COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Towards a better functioning Single Market for services – building on the results of the mutual evaluation process of the Services Directive  (Text with EEA relevance)
Date: 2011-01-27
Institutions: European Commission
Subjects: administrative cooperation, administrative formalities, freedom to provide services, right of establishment, service, services contract, single market

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EUROPEAN COMMISSION 

Brussels, 27.1.2011 
COM(2011) 20 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Towards a better functioning Single Market for services – building on the results of the 
mutual evaluation process of the Services Directive 

(Text with EEA relevance) 

{SEC(2011) 102 final} 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Towards a better functioning Single Market for services – building on the results of the 
mutual evaluation process of the Services Directive  

(Text with EEA relevance) 

Services are the driving force of the EU economy. Broadly speaking, 9 out of 10 new jobs are 
created  in  this  sector.  A  well-functioning  and  truly  integrated  Single  Market  for  services  is 
therefore  a  key  tool  for  creating  the  growth,  jobs  and  innovation  needed  in  Europe  and  to 
enhance its global competitiveness. The structural reforms required to create a genuine Single 
Market for services are also at the heart of the "Europe 2020" strategy1, which highlighted that 
"an open single market for services must be created on the basis of the Services Directive". 
The recently adopted Commission Communication "Towards a Single Market Act"2 stressed 
the  need  to  further  deepen  the  Single  Market  for  services  and  to  build  on  the  results  of  the 
"mutual evaluation" process provided for in the Services Directive3.  

In this Communication, the Commission presents the main results of the "mutual evaluation" 
process and builds on them to move on to a new phase in the building up of a Single Market 
for services where the benefits of the Services Directive are consolidated and complemented 
by  a  set  of  further  actions.  This  Communication  is  accompanied  by  a  Commission  staff 
working  document  describing  in  more  detail  the  work  undertaken  during  the  "mutual 
evaluation" process and the first set of results of the legislative reforms adopted by Member 
States to implement the Directive. 

1.  SERVICES ARE THE DRIVING FORCE OF THE EU ECONOMY  

The creation of a Single Market for services – an area without internal frontiers in which the 
free movement of services is ensured – has been one of the cornerstones of the European 
project from its origin. The Single Market for services was not designed, and should not be 
seen, as an end in itself. It is a tool to improve European businesses' and citizens' daily life 
and  welfare.  We  need  to  use  the  enormous  potential  it  offers  as  a  lever  for  creating 
sustainable growth and jobs, widening choice for consumers and opening new opportunities 
for businesses. 

A  well  functioning  Single  Market  for  services  is  even  more  urgently  needed  in  light  of  the 
current  economic  crisis.  Today,  services  are  the  main  driver  of  the  EU  economy  and 
economic  activity  has  been  shifting  markedly  to  knowledge-intensive  services  over  the  last 

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Communication from the Commission "Europe 2020 - A strategy for smart, sustainable and inclusive 
Growth", COM(2010) 2020 final. 
"Towards  a  Single  Market  Act  -  For  a  highly  competitive  social  market  economy",  COM(2010)  608 
final. 
Directive  2006/123/EC  of  the  European  Parliament  and  of  the  Council,  of  12  December  2006,  on 
Services in the Internal Market. OJ L 376/36 of 27.12.2006. 

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decades. Services account for over two-thirds of EU GDP and employment, and have been 
the  source  of  all  net  job  creation  in  recent  years.  Furthermore,  approximately  75%  of 
services trade concerns the supply of services to other businesses in almost any sector of the 
European  economy,  in  particular  industry.  More  integrated  and  better  functioning  services 
markets should therefore enhance the competitiveness of the EU economy as a whole.  

However, the Single Market for services is not yet delivering its full potential. Services still 
represent only around one-fifth of total intra-EU trade, a share that is modest compared with 
their presence in the economy (even taking into account the fact that certain services are by 
nature of a less tradable and/or of a more local character). The absence of dynamism in intra-
EU services trade becomes clear when mirrored against EU's global trade in services. Since 
2004, trade in services between the EU and the rest of the world has been growing faster than 
inside  the  Single  Market.  Today  only  about  8%  of  European  SMEs  do  business  in  other 
Member  States.  As  a  consequence,  innovative  activities  that  are  vital  for  growth  remain 
within  national  borders  and,  often,  do  not  reach  the  required  critical  mass.  This  hampers 
choice  for  users  of  services  as  well  as  Europe's  potential  for  innovation.  Furthermore, 
productivity growth has been slow in recent years in a number of services sectors, partly due 
to  the  low  intensity  of  competition,  which  remains  inhibited  by  unjustified  barriers  to  the 
Single Market.  

