  from  the  fact  that  the 
interested  party  must  await  acknowledgement  of  receipt  of  a  declaration  in  order  to 
commence the activity in question or for the latter to become lawful. 

(21)  The  concept  of  the  coordinated  field  covers  all  requirements  applicable  to  access  to 
service activities and to the exercise thereof, in particular those laid down by the laws, 
regulations and administrative provisions of each Member State, whether or not they 
fall within an area harmonised at Community level or are general or specific in nature 
and regardless of the legal field to which they belong under national law.  

it 

level, 

is  necessary 

(22)  One of the fundamental difficulties faced, in particular by SMEs, in accessing service 
activities  and  exercising  them  is  the  complexity,  length  and  legal  uncertainty  of 
administrative  procedures.  For  this  reason,  following  the  example  of  certain 
modernising  and  good  administrative  practice  initiatives  undertaken  at  Community 
and  national 
to  establish  principles  of  administrative 
simplification, inter alia through the introduction, coordinated at Community level, of 
a system of single points of contact, limitation of the obligation of prior authorisation 
to  cases  in  which  it  is  essential  and  the  introduction  of  the  principle  of  tacit 
authorisation  by  the  competent  authorities after  a  certain  period  of  time  has  elapsed. 
Such modernising action, while maintaining the requirements on transparency and the 
updating of information relating to operators, is intended to eliminate the delays, costs 
and  dissuasive  effects  which  arise,  for  example,  from  unnecessary  or  excessively 
complex  and  burdensome  procedures,  the  duplication  of  procedures,  the  red  tape 
involved in submitting documents, the use of discretionary powers by the competent 
authorities,  indeterminate  or excessively long periods before a  response  is given,  the 
limited  duration  of  validity  of  authorisations  granted  and  disproportionate  fees  and 
penalties.  Such  practices  have  particularly  significant  dissuasive  effects  on  providers 
wishing  to  develop  their  activities  in  other  Member  States  and  require  coordinated 
modernisation within an enlarged internal market of twenty-five Member States.  

(23) 

In order to facilitate access to service activities and the exercise thereof in the internal 
market,  it  is  necessary  to  establish  an  objective,  common  to  all  Member  States,  of 
administrative simplification and to lay down provisions concerning, inter alia, single 
points  of  contact,  the  right  to  information,  procedures  by  electronic  means  and  the 
establishment  of  a  framework  for  authorisation  schemes.  Other  measures  adopted  at 
national  level  to  meet  that  objective  may  involve  reduction  of  the  number  of 
procedures  and  formalities  applicable  to  service  activities  and  the  restriction  of  such 
procedures  and  formalities  to  those  which  are  essential  in  order  to  achieve  a  general 
interest  objective  and  which  do  not  duplicate  each  other  in  terms  of  content  or 
purpose.  

(24)  With the aim of administrative simplification, general formal requirements, such as a 
certified  translation,  must  not  be  imposed,  except  where  objectively  justified  by  an 
overriding reason relating to the public interest, such as the protection of workers. It is 
also necessary to ensure that an authorisation normally permits access to, or exercise 
of, a service activity throughout the national territory, unless a new authorisation for 
each establishment, for example for each new hypermarket, is objectively justified by 
an  overriding  reason  relating  to  the  public  interest,  such  as  protection  of  the  urban 
environment. 

(25) 

It  is  appropriate  to  provide  for  single  points  of  contact  in  order  to  ensure  that  each 
provider  has  a  single  point  at  which  he  can  complete  all  procedures  and  formalities. 

32 

 
 
  
 
The  number  of  single  points  of  contact  per  Member  State  may  vary  according  to 
regional or local competencies or according to the activities concerned. The creation of 
single  points  of  contact  does  not  interfere  with  the  allocation  of  functions  among 
competent  authorities  within  each  national  system.  Where  several  authorities  at 
regional or local level are competent, one of them may assume the role of single point 
of  contact  and  coordinator.  Single  points  of  contact  may  be  set  up  not  only  by 
administrative  authorities  but  also  by  chambers  of  commerce  or  crafts,  or  by  the 
professional  organisations  or  private  bodies  to  which  a  Member  State  decides  to 
entrust  that  function.  Single  points  of  contact  have  an  important  role  to  play  in 
providing assistance to providers either as the authority directly competent to issue the 
documents  necessary  to  access  a  service  activity  or  as  an  intermediary  between  the 
provider and the authorities which are directly competent. In its Recommendation of 
22  April  1997  on  improving  and  simplifying  the  business  environment  for  business 
start-ups15,  the  Commission  was  already  encouraging  Member  States  to  introduce 
points of contact to simplify formalities. 

(26)  The  setting  up,  in  the  reasonably  near  future,  of  electronic  means  of  completing 
procedures and formalities will be vital for administrative simplification in the field of 
service activities, for the benefit of providers, recipients and competent authorities. In 
order to meet that obligation as to results, national laws and other rules applicable to 
services may need to be adapted. The fact that it must be possible to complete those 
procedures and formalities at a distance means in particular that Member States must 
ensure  that  they  may  be  completed  across  borders.  The  obligation  as  to  results  does 
not  cover  procedures  or  formalities  which  by  their  very  nature  are  impossible  to 
complete at a distance. 

(27)  The  possibility  of  gaining  access  to  a  service  activity  may  be  made  subject  to 
authorisation by the competent authorities only if that decision satisfies the criteria of 
non-discrimination,  necessity  and  proportionality.  That  means,  in  particular,  that 
authorisation  schemes  should  be  permissible  only  where  an  a  posteriori  inspection 
would not be effective because of the impossibility of ascertaining the defects of the 
services  concerned  a  posteriori,  due  account  being  taken  of  the  risks  and  dangers 
which could arise in the absence of a prior inspection. However, the provision to that 
effect  made  by  this  Directive  cannot  be  relied  upon  in  order  to  justify  authorisation 
instruments  such  as 
schemes  which  are  prohibited  by  other  Community 
Directive 1999/93/EC  of 
the  Council  of 
the  European  Parliament 
13 December 1999  on  a  Community  framework  for  electronic  signatures16,  or 
Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 
on  certain  legal  aspects  of  information  society  services,  in  particular  electronic 
commerce, in the internal market ('Directive on electronic commerce')17. The results of 
the  process  of  mutual  evaluation  will  make  it  possible  to  determine,  at  Community 
level, the types of activity for which authorisation schemes should be eliminated.  

and 

(28) 

In cases where the number of authorisations available for an activity is limited because 
of  scarcity  of  natural  resources  or  technical  capacity,  as  may  be  the  position,  for 
example, with regard to the award of analogue radio frequencies or the exploitation of 
hydro-electric plant, a procedure for selection from among several potential candidates 

15 
16 
17 

OJ L 145, 5.6.1997, p. 29. 
OJ L 13, 19.1.2000, p. 12. 
OJ L 178, 17.7.2000, p. 1. 

33 

 
 
  
 
                                                 
must be adopted, with the aim of developing through open competition the quality and 
conditions  for  supply  of  services  available  to  users.  Such  a  procedure  must  provide 
guarantees  of  transparency  and  impartiality  and  the  authorisation  thus  granted  must 
not  have  an  excessive  duration,  or  be  subject  to  automatic  renewal,  or  confer  any 
advantage  on  the  successful  provider.  In  particular,  the  duration  of  the  authorisation 
granted must be fixed in such as way that it does not restrict or limit free competition 
beyond what is necessary to enable the provider to recoup the cost of investment and 
to make a fair return on the capital invested. Cases where the number of authorisations 
is  limited  for  reasons  other  than  scarcity  of  natural  resources  or  technical  capacity 
remain  in  any  case  subject  to  the  other  provisions  of  this  Directive  relating  to 
authorisation schemes. 

(29)  The  overriding  reasons  relating  to  the  public  interest  to  which  reference  is  made  in 
certain harmonisation provisions of this Directive are those recognised by the Court of 
Justice  in  relation  to  Articles  43  and  49  of  the  Treaty,  notably  the  protection  of 
consumers, recipients of services, workers and the urban environment.  

(30) 

In order to establish a genuine internal market for services, it is necessary to abolish 
any  restrictions  on  the  freedom  of  establishment  and  the  free  movement  of  services 
which  are  still  enshrined  in  the  laws  of  certain  Member  States  and  which  are 
incompatible with Articles 43 and 49 of the Treaty respectively. The restrictions to be 
prohibited  particularly  affect  the  internal  market  for  services  and  should  be 
systematically dismantled as soon as possible.  

(31)  The  Court  of  Justice  has  consistently  held  that  the  freedom  of  establishment  is 
predicated,  in  particular,  upon  the  principle  of  equal  treatment,  which  entails  the 
prohibition  not  only  of  any  discrimination  on  grounds  of  nationality  but  also  of  any 
indirect  discrimination  based  on  other  grounds  but  capable  of  producing  the  same 
result.  Thus,  access  to  a  service  activity  or  the  exercise  thereof  in  a  Member  State, 
either as a principal or secondary activity, may not be made subject to criteria such as 
place  of  establishment,  residence,  domicile  or  principal  provision  of  the  service 
activity. Similarly, a Member State may not restrict the legal capacity or the right to 
bring  legal  proceedings  of  companies  incorporated  in  accordance  with  the  law  of 
another  Member  State  on  whose  territory  they  have  their  primary  establishment. 
Moreover,  a  Member  State  may  not  confer  any  advantages  on  providers  having  a 
particular  national  or  local  socio-economic  link;  nor  may  it  restrict,  on  grounds  of 
place of establishment, the provider’s freedom to acquire, exploit or dispose of rights 
and goods or to access different forms of credit or accommodation in so far as those 
choices are useful for access to his activity or for the effective exercise thereof.  

(32)  The  prohibition  of  economic  tests  as  a  prerequisite  for  the  grant  of  authorisation 
covers economic tests as such, but not requirements which are objectively justified by 
overriding  reasons  relating  to  the  public  interest,  such  as  protection  of  the  urban 
environment.  That  prohibition  does  not  affect  the  exercise  of  the  powers  of  the 
authorities responsible for applying competition law. 

(33) 

In order to coordinate the modernisation of national rules and regulations in a manner 
consistent  with  the  requirements  of  the  internal  market,  it  is  necessary  to  evaluate 
certain  non-discriminatory  national  requirements  which,  by  their  very  nature,  could 
severely restrict or even prevent access to an activity or the exercise thereof under the 
freedom of establishment. Member States must ensure, during the transposition period 
of  this  Directive,  that  such  requirements  are  necessary  and  proportionate  and,  where 

34 

 
 
  
 
appropriate, they must abolish or amend them. Moreover, those requirements must in 
any case be compatible with Community competition law. 

(34)  The  restrictions  to  be  examined  include  national  rules  which,  on  grounds  other  than 
those relating to professional qualifications, reserve access to activities such as games 
of chance to particular  providers.  Similarly, among the requirements to be examined 
are "must carry" rules applicable to cable operators which, by imposing an obligation 
on  an  intermediary  service  provider  to  give  access  to  certain  services  delivered  by 
specific service providers, affect his freedom of choice, access to programmes and the 
choice of the recipients.  

(35) 

It  is  appropriate  that  the  provisions  of  this  Directive  concerning  freedom  of 
establishment should apply only to the extent that the activities in question are open to 
competition, so that they do not oblige Member States to abolish existing monopolies, 
notably those of lotteries, or to privatise certain sectors. 

(36)  The  fact  that  this  Directive  specifies  a  number  of  requirements  to  be  abolished  or 
evaluated by the Member States during the transposition period is without prejudice to 
any  infringement  proceedings  against  a  Member  State  for  failure  to  fulfil  its 
obligations under Articles 43 or 49 of the Treaty. 

(37) 

(38) 

In  order  to  secure  effective  implementation  of  the  free  movement  of  services  and  to 
ensure that recipients and providers can benefit from and supply services throughout 
the Community regardless of frontiers, it is necessary to establish the principle that a 
provider  may  be  subject  only  to  the  law  of  the  Member  State  in  which  he  is 
established. That principle is essential in order to enable providers, especially SMEs, 
to avail themselves with full legal certainty of the opportunities offered by the internal 
market.  By  thus  facilitating  the  free  movement  of  services  between  Member  States, 
that  principle,  together  with  harmonisation  and  mutual  assistance  measures,  also 
enables recipients to gain access to a wider choice of high quality services from other 
Member States. That principle should be complemented by an assistance mechanism 
enabling  the  recipient,  in  particular,  to  be  informed  about  the  laws  of  the  other 
Member  States,  and  by  the  harmonisation  of  rules  on  the  transparency  of  service 
activities.  

It  is  also  necessary  to  ensure  that  supervision  of  service  activities  is  carried  out  at 
source, that is to say, by the competent authorities of the Member State in which the 
provider  is  established.  The  competent  authorities  of  the  country  of  origin  are  best 
placed to ensure the effectiveness and continuity of supervision of the provider and to 
provide  protection  for  recipients  not  only  in  their  own  Member  State  but  also 
elsewhere  in  the  Community.  In  order  to  establish  mutual  trust  between  Member 
States  in  the  regulation  of  service  activities,  it  should  be  clearly  laid  down  that 
responsibility  under  Community  law  for  supervision  of  the  activities  of  providers, 
regardless  of  the  place  where  the  service  is  provided,  lies  with  the  Member  State  of 
origin.  Determination  of  judicial  jurisdiction  does  not  fall  within  the  scope  of  this 
(EC)  No  44/2001  of 
that  of  Council  Regulation 
Directive  but  within 
22 December 2000 on jurisdiction and the recognition and enforcement of judgments 
in  civil  and  commercial  matters18,  or  other  Community  instruments  such  as 
the  Council  of 
Directive 96/71/EC  of 

the  European  Parliament  and  of 

18 

OJ L 12, 16.1.2001, p. 1. Directive as last amended by the Act of Accession 2003. 

35 

 
 
  
 
                                                 
16 December 1996  concerning  the  posting  of  workers  in  the  framework  of  the 
provision of services19. 

(39)  As a corollary to the principle that the law of the country of origin should apply and 
that the country of origin should be responsible for supervision, it is necessary to lay 
down the principle that Member States may not restrict services coming from another 
Member State. 

