Communication from the Commission to the European Parliament pursuant to the second subparagraph of Article 251 (2) of the EC Treaty concerning the common position of the Council on the adoption of a Directive of the European Parliament and of the Council on Services in the Internal Market
Date: 2006-07-25
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, 25.07.2006 
COM(2006) 424 final 

2004/0001 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to the second subparagraph of Article 251 (2) of the EC Treaty 

concerning the 

common position of the Council on the adoption of a Directive of the European 
Parliament and of the Council on Services in the Internal Market 

EN 

   EN 

 
 
 
  
 
 
2004/0001 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to the second subparagraph of Article 251 (2) of the EC Treaty 

concerning the 

common position of the Council on the adoption of a Directive of the European 
Parliament and of the Council on Services in the Internal Market 

1. 

BACKGROUND 

Proposal transmitted to the European Parliament and the Council 
(document COM(2004)2 final – 2004/0001(COD) on: 

06.02.2004 

European Economic and Social Committee opinion delivered on: 

09.02.2005 

Committee of the Regions opinion delivered on: 

29.09.2004 

European Parliament opinion (first reading) delivered on: 

16.02.2006 

Amended proposal transmitted on: 

Common position adopted with qualified majority on: 

06.04.2006 

24.07.2006 

2. 

AIM OF THE COMMISSION PROPOSAL 

The Commission proposal aims at: 

–  improving the basis for economic growth and employment in the EU; 

–  achieving  a  genuine  Internal  Market  in  services  by  removing  legal  and  administrative 

barriers to the development of service activities; 

–  strengthening the rights of consumers as users of services;  

–  establishing  legally-binding  obligations  for  effective  administrative  co-operation  between 

Member States. 

3. 

COMMENTS ON THE COMMON POSITION 

3.1. 

General comments 

The common position adopted by the Council retains indeed the essence of the Commission's 
amended proposal which, in turn, incorporated a large majority of the amendments adopted by 
the European Parliament in its first reading. Furthermore, as regards the key elements of the 
proposal (notably the exclusions from the scope of application and the provisions dealing with 

EN 

2 

   EN 

 
 
 
the  freedom  to  provide  services)  the  Council's  common  position  has  respected  the  political 
agreement  reached  by  the  European  Parliament,  which  is  reflected  now  in  the  common 
position, as it was indeed in the Commission's amended proposal.  

Overall,  the  common  position  incorporates,  either  fully  or  in  spirit,  all  of  the  European 
Parliament's amendments which were accepted by the Commission at the Plenary. In respect 
of  some  other  issues,  it  meets,  the  concerns  expressed  in  the  European  Parliament's 
amendments  and  finds  solutions  to  these  concerns,  although  the  drafting  may  be  different. 
Finally,  the  common  position  also contains  a  number  of  additional  new  provisions  that  will 
enhance  transparency  and  cooperation  between  Member  States  and  the  Commission,  which 
may be instrumental in ensuring proper implementation of the Directive. 

The  main  aspects  of  the  common  position  are  commented  on  in  detail  below.  Firstly,  those 
which respond to the European Parliament's amendments are addressed. These constitute the 
majority since both the Commission's amended proposal and the Council's common position 
have taken on board the majority of the European Parliament's amendments. Secondly, other 
issues added by the Council in its common position are set out. 

3.2. 

Aspects  of  the  common  position  responding  to  the  European  Parliament's 
amendments  

3.2.1.  Scope of application and other general provisions (Articles 1-4) 

Specific  areas  of  law  (Article  1).  Concerning  the  subject-matter  of  the  Directive  and  its 
relationship  with  specific  areas  of  law  (fundamental  rights,  labour  law,  criminal  law,  the 
protection or promotion of cultural and linguistic diversity and media pluralism) the common 
position incorporates the substance of the European Parliament's amendments (7, 8, 290, 291, 
297,  298,  299,  relevant  part  of  72)  and  of  the  amended  proposal  with  some  drafting 
adjustments which are accepted by the Commission as they aim at improving the text without 
changing  the  substance  of  the  vote  in  the  European  Parliament  or  of  the  Commission's 
amended proposal.  

