COMMISSION STAFF WORKING DOCUMENT Business Journey on the Single Market: Practical Obstacles and Barriers Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Identifying and addressing barriers to the Single Market
Date: 2020-03-10
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: EU market, administrative cooperation, application of EU law, business activity, consumer protection, cross-border cooperation, goods and services, single market, small and medium-sized enterprises

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 10.3.2020  SWD(2020) 54 final  COMMISSION STAFF WORKING DOCUMENT   Business Journey on the Single Market: Practical Obstacles and Barriers    Accompanying the document  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Identifying and addressing barriers to the Single Market {COM(2020) 93 final}  
 
 
CONTENTS 

CONTENTS .......................................................................................................................... 1 

OBJECTIVES, APPROACH, AND CAVEATS ........................................................................... 2 
2 
3 
4 

Objectives 
Approach and caveats 
Main sources 

SUMMARY: PRACTICAL OBSTACLES AND BARRIERS TO THE SINGLE MARKET................. 6 
6 
10 
11 
14 

Different perspectives on the achievements of the single market 
Analytical approach 
List of obstacles to the single market 
Root causes and link with EU policy 

GENERAL OBSTACLES AND BARRIERS ............................................................................. 18 
Summary table: general obstacles and barriers ............................................................................................. 18 

General barriers and obstacles along the business journey ........................................................................... 19 
19 
Step 1 Steps before expanding 
22 
Step 2a Steps to selling cross-border: product and services regulation 
38 
Step 2b Steps to selling cross-border: marketing and access to clients 
40 
Step 2c Steps to selling cross-border: delivering goods and services 
50 
Step 2d Steps to selling cross-border: barriers to entry and uneven playing field 
54 
Step 2e Steps to selling cross-border: taxes 
62 
Step 2f Steps to selling cross-border: after-sales 
Step 3a Additional steps for establishment: setting up a business activity in another Member State  77 
81 
Step 3b Additional steps for establishment: staffing 
89 
Step 3c Additional steps for establishment: sourcing and supplies 
89 
Step 3d Additional steps for establishment: investing and financing 
94 
Step 3d Additional steps for establishment: taxes, subsidies and other public help 
96 
Throughout the business journey 

OBSTACLES IDENTIFIED PER SECTOR .............................................................................. 99 
Summary table: obstacles and barriers identified per sector ......................................................................... 99 

Obstacles identified per sector .................................................................................................................... 100 
100 
104 
108 
111 
113 
114 
121 
125 
130 
132 
134 
138 
141 
144 
149 
155 
173 

Accounting and Tax advice 
Architecture and engineering 
Audit 
Automotive 
Chemicals 
Construction 
Electronic communications networks and services 
Energy 
Food and beverages 
Hotels and accommodation 
Industrial machinery 
Intellectual property agents 
Legal 
Pharma 
Retail 
Transport 
Waste management 

1 

 
 
OBJECTIVES, APPROACH, AND CAVEATS 

Objectives 

The European Council has invited the Commission to identify obstacles that keep the single 
market  from  integrating  further  and  from  providing  a  level  playing  field  to  businesses 
attempting  to  benefit  from  it.  At  its  meeting  of  21  -  22  March  2019,  the  European  Council 
concluded that ‘the single market should be further deepened and strengthened (…)’ and called 
on  the  EU  and  its  Member  States  to  act,  adding  that  ‘remaining  unjustified  barriers  must  be 
removed,  building  on  the  Commission  Communication  of  November  2018,  and  no  new  ones 
created’.  Building  on  this  initial  request,  the  May  2019  Competitiveness  Council  called  on  the 
Commission to ‘complete, by March 2020, the assessment of the remaining regulatory and non-
regulatory obstacles and opportunities within the single market, with a special focus on services, 
building  on  the  European  Council  conclusions  of  December  2018  and  March  2019  and  on  the 
Commission’s November 2018 report, taking the perspective of businesses and consumers….’1   

This staff working document contributes to the response to this request. The document aims 
to  identify  current  obstacles  to  the  single  market.  It  is  clear  that  the  integration  of  the  single 
market is an ever-evolving process, influenced by regulatory initiatives at EU or national level, 
by everyday decisions of various actors, businesses, consumers, investors, workers, etc., and also 
by technological, society or international change. It is therefore essential to keep in mind that this 
study provides only a snapshot of the current situation.  

In  2019,  the  Commission  issued  a  report  on  the  performance  of  the  single  market  in  the 
context of the European Semester2, relying mostly on indicators related to the integration of the 
Single  Market.  It  intends  to  publish  such  a  performance  report  on  an  annual  basis. That  report 
differs  significantly  from  this  one,  which  identifies  general  and  sector-specific  barriers,  from  a 
business journey perspective. The two reports therefore complement each other.  

This  study focuses  on  the  obstacles most  often  reported  by  businesses  themselves,  without 
claiming to be exhaustive, and proposes the ‘business journey’ framework to identify obstacles 
and  hurdles  faced  by  businesses  in  the  different  steps  involved  for  the  export  of  goods  and 
services to or for the establishment in another Member State. That framework simplifies what is 
actually a complex reality. Obstacles to the single market typically occur in many variations and 
sub-types, and are often complex and multi-layered. An obstacle experienced by a business, such 
as  not  being  allowed  to  sell  its  product,  can  be  due  to  different  root  causes,  or  underlying 
obstacles, or even to a complex combination of factors. It is therefore not possible to exhaustively 
identify and analyse all obstacles in their totality, multiplicity, and complexity.   

This document aims to provide a fact base and foster a common understanding of the current 
obstacles  to  the  single  market  faced  by  businesses.  It  also  aims  to  provide  input  into  potential 
future  discussions  about  appropriate  single  market  policies.  It  supports  the  Communication 
‘Identifying and addressing barriers to the single market’ (‘the Communication’)3, adopted today, 

1 European Council conclusions, meeting on 21 and 22 March 2019: 

https://data.consilium.europa.eu/doc/document/ST-1-2019-INIT/en/pdf and Competitiveness Council 
conclusions on "A new level of ambition for a competitive Single Market", meeting on 27 May 2019: 
https://data.consilium.europa.eu/doc/document/ST-9743-2019-INIT/en/pdf  

2 https://ec.europa.eu/info/publications/2020-european-semester-single-market-performance-report_en 

3 “Identifying and addressing barriers to the Single Market”, COM/2020/93. 

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which aims to describe the most relevant areas of concern for businesses and consumers, identify 
their root causes and set out ways to address them. This staff working document underpins the 
Communication from the business perspective, through the ‘business journey’. 

Approach and caveats 

The  starting  point  of  this  study  is  the  obstacles  experienced  by  businesses  in  the  single 
market as reported by them. This means, in practice, that this study first describes the barriers 
as  reported  by  businesses.  In  a  second  step,  the  study  also  analyses  their  root  causes  in  its 
relevant policy context. This starting point differs from a  more policy or legal-oriented starting 
point, which has often been the approach followed by prior studies. This allows to shed a new 
light on how the integration of the single market is perceived by its active users, the businesses, 
in their efforts to reach its other active users, the customers and clients. 

Consequently,  the  study  addresses  the  freedoms  of  circulation  of  goods,  services  and 
capital,  and  also  the  free  movement  of  persons  to  the  extent  it  concerns  labour  force 
mobility. The study also touches on some of the EU policies that flank the internal market such 
as  competition  rules,  judicial  cooperation  in  civil  matters,  public  procurement  or  social  policy 
related to cross-border issues.  

The opinions collected in this study reflect this approach. Businesses, chambers of commerce, 
and  other  business  organisations  reported  obstacles  as  they  perceive  them,  and  in  their  own 
words.  They  study  both  regulatory  and  non-regulatory  obstacles.  Sometimes,  even  if  a  given 
obstacle  affects  domestic  businesses  and  non-domestic  businesses  equally,  it  can  amount  to  a 
barrier  to  entry  and  may  distort  competition.  Sometimes,  a  given  obstacle  represents  a  hard, 
‘binding’ constraint; other times, it could be surmountable, if taken in isolation and using enough 
effort,  time  and  money.  In  this  document,  the  word  ‘obstacle’  has  to  be  understood  as 
encompassing  this  wide  range  of  challenges  and  hurdles  faced  by  businesses  across  the  single 
market.  

This study primarily use sources that capture the perceptions of businesses that intend to 
become  or  are  already  active  across  the  single  market,  via  exports,  imports  and/or 
establishments  in  other  Member  States.  The  existing  sources  included  surveys  of  businesses, 
databases  and  analyses.  In  addition,  a  specific  consultation  of  chambers  of  commerce  was 
conducted to gain a more comprehensive picture of different obstacles. Finally, the analysis also 
builds on in-house expertise at the Commission. Evidence has been collected from two channels, 
allowing  a  more  comprehensive  approach  to  the  issues  identified:  non  sector-specific  sources 
(‘general obstacles and barriers’) and sector-specific sources (“obstacles identified per sector”). 
While most obstacles have been found in both channels, some are sector specific. 

3 

 
 
Main sources 

External surveys and reports 

  Eurochambres, ‘Business survey – EU Internal Market: Barriers and Solutions’, 2019 

(Eurochambres 2019 survey) 

  World Bank Group, ‘Doing Business 2019’, 2019 (World Bank Doing Business report) 
  Centre for European Policy Studies (CEPS), ‘Hidden Treasures: Mapping Europe’s 

sources of competitive advantage in doing business’, 2019 (Hidden Treasures report) 

  The Association of German Chambers of Commerce and Industry (DIHK), ‘DIHK 
Survey on Single Market Obstacles 2019: Services, Goods and Investments’ (DIHK 
2019 survey) 

  Dutch Ministry of Economy, Dutch export agency, ‘Doing Business in Europe’, 2018 

(Dutch Doing Business in Europe survey)  

  Estonian Ministry of Foreign Affairs and Communications, ‘Mapping: applicable 

regulatory requirements for a construction company on its export journey to Estonia, 
Finland, and Sweden’, 2018 

  Governments of Ireland, Denmark, Finland and Czechia, and Copenhagen Economics, 

‘Making EU Trade in Services Work for All: Enhancing innovation and 
competitiveness throughout the EU economy’, November 2018 

Dedicated reports, surveys and contributions received from chambers of commerce and other 
business organisations 

  Austrian Chamber of Commerce 
  Croatian Chamber of Economy 
  Cyprus Chamber of Commerce and Industry 
  Czech Chamber of Commerce 
  Confederation of Danish Industry 
  Confederation of Finnish Industries 
  French Chamber of Commerce and Industry 
  Latvian Chamber of Commerce and Industry 
  Malta Chamber of Commerce 
  Spanish Chamber of Commerce 
  Confederation of Swedish Enterprise 

Internal and external databases and reports  

  European Commission, ‘Annual report on European SMEs 2017/2018’, 2018 
  SOLVIT database, European Commission 
  European Central Bank, ‘Investment Barriers 2019’, 2019 
  European Enterprise Network 
 
  Safety Gate 

Intellectual Property SME Scoreboard 2019 

Additional sources are referenced in the text. 

Obstacles  were  included  in  this  study  if  a  significant  percentage  of  surveyed  businesses 
and/or  if  different  sources  consistently  reported  them  as  an  obstacle.  In  that  respect,  it  is 
striking  how  often  the  various  sources  revealed  similar  obstacles.  While  this  study  used  many 
sources,  the  obstacles  identified  should  in  no  regards  be  seen  as  exhaustive,  in  particular  for 
obstacles that occur relatively less frequently and/or that are specific to sectors not under review. 
It  is  important  to  keep  in mind  that  this  study  provides  only  a  snapshot  of the  obstacles  to the 

4 

 
 
single market. Completely new obstacles that might emerge in the future are beyond of the scope 
of this study.  

The study provides some quantification to assess the prevalence and, where available, economic 
importance of obstacles. This quantification and other figures might not include the most recent 
economic and political developments, in line with the report’s approach of providing a snapshot. 
In  particular,  when  data  is  provided  for  the  EU,  it  includes  the  UK  (EU28),  unless  otherwise 
specified. Beyond quantification, the relative importance of an obstacle also needs to be assessed 
qualitatively,  in  relation  to  its  impact  on  key  objectives  of  industrial  policy,  such  as  digital 
transformation or the transition to a carbon neutral economy, and other megatrends.  

As a complement to the description of the obstacles as expressed by businesses, the study also 
provides  a  preliminary  analysis  of  their  root  causes  and  their  link  to  the  policy  context.  This 
analysis was performed by the Commission services. 

The root causes of each obstacle can at times be complex and involve a combination of factors 
(regulatory  or  not).  For  some  obstacles  mentioned  by  businesses,  further  research  is  needed  to 
positively identify their root cause(s).   

5 

 
 
 
SUMMARY: PRACTICAL OBSTACLES AND BARRIERS TO THE 
SINGLE MARKET 

Different perspectives on the achievements of the single market  

The EU’s single market is the world’s largest interconnected market, comprising more than 
500  million4  people  and  27.5  million  companies5.  Designed  to  allow  goods,  services,  capital 
and  people  to  move  freely  across  borders,  the  single  market  makes  it  easier  for  firms  and 
professionals to reach customers and suppliers all across Europe. The level playing field provided 
by the single market has helped increase the level and fairness of competition and the quality and 
supply of goods and services. It has been liable to lead to price reductions, improved productivity 
and strengthened the economies of the EU’s Member States.  

  The  single  market  has  a  positive  impact  on  GDP.  A  recent  study  by  the  European 
Commission estimates that, compared to a counterfactual scenario in which EU countries 
trade  under  WTO  rules,  the  economic  benefits  of  the  single  market  range  between  8% 
and 9% higher GDP on average for the EU. Abstracting from trade and focusing only on 
the effect of increased competition, the benefits still amount to about 2% of GDP.6   
  The  single market  has  a positive  impact on trade.  The increasing  globalisation  does 
not reduce the importance of the single market. While extra-EU exports in goods stood at 
almost  EUR  2  trillion  in  2018,  intra-EU  cross-border  trade  were  more  than  EUR  3.5 
trillion in 20187. For services, the picture is similar, with a total of EUR 1.2 trillion intra-
EU cross-border trade and EUR 0.9 trillion extra EU exports.8  

  The single market has reduced mark-ups and increased productivity. According to a 
recent  study,  the  welfare  gain  from  the  single  market  for  EU  Member  States  would 
amount to about EUR 427 billion per year. A large part of this benefit comes from higher 
productivity  and  lower  mark-ups.  While  there  are  major  differences  between  European 
regions,  estimates  indicate  that  all  regions  benefited  from  belonging  to  the  single 
market.9  

  The  single  market  also  has  a  positive  impact  on  employment,  mainly  thanks  to  the 
impact  on  GDP  and  productivity.  Calculating  the  number  of  additional  jobs  that  exist 
thanks to the single market is very difficult, but according to some rough estimates, up to 

4 Source: Eurostat, Population change - Demographic balance and crude rates at national level 
[demo_gind]. The figure refers to 2019. Excluding the UK, the population is 447 million.  

5 Source: Eurostat, Business demography by legal form, [bd_9ac_l_form_r2]. The figure refers to the 

business economy, except the activities of holding companies, for 2017 (latest available here at the 
moment of writing). Excluding the UK, the number of firms is 25 million.  

6 J. in ‘t Veld (2019), Quantifying the Economic Effects of the single market in a Structural Macromodel, 
European Economy Discussion Paper 094, European Commission Directorate-General for Economic 
and Financial Affairs.  

7 Source: Eurostat, Intra and Extra-EU trade by Member State and by product group [ext_lt_intratrd]. Data 

refers to EU-28. 

8 Source: Eurostat, [bop_its6_det] 

9 Mion and Ponattu (2019), Estimating economic benefits of the Single Market for European countries and 

regions, Bertelsmann Stiftung Policy Paper. 

6 

 
                                                      
56 million jobs in the EU could depend on trade within the single market10. Focusing on 
services  only,  the  number  of  employees  dependent  on  cross-border  services  may  have 
almost doubled in the EU since 2000, recording a 94% increase as compared to a 5.5% 
raise  in  total  employment.11  These  estimates  rely  on  the  assumption  of  a  linear 
relationship  between  employment  and  production,  and  so  should  be  interpreted  with 
caution. Nonetheless, they can be illustrative of the magnitude of the positive impact on 
employment of the single market.    

  The single market has a positive impact on investment. If the single market did not 
exist,  the  EU  capital  stock  could  fall  by  10%  according  to  recent  Commission 
estimates.12  Moreover,  a  recent  study  from  the  European  Central  Bank  shows  that,  on 
average,  joining  the  EU  increased  inward  foreign  direct  investment  (FDI)  flows  from 
other  EU  countries  by  44  %.13  As  a  result,  EU  Member  States  are  by  far  the  most 
important  investors  in  almost  all  countries  of  the  EU:  more  than  50  per  cent  of 
international investments are held by other EU Member States.14  

  The single market is the go-to market for European SMEs. It accounts for 70% of the 
value of SME exports of goods, while 80% of all exporting SMEs sell to other Member 
States.15 Still, only 16.5% of SMEs in industry export to other Member States and this 
proportion  has  been  relatively  stable  in  recent  years16.  There  exists  a  clear  relationship 
between enterprise size and internationalisation, with medium-sized and large enterprises 
more often exporting than micro and small enterprises. 

  The single market is a key enabler of efficient  value chain integration across the EU, 
which is increasingly important in both manufacturing (e.g., car production, Airbus) and 
services (e.g., Uber). A recent IMF study17 suggests that, based on a simple global value 
chain participation index, Europe is significantly more integrated into international value 
chains  than  the  Americas  and  Asia.  Between  2000  and  2013,  the  share  of  European 
exports  involved  in  global  value  chain  trade  increased  by  10  percentage  points  (pps), 
reaching  about  70%  of  total  exports  of  goods  and  services.  Over  this  period,  this  ratio 
increased by only 2 pps in the Americas and 6 pps in Asia. While this might also be due 
to the ability of European firms to find opportunities abroad, the IMF points also to the 
role played by the single market and the European monetary union. 

  The  single  market  has  been  a  valuable  asset  in  multilateral  and  bilateral  trade 
negotiations, and in our push for global and sectoral standard setting, as foundations of a 
rule-based  international  order.  The  European  economic  sovereignty  will  be  further 

10  Højbjerre Brauer Schultz (2018), ’25 years of the European Single Market‘, Study funded by the Danish 

Business Authority.  

11 IW Consult GmbH (2019), ’Cross border services in the internal market: an important contribution to 

economic and social cohesion‘, study for the European Economic and Social Committee.  

12 J. in ‘t Veld (2019), Quantifying the Economic Effects of the single market in a Structural Macromodel, 
European Economy Discussion Paper 094, European Commission Directorate-General for Economic 
and Financial Affairs. 

13 Federico Carril-Caccia and Elena Pavlova (2018), Foreign direct investment and its drivers: a global and 

EU perspective, Published as part of the ECB Economic Bulletin, Issue 4/2018. 

14 Højbjerre Brauer Schultz (2018), ’25 years of the European Single Market‘, Study funded by the Danish 

Business Authority. 

15 2017/2018 Annual Report on European SMEs – SMEs growing beyond borders. 

16 EU-28 Small Business Act factsheet 

17 International Monetary Fund (2019), Trade Tensions, Global Value Chains, and Spillovers: Insights for 

Europe, No 19/10. 

7 

 
                                                      
reinforced  with the  modernisation  of the single  market to support  the  green  and  digital 
transition. 

But despite all these positive achievements, when businesses are asked about their perception 
of the single market, they often draw a different picture.  

 

In  October  2018,  at  the  final  European  Parliament  of  Enterprises  of  the  2014-2019 
legislative  term,  69,3%  of  entrepreneurs  replied  “No”  to  the  question  “Is  the  single 
market  sufficiently  integrated,  allowing  your  company  to  operate  and  compete 
freely?”18.   

  While the majority of companies agree that legislation in the EU helps ensure the quality 
and  safety  of  goods  and  services  (65%  agree,  29%  disagree)  and  improves  access  to 
suppliers and customers (55% agree, 35% disagree), opinions are more evenly divided on 
whether it reduces or removes the differences in legal requirements in different Member 
States  to  the  benefit  of  companies  (46%  agree;  39%  disagree),  helps  to  create  a  level 
playing  field  for  all  companies  (45%  agree;  48%  disagree),  to  be  competitive  (44% 
agree; 47% disagree) and to encourage companies to invest (43% agree; 44% disagree).19 
In  addition,  the  lack  of  means  for  debt  recovery  is  a  major  problem  for  49%  of 
businesses.20 

  According  to  the  Annual  report  on  European  SMEs  2017/2018,  only  4%  of  European 
SMEs undertake FDI in the EU. Medium-sized firms that experienced strong growth in 
turnover and that belong to an international group are more likely to undertake FDI. The 
Flash  Eurobarometer  451  reveals  that  many  SMEs  do  not  think  that  EU  legislation  is 
supportive of investment. 

  Most  companies  perceive  legislation  in  the  EU  as  complex  and  burdensome, 
increasing  the  amount  of  paperwork  (70%)  and  the  cost  of  administrative  processes 
(67%)21.  This  is  confirmed  by  several  sources  and  has  not  substantially  changed in  the 
last  years.  For  instance,  according  to  an  Executive  Opinion  Survey  run  by  the  World 
Economic  Forum,  the  burden  of  (domestic)  government  regulation  has  only  slightly 
improved  in  recent  years,  moving  from  3.21  out  of  7  (with  7  corresponding  to  “Not 
burdensome  at  all”)  in  2014  to  3.35  in  2018.    Similarly,  according  to  the  Flash 
Eurobarometer  457,  the  share  of  businesses  who  think  that  the  complexity  of 
administrative procedures is a problem when doing business has changed only from 63% 
in 2013 to 60% in 2017. The burden can be even higher when crossing borders, to the 
extent that different rules and procedures require further adaptation from firms22. 

18 Eurochambres, ’Business survey – EU Internal Market: Barriers and Solutions’, 2019 

19  Businesses  that  work,  trade,  or  offer  services  in  other  countries  are  generally  more  likely  to  see  the 
benefits of legislation that applies to businesses in the EU than those operate only in their own country. 
When looking only at companies that are active abroad, companies that are active in three or more EU 
countries do not generally have views that differ much from those that are active only one or two other 
countries. 

20 Flash Eurobarometer 457, Businesses’ attitudes towards corruption in the EU, October 2017 

21 Flash Eurobarometer 451, Business perceptions of regulation, March 2017  

22 For an average cross-border business, administrative costs have been found to be more than 50% higher 
than for an average domestic business. At the same time, where implemented, e-government solutions 
apply more to the domestic context than to a cross-border perspective, while interoperability of public 
authorities’  e-systems  is  still  limited.  (Ecorys  Netherlands  in  association  with  Mazars,  ‘Study  about 
administrative  formalities  of  important  procedures  and  administrative  burdens  for  businesses’, 
European Commission, April 2017) 

8 

 
                                                      
  Also according to the ‘Hidden Treasures’ report by the CEPS (2019), businesses often 
perceive Europe negatively when it comes to entrepreneurship and innovation: a land of 
red  tape,  a  mix  of  precaution  and  bureaucracy  where  doing  business  is  difficult  if  not 
impossible.   

  The  analysis  of  the  World  Bank  Doing  Business  Report  can  also  help  identify  some 
patterns within the single market. The table below shows how EU Member States rank 
according  to  different  indicators  that  measure  the  ease  of  doing  business  for  small  and 
medium-sized domestic firms in the largest business city of each economy23. None of the 
indicators  is  tailored  to  measure  the  performance  of  the  single  market24,  but  a  visual 
analysis of the table suggests marked differences in the performance of Member States. 
The red cells identify countries ranking below 50, while the green cells identify countries 
in  the  top  10.  In  column  8,  a  star  identifies  Member  States  whose  main  trade  partners 
(both for import and export) are other EU Member States. Overall, the table suggests that 
EU  Member  States  perform  very  well  in  the  indicator  measuring  the  ease  of  trading 
across  borders,  with  16  countries  earning  the  maximum  score  and  top  rank25.  This 
amounts  to  80%  of  the  countries  whose  main  trading  partners  are  within  the  EU.  The 
situation is relatively less positive for other indicators, as for instance the ease of getting 
credit,  dealing  with  construction  permits  or  starting  a  business,  for  which  several 
Member States rank below 50.  

23 Since 2015, in economies with a population of more than 100 million, the second-largest city is also 

included. 

24 The World Bank Doing Business methodology does not differentiate between nationals and foreigners 

starting a business, or between domestic and non-domestic companies registering property, asking for 
a construction permit, etc.  

25 The indicator ‘Trading across borders’ measures the time and cost to export the product of comparative 
advantage and to import auto parts (page 19, World Bank Doing Business Report 2020). It is based on 
the  ease  of  trade  with  the  most  important  import  and  export  partners,  which  in  the  EU  are  not 
necessarily  other  EU  Member  States.  In  particular,  it  is  assumed  that  each  economy  imports  a 
standardised  shipment  of  auto  parts  from  its  natural  import  partner,  i.e.  the  economy  from  which  it 
imports the largest value of auto parts. Moreover, it is assumed that each economy exports the product 
of its comparative advantage (defined by the largest export value) to its natural export partner, i.e. the 
economy  that  is  the  largest  purchaser  of  this  product.  While  for  most  European  Member  States  the 
natural trade partner is another Member State, this is not always the case. For instance, the main export 
partner of Ireland is the USA.  

9 

 
                                                      
These  contrasted  views  call for  a  deeper  analysis of  obstacles  experienced by  the  users of 
the single market, i.e. businesses which attempt to do business across the single market.  

Analytical approach 

This study follows a two-step approach, centred on the journey of businesses attempting to 
do business across the single market.  

The  starting  point  of  the  approach  chosen  for  this  study  is  the  obstacles  as  experienced  and 
reported by businesses active on the single market. It therefore reflects how the integration of the 
single  market  is  perceived  by  its  active  users  –  businesses  –  in  their  efforts  to  reach  its  other 
active users, the customers and clients. 

The  study  builds  on  several  sources:  existing  business  surveys  or  analyses,  databases  and  a 
dedicated  consultation  of  chambers  of  commerce  and  other  business  organisations.  The 
Commission  services  also  provided  valuable  input.  Obstacles  were  included  in  this  survey  if  a 
significant  percentage  of  surveyed  businesses  and/or  if  different  sources  consistently  reported 
them as an obstacle.  

The analysis of the study follows the journey of a business attempting to benefit from the 
single  market.  This  allows  us  to  identify  the  actual  obstacles  that  it  reports  that  it 
encounters.  This  journey  typically  starts  with  an  analysis  of  the  market  opportunity  and 
feasibility of exporting to or establishing a business in another Member State. When the business 
starts exporting, it may be asked to comply with regulatory or administrative requirements, will 
need to access its clients, deliver its goods or services, or might face micro-economic obstacles to 
competition.  It  will  also  have  to  meet  tax  obligations  and  ensure  after-sales  service  and 
obligations. If and when it establishes itself in another Member State, a business may need to set 
up  its business  activity,  hire  staff (locally  or from  its headquarters),  find local suppliers, invest 
and finance itself locally, and meet its local tax obligations.  

This approach and framework addresses the freedoms of circulation of goods, services, capital (in 
the  business  journey  steps  of  establishment,  investments  and  financing),  and  also  freedom  of 
movement to the extent it concerns worker mobility.  

In  the  second  step,  the  root  causes  of  each  identified  obstacle  are  analysed  in  their  relevant 
policy context. This analysis mainly relies on the sector and policy expertise of the Commission 

10 

 
 
services. It is important to be mindful of the unavoidable limitations of the causal analysis in this 
report.  Indeed,  it  is  sometimes  difficult  to  reliably  understand  root  causes  without  further 
investigation.  Often  the  root  causes  are  a  complex  combination  of  several  factors;  sometimes 
obstacles are linked, and their root causes must be analysed more holistically.  

In  addition,  the  study  analyses  the  practical  obstacles  and  barriers  in  a  sample  of  economic 
sectors, to better appreciate  sector specificities. The selection of sectors included in the sample 
does  not  imply  prioritisation,  but  was  composed  to  ensure sufficient representation  of different 
sector  characteristics:  size,  importance  for  other  sectors,  relevance  to  the  green  and  digital 
transitions,  and  a  balance  between  manufacturing  and  services  and  domestic  or  export 
orientation.  

List of obstacles to the single market 

The following table sets out the general obstacles reported by businesses that apply to all or most 
sectors of the EU economy.  

Business journey step 
1. Steps before expanding 

Obstacle / barrier 

1 

Insufficient information about business opportunities and partners 
as well as applicable rules 

2. Steps to selling cross-border 
a)  Product and services 

2  Difficulties in meeting requirements to sell goods or services 

regulation 

3 

Problems with mutual recognition affecting the free movement of 
goods not covered by EU harmonisation legislation 
Fragmentation of rules for digital services  

4 
5  Differences in consumer protection 
6  Uneven access to public procurement  
7  Differences in liability rules and insurance requirements 

b) 

Marketing and access to 
clients 

c)  Delivering goods and 

services 

d)  Barriers to entry and 
uneven playing field 

e)  Taxes 

15 

8 

Burdensome advertising and marketing restrictions 

9 
10 

11 

Transport bottlenecks, lack of access and restrictions 
Insufficient internet and cloud infrastructure 
Burdens and obstacles in the context of posting workers to other 
Member States  

12  Market power 
13 
14 

Price regulations 
Problems with recognition of electronic identification 
Burdensome procedures due to differences in tax systems and 
administrations 

f)  After-sales (debt 

collection, guarantees, 
dispute resolution, etc.) 

16  Tax reimbursement refusals and double taxation 
17  Uneven playing field due to taxation differences 
18  Heterogeneous rules on guarantees and contractual remedies 
19 
Ineffective contract enforcement and dispute resolution 
20  Costs and delays of collecting payments and recovering debt 
21  Barriers to data availability and unclear data privacy rules 
22  Obstacles to effective intellectual property rights protection 

3. Additional steps for establishment 
a)  Setting up a business 
b)  Staffing  

23  Hurdles to starting a business 
24  Lack of skilled workers and limited worker mobility 
25  Difficulties with accessing a regulated profession 

c)  Sourcing  and suppliers  
Investing and financing 
d) 

26 

27 

Complex, burdensome and/or uneven labour and social 
regulations 
No frequently reported barriers or obstacles in this step 
Obtaining finance for operations in another country of the single 
market 

28  Restrictions on corporate ownership 

11 

 
  
 
 
 
 
 
 
 
 
  
 
  
 
  
 
 
 
 
 
  
 
 
e) 

Taxes, subsidies and 
other public help 

29 

30 

Insufficient credit information 
National tax exemptions for direct taxes, subsidies, and financial 
contribution requirements 

Throughout the business journey 

31  Language 

The following table sets out the identified obstacles for a sample of sectors. 

Sector 
Accounting and Tax 
advice 

Architecture and 
engineering 
Audit 

Obstacle / barrier 
National entry and exercise requirements for the profession of 
accountant/tax advisor 
Lack of comparability in national accounting/tax standards and 
practices 

32 

33 

34  National entry and exercise requirements for architects and engineers 

35 

National adaptation of audit regulatory requirements under audit 
directives and regulations 

Automotive 

36  Different national rules on spare parts 

Chemicals 
Construction 

Electronic 
communications 
networks and services 

Energy 

Food and beverages 
Hotels and 
accommodation 
Industrial machinery 

Intellectual Property 
Agents 
Legal 
Pharma 

Retail 

Transport 

37 

Market of used vehicles: different national rules for the import and 
registration of vehicles 
Few identified legislative barriers remain 

38  Market access and exercise requirements for construction services 
39  Burdensome and complex building permit procedures 

40 

Posting of workers and cross-border service provision by self-
employed persons 

41  Late payments 
42  Additional national requirements for construction products 

43 

44 

Economic and legal barriers to deployment of electronic 
communications networks 
Legal and economic barriers to accessing networks and services at 
reasonable prices and under non-discriminatory conditions 
Inefficient unbundling may create market distortions 
45 
46  Access to markets for demand response aggregators 

47 

Retail price regulation hinders free competition; uncertainty 
concerning future regulatory developments 

48  Data critical for operations is difficult to access or of low quality  
49  Flat taxes and charges reduce importance of price signals for end-users 
50  Additional national requirements on food labelling 

51 

Authorisation and registration requirements for hotels or other 
accommodation providers and related detailed requirements  
52  Undue additional national markings, standards and requirements 

53 

54 

55 

Uneven market surveillance and enforcement creating uneven playing 
field for industrial machines 
Different regulatory requirements among Member States for modifying 
or refurbishing construction and agricultural machinery in use 
National entry and exercise requirements for patents and trademark 
agents 

56  National entry and exercise requirements for legal services 
57  Restrictions to e-commerce of medicines based on health grounds 

58 

Restrictions regarding the establishment, ownership and advertising of 
pharmacies and health care service providers 

59  Labelling language requirements  
60  Restrictions to retail establishment  
61  Restrictions to retail operations  

62 

63 

64 

E-commerce: complexity and uncertainty of applicable rules for cross-
border sales and purchases 
Information on market opportunities: difficulty for small road transport 
operators to have access to market information (market opportunities) 
Information on market opportunities/network: lack of information on 
service  facilities and services offered to railway undertakings 

12 

 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65 

Lack of information on posting rules, enforcement and road traffic 
restrictions 

66  Excessive complexity of rules on inland waterways 

67 

Inconsistent and unclear rules in public procurement in transport, and 
access to these rules is too restrictive 

68  Lack of flexibility linked to driving time restrictions 
69  Restrictions on work time in inland waterways 

70 

Different enforcement practices in road transport among Member 
States 

71  Staffing: Skills shortages and mismatches in the rail sector 

72 

Territorial supply constraints and/or sourcing restrictions: availability 
of adapted rail rolling stock 

73  Restrictions on cabotage in road transport 
74  Lack of interoperability in railways 

75 

Lack of harmonised processes for authorisation of railway products 
and for safety certification of railway operators 

76  Lack of rail network coordination 

77 

Fragmented EU airspace with 28 separate air traffic management 
systems 

78  Fragmentation of the aviation radio band spectrum 
79  Lack of information on the availability of materials 
80  Non-harmonized end-of-waste criteria 

81 

82 

83 

Absence of standardised system to demonstrate the performance of 
recycled materials  
Insufficient enforcement of European environmental legislation 
Heterogeneity of Extended Producer Responsibility schemes in 
Member States 

Waste management 

Obstacles have been found to limit businesses in their cross-border operations in four ways: 

  The  most  extreme  way  is  when  a  business  is  prevented  from  providing  its  goods  or 
services  or  from  establishing  itself  in  another  Member  State.  This  can  occur  when  a 
local authority does not grant an authorisation, for example, or when a business cannot 
get access to the distribution infrastructure.  

  The  second  way  is  when  a  business  faces  significant  additional  costs  or  burdens  in 
order to find basic information. This might be information about multiple and complex 
regulatory  requirements  and  administrative  procedures,  or  information  about  market 
opportunities and business partners. 

  The third way is when a business faces delays and uncertainty in its operations. This 
can occur when administrative procedures cause delays or when businesses find it hard to 
access capital or skilled workers. It can also occur in cases of weak or slow enforcement 
of legal rights, and legal uncertainty. 

  The fourth  way  is  when  the  obstacles  create  an  uneven  playing field  by  giving  some 
businesses a competitive advantage over others. This can occur when some regulatory or 
non-regulatory requirements disproportionately affect businesses expanding from another 
Member State. 

In  practice,  these  obstacles  accumulate.  Additional  costs  or  burdens  can  be  overcome  when 
dealt with one by one. However, a business often faces several constraints at the same time when 
doing  business  in  another  country  (such  as  obtaining  a  product  authorisation,  dealing  with  tax 
forms  and  procedures,  labour  and  social  requirements  for  hiring  staff,  setting  up  the  business 
activity,  understanding  and  complying  with  local  consumer  protection  laws).  This  burden  of 
combined constraints multiplies by the number of Member States where the business would like 
to  expand,  as  the  differences  in  the  procedures  of  Member  States  allow  for  very  limited 
economies of scale.  

13 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
Together, these constraints deter many SMEs from doing business across borders in the EU and 
therefore  from  taking  their  most  natural  direction  for  growth,  which  is  the  single  market.  For 
micro-enterprises,  the  cumulative  effect  of  a  few  of  those  can  weaken  the  business  case  for 
venturing  beyond  borders,  to  the  point  that  entrepreneurs  prefer  to  pass  on  the  opportunity. 
Similarly,  administrative  delays  can  even  make  it  impractical  to  operate  or  sell  in  another 
Member State in some sectors, and generate uncertainties on potential cross border operations.  

Some  obstacles  affect  domestic  and  cross-border  businesses  alike.  Local  and  foreign 
businesses  may  face  the  same  challenges,  such  as  access  to  skilled  staff  or  complex  local 
administrative  procedures.  Nevertheless,  obstacles  can  in  practice  affect  businesses  from  other 
Member States relatively more than local businesses. For instance:  

  Non-harmonised rules and/or procedures force businesses to inquire about and deal with 
this diversity and associated complexity. As the differences found in Member States do 
not  allow  for  economies  of  scale,  the  burden  increases  in  proportion  to  the  number  of 
Member States across which a business is active. This favours businesses that focus on 
their domestic markets, and protects incumbents.  

  The scarcity  of  some  resources  (such  as  skilled  staff,  energy  or  high-speed  broadband) 
favours  incumbents  that  enjoy  a  first  mover  advantage  for  these  scarce  resources,  and 
may  even  prevent  the  entry  of  new  business  models  that  depend  on  access  to  these 
resources. 

Since  the  launch  of  the  single  market,  obstacles  that  were  both  regulatory  and  discriminatory 
have been the first ones addressed. The tangible achievements of the single market, as shown in 
external assessments such as the World Bank Doing Business report, demonstrate how successful 
the  EU  has  been  in  reducing  such  obstacles.  The  list  of  obstacles  reported  by  businesses 
demonstrates that to deepen the single market today, it is necessary to look also at non-regulatory 
and non-discriminatory obstacles, and often very practical obstacles. 

This  also  helps  explain  the  apparent  contradiction  between  the  tangible  achievements  of  the 
single market and external policy analyses on the one hand, and the views of businesses on the 
other. 

When looking at a sample of sectors representative of the diversity of the economy, the same or 
similar general barriers were identified. For instance, entry and exercise requirements are found 
to  be  important  barriers  for  many  regulated  professions  (such  as  accountants,  tax  advisers, 
auditors,  construction  tradespeople,  architects  and  engineers,  legal  professions  or  intellectual 
property agents).  

Some general barriers are especially important for some sectors. For instance, undue additional 
markings,  standards  and  requirements  for  products  already  complying  with  harmonised 
legislation are particularly prevalent in the industrial machinery or construction product sectors. 

In addition, some barriers are sector-specific. For instance, the lack of rail network coordination 
on  issues  such  as  IT  tools  for  traffic  management  or  performance  of  maintenance  work  can 
discourage new entrants in the market. 

Root causes and link with EU policy 

Root  causes  of  these  practical  obstacles  and  barriers  vary.  Often,  one  obstacle  is  due  to  a 
combination of root causes. This study identified five main types of root causes.  

1.  Some barriers originate in regulatory choices at EU level and national level. These can 

be: 

Restrictive national rules and limited role of EU legislation 

14 

 
Businesses  active  across  the  single  market  often  face  restrictive  national  rules,  in 
particular  in  policy  areas  where  Member  States  take  different  regulatory  approaches, 
including  areas  characterised  by  innovation  and  new  business  models.  Divergent  and 
restrictive  regulatory  approaches  also  occur  in  areas  where  the  EU  has  no  or  limited 
legislative  competences,  and/or  where  there  are  unanimity  requirements  in  the  Treaty 
(taxation/social security or education). Finally, the limited role of the EU can also be due 
to the need to comply with the principles of subsidiarity and proportionality in a given 
area. 

EU legislation may leave flexibility in the level of harmonisation and/or Member States’ 
practice (‘gold plating’) 

In some areas, minimum harmonisation leaves room for Member States to set standards 
above an identified baseline. This may lead to divergent rules across the single market, 
which  impose  burdens  on  market  actors.  Member  States  often  consider  that  setting 
additional requirements at national level is necessary for certain public policy purposes, 
such as safety or environmental protection. While there may indeed be good reasons to 
exceed the requirements of EU legislation when transposing them into domestic law, this 
often translates into additional administrative burdens for companies, thus undermining 
the single market, with a particular impact on SMEs.  

Gold  plating  can  be  particularly  severe  in  services  provision.  In  some  cases,  as  for 
instance  the  interpretation  and  application  of  requirements  for  industrial  machinery,  it 
can even be considered as the real cause behind regulatory differences.  

Requirements justified for public policy reasons 

Some  of  the  concerns  reported  by  users  can  stem  from  situations  in  which  the  EU 
legislation  pursues  other  legitimate  policy  objectives,  striking  a  balance  between  such 
objectives and the imperative of market freedoms within the single market. These policy 
objectives include consumer protection and protection of social rights (e.g. the posting of 
workers directive).  

Complex EU legislation 

The interaction between various pieces of legislation, often at EU and at national level, 
and frequently changing legislation are a challenge. This may generate legal uncertainty 
as  well  as  compliance  costs,  and  thus  adversely  affect  the  business  environment  and 
economic  activities,  with  a  particular  impact  on  SMEs.  In  addition,  a  more  green  and 
digital economy requires adapted rules for products at EU level. 

2.  Some barriers originate in the transposition, implementation and enforcement of EU 

legislation. This can be: 

Imperfect transposition of EU directives 

The  lack  of  timely  and  correct  transposition  of  EU  directives  by  Member  States 
undermines  the  proper  functioning  of  the  single  market  by  increasing  regulatory 
fragmentation.  This  may  be  for  example  the  case  of  selling  goods  or  services  cross-
border. 

Inadequate implementation of Union Law 

In addition to correctly transposing EU directives, Member States are also responsible for 
the  correct  implementation  of  EU  legislation.  Several  existing  principles  (e.g.  mutual 
recognition, administrative simplification such as the points of single contact, etc.), while 
potentially  formally  transposed  by  Member  States,  often  lack  (full)  implementation  in 
practice. This  generates  unnecessary  or  disproportionate obstacles  for  businesses  active 

15 

 
across the single market. The issue of implementation and application of EU law is also 
important at the level of regional and local authorities in the Member States.  

Inadequate enforcement of EU legislation 

Detecting,  investigating  and  addressing  situations  of non-compliance is  key  for  a  well-
functioning single market. Different types of enforcement responsibilities are held at both 
EU and national levels. Failure to resolve breaches of EU law results in barriers faced by 
businesses remaining unaddressed, or illegal products continuing to circulate across the 
single market.     

3.  Some barriers originate in administrative capacity and practices. These can be: 

Insufficient or incompatible e-government solutions at national level 

Insufficient development of e-government solutions can hamper the development of the 
single  market.  This  is  particularly  an  issue  for  access  to  information  on  rules  and 
requirements. This is also a root cause of the difficulties linked with national formalities 
or procedures to meet requirements for selling goods or services cross-border. 

Insufficient  coordination  between  the  Commission  and  national  administrations  and 
among national administrations 

This particular situation is a major factor undermining trust and fair competition on the 
single market. This issue often arises when businesses or professionals try to grow their 
business in another Member State. Insufficient cooperation is particularly relevant in the 
area  of  market  surveillance,  where  different  views  of  product  market  surveillance 
authorities have been identified as an obstacle, but is also relevant in the area of services. 
Due  to  limited  exchange  of  information  between  Member  States,  national  procedures 
often do not take account of requirements that service providers have already complied 
with  in  their  home  Member  State.  As  a  result,  controls  are  unnecessarily  duplicated, 
adding complexity for cross-border service providers. 

Insufficient staff or expertise at national, regional or local level 

Insufficient  administrative  capacity  dedicated  to  implementing  single  market  rules, 
including at regional and local level, undermines trust in the single market and the level 
playing field. This root cause is relevant when businesses or professionals want to grow 
their  business  in  their  home  or  another  Member  State  (including  in  the  field  of  public 
procurement).  

4.  Some  barriers  originate  in  the  general  business  environment  in  Member  States.  To  a 
large  extent,  the  business  environment  is  common  to  domestic  businesses  and  to  those 
active across borders. Such barriers are not specific to cross-border activities, yet affect 
businesses active across Member States and are thus reported by them as obstacles. They 
include  regulatory  and  administrative  burdens, 
lack  of  predictable  regulatory 
frameworks,  and  relate  to  the  quality  of  governance  and  institutions.  Barriers  include 
dealing  with  construction  permits  (for  instance  in  the  area  of  telecoms  infrastructure), 
entry  and  exercise  requirements  for  certain  activities  or  professions,  getting  electricity, 
solving business disputes in and out of court and paying taxes.  

5.  Some barriers are not linked to public policy. Root causes of barriers may not be linked 
to  public  policies,  whether  national  or  EU.  Markets  in  different  Member  States  exist 
within broader cultural contexts. Different consumer preferences or languages throughout 
the EU make cross-border activities more complex than domestic ones. The commercial 
choices by private parties – which can be perfectly legitimate  – or logistical issues can 
explain  certain  difficulties  reported  by  companies,  such  as  in  the  case  of  rejection  or 
redirection of cross-border purchases or territorial supply constraints on retail businesses. 

16 

 
General  macroeconomic  and  microeconomic  conditions  can  play  a  role.  Geographical 
and  infrastructural  features  can  also  create  barriers  to  accessing  a  market,  for  example 
due to increased transport times and distances, or natural barriers to entry. 

17 

 
 
 
 
GENERAL OBSTACLES AND BARRIERS 

This  section  lists  practical  obstacles  and  barriers  as  reported  by  most  surveyed  businesses, 
irrespective of their sector. As noted previously, the list is based on what the businesses currently 
report, and might therefore not reflect emerging or future developments. 

Summary table: general obstacles and barriers 

Business journey step 
1. Steps before expanding 

Obstacle / barrier 

1 

Insufficient information about business opportunities and partners 
as well as applicable rules 

2. Steps to selling cross-border 
a)  Product and services 

2  Difficulties in meeting requirements to sell goods or services 

regulation 

3 

Problems with mutual recognition affecting the free movement of 
goods not covered by EU harmonisation legislation 
Fragmentation of rules for digital services  

4 
5  Differences in consumer protection 
6  Uneven access to public procurement  
7  Differences in liability rules and insurance requirements 

b) 

Marketing and access to 
clients 

c)  Delivering goods and 

services 

d)  Barriers to entry and 
uneven playing field 

e)  Taxes 

15 

8 

Burdensome advertising and marketing restrictions 

9 
10 

11 

Transport bottlenecks, lack of access and restrictions 
Insufficient internet and cloud infrastructure 
Burdens and obstacles in the context of posting workers to other 
Member States  

12  Market power 
13 
14 

Price regulations 
Problems with recognition of electronic identification 
Burdensome procedures due to differences in tax systems and 
administrations 

f)  After-sales (debt 

collection, guarantees, 
dispute resolution, etc.) 

16  Tax reimbursement refusals and double taxation 
17  Uneven playing field due to taxation differences 
18  Heterogeneous rules on guarantees and contractual remedies 
19 
Ineffective contract enforcement and dispute resolution 
20  Costs and delays of collecting payments and recovering debt 
21  Barriers to data availability and unclear data privacy rules 
22  Obstacles to effective intellectual property rights protection 

3. Additional steps for establishment 
a)  Setting up a business 
b)  Staffing  

23  Hurdles to starting a business 
24  Lack of skilled workers and limited worker mobility 
25  Difficulties in accessing a regulated profession 

c)  Sourcing  and suppliers  
Investing and financing 
d) 

e) 

Taxes, subsidies and 
other public help 

26 

27 

Complex, burdensome and/or uneven labour and social 
regulations 
No frequently reported barriers or obstacles in this step 
Obtaining finance for operations in another country of the single 
market 

28  Restrictions on corporate ownership 
Insufficient credit information 
29 
National tax exemptions for direct taxes, subsidies, and financial 
contribution requirements 

30 

Throughout the business journey 

31  Language 

18 

 
  
 
 
 
 
 
 
 
 
  
 
  
 
  
 
 
 
 
 
  
 
 
  
  
  
General barriers and obstacles along the business journey  

Step 1 Steps before expanding 

1. Insufficient information about business opportunities and partners as well 

as applicable rules 

Practical obstacles and barriers reported by businesses 

Businesses  report  difficulty  to  access  several  types  of  information:  i)  commercial  information 
(e.g., on market size, clients, potential partners) from the private sector, ii) business registers, and 
iii) information on rules and regulations applicable in another Member State.  

i) Commercial information  

Stakeholders  report  difficulties  in  obtaining  commercial  information  in  order  to  expand  their 
business abroad. Surveys from both Eurochambres 2019 survey and the Dutch Doing Business in 
Europe survey find that entrepreneurs need more information about networks and opportunities to 
do business in other Member States. In particular, respondents to a survey of the Confederation 
of  Finnish  Industries  identify  difficulties  “across  the  value  chain,  from  assessing  and  finding 
good dealers and partners even before entering the market and in the bidding phase, to after sale 
services (e.g. installation and construction of equipment)”.  

The  problem  is  particularly  prominent  among  SMEs.  The  Latvian  Chamber  of  Commerce  and 
Industry  reports  that  entering  foreign  Member  States’  markets  can  be  even  more  difficult  for 
SMEs because they do not have sufficient resources to do a proper evaluation of market risks and 
opportunities. Similarly, the Interim Evaluation of the COSME programme finds that SMEs are 
in need of information to help them develop their activities outside their home country. It states 
that  “the  limited  capacity  of  SMEs  to  internationalise  their  activities  and  their  challenges  in 
‘finding customers’ can be considered an information asymmetry failure.”26 

ii) Access to business register information 

Legal and financial information on other businesses may be costly. Such information is available 
in  a  business  register,  but  majority  of  business  registers  charge  a  fee  to  provide  company 
information. For example, the Austrian Chamber of Commerce reports insufficient free access to 
commercial registries data. For example, the central portal of the German business register does 
not  provide  information  in  machine-readable  formats  and  charges  “high  administration  fees”. 
Similarly, the Czech Chamber of Commerce reports “insufficient reliable information about legal 
status  and  financial  situation  of  potential  business  partners  in  other  Member  States”  as  an 
obstacle. 

19 

 
 
                                                      
 
 
At the same time, national business registers have been connected through the Business Registers 
Interconnection System (BRIS)27 since 2017. BRIS allows companies and entrepreneurs to search 
and obtain free information on EU limited liability companies in a multilingual and user-friendly 
way through the e-Justice Portal. 

iii) Information on rules and regulations applicable in another Member State 

This  obstacle  has  different  dimensions.  On  the  one  hand,  the  national  rules  themselves  can  be 
complex and unclear. Participants in a 2016 public consultation claimed that, even when online 
information  about  applicable  national  rules  related  to  doing  business  in  another  Member  State 
exists, it is difficult to find or understand it or it is too general.28 The Confederation of Finnish 
Industries, for example, states that the “complexity of regulations and bureaucracy,” reinforced 
by difficulties in finding correct information, is a frequent issue that companies face. Similarly, 
the DIHK 2019 survey mentions a lack of information or understanding of the different rules that 
apply in each Member State as a frequent barrier. On the other hand, online information on rules 
can  be  missing,  incomplete  or  unclear.  In  a  survey  by  the  Czech  Chamber  of  Commerce,  the 
inaccessibility  to  information  on  rules  and  requirements  was  highlighted  to  be  an  extremely 
significant  or  significant  barrier.  The  Confederation  of  Danish  Industry  highlights  that  because 
many  references to  standards  are  not  published,  some  companies  might  be  forced  to  use  third-
party certification before they can market their products.  

Available quantification 

7  out  of  11  business  organisations  that  replied  report  issues  related  to  this  barrier.  More 
specifically: 

i) Commercial information 

The  Czech  Chamber  of  Commerce  reports  that  52  %  of  Czech  companies  say  that  a  lack  of 
accurate  and  clear  information  is  a  serious  or  a  very  serious  obstacle.  For  53%  of  SMEs, 
“identifying business partners abroad is too difficult” according to the 2017/2018 Annual Report 
on European SMEs. This makes it one of the top five obstacles to exporting.29  

Similarly, 31% of SMEs with exporting experience and 21% of SMEs without such experience 
mention  the  “difficulty  to  identify  business  partners”  in  another  Member  State  as  a  barrier  to 
doing business across the single market, according to the Centre for European Policy Studies. In 
addition, 22% and 11%, respectively, also report “not knowing where to find information about 
potential market”. 

In  the  area  of  public  procurement,  availability  of  information  on  public  procurement 
opportunities varies greatly across Member States in the EU in spite of a single point of access at 
EU level (Tender Electronic Daily – TED). The table below illustrates this variation. 

Publication rate (value of procurement published in TED as a share of the GDP): 

27 Directive 2012/17/EU of the European Parliament and of the Council of 13 June 2012 amending Council 
Directive 89/666/EEC and Directives 2005/56/EC and 2009/101/EC of the European Parliament and 
of the Council as regards the interconnection of central, commercial and companies registers 

28 Commission staff working document - Synopsis report on the stakeholder consultation on the Single 

Digital Gateway, SWD(2017) 212 final, p.4.s 

29 Commission staff working document - Synopsis report on the stakeholder consultation on the Single 

Digital Gateway, SWD(2017) 212 final. 

20 

 
                                                      
Source: European Commission, TED 

ii) Access to business register information 

According  to  the  Eurochambres  2019  survey,  “insufficient  legal/financial  information  about 
potential  business  partners  in  other  countries”  ranks  eight  in  obstacles  to  the  single  market, 
reported  by  58.9%  of  respondents.  It  is  particularly  important  for  companies  with  less  than  10 
employees. 

Nonetheless, the available statistics about the Business Registers Interconnection System (BRIS), 
show a constant increase in its use, including by companies and entrepreneurs, with over 732,000 
company searches since BRIS went live in June 2017.  

iii) Information on rules and regulations applicable in another Member State 

According  to  the  Eurochambres  2019  survey,  “inaccessibility  to  information  on  rules  and 
requirements”  ranks  third  in  obstacles  to  the  single  market,  reported  by  69.1%  of  respondents. 
According to the Hidden Treasures report, “not knowing the rules which have to be followed” is 
a barrier for 31% of SMEs in the five largest Member States. 

Analysis of the reported practical obstacles and barriers 

As  regards  Commercial  information  about  business  opportunities  ((i)  above),  there  is  limited 
role of EU legislation to provide information about business opportunities for the private sector. 
Finding such information is, to a large extent, dealt at firm level. Still, Member States have put in 
place networks and dedicated administrations to support their exports.  

In the area of public procurement opportunities, there is a problem of inadequate enforcement, 
notably, with uneven publication rates among Member States (cf. graph). 

As regards information on companies available in business registers ((ii) above), Directive (EU) 
2017/1132  requires  EU  Member  States  to  ensure  disclosure  of  information  on  limited  liability 
companies. Such information includes important documents such as instruments of constitutions, 
statutes  and  name  of  legal  representatives.  Business  registers  can  charge  fees  for  those 
documents, which must not exceed the administrative cost incurred by the business register. This 
Directive also requires Member States to provide additional information free of charge through 
the  system  of  interconnection  of  registers  (BRIS),  including  names  of  legal  representatives, 
object of the company and information on their branches. 

The  issue  of  information  on  rules  and  regulations  applicable  in  another  Member  state  ((iii) 
above) seems to be a problem of inadequate implementation of EU legislation. For example, 
the  Services  Directive  requires  Member  States  to  make  information  on  rules  and  requirements 

21 

 
 
easily  accessible  at  a  distance  and  by  electronic  means  through  the  so-called  Points  of  Single 
Contact.  In  particular  during  the  implementation  of  the  Services  Directive,  the  Commission 
invested  major  efforts  in  partnership  with  Member  States,  with  a  view  to  making  them  reach 
concrete achievements on that front.30 In view of some persistent shortcomings, the Commission 
has recently launched infringement procedures to solve  Member States’ partial inaction on that 
front. It is also linked to other broader aspects of the general business environment in Member 
States.  The  issue  has  recently  been  addressed  at  EU  level  through  the  Single  Digital 
Gateway. Regulation (EU) 2018/1724 establishing a Single Digital Gateway aims at facilitating 
online  access  to  the  information,  administrative  procedures  and  assistance  services  that 
businesses need to get active in another EU country. By the end of 2020, through a single point of 
access,  they  will  be  able  to  find  reliable,  qualitative  information  on  EU  and  national  rules  that 
apply  to  them  when  they  want  to  exercise  their  single  market  rights,  know  how  to  carry  out 
administrative  procedures  and  what  steps  they  need  to  follow.  In  addition,  if  users  are  still 
confused about which rules apply or have trouble with a procedure, they will be guided to the EU 
or national assistance service most suited to address their problem.  

In  addition,  specifically  as  regards  information  about  company  law  related  procedures  and 
requirements, Directive (EU) 2019/1151 requires Member States to provide such information free 
of charge through the single digital gateway and, where applicable, on the e-Justice Portal and at 
least in a language broadly understood by the largest possible number of cross-border users. This 
includes information on the formation of limited liability companies and registration of branches 
online.  Member  States  will  also  make  national  online  templates  available  for  the  formation  of 
private limited liability companies (and can decide to provide such templates also for other types 
of companies). The timely transposition of this Directive by Member States will be important in 
this context. 

Step 2a Steps to selling cross-border: product and services regulation 

2. Difficulties in meeting requirements to sell goods or services 

Practical obstacles and barriers reported by businesses 

Businesses report four different categories of difficulties in meeting requirements to sell goods or 
services: i) they are prevented from providing their goods or services or they have to adapt them, 
ii) unfair competition of non-compliant products, iii) they face administrative burdens to conform 
to  technical  requirements  and  other  national  rules,  and  iv)  difficulty  to  access  information  on 
requirements (see section of access to information).  

i) Businesses are prevented from providing their goods or services or they have to adapt them 

30   See for ex. Commission Decision of 2 October 2009 setting out the practical arrangements for the 

exchange of information by electronic means between Member States under Chapter VI of Directive 
2006/123/EC of the European Parliament and of the Council on services in the internal market. See 
also COM/2011/0020 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. 

22 

 
                                                      
Sometimes,  goods  lawfully  marketed  in  one  EU  country  are  refused  market  access  in  another 
without good reason, as reported by the Austrian Chamber of Commerce.31 

For example, the Spanish Chamber of Commerce reports issues with the acceptance of products 
in  several  Member  States.  Specifically,  this  organisation  reports  that  electrical  equipment  and 
electrical safety and security systems exported to some Member States must be certified by the 
certification authority of that country. Other European certifications are not accepted. In addition 
to  the  certification  costs,  exporters  are  reportedly  required  to  pay  the  certification  authority  a 
share of their sales revenue as a fee.  