In short, the EU economy urgently needs a more integrated, deepened Single Market for 
services.  This  is  necessary  to  help  businesses  –  in  services  and  industry  –  to  grow,  create 
more jobs and better position themselves globally. It is also key to leading the EU economy 
onto  the  path  to  recovery.  Additional  growth  in  services  should  also  help  accompanying 
structural changes in the EU economy and compensate for employment adjustments in other 
sectors.  

The  adoption  and  subsequent  implementation  of  the  Services  Directive  has  been  a  crucial 
milestone in improving the functioning of the Single Market for services. It has done so by 
removing  unjustified  barriers,  simplifying  the  regulatory  framework  and  helping  modernise 
public administrations. Yet more remains to be done. The recently adopted Communication 
“Towards a Single Market Act” confirmed the importance of the Single Market for services 
and the need to further develop it. Taking the results of the process of "mutual evaluation" of 
the Services Directive as a starting point, this communication sets out an ambitious work 
programme  that  should  bring  us  closer  to  this  aim.  It  complements  and  reinforces  other 
ongoing efforts at EU level to improve the functioning of services markets, in particular the 
follow-up of the "retail market monitoring" exercise4 and the Europe 2020 flagship initiative 
"A  Digital  Agenda  for  Europe"5  ,  as  well  as  the  forthcoming  initiatives  to  foster  a  better 
functioning Single Market for e-commerce6. 

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See  the  Retail  market  monitoring  report:  “Towards  more  efficient  and  fairer  retail  services  in  the 
internal market for 2020”, COM(2010)355 final. 
Communication  from  the  Commission  "Europe  2020  -A  strategy  for  smart,  sustainable  and  inclusive 
growth", COM(2010) 2020 
Public consultation on the future of electronic commerce in the internal market and the implementation 
of the Directive on Electronic commerce (2000/31/EC) August 2010. 

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2.  THE SERVICES DIRECTIVE –  A  MAJOR  STEP  TOWARDS  A  BETTER  FUNCTIONING SINGLE 

MARKET FOR SERVICES  

Services are very diverse and often complex activities. So are the rules that Member States 
impose on them  and  the barriers  service providers and recipients may face  when  seeking to 
benefit  from  the  Single  Market.  Barriers  hit  services  harder  than  goods  -  because  of  the 
intangible nature of services, the importance of the know-how of the service provider, the use 
of equipment across borders, etc. They also hit SMEs, in particular micro-enterprises (95% of 
all services providers in the EU), harder than larger firms. Many of these barriers are of a 
cross-cutting  nature,  i.e.  are  common  to  a  wide  variety  of services across  all stages of the 
provider's activity. In addition, they have a number of common features, including the fact 
that they often arise from administrative burdens, the legal uncertainty associated with cross 
border activity and the lack of mutual trust between Member States7.  

Against this background, the European Parliament and the Council adopted in December 
2006 the Services Directive, a horizontal Single Market instrument that covers a large variety 
of service activities representing about 40% of EU GDP and employment. The Directive had 
to  be  fully  implemented  by  end  2009.  Its  three  years'  implementation  period  required  an 
unprecedented effort across all levels of national administrations and strong political backing, 
including from the European Parliament and the Council.  