Scope of application (Article 2). With regard to the scope of application of the Directive, the 
common position takes account to a great extent of the amendments adopted by the European 
Parliament in its first reading. Concerning services of general interest the common position 
fully  reflects  the  content  of  the  amendments  of  the  European  Parliament  (see  in  particular 
amendments 13, 44, 73 and relevant parts of amendments 72 and 289) and, in comparison to 
the amended proposal, it further clarifies in the text of Article 2 that non-economic services of 
general  interest  fall  outside  the  scope  of  the  Directive.  In  relation  to  transport  services  and 
port services the common position confirms the exclusion of all transport services, including 
port  services,  as  adopted  in  the  European  Parliament's  amendments  20  and  306.  In 
comparison to the amended proposal, the wording of the exclusion for transport services was 
slightly modified to bring it into line with the wording of Article 51 of the Treaty and it was 
merged  with  the  exclusion  of  port  services.  This  does  not  change  the  substance  of  the 
provision and is therefore accepted by the Commission. As regards audiovisual services the 
substance  of  the  European  Parliament's  amendments  19  and  79  is  reflected  in  the  common 
position. The common position slightly redrafts the relevant text in Article 2 of the amended 
proposal to clarify that the exclusion of audiovisual services covers cinematographic services; 
this  is  accepted  by  the  Commission.  Relating  to  the  exclusion  of  social  services,  European 
Parliament's amendments (see amendments 252, 294, 295 and 296) have also been taken into 
account  in  the  common  position.  Compared  to  the  Commission's  amended  proposal  the 

EN 

3 

   EN 

 
common position further clarifies that services provided by charities are also covered by the 
exclusion;  the  Commission  accepts  this  text  because  it  is  of  the  opinion  that  the  definition 
contained in the common position will improve the legal certainty as far as the exclusion of 
social services is concerned. Compared to the Commission’s amended proposal the common 
position  further  adds  exclusions  concerning  services  provided  by  notaries  and  bailiffs  who 
are appointed by an official act of government. This exclusion is essentially in line with the 
European Parliament's amendments 18 and 81 and it is accepted by the Commission. Finally, 
the  common  position  has  confirmed  the  exclusion  of  services  of  temporary  work  agencies, 
health services, gambling activities, private security services and taxation from the scope of 
application of the Directive as provided for by the European Parliament's amendments (see in 
particular  17,  19,  78,  80,  82,  300,  302/332,  304)  as  well  as  by  the  Commission's  amended 
proposal.  

Relationship  of  the  Directive  with  other  provisions  of  Community  law  (Article  3).  The 
common  position  follows  the  approach  of  the  European  Parliament's  amendments  (21,  83, 
219, 307) and of the amended proposal and therefore clearly states that the Directive does not 
affect other Community instruments and that, in the event of a conflict with other Community 
instruments  governing  specific  aspects  of  access  to  and  exercise  of  a  services  activity,  the 
provisions  on  those  specific  aspects  in  such  instruments  shall  prevail.  Furthermore,  the 
common  position  also  confirms  that  the  Directive  does  not  concern  rules  of  private 
international  law,  in  particular  those  which  guarantee  that  consumers  benefit  from  the 
protection  granted  to  them  by  the  consumer  protection  rules  laid  down  in  the  consumer 
legislation in force in their Member States.  

Definitions  (Article  4).  The  common  position  reflects  the  amendments  of  the  European 
Parliament  (1-3,  5-6,  11,  25-26,  93-94,  and  97-98)  and  the  text  of  the  amended  proposal 
concerning the definition of terms used in the Directive.  

3.2.2.  Administrative simplification (Articles 5-8) 

Simplification of procedures (Article 5). The common position integrates the amendments of 
the European Parliament (see amendments 27, 29-30, 99; relevant part of amendment 100) as 
endorsed  by  the  amended  proposal,  subject  to  minor  redrafting.  Thus,  a  new  sentence  in 
paragraph  1  makes  it  clear  that  Member  States'  obligation  to  simplify  their  procedures  and 
formalities  will  arise  when,  upon  examination,  these  appear  to  be  "not  sufficiently  simple". 
This addition can be accepted by the Commission. 

Points of single contact (Article 6). The common position essentially endorses the text of the 
amended  proposal,  based  on  the  relevant  amendments  (104  and  309)  of  the  European 
Parliament. By changing the preposition "at" to "through" in paragraph 1, it further clarifies 
that  the  role  of  the  points  of  single  contact  may  be  limited  to  acting  as  an  intermediary 
between  the  service  provider  and  the  competent  authority/ies.  This  clarification  can  be 
accepted by the Commission.  

Right  to  information  (Article  7).  The  common  position  integrates  the  amendments  of  the 
European  Parliament  (31,  33,  105-106  and  108-110)  accepted  in  the  amended  proposal, 
subject  to  minor  redrafting  relating  to  the  non-interference  of  the  Directive  with  Member 
States' legislation on the use of languages.  