Businesses, particularly SMEs that are faced with national rules preventing them from marketing 
their  products,  which  have  already  been  lawfully  marketed  in  another  Member  State,  tend  to 
either adapt their products instead of relying on mutual recognition or not enter that market. 

In  the  construction  sector,  the  Confederation  of  Danish  Industry  reports  that  several  Member 
States continue to require national quality marks and documentation. This often goes beyond the 
CE  marking  laid  out  in  the  Construction  Product  Regulation.  An  example  is  fire  safety,  where 
Sweden,  Belgium  and  France  appear  to  require  several  certificates  which  cover  the  same 
characteristics  as  the  CE  marking.  The  demand  for  additional  certificates  “constitutes  a  heavy 
bureaucratic  burden  for  manufacturers  wishing  to  export  their  products  to  the  aforementioned 
markets”. 

Similarly,  the  Confederation  of  Finnish  Industries  reports  that  technical  standards  for 
constructions  and  building  materials  are  frequently  divergent,  which  leads  to  a  need  to  locally 
adapt projects. 

The Confederation of Danish Industry reports that temperature requirements for semi-preserved 
foods vary throughout Europe. This causes problems for companies that produce their products in 
one  Member  State  and  wish  to  export  them  to  other  Member  States.  For  example,  as  Danish 
legislation  requires  lower  temperature,  a  foreign  company  had  to  send  its  products  to  external 
cooling facilities to comply with the Danish temperature requirements. 

Several  business  organisations  and  multiple  SOLVIT  cases  report  that  “Member  States  use 
different requirements on entering of products in their domestic markets, ignoring the EU rules 
on  mutual  recognition,”  as  formulated  by  the  Czech  Chamber  of  Commerce.  The  DIHK  2019 
survey  reports  that  there  are  “difficulties  with  the  mutual  recognition  of  national  regulation  in 
other EU Member States”. The survey adds “For instance, certain companies complain about the 
inconsistent recognition of professional qualifications in the single market. The same applies to 
eSignatures”. DIHK claims that there should be guaranteed freedom to provide services under the 
EU  law  (including  in  the  European  Court  of  Justice  case  law),  but  that  in  practice,  it  is  “not 
always effectively implemented”. 

“Different national service rules” are the second most significant obstacle to the single market, 
indicated  as  significant  or  very  significant  by  71%  of  respondents  to  the  Eurochambres  2019 
survey  (81%  and  60%  for  service  providers  and  producers,  respectively).  The  majority  of 
respondents  to  a  survey  by  the  Czech  Chamber  of  Commerce  highlight  that  different  national 
service  rules  are  an extremely  significant  or  significant  problem.  Similarly,  “different  technical 
standards” are reported as an obstacle by 18% of self-employed, according to the Dutch Doing 
Business report. 

For example, the Greek Chamber of Commerce states that when exporting, different product and 
services  market  regulations  per  country  “make  business  more  complex  and  increase  cost  to 

31 The Chamber of Commerce also adds “These are individual cases and no pattern can be derived from 

that. In practice, our member companies rarely face obstacles, delays and additional costs.” 

23 

 
                                                      
comply”. Similarly, Malta Chamber of Commerce argues that “once a product is registered in the 
EU, it should not have to be re-registered”. 

In the area of goods, certain national measures may have a restrictive effect on goods leaving the 
territory of that Member State. Such measures can be a direct ban or restriction of exports, such 
as, an obligation to sell the entire production or a percentage of it (gas, electricity, wood, etc.) on 
the  domestic  market,  which  prevents  economic  operator  from  selling  their  products  in  another 
Member State. It can also take the form of a national measure indistinctly applicable to domestic 
and foreign economic operators that may have a greater (restrictive) effect on goods leaving the 
territory  of  that  Member  State,  such  as  an  obligation  to  draw  up  all  invoices  relating  to  cross-
border transactions exclusively in the official language of that Member State. Export restrictions 
are  in  principle  prohibited  under  Article  35  TFEU.  Therefore,  Member  States  putting  in  place 
such  national  measures  need  to  demonstrate  that  these  are  justified  by  a  public  objective,  and 
proportionate as to achieve the said objective. Furthermore, where the matter is harmonised by 
EU rules, Member States must comply with those rules.  

ii) Unfair competition of non-compliant products 

There  are  still  many  unsafe  and  non-compliant  products  sold  on  the  EU  market,  although  one 
would  expect  that  EU  rules  should  be  applied  uniformly  throughout  the  EU.  This  not  only 
endangers  consumers,  but  also  puts  compliant  businesses  at  a  competitive  disadvantage.  For 
instance,  third-country  products  could  in  some  instances  be  unsafe  and  also  therefore  non-
compliant  with  EU  legislation.  However,  Member  State  authorities  can  have  difficulties  to 
control this trade for several reasons. One reason is that it is problematic for them to take efficient 
action against the responsible operator when located outside the EU. In particular, this is the case 
in relation to consumer products not covered by EU harmonisation legislation. Other reasons can 
include lack of administrative capacity for market surveillance authorities or lack of cooperation 
between them cross border. Again, this results in an unequal level playing field for companies. 

iii)  Businesses  face  administrative  burden  to  conform  to  technical  requirements  and  other 
national rules 

Even when information about technical requirements is available and businesses have to legally 
undergo  a  given  procedure  and  meet  certain  requirements,  the  process  of  registration  and 
approval of a given product or activity can be seen as slow and administratively heavy. 

These administrative delays can create hurdles for companies, as two SOLVIT cases illustrate. In 
one case, an agrochemical company reported that it applied for a parallel trade permit to another 
Member  State  for  two  plant  protection  products.  Two  months  later,  the  Member  State’s 
authorities confirmed they received documents to assess one of the applications. Another month 
later, they confirmed they received documents for the other application. However, the applicant 
still has not received a decision on either of their applications three months later.  

In  another  SOLVIT  case,  a  foreign  company  reports  that  it  was  in  contact  with  a  company 
interested in the sale of their nutritional and cosmetic products in that company’s Member State. 
The  products  had  been  sold  on  the  foreign  company’s  market  for  more  than  10  years  and  are 
regularly  registered  in  the  Member  State.  The  foreign  company  requested  a  registration  at  the 
Member  State’s  authorities.  However,  two  years  later,  these  authorities  are  still  analysing 
whether the products can be approved. 

Available quantification 

10 out of 11 business organisations (that replied to a Commission survey) reported issues related 
to this barrier. More specifically: 

24 

 
i) Businesses are prevented from providing their goods or services or they have to adapt them 

Up  to  71%  of  SMEs  were  faced  with  a  market  access  denial  decision  after  using  mutual 
recognition for entering a market32  

 ‘Different national service rules’ are the second most significant obstacle to the single market, 
indicated  as  significant  or  very  significant  by  71%  of  respondents  to  the  Eurochambres  2019 
survey  (81%  and  60%  for  service  providers  and  producers,  respectively).  Similarly,  ‘different 
technical standards’ are reported as an obstacle by 18% of self-employed, according to the Dutch 
Doing Business in Europe survey. 

ii) Unfair competition of non-compliant products 

The  number  of  unsafe  and  non-compliant  products  sold  on  the  EU  market  is  deemed  to  be  as 
many  as  32%  of  toys,  58%  of  electronics,  47%  of  construction  products  or  40%  of  personal 
protective  equipment  inspected33.  This  is  particularly  relevant  as,  over  the  last  few  years,  the 
share  of  people  ordering  goods  or  services  online  increased  steadily.  60%  of  EU  consumer 
purchased  products  online  in  year  2018  (Eurostat).  More  and  more  of  the  dangerous  products 
notified in the Rapid Alert System for non-food dangerous products are sold online. In 2018, a 
total of 2257 alerts were circulated in this system. 53% of products notified in the Rapid Alert 
System originate from China.  

iii) Businesses face administrative burden to conform to technical requirements 

“Complex  administrative  procedures”  are  the  most  serious  obstacle  to  the  single  market, 
indicated  as  significant  or  very  significant  by  79%  of  respondents  to  the  Eurochambres  2019 
survey (80% and 78% for service providers and producers, respectively). Similarly, according to 
the Hidden Treasures study, administrative procedures are an obstacle for 37% of SMEs without 
exporting experience and 26% of SMEs with exporting experience.  

According  to  the  Dutch  Doing  Business  in  Europe  survey,  20%  of  self-employed  respondents 
mentioned major obstacles in the area of importing and exporting services, particularly regarding 
the complexity and duration of the process in order to receive consent for delivering a service. 

For example, in only a quarter of Member States does the consumer protection authority take a 
decision in a case covered by EU consumer law in less than three months on average, according 
to the Hidden Treasures report. 

A  recent  assessment  shows  that  the  administrative  costs  created  by  national  sector-specific 
requirements in the areas of regulated business services and construction services can go up to 
EUR 10,000 and more.34 Per company level total compliance costs for European businesses are 
estimated to amount to 0,48 % of turnover.35  

The  problem  is also  prevalent  among  SMEs.  According  to  a  EU  Flash  Eurobarometer,  24%  of 
respondents reported that administrative procedures for exporting are too complicated. 

32 Impact Assessment accompanying the document Proposal for a Regulation of the European Parliament 
and of the Council on the mutual recognition on goods lawfully marketed in another Member State, 
SWD (2017) 471 final. 

33 Impact Assessment accompanying the document Proposal for a Regulation of the European Parliament 
and of the Council on procedures for compliance with and enforcement of Union harmonisation 
legislation on products, SWD (2017) 466 final. 

34 Ecorys, “Administrative formalities and costs involved in accessing markets cross-border for provisions 
of accountancy, engineering and architecture services”, 2017; Ecorys, “Study on costs involved in 
accessing markets cross-border for provision of construction services”, 2018 

35 http://ec.europa.eu/smart-regulation/evaluation/search/download.do?documentId=9966151 

25 

 
                                                      
Analysis of the reported practical obstacles and barriers 

The problems that businesses may be forbidden from providing their goods or services and may 
have to adapt them, are in most cases due to either restrictive national rules (and a limited role 
of  EU  legislation),  or  EU  legislation  leaving  flexibility  to  Member  States,  as  well  as  an 
inadequate  enforcement  and  implementation  of  EU  law.  On  these  issues  it  is  worthwhile 
differentiating  services  from  goods  as  they  have  different  legal  frameworks.  It  should  also  be 
added that as regards e-commerce, criteria triggering goods requirements are not always clear and 
consistent (see barrier 59 on complexity and uncertainty of applicable rules for cross-border sales 
and purchases). 

In addition, many intra-EEA trade barriers and obstacles to cross-border e-commerce are rooted 
in  private  behaviour  of  businesses  rather  than  regulation.  In  recent  years,  the  Commission  has 
intervened  through  competition  enforcement  action  to  stop  certain  companies’  illegal  practices 
that partitioned the Single Market and prevented licences in Europe from selling products cross-
border and across customer groups. 

Goods 

In the opinion of Confederation of Danish Industry, there is a lack of a systematic follow-up on 
Member  States’  obligations  to  enforce  common  EU  rules,  insufficient  reporting  of  the 
surveillance, and a lack of publication of references to European harmonised standards. 

Enforcement  differences  can  indeed  create  an  uneven  playing  field.  Sometimes,  one  Member 
State’s  market  surveillance  authority  may  consider  that  a  product  is  compliant  with  EU 
legislation, whereas in other Member States, authorities may take a different view. In those cases, 
a  company  may  be  requested  to  take  corrective  actions  and  even  take  the  product  out  of  the 
market, which can create significant economic loses. 

However,  it  is  important  that  there  is  a  common  understanding  among  market  surveillance 
authorities  of  what  are  non-compliant  products.  To  this  end,  the  recently  adopted  Market 
Surveillance  Regulation  2019/1020  (which  builds  on  market  surveillance  and  compliance  of 
products and amending Directive 2004/42/EC and Regulations (EC) No 765/2008 and (EU) No 
305/2011), will reinforce the coordination among Member States market surveillance authorities 
in  the  harmonized  area,  with  the  set-up  of  the  EUPCN  (European  Union  Product  Compliance 
Network). Among other aspects, the EUPCN will facilitate the exchange of information via the 
electronic  portal  ISCMS  on  the  outcome  of  the  inspections,  and  will  also  allow  authorities  to 
share and agree on product-specific risk-assessment methodologies. 

Requirements  linked  to  the  need  to  ensure  the  safety  of  products  also  might  constitute  an 
obstacle. This is, nonetheless, a justified obstacle to ensure health and safety. On the other side, 
the  different  regime  in  place  for  harmonised  and  non-harmonised  products  constitute  an 
avoidable  obstacle. There  is  therefore the  need to have  a  more  coherent safety  regime  for  both 
type of products.  

Additionally, a procedure called “safeguard clause” is foreseen in the harmonised legislation to 
allow  Member  States  and  the  Commission  to  take  a  position  concerning  a  national  restrictive 
measure.  

The sectoral sections on industrial machinery and construction provide concrete examples of 
these problems, which also can find their origin in sector-specific legislation.  

Services 

The  main  root  causes  seem  to  be  related  to  inadequate  implementation  of  EU  law  and  more 
generally the general business environments in Member States.  

26 

 
Both Treaty and secondary legislation like the Services Directive clearly distinguishes between 
the  rules  applicable  to  establishing  service  providers  and  those  applicable  to  providers  of 
temporary  cross-border  services  (e.g.,  service  providers  like  lawyers  or  IT  specialists  when 
posted in another Member State). It requires Member States to abstain from imposing their own 
requirements on temporary cross-border service providers except in cases justified by a limited 
number of overriding reasons of public interest. This means that the requirements Member States 
can  impose  on  these  temporary  service  providers  are  limited.  In  practice  nevertheless,  service 
providers  still  face  regulatory  obstacles  when  providing  temporary  services  in  other  Member 
States. Furthermore, there is often a lack of clarity in the legislation of Member States as well as 
for  example  on  the  points  of  single  contact  whether  and  how  national  requirements  apply  to 
temporary cross-border providers.     

Administrative capacity 

The  root  cause  of  the  administrative  burden  borne  by  businesses  seems  to  be  often  linked  to 
insufficient  administrative  capacity  and  practices  for  the  implementation  of  EU  law  by 
national  authorities.  Administrative  burden  can in certain circumstances  be justified in order to 
protect public interests, such as safety or health, but must be in compliance with rules such as the 
principles  of  non-discrimination  and  proportionality  and  going  along  with  at  least  partly 
harmonised market regulation, which is properly enforced.  Lack of capacity for effective market 
surveillance is discussed in the next section.  

The  Services  Directive  addresses  the  issue  of  administrative  burden  faced  by  companies  to 
comply with national requirements. It requires Member States to abolish unjustified authorisation 
schemes, simplify administrative procedures and formalities for those services and areas falling 
into this ambit of application. Moreover, under the Services Directive, authorisation procedures 
must  comply  with  a  number  of  requirements  such  as  clarity,  publicity,  impartiality,  reasonable 
waiting  period.  Information  on  requirements  should  be  easily  accessible  and  service  providers 
should be able to complete procedures at a distance and by electronic means (through the national 
"points of single contact"). To make these rules operational, the Commission has carried out over 
the  years  substantial  work  together  with  Member  States.36  There  is  still  important  scope  for 
improving  the  implementation  of  these  provisions  by  Member  States.  Administrative  capacity 
and the dedication of national resources plays an important role in this regard.  

3. Problems with mutual recognition affecting the free movement of goods 

not covered by EU harmonisation legislation 

This barrier is a part of the previous section on difficulties in meeting requirements to sell goods 
and services. However, it is of such importance that it requires a section of its own. 

36 See Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on 
electronic identification and trust services for electronic transactions in the internal market and 
repealing Directive 1999/93/EC (OJ L 257, 28.8.2014, p. 73); see also Commission Decision of 16 
October 2009 setting out measures facilitating the use of procedures by electronic means through the 
‘points of single contact’ under Directive 2006/123/EC of the European Parliament and of the Council 
on services in the internal market; Commission Decision 2011/130/EU of 25 February 2011 
establishing minimum requirements for the cross-border processing of documents signed electronically 
by competent authorities under Directive 2006/123/EC of the European Parliament and of the Council 
on services in the internal market. 

27 

 
                                                      
Practical obstacles and barriers reported by businesses 

Building on the previous section, business organisations point out general issues in particular on 
the free  movement  of  goods  not  covered  by  EU  harmonisation  legislation,  which  cover  a  wide 
range  of  consumer  goods  (such  as  textiles,  footwear,  childcare  articles,  jewellery,  tableware  or 
furniture).  

As reported by the Austrian Chamber of Commerce, in some instances goods lawfully marketed 
in  one  EU  country  are  refused  market  access  in  another  without  good  reason37.  Similarly, 
“different technical standards” are reported as an obstacle by 18% of self-employed, according to 
the Dutch Doing Business in Europe survey. The Greek Chamber of Commerce states that when 
exporting,  different  product  and  services  market  regulations  per  country  “make  business  more 
complex and increase cost to comply”. Similarly, Malta Chamber of Commerce argues that “once 
a product is registered in the EU, it should not have to be re-registered”.  According to a survey 
by the Confederation of Finnish Industries, 44% of respondents mention different standards as a 
barrier and 36% mentioned regulatory differences as a barrier. The Czech and German chambers 
of  commerce  as  well  as  multiple  SOLVIT  cases  report  that  Member  States  use  different 
requirements on entering of products in their domestic markets, ignoring the EU rules on mutual 
recognition.  

Available quantification 

The share of goods in intra-EU trade makes up significant part of the single market. It generates 
around  25%  of  EU  GDP  and  75%  of  trade  in  goods  between  EU  Member  States.  The  EU 
accounts for around one sixth of the world’s trade in goods. Trade in goods between EU Member 
States was valued at EUR 3,063 billion in 2015.  

According  to  a  EU  Flash  Eurobarometer,  more  than  one  third  of  SMEs  (36%)  have  imported 
from  another  country  within  the  EU,  while  30%  have  exported  to  another  EU  country. 
Additionally, 7 out of 11 business organisations (that replied to a Commission survey) reported 
issues related to this barrier. 

A  wide  range  of consumer  products  are  not  harmonised  by  EU  legislation (the so-called “non-
harmonised goods” such as textile, footwear, childcare articles, jewellery, tableware or furniture). 
Up to 71% of SMEs who tried the existing mutual recognition system were faced with a market 
access  denial  decision.    The  lower  intra-EU  trade  for  textiles  could  be  explained  by  strong 
imports from third countries. In 2018, the EU imported EUR 115 billion in textiles and clothes. 
In particular, for clothes imports are very large, with over EUR 80 billion in 2018. 

Analysis of the reported practical obstacles and barriers 

EU  legislation  leaves  flexibility  for  the  free  circulation  of  goods  not  covered  by  EU 
harmonisation legislation by relying on the principle of mutual recognition.  

Inadequate  enforcement  of  EU  law  and  insufficient  administrative  capacity  and  practices: 
there is often limited information about national and EU rules that have to be complied with. This 
includes  procedures  and  guidance,  documents  templates  and  information,  or  information  about 
relevant  authorities.  Some  aspects  of  products  may  be  partially  covered  by  EU  harmonisation 

37 The Chamber of Commerce also adds “These are individual cases and no pattern can be derived from 

that. In practice, our member companies rarely face obstacles, delays and additional costs.” 

28 

 
                                                      
legislation. It might be complicated to identify the applicable national technical rule for certain 
types of goods and it is not always easy to find the right authority at the national level to provide 
the necessary information. 

The  mutual  recognition  principle  ensures  that  products  not  subject  to  EU-wide  harmonisation 
legislation can, in principle, move freely within the single market, if they are lawfully marketed 
in one Member State. This principle should in theory allow manufacturers to sell their products 
across  Europe  without  any  additional  requirements.  To  make  the  principle  faster,  simpler  and 
clearer  in  practice,  the  EU  adopted  Regulation  (EU)  2019/55  on  the  mutual  recognition 
declaration  which  was  adopted  in  March  2019  and  will  start  applying  as  of  19  April  2020, 
together with an action plan to speed-up the implementation of the mutual recognition principle. 
The new Regulation 2019/515 establishes a voluntary Mutual Recognition Declaration, stronger 
administrative cooperation and alternative business friendly problem solving procedure in case of 
denial.  The  Regulation  also  foresees  that  Product  Contact  Points  of  Member  States  provide 
economic operators with the necessary information concerning their products (e.g. the applicable 
technical  rules,  the  contact  details,  etc.)-  Guidance  on  Regulation  2019/515  shall  also  ease  the 
application  by  economic  operators  and authorities  of the  principle  of  mutual recognition in the 
EU single market. 

4. Fragmentation of rules for digital services  

Practical obstacles and barriers reported by businesses 

This  barrier  is  a  part  of  the  section  on  difficulties  in  meeting  requirements  to  sell  goods  and 
services. However, as it plays out differently for digital services, it deserves a section of its own. 

Digital services face different legal requirements across the single market. This fragmentation is 
increasingly  burdensome  and  leads  to  ineffective  supervision  of  digital  services.  As  a 
consequence,  the  protection  of  citizens’  safety  and  rights  online  can  be  more  difficult.  This 
affects disproportionately small businesses that offer innovative online services.   

Available quantification  

Conservative estimates point to around 10 000 EU start-ups established in Europe that might be 
struggling with the fragmentation of digital services38. More data is currently being collected and 
analysed  in  the  context  of  the  evidence-gathering  and  consultation  exercise  feeding  into  the 
Digital Services Act that the Commission has announced for the end of 2020.  

Analysis of the reported practical obstacles and barriers 

The root cause of this barrier relates to the renewed need for harmonisation at EU level.  

38 Based on the Dealroom database, which assembles data on innovative companies on a global and 

European scale. 

29 

 
 
                                                      
The regulatory framework for digital services dates back to 2000, when the landscape of services 
was significantly different from today. The current legal framework for digital services, anchored 
in the Treaty’s freedoms for establishment and service provision, is set out in the e-Commerce 
Directive, which harmonised several key aspects relating to the free provision of digital services 
across in the internal market of the EU.   

With 20 years of case law interpreting the E-Commerce Directive, sometimes in diverging ways, 
the  legal  notions  on  the  services  covered  and  their  respective  responsibilities  lack  precision. 
Member States are also regulating in this field, in particular to address legitimate public policy 
concerns  raised  by  the  dissemination  of  illegal  content  on  their  territories.  This  creates  a 
patchwork  of  national  rules  and  fragmentation  in  the  Digital  Single  Market,  as  well  as  legal 
uncertainty  which  is  discouraging  for  businesses,  particularly  SMEs,  from  benefitting  from  the 
opportunities that the single market has to offer.  

Moreover, the cooperation procedures amongst competent authorities are not being used today, 
and Member States are taking further unilateral actions. 

A number of recent policy and regulatory interventions have addressed specific challenges for the 
dissemination  of  content  online,  in  particular  with  regard  to  the  illicit  dissemination  of 
copyrighted  content  (Copyright  Directive)  or  cover  specific  types  of  platforms  and  a  subset  of 
illegal  content  (Audiovisual  Media  Services  Directive  covering  video-sharing  platforms).  A 
Commission  Recommendation  of  2018  sets  general  lines  for  the  actions  expected  from  all 
hosting services (including online platforms). 

Against  this  background,  the  President  of  the  European  Commission  announced  a  Digital 
Services Act to ‘upgrade our liability and safety rules for digital platforms, services and products, 
and complete our Digital Single Market’. 

5. Differences in consumer protection 

Practical obstacles and barriers reported by businesses  

Despite the existing set of consumer laws at EU level, businesses, as reported for instance by 
the DIHK 2019 survey, widely reported that they face divergent consumer protection rules 
in such areas as consumer rights, consumer sales and guarantees, contract terms, price indication 
and disclosure, which create additional costs, especially for retailers.  

According  to  the  businesses,  differences  in  national  rules  related  to  consumer  protection 
create additional costs, particularly for retailers. Businesses perceive that this problem may be 
exacerbated  by  the  Geo-blocking  Regulation.  Even  if,  from  a  strictly  legal  point  of  view,  the 
Geo-blocking Regulation does not oblige entrepreneurs to sell to consumers in another Member 
State39, businesses warn that prohibiting them from discriminating on the basis of the customer's 
nationality, residence or establishment when selling can lead in practice to the same result.  

39 The Regulation does not impose an obligation on traders to sell across the EU, although it does prohibit 
them  from  discriminating  on  the  basis  of  the  customer's  nationality,  residence  or  establishment  when 
selling. Furthermore, the Regulation does not introduce an obligation to deliver across the EU. It defines 
specific  situations  where  customers  cannot  be  denied  access  to  the  goods  or  services  of  the  trader  for 
reasons relating to their nationality, residence or establishment. 

30 

 
                                                      
Beyond the Geo-blocking  regulation, the Commission has contributed through  competition law 
enforcement to tackle anti-competitive cross-border trade restrictions and geo-blocking practices 
that limit the availability of products for European consumers. 

The Commission undertook a comprehensive evaluation of general EU consumer protection 
legislation  during  2016-2017,  which  identified  limited  redress  possibilities  for  consumers  and 
diverging  enforcement  across  Member  States  as  the  main  issues  hindering  the  effectiveness  of 
EU consumer legislation.  

Available quantification 

Differences  in  consumer  protection  rules  and  contract  law  -including  legal  advice-  was 
considered  a  ‘very  important’  or  ‘fairly  important’  obstacle  to  the  development  of  cross-
border sales to other EU countries by 42 % of retailers using face-to-face sales channels and by 
46 %  of  retailers  using  distance  sales  channels.  In  particular,  differences  in  national  rules  that 
currently exist in some Member States and go beyond the minimum harmonisation level of the 
Consumer Sales and Guarantees Directive were reported as causing moderate to major costs for 
retailers,  such  as  the  free  choice  of  remedies  as  opposed  to  the  hierarchy  of  remedies  (54%), 
periods of reversal of burden of proof longer than 6 months (38 %), the absence of an obligation 
for consumers to notify a defect within 2 months (37 %) and a longer legal guarantee period (36 
%).40 

In addition to different substantive rules, barriers related to consumer protection stem also 
from the national consumer protection proceedings. In only a quarter of Member States does 
the consumer protection authority take a decision in a case covered by EU consumer law in less 
than three months on average41. 

In  the  Eurochambres  2019  survey,  “differences  in  national  (online)  consumer  rights”  are 
reported  as  an  obstacle  by  36.30%  of  respondents.  Finally,  6  out  of  11  business  organisations 
(that replied to a Commission survey) reported issues related to this barrier. 

Analysis of the reported practical obstacles and barriers 

The  main  root  cause  of  this  potential  hurdle  stems  from  the  fact  that  EU  legislation  leaves 
flexibility in the level of harmonisation, which creates space for differences in national rules. 
There may be legitimate reasons for Member States to maintain specific national rules in some 
cases.  The  revised  Consumer  Protection  Cooperation  Regulation  (EU)  2017/2394,  which 
strengthens enforcement cooperation procedures and the powers of national authorities to address 
cross-border and widespread infringements of EU consumer law, entered into application on 17 
January  2020.  Additionally,  in  e-commerce,  criteria  triggering  regulatory/consumer  protection 
obligations and jurisdiction are not always clear and consistent (cf. barrier 59 on complexity and 
uncertainty of applicable rules for cross-border sales and purchases).  

i) Significant EU rules leave flexibility in the level of harmonisation 

Consumer protection is embedded in a broad scope of EU legislation. While the Consumer 
Rights  Directive  and  the  Unfair  Commercial  Practices  Directive  follow,  in  general,  a  full 

40 Consumer legislation – 2017 Fitness Check (SWD(2017) 209 final) 

41 Hidden Treasures, Mapping Europe’s sources of competitive advantage in doing business, Donald Kalff 

and Andrea Renda, CEPS (Centre for European Policy Studies), Brussels, 2019 

31 

 
                                                      
harmonisation  approach  (with  exceptions  in  certain  areas  and  allowing  Member  States  several 
regulatory  choices),  the  other  four  substantive  legal  acts  (Consumer  Sales  and  Guarantees 
Directive42  1999/44/EC  (CSGD);  Unfair  Contract  Terms  Directive  93/13/EEC  (UCTD);  Price 
Indication  Directive  98/6/EC  (PID);  Geo-blocking  Regulation)  provide  for  minimum 
harmonisation.  

ii) Recent relevant initiatives 

The  revised  Consumer Protection  Cooperation  Regulation, entered into  application  on  17 
January 2020. It provides a new procedure to address Union wide violations of consumer law 
and  a  better  surveillance  system.  The  Commission  also  has  a  stronger  coordination  role  and  is 
able to prompt coordinated enforcement investigations in the event of Union wide infringements.  

In  addition,  a  new  regulation  on  Market  Surveillance  and  Compliance  is  expected  to 
address some of the challenges mentioned above when it comes to products covered by EU-
wide harmonisation legislation. It will come into force in 2021. 

The  issue  of  differences  in  national  laws  has  also  been  partly  addressed  by  the  recently 
adopted  Directives  on  sales  of  goods  and  the  supply  of  digital  content/digital  services: 
Directives (EU) 2019/770 and 2019/771 fully harmonise certain key contract law rules that were 
identified as obstacles to cross-border trade of goods and of digital content/digital services within 
the  EU.  These  include  rules  on  conformity  requirements,  as  well  as  consumer  remedies  in  the 
event  of a  lack  of  conformity  and the  conditions for  their  exercise.  However,  the  length of the 
legal guarantee period remains subject to minimum harmonisation. 

Finally, the Geo-blocking Regulation provided a harmonised approach to blocking the access to 
online  interfaces  and  other  discriminatory  practices,  with  a  view  to  favour  access  to  offers  by 
consumers  in  specific  situations,  while  providing  ex  lege  clarifications  as  to  the  applicable 
provisions in these cases. 

Beyond  the  Geo-blocking  Regulation,  the  Commission’s  competition  enforcement  has  tackled 
certain companies’ illegal practices that partitioned the Single Market to the ultimate detriment of 
European  consumers.  In  2018,  the  Commission  fined  four  consumer  electronics  manufacturers 
(Asus, Denon & Marantz, Philips and Pioneer) for resale price maintenance (“RPM”) in relation 
to  a  number  of  widely  used  consumer  electronics  products.  In  the  case  of  Pioneer,  the 
infringement  also  covered  restrictions  to  cross-border  trade  between  EU  Member  States.  The 
Commission also fined the US clothing company Guess for imposing, among others, restrictions 
of  cross-border  sales  to  consumers  (contractual  geo-blocking)  and  RPM.  Between  March  2019 
and  January  2020,  the  Commission  fined  three  brand-owners  and  licensors  of  rights  for 
merchandising  products  (Nike,  Sanrio  and  NBC  Universal)  for  their  licensing  and  distribution 
agreements  restricting  cross-border  and  online  sales  of  merchandising  products  such  as  bags, 
toys, school accessories and clothes, notably for children. 

42 Which will be replaced by the newly adopted Directive (EU) 2019/771 on contracts for the sales of 

goods. 

32 

 
 
                                                      
6. Uneven access to public procurement 

Practical obstacles and barriers reported by businesses  

There is a perception among chambers of commerce and other business organisations of several 
Member  States  that  local  suppliers  tend  to  be  favoured  over  foreign  ones,  which  discourages 
companies  from  making  the  effort  and  taking  the  time  to  bid  across  borders.  Although  overall 
transparency  has  increased  during  recent  years,  cross-border  activities  as  measured  by  the 
number  of  contracts  awarded  to  non-domestic  suppliers,  are  limited.  For  instance,  the 
Confederation of Danish Industry reports that between 2009 and 2015 only 2% of tenders were 
won by European companies in another Member State. According to the Dutch Doing Business 
in Europe survey, access to public procurement is the single most significant obstacle for SMEs: 
32% of self-employed and 42% of SMEs in the area of services say they face barriers in gaining 
access to public procurement. This is also a barrier for the export of products, according to 37% 
of respondents to the same survey.  

The Austrian Chamber of Commerce reports that, in the summer of 2015, a company producing 
vehicle restraint systems was excluded from participating in a public tender in another Member 
States  on  the  grounds  that  the  product  suddenly  no  longer  complied  with  the  local  safety 
provisions’. However, the product was CE marked and was legally and properly used as a vehicle 
restraint system in all other countries.  

The  Confederation  of  Finnish  Industries  reports  that  each  Member  State  has  its  own  process, 
which  can  include  requirements  for  a  priori  references  within  a  very  specific  field,  obviously 
favouring a preferred supplier; requests in specific languages, requirements for service attention 
(e.g.  response  time)  that  effectively  prohibit  remote  bidders  from  complying;  extensive 
documentation requirements regarding the bidder's organisation, business plans, ownership, other 
business,  key  employee  background,  etc.  In  addition,  businesses  report  that  in  Italy,  the  anti-
corruption  regulation  seems  to  cause  disproportionate  administrative  burdens  for  non-local 
companies participating in public tenders.  

Other business reports suggest that the main issues affecting public procurement systems in many 
Member  States  are  the  lack  of  professionalism  regarding  procedures,  preparation  of  tender 
documents  and  use  of  criteria  for  evaluation  of  tenders;  as  well  as  lack  of  legal  or  technical 
training  that  leads  to  lack  of  specific  skills  and  capacities.  The  Czech  Chamber  of  Commerce 
reports  that  69%  of  Czech  companies  find  public  procurement  practices  arbitrary  and  would 
prefer  to  establish  a  single  EU-wide  repository  where  they  can  enter  company  data  and 
documentation required or public tender processes in order to avoid multiple requests. 

Businesses reported in a recent survey43 the following main obstacles for bidding cross-border (in 
parenthesis  the  percentage  of  respondents  that  perceived  each  of  these  as  a  “high  relevant 
barrier”):44  High  competition  from  national  bidders  (40%);  Perceived  preference  among 
contracting authorities for local bidders (39%); Unfamiliar legal context or formal requirements 
(e.g.  contract,  labour  law, certificates  to  provide  such  as  special  permits  necessary  for  offering 
services abroad etc.) leading to market entry barriers in the awarding country (32%); Additional 
costs due to geographic distance (i.e. implementation of contract is more expensive compared to 
delivery of contract close to own location) (30%); Language barriers (23%). 

43 Survey DG GROW, cross-border study 

44 Idem. Idem. Final European Commission report on the Measurement of impact of cross-border penetration in public 

procurement, February 2017... 

33 

 
                                                      
Finally, architects report a certain number of difficulties with procurement rules. The majority of 
architectural practices (more than 99%) are small companies with fewer than 50 employees. This 
can create obstacles related to the public procurement requirements such as minimum turnover. 
In response to the Architects' Council of Europe survey in 2018, 78% of architects said that they 
had experienced difficulties as part of the bidding process for OJEU advertised projects. About 
40%  of  these  respondents  reported  they  had  difficulty  in  fulfilling  the  minimum  turnover 
threshold,  while  nearly  as  many  felt  the  process  was  too  onerous.  More  than  30%  thought  the 
bidding  process  was  too  costly,  or  that  they  had  insufficient  past  experience.  According  to  the 
same  survey,  currently  around  17%  of  the  architectural  companies’  turnover  is  on  average 
generated  through  public  tenders45.  The  vast  majority  of  architectural/engineering  contracts 
registered in the TED database (around 98%) is still awarded domestically. 

Available quantification 

Cross-border contracts (direct or indirect i.e. through a subsidiary) represented approximately ¼ 
of  the  number  of  awarded  contracts  in  the  EU  and  of  the  total  value  of  the  contracts  between 
2009  and  2015.  The  direct  cross-border  share  in  the  number  of  awards  was  below  5%  in  the 
majority  of  the  28  Member  States46.  At  EU  level,  on  average,  SMEs  only  win  55  %  of  the 
contracts published in TED47 (this does not reflect their share in the EU economy). 

According  to  the  Dutch  Doing  Business  in  Europe  survey,  access  to  public  procurement  is the 
single most significant obstacle for SMEs: 32% of self-employed and 42% of SMEs in the area of 

45 2018 ACE sector study.  

46 https://ec.europa.eu/info/sites/info/files/file_import/european-semester_thematic-factsheet_public-

procurement_en_0.pdf  

47   Tenders Electronic Daily - the online version of the 'Supplement to the Official Journal' of the EU, 

dedicated to European public procurement 

34 

 
 
                                                      
services  say  they  face  barriers  in  gaining  access  to  public  procurement.  In  the  Eurochambres 
2019  survey,  “arbitrary  public  procurement  practices”  are  reported  by  38.2%  of  respondents. 
Additionally, 6 out of 11 business organisations (that replied to a Commission survey) reported 
issues related to this barrier. 

As regards enforcement and remedies, the available data show many divergences in the design 
and functioning of national remedies systems:48  

  There  are  specialised  review  bodies  in  16  Member  States;  in  11  Member  States,  non-
specialised  administrative  or  common  courts  are  in  charge  of  the  review.  The 
appointment  of  members  of  review  bodies  is  different  in  administrative  review  bodies 
and in judicial review bodies, and the number of their members varies from 3 to 70. 

  The median length of the review fluctuates from around 15 days (Poland, Romania) to 
almost  267  days  (Luxembourg).  For  some  Member  States,  data  is  not  available. 
Moreover,  time  limits  for  delivering  decisions  are  different  or  non-existent  in  some 
Member  States.  The  number  of  decisions  as  a  percentage  of  the  number  of  calls  for 
competition  published  in  TED  per  year  varies  from  1.7  %  (Luxembourg)  to  59.7  % 
(Romania). 

  Review  fees  differ  significantly  among  Member  States.  While  in a  few Member  States 
the review is free (France, Spain, Luxembourg, Sweden, Latvia), in  some countries the 
fees can be as high as EUR 380,000 (Czech Republic). In some Member States, the fees 
take form of a refundable deposit, in others it is non-refundable. As for the proportion of 
appealed first instance decisions, while in Denmark only 3 % of decisions are appealed, 
almost half of decisions are appealed in Bulgaria. 

Analysis of the reported practical obstacles and barriers  

Based on the analysis of the general performance of the EU public procurement market, a number 
of  barriers  can  be  identified  as  follows:  (i)  access  to  and  awareness  of  public  procurement 
opportunities; (ii) geographical distance, unfamiliarity with the legal context, cultural differences; 
(iii)  weak  administrative  capacity,  bureaucracy,  lack  of  professionalisation;  (iv)  barriers  to 
enforcement  and  remedies.  These  relate  to  EU  legislation  leaving  flexibility  as  regards 
implementation  and  different  policy  objectives, inadequate  enforcement  of EU  legislation, 
and insufficient administrative capacity and practices. 

The diversity of the national enforcement systems generates in some cases legal uncertainty and 
practical problems especially for cross-border economic operators.  

48 Data collected through the Network of first instances review bodies (not published); 

Report from the Commission to the European Parliament and the Council on the effectiveness of 
Directive 89/665/EEC and Directive 92/13/EEC, as modified by directive 2007/66/EC, concerning 
review procedures in the area of public procurement, COM/2017/028 final; 

Final report - Study to explore data availability at the national level in order to develop indicators for 

evaluating the performance of the Remedies Directives; 

Study to explore data availability at the national level in order to develop indicators for evaluating the 

performance of the ‘Remedies Directives’ Annex 2: Country Fiches. 

35 

 
                                                      
The  Remedies  Directives  introduce  minimum  level  of  protection  of  economic  operators’  rights 
during  public  procurement  procedures  and  minimum  requirements  on  national  public 
procurement review systems. Nevertheless, Member States remain free in how to establish their 
national remedies systems and in their choice of the body responsible of the review. 

Potentially  affecting  all  bidders  (national  and  foreign  alike),  diversified  remedies  systems  can 
deter economic operators from taking part in public procurement procedures, which can lead to a 
decreased transparency and ultimately to limited competition across the single market. 

Insufficient administrative capacity (of EU and national public procurement rules). Contracting 
authorities  often  face  a  lack  of  administrative  capacity,  lack  of  knowledge  of  the  rules  and  of 
technical  expertise.  Administrative  capacity  to  manage  public  procurement  processes  varies 
greatly between Member States and limitations can be perceived at all levels, but administrative 
capacity  is  frequently  weakest  at  the  level  of  local  authorities.  The  lack  of  administrative 
capacity,  adequate  systems,  and  effective  governance  structures  have  been  identified  as  main 
challenges in complying with procurement rules when implementing ESI funds. 

Complex  EU  legislation.  As  single  market  instruments,  the  public  procurement  directives 
regulate  only  those  contracts  that  are  above  the  EU  thresholds.  Mindful  of  the  principle  of 
subsidiarity  the  directives  regulate  the  most  important  issues  and  give  Member  States  a  large 
margin of manoeuvre in their implementation.  

Furthermore,  through  the  new  public  procurement  framework,  public  buyers  are  encouraged  to 
use more quality criteria justified by public policy reasons (e.g. green, social, innovative), whose 
introduction  might  create  challenges  to  economic  operators  during  the  transition  to  sustainable 
procurement practices.  

Recent initiatives 

In  terms  of  relevant  policy  context,  EU  public  procurement  rules  have  been  fundamentally 
modernised  with  the  adoption  of  the  new  generation  of  EU  public  procurement  directives  in 
2014, in force since 2016 but transposed by Member States with an average delay of 2 years.  

The Commission facilitated the creation of the Network of First Instance Remedies Bodies with 
the  aim  to  strengthen  cooperation  and  to  increase  the  EU-wide  efficiency  of  review.  The 
European  Commission  develops  guidance  and  good  practices  on  green,  social  and  innovative 
procurement as well as access of third country operations to the EU market. 

Professionalisation of public procurement aims to improve the whole range of professional skills 
and competences of the people conducting or participating in tasks related to procurement. The 
new rules on e-procurement introduced by the 2014 Directives are expected to increase efficiency 
and transparency by simplifying the process and result in significant savings for all  parties. The 
e-procurement timeline is shown below.  

36 

 
 
7. Differences in liability rules and insurance requirements 

Practical obstacles and barriers reported by businesses  

Respondents to the Dutch Doing Business in Europe survey highlight that small businesses 
face obstacles because liability rules differ between Member States. For example, “in some 
Member States, it must be demonstrated that there are sufficient financial resources to pay out in 
the  case  of  liability,  or  it  must  be  demonstrated  that  there  is  liability  insurance  that  covers 
sufficient  risks.”  But  finding  corresponding  insurance  can  be  especially  problematic  for  small 
businesses, especially because liability, insurance and risks are handled differently. 

In  many  Member  States  there  are  national  rules  which  oblige  service  providers  to  cover  risks 
related  to  their  professional  liability  through  a  mandatory  insurance.  This  is  an  additional 
safeguard for customers of the services concerned, but businesses allege that such requirements 
on professional indemnity insurance constitute a market entry barrier, in particular for operators 
active across the single market. There are several potential issues, including: 

  There  are  large  differences  regarding  obligations  on  professional  indemnity  insurance 
between different Member States within the same services sector and activity, leading to 
fragmentation  of  single  market  rules,  complicating  the  free  movement  of  services  in 
particular for SMEs; 

  Host  Member  States  often  do  not  take  into  consideration  the  insurance  coverage 
previously  acquired  by  service  providers  in  other  Member  States.  This  leads  to 
duplications,  complexities  and  additional  costs  for  service  providers  which  are  active 
cross-border. In addition, they might find it difficult to find sufficient offer on the market 
for their specific (cross-border) insurance needs. 

Available quantification 

Problems  reported  by  cross-border  service  providers  related  to  insurance  requirements 
have been repeatedly highlighted by stakeholders.49 One survey showed, for example, that over 
20% of service providers active cross-border highlighted specific problems related to complying 
with the insurance requirements of the host Member State.  

These  requirements  are  widespread  in  different  services  sectors  such  as  professional 
services50 and construction51. For example, in the construction services sector there is an ever-
increasing discrepancy in the regulation of liability and insurance. While certain Member States 
(e.g.  BE,  FR)  impose  a  stringent  and  legally  compulsory  decennial  insurance  on  a  range  of 
construction  works  and  companies  taking  part  in  the  construction  process,  in  others  Member 
States there is no legal obligation for construction parties in terms of insurance.  

Analysis of the reported practical obstacles and barriers 

Due to the strong civil law traditions in the Member States, the role of EU legislation is limited 
to  liability  for  defective  products.  The  Product  Liability  Directive  85/374/EEC  (the  Directive) 

49 For example SWD(2014) 130 final - Access to insurance for services provided in another Member State. 
An updated analysis on the impact of insurance requirements in services is currently ongoing.  
50 See COM(2016) 820 final 
51 See http://www.elios-ec.eu/sites/default/files/elios2-final-report.pdf  

37 

 
                                                      
ensured  a  harmonised  system  of  compensation  for  consumers  who  suffered  damage  from 
defective products through strict liability of producers.  

Given the changing nature of our economy, the rules we have no longer fully reflect our reality 
and can therefore lead to legal uncertainty and become barriers to the full development of 
the single market in themselves. It may be necessary to assess the extent to which current rules 
on  liability  should  be  updated  to  reflect  the  evolution  of  technologies  and  to  prevent  a 
fragmentation of national frameworks.  

Regarding  insurance  requirements,  the  highlighted  issues  seem  primarily  related  to  restrictive 
national rules  and insufficient implementation and enforcement of EU legislation. Member 
States  are  generally  not  applying  the  requirements  set  by  EU  law,  in  particular  the  Services 
Directive, to take into account essentially equivalent or comparable insurance requirements set by 
other Member States. 

Two recent developments may address some of these issues.  

  The Commission issued in 2017 detailed guidance to Member States on reform needs in 
regulation of professional services for seven professions (architects, engineers, lawyers, 
patent  agents,  accountants/tax  advisors,  real  estate  agents  and  tourist  guides)  and  also 
covered professional indemnity insurance requirements.   

  A Directive on a proportionality test before adoption of new regulation of professions or 
amendments  to  existing  rules  was  adopted  in  June  2018.  It  requires  Member  States  to 
undertake  an assessment  of  proportionality  in  accordance  with  the  common  framework 
laid  down  in  this  Directive  before  they  introduce  new,  or  amend  existing,  legislative, 
regulatory or administrative provisions restricting access to, or the pursuit of, regulated 
professions.  This  also  covers  rules  concerning  professional  indemnity  insurance 
requirements.  

Step 2b Steps to selling cross-border: marketing and access to clients 

8. Burdensome advertising and marketing restrictions 

See also related barriers in the pharmaceutical sector. 

Practical obstacles and barriers reported by businesses  

Restrictions  on  advertising  and  promotion  can  be  detrimental  for  businesses  exporting  on  the 
single market. Such restrictions may have the effect of favouring domestic goods and services, 
and render it more difficult for goods and services lawfully marketed in other Member States to 
penetrate  the  market  of  the  importing  Member  State.  This  is  reported  by  SMEs  in  the  Dutch 
Doing  Business  in  Europe  survey,  by  a  variety  of  SOLVIT  cases,  and  by  several  business 
organisations. Specifically, “restrictions on advertising, promotions and pricing” are reported as 
an  issue  when  exporting  by  the  Maltese  Chamber  of  Commerce.  Similarly,  “Language  / 
translation  requirements for  marketing”  and  “local  advertising  restrictions  or different rules  for 
marketing”  are  reported  as  barriers  by  respondents  to  the  Confederation  of  Finnish  Industries 
survey. 

Based  on  data  from  the  Technical  Regulation  Information  System,  Member  States  sometimes 
propose  regulations  on local  content  in  marketing  materials.  For  example,  one  Member  State’s 

38 

 
legislation added a requirement according to which everyone marketing agricultural products and 
foodstuffs  was  required  to  ensure  that  at  least  half  of  the  products  originated  in  that  Member 
State. 

As a specific example of this barrier, in a SOLVIT case, a hospital in one Member State tried to 
place a job advertisement for doctors in another Member State’s medical journal. However, the 
journal  only  accepted  advertisements  from  its  own  Member  State’s  employers.  In  another 
example,  a  respondent  to  a  Confederation  of  Finnish  Industries’  survey  stated  that  “direct 
marketing rules in B2B relation are too strict in EU, especially as applied in Germany”. It takes 
several years to be able grow with own customer contact data for direct marketing and this gives 
local companies the advantage of a historical contact network that cannot be bought or shared by 
new players from other countries.  

Available quantification 

“The marketing of a service has to adhere to different standards” is reported as a barrier by 27% 
of  SMEs,  according  to  the  Dutch  Doing  Business  in  Europe  survey.  “Language  /  translation 
requirement  for  marketing”  and  “local  advertising  restrictions  or  different  rules  for  marketing” 
are  reported  as  barriers  by  35%  and  19%  of  respondents  to  the  Confederation  of  Finnish 
Industries survey, respectively. 

Analysis of the reported practical obstacles and barriers 

This barrier mainly originated in  restrictive national rules, an inadequate of implementation 
of  EU  law  by  Member  States,  Member  States’  general  business  environment,  and 
requirements justified by public policy reasons.  

The EU Service Directive allows restrictions to commercial communication, provided these are 
proportionate and non-discriminatory. Member States have to remove unnecessary restrictions on 
commercial  communications  (including  advertising),  while  at  the  same  time  safeguarding  the 
independence  and  integrity  of  the  regulated  professions.  Absolute  bans  by  Member  States  on 
commercial communications by regulated professions are not allowed. For example, under that 
provision, a national ban on canvassing has been regarded in the case law as a total prohibition on 
commercial communications and thus unlawful. 

In addition, a Directive on a proportionality test before adoption of new regulation of professions 
or  amending  the  existing  rules  was  adopted  in  July  201852.  It  requires  Member  States  to 
undertake an assessment of proportionality in accordance with the common framework laid down 
in  this  Directive  before  they  introduce  new,  or  amend  existing,  legislative,  regulatory  or 
administrative provisions restricting access to, or the pursuit of, regulated professions. This also 
covers rules regarding advertising in regulated professions. Reforms in professional services are 
also part of the country-specific recommendations in the context of the European Semester. 

Concerning goods, restrictions on advertising and promotion may be in some circumstances often 
considered  as  selling  arrangements.  However,  they  may  constitute  measures  having  equivalent 
effect  under  Article  34  TFEU  when  they  have  legally  (de  jure)  and  factually  (de  facto) 
discriminatory  effects,  that  is,  when  they  result  into  more  limited  marketing  opportunities  for 
imported products, for instance, than for domestic ones.  

52 Directive (EU) 2018/958 of the European Parliament and of the Council of 28 June 2018 on a 

proportionality test before adoption of new regulation of professions, OJ L 173, 9.7.2018, p. 25 

39 

 
                                                      
Restrictions  on  internet  advertising  may  fragment  the  internal  market  and  endanger  a  well-
functioning and competitive digital single market53.  

Step 2c Steps to selling cross-border: delivering goods and services 

9. Transport bottlenecks, lack of access and restrictions 

Practical obstacles and barriers reported by businesses  

Businesses  face  transportation  obstacles  related  to  i)  access  to  transport  network,  ii) 
geographical  barriers  for  remote  regions,  iii)  bans  on  categories  of  goods,  and  iv)  other 
sector-specific barriers.  

i) Access to transport network 

Transport  infrastructure  varies  considerably  across  Member  States.  The  Commission 
analysis has shown that road transport performance can be measured as a function of accessibility 
(number  of  destinations  that  can  be  accessed  in  a  fixed  time)  over  proximity  (number  of 
destinations  within  a  fixed  geographical  radius).54  The  following  graph  summarises  the 
Commission’s  findings  and  indicates  that  the  transport  performance  is  significantly  higher  in  
Western and Southern EU countries, as compared to Central and Eastern Europe. 

Figure 3.5: Accessibility, proximity and transport performance by road per country, 2016 

Source: European Commission, DG REGIO 

53 If the paid reference concerns a service in the information society, the e-commerce Directive applies – in 

this case, please refer to discussions on barrier 4 fragmentation of digital services  
54 https://ec.europa.eu/regional_policy/sources/docgener/work/2019_02_road_transport.pdf.  

40 

 
 
 
                                                      
The situation in the EU is heterogeneous, and potentially jeopardises transport connectivity 
in  the  single  market.  In  particular,  countries  that  have  joined  the  EU  since  2004  still  need  to 
catch up with the performance level of older Member States. In addition, returns on investments 
in transport infrastructure, skills and deployment of new technologies become visible only in the 
long term. In addition, 15% of respondents to the September 2019 survey of the Confederation of 
Finnish Industries mention bottlenecks and barriers to transport as an issue when doing business 
in the single market. 

ii) Geographical barriers for remote regions 

Remote regions face additional barriers to market integration in this area due to high transport 
costs. For example, Malta is geographically isolated from the trans-European transport network. 
Barriers  related  to  remote/geographically  isolated  areas  are  mentioned  by  4  out  of  11 
business organisations (that replied to a Commission survey). 

iii) Transportation bans on categories of goods  

the 

integration  of 

Sectoral  driving  bans  on  categories  of  goods  that  cannot  be  transported  across  Member  States 
may represent an obstacle to the free movement of goods under Article 34 TFEU. Such sectoral 
driving  bans  can  hamper 
if  considered 
disproportionate,  be  qualified  as  a  measure  of  equivalent  effect  to  a  quantitative  restriction, 
contrary  to  Article  34  TFEU  on  the  free  movement  of  goods.  The  recently  amended  sectoral 
driving  ban  in  the  Austrian  A12  highroad  includes  additional  categories  of  goods  that  are  not 
allowed  to  transit,  unless  carried  by  EURO  VI  type  D  heavy  duty  vehicles  registered  after 
September  2018.  The  importance  of  motorway  A12  is  significant,  since  it  is  part  of  the 
Scandinavian-Mediterranean TEN-T core network corridor.  

internal  market,  and 

the 

iv) Other sector-specific barriers 

Many other sector-specific barriers affect each of the transport modes:  difficulty for small 
road  transport  operators  to  access  market  information;  lack  of  information  on  service  facilities 
and services offered to railway undertakings; lack of information on posting rules, enforcement 
and road traffic restrictions; excessive complexity of rules on Inland waterways; complex rules in 
public  procurement  in  transport,  and  access  to  these  rules  is  too  restrictive;  lack  of  flexibility 
linked  to  driving  time  restrictions;  restrictions  on  work  time  in  inland  waterways;  different 
enforcement  practices  in  road  transport  among  Member  States;  staffing:  Skills  shortages  and 
mismatches  in  the  rail  sector;  sourcing  problems;  availability  of  adapted  rail  rolling  stock; 
restrictions on cabotage in road transport; lack of interoperability in railways; lack of harmonised 
processes for authorisation of railway products and for safety certification of railway operators; 
lack  of  rail  network  coordination;  fragmented  EU  airspace  with  27  separate  air  traffic 
management systems; fragmentation of the aviation radio band spectrum. 

In  addition,  evidence  suggests  that  cross-border  parcel  delivery  services  are  three  to  five 
times more costly than the equivalent domestic service. The recently adopted Regulation on 
cross-border parcel delivery services aims to address this issue; it complemented the Directive in 
so far that it increased regulatory oversight and price transparency for domestic and cross-border 
parcel  delivery  services.  In  order  to  reduce  price  transparency  deficits  it  mandated  the 
Commission to publish tariffs for the delivery of single-piece postal items subject to the universal 
service. It also increased the regulatory oversight of the national authorities by requiring them to 
assess, for a defined set of universal postal services others than items of correspondence, if cross-
border tariffs are unreasonably high. 

41 

 
Available quantification 

4 out of 11 business organisations (that replied to a Commission survey) reported issues related 
to this barrier. 

Total  freight  transport  activities  in  the  EU  in  2015  amounted  to  an  estimated  EUR  3,516 
billion tonne-kilometres and are predicted to increase by a further 50% until 2050. Almost 
half  of  these  activities  are  currently  carried  out  by  road,  followed  by  sea  (31.6%),  railway 
(11.9%), inland waterway (4.2%) and oil pipeline (3.3%). Only 0.1% of goods were transported 
by air. Freight transport activities are subject to various sectoral rules and are accompanied by a 
large amount of information, which in vast majority cases still involves paper documents at one 
stage or another.  

Analysis of the reported practical obstacles and barriers 

i) Access to transport network 

The  explanation  of  infrastructure  related  barriers  firstly  stems  from  the  inadequate 
implementation  of  TEN-T.  Additionally,  the  policy  design  of  TEN-T  leaves  behind  some 
regions  and  does  not  remove  all  geographical  bottlenecks  and  does  not  fully  take  into  account 
spill over effects.  

As  regards  intermodal  transport,  the  EU  legislation  leaves  flexibility  in  the  level  of 
harmonisation.  

ii) Geographical barriers for remote regions 

Remote  regions  face  additional  barriers  to  market  integration  in  this  area  due  to  the  distance 
involved  and  because  of  the  low  population  and  population  density,  which  translates  into  low 
economic  activity.  All  of  these  factors  prevent  building  up  economies  of  scale  in  transport 
activities and lead to high unit costs of transport in these areas. Remote islands are particularly 
strongly affected by this issue. The root cause is not linked to public policy.  

Zooming in on barriers to intermodality 

In the highly competitive economy, industries depend on efficient multimodal logistics chains to 
organise the transport of raw materials and goods. However, in Europe discrepancies in sectoral 
and  modal  legislations  at  both  the  EU  and  national  levels  lead  to  significant  operational 
inefficiencies  and  excessive  administrative  costs.  The  underlying  reason  is  that  currently,  the 
EU  and  national  regulatory  framework  for  different  modes  of  transport  is  mostly 
elaborated  separately  and  from  the  perspective  of  a  multimodal  operator  this  and  creates 
considerable costs and impedes efficient functioning of transport system..  

Firstly,  the  legal  framework  for  freight  transport  information  in  the  EU  is  patchy  and 
burdensome.  The  range  of  legal  instruments  concerned  is  very  broad,  including  the  rules 
applicable  to  vehicles  (technical,  safety  and  environmental  norms  and  standards),  personnel 
manning  them  (e.g.  professional  qualifications,  working  time),  services  (access  to  market)  and 
goods (e.g. customs, rules applicable to dangerous goods). This is accompanied by a request to 
make available a large amount of information, which in vast majority of cases still involves paper 
documents at one stage or another At national level, legislation on acceptance by authorities of 
electronic freight transport information differs, depending on the mode of transport or regulatory 
purpose.  Technical  systems  for  the  electronic  exchange  of  transport  information  also  vary 
between and within countries and transport modes 

42 

 
 
Secondly, price signals related to multimodal transport are incoherent between the modes, 
Member  States  or  geographic  areas.  The  positive  and  negative  spill-over  effects  of 
regulating/taxing/charging one mode (and not the other) are not always sufficiently considered.  