in 

step 

forward 

terms  of 

removing  barriers  and 

The  results  of  implementation,  even  if  still  under  completion  in  some  Member  States, 
the 
constitute  a  major 
modernisation/simplification  of  legislation.  Hundreds  of  discriminatory,  unjustified  or 
disproportionate  requirements  existing  throughout  the  EU  have  been  abolished  in  important 
service sectors such as retail, the services of the regulated professions, the construction sector, 
the  tourism  sector  or  the  business  services  sector.  This  has  been  carried  out  via  more  than 
1.000 implementing laws, some of which were "omnibus laws" containing dozens of changes 
to different pieces of legislation. Many Member States have also set up specific mechanisms 
to prevent new barriers from emerging in the future such as internal notification obligations, 
guidelines  for  future  legislation  or  "Single  Market  tests"  in  the  impact  assessment  of  new 
requirements.  Finally,  clauses  to  facilitate  the  free  movement  of  services  from  providers 
legally  established  in  other  Member  States  have  been  introduced  in  national  legislation.  If 
properly enforced, they should significantly improve the functioning of the Single Market for 
services8. However, it is important to stress that the full potential of the Directive will only 
be  realised  when  all  Member  States  complete  all  the  required  legislative  changes  to 
implement  it.  This  is  particularly  the  case  in  those  Member  States  that  have  adopted 
framework horizontal laws implementing the Directive but have not (or have hardly) changed 
existing sector specific legislation to remove unjustified barriers there.  

Legislative changes only represent one strand of the achievements during implementation. A 
major effort to modernise public administrations has also been made and is still being pursued 
-in  particular  via  the  setting  up  of  “Points  of  Single  Contact”-  e-government  portals  for 
business  now  operational  in  most  Member  States.  And  a  culture  of  administrative 
cooperation to facilitate the free movement of services -including via the use of the "Internal 

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For  a  full  analysis,  see  the  2002  Report  from  the  Commission  to  the  Council  and  the  European 
Parliament of "The State of the Internal Market for Services" COM (2002) 441 final of 30.07.2002.  
See in annex to this Communication an overview of legislative changes adopted by Member States and 
the services sectors that should benefit the most.  

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Market  Information"  system  -  is  developing.  Again,  these  efforts  need  to  be  sustained  to 
ensure that the effects of the Directive are fully felt on the ground.  

Overall, conservative estimates predict that the implementation of the Services Directive has 
the potential to bring about economic gains of up to 140 billion Euros, representing up to 
1.5%  growth  of  EU  GDP9.  These  estimates  do  not  take  into  account  the  purely  national 
effects of administrative and regulatory simplification, which should also be significant.  

The importance of the Services Directive for the development of the Single Market for 
services  does  not  end  here.  Indeed,  the  Directive  contains  a  set  of  mechanisms  and  tools 
enabling further progress beyond implementation. A particularly powerful tool is the process 
of mutual evaluation foreseen in the Directive, which was undertaken by Member States and 
the  Commission  throughout  2010.  This  Communication  presents  its  key  findings  and 
identifies  on  this  basis  a  set  of  actions  to  further  deepen  the  Single  Market  for  services 
and  to  bring  it  closer  to  the  needs  of  EU  citizens  and  businesses.  It  builds  on  the  results  of 
discussions  between  the  Member  States  and  the  Commission  and  the  main  conclusions 
reached, as well as the contributions to the public consultation that was also carried out.  

3. 

THE PROCESS OF MUTUAL EVALUATION – A POWERFUL TOOL TO ASSESS THE STATE 
OF THE SINGLE MARKET FOR SERVICES  

The  "mutual  evaluation"  process  was  an  innovative  and  evidence-based  exercise  of  "peer 
review",  foreseen  by  the  Services  Directive  itself.  Whilst  such  a  mechanism  would  not  be 
adapted or required in the context of the implementation of all EU Directives, the specificities 
of the Services Directive made it necessary. First, its wide scope required Member States to 
carry out a systematic and comprehensive review of their legislation. Second, the Directive 
gave  Member  States  the  task  of  assessing  a  number  of  legal  requirements  typically 
imposed  on  service  providers:  requirements  on  the  establishment  (such  as  authorisation 
schemes,  territorial  restrictions  or  capital  ownership  restrictions)  and  requirements  on  the 
cross border provision of services (such as registration, notification or insurance obligations). 
Member States had to review and assess these requirements against certain criteria set out in 
the  Directive  to  see  if  they  should  be  maintained,  needed  to  be  modified,  or  had  to  be 
abolished.  

In view of the magnitude and complexity of these tasks, the exchange of information and 
experience and the "peer review" allowed by the "mutual evaluation" process were key 
to engage all Member States on the path of successful implementation of this ambitious piece 
of  legislation.  It  is  worth  noting,  however,  that  certain  implementation  related  questions  – 
such as the setting up of the "Points of Single Contact" – did not form part of this exercise.  