Procedures by electronic means (Article 8). The common position integrates the text of the 
amended proposal, which drew on the European Parliament's amendments (relevant parts of 
amendment  32  and  111).  The  common position clarifies in Recital  52  that  the  obligation  to 

EN 

4 

   EN 

 
provide  for  procedures  by  electronic  means  does  not  prevent  Member  States  from  offering 
other  means,  in  addition  to  electronic  ones,  to  complete  procedures  and  formalities.  In 
addition,  the  common  position  extends  the  possibility  to  apply  non-electronic  procedures  to 
cases where it is necessary to vet the personal integrity of the provider or his responsible staff. 
Lastly,  the  common  position  provides  in  paragraph  3  that  rules  designed  to  facilitate 
interoperability must take into account "common standards developed at Community level". 
These changes can be accepted by the Commission, as they improve the text. 

3.2.3.  Freedom of establishment for providers (Articles 9-15) 

Authorisation schemes (Article 9). The common position integrates the text of the amended 
proposal  (which  had  incorporated  amendments  35  and  112-113  and,  partially,  amendments 
37,  115  and  117),  subject  to  minor  drafting  changes  in  paragraph  3.  The  Commission  can 
accept this modification, since it enhances the clarity of the text without altering the substance 
of the European Parliament's amendment.  

Conditions  for  granting  of  authorisation  (Article  10).  The  common  position  integrates  the 
text  of  the  amended  proposal,  partially  based  on  the  European  Parliament's  amendments 
(amendments  34,  118,  119,  120,  121,  122),  subject  to  minor  drafting  changes.  Unlike  the 
amended  proposal  (which  had  endorsed  the  European  Parliament's  amendment  120),  the 
common  position  does  not  provide  in  paragraph  3  that  Member  States,  when  assessing 
whether  conditions  for  granting  authorisations  in  another  Member  State  are  equivalent  or 
essentially comparable, shall consider the effect and effectiveness of their enforcement. This 
deletion is acceptable to the Commission because the sentence gave rise to concerns relating 
to  its  practicability.  Finally,  the  common  position  specifies  in  paragraph  6  that  decisions 
granting an authorisation need not be reasoned or open to challenge before the courts; this is 
in line with amendment 122 of the European Parliament, which had not been integrated into 
the amended proposal. The Commission can accept this addition. 

Duration  of  authorisation  (Article  11).  Selection  from  among  several  candidates  (Article 
12). The common position integrates the text of the amended proposal, largely based on the 
European  Parliament's  amendments  (36,  38,  124-127,  128  and  129;  part  of  amendments  30 
and 130). 

Prohibited  requirements  (Article  14).  The  common  position  integrates  the  text  of  the 
amended proposal, chiefly based on the European Parliament's amendments (41, 138, 140 and 
141, 40, 142 and 143), with additions in paragraph 6 (the ban on consultation of competing 
operators does not concern consultation of the public at large) and in paragraph 7 (insurance is 
equated  with  financial  guarantees:  Member  States  may  still  impose  either  one  of  those,  as 
long  as  there  is  no  obligation  to  take  them  out  from  a  provider  established  in  that  Member 
State). The Commission can accept these additions as they improve the clarity of the text. 

Requirements to be evaluated (Article 15). The common position follows the approach of the 
amended  proposal  and  the  European  Parliament's  amendments  (42,  144-145,  147-149  and 
242; 146 and 150) endorsed by it, while making some changes in the provision (see below, § 
3.3). 

EN 

5 

   EN 

 
3.2.4.  Freedom  to  provide  services  and  derogations  (Articles  16-18,  corresponding  to 

Articles 16-19 in the Commission's amended proposal) 

As regards the provision on the freedom to provide services (Article 16) the common position 
fully  reflects  the  European  Parliament's  amendments  (see  amendments  45  to  47,  152  and 
293/rev4) which were incorporated into the Commission's amended proposal, and adds a new 
recital  (82)  containing  clarifications  on  the  application  of  Member  States'  rules  on 
employment  conditions.  Concerning  the  related  additional  derogations  (Article  17)  the 
common  position  also  reflects  the  amendments  of  the  European  Parliament  (53,  48,  50,  51, 
54, 161, 162, 163, 165, 169, 170,  171, 172, 173,  174  and 175,  400, 404) and integrates the 
text of the amended proposal with a minor redrafting in paragraph 12 as regards shipment of 
waste.  The  provision  on  transitional  derogations  (Article  18  of  the  Commission's  original 
proposal)  has  been  deleted  in  line  with  the  European  Parliament's  vote  in  first  reading  and 
with  the  Commission  amended  proposal.  Finally,  the  common  position  confirms  the  text  of 
the amended proposal with regard to case-by-case derogations (Article 18, corresponding to 
Article 19 of the Commission's amended proposal). 