Thirdly,  the  coordination  of  technical  norms  and  standards  between  Member  States  and 
between different modes of transport continues to be inefficient. For complicated multimodal 
operations, this causes considerable cost disadvantages and delays. Different rules exist on same 
corridors  for  example  on  size  of  loading  units,  length  of  trains,  languages,  safety  equipment, 
transhipment equipment etc.  

Lastly,  there  is  room  to  improve  the  coordination  of  policy  and  infrastructure 
developments, both at Member State and EU level. In addition, no designated rules exist at EU 
level for multimodal investment projects neither as regards state aid nor for project assessment.  
Improving  the  collection  of  data  on  multimodal  and  intermodal  operations  would  allow  to 
enhance the data  analysis across sectors  and,  by  so  doing,  better  plan  infrastructure  investment 
and transport policy.  

Harmonisation  and  streamlining  of  applicable  rules  and  technical  norms  as  well  as 
digitalisation of information exchange could make the multimodal transport of goods much more 
efficient  and  reliable  and  generate  significant  savings55  while  supporting  decarbonisation.  The 
industry is asking for a coherent EU approach that demands better co-operation and co-ordination 
between different dimensions of transport policy and beyond. A horizontal EU level fitness check 
of rules applicable to multimodal transport may be necessary to achieve this.  

10. Insufficient internet and cloud infrastructure 

Practical obstacles and barriers reported by businesses  

Lack of high-speed internet networks and cloud infrastructure hinders business operations on the 
single market. 

The  existence  of  high-speed  electronic  communications  networks  is  a  pre-requisite  for  the 
development  of  the  digital  single  market.  Coverage  of  high-speed  broadband  networks  has 
improved significantly over recent years but there is still a gap to close for people and businesses, 
in particular in rural and remote areas. Such areas cannot yet benefit from modern digital services 
(e.g. eHealth, eGovernment, eLearning) and cannot access or provide online cross-border offers.  

Cloud  computing  is  essential  for  the  uptake  of  emerging  technologies,  such  as  artificial 
intelligence,  blockchain,  internet  of  things  and  high  performance  computing.  The  global  cloud 
market  is  dominated  by  non-European  (American  and  Chinese)  providers.  In  2018,  Amazon, 
Microsoft and Google accounted together for almost 75% of the cloud infrastructure market and 
Alibaba is on the rise. The European cloud infrastructure and service providers are very scattered 
and the largest European provider (OVH) only holds 1% of the market share.  

The  lack  of  reliable,  energy-efficient,  trusted  and  secure  cloud  infrastructure  and  service 
providers  has  an  impact  on  the  development  of  services,  in  particular  the  take-up  of  cloud 

55   Impact assessment accompanying electronic Freight Transport Information Regulation assessed that 
by digitising information required for land transport cargo only could save industry between EUR 20 
and EUR 27 billion between 2018 and 2040, https://eur-
lex.europa.eu/resource.html?uri=cellar:810e3b10-59bb-11e8-ab41-
01aa75ed71a1.0001.02/DOC_1&format=PDF 

43 

 
                                                      
services in Europe. There is also a considerable gap in cloud take-up between the Member States. 
In  addition,  the  gap  is  also  increasing  in  cloud  take-up  between  large  businesses  and  SMEs, 
according to the Digital Economy and Society Index. 

Available quantification 

The EU has made some progress in recent years in terms of broadband coverage (with substantial 
differences  among  Member  States).  But  it  still  has  insufficient  superfast  ‘gigabit’  broadband 
connections and adequate broadband in rural areas. By the end of 2018, 83% of European homes 
were  covered  by  fast  broadband  with  at  least  30  Mbps  (up  from  67%  in  2014)  and  41%  of 
European households have a subscription (as opposed to 16% in 2014). Ultrafast connectivity of 
at least 100 Mbps is available to 60% of households. 20% of homes use ultrafast broadband: this 
is  four  times  higher  than  in  2014.  Average  4G  mobile  coverage  stands  at  94%  of  the  EU 
population (85% 2 years ago), while there are 96 mobile broadband subscriptions per 100 people 
(67 in 2014).  

However,  in  rural  areas  the  figures  decrease  to  only  53%  for  broadband  connections  above  30 
Mbps  and  to  19%  for  broadband  connections  above  100  Mbps,  with  significant  variations 
between Member States. 

The future economic success of our key industries depends on data processing infrastructures and 
services. More  than  60%  of  artificial  intelligence  will  run over  the  cloud,  according  to an  IDC 
report. But despite the significant reduction of IT costs and scalability of cloud, only one out of 
four businesses uses cloud computing in Europe in 2018. 

Analysis of the reported practical obstacles and barriers 

To an extent, this barrier is not linked to public policy but to geographical realities and lag in 
technological uptake. It is however reinforced by complexity of EU legislation and inadequate 
implementation of EU legislation. 

In  the  case  of  internet  networks,  the  economics  of  the  sector is  typically  characterised  by  very 
high  sunk  cost  (for  network  deployment,  spectrum  licences).  Additionally,  inefficiencies  in the 
deployments of electronic communications networks (mainly in terms of administrative burden) 
are regularly reported as one key problem for the sector. Furthermore, there may be problems of 
market access, which can ensue not only from public measures but also from private behaviour 
(e.g. anticompetitive practices or abuse of dominance).  

Despite the existing sectorial rules encouraging investments, there are thus still some areas which 
telecoms providers consider non-profitable. Public support can only target part of those due to the 
level  of  public  resources  available  and  the  administrative  red  tape  it  generates.  Moreover,  the 
current state aid rules are based on the targets for 2020 (focus on areas with no broadband or only 
basic broadband). As a result, all public investment in Gigabit networks in areas with 30 Mbps 
require a Commission approval (with processing time of at least a year). 

The  EU  regulatory  framework  for  electronic  communications  has  brought  competition,  better 
prices and quality services to consumers and businesses. The telecoms rules were reformed last 
year  through  the  European  Electronic  Communications  Code,  which  aims  to  create  a  pro-
competitive  and  investment-friendly  regulatory  environment.  Member  States  need  to  transpose 
the Code into national legislation by 21 December 2020. 

However,  Member  States  sometimes  tend  to  apply  inadequate/insufficient  and  inconsistent 
regulations.  This  is  a  problem  that  needs  to  be  addressed  at  EU  level.  It  is  particularly  urgent 

44 

 
because the market is rapidly evolving through technological changes. These challenges include 
setting termination rates for voice calls markets, ensuring that benefits of “Roam like at home” 
are  maintained  after  the  expiry  of  the  roaming  rules,  or  harmonizing  regulatory  measures  on 
various aspects (in particular prices).  

Finally,  are  also  a  number  of  ongoing  funding  initiatives:  European  Structural  and  Investment 
Funds  2014-20,  Connecting  Europe  Broadband  Fund  (CEBF)  launched  in  2018,  WiFi4EU 
initiative to support free connectivity in public spaces lunched in 2018, and Connecting Europe 
Facility (CEF2 Digital) which is part of the MFF negotiations.56 

In  the  case  of  cloud  infrastructure,  insufficient  sustainable  capacities  and  take-up  is  caused  by 
underinvestment  in  the  past  and  a  lack  of  support  for  businesses  (of  all  sizes)  and  public 
administrations. In addition, a horizontal framework with clear rules for cloud infrastructure and 
service  providers  is  missing  in  Europe.  Open  source  could  become  an  essential  enabler  to 
accelerate the green transition of cloud to edge infrastructure. 

The  EU  has  put  in  place  key  regulatory  principles  for  cloud  services  providers  (GDPR, 
Regulation  on  Free  Flow  of  non-personal  Data,  NIS  Directive,  EU  Cybersecurity  Act)  and  has 
been working to develop European compliance tools to raise the level of security and trust. On-
going  work  includes  industry-led  codes  of  conduct  in  the  area  of  data  protection  and  data 
portability and preparatory work for a European security certification scheme for cloud service 
providers. 

As announced in the Communication on a European strategy for data57, combined investment in a 
High  Impact  Project  on  European  Data  Spaces and the  European federation  of  energy-efficient 
and  trustworthy  cloud  infrastructures  should  together  reach  EUR  4-6  billion.  The  Commission 
itself proposes investment as high as EUR 2 billion. The European data spaces would encompass 
data sharing architectures (e.g. including standards for data sharing) and governance mechanisms. 
The start of the implementation of the project is foreseen for 2022. 

11. Burdens and obstacles in the context of posting workers to other Member 

States  

Practical obstacles and barriers reported by businesses  

From  the  perspective  of  companies  who  post  workers  abroad,  requirements  related  to  posting 
workers often create administrative burdens and other difficulties or obstacles to doing business 
across the single market. This is the case for both businesses in the services sectors and in those 
sectors  where  services  are  increasingly  offered  alongside  a  manufactured  good  (such  as  repair 
and  maintenance  in  the  context  of  after-sales).  Businesses  say  they  face  obstacles  that  can  be 
divided into three main categories, namely i) lacking, fragmented or unclear information, ii) high 
administrative  burdens  and/or  administrative  delays  on  the  side  of  national  authorities  and  iii) 
practical and other constraints to meet requirements. 

i) Obstacles relating to information 

56 For the 2021-2027 EU budgetary period, the Commission has proposed EUR 3 billion for digital service 
infrastructures, of which a significant fraction in support of large scale deployment of 5G corridors 
along pan-European transport paths. 

57 COM(2020) 66. 

45 

 
                                                      
First, businesses claim that lacking, fragmented or unclear information can make posting workers 
a  laborious  and  uncertain  process.  For  instance,  the  Danish  and  Finnish  business  organisations 
report that companies struggle to understand which documentation and registration requirements 
to adhere to, and which authorities to refer to. Similarly, the French Chamber of Commerce and 
Industry  states  that  “differences  in  posting  of  workers  rules  and  procedures  between  Member 
States lead to confusion […]” Finally, the Maltese Chamber of Commerce states that companies 
would like to see labour and social regulations simplified in terms of “[posting] employees in a 
different jurisdiction […] access to information [applying] national labour laws to that posting in 
other [Member States].” 

According to the Confederation of Danish Industry, in some Member States, companies have to 
consult several websites — sometimes only available in the local language — to obtain a clear 
picture of all the requirements. Because of the fragmented information, they are often not certain 
they  have  everything  in  order.  The  organisations  quotes  the  experience  of  a  company  as  an 
example:  “[…]  the  lack  of  transparency  puts  this  company  in  a  very  uncomfortable  situation 
when fulfilling their service contracts”.  

ii) Obstacles relating to high administrative burden and/or administrative delays on the side of 
national authorities 

Second,  businesses  report  high  administrative  costs  for  complying  with  national  and  EU 
legislation related to posting workers. Member States may require a large number of documents 
concerning posted workers for each and every service provision. For example, the Confederation 
of Finnish Industries reports that the implementation of the Directive 2014/67/EU on posting of 
workers  is  “deemed  admin-heavy,  including  reporting  obligations  to  local  authorities”.  As 
reported  by  the  organisation,  following  the  rules  can  be  difficult  even  when  posting  within  a 
group of companies.  

The  DIHK  2019  survey  states  that  “the  EU  legal  framework  creates  barriers  for  businesses  in 
providing services, discouraging them from posting their workers to other Member States.  

A concrete example of an administrative burden observed by businesses in the field of posting 
relates to the obligation for prior notification when sending a worker abroad. A complaint filed 
with  SOLVIT  by  a  construction  company  working  in  another  country  illustrates  issues  of 
practical constraints relating to the legislation. Because of the nature of the work, the company 
frequently  changes  building  sites,  sometimes  even  several  times  in  one  day.  However,  the 
legislation in the country where the work is carried out requires a posting notification to be made 
at least one week in advance. Since orders are rarely placed early enough, it is hard to plan which 
workers will be present on a site that early. The company tried to use a provisional declaration, 
stating they “expect a periodic presence in next 3 months“, but that was not sufficient.  

Other  specific  problems  are  reported  with  the  Portable  Document  A1  (A1  form),  which  is 
required  to  demonstrate  the  affiliation  to  the  social  security  system  of  the  home  Member  State 
when going abroad. In a SOLVIT case, a company described a concrete problem it faced when 
trying to meet the administrative requirements. The employees of this company were working in 
another Member State, contributing to the social security scheme of that country. After a year, the 
social security authority in the host Member State notified the employees to submit A1 forms to 
prove  that  they  were  covered  by  a  social  security  scheme.  The  employees  contacted  the  home 
Member State authorities and requested the A1 forms, because in the requested period, they had 
worked there. However, the authorities did not provide the form, because during that period, the 
employees  were  also  residing  in  the  host  Member  State  and  were  covered  by  the  law  of  that 
country. Instead, the authorities issued certificates other than then the A1 form proving that they 
were  covered  by  the  national  social  security  scheme.  However,  the  authorities  of  the  home 
Member State did not accept documents other than A1 forms. 

46 

 
A frequently mentioned obstacle is administrative delays in obtaining A1 forms from the national 
authorities  to  prove  social  security  coverage  in  the  home  Member  State.  In  some  cases, 
interactions with the authorities are paper-based rather than digital. Similarly, the Confederation 
of  Swedish  Enterprise  describes  issues  with  A1  forms  for  bus  companies  operating  in  another 
Member  State:  the  forms  are  required  even  for  trips  scheduled  only  days  or  weeks  ahead,  but 
Member State authorities can take several months to produce them. 

Businesses often complain that the prior notification and the A1 forms are in principle required 
for any type of cross-border work, including business trips and very short term postings, which is 
seen  as  disproportionate  and  excessively  burdensome.  As  described  by  the  Czech  Chamber  of 
Commerce, requirements to provide the A1 form create a burden for workers on business trips, 
and even participants in conferences, exhibitions and meetings.  

iii) Practical and other constraints to meet requirements 

Third,  businesses  complain  about  uneven  or  unclear  enforcement  of  the  rules.  The  Maltese 
Chamber of Commerce cites an experience from another country where “authorities are using the 
A1  certificate  as  an  excuse  to  stall  [the  process  of]  posting  of  workers.  This  is  [discouraging] 
several companies from dealing with this country.” 

The  Austrian  Chamber  of  Commerce  also  reports  problems  with  enforcement  of  the  rules  on 
minimum rates of pay applicable to posted workers. If wages do not comply with the posting of 
workers directive, Austrian authorities issue fines to companies abroad. However, they have “no 
information if these fines are executed” by the Member States in which such companies reside. 

Available quantification 

Service  providers  often  report  burdensome  and  complex  requirements  linked  to  the  posting  of 
workers as a major obstacle to offering services across the single market. In particular, this is the 
case for SMEs who report facing difficulties if they wish to expand in the single market, due to a 
lack of resources and expertise to overcome burdensome administrative requirements. 

The relative importance of this barrier varies greatly depending on the sector and the frequency 
of posting therein. For instance, with 40% of all postings taking place in the construction sector, 
requirements related to posting are often identified as the leading obstacle to cross-border service 
provision.  

However,  apart  from  frequent  reports  about  excessive  red  tape  and  legal  uncertainty  linked  to 
posting obligations, the associated costs (such as for external legal advice or resources needed to 
complete paperwork) and other consequences (such as business decisions not to explore certain 
cross-border  opportunities  due  to  administrative  complexity)  have  not  been  specifically 
quantified.  

Different enforcement and  implementation  of  the  rules  for  posting  workers to another Member 
State  are  considered  a  barrier  by  58%  of  the  respondents  to  the  Eurochambres  2019  survey. 
About 13% of SOLVIT cases analysed relate to this barrier.  

8 out of 11 business organisations (that replied to a Commission survey) reported issues related 
to this barrier. Additionally, 22% of the respondents to the survey done by the Confederation of 
Finnish Industries report this as a barrier and 51% of Czech companies consider this a significant 
or a very significant obstacle (according to a survey focusing on obstacles on single market). 

47 

 
Analysis of the reported practical obstacles and barriers 

A  number  of  root  causes  to  these  perceived  obstacles  can  be  identified.  Firstly,  whereas  the 
Treaty  guarantees  the  free  provsion  of  services,  EU  legislation  has  also  created  requirements 
justified  by  public  policy  reasons  to  safeguard  the  protection  of  workers.  Secondly,  EU 
legislation  left  flexibility  in  the  implementation  by  the  Member  States.  Thirdly,  insufficient 
administrative  capacity  and  inadequate  implementation  of  EU  legislation  by  national 
authorities  also  produces  obstacles,  which  in  certain  circumstances  may  be  unjustified  or 
disproportionate.  The  structure  of  this  section  is  organised  in  the  following  way.  First,  a  brief 
reminder of the legislative context sets the scene for the subsequent analysis of the root causes. 
Second, a number of recent initiatives at the EU level to address these issues are accounted for in 
each barrier section.  

At  the  EU  level,  the  rules  governing  the  posting  of  workers  are  established  in  the  Posting  of 
Workers Directive (96/71/EC, amended version 2018/957 to be transposed by 30 July 2020) and 
the  Posting  of  Workers  Enforcement  Directive  (2014/67/EU).  The  latter,  also  known  as  the 
'Enforcement  Directive',  provides  key  tools  to  fight  circumvention  and  abuse  of  EU  rules  on 
posting  of  workers  and  to  improve  administrative  cooperation  and  exchange  of  information 
between Member States to this end. 

The  rules  on  the  coordination  of  social  security  systems  as  established  in  Regulation  (EU) 
883/2004 and Regulation (EU) 987/2009 provide further requirements specifically with regard to 
the  social  security  affiliation  of  workers  in cross-border  situations. This  includes  among  others 
the obligation for the company to send a notification to the national authorities prior to sending a 
worker abroad, whenever possible, and also the requirement for the national autorities to provide 
the Portable Document A1 (the A1 form), which serves to demonstrate the affiliation to the social 
security system of the home Member State. 

Public policy objectives 

EU law defines a set of (mostly  minimum) requirements regarding the terms and conditions of 
employment for posted workers. These serve to  balance the freedom to provide services across 
the  EU  with  safeguarding  the  protection  of  workers.  A  level  playing  field  between  Member 
States in terms  of employment  conditions is  needed to  guarantee  that these rights  and  working 
conditions are protected throughout the EU. This serves to avoid that foreign service providers 
undercut  the  legally  minimum  social  conditions  applicable  to  the  concerned  category  and  thus 
unfairly  compete  with  local  service  providers.  Moreover,  sometimes  requirements  that  are 
experienced as conrete burdens, such as the requirement to provide a PD A1 form, also serve the 
purpose of protecting citizens, for instance by ensuring that people only have to pay contributions 
in one country (which is a pillar of the social security coordination rules) without depriving these 
persons from the requried social security coverage while being posted. 

The  applicable  set  of  rules,  created  to  balance  different  legitimate  interests,  sometimes  creates 
obligations  and  the  need  to  follow  administrative  procedures  for  businesses.  Nevertheless,  the 
Commission  services  are  aware  that  some  concrete  requirements,  for  instance  the  current 
administrative  requirement  for  notifying  any  cross-border  activity  in  advance,  can  be 
disproportionately burdensome or excessively difficult to fulfil, especially when a posting is of a 
short  duration  and/or  organised  at  a  short  notice  (such  as  the  requirement  for  the  A1  form  for 
business trips). Moreover, the Commission has been supportive of justifiable exemptions such as 
business trips in the context of the ongoing revision of the Social Security Coordination.  

Flexibility of implementation 

Member  States  have  put  in  place  various  measures  concerning  posted  workers  further  to  the 
Posting of Workers Directive (96/71/EC, revised version 2018/957 to be transposed by 30 July 
2020) and the Posting of Workers Enforcement Directive (2014/67/EU).  

48 

 
The administrative  and  control  measures  imposed  by  Member  States  can  include  a  notification 
obligation concerning posted workers, covering a number of information elements on the service 
provider, the posted workers and the location and timings of the service provision. In addition to 
the notification obligation, an A1 form needs to be obtained from the home national authority. In 
2017, 2.8 million A1 forms were issued across the EU58.  

The concrete requirements put in place by Member States are rather diverse, in particular when it 
comes  to  the  process  of  notification,  the  documentation  and  translation  requirements.  This  is  a 
root cause for complexity for businesses and difficulty to obtain the correct information.  

Measures taken by Member States based on the Postingof Workers Enforcement Directive need 
to be proportionate and justified, balancing the need for administrative and control measures and 
other requirements with the freedom to provide services. Certain Member States have introduced 
to  be  unjustified  or 
some  administrative  and  control  measures  which  were  found 
disproportionate. Furthermore, sanctions for violations of administrative requirements related to 
posting of workers need to be non-discriminatory, sufficiently predicatble and proprotionate.  

In 2019, the Commission published an Implementation report concerning the Posting of Workers 
Enforcement  Directive  as  well  as  a  Practical  Guide  on  Posting,  intended  to  help  citizens, 
businesses and national authorities in understanding  the rules and to facilitate their application.  

Administrative capacity and implementation  

Many problems also stem from administrative operational issues. These include lack of efficient 
IT (on-line) tools or slow implementation thereof, and difficulty in finding information (on-line). 
This  lack  of  electronic  tools  adds  to  the  still  hampering  cooperation  between  Member  State 
administrations,  and  administrative  capacity  (and  willingness)  to  provide  documents  and/or 
respond to queries from administrations from other Member States. 

Recent initiatives that could address some of these difficulties 

In  all  matters concerning  labour  mobility,  the  new  European  Labour  Authority (ELA)  supports 
the  Commission  and  Member  States  in  implementing  and  enforcing  the  rules,  and  facilitate 
administrative  cooperation  between  Member  States.  Besides  tasks  such  as  coordinating  and 
supporting  concerted  and  joint  inspections,  the  Authority  will  facilitate  the  exchange  of 
information  between  national authorities.  Moreover, in  case  of  dispute regarding  any  particular 
aspect of administrative cooperation between two or more Member States on posting matters, the 
Authority  will  provide  a  mediation  system  to  solve  the  issue.  Furthermore,  the  Commission 
services  are  working  with  the  Member  States  when  it  comes  to  identifying  best  practices,  to 
ensure  appropriate  control  without  imposing  disproportionate  burdens  on  social  security 
institutions or on economic operators.  

Moreover,  the  Electronic  Exchange  of  Social  Security  Information  (EESSI)  made  available  in 
2017  should  contribute  to  reducing  administrative  delays  in  social  security  coordination.  The 
EESSI  is  an  IT  platform  connecting  electronically  thousands  of  social  security  institutions  of 
Member  States  plus  Iceland,  Liechtenstein,  Norway  and  Switzerland.  It  aims  at  making  the 
exchange of social security information easier and more secure. 

When it comes to the applicable terms and conditions of employment concerning posted workers, 
Member States are obliged to ensure access to information and to set up single national official 
websites.  However,  shortcomings  remain  when  it  comes  to  the  clarity  and  accessibility  of 
information, leading  to  legal  uncertainty.  The  Single Digital  Gateway  will  facilitate  clarity  and 

58 De Wispelaere, F. & Pacolet, J. (2018), Posting of Workers – PD A1 Questionnaire, Network Statistics 

FMSSFE, European Commission. 

49 

 
                                                      
accessibility  of  information.  By  the  end  of  2020,  the  Gateway  will  through  a  single  point  of 
access provide businesses and citizens with information notably on posting of workers.  

Step 2d Steps to selling cross-border: barriers to entry and uneven playing field 

12. Market power 

Practical obstacles and barriers reported by businesses  

Businesses  aiming  to  trade  across  the  borders  are  confronted  with  the  market  power  of 
some of their competitors. A consultation led by the European Commission concluded in 2018 
showed  that  around  three  quarters  of  respondents  considered  fair  competition  as  an  important 
challenge for the EU59. 

Capturing the variation of intensity of this barrier over time is not easy. Findings in the US 
show that concentration in many sectors has increased over the past two decades60, but whether 
this  has  been  the  case  in  Europe  still  needs  to  be  determined.  However,  there  are  still  some 
remaining  gaps  in  the  single  market  in  several  strategic  sectors,  including  in  sectors  such  as 
manufacturing,  telecoms,  electricity,  gas  transport,  and  financial services,  as  well  as  the  digital 
market: 

As regards the manufacturing sectors, EU manufacturers suffer cartel overcharges. These 
manufacturers rely on efficient supply chains along which to source competitively priced inputs. 
However,  cartel  overcharges  -  often  in  the  interval  of  10-20%  -  harm  EU  manufacturers, 
especially in sectors exposed to fierce global competition such as the automotive industry. Such 
collusion raises the price of components for manufacturers selling cars in Europe, damaging their 
ability to compete internationally. 

59 Impact assessment accompanying the Commission's proposal for a Single Market Programme. 

60 Report by the President's Council of Economic Advisers.  

50 

 
 
 
 
                                                      
In  the  telecom  sectors,  competitors  tend  to  suffer  from  the  market  power  of  national 
incumbents.  Europe’s  telecoms  markets  used  to  be  national  public  monopolies,  but  they  were 
opened up by several legislative packages starting in 1988 and culminating in full liberalisation in 
2002. In this sector, some incumbents found it hard to play by the new rules. 

As  regards  digital  markets,  competitors  have  been  confronted  with  the  rise  of  a  limited 
number  of  incumbents.  Adapting  to  an  increasingly  digital  environment  has  been  a  major 
challenge  for  the  enforcement  of  EU  competition  policy  in  recent  years,  with  the  raise  of  a 
limited  number  of  (mostly  non  EU)  incumbents,  whose  relative  market  power  or  strategic 
position can restrict access to markets and consumers, notably through high concentration levels, 
network effects and control over data and analytics. 

In the energy sector, the market power of historic market players is extremely strong. The 
inefficient  unbundling  of  DSOs  and  suppliers  has  led  to  a  number  of  concerns  around  market 
functioning. In several Member States, the separation of distribution and supply activities cannot 
be  considered  complete,  which  could  result  in  market  inefficiencies.  For  example,  some  have 
argued  that  if  the  DSO  and  the  retailer  work  in  close  cooperation,  the  DSO  can  forewarn  the 
supplier about planned consumer switching, or in an extreme case obstruct the switching process. 
The incumbents benefit from information imbalance, compared with new market entrants. 

In the transport sector, it remains difficult for small road transport operators to get access 
to market information. For instance, small operators involved in international transport find it 
harder  to  access  information  about  demand  for  transport  services  abroad  than  well-established 
larger operators. Often they end up working in sub-contracting chains for intermediaries (freight 
forwarders) who have better access to market information. 

Analysis of the reported practical obstacles and barriers 

The root causes of market power barriers vary by sector and market.  

However, they are often not linked to public policy. They can be a legacy from the past, with 
incumbents remaining prevalent in spite of the liberation of the sectors in which they operate, or 
are related to the behaviour of dominant players, or to the intrinsic characteristics of the sector 
that foster barriers to entry, exit or an uneven playing field. This includes network effects, which 
are  prevalent  in  network  sectors  (e.g.,  transportation,  energy,  telecommunications),  but  also  in 
(emerging) digital markets.  

EU Competition policy ensures the constant scrutiny of mergers, State aid and cartel/antitrust 
controls. 

13. Price regulations 

Practical obstacles and barriers reported by businesses 

Price regulations impact certain businesses  when they are exporting their goods and services 
to  other  Member  States.  There  are  price  regulations  in  many  Member  States  for  medicines, 
alcoholic  beverages,  tobacco  and  books,  as  well  as  certain  services.  These  price  regulations 
prevent  businesses  from  competing  either  on  price  or  on  quality.  There are also  restrictions  on 
sales at a loss or on the remuneration of marketing services.  

“Price  regulations”  are  also  listed  as  a  barrier  by  9%  of  respondents  to  the  Confederation  of 
Finnish Industries’ survey. A chamber of commerce mentions a national law on unfair terms and 

51 

 
conditions  in  the  food  trade  which  “[prohibits]  to  sell  below  cost  price”  and  “[restricts] 
remuneration for marketing services”.  

Available quantification 

According  to  the  Dutch  Doing  Business  in  Europe  survey,  “Different  maximum/minimum 
prices  per  country”  are  considered  a  barrier  by  18%  of  self-employed  who  export  of  products. 
“Price  regulations”  are  also  listed  as  a  barrier  by  9%  of  respondents  to  the  Confederation  of 
Finnish Industries’ survey. 

Analysis of the reported practical obstacles and barriers 

Price regulation is a competence of Member States, with limited role of EU legislation.  

Price  regulation  is  usually  considered  a  ‘selling  arrangement’  under  Article  34  TFEU,  which, 
according to the European Court of Justice is not such as to hinder directly or indirectly, actually 
or  potentially,  trade  between  Member  States,  on  condition  that  those  provisions  apply  to  all 
relevant traders operating within the national territory and that they affect in the same manner, in 
law and in fact, the marketing of domestic products and of those from other Member States. This 
is not the case when, for example, the price regulation triggers the prohibition of any discounts or 
bonuses. For example, in the case of a German legislation which provided for a system of fixed 
prices  for  the  sale  by  pharmacies  of  medicinal  products,  the  Court  considered  that  “price 
competition  is  capable  of  providing  a  more  important  factor  of  competition  for  mail-order 
pharmacies  than  for  traditional  pharmacies,  since  price  competition  lays  the  basis  for  their 
potential  to  access  the  German  market  directly  and  to  continue  to  be  competitive  in  it. 
Consequently, and in so far as sales by mail order constitute a more important means of accessing 
the German market directly for pharmacies established in Member States other than Germany, if 
not, given the particular characteristics of the German market evidenced in the documents in the 
case file submitted to the Court, potentially the only means of accessing that market directly, the 
national legislation at issue in the main proceedings does not affect the sale of national medicinal 
products in the same way as it affects the sale of medicinal products originating in other Member 
States” (C-148/15, Deutsche Parkinson Vereinigung, paragraphs 24 and 25). 

In the area of services, in the Services Directive the EU legislator has required Member States to 
review their rules imposing fixed or minimum or maximum tariffs. Fixed or minimum/maximum 
tariffs  are  sometimes  imposed  on  service providers such  as certain  regulated  professions. They 
can only be kept in place in case they are non-discriminatory, justified by an overriding reason 
related  to  the  public  interest  and  proportionate.  The  proportionality  analysis  encompasses  the 
need  to  be  part  of  a  coherent  regime  (see  the  recent  case  regarding  tariffs  for  architects  and 
engineers in Germany). 

In  the  area  of  goods,  national  price  control  regulation  takes  various  forms.  Minimum  and 
maximum  price  regulation  often  affect  imported  products,  when  these  are  relying  on  price 
competition to penetrate a new market. Minimum fixed prices can restrict imports if it prevents 
their  lower  cost  to  be  reflected  in  the  retail  selling  price,  because  importers  are  deprived  from 
their competitive advantage. A maximum fixed price can also restrict export, if fixed at a level 
which renders the  sale  of imported  products impossible  or  more  difficult than  that  of  domestic 
products.  These  policies  are  trying  to  address  unfair  commercial  practices  and  consumer 
protection.  Fixed  prices  in  the  pharmaceutical  sector  concern  prescription  only  medicinal 
products,  and  are  often  linked  to  the  organisation  of  the  national  social  security  system, 
reimbursement  policies,  and  the  need  to  control  increasing  healthcare  costs.    For  books,  price 
regulation is generally for the Member States a measure to organise the protection of books as 

52 

 
cultural  products. The  CJEU  has  considered "the  protection  of  books  as  cultural  objects" as an 
overriding  requirement  in  the  public  interest  capable  of  justifying  measures  restricting  the  free 
movement  of  goods  (C-531/07,  Libro,  paragraph  34).  However,  the  Court  has  also  held  that 
measures that aim to ensure the protection of books as cultural objects need to be appropriate for 
achieving the objective fixed and to not go beyond what is necessary to achieve it.  

14. Problems with recognition of electronic identification 

Practical obstacles and barriers reported by businesses 

Businesses operating on the single market face problems with electronic identification (electronic 
signatures,  seals,  time  stamps,  registered  delivery  services  or  certificates  for  website 
authentication).  Historically,  each  Member  State  had 
its  own  electronic 
identification systems and legal frameworks. This causes fragmentation and increases transaction 
costs.  The  Commission  has  been  aware  of  this  problem  since  2008,  and  has  been  working  in 
partnership  with  Member  States  to  make  cross-border  e-procedures  technically  secure,  legally 
certain and possible in practice.61 The eIDAS regulation was designed to unify the systems,  but 
its low level of enforcement/application uptake limited its effectiveness.62 

implemented 

For  example,  the  DIHK  2019  survey  reports  that  in  one  Member  State,  it  is  mandatory  for 
managing  directors  to  electronically  sign  the  financial  statements.  In  principle,  it  should  be 
possible  to  use  an  e-signature  valid  in  another  EU  Member  State.  But  in  practice,  only  e-
signatures issued in the specific Member State are accepted.  

Implementation of eID under eIDAS has been slow, and uptake of national eIDs by the private 
sector limited. Member States are hesitant to open their national eID systems up to authentication 
services. The absence of a common approach at the EU level on access conditions to eIDAS for 
private service providers increases fragmentation of the single market. 

Available quantification 

According  to  a  2019  study  on  eIDs  and  SMEs,  46%  of  SMEs  (in  surveyed  countries)  used 
electronic  signatures.  For  22%  of  SMEs,  one  of  the  motivations  for  adopting  eID  and  trust 
services  was  to  “operate  more  easily  across  the  borders  in  the  EU”.  50%    “were  interested  in 
further digitalising their business”.63 

61 See Commission Decision of 16 October 2009 setting out measures facilitating the use of procedures by 
electronic means through the ‘points of single contact’ under Directive 2006/123/EC of the European 
Parliament and of the Council on services in the internal market; Commission Decision 2011/130/EU 
of 25 February 2011 establishing minimum requirements for the cross-border processing of documents 
signed electronically by competent authorities under Directive 2006/123/EC of the European 
Parliament and of the Council on services in the internal market. 

62 Study on a marketing plan to stimulate the take-up of eID and trust service for the digital single market: 

https://op.europa.eu/en/publication-detail/-/publication/132cadac-49c5-11e8-be1d-
01aa75ed71a1/language-en/format-PDF/source-search  

63 EIDAS study on pilots for replication of multipliers: https://op.europa.eu/en/publication-detail/-

/publication/712f9ce2-5042-11e9-a8ed-01aa75ed71a1  

53 

 
                                                      
Analysis of the reported practical obstacles and barriers 

Building on a previous comitology decision pursuant to the Services Directive, eIDAS (adopted 
in  2014)  has  created  an  exemplary  cross-border  framework  for  digital  identity.  Nonetheless, 
flexibilities  left  by  EU  legislation,  inadequate  implementation  of  EU  legislation,  and 
complexity of EU legislation make it difficult to provide flexible, convenient, and trusted eID 
solutions cross-border. 

In  terms  of  flexibilities  and  inadequate  implementation,  mutual  recognition  of  national  eID 
schemes is mandatory only for notified eID schemes. However, Member States are not obliged to 
perform  the  notification  (only  15  have  notified  their  eID  schemes).  In  practice,  this  prevents 
Member  States  from  mutually  accepting  each  other’s’  eID  schemes.  Citizens  from  the  13 
Member States that have not gone through the notification process thus cannot use their national 
eIDs to prove their identity elsewhere in the EU.  

There  are  also  complexities  in  the  design  of  eIDAS.  The regulation limits  the  information  that 
can  be  reliably  disclosed  to  third  parties.  In  the  case  of  regulated  trust  services,  the  eIDAS 
provides  the  possibility  of  including  additional  specific  attributes.  However,  it  does  not  set 
standards for interoperability and acceptance of those attributes. Additionally, eIDAS only covers 
digital  identities  of  natural  and  legal  persons.  This  restricts  its  uptake  in  other  cases  such  as 
internet of things devices or connected cards.  

Finally, eIDAS focuses on the public sector and does not impose any obligation on the private 
sector.  This  leads  to  the  development  of  private  digital  identity  services  and  solutions,  such  as 
those provided by online platforms. While these provide convenient identification services, they 
are not necessarily aligned with the EU vision of trusted digital identity, e-privacy and personal 
data protection. 

Step 2e Steps to selling cross-border: taxes 

15. Burdensome procedures due to differences in tax systems and administrations 

Practical obstacles and barriers reported by businesses 

Member  States  have  different  tax  systems  and  administrations,  which  according  to  companies 
may create burdens. Taxation is often costly to comply with in one Member State, and because of 
differences between Member States, these costs add up when operating across the single market.  

As  stated  by  a  German  trade  organisation,  different  “national  tax  procedural  rules  [are  a] 
considerable  obstacle.”  It  adds  that  specifically,  “different provisions of the  respective  national 
substantive  law  pose  great  difficulties  for  SMEs  in  particular.”  A  European  Startup  Network 
position  paper  of  2019  stated  that  the  difficulty  in  obtaining  ‘VAT  recovery  hampered  trade’, 
especially e-commerce trade. 

For exporting companies, calculating and processing VAT payments in different Member States 
often means hiring additional specialists.  

As reported by several trade organisations, differences in VAT may be hard to navigate. This is 
particularly the case for VAT compliance for services. For example, while the French chamber of 
commerce  welcomes  reforms  of  the  service  provision  system,  it  says  that  ‘exceptions  to  the 
general  scheme  […]  are  still  too  numerous  and  generate  differences  in  interpretation  and 
qualification  by  the  national  tax  administrations,  which  could  be  detrimental  to  service 

54 

 
companies.’  It  also  reports  that  SMEs  often  experience  troubles  with  properly  following 
requirements  of  VAT  regimes.  On  a  more  technical  level,  businesses  complain  that  the  VAT 
information  exchange  system  (VIES)  does  not  allow  for  checking  the  name  of  the  company 
attached  to  the  number  for  every  country.  This  makes  it  even  more  difficult  for  exporting 
companies to calculate and process VAT payments. 

In  the  case  of  services,  according  to  a  German  trade  organisation,  companies  have  to  consider 
many factors, such as ‘whether the vendor or the customer has to pay the tax’, which tax rate and 
other national regulations are applicable, and in which Member State the VAT is to be paid. The 
simplification rule of reverse charge, which shifts the liability to account for the VAT on a supply 
from the supplier to the customer, still does not cover all cross-border services, such as real estate 
services.  In  addition,  the  conditions  for  the  application  of  the  reverse  charge  differ  between 
Member States in some ways. 

Another  reported  obstacle  is  different  VAT  and  registration  requirements.  A  Finnish  trade 
organisation  survey  highlights  this  issue.  Survey  respondents  cited  “VAT  compliance  and 
registration-related  difficulties  or  problems  in  recovering  input  VAT”  as  a  barrier  to  doing 
business in the single market.  

Moreover, using the transport industry as an example, the Swedish trade organisation points out 
obstacles caused by VAT differences and registration requirements. “All countries have different 
regulations  and  requirements  [and]  detailed  information  is  often  only  available in  the  country's 
local language,”  states  the organisation’s  report,  adding  that  “in  recent  years, several  European 
countries introduced VAT rules and requirements for VAT registration” for specific fields such 
as international bus passenger transport. As a result, for example, calculating VAT is a complex 
task for bus companies planning a trip through Europe. They must know what costs and expenses 
arise at which part of the trip and combine that with specific rules of each country. These rules 
differ significantly in both rates and calculation methods. Additionally, if the trip goes through 
certain Member States, a registration requirement complicates the task further. 

Available quantification 

According to the Annual Report on European SMEs 2017/2018, "dealing with foreign taxation 
issues is too complicated" is reported as a barrier to exporting for 63% of SMEs. According to a 
CEPS study, ‘foreign taxation’ is considered to be too complicated and/or too costly according to 
both SMEs with exporting experience (32%) and those without (19%). 

60,4% of respondents to the Eurochambres 2019 survey find differing VAT procedures to be an 
obstacle to doing business in the single market. Issues with VAT are  also linked to 24% of the 
SOLVIT complaints analysed. Non-VAT related taxation issues are also considered an obstacle 
to the single market by respondents to the Eurochambres 2019 survey (54,2%).  

According  to  the  Dutch  Doing  Business  in  Europe  report,  20%  of  SMEs  (and  18%  of  self-
employed)  report  settling  VAT  as  ‘hard  or  costly’.  Similarly,  according  to  a  survey  by  the 
Finnish  trade  organisation,  17%  of  respondents  experienced  VAT  compliance  as  a  “barrier  to 
business in the single market”.  

VAT compliance costs of SMEs (companies with turnover below EUR 100,000) are estimated at 
a  total  of  EUR  68  billion  per  year.64  This  discourages  them  from  trading  cross-border  and 
prevents their growth: evidence suggests that only about 15% of SMEs trade cross-border.65 

64 Within this figure are included three main groups of businesses: businesses using the SME exemption, 
businesses using domestic standard VAT regimes and businesses engaged in cross-border trade 
irrespective of whether or not they use the SME exemption for their domestic transactions. 

55 

 
                                                      
A  recent  study  by  KPMG-GFK66  estimated  the  relative  (direct  and  indirect)  tax  compliance 
burden  across  19  EU  Member  States.  It  showed  that  the  average  enterprise  with  cross-border 
activities faces much higher tax compliance costs (about 67% higher) than enterprises active only 
in  their  home  country.  However,  in  relation  to  a  company’s  turnover  ratio,  the  relative  tax 
compliance burden for companies engaged in cross-border trade is 0.86 percentage points lower 
than for similar companies engaged only in their domestic markets 67.’ 

Tax  compliance  costs  are  also  frequent  in  the  field  of  direct  taxation.  Estimated  direct  tax 
compliance  costs  for  large  companies  amount  to  about  2%  of  paid  taxes,  while  for  SMEs  the 
estimate  was  about  30%.  The  shares  of  sales  are  0.02%  for  large  companies  and  2.6%  for  the 
small  ones.  Compliance  costs  are  estimated  to  increase  with  cross-border  activity  and  with  the 
proliferation in the numbers of subsidiaries.68  

Analysis of the reported practical obstacles and barriers 

This barrier originates in regulatory choices at EU level and national level. For direct taxation, 
the  barriers  are  linked  to  the  lack  of  EU  legislation  and  harmonisation,  leading  to  diverging 
regulatory  frameworks.  As  regards  indirect  taxation,  the  barriers  relate  to  the  lack  of  full 
harmonisation (for exemptions in particular). 

Currently, taxpayers (for either direct or indirect taxes), with cross-border activity in the single 
market  have  to  comply  with  up  to  27  divergent  tax  systems.  The  co-existence  of  different  tax 
systems inevitably generates uncertainty for cross-border investment. Significant tax obstacles to 
cross-border  business  activity  include  the  possibility  of  unrelieved  double  taxation  on  cross-
border income and capital. Taxpayers also face difficulties in finding information about the exact 
tax  rates  applicable  in  different  Member  States.  In  addition,  differences  and  inconsistencies 
between the various tax systems of Member States lead to burdensome procedures.69  

Recent initiatives to address these barriers 

Twice a year, the Commission publishes tables with the applicable VAT rates in all EU Member 
States. It also strives to make all information available in the Taxes in Europe database70 and to 
accommodate specific requirements arising from the implementation of the rules on e-commerce 
due for 2021. 

Cumbersome  registration  requirements  will  be  mitigated  by  the  recently  adopted  new  detailed 
measures that will lead to the smooth transition to new VAT rules for e-commerce that come into 

65 Data based on an Directive 2006/112/EC Amendment Impact Assessment 

(https://ec.europa.eu/taxation_customs/sites/taxation/files/18012018_impactassessment_vat_smes_en.
pdf) and 

Special scheme for small enterprises under the VAT Directive 2006/112/EC 

(https://ec.europa.eu/taxation_customs/business/vat/vat-reports-published_en).  

66 KPMG-GFK (2018), Study on tax compliance costs for SMEs. Study commissioned by the European 

Commission, European Commission Tender No. EASME/COSME/2015/004. 

67 KPMG-GFK (2018), Study on tax compliance costs for SMEs. Study commissioned by the European 

Commission, European Commission Tender No. EASME/COSME/2015/004. 

69 https://op.europa.eu/en/publication-detail/-/publication/0ed32649-fe8e-11e8-a96d-

01aa75ed71a1/language-en 

69 https://op.europa.eu/en/publication-detail/-/publication/0ed32649-fe8e-11e8-a96d-

01aa75ed71a1/language-en 

70 http://ec.europa.eu/taxation_customs/tedb/taxSearch.html  

56 

 
                                                                                                                                                              
force in January 202171. The current simplified system to declare and pay VAT on business-to-
consumer  e-services  (Mini  One  Stop  Shop)  in  the  EU  will  be  extended  to  companies  selling 
goods online and to other cross-border services. 

Current  legislation  allows  for  simplified  procedures  for  SMEs,  with  the  objective  of  lowering 
VAT  compliance  costs.  Many  countries  apply  these  simplified  procedures,  which  include 
exemptions  from  VAT  for  companies  with  an  annual  turnover  below  a  certain  threshold. 
However, compliance costs for SMEs are still disproportionate, in particular when trading cross-
border,  because  an  exemption  is  often  only  available  to  companies  established  within  the 
Member State in which the VAT is due. This also creates distortive effects on competition, both 
in domestic and EU markets. 

In January 2018, the Commission adopted a proposal72 aimed at reviewing the current rules on 
VAT  exemptions  for  SMEs.  The  main  objectives  of  the  initiative  are  the  following:  to  reduce 
compliance  costs  for  SMEs,  provide  a  more  level  playing  field  for  them,  and  contribute  to  the 
fight against VAT fraud73. The Council has recently adopted the proposal. The new VAT scheme 
for SMEs will apply as of 1 January 2025. 

The Commission’s proposal for a Common Consolidated Corporate Tax Base (CCCTB) would 
lower the compliance costs for corporate income taxation by providing for a single set of rules for 
calculating  the  tax  base. With  the  CCCTB,  companies  operating  across  borders  will  be  able  to 
comply with one, single EU system for computing their taxable income. They will also be able to 
file one tax return for all of their EU activities. The CCCTB is currently being discussed in the 
Council. 

16. Tax reimbursement refusals and double taxation 

Practical obstacles and barriers reported by businesses 

Inconsistencies  in  the  taxation  regimes  of  Member  States  can  lead  to  refusals  of  tax 
reimbursement and to double taxation. This issue may concern both indirect and direct taxes. 

According  to  the  EU  VAT  Forum 74,  VAT  double  taxation  may  occur  in  several  ways.  For 
example, a transaction may be taxed several times in different Member States without businesses 
being  able to  recover  it  in  either  of  the Member  States.  More  generally,  VAT can  end  up  as  a 
final  cost  and  the  principle  of  neutrality  may  not  be  respected75.  Factors  contributing  to  VAT 

71 Council Directive (EU) 2019/1995 amending Directive 2006/112/EC as regards provisions relating to 

distance sales of goods and certain domestic supplies of goods; and Council Implementing Regulation 
(EU) 2019/2026 amending Implementing Regulation (EU) No 282/2011 as regards supplies of goods 
or services facilitated by electronic interfaces and the special schemes for taxable persons supplying 
services to non-taxable persons, making distance sales of goods and certain domestic supplies of goods 

72 https://ec.europa.eu/taxation_customs/business/vat/action-plan-vat/vat-scheme-for-small-businesses_en 

73 https://ec.europa.eu/taxation_customs/sites/taxation/files/18012018_proposal_vat_smes_en.pdf  

74 The EU VAT Forum is a working group of business representatives, Member States’ tax administrations 

representatives, academics and the Commission. 

75 According to the OECD, ‘The full right to deduct input tax through the supply chain, except by the final 
consumer, ensures the neutrality of the tax, whatever the nature of the product, the structure of the 
distribution chain and the technical means used for its delivery (retail stores, physical delivery, 
Internet)’, OECD Consumption Tax Trends 2018 VAT/GST and Excise Rates, Trends and Policy 
Issues: VAT/GST and Excise Rates, Trends and Policy Issues. 

57 

 
                                                      
double taxation include Member States’ different qualifications of the nature of the transaction, 
the definition of taxable persons, the place of the transaction or the lack of a right to deduct VAT.  

Two SOLVIT cases illustrate these issues.  In one case, a company from a Member State asked 
the  authority  of  another  Member  State for  a VAT  refund  for  goods  that  were  purchased in  the 
second  country  and  brought  back  to  the  first.  The  authority  of  the  second  Member  State  twice 
requested additional information from the company, but in the end, the VAT refund was in part 
refused without further explanations. 

In  another  case,  a  foreign  company  registered  as  a  VAT  intra-Community  operator,  was  taxed 
with 100% VAT in a Member State on a purchase of a car to be partly used by a business client. 
The  authorities  where the car  was  purchased  refused  the  VAT refund on  any  amount  based  on 
Directive  2008/9/EC  and  Directive  2006/112/EC.  Despite  the  above,  SOLVIT  has  received  an 
opinion  report  from  the  tax  agency  of  the  Member  State  in  which  the  business  was  registered, 
recognizing this as a clear double taxation case. 

A requirement for registration and subsequent difficulties in recovering VAT is another frequent 
source of complaints. According to the Finnish trade organisation, the German trade organisation 
and  the  German  Chamber  of  Commerce,  it  is  frequently  not  possible  to  recover  VAT  without 
setting up offices in other Member States, which creates an additional burden on businesses. For 
instance,  in  certain  Member  States,  it  is  necessary  for  a  supplier  to  register  for  VAT  in  that 
country (if the supplier is the person liable for payment of VAT). This registration can take up to 
three months. Additionally, the supplier may need to follow numerous other formalities, such as 
daily attendance registration or a contract registration with the social insurance system.  

In  addition  to  VAT  double  taxation  leading  to  direct  costs,  the  EU  VAT  Forum  stressed  that 
indirect  costs  may  occur  when  companies  adapt  their  business  flow  to  prevent  double  taxation 
risks.  To  do  so,  companies  may  choose  specific  manufacturing  sequences,  transport  routes,  or 
business partners. In come extreme cases, these may be located outside of the singlemarket. 

Double  taxation  is  also  an  issue  for  direct  taxes.  Notable  examples  of  current  double  taxation 
issues in direct taxation are: 

  Cross-border business restructuring operations: For example, different interpretations of 
Member States in cross-border restructurings might result in the double taxation of 
capital gains; 

  The tax treatment of transfer pricing: If a Member State unilaterally adjusts the price set 
by a company in a cross-border intra-group transaction, and that adjustment is not offset 
by a corresponding adjustment in the other concerned Member State(s), double taxation 
can occur. 

Further, both the German Chamber of Commerce and the German trade organisation report that 
tax  calculation  (such  as  profit  calculation)  is  a  challenge  for  companies  operating  across  the 
border in certain services markets.  

Available quantification 

Trade  organisations  and  chambers  of  commerce  both  mention  these  issues  as  barriers.  For 
instance,  according  to  the  Finnish  trade  organisation,  17 %  of  respondents  mention  VAT 
compliance as a barrier.  

60,4% of respondents to the Eurochambers 2019 survey find differing VAT procedures to be an 
obstacle  to  doing  business  in  the  single  market.  Non-VAT  related  taxation  issues  are  also 
considered an obstacle to the single market by respondents to the survey (54,2%).  

58 

 
Complex and costly tax rules are also an important obstacle for both self-employed and SMEs, 
according to the Dutch Doing Business in Europe report. Specifically, procedures in the field of 
VAT  are  mentioned  as  an obstacle  by  18  %  of  self-employed  and  20  %  of  SMEs,  while  other 
taxes are only mentioned as an obstacle by self-employed (23 %). 

As regards the frequency of double taxation of company profits, the number of pending mutual 
agreement  procedures76  has grown  steadily  in  recent  years. They  have almost  doubled  between 
2013 and 2018. There were nearly 2 000 pending cases in the EU at the end of 2018, with many 
lasting as long as 2 years and some even longer.  

Analysis of the reported practical obstacles and barriers 

This  barrier  originates  in  regulatory  choices  at  EU  level  and  national  level.  Businesses  face 
problems of double taxation for both indirect and direct taxes when supplying goods or services 
to other Member States.  

Indirect taxes – Limited role of EU legislation and diverging implementation 

According  to the  EU VAT  Forum,  VAT  double taxation in  cross-border  transactions  is  mainly 
due  to  divergent  interpretations  of  the  VAT  Directive77  by  the  Member  States  and  their 
implementation in national legislation in different circumstances. 

Direct taxes78 – Limited role of EU legislation and diverging rules 

Direct taxes are primarily the responsibility of Member States. Tax rules are consequently often 
drafted without enough consideration of the cross-border dimension of business activities. This 
lack of consideration creates mismatches in the interaction between disparate national corporate 
tax  regimes.  In  other  words,  companies  operating  in  the  single  market  thereby  need  to comply 
with different national tax systems. Such mismatches create risks of double taxation and double 
non-taxation79 and thereby distort the functioning of the single market.  

Recent initiatives to address the issues  

To address the issue of double taxation of income, the EU adopted in 2017 the Directive on tax 
dispute  resolution  mechanisms80.  The  Directive  entered  into  force  on  1  July  2019.  It  aims  to 
improve the swift resolution of double taxation disputes, notably through mandatory arbitration81. 
Shorter dispute resolution will consequently facilitate cross-border activity.  

76   Mutual agreement procedures bring together two or more countries’ tax authorities to resolve tax-

related disputes (mostly involving double taxation).  

77 Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 

78 For additional information on direct taxation cross-border issues, see 

https://ec.europa.eu/taxation_customs/individuals/personal-taxation/direct-tax-crossborder-problems-
affecting-citizens_en 

79 See also CCCTB impact assessment 

https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/company_tax/c
ommon_tax_base/com_sec_2011_315_impact_assesment_en.pdf  

80   Council Directive (EU) 2017/1852. 

81 For more information, see Removing cross-border tax obstacles for EU citizens 

(https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/gen_info/tax_
policy/com%282010%29769_en.pdf) and  Ways to tackle cross-border tax obstacles facing individuals 
within the EU (https://publications.europa.eu/en/publication-detail/-/publication/4bfee942-ca41-11e5-
a4b5-01aa75ed71a1) 

59 

 
                                                      
The  Commission’s  proposal  for  a  CCCTB  presents  a  comprehensive  solution  to  corporate  tax 
mismatches within the single market, while also providing a competitive corporate tax system for 
the EU. 

Further, at the end of 2017, the Commission services put forward a non-binding code of conduct 
for Member States on how to withhold tax on cross-border income (such as dividends) in a more 
taxpayer-friendly manner. It aims at balancing the necessity to ensure that taxpayers pay their fair 
share with the importance of avoiding delays and excessive administrative burdens for both tax 
authorities  and  investors.  Concrete  suggestions  in  the  code  of  conduct  include  single  points  of 
contact in Member State tax administrations to deal with questions from investors on withholding 
tax.  

17. Uneven playing field due to taxation differences 

Practical obstacles and barriers reported by businesses 

Differences  in  taxation  can  also  be  exploited  by  companies,  creating  unfair  advantages  and  an 
uneven playing field in the single market.  

The French Chamber of Commerce reports that a lack of harmonisation of direct taxation, such as 
corporate and income taxes, is a clear barrier to a fair single market and also leads to labour cost 
competition and social dumping between Member States.  

In  addition,  according  to  a  Greek  trade  organisation,  VAT  fraud  poses  important  issues.  This 
includes  ‘fake  invoices’  as  well  as  ‘companies  importing  from  the  EU  without  VAT  and  then 
reselling within the import country’. This means that companies can collect VAT from the client 
without  then  paying  it  to  the  state.  This  facilitates  imports  and  makes  the  imported  products 
cheaper while also posing barriers to exports. 

Multinational enterprises that engage in aggressive tax planning practices, exploiting loopholes in 
and  mismatches  between  national  taxation  systems,  benefit  from  a  competitive  cost  advantage. 
This undermines the level playing field and can allow them to increase market shares and raise 
entry  barriers  to  the  detriment  of  other  firms,  hindering  innovation  and  reducing  the 
competitiveness of the EU as a whole. 

Available quantification 

One out of the nine chambers of commerce that responded to the Commission’s dedicated survey 
mentioned this barrier. Sorbe and Johansson (2017)82 provide evidence that profit shifting distorts 
competition, leading to higher market concentration and higher mark-ups for companies engaged 
in tax planning. 

While  many  studies  demonstrate  the  existence  of  tax  avoidance  practices,  it  is  difficult  to 
measure revenues lost due to these practices. This is due to the complexity of the phenomenon 
and limitations in collecting data. A study commissioned by the European Parliament83 however 

82 Sorbe, Stéphane, and Åsa Johansson (2017): International Tax Planning, Competition and Market 

Structure. OECD Economic Departments Working Papers Series, No. 1358. 

83   R. Dover, B. Ferrett, D. Gravino, E. Jones and S. Merler, ‘Bringing transparency,coordination 

andconvergence to corporatetax policies in the European Union’, European Parliamentary Research 
Service, 2015. 

60 

 
                                                      
finds that the revenue lost from profit-shifting in the EU amounts to about EUR 50-70 billion a 
year 84. Álvarez-Martínez et al. (2018) find that tax avoidance in the EU leads to annual losses of 
EUR 36 billion of corporate income tax revenue. Tørsløv et al. (2018) estimate that the EU loses 
around EUR 37 billion a year85. By way of comparison, corporate income tax revenues totalled 
EUR 445 billion in the EU in 2018. 

There  is  clear  evidence  for  an  uneven  playing  field  between  tax-planning  multinational  groups 
and domestic firms. As shown in a study by the Leibniz Centre for European Economic Research 
(ZEW)86,  cross-border  tax  planning  can  considerably  reduce  the  effective  average  tax  rate  for 
companies  using  respectively  hybrid  financing  structures  (-36.3%),  exploiting  an  intellectual 
property box regimes (-108.3%), and financing structures via an offshore tax treaty (-25.3%). 

Empirical evidence also shows that multinational entities have obtained lower effective taxation 
levels. For instance, Egger et al. (2010)87 compare the tax liabilities of multinationals with those 
of  domestic  firms.  They  find  that  foreign-owned  affiliates  in  high-tax  European  countries  pay 
32%  less  tax  than  domestically  owned  companies.  A  similar  study  by  Finke  (2013) 88  for 
Germany finds a gap of 27%. 

Analysis of the reported practical obstacles and barriers 

This  barrier  originates  in  regulatory  choices  at  EU  level  and  national  level.  Taxes  have  not 
been subject  to  much  harmonisation  in  the  EU, leading  to  national tax  rules, with  minimal  EU 
harmonisation. This has led to tax competition between Member States.  