In  October  2009,  at  the  High  Level  Group  of  the  Competitiveness  Council,  the 
Commission and Member States agreed on the methodology to use for what was to be a 
major  exercise  involving  30  countries10  and  covering  close  to  35.000  requirements.  Work 
started  in  2010  with  Member  States  meeting  between  January  and  March  in  "clusters"  of 
five  countries  each  to  discuss  the  situation  in  those  individual  countries  and  prepare  further 
discussions. It then continued between March and October with "plenary meetings" at which 

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"Expected  economic  benefits  of  the  European  Services  Directive",  Netherlands  Bureau  for  Economic 
Policy Analysis (CPB), November 2007. 
The  three  EFTA  countries  part  of  the  EEA  Agreement  -  Iceland,  Lichtenstein  and  Norway-  also 
participated. 

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specific  requirements  and  the  main  services  sectors  covered  by  the  Directive  were 
examined11.  Interested  parties  were  called  upon  to  provide  their  views  in  a  public 
consultation which was conducted between the end of June and mid September 2010. 

4.  THE KEY FINDINGS OF THE PROCESS OF MUTUAL EVALUATION 

4.1.  What has been achieved?  

The  overall  assessment  of  the  "mutual  evaluation"  process  is  very  positive.  By  putting  in 
place  a  structured  dialogue  between  Member  States  it  has  created  transparency  as  to  the 
results of the implementation of the Services Directive and it has helped identify and promote 
good  regulatory  practices.  Discussions  have  also  helped  to  foster  a  habit  of  dialogue. 
Contact and exchange  of  information between Member  States  (from bilateral and  “clusters” 
contacts  to  larger  groups)  have  multiplied  all  along  the  process  and  have  been  key  to  its 
results.  

The process of  mutual  evaluation has  also  allowed  the drawing up of  a  detailed  picture  of 
the state of an important part of the Single Market for services. It has been the first time 
that Member States and the Commission have carried out together a thorough assessment of 
national rules affecting service activities. This concerned rules at national, regional and local 
level as well as rules set by professional associations with regulatory powers. In that respect, 
mutual evaluation has had an unprecedented "Single Market effect" within Member States 
as all levels of national administrations were called upon to critically assess their own rules 
and those existing in other Member States from a Single Market perspective. 

Finally, this process has also proven to be a valuable tool to identify remaining obstacles for 
the Single Market and to lay the basis for future policy actions in the service sector. All this 
was possible thanks to the active involvement of Member States, who took ownership of the 
process and actively participated in it. 

4.2.  What remains to be done?  

Discussions with Member States and stakeholders' contributions have shown that the Single 
Market  remains  a  work  in  progress  in  certain  service  sectors,  in  particular  as  far  as  the 
cross-border provision of services is concerned.  

Part of the problem seems to be that a number of EU rules adopted over the years to help 
the functioning of the Single Market for services are not being used to their full extent 
and  are,  at  times,  implemented  or  applied  inconsistently.  Services  are  often  subject  to  a 
number  of  different  EU  instruments.  Some  of  them  apply  in  a  horizontal  manner  like  the 
Services  Directive  or  the  E-commerce  Directive12.  Others  such  as  the  Directive  on  the 

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The  following  services  sectors  were  identified  by  Member  States  as  a  priority:  construction  and 
property related services, tourism and related services, food and beverage services, services of regulated 
professions,  wholesale  and  retail  services,  business  services  and  private  education  services.  The 
Services Directive Committee was informed on the results of the process at its meeting of 15 October 
2010. 
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, (OJ L 
178, 17.7.200, p.1). 

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Recognition  of  Professional  Qualifications13  regulate  issues  of  central  relevance  to  a  large 
number  of  service  activities.  There  are  many  other  EU  instruments  which  have  a  very 
significant  impact  on  the  services  sector  like  those  regulating  business-to-consumer 
transactions or the protection of the environment. The mutual evaluation has shown that there 
is  sometimes  a  lack  of  clarity  as  to  how  these  instruments  interact.  Also,  sometimes  the 
national  implementation/application  of  these  instruments  does  not  seem  to  take  sufficient 
account of the actual functioning of the Single Market. In practice, this leads to uncertainty as 
to  which  rules  apply,  in  particular  in  the  context  of  cross-border  service  provision,  to  the 
detriment of the ability and willingness of SMEs to operate abroad. 