(40) 

(41) 

(42) 

It is necessary to provide that the rule that the law of the country of origin is to apply 
may be departed from only in the areas covered by derogations, general or transitional. 
Those derogations are necessary in order to take into account the level of integration 
of the internal market or certain Community instruments relating to services pursuant 
to which a provider is subject to the application of a law other than that of the Member 
State  of  origin.  Moreover,  by  way  of  exception,  measures  against  a  given  provider 
may also be adopted in certain individual cases and under certain strict procedural and 
substantive conditions. In order to ensure the legal certainty which is essential in order 
to  encourage  SMEs  to  provide  their  services  in  other  Member  States,  those 
derogations  should  be  limited  to  what  is  strictly  necessary.  In  particular,  derogation 
should  be  possible  only  for  reasons  related  to  the  safety  of  services,  exercise  of  a 
health profession or matters of public policy, such as the protection of minors, and to 
the extent that national provisions in this field have not been harmonised. In addition, 
any  restriction  of  the  freedom  to  provide  services  should  be  permitted,  by  way  of 
exception,  only  if  it  is  consistent  with  fundamental  rights  which,  as  the  Court  of 
Justice  has  consistently  held,  form  an  integral  part  of  the  general  principles  of  law 
enshrined in the Community legal order. 

In  cases  where  a  provider  moves  temporarily  to  a  Member  State  other  than  the 
Member State of origin, it is necessary to provide for mutual assistance between those 
two  States  so  that  the  former  can  carry  out  checks,  inspections  and  enquiries  at  the 
request of the Member State of origin or carry out such checks on its own initiative if 
these are merely factual checks. Moreover, it should be possible in the case of posted 
workers for the Member State of posting to take action against a provider established 
in  another  Member  State  in  order  to  ensure  compliance  with  the  employment  and 
working conditions applicable under Directive 96/71/EC. 

It is appropriate to provide for derogation from the country of origin principle in the 
case  of  services  covered  by  a  general  prohibition  in  the  Member  State  to  which  a 
provider  has  moved,  if  that  prohibition  is  objectively  justified  by  reasons  relating  to 
public  policy,  public  security  or  public  health.  That  derogation  should  be  limited  to 
general prohibitions and should not, for example, cover national schemes which, while 
not prohibiting an activity in a general manner, reserve the exercise of that activity to 
one or several specific operators, or which prohibit the exercise of an activity without 
prior authorisation. The fact that a Member State permits an activity, but reserves it to 
certain operators, means that the activity is not subject to a general prohibition and is 
not regarded as inherently contrary to public policy, public security or public health. 
Consequently, the exclusion of such an activity from the scope of the Directive would 
not be justified. 

19 

OJ L 18, 21.1.1997, p. 1. 

36 

 
 
  
 
                                                 
(43)  The country of  origin principle should not apply to specific requirements, laid down 
by  the  Member  State  to  which  a  provider  has  moved,  the  rationale  for  which  is 
inextricably  linked  to  the  particular  characteristics  of  the  place  where  the  service  is 
provided, and which must be fulfilled in order to maintain public policy, public safety, 
public  health  or  the  protection  of  the  environment.  Such  would  be  the  position,  for 
example,  in  the  case  of  authorisations  to  occupy  or  use  the  public  highway, 
requirements relating to the organisation of public  events  or requirements  relating to 
the safety of building sites.  

(44)  The  exclusion  from  the  country  of  origin  principle  of  matters  relating  to  the 
registration of vehicles leased in a Member State other than that in which they are used 
follows from the case-law of the Court of Justice, which has accepted that a Member 
State may impose such an obligation, in accordance with proportionate conditions, in 
the case of vehicles used on its territory. That exclusion does not cover occasional or 
temporary rental.  

(45)  A  number  of  Directives  concerning  contracts  concluded  by  consumers  have  already 
been  adopted  at  Community  level.  However,  the  approach  followed  by  those 
Directives  is  one  of  minimal  harmonisation.  In  order  to  limit  as  far  as  possible 
divergences  between  consumer  protection  rules  across  the  Community  that  fragment 
the  internal  market  to  the  detriment  of  consumers  and  enterprises,  the  Commission 
stated in its Communication on consumer policy strategy 2002-200620 that one of the 
its key priorities would be full harmonisation. Furthermore, the Commission stressed 
in its Action Plan on "A more coherent European contract law"21 the need for greater 
coherence in European consumer law which would entail, in particular, a review of the 
existing  law  on  contracts  concluded  with  consumers  in  order  to  remedy  residual 
inconsistencies, to fill gaps and to simplify legislation. 

(46) 

(47) 

It  is  appropriate  to  apply  the  country  of  origin  principle  to  the  field  of  contracts 
concluded by consumers for the supply of services only to the extent that Community 
Directives  provide  for  full  harmonisation,  because  in  such  cases  the  levels  of 
consumer  protection  are  equivalent.  The  derogation  from  the  country  of  origin 
principle  relating  to  the  non-contractual  liability  of  a  provider  in  the  case  of  an 
accident involving a person and occurring as a consequence of the service provider's 
activities in the Member State into which he has moved temporarily concerns physical 
or material damage suffered by a person in the accident. 

It  is  necessary  to  allow  Member  States  the  possibility,  exceptionally  and  on  a 
case-by-case  basis,  of  taking  measures  which  derogate  from  the  country  of  origin 
principle  in  respect  of  a  provider  established  in  another  Member  State,  for  certain 
reasons such as the safety of services. It should be possible to take such measures only 
in the absence of harmonisation at Community level. Moreover, that possibility should 
not permit restrictive measures to be taken in areas in which other Directives prohibit 
all  derogation  from  the  free  movement  of services,  such  as  Directive  1999/93/EC  or 
Directive 98/84/EC of the European Parliament and the Council of 20 November 1998 
on the legal protection of services based on, or consisting of, conditional access22. Nor 
should that possibility permit the extension or limitation of derogations provided for in 

20 
21 
22 

OJ C 137, 8.6.2002, p. 2. 
OJ C 63, 15.3.2003, p. 1. 
OJ L 320, 28.11.1998, p. 54. 

37 

 
 
  
 
                                                 
other  Directives,  such  as  Council  Directive  89/552/EEC  of  3  October  1989  on  the 
coordination  of  certain  provisions  laid  down  by  law,  regulation  or  administrative 
action in Member States concerning the pursuit of television broadcasting activities23 
or Directive 2000/31/EC. 

(48)  Restrictions on the free movement of services, contrary to this Directive, may arise not 
only from measures applied to providers, but also from the many barriers to the use of 
services  by  recipients,  especially  consumers.  This  Directive  mentions,  by  way  of 
illustration, certain types of restriction applied to a recipient wishing to use a service 
performed by a provider established in another Member State.  

(49) 

(50) 

In accordance with the Treaty rules on the free movement of services, as interpreted by 
the  Court  of  Justice,  discrimination  on  grounds  of  the  recipient’s  nationality  or 
national or local residence is prohibited. Such discrimination could take the form of an 
obligation,  imposed  only  on  nationals  of  another  Member  State,  to  supply  original 
documents,  certified  copies,  a  certificate  of  nationality  or  official  translations  of 
documents  in  order  to  benefit  from  a  service  or  from  more  advantageous  terms  or 
prices. However, the prohibition of discriminatory requirements does not preclude the 
reservation  of  advantages,  especially  as  regards  tariffs,  to  certain  recipients,  if  such 
reservation is based on legitimate, objective criteria, such as a direct link to taxes paid 
by those recipients. 

the 

integration  of 

If an internal area without frontiers is to be effectively achieved, Community citizens 
must  neither  be  prevented  from  benefiting  from  a  service  which  is  technically 
accessible  on  the  market,  nor  be  made  subject  to  different  conditions  and  tariffs,  by 
reason of their nationality or place of residence. The persistence of such discrimination 
with  respect  to  the  recipients  of  services  highlights,  for  the  Community  citizen,  the 
absence  of  a  genuine  internal  market  in  services  and,  in  a  more  general  sense, 
compromises 
the  peoples  of  Europe.  The  principle  of 
non-discrimination  within  the  internal  market  means  that  access  by  a  recipient,  and 
especially  by  a  consumer,  to  a  service  on  offer  to  the  public  may  not  be  denied  or 
hampered by application of a criterion, included in general conditions made available 
to  the  public,  relating  to  the  recipient’s  nationality  or  place  of  residence.  It  does  not 
follow that provision may not be made in such general conditions for variable tariffs 
and conditions to apply to the provision of a service, where those tariffs and conditions 
are directly justified for objective reasons such as additional costs effectively incurred 
because of the distance involved or the technical characteristics of the provision of the 
service,  or  different  market  conditions,  or  extra  risks  linked  to  rules  differing  from 
those of the Member State of origin. 

(51) 

In accordance with the principles established by the Court of Justice with regard to the 
freedom to provide services, and without endangering the financial balance of Member 
States’ social security systems, greater legal certainty as regards the reimbursement of 
health  costs  should  be  provided  for  patients,  who  benefit  as  recipients  from  the  free 
movement  of  services,  and  for  health  professionals  and  managers  of  social  security 
systems.  

23 

OJ L 298, 17.10.1989, p. 23. Directive as amended by Directive 97/36/EC of the European Parliament 
and of the Council (OJ L 202, 30.1.1997, p. 60). 

38 

 
 
  
 
                                                 
(52)  Council  Regulation  (EEC)  No  1408/71  of  14  June  1971  on  the  application  of  social 
security  schemes  to  employed  persons,  to  self-employed  persons  and  to  members  of 
their  families  moving  within  the  Community24  and,  in  particular,  its  provisions 
regarding  affiliation  to  a  system  of  social  security,  fully  applies  to  employed  and 
self-employed workers who provide or take part in the supply of a service. 

(53)  Article  22  of  Regulation  (EEC)  No  1408/71,  which  concerns  authorisation  for 
assuming  the  costs  of  health  care  provided  in  another  Member  State,  contributes,  as 
the Court of Justice has emphasised, to facilitating the free movement of patients and 
the  provision  of  cross-border  medical  services.  The  purpose  of  that  provision  is  to 
ensure that insured persons possessing an authorisation have access to health care in 
another Member State under conditions which, as regards the assumption of costs, are 
as  favourable  as  those  applying  to  insured  persons  in  that  Member  State.  It  thus 
confers  on  insured  persons  rights  they  would  not  otherwise  have  and  facilitates  the 
free movement of services. On the other hand, that provision does not seek to regulate, 
nor in any way to prevent, reimbursement, at the rates applicable in the Member State 
of affiliation, of the costs of health care provided in another Member State, even in the 
absence of a prior authorisation. 

(54) 

In the light of the case-law developed by the Court of Justice on the free movement of 
services,  it  is  necessary  to  abolish  the  requirement  of  prior  authorisation  for 
reimbursement by the social security system of a Member State for non-hospital care 
provided  in  another  Member  State,  and  Member  States  must  amend  their  legislation 
accordingly. In so far as the reimbursement of such care remains within the limits of 
the  cover  guaranteed  by  the  sickness  insurance  scheme  of  the  Member  State  of 
affiliation,  abolition  of  the  prior  authorisation  requirement  is  not  likely  seriously  to 
disrupt the financial equilibrium of social security systems. As the Court of Justice has 
consistently held, the conditions under which Member States grant non-hospital care 
on their own territory remain applicable in the case of care provided in a Member State 
other  than  that  of  affiliation  in  so  far  as  those  conditions  are  compatible  with 
Community law. By the same token, authorisation schemes for the assumption of costs 
of  care  in  another  Member  State  must  comply  with  this  Directive  as  regards  the 
conditions for granting authorisation and the related procedures.  

(55)  As  the  Court  of  Justice  has  consistently  held  with  regard  to  the  free  movement  of 
services,  a  system  of  prior  authorisation  for  the  reimbursement  of  hospital  care 
provided in another Member State appears justified by the need to plan the number of 
hospital infrastructures, their geographical distribution, the mode of their organisation, 
the  equipment  with  which  they  are  provided  and  even  the  nature  of  the  medical 
services which they are able to offer. The aims of such planning are to ensure, within 
each Member State, sufficient permanent access to a balanced range of quality hospital 
care, to secure efficient cost management and, so far as is possible, to avoid wastage of 
financial, technical or human resources. In accordance with the case-law of the Court 
of  Justice,  the  concept  of  hospital  care  must  be  objectively  defined  and  a  system  of 
prior authorisation must be proportionate to the general interest objective pursued.  

(56)  Article  22  of  Council  Regulation  (EEC)  No  1408/71  specifies  the  circumstances  in 
which the competent national institution may not refuse an authorisation sought on the 
basis of that provision. Member States may not refuse authorisation in cases where the 

24 

OJ L 149, 5.7.1971, p. 2. Regulation as last amended by the Act of Accession 2003. 

39 

 
 
  
 
                                                 
hospital  care  in  question,  when  provided  in  their  territory,  is  covered  by  their  social 
security  system,  and  treatment  which  is  identical  or  equally  effective  cannot  be 
obtained  in  time  in  their  territory  under  the  conditions  laid  down  by  their  social 
security system. The Court of Justice has consistently held that the condition relating 
to  acceptable  delay  must  be  considered  together  with  all  the  circumstances  of  each 
case,  taking  due  account  not  only  of  the  medical condition of the patient at the time 
when  authorisation  is  requested,  but  also  his  medical  history  and  the  probable 
evolution of his illness.  

(57)  The  assumption  of  costs,  by  the  social  security  systems  of  the  Member  States,  in 
respect of health care provided in another Member State must not be lower than that 
provided  for  by  their  own  social  security  system  for  health  care  provided  in  their 
territory. As the Court has consistently pointed out with regard to the free movement 
of services, in the absence of authorisation, the reimbursement of non-hospital care in 
accordance  with  the  scales  of  the  Member  State  of  affiliation  would  not  have  a 
significant  effect  on  the  financing  of  its  social  security  system.  In  cases  where 
authorisation  has  been  granted,  in  the  framework  of  Article  22  of  Regulation  (EEC) 
No 1408/71, the assumption of costs is made in accordance with the rates applicable in 
the  Member  State  in  which  the  health  care  is  provided.  However,  if  the  level  of 
coverage  is  lower  than  that  to  which  the  patient  would  have  been  entitled  if  he  had 
received the same care in the Member State of affiliation, the latter must assume the 
remaining costs up to the level which would have applied.  