3.2.5.  Rights of recipients of services (Articles 19-21, corresponding to Articles 20-23 in 

the Commission's amended proposal) 

Concerning the rights of recipients of services (Articles 19-21) the common position reflects 
to  a  very  large  extent  the  amendment  adopted  by  the  European  Parliament  as  well  as  the 
Commission  amended  proposal.  More  specifically,  as  regards  the  provisions  on  prohibited 
restrictions and non-discrimination (Articles 19-20) the common position confirms the text 
of  the  amended  proposal  apart  from  the  deletion  of  paragraph  c)  which  is  accepted  by  the 
Commission.  On  assistance  for  recipients  (Article  21)  the  common  position  reflects,  with 
minor changes, the European Parliament's amendment 178 and the amended proposal. Finally, 
the  common  position  follows  fully  the  approach  of  the  European  Parliament  and  of  the 
amended  proposal  and  confirms  the  deletion  of  the  provisions  on  the  reimbursement  of 
healthcare  received  in  another  Member  State  which  were  contained  in  Article  23  of  the 
original proposal.  

3.2.6.  Posting  of  workers  and  of  third  country  nationals  (Articles  24  and  25  of  the 

original proposal) 

The  common  position  follows  the  approach  of  the  European  Parliament  (amendments  181, 
182/248,  63-64,  183/249  and  65-66)  and  of  the  amended  proposal  and  thus  confirms  the 
deletion of Articles 24 and 25. 

3.2.7.  Quality  of  services  (Articles  22-27,  corresponding  to  Articles  26-32  in  the 

Commission's amended proposal) 

Concerning the provision on information on providers and their services (Article 22, former 
Article  26  of  the  Commission's  amended  proposal),  the  common  position  reflects  the 
European Parliament's vote as well as the amended proposal as regards the obligation for the 
provider  to  disclose  information  on  its  legal  status  and  form.  Furthermore  all  information 
requirements  which  were  already  required  by  other  provisions  of  the  Directive  (such  as  on 
insurance  or  guarantees,  after-sales  guarantees,  multidisciplinary  activities  and  codes  of 
conduct)  are  grouped  together  in  this  article,  which  is  accepted  by  the  Commission.  On 
professional  liability  insurance (Article  23,  former Article 27 of the Commission's amended 

EN 

6 

   EN 

 
proposal),  the  common  position  follows  the  approach  of  the  European  Parliament  (see  in 
particular amendments 64, 187, 188 and 190) and of the amended proposal and confirms that 
professional  insurance  is  not  mandatory.  The  common  position  inserts  a  number  of  minor 
changes  to  the  amended  proposal  such  as  the  transfer  of  paragraph  2  on  information 
requirements  to  Article  26  and  the  deletion  of  the  procedure  in  the  case  of  failure  in  the 
insurance  market,  which  was  in  fact  redundant  given  the  non  mandatory  character  of  the 
professional  insurance.  Finally,  in  relation  to  provisions  on  multidisciplinary  activities 
(Article 25, former Article 30 of the Commission's amended proposal), policy on quality of 
services (Article 26, former Article 31) and settlement of disputes (Article 27, former Article 
32) the common position confirms in full, with only minor drafting adjustments, the texts of 
the European Parliament's amendment and of the amended proposal.  

3.2.8.  Administrative cooperation (Articles 28-36, corresponding to Articles 33-38 in the 

Commission's amended proposal) 

Mutual  assistance,  supervision  and  related  provisions  (Articles  28-36).  The  common 
position integrates with very minor changes the text of the amended proposal which itself had 
incorporated the amendments of the European Parliament (see in particular amendments 68-
69, 197-198, 200-203) although it used a different structure based on previous discussions in 
the Council.  

3.2.9.  Convergence  programme  and  final  provisions  (Articles  37-46,  corresponding  to 

Articles 39-48 in the Commission's amended proposal) 

With regard to codes of conduct (Article 37, former Article 39 in the Commission's amended 
proposal),  additional  harmonisation  (Article  38,  former  Article  40),  and  the  review  clause 
(Article  41,  former  Article  43),  the  common  position  confirms,  with  minor  changes  that  do 
not affect the substance of these provisions, the European Parliament's amendments and the 
amended  proposal.  Finally,  concerning  the  implementation  period  (Article  44  (1),  former 
Article 45(1)), the common position incorporates the European Parliament's amendment and 
extends the implementation period to 3 years, instead of the 2 years which were envisaged in 
the amended proposal. This can be accepted by the Commission. 