The mutual evaluation has also revealed that remaining difficulties result from the wide use 
by  Member  States  of  the  possibility  to  reserve  certain  service  activities  for  certain 
operators.  There  are  800  different  activities  in  the  EU  that  are  considered  to  be  regulated 
professions  in  one  or  more  Member  States  and  are  reserved  for  providers  with  specific 
qualifications. Whilst in certain cases there may be valid policy reasons to justify this practice 
(for instance because of the complexity of the activities to be performed or their implications 
for the security or safety of the consumer), this does not seem to be always the case. Many 
activities are regulated in only a few Member States and more than 25% of them are regulated 
in just one Member State (for instance in the case of the services of photographers, barmen, 
corset  makers  or  chambermaids).  This  issue  has  probably  been  the  one  most  frequently 
mentioned  by  Member  States  as  a  barrier  for  the  functioning  of  the  Single  Market,  in 
particular for cross-border services, notably between Member States where the activity is not 
regulated  and  Member  States  where  the  activity  is  regulated  (for  instance,  a  self-employed 
photographer may not be able to photograph a corporate event happening in a Member State 
which reserves this activity to persons with specific professional qualifications in photography 
unless he can prove that he has at least two years of prior professional experience). Member 
States have also highlighted the fact that in some sectors, e.g. construction, there seems to be 
a high number of regulated “specialisations” whose relevance may be questioned because of 
the  costly  market  fragmentation  they  provoke  and  which  may  constitute  a  hindrance  to  the 
provision of high quality services (for instance, someone with the qualification of “electrical 
technician” who  may  face  difficulties when wanting to  provide services  in another Member 
State where certain of his activities would be reserved to a different regulated profession, such 
as “electrical equipment installers”). 

Discussions  during  the  mutual  evaluation  also  raised  questions  related  to  legal  form 
requirements (for instance, restrictions as to the legal forms available to operators taking up 
certain  activities  such  as  a  prohibition  on  providers  of  crafts  services  to  take  the  form  of 
limited liability companies) and capital ownership requirements (for instance, obligations to 
have  specific  qualifications  in  order  to  hold  share  capital  in  companies  providing  certain 
services such as the rule that one must be a qualified tax advisor to hold capital in a company 
offering tax advice services). Whilst there may be valid policy reasons behind some of these 
requirements  (for  instance  ensuring  the  independence  or  the  personal  involvement  of  the 
service provider) they nonetheless create barriers to the functioning of the Single Market for 
services.  Despite  the  improvements  attained  through  the  implementation  of  the  Services 
Directive, 
the 
proportionality  of  certain  rules  was  intensely  debated  during  the  mutual  evaluation. 
Limitations  on  the available  legal forms  are  often the cause of  difficulties  for companies or 

important  differences  remain.  Consequently, 

justification  and/or 

the 

13 

Directive  2005/36/EC  of  the  European  Parliament  and  the  Council  of  7  September  2005  on  the 
recognition of professional qualifications (OJ L 255, 30.9.2005, p. 22). 

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professionals wanting to establish in another Member State as they restrict their choice of the 
most appropriate vehicle for purposes such as taxation or financing. Requirements relating to 
capital  ownership  may  result  in  reduced  options  for  the  acquisition  of  financing  and  in 
limitations  on  available  business  models.  Finally,  the  application  of  legal  form  or  capital 
ownership requirements to cross-border provision of services may have particularly restrictive 
effects  such  as  depriving  certain  providers  of  the  possibility  to  offer  their  services  cross-
border merely because of the legal form in which they operate. 