(58)  As  regards  the  posting  of  workers  in  the  context  of  the  provision  of  services  in  a 
Member  State  other  than  the  Member  State  of  origin,  it  is  necessary  to  clarify  the 
division of roles and tasks between the Member State of origin and the Member State 
of posting, in order to facilitate the free movement of services. The present Directive 
does  not  aim  to  address  issues  of  labour  law  as  such.  The  division  of  tasks  and  the 
specifying  of  the  forms  of  cooperation  between  the  Member  State  of  origin  and  the 
Member  State  of  posting  facilitates  the  free  movement  of  services,  especially  by 
abolishing  certain  disproportionate  administrative  procedures,  while  also  improving 
the monitoring of compliance with employment and working conditions in accordance 
with Directive 96/71/EC. 

(59) 

In order to avoid discriminatory or disproportionate administrative formalities, which 
would be a disincentive to SMEs in particular, it is necessary to preclude the Member 
State of posting from making postings subject to compliance with requirements such 
as an obligation to request authorisation from the authorities. The obligation to make a 
declaration to the authorities of the Member State of posting should also be prohibited. 
However, it should be possible to maintain such an obligation until 31 December 2008 
in the field of building work in accordance with the Annex to Directive 96/71/EC. In 
that connection, a group of Member State experts on the application of that Directive 
are  studying  ways  to  improve  administrative  cooperation  between  Member  States  in 
order  to  facilitate  supervision.  Furthermore,  as  regards  employment  and  working 
conditions other than those laid down in Directive 96/71/EC, it should not be possible 
for  the  Member  State  of  posting  to  take  restrictive  measures  against  a  provider 
established in another Member State. 

(60)  By  virtue  of  the  free  movement  of  services,  a  service  provider  is  entitled  to  post 
workers even if they are not Community citizens but third country nationals, provided 
that they are legally present and lawfully employed in the Member State of origin. It is 
appropriate to place the Member State of origin under an obligation to ensure that any 

40 

 
 
  
 
posted worker who is a third country national fulfils the conditions for residence and 
lawful  employment  laid  down  in  its  legislation,  including  with  regard  to  social 
security. It is also appropriate to preclude the host Member State from imposing on the 
worker or the provider any preventative controls, especially as regards right of entry or 
residence  permits,  except  in  certain  cases.  Nor  should  it  be  possible  for  the  host 
Member  State  to  impose  any  obligations  such  as  possession  of  an  employment 
contract  of  indefinite  duration  or  a  record  of  previous  employment  in  the  Member 
State of origin of the provider. 

(61)  Following  the  adoption  of  Council  Regulation  (EC)  No  859/2003  of  14  May  2003 
extending 
the  provisions  of  Regulation  (EEC)  No  1408/71  and  Regulation 
(EEC) No 574/72 to nationals of third countries who are not already covered by those 
provisions  solely  on  the  ground  of  their  nationality25,  third  country  nationals  are 
covered  by  a  system  of  cooperation  on  the  application  of  social  security  schemes  to 
employed  persons  and  to  members  of  their  families  moving  within  the  Community, 
established  by  Regulation  (EEC)  No  1408/71,  under  which  the  rules  of  the  country 
under whose social security scheme the worker is insured are to apply. 

(62) 

It is appropriate to provide that, as one of the means by which the provider may make 
the information which he is obliged to supply easily accessible to the recipient, he is to 
supply  his  electronic  address,  including  that  of  his  website.  Furthermore,  the 
obligation  to  present  certain  information  in  the  provider’s  information  documents 
presenting  his  services  in  detail  should  not  cover  commercial  communications  of  a 
general nature, such as advertising, but rather documents giving a detailed description 
of the services proposed, including documents on a website.  

(63)  Any operator providing services involving a particular health, safety or financial risk 
for the recipient should be covered by appropriate professional indemnity insurance, or 
by  another  form  of  guarantee  which  is  equivalent  or  comparable,  which  means,  in 
particular,  that  he  should  have  adequate  insurance  coverage  for  services  provided  in 
one or more Member States other than the Member State of origin. 

(64) 

(65) 

It is necessary to put an end to the total prohibitions of commercial communications 
by  the  regulated  professions,  not  by  removing  bans  on  the  content  of  a  commercial 
communication  but  rather  those  which,  in  a  general  way  and  for  a  given  profession, 
forbid  one  or  more  forms  of  commercial  communication,  such  as  a  ban  on  all 
advertising  in  one  or  more  given  media.  As  regards  the  content  and  methods  of 
commercial communication, it is necessary to encourage professionals to draw up, in 
accordance with Community law, codes of conduct at Community level. 

In  order  to  increase  transparency  and  promote  assessments  based  on  comparable 
criteria with regard to the quality of the services offered and supplied to recipients, it is 
important that information on the meaning of quality labels and other distinctive marks 
relating  to  these  services  be  easily  accessible.  That  obligation  of  transparency  is 
particularly important in areas such as tourism, especially the hotel business, in which 
the  use  of  a  system  of  classification  is  widespread.  Moreover,  it  is  appropriate  to 
examine  the  extent  to  which  European  standardisation  could  facilitate  compatibility 
and quality of services. European standards are drawn up by the European standards-
setting  bodies,  the  European  Committee  for  Standardisation  (CEN),  the  European 

25 

OJ L 124, 20.5.2003, p. 1. 

41 

 
 
  
 
                                                 
Committee  for  Electrotechnical  Standardisation  (CENELEC)  and  the  European 
Telecommunications  Standards  Institute  (ETSI).  Where  appropriate,  the  Commission 
may,  in  accordance  with  the  procedures  laid  down  in  Directive  98/34/EC  of  the 
European Parliament  and  of the Council of 22 June 199826 laying down a procedure 
for the provision of information in the field of technical standards and regulations and 
of  rules  on  Information  Society  services,  issue  a  mandate  for  the  drawing  up  of 
specific European standards.  

(66)  The  development  of  a  network  of  Member  State  consumer  protection  authorities, 
which  is  the  subject  of  the  proposal  for  the  Regulation  on  consumer  protection 
cooperation,  complements  the  cooperation  provided  for  in  this  Directive.  The 
application of consumer protection legislation in cross-border cases, in particular with 
regard  to  new  marketing and  selling practices, as well as the need to remove certain 
specific  obstacles  to  cooperation  in  this  field,  necessitates  a  higher  degree  of 
cooperation between Member States. In particular, it is necessary in this area to ensure 
that  Member  States  require  the  cessation  of  illegal  practices  by  operators  in  their 
territory who target consumers in another Member State.  

(67) 

It is necessary to provide that the Member States, in cooperation with the Commission, 
are  to  encourage  interested  parties  to  draw  up  codes  of  conduct  at  Community  level 
aimed  in  particular  at  promoting  the  quality  of  services  and  taking  into  account  the 
specific  nature  of  each  profession.  Those  codes  of  conduct  should  comply  with 
Community law, especially competition law. 

(68)  This Directive is without prejudice to any legislative or other initiatives in the field of 

consumer protection. 

(69)  The  absence  of  a  reaction  from  the  Commission  in  the  context  of  the  mutual 
evaluation procedure provided for by this Directive has no effect on the compatibility 
with  Community  law  of  national  requirements  which  are  included  in  reports  by 
Member States. 

(70)  Directive 98/27/EC of the European Parliament and of the Council of 19 May 1998 on 
injunctions  for  the  protection  of  consumers'  interests27  approximates  the  laws, 
regulations and administrative provisions of the Member States relating to actions for 
an injunction aimed at the protection of the collective interests of consumers included 
in  the  Directives  listed  in  the  Annex  to  Directive  98/27/EC.  In  order  to  enable  such 
actions to be brought in cases where the present Directive has been infringed, to the 
detriment  of  the  collective  interests  of  consumers,  the  Annex  to  Directive  98/27EC 
should be amended accordingly. 

(71)  Since the objectives of the proposed action, namely the elimination of barriers to the 
freedom  of  establishment  for  service  providers  in  the  Member  States  and  to  the  free 
provision of services between Member States, cannot be sufficiently achieved by the 
Member  States  and  can  therefore,  by  reason  of  the  scale  of  the  action,  be  better 
achieved  at  Community  level,  the  Community  may  adopt  measures,  in  accordance 
with the principle of subsidiarity as set out in Article  5 of the  Treaty. In accordance 

26 
27 

OJ L 204, 21.7.1998, p. 37. Directive as last amended by the Act of Accession 2003. 
OJ  L  166,  11.6.1998,  p.  51.  Directive  as  last  amended  by  Directive  2002/65/EC  of  the  European 
Parliament and of the Council (OJ L 271, 9.10.2002, p. 16). 

42 

 
 
  
 
                                                 
with the principle of proportionality, as set out in that Article, this Directive does not 
go beyond what is necessary to achieve those objectives. 

(72)  This  Directive  respects  fundamental  rights  and  observes  the  principles  which  are 
recognised notably in the Charter of Fundamental Rights of the European Union and, 
in particular, in Articles 8, 15, 21 and 47 thereof. 

(73)  The measures necessary for the implementation of this Directive should be adopted in 
accordance  with  Council  Decision  1999/468/EC  of  28  June  1999  laying  down  the 
procedures for the exercise of implementing powers conferred on the Commission28, 

HAVE ADOPTED THIS DIRECTIVE: 

28 

OJ L 184, 17.7.1999, p. 23. 

43 

 
 
  
 
                                                 
Chapter I 

General provisions 

Article 1 

Subject-matter 

This  Directive  establishes  general  provisions  facilitating  exercise  of  the  freedom  of 
establishment for service providers and the free movement of services. 

Article 2 

Scope 

1. 

2. 

This Directive shall apply to services supplied by providers established in a Member 
State. 

This Directive shall not apply to the following activities: 

(a) 

financial services as defined in Article 2(b) of Directive 2002/65/EC; 

(b) 

electronic communications services and networks, and associated facilities and 
to  matters  covered  by  Directives 2002/19/EC29, 
services,  with  respect 
2002/20/EC30, 2002/21/EC31, 2002/22/EC32 and 2002/58/EC33 of the European 
Parliament and of the Council;  

(c) 

transport  services  to  the  extent  that  they  are  governed  by  other  Community 
instruments the legal basis of which is Article 71 or Article 80(2) of the Treaty. 

3. 

This  Directive  does  not  apply  to  the  field  of  taxation,  with  the  exception  of 
Articles 14 and 16 to the extent that the restrictions identified therein are not covered 
by a Community instrument on tax harmonisation. 

29 
30 
31 
32 
33 

OJ L 108, 24.4.2002, p. 7. 
OJ L 108, 24.4.2002, p. 21. 
OJ L 108, 24.4.2002, p. 33. 
OJ L 108, 24.4.2002, p. 51. 
OJ L 201, 31.7.2002, p. 37. 

44 

 
 
  
 
 
                                                 
Article 3 

Relationship with other provisions of Community law  

Member States shall apply the provisions of this Directive in compliance with the rules of the 
Treaty on the right of establishment and the free movement of services. 

Application  of  this  Directive  shall  not  prevent  the  application  of  provisions  of  other 
Community instruments as regards the services governed by those provisions.  

Article 4 

Definitions 

For the purposes of this Directive, the following definitions shall apply: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

"service" means any self-employed economic activity, as referred to in Article 50 of 
the Treaty, consisting in the provision of a service for consideration;  

"provider"  means  any  natural  person  who  is  a  national  of  a  Member  State,  or  any 
legal person, who offers or provides a service;  

"recipient"  means  any  natural  or 
non-professional purposes, uses, or wishes to use, a service;  

legal  person  who,  for  professional  or 

"Member State of origin" means the Member State in whose territory the provider of 
the service concerned is established; 

"establishment"  means  the  actual  pursuit  of  an  economic  activity,  as  referred  to  in 
Article  43  of  the  Treaty,  through  a  fixed  establishment  of  the  provider  for  an 
indefinite period; 

"authorisation scheme" means any procedure under which a provider or recipient is 
in effect required to take steps in order to obtain from a competent authority a formal 
decision,  or  an  implied  decision,  concerning  access  to  a  service  activity  or  to  the 
exercise thereof;  

"requirement"  means  any  obligation,  prohibition,  condition  or  limit  provided  for  in 
the  laws,  regulations  or  administrative  provisions  of  the  Member  States  or  in 
consequence of case-law, administrative practice or the rules of professional bodies, 
the  collective  rules  of  professional  associations  or  other  professional 
or 
organisations, adopted in the exercise of their legal autonomy;  

"competent  authority"  means  any  body  or  authority  which  has  a  supervisory  or 
regulatory  role  in  a  Member  State  in  relation  to  service  activities,  including,  in 
particular,  administrative  authorities,  professional  bodies,  and  those  professional 
associations or other professional organisations which, in the exercise of their legal 
autonomy, regulate in a collective manner access to service activities or the exercise 
thereof; 

45 

 
 
  
 
(9) 

(10) 

(11) 

(12) 

(13) 

(14) 

"coordinated field" means any requirement applicable to access to service activities 
or to the exercise thereof; 

“hospital  care”  means  medical  care  which  can  be  provided  only  within  a  medical 
infrastructure and which normally requires the accommodation therein of the person 
receiving the care, the name, organisation and financing of that infrastructure being 
irrelevant for the purposes of classifying such care as hospital care; 

"Member  State  of  posting"  means  the  Member  State  in  whose  territory  a  provider 
posts a worker in order to provide services there; 

"lawful  employment"  means  the  salaried  activity  of  a  worker,  performed  in 
accordance with the national law of the Member State of origin of the provider; 

"regulated  profession"  means  a  professional  activity  or  a  group  of  professional 
activities,  access  to  which  or  pursuit  of  which,  or  one  of  the  modes  of  pursuing 
which, is conditional, directly or indirectly, upon possession of specific professional 
qualifications, pursuant to laws, regulations or administrative provisions; 

"commercial  communication"  means  any  form  of  communication  designed  to 
promote,  directly  or  indirectly,  the  goods,  services  or  image  of  an  undertaking, 
organisation  or  person  engaged  in  commercial,  industrial  or  craft  activity  or 
practising  a  regulated  profession.  The  following  do  not  in  themselves  constitute 
commercial communications: 

(a) 

(b) 

information  enabling  direct  access  to  the  activity  of  the  undertaking, 
organisation  or  person,  including  in  particular  a  domain  name  or  an 
electronic-mailing address; 

communications  relating  to  the  goods,  services  or  image  of  the  undertaking, 
organisation or person, compiled in an independent manner, particularly when 
provided for no financial consideration. 