The single market has eased the way businesses operate within the EU, but its sustainability is 
based on fair competition according to a set of common rules. The uneven playing field among 
Member States in taxation combined with the freedom of movement and digitalisation has led to 
new forms of tax competition.  

Certain forms of tax competition89 undermine the level playing field between businesses in the 
single  market  by  providing  avenues  for  aggressive  tax  planning.  Companies  that  lower  their 
effective tax burden benefit from an unfair competitive cost advantage, compared to companies 
that do not or cannot use aggressive tax planning schemes. This distorts the level playing field 
and  allow  some  large  firms  to  gain  market  shares  and  raise  entry  barriers  to  the  detriment  of 
other, often smaller, firms. Unfair tax competition also leads to  subsidy races between Member 
States, allowing countries with the deepest pockets to give their companies an unfair competitive 
advantage over companies from countries with less money to spend on subsidies. 

Recent initiatives to address these barriers 

84   The method captures profit-shifting in the EU, excluding Spain, Hungary and Finland. It is based on the 
‘CIT efficiency’ method, which attributes to profits shifting all differences between a Member State’s 
CIT to gross operating surplus and the EU average of the ratio.  

85 Own computations based on Tørsløv et al. (2018), The missing profits of nations 

86 ZEW (2016c), The Impact of Tax-planning on Forward-looking Effective Tax Rates, forthcoming in 

Taxation Papers, DG Taxation and Customs Union, European Commission. 

87 Egger, P., Eggert, W. and Winner, H. (2010), 'Saving Taxes through Foreign Plant Ownership', Journal 

of International Economics 81(1), pp. 99-108. 

88 Finke, K. (2013), Tax Avoidance of German Multinationals and Implications for Tax Revenue Evidence 

from a Propensity Score Matching Approach, mimeo. 

89 Tax competition occurs when countries set their tax policies in reaction to the tax policy of others to 

either attract or retain mobile resources, including real activities and book profits. 

61 

 
                                                      
The  Commission  has  taken  initiatives  to  address  these  barriers,  notably  by  proposing  a  fair 
taxation of the digital economy90 and a common consolidated corporate tax base91. In addition, it 
is working closely with Member States in the current international discussions on the reform of 
the  international  corporate  tax  system,  which  are  articulated  around  two  broad  pillars:  (1) 
realigning taxing rights with value creation and (2) setting a global minimum effective taxation of 
business  profits.  The  Commission  has  also  enforced  State  aid  rules  against  public  authorities 
granting a favourable tax treatment to companies engaged in aggressive tax planning. 

Step 2f Steps to selling cross-border: after-sales 

18. Heterogeneous rules on guarantees and contractual remedies 

Practical obstacles and barriers reported by businesses 

Businesses  selling  directly  to  consumers  located  in  another  Member  State  face  several 
problems caused by differences in contractual and legal practices related to legal guarantee 
of  conformity.  Differences  between  national  contract  law  rules  related  to  guarantees  and 
contractual  remedies,  have  been  consistently  reported  by  businesses  as  important  obstacles  to 
cross-border  trade.  Such  differences  can  affect  businesses  selling  cross-border  directly  to 
consumers  (Business  to  consumers  contracts)  or  to  other  businesses  (Business  to  business 
contracts).  

In  business  to  consumers  contracts,  retailers  who  direct  their  activities  to  consumers  in 
another  country  generally  choose  to  apply  the  national  law  of  their  country  (not  the 
consumer’s  national  law).  However,  they  must  also  comply  with  the  mandatory  consumer 
contract law rules of the consumer's country, to the extent those rules provide a higher level of 
consumer  protection.  Therefore,  businesses  intending  to  sell  to  consumers  in  other  Member 
States are faced with the legal costs of finding out about the consumer's national law in order to 
adapt their contract terms accordingly, or to assess in advance the legal and financial risk in the 
event of activation of the guarantees.  

Business  to  business  contracts  are  governed  by  the  principle  of  contractual  freedom,  but 
businesses  can  face  an  unbalanced  bargaining  power.  In  some  areas,  the  unbalanced 
bargaining  power  of  the  parties  may  lead  to  imposition  of  unfair  contractual  terms  and 
conditions, affecting mainly SMEs and start-ups, in particular in respect of access to the online 
platform economy and cloud computing services. 

Available quantification 

In the Eurochambres 2019 survey, “Different contractual/legal practices” rank fifth in obstacles 
to the single market, reported by 65.6% of respondents. 

90   https://ec.europa.eu/taxation_customs/business/company-tax/fair-taxation-digital-economy_en 

91   https://ec.europa.eu/taxation_customs/business/company-tax/common-consolidated-corporate-tax-

base-ccctb_en 

62 

 
                                                      
As regards business to consumer relations, EU retailers report more difficulties to comply 
with consumer law in other EU countries than on domestic markets. The latest 2018 survey 
on retailers’ attitude towards cross-border trade and consumer protection92 shows that 71.5% of 
EU retailers find it easy to comply with consumer law on domestic markets compared to 58.1% 
of retailers selling to other EU countries that find it easy to comply with consumer legislation in 
other EU countries. 

In business to business relations, difficulties are reported as regards cloud computing. The 
Study on the Economic Detriment to SMEs arising from unfair and unbalanced cloud computing 
contracts showed that 24% of companies using cloud computing services encounter issues related 
to lack of clarity and transparency of contract terms (21%) and limited liability of the provider 
(16%).  The  study  estimated  that,  considering  a  usage  rate  of  cloud  computing  of  16%  and  an 
incidence  of  contract-related  problems  at  24%,  about  582,924  micro,  small  and  medium 
enterprises suffered from these problems across the EU during the period 2016-2017.  

As  regards  access  to  the  online  platform  economy,  the  impact  assessment93  leading  to  the 
Commission proposal for a Regulation on promoting fairness and transparency for business users 
of  online  intermediation  services94  found  “that  nearly  half  (46%)  of  business  users  experience 
problems with online platforms in the course of their business relationship, with varying impacts. 
Such  problems  include  potentially  harmful  trading  practices,  (the  main  categories  of  which  are 
set  out  in  the  following  sections).  Of  those  users  that  did  experience  problems,  21%  said  that 
these problems occurred often. Heavy users of online platforms, that is to say those that generate 
over half their turnover via online platforms, are far more likely to experience problems (75%) 
and more frequently (33%) report experiencing problems often”. 

Analysis of the reported practical obstacles and barriers 

The  root  cause  of  this  hurdle  for  business  to  consumer  relations  mostly  relates  to  regulatory 
choices  at  EU  level  and  national  level.  EU  rules  on  legal  guarantees  only  provide  minimum 
harmonisation and stricter national rules exist in several countries. Complexity of EU legislation 
can  also  be  root  cause,  since  the  interplay  between  some  of  them  may  generate  confusion  for 
businesses. 

Conformity  and  guarantees  is  a  shared  competence  between  the  EU  and  the  Member 
States,  and  EU  legislation  has  intervened  in  the  area  of  consumer  contract  law.  The 
Consumer  Sales  and  Guarantees  Directive  1999/44/EC  regulates  conformity  requirements  and 
legal guarantee obligations. However, it does so only by way of minimum harmonisation. This is 
the root cause of the barriers for businesses, especially in the cross-border context. As a result of 
the  minimum  harmonisation  nature  of  these  rules,  many  Member  States  have  adopted  national 
laws  that  go  beyond  the  current  minimum  EU  requirements.  EU  businesses  must  comply  with 
these diverging national rules when targeting consumers in other Member States. 

It has been reported that the Geo-blocking Regulation, which came into application at the 
end  of  2018,  creates  concerns  for  SMEs  regarding  the  impact  of  its  combination  with  the 
already existing Directive on Guarantees. However, the Geo-blocking Regulation does not oblige 
entrepreneurs to deliver to another Member State under all circumstances, but prohibits refusal to 

92 “Retailers' attitudes towards cross-border trade and consumer protection (main report) – 2018”, p.10, 
available at: https://ec.europa.eu/info/files/retailers-attitudes-towards-cross-border-trade-and-
consumer-protection-main-report-2018_en 

93 SWD/2018/138 final 

94 COM/2018/238 final 

63 

 
                                                      
sell under the same conditions as a local for reasons related to a customer's nationality, place of 
residence  or  place  of  establishment,  unless  it  is  objectively  justified.  The  Regulation  does  not 
allow a trader to discriminate against a foreign customer wanting to buy a good under the same 
conditions  as  a  local  (the  so-called  "shop-like-a-local''  scenario).  While  specific  territorial 
limitations regarding contractual relations between a seller and a buyer after the delivery of the 
product are not prohibited by the Geo-blocking Regulation, the Directive on Consumer Sales and 
Guarantees  may  be  applicable.  Therefore,  in  case  of  a  lack  of  conformity,  a  consumer  has  the 
right to  have  goods  brought into  conformity  free  of charge  by  repair  or replacement,  including 
free of charge transportation of the goods. 

Under the new Sale of Goods Directive 2019/771, which will replace the current Directive 
on Consumer Sales and Guarantees as from 1 January 2022, the seller can refuse to bring 
the  goods  in  conformity  if  both  repair  and  replacement  are  impossible  or  would  impose 
disproportionate  costs  on  the  seller,  and  the  costs  of  postage  and  carriage  can  be  considered 
disproportionate  if  the  goods  are  located  in  a  place  different  from  where  they  were  originally 
delivered. 

The so-called P2B Regulation95 will apply from 12 July 2020. It is the first instrument to address 
the  challenges  of  the  online  platform  economy,  produced  notably  by  an  imbalance  of  power 
between  online  platforms  and  their  business  users.  It  aims  at  reducing  the  regulatory 
fragmentation caused by emerging national rules and also lays the ground for further initiatives.  

The  Regulation  relies  on  four  main  pillars:  it  obliges  platforms  and  search  engines  to  comply 
with high level transparency obligations that will provide clarity on a number of aspects, such as 
changes  to  terms  and  conditions,  the  grounds  for  suspension  or  termination  of  the  use  of  a 
platform, ranking, etc. It ensures fairness by prohibiting the most widespread and harmful trading 
practices  (e.g.  sudden  changes  to  terms  and  conditions  without  sufficient  advance  notice, 
retroactive  changes  to  terms  and  conditions).  It  provides  for  improved  internal,  external  and 
judicial  redress  for  business  users,  by  requiring  all  but  the  smallest  platforms  to  put  in  place 
internal  complaint-handling  systems  and  to  identify  mediators,  with  whom  they  are  willing  to 
engage to resolve disputes. Finally it provides for monitoring of the evolution and emergence of 
issues in the digital platform economy through the EU Observatory set up by the Commission in 
2018. 

19. Ineffective enforcement of contracts and administrative decisions and 

dispute resolution 

Practical obstacles and barriers reported by businesses  

Effective justice  systems, which  ensure  the  proper enforcement  of  contracts  and  rights  or 
administrative  decisions  and  resolution  of  disputes,  are  fundamental  for  markets  to 
function  properly  and  to  create  a  business  and  investment  friendly  environment.  Where 
judicial  systems  guarantee  the  enforcement  of  rights  or  administrative  decisions,  creditors  are 
more  likely  to  lend,  businesses  face  less  risks  and  are  dissuaded  from  opportunistic  behaviour, 
transaction costs are reduced and innovative businesses are more likely to invest. The beneficial 
impact  of  well-functioning  justice  systems  for  the  economy  is  supported  by  a  wide  range  of 

95 Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on 

promoting fairness and transparency for business users of online intermediation services, OJ L 186, 
11.7.2019, p. 57 

64 

 
                                                      
studies and academic literature, including from the International Monetary Fund96 the European 
Central  Bank97,  the  OECD98,  the  World  Economic  Forum99,  and  the  World  Bank100.  The  EU 
Justice  Scoreboard  presents  an  annual  overview  of  indicators  with  relevance  for  the 
independence,  quality  and  efficiency  of  justice,  the  three  essential  parameters  of  an  effective 
justice system. 

i) Enforcement of contracts and rights and public administrative decisions 

Businesses  selling  directly  to  consumers  located  in  another  Member  State  face  national 
specificities when resolving commercial disputes. Businesses intending to sell to consumers in 
other Member States are faced with the legal costs of finding out about the  consumer's national 
law  in  order  to  adapt  their  contract  terms  accordingly,  or  to  assess  in  advance  the  legal  and 
financial  risk  in  the  event  of  disputes.  Several  Chambers  of  Commerce  surveyed  mentioned 
differences  in  contractual  and  legal  practices  and  local  specificities  of  resolving  commercial 
disputes (arbitration, out of the court settlements, trade courts, etc) as a barrier. Respondents to 
the Eurochambres 2019 survey also mention it as a significant barrier, particularly for SMEs. 

Businesses also face difficulties when challenging administrative decisions, as for instance in 
public procurement or in the recognition of electronic identification. As reported in barrier 6 
on  public  procurement,  chambers  of  commerce  and  other  business  organisations  in  several 
Member States perceive that local suppliers tend to be favoured over foreign ones. As reported in 
barrier 14, businesses face problems with electronic identification.  

The enforcement of contracts and the resolution of disputes or unfair public administrative 
decisions  are  fundamental  for  markets  to  function  properly.  Good  contract  enforcement 
procedures reduce uncertainty  by  assuring  buyers,  sellers, investors  that  their  contractual  rights 
will  be  upheld  by  courts.  When  contractual  disputes  cannot  be  swiftly  resolved,  or  when  the 
procedures are bureaucratic and cumbersome, it may impede cross-border trade. 

The enforcement of rights in relation to public authorities is essential for investors to feel 
confident  that  their  cross-border  investments  are  protected.  The  rules  protecting  investors 
from public authorities’ measures affecting them negatively, and the access to effective remedies 
in  case  of  problems,  influence  investors’  decisions.  EU  investors  reported  concerns  about  the 
effective enforcement of theirs rights vis-a-vis -the State.  

ii) Justice systems 

Businesses  in  some  Member  States  report  facing  lengthy  legal  proceedings.  This  implies 
that companies may not even be in a position to ensure that their rights are enforced. SMEs 
tend to be more likely to face barriers to access courts, particularly in a cross-border setting. This 
holds true in situations where litigation needs to be sustained over longer periods of time due to 

96  

97 

98 

99 

IMF, Regional Economic Outlook, November 2017, Europe: Europe Hitting its Stride, pp. xviii, pp. 
40, 70: https://www.imf.org/~/media/Files/Publications/REO/EUR/2017/November/eur-booked-
print.ashx?la=en  

ECB, ‘Structural policies in the euro area’, June 2018, ECB Occasional Paper Series No 210: 
https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op210.en.pdf?3db9355b1d1599799aa0e475e562465
1  

See e.g. ‘What makes civil justice effective?’, OECD Economics Department Policy Notes, 
No. 18 June 2013 and ‘The Economics of Civil Justice: New Cross-Country Data and Empirics’, 
OECD Economics Department Working Papers, No. 1060. 

World Economic Forum, ‘The Global Competitiveness Report 2018’, October 2018: 
https://www.weforum.org/reports/the-global-competitveness-report-2018  

100  World Bank, ‘World Development Report 2017: Governance and the Law, Chapter 3: The role of 

law’, pp. 83, 140: http://www.worldbank.org/en/publication/wdr2017  

65 

 
                                                      
the financial burden caused. An additional difficulty is that court proceedings usually take place 
in the official language of the Member State, making it more difficult for non-nationals to settle 
disputes, even when benefitting from a national counsel. An efficient justice system manages its 
caseload and backlog of cases, and delivers its decisions without undue delay. 

Dispute resolution in different jurisdictions and questions regarding application of different 
legal  rules  is  considered  an  issue.  Debt  collection  from  abroad  through  judicial  system  is 
flagged as extremely time consuming and costly, and “punishes the good companies and allows 
the dishonest, misbehaving companies to exist in the market.” This was raised by some surveyed 
respondent as one of the biggest barriers to growing business. Moreover, in some cases, investors 
raise concerns about the quality of judicial proceedings in terms of appropriate consideration of 
their rights and remedies awarded in cross-border administrative disputes. 

SMEs also face particular barriers as regards access to justice, for instance when it comes 
to Intellectual Property Rights (IPR). According to the CEPS101 study, evidence shows that the 
cost  of filing  court  proceedings,  which  may  include either  court fees  or the cost  of  a specialist 
legal advice, to enforce IPRs, and in particular patents, present significant disparities between the 
Member  States,  and  can  remain  beyond  the  reach  of  many  SMEs.  Moreover,  in  the  case  of 
controversies  with  large  companies,  it  may  become  prohibitively  costly  for  SMEs  to  sustain 
litigation  for  a  long  time.  This  is  a  clear  barrier  also  in  the  experience  of  some  business 
organisations,  which  noted  that  patenting  in  EU  is  too  cumbersome  and  expensive  for  small 
companies, and seriously impeding trade. Legal costs for defending IPR were deemed too high 
and  time  consuming.  Some  surveyed  respondents  called  for  clarification  of  the  rules  and  legal 
effect of arbitration awards within EU. 

Available quantification 

“Concerns about resolving commercial or administrative disputes, also because of deficits 
in  legal  protection  before  national  or  European  authorities  and  courts”  are  considered  a 
barrier by 60.5% of respondents to the Eurochambres 2019 survey, as well as by respondents 
to the survey conducted by business organisations. The surveys reported that up to almost half of 
SMEs in the five largest EU Member States also find that the costliness of dispute resolution is a 
barrier, according to the Centre for European Policy  Studies. This is for example supported by 
the findings and practical experiences of both the French and the Austrian business organisations. 
The  Austrian  Chamber  of  Commerce  refers  especially  to  small  companies,  which  are  afraid  of 
supplying  products  to  other  EU  Member  States  because  different  national  laws  are  applicable. 
Overall, 5 out of 11 business organisations that replied to a Commission survey reported issues 
related to this barrier. 

The 2019 EU Justice Scoreboard provides relevant data on both the availability of legal aid 
and the length of the proceedings. Over the years, legal aid has become less accessible in some 
Member States. The level of court fees has remained largely stable since 2016 although in several 
Member States, the court fees have risen as a proportion of the claim, especially for low value 
claims, imputable to the increase of the minimum court fee applicable.  

Since 2010, in nearly all of the Member States which have been identified in the context of 
the  European  Semester  as  facing  specific  challenges,  the  length  of  first  instance  court 
proceedings  in  the  broad  ‘all  cases’  category  and  the  litigious  civil  and  commercial  cases 
has  decreased  or  remained  stable.  Progress is  continuing  in  almost  all Member  States facing 

101   Hidden Treasures, Mapping Europe’s sources of competitive advantage in doing business, Donald 

Kalff and Andrea Renda, CEPS (Centre for European Policy Studies), Brussels, 2019 

66 

 
                                                      
the most substantial challenges with their backlog of cases, regardless of the category of cases. 
Despite  these  improvements,  significant  differences  remain  between  Member  States  with 
comparatively few pending cases and those with a high number of pending cases. 

Attention can also be drawn to the length of proceedings in two specific areas of EU law: 
competition law and EU trademark law. Firstly, enforcement of competition law, for which the 
overall caseload faced by courts across Member States decreased significantly in 2017, while it 
remained  stable  or  increased  in  seven  Member  States.  In  2017,  only  three  Member  States 
reported  an  average  length  exceeding  1000  days,  compared  to  eight  Member  States  one  year 
earlier. Secondly, in the area of the EU trademark, in 2017 the average length of EU trademark 
infringement  cases  has  increased  significantly  in some  Member  States,  with  13 Member  States 
reporting an average length exceeding 400 days in the years considered. 

According to the latest data available102, more than 30% of retailers selling online consider 
that there are ‘potentially higher costs of resolving disputes and complaints cross-border’. For 
all obstacles, the data show that the situation as seen by retailers has improved compared to 2014 
and 2016. In addition, the share of retailers actually selling cross-border that consider the above 
to be obstacles to cross-border sales is smaller than the share of retailers that currently do not sell 
cross-border and consider the above as obstacles to cross-border sales.  

Analysis of the reported practical obstacles and barriers 

Rules  and  procedures  for  contract  enforcement  are  partly  laid  down  at  national  level,  with 
limited  role  of  EU  legislation.  This  generates  different  rules  between  the  Member  States. 
Moreover,  when  disputes  are  brought  to  courts,  businesses  are  confronted  with  potentially 
lengthy legal proceedings caused by insufficient administrative capacity and practices. Lastly, 
in  relation  to  business  to  consumer  disputes,  the  vast  majority  of  issues  are  resolved  in  an 
amicable manner directly between traders and consumers. Traders do not implement adequately 
Alternative  Dispute  Resolution  themselves.  The  European  Consumer  Centres  also  encourage 
traders to reply positively to cross-border disputes with consumers.  

i) Enforcement of contracts and rights and public administrative decisions 

The  overall  fragmentation  of  contract  law  in  the  EU  is  due  to  different  national  rules  in 
Member  States.  The  regulation  of  dispute  resolution  and  the  provision  of  a  functioning  legal 
system to litigants is almost exclusively a matter dealt under national law. The fragmentation of 
contract  law  in  the  EU  is  due  to  different  national  rules  in  Member  States.  On  civil  law, 
businesses  may  face  significant  difficulties  when  they  need  to  pursue  cross-border  litigation  in 
civil and  commercial  matters in the  EU, considering  the complexity  of  the interaction  between 
the different sets of rules. EU legislation on judicial cooperation in civil matters aims to provide 
legal certainty and solutions in relation to key aspects in cross-border litigation (which courts are 
competent and which law is applicable) and to facilitate cross-border enforcement. 

Businesses  also  face  difficulties  when  challenge  administrative  decisions,  such  as  for 
instance  in  public  procurement  or  recognition  of  electronic  identification.  As  reported  in 
barrier  6  on  public  procurement,  available  data  shows  many  divergences  in  the  design  and 
functioning  of  national  remedies  systems.  As  reported  in  barrier  14,  businesses  face  problems 
with electronic identification.  

Other problems faced by businesses wishing to expand to other Member  States may arise 
from the lack of adaptation of national and EU law to the digital economy. This may be the 

102 2018 retailers survey for the 2019 edition of the Consumer Conditions Scoreboard (not yet published) 

67 

 
                                                      
case,  for  example,  for  businesses  wanting  to  adopt  new  technologies  such  as  blockchain  and 
smart contracts.  

ii) Challenge to unlawful public measures 

EU law enables the protection of the rights of businesses and consumers notably in cross-border 
situations  in  the  EU  through  multiple  ways  and  at  different  levels.  Whereas  EU  law  offers  a 
number of mechanisms aiming at the prevention of violations of their rights under internal market 
law,  EU  law  also  provides  for  the  judicial  enforcement  of  those  rights.  Where  judicial 
enforcement  is  considered  to  be  the  most  appropriate  avenue  or  where  other  possibilities  have 
been  exhausted,  an  individual  can  rely  on  a  fully-fledged  and  complete  system  of  judicial 
remedies  under  EU  law  (see  Communication  on  Protection  of  intra-EU  investment  of  19  July 
2018). 

A number of judicial remedies are available to individuals before national courts, which consist 
in particular of: 

  provisional measures (interim relief),  
 
 

the obligation to interpret national law in a way that is consistent with EU law,  
the obligation for the judge to set aside of its own motion any act (even of constitutional 
nature) which is in conflict with EU law,  
the elimination of the consequences of a violation of EU law, 
the award of damages for violations of EU law (including for judicial wrong-doing).  

 
 

In July 2018, the Commission adopted the Communication on Protection of intra-EU investment 
to  clarify  and  recall  the  most  relevant  EU  rules  protecting  investment  in  the  EU.  Yet,  some 
investors  and  stakeholders  express  concerns  about  the  enforcement  of  investors’  rights  and  the 
Commission  is  exploring  ways  to  strengthen  intra-EU  investment  protection  and  make  cross-
border investments easier. 

iii) Limited access to justice is mostly the responsibility of Member States 

It is also important to underline that pursuant to Article 19 (1) TEU Member States are obliged to 
provide  remedies  sufficient  to  ensure  effective  legal  protection  in  the  fields  covered  by  Union 
law. In these fields, under Article 47 of the Charter, which is directly applicable, everyone has the 
right to an effective remedy and to a fair trial.110Right to effective judicial protection: judicial 
redress  must  not  only  be  possible  (C-50/00  P,  UPA)  but  also  rendered  by  an  independence  of 
judiciary (C-64/16, PT judges; C-506/04, Wilson) within a reasonable time (C-612/15, Kolev; C-
138/17 P Gascogne).103 

Since  2016,  a  new  EU  directive  provides  a  framework  for  the  establishment  of  quality 
alternative  dispute  resolution  in  consumer  disputes  in  all  Member  States,  covering  all 
sectors  and  for  many  of  them  able  to  act  in  cross-border  business  to  consumer  cases.  In 
2019  there  were  around  460  alternative  dispute  resolution  (ADR)  entities  in  the  28  Member 
States (including the United Kingdom). However, there is still a too low engagement of traders in 
ADR schemes, partly because of lack of information and partly because of costs. In addition, the 
Online Dispute Resolution platform is functional since February 2016 and helps consumers and 
traders  agree  on  the  best  ADR  bodies  to  solve  business  to  consumer  disputes  related  to  online 
trade.  This  platform  provides  translation  facilities.  Since  then,  the  platform  has  attracted  more 
than 8.5 million visitors and 120 000 consumers sought for a solution to their issues. There are 
anecdotal reports of ADR bodies refusing to treat complaints coming from a foreign consumer, as 
they have difficulties understanding the complaint, assessing the evidence in the foreign language 
or applying foreign law.  

103 See Commission Communication on “Protection of Intra-EU Investment”, pages 19 and on. 

68 

 
                                                      
Businesses  face  lengthy  judicial  procedures  in  some  Member  States,  which  may  create 
situations in which companies desist from pursuing their rights. This is particularly true for 
SMEs, which have limited financial resources for sustaining litigation and limited resources for 
overcoming language barriers in court cases. The issue stems from difficulties at Member State 
level.  Simplified  “European  procedures”  in  cross-border  civil  litigation,  such  as  the  European 
Payment  Order  to  obtain  a  decision  quickly  for  cases  in  which  it  is  presumed  that  no  legal 
defence  will  be  advanced,  aim  to  provide  solutions  to  these  problems,  but  there  is  still  lack  of 
awareness of their existence.   

The Mediation Directive has provided an EU legislative framework to encourage the use of 
mediation to solve cross-border commercial disputes. Mediation can provide a cost-effective 
and quick extrajudicial resolution of disputes in civil and commercial matters through processes 
tailored to the needs of the parties. Directive 2008/52/EC on certain aspects of mediation in civil 
and commercial matters aims at facilitating access to alternative dispute resolution and promoting 
the  amicable  settlement  of  disputes  by  encouraging  the  use  of  mediation  and  by  ensuring  a 
balanced relationship between mediation and judicial proceedings.  

According  to  the  2018  EU  Justice  Scoreboard,  among  the  reasons  for  good  perception  of 
independence of courts and judges, nearly four-fifth of companies and of citizens (equivalent to 
38%  or  44%  of  all respondents,  respectively)  named  the  guarantees  provided  by  the  status and 
position of judges. The Commission is pursuing some infringement procedures to ensure that all 
Member States comply with the requirement of independence of judges as laid down in EU law. 

20. Costs and delays of collecting payments and recovering debt 

Practical obstacles and barriers reported by businesses  

Businesses  face  costs  and  delays  when  collecting  payments  and/or  recovering  debts  in 
another  Member  State.  The  cost  and  delay  of  collecting  payments  and/or  recovering  debts  is 
considered a barrier according to a variety of surveys and sources.  

Several  consulted  surveys  mention  difficulties  related  to  payment  recovery.  57.4%  of 
respondents to the Eurochambres 2019 survey marked “issues related to payment recovery” as an 
obstacle. In addition, 38% of respondents to the survey of the Confederation of Finnish Industries 
and 19% of respondents to the Dutch Doing Business in Europe survey mention different rules 
for debt collection as a barrier. If payments between businesses were carried out according to the 
contractual deadline agreed, the additional cash liberated and reinvested in the economy would 
pay for 6 million jobs in the EU104.  

According to World Bank Doing Business 2019 report, the lowest scoring Member States are 
Luxembourg,  Lithuania,  Hungary  and  Greece,  ranking  from  30  down  to  34/189.  When 
comparing with the year 2015, there is an improvement, with rank 62/189 for Luxembourg and 
67/189  for  Lithuania. The indicator used  is  a  composite  indicator  based  on scores  for recovery 
rate and strength of insolvency, with 50% weight for each.  

SMEs  in  particular  face  issues  in  transnational  debt  collection  and  particularly  in  the 
implementation  of  such  European  legal  proceedings  as  the  European  payment  order  or  small 
claim  proceedings.  The  payment  policies  of  larger  companies  applied  in  some  Member  States 
(e.g. “90 days + end of month, in practice more than 100 days in average”) can be a significant 

104 ECE 

69 

 
                                                      
barrier to doing business. Business report differences between Northern and Southern European 
practices, which may cause cashflow difficulties for companies used to evolve in a business with 
short  payment  practice.  The  most  affected  sectors  include:  construction,  retail,  consulting  and 
professional services. In general, any sector where there is a prevalence of SMEs in the relevant 
value chain is potentially affected by this hurdle.  

Available quantification 

In Europe half of all businesses do not survive the first 5 years of their existence. In recent 
years, an average of 200,000 firms went bankrupt each year in the EU, resulting in direct 
job  losses  totalling  5.1  million  over  three  years105.  About  one-quarter  of  these  bankruptcies 
involved creditors and debtors in more than one EU Member State106. However, the single market 
dimension  of  the  problems  is  larger  than  these  figures  suggest,  since  many  companies  avoid 
expanding or investing cross-border in the first place, due to the non-convergence of insolvency 
frameworks and uncertainty about the effectiveness of the applicable national insolvency rules. 

At  the  same  time,  the  share  of  zombie  firms  has  been  increasing  in  several  EU  countries 
over the last decade.  

Member States with less efficient insolvency and claim enforcement frameworks are faced with 
the  weight  of  existing  company  debt,  which  deters  investors,  holds  back  consumption,  and 
creates a situation of debt overhang. Conversely, efficient insolvency frameworks can contribute 
in a tangible way to create jobs and sustainable growth by helping companies in difficulties, but 
still viable, to get back on their feet and quickly taking companies beyond rescue off the market. 

According  to  the  Small  Business  Act  performance  review,  the  EU  average  time  to  resolve 
insolvency  in  2019  is  2.01  years  (1.7  in  OECD  high-income,  1  in  USA),  while  the  cost  of 
resolving insolvency (cost of recovering debt as % of the debtor's estate) is 10.43 (9.3 in OECD 
high-income, 10 in USA).  

The risk of late payment or non-payment is also the first major obstacle to the participation 
in public procurement of European SMEs. It was considered an obstacle by 56% of SMEs in 
the EU in 2015, and considered a major obstacle by 43% of SMEs107. But late payment is also a 
practice deeply embedded in B2B (business to business) transactions. Only 40% of businesses are 
paid on time in the EU. 50% of the delays are severe, exceeding 60 days. Late payments account 
for 1 out of 4 bankruptcies in the EU108.  

105 Impact Assessment accompanying the Commission Recommendation on a New Approach to Business Failure and 

Insolvency, SWD(2014) 61 final, 12 March 2014, p. 2. , https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=SWD:2016:357:FIN#footnote27  

106 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2016:357:FIN#footnote28  

107 

http://ec.europa.eu/COMMFrontOffice/PublicOpinion/index.cfm/Survey/getSurveyDetail/instruments/
FLASH/surveyKy/2089 

108 Source: ECE (European Commission for Europe) 

70 

 
                                                      
Analysis of the reported practical obstacles and barriers 

This barrier is mostly explained by limited role of EU legislation109 and insufficient awareness 
of the existing European procedures for cross-border situations. In addition, the general business 
environment  (unfair  payment  practices  of  bigger  companies  towards  smaller  ones,  and  long 
verification  and  payment  procedures,  especially  in  the  public  sector)  and  administrative 
capacity and practices also explain this hurdle.  

Outside insolvency, the enforcement of unpaid claims is a matter of judicial procedures, the 
regulation of which is indeed primarily a prerogative of the Member States.  

The barrier also results from constraints faced by the  justice system in Member States. These 
constraints are partly explained by a lack of sufficient funding of courts in a number of Member 
States, an absence of proper training of judges or an absence of digitalisation of court procedures. 
The  Directive  on  restructuring  and  insolvency  sets  an  obligation  of  Member  States  to  provide 
training  to  insolvency  judges  and  ensure  digitalisation  of  insolvency  proceedings  (within  an 
extended transposition period of 5 – 7 years). 

Besides  the  core  areas  of  Member  State  competence  for  civil  judicial  procedures  and 
insolvency procedures, there are a number of EU legislative instruments which are either in 
force, in a transposition period or in the legislative process which try to regulate at the EU level 
at least the surrounding environment of judicial enforcement and insolvency procedures. These 
include  the  European  Payment  Order  Regulation  1896/2006/EC  (in  force),  the  Insolvency 
Regulation 2015/848/EU (in force), and the Late Payment Directive 2011/7/EU (in force), 

i) Payment procedures not sufficiently harmonised 

The  EU  legal  framework  for  cross  border  claims  (Late  Payment  Directive  2011/7/EU) is  well-
established, but its implementation suffers from lack of a mutual assistance/quick resolution 
system and from a different level of implementation throughout the single market. 

 

 

In  commercial  transactions  between  private  operators,  businesses  are  afraid  of  making 
claims  out  of  fear  of  damaging  business  relations,  especially  when  their  customer  is  a 
larger enterprise and there is an asymmetry in the bargaining position (“fear factor”). In 
this case, businesses prefer to accept unfair payment conditions (and expose themselves 
to the risk of delayed payment).  
In  commercial  transactions  with  the  public  administration,  businesses  do  not  have  any 
effective  means  of  ensuring  that  the  counterpart  respects  the  periods  of  payment 
harmonised in the directive; this threatens the existence of the economic operator itself, 
particularly for SMEs, since it aggravates liquidity constraints and increases costs; 

  The  different  EU  regulations  facilitating  cross-border  debt  recovery  are  still  not 
sufficiently well-known by business, in particular SMEs, and more needs to be done to 
raise awareness.110 

ii) New insolvency proceedings not implemented yet 

109 The rules on international jurisdiction of courts, the law applicable in cross-border cases and on the 
recognition and enforcement of decisions is fully harmonised through the EU rules on civil judicial 
cooperation. 

110 Regulations 44/2001 on jurisdiction and recognition and  enforcement of  judgements in civil and 

commercial laws, Regulation  805/2004 on a European Enforcement Order, Regulation 1896/2006 on 
European order of Payment, Regulation 861/2007 on European Small Claim procedure. All these 
regulations do not apply to Denmark.   

71 

 
  
                                                      
The  new  Directive  on  restructuring  and  insolvency  2019/1023/EU  (in  a  transposition  period) 
introduces an early warning mechanism and second chance provisions – up to 3 years maximum 
discharge  period.  It  aims  at  reducing  differences  in  MS’s  restructuring  and  insolvency 
frameworks  in  order  to  enhance  a  free  flow  of  capital  across  the  EU.  The  transposition  period 
will take place between July 2019 and July 2021. 

This  directive  also  establishes  an  obligation  for  Member  States  to  collect  such  data  on 
insolvency  proceedings.  Studies  are  being  performed  by  the  European  Commission  and  the 
European Banking Authority (EBA) to obtain data on non-insolvency claim enforcement.  

21. Barriers to data availability and unclear data privacy rules 

Practical obstacles and barriers reported by businesses  

Business  face  barriers  to  cross-sector  and  cross-border  data  availability,  fragmentation  of 
standards, and unclear privacy rules. 

Data  availability  remains  a  problem  across  sectors  and  borders  in  the  EU.  Some  data  are 
difficult to gather for businesses because they are generated or stored in a different country or in 
closed environments (such as machines, cars or factories). Public sector data interoperability also 
is  an  issue,  especially  its  use  across  different  borders  and  sectors.  The  continuous  lack  of 
interoperable  non-embedded  software  systems  and  application  programming  interfaces  (APIs) 
also creates problems further down on data porting, data access, data sharing and re-use of data. 

Data localisation restrictions take different forms in different sectors (e.g. financial, public, 
health  sector).  For  example,  a  Member  State  supervisory  authority  may  advise  the  financial 
service  providers  to  store  their  data  locally.  As  a  result,  the  financial  service  providers  cannot 
freely choose to store their data in Europe where it is the most cost-efficient.  

According to various sources, data-storing costs vary across the EU. For example, the annual 
cost  of  a  server  for  health  data  in  Germany  is  EUR  3,000,  but  in  France  EUR  13,000.111 
Similarly, the price of storage per gigabyte with a Hungarian cloud service provider is more than 
25 times that of a large provider in Germany.112 

There  is  also  increasing  risk  of  fragmentation  of  standards.  Several  Member  States  are  taking 
initiatives,  including  legislation,  in  order  to  facilitate  access  to  privately  held  data  in  different 
constellations (business-to-business, business-to government). However, these national measures 
may lead to fragmentation on the European market. As a result, businesses face a situation in the 
EU where data access and re-use happens at different speeds in different countries. Consequently, 
opportunities to develop cross-border applications are limited.  

Finally,  businesses  report  uncertainty  about  privacy  rules.  The  DIHK  2019  survey  reports  that 
GDPR is not implemented uniformly throughout the EU because of low harmonisation, but also 
inconsistent interpretation. For example, “there are sometimes different views, e.g. regarding who 
is the controller and who is the processor (e.g. in personnel management) [which] leads to a need 
for  clarification  in  international  business  relations.”  Similarly,  the  Dutch  Doing  Business  in 
Europe survey states that “both SME's and Self-employed experience expensive transport costs 

111 Data based on public consultation with stakeholders (2017). 

112 Data based on the impact assessment (SWD(2017)304). 

72 

 
                                                      
and  privacy  legislation  as  the  greatest  obstacles  relating  to  the  e-commerce  of  services  and 
products.” 

Available quantification 

With regard to the online sale of goods and services, both self-employed (26%) and SMEs (29%) 
experience compliance with privacy legislation as one of the biggest obstacles, according to the 
Dutch  Doing  Business  in  Europe  survey.  The  fact  that  data  has  to  be  saved  locally  is  also 
considered a barrier to e-commerce by 13% of self-employed and 14% of SMEs. 

Studies  undertaken  by  the  Commission  (DG  CONNECT)  and  results  of  public  online 
consultations  conducted  in  2017  and  2018  showed  that  more  business-to-business  data  sharing 
would  be  beneficial  to  businesses,  and  that  trust,  legal  certainty  and  information  were  key 
components in any data-sharing situation. Almost half of responding companies using data have 
experienced some problems in accessing data held by others. Another survey showed that around 
40%  of  responding  SMEs  experienced  problems  with  accessing  relevant  data  from  another 
company. 

Analysis of the reported practical obstacles and barriers 

The  root causes originate  from  inadequate  implementation  of  EU  legislation,  EU  legislation 
leaving flexibility in  the  level of  harmonisation,  and  from  requirements  justified  by  public 
policy reasons. 

The  EU  has  put  in  place  key  regulatory  principles  for  cloud  services  providers  (the  GDPR, 
Regulation  on  Free  Flow  of  non-personal  Data,  NIS  Directive,  EU  Cybersecurity  Act)  and  has 
been working to develop European compliance tools to raise the level of security and trust. The 
GDPR  prohibits  restriction  the  free  movement  of  personal  data  within  the  Union  for  reasons 
connected  to  data  protection  (Article  1.1  GDPR).  The  Free  Flow  of  Non-Personal  Data 
Regulation  stipulates  that  data  localisation  restrictions  are  prohibited  except  if  justified  by 
reasons of public security. By 30 May 2021, Member States must repeal such restrictions.  

However, enforcement is insufficient. Awareness of the principle of free movement of data is 
low  among  public  authorities  (in  particular  at  regional  and  local  level)  and  businesses.  Some 
Member States still impose national data localisation requirements. Additionally, harmonisation 
in some areas is flexible. While the GDPR has done away to a large extent with the fragmented 
landscape that existed under the previous directive, it leaves some margins for national legislation 
to specify certain of its provisions (but not on the free flow of personal data). There also a lack of 
EU-level  data  governance  mechanisms  addressing  the  challenge  of  data  interoperability  within 
and between sectors. 

Apart from ensuring the free movement of personal data, the GDPR also pursues the protection 
of  natural  persons  with  regard  to  the  processing  of  their  personal  data.  The  right  to  data 
protection is a fundamental right enshrined in Article 8 of the EU Charter on Fundamental Rights 
and Article 16 of the Treaty on the Functioning of the EU (TFEU) provides the legal basis for the 
laying  down  of  rules  relating  to  the  protection  of  individuals  with  regard  to  the  processing  of 
personal data. 

In terms of current work, as part of the next Multiannual Financial Framework, the Commission 
has already proposed using funds from the Connecting Europe Facility 2 (EUR 420 million) and 
the  Digital  Europe  Programme  (EUR  220  million)  to  finance  the  interconnection  of  new  and 
existing  EU  cloud  infrastructures  and  to  deploy  pan-European  cloud  services.  Additional  on-

73 

 
going  work  includes  industry-led  codes  of  conduct  in  the  area  of  data  protection  and  data  and 
preparatory work for a European security certification scheme for cloud service providers. 

22. Obstacles to effective intellectual property rights protection 

Practical obstacles and barriers reported by businesses 

According  to  the  Dutch  Doing  Business  in  Europe  survey,  the  “use  of  intellectual  property  is 
difficult” according to 22% of self-employed in e-commerce in a cross-border context. According 
to  the  European  Union  Intellectual  Property  Office,  the  main  reason  for  not  registering 
intellectual property rights is a lack of knowledge about what intellectual property is and what its 
benefits are. The percentage giving this reason reaches 38% in 2019 (see graph). Indeed, 61% of 
non-owners  would  consider  registration  if they  had  a  better  understanding  of  IPRs.    Moreover, 
11% consider that the cost has a deterrent effect.   

According  to  the  2019  SME  Scoreboard  of  the  European  Union  Intellectual  Property  Office 
(EUIPO), some 55% of intellectual property right owners say that copying by competitors is the 
biggest threat to their IPRs in the coming year and 24% of SME IPR owners report they suffered 
infringement of their intellectual property rights.  

Available quantification 

IP-intensive  industries  currently  account  for  42%  of  EU  GDP,  for  93%  of  EU  exports  and  for 
28% of jobs in Europe113. 

Only 9% of SMEs have registered IP rights114.  

Today obtaining patent protection in the whole EU can cost up to EUR 36000 compared to USD 
2000 in the United States115.  

113 2019 Status Report on IPR infringement, European Observatory on Infringements of IPR, 2019 (p. 9). 

114 EUIPO, 2015, also quoted in High-growth firms and intellectual property rights, EUIPO-EPO, 2019 

74 

 
 
                                                      
According  to  the  European  Union  Intellectual  Property  Office  SME  Scoreboard  2019,  24%  of 
SMEs  have  suffered  from  an  intellectual  property  right  infringement  in  the  previous  3  years. 
Trademarks were the most infringed right (48%), followed by patents (24%). The most common 
impacts of IPR infringement were identified as loss of turnover (33%) and damage to reputation 
(27%). 

Analysis of the reported practical obstacles and barriers 

Today,  the  EU  has  already  a  strong  intellectual  property  framework  with  harmonised  national 
laws  for  copyright,  trademarks,  designs,  trade  secrets,  biotechnological  inventions  and 
supplementary  protection  certificates  (SPCs);  unitary  titles  for  trademarks,  designs  and  plant 
variety  rights;  a  common  regime  for  agricultural  and  food  geographical  indications;  and  a 
harmonised regime for civil law enforcement of IP rights. However, many single market barriers 
related to IP protection still remain, preventing businesses from grasping the full benefits of IP as 
a  tool  for  innovation,  creativity  and  growth.  These  barriers  can  be  mostly  explained  by  a 
regulatory choices in some areas and insufficient administrative capacity and practices.  

i) Fragmentation of intellectual property rights 

Today, EU law has already a strong IP framework, with harmonised national laws for copyright, 
trademarks,  designs,  trade  secrets,  biotechnological  inventions  and  supplementary  protection 
certificates  (SPCs);  unitary  titles  for  trademarks,  designs  and  plant  variety  rights;  a  common 
regime for agricultural and food geographical indications as well as a harmonised regime for civil 
law  enforcement  of  IP  rights.  Businesses  consider  these  rights  important  (see  table  below), 
according to the European Union Intellectual Property Office SME Scoreboard 2019. However, 
many  single  market  barriers  related  to  IP  protection  still  remain,  preventing  businesses  from 
grasping the full benefits of IP as a tool for innovation, creativity and growth. In some areas, IPR 
protection  remains  fragmented,  creating  information  gaps  for  SMEs  and  making  some 
registration procedures complex and costly. 

115 https://ec.europa.eu/commission/presscorner/detail/en/IP_11_470 Data gathered during preparatory 

works for Impact Assessment for the unitary patent package 

75 

 
 
 
 
                                                                                                                                                              
The  current  European  patent  system  is  complex,  fragmented  and  costly.  Currently,  in  the  EU 
patents can be obtained either by applying directly to national patent offices for patents that are 
only valid in the country concerned, or by applying to the European Patent Office (EPO) for a 
“European  patent”  which is a bundle of national patents with validation in each country where 
the applicant wishes to have protection. After granting, the enforcement of European patents is 
essentially  a  matter  of  national  law.  The  introduction  of  the  Unitary  Patent  System  (in 
ratification) will bring down costs for registration, translation and litigation significantly, but is 
still  not  a  reality.  On  Supplementary  Patent  Certificates  (SPCs)  we  are  confronted  with  each 
country  having  its  own  procedure  creating  different  levels  of  protection  and  an  absence  of 
transparency. This creates a serious single market barrier for the pharmaceutical sector.  

The first results of the ongoing evaluation of EU legislation on designs protections suggest that 
the current legal framework is not up to date with the digital age, lacks clarity and transparency, 
involves  unnecessary  administrative  burdens  for  obtaining  simple  and  fast  protection,  and 
contains significant gaps in protection hindering the effective fight against counterfeiting. There 
is  also  a  great  lack  of  consistency  between  national  laws  and  between  national  laws  and  EU 
legislation. In particular, the current EU legislation did not harmonise rules on visible spare parts 
protection,  allowing  Member  States  to  use  designs  protection  to  close  off  repairs  markets,  and 
causing  divergences  between  Member  States,  leading  to  single  market  barriers. This  is  notably 
the case of visible spare parts in the automotive sector, where the prices on the after-market tend 
to  be  lower  in  Member  States  that  no  longer  have  the  design  protection  rules  resulting  in 
increased competition. According to a French Competition Authority opinion from 2012, “these 
intellectual property rights, applied to spare parts, hamper the manufacturing and marketing in 
France  of  parts  not  produced  by the original equipment  manufacturer.  They  thus  confer to the 
original  equipment  manufacturer  a  legal  monopoly  that  concerns  70%  of  the  visible  parts 
market“. 

Although there are EU uniform regimes for the protection of geographical indications, for wines, 
spirits, foodstuffs and agricultural products, protection of non-agricultural products with special 
qualities  or  reputations  based  on  their  origin  such  as  “Solinger  knives”  or  “Murano  glass”  is 
fragmented in the Union. Certain Member States have either created national sui generis systems 
(e.g. FR, PL, PT, IT) or trademarks (e.g. DK) to protect such geographical indications.  

Intellectual property theft is a serious concern in all the Member States with counterfeit products 
found in a large and growing number of industries such as common consumer goods (e.g. health 
products,  food  and  drink,  cosmetic  toy,  textiles),  machines,  chemicals,  phones  and  batteries 
which  may  not  only  damage  brand  reputations  but  also  create  health  risks  within  the  single 
market. In this context, the IP Enforcement Directive116 has harmonised the measures, procedures 
and remedies used in civil law proceedings. The application of the Directive by national courts is 
however not uniform throughout the EU with considerable differences e.g. on the conditions for 
injunctions, the seizure of evidence, damages and legal costs.  

ii) Administrative practices of enforcement authorities 

There is also insufficient coordination and cooperation between national enforcement authorities, 
and  a  lack  of/fragmented  commitment  of  intermediaries  which  makes  the  enforcement  of 
intellectual property rights within the single market even more difficult. 

116 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the 

enforcement of intellectual property rights. OJ L 157,30.4.2004. 

76 

 
 
                                                      
Step 3a Additional steps for establishment: setting up a business activity in 

another Member State 

23. Hurdles to starting a business 

Practical obstacles and barriers reported by businesses  

Registration of business activity 

Businesses face difficulties when registering their business activity in other Member States, 
as information about procedures and requirements is not always easy to find. Many respondents 
to  the  survey  carried  out  by  some  chambers  of  commerce  and  other  business  organisations 
commented that there is a lot of red tape and unnecessary administration, which affects both local 
and  non-local  companies,  discouraging  market  integration.  The  type  of  information  made 
available,  as  well  as  the  way  it  is  made  available,  i.e.  whether  online  and  in  what  language, 
differs greatly between Member States. According to some business organisations for example, 
although national requirements may all be justified, the range and complexity are a challenge for 
companies. 

Businesses report that it is difficult to obtain a total overview of what to comply with, which 
procedures to follow, and which authorities to engage with in any given Member State. Existing 
information contact points/points of single contact do not cover the entire range of requirements 
and it is often impossible to get an over-all view of all contact points. It adds to the complexity, 
that  Member  States  often  revise  the  national  legislation  relevant  for  companies.  This  makes  it 
difficult to find both industry specific information and general information which applies to all 
enterprises  and  causes  delays  to  the  point  of  becoming  a  total  barrier  to  market  entry.  Similar 
experiences are reported by the DIHK 2019 survey.117 

Different requirements, including different time limits and legal fees are a significant barrier as 
well,  as  reported  by  several  business  organisations,  including  the  French  and  the  Czech.  They 
have reported, for instance, difficulties for laboratories in the pharmaceutical sector, to carry out 
requested tests. To be able to carry out the requested tests, a request for prior authorisation has to 
be made to the authorities of the home country; but for each test order, the laboratory must repeat 
the authorisation procedure - even for very small quantities.  

Market access controls in services 

Service providers often need to obtain a sector-specific licence, authorisation or certification in 
order to establish in another Member State and provide services there on a long term basis. On 
the one hand, obtaining such an authorisation requires service providers to comply with a number 
of  underlying  regulatory  conditions.  The  conditions  can  be  restrictive  and  difficult  to  meet  for 
them.  In  addition,  these  procedures  often  entail  a  large  amount  of  administrative  complexity, 
involving  for  example  heavy  paperwork  and  long  decision  periods  by  competent  authorities. 
These  issues  are  consistently  highlighted  by  stakeholders  as  important  obstacles,  for  example 
recently  in  surveys  by  the  Czech  Ministry  of  Industry  and  Trade,  the  Finish  Confederation  of 
Industries and Eurochambres.    

117 See also barrier 1 on “Insufficient information about business opportunities and partners”. 

77 

 
                                                      
Available quantification 

Registration of business activity 

6  out  of  11  business  organisations  (that  replied  to  a  Commission  survey)  reported  issues 
related  to  this  barrier.  27%  of  SMEs  operating  in  services  mention  “different  rules  for 
bookkeeping and administration” as a barrier, according to the Dutch Doing Business in Europe 
survey.  
According to the results of a 2016 public consultation118, the registration of business activity 
including  online  registration  of  a  company was  seen  as  the  most  important  procedure for 
businesses. This view is shared by 27% of respondents to the Doing Business report as well as by 
the contributions of 5 of the 9 chambers of commerce consulted as part of this study. Finally, the 
World  Bank  Group  Doing  Business  report  ranks  EU  Member  States  between  the  11th  and  the 
134th place out of 190 countries as regards the ease of doing business (which covers a number of 
procedures  including  company  registration,  minimum  capital  requirements,  tax  and  social 
security relevant registrations and licensing.  

Specifically  as  regards  registration  of  limited  liability  companies,  understood  as  creation  of  a 
company as a legal entity, the 2017 public consultation119, preparing the proposals for the 2018 
Company Law Package, showed strong support from business organisations (70%) and Member 
States  (64%)  for  the  introduction  of  new  rules  on  fully  online  registration  of  limited  liability 
companies and on fully online filing of company information in business registers. Currently, in 
more than half of Member States, there exists a fully online registration of companies but in other 
countries, it is still necessary to go in person to the authority/body responsible. The situation is 
similar as regards registration of branches. Applications for company registration made in person 
and  on  paper  are  generally  more  expensive  and  take  longer  to  process  than  electronic  ones, 
resulting in higher costs for companies120. 

Market access controls in services 

Sector-specific market controls in services are highlighted by businesses as a major obstacle. 
For example, “different national service rules” are highlighted as a significant or very significant 
obstacle to the single market by 81% of respondents to the Eurochambres 2019 survey who are 
active in the area of services. A survey by the Finnish Confederation of Industries showed that 
businesses  consider  among  the  top  five  barriers  differences  in  technical  and  regulatory 
requirements,  and  setting  up  a  legal  entity  including  obtaining  the  necessary  authorisations.  A 
survey  by  the  Czech  Ministry  of  Industry  and  Trade  highlighted  the  slow  process  of  obtaining 
authorisations  or  registrations  to  provide  services  as  one  of  the  major  obstacles.  A  recent 
assessment  shows  that  the  administrative  costs  created  by  national  regimes  for  sector-specific 
market access in the areas of regulated business services and construction services can amount to 
EUR 10,000 and more.121 

118 Commission staff working document - Synopsis report on the stakeholder consultation on the Single 

Digital Gateway, SWD(2017) 212 final, p.4. 

119 https://ec.europa.eu/info/consultations/eu-company-law-upgraded-rules-digital-solutions-and-efficient-

cross-border-operations-0_en 

120 Impact Assessment accompanying the proposal on the use of digital tools, SWD/2018/141 final, p. 16. 

121 Ecorys, “Administrative formalities and costs involved in accessing markets cross-border for provisions 
of accountancy, engineering and architecture services”, 2017; Ecorys, “Study on costs involved in 
accessing markets cross-border for provision of construction services”, 2018 

78 

 
                                                      
Analysis of the reported practical obstacles and barriers 

The  root  causes  originate  in  restrictive  national  rules,  limited  role  of  EU  legislation, 
inadequate implementation and transposition of EU legislation, administrative capacity and 
practices,  general  business  environments,  and  requirements  justified  by  public  policy 
reasons. 

Registration of business activity 

The  root  causes  originate  in  limited  EU  legislation,  administrative  implementation  issues, 
including  the lack  of administrative capacity  or the  use  of  divergent administrative  procedures, 
and  other  legitimate  policy  objectives  (e.g.  security,  anti-money  laundering,  etc.).  Recent 
initiatives should contribute to addressing this obstacle. 

As regards formation of limited liability companies, it is mostly a matter of national competence, 
with limited EU legislation.  

However, the fundamental freedoms enshrined in the Treaty apply in this sector too. Moreover, 
the Services Directive sets out a number of substantive and procedural rules regarding the setting 
up of a business. The recently adopted Directive (EU) 2019/1151 on the use of digital tools and 
processes,  which  followed  the  2017  public  consultation  mentioned  above,  will  enable 
entrepreneurs  to  set  up  new  companies  or  branches  fully  online  while  providing  for  strong 
security standards (allowing authorities to require physical presence in exceptional cases). These 
new  rules  are  expected  to  bring  important  cost  savings  and  efficiency  gains  for  companies,  in 
particular for SMEs as online procedures will be available in all Member States and companies 
will be able to use them not only at national level but also cross-border. This Directive will also 
require Member States to provide information online and free of charge on the  most important 
company law requirements, and will extend the company information available for free through a 
business  register  interconnection  system  (BRIS).  Both  will  lead  to  easier  EU-wide  access  to 
information about other companies, which is particularly important for SMEs. 

The  single  digital  gateway  (Regulation  (EU)  2018/1724)  aims  at  improving  the  access  for 
citizens and companies to information on national and EU rules, rights and procedures. As 
of December 2020, it will become the online access point for EU citizens and business in need of 
information  to  get  active  in  any  EU  Member  State.  It  will  provide  links  to  procedures  and 
assistance services, by signposting to the right national or local websites. All information will be 
available in  English. The  areas of information relevant  for  business  are the following:  starting, 
running  and  closing  a  business;  employees;  taxes;  goods;  services;  funding  a  business;  public 
contracts; and health and safety at work. 

Market access controls in services 

As regards market access controls in services, the main root causes seem to be related to lack of 
implementation  of  EU  legislation,  restrictive  national  rules  and  a  lack  of  cooperation 
between Member States. 

As  explained  in  the  Handbook  on  implementation  of  the  Services  Directive,  the  Services 
Directive  does  not  limit  itself  to  clarifying  and  systematizing  the  case  law  of  the  Court  of 
Justice  of  the  European  Union  about  freedom  of  establishment  and  freedom  to  provide 
services, which as such would already have had added value. It also provides for a sweeping 
modernisation reform of legislation and administration which the Member States are obliged to 
implement. This in particular facilitates the life of service providers, notably SMEs, who want 
to set up new or expand existing businesses or provide their services in other Member States 
on a temporary basis. Some important aspects of the Directive are as follows:  

  Administrative and legislative simplification and modernisation, including improving 

transparency and "slimming down" authorisation procedures;  

79 

 
  Set  up  one-stop  shops  for  service  providers  (so  called  "Points  of  Single  Contact") 
offering the possibility to complete formalities and procedures online at a distance; 

  Review and adaptation of the existing legal requirements applicable to services; 
  Elimination  of  national  legal  requirements  that  are  discriminatory,  unnecessary  or 

disproportionate; 

  Ensuring  that  undertakings  may  provide  their  services  cross-border  on  a  temporary 

basis; 

  Requiring  national  authorities  to  take  into  account  equivalent  controls  imposed  by 

other Member States for establishing service providers (‘mutual recognition’); 
  Prohibition of total bans on commercial communications by regulated professions; 
  Limits to restrictions to the exercise of multidisciplinary activities.  
 

In addition, the Services Directive also aims to strengthen cooperation by setting upa 
system  of  administrative  cooperation  among  national  authorities.  This  allows 
increasing  the  exchange  of  information  between  Member  States,  enabling  also  to 
supervise more effectively service providers across borders.   

Finally, the Services Directive improves the rights of service recipients, by providing inter alia 
for: 

  Non-discrimination against service recipients on the basis of their nationality or place 
of residence. This obligation of non-discrimination must be complied with by public 
administrations and by service providers.  

  Comprehensive information rights for service recipients. 