3.3. 

Other elements introduced by the Council in the common position 

Authorisation procedures (Article 13). In comparison to the amended proposal, the common 
position  makes  some  changes  to  paragraphs  3  and  4  of  Article  13  and  in  Recital  63,  which 
relate to the principle that authorisations are deemed to have been granted in the absence of a 
response  by  competent  authorities.  According  to  the  common  position  Member  States  are 
allowed  to  extend  the  deadline  for  the  reply  when  this  is  justified  by  the  complexity  of  the 
issue,  and  provided  that  the  applicant  is  duly  informed  of  the  extension  and  of  the  reasons 
thereof.  Furthermore,  recital  63  explains  that  different  arrangements  for  authorisation 
procedures  that  can  be  put  in  place  by  Member  States,  when  objectively  justified  by 
overriding  reasons  relating  to  the  public  interest,  may  include  rules  providing  for  tacit 
rejection  of  the  request  upon  expiry  of  the  relevant  time  period.  These  changes  should  also 
meet concerns of the European Parliament which had voted for the deletion of the principle of 
tacit  authorisations  since  this  principle  was  considered  as  not  allowing  for  sufficient 
flexibility. At the same time the aim of ensuring that authorisation procedures became more 
rapid  and  more  predictable  for  economic  operators  will  not  be  prejudiced.  Therefore  the 
Commission accepts the changes made to Article 13 in the common position.  

EN 

7 

   EN 

 
Evaluation  process  relating  to  the  freedom  of  establishment  (Article  15).  The  common 
position  makes  some  changes  to  paragraph  4  concerning  the  implication  of  the  evaluation 
process for services of general economic interest. These modifications aim to clarify that the 
evaluation  process  should  not  obstruct  the  performance  of  tasks  assigned  to  services  of 
general  economic  interest.  This  should  meet  the  concerns  of  the  European  Parliament 
concerning the potential effect of the evaluation process on SGEI. In the Commission's view 
it is clear that the evaluation process should not put at risk the performance of tasks of SGEI. 
to  notification 
The  common  position  furthermore 
requirements  for  Member  States.  This  should  address  concerns  of  the  European  Parliament 
which  considered  the  notification  obligation  as  being  too  restrictive  for  Member  States.  In 
particular, the common position deletes from paragraph 6 the phrase "and the need for it arises 
from new circumstances". This deletion can be accepted. In paragraph 7, the common position 
adds a new sentence to explain that notification in accordance with Directive 98/34/EC will 
also fulfil the obligation of notification under this Directive. The Commission can also accept 
this  insertion,  which  provides  enhanced  legal  certainty  for  the  national  administrations  and 
Community  institutions  alike.  The  Commission  underlines  that  only  information  society 
services are currently covered by Directive 98/34/EC, as modified by Directive 98/48/EC.  

introduces  changes  with  respect 

Screening  of  national  requirements  (Article  39,  corresponding  to  Article  41  in  the 
Commission's amended proposal. The common position provides, in Article 39 (5), for a new 
procedure  by  which  Member  States  shall  present  a  report  to  the  Commission  on  national 
requirements the application of which could fall under Article 16(1) third sub-paragraph and 
Article  16(3)  and  the  Commission  shall  communicate  these  requirements  to  other  Member 
States  and  provide  analyses  and  orientations  on  their  application  in  the  context  of  the 
Directive. The Commission can accept these provisions since they increase transparency and 
legal certainty for economic operators.  

Comitology  (Article  40,  corresponding  to  Article  42  of  the  Commission's  amended 
proposal). The common position provides for a regulatory committee. The Commission can 
accept this provision. 

Protection  of  personal  data  (Article  43).  The  common  position  inserts  an  Article  on  the 
protection of personal data which seeks to clarify that the application of the Directive and in 
particular the exchange of information between Member States shall respect rules on personal 
data. The Commission can accept this provision 

4. 

CONCLUSIONS 

The  Commission  takes  the  view  that  the  common  position  retains  the  key  elements  of  the 
Commission's modified proposal as well as those of the European Parliaments amendments. 
The  Commission  finds  that  the  common  position  strikes  a  good  balance  and  constitutes  a 
viable compromise that will help achieving a genuine Internal Market in services as well as 
realising  the  objectives  of  the  Lisbon  strategy  while  respecting  a  high  quality  of  services, 
including public services, social and consumer rights. The Commission therefore supports the 
common position adopted by the Council. 

EN 

8 

   EN