Chapter II 

Freedom of establishment for service providers 

SECTION 1 

ADMINISTRATIVE SIMPLIFICATION

Article 5 

Simplification of procedures 

1. 

Member States shall simplify the procedures and formalities applicable to access to a 
service activity and to the exercise thereof. 

46 

 
 
  
 
 
2. 

3. 

Where  Member  States  require  a  provider  or  recipient  to  supply  a  certificate, 
attestation or any other document proving that a requirement has been satisfied, they 
shall  accept  any  document  from  another  Member  State  which  serves  an  equivalent 
purpose or from which it is clear that the requirement in question has been satisfied. 
They may not require that a document from another Member State be produced in its 
original  form,  or  as  a  certified  copy  or  as  a  certified  translation,  save  in  the  cases 
provided  for  in  other  Community  instruments  or  where  such  a  requirement  is 
objectively justified by an overriding reason relating to the public interest.  

Paragraph 2  shall  not  apply  to  the  documents  referred  to  in  Article 46  of 
Directive ../../EC of the European Parliament and of the Council34 or in Article 45(3) 
of Directive ../../EC of the European Parliament and of the Council35. 

Article 6 

Single points of contact 

Member States shall ensure that, by 31 December 2008 at the latest, it is possible for a service 
provider to complete the following procedures and formalities at a contact point known as a 
"single point of contact": 

(a) 

all procedures and formalities needed for access to his service activities, in particular, 
all  necessary  declarations,  notifications  or  applications  for  authorisation  from  the 
competent  authorities,  including  applications  for  inclusion  in  a  register,  a  roll  or  a 
database, or for registration with a professional body or association; 

(b) 

any applications for authorisation needed to exercise his service activities. 

Article 7 

Right to information 

1. 

Member  States  shall  ensure  that  the  following  information  is  easily  accessible  to 
providers and recipients through the single points of contact: 

(a) 

(b) 

requirements applicable to providers established in their territory, in particular 
those requirements concerning the procedures and formalities to be completed 
in order to access and to exercise service activities; 

the  contact  details  of  the  competent  authorities  enabling  the  latter  to  be 
contacted directly, including the particulars of those authorities responsible for 
matters concerning the exercise of service activities; 

34 

35 

[Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on  the  recognition  of 
professional qualifications.] 
[Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on  the  coordination  of 
procedures for the award of public works, supply and service contracts.] 

47 

 
 
  
 
                                                 
(c) 

(d) 

(e) 

the  means  of  and  conditions  for  accessing  public  registers  and  databases  on 
providers and services; 

the  means  of  redress  available  in  the  event  of  dispute  between  the  competent 
authorities  and  the  provider  or  the  recipient,  or  between  a  provider  and  a 
recipient or between providers; 

the  contact  details  of  the  associations  or  organisations,  other  than  the 
competent authorities, from which providers or recipients may obtain practical 
assistance. 

Member States shall ensure that it is possible for providers and recipients to receive, 
at their request, assistance from the competent authorities, consisting in information 
on the way in which requirements referred to in point (a) of paragraph 1 are generally 
interpreted and applied. 

Member  States  shall  ensure  that  the  information  and  assistance  referred  to  in 
paragraphs 1  and  2  are  provided  in  a  clear  and  unambiguous  manner,  that  they  are 
easily  accessible  at  a  distance  and  by  electronic  means,  and  that  they  are  kept 
up-to-date. 

Member  States  shall  ensure  that  the  single  points  of  contact  and  the  competent 
authorities respond as quickly as possible to any request for information or assistance 
as  referred  to  in  paragraphs 1  and  2  and,  in  cases  where  the  request  is  faulty  or 
unfounded, inform the applicant accordingly without delay. 

Member States shall implement paragraphs 1 to 4 by 31 December 2008 at the latest. 

Member  States  and  the  Commission  shall  take  accompanying  measures  in  order  to 
encourage  single  points  of  contact  to  make  the  information  provided  for  in 
paragraphs 1 and 2 available in other Community languages. 

Article 8 

Procedures by electronic means  

Member  States  shall  ensure  that,  by  31 December 2008  at  the  latest,  all  procedures 
and formalities relating to access to a service activity and to the exercise thereof may 
be  easily  completed,  at  a  distance  and  by  electronic  means,  at  the  relevant  single 
point of contact and with the relevant competent authorities. 

Paragraph 1  shall  not  apply  to  the  inspection  of  premises  on  which  the  service  is 
provided  or  of  equipment  used  by  the  provider,  or  to  physical  examination  of  the 
capability of the provider. 

The Commission shall, in accordance with the procedure referred to in Article 42(2), 
adopt detailed rules for the implementation of paragraph 1 with a view to facilitating 
the  interoperability  of  information  systems  and  use  of  procedures  by  electronic 
means between Member States. 

2. 

3 

4. 

5. 

6. 

1. 

2. 

3. 

48 

 
 
  
 
SECTION 2 

AUTHORISATIONS 

Article 9 

Authorisation schemes 

1. 

Member  States  shall  not  make  access  to  a  service  activity  or  the  exercise  thereof 
subject to an authorisation scheme unless the following conditions are satisfied: 

(a) 

the authorisation scheme does not discriminate against the provider in question; 

(b) 

(c) 

the  need  for  an  authorisation  scheme  is  objectively  justified  by  an  overriding 
reason relating to the public interest;  

the objective pursued cannot be attained by means of a less restrictive measure, 
in particular because an a posteriori inspection would take place too late to be 
genuinely effective. 

In  the  report  referred  to  in  Article 41,  Member  States  shall  identify  their 
authorisation  schemes  and  give  reasons  showing 
their  compatibility  with 
paragraph 1. 

This  Section  shall  not  apply  to  authorisation  schemes  which  are  either  imposed  or 
permitted by other Community instruments. 

Article 10 

Conditions for the granting of authorisation 

Authorisation  schemes  shall  be  based  on  criteria  which  preclude  the  competent 
authorities from exercising their power of assessment in an arbitrary or discretionary 
manner. 

2. 

3. 

1. 

2. 

The criteria referred to in paragraph 1 must be: 

(a) 

non-discriminatory; 

(b)  objectively justified by an overriding reason relating to the public interest; 

(c) 

proportionate to that public interest objective;  

(d)  precise and unambiguous; 

(e) 

objective; 

(f)  made public in advance. 

49 

 
 
  
 
3. 

4. 

5. 

6. 

The conditions for granting authorisation for a new establishment shall not duplicate 
requirements and controls which are equivalent or essentially comparable as regards 
their purpose, to which the provider is already subject in another Member State or in 
the same Member State. The contact points referred to in Article 35 and the provider 
shall assist the competent authority by providing any necessary information on those 
requirements. 

The authorisation shall enable the provider to have access to the service activity, or 
to  exercise  that  activity,  throughout  the  national  territory,  including  by  setting  up 
agencies,  subsidiaries,  branches  or  offices,  except  where  an  authorisation  for  each 
individual  establishment  is  objectively  justified  by  an  overriding  reason  relating  to 
the public interest. 

The authorisation shall be granted as soon as it has been established, in the light of an 
appropriate examination, that the conditions for authorisation have been met. 

Any refusal or other response from the competent authorities, including withdrawal 
of an authorisation, shall be fully reasoned, in particular with regard to the provisions 
of this Article, and shall be open to challenge before the courts. 

Article 11 

Duration of authorisation  

1. 

An  authorisation  granted  to  a  provider  shall  not  be  for  a  limited  period,  except  in 
cases where: 

(a) 

the authorisation is being automatically renewed; 

(b) 

the number of available authorisations is limited;  

2. 

3. 

(c) 

a  limited  authorisation  period  can  be  objectively  justified  by  an  overriding 
reason relating to the public interest. 

Paragraph 1 shall not concern the maximum period during which the provider must 
actually commence his activity after receiving authorisation. 

Member  States  shall  require  the  provider  to  inform  the  relevant  single  point  of 
contact  provided  for  in  Article 6  of  any  change  in  his  situation  which  is  likely  to 
affect  the  efficiency  of  supervision  by  the  competent  authority,  including,  in 
particular,  the  creation  of  subsidiaries  whose  activities  fall  within  the  scope  of  the 
authorisation  system,  or  which  results  in  the  conditions  for  authorisation  no  longer 
being met, or which affects the accuracy of information available to a recipient. 

50 

 
 
  
 
1. 

2. 

1. 

2. 

3. 

4. 

5. 

Article 12 

Selection from among several candidates 

Where the number of authorisations available for a given activity is limited because 
of  the  scarcity  of  available  natural  resources  or  technical  capacity,  Member  States 
shall  apply  a  selection  procedure  to  potential  candidates  which  provides  full 
guarantees  of  impartiality  and  transparency,  including,  in  particular,  adequate 
publicity about the launch of the procedure. 

In  the  cases  referred  to  in  paragraph 1,  authorisation  must  be  granted  for  an 
appropriate limited period and may not be open to automatic renewal, nor confer any 
other  advantage  on  the  provider  whose  authorisation  has  just  expired  or  on  any 
person having any particular links with that provider. 

Article 13 

Authorisation procedures 

Authorisation procedures and formalities shall be clear, made public in advance and 
such  as  to  provide  interested  parties  with  a  guarantee  that  their  application  will  be 
dealt with objectively and impartially. 

Authorisation procedures and formalities shall not be dissuasive and shall not unduly 
complicate or delay the provision of the service. They shall be easily accessible and 
any  charges  which  the  relevant  parties  may  incur  from  their  application  shall  be 
proportionate to the cost of the authorisation procedures in question.  

Authorisation  procedures  and  formalities  shall  provide  interested  parties  with  a 
guarantee that their applications will be processed as quickly as possible and, in any 
event, within a reasonable period which is fixed and published in advance. 

Failing  a  response  within  the  time  period  set  in  accordance  with  paragraph  3, 
authorisation  shall  be  deemed  to  have  been  granted.  Different  arrangements  may 
nevertheless be put in place in respect of certain specific activities, where objectively 
justified by overriding reasons relating to the public interest. 

All applications for authorisation shall be acknowledged as quickly as possible. The 
acknowledgement must specify the following: 

(a) 

the period for response referred to in paragraph 3; 

(b) 

the available means of redress; 

(c) 

a  statement  that  in  the  absence  of  a  response  within  the  period  specified,  the 
authorisation shall be deemed to have been granted. 

6. 

In  the  case  of  an  incomplete  application  or  where  an  application  is  rejected  on  the 
grounds  that  it  fails  to  comply  with  the  required  procedures  or  formalities,  the 

51 

 
 
  
 
persons having an interest in the matter must be informed as quickly as possible of 
the need to supply any additional documentation.  

SECTION 3 

REQUIREMENTS PROHIBITED OR SUBJECT TO EVALUATION 

Article 14 

Prohibited requirements 

Member States shall not make access to or the exercise of a service activity in their territory 
subject to compliance with any of the following: 

(1) 

discriminatory requirements based directly or indirectly on nationality or, in the case 
of companies, the location of the registered office, including in particular: 

(a) 

(b) 

nationality  requirements  for  the  provider,  his  staff,  persons  holding  the  share 
capital or members of the provider’s management or supervisory bodies; 

a requirement that the provider, his staff, persons holding the share capital or 
members  of  the  provider’s  management  or  supervisory  bodies  be  resident 
within the territory. 

a prohibition on having an establishment in more than one Member State or on being 
entered in the registers or enrolled with professional bodies or associations of more 
than one Member State;  

restrictions  on  the  freedom  of  a  provider  to  choose  between  a  principal  or  a 
secondary  establishment,  in  particular  an  obligation  on  the  provider  to  have  his 
principal  establishment  in  their  territory,  or  restrictions  on  the  freedom  to  choose 
between establishment in the form of an agency, branch or subsidiary; 

conditions of reciprocity with the Member State in which the provider already has an 
establishment,  save  in  the  case  of  conditions  of  reciprocity  provided  for  in 
Community instruments concerning energy; 

the case-by-case application of an economic test making the granting of authorisation 
subject  to  proof  of  the  existence  of  an  economic  need  or  market  demand,  or  an 
assessment  of  the  potential  or  current  economic  effects  of  the  activity,  or  an 
assessment of the appropriateness of the activity in relation to the economic planning 
objectives set by the competent authority; 

the  direct  or  indirect  involvement  of  competing  operators,  including  within 
consultative  bodies,  in  the  granting  of  authorisations  or  in  the  adoption  of  other 
decisions of the competent authorities, with the exception of professional bodies and 
associations or other organisations acting as the competent authority; 

(2) 

(3) 

(4) 

(5) 

(6) 

52 

 
 
  
 
(7) 

(8) 

1. 

2. 

an  obligation  to  provide  or  participate  in  a  financial  guarantee  or  to  take  out 
insurance from a service-provider or body established in their territory; 

an obligation to have been entered, for a given period, in the registers held in their 
territory or to have exercised the activity for a given period in their territory.  

Article 15 

Requirements to be evaluated 

Member  States  shall  examine  whether,  under  their  legal  system,  any  of  the 
requirements  listed  in  paragraph  2  are  imposed  and  shall  ensure  that  any  such 
requirements are compatible with the conditions laid down in paragraph 3. Member 
States shall adapt their laws, regulations or administrative provisions so as to make 
them compatible with those conditions. 