The  mutual  evaluation  process  has  also  confirmed  that  insurance  obligations  are  often 
imposed  on  cross-border  service  providers  by  the  Member  State  where  the  service  is 
provided,  disregarding  the  fact  that  the  provider  may  already  be  adequately  insured  in  its 
place of establishment (for instance a patent agent going to another Member State to submit a 
patent application for one of its clients back home being required to take out a new insurance 
policy  even  if  the  risk  vis-à-vis  that  client  is  already  insured).  In  light  of  the  Services 
Directive,  the  justification  and  proportionality  of  imposing  such  obligations  needed  to  be 
assessed in a good number of cases. In the cases where such a requirement can be justified, 
providers  could  be  faced  with  a  very  practical  problem:  it  seems  that  there  are  significant 
difficulties  in  obtaining  insurance  for  cross-border  service  activities  (insurance  may  be 
difficult  to  find  on  the  market  or  may  be  subject  to  highly  onerous  conditions).  This  was 
highlighted during the mutual evaluation process as an issue creating significant problems for 
the cross border provision of services in sectors such as business services or construction. 

Finally,  the  mutual  evaluation  process  confirms  the  need  to  make  the  Single  Market  for 
services  a  more  concrete  reality  on  the  ground,  keeping  in  mind  that  it  is  shaped  by  the 
simultaneous application of a multitude of rules at regional and local level in an increasingly 
large  and  diverse  Union.  We  need  more  dialogue  (with  and  between  Member  States’ 
administrations  as  well  as  between  administrations  and  service  providers)  on  issues  that  are 
central to the Single Market such as the freedom to provide services, and more transparency 
to avoid as much as possible the emergence of new barriers. The complexity of a large Union 
also  increases  the  importance  of  enforcement  at  national  level,  in  particular  ensuring  that 
service  providers  have  effective,  fast  and  affordable  means  of  redress  at  national  level  to 
enforce their Single Market rights.  

5.  THE  WAY  FORWARD:  ACTIONS  FOR  FURTHER  DEEPENING  THE  SINGLE  MARKET  FOR 

SERVICES 

The  key  findings  of  the  mutual  evaluation  demonstrate  that  the  Commission  needs  to  take 
further steps to enable the European economy to fully benefit from the potential of the Single 
Market for services.  

As a matter of priority, the Commission will continue and step up work with Member States 
on  an  individual  basis  so  as  to  achieve  a  complete  and  correct  transposition  and 
implementation of the Services Directive in all Member States. In the first half of 2011, 
the Commission will carry out a series of bilateral meetings with those Member States where 
there  are  strong  indications  of  incorrect  or  incomplete  implementation  of  the  Services 
Directive. When needed, formal enforcement measures will be taken.  

In parallel, a first economic assessment of the actual implementation of the Directive and of 
its impact on the functioning of the services markets will be carried out by the Commission in 
2011.  

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In  addition,  the  Commission  ,  building  on  the  acquis,  will  take,  a  number  of  additional 
measures to take the Single Market for services forward.  

5.1.  A Single Market "performance check" for services 

Together with Member States, the Commission will undertake a "performance check" of the 
Single Market for services. The aim here will be to assess the situation from the perspective of 
the users of the Single Market, such as the company that wants to open a subsidiary in another 
Member  State,  the  self-employed  person  who  wants  to  provide  services  across  borders,  the 
SME  or  the  consumer  seeking  to  use  services  provided  by  someone  established  in  another 
Member  State.  The  "performance  check"  should  provide  an  assessment  of  how  different 
pieces of EU legislation are applied and how they work on the ground.  

In  order  to  get  a  realistic  and  useful  overview  of  the  functioning  of  the  Single  Market  for 
services  through  the  "performance  check",  it  will  be  necessary  to  take  account  of  EU 
instruments beyond the Services Directive. Furthermore, the "performance check" should not 
be carried out in the abstract but rather on the basis of concrete sectors and activities (practical 
case studies) which will illustrate how the Single Market works and in what areas problems 
remain.  The  idea  would  be  to  define  a  set  of  practical  scenarios  in  specific  sectors  where 
businesses  and  citizens  most  often  confront  poor  functioning  of  the  Single  Market  and  to 
prioritise  sectors  on  the  basis  of  employment  and  growth  potential.  This  does  not  mean 
however that the results of the performance check will only be of relevance for those specific 
sectors. In view of the often cross-cutting nature of the barriers in the services sector and the 
legislative instruments applicable to it, the "performance check" will also be useful to identify 
issues of a horizontal nature. On the basis of the mutual evaluation process, it would seem that 
services  in  the  construction  sector,  the  tourism  sector  and  the  business  services  sector  are 
likely  to  be  good  candidates  for  the  "performance  check".  In  operational  terms,  the 
"performance  check"  should  bring  together  different  Commission  services  and  the  relevant 
departments  of  Member  States'  administrations.  They  will  work  together  to  assess  the 
difficulties  in  joint  application,  at  national  level,  of  EU  instruments,  the  reasons  for  the 
difficulties  and  possible  solutions.  The  analysis  should  be  supported  by  evidence  of  how 
specific sectors work in practice14, and should include contributions from stakeholders.  