The  extent  of  implementation  of  the  above  provisions  has  been  very  different  across  Member 
States, resulting in a regulatory landscape that remains highly restrictive in many services sectors.  

For example as highlighted above, national competent authorities, when they apply their national 
requirements  on  establishing  service  providers,  should  take  into  account  equivalent  controls  to 
which the service provider was already subject in the same or another Member State. To facilitate 
the  application  of  this  mutual  recognition  principle,  the  Services  Directive  obliges  Member 
States  to  assist  each  other  and  to  exchange  information.  To  this  end,  the  Internal  Market 
Information system (IMI) offers a multilingual platform for electronic exchange of information 
between Member States. 

In practice, Member States do not consistently or fully implement and apply the provisions of the 
Services Directive as regards mutual recognition. In addition, there is also very limited exchange 
of  information  between  Member  States  in  the  IMI  system  on  questions  linked  to  the  Services 
Directive. As a result, national procedures often disregard requirements that the service provider 
already met in its home Member State. This leads to an unnecessary duplication of controls and 
complexities  for  service  providers  coming  from  other  Member  States,  who  are  disadvantaged 
compared to domestic operators. 

As  another  example,  the  Services  Directive  also  addresses  the  issue  of  administrative  burden 
faced by companies to comply with national requirements (as also highlighted above). It requires 
Member States to simplify administrative procedures and formalities for those services and areas 
of  regulation  in  scope.  Information  on  requirements  should  be  easily  accessible  and  service 
providers should be able to complete procedures at a distance and by electronic means (through 
the  national  "points  of  single  contact").  There  is  still  great  scope  for  improving  the 
implementation  also  of  these  provisions  by  Member  States.  Administrative  capacity  and  the 
dedication of national resources plays an important role in this regard. 

80 

 
 
Finally, in the context of the European Semester country specific recommendations addressed to 
Member  States  often  encourage  them  to  improve  their  business  environment  by  carrying  out 
structural  reforms  in  services  sectors.  In  general,  the  implementation  progress  of  the 
recommendations remains fairly limited.    

The  sectoral  sections  on  regulated  professions  (architects,  engineers,  patent/trademark  agents, 
legal services, etc.) provide concrete examples of the problems faced by those service providers 
when they want to establish their business in another Member State. 

Step 3b Additional steps for establishment: staffing 

24. Lack of skilled workers and limited worker mobility 

Practical obstacles and barriers reported by businesses  

Skills  shortages  affect  the  performance  of  the  single  market  and  its  ability  to  generate  quality 
jobs,  especially  as  technological  change,  digitalisation,  and  the  growth  of  the  service  sector  in 
recent  years  have  led  to  an  increased  demand  for  highly  skilled  workers.  The  lack  of  skilled 
workers, compounded by skills mismatches, has been a persistent problem over many years in the 
EU,  as  pointed  out  by  many  reports.  The  European  Centre  for  the  Development  of  Vocational 
Training  (CEDEFOP)  has  found  that  recruitment  difficulties  for  some  professions  may  be 
temporary, such as ICT developers and some occupations, primarily in the health sector.122 

Skills  shortages123  hinder  the  integration  of  the  single  market  as  they  may  impede  business 
models  successful  in  some  Member  State  from  expanding  across  the  single  market.  They  may 
also favour incumbents which were able to secure scarce talent before competitors. If companies 
end  up  hiring  under-qualified  people,  they  will  have  to  spend  money  and  time  to  train  them, 
which also slows the adoption of new technologies. SMEs face particular problems due to fewer 
resources  and  means  to  train  staff  and  often  cannot  match  salaries  paid  by  larger 
companies/public sector. 

This is supported by various reports. For example, the DIHK 2019 survey mentions “a shortage 
of qualified and unqualified workers” as an obstacle to business expansion. Similarly, the Czech 
Chamber of Commerce reports the “lack of skilled labour in some Member States” as a barrier. 

Available quantification 

The need for skilled workers is increasing everywhere, but shortages vary substantially between 
Member  States.  In  2018,  businesses  reporting  that  labour  shortages  are  a  factor  limiting  their 

122 CEDEFOP (2014) Skill mismatch: more than meets the eye 

123 The European Centre for the Development of Vocational Training (CEDEFOP) defines a skill shortage 
as a situation where the demand for skills exceeds supply at prevailing rate of pay and working 
conditions. This situation, is according to CEDEFOP, different from skills gaps or under-skilling, 
where individuals lack the skills and abilities necessary to perform the current job (as perceived by 
employees) or perform the job proficiently (as perceived by employers). See CEDEFOP (2018) 
Insights into skills shortages and skills mismatches. 

81 

 
                                                      
production  have  increased  in  all  Member  States  compared  to  2013,  with  peaks  in  Hungary 
(almost half) and Malta (close to 40%), three countries above 30% (Portugal, Sweden, Estonia) 
and ten countries between 20 and 30%. According to CEDEFOP, about “10% of firms find that 
their newly recruited university graduates lack the necessary skills”. 

According to the Hidden Treasures report, 38% of SMEs without exporting experience and 11% 
of SMEs with exporting experience mention the lack of specialised staff as a barrier to exporting 
to other EU Member States. 

Currently, over one third of the labour force does not have basic digital skills (whereas most jobs 
already  require  a  basic level  of digital  skills).  53%  of  companies have  difficulties  in recruiting 
digital experts and there are 1 million vacancies for ICT specialists in the EU. 

According  to  a  2019  European  Investment  Bank  Report  on  Investment  Barriers,  a  lack  of 
“availability of skilled staff” is perceived as a long-term barrier to investment by more than 70 % 
of respondents. 

Finally, 4 out of 11 business organisations that replied to a Commission survey reported issues 
related to this barrier. 

Analysis of the reported practical obstacles and barriers 

The shortages reflect a demand for skilled workers  – whose root cause is not linked to public 
policy – exceeding the supply for skilled workers. The responsibility to deal with skills shortages 
lays  primarily  with  Member  States.  This  is  an  area  where  there  is  limited  role  of  EU 
legislation124.  

Root cause not linked to public policy 

Many  EU  Member  States  today  are  experiencing  high  labour  shortages,  especially  of  skilled 
labour—though with significant differences between countries.  

The  first  root  cause  that  comes  to  mind  is  the  transformation  of  the  economy,  including  in 
particular  globalisation  and  digitalisation,  which  have  increased  the  need  for  highly  skilled 
workers.  

According to CEDEFOP, in many cases the root causes of recruitment difficulties reflect labour 
market friction such as low labour mobility, seasonal shifts in demand, for example in tourism, 
lack of information and wage rigidities.125 

Higher workforce mobility might reduce skills gaps to some extent. But factors limiting mobility 
are often not related to regulatory barriers. Rather, they are related to low motivation and limited 
benefit, in particular for highly skilled workers who are more likely to find good positions closer 
to home.  

No EU legislation on education and training systems, as it is a mostly national competence 

The other root cause for labour shortages is that there are not enough workers with the high-level 
skills  required.  A  skilled  workforce  is  the  result  of  good  education  and  training  systems  and 
appropriate participation of adult workers in continuing professional development. Education and 
training systems are mostly regulated at national level, as are the provision of continuing training 
opportunities and services for career guidance and validation of skills.  

124 In the context of the European Semester, the Union has made recommendations on national education 

and training policies 

125 CEDEFOP (2014) Skill mismatch: more than meets the eye 

82 

 
                                                      
However,  the  EU  has  set  up  initiatives  that  may  to  a  certain  extent  support  Member  States  in 
designing and implementing appropriate policies (for example, the EU directives on professional 
qualifications,  which  lay  down  inter  alia  education  and  training  requirements,  the  strategic 
framework  for  European  cooperation  in  Education  and  Training).  The  new  reinforced  Skills 
Agenda will give a new impetus to for re- and upskilling of the workforce in the context of the 
green, digital transitions and demographic changes, together with the accompanying Commission 
Proposal  for  a  Council  Recommendation  on  vocational  education  and  training  (VET).  The 
European Social Fund is a source of financial support for national and regional action to provide 
people with opportunities for training, guidance and validation. EU instruments such as Europass 
and  the  European  Qualifications  Framework  make  skills  and  qualifications  more  transparent 
throughout Europe, facilitating the matching of skills supply and demand. The EURES network 
also helps employers and jobseekers find each other in the European labour market.  

25. Difficulties in accessing a regulated profession 

Practical obstacles reported by businesses 

According to business associations, professionals moving from one Member State to another face 
obstacles relating  to the  recognition/exercise  of their professional  qualifications and/or  meeting 
other requirements to access a regulated profession. These are considered a barrier by 42.2% of 
respondents  to  the  Eurochambres  2019  survey.  Likewise,  the  Czech  Chamber  of  Commerce 
reports  that  “difficulties  in  the  recognition  of  professional  qualifications  and  meeting  other 
requirements  to  access  a  regulated  profession”  create  a  barrier.  In  addition,  the  DIHK  2019 
survey states that businesses report “inconsistent recognition of professional qualifications in the 
single market” despite EU-wide rules on the matter.  

Firstly,  sometimes  professionals  face  problems  with  obtaining  recognition  of  their  professional 
qualifications.  For  instance,  in  one  SOLVIT  case  an  electrician  with  30  years  of  professional 
experience,  of  which  more  than  10  years  in  a  self-employed  status,  was  told  his  academic 
qualifications were not equivalent to those required to practise as a registered electrician in the 
host  Member  State  and  he  therefore  had  to  take  an  additional  test  or  go  through  an  adaptation 
period.  However,  on  the  basis  of  his  professional  experience  in  his  home  country,  the  host 
Member  State  should  have  automatically  recognised  his  professional  qualifications  and  given 
him full access to the profession of registered electrician. 

Secondly, the process of getting a permission to exercise a professional service appears in some 
instances  as  slow  and  cumbersome.  According  to the  Dutch  Doing  Business  in Europe survey, 
20%  of  self-employed  entrepreneurs  working  in  services  consider  the  process  of  getting  a 
permission  for  the  execution  of  a  service  complex  or  slow. Three  SOLVIT  cases  can  illustrate 
this  obstacle  in  the  area  of  professional  services.  In  the  first  case,  a  physiotherapist  from  one 
Member  State  applied  for  professional  recognition  in  another  Member  State  but  had  still  not 
received  a  response  from  the  host  country’s  authorities  one  year  after  applying.  In  the  second 
case, a number of nurses from one Member State applied to have their professional qualifications 
recognised in a neighbouring Member State. However, the authorities of the host country did not 
respect the deadline of 3 months for replying to the application. Finally, in a third SOLVIT case, 
a boat charter business from one Member State sought to establish itself in another Member State 
and therefore needed to have a licence from that host Member State recognising the professional 
qualifications  of  one  of  the  company’s  boat  skippers.  However,  for  reasons  of  administrative 
backlog, the local competent authority indefinitely delayed issuing such a licence. 

83 

 
Thirdly,  sometimes  businesses  or  individuals  are  confronted  with  unnecessary  administrative 
burdens, such as excessive documentation and/or certification requirements, when they want to 
perform a professional activity abroad. For instance, tour guides from one Member State wishing 
to guide tourists in a neighbouring Member State have notified SOLVIT that the latter has been 
requesting certified translations of their professional qualifications. 

Fourthly, language requirements remain an obstacle to the execution of a profession in another 
country. While EU law allows countries to require that professionals have the necessary language 
skills to practice the profession in the host Member State, in some cases authorities go beyond 
what  is  allowed.  For  instance,  in  a  SOLVIT  case  concerning  a  carpenter  working  in  another 
country, the worker was told that to be entitled to full pay as a skilled carpenter, he needed a local 
language proficiency certificate, in spite of having already worked for over 10,000 hours in that 
country. Businesses report this as obstacles for them or individuals to work in different Member 
states.  

Available quantification 

The  number  of  regulated  professions  in  the  EU  is  considerably  high.  According  to  a  2017 
Commission  study,  22%  of  the  European  labour  force  is  directly  affected  by  professional 
regulation.  Higher  restrictions  also  impact  cross-border  mobility  by  imposing  significant 
costs on non-national workers. Depending on the profession and under certain assumptions on 
labour  demand  structure,  there  could  be  between  3%  and  9%  more  people  working  in  a  given 
profession in the EU if access requirements were less stringent126. 

Different  national  approaches  to  regulation  result  in  a  significant  divergence  in  the  level  and 
types  of  regulation.  Indeed,  the  professions  that  are  subject  to  regulation  differ  substantially 
across  Member  States.  Based  on  what  Member  States  notified  in  the  regulated  professions 
database,  there  were  over  5800  regulated  professions  across  the  EU  in  2019.  The  number  of 
regulated  professions  differ  greatly  across  Member  States,  ranging  from  Lithuania,  which 
reported 77, to Hungary with 533.  

As regards mobility of professionals, based on the information provided by the Member States, in 
the  period  between  1997  and  end  of  2019,  medical  doctors  and  nurses  were  the  top  two  most 
mobile regulated professions in the EU, with 154,863/149,307 decisions taken respectively on the 
recognition of professional qualifications for the purpose of permanent establishment within the 
EU, EEA and Switzerland127.  

In  the  Eurochambres  2019  survey,  “difficulties  in the  recognition  of  professional  qualifications 
and/or meeting other requirements to access a regulated profession” was marked as a barrier by 
42.2%  of  respondents.  Additionally,  4  out  of  11  business  organisations  (that  replied  to  a 
Commission survey) reported issues related to this barrier. 

Analysis of the reported practical obstacles and barriers 

This barrier originates in restrictive national rules as part of the general business environment 
in  Member  States.  While  there  might  be  valid  public  interest  reasons  to  regulate  certain 

126 Koumenta, M. and M. Pagliero (2016), "Measuring Prevalence and Labour Market Impacts of 
Occupational Regulation in the EU". See: http://ec.europa.eu/DocsRoom/documents/20362    

127 See information under “Ranking – the most mobile professions” in the Regulated professions database, 

available at: https://ec.europa.eu/growth/tools-databases/regprof/index.cfm.  

84 

 
                                                      
professions, these national rules restricting access to and exercise of professions across Member 
States  inevitably  creates  barriers  for  the  mobility  of  professionals  in  the  single  market. 
Substantial  divergence  as  regards  regulatory  approaches  (including  whether  to  regulate  a 
professional activity at all) and the extent and content of regulation in the Member States have a 
significant impact on cross-border establishment or provision of services.  

Two recent EU initiatives may address some of these issues.  

 

In 2017 the Commission issued a detailed guidance to Member States on reform needs in 
regulation of professional services for seven professions (architects, engineers, lawyers, 
patent  agents,  accountants/tax  advisors,  real  estate  agents  and  tourist  guides)  covering 
qualifications  as  well  as  other  access  and  exercise  requirements.128  Stronger  take-up  of 
these recommendations would reduce some of the problems experienced by businesses.   
  Furthermore, a Directive on a proportionality test before adoption of new regulation of 
professions  or  amending  the  existing  rules  was  adopted  in  July  2018  and  needs  to  be 
implemented by 31 July 2020.129 It requires Member States to undertake an assessment of 
proportionality  in  accordance  with  the  common  framework  laid  down  in  the  Directive 
before  they  introduce  new,  or  amend  existing,  legislative,  regulatory  or  administrative 
provisions restricting access to, or the pursuit of, regulated professions. This covers rules 
concerning  professional  qualifications  but  also  other  access  and  exercise  requirements. 
Such  a  better  ex  ante  assessment  of  national  legislation  should  help  to  prevent  new 
barriers from arising. 

In  addition,  reforms 
recommendations in the context of the European Semester. 

in  professional  services  are  also  part  of 

the  country-specific 

Inadequate  application  of  EU  legislation  and  general  business  environment  in  Member 
States. Additionally, Member States sometimes fail to correctly or timely deal with requests for 
recognition of qualifications. This might in some cases be related to a lack of staff or expertise at 
the national level. In addition, the document requirements, as well as requests for authentications, 
certified copies and certified translations of such documents, imposed by Member States often go 
beyond what is absolutely necessary and create additional red tape. 

The Services Directive has laid down a number of rules regarding market access, including for 
non-regulated professions (see above). Furthermore, the EU has put in place measures concerning 
the recognition of professional qualifications, notably through the Directive on the recognition of 
professional  qualifications  (2005/36/EC)  which  was  reviewed  in  2013,  and  through  sectoral 
legislation.  

Directive  2005/36/EC  lays  out  the  principles  of  cross-border  mutual  recognition  of 
professional qualifications in the EU  and harmonises minimum training requirements for seven 
sectoral  professions  (doctors,  general  care  nurses,  midwives,  dentists,  pharmacists, 
veterinarians and architects) . In addition, it contains specific rules dealing with professionals 
who  want  to  provide  services  in  another  country  on  a  temporary  or  occasional  basis.  For 
professionals  wanting  to  establish  abroad,  Directive  2005/36/EC  provides  three  routes  of 
recognition of professional qualifications, namely automatic recognition for the seven professions 
with harmonised minimum training, automatic recognition based on professional experience, and 
a  general  system  for  all  other  professions.  For  certain  specific  professional  services,  further 
information is provided in the sector-specific fiches. 

128 Communication on reform recommendations for regulation in professional services, COM(2016) 820 

final 

129 Directive (EU) 2018/958 of the European Parliament and of the Council of 28 June 2018 on a 

proportionality test before adoption of new regulation of professions, OJ L 173, 9.7.2018, p. 25 

85 

 
                                                      
Certain  professions  such  as  lawyers,  sailors,  air  traffic  controllers,  train  drivers,  insurance 
intermediaries,  and  professionals  dealing  with  toxic  products  are  governed  by  specific 
legislation and the recognition procedures, under Directive 2005/36/EC will not always apply to 
them.  

Under  the  general  recognition  regime,  access  to  regulated  professions  is  granted  to  any 
individual who can demonstrate that he/she is fully qualified in his home country. Only in cases 
where  an  individual's  qualifications  differ  substantially  (i.e.  where  his  training  covered 
substantially  different  matters)  from  those  of  the  host  country  or,  in  case  the  profession  is  not 
regulated in the home country, where the individual has not worked full-time for one year in that 
profession, compensatory measures may be imposed to make up for the disparity. In such a case 
the  Directive  allows  citizens  to  choose  between  a  period  of  supervised  practice  ("adaptation 
period")  and  an  aptitude  test.  Successful  completion  of  either  ought  to  grant  an  individual  full 
access  to  his/her  field.  The  need  to  fulfil  such  compensation  measures  can  of  course  create  a 
significant obstacle to the free movement of professionals who want to establish abroad. 

There  are  additional  instruments  in  place  to  simplify  the  process  of  having  one’s  professional 
qualifications  recognized.  The  European  Professional  Card  is  an  electronic  certificate, 
currently  available  for  general  care  nurses,  pharmacists,  physiotherapists, mountain  guides 
and  real  estate  agents.  The  card  simplifies  the  recognition  process  and  introduces  efficiencies 
that  benefits  both  professionals  and  competent  authorities,  without  replacing  the  traditional 
recognition procedures. It is available since 2016.  

Information about European rules on the recognition of professional qualifications is available on 
the  Commission online portal  Your  Europe.  National  information  will  be  available through  the 
Single Digital gateway, also in languages understood by cross-border users (e.g., English), at the 
end of 2020. Points of Single Contact are foreseen in the Services Directive and the Professional 
Qualifications Directive (see above).  

As far as language requirements are concerned, the revised Professional Qualifications Directive 
codifies  and  develops  the  already  existing  case  law  whereby  language  requirements  must  be 
justified and proportionate and the checking of the language knowledge of a professional should 
take  place  only  after  the  host  Member  State  has  recognised  the  qualification  but  it  might 
intervene  before  the  professional  accesses  the  profession.  In  the  case  of  professions  with 
implications for patient safety, competent authorities may carry out systematic language controls, 
in compliance with EU law and the principle of proportionality. In other cases, language control 
can  intervene  only  if  the  competent  authority  has  a  serious  and  concrete  doubt  regarding  the 
language knowledge of the professional. In any case, language control should be limited to the 
knowledge of one official or administrative language of the host Member State. 

26. Complex, burdensome and/or uneven labour and social regulations 

Practical obstacles and barriers reported by businesses  

Companies  often  quote  complex  and  different  labour  and  social  regulations  across  the  single 
market,  and  the  lack  of  information  about  these  regulations,  as  practical  obstacles  to  doing 
business across the single market. The practical obstacles fall into three categories: i) the lack of 
clarity or information on requirements related to labour and social regulations; ii) the associated 
(administrative)  burden;  iii)  differences  in  labour  and  social  regulations,  creating  an  uneven 
playing field. 

i) Testimonies about the lack of clarity or information on requirements 

86 

 
According  to  the  Confederation  of  Swedish  Enterprise,  companies  perceive  the  procedures  to 
provide cross-border services to be unclear and burdensome. This is especially the case for SMEs 
in the construction sector. In this sector in particular, it may be challenging to “examine specific 
national/local  labour  market  regulations  […]  and  collective  bargaining  agreements”.  These 
include  working  hours,  minimum  wages,  or  documentation  to  be  held  ready  for  inspection  on 
site. 

Similarly,  the  Confederation  of  Finnish  Industries  states  that  businesses  report that information 
on social security in other Member States is difficult to understand. 

ii) Testimonies about complexity and associated administrative burden 

Businesses  report  complexity  and  the  associated  burden  of  complying  with  various  labour 
organisations  across  the  single  market.  The  most  affected  are  those  businesses  trying  to  do 
business  across  the  single  market,  which  is  typically  the  case  for  businesses  that  are  either 
expanding or are less familiar with domestic labour regulation. The additional resources needed 
to find basic information may discourage businesses from expanding across the single market.  

The Confederation of Swedish Enterprise states that “the past five years have seen many new and 
different  country-specific  rules  that  require  increased  administration  and  thus  raise  costs  for 
European  bus  companies  operating  throughout  Europe.”  These  include  new  minimum  wage 
regulations and the necessity to carry Member State-specific documents. It adds that "bus drivers 
providing  winter  holiday  travels  to  another  country  are  forced  to  adapt  to  “extremely  complex 
rules and documentation requirements that in many cases [were] not possible to submit in such a 
short time”. 

The Dutch Doing Business in Europe survey quotes multiple and complex requirements, which 
differ from country to country and can concern: employment contract rules, applicable collective 
bargaining agreements, employees registration with the relevant organisations for social benefits 
(in some countries, by the employer), duty for the employer to check employees registration with 
the tax authorities, mandatory employee health checks, regulation of the insurance of employees 
and implications for the employment contracts or tax returns, etc.  

The Maltese  Chamber  of  Commerce  reports  that,  according  to  some  companies,  there  are  “too 
many  regulations  related  to  employing  people”.  For  example,  they  state  that  “registration  of 
employees in Malta should be more efficient, and clearer guidelines to the implications of labour 
laws and employment tax”. 

These regulatory complexities and their associated administrative burden may indeed affect both 
national and foreign businesses. However, foreign businesses trying to enter the markets are more 
affected than established incumbents.  

3) Testimonies about differences in labour and social regulations, including their implementation 

The Confederation of Finnish Industries reports that regulations against social dumping […] are 
not  sufficiently  harmonised.  It  also  reports  that  failure  to  enforce  regulations  distorts  the  level 
playing field. 

Similarly,  the  Confederation  of  Danish  Industry  states  that  “[depending]  on  the  nature  of  the 
service […], service providers must register with various authorities and provide documentation 
of  for  example  authorisations,  the  company’s  eligibility,  workers  qualifications,  remuneration, 
social security etc.“ They add that “[although] these requirements may all be justified, the range 
and complexity are a challenge for companies”. 

The French Chamber of Commerce and Industry states that “a lack of (social) tax harmonisation 
leads  to  labour  costs  competition  and  social  dumping  between  EU  members  particularly  with 
Central and Eastern European Countries.” 

87 

 
 
The Austrian Chamber of Commerce reports that “restrictions on employment flexibility create a 
barrier,  affecting  particularly  the  temporary  employment  of  students,  apprentices  and  skilled 
workers”. It adds as example that projects under Erasmus+ and Mobilise SMEs are “hindered by 
rigid national employment laws, i.e. the administrative burden and legal uncertainties are too big 
so that many SMEs are reluctant to participate”.  

Finally, the Maltese Chamber of Commerce reports that businesses consider there to be too may 
“variances in tax and social security contributions”. 

Available quantification 

According to a 2019 European Investment Bank Report on Investment Barriers, “Labour market 
regulations” are perceived as a long-term barrier to investment by 60% of respondents130. 

4 out of 11 business organisations that replied to a Commission survey reported issues related to 
this barrier. 

Analysis of the reported practical obstacles and barriers 

All three problems identified by businesses stem from requirements justified for public policy 
reasons,  limited  role  of  EU  legislation,  and  inadequate  implementation  by  national 
authorities.  

Different legitimate policy objectives 

Labour and social regulations pursue legitimate policy objectives, essentially protecting rights of 
workers,  even  if  in  some  cases  at  the  cost  of  some  burden,  complexity  and  obligations  for 
businesses.  Indeed,  EU  labour  law  and  rules  on  health  and  safety  at  work  are  one  of  the 
foundations of the single market. The free flow of goods, services, capital and workers needs to 
be accompanied by labour law social rules, to make sure that countries and businesses compete 
fairly on the strength of their products – not by lowering social standards. 

With  over  240  million  workers  in  the  European  Union,  EU  labour  law  directly  benefits  large 
numbers of people, EU labour law and rules on health and safety at work also benefit employers 
and society as a whole by: 

  providing a clear framework of rights and obligations in the workplace; 

 

setting a general framework for information and consultation of workers, hence allowing 
for effective anticipation of change and smooth industrial relations in companies; 

  protecting  the  health  of  the  workforce,  thus  allowing  for  longer  and  more  productive 

working lives, also alleviating social security costs; 

  promoting sustainable economic growth and a level playing field across the EU. 

At the same time, the rules laid down in EU law (e.g. the posting of workers Directive and the 
Enforcement Directive) must be complied with. Equally, the rules laid down in the Treaty (such 
as  the  free  movement  of  services)  and  the  general  principles  of  EU  law  (such  as  non-
discrimination and proportionality) must be upheld.  

Primarily a competence of the Member States 

130 The reports builds particularly on the results from the annual EIB Investment Survey (EIBIS), which 

covers some 12 000 businesses across the EU. 

88 

 
                                                      
Labour  and  social  regulations  are  primarily  laid  down  in  Member  States’  rules.  EU  legislation 
sets minimum standards in many areas. Member States however can go beyond these minimum 
standards  and,  furthermore,  regulate  those  areas  where  the  EU  has  no  competence  to  act.  This 
may result in different social and labour market rights, obligations, systems, procedures, etc.  

Even where restrictive rules are justified and proportionate, diversity may cause complexity and 
burden  for  businesses  operating  across  the  single  market.  Applying  different  wages  and  social 
protection rules to different categories of workers may also tilt the playing field for businesses 
competing  across  the  single  market.  Moreover,  it  can  also  create  incentives  for  businesses 
seeking  to  gain  a  competitive  advantage  from  such  differences,  for  instance  by  temporarily 
offering  their  services  in  foreign  countries  –  and/or  relocating  production  there.  This  practice, 
which  is  often  described  as  ‘social  dumping’  and  is  partly  related  to  the  debate  on  posting  of 
workers, reflects the fact that labour and more in general living standards are different within the 
EU. If not accompanied by proper measures at EU and national level, this may create the risk of 
downward  pressure  on social  conditions. Moreover,  it  is  essential to  ensure the  comprehensive 
and  effective  enforcement  of  justified  and  proportionate  labour  rules  in  the  EU.  By  setting 
minimum standards, the EU promotes more homogeneous rules and standards across the single 
market. The European social market economy allows the economy to grow and reduces poverty 
and inequality. The European Pillar of Social Rights, fostering equal opportunities and access to 
the labour market, fair working conditions and social protection and inclusion, actively promotes 
upward convergence between Member States, social fairness and prosperity. The implementation 
of the Pillar is supported by a social scoreboard, also integrated into the European Semester. 

Suboptimal administrative implementation  

Finally, the administrative implementation of labour and social regulations sometimes does not 
successfully  minimise  the burden  on  businesses. This  may  create  uneven access  to  information 
and  a  high  burden  to  comply  with  social  and  labour  regulations.  Information  about  European 
rules  on  terms  of  employment,  social  security  rights  and  obligations  is  available  on  the 
Commission  portal  Your  Europe.  National  information  will  be  available  through  the  Single 
Digital Gateway, also in languages understood by cross-border users (e.g., English), by the end of 
2020.  

Step 3c Additional steps for establishment: sourcing and supplies 

Our sources did not report major barriers in this business journey step. 

Step 3d Additional steps for establishment: investing and financing 

27. Obtaining finance for operations in another country of the single market 

Practical obstacles and barriers reported by businesses  

A  number  of  businesses  experience  difficulties  in  finding  funding  for  their  operations  or 
subsidiaries in another Member State. While access to finance has improved on average in recent 
years, it remains problematic in some Member States (see below). Access to finance is typically 
more challenging for SMEs.  

89 

 
This  is  even  more  true  for  risk  capital,  which  continues  to  be  scarce  for  high-growth  SMEs. 
Venture capital raised in Europe is about one fifth of the amount raised in the US131 and the EU 
venture capital funds are more shallow in volume. Indeed, in 2018 venture capital funds in the 
EU had an average size of around EUR 56 million whereas in the US they were on average three 
times  bigger132.  There  are  significant  differences  between  Member  States  in  their  access  to 
venture capital. 

This is  echoed  by  business  organisations.  For  instance,  the  French  Chamber  of Commerce  and 
Industry mentioned that innovative start-ups have difficulties in finding private financing. 

The  difficulty  in  accessing  funding  affects  both  domestic  and  non-domestic  businesses  alike. 
However,  it  would  affect  disproportionately  those  businesses  that  are  trying  to  expand  in  the 
markets with limited access to capital, compared to already established businesses.  

Businesses  also  reported  that  ‘mother  companies  in  their  home  country  cannot  always  transfer 
financial  resources  to  their  subsidiaries  located  in  another  country.  In  addition  and  as  a  result, 
financial products such as guarantees and loans of the parent company cannot be transferred and 
must be re-engineered’.  

Available quantification 

3 out of 11 business organisations that replied to a Commission survey reported issues related to 
this barrier. The European Central Bank’s 2019 Survey on the access to finance of enterprises133 
found that 7% of surveyed businesses134 report access to finance as their most important concern. 
While  this  has  improved  on  average  over  time  (from  14%  in  2014),  access  to  finance  is  more 
acute in some Member States. 

Analysis of the reported practical obstacles and barriers 

The  root  cause  of  the  difficult  access  to  finance  in  some  countries  is  a  combination  of 
macroeconomic and financial causes not linked to public policy, and of the limited role of EU 
legislation, in particular relating to the Economic and Monetary Union.  

Root causes not originating in public policy: Macroeconomic and financial causes 

The  recent  financial  crises  triggered  diverging  access  to  finance  across  Member  States,  in 
particular  within  the  Euro  Area.  While  this  improved  in  recent  years,  differences  remain.  The 
root causes relate to the historical macro-economic context (the emergence of the global financial 
crisis) and the interdependency of sovereign debt and national banking systems.  

EU legislation: Incomplete Economic and Monetary Union 

The  architecture  of  the  Economic  and  Monetary  Union,  including  the  fragmentation  of  capital 
markets  and  banking  supervision  and  resolution  authorities,  lacked  crucial  elements  to  face  a 
major financial, economic and sovereign debt crisis.  

131 European Commission (2018). 

132 European Commission 2018 https://ec.europa.eu/commission/presscorner/detail/en/MEMO_18_2764  

133 European Central Bank, Survey on the access to finance of enterprises, 2019. Accessible on 

https://www.ecb.europa.eu/stats/ecb_surveys/safe/html/index.en.html  

134 The total euro area sample size was 11,204 enterprises, of which 10,241 (91%) had fewer than 250 

employees. 

90 

 
                                                      
To  address  these  challenges,  the  European  Commission  launched  the  agenda  to  complete  the 
Economic  and  Monetary  Union,  including  the  Banking  Union  and  the  Capital  Markets  Union. 
The results achieved over recent years are noteworthy, both from an institutional and economic 
perspective.  

Nevertheless,  important  elements  are  still  missing  in  the  overall  construction  of  Europe’s 
Economic  and  Monetary  Union.  The  Commission  Communication  ‘Deepening  Europe's 
Economic Monetary Union: Taking stock four years after the Five Presidents' Report’ sets out the 
challenges still to be addressed.  

The root causes of the business difficulties in effectively executing cross-border transfers of loans 
and guarantees from parent companies to their subsidiaries relate to the way banks perceive the 
credit risk and structure their exposure across the legal entities of their business clients. This in 
turn relates to a wide scope of factors not originating in public policy and others relating to EU 
legislation.  

Root causes not originating in public policy 

The root causes not originating in public policy include the location of the collateral, which may 
not  be  the  same  as  the  location  of  the  loan.  In  this  respect,  real  estate  is  a  typical  example  of 
collateral, for which local knowledge is essential to understand its value over time.  

Among  root  causes  can  also  be  mentioned  the  lack  of  a  letter  of  comfort  from  the  parent 
company to the subsidiary, the insufficient level of available credit information for the subsidiary 
in the host Member State (see obstacle ‘Insufficient credit information’), the fragmentation of EU 
capital  markets  along  the  national  lines  and  the  lack  of  data  interconnectivity  in  the  banking 
sector.  

EU legislation: no harmonisation of some accounting rules 

Different national rules with respect to accounting rules leads to diverging assessment of risk and 
legal structuring of exposure across jurisdictions.  

28. Restrictions on corporate ownership 

Practical obstacles and barriers reported by businesses  

Businesses suffer from significant restrictions as regards their shareholder structures and 
the  allocation  of  their  voting  rights.  Member  States  impose  such  restrictions  on  service 
providers  across  a  range  of  sectors.  For  instance,  a  company  can  only  be  established  if  the 
shareholder  belongs  to  a  particular  profession  or  if  the  voting  rights  are  allocated  among  the 
shareholders in a constraining way.  It is also sometimes required that the shareholders must be 
resident in the country in question or have a certain diploma. 

These  restrictions  potentially  entail  serious  obstacles  for  service  providers  that  want  to 
become active cross-border, given that such restrictions are likely to oblige them to change their 
shareholding  structure  or  even  their  overall  business  model.  This  can  lead  to  a  de  facto 
prohibition of entry as companies would be forced to change their corporate structure or even to 
replace shareholders by others in order to establish in another Member State. 

91 

 
 
Available quantification 

According  to  the  Dutch  Doing  Business  in  Europe  survey,  22%  of  respondents  in  service 
sectors report that establishment is difficult due to local ownership and local management rules. 
The  prevalence  of  national  requirements  on  shareholding  has  also  been  flagged  by  the 
Commission  on  several  occasions,  including  for  example  as  part  of  the  recent  indicator  on  the 
restrictiveness of professional services regulation.135  

Analysis of the reported practical obstacles and barriers 

The root cause relates to the restrictive national rules (and limited role of EU legislation) and 
inadequate implementation of EU legislation by Member States. 

Corporate  law  is  partly  a  national  competence.  However,  given  that  some  corporate 
requirements  can  affect  freedom  of  establishment,  the  freedom  to  provide  services  or  the  free 
movement  of  capital,  the Treaty  provisions  apply.  Moreover,  to  the  extent  that  the  matter  falls 
into  its  ambit  of  application,  the  Services  Directive  (2006/123/EC)  obliges  Member  States  to 
eliminate national requirements that are discriminatory, not justified by an overriding reason of 
public interest or disproportionate. The Directive clearly bans a number of specific national rules, 
such  as  the  obligation  to  establish  or  the  economic  needs  test,  and  also  discriminatory 
requirements  based  directly  or  indirectly  on  nationality,  including  nationality  requirements  of 
shareholders.  For  other  requirements,  Member  States  have  the  responsibility  to  evaluate  their 
necessity and proportionality, and to notify them to the Commission, which may adopt decisions 
pursuant to Art. 15(7) Services Directive. In any event, a judicial control of national measures is 
provided  for.  Requirements  which  must  be  notified  and  assessed  include,  for  example,  non-
discriminatory requirements on the shareholding structure of the company. The implementation 
of  the  Services  Directive  by  Member  States  still  leaves  large  unexploited  potential.  Currently, 
there  is  still  a  significant  regulatory  divergence,  with  some  Member  States  imposing  heavy 
requirements on corporate ownership while others imposing few or no similar conditions. 

In addition, a Directive on a proportionality test before adoption of new regulation of professions 
or  amending  the  existing  rules  was  adopted  in  July  2018136.  The  Directive  also  lay  down  a 
common  framework  that  Member  States  must  use  to  assess  proportionality  before  introducing 
new, or amend existing, legislative, regulatory or administrative provisions restricting access to, 
or the pursuit of, regulated professions. This also covers rules restrictions on corporate ownership 
in  regulated  professions.  Reforms  in  professional  services  are  also  part  of  the  country-specific 
recommendations in the context of the European Semester. 

29. Insufficient credit information 

Practical obstacles and barriers reported by businesses  

Insufficient credit information is an issue for many SMEs when applying for loans, even in their 
home  Member  States.  They  sometimes  lack  track  record,  or  producing  credit  information  can 

135 See SWD(2016) 436 final 

136 Directive (EU) 2018/958 of the European Parliament and of the Council of 28 June 2018 on a 

proportionality test before adoption of new regulation of professions, OJ L 173, 9.7.2018, p. 25 

92 

 
                                                      
entail high cost (for instance receiving a rating from a credit rating agency). To make things more 
difficult,  a  large  number  of  companies  state  that  they  “do  not  feel  confident  negotiating”  with 
banks  and  even  fewer  with  equity  investors  and  venture  capital  firms.  The  problem  becomes 
exacerbated when a company tries to obtain credit in another Member States. 

This challenge extends to businesses that would like to assess the credit risk of potential business 
the  single  market.  The  Confederation  of  Finnish  Industries  flagged 
partners  across 
creditworthiness assessments as an issue. According to a respondent to their survey, “the current 
commercial  credit  assessment  and insurance  companies  do  not  cover  the full  EU,  especially  in 
the Eastern Europe.”  

Available quantification 

In  the  Eurochambres  2019  survey,  “insufficient  legal/financial  information  about  potential 
business  partners  in  other  countries”  was  reported  by  58.9%  of  respondents.  This  makes  it  the 
eight most important obstacle.  

Analysis of the reported practical obstacles and barriers 

The  root  causes  are  not  linked  to  public  policy.  Credit  assessments  are  an  essential  and 
necessary  step  to  providing  credit,  either  by  banks  or  by  businesses  for  their  potential  trade 
partners. These credit assessments require the availability of information and entail costs on the 
side of the borrower and lender (or external credit rating agency).  

When asked to provide credit to a (small) business in another Member States, banks might find it 
even  more  difficult  to  assess  the  creditworthiness.  Indeed  credit  information  varies  widely  in 
different Member States in terms of what information is shared, by whom, how it is shared and 
who has access to it. 

Nevertheless,  as  part  of  the  Capital  Markets  Union  action  plan,  the  Commission  has  taken 
forward  a  comprehensive  strategy  to  overcome  information  barriers  that  prevent  SMEs  and 
prospective investors from identifying funding or investment opportunities. The Commission has 
particularly worked with European banking federations and business organisations on structuring 
the  feedback  given  by  banks  to  declined  SME  credit  applications.  This  European  initiative 
consists  of  a  set  of  principles  put  forward  in June  2017  and  agreed  by  the  banking  industry  to 
help SMEs understand the reasons for the credit application being refused. The Commission has 
also mapped existing local or national support and advisory capacities across the EU in order to 
promote best practices on assisting SMEs, which could benefit from alternative funding options. 

93 

 
Step 3d Additional steps for establishment: taxes, subsidies and other public help 

30. National tax exemptions for direct taxes, subsidies, and financial 

contribution requirements 

Practical obstacles and barriers reported by businesses 

Conditions for tax exemptions and R&D subsidies can be specific to a region or a Member State. 
Similarly,  requirements  for  financial  contributions  for  media  service  providers  are  also  often 
specific to a Member State. This may tie a business to a specific location and create a barrier for 
those businesses who wish to expand to another Member State. 

Additionally, in many Member States, there are barriers to cross-border flows of R&D subsidies 
(and sometimes even preferential access to subsidies for local providers of R&D services). While 
some EU-funded projects can be transferred to another country, many nationally funded projects 
cannot. Direct and indirect public support for R&D also differs significantly, and the use of non-
transferable  R&D  tax  incentives  is  increasing.  This  distorts  the  R&D  landscape  in  the  single 
market. 

Finally,  cross-border  media  service  providers  may  be  subject  to  different  national  financial 
contribution obligations for the production of European works. These obligations depend on the 
Member States where the services are provided or on the markets which are being targeted. These 
differences in conditions can cause fragmentation of the single market for linear and on-demand 
services. 

Available quantification 

As  mentioned  in  the  barrier  on  burdensome  procedures,  due  to  differences  in  tax  systems  and 
administrations,  according  to  Annual  Report  on  European  SMEs  2017/2018,  “dealing  with 
foreign taxation issues is too complicated” for 63% of SMEs. This discourages them from trading 
cross-border and prevents growth (evidence suggests that only about 15% of SMEs trade cross-
border).137 

More than one fifth of all TV channels (917, or 21%) and over a third (306, or 36%) of paid on-
demand services based in the 28 Member States (including the United Kingdom) were targeting 
other EU-28 markets.138 In one impact assessment, the cost of moving to a targeted Member State 
in terms of the financial contributions related to the promotion of European works was between 
EUR 5.8 and 8.2 million. These were estimated for Netflix and iTunes based on their turnover in 
five Member States (Spain, United Kingdom, France, Italy and Germany).139 

137 Data based on an Directive 2006/112/EC Amendment Impact Assessment 

(https://ec.europa.eu/taxation_customs/sites/taxation/files/18012018_impactassessment_vat_smes_en.
pdf) and 

Special scheme for small enterprises under the VAT Directive 2006/112/EC 

(https://ec.europa.eu/taxation_customs/business/vat/vat-reports-published_en).  

138 https://rm.coe.int/audiovisual-media-services-in-europe-market-insights/16809816d1 

139 In the impact assessment accompanying the Audiovisual Media Services Directive proposal. 

94 

 
                                                      
The  paid  video-on-demand  market  is  growing  fast  (44%  on  average  since  2012)140.    Several 
Member  States  have  adopted  or  are  considering  adopting  financial  obligations  for  the  cross-
border  production  of  European  works.  Their  number  is  likely  to  increase  due  to  the  provision 
recently  introduced  in  Audiovisual  Media  Services  Directive  which  allows  Member  States  to 
impose these obligations under certain conditions.  

Analysis of the reported practical obstacles and barriers 

This perceived barrier is linked to limited role of EU legislation, and requirements justified by 
public policy reasons.  

Due to minimum harmonisation, taxpayers (e.g. businesses, investors, workers etc.) with cross-
border activity have to comply with up to 27 divergent tax systems. This first leads to difficulties 
in finding information about the VAT rates applicable in different Member States.141 Similarly, 
barriers in R&I direct and indirect subsidies are caused by policy discrepancies between Member 
States and a lack of EU policy that would decrease unfair incentives. 

The recently adopted Audiovisual Media Services Directive clarifies the possibility for Member 
States  to  impose  financial  contributions  (direct  investments  or  levies  payable  to  a  fund)  upon 
media service providers. This includes providers established in a different Member State that are 
targeting the Member State’s audiences. These measures would be voluntary, and Member States 
would  need  to  comply  with  the  principle  of  non-discrimination  and  proportionality.  The 
Audiovisual Media Services Directive also clarifies that the measures can only be imposed on the 
revenues generated in the targeted Member States and that there can be no double imposition. 

The  objective  of  cultural  diversity  (including  linguistic  diversity  and  favouring  of  independent 
productions)  can  constitute  an  objective  of  general  public  interest  that  justifies  barriers  to  free 
movement. This includes financial contributions to the production of European works applicable 
to  providers  established  in  another  Member  State  (provided  that  the  measures  are  non-
discriminatory and proportionate).  

Finally, as regards subsidies more generally, it should be recalled that in the EU, national State 
aid may be awarded only if it is authorised in advance by the Commission or it is compatible with 
a State aid exemption Regulation.  

140 European Audiovisual Observatory, Yearbook 2018/2019 Key Trends, Strasbourg 2019 

141 https://op.europa.eu/en/publication-detail/-/publication/0ed32649-fe8e-11e8-a96d-

01aa75ed71a1/language-en  

95 

 
 
                                                      
Throughout the business journey 

31. 

 Language 

Practical obstacles and barriers reported by businesses  

Language can be an obstacle throughout a business journey, adding an extra burden to many of 
the barriers listed earlier in this report. To relate this obstacle to the single market, it is helpful to 
differentiate  i)  the  effects  of  language  on  the  competitive  playing  field,  ii)  the  availability  of 
information on regulatory requirements in several languages, and iii) rules requiring the use of a 
particular  language  (or  prohibiting  the  use  of  other  languages)  for  private  service  or  good 
markets.  

First, the lack of language skills can put a company into a competitive disadvantage ((i) above). 
For example the DIHK 2019 survey states that “companies that do not have personnel with the 
corresponding  foreign  language  skills  are  often  faced  with  a  great  challenge”.  Similarly,  the 
Confederation of Finnish Industries lists “staffing: lack of language skills” as a barrier. 

Secondly, information on regulatory requirements may not be available in foreign languages ((ii) 
above). This barrier is reported extensively by many chambers of commerce and other business 
organisations. For instance, the  Dutch Doing Business in Europe survey states that “information 
about  obligations  in  other  Member  States  is  difficult  or  impossible  to  find,  [which]  makes  it 
considerably more difficult for entrepreneurs to comply with the rules,” listing language as one of 
the major barriers. The report also states that “tendering across the border remains difficult. The 
procedures are complex and the language barrier remains an obstacle.” 

According to the DIHK 2019 survey, obtaining information in a foreign language and translation 
of  documents  are  “a  major  effort  for  companies,  especially  for  SMEs  [because  information], 
regulations,  collective  agreements  […]  are  often  only  available  in  national  language”.  The 
Confederation of Finnish Industries states that the importance of language barriers is “9 [on] the 
scale of 1 to 10.” 

The Austrian Chamber of Commerce mentions that official websites are “often not available in 
English”, while the Czech Chamber of Commerce states that “72 % of companies are calling for 
an  operational  single  digital  gateway—online  portal,  where  companies  could  find  accurate  and 
clear  information  in  different  languages  on  all  necessary  procedures  and  formalities  to  operate 
domestically or in another EU country.” Similarly, Confederation of Danish Industry states that 
in some Member States “[a company] has to consult several websites— at times only available in 
the local language—to obtain an overview of the relevant requirements.” 

The French Chamber of Commerce and Industry states that it is difficult “to find information on 
relevant  regulation  and  procedures  in  languages  other  than  the  national  language(s)”,  while 
Confederation  of  Swedish  Enterprise  adds  that  “there  are  now  a  dozen  of  countries  requiring 
VAT registration and VAT for international bus passenger transport. All countries have different 
regulations  and  requirements  while  detailed  information  is  often  only  available at the country's 
local language.” 

Thirdly,  Member  States  sometimes  impose  burdensome  language  requirements  on  companies 
((iii)  above).  For  example,  the  French  Chamber  of  Commerce  and  Industry  reports  difficulties 
with procedures which “can only be carried out in one language (for example, when a company 
has  to  reply  to  a  call  for  tenders  only  in  the  national  language).”  Also,  the  Confederation  of 
Finnish  Industries  considers  “local  language  /  translation  requirements  for  packaging” 

96 

 
burdensome, adding that “different rules on many languages are hard to manage”. According to 
the  organisation,  food  marketing  has  local  rules.  It  is  difficult  to  get  information  about  those 
rules, including specific language requirements when selling to public government customers. 

Several  SOLVIT  cases  showcase  this  barrier.  In  one  case,  a  foreign  company  engaged  in  a 
procurement  and  discovered  in  a  Q&A  session  that  references  (reports  attached  along  a 
company’s tender) could not be in any other language than that of the Member State. This means 
that reference lists of companies from other Member States are drastically reduced, and so is their 
chance to win the procurement. 

In a second case, a foreign company received a fine because they used an English slogan. The 
authorities  fined  the  foreign  company  as  they  were  of  the  opinion  that  the  English  slogan 
discriminated against citizens who did not know English.  

In  a  third  case,  a  foreign  business  had  been  required  to  provide  proof  of  knowledge  of  the 
language of the Member State in which they did their business. In the opinion of SOLVIT, the 
authorities  in  the  Member  State  misapplied  the  principles  set  out  in  the  amended  Directive  on 
Professional  Qualifications  as  regards  language  requirements.  Consequently,  the  business  was 
denied the possibility of applying to a public tender. 

Available quantification 

“Language barriers” are indicated as significant or very significant by 36% of respondents to the 
Eurochambres  2019  survey.  “Better  and  clearer  information  on  a  single  EU  online  portal  in 
different languages concerning all necessary procedures and formalities to operate in another EU 
country” was supported by 86% of respondents, making it the second most prominent solution to 
obstacles on the single market. Additionally, 77.5% respondents supported “a standardised EU-
wide VAT declaration in your native language” as a solution  

According  to  the  Confederation  of  Finnish  Industries’  survey,  35%  and  29%  of  respondents 
consider  “local  language  marketing”  and  “local  language  packaging”  as  barriers,  respectively. 
Additionally, 21% of respondents have issues with language skills when staffing. 

Similarly,  “lack  of  language  skills”  is  a  barrier  for  32%  of  SMEs  surveyed  by  the  Centre  for 
European Policy Studies study Hidden Treasures. 

4 out of 11 business organisations (that replied to a Commission survey) reported issues related 
to this barrier. 

Analysis of the reported practical obstacles and barriers 

First and foremost, the existence of many different languages across the single market is a ‘fact 
of life’ which is not linked to public policy.  

To  analyse  the  root  causes  further,  we  need  to  differentiate  i)  the  effects  of  language  on  the 
competitive playing field, ii) the availability of information on regulatory requirements in several 
languages, and iii) rules requiring the use of a particular language (or prohibiting the use of other 
languages) for private service or good markets. 

Regarding the effects of language on the competitive playing field ((i) above), as this concerns 
commercial and private communication and / or information, the root cause is only the existence 
of many different languages across the single market, which does not originate in public policy.  

The  unavailability  of  information  on  regulatory  requirements  in  foreign  languages  ((ii)  above) 
originates also in a lack of harmonisation.  

97 

 
Under the Services Directive, Points of Single Contact must be set up in each Member State. The 
co-legislators adopted the Single Digital Gateway in 2018. By 2020, the Gateway will facilitate 
online  access  to  information,  forms  and  assistance  for  citizens  and  businesses  either  staying  at 
home or getting active in another Member State. This information is made available in a language 
for cross-border users (e.g., English). The Your Europe portal will be the European single entry 
point and will be available in all languages. It will enable users to both comply with their single 
market obligations and to exercise their rights.  

The rules requiring the use of a particular language ((iii) above) originate also in the fact that EU 
legislation  did  not  impose  full  harmonisation  and  considers  that  the  use  of  a  particular 
language  can  in  some  cases  be  justified  and  proportional.  In  the  area  of  products  subject  to 
harmonisation  legislation,  the  language(s)  to  be  used  when  providing  certain  information  is 
defined  by  the  applicable  harmonisation  legislation.  In  the  absence  of  EU  harmonisation 
legislation,  Member  States  may  require  that  certain  information  must  be  given  by  a  market 
operator in a language that is easily understood by the consumer. However, the obligation to use 
a given language in business-to-business relations prior to sale to the final consumer cannot as a 
rule be justified on consumer protection grounds. 

Nevertheless, the revised Professional Qualifications Directive codifies and develops the already 
existing  case  law  on  the  rights  and  obligations  of  Member  States  regarding  language 
qualifications requirements which must be justified and proportionate. In particular: the checking 
of the language knowledge of a professional should take place only after the host Member State 
has  recognised  the  qualification.  The  host  Member  State  might  however  intervene  before  the 
professional  accesses  the  profession.  In  the  case  of  professions  with  implications  for  patient 
safety,  competent  authorities  may  carry  out  systematic  language  controls.  In  other  cases, 
language control can intervene only if the competent authority has a serious and concrete doubt 
regarding  the language  knowledge  of  the  professional.  In  any  case,  language  control should  be 
limited to the knowledge of one official or administrative language of the host Member State. 

As  regards  the  field  of  public  procurement,  the  common  procurement  vocabulary  establishes  a 
single classification system for public procurement across Member States, aimed at standardising 
the references used by contracting authorities and entities to describe procurement contracts. 

98 

 
 
OBSTACLES IDENTIFIED PER SECTOR 

This section  lists  the  barriers identified for  some  important  sectors reviewed  in  the  light  of  the 
business journey. This sectoral approach results not only from the business reports themselves as 
done  above,  but  has  been  complemented  through  a  review  of  prominent  Commission  policies. 
This sectoral approach aims at providing a more specific light on the same barriers as the ones 
reported by the businesses above. 

The selection of the sectors analysed here does not imply a prioritisation. Instead, the sample was 
composed  in  order  to  ensure  representation  of  sectors  with  different  characteristics  in  terms  of 
size,  trade  openness,  strategic  importance  for  European  priorities  (as  the  green  and  digital 
transitions), and a balance between manufacturing and services. 

Summary table: obstacles and barriers identified per sector 

Sector 
Accounting and Tax 
advice 

Architecture and 
engineering 
Audit 

Obstacle / barrier 
National entry and exercise requirements for the profession of 
accountant/tax advisor 
Lack of comparability in national accounting/tax standards and 
practices 

32 

33 

34  National entry and exercise requirements for architects and engineers 

35 

National adaptation of audit regulatory requirements under audit 
directives and regulations 

Automotive 

36  Different national rules on spare parts 

Chemicals 
Construction 

Electronic 
communications 
networks and services 

Energy 

Food and beverages 
Hotels and 
accommodation 
Industrial machinery 

Intellectual Property 
Agents 
Legal 

37 

Market for used vehicles: different national rules for the import and 
registration of vehicles 
Few identified legislative barriers remain 

38  Market access and exercise requirements for construction services 
39  Burdensome and complex building permit procedures 

40 

Posting of workers and cross-border service provision by self-
employed persons 

41  Late payments 
42  Additional national requirements for construction products 

43 

44 

Economic and legal barriers to deployment of electronic 
communications networks 
Legal and economic barriers to accessing networks and services at 
reasonable prices and under non-discriminatory conditions 
Inefficient unbundling may create market distortions 
45 
46  Access to markets for demand response aggregators 

47 

Retail price regulation hinders free competition; uncertainty 
concerning future regulatory developments 

48  Data critical for operations is difficult to access or of low quality  
49  Flat taxes and charges reduce importance of price signals for end-users 
50  Additional national requirements on food labelling 

51 

Authorisation and registration requirements for hotels or other 
accommodation providers and related detailed requirements  
52  Undue additional national markings, standards and requirements 

53 

54 

55 

Uneven market surveillance and enforcement creating uneven playing 
field for industrial machines 
Different regulatory requirements among Member States for modifying 
or refurbishing construction and agricultural machinery in use 
National entry and exercise requirements for patents and trademark 
agents 

56  National entry and exercise requirements for legal services 

99 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pharma 

Retail 

Transport 

57  Restrictions to e-commerce of medicines based on health grounds 

58 

Restrictions regarding the establishment, ownership and advertising of 
pharmacies and health care service providers 

59  Labelling language requirements  
60  Restrictions on retail establishment  
61  Restrictions on retail operations  

62 

63 

64 

65 

E-commerce: complexity and uncertainty of applicable rules for cross-
border sales and purchases 
Information on market opportunities: difficulty for small road transport 
operators to have access to market information (market opportunities) 
Information on market opportunities/network: lack of information on 
service  facilities and services offered to railway undertakings 
Lack of information on posting rules, enforcement and road traffic 
restrictions 

66  Excessive complexity of rules on inland waterways 

67 

Inconsistent and unclear rules in public procurement in transport, and 
access to these rules is too restrictive 

68  Lack of flexibility linked to driving time restrictions 
69  Restrictions on work time in inland waterways 

70 

Different enforcement practices in road transport among Member 
States 

71  Staffing: Skills shortages and mismatches in the rail sector 

72 

Territorial supply constraints and/or sourcing restrictions: availability 
of adapted rail rolling stock 

73  Restrictions on cabotage in road transport 
74  Lack of interoperability in railways 

75 

Lack of harmonised processes for authorisation of railway products 
and for safety certification of railway operators 

76  Lack of rail network coordination 

77 

Fragmented EU airspace with 28 separate air traffic management 
systems 

Waste management 

78  Fragmentation of the aviation radio band spectrum 
79  Lack of information on the availability of materials 
80  Non-harmonized end-of-waste criteria 

81 

82 

83 

Absence of standardised system to demonstrate the performance of 
recycled materials  
Insufficient enforcement of European environmental legislation 
Heterogeneity of extended producer responsibility schemes in Member 
States 

Obstacles identified per sector 

Accounting and Tax advice 

Accounting services play an important role in the single market, not only as a standalone service 
but also as an input to other important economic activities. Around 80% of this sector’s outputs 
are used as intermediate inputs for other sectors in the EU both domestically and cross-border. 

Accounting and tax advice service providers may face obstacles at different stages of their cross-
border  operations,  including  many  of  the  horizontal  barriers  listed  above.  Obstacles  specific  to 
the  sector  arise  mainly  from  the  national  entry  and  exercise  requirements  for  the  profession  of 
accountant/tax  advisor  (described  below),  lack  of  information  on  relevant  administrative 
formalities, as well as differences in the national accounting standards and practices both when 
providing services on a temporary basis and when setting up a business abroad.  

100 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
32. National entry and exercise requirements for the profession of 

accountant/tax advisor 

Description  

Professional  services  can  be  regulated  at  EU,  national,  regional  and  sometimes  local  levels. 
Professions in the field of accountancy and/or tax advice are regulated in the majority of Member 
States. In this context, Member States require a certain level of qualification and usually impose a 
range  of  other  requirements.  However,  some  of  these  requirements  and  their  accumulation  can 
become disproportionate and costly for workers, self-employed and companies operating cross-
border.   