Member  States  shall  examine  whether  their  legal  system  makes  access  to  a  service 
activity  or  the  exercise  of  it  subject  to  compliance  with  any  of  the  following 
non-discriminatory requirements: 

(a) 

(b) 

(c) 

(d) 

quantitative  or  territorial  restrictions,  in  particular  in  the  form  of  limits  fixed 
according  to  population,  or  of  a  minimum  geographical  distance  between 
service-providers; 

an obligation on a provider to take a specific legal form, in particular to be a 
legal  person,  to  be  a  company  with  individual  ownership,  to  be  a  non-profit 
making organisation or a company owned exclusively by natural persons; 

requirements  which  relate  to  the  shareholding  of  a  company,  in  particular  an 
obligation to hold a minimum amount of capital for certain service activities or 
to  have  a  specific  professional  qualification  in  order  to  hold  capital  in  or  to 
manage certain companies; 

requirements,  other  than  those  concerning  professional  qualifications  or 
provided  for  in  other  Community  instruments,  which  reserve  access  to  the 
service  activity  in  question  to  particular  providers  by  virtue  of  the  specific 
nature of the activity; 

(e) 

a ban on having more than one establishment in the territory of the same State; 

(f) 

requirements fixing a minimum number of employees; 

(g) 

fixed minimum and/or maximum tariffs with which the provider must comply;  

(h)  prohibitions and obligations with regard to selling below cost and to sales; 

(i) 

(j) 

requirements  that  an  intermediary  provider  must  allow  access  to  certain 
specific services provided by other service-providers; 

an obligation on the provider to supply other specific services jointly with his 
service. 

53 

 
 
  
 
3. 

Member  States  shall  verify  that  requirements  referred  to  in  paragraph  2  satisfy  the 
following conditions: 

(a) 

non-discrimination:  requirements  must  be  neither  directly  nor  indirectly 
discriminatory according to nationality or, with regard to companies, according 
to the location of the registered office; 

(b)  necessity:  requirements  must  be  objectively  justified  by  an  overriding  reason 

relating to the public interest; 

(c) 

proportionality:  requirements  must  be  suitable  for  securing  the  attainment  of 
the objective pursued; they must not go beyond what is necessary to attain that 
objective; and it must not be possible to replace those requirements with other, 
less restrictive measures which attain the same result. 

4. 

In  the  mutual  evaluation  report  provided  for  in  Article  41,  Member  States  shall 
specify the following: 

5. 

6. 

(a) 

the  requirements  that  they  intend  to  maintain  and  the  reasons  why  they 
consider  that  those  requirements  comply  with  the  conditions  set  out  in 
paragraph 3; 

(b) 

the requirements which have been abolished or made less stringent. 

From the date of entry into force of this Directive, Member States shall not introduce 
any new requirement of a kind listed in paragraph 2, unless that requirement satisfies 
the  conditions  laid  down  in  paragraph  3  and  the  need  for  it  arises  from  new 
circumstances.  

Member  States  shall  notify  to  the  Commission  any  new  laws,  regulations  or 
administrative  provisions  which  set  requirements  as  referred  to  in  paragraph  5, 
those  requirements.  The  Commission  shall 
together  with 
communicate the provisions concerned to the other Member States. Such notification 
shall not prevent the adoption by Member States of the provisions in question.  

the  reasons  for 

Within  a  period  of  3  months  from  the  date  of  notification,  the  Commission  shall 
examine the compatibility of any new requirements with Community law and, as the 
case  may  be,  shall  adopt  a  decision  requesting  the  Member  State  in  question  to 
refrain from adopting them or to abolish them.  

54 

 
 
  
 
Chapter III 

Free movement of services 

SECTION 1 

COUNTRY OF ORIGIN PRINCIPLE AND DEROGATIONS 

Article 16 

Country of origin principle 

(1) 

Member States shall ensure that providers are subject only to the national provisions 
of their Member State of origin which fall within the coordinated field. 

Paragraph 1 shall cover national provisions relating to access to and the exercise of a 
service  activity,  in  particular  those  requirements  governing  the  behaviour  of  the 
provider,  the  quality  or  content  of  the  service,  advertising,  contracts  and  the 
provider's liability.  

(2) 

(3) 

The Member State of origin shall be responsible for supervising the provider and the 
services  provided  by  him,  including  services  provided  by  him  in  another  Member 
State.  

Member States may not, for reasons falling within the coordinated field, restrict the 
freedom to provide services in the case of a provider established in another Member 
State, in particular, by imposing any of the following requirements:  

(a) 

an obligation on the provider to have an establishment in their territory; 

(b) 

(c) 

(d) 

(e) 

(f) 

an  obligation  on  the  provider  to  make  a  declaration  or  notification  to,  or  to 
obtain  an  authorisation from, their  competent  authorities,  including  entry  in  a 
register or registration with a professional body or association in their territory; 

an  obligation  on  the  provider  to  have  an  address  or  representative  in  their 
territory or to have an address for service at the address of a person authorised 
in that territory;  

a  ban  on  the  provider  setting  up  a  certain  infrastructure  in  their  territory, 
including  an  office  or  chambers,  which  the  provider  needs  to  supply  the 
services in question; 

an  obligation  on  the  provider  to  comply  with  requirements,  relating  to  the 
exercise of a service activity, applicable in their territory; 

the application of specific contractual arrangements between the provider and 
the recipient which prevent or restrict service provision by the self-employed; 

55 

 
 
  
 
(g) 

(h) 

(i) 

an  obligation  on  the  provider  to  possess  an  identity  document  issued  by  its 
competent authorities specific to the exercise of a service activity; 

requirements which affect the use of equipment which is an integral part of the 
service provided; 

restrictions on the freedom to provide the services referred to in Article 20, the 
first subparagraph of Article 23(1) or Article 25(1). 

Article 17 

General derogations from the country of origin principle 

Article 16 shall not apply to the following:  

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

(10) 

postal services within the meaning of point (1) of Article 2 of Directive 97/67/EC of 
the European Parliament and the Council36;  

electricity  distribution  services  within  the  meaning  of  point  (5)  of  Article  2  of 
Directive 2003/54/EC of the European Parliament and of the Council37; 

gas  distribution  services  within  the  meaning  of  point  (5)  of  Article  2  of 
Directive 2003/55/EC of the European Parliament and of the Council38; 

water distribution services; 

matters covered by Directive 96/71/EC; 

matters  covered  by  Directive  95/46/EC  of  the  European  Parliament  and  of  the 
Council39; 

matters covered by Council Directive 77/249/EEC40; 

the  provisions  of  Article  [..]  of  Directive ../../EC  on the recognition  of professional 
qualifications; 

the  provisions  of  Regulation  (EEC)  No  1408/71  determining  the  applicable 
legislation; 

the provisions of Directive …/../EC of the European Parliament and the Council [on 
the right of citizens of the Union and their family members to move and reside freely 
within the territory of the Member States, amending Regulation (EEC) 1612/68 and 
repealing  Directives  64/221/EEC,  68/360/EEC,  72/194/EEC,  73/148/EEC, 
75/34/EEC,  75/35/EEC,  90/364/EEC,  90/365/EEC  and  93/96/EEC],  that  lay  down 

36 
37 
38 
39 
40 

OJ L 15, 21.1.1998, p. 14. 
OJ L 176, 15.7.2003, p. 37. 
OJ L 176, 15.7.2003, p. 57. 
OJ L 281, 28.11.1995, p. 1. 
OJ L 78, 26.3.1997, p. 17. 

56 

 
 
  
 
                                                 
(11) 

(12) 

(13) 

the administrative formalities that beneficiaries must undertake before the competent 
authorities of the host Member States;  

in the case of the posting of third country nationals, the requirement for a short stay 
visa  imposed  by  the  Member  State  of  posting,  subject  to  the  conditions  set  out  in 
Article 25(2); 

the  authorisation  regime  provided  for  in  Articles  3  and  4  of  Council  Regulation 
(EEC) No 259/9341; 

copyright, neighbouring rights, rights covered by Council Directive 87/54/EEC42 and 
by  Directive  96/9/EC  of  the  European  Parliament  and  of  the  Council43  as  well  as 
industrial property rights;  

(14) 

acts requiring by law the involvement of a notary; 

(15) 

statutory audit; 

(16) 

(17) 

services  which,  in  the  Member  State  to  which  the  provider  moves  temporarily  in 
order to provide his service, are covered by a total prohibition which is justified by 
reasons relating to public policy, public security or public health; 

specific  requirements  of  the  Member  State  to  which  the  provider  moves,  that  are 
directly  linked  to  the  particular  characteristics  of  the  place  where  the  service  is 
provided and with which compliance is indispensable for reasons of public policy or 
public security or for the protection of public health or the environment; 

(18) 

the authorisation system applicable to the reimbursement of hospital care; 

(19) 

the registration of vehicles leased in another Member State; 

(20) 

the freedom of parties to choose the law applicable to their contract; 

(21) 

(22) 

(23) 

contracts for the provision of services concluded by consumers to the extent that the 
provisions governing them are not completely harmonised at Community level; 

the formal validity of contracts creating or transferring rights in immovable property, 
where contracts are subject, under the law of the Member State in which the property 
is located, to imperative formal requirements; 

the  non-contractual  liability  of  a  provider  in  the  case  of  an  accident  involving  a 
person  and  occurring  as  a  consequence  of  the  service  provider's  activities  in  the 
Member State to which he has moved temporarily. 

Article 18 

Transitional derogations from the country of origin principle 

1. 

Article 16 shall not apply for a transitional period to the following: 

41 
42 
43 

OJ L 30, 6.2.1993, p. 1. 
OJ L 24, 27.1.1987, p. 36. 
OJ L 77, 27.3.1996, p. 20. 

57 

 
 
  
 
                                                 
2. 

3. 

1. 

(a) 

the way in which cash-in-transit services are exercised; 

(b)  gambling  activities  which  involve  wagering  a  stake  with  pecuniary  value  in 

games of chance, including lotteries and betting transactions; 

(c) 

access to the activity of judicial recovery of debts. 

The derogations referred to in points (a) and (c) of paragraph 1 of this Article shall 
not apply after the date of application of the harmonisation instruments referred to in 
Article 40(1) or in any case after 1 January 2010.  

The derogation referred to in point (b) of paragraph 1 of this Article shall not apply 
after  the  date  of  application  of  the  harmonisation  instrument  referred  to  in 
Article 40(1)(b). 

Article 19 

Case-by-case derogations from the country of origin principle 

By  way  of  derogation  from  Article  16,  and  in  exceptional  circumstances  only,  a 
Member  State  may,  in  respect  of  a  provider  established  in  another  Member  State, 
take measures relating to any of the following: 

(a) 

the safety of services, including aspects related to public health; 

(b) 

the exercise of a health profession; 

(c) 

the  protection  of  public  policy,  notably  aspects  related  to  the  protection  of 
minors. 

2. 

The measures provided for in paragraph 1 may be taken only if the mutual assistance 
procedure laid down in Article 37 is complied with and all the following conditions 
are fulfilled: 

(a) 

(b) 

the national provisions in accordance with which the measure is taken have not 
been  subject  to  Community  harmonisation  in  the  fields  referred  to  in 
paragraph 1;  

the  measures  provide  for  a  higher  level  of  protection  of  the  recipient  than 
would  be  the  case  in  a  measure  taken  by  the  Member  State  of  origin  in 
accordance with its national provisions; 

(c) 

the Member State of origin has not taken any measures or has taken measures 
which are insufficient as compared with those referred to in Article 37(2); 

(d) 

the measures are proportionate. 

3. 

Paragraphs 1 and 2 shall be without prejudice to provisions, laid down in Community 
instruments,  which  guarantee  the  freedom  to  provide  services  or  which  allow 
derogations therefrom. 

58 

 
 
  
 
SECTION 2 

RIGHTS OF RECIPIENTS OF SERVICES 

Article 20 

Prohibited restrictions 

Member States may not impose on a recipient requirements which restrict the use of a service 
supplied  by  a  provider  established  in  another  Member  State,  in  particular  the  following 
requirements:  

(a) 

(b) 

(c) 

1. 

2. 

an obligation to obtain authorisation from or to make a declaration to their competent 
authorities; 

limits on tax deductibility or on the grant of financial assistance by reason of the fact 
that the provider is established in another Member State or by reason of the location 
of the place at which the service is provided;  

requirements which subject the recipient to discriminatory or disproportionate taxes 
on the equipment necessary to receive a service at a distance from another Member 
State. 

Article 21 

Non-discrimination 

Member States shall ensure that the recipient is not made subject to discriminatory 
requirements based on his nationality or place of residence. 

Member States shall ensure that the general conditions of access to a service, which 
are  made  available  to  the  public  at  large  by  the  provider,  do  not  contain 
discriminatory  provisions  relating  to  the  nationality  or  place  of  residence  of  the 
recipient,  but  without  precluding  the  possibility  of  providing  for  differences  in  the 
conditions  of  access  where  those  differences  are  directly  justified  by  objective 
criteria.  

Article 22 

Assistance for recipients 

1. 

Member  States  shall  ensure  that  recipients  can  obtain,  in  their  Member  State  of 
residence, the following information:  

59 

 
 
  
 
(a) 

(b) 

(c) 

information on the requirements applicable in other Member States relating to 
access  to  and  exercise  of  service  activities,  in  particular  those  relating  to 
consumer protection; 

information on the means of redress available in the case of a dispute between 
a provider and a recipient; 

the contact details of associations or organisations, including Euroguichets and 
the  contact  points  of  the  European  extra-judicial  network  (EEJ-net),  from 
which providers or recipients may obtain practical assistance. 

Member  States  may  confer  responsibility  for  the  task  referred  to  in  paragraph  1  to 
single points of contact or to any other body, such as Euroguichets, the contact points 
of the European extra-judicial network (EEJ-net), consumer associations or Euro Info 
Centres. 

By the date specified in Article 45 at the latest, Member States shall communicate to 
the  Commission  the  names  and  contact  details  of  the  designated  bodies.  The 
Commission shall transmit them to all Member States. 