The "performance check" should allow the formulation of sector-specific conclusions on the 
functioning  of  the  Single  Market  for  services  and,  where  necessary,  identify  the  need  for 
other actions, including legislative intervention if required 

In 2011, based on Member States' input as to the specific sectors that should be examined, the 
Commission will launch the “performance check” of the Single Market for services. The aim 
will  be  to  finalise  it  within  one  year  with  a  view  to  report  on  the  results  to  the  European 
Parliament and to the Council and, if required, propose further measures by the end of 2012.  

14 

The  Commission  Consumer  Market  Scoreboard  for  instance  provides  very  useful  information  as 
regards the practical functioning of service markets from the point of view of consumers. 

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5.2.  Targeted actions aimed at tackling remaining regulatory barriers unjustifiably 

hindering the potential of the Single Market for services  

The  mutual  evaluation  process  has  identified  several  specific  issues  which  seem  to  cause 
difficulties for businesses and citizens in the Single Market and which merit examination in 
more  detail.  The  identification  and  evaluation  of  the  extent  of  these  difficulties  should  be 
discussed during the "performance check". In parallel, the Commission will work specifically 
on them to further assess the situation and the need to take specific actions at the EU level.  

- The Commission will launch an assessment of the issue of reserves of activity focussing in 
particular on areas where the link with the professional qualification required warrants further 
discussion.  This  should  be  done  in  view  of  the  need  to  achieve  more  integrated  services 
markets offering high quality services as demanded by service recipients. On the basis of this 
assessment and the findings of the "performance check", the Commission will decide by 2012 
on possible specific initiatives. 

-  The  Commission  will  launch  an  assessment  to  better  understand  the  manner  in  which 
restrictions on capital ownership and legal form affect certain services sectors and to gather 
evidence  on  the  economic  effects  of  these  rules.  On  the  basis  of  this  assessment  and  the 
findings of the "performance check" the Commission will decide by 2012 on possible specific 
initiatives. 

- The difficulties for cross-border service providers resulting from insurance requirements 
should be examined first with stakeholders, including the insurance industry, with a view to 
finding  practical  solutions.  On  the  basis  of  this  assessment  and  the  findings  of  the 
"performance check" the Commission will decide by 2012 on possible specific initiatives. 

5.3.  Targeted actions to make the Single Market for services a more concrete reality 

on the ground 

In order to ensure that the freedom to provide services clause in Article 16 of the Services 
Directive  is  applied  properly  and  consistently  in  all  Member  States,  the  Commission  will 
closely monitor its application and discuss its findings with all Member States. This process 
can  be  built  upon  the  Services  Directive  itself,  which  already  foresees  that  the  Commission 
reports on the functioning of this clause. The monitoring should, to a large extent, be based on 
the collection of information and views from Member States and stakeholders. 

The  Commission  will  issue  annual  guidance  on  the  application  by  Member  States  of  the 
freedom to provide services clause and the evolution of cross-border service provision in the 
Single Market. The first of such annual guidance should be issued by the end of 2011.  

Going  forward,  it  is  also  essential  to  enhance  transparency  to  avoid  new  regulatory 
barriers.  An  obligation  on  Member  States  to  notify  new  establishment  requirements  and 
requirements  affecting  the  free  movement  of  services  is  already  in  the  Services  Directive. 
There is an immediate need to consolidate this obligation by providing guidance to Member 
States'  administrations  on  how  to  use  it.  Subsequently,  it  would  be  important  to  assess 
whether a targeted extension of its scope of application is warranted. 

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In 2011, the Commission will work with Member States to consolidate the notification system 
in the Services Directive and to help providing guidance to national administrations as to its 
operation. By the end of 2012, the Commission will report on the functioning of the system 
and the need for a targeted extension of its scope of application. 