For  temporary  and  occasional  provision  of  services,  the  principle  of  free  movement  of 
professionals  applies  and  in  most  cases  only  allows  for  a  prior  declaration  requirement  by  the 
host Member State. However, when establishing as a self-employed or as a company in another 
Member  State  where  the  accounting  profession  is  regulated,  qualification  requirements  and  a 
range of other restrictions (such as registration with a professional association) might apply. In 
addition,  the  so-called  exercise  requirements  linked  to  qualifications  can  come  into  play  for 
accounting  service  providers  (e.g.  multidisciplinary  practices,  corporate  form  and  ownership 
restrictions).  Apart from  the  obstacles related  to  professional regulation,  complexity  created  by 
the differences in national accounting/tax standards and practices may also hamper provision of 
accounting services abroad. 

National entry and exercise requirements for the profession of accountant/tax advisor, as well as 
differences  in  the  national  accounting/tax  standards  and  practices,  may  thus  create  important 
obstacles  for  accounting  firms  and  individuals  in  the  single  market.  More  details  on  these  are 
provided below. 

The entry to the profession of accountant of tax advisor is protected either by a title or a reserve 
of  activities,  or  both  of  the  above,  in  18  Member  States:    Austria,  Belgium,  Bulgaria,  Croatia, 
Czechia,  France,  Germany,  Greece,  Hungary,  Ireland,  Italy,  Luxemburg,  Malta,  Netherlands, 
Poland,  Portugal,  Romania  and  Slovakia.  Some  Member  States  reserve  both  tax  advice  and 
accounting  activities,  some  reserve  only  accountancy  i.e.  bookkeeping/drafting  of  consolidated 
financial  statements,  while  some  reserves  only  tax  advice/representation  before  the  tax 
authorities.  

Requirements additional to qualification requirements often imposed by Member States include: 

-  Mandatory registration with a professional body (required in 14 MS); 
-  Professional indemnity insurance (required in 13 MS); 
-  Corporate  structure  restrictions  (e.g.  on 
multidisciplinary practices; exist in 10 MS). 

legal  form,  shareholding/voting  rights, 

This  group  of  restrictions  is  primarily  relevant  for  establishment  situations.  For  temporary 
provision of services Directive 2005/36/EC only allows for a prior declaration requirement (but 
some  other  requirements  can  still  be  imposed,  notably  those  relating  to  access  to  reserved 
activities and conduct rules which have a direct link to the qualification required). 

The following graph illustrates the divergence in intensity and type of requirements imposed in 
different Member States: 

101 

 
 
Note:  European  Commission  (COM(2016)  820  and  SWD  (2016)  436).  Restrictiveness  indicator  measures  the  overall  intensity  of 
restrictions in national regulation as regards access to and exercise of certain regulated professions, quantified on a scale from 0 to 6. 

The categories of restrictions above include: 

-  Regulatory approach: exclusive or shared reserved activities; protection of title. 
-  Qualification  requirements:  years  of  education  and  training;  number  of  pathways  to 
obtain qualifications; existence of mandatory traineeship; obligation to have professional 
experience  to  get  full  capacity;  existence  of  mandatory  state  exam;  continuous 
professional development obligations.  

-  Other  entry  requirements:  compulsory  membership  or  registration  in  a  professional 
body; limitation to the number of licences granted; territorial validity of the professional 
qualification and/or licence; age restriction; other authorisation requirements.  

-  Exercise  requirements:  restriction  on  corporate  form/type  of  entity;  shareholding 
requirements;  voting  rights  control;  prohibitions  on  joint  exercise  of  professions; 
incompatibilities of activities for a professional; professional indemnity insurance; tariff 
restrictions; restrictions on advertising. 

Available quantification 

Based on the Member States’ notifications in the EU Regulated Professions Database, there are 
45  regulated  professions  registered  under  the  generic  title  ‘Accountant/tax  advisor’  across  the 
EU.  

These obstacles reduce competition, lead to excessive rents and lower the allocative efficiency of 
the sector. In fact, an analysis by the Commission shows that e.g. reducing the level of regulatory 
restrictiveness in the sector of accounting services has the potential to increase market entry rates 
of new service providers by up to 15%.142  

A recent assessment shows that the administrative costs created by these requirements143 faced by 
accounting companies that want to establish in another Member State can amount to EUR 10,000 
and more.144 

142 European Commission, “Business services – Assessment of Barriers and their Economic Impact”, 2015 

143 Often national procedures are characterised by the submission multiple documents, some in certified 
copy or original format (certified translations often being required), long decision periods and no 
mechanism of tacit approval. Online information on applicable formalities is often scarce, hard-to-find 
and predominantly in the local language. E-procedures are only available to a limited extent. 

144 Ecorys, “Administrative formalities and costs involved in accessing markets cross-border for provisions 

of accountancy, engineering and architecture services”, 2017 

102 

 
 
 
                                                      
Analysis 

Restrictive national rules (with limited role of EU legislation): As explained in the analysis of 
the  barrier  ‘Difficulties  with  accessing  a  regulated  profession’,  restrictive  regulation  across 
Member States inevitably creates barriers for the mobility of professionals in the single market. 
The different regulatory approaches taken by Member States have a significant impact on cross-
border establishment or provision of services. 

For  temporary  and  occasional  provision  of  services,  Directive  2005/36/EC  guarantees  the 
principle of free movement of professionals and in most cases only allows for a prior declaration 
requirement by the host Member State. However, when establishing as a self-employed or as a 
company  in  another  Member  State  where  the  accounting  profession  is  regulated,  qualification 
requirements – mitigated by the mutual recognition rules of Directive 2005/36/EC – and a range 
of  other  restrictions  (such  as  registration  with  a  professional  association)  might  apply.  In 
addition,  the  so-called  exercise  requirements  linked  to  qualifications  can  come  into  play  for 
accounting  service  providers  (e.g.  multidisciplinary  practices,  corporate  form  and  ownership 
restrictions).  Apart from  the  obstacles related  to  professional regulation,  complexity  created  by 
the differences in national accounting/tax standards and practices may also hamper provision of 
accounting services abroad. 

The Services Directive (2006/123/EC) also addresses a range of obstacles to free movement of 
services not covered by other pieces of EU law such as Directive 2005/36/EC on the recognition 
of  professional  qualifications.  The  Services  Directive  requires  Member  States  to  reduce  or 
remove  regulatory  and  administrative  barriers  dissuading  service  providers  to  operate  cross-
border.  

At the same time, the administrative burden on applicants when going through these procedures 
remains  heavy  in  many  cases.  Hence,  in  addition  to  regulatory  complexity  (e.g.  concerning 
authorisation  procedures  and  conditions,  qualification  requirements  or  requirements  related  to 
insurance),  the  sector  encounters  administrative  complexity  including  lack  of  relevant 
information and of procedures available online.  

In January 2017, the Commission issued detailed guidance to Member States on reform needs in 
regulation of professional services, including accounting services.  

A  directive  on  a  proportionality  test  before  adoption  of  new  regulation  of  professions  or  when 
amending the existing one was adopted in July 2018 and will have to be implemented by Member 
States by July 2020. It requires Member States to undertake an assessment of proportionality in 
accordance with the common framework laid down in this Directive before they introduce new, 
or amend existing, legislative, regulatory or administrative provisions restricting access to, or the 
pursuit of, regulated professions.  

Reforms  in  professional  services  are  also  part  of  the  country-specific  recommendations  in  the 
context of the European Semester. 

Moreover,  Directive  2005/36/EC  together  with  the  Services  Directive  (2006/123/EU)  require 
Member States to establish electronic National Points of Single Contact which have to provide 
access to information on all requirements that providers must comply with when establishing or 
providing services, including as regards regulated professions, as well as to online procedures for 
such  requirements,  such  as  e.g.  authorisation  schemes  or  the  recognition  of  professional 
qualifications. Information about European rules on the recognition of professional qualifications 
is also available on the Your Europe website.  

National information and access by electronic means to a range of procedures will be available 
also through the single digital gateway, including in languages understood by cross-border users 
like English, at the end of 2020. 

103 

 
33. Lack of comparability in national accounting/tax standards and practices 

As  regards  accounting  rules,  a  suboptimal  cross-border  comparability  of  information  in 
published  financial  statements  is  observed.  This  situation  is  impinging  mainly  on  SMEs,  and 
results  from  the  national  transposition  of  the  Accounting  Directive,  which  is  for  a  large  part 
principles-based and contains many options for Member States to choose. The High Level Forum 
on the Capital Markets Union set up by the Commission is currently examining whether and how 
this  situation  would  prevent  SMEs  from  obtaining  funding  and  prospective  investors  from 
identifying investment opportunities.  

However, this lack of comparability is also critical for larger companies (that account for 2% of 
the limited liability companies in the EU), as they usually have more cross-border operations than 
smaller companies.  

The Regulation on the application of international accounting (IAS Regulation) adopted in 2002 
has  significantly  enhanced  comparability  and 
the 
Commission’s  evaluation  of  the  IAS  Regulation  (2015).  The  IAS  Regulation  obliges  entities 
listed  on  EU  regulated  markets  to  apply  International  Financial  Reporting  Standard  (IFRS). 
Furthermore,  all  Member  States  have  expanded  the  scope  of  application  of  IFRS  to  other 
companies for the preparation of their consolidated financial statements.  

transparency,  as  demonstrated  by 

Architecture and engineering 

Architectural  and  engineering  services  play  an  important  role  in  the  single  market,  not  only  as 
standalone services but also providing inputs to other important economic activities. Around 80% 
of  this  sector’s  outputs  are  used  as  intermediate  inputs  for  other  sectors  in  the  EU  both 
domestically and cross-border. 

34. National entry and exercise requirements for architects and engineers 

Description  

Architectural  and  engineering  companies  may  face  obstacles  at  different  stages  of  their  cross-
border  operations,  both  when  providing  services  on  a  temporary  basis  and  when  setting  up  a 
business abroad. This includes many of the cross-cutting horizontal issues described above. More 
specifically,  for  temporary  and  occasional  provision  of  services,  the  principle  of  free 
movement  of  professionals  applies  and  in  most  cases  only  allows  for  a  prior  declaration 
requirement  by  the  host  Member  State.  However,  when  establishing  as  self-employed  or  as  a 
company in another Member State where the architectural or engineering profession is regulated, 
qualification  requirements  and  a  range  of  other  restrictions  (such  as  registration  with  a 
professional association) might apply. In addition, the so-called exercise requirements linked to 
qualifications  can  come  into  play  for  architectural  or  engineering  service  providers  (e.g. 
multidisciplinary practices, corporate form and ownership restrictions).  

Furthermore, even where countries do not heavily regulate access to the profession and conduct, 
but rather rely on a system of liability or ex-post controls by responsible bodies, such measures 

104 

 
might act as obstacles to the exercise of the profession145. In addition, stringent regulations in 
the  construction  sector  or  requirements  imposed  on  companies  active  in  cross-border  service 
provision,  access  to  public  procurement  and  insurance  requirements  abroad  may  act  as 
important hurdles when providing architectural and engineering services abroad.  

In  a  survey  by  the  Architects'  Council  of  Europe  in 2018,  9%  of  the  respondents  who  had  not 
worked abroad cited issues with professional liability insurance coverage in other EU countries 
as a major obstacle to doing so146. 

Architects 

Entry to the profession is protected either by a title or a reserve of activities, or both of the above, 
in 25 Member States (except Denmark and Sweden). The education of architects has largely been 
harmonised  so  that  qualifications  can  benefit  from  automatic  recognition  under  Directive 
2005/36/EC. The greatest variance between Member States is in the reserves of activities. As is 
also  the  case  for  civil  engineers,  reservations  may  be  scattered  across  different  rules  and 
regulations,  which  might  cover  rules  on  construction,  restoration,  cultural  protection,  energy 
efficiency and others. 

Requirements additional to qualification requirements often imposed by Member States include: 

-  Professional indemnity insurance (required in 16 MS); 
-  Membership  of  a  professional  organisation,  often  through  an  authorisation  procedure 

(required in 20 MS); 

-  Corporate  structure  restrictions  (e.g.  on 
multidisciplinary practices; exist in 16 MS); 

legal  form,  shareholding/voting  rights, 

-  Continuous professional development (required in 15 MS). 

Note:  European  Commission  (COM(2016)  820  and  SWD  (2016)  436).  Restrictiveness  indicator  measures  the  overall  intensity  of 
restrictions in national regulation as regards access to and exercise of certain regulated professions, quantified on a scale from 0 to 6. 

Engineers 

Entry to the profession is protected either by a title or a reserve of activities, or both of the above, 
in  25 Member  States (except  Netherlands  and  Sweden).  Divergences  in  the  organisation  of the 
profession are reflected in the reserved activities which vary significantly across countries. 

Requirements additional to qualification requirements often imposed by Member States include: 

-  Professional indemnity insurance (required in 15 MS); 

145   Etude du Centre européen des professions libérales (EuZFB) de l’Université de Cologne, «Le secteur 
européen  de  l’architecture.  Une  perspective  scientifique  sur  le  débat  de  l’impact  économique  des 
différentes approches réglementaires dans les Etats membres de l’Union européenne», Janvier 2017 

146 2018 ACE sector study. 

105 

 
 
 
                                                      
-  Membership  of  a  professional  organisation,  often  through  an  authorisation  procedure 

(required in 13 MS). 

Note:  European  Commission  (COM(2016)  820  and  SWD  (2016)  436).  Restrictiveness  indicator  measures  the  overall  intensity  of 
restrictions in national regulation as regards access to and exercise of certain regulated professions, quantified on a scale from 0 to 6. 

The categories of restrictions above include: 

-  Regulatory approach: exclusive or shared reserved activities; protection of title. 
-  Qualification  requirements:  years  of  education  and  training;  number  of  pathways  to 
obtain qualifications; existence of mandatory traineeship; obligation to have professional 
experience  to  get  full  capacity;  existence  of  mandatory  state  exam;  continuous 
professional development obligations.  

-  Other  entry  requirements:  compulsory  membership  or  registration  in  a  professional 
body; limitation to the number of licences granted; territorial validity of the professional 
qualification and/or licence; age restriction; other authorisation requirements.  

-  Exercise  requirements:  restriction  on  corporate  form/type  of  entity;  shareholding 
requirements;  voting  rights  control;  prohibitions  on  joint  exercise  of  professions; 
incompatibilities of activities for a professional; professional indemnity insurance; tariff 
restrictions; restrictions on advertising. 

In  contrast  to  some  Member  States,  which  require  that  only  qualified  professionals  with 
appropriate  licences,  certifications  or  registrations  with  a  relevant  body  may  legally  practice 
architecture, other Member States (Denmark, Estonia, Finland and Sweden) do not regulate the 
profession  as  such  but  rather  rely  upon  other  checks  of  competence  within  the  construction 
environment. Such ‘non-regulating’ countries use certification of competences of architects or ad 
hoc evaluation of competences or experience on a case-by-case basis as a condition for allowing 
architects to provide specific services (e.g. submission of plans or building permits).    

Available quantification 

Based on the Member States’ notifications in the EU Regulated Professions Database, there are 
51  regulated  professions  registered  under  the  generic  title  ‘Architect’  and  29  regulated 
professions registered under the generic title ‘Civil engineer’ across the EU.  

Commission analysis indicates that reducing the level of regulatory restrictiveness in the sectors 
of engineering and architectural services has the potential to increase market entry rates of new 
service providers by up to 10% and 18% respectively.147  

A recent assessment shows that the administrative costs created by these requirements faced by 
architectural  and  engineering  companies  that  want  to  establish  in  another  Member  State  can 
amount to EUR 10,000 and more.148  

147 European Commission, “Business services – Assessment of Barriers and their Economic Impact”, 2015 

106 

 
 
                                                      
Analysis 

Restrictive  national  rules  (with  limited  role  of  EU  legislation):  Architect  and  engineer  are 
‘regulated  professions’  in  most  Member  States.  As  explained  in  the  analysis  of  the  barrier 
‘Difficulties  with  accessing  a  profession’,  the  restrictive  regulation  across  Member  States 
inevitably  creates  barriers  for  the  mobility  of  professionals  in  the  single  market.  The  different 
regulatory  approaches  taken  by  Member  States  have  a  significant  impact  on  cross-border 
establishment  or  provision  of  services.  Directive  2005/36/EC  guarantees  the  principle  of  free 
movement  of  professionals  for  temporary  and  occasional  provision  of  services  and  in  most 
cases only allows for a prior declaration requirement by the host Member State. However, when 
establishing as self-employed or as a company in another Member State where the architectural 
or engineering profession is regulated, qualification requirements and a range of other restrictions 
(such as registration with a professional association) might apply. Under Directive 2005/36/EC, 
the  education  of  architects  has  been  largely  harmonised  so  that  qualifications  can  benefit  from 
automatic recognition. However, access to the profession of engineer depends on the principle of 
mutual  recognition  as  there  is  no  automatic  recognition  of  qualifications.  The  profession  of 
engineer is regulated in varied ways depending on the limits of authorisations, permits, titles, or 
levels of responsibilities. Moreover, for both architects and engineers, there is a wide variety of 
regulation  in  terms  of  scope  of  reserved  activities,  and  other  entry  and  exercise  requirements 
(such  as  insurance,  corporate  form  and/or  shareholding,  restrictions  on  multidisciplinary 
activities, continuous professional development requirements).  

Regulation  is  instrumental  in  certain  professional  services  to  protect  consumers  and  other 
important public interests.  

the  regulatory  requirements  and 

However,  some  of 
their  accumulation  can  become 
disproportionate  and  costly  for  workers,  the  self-employed  and  companies  operating  cross-
border.    Often  national  procedures  are  characterised  by  multiple  documents  to  be  submitted, 
some  in  certified  copy  or  original  format  (certified  translations  often  being  required),  long 
decision  periods  and  no  mechanism  of  tacit  approval.  Online  information  on  applicable 
formalities is often scarce, hard to find and predominantly in the local language. E-procedures are 
only available to a limited extent. 

In January 2017, the Commission issued detailed guidance to Member States on reform needs in 
regulation of professional services, including architectural and engineering services.  

A  directive  on  a  proportionality  test  before  adoption  of  new  regulation  of  professions  or  when 
amending the existing one was adopted in July 2018 and will have to be implemented by Member 
States by July 2020. It requires Member States to undertake an assessment of proportionality in 
accordance with the common framework laid down in this Directive before they introduce new, 
or amend existing, legislative, regulatory or administrative provisions restricting access to, or the 
pursuit of, regulated professions.  

The Services Directive (2006/123/EC) also plays an important role, as regards the requirements 
in  scope  of  that  Directive  that  are  not  covered  by  other  pieces  of  EU  law  such  as  Directive 
2005/36/EC on the recognition of professional qualifications. It addresses a range of obstacles to 
free movement of services by requiring Member States to adopt reforms aimed  at removing or 
reducing  them.  These  include  regulatory  barriers  but  also  obstacles  of  an  administrative  nature 
dissuading in practice service providers to operate cross-border. 

148 Ecorys, “Administrative formalities and costs involved in accessing markets cross-border for provisions 

of accountancy, engineering and architecture services”, 2017 

107 

 
                                                                                                                                                              
Reforms  in  professional  services  are  also  part  of  the  country-specific  recommendations  in  the 
context of the European Semester. 

Moreover,  Directive  2005/36/EC  together  with  the  Services  Directive  (2006/123/EU)  require 
Member  States to establish  National  Points  of  Single Contact. These  have to  provide  access  to 
information on all requirements that providers must comply with when establishing or providing 
services  including  as  regards  regulated  professions,  as  well  as  to  online  procedures  for  such 
requirements,  as  e.g.  authorisation  schemes  or  the  recognition  of  professional  qualifications. 
Information  about  European  rules  on  the  recognition  of  professional  qualifications  is  also 
available  on  Your  Europe.  National  information  and  access  by  electronic  means  to  a  range  of 
procedures  will  be  available  also  through  the  single  digital  gateway,  including  in  langauges 
understood by cross-border users like English, at the end of 2020. 

Audit 

The audit of companies' financial statements is a service provided in the public interest. The role 
of the auditor is to contribute to the credibility as well as reliability of these financial statements. 
The audit profession is therefore fundamental for normal market functioning. The auditors' output 
is also used for market stability by regulators/supervisors and for tax collection by tax and other 
government  authorities.  The  work  of  auditors  impacts  not  only  auditors,  but  also  audited 
companies, shareholders and potential investors. In addition, a wider range of other stakeholders 
benefit  from  audits.  These  include  lenders,  trade  partners,  employees,  credit  rating  agencies  or 
equity analysts.  

Following the requirement from the Audit Regulation, national competent authorities must, every 
3 years, prepare a national report on the developments in the market of statutory audit of public-
interest entities (PIEs). Based on this information, the Commission publishes a joint report about 
the  EU  market.  The  first  Commission  report  was  published  in  2017.  The  Commission  will 
publish its second joint report on the developments in this market in 2020.  

Data from the 2016 Commission Report on monitoring developments on the market for providing 
statutory audits of public-interest entities149 showed there were 250047150 individuals registered 
as statutory auditors in the EU. In 26 Member States151 26% of registered statutory auditors are 
employed  by  or  associated  with  an  audit  firm.  These  numbers  vary  widely  across  Member 
States152. About 5%153 of the total number of registered audit firms in the EU carry out statutory 
audits of PIEs. 

149 Report from the Commission to the Council, the European Central Bank, the European Systemic Risk 
Board and the European Parliament on monitoring developments in the EU market for providing 
statutory audit services to public-interest entities pursuant to Article 27 of Regulation (EU) 537/2014. 

150 Reference period year 2015, except for: Bulgaria and Estonia (2014/2015); Germany and Denmark 

(2016); and Greece (2014). Data is from 28 Member States. 

151 Data from Austria and France is missing. 

152 The number for Italy includes a large number of accountants who historically were registered as 

auditors as well. In addition, Ireland has a unique situation, as members of UK-regulated accountancy 
bodies are also registered in Ireland. Therefore, numbers for Ireland might be inflated due to this 
possible double counting. Similarly, some Irish regulated accountants may also be registered in the 
UK. 

153 Based on data from 28 Member States. 

108 

 
                                                      
The  total  turnover  of  audit  firms  auditing  PIEs  in  25  EU  Member  States  (data  from  Bulgaria, 
France and Spain is not available) is approximately EUR 31 billion. However, the numbers per 
Member State show a disparity across the EU.  

The  market  for  statutory  audits  of  PIEs  is  relatively  concentrated  in  most  Member  States. 
According  to  the  above-mentioned  report,  the  Big  Four  audit  firms154  have  an  average  market 
share  of  almost  70%  in  the  number  of  statutory  audits  of  PIEs.  For  turnover,  their  EU  market 
concentration  is  around  80%  on  average155.  The  Big  Four  hold  a  concentrated  oligopoly  in  11 
Member States for the number of statutory audits, and in 15 Member States for turnover. 

Recently,  several  developments  have  been  shaping  the  EU  audit  market.  These  developments 
include  the  impacts  from  the  legal  framework  introduced  by  the  audit  reform,  the  changing 
political  context  and  impacts  of  Brexit,  IT  developments,  and  scandals  in  some  EU  Member 
States  involving  audit  firms.  Audit  firms  are  starting  to  adjust  to  digitalisation.  The  European 
Parliament has also carried out some assessments in relation with the audit reform with the aim to 
strengthen the confidence and transparency in the financial markets and address scandals in the 
market.  

35. National adaptation of audit regulatory requirements under audit 

directives and regulations 

Description (in the regulated market: Audit Directive and Regulation) 

Auditor is a ‘regulated profession’ in all Member States, which means that in order to practice 
this profession Member States require a certain level of qualification and usually impose a range 
of requirements. It is regulated through the Audit Directive and the Audit Regulation. Some of 
these requirements are adapted at national level. The EU audit market is very diverse in terms of 
size  and  structure.  Different  national  approaches  in  the  regulatory  requirements  result  in  a 
significant  divergence  across  Member  States.  The  nature  of  the  divergence  in  the  national 
markets has an impact on cross-border mobility by imposing costs on workers, self-employed and 
companies operating cross-border.   

In  addition,  these  barriers  also  create  administrative  burdens,  in  particular  for  SMEs.  Often 
national  procedures are  characterised by  multiple  documents  to  be  submitted,  some  in  certified 
copy or original format (certified translations often being required), long decision periods and no 
mechanism of tacit approval. Online information on applicable formalities is often scarce, hard to 
find and predominantly in the local language. E-procedures are only available to a limited extent.  

National requirements also imply a burden of legal compliance for SME audit firms, who  may 
refrain from going cross-border to avoid extra compliance and administrative costs.   

154 PwC, Deloitte, KPMG, and EY. 

155 Report from the Commission to the Council, the European Central Bank, the European Systemic Risk 
Board and the European Parliament on monitoring developments in the EU market for providing 
statutory audit services to public-interest entities pursuant to Article 27 of Regulation (EU) 537/2014. 

109 

 
                                                      
Available quantification 

Audit services play an important role in the single market, not only as a standalone service but 
also as an input to other important economic activities. Currently, we do not have a quantification 
of the impact of the barrier in the market. However, indicators received from the National Audit 
Oversight Bodies on number of statutory auditors approved in another Member States show that 
there  is  presently  no  cross  border  EU  audit  market156.    Data  from  2016  showed  that  in  the  28 
Member States (including the United Kingdom) there were only 97 statutory auditors approved 
from another Member State157. 

Analysis 

The  EU  audit  legislation  is  composed  of  Directive  2014/56  (applying  to  all  audits)  and 
Regulation  537/2014  (applying  to  Public-Interest  Entities-  PIEs  audits  only).  Both  pieces  of 
legislation entered into force on 16 June 2014 and became applicable on 17 June 2016.  

The audit reform was initiated following the economic and financial crisis starting in 2008 and it 
was meant to address several shortcomings observed at the time on the audit market. The purpose 
of  these  rules  is  to  improve  audit  quality  in  order  to  boost  investor  confidence  in  the  financial 
statements  of  companies  and  to  foster  competition  in  a  highly  concentrated  market  for  Public 
Interest Entities (PIEs). 

Some of the requirements imposed by Member States include: 

  Educational qualifications (Article 6 of the Audit Directive) 

  Examination of professional competence (Article 7) 

  Test of theoretical knowledge (Article 8) 

  Practical training (Article 10) 

  Qualification through long-term practical experience (Article 11) 

  Combination of practical and theoretical instructions (Article 12) 

  Continuing Education (Article 13) 

  Registration of statutory auditors (Article 16) 

  Registration of audit firms (Article 17)  

During  the  legislative  process,  the  co-legislators  inserted  various  discretions  into  the  Audit 
Regulation  that  Member  States  can  choose  to  adopt.  Some  of  these  relate  to  key-measures 
applicable to PIE audits (e.g. (i) the list of non-audit services that an auditor cannot carry out for 
his audit clients (Article 5 of the Regulation), (ii) the cap for non-audit services provided to audit 
clients  (Article  4  of  AR),  and  (iii)  the  rotation  for  audit  firms  as  they  have  the  possibility  to 
choose an extension by allowing public tender or joint audit (Article 17 of AR)). 

In  various  instances,  such  as  in  the  replies  to  the  call  for  evidence  and  stakeholder  workshops 
organised  by  the  unit  in  charge  of  audit,  stakeholders  raised  strong  concerns  that  the 
implementation  of  the  Audit  Regulation  could  result  in  a  patchwork  of  diverging  'national 

156 National Market Monitoring reports  

157 There were 250047 registered statutory auditors in the EU-28 data from 2016 – Report from the 

Commission to the Council, the European Central Bank, the European Systemic Risk Board and the 
European Parliament on monitoring developments in the EU market for providing statutory audit 
services to public-interest entities pursuant to Article 27 of Regulation (EU) 537/2014. 

110 

 
                                                      
options'  on  pivotal  aspects  of  the  new  rules,  leading  to  inconsistencies  across  the  EU  and 
generating extra administrative costs and complexity. The Regulation contains a clause according 
to  which  a  report,  to  the  European  Parliament  and  to  the  Council,  has  to  be  prepared  on  its 
application by 17 June 2028. 

On  the  one  hand,  the  options  can  create  cross-border  obstacles  for  groups  with  audited 
components in different Member States, generating additional complexity and costs. On the other 
hand, companies and audit firms that operate exclusively on a national basis appear to have called 
on  national  legislators  to  favour  a  specific  national  approach,  facilitating  continuity  with  the 
regime currently in place.  

There  is  little  evidence  to  substantiate  the  claims  up  to  now,  as  the  concerns  raised  by 
stakeholders are only based on policy claims and were never quantified. The preliminary picture 
of the outcome of the implementation process suggests that the key national options are applied 
differently from one Member State to the other leading to fragmentation in the EU audit market. 

The particular way in which Member States choose to regulate a profession can be explained by a 
number  of  factors,  such  as  the  social  importance  of  a  profession,  efficiency  of  alternative 
instruments of consumer protection, business culture etc.  Divergences in the national regulatory 
framework  may  indicate  potential  for  further  streamlining  and  improving  the  regulatory 
framework for EU audit services.  

The  Commission  continues  to  monitor  the  developments  in  the  market  for  providing  statutory 
audit services to PIEs in the EU and will publish a second report on this market in the course of 
2020. 

Automotive 

The automotive industry is crucial for Europe’s prosperity. The automotive sector provides direct 
and  indirect  jobs  to  13.8  million  Europeans,  representing  6.1%  of  total  EU  employment.  2.6 
million  people  work  in  direct  manufacturing  of  motor  vehicles,  representing  8.5  %  of  EU 
employment in manufacturing. The EU is among the world's biggest producers of motor vehicles 
and  the  sector  represents  the  largest  private  investor  in  research  and  development  (R&D).  To 
strengthen  the  competitiveness  of  the  EU  automotive  industry  and  preserve  its  global 
technological leadership, the European Commission supports global technological harmonisation 
and provides funding for R&D. 

The market for new vehicles is currently subject to harmonised rules in the EU in the context of 
the  EU  Type-Approval  Framework  (Directive  2007/46/EC  and  soon  Regulation  (EU)  No 
2018/858  and  all  related  regulations  and  directives  on  emissions  and  safety).  Thanks  to  these 
rules, all new vehicles sold in the EU are in principle subject to the same technical requirements 
for  emissions  and  safety.  This  also  means  that  all  vehicles  complying  with  these  rules  can  be 
registered and circulate in all Member States. 

Some  barriers  are  emerging:  not  yet  widely  reported  by  businesses,  but  possibly  becoming 
important in the future. In the automotive industry, emerging barriers include the lack of access 
to in-vehicle data for third parties. This is particularly relevant in the case of integrated mobility 
services,  which  may  rely  on  different  types  of  vehicles  to  be  integrated  in  a  complex  system. 
Technical  barriers  can  be  implemented  on  the  vehicle  software  or  on  the  data  provided.  This 
might create market entry barriers. Analysis and quantification of this barrier is beyond the scope 
of this report. 

111 

 
36. Different national rules on spare parts 

Description 

Aftermarket  spare  parts  in  the  automotive  sector  are,  with  few  exceptions,  not  subject  to 
harmonised  type  approval  rules.  With  different  rules  across  the  Member  States,  this  leads  to 
single market fragmentation. Some of these parts can also have an impact on safety.  

Available Quantification 

It is difficult to give a precise quantification. The multiplication of national legislation on parts 
can contribute to increase costs both for manufacturers and consumers.  

Analysis 

EU legislation leaves flexibility in the level of harmonisation: The absence of rules for certain 
aftermarket  parts  creates  distortion  between  manufacturers  that  produce  parts  for  both  new 
vehicles and aftermarket and those who focus only on aftermarket. 

The Commission is currently examining the need for issuing secondary harmonised legislation in 
the context of the EU type-approval framework to ensure safety in relation to automotive spare 
parts. This could eventually reduce the costs linked with divergent national requirements. 

37.  Market for used vehicles: different national rules for the import and 

registration of vehicles 

Description  

The market for used vehicles is still somewhat fragmented. This is due to a variety of reasons. 
For instance, the market is not fully harmonised. As a result there are still diverging national rules 
for the import and registration of used vehicles. Other issues include lack of mutual recognition 
of  national  individual  approvals  for  multi-stage  built  vehicles,  different  rules  for  periodical 
technical inspections, asymmetry of information between the seller and the buyer favouring fraud 
(e.g. odometer fraud) etc. 

Available quantification 

According  to  a  2014  Commission  study158,  57%  of  respondents  experienced  problems  when 
buying  from  abroad.  The  total  annual  detriment  for  problems  that  occurred  within  one  year  of 
purchasing  a  second  hand  car  was  estimated  at  between  EUR  1.9  and  EUR  4.1  billion  in  the 
EU28 (including the United Kingdom). These problems are true barrier for a real EU market for 

158 https://ec.europa.eu/info/publications/study-second-hand-cars-market_en 

112 

 
                                                      
used  cars.  This  is  a  problem  for  business,  but  this  is  also  a  problem  for  ordinary  people  (e.g. 
moving their car from one Member State to another). 

Analysis 

Limited role of EU legislation:  Rules regarding the registration of used vehicles are subject to 
harmonisation  in  terms  of  mutual  recognition  of  registration  and  roadworthiness  certificates. 
Pursuant  to  Article  4  of  Directive  1999/37/EC  on  the  registration  documents  for  vehicles,  the 
harmonised  registration  certificate  issued  by  a  Member  State  must  be  recognised  by  the  other 
Member State for the vehicle’s re-registration in its territory. Furthermore, according to Article 8 
of Directive 2014/45/EU on periodic roadworthiness tests for motor vehicles and their trailers, in 
the case of re-registration of a vehicle already registered in another Member State, each Member 
State shall recognise the roadworthiness certificate issued by that other Member State.  

In  the  absence  of  EU  harmonised  rules,  transferring  the  registration  of  one  vehicle  from  one 
Member State to another one is not straightforward. For businesses, this is for instance the case of 
the majority of trucks and buses, which are built in multi stages. If the chassis is covered by EU 
harmonised  rules,  the  bodywork  that  is  added  at  a  subsequent  stage  is  covered  by  a  national 
individual  approval.  This  approval  is  not  necessarily  recognised  for  the  registration  in  another 
Member  State.  If  in  principle,  the  mutual  recognition  principles  should  apply,  this  leads  in 
practice to another national individual approval. This is particularly burdensome for SMEs which 
are usually making this bodywork. This matter could be resolved by further harmonised EU rules 
on  individual  approvals  instead  of  referring  to  the  mutual  recognition  principles  which  are  not 
easy to enforce on the ground for businesses. The same could apply for periodical inspections or 
the asymmetry of information between the buyer and the seller (Database on odometer records). 

The  problem  of  transferring  the  registration  of  one  vehicle  from  one  Member  State  to  another 
was already identified by the Commission previously and led to a legislative proposal in 2012. 
The  proposal  was  mainly  based  on  the  mutual  recognition  principles  (registered  once  accepted 
everywhere).  The  proposal  was  supported  by  the  European  parliament  but  was  rejected  by  the 
Council, mostly due to possible negative effects on the national car taxation schemes.  

Chemicals 

The EU is the second largest chemicals producer in the world, after China, with sales of EUR 542 
billion  or  15.6%  of  world  chemical  sales  in  2017.  The  chemical  manufacturing  sector  is  the 
fourth largest within EU total manufacturing by turnover, with EUR 553 billion in 2015 or 7.5% 
of the total, with sales of EUR 542 billion, with over 28000 firms (out of which 96% are SMEs). 

The chemical industry is among the largest investors in EU manufacturing, with about EUR 21.6 
billion  of  capital  spending  in  2017,  or  a  capital  intensity  of  16.8%  of  value  added,  above  the 
average of EU manufacturing. The sector counts 1.2 million direct jobs  – one third of which in 
SMEs-,  generates  around  3.6  million  indirect  jobs  and  supports  an  estimated  19  million  jobs 
across all value chains.  

The  EU  is  the  largest  chemicals  exporting  region  and  the  third  largest  importing  region  in  the 
world. The single  market  drives the  EU  chemical sales.  By  2017, intra-EU  sales  accounted for 
EUR 305 billion or 56% of total EU chemical sales, up from 46% in 2007, an increase on average 
by 2.5% per annum. In 2017, sales in the EU country home  markets represented 15% of sales, 
down  from  34%  in  2007. EU  is  net  exporter  and  EU  exports  to  third  countries increased  from 
20% of chemical sales revenue in 2007 to 29% in 2017.  

113 

 
The EU Chemical industry is called to play an enabling role in the industry transformation and in 
the  shift  towards  a  sustainable,  circular  and  carbon  neutral  economy.  The  chemical  industry 
supplies most of manufacturing sectors, is part of multiple value chains and chemicals are used in 
a  wide  range  of  products.  The  chemical  sector  can  be  a  solution  provider  to  reduce  the 
environmental footprint of many other sectors, in particular in energy efficiency and renewable 
energy applications. 

The  EU  chemical  legislation  deals  with  the  complexity  of  chemical  hazards  and  risks,  and  has 
been  instrumental  in  ensuring  free  circulation  of  substances,  mixture  and  articles  within  the 
internal market throughout harmonisation of standards and requirements that reduced barriers for 
intra-EU  trade.  The  EU  chemicals  legislation  incorporates  international  standards  in  several 
areas,  a  fact  that  contributes  to  reduce  potential  trade  frictions  and  to  address  transboundary 
chemical related issues.  Adopted in June 2019, the fitness check of the most relevant chemicals 
legislation excluding REACH concluded that overall there are no significant issue with chemicals 
free circulation on the internal market159. 

Some  barriers  are  emerging  and  may  affect  the  overall  functioning  of  the  single  market  for 
chemicals and become also important for the transition to a more circular production and use of 
safer chemicals in Europe: 

  Resource  constraints  at  national  level  affect  the  capacity  to  carry  out  enforcement 
activities, such as inspections and other controls, including market surveillance activities 
or  reporting.  These  constraints  together  with  differences  across  Member  States  in  the 
level  of  implementation  and  enforcement  of  some  pieces  of  EU  chemicals  legislation  
lead  to  an  inconsistent  application  of  the  EU  law,  and  ultimately  to  negative 
consequences on the free movement of goods within the EU.160  

  Lack  of  access  to  finance  and  other  incentives.  For  example  frontrunner  industries 

producing and using safer alternatives, e.g. use of less hazardous chemicals. 

These barriers are common to other economic sectors and have been covered in the section on 
general barriers.  

Construction 

The  European  construction  sector  is  a  prime  driver  of  economic  growth  and  employment.  It 
accounts  for  9%  of  GDP161  and  18  million  jobs  in  2018,  in  3.5  million  businesses,  mostly  in 
micro and small firms that provide local employment. Indeed, SMEs play a particularly important 
role in the sector, as it accounted for 88% of EU employment in that sector in 2016162. The sector 
also relies on supplies from other sectors of economy, thus creating a multiplier effect. 

159  Recent  information  on  the  effect  of  chemicals  legislation  on  the  single  market  can  be  found  in 
COM(2018)  116  final  (the  Commission  General  Report  on  the  operation  of  REACH  and  review  of 
certain elements - Conclusions and Actions), COM(2019) 264 final (Findings of the Fitness Check of 
the  most  relevant  chemicals  legislation  (excluding  REACH)  and  identified  challenges,  gaps  and 
weaknesses), and the accompanying Staff Working Documents. 

160 COM(2019) 264 final (Findings of the Fitness Check of the most relevant chemicals legislation 

(excluding REACH) and identified challenges, gaps and weaknesses 

161 FIEC, Annual Report 2019. http://www.fiec.eu/en/library-619/annual-report-english.aspx.  
162 Eva Rytter Sunesen, Copenhagen Economics, ‘Making EU trade in services work for all’, November 

2018 (p. 39) 

114 

 
                                                      
The  construction  sector  value  chain  consists  of  construction  services  (NACE  F),  real  estate 
activities  (NACE  L),  architectural  and  engineering  activities  and  related  technical  consultancy 
(NACE  M)  and  certain  manufacturing  sub-sectors  (NACE  C),  related  to  the  construction 
sector163.  For  the  purposes  of  this  exercise,  market  barriers  in  architectural  and  engineering 
sectors are covered in a separate fiche and will not be discussed here. 

The  sector  has  the  key  enabling  role  in  the  transition  to  a  low-carbon  economy,  as  buildings 
account for nearly 40% of total energy consumption164, a third of CO2 emissions. Construction is 
also a major consumer of natural resources with 50% of extracted materials going to the sector. It 
has also a significant environmental impact, as it produces 35% of all waste in the EU165. Thus, 
there is a big potential for creating jobs in a green economy166. 

The construction sector is among the least digitised, there is therefore a huge potential to raise the 
efficiency of construction processes and in the operation of buildings. 

The integration of digital technologies  in construction has to be carefully monitored as it could 
facilitate  the  appearance  of  new  market  barriers,  for  instance  if  a  major  market  actors  would 
impose their proprietary technology for building data collection and processing. 

38. Market access and exercise requirements for construction services 

Description  

Controls imposed on construction service providers for accessing the market (both for temporary 
cross-border  provision  and  for  secondary  establishment)  vary  significantly  in  terms  of 
restrictiveness among the Member States. There is a wide variety of such controls, controlling not 
only market access of general construction services (NACE F.41), but also market access of more 
specialised  construction  services  (NACE  F.43).  They  have  been  extensively  studied  by  the 
Commission.167  

These  market  access  control  schemes  lead  to  both  regulatory  and  administrative  burdens  for 
service providers active in the single market: 

  Regulatory  burden:    in  general,  national  legislation  governing  horizontal  control 
schemes  for  construction  services  takes  very  limited  consideration  of  cross-border 
situations, be they secondary establishments or temporary cross-border provisions. This 
leads to duplications and complexity for service providers going cross border, who need 
to adapt to very diverging national conditions on market access. 

163 NACE (from the French term "Nomenclature Statistique des Activités économiques dans la 
Communauté européenne") is the statistical classification of economic activities in the European 
Community.  
http://ec.europa.eu/eurostat/documents/3859598/5902521/KS-RA-07-015-EN.PDF  
164 COM(2019) 640 final “The European Green Deal” 

165 Eurostat, available at https://ec.europa.eu/eurostat/statistics-

explained/index.php?title=Waste_statistics#Total_waste_generation 

166 COM(2014) 446 final "Green Employment Initiative: Tapping into the job creation potential of the 

green economy" 

167 See Ecorys, " Simplification and mutual recognition in the construction sector under the Services 

Directive”, 2016 and Ecorys, “Study on costs involved in accessing markets cross-border for provision 
of construction services”, 2018 

115 

 
                                                      
  Administrative  burden:  national  market  access  procedures  are  often  burdensome, 
characterised by multiple documents to be submitted, some in certified copy or original 
format,  with  certified  translations  often  being  required,  long  decision  periods,  no  tacit 
approval,  limited  validity  in  time  and  even,  in  some  cases,  limited  territorial  validity. 
Online  information  on  applicable  formalities  is  often  scarce,  hard-to-find  and 
predominantly  in  the  local  language.  E-procedures  are  only  available  to  a  very  limited 
extent. 

A number of professions involved in the construction sector are ‘regulated professions’ in several 
Member States (architects, engineers, as well as various crafts professions), which means that in 
order to practice these professions most Member States require a certain level of qualification and 
impose  a  range  of  other  requirements  (for  details  on  architects  and  engineers  see  the  separate 
fiche).  

Based  on  the  Member  States’  notifications  in  the  EU  Regulated  Professions  Database, 
construction crafts (e.g. carpenter, bricklayer and plumber) are regulated in about one third of the 
Member  States,  primarily  as  ‘reserves  of  activities’.  Additionally,  there  are  51  regulated 
professions registered under the generic title ‘Architect’ and 29 regulated professions registered 
under the generic title ‘Civil engineer’. Apart from the administrative costs imposed on service 
providers, these obstacles reduce competition and hamper mobility of workforce and balancing of 
demand/offer for the trades at stake. This barrier is extensively described under ”Difficulties with 
accessing a regulated profession”. 

Available quantification 

The impact of regulatory and administrative burden created by market access controls is very 
difficult  to  determine.  The  costs  of  complying  with  authorisation  schemes  imposed  on 
construction service providers strongly depend on the complexity of the scheme. In some cases, 
administrative  costs  of  complying  with  these  national  procedures  amount  to  EUR  10,000  and 
more168 for a company. 

Analysis 

Restrictive national rules and limited role of EU legislation: With very few exceptions (e.g. 
installation  services  involving  F-gases),  construction  services  do  not  have  a  harmonised  legal 
framework  at  EU  level.  Most  aspects  are  regulated  at  national,  regional  and  sometimes  local 
levels.  

Inadequate implementation of EU rules. At the same time, EU legislation (such as the Services 
Directive  and  Directive  2005/36/EC)  plays  an  important  role  in  facilitating  free  movement  of 
services in the construction sector. 

168 Ecorys, “Study on costs involved in accessing markets cross-border for provision of construction 

services”, 2018 

116 

 
 
 
 
                                                      
The mutual recognition procedures for professional qualifications of Directive 2005/36/EC and 
the principles laid out in the Services Directive169 aim to facilitate free movement and the export 
of construction services.   

As  explained  in  the  fiche  on  the  recognition  of  professional  qualifications  on  architects  and 
engineers, even if the Directive 2005/36/EC provides for the automatic recognition of architects, 
it relies on mutual recognition for other construction professions.  

Member  States  may  also  impose  a  range  of  entry  and  exercise  requirements  additional  to 
qualification  requirements.  Construction  services  are  covered  by  the  Services  Directive170, 
requiring  Member  States  to  recognise  requirements  met  in  other  Member  States  (‘mutual 
recognition’)  and  impose  national  requirements  on  service  providers  only  when  they  are  non-
discriminatory, necessary and in a proportionate way.  

The full implementation of these provisions by Member States still leaves significant margin for 
improvement.  

As  a  result,  the  administrative  burden  on  applicants  when  going  through  these  procedures 
remains heavy in many cases and service providers expanding across the EU need to comply with 
an accumulation of different national rules. This is very burdensome, in particular for SMEs. 

Beginning 2017 the Commission issued a detailed guidance to Member States on reform needs in 
regulation of professional services, including architectural and engineering activities.  

A  directive  on  a  proportionality  test  before  adoption  of  new  regulation  of  professions  or  when 
amending the existing one was adopted in July 2018.   

The  information  that  businesses  need  (concerning  licences,  authorisations,  permits,  and 
notifications)  in  order  to  provide  services  in  the  single  market  will  be  accessible  through  the 
Single Digital Gateway, also in English, by the end of 2020. 

Reforms in services are also part of the country-specific recommendations in the context of the 
European Semester. 

39. Burdensome and complex building permit procedures 

Description  

A building control scheme is a legal requirement and procedure, which ultimately allows for the 
construction  work  of  a  certain  building,  its  renovation  as  well  as  an  engineering  work  to  take 
place in a given location.  

These  building  permit  procedures  can  represent  a  high  level  of  administrative  and  regulatory 
burdens,  in  particular  for  construction  service  providers  from  other  Member  States  and  SMEs. 
For example: 

  Electronic  procedures  to  complete  building  permit  procedures  are  often  not  available. 
While  some  Member  States  (or  regions)  offer  procedures  that  are  largely  available 
online,  many  others  still  require  the  handling/submission  of  large  amounts  of  paper 

169 Directive 2006/123/EC 

170 Directive 2006/123/EC 

117 

 
                                                      
forms.  Many  Member  States  also  ask  for  translation  of  these  documents,  including 
certified translations; 
Information  on  applicable  building  permit  rules  and  procedures  is  often  not  available 
online (and/or only in the local language); 

 

  Fees for building permit applications vary significantly, ranging from very low levels to 
high  fees  that  go  beyond  what  is  proportionate  to  the  cost  of  administering  the 
application; 

  Deadlines for decisions by Member States are sometimes very long, ranging up to several 
months. And tacit approval is not a widely adopted practice by national authorities; 
  Non-site  specific  issues  are  often  controlled  repeatedly  for  each  building  project  –  the 

once-only principle is often not applied; 

  Several  administrative  procedures  need  to  be  completed  from  building  permit  to  final 

completion, often involving different authorities. 

In a survey by the Architects' Council of Europe in 2018, 32% of the respondents who had not 
worked  abroad  cited  insufficient  knowledge  of  planning  or  building  regulations  as  a  major 
obstacle to doing so171. 

Available quantification 

The restrictiveness and administrative costs of building permit procedures have been mapped by 
several studies and analyses, done for example by the Commission and the World Bank172.   

The administrative costs of these building permit procedures differ significantly across Member 
States (and even regions/municipalities within a Member State) and strongly depend also on the 
complexity  of  the  building  concerned. These  costs  involve  not  only  fees  to  be paid  to  national 
authorities,  but  also  staff  time  devoted  to  finding  the  relevant  information  and  completing 
procedures. They can easily represent several thousands of euros, even for relatively small-scale 
building  projects.173  Costs  are  typically  lower  in  situations  where  Member  States  allow  for 
“lighter procedures” in case of minor works.      

Analysis 

Restrictive national rules and limited role of EU legislation. With very few exceptions (e.g. 
removal  of  asbestos),  construction  services  do  not  have  a  harmonised  legal  framework  at  EU 
level.  They  are  regulated  at  EU,  national,  regional  and  particularly  local  levels,  in  so  far  as 
building permit procedures are concerned. EU law does play an important role to facilitate free 
movement in the sector.  

Complex EU legislation. Buildings and other construction works remain within the competence 
of  Member  States  who  are  fully  responsible  for  the  safety,  environmental  and  energy 

171 The architectural profession in Europe 2018 – ACE sector study. Available at: https://www.ace-

cae.eu/fileadmin/New_Upload/7._Publications/Sector_Study/2018/2018__ACE_Report_EN_FN.pdf. 

172 https://www.doingbusiness.org/en/data/exploretopics/dealing-with-construction-permits  

173 See Ecorys, “Study on costs involved in accessing markets cross-border for provision of construction 

services”, 2018 

118 

 
                                                      
requirements applicable to them. The Construction Products Regulation (CPR)174 does not set any 
product requirements for construction products. Instead, it sets harmonised rules on how to assess 
and  express  the  performance  of  these  products  in  view  of  their  essential  characteristics  (e.g., 
reaction to fire, thermal conductivity or sound insulation) and provides harmonised rules on their 
CE  marking.  Further,  only  certain  construction  products  are  harmonized  under  the  CPR  are 
accordingly  marketed  with  the  CE  marking  affixed  to  them.  Construction  products  that are not 
CE  marked  are  subject  to  the  mutual  recognition  principle.  The  CPR  thus  only  sets  the  basic 
framework  for  requirements  on  the  use  of  construction  products  in  the  context  of  providing  a 
construction service, which need to be performance-based. Additionally, disproportionate on-site 
rules on the use of construction products dictate the type of product to be used instead of, as per 
the CPR, prescribing the required performance of admissible products to be used.  

Inadequate  implementation  of  EU  law  and  insufficient  administrative  capacity.  Different 
principles under the Services Directive (e.g. on regulatory and administrative simplification) are 
also relevant but their implementation by Member States is lacking. For example, the application 
of  the  principle  of  mutual  recognition  is  weakened  by  the  fact  that  local  authorities,  often  in 
charge of granting building permits, are unaware of the obligation to consider compliance with 
equivalent requirements which are not site-specific, such as insurance coverage and requirements 
on the use of equipment (such as cranes). 

The  information  that  businesses  need  (concerning  licences,  authorisations,  permits,  and 
notifications)  in  order  to  provide  services  in  the  single  market  will  be  accessible  through  the 
single digital gateway, also in English, by the end of 2020. 

40. Posting of workers and cross-border service provision by self-employed 

persons 

Description 

Businesses in the construction sector frequently report that requirements linked to the posting of 
workers, beyond an increase in administrative burden, constitute a major barrier to offering their 
services across the single market.175 This barrier is extensively described in the specific barrier 
“Burdens and obstacles in the context of posting workers to other Member States”.  

174 Regulation (EU) No 305/2011 of the European Parliament and of the Council of 9 March 2011 laying 
down harmonised conditions for the marketing of construction products and repealing Council 
Directive 89/106/EEC, OJ L 88, 4.4.2011, p. 5. 

175 (EEN SME feedback German2Belgium 2019)  

119 

 
                                                      
41. Late payments 

Description  

The risk of late payment or non-payment is the first major obstacle to the participation in public 
procurement  of  European  SMEs:  it  was  considered  an  obstacle  by  56%  of  SMEs  in  the  EU  in 
2015, and considered a major obstacle by 43% of SMEs.176  

SMEs  in  the  construction sector  are  particularly  affected  by  late  payments.177  The  construction 
sector stands out as the one where companies are more likely to experience problems with late 
payment (56% compared to 47% for the EU average178). 

This  barrier  is  extensively  described  under  “Costs  and  delays  of  collecting  payments  and 
recovering debt”. 

42. Additional national requirements for construction products 

Description  

In  the  construction  sector,  the  Confederation  of  Danish  Industry  reports  that  several  Member 
States continue to require national quality marks and documentation. This often goes beyond the 
CE marking laid out in the Construction Product Regulation (EU) 305/2011. An example is fire 
safety,  three  Member  States  would  require  several  certificates  which  cover  the  same 
characteristics  as  the  CE  marking.  The  demand  for  additional  certificates  “constitutes  a  heavy 
bureaucratic  burden  for  manufacturers  wishing  to  export  their  products  to  the  aforementioned 
markets”. Similarly, the Confederation of Finnish Industries reports that technical standards for 
constructions  and  building  materials  are  frequently  divergent,  so  that  companies  need  to  adapt 
their products to local requirements. Among other industries, this affects engineering, machinery 
and power grid systems.  

SOLVIT  cases  well  illustrate  hurdles  that  businesses  face  with  construction  products.    In  one 
case, a company from one Member State wanted sell vehicle restraint systems in a neighbouring 
Member  State.  The  company  tested  their  vehicle  restraint  systems  pursuant  to  harmonised 
standard EN 1317-5 and CE-marked them under the Construction Products Regulation. However, 
when  the  company  wanted  to  place  their  products  on  the  market  of  the  neighbouring  Member 
State, they were informed the requirements had to be checked again and additional requirements 
had to be fulfilled in order to be able to sell there. In the end, the company was referred to the 
applicable national standards to obtain a ‘voluntary’ national certificate issued by a private body. 
It was argued, such additional requirements under national law, and even voluntary certification 
procedures,  constitute  a  barrier  to  companies  from  other  Member  States  and  a  violation  of  the 
free movement of goods.  

176http://ec.europa.eu/COMMFrontOffice/PublicOpinion/index.cfm/Survey/getSurveyDetail/instruments/F

LASH/surveyKy/2089 

177   https://op.europa.eu/en/publication-detail/-/publication/c8b7391b-9b80-11e8-a408-

01aa75ed71a1 

178 SAFE survey 2019, responses to the question whether companies have experienced problems with late 

payments (and whether they happen regularly or occasionally) 

120 

 
                                                      
Available quantification 

The  study  on  the  economic  impacts  of  the  Construction  Products  Regulation  assessed  the total 
value of construction products manufactured in the EU in 2013 at EUR 418 billion. 

Analysis 

The  root  cause  of  this  barrier  relates  to  inadequate  implementation  and  enforcement  of  EU 
legislation: Member States, as for instance Germany and the Czechia, infringe the Construction 
Products  Regulation  by  adding  additional  national  requirements  for  CE-marked  construction 
products outside the harmonised structure created by the Construction Products Regulation. This 
has led the Commission to take action and start infringement proceedings. There are indications 
that similar breaches of Union law may be taking place in virtually every Member State.  

The Construction Products Regulation is considered part of the EU New Legislative Framework 
(NLF)  product  legislation.  Yet,  contrary  to  other  NLF  directives  and  regulations,  CPR-based 
harmonised  standards  are  compulsory  for  manufacturers  of  harmonised  construction  products. 
The  use  of  these  harmonised  standards  is  obligatory  also  for  Member  States  when  setting  fire 
safety,  environmental,  energy  and  other  requirements  for  construction  works  and  products.  In 
addition, CPR-based harmonised standards are “exhaustive”, meaning that no additional national 
requirements can be imposed on construction products, even in those cases where standards do 
not fully cover all relevant aspects of the seven Basic Requirements for Construction Works. All 
construction products within this harmonised sphere have to be CE-marked.    

In  this  context,  the  Member  States  often  claim  that  setting  additional  requirements  for 
construction  products  at  national  level  is  necessary  for  safety  or  environmental  purposes,  and 
even more so in the case of outdated and incomplete harmonised standards. However, this may 
lead to conflicts between harmonised standards and the national rules in place, as for example for 
products  repairing  concrete  structures  (EN  1504  –  series).  While  the  Commission  wishes  to 
address the concerns of some Member States in protecting safety of their citizens by filling the 
“gaps”  in  the  incomplete  harmonised  standards,  Member  States  are  also  supplementing  and 
replacing  the  existing  content  of  these  standards  (harmonised  assessment  methods  and  criteria, 
classifications) with their own rules, thus fragmenting the single market and obstructing the free 
movement of construction products across the EU. Problematic national rules are in certain cases 
just  ‘recommendations’,  directed  not  to  the  manufacturers  of  construction  products  but  to 
constructors. Nevertheless, by obliging the constructors to obtain additional information, national 
authorities are in fact indirectly also compelling the manufacturers to provide such information as 
a prerequisite for getting their products sold.  

Information about national product rules and regulations will be available online, also in English, 
through the Single Digital Gateway at the end of 2020.  

Electronic communications networks and services 

A fully operational digital single market can generate additional growth of up to EUR 415 billion 
(Commission  Communication  of  May  2015  on  the  digital  single  market).  Electronic 
communications  is  a  strategic  sector  which  generates  directly  EUR  169  billion  in  added  value 
(approximately  1.3%  of  EU  GDP)  and  over  1  million  jobs  (approximately  0.47%  of  total 
employment), with high productivity thanks to the use of ICT (EUR 144000 p.p.). 

The  existence  of  high-speed  electronic  communications  networks  is  a  pre-requisite  for  the 
development  of  the  digital  single  market.  Coverage  of  high-speed  broadband  networks  has 

121 

 
improved significantly over recent years but there is still a gap to close for people and businesses, 
in particular in rural and remote areas. 

Electronic  communications  services  enable  a  large  range  of  other  services  and  products  in 
virtually  all  sectors.  Electronic  communications  networks  constitute  critical  infrastructure  – 
indispensable for public services and economic and social life. 

Gigabit  connectivity  powered  with  secure  fibre  and  5G  infrastructures  is  a  fundamental 
prerequisite for tapping into Europe’s digital growth potential. 