In  order  to  be  able  to  send  the  information  referred  to  in  paragraph  1,  the  relevant 
body  approached  by  the  recipient  shall  contact  the  relevant  body  for  the  Member 
State concerned. The latter shall send the information requested as soon as possible. 
Member States shall ensure that those bodies give each other mutual assistance and 
shall put in place all possible measures for effective cooperation. 

The Commission shall, in accordance with the procedure referred to in Article 42(2), 
adopt  measures  for  the  implementation  of  paragraphs  1,  2  and  3,  specifying  the 
technical  mechanisms  for  the  exchange  of  information  between  the  bodies  of  the 
various Member States and, in particular, the interoperability of information systems. 

Article 23 

Assumption of health care costs 

Member States may not make assumption of the costs of non-hospital care in another 
Member State subject to the granting of an authorisation, where the cost of that care, 
if  it  had  been  provided  in  their  territory,  would  have  been  assumed  by  their  social 
security system. 

The  conditions  and  formalities  to  which  the  receipt  of  non-hospital  care  in  their 
territory  is  made  subject  by  Member  States,  such  as  the  requirement  that  a  general 
practitioner  be  consulted  prior  to  consultation  of  a  specialist,  or  the  terms  and 
conditions relating to the assumption of the costs of certain types of dental care, may 
be  imposed  on  a  patient  who  has  received  non-hospital  care  in  another  Member 
State. 

Member States shall ensure that authorisation for assumption by their social security 
system of the cost of hospital care provided in another Member State is not refused 
where the treatment in question is among the benefits provided for by the legislation 
of the Member State of affiliation and where such treatment cannot be given to the 

60 

2. 

3. 

4. 

1. 

2. 

 
 
  
 
3. 

4. 

1. 

patient within a time frame which is medically acceptable in the light of the patient’s 
current state of health and the probable course of the illness. 

Member  States  shall  ensure  that  the  level  of  assumption  by  their  social  security 
system of the costs of health care provided in another Member State is not lower than 
that  provided  for  by  their  social  security  system  in  respect  of  similar  health  care 
provided in their territory. 

Member States shall ensure that their authorisation systems for the assumption of the 
costs  of  health  care  provided  in  another  Member  State  are  in  conformity  with 
Articles 9, 10, 11 and 13. 

SECTION 3  

POSTING OF WORKERS 

Article 24 

Specific provisions on the posting of workers 

Where  a  provider  posts  a  worker  to  another  Member  State  in  order  to  provide  a 
service,  the  Member  State  of  posting  shall  carry  out  in  its  territory  the  checks, 
inspections and investigations necessary to ensure compliance with the employment 
and  working  conditions  applicable  under  Directive  96/71/EC  and  shall  take,  in 
accordance with Community law, measures in respect of a service provider who fails 
to comply with those conditions. 

However,  the  Member  State  of  posting  may  not  make  the  provider  or  the  posted 
worker subject to any of the following obligations, as regards the matters referred to 
in point (5) of Article 17: 

(a) 

(b) 

to  obtain  authorisation  from,  or  to  be  registered  with,  its  own  competent 
authorities, or to satisfy any other equivalent requirement; 

to make a declaration, other than declarations relating to an activity referred to 
in  the  Annex  to  Directive  96/71/EC  which  may  be  maintained  until 
31 December 2008; 

(c) 

to have a representative in its territory; 

(d) 

to hold and keep employment documents in its territory or in accordance with 
the conditions applicable in its territory.  

2. 

In  the  circumstances  referred  to  in  paragraph  1,  the  Member  State  of  origin  shall 
ensure that the provider takes all measures necessary to be able to communicate the 
following information, both to its competent authorities and to those of the Member 
State of posting, within two years of the end of the posting: 

(a) 

the identity of the posted worker;  

61 

 
 
  
 
(b)  his position and the nature of the tasks attributed to him, 

(c) 

the contact details of the recipient, 

(d) 

the place of posting, 

(e) 

the start and end dates for the posting, 

(f) 

the employment and working conditions applied to the posted worker; 

In  the  circumstances  referred  to  in  paragraph  1,  the  Member  State  of  origin  shall 
assist  the  Member  State  of  posting  to  ensure  compliance  with  the  employment  and 
working  conditions  applicable  under  Directive  96/71/EC  and  shall,  on  its  own 
initiative, communicate to the Member State of posting the information specified in 
the  first  subparagraph  where  the  Member  State  of  origin  is  aware  of  specific  facts 
which  indicate  possible  irregularities  on  the  part  of  the  provider  in  relation  to 
employment and working conditions. 

Article 25 

Posting of third country nationals 

1. 

2. 

3. 

Subject  to  the  possibility  of  derogation  as  referred  to  in  paragraph  2,  where  a 
provider posts a worker who is a national of a third country to the territory of another 
Member State in order to provide a service there, the Member State of posting may 
not  require  the  provider  or  the  worker  posted  by  the  latter  to  hold  an  entry,  exit, 
residence or work permit, or to satisfy other equivalent conditions. 

Paragraph  1  does  not  prejudice  the  possibility  for  Member  States  to  require  a 
short-term  visa  for  third  country  nationals  who  are  not  covered  by  the  mutual 
recognition  regime  provided  for  in  Article  21  of  the  Convention  implementing  the 
Schengen Agreement. 

In  the  circumstances  referred  to  in  paragraph  1,  the  Member  State  of  origin  shall 
ensure  that  a  provider  posts  only  a  worker  who  is  resident  in  its  territory  in 
accordance with its own national rules and who is lawfully employed in its territory. 

The  Member  State  of  origin  shall  not  regard  a  posting  made  in  order  to  provide  a 
service  in  another  Member  State  as  interrupting  the  residence  or  activity  of  the 
posted worker and shall not refuse to readmit the posted worker to its territory on the 
basis of its national rules. 

The Member State of origin shall communicate to the Member State of posting, upon 
its  request  and  in  the  shortest  possible  time,  information  and  guarantees  regarding 
compliance with the first subparagraph and shall impose the appropriate penalties in 
cases of non-compliance. 

62 

 
 
  
 
Chapter IV 

Quality of services 

Article 26 

Information on providers and their services 

1. 

Member States shall ensure that providers make the following information available 
to the recipient: 

(a) 

the  name  of  the  service  provider,  the  geographic  address  at  which  he  is 
established,  and  the  details  which  enable  him  to  be  contacted  rapidly  and 
communicated with directly and, as the case may be, by electronic means;  

(b)  where the provider is registered in a trade or other similar public register, the 
name  of  that  register  and  the  provider's  registration  number,  or  equivalent 
means of identification in that register; 

(c)  where the activity is subject to an authorisation scheme, the particulars of the 

relevant competent authority or the single point of contact; 

(d)  where  the  provider  exercises  an  activity  which  is  subject  to  VAT,  the 
identification number referred to in Article 22(1) of Directive 77/388/EEC; 

(e) 

in  the  case  of  the  regulated  professions,  any  professional  body  or  similar 
institution with which the provider is registered, the professional title and the 
Member State in which that title has been granted;-   

(f) 

the general conditions and clauses, if any, used by the provider; 

(g) 

contractual  clauses  concerning  the  law  applicable  to  the  contract  and/or  the 
competent courts. 

2. 

Member States shall ensure that the information referred to in paragraph 1, according 
to the provider's preference: 

(a) 

is supplied by the provider on his own initiative; 

(b) 

(c) 

(d) 

is easily accessible to the recipient at the place where the service is provided or 
the contract concluded; 

can  be  easily  accessed  by  the  recipient electronically  by  means  of  an  address 
supplied by the provider; 

appears in any information documents supplied to the recipient by the provider, 
setting out a detailed description of the service he provides. 

3. 

Member  States  shall  ensure  that,  at  the  recipient’s  request,  providers  supply  the 
following additional information: 

63 

 
 
  
 
(a) 

the main features of the service; 

(b) 

the  price  of  the  service  or,  if  an  exact  price  cannot  be  given,  the  method  for 
calculating the price so that the recipient can check it, or a sufficiently detailed 
estimate;  

(c) 

the legal status and form of the provider; 

(d) 

as  regards  the  regulated  professions,  a  reference  to  the  professional  rules 
applicable in the Member State of origin and how to access them.  

Member  States  shall  ensure  that  the  information  which  a  provider  must  supply  in 
accordance  with  this  Chapter  is  made  available  or  communicated  in  a  clear  and 
unambiguous manner, and in good time before conclusion of the contract or, where 
there is no written contract, before the service is provided.  

The  information  requirements  laid  down  in  this  Chapter  are  in  addition  to 
requirements  already  provided  for  in  Community  law  and  do  not  prevent  Member 
States  from  imposing  additional  information  requirements  applicable  to  providers 
established in their territory. 

The Commission may, in accordance with the procedure referred to in Article 42(2), 
specify  the  content  of  the  information  provided  for  in  paragraphs  1  and  3  of  this 
Article  according  to  the  specific  nature  of  certain  activities  and  may  specify  the 
practical means of implementing paragraph 2.  

Article 27 

Professional insurance and guarantees  

Member States shall ensure that providers whose services present a particular risk to 
the health or safety of the recipient, or a particular financial risk to the recipient, are 
covered by professional indemnity insurance appropriate to the nature and extent of 
the risk, or by any other guarantee or compensatory provision which is equivalent or 
essentially comparable as regards its purpose. 

Member  States  shall  ensure  that  providers  supply  a  recipient,  at  his  request,  with 
information  on  the  insurance  or  guarantees  referred  to  in  paragraph  1,  and  in 
particular the contact details of the insurer or guarantor and the territorial coverage.  

When  a  provider  establishes  himself  in  their  territory,  Member  States  may  not 
require professional insurance or a financial guarantee from the provider where he is 
already  covered  by  a  guarantee  which  is  equivalent,  or  essentially  comparable  as 
regards  its  purpose,  in  another  Member  State  in  which  the  provider  is  already 
established. 

Where  equivalence  is  only  partial,  Member  States  may  require  a  supplementary 
guarantee to cover those aspects not already covered. 

4. 

5. 

6. 

1. 

2. 

3. 

4. 

Paragraphs 1, 2 and 3 do not affect professional insurance or guarantee arrangements 
provided for in other Community instruments. 

64 

 
 
  
 
5. 

1. 

2. 

3. 

1. 

2. 

For the implementation of paragraph 1, the Commission may, in accordance with the 
procedure  referred  to  in  Article  42(2),  establish  a  list  of  services  which  exhibit  the 
characteristics referred to in paragraph 1 and establish common criteria for defining, 
for the purposes of the insurance or guarantees referred to in that paragraph, what is 
appropriate to the nature and scope of the risk.  

Article 28 

After-sales guarantees 

Member  States  shall  ensure  that  providers  supply  a  recipient,  at  his  request,  with 
information on the existence or otherwise of an after-sales guarantee, on its content 
and on the essential criteria for its application, in particular, its period of validity and 
territorial cover.  

Member States shall ensure that the information referred to in paragraph 1 appears in 
any information documents supplied by providers, setting out a detailed description 
of the services offered. 

Paragraphs 1 and 2 do not affect the regulation of after-sales guarantees provided for 
in other Community instruments. 

Article 29 

Commercial communications by the regulated professions  

Member States shall remove all total prohibitions on commercial communications by 
the regulated professions. 

Member  States  shall  ensure  that  commercial  communications  by  the  regulated 
professions  comply  with  professional  rules,  in  conformity  with  Community  law, 
which  relate,  in  particular,  to  the  independence,  dignity  and  integrity  of  the 
profession,  as  well  as  to  professional  secrecy,  in  a  manner  consonant  with  the 
specific nature of each profession,. 

Article 30  

Multidisciplinary activities 

1. 

Member  States  shall  ensure  that  providers  are  not  made  subject  to  requirements 
which oblige them to exercise a given specific activity exclusively or which restrict 
the exercise jointly or in partnership of different activities.  

However, the following providers may be made subject to such requirements: 

(a) 

the  regulated  professions,  in  so  far  as  is  justified  in  order  to  guarantee 
compliance  with  the  rules  governing  professional  ethics  and  conduct,  which 
vary according to the specific nature of each profession; 

65 

 
 
  
 
(b)  providers  of  certification,  accreditation,  technical  monitoring,  test  or  trial 
services  in  so  far  as  is  justified  in  order  to  ensure  their  independence  and 
impartiality. 

2. 

Where  multidisciplinary  activities  are  authorised,  Member  States  shall  ensure  the 
following:  

(a) 

that  conflicts  of  interest  and  incompatibilities  between  certain  activities  are 
prevented; 

(b) 

that the independence and impartiality required for certain activities is secured;  

(c) 

that the rules governing professional ethics and conduct for different activities 
are compatible with one another, especially as regards matters of professional 
secrecy. 

Member  States  shall  ensure  that  providers  supply  the  recipient,  at  his  request,  with 
information on their multidisciplinary activities and partnerships and on the measures 
taken  to  avoid  conflicts  of  interest.  That  information  shall  be  included  in  any 
information  document  in  which  providers  give  a  detailed  description  of  their 
services. 

In the report referred to in Article 41, Member States shall indicate which providers 
are  subject  to  the  requirements  laid  down  in  paragraph  1,  the  content  of  those 
requirements and the reasons for which they consider them to be justified. 

Article 31 

Policy on quality of services 

Member  States  shall,  in  cooperation  with  the  Commission,  take  accompanying 
measures  to  encourage  providers  to  take  action  on  a  voluntary  basis  in  order  to 
ensure  the  quality  of  service  provision,  in  particular  through  use  of  one  of  the 
following methods: 

(a) 

by having their activities certified or assessed by independent bodies; 

(b)  by drawing up their own quality charter or participating in quality charters or 

labels drawn up by professional bodies at Community level.  

Member States shall ensure that information on the significance of certain labels and 
the  criteria  for  applying  labels  and  other  quality  marks  relating  to  services  can  be 
easily accessed by recipients and providers.  

Member  States  shall,  in  cooperation  with  the  Commission,  take  accompanying 
measures  to  encourage  professional  bodies,  as  well  as  chambers  of  commerce  and 
craft associations, within Member States to cooperate at Community level in order to 
promote  the  quality  of  service  provision,  especially  by  making  it  easier  to  assess  a 
provider’s competence.  