Finally, we need to help service providers, in particular SMEs, to enforce their rights in the 
Single Market so as to ensure they do not give up on testing markets across borders simply 
because it is made too difficult by regulatory barriers. The SOLVIT network already plays an 
important role in this respect by providing informal  solutions to problems encountered with 
public authorities.  Going beyond this type of  alternative  dispute resolution  mechanisms,  the 
possibility to propose measures to ensure easy-to-use, fast and affordable redress at national 
level for breach of Single Market rights should be considered.  

The Commission will assess the effectiveness of means of redress available at national level 
to service providers for breach of their Single Market rights by national administrations and 
decide on next steps by the end of 2012. 

6.  CONCLUSIONS  

The  implementation  of  the  Services  Directive  is  an  important  step  towards  a  better 
functioning  Single  Market  for  services.  But  more  remains  to  be  done.  Building  upon  the 
process of mutual evaluation of the Services Directive, this Communication proposes a set of 
actions  with  the  ultimate  goal  of  deepening  the  Single  Market  for  services  and  bringing  it 
closer to the needs of businesses and citizens. This is a shared responsibility and the success 
of  the  actions  proposed  will  depend  on  the  commitment  of  all  institutions  and  stakeholders 
involved.  

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Future actions  

Objectives 

Proposed action 

Time line 

 Ensure  that  a  complete  and 
correct implementation of the 
Services Directive effectively 
contributes  to  realise  the  full 
potential of the Single Market 
for services.  

that 
applicable 

the  EU 
Make  sure 
legislation 
to 
services  is  functioning  well 
on the ground and effectively 
contributes 
enhancing 
to 
services  trade  in  the  Single 
Market.  

Remove  remaining  obstacles 
to 
the 
the  functioning  of 
Single Market for Services.  

Remove  remaining  obstacles 
to 
the 
the  functioning  of 
Single Market for Services.  

Remove  remaining  obstacles 
the 
the  functioning  of 
to 
Single Market for Services 

in  a  bilateral 
-  Engage 
dialogue  with  a  number  of 
where 
States 
Member 
implementation 
lagging 
is 
behind  and,  when  necessary, 
adopt 
formal  enforcement 
measures. 

-  Undertake  a  first  economic 
assessment  of  the  Services 
Directive implementation.  

First half of 2011 

End of 2011 

-  Conduct  a  "Performance 
Check"  of  the  Single  Market 
for Services.  

2011-2012 

By the end of 2012 

the  effects  of 
-  Assess 
Member 
rules 
States' 
reserving  certain  activities  to 
providers  with 
specific 
qualifications  and  decide  on 
the 
specific 
need 
initiatives.  

for 

By the end of 2012 

By the end of 2012 

imposed 

the  effects  of 
-  Assess 
restrictions 
by 
Member  States  on  the  legal 
form  and  capital  ownership 
service  providers  and 
of 
for 
decide  on 
specific initiatives.  

the  need 

insurance 

- Assess the difficulties faced 
by  service  providers  because 
obligations 
of 
imposed 
cross-border 
situations  and  decide  on  the 
need for specific initiatives. 

in 

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Make  sure  that  business  and 
citizens  wanting  to  provide 
and to receive services across 
borders  can  benefit  from  the 
Single Market.  

- Provide regular guidance to 
the 
Member  States 
application  of  the  Services 
Directive  freedom  to  provide 
services clause. 

on 

End  of  2011  and 
annually 

then 

Prevent 
the  emergence  of 
new  regulatory  barriers  to 
services  in  Member  States' 
legislation.  

assistance 

-  Provide 
to 
Member  States  as  regards 
the 
compliance 
obligations 
notification 
foreseen 
the  Services 
Directive.  

with 

in 

Services 

- Report on the functioning of 
the 
Directive 
notifications'  obligations  and 
on 
targeted 
possible 
extension of their scope. 

a 

-  Assess  the  effectiveness  of 
means  of  redress  available  at 
national  level  for  breach  of 
Single  Market 
rights  by 
national  administrations  and 
report  on 
for 
specific initiatives.  

the  need 

that 

SMEs 

service 
 Ensure 
providers, 
in 
particular,  can  fully  benefit 
from 
their  Single  Market 
rights 

2011 

By the end of 2012 

By the end of 2012 

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