43. Economic and legal barriers to deployment of electronic communications 

networks 

Description 

As a network-based economic sector, the telecoms sector is typically characterised by very high 
sunk  costs  (for  network  deployment,  spectrum  licences).  Despite  the  existing  sectorial  rules 
which  encourage  investments  through  a  more  flexible  regulatory  environment  in  the  telecoms 
market, companies are experiencing difficulties in ensuring an efficient deployment of networks 
due  to  the  administrative  red  tape  associated  with  it.  There  are  also  still  some  areas  (e.g.  rural 
areas which do not offer scaling-up, as opposed to metropolitan areas) which they consider non-
profitable  and  public  support  can  only  target  part  of  those  due  to  the  level  of  public  resources 
available.  

Inefficiencies  in  the  deployments  of  electronic  communications  networks,  mainly  in  terms  of 
administrative  burdens,  are  regularly  reported  as  one  key  problem  for  the  sector.  Building  and 
running electronic communications services, including 5G, means facing a number of difficulties 
(burdensome  permit  granting,  high  fees,  problems  to  access  to  physical  infrastructure,  lack  of 
information  on  existing  infrastructure,  etc.).  These  result  in  a  slower,  more  costly  and  less 
efficient deployment of electronic communications networks.  

As  it  was  identified  in  the  report  on  the  implementation  of  the  Broadband  Cost  Reduction 
Directive179 and through recent exchanges with stakeholders and national authorities, a number of 
issues  persist  in  connection  with  the  roll-out  of  electronic  communications  networks.  These 
include:  

 

issues linked to long-lasting and complex permit granting procedures (often exceeding 
the four-month default deadline); 

  divergent costs for civil works (with reported costs of a magnitude ten times higher for 

 

 

certain types of civil works); 
limited use of the cross-sectorial character of the measures which intend to foster the 
sharing and reuse of existing physical infrastructure and to obtain synergies through the 
coordination of civil works;  
access to buildings for the installation of in-building infrastructure, lack of availability of 
relevant information, etc. 

In particular, businesses in the mobile or wireless sector also report barriers such as: 

 

the high reserve prices and costly coverage obligations included in spectrum awards; 

179 COM(2018) 492 final 

122 

 
                                                      
 

the late and uncoordinated assignment of spectrum frequencies (e.g. non-timely  awards 
of 5G pioneer bands).  

Available quantification 

The Commission recently reconfirmed the 2015 Gigabit objectives180, which aim to provide all 
European  households,  rural  or  urban,  with  access  to  networks  offering  a  download  speed  of  at 
least  100 Mbps  and  being capable  of  symmetric  Gigabit speed by  2025.  Investment  in  Gigabit 
connectivity powered with secure fibre and 5G infrastructures is a fundamental prerequisite for 
Europe’s  digital  growth,  and  requires  additional  investment  of  at  least  EUR  155  billion  that 
cannot be fully met by the private sector, even if improved market demand and a more flexible 
regulatory environment have improved investment incentives.  

Previous studies found that e.g. civil engineering works, such as the digging-up of roads to lay 
down  high-speed  broadband,  account  for  up  to  80%  of  the  cost  of  deploying  high-speed 
networks. This shows the potential of putting in place measures, which would accelerate the roll-
out of high-speed networks. 

Analysis 

These  barriers  are  caused by  a  combination  of  inadequate implementation  of EU  legislation, 
limited EU legislation, and causes not linked to public policy (e.g. microeconomic factors). 

The problems linked to the roll-out of electronic communications networks are mainly linked to 
insufficient administrative capacity and red tape, as well as the inadequate implementation 
and exemptions and optional character, or lack of binding effect of some of the measures under 
the Broadband Cost Reduction Directive. Examples include transparency obligations for public 
sector bodies, rules on apportioning the costs associated with the coordination of civil works, or 
electronic submission of permits applications. 

At the EU level, telecoms rules were reformed last year with the entry into force of the European 
Electronic  Communications  Code,  which  aims  to  create  a  pro-competitive  and  investment-
friendly  regulatory  environment.  Member  States  need  to  transpose  the  Code  into  national 
legislation by 21 December 2020. 

Moreover,  in  2014,  the  EU  adopted  more  targeted  legislation  aiming  at  facilitating  and 
incentivising  the  roll-out  of  high-speed  electronic  communications  networks  by  lowering 
deployment costs. However, the transposition of this legislation has been late in many Member 
States  and  its  implementation  across  the  EU  has  resulted  in  limited  impact.  According  to  a 
Commission report181, there has been some impact as regards access to physical infrastructure but 
there  are  several  areas  for  improvement,  such  as  the  coordination  of  civil  works  and  the  time-
consuming and burdensome procedures for permit granting. 

Reinvigorated  measures  for  reducing  the  costs  of  deployment  of  electronic  communications 
networks could face difficulties due to fragmented and overly complex existing administrative 
processes  (often  dealt  by  local  authorities),  and  the  cross-sectorial  character  of  the  measures 
(stakeholders from other sectors sometimes lack sufficient incentives). 

180   Connectivity for a Competitive Digital Single Market - Towards a European Gigabit Society, 

COM(2016) 587 final 

181 COM(2018) 492 final 

123 

 
                                                      
44. Legal and economic barriers to accessing networks and services at 

reasonable prices and under non-discriminatory conditions 

Description 

In order to provide broadband or mobile call services, telecoms operators need access to a fixed 
or a mobile network. To build an entire network is very costly, with high and often sunk costs, 
and  there  might  be  legal  and  administrative  barriers (as  seen  above). Therefore,  operators  may 
seek  access  to  another  operator’s  already  existing  network.  However,  the  price  and  conditions 
imposed  by  incumbent  (competing)  operators  to  access  their  network  could  constitute  another 
barrier. The EU set up a regulatory framework made of binding and non-binding rules, which are 
for  National  Regulatory  Authorities  (NRAs)  to  apply.  Despite  the  efforts  of  NRAs  and  the 
Commission 
the  framework,  regulation  of  electronic 
communications  market  is  not  infallible.  One  illustrative  case  is  that  in  which  a  market  is  not 
reviewed  within  the  deadlines  imposed  by  the  framework  and  thus  the  regulation  becomes 
inappropriate to address issues related to the fast evolution of that given market.  

to  ensure  full  adherence  with 

Network owners (which are often vertically-integrated) have high incentives to refuse access to 
their  network.  They  can  either  refuse  access  tout  court  or  make  it  very  difficult  in  practice, 
namely  by  applying  high  access  prices,  imposing  discriminatory  conditions,  or  degrading  the 
quality of the service. 

Moreover, alternative operators lack economies of scale and scope: a new operator’s costs could 
be considerably higher than for a large incumbent operator offering several products. In addition, 
it  is  often  difficult  for  a  new  entrant  to  find  customers  due  to  long-term  contracts  that  bound 
consumers  or  businesses,  or  switching  barriers  (this  barrier  is  particularly  relevant  for  the 
wholesale high-quality access market which serves businesses 

Available quantification 

The  barrier  particularly  affects  new  and  small  market  entrants,  but  we  do  not  have  data  to 
quantify the barrier.  

Analysis 

This barrier is caused by limited role or EU legislation and by factors which are not linked to 
public policy (e.g. microeconomic causes). 

Barriers are often caused by inadequate or inconsistent regulation applied across Member States. 
Since  the  liberalisation  of  the  sector,  the  EU  has  repeatedly  intervened  through  legislation  to 
address a number of barriers to the single market (e.g., access to infrastructure, roaming like at 
home, and general authorisation). Those efforts allowed competition to emerge, but are often not 
sufficient. 

As  telecoms  markets  are  fast  moving,  technology  evolves  rapidly  and  regulation  needs  to  be 
often revised to address new bottlenecks. A major revamp of telecoms rules took place in 2018 
resulting in the adoption of European Electronic Communications Code. Further challenges now 
lie in the implementation of the Code. In an effort to increase harmonisation, the Commission is 
working on several projects, including   

124 

 
 

 

the review of a Recommendation on relevant markets susceptible to ex ante 
regulation which shall guide national regulators in their assessment of market 
conditions, and 
a delegated act setting a Eurorate for terminating calls to fixed and mobile networks. 

In  particular,  in  mobile  voice  call  markets,  barriers  derive  from  discrepancies  in  national 
regulatory approaches. For example, as the previously adopted Recommendation on termination 
rates  has  proven  insufficient  to  harmonise  national  approaches  to  calculating  termination  rates, 
the  Code  has  tasked  the  Commission  with  the  adoption  of  a  delegated  act  setting  harmonised 
termination rates across in the EU by the end of 2020.  

Energy 

Energy is a ‘basic’ economic good that is an input to the production of almost every other good 
and service in the modern economy. The EU consumed 1,675 million tonnes of oil equivalents of 
energy in 2017. 

Competitive wholesale and retail markets for electricity and gas, and the free exchange of energy 
across borders play an important role in ensuring that household and industrial consumers benefit 
from low prices, high standards of service, and a wide selection of offers. Strategically, they are 
especially important for the emergence of new energy services that will help the energy system 
become  more  flexible  and  thus  better  adapted  to  an  energy  system  based  on  renewables.  A 
competitive  and  EU-wide  interconnected  energy  market  is  also  an  important  element  of  the 
Green Deal, as it helps to reduce CO2 emissions at least cost182. 

Despite  this,  high  levels  of  market  concentration,  growing  gaps  between  retail  and  wholesale 
prices,  and  low  levels  of  innovation  are  leading  to  persistently  low  levels  of  consumer 
satisfaction in the energy sector. Competition in wholesale and retail markets for electricity and 
gas  remains  limited  in  many  Member  States,  new  entrants  face  a  broad  range  of  hurdles  in 
establishing themselves and operating in the EU, and undue barriers to energy exchanges across 
borders persist.  

Moreover, the procedures and processes for operating in the retail market can differ significantly 
from  one  Member  State  to  another,  impeding  cross-border  entry  for  even  established  energy 
suppliers  and  service  companies  within  the  single  market.  The  cumulative  weight  of  these  and 
other barriers on energy retail markets can have a significant negative impact on competition and, 
by extension, consumer welfare and innovation. The Commissions plans to publish a major study 
into  these  issues,  which  could  pave  the  way  for  action  to  address  them.  Not  using  the  full 
potential of the EU electricity and gas markets to drive down prices is one factor that contributes 
to the high level of electricity and gas prices compared to other regions and harms those parts of 
the European industry who compete with regions with lower prices. 

182   The Single Market Performance report (COM(2019)650final), included in the Autumn package 

published on 17 December 2019, stresses the limited competition in the energy retail markets, the need 
for fully efficient capacity mechanisms and the inefficiencies in energy taxation. 

125 

 
                                                      
45. Inefficient unbundling may create market distortions 

Description  

Even in cases when unbundling has been completed, incumbent suppliers may often still have an 
advantage  over  new  entrants.  For  instance,  if  the  customers  of  the  incumbent  supplier  are  less 
willing  to  change  supplier  than  other  customers,  the  incumbent  player  has  more  freedom  to 
increase prices. This is further corroborated by the fact that incumbents can offer lower prices to 
specific  consumers  to  prevent  them  from  switching.  They  may  then  cross-subsidise  this  price 
decrease by charging higher prices for those consumers who are less willing to change. Finally, 
when  people  move  house,  the  regime  surrounding  the  location  change  itself  may  favour  the 
incumbent. 

In  cases  where  the  unbundling  of  Distribution  System  Operators  (DSOs)  has  been  inefficient, 
there are also a number of concerns regarding market functioning. In several Member States, the 
separation of distribution and supply activities cannot be considered complete, which could result 
in market inefficiencies. For example, some have argued that if the DSO and the retailer work in 
close cooperation, the DSO can forewarn the supplier about planned consumer switching, or in an 
extreme case obstruct the switching process. In addition, the DSO can provide information to the 
associated supplier about a potential market entry. 

Available quantification 

45%  of  electricity  and  gas  suppliers  surveyed  in  2019  ranked  the  strategic  advantage  of 
incumbents as a substantial barrier. 41% of electricity and gas suppliers surveyed in 2019 ranked 
ineffective unbundling as a substantial barrier. 

Analysis 

Limited role of EU legislation around retail competition may have contributed to the excessive 
market power of incumbents in the past. The current Gas Directive (2009/73/EC) still provides 
Member States with greater leeway to decide to what extent they create a level playing field for 
all market players. This may disproportionately affect market functioning.  

The Electricity Directive (2019/944) introduces general provisions to ensure that Member States 
ensure  a  level  playing  field  for  competition,  as  well  as  a  host  of  specific  measures  to  remove 
market barriers. These rules will need to be transposed before 2021. In addition, the Commission 
is empowered to adopt implementing legislation for a standardised approach to the provision and 
exchange of data that makes the market more contestable and efficient.  

Nevertheless, one source of concern is the fact that Member States may choose not to unbundle 
the  supply  operations  of  distribution  system  operators  (DSOs)  with  fewer  than  100,000 
customers. This has raised fears that bundled supplier-DSOs have privileged access to data that 
could be used to distort competition. Unbundling is an issue that has not been tackled in the new 
rules. 

Additionally,  national  incumbents  may  benefit  from  the  rules  which  apply  in  case  of  payment 
default from the end consumers. These rules entail that in case of payment default, the supplier 
has to support the loss for the entirety of the unpaid bill, including cost components which do not 
relate to the distribution of energy, i.e. also the purchase of energy. As a consequence, only the 
biggest market players, which have a sufficiently wide customer portfolio, can absorb the risk of 

126 

 
default of the end consumer. These credit default rules are a significant barrier detrimental to the 
smaller market players. The commission is currently investigating this hurdle183. 

46.  Access to markets for demand response aggregators 

Description  

It is difficult for innovative and decentralised solutions to access the electricity market. This is 
because  the  electricity  market  was  designed  at  a  time  when  large-scale,  centralised  generation 
capacity dominated the electricity system. It can, therefore, implicitly and arbitrarily favour such 
assets, to the detriment of innovative new solutions such as demand response. This is typically 
the case of companies from other countries trying to do business across the single market.  

Available quantification 

The barrier particularly affects enterprises using innovative business models. For instance,  54% 
of  demand  response  aggregators  (a  kind  of  energy  service  company)  surveyed  in  2019  ranked 
unfavourable market access conditions as a substantial barrier.  

Analysis 

The  root  cause  of  this  barrier  was  the  limited  role  of  EU  legislation  and  complex  or  non-
modernized EU legislation. Underdeveloped EU rules around aggregation may have contributed 
to the lack of a level playing field for such actors in the past.  

In an effort to address this and other problems, the co-legislators adopted in 2019 the Electricity 
Regulation (2019/943) and Electricity Directive (2019/944)184. These legislative acts introduce a 
range of provisions to ensure that Member States ensure a level playing field for aggregators. The 
Regulation  is  directly  applicable  from  1  January  2021,  whereas  the  Directive  will  need  to  be 
transposed  before  2021.  In  addition,  the  Commission  is  empowered  to  adopt  implementing 
legislation  for  demand  response.  Full  application  of  the  new  2019  rules,  and  the  new 
implementing legislation, could help address this. In parallel, the provisions under Article 15 of 
the Energy Efficiency Directive (2012/27/EU), addressed the need to ensure a level playing field 
for aggregators. 

183 Call for tender ENER/B3/2018-313 regarding the Study on ‘Barriers to entry in retail energy markets’ 

184 See in detail on the improvements introduced by the “Clean Energy Package”  

127 

 
                                                      
47. Retail price regulation hinders free competition; uncertainty concerning 

future regulatory developments 

Description 

Retailers buy energy from the wholesale market and sell it to customers, usually at fixed prices. 
Wholesale  price  regulation,  which  is  still  present  in  some  Member  States,  prevents  effective 
competition  between  electricity  generators  or  gas  producers,  to  the  detriment  of  competition  at 
retail level. Price regulation can generate a huge uncertainty on the retailers’ cost side, with only 
small manoeuvrability on the revenue side, which can act as a barrier. In many countries, price 
regulation is applied to non-vulnerable consumers as well. This hinders the creation of consumer-
friendly  pricing  schemes,  thus  reducing  consumer  welfare  and  supplier’s  profitability  as  well. 
Also,  regulated  retail  prices  which  do  not  reflect  the  wholesale  market  price  do  not  support 
demand side response development and do not provide an economic incentive to energy efficient 
behaviour  and  technologies.  Finally,  price  regulation  is  often  paired  with  minimum  service 
obligations, which can be an additional burden to the supplier.  

Available quantification 

39%  of  market  participants  surveyed  in  2019  ranked  price  regulation  as  a  substantial  barrier. 
41.5% of gas suppliers surveyed in 2019 ranked price or volume risk as a substantial barrier. This 
can be exacerbated by regulated prices. 

Analysis  

The barrier stems from EU legislation leaving flexibility around interventions in price setting for 
electricity  and  gas.  The  current  Gas  Directive  (2009/73/EC)  still  provides  Member  States  with 
broad  leeway  to  apply  interventions  in  price  setting  in  a  manner  that  may  disproportionately 
affect  market  functioning.  However,  the  recently  adopted  Electricity  Directive  (2019/944) 
introduces  a  number  of  provisions  to  ensure  that  Member  States  apply  interventions  in  price 
setting in a proportionate manner. These rules will need to be transposed before 2021. 

48. Data critical for operations is difficult to access or of low quality  

Description 

Information availability is vital for a profitable operation of a retail business. However, several 
barriers are a result of some sort of information shortage for the service provider. 

The  first  type  of  information  problem  occurs  when  the  potential  entrant  is  not  able  to  gain 
sufficient  knowledge  about  the  markets.  The  lack  of  information  may  not  be  the  result  of 
behaviour  that  hinders  competition,  but  occurs  because  of  a  lack  of  information-aggregating 
platforms and procedures. 

Many sources show that obtaining information prior entering a market is often difficult. It may 
only be possible through consultants, who are not aware of the whole picture, but specialised in 

128 

 
several subtopics. Additionally, official documents from the regulator may not contain sufficient 
information.  

Information  shortage  is  especially  harmful  to  the  innovative  business  models.  In  the  electricity 
sector, sharing information about customers and their smart meter data can significantly help new 
market entrants and the operation of innovative service models, such as companies offering new 
types of energy-related services. In the natural gas market, some have argued that the information 
advantage of network operators prevents other market participants from developing and investing 
in gas storage. 

Available quantification  

36% of market participants surveyed in 2019 ranked this as a substantial barrier. 

Analysis  

As a result of a limited role of EU legislation in the area, requirements and procedures are not 
harmonised. The absence of precise EU rules around non-discriminatory access to data may have 
contributed to the continued existence of this barrier in the past. 

The  current  Gas  Directive  (2009/73/EC)  still  provides  Member  States  with  greater  leeway 
concerning access to data. This may disproportionately affect market functioning. 

The Electricity Directive (2019/944) introduces general provisions to ensure that Member States 
create a level playing field for access to data. These rules will need to be transposed before 2021. 
In addition, the Commission is empowered to adopt implementing legislation for a standardised 
approach  to  the  provision  and  exchange  of  data  that  makes  the  market  more  contestable  and 
efficient. 

49. Flat taxes and charges reduce importance of price signals for end-users 

Description  

Fixed network charges and flat-taxes can reduce the price signals to end customers necessary to 
incentivise them to vary their consumption according to changes in prices on electricity markets. 
The  perceived  lack  of  accurate  price  signals  could  undermine  the  business  case  for  innovative 
business models such as demand response aggregation. 

Available quantification  

35.7%  of  demand  response  aggregators  surveyed  in  2019  ranked  flat  taxes  and  charges  as  a 
substantial barrier. This exacerbates the lack of market price signals at retail level, which 49% of 
demand response aggregators ranked as a substantial barrier 

129 

 
Analysis 

This barrier is caused by limited role of EU legislation in national indirect taxation regimes for 
energy,  which  is  in  turn  the  product  of  a  lack  of  willingness  on  the  part  of  Member  States  to 
tackle  market  distortions  and  perverse  incentives  stemming  from  the  way  energy  is  taxed  in  a 
coordinated way. The field of taxation is primarily a prerogative of the Member States. 

Food and beverages 

The European food and beverages industry employs 4.57 million people. With a turnover of EUR 
1.1 trillion and EUR 230 billion in value added, it is the largest manufacturing industry in the EU. 
In half of the EU’s 27 Member States, the food and beverages industry is the biggest employer 
within manufacturing.  

In  the  last  10  years,  EU  food  and  drink  exports  have  doubled,  reaching  over  EUR  90  Billion 
annually and contributing to a positive trade balance of almost EUR 30 Billion. EU food products 
are well known for their high quality and food safety standards. 

The single market cannot exist without mutual trust. Harmonised rules for food safety contribute 
to ensuring this trust and support the functioning of the single market, while also providing a high 
level of protection to consumers.  

Responsibility lies with food business operators to ensure the safety of their products. However, 
there  are  agreed  indicators  to  measure  such  safety.  If  these  indicators  are  not  respected,  the 
placing on the market of the product is blocked.  

Such safeguards cannot be seen as a barrier to trade since the prohibition of placing on the market 
and recalls of affected foodstuffs would be justified on grounds of consumer protection, and to 
push companies to comply with their responsibility as food business operator vis-à-vis the level 
of food safety expected in the EU.  

Member  States’  food  legislation  is  therefore  highly  harmonised  and  the  sector  benefits 
significantly from the opportunities offered by the single market.  

A  fitness  check  of  Regulation  178/2002  on  the  General  Food  Law  (GFL)185  was  launched  in 
2014, covering the period 2002-2013. It examined the Regulation and the implementation of its 
main  elements  in  other  secondary  EU  legislation.  The  results  showed  that  the  structure  of  the 
GFL Regulation as framework provided a common and consistent basis at both EU and national 
level for the entire food chain including feed. Combined with a great degree of harmonisation in 
other  EU  secondary  food  legislation,  it  contributed  to  the  effective  functioning  of  the  single 
market by creating a level playing field for all food business operators in the EU market while 
limiting  trade  impacts.  The  sector  faces  however  certain  challenges  in  both  international  and 
European markets, which are analysed below. 

185 https://ec.europa.eu/food/sites/food/files/gfl_fitc_comm_staff_work_doc_2018_part1_en.pdf 

130 

 
                                                      
50. Additional national requirements on food labelling 

Description  

Different national rules on food labelling may create obstacles to the smooth movement of food, 
and by extension, lead to a fragmentation of the single market. In some cases, EU food legislation 
allows  Member  States  to  complement  existing  harmonised  rules.  In  this  context,  national 
initiatives  have  recently  been  adopted by  Member  States  in the area  of  food  labelling  –  and  in 
particular with regard to origin labelling indication186 and alcohol labelling187 – that may create 
barriers to trade inside the EU.  

Even voluntary labelling measures can constitute barriers. In one case, a Member State notified 
the Commission about a voluntary indication. Although it was not presented as a quality label it 
may potentially have restrictive effects on the actual marketing of foods products. 

Regarding alcohol labelling, some of the measures that Member States notified raised concerns as 
to their compatibility with secondary EU legislation on food labelling. Some examples include a 
national requirement on nutrition declaration and its presentation. 

In addition, national recommendations on front-of-pack nutrition labelling188, although voluntary, 
could create a pressure on EU food business operators to label all products present on the national 
market with the official scheme promoted by the Member State in question.  

National labelling schemes can lead to inequalities in consumer access to information across the 
EU. Finally, additional national requirements on food labelling could have an effect of boosting 
domestic production to the detriment of products coming from other Member States. 

Available quantification 

The impact of national mandatory schemes on origin and alcohol labelling is difficult to assess at 
this stage, as they were implemented at different points in time and some of them just started to 
run  or  are  about  to  be  launched.  However,  a  number  of  stakeholders  presented  figures  and 
positions  showing  that  the  diversification  of  requirements  in  the  field  of  food  labelling  has 
already had a negative effect on the EU food chain and constitutes an impediment to the single 
market.  

186 Eight MS have launched, or are about to launch, national legislations on origin for certain food 

products, mainly for milk and milk used in dairy products, but also meat used in processed foods. 

187 Some MS maintained or adopted national measures imposing additional labelling requirements on 

ingredients or certain ingredients for alcoholic beverages or certain alcoholic beverages and Ireland 
adopted a measure on mandatory nutrition declaration for alcoholic beverages 

188 There are currently five front-of-pack schemes developed or endorsed by MS: the Keyhole logo (used in 
SE, DK, LT), the Nutri-Score (used in FR and BE and future implementation announced by DE and 
ES), the FIN Heart Symbol, the SL 'Little Heart' logo and the CZ 'Healthy Living' logo. 

131 

 
 
                                                      
Analysis 

The barrier is caused by EU legislation leaving flexibility in the level of harmonisation. At EU 
level,  food  labelling  is  governed  by  the  provisions  of  the  Regulation  on  the  provision  of  food 
information to consumer189. The Regulation establishes procedures that allow the Member States 
to have additional labelling requirements for specific categories of foods and for which there are 
no  harmonised  rules  at  EU  level.  The  same  Regulation  allows  Member  States  to  recommend 
front-of-pack nutrition labelling provided that specific requirements are met. 

Hotels and accommodation  

The European hospitality sector is a key contributor to growth in Europe.  

According to HOTREC190, the European umbrella association of hotels, restaurants and cafes, the 
sector contributes around 3.7% of the total GDP.  

Between 2009 and 2016, the European hospitality sector’s turnover increased by more than 35%, 
reaching a total of EUR 605 billion in 2016. 60% of its value added is generated by SMEs.  

The hospitality sector is composed of 2 million enterprises, 90% of which are micro enterprises, 
among which 200000 hotels. 

Hospitality  businesses  alone  provide  for  11.9  million  jobs  directly  (high  share  of  young  and 
women), representing 80% of the total EU tourism workforce.  

Hotels, restaurants, bars and similar establishments registered an annual 2,9% growth of 
employment  during  the  first  decade  of  the  millennium,  compared  to  0,7%  annual  
employment growth in the overall economy. The hospitality industry created 1.6 million 
new jobs between 2013 and 2016.  

The hotel sector has significant direct and indirect transversal effects on other economic 
sectors, including construction, agro-food, transport, retail, etc…  

The major megatrends affecting the sector are: 

  Sustainability:  the  hotel  industry,  while  being  among  the  leading  economic  sectors 
implementing practical steps with regards to resource efficiency, is still a sector of high 
environmental  footprint.  Targeted  initiatives  by  the  industry  in  improving  sustainable 
management include water and waste management, energy  efficiency and the reduction 
of food waste. 

  Digitalisation:  the  rapid  evolution  of  online  hotel  booking  and  review  sites  have  had  a 
strong  impact  on  the  industry  and  now  represent  a  vital  part  of  the  hotels’  distribution 
channels. In 2016, 49% of all bookings were made online, through the two major Online 
Travel  Agency  (OTAs191),  which  capture  60%  of  the  online  bookings  market  share  in 

189 Regulation (EU) No 1169/2011 of the European Parliament and of the Council of 25 October 2011 on 
the provision of food information to consumers, amending Regulations (EC) No 1924/2006 and (EC) 
No 1925/2006 of the European Parliament and of the Council, and repealing Commission Directive 
87/250/EEC, Council Directive 90/496/EEC, Commission Directive 1999/10/EC, Directive 
2000/13/EC of the European Parliament and of the Council, Commission Directives 2002/67/EC and 
2008/5/EC and Commission Regulation (EC) No 608/2004  

190 HOTREC, https://datas.com/hotrec/hotrec-eu-elections-white-paper/files/assets/basic-html/page-5.html  

191 Expedia and Booking Holdings (formerly Priceline) groups 

132 

 
                                                      
Europe. One study shows that independent hotels make up 67% of total room supply in 
the EU and that 71% of their online bookings are made through online platforms192. 
  New  business  models:  responding  to  customer  demand,  the  appearance  and  rapid 
evolution  of  the  new  business  models  of  the  collaborative  economy  in  the  tourism 
accommodation  sector  has  brought  significant  changes  to  the  overall  hospitality  and 
accommodation market and the entire tourism value chain.  

  Skills  and  competences  of  the  sector:  while  the  hotel  sector  offers  employment 
opportunities for people with all education levels, it has difficulty in finding and retaining 
professionals  with  the  right  skills.  It  calls  for  stronger  strategy  and  better  cooperation 
between  the  industry,  public  authorities  and  academia  in  closing  the  skills  gaps, 
reinforcing vocational education and training and apprenticeships193. 

  Hotel  classification  schemes  –  quality  of  service:  the  hotel  classification  schemes  or 
“stars system” – intended to communicate to customers about the quality of the hotel and 
its  services  offered  –  is  defined  at  national  level.  While  many  similarities  exist, 
discrepancies  have  been  detected  between  the  MS  systems.  The  industry  has  made 
significant  efforts  to  bring  consistency  into  hotel  stars  at  EU  level194-  with  limited 
results. 

51. Authorisation and registration requirements for hotels or other 
accommodation providers and related detailed requirements  

Description  

In  most  EU  Member  States,  there  are  authorisation  or  registration  requirements  applicable  to 
hotels and other types of accommodation providers. This may include either an authorisation by a 
competent authority (i.e. getting a licence) or a registration in the relevant register, without which 
the hotel or other accommodation provider is not allowed to start operations. 

Quantification 

No quantification is available 

Analysis 

Inadequate implementation of EU legislation: The tourism sector and in particular the hotels 
and  accommodation  sector  is  covered  by  the  Services  Directive.  The  Services  Directive  lays 
down  specific  rules  on  the  characteristics  that  the  authorisation  schemes  and  registration 
requirements imposed on the services providers have to comply with. In particular according to 

192 Source: IA of the P2B Regulation https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-

5222469_en 

193 https://www.hotrec.eu/wp-content/uploads/2019/09/2019-09-12-

Final_joint_statement_labour_shortages_and_skills_mismatches.pdf 

194 https://www.hotrec.eu/industry-projects/hotel-stars/ 

133 

 
 
                                                      
Article  9  of  the  Services  Directive,  the  authorisation  schemes  have  to  be  non-discriminatory, 
justified  by  an  overriding  reason  relating  to  the  public  interest,  and  the  objective  they  pursue 
cannot be attained by means of a less restrictive measure. The Directive lays down further rules 
on the authorisation schemes in Articles 10 to 15. 

However, restrictiveness of national requirements shows a significant dispersion across Member 
States. It evolved over time, being justified by consumer safety and public policy considerations. 
The  particular  way  in  which  Member  States  choose  to  regulate  a  hotel  or  an  accommodation 
provider  can  be  explained  by  a  number  of  factors,  such  as  business  culture,  efficiency  of 
alternative  means  of  consumer  protection  etc.  Strong  divergences  in  national  regulation  may 
indicate potential for further streamlining and improving the regulatory framework for hotels and 
accommodation providers. 

Information  about  national  rules  and  regulations  on  providing  services  (concerning  licences, 
authorisations,  permits,  and  notifications)  will  be  available  online,  also  in  English,  through  the 
Single Digital Gateway as of end-2020. 

Industrial machinery 

Some  barriers  are  emerging:  not  yet  widely  reported  by  businesses,  but  possibly  becoming 
important in the future. In industrial machinery, emerging barriers include  missing product and 
services standards in new technologies such as artificial intelligence and internet of things. This 
might  increase  future  compliance  costs  and  create  information  asymmetry.  Specifically,  in  an 
Industry 4.0 environment, the lack of access to proprietary interfaces and data formats can make 
interoperability  practically 
lock-in  and  reducing 
competition. Analysis and quantification of this barrier is beyond the scope of this report. 

impossible,  creating  a  strong  vendor 

The  sector  of  machinery  and  equipment  sector  recorded  a  turnover  in  2017  of  EUR  663  bn, 
production  of  EUR  609  billion  and  a  value  added  of  EUR  191  billion.  The  machinery  sector 
employed  2.8  million  people  in  2017  and  registered  82,350  enterprises.    The  share  of  persons 
employed  in  machinery  within  total  manufacturing  was  on  average  9.9%  in  the  EU  in  2017. 
Specialisation was much higher in Denmark (18%), Germany and Finland (about 15%), Austria 
and  Italy  (13%),  Sweden, Luxembourg  and  the  Netherlands (about  12%). The  least specialised 
countries were Greece, Lithuania and Latvia (about 3%), Malta and Cyprus (2.5% and 1.7%). In 
addition, it is a strategic input to important sectors such as automotive and aeronautics. It has the 
potential  to  leverage  or  develop  state  of  the  art  technologies,  such  as  digital,  3D  printing  and 
artificial intelligence.  

52. Undue additional national markings, standards and requirements 

Description  

Some  stakeholders  report  the  continued  existence  of  national  requirements,  i.e.  the  industrial 
machinery  is  required  to  follow  some  national  standards195.  Respondents  in  the  context  of  the 
evaluation of the Machinery Directive have indicated that national standards still take precedence 
in certain Member States. 

195 Evaluation of the Machinery Directive, SWD(2018) 161 final, pp. 20-21 

134 

 
                                                      
Similar  issues  were  raised  in  relation  to  customer  requirements.  Examples  were  given  for 
requests from users in Germany to have the 'GS' mark, which takes priority over the CE marking 
and  customers  in  France  demanding  that  machines  fulfil  Apave  standards,  on  top  of  European 
standards196.  Although  such  approaches  are  market/customer  driven  and  do  not  contradict  the 
law,  they  (may)  result  in  a  barrier  to  trade  if  the  adherence  to  the  national  standards  becomes 
uneconomical.  

Available quantification 

Only  9%  of  stakeholders  consulted  in  the  context  of  the  evaluation  of  the  Directive  in  2018 
reported  that in the  past  5 years  the  approval  of  their  product in  one  EU  country  had  not  been 
recognised in another country.  

Analysis 

Inadequate enforcement of EU legislation: The application of harmonised European standards 
in  the  EU  harmonised  area  and  national  standards  for  the  non-harmonised  area  should  remain 
voluntary. Rendering voluntary standards mandatory hinders the free movement of goods within 
the single market. 

Furthermore,  requesting  the  compliance  with  national  standards  (including  by  customers)  is 
incompatible  with the  harmonised  area on  product legislation.  For  example,  Article  7(2)  of  the 
Machinery  Directive  states  that  ‘Machinery  manufactured  in  conformity  with  a  harmonised 
standard, the  references to  which  have  been  published  in  the  Official  Journal  of  the  European 
Union, shall be presumed to comply with the essential health and safety requirements covered by 
such  a  harmonised  standard.’  When  the  reference  of  European  harmonised  standards  are 
published  in  the  Official  Journal  of  the  EU  in  support  of  the  relevant  EU  legislation,  the 
equivalent  national  standards  must  be  withdrawn.  The  use  of  such  European  harmonised 
standards enables the free movement of products within the single market.  Member States must 
not demand compliance with national standards when European harmonised standards are used. 
The EU has developed more than 750 standards for industrial machinery that apply throughout 
the single market and provide a presumption of conformity. While such instances do occur, they 
are  not  a  systematic  problem  and  only  affect  the effectiveness  of  the Machinery  Directive  to  a 
limited extent197.  

However, information about applicable European standards, technical specifications, and product 
certifications is available on Your Europe. National information will be available online, also in 
English, through the Single Digital Gateway at the end of 2020. 

EU legislation, using the Directive as legal instrument, allowed flexibility of implementation 
(leading  to  partial  harmonisation,  gold  plating):  Most  stakeholders  consulted  for  the 
evaluation of the Machinery Directive198 highlighted differences in the interpretation/ application 
of the requirements of the Directive between countries.  

196 Evaluation of the Machinery Directive, SWD(2018) 161 final, p. 21 

197 Evaluation of the Machinery Directive, SWD(2018) 161 final, p. 21 

198 Evaluation of the Machinery Directive, SWD(2018) 161 final, p. 21 

135 

 
                                                      
53. Uneven market surveillance and enforcement creating uneven playing 

field for industrial machines 

Description  

There is significant variation across Member States in the extent to which inspections lead to a 
determination of non-compliance – for example 6% in Austria compared with 79% in Denmark. 
Countries  differed  not  only  in  the  number  of inspections  carried out  and  products  targeted,  but 
also in their approaches to rectifying measures. Some focus mainly on voluntary measures, while 
others resort to restrictive measures and sanctions in the case of non-compliance199. 

Market  surveillance  and  enforcement  for  the  Machinery  Directive  are  generally  seen  as 
insufficient and ineffective. Nearly three-quarters of stakeholders consulted in the context of the 
evaluation of the Directive rated these as having limited or no effectiveness. In addition, the vast 
majority believed that the number and frequency of inspections are currently too low. 

Available quantification 

As can be seen in the table below, the average annual number of inspections carried out in 2013 
per  100  enterprises  varies significantly  among  the  19  Member  States  that  were involved  in the 
consultation. 

199 Evaluation of the Machinery Directive, SWD(2018) 161 final, pp. 26-27 

136 

 
                                                      
Table 9 Average annual number of inspections (2010-13) relevant to Sector 9 – Machinery, as a proportion of 
production value, imports and exports, by country200 

Machinery 

Number of 
Inspections… 

…Per EUR 1bn 
of export 
value (2013) 
56 
263 
22 
9 
17 
41 
9 
20 
29 
8 
1 
3 
21 
349 
5 
1 
7 
21 
11 
14 
Sources:  Inspections  (Report  on  the  Member  States  –  Sector  9  Machinery),  Number  of  enterprises  and  Production 
values (Eurostat [sbs_na_ind_r2]), Import / export values (COMEXT EU trade data). 

Sweden 
Bulgaria 
Poland 
France 
Hungary 
Romania 
Czechia 
Finland 
Slovenia 
Denmark 
Italy 
Belgium 
Estonia 
Cyprus 
Ireland 
Austria 
Portugal 
Greece 
Latvia 
EU (19 countries) 

…Per EUR 1bn 
of production 
value (2013) 
91 
785 
101 
19 
81 
206 
38 
18 
130 
9 
1 
9 
239 
1661 
27 
3 
23 
47 
116 
27 

…Per EUR 1bn 
of import 
value (2013) 
61 
200 
22 
7 
20 
35 
11 
20 
38 
10 
2 
2 
19 
133 
5 
2 
6 
8 
8 
16 

…Per 100 
enterprises 
(2013) 
60 
109 
19 
15 
23 
44 
8 
17 
24 
9 
0 
7 
51 
120 
19 
4 
3 
2 
13 
13 

1,904 
951 
884 
727 
570 
559 
434 
248 
178 
152 
103 
93 
76 
71 
52 
52 
52 
42 
22 
7,168 

Analysis 

Inadequate operational implementation of EU legislation: the main problems and barriers to 
the effective identification and removal of non-compliant machinery put forward by stakeholders 
included  a  lack  of  resources  and  funding,  as  well  as  a  lack  of  cross-border  cooperation,  poor 
targeting of efforts, a lack of staff knowledge/competence and an imbalanced focus on consumer 
products201.  

However, it is important to note that the Commission has already addressed most of these issues 
in the context of the revision of the legal framework for market surveillance. As a consequence, 
the implementation of the new Regulation on Market Surveillance will strengthen the framework 
for controls  on  products, including  industrial  machinery,  entering  the single  market  and  should 
improve cooperation between market surveillance and customs authorities. 

200 Evaluation of the Machinery Directive, SWD(2018) 161 final, pp. 26 

201 Evaluation of the Machinery Directive, SWD(2018) 161 final, pp. 27-28 

137 

 
                                                      
54. Different regulatory requirements among Member States for modifying 

or refurbishing construction and agricultural machinery in use 

Description  

The  Member  States  apply  different  regulatory  requirements  for  machinery  in  use,  which  are 
modified or refurbished. 

Available quantification 

Quantification  of  this  barrier  is  unavailable.  Although  industrial  machines  are  not  usually 
refurbished, this happens frequently with construction and agricultural machines. 

Analysis 

Limited role of EU legislation: Member States interpret differently the criteria to consider that a 
‘substantially modified” machine is new. In practice, the Machinery Directive sets requirements 
for design and manufacturing of machines and does not apply after the placement in the market. 
The  Directive  on  Work  Equipment  governs  industrial  machinery  in  use/in  service.  The  EU 
legislative  framework  does  not  clarify  which  directive  applies  in  the  event  of  a  substantial 
modification.   

The Blue Guide on the free movement of goods has provided some guidance, which states that if 
the  product  encounters  a  substantial  modification,  it  becomes  a  new  product  and  those  that 
modify the product must go through a new conformity assessment according to the relevant piece 
of legislation. Some Member States have contested this approach. Discussions on the concept of 
substantial  modification  are  going  on  in  view  of  a  potential future  regulatory  framework  either 
general or sectorial.  

Information  about  applicable  European  standards,  technical  specifications,  and  product 
certifications are available on Your Europe. National information will be available online, also in 
English, through the Single Digital Gateway at the end of 2020. 

Intellectual property agents 

55. National entry and exercise requirements for patents and trademark 

agents 

Description 

Intellectual  property  plays  an  important  role  in  the  single  market  supporting  many  important 
economic activities, including digital services. 

Intellectual  property  agents  may  face  obstacles  at  different  stages  of  their  cross-border 
operations,  both  when  providing  services on  a temporary  basis  and  when  setting  up  a  business 

138 

 
abroad.  This  includes  many  of  the  cross-cutting  horizontal  issues  described  above.  More 
specifically,  for  temporary  and  occasional  provision  of  services,  the  principle  of  free 
movement of professionals applies and in most cases only allows a prior declaration requirement 
by  the  host  Member  State.  However,  when  establishing  as  self-employed  or  as  a  company  in 
another Member State where the profession is regulated, qualification requirements and a range 
of  other  restrictions  (such  as  registration  with  a  professional  association)  might  apply.  In 
addition,  the  so-called  exercise  requirements  linked  to  qualifications  can  come  into  play  for 
intellectual  property  agents  (e.g.  multidisciplinary  practices,  corporate  form  and  ownership 
restrictions).  

National  entry  and  exercise  requirements  for  the  profession  of  intellectual  property  agent  may 
thus  create  important  obstacles  for  firms  and  individuals  in  the  single  market.  More  details  on 
these are provided below. 

Entry  to  the  profession  of  patent/trademark  agent  is  protected  either  by  a  title  or  a  reserve  of 
activities, or both in 24 Member States (all Member States but Denmark, Malta and Latvia). The 
scope of reserved of activities varies across Member States.  

Requirements additional to qualification requirements often imposed by Member States include: 

-  Prior professional experience (required in most MS); 
-  Professional indemnity insurance (required in 11 MS); 
-  Corporate  structure  restrictions  (e.g.  on 
multidisciplinary practices; exist in 11 MS). 

legal  form,  shareholding/voting  rights, 

The following graph demonstrates the divergence in intensity and type of requirements imposed 
in different Member States: 

Note:  European  Commission  (COM(2016)  820  and  SWD  (2016)  436).  Restrictiveness  indicator  measures  the  overall  intensity  of 
restrictions in national regulation as regards access to and exercise of certain regulated professions, quantified on a scale from 0 to 6. 

More specifically, the categories of restrictions above include: 

-  Regulatory approach: exclusive or shared reserved activities; protection of title. 
-  Qualification  requirements:  years  of  education  and  training;  number  of  pathways  to 
obtain qualifications; existence of mandatory traineeship; obligation to have professional 
experience  to  get  full  capacity;  existence  of  mandatory  state  exam;  continuous 
professional development obligations.  

-  Other  entry  requirements:  compulsory  membership  or  registration  in  a  professional 
body; limitation to the number of licences granted; territorial validity of the professional 
qualification and/or licence; age restriction; other authorisation requirements.  

-  Exercise  requirements:  restriction  on  corporate  form/type  of  entity;  shareholding 
requirements;  voting  rights  control;  prohibitions  on  joint  exercise  of  professions; 

139 

 
 
incompatibilities of activities for a professional; professional indemnity insurance; tariff 
restrictions; restrictions on advertising. 

Available quantification 

Based on the Member States’ notifications in the EU Regulated Professions Database, there are 
22  regulated  professions  registered  under  the  generic  title  ‘Patent/trademark  agent’  across  the 
EU.  

Analysis 

Restrictive  national  regulatory  environment  (with  limited  role  of  EU  legislation):  
Professional services can be regulated at EU, national, regional and sometimes local levels. The 
profession  of  intellectual  property  agent  is  regulated  in  the  majority  of  Member  States.  In  this 
context,  Member  States  require  a  certain  level  of  qualification  and  usually  impose  a  range  of 
other  requirements.  However,  some  of  the  regulatory  requirements  and  their  accumulation  can 
become  disproportionate  and  costly  for  workers,  the  self-employed  and  companies  operating 
cross-border. 

As  explained  in  the  analysis  of  the  barrier  ‘Difficulties  with  accessing  a  profession’,  the 
restrictive  regulation  across  Member  States  inevitably  creates  barriers  for  the  mobility  of 
professionals in the single market. The different regulatory approaches taken by Member States 
have a significant impact on cross-border establishment or provision of services.  

Directive  2005/36/EC  establishes  a  system  of  mutual  recognition  of  professional  qualifications 
and applies to intellectual property agents in order to allow for mobility. The Services Directive 
(2006/123/EC) also addresses a range of obstacles to free movement of services not covered by 
other  pieces  of  EU  law  such  as  Directive  2005/36/EC  on  the  recognition  of  professional 
qualifications.  The  Services  Directive  requires  Member  States  to  reduce  or  remove  regulatory 
and administrative barriers dissuading service providers to operate cross-border.  

At the same time, the administrative burden on applicants when going through these procedures 
remains  heavy  in  many  cases.  Hence,  in  addition  to  regulatory  complexity  (e.g.  concerning 
authorisation  procedures  and  conditions,  qualification  requirements  or  requirements  related  to 
insurance),  the  sector  encounters  administrative  complexity  including  lack  of  relevant 
information and of procedures available online. 

In  2017,  the  Commission  issued  a  detailed  guidance  to  Member  States  on  reform  needs  in 
regulation  of  professional  services,  including  patent  agent  services.  Reforms  in  professional 
services  are  also  part  of  the  country-specific  recommendations  in  the  context  of  the  European 
Semester. 

A  directive  on  a  proportionality  test  before  adoption  of  new  regulation  of  professions  or  when 
amending the existing one was adopted in July 2018 and will have to be implemented by Member 
States by July 2020. It requires Member States to undertake an assessment of proportionality in 
accordance with the common framework laid down in this Directive before they introduce new, 
or amend existing, legislative, regulatory or administrative provisions restricting access to, or the 
pursuit of, regulated professions.  

Moreover,  Directive  2005/36/EC  together  with  the  Services  Directive  (2006/123/EU)  require 
Member States to establish electronic National Points of Single Contact which have to provide 
access to information on all requirements that providers must comply with when establishing or 
providing services, including as regards regulated professions, as well as to online procedures for 

140 

 
such  requirements,  such  as  e.g.  authorisation  schemes  or  the  recognition  of  professional 
qualifications. Information about European rules on the recognition of professional qualifications 
is also available on Your Europe. National information and access by electronic means to a range 
of  procedures  will  be  available  also  through  the  Single  Digital  Gateway,  including  languages 
understood by cross-border users (like English), at the end of 2020.     

Legal 

The  provision  of  legal  services  is  a  sector  of  considerable  economic  importance.  According  to 
Eurostat’s Structural Business Statistics, the total turnover in the EU is estimated at roughly EUR 
150  billion  in  2016. The UK  is the  biggest  national  market  with  a turnover  of  almost  EUR  40 
billion in 2016, followed by Germany and France. More than 600,000 enterprises are registered 
that carry out legal activities in the EU. The sector provides employment to 1.6 million persons. 
The  vast  majority  of  businesses  in  the  sector  are  thus  SMEs  (average  number  of  persons 
employed is 2.6). An important part of the activities of the sector is the provision of services to 
other businesses (more than EUR 60 billion in 2016 in those countries where data is available). In 
principle, all other sectors need some form of legal advice. The provision of legal advisory and 
representation  services  in  judicial  procedures  concerning  business  and  commercial  law  is  the 
economically most important activity (more than EUR 20 billion). 

56. National entry and exercise requirements for legal services 

Description 

Legal  service  providers  may  face  obstacles  at  different  stages  of  their  cross-border  operations, 
both when providing services on a temporary basis and when setting up a business abroad. This 
includes  many  of  the  cross-cutting  horizontal  issues  described  above.  Both  for  temporary 
provision  of  services  and  when  establishing  as  a  self-employed  or  as  a  company  in  another 
Member State, the professional title of lawyer is recognized automatically. When establishing as 
a  self-employed  or  as  a  company  in  another  Member  State,  the  automatic  recognition  of  the 
professional  title  of  lawyer  is  regulated.  Still,  some  professional  regulation  requirements,  in 
particular  broad  reserves  of  activities,  may  create  cross-border  obstacles.  In  addition,  the  so-
called exercise requirements linked to qualifications can come into play (e.g. multidisciplinary 
practices, corporate form and ownership restrictions). 

Certain  legal  professions  are  regulated  in  all  Member  States,  which  means  that  in  order  to 
practice  these  professions  Member  States  require  a  certain  level  of  qualification  and  usually 
impose  a  range  of  other  requirements.  Entry  to  the  profession  is  regulated  with  a  reserve  of 
activities/protected title in all Member States. Member States have adopted different approaches 
as to the specific activities reserved to lawyers.  

Requirements often imposed by Member States include: 

-  Mandatory  registration  with  a  professional  body,  often  through  an  authorisation 

procedure (required in all MS); 

-  Continuous professional development (required in 22 MS)  
-  Professional indemnity insurance (required in most MS); 

141 

 
 
-  Corporate  structure  restrictions  (e.g.  on 

legal  form,  shareholding/voting  rights, 

multidisciplinary practices; exist in most MS). 

The following graph demonstrates the divergence in intensity and type of requirements imposed 
in different Member States: 

Note:  European  Commission  (COM(2016)  820  and  SWD  (2016)  436).  Restrictiveness  indicator  measures  the  overall  intensity  of 
restrictions in national regulation as regards access to and exercise of certain regulated professions, quantified on a scale from 0 to 6. 

The categories of restrictions above include: 

-  Regulatory approach: exclusive or shared reserved activities; protection of title. 
-  Qualification  requirements:  years  of  education  and  training;  number  of  pathways  to 
obtain qualifications; existence of mandatory traineeship; obligation to have professional 
experience  to  get  full  capacity;  existence  of  mandatory  state  exam;  continuous 
professional development obligations.  

-  Other  entry  requirements:  compulsory  membership  or  registration  in  a  professional 
body; limitation to the number of licences granted; territorial validity of the professional 
qualification and/or licence; age restriction; other authorisation requirements.  

-  Exercise  requirements:  restriction  on  corporate  form/type  of  entity;  shareholding 
requirements;  voting  rights  control;  prohibitions  on  joint  exercise  of  professions; 
incompatibilities of activities for a professional; professional indemnity insurance; tariff 
restrictions; restrictions on advertising 

Available quantification 

Based on the Member States’ notifications in the EU Regulated Professions Database, there are 
42 regulated professions registered under the generic title ‘Lawyer/Barrister/Solicitor’ across the 
EU.  

Commission analysis indicates that for instance reducing the level of regulatory restrictiveness in 
the  sector  of  legal  services  has  the  potential  to  increase  market  entry  rates  of  new  service 
providers by up to 13%.202  

Analysis 

Restrictive national rules (with limited role of EU legislation): Directive 98/5/EC203 organises 
the automatic recognition of the professional title of lawyer when establishing as self-employed 

202 European Commission, “Business services – Assessment of Barriers and their Economic Impact”, 2015 

142 

 
 
                                                      
or  as  a  company  in  another  Member  State.  Additionally,  Directive  77/249/EEC204  ensures  the 
automatic recognition of the professional title of lawyer in another Member State for temporary 
and  occasional  provision  of  services.  In  addition,  Directive  2005/36/EC  lays  out  the  general 
principles  of  cross-border  recognition  of  professional  qualifications  in  case  of  immediate 
establishment under the home country professional title.  

The  Lawyers  Directives  ensure  the  automatic  recognition  of  professional  title  of  lawyer  across 
Member States without harmonising the minimum training requirements based on the principle of 
mutual  recognition,  leaving  certain  rules  such  as  restrictions  on  multidisciplinary  practices, 
corporate form and ownership restrictions, as well as specific activities reserved to lawyers, to be 
defined at Member State level. Some of the regulatory requirements and their accumulation can 
become  disproportionate  and  costly  for  workers,  the  self-employed  and  companies  operating 
cross-border.  Online  information  on  applicable  formalities  is  often  scarce,  hard-to-find  and 
predominantly  in  the  local  language.  E-procedures  are  only  available  to  a  limited  extent. 
Restrictive  regulation,  notably  a  broad  range  of  activities  reserved  to  lawyers,  may  prevent 
(cross-border) start-ups, especially in innovative services such as ‘legal tech’. 

In  2017,  the  Commission  issued  a  detailed  guidance  to  MS  on  reform  needs  in  regulation  of 
professional services, including legal services. Reforms in professional services are also part of 
the country-specific recommendations in the context of the European Semester. A directive on a 
proportionality  test  before  adoption  of  new  regulation  of  professions  or  when  amending  the 
existing  one  was  adopted  in  July  2018  and  will  have  to  be  implemented  by  Member  States  by 
July 2020. It requires Member States to undertake an assessment of proportionality in accordance 
with  the  common  framework  laid  down  in  this  Directive  before  they  introduce  new,  or  amend 
existing, legislative, regulatory or administrative provisions restricting access to, or the pursuit of, 
regulated professions.  

The Services Directive (2006/123/EC) also plays an important role, as regards the requirements 
in  scope  of  that  Directive  that  are  not  covered  by  other  pieces  of  EU  law  such  as  Directive 
2005/36/EC on the recognition of professional qualifications. It addresses a range of obstacles to 
free movement of services by requiring Member States to adopt reforms aimed  at removing or 
reducing  them.  These  include  regulatory  barriers  but  also  obstacles  of  administrative  nature 
dissuading service providers to operate cross-border. 

Moreover,  Directive  2005/36/EC  together  with  the  Services  Directive  (2006/123/EU)  require 
Member States to establish electronic National Points of Single Contact which have to provide 
access to information on all requirements that providers must comply with when establishing or 
providing services including as regards regulated professions as well as to online procedures for 
such requirements, as e.g. authorisation schemes or the recognition of professional qualifications. 
Information  about  European  rules  on  the  recognition  of  professional  qualifications  is  also 
available on Your Europe.  

National information and access by electronic means to a range of procedures will be available 
also through the Single Digital Gateway,  including  languages understood by cross-border users 
(like English), at the end of 2020. 

203 Directive 98/5/EC organises the automatic recognition of the professional title of lawyer in another 

Member State in case of establishment. Under that directive, a lawyer qualified in his home Member 
State and registered there as exercising lawyer can establish in another Member State and practice 
under his home professional title. 

204 Directive 77/249/EEC organises the automatic recognition of the professional title of lawyer in another 
Member State in case of temporary provision of services. Under that Directive, a lawyer qualified in 
his home Member State and registered there as exercising lawyer can provide temporary services 
under his home professional title in another Member State without any obligation of prior registration.   

143 

 
                                                                                                                                                              
Pharma 

The pharmaceutical industry alone invests over EUR 35 billion in R&D in Europe, the highest 
proportion of all industrial sectors. In 2018, the sector registered a EUR 65.3 billion trade surplus   
and a EUR 172 billion market value, representing more than 650 thousand direct jobs. 

Challenges on the supply and demand sides 

With an ageing population and a rising burden of disease, medicines are one of the key elements 
of health policy. Individual patients and health systems overall across the EU expect to benefit 
from  safe,  effective,  state-of-the-art  and  affordable  innovative  pharmaceuticals  that  address 
unmet medical needs.  

Innovative  technologies  such  as  genome  editing,  digital  solutions  and  artificial  intelligence  are 
rapidly  transforming  the  pharmaceutical  sector  and  changing  the  way  medicines  are  developed 
and  used.  Traditional  boundaries  with  other  sectors  may  disappear  in  the  future  (e.g.  between 
medicines  and  medical  devices,  between  products  and  services).  The  pharmaceutical  industry 
also shares challenges with other industrial sectors. Examples include the increasing dependency 
on  non-EU  countries  for  supplies  (80%  of  active  ingredients  come  from  China  and  India)  and 
competition  with  companies  operating  in  jurisdictions  with  lower  environmental  or  social 
standards.  

The 2016 Council conclusions on strengthening the balance in the pharmaceutical systems in the 
EU  noted  “with concerns  an  increasing  number  of  examples  of  market  failures  in  a  number  of 
Member  States,  where  patients’  access  to  effective  and  affordable  essential  medicines  is 
endangered by very high and unsustainable price levels, market withdrawal of products that are 
out-of-patent,  or  when  new  products  are  not  introduced  to  national  markets  for  business 
economic  strategies  and  that  individual  governments  have  sometimes  limited  influence  in  such 
circumstances”.    The  conclusions  also  highlighted  “that  the  functioning  of  the  pharmaceutical 
system  in  the  EU  and  its  Member  States  depends  on  a  delicate  balance  and  a  complex  set  of 
interactions  between  marketing  authorisation  and  measures  to  promote  innovation,  the 
pharmaceutical  market,  and  national  approaches  on  pricing,  reimbursement  and  assessment  of 
medicinal  products.(…)  Several  Member  States  expressed  concerns  that  this  system  may  be 
imbalanced  and  that  it  may  not  always  promote  the  best  possible  outcome  for  patients  and 
society.” 

Access  to  medicines  on  EU  markets  is  indeed  a  growing  issue that  concerns  both  new  and  old 
products.  On  the  one  hand,  new  innovative  therapies  do  not  always  reach  patients  due  to 
companies’ marketing strategies, high prices or pricing mechanisms. On the other hand, supply 
disruptions and shortages of well-established essential medicines have increased in recent years. 
The  reasons  for  these  shortages  differ  across  Member  States.  Although  they  affect  all  EU 
countries, small markets tend to face these problems more acutely.   

Specificities of pharmaceutical “goods” 

The  pharmaceutical  sector  is  highly  regulated.  The  primary  purpose  of  rules  covering  the 
authorisation, distribution and monitoring of medicinal products is to safeguard public health, to 
improve health outcomes and to ensure the continuous quality, safety and efficacy of medicinal 
products administered to patients while allowing the free movement and availability of medicinal 
products.  The  development  of  medicines  is  a  lengthy  and  costly  process  involving  both  public 
and  private  financing.  Obtaining  a  marketing  authorisation  is  a  prerequisite  for  placing  a 

144 

 
pharmaceutical  product  on  the  market.  The  quality,  safety  and  efficacy  of  pharmaceuticals  are 
continuously  monitored  over  their  life  cycle  and  may  lead  to  new  evidence  that  obliges 
competent  authorities  and  market  authorisation  holders  to  react  and  correct  or  adjust  previous 
scientific  assessments.  Production  and  distribution  are  subject  to  thorough  quality  control  and 
quality  assurance  requirements.  While  sometimes  decried  as  barriers,  such  requirements 
constitute legitimate and proportionate public health safeguards. 