3. 

4. 

1. 

2. 

3. 

66 

 
 
  
 
4. 

5. 

1. 

2. 

3. 

4. 

5. 

1. 

Member  States  shall,  in  cooperation  with  the  Commission,  take  accompanying 
measures to encourage the development of independent assessments in relation to the 
quality  and  defects  of  service  provision,  and  in  particular  the  development  at 
Community  level  of  comparative  trials  or  testing  and  the  communication  of  the 
results. 

Member  States  and  the  Commission  shall  encourage  the  development  of  voluntary 
European  standards  with  the  aim  of  facilitating  compatibility  between  services 
supplied  by  providers  in  different  Member  States,  information  to  the  recipient  and 
the quality of service provision.  

Article 32 

Settlement of disputes 

Member  States  shall  take  the  general  measures  necessary  to  ensure  that  providers 
supply  a  postal  address,  fax  number  or  e-mail  address  to  which  all  recipients, 
including those resident in another Member State, can send a complaint or a request 
for information on the service provided.  

Member  States  shall  take  the  general  measures  necessary  to  ensure  that  providers 
respond to the complaints referred to in paragraph 1 in the shortest possible time and 
make best efforts to find appropriate solutions. 

Member States shall take the general measures necessary to ensure that providers are 
obliged to demonstrate compliance with the obligations laid down in this Directive as 
to the provision of information and to demonstrate that the information is accurate. 

Where  a  financial  guarantee  is  required  for  compliance  with  a  judicial  decision, 
Member States shall recognise equivalent guarantees lodged with a provider or body 
established in another Member State.  

Member  States  shall  take  the  general  measures  necessary  to  ensure  that  providers 
who  are  subject  to  a  code  of  conduct,  or  are  members  of  a  trade  association  or 
professional  body,  which  provides  for  recourse  to  a  non-judicial  means  of  dispute 
settlement, inform the recipient accordingly, and mention that fact in any document 
which presents their services in detail, specifying how to access detailed information 
on the characteristics of and conditions for the use of such a mechanism. 

Article 33 

Information on the good repute of providers 

Member  States  shall,  at  the  request  of  a  competent  authority  in  another  Member 
State,  supply  information  on  criminal  convictions,  penalties,  administrative  or 
disciplinary measures and decisions concerning insolvency or bankruptcy involving 
fraud, taken by their competent authorities in respect of the provider, which are liable 
to  bring  into  question  either  his  ability  to  conduct  his  business  or  his  professional 
reliability.  

67 

 
 
  
 
2. 

3. 

1. 

2. 

1. 

2. 

3. 

The Member State which supplies the information referred to in paragraph 1 shall at 
the same time specify whether a particular decision is final or whether an appeal has 
been  lodged  in  respect  of  it,  in  which  case  the  Member  State  in  question  should 
provide an indication of the date when the decision on appeal is expected. 

Moreover, that Member State shall specify the provisions of national law pursuant to 
which the provider was found guilty or penalised. 

Implementation  of  paragraph  1  must  comply  with  the  rights  guaranteed  to  persons 
found guilty or penalised in the Member States concerned, especially as regards the 
protection of personal data.  

Chapter V 

Supervision  

Article 34 

Effectiveness of supervision 

Member States shall ensure that the powers of monitoring and supervision provided 
for  in  national  law  in  respect  of  the  provider  and  the  activities  concerned  are  also 
exercised where a service is provided in another Member State.  

Member States shall ensure that providers supply their competent authorities with all 
the information necessary for monitoring their activities.  

Article 35 

Mutual assistance 

In accordance with Article 16, Member States shall give each other mutual assistance 
and  shall  put  in  place  all  possible  measures  for  effective  cooperation  with  one 
another in order to ensure the supervision of providers and the services they provide. 

For the purposes of paragraph 1, Member States shall designate one or more points 
of contact, the contact details of which shall be communicated to the other Member 
States and the Commission. 

Member States shall supply the information requested by other Member States or the 
Commission by electronic means and within the shortest possible period of time. 

Upon becoming aware of any unlawful conduct by a provider, or of specific acts, that 
are likely to  cause serious  damage  in a  Member  State,  Member  States  shall  inform 
the Member State of origin, within the shortest possible period of time. 

Upon  becoming  aware  of  any  unlawful  conduct  by  a  provider  who  is  likely  to 
provide services in other Member States, or of specific acts, that could cause serious 

68 

 
 
  
 
4. 

5. 

6. 

1. 

2. 

damage  to  the  health  or  safety  of  persons,  Member  States  shall  inform  all  other 
Member States and the Commission within the shortest possible period of time.  

The Member State of origin shall supply information on providers established in its 
territory  when  requested  to  do  so  by  another  Member  State  and  in  particular 
confirmation that a service provider is established in its territory and exercising his 
activities in a lawful manner; 

inspections  and 
The  Member  State  of  origin  shall  undertake 
investigations requested by another Member State and shall inform the latter of the 
results and, as the case may be, of the measures taken. 

the  checks, 

In the event of difficulty in meeting a request for information, the Member State in 
question shall rapidly inform the requesting Member State with a view to finding a 
solution. 

Member States shall ensure that registers in which providers have been entered, and 
which may be consulted by the competent authorities in their territory, may also be 
consulted,  in  accordance  with  the  same  conditions,  by  the  equivalent  competent 
authorities of the other Member States. 

Article 36 

Mutual assistance in the event of the temporary movement of the provider 

In respect of the matters covered by Article 16, where a provider moves temporarily 
to  another  Member  State  in  order  to  provide  a  service  without  being  established 
there,  the  competent  authorities  of  that  Member  State  shall  participate  in  the 
supervision of the provider in accordance with paragraph 2. 

At the request of the Member State of origin, the competent authorities referred to in 
paragraph 1 shall carry out any checks, inspections and investigations necessary for 
ensuring  effective  supervision  by  the  Member  State  of  origin.  In  so  doing,  the 
competent authorities shall act to the extent permitted by the powers vested in them 
in their Member State. 

On their own initiative, those competent authorities may conduct checks, inspections 
and  investigations  on  the  spot,  provided  that  those  checks,  inspections  or 
investigations meet the following conditions: 

(a) 

(b) 

(c) 

they consist exclusively in the establishment of facts and do not give rise to any 
other  measure  against  the  provider,  subject  to  the  possibility  of  case-by-case 
derogations as provided for in Article 19; 

they are not discriminatory and are not motivated by the fact that the provider 
is established in another Member State; 

they  are  objectively  justified  by  an  overriding  reason  relating  to  the  public 
interest and are proportionate to the objective pursued. 

69 

 
 
  
 
Article 37 

Mutual assistance in the event of case-by-case derogations from the country of origin 
principle 

1. 

2. 

3. 

4. 

5. 

6. 

Where  a  Member  State  intends  to  take  a  measure  pursuant  to  Article  19,  the 
procedure laid down in paragraphs 2 to 6 of this Article shall apply without prejudice 
to proceedings before the courts. 

The Member State referred to in paragraph 1 shall ask the Member State of origin to 
take measures with regard to the service provider, supplying all relevant information 
on the service in question and the circumstances of the case.  

The Member State of origin shall check, within the shortest possible period of time, 
whether the provider is operating lawfully and verify the facts underlying the request. 
It  shall  inform  the  requesting  Member  State  within  the  shortest  possible  period  of 
time of the measures taken or envisaged or, as the case may be, the reasons why it 
has not taken any measures. 

Following  communication  by  the  Member  State  of  origin  as  provided  for  in  the 
second  subparagraph  of  paragraph  2,  the  requesting  Member  State  shall  notify  the 
Commission and the Member State of origin of its intention to take measures, stating 
the following: 

(a) 

(b) 

the  reasons  why  it  believes  the  measures  taken  or  envisaged  by  the  Member 
State of origin are inadequate; 

the reasons why it believes the measures it intends to take fulfil the conditions 
laid down in Article 19. 

The  measures  may  not  be  taken  until  fifteen  working  days  after  the  date  of 
notification provided for in paragraph 3. 

Without  prejudice  to  the  possibility  for  the  requesting  Member  State  to  take  the 
measures  in  question  upon  expiry  of  the  period  specified  in  paragraph  4,  the 
Commission  shall,  within  the  shortest  possible  period  of  time,  examine  the 
compatibility with Community law of the measures notified. 

Where the Commission concludes that the measure is incompatible with Community 
law,  it  shall  adopt  a  decision  asking  the  Member  State  concerned  to  refrain  from 
taking the proposed measures or to put an end to the measures in question as a matter 
of urgency. 

In  the  case  of  urgency,  a  Member  State  which  intends  to  take  a  measure  may 
derogate  from  paragraphs  3  and  4.  In  such  cases,  the  measures  shall  be  notified 
within the shortest possible period of time to the Commission and the Member State 
of  origin,  stating  the  reasons  for  which  the  Member  State  considers  that  there  is 
urgency. 

70 

 
 
  
 
Article 38 

Implementing measures 

In accordance with the procedure referred to in Article 42(2), the Commission shall adopt the 
implementing measures necessary for the implementation of this Chapter, specifying the time-
limits provided for in Articles 35 and 37 and the practical arrangements for the exchange of 
information  by  electronic  means  between  the  single  points  of  contact,  and  in  particular  the 
interoperability provisions for information systems. 

Chapter VI  

Convergence programme 

Article 39 

Codes of conduct at Community level  

1. 

Member  States  shall,  in  cooperation  with  the  Commission,  take  accompanying 
measures to encourage  the  drawing  up  of codes  of  conduct  at  Community  level,  in 
conformity with Community law, in particular in the following areas:  

(a) 

(b) 

the  content  of  and  detailed  rules  for  commercial  communications  relating  to 
regulated professions, as appropriate to the specific nature of each profession; 

the rules of professional ethics and conduct of the regulated professions which 
aim  in  particular  at  ensuring,  as  appropriate  to  the  specific  nature  of  each 
profession, independence, impartiality and professional secrecy;  

(c) 

the conditions to which the activities of estate agents are subject. 

2. 

3. 

4. 

Member States shall ensure that the codes of conduct referred to in paragraph 1 are 
accessible at a distance, by electronic means and transmitted to the Commission. 

Member  States  shall  ensure  that  providers  indicate,  at  the  recipient’s  request,  or  in 
any  information  documents  which  present  their  services  in  detail,  any  codes  of 
conduct  to  which  they  are  subject  and  the  address  at  which  these  codes  may  be 
consulted by electronic means, specifying the language versions available.  

Member States shall take accompanying measures to encourage professional bodies, 
organisations  and  associations  to  implement  at  national  level  the  codes  of  conduct 
adopted at Community level. 

71 

 
 
  
 
Article 40 

Additional harmonisation 

1. 

The Commission shall assess, by [one year after the entry into force of this Directive] 
at the latest, the possibility of presenting proposals for harmonisation instruments on 
the following subjects: 

(a) 

the detailed rules for the exercise of cash-in-transit services;  

(b)  gambling  activities  which  involve  wagering  a  stake  with  pecuniary  value  in 
games of chance, including lotteries and betting transactions, in the light of a 
report by the Commission and a wide consultation of interested parties; 

(c) 

access to the activity of judicial recovery of debts. 

2. 

In  order  to  ensure  the  proper  functioning  of  the  internal  market  for  services,  the 
Commission shall assess the need to take additional initiatives or to present proposals 
for legislative instruments, particularly in relation to the following: 

(a)  matters  which,  having  been  the  subject  of  case-by-case  derogations,  have 

indicated the need for harmonisation at Community level;  

(b)  matters  covered  by  Article  39  for  which  it  has  not  been  possible  to  finalise 
codes of conduct before the date of transposition or for which such codes are 
insufficient to ensure the proper functioning of the internal market; 

(c)  matters  identified  through  the  mutual  evaluation  procedure  laid  down  in 

Article 41; 

(d) 

consumer protection and cross-border contracts. 

Article 41 

Mutual evaluation 

1. 

By the [date of transposition] at the latest, Member States shall present a report to the 
Commission, containing the information specified in the following provisions: 

(a)  Article 9(2), on authorisation systems; 

(b)  Article 15(4), on requirements to be evaluated;  

(c)  Article 30(4), on multidisciplinary activities. 

2. 

The  Commission  shall  forward  the  reports  provided  for  in  paragraph  1  to  the 
Member States, which shall submit their observations on each of the reports within 
six months. Within the same period, the Commission shall consult interested parties 
on those reports.  

72 

 
 
  
 
3. 

4. 

1. 

2. 

The Commission shall present the reports and the Member States’ observations to the 
Committee referred to in Article 42(1), which may make observations.  

In the light of the observations provided for in paragraphs 2 and 3, the Commission 
shall, by 31 December 2008 at the latest, present a summary report to the European 
Parliament  and  to  the  Council,  accompanied  where  appropriate  by  proposals  for 
additional initiatives. 

Article 42 

Committee 

The Commission shall be assisted by a Committee, consisting of representatives of 
the Member States and chaired by the Commission representative. 

reference 

Where 
this  paragraph,  Articles  3  and  7  of 
Decision 1999/468/EC shall apply, in accordance with the provisions of Article 8 of 
that Decision. 

is  made 

to 

3. 

The Committee shall adopt its rules of procedure. 

Article 43 

Report 

Following the summary report referred to in Article 41(4), the Commission shall, every three 
years, present to the European Parliament and to the Council a report on the application of this 
Directive, accompanied, where appropriate, by proposals for its amendment. 

Article 44 

Amendment of Directive 1998/27/EC 

In the Annex to Directive 1998/27/EC, the following point shall be added: 

"13. 

Directive../../EC of the European Parliament and of the Council of … on services in 
the internal market (OJ L […], […], p. […])". 

Chapter VII 

Final provisions 

Article 45 

1. 

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative 
provisions  necessary  to  comply  with  this  Directive  by  [2  years  after  the  entry  into 

73 

 
 
  
 
force] at the latest. They shall forthwith communicate to the Commission the text of 
those provisions and a correlation table between those provisions and this Directive. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 

This  Directive  shall  enter  into  force  on  the  day  following  that  of  its  publication  in  the 
Official Journal of the European Union. 