The retail of medicinal products is a national competence, subject to compliance with the Treaty 
provisions. In many EU countries, only pharmacists are authorised to sell medicines to the public. 
The  Member  States  choices  regarding  the  organisation  of  the  retail  depend  on  the  role  of 
pharmacists  in  the  health  system.  It  is  influenced  among  other  things  by  the  availability  of 
medical practitioners or the level of consumption of medicines.  

The  online  sale  of  medicinal  products  is  limited  and  regulated  in  many  Member  States  for  the 
already  mentioned  public  health  concerns.  When  organising  the  retail  of  medicines  and 
regulating internet sales of medicinal products, Member States needs to weigh the risk to public 
health  stemming  from  mis/overconsumption  of  medicines  or  the  danger  of  falsified  products 
entering the legal supply chain against the free movement of goods principle. 

57. Restrictions to e-commerce of medicines based on health grounds 

Description  

Currently, most Member States restrict the supply via the internet of medicines. The restrictions 
concern mostly the supply of prescription medicines, and aim to fight, among  other things, the 
abuse,  misuse,  and  falsification  of  medicines.  Such  restrictions  need  to  be  justified  on  public 
health grounds, and not unduly restrict the functioning of the internal market. The risk of falsified 
products  entering  the  supply  chain  is  real  and  well  documented.  It  constituted  one  of  the  key 
reasons for the European Commission to propose the Directive on Falsified Medicines205, which 
introduced  a  series  of  measures  aiming  to  safeguard  the  functioning  of  the  internal  market  for 
medicinal  products,  whilst  ensuring  a  high  level  of  protection  of  public  health against falsified 
medicinal products.  

Available quantification 

The  risk  of  falsification  affects  all  medicinal  products  and  is  significant.  Between  April  and 
October 2018, Europol seized 13 million doses worth of around EUR 165 million in the context 
of the ‘MISMED 2’ operation targeting the illegal trafficking of medicines throughout Europe. 

Analysis 

The root causes of this barrier are complex EU legislation and requirements justified by public 
policy reasons (specifically, protection of patients and public health). Medicines are clearly not a 

205 Directive 2011/62/EU of the European Parliament and of the Council of 8 June 2011 amending 
Directive 2001/83/EC on the Community code relating to medicinal products for human use, as regards the 
prevention of the entry into the legal supply chain of falsified medicinal products, OJ L 174, 1.7.2011, p. 
74 

145 

 
                                                      
product like any other. Medicines address necessary vital needs that might involve life and death 
stakes.  The  free  movement  of  medicines  needs  to  take  into  account  their  particular  nature,  for 
instance the requirement of an authorisation for the market of a Member State in question. These 
products  are  not  are  not  freely  available,  but  subject  to  the  prescription  of  the  physiologist 
treating  a  particular  patient,  and  available to  them  via  a  regulated  supply  chain. The  beneficial 
effect of medicine will only be achieved if a proper posology is followed, which can be ensured 
by the advice of pharmacist. This is particularly the case for medicines available over the counter. 
The Falsified Medicinal Directive minimises the risk of falsified medicines entering into the legal 
supply chain via the internet by introducing an EU-wide logo to identify legal online pharmacies 
and  setting  specific  monitoring  conditions  on  pharmacies  engaged  in  such  activities.  Lack  of 
proper  information  in  Member  States  on  the  logo,  together  with  insufficient  enforcement, 
constitutes  a  risk.  Fake  online  pharmacies  may  use  the  logo  with  a  flag  of  a  Member  State 
unlikely  to  take  action  against  such  a  pharmacy.  If  at  the  same  time  patients  are  not  properly 
informed  on  how  the  verification  mechanisms  of  the  logo  works,  the  logo  may  provide  false 
reassurance  and  defeat  its  original  purpose.  The  purpose  is  to  safeguard  the  functioning  of  the 
internal market for medicinal products, whilst ensuring a high level of protection of public health 
against  falsified  medicinal  products.  Specific  conditions  regarding  the  storage  or  transport  of 
certain medicines may also justify online retail supply restrictions. 

The online supply of medicinal products (both prescription and over the counter) is covered by 
various  pieces  of  secondary  Union  legislation  and,  ultimately,  by  the  Treaty  provisions  on  the 
free movement of goods (Art. 34-36 TFEU). As an information society service, the online supply 
of  medicinal  products  is  subject  to  Directive  2000/31/EC206  (e-commerce),  which  subjects  the 
restriction to providing such services to a certain number of conditions. Directive 2001/83/EC207 
subjects  the  entitlement  to  supply  medicinal  products  via  the  Internet  to  the  legislation  of  the 
Member  State  of  establishment.  Medicinal  products  sold  online  have  to  comply  with  the 
legislation of the Member State of destination. Member States may impose additional conditions 
for the retail supply of medicines sold by Internet on their territory if justified on public health 
grounds, in the light of the jurisprudence developed by the Court of Justice under Articles 34-36 
TFEU.  Directive  2001/83/EC  recognises  the  Member  States’  competence  to  limit  the  internet 
sales  (or  distance  sales)  of  medicines  to  those  that  do  not  require  a  prescription  (i.e.  ‘over  the 
counter’)  only  for  reasons  of  public  health  protection.  In  order  to  minimise  the  risk  to  public 
health  due  to  falsified  medicines  entering  into  the  legal  supply  chain  via  internet  the  Falsified 
Medicines Directive introduced a common, EU-wide logo to identify legal online pharmacies. 

58. Restrictions regarding the establishment, ownership and advertising of 

pharmacies and health care service providers 

Description 

Pharmacies  face  requirements  prescribing  a  minimum  distance  between  pharmacies  and  a 
minimum number of inhabitants of areas where a new pharmacy can be set up (geographical and 

206 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') OJ L 178, 17.7.2000, p. 1 
207 Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the 
Community code relating to medicinal products for human use, OJ L 311, 28.11.2001, p. 67 

146 

 
 
                                                      
demographical  restrictions).  For  example,  some  Member  States  set  the  minimum  unit  of 
population  required  for  the  opening  of  a  pharmacy,  as  a  general  rule,  at  2  800  inhabitants  per 
establishment  and  the  minimum  distance  between  pharmacies  at  250  metres.  In  detail,  these 
general provisions are usually more nuanced.  

Member  States  also  regulate  the  ownership  of  pharmacies  (restrictions  on  who  can  own  and 
operate a pharmacy and how). According to the case-law, Member States are entitled to require 
that medicinal products be supplied by pharmacists enjoying genuine professional independence. 
Some  Member  States  stipulate  that  only  pharmacists  may  own  and  operate  a  pharmacy, 
sometimes also limiting the number of pharmacies that can be owned by a single pharmacist to 
four. Other Member States prescribe that pharmacies should be at least controlled by pharmacists 
(51% of shares). Moreover, in some Member States pharmacies cannot be owned by wholesalers, 
doctors or producers of medicine to exclude any potential conflict of interest. 

Lastly,  there  are  also  bans  on  advertising  in  the  healthcare  sector,  including  pharmacies  (cf. 
Burdensome advertising restrictions). For example, some Member States prohibit  advertising of 
pharmacies  and  their  activities.  Pharmacies  can  communicate  only  their  address  and  opening 
hours, which considerably limits their possibilities to inform patients about their services. 

Other  Member  States  ban  in  a  similar  way  professional  communication  by  dentist  or  doctors. 
These  medical  professions  are  only  allowed  to  make  themselves  known  to  their  potential 
clientele,  affixing  a  plaque  at  the  place  of  practice.  In  those  Member  States,  doctors  or  dentist 
cannot use any other type of media (print, internet) for advertising. 

Available quantification 

No quantification available. 

Analysis 

Some  national  regulations  restrict  the  establishment  and  ownership  of  pharmacies  or  impose 
limitations  in  terms  of  advertising.  There  are  also  restrictions  as  regards  healthcare  service 
providers.  

The  CJEU  has  accepted  that  restrictions  on  a  minimum  distance  between  pharmacies  and  a 
minimum number of inhabitants of areas where a new pharmacy can be set up can be justified, 
when they allow for an even distribution of pharmacies and their services across the country and 
if they pursue this objective in a coherent manner.208 Whether such a barrier to the single market 
is justified will thus depend on the geographical structure of the Member State concerned, such as 
the existence of isolated areas and the distribution of population.  

As regards ownership of pharmacies, the Court of Justice has held that such a restriction could be 
justified  in  the  light  of  public  health.  It  concluded  that  there  is  a  risk  that  legislative  rules 
designed  to  ensure  the  professional  independence  of  pharmacists  would  not  be  observed  in 
practice, given that the interest of a non-pharmacist in making a profit would not be tempered in a 
manner equivalent to that of self-employed pharmacists. The fact that pharmacists would work as 

208 CJEU case C-570/07 and 571/07, Blanco Perez and Chao Gomez, ECLI:EU:2010:300.  

147 

 
                                                      
employees  under  a  non-pharmacists  operator  could  make  it  difficult  for  them  to  oppose  profit-
driven instructions (and protect the interest of the patient).209 

With regard to advertising restrictions, the Court of Justice has held that Article 8(1) of Directive 
2000/31/EC on electronic commerce precludes national legislation, which imposes a general and 
absolute prohibition of any advertising relating to the provision of oral and dental care services, 
in  as  much  as  it  prohibits  any  form  of  electronic  commercial  communications,  including  by 
means  of  a  website.  In  the  same  vain,  Article  56  TFEU  precludes  national  legislation,  which 
imposes a general and absolute prohibition of any advertising relating to the provision of oral and 
dental  care  services210.  The  Court  has  considered  such  general  bans  on  advertising 
disproportionate. 

Member States can introduce restrictions with regard to health care services provided that they 
are  applied  in  a  non-discriminatory  manner,  justified  by  overriding  reasons  of  general  interest 
(for  example  the  protection  of  public  health)  and  proportionate;  which  means these  restrictions 
need  to  be  suitable  for  securing  the  attainment  of  the  objective  which  they  pursue,  cannot  go 
beyond  what  is  necessary  to  attain  it,  and  are  pursued  in  a  consistent  and  systematic  manner.  
Article  168(7)  TFEU  grants  Member  States  the  responsibility  for  the  definition  of  their  health 
policy and for the organisation and delivery of health services and medical care. Nevertheless, in 
doing so, they have to respect the fundamental freedoms of the Single Market. It should be noted 
that  the  establishment  of  pharmacies  or  advertising  by  health  care  professionals  are  issues  not 
covered  by  the  Services  Directive  (Article  2f  on  exclusion  of  health  care  services).  In  recent 
years,  the  Court  has  delivered  several  judgments  related  to  restrictions  on  the  establishment  of 
healthcare operators. In these decisions, the Court confirmed that EU law does not detract from 
the power of Member States to organise their health and social security systems and to adopt, in 
particular,  provisions  governing  the  organisation  and  provision  of  health  services  and  medical 
care, as long as they comply with the principles of non-discrimination and proportionality.211 

In  this  context,  a  Directive  on  a  proportionality  test212  before  adoption  of  new  regulation  of 
professions or amending the existing rules was adopted in June 2018. It requires Member States 
to  undertake  an  assessment  of  proportionality  in  accordance  with  the  common  framework  laid 
down  in  this  Directive  before  they  introduce  new,  or  amend  existing,  legislative,  regulatory  or 
administrative  provisions  restricting  access  to,  or  the  pursuit  of,  regulated  professions.  This 
would cover not only rules concerning professional qualifications but also requirements related to 
establishing  pharmacies,  such  as  territorial  restrictions  or  ownership  requirements,  as  well  as 
advertising restrictions. 

209 CJEU cases C-531/06 Commission/Italy, and C-171/07 and C-172/07 Apothekerkammer des Saarlandes 

ao,. 

210 CJEU case C-339/15  Luc Vanderborght.  

211 CJEU cases C-169/07 Hartlauer, C-367/12 Sokoll-Seebacher, C-171/07 and C-172/07 

Apothekerkammer des Saarlandes ao, C-570/07 and 571/07, Blanco Perez and Chao Gomez, and C-
339/15 Vanderborght. 

212 Directive (EU) 2018/958 of the European Parliament and of the Council of 28 June 2018 on a 

proportionality test before adoption of new regulation of professions, OJ L 173, 9.7.2018, p. 25 

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59. Labelling language requirements  

Description  

Article 63 of Directive 2001/83/EC requires that the labelling of a medicinal product shall appear 
in the official languages of the Member State where the product is marketed as specified by that 
Member State.  

Available quantification 

This requirement applies to all marketing authorisations, i.e. all medicines placed on the market. 
It  is  worth  noting  in  this  context  that  80%  of  EU  citizens  already  search  for  health-related 
information on the internet. 

Analysis 

Even though this requirement is due to the need for patients and healthcare professionals to have 
easy access to clear and understandable information on the product, this has been identified as a 
barrier as the current rules focus on information to patients through printouts and do not reflect 
technological  possibilities  to  provide  the  same  information  in  an  electronic  format.  A  better 
integration of such possibilities may reduce the burden on businesses when marketing the product 
and  supporting  a  more  flexible  re-allocation of  products to  meet  demand  throughout  the  single 
market,  provided  that  "non-digital  natives"  will  continue  to  have  access  to  information  in  the 
language they need.   

The  European  Medicines  Agency  is  currently  conducting  a  study  on  electronic  product 
information,  which  may  provide  additional  data  regarding  the  burden  imposed  by  the  current 
language requirements. 

The  barrier  relates  to  the  aim  of  ensuring  that  patients  in  a  given  Member  State  can  easily 
understand  how  to  use  a  medicine  as  well  as  its  benefits  and  risks.  Medicines  contain  active 
substances that provide a therapeutic benefit as primary effect but can also generate side effects. 
Inappropriate use can have disastrous consequences, at the level of the patient or the population 
as a whole (e.g. development of resistance to antibiotics).  

Retail 

The retail sector represents 4.5% of GVA (2015) and 8.6% of employment in the EU.  

Its importance is even more visible when combined with the wholesale sector. The two together 
produce  10%  of  EU  value  added  and  employ  13%  of  the  total  workforce.  Retail  is  also  very 
important  for  youth  employment  (around 13%  of  retail  employees  are in the  15-24  age  range). 
For  many,  this  is  the  first  job.  From  all  young  people  employed,  21%  worked  in  retail  and 
wholesale, compared to 14% of people between 25 and 49 years old and 12% for people between 
50 and 64 years old.  

Nearly 5.5 million (23% of all non-financial business economy) companies are active in the EU 
retail  and  wholesale  sectors  (3.6  million  in  retail  and  1.8  million  in  wholesale,  2015).  Most  of 
them are SMEs, which also generate 66% of the sectors' value added and 70% of employment. 

149 

 
For  all  SMEs  active  in  the  non-financial  sector,  22%  of  value  added  comes  from  retail  and 
wholesale  enterprises  (compared  to  20%  by  manufacturing  and  11%  by  construction  firms, 
2015). Running a shop seems to be the most common type of a family business – the number of 
SMEs  per  100 inhabitants was  largest in  distributive  trades  and  accounted for  1.2  company  on 
average in the EU. 

Retail is important to the single market not only due to its size but also because of its linkages 
with  other  sectors  of  the  economy  -  the  wholesale  sector,  manufacturers  of  certain  products 
(designed  for  final  consumption),  farmers,  as  well  as  providers  of  relevant  services  (e.g. 
transportation,  logistics, or  business services).  Because  of  those links,  regulatory  restrictions  in 
retail account for as much as 32% of all services market related restrictions that are carried over 
to other sectors.213  

The digital transformation is one of the key trends in the retail sector. This brings both new 
opportunities as well as challenges for businesses. E-commerce has become a fact of life for most 
EU consumers: 7 out of 10 internet users made online purchases in 2018, an increase from 5 out 
of 10 internet users in 2008. However there are big divergences among the Member States – 86% 
of internet users in Denmark were shopping online, while in Romania for instance only 26%. In 
2017,  only  19.5%  of  all  companies  (with  at  least  10  employees)  were  selling  online214  and  e-
commerce accounted for 17.4% of the total turnover of companies. The share of those planning 
to start selling online stagnates at less than 20%.215 Most EU retailers already selling online plan 
to continue doing so over the next 12 months (91% in 2018). Less than a fifth (18.4%) of those 
that only sell in shops show an interest in trading online in the coming 12 months - a proportion 
that has been declining in recent years - indicating that EU businesses have still to embrace the 
digital age. 

The retail sector has important role in sustainability. Whether brick-and-mortar or e-commerce, 
or  both,  a  retailer  has to  respond to  consumer  needs,  which  are  turning  towards  environmental 
and  social  sustainability.  Retailers  are  proving  to  be  creative  and  inventive  in  their  sustainable 
development aspirations, including through reducing single-use packaging, reducing food waste 
and sourcing in a responsible way. 

60. Restrictions on retail establishment  

Description  

Businesses often have to follow lengthy procedures and meet extensive requirements to establish 
a  new  shop.  This  can  be  especially  burdensome  because  retail  establishment  is  regulated 
differently  in  different  Member  States.  In  addition,  retail  establishment  is  often  regulated  at 
regional  and  local  level  which  increases  the  level  of  complexity  and  the  risk  of  unlawful 
requirements. 

In  some  cases, opening  a  shop  means  meeting  many  requirements. These include  authorisation 
and  planning  permits  (depending  on  shop  size),  location-specific  rules  or  size  limits  (bans  on 

213 European Commission DG Internal Market, Industry, Entrepreneurship and SMEs, Background documents 

for the European Semester (2018) The EU retail sector. 

214 E-sales data refer to both business-to-business and to business-to-consumer transactions (source: 

Eurostat, online data code: isoc_ec_eseln2).   

215 Consumer Conditions Scoreboard 2019 

150 

 
                                                      
opening shops above certain sizes in certain locations), rules on the range of products sold (due to 
rigid local planning), impact assessments (traffic, employment, retail etc.) to be carried out by the 
applicant, or requirements for economic data. 

Procedures  for  opening  a  shop  can  be  lengthy.  Theoretically,  deadlines  to  complete  the 
formalities range from 1 to 12 months. However, in practice, retailers face procedures of much 
longer duration. 

This  burden  may  make  it  difficult  or  even  impossible  for  some  businesses  to  open  a  shop.  
Restrictive requirements have a negative impact in particular on market structure and dynamics. 
They may influence a retailer’s decision on market entry, the location of the shop, its size, format 
and assortment. 

Even when such regulations do not prevent market entry as such, they may hamper the ability of 
businesses to adjust to consumers’ preferences and to successfully compete on the market. Such 
regulations may also have a discriminatory effect on foreign companies if they target formats and 
sizes more common abroad.   

Available quantification 

Retail establishment requirements occur in all Member States, but their extents differ. In the most 
restrictive Member State, the accumulation of particular restrictions can lead to a restrictiveness 
level  four  or  five  times  higher  than  in  the  least  restrictive  Member  State  (according  to  the 
Commission’s retail restrictiveness indicator). 

There is a significant impact of establishment restrictions on the performance of retailers as well 
as on consumers. This is shown by an analysis of links between the retail restrictiveness indicator 
and  economic  outcomes.  In  Member  States  with  higher  establishment  restrictions,  fewer  new 
retail  companies  enter and  leave  the  market  and  market  concentration  and  consumer  prices  are 
higher. 

Source: Own calculations based on information collected from Member States, from Eurostat and through dedicated 
studies216 

216 Data for the RRI reflect the state of play for 2017. In some cases, when important changes took place after 

December 2017, the information has been updated and taken into account in the scores. The most recent data from 
Eurostat available at the time of the analysis is for 2015. 

151 

 
 
                                                      
Analysis 

This barrier is mainly caused by a restrictive national rules and limited role of EU legislation, 
administrative capacity and practices, and requirements justified by public policy reasons. 
Regulatory barriers may result from a lack of proper implementation of EU law and in particular 
the Services Directive.  

Very  often,  retail  establishment  is  regulated  at  regional  and/or  local  level.  These  regulations 
typically  aim  at  a  number  of  territorial  policy  objectives  (such  as  town  and  country  planning) 
that, although legitimate and well grounded, can lead to inefficient fragmentation of the market. 
There is some evidence that different Member States aim at the same policy objectives using less 
restrictive measures. This suggests that there might be scope for further policy convergence while 
fully respecting public policy priorities. 

The Commission Communication “A European retail sector fit for the 21st century” encourages 
Member  States  to  assess  their  existing  regulatory  frameworks  to  make  sure  they  are  non-
discriminatory,  duly  justified  and  proportionate  and  are  effective  for  the  public  objectives 
pursued.  Additionally,  examples  from  some  Member  States  indicate  that  there  is  scope  for 
improvement for Member States with restrictive regulations.  

61. Restrictions on retail operations  

Description  

Operational  restrictions  affect  severely  the  day-to-day  business  activities  of  off-line  retailers, 
putting  them  often  at  a  disadvantage  vis-à-vis  online  players.  There  are  big  differences  in 
operational restrictions across the EU. They typically include regulated opening hours, product-
specific  sales  restrictions  (e.g.  non-prescription  or  over-the-counter  medicines),  restrictions  for 
sales,  promotions  and  discounts,  retail-specific  taxes  and  fees.  In  a  few  cases,  there  are  also 
obligations direct or indirect to source a certain share of products nationally, in order to promote 
national supply chains.  

There  are  also  non-regulatory  operational  restrictions,  which  stem  from  (possibly  unfair) 
contractual  relations  between  private  operators.  These  include  for  instance  territorial  supply 
constraints,  which  force  retailers  to  source  products  domestically  from  a  specific  national 
subsidiary. 

As result, consumers in some Member States might be worse off in terms of choice of products 
and their prices. This issue is the subject of a Commission study launched in September 2019. 

Available quantification 

The relevance of the barriers above varies substantially across Member States, across firm size 
and across sub-sectors. The retail restrictiveness indicator is a useful tool for monitoring Member 
States' efforts in reducing retail restrictions.  

According to numerous studies, liberalisation of shop opening hours led to an increase in shops’ 
turnover  and  the  sector’s  employment.  It  is  also  likely  to  influence  the  employment  structure, 
providing new work possibilities for certain groups of employees such as young people or those 
engaged in other activities most of the time (students, part-time workers, parents taking care of 

152 

 
young children). Highly restricted shop opening hours also have a negative impact on consumer 
welfare.217 

Studies have also shown that prices of non-prescription medicines are higher in countries where 
their distribution is restricted and they are only sold in pharmacies.  

Rules regulating sales promotions and discounts limit retailers' ability to optimise their  stock, to 
correspond  to their  customers'  needs  and,  more  generally,  to freely  choose their  marketing  and 
pricing strategy for maximising profits. This also harms consumers' economic interests.218  

In  countries  where  a  retail-specific  tax  applies,  the  tax  burden  of  it  is  born  only  by  brick-and 
mortar  retailers  as  it  is  usually  based  on  selling  space.  This  does  not  help  offline  retailers  to 
compete with the online ones on an equal footing. The existing retail taxes fall more heavily on 
big companies as they start from a certain threshold. This might deter companies from increasing 
selling space or turnover, or even from entering the market. Apart from that, a retail-specific tax 
increases costs of operation of a retail company. 

Operational  restrictions  imply  on  retail  companies  direct  costs  of  compliance.  Results  of  a 
survey219  suggest  that  the  smallest  retailers  bear  the  highest  costs:  3.5%  of  turnover  for  micro 
enterprises,  0.36%  for  small  enterprises,  and  0.1%  for  medium  enterprises.  The  total  monetary 
burden  linked  to  the  cost  of  compliance  with  relevant  regulations  varies  across  countries  and 
across  companies  of  different  sizes,  but  to  a  lesser  extent  across  different  types  of  retailers.220 
The overall monetary value of the compliance cost borne by retail firms is estimated at EUR 26.7 
billion, which to a large extent falls on micro companies.221 

Analysis 

This  barrier  is  caused  by  restrictive  national  rules  and  limited  role  of  EU  legislation, 
administrative  capacity  and  practices,  and  causes  not  linked  to  public  policy  (cultural 
differences,  consumer  preferences).  Regulatory  barriers  may  result  from  the  lack  of  proper 
implementation of EU law. Best practice examples from some Member States indicate that there 
is scope for improvement for countries with restrictive regulations. 

The  Retail  Communication  sets  out legal  guidance  and  best  practices  to  help public  authorities 
assess  their  regulatory  frameworks  and  identify  possible  less  restrictive  measures.  In  pursuing 
their policy objectives, Member States and local administration need to ensure that the measures 
affecting  the  retail  sector  and  the  products  sold  are  non-discriminatory,  duly  justified  and 
proportionate. They are also encouraged to ensure that these measures are effective for the public 
policy  objectives  pursued,  address  their  concerns  in  a  proportionate  way,  and  are  fit  for  the 
quickly changing retail environment and the free movement of goods. 

217 A European retail sector fit for the 21st century {COM(2018) 219 final} - {SWD(2018) 237 final} 

218 OECD Economic surveys, Greece, 2016; OECD Economic surveys, France, 2015; after SWD(2018) 

237 final 

219 A survey of 1455 retail companies (of different size categories, selling different types of goods, and 
active both on-line and/or off-line) was carried out in 28 EU countries; LE Europe, Spark Legal 
Network and Consultancy, VVA Consulting (2018) Operational restrictions in the retail sector, study 
carried out for the European Commission. 

220 As a percentage of turnover, it seems to be the highest in Portugal, Poland, Latvia, Romania, France and 

Austria, and the lowest in Luxemburg, Ireland, Malta, Denmark and Belgium. 

221 A European retail sector fit for the 21st century, {COM(2018) 219 final} - {SWD(2018) 237 final} 

153 

 
                                                      
62. E-commerce: complexity and uncertainty of applicable rules for cross-

border sales and purchases 

Description of the barrier: 

In  practice,  business  often  face  difficulty  in  knowing  which  national  consumer  laws  apply. 
Criteria triggering regulatory/consumer protection obligations and jurisdiction in the country of 
destination  of  the  trade/services  are  not  always  clear/consistent  (including  VAT  requirements, 
consumer  protection,  goods  requirements,  extended  producer  responsibility  and  waste 
management, etc…). All these different criteria add complexity to the legal framework applicable 
to a cross-border provider/retailer.  

The  E-commerce  Directive  sets  forth  a  country  of  origin  principle  (not  applicable  to  goods, 
however) subject to possible derogation in individual enforcement cases (including in particular 
consumer  protection).  Also,  in  this  case,  the  identification  of  possible  derogation  from  the 
country of origin principle only applies ex post and adds to complexity.  

Available quantification 

Cross-border  trade  is  still  less  developed  than  domestic  trade:  approx.  only  a  third  of  on-line 
consumers and a third of retailers respectively buy and sell abroad222. Compliance with different 
tax regulations and consumer protection rules often feature among the most important obstacles 
for cross-border sales223.   

Analysis 

Member  States  have  an  incentive  to  ensure  that  consumer  protection  rules/safeguards  are  fully 
enforced in the Member State of destination of the goods/services. In this regard, EU legislation 
follows  different  criteria  subject  to  different  interpretation  and/or  not  always  consistent 
approaches (targeting of consumers vs country of origin/mere establishment). 

International  private  law  is  based  on  the  concept  of  “targeting  the  Member  State  of  the 
consumer”  which  triggers  the  application  of  consumer  protection  contractual  clauses  and 
jurisdiction in the Member State of the consumer. This concept was interpreted very extensively 
by CJEU case law (Alpenhof judgement), so that any kind of on-line cross-border trade may even 
inadvertently  trigger  the  application  of  country  of  destination  provisions.  Other  pieces  of 
legislation  provide  for  different  criteria  (e.g.  electric  waste  management  obligations  based  on 
“placing  in  the  market”  or  Extended  Producer  Responsibility),  which  also  trigger  compliance 
with  national  schemes/requirements  by  the  trader.  Similarly,  VAT  requirements  (including 

222 In 2018 88% of e-shoppers made on-line purchases from sellers in their own country, while 36% bought 
online from sellers in other EU countries. A further 26% made purchases from sellers outside the EU. 
On the seller side, in 2016, 36% of EU retailers were selling through e-commerce and yet only 11.2% 
sold to consumers located in other EU countries (Consumer Conditions Scoreboard 2017) 

223 E.g.  Retailers’ attitudes towards cross-border trade and consumer protection 2016 – Study for DG 

JUST, where they feature respectively second and third most prominent obstacle (immediately after 
debt recovery). The share is even higher for trade of goods See also Eurocommerce survey on cross-
border obstacles https://www.ecommerce-europe.eu/wp-content/uploads/2016/07/Research-Report-
Cross-Border-E-commerce-Barometer-2016-FINAL.pdf  

154 

 
                                                      
registration) in the host MS are automatically triggered when selling cross-border. Other national 
requirements concerning goods (such as labelling) may also be triggered on the basis of different 
criteria. 

The Services Directive requires Member States to abstain from imposing their own requirements 
on  incoming  service  providers  except  where  they  are  justified  by  a  limited  number  of  public 
policy  objectives  spelled  out  in  Article  16  of  the  Directive.  Restrictions  imposed  on  e-retailers 
need also to be assessed in the light of this provision.    

In  addition,  the  Commission’s  competition  law  enforcement  action  contributes  to  tackle  cross-
border  trade  restrictions  and  geo-blocking  practices  when  they  are  the  result  of  businesses’ 
private  behaviour  rather  than  regulation.  Recent  competition  cases  in  this  regard  where  the 
Commission has fined the companies for such anti-competitive behaviour concern four consumer 
electronics  manufacturers  (Asus,  Denon  &  Marantz,  Philips  and  Pioneer),  The  US  clothing 
company  Guess,  and  three  brand-owners  and  licensors  of  rights  for  merchandising  products 
(Nike, Sanrio and Universal Studios). 

Transport 

Transport  is  a  fundamental  sector  for  and  of  the  economy.  Transport  services  embrace  a 
complex  network  of  around  1.2  million  private  and  public  companies  in  the  EU,  employing 
around 11 million people and providing goods and services to citizens and businesses in the EU 
and its trading partners. The transport sector represents more than 5% of total employment and 
almost  5%  of  GDP.  Transport  also  provides  mobility  for  Europeans,  thus  contributing 
significantly to the free movement of persons within the single market.  

Efficient transport services and infrastructure are vital to exploiting the economic strengths 
of  all  regions  of the  European  Union, to  supporting  the  single market  and growth,  and  to 
enabling  economic  and  social  cohesion.  They  also  influence  trade  competitiveness,  as  the 
availability,  price,  and  quality  of  transport  services  have  strong  implications  on  production 
processes and the choice of trading partners. With such a central role, transport is by definition 
also inter-related with various policy areas, such as environmental and social policies. 

In this context, the contribution of transport policy to the competitiveness of EU industry is 
also  crucial.  Not  only  does  a  well-functioning  infrastructure  network  and  a  high  level  of 
connectivity contribute directly to the competitiveness of the manufacturing industry through the 
optimisation  of  logistical  services  and  supply  chains,  transport  policy  also  shapes  the  overall 
framework in which transport users and service providers can operate. Transport legislation sets 
technical and operating standards to ensure safety and minimise the environmental burden, and 
manufacturers  must  comply  with  these.  Having  standards  that  are  harmonised  at  EU  level  is 
crucial for a well-functioning single market. Therefore, the single market for transport equipment 
goes  hand-in-hand  with  the  Single  European  Transport  Area  –  the  single  market  for  transport 
services.  

The  main  challenges  for  the  transport  sector  in  the  EU  include  the  continuation  of  the 
integration of a well-functioning Single European Transport Area, connecting Europe with 
modern, multi-modal and safe transport infrastructure networks, and shifting towards low-
emission mobility, which also involves reducing other negative externalities of transport, such as 
greenhouse gas emissions. From a social perspective, affordability, reliability and accessibility of 
transport are key. Addressing these challenges will help pursue sustainable growth in the EU. 

Some  additional  barriers  are  emerging:  not  yet  widely  reported  by  businesses,  but  possibly 
becoming important in the future. In transport, emerging barriers include: 

155 

 
 

Introduction of a new approach to aviation safety regulation which would be based on 
risk and performance. 

  Lack of common interoperable standards and common rules for certified drone 
operations. This might increase compliance costs and create legal uncertainty. 

Analysis and quantification of these barriers is beyond the scope of this report. 

63. Information on market opportunities: difficulty for small road transport 
operators to have access to market information (market opportunities)  

Description  

Small  operators  involved  in  international  road  transport  have  more  difficulties  in  getting 
access to information about demand for transport services abroad than well-established larger 
operators.  Often  they  end  up  working  in  sub-contracting  chains  for  intermediaries  (freight 
forwarders) who have better access to market information.  

Analysis 

This  barrier  is  a  national  competence.  Business  actors  looking  for  transport  services  are  not 
obliged to publicize their demands.  

This barrier is unrelated to EU or national legislation. 

64. Information on market opportunities/network: lack of information on 

service facilities and services offered to railway undertakings 

Description  

In order to provide transport services, rail undertakings need not only to be able to run through 
the rail network but also to use some service facilities. Stations for allowing passengers to step in 
and  off  the  trains,  freight  terminals  to  load  and  unload  goods,  marshalling  yards  for  train 
composition  and  maintenance,  refuelling  and  cleaning  facilities  for  the  proper  functioning  of 
wagons and locomotives.  

For  railway  undertakings  and  freight  forwarders,  information  about  services  facilities  and 
availability  of  services  provided  therein  is  fundamental  for  an  effective  planning  of  their 
journeys.  However,  the  service  facilities’  market  is  quite  fragmented.  Together  with  the  main 
infrastructure managers and railway undertakings, these facilities are owned and managed by a 
significant  number  of  small  and  medium  enterprises.  This  is  true  also  for  the  services  offered 
within such facilities. Finding the (correct) information from such a multitude of providers proves 
to be very challenging.  

156 

 
Available quantification 

There  are  no  comprehensive  figures  on  rail  service  facilities.  The  2016  study  “User-friendly 
access  to  information  about  last-mile  infrastructure  for  rail  freight”224,  identified  22  thousand 
access points to rail freight. The vast majority (more than 70 %) are private sidings, followed by 
stations  with  public  sidings,  intermodal  and  conventional  rail  terminals.  The  European  Rail 
Facilities  Portal225  provides  a  limited  sample  of  more  than  5,200  facilities  and  sidings  (end  of 
January 2020), which demonstrates the complexity of the issue in terms of the numerous types of 
facilities  and  services  and  differences  in  ownership  and  level  of  detail  of  the  available 
information.  

The  Portal  contains  data  on  passenger  stations,  intermodal  terminals,  multifunctional  rail 
terminals,  marshalling  yards,  maintenance  facilities,  refuelling  facilities,  mobile  service 
providers, public and private sidings, storage sidings and other facilities (with more facility types 
available). The entities providing the descriptions to the Portal include service facility operators, 
infrastructure  managers,  port  authorities,  rail  freight  corridors,  transport  operators,  etc., 
demonstrating the variety in ownership schemes and information sources.  

Analysis 

The existing mapping all rail service facilities and the current provision of key information about 
them  have  been  deemed  inadequate  by  different  sources,  therefore  constituting  a  significant 
barrier to the efficient planning of rail services, in particular across borders. 

In addition, existing discriminatory practices in the facility market such as high charges, refusal 
of access by pretending that the facility is full, intentional low quality of services can constitute 
additional  barriers.  The  European  Rail  Freight  Association  (ERFA)  considers  that  transparent 
access conditions, pricing and clear procedures for handling requests and solving conflicts could 
actually  optimise  the  effective  use  of  service  facilities226.  Also  Allrail,  the  association 
representing new entrants into the rail market, welcomed actions improving transparency and fair 
access to service facilities in Europe(227). 

The Commission implementing Regulation (EU) 2017/2177 aims at eliminating these barriers by 
repeating  the  obligation  upon  service  providers  to  establish  and  publish  a  service  facility 
description, by providing a detailed list of information that service facility operators must make 
publicly  available,  thus  ensuring  the  completeness  of  the  information  provided,  and  by  laying 
down the details of the procedure and criteria to be followed for access to service facilities and to 
the services supplied therein as listed in points 2, 3 and 4 of Annex II to Directive 2012/34/EU. 

Concerning  the  publication  of  a  service  facility  description,  the  Regulation  allows  service 
providers to choose their preferred solution among three options:  

-  by  publishing  the  information  on  their  own  website  and  providing  the  infrastructure 

managers with a link to be included in the network statement;  

-  by  providing  the  infrastructure  managers  with  the  relevant  ready-to-be-published 

information to be included in their network statement; or 

(224) https://ec.europa.eu/transport/sites/transport/files/2016-11-last-mile-gis-final-report.pdf 

(225) https://railfacilitiesportal.eu/ 

226 http://www.erfarail.eu/uploads/ERFAs_inputs_-_Access_to_service_facilities.pdf 

227  http://allrail.eu/wp-content/uploads/2017/10/050717-ALLRAIL-Decisions-of-ECJ-and-ACM-for-a-

competitive-rail-market-05.07.2017.pdf 

157 

 
                                                      
-  by publishing the information on a common web portal and providing the infrastructure 

managers with a link to be included in their network statement.  

Under the third option, the EU Commission developed and, in June 2019, launched the European 
Rail  Facilities  Portal,  with  the  aim  of  offering  an  easy  and  user-friendly  access  to  information 
about  rail  freight  facilities  all  over  Europe.  It  is  a  GIS-based  portal,  mapping  and  providing 
information  on  all  types  of  rail  service  facilities  (e.g.,  train  stations,  intermodal  terminals, 
marshalling  yards,  refuelling  facilities)  and  information  on  private  branch  lines  and  sidings  all 
over  Europe.  It  also  provides  information  on  the  availability  of  rail-related  services  (e.g. 
locomotive repair and maintenance, refuelling and customs clearance). The Portal allows users to 
easily  search  for  specific  types  of  rail  facilities  or  services  by  using  exhaustive  pre-defined 
categories that filter the information, such as types of equipment, types of loading units accepted 
at  the  facility,  types  of  cargo,  etc.  It  is  possible  to  search  in  a  particular  geographical  area  by 
using the map zoom-in tool, by typing in a postcode, by filtering facilities located on any of the 
Rail Freight Corridors. 

As the use of the Portal is optional, the challenges now are to convince service facility operators 
to publish the descriptions on the Portal and to develop its functionalities, in order to ensure also 
easy and transparent access to information on capacity availability. The Commission is working 
on the project together with rail stakeholders. 

The Rail Freight Corridors Regulation (228) addresses the issue of information on rail facilities on 
the  corridors  by  requiring  the  publication  in  one  place  for  each  corridor  of  a  list  and  the 
characteristics  of terminals, in particular information concerning the conditions and methods of 
accessing the terminals. 

65. Lack of information on posting rules, enforcement and road traffic 

restrictions  

Description  

Operators  involved  in  international  transport  and  carrying  out  operations  in  several  MS  have 
difficulties  in  accessing  information  on  posting  of  workers  rules  in  road  transport,  different 
national  enforcement  practices  (e.g.  different  penalties  for  similar  infringements)  and  different 
traffic restrictions (e.g. in some MS trucks cannot use roads on Sundays and holidays; different 
holidays in different MS, etc.).  

Available quantification 

Quantification not available.  

228 Regulation (EU) No 913/2010 of the European Parliament and of the Council of 22 September 2010 

concerning a European rail network for competitive freight. 

158 

 
 
                                                      
Analysis 

Member States have competence to define national holidays. In the absence of common EU rules 
on traffic restrictions and posting, Member States keep the right to implement different national 
rules.  

In  terms  of  enforcement  and  penalties,  Member  States  have  to  apply  the  principles  of 
proportionality and non-discrimination. However, they keep the right to have different levels of 
sanctions.  

Information on posting rules, traffic restrictions and level of sanctions is often available only in 
the  national  language  of  the  Member  States,  in  different  internet  sites,  making  it  difficult  for 
operators  to  have  a  precise  overview  of  the  rules  applied  in  several  different  Member  States 
where they operate.     

In  Mobility  Package  I,  the  Commission  proposed  specific  rules  on  posting  in  the  area  of  road 
transport. It includes, in particular, specific rules for the implementation of posting in the field of 
road  transport  to  avoid  undue  administrative  burden  on  road  transport  undertakings.  More 
generally,  one  of  the  objective  of  Mobility  Package  I  is  to  improve  enforcement,  in  particular 
through  enhanced  exchange  of  information  between  Member  States.  Such  exchanges  of 
information  should  ease  and  accelerate  road  side  controls,  which  will  benefit  road  transport 
undertakings. 

As  regards  traffic  restrictions,  the  Commission  has  already  made  a  proposal  in  the  past  to 
harmonise  them  at  EU  level.  However,  this  was  rejected  by  the  MS,  who  wish  to  keep  their 
national competence in this area. 

66. Excessive complexity of rules on inland waterways  

Description  

The European Barge Union (EBU) and the European Skippers Organisation (ESO) have raised 
concerns  related  to  the  inland  waterway  transport  sector  regarding  the  implementation  of 
Directive  2014/67/EU  on  the  enforcement  of  Directive  96/71/EC  concerning  the  posting  of 
workers in various Member States, particularly Germany, France and Austria. 

Analysis 

The  concerns  regard  the  compatibility  with  [EU  law  of  the  German  law  introducing  minimum 
wages229 that entered into force in August 2014], as well as the national implementation in France 
and  Austria  of  the  above  mentioned  Directive.  According  to  the  Directive  all  measures 
introduced  by  a  law  implementing  above  mentioned  Directive  should  be  justified  and 
proportionate.  The  organisations  believe  that  these  principles  are  not  met  as  far  as  Inland 
Waterway  Transport  is  concerned.  The  industry  -  mainly  SMEs  -  is  faced  with  measures  and 
administrative  burdens  that  would  seriously  hamper  their  activities  and  lead  to  a  de  facto 
stagnation  of  their  business.  Moreover  the  measures  are  considered  discriminatory  for 

229 "Mindestlohngesetz" (MiLoG = www.gesetze-im-internet.de/milog/index.html) 

159 

 
                                                      
carriers/employers from outside the Member State, which is particularly problematic as there is a 
considerable share of cross border traffic in the countries concerned.  

It  should  be  noted  that  although  the  procedure  for  delivering  the  information  to  the  national 
authority in Germany has been digitalised, this imposes even more administrative burdens rather 
than decreasing them, due to the complexity of the online portal, which consists of very complex 
legal questions, which are difficult to understand for non-residents. A request to physically store 
the requested information is considered impossible to meet. The industry would e.g. recommend 
an audit on board rather than imposing the reporting of the information in advance as requested in 
Germany and Austria. The situation in France is somewhat different as the law requires a legal 
representative in the country itself. This requirement leads to important additional costs on top of 
other administrative burdens. 

67. Inconsistent and unclear rules in public procurement in transport, and 

access to these rules is too restrictive 

Description  

Often complex rules in public procurement are one of the main barriers leading to delays in the 
development  of  transport  projects.  In  particular,  the  heterogeneous  transposition  of  the  EU 
procurement  directives  creates  barriers  to  the  single  market  by  limiting  EU-wide  competition: 
divergent  national  rules  and  language  requirements  deter  applicants  from  applying  for  public 
tenders in other EU Member states. 

Cross-border  transport  projects  face  difficulties  in  conducting  public  procurement,  resulting  in 
particular  from  the  need  to  apply  different  national  procurement  legislations.  This  adds 
complexity  to  the  projects  and  creates  costs.  While  a  modernised  framework  for  public 
procurement  has  started  to  apply  over  the  past  few  years,  a  gap  remains  in  the  area  of  cross-
border procurement, obstructing the implementation of projects developed jointly by two or more 
Member  States.  To  address  barriers  to  the  implementation  of  large  cross-border  projects,  the 
Commission  in  May  2018  submitted  a  proposal  for  a  regulation  on  streamlining  measures  for 
advancing the realisation of the trans-European transport network. It provides, inter alia, for the 
application of only one legal framework on public procurement for cross-border projects (Article 
8).  

Available quantification 

Given  the  transnational  nature  of  the  TEN-T,  any  delay  impacting  one  project  has  an  adverse 
effect on the whole stretch of a corridor. The TEN-T framework adopted in 2013 moves from a 
project driven approach (patchwork of individual projects) to a network approach based on a dual 
layer  TEN-T  to  be  realised.  This  requires  a  synchronised  approach  for  the  development  of 
projects  across  borders,  both  in  terms  of  project  preparation and  permitting.  This  is  even  more 
relevant  as  regards  cross-border  public  procurement.  In  the  case  of  cross-border  projects 
developed together by neighbouring Member States, the joint tendering procedures are necessary 
to better grasp synergies and benefits of scale.  

The  Brenner  Base  Tunnel  is  one  example.  This  cross-border  project  is  one  of  the  emblematic 
TEN-T projects aiming at linking together different parts of the EU. Since the very beginning it 
was  conceived  as  a  long-term  asset  worth  in  total  EUR  8  billion.  As  a  result  of  procurement 
issues,  delays  in  the  start  of  phase  III/works  (2011)  of  about  19  months  caused  a  shift  of  the 

160 

 
finalisation of the project from 2025 to 2026 and led to additional costs of about EUR 20 million 
(including additional time till finalisation). 

Analysis 

The  barrier  results from  EU  legislation leaving flexibility  as  regards  implementation,  which 
sometimes creates confusion and delays in the implementation of transport projects and limit EU 
wide competition. 

EU  law  sets  out  minimum  harmonised  public  procurement  rules.  These  rules  govern  the  way 
public authorities and certain public utility operators purchase goods, works and services. They 
are  transposed  into  national  legislation  and  apply  to  tenders  whose  monetary  value  exceeds  a 
certain  amount.  All  Member  States  have  transposed  Directive  2014/25/EU  on  procurement  by 
entities  operating  in  the  water,  energy,  transport  and  postal  services  sectors  and  repealing 
Directive 2004/17/EC. But differences in transposition create obstacles and confusion and lead to 
delays in the development of transport projects. In the transport sector, public authorities are the 
principal buyers. 

68. Lack of flexibility linked to driving time restrictions 

Description  

Operators  involved  in  international  transport  and  carrying  out  operations  in  several  MS  often 
complain about the lack of flexibility of driving and rest time rules. In particular, operators from 
peripheral Member States sometimes complain that, for example, that they have to stop the truck 
a few kilometres away from home to take a weekly rest, since they have reached their maximum 
driving time limit.  

Analysis 

There are common rules in the EU for maximum driving times and rest periods. These are the 
same for all MS to avoid discrimination.   

In  Mobility  Package  I  (currently  under  negotiation  with  the  EP  and  Council),  the  Commission 
proposed a certain additional flexibility for drivers, in order to avoid situations such as the one 
described above (e.g. the possibility of taking two consecutive reduced weekly rests, possibility 
to derogate slightly from maximum driving time limits in specific circumstances).   

69. Restrictions on work time in inland waterways 

Description  

The  European  Barge  Union  (EBU)  and  the  European  Skippers  Organisation  (ESO)  have 
indicated that the current national and/or Rhine regulation on rest time for safety reasons is too 

161 

 
 
rigid and could be modernised and possibly replaced by a new EU regulatory framework, which 
would ensure harmonised rules at EU level and a reduction of barriers in the single market.  

Available quantification 

Not available. 

Analysis 

Unlike e.g. for the road sector, in the area of inland waterways, the rest time for safety reasons is 
currently not regulated at EU level, but at the level of the Member States.  

70. Different enforcement practices in road transport among Member States 

Description  

Operators  are  faced  with  different  level  of  enforcement  of  the  road  transport  rules  in  different 
MS. For example, in some MS there are almost no roadside checks at all, while in others there 
are frequent checks. The level of fines for the same infringement also differs. 

Available quantification 

Quantification not available. 

Analysis 

Member States are largely responsible for enforcement of the road transport rules in their national 
territories.  The  level  of  enforcement  (e.g.  roadside  checks)  depends  on  available  resources  and 
prioritisation  of  enforcement  activities,  even  though  there  are  minimum  levels  of  enforcement 
laid  down  in  EU  legislation,  i.e.  mainly  Directive  2006/22  and  Article  12  of  Regulation 
1071/2009.  Also,  while  there  is  an  EU-level  classification  of  the  seriousness  of  infringements, 
Member  States  keep  the  right  to  set  the  level  of  the  sanctions,  subject  to  the  principles  of 
proportionality and non-discrimination. 

Enforcement requires significant resources from Member States, in terms of training of enforcers, 
time  spent  in  roadside  checks,  etc.  While  the  EU  cannot  directly  finance  national  enforcement 
resources, it has a role to play in terms of training of enforcers, exchange of best practices, etc. 
The recently established European Labour Authority (ELA) should help increase and harmonise 
the level of enforcement between different Member States.  

In  Mobility  Package  I  (currently  under  negotiation  with  EP  and  Council),  the  Commission 
proposed  several  measures  to  harmonise  enforcement  practices  and  make  them  more  effective 
and efficient. However, the level of fines will remain a national competence.   

162 

 
71. Staffing: Skills shortages and mismatches in the rail sector 

Description  

The  rail  transport  industry  makes  a  substantial  contribution  to  the  EU  economy,  directly 
employing  over  1  million  people  and  generating  an  equivalent  number  of  jobs  in  connected 
sectors and ancillary services. It generates an estimated turnover of EUR 74,113 million. 

Innovative digital solutions, new business models (e.g. sharing, collaborative), new services, new 
jobs  (e.g.  remote  operators  of  vehicles)  as  well  as  new  challenges  (e.g.  cybersecurity)  are 
emerging.  

Digitalisation  and  new  transport  models  can  provide  better,  safer,  more  accessible  and  more 
affordable services. Connectivity and automation can compensate for human error, for example 
in avoiding accidents.  

A key challenge rail faces is to remain an attractive sector for workers in the future in the context 
of globalisation, with new ways of doing business and innovations, and to meet in full the needs 
of  all  categories  of  passengers.  The  ageing  population  combined  with  the  lack  of  the  required 
technical skills is becoming a bottleneck in maintaining the sector’s competitiveness. 

Available quantification 

New  challenges  are  best  tackled  with  people  of  different  skillset  and  mind-set.  Promoting 
diversity  is  essential  in  a  sector  which  will  undergo  tremendous  changes  in  the  next  years  and 
which already faces labour force shortages. Rail is an ageing and male-dominated sector, which 
suffers from negative stereotypes and often harsh working conditions (e.g. mobile jobs, atypical 
hours, violence and harassment). As a consequence, the sector is not appealing to young women 
and men and faces an increasing risk of workforce shortages. Only 22% of the transport workers 
are women (most of whom work in administrative positions). Women are also underrepresented 
in the rail sector, making up only about 21% of the total workforce in 2016.  

With one third of its workforce about to retire and the profound transformations led by upcoming 
automation, young men and especially women should step in for the future of rail. Hence, it is 
essential to find ways to attract young people to the sector, including by improving  job quality 
and working conditions. 

Reskilling needs will increase in the future. A study of Shift2Rail Joint Undertaking (S2R) in its 
Human  Capital  Report  Series  shows  that  all  job  categories  ranging  from  train  drivers  to  rail 
operation  managers  (International  Standard  Classification  of  Occupations  -  ISCO  1  to  7)  will 
shift within next 5 years to higher skills levels230.   

The  EU  industry  association  UNIFE,  association  gathering  over  100  of  Europe’s  leading  large 
and  SME  rail  supply  companies,  advocates  the  need  of  skills  and  competencies  in  the  rail 
sector231. In its Dublin Declaration of June 2019, UNIFE urged the EU to act, amongst others, to 
improve skills intelligence and address skills shortages in their industry232. 

(230) https://shift2rail.org/publications/human-capital-report-series/ .  

(231) UNIFE Annual Report 2019 (http://unife.org/component/attachments/attachments.html?id=1078 ).  

(232) http://unife.org/component/attachments/attachments.html?id=1031&task=download See also .  

163 

 
                                                      
Analysis 

While  some  professional  competences  have  not  changed  much  in  most  cases,  new  skills  and 
training are necessary to deal with the introduction of new tools and technologies.  

In  particular,  digitalisation  and  digitisation  have  a  strong  impact  on  production,  processes, 
operations and skill needs. The key digital innovations include driverless operations, automation 
of planning, predictive maintenance and automation of traffic control. Companies report shortage 
in particular occupational field such as system engineers and architects, software developers, IT 
security  specialists  and  big  data  analysts.  An  increased  offer  and  adaptation  of  specialist 
Vocational  Education  and  Training  (VET)  and  continual  re-/upskilling  will  be  necessary  to 
accompany  the  digital  transformation,  enhance  productivity  and  mobility  as  well  as  to  ensure 
availability of skilled staff for the future rail projects. 

The  European  Parliament  Resolution  from  2016  on  the  competitiveness  of  the  Rail  Supply 
Industry  (2015/2887(RSP))  points  out  that  the  industry  lacks  skilled  labour  and  calls  on  the 
Commission to prepare actions to promote lifelong learning and technical skills. In response to 
this  Resolution,  the  Commission  established  an  expert  group  on  the  competitiveness  of  the 
European Rail Supply Industry.  

The  Industrial  Policy  Communication  (COM(2017)  479)  mentions  that,  in  the  context  of  EUs 
leadership  in  a  low-carbon  and  circular  economy,  strong  emphasis  must  be  placed  on  low 
emission mobility. Rail transport  is  critical for  a  more  sustainable  transport  sector; it only 
accounts for 2% of total EU energy consumption in transport, while in 2016 it carried 11.2% of 
freight  and  6.6%  of  passengers  of  all  transport  modes  (land,    air    and    waterways).  Skills 
shortages  could  severely  hinder  the  capacity  of  rail  to  raise  up  to  the  challenge  of  modal  shift 
towards a more sustainable transport sector. 

Language  requirements  for  train  drivers  were  revised  in  2016,  to  allow  the  exemption  of  train 
drivers  from  the  B1  level  language  requirement  if  they  only  reach  the  border  station  of  a 
neighbouring  Member  State,  provided  that  safety  is  not  be  negatively  impacted.  The  sector  is 
currently exploring other options such as rail-specific terminology, or a lower general language 
level  combined  with  alternative,  electronic  means  to  support  effective  communication.  These 
alternative options can now be tested in the framework of pilot projects in day-to-day operations. 
This  could  lead  to  a  possible  revision  of  the  Train  Drivers  Directive233,  which  would  give  the 
opportunity to take into account changes due to new technologies in the skills required and job 
profile of train drivers.  

Rail  workers  need  to  adapt  to  technological  innovation  and  the  increased  use  of  digital 
technologies.  This  has  been  a  focus  within  the  Shift2Rail  Joint  Undertaking,  which  has 
contracted  a  study  to  identify  what  skills  will  be  most  important  in  the  future  for  different 
categories of railway staff.  

From  the  evidence  that  the  transport  sector  is  one  of  the  most  gender  imbalanced  sectors,  the 
Commission  has  set  up  tools  to  encourage  EU  stakeholders  from  all  transport  modes  to 
strengthen women's employment with the political backing of the European Parliament, Member 
States, the European Economic and Social Committee and the European social partners. A non-
legislative  approach  has  been  adopted  to  encourage  transport  companies  to  fight  negative 
stereotypes  and  to  improve  their  gender  balance.  It  complements  the  legislative  framework 
addressing working conditions in the various transport modes.  

(233) Directive 2007/59/EC of the European Parliament and of the Council of 23 October 2007 on the 
certification of train drivers operating locomotives and trains on the railway system in the Community, OJ 
L 315, 3.12.2007, p. 51–78. 

164 

 
                                                      
The measure implemented include: a business case to increase female employment in transport; 
the  signature  of  the  Declaration  on  equal  opportunities  from  women  and  men  in  the  transport 
sector; an inspiring list of possible measures that companies can take with an indication of their 
cost; an online module to exchange good practices and an action oriented Platform.  

The involvement of the ‘Sectoral Social Dialogue Committee Rail’ is crucial as it puts the social 
impact of automation/digitalisation on its work programme, or carries out activities to anticipate 
and  manage  change.  The Commission  will  continue  to  participate  in  and  contribute  actively  to 
this committee on this matter.  

72. Supply constraints and/or sourcing restrictions: availability of adapted 

rail rolling stock  

 Description  

In order to access rail markets, new entrants need rolling stock adapted to the services they are 
willing to provide and to the network on which they will provide them.  

If new operators lack the appropriate financial resources, they are not able to afford buying new 
rolling stock and should rely on the secondary and leasing markets.  

However, secondary and leasing markets for rolling stock are very limited. Incumbents with their 
fleets  therefore  have  a  competitive  advantage  and  for  new  entrants  it  is  harder  to  access  rail 
markets.  

A smooth and non-discriminatory access to rolling stock is fundamental for alternative rail 
operators to enter new markets.  

This  is  particularly  true  for  passenger  services.  Smaller  operators  risk  lacking  the  appropriate 
financial resources to engage in significant investments for buying rolling stock in order to enter 
a new domestic market or to compete with the national incumbent for bigger PSO contracts. 

Available quantification 

For passenger services, the unavailability of rail rolling stock is reported as a major market entry 
barrier by new entrants throughout the European Union.  

Analysis 

The Fourth Railway Package provides for the gradual opening of public service contracts’ market 
from  December  2019,  giving  a  choice  between  competitive  tendering  and  direct  award  until 
December 2023. From 24 December 2023 the principle of competitive tendering will apply and 
direct award will be possible only on the basis of exemptions.  

The  Regulation  on  public  passenger  transport  services  by  rail  and  by  road234  includes  some 
provisions related to rolling stock in the framework of competitive tendering procedures for the 

(234) Regulation (EC) 1370/2007 of the European Parliament and the Council of 23 October 2007 on public 

passenger transport services by rail and by road, as amended by Regulation 2016/2338 of 14 
December 2016.  

165 

 
                                                      
attribution  of  public  service  obligations.  In  particular,  the  competent  tendering  authority  shall 
assess whether measures are necessary to ensure effective and on-discriminatory access to rolling 
stock. 

However, the lack of access to adapted rail rolling stock, in particular in the passenger market, is 
a major entry barrier for new entrants, which puts them at a significant disadvantage compared to 
dominant  incumbent  operators.  New  entrants  face  financing  risk  for  the  acquisition  of  rolling 
stock  compared  to  incumbents,  as  they  do  not  enjoy  the  implicit  state  guarantee  such  as  state- 
owned incumbents, nor the size of incumbents’ acquisition projects.  

Secondary and leasing markets are limited also limited due to the remaining fragmentation of the 
EU rail network.  

Finally, the asymmetric access of competitors to State guarantees compounds these problems. 

73. Restrictions on cabotage