Article 46 

This Directive is addressed to the Member States. 

Done at Brussels, […] 

Article 47  

For the European Parliament 
The President 
[…] 

For the Council 
The President 
[…] 

74 

 
 
  
 
LEGISLATIVE FINANCIAL STATEMENT 

Policy area(s): Internal Market 

Activit(y/ies): Internal Market for goods and services 

TITLE OF ACTION: PROPOSAL FOR A DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE 
COUNCIL ON SERVICES IN THE INTERNAL MARKET  

1. 

BUDGET LINE(S) + HEADING(S) 

12 02 01 Implementation and development of the internal market 

12 01 04 01 Implementation and development of the internal market – Expenditure 
on administrative management 

2. 

OVERALL FIGURES  

2.1. 

Total  allocation  for  action  (operational  expenditure):  EUR  0.700  million  in 
commitment  appropriations,  already  covered  by  existing  allocation  under 
internal market policy area in the financial programming.  

2.2. 

Period of application: 

2004 - 2010 

2.3. 

Overall multiannual estimate of expenditure: 

(a) 

Schedule  of  commitment  appropriations/payment  appropriations 
intervention) (see point 6.1.1) 

(financial 

EUR million (to three decimal places) 

2004 

2005 

2006 

2007 

2008 

2009 
and 
subs. 
years 

Total 

Commitments 

0.200 

0.400 

Payments 

0.100 

0.500 

(b) 

Technical and administrative assistance and support expenditure (see point 6.1.2) 

Commitments 

Payments 

Subtotal a+b 

Commitments 

0.200 

0.400 

Payments 

0.100 

0.500 

0.100 

0.100 

0.100 

0.100 

75 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(c) 

Overall  financial  impact  of  human  resources  and  other  administrative  expenditure 
(see points 7.2 and 7.3) 

Commitments/ 
payments 

0.869 

0.869 

0.869 

0.869 

TOTAL a+b+c 

Commitments 

Payments 

1.069 

1.269 

0.869 

0.969 

0.969 

1.369 

0.869 

0.969 

2.4. 

Compatibility with financial programming and financial perspective 

Proposal is compatible with existing financial programming. 

2.5. 

Financial impact on revenue: 

Proposal  has  no  financial  implications  (involves  technical  aspects  regarding 
implementation of a measure) 

3. 

BUDGET CHARACTERISTICS 

12 02 01 Implementation and development of the internal market 

Type of expenditure 

New 

EFTA 
contribution 

Contributions 
form applicant 
countries 

Heading in 
financial 
perspective 

No Comp 

Diff 

NO 

YES 

NO 

No 3 

12 01 04 01 Implementation and development of the internal market – Expenditure 
on administrative management 

Type of expenditure 

New 

EFTA 
contribution 

Contributions 
form applicant 
countries 

Heading in 
financial 
perspective 

No Comp 

Non Diff 

NO 

YES 

NO 

No 3 

76 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4. 

LEGAL BASIS  

Article 47(2) and Article 55 as well as Article 71 and Article 80(2) of the EC Treaty 

5. 

DESCRIPTION AND GROUNDS 

5.1. 

Need for Community intervention  

5.1.1.  Objectives pursued 

Services  are  everywhere  in  the  modern  economy.  In  the  EU,  services  excluding  public 
administration account for 53.6% of GDP and 67.2% of employment and offer good prospects 
for further growth and more jobs. However, the freedom to provide cross-border services and 
the  freedom  of  establishment  across  borders  are  hampered  by  a  large  number  of  barriers. 
Realising the potential of services in the internal market, and ensuring that they deliver better 
quality  and  value  to  European  citizens  and  business,  is  a  major  aim  of  the  EU's  economic 
reform programme.  

The Commission’s report on the State of the Internal Market for Services (COM(2002) 441 
final),  included  an  inventory  of  the  barriers  which  hinder  the  development  of  cross-border 
services.  These  barriers  affect  a  large  variety  of  service  activities  such  as  distribution, 
employment agencies, certification, laboratories, construction, real estate agencies, craftsmen, 
tourism and they hit SMEs, which are predominant in the services sector (89% of SMEs are 
involved in services), particularly hard.  

The  report,  and  the  impact  assessment  which  accompanies  the  Directive  on  services  in  the 
internal  market,  examine  the  effects  of  these  barriers  on  the  EU  economy  and  show  the 
potential gains to be achieved by the removal of these barriers, which fragment the internal 
market in Services.  

5.1.2.  Measures taken in connection with ex ante evaluation  

(a) 

(b) 

The  ex  ante  evaluation  on  the  Commission's  Internal  Market  Strategy  for  Services 
was conducted in-house in August 2002. The Internal Market Strategy for Services 
consists of two stages. The first stage was concluded by the above-mentioned report 
on the State of the Internal Market in Services. The second stage covers the adoption 
of  a  proposal  for  a  Directive  on  Services  in  the  Internal  Market  as  well  as  non-
legislative measures.  

The  ex  ante  evaluation  explained  the  context  of  the  Services  Strategy,  its  rationale 
and  approach  and  summarised  the  work  carried  out  during  the  first  stage  of  the 
Services  Strategy,  which  focussed  in  particular  on  the  wide  variety  of  sources  of 
evidence of barriers. It also included a preliminary outline of systems and indicators 
to monitor the effectiveness of the second stage of the Services Strategy. 

It  found  that  the  Services  Strategy  had  so  far  been  well  managed  and  provided  the 
necessary  information  for  the  implementation  of  the  second  stage  of  the  Services 
Strategy. It confirmed the need for Community action in this field and demonstrated 
the value added and cost-effectiveness of Community intervention. 

77 

 
 
  
 
5.2. 

Action envisaged and budget intervention arrangements 

The  Directive  will  address  internal  market  barriers  a  combination  of  three  inter-linked 
elements: the country of origin principle, harmonisation and administrative cooperation. 

– 

– 

– 

In  order  to  facilitate  cross-border  establishment,  there  is  a  need  for  administrative 
simplification,  a  need 
to  remove  restrictions  resulting  from  over-complex, 
intransparent  or  discriminatory  authorisation  procedures  and  a  need  to  remove  a 
number  of  other  requirements  which  currently  hamper  cross-border  establishment 
strategies of service providers. 

The  barriers  affecting  the  freedom  to  provide  services  require  mainly  that  Member 
States  refrain  from  applying  their  own  rules  and  regulations  to  incoming  services 
from other Member States and from supervising and controlling them. Instead they 
should  rely  on  control  by  the  authorities  in  the  country  of  origin  of  the  service 
provider. However, temporary derogations from the country of origin principle will 
be  provided  -  for  example,  for  secure  transport  of  cash  and  debt  collection.  These 
issues need further analysis and will be subject to external studies. 

The application of the country of origin principle will necessitate an efficient system 
of  administrative  cooperation  between  Member  States,  establishing  their  respective 
responsibilities  in  the  context  of  cross-border  service  provision.  There  might  be  a 
need  for  a  coordinated  solution  in  order  to  facilitate  the  exchange  of  information 
through electronic means. 

The  Directive  will  ensure  a  progressive  approach  to  implementation.  It  will  address  a  large 
number  of  barriers  immediately  while  setting  up  a  framework  to  resolve,  within  fixed  time 
periods, the remaining barriers on the basis of mutual evaluation between Member States and 
further consultation with stakeholders. Therefore, the resources allocations will be extended to 
cover a certain period of time.  

5.3.  Methods of implementation 

The negotiation of the Directive in the Council and in the European Parliament will be carried 
out  by  DG  MARKT  staff  within  existing  resources.  The  transposition  of  the  Directive  will 
require monitoring and assistance to the Member States. This will also be carried out by the 
staff of DG MARKT. Furthermore, Article 41 of the Directive specifies that Commission will 
be  assisted  by  a  committee  consisting  of  Member  States’  representatives  on  certain  specific 
issues. 

78 

 
 
  
 
6. 

FINANCIAL IMPACT 

6.1. 

Total  financial 
programming period) 
6.1.1.  Financial intervention 

impact  on  operational  expenditure  -  (over  the  entire 

Commitments (in EUR million to three decimal places) 

Breakdown 

2004 

2005 

2006 

2007 

2008 

Total 

2009 
and 
subs. 
Years] 

Action 1 

Action 2 

etc. 

0.400 

0.200 

TOTAL 

0.200 

0.400 

6.1.2.  Technical  and  administrative  assistance,  support  expenditure  and  IT  expenditure 

(commitment appropriations) 

2004  

2005 

2006 

2007 

2008 

Total 

2009 
and 
subs. 
Years 

1) 
administrative assistance 

Technical 

and 

Technical 

a) 
offices

assistance 

b)  Other 
administrative assistance: 

technical 

and 

- intra muros: 

- extra muros: 

of  which  for  construction 
and 
of 
maintenance 
computerised  management 
systems 

Subtotal 1 

2) Support expenditure 

a) Studies 

b) Meetings of experts 

c) Information and 
publications 

Subtotal 2 

TOTAL 

0.100 

0.100 

79 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6.2. 

Calculation of costs by measure envisaged in operational expenditure (over the 
entire programming period) 

Breakdown  

Commitments (in EUR million to three decimal places) 

Type  
of outputs 
(projects, files ) 

Number of 
outputs 

Average unit 
cost 

(total for years 
2004-2010)  

Total cost 

(total for years 
2004-2010)  

Action 1 

- Measure 1 (analysis of secure 
transport of cash in view of 
proposing complementary 
harmonisation) 

-  Measure  2  (analysis  of  debt 
collection  in  view  of  proposing 
complementary harmonisation) 

Action 2 

-  Measure  1  (development  and 
monitoring  of  economic  indicators 
– see 8.1 Follow-up arrangements) 

Study 

Study  

Study 

1 

1 

1 

0.200 

0.200 

0.200 

0.200 

0.200 

0.200 

TOTAL COST  

0.600 

0.600 

80 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7. 

IMPACT ON STAFF AND ADMINISTRATIVE EXPENDITURE  

Human  and  administrative  resource  requirements  will  be  covered  from  within  the  budget 
allocated to the managing DG in the framework of the annual allocation procedure. 

7.1. 

Impact on human resources 

Staff to be assigned to management of the 
action using existing resources 

Description of tasks deriving from the 
action 

Types of post 

Total 

Number of 
permanent posts 

Number of 
temporary posts 

Officials 
temporary staff 

or 

A 

B 

C 

6 

1 

0.5 

Other human resources 

1 END 

Total 

7.2. 

8 

0.5 

Overall financial impact of human resources 

Because  the  Directive  covers  a  wide 
range  of  services  activities  specific 
knowledge is needed on a multitude of 
regulated 
(distribution, 
sectors 
professions,  construction,  certification, 
craftsmen  etc.)  as  well  as  on  specific 
questions  such  as  reimbursement  of 
administrative 
or 
care 
health 
simplification.  

6 

1.5 

1 

8.5 

EUR million to three decimal places 

Type of human resources 

Amount (EUR) 

Method of calculation*  

Officials 

Temporary staff 

Other human resources 

0.756 

0.054 

0.043 

7* 0.108 

0.5* 0.108 

1* 0.043  

(specify budget line) 

Total 

0.853 

The amounts are total expenditure for twelve months. 

81 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.3. 

Other administrative expenditure deriving from the action 

EUR million to three decimal places 

Amount EUR 

Method of calculation 

0.016 

24 experts* 650 

Budget line 

(number and heading) 

Overall allocation (Title A7) 

12 01 02 11 01 – Missions 

12 01 02 11 02 – Meetings, conferences 
12 01 02 11 03 – Committees (consultative committee) 

12 01 02 11 04 – Studies and consultations 

Other expenditure (specify) 

Information systems  

Other administrative expenditure (specify) 

The amounts are total expenditure for twelve months. 

Total 

0.016 

EUR million to three decimal places 

I. 

II. 

Annual total (7.2 + 7.3) 

Duration of action 

III. 

Total cost of action (I x II) 

0.869 

4 years 

3.476* 

* costs for human resources could be extended beyond the 4 years depending on the results of the negotiation 
and the subsequent work programme 

8. 

FOLLOW-UP AND EVALUATION 

8.1. 

Follow-up arrangements 

The  Directive  would  be  implemented  by  the  Member  States  two  years  after  its 
adoption  (which  is  envisaged  by  the  end  of  2005),  i.e.  by  the  end  of  2007. 
Furthermore,  an  additional  year  (until  the  end  of  2008)  is  foreseen  to  achieve  the 
move  to  the  necessary  system  of  administrative  cooperation  (putting  in  place 
electronic  procedures,  implementation  of  single  points  of  contact  etc.).  This 
additional  time  for  implementation  takes  account  of  the  initial  administrative 
investments required. 

The  Commission  services,  assisted  by  a  committee  consisting  of  Member  States’ 
representatives,  will  actively  monitor  and  assist  the  25  Member  States  in  the 
transposition  of  the  Directive.  The  large  scope  and  the  wide  range  of  issues 
addressed in the Directive require partnership between the Commission and Member 
States  to  ensure  a  smooth  and  homogenous  transposition  and  functioning  of  the 
Directive across the Union. 

The Commission services would also monitor the expected impacts of the Directive. 
More  specifically,  with  the  assistance  of  external  economic  consultants  (contract 

82 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
already  concluded  but  will  require  financing  in  2004)  economic  indicators 
(e.g. compliance  costs  of  service  companies,  Community  cross-border  trade/FDI  in 
services, involvement of SMEs in cross-border trade/FDI, price differentials) will be 
tracked. 

8.2. 

Arrangements and schedule for the planned evaluation 

Since the real economic and social impacts will not be measurable until such time as 
the Directive has been fully working, it is proposed that the first ex post evaluation 
will feature in the report that will be presented by the Commission by 2008 and that 
further  evaluations  will  feature  in  the  reports  to  be  presented  every  three  years 
following the first report. 

9. 

ANTI-FRAUD MEASURES 

Open tendering procedures will be used for the aforementioned study contracts and a 
close follow up of the resulting contracts will be carried out.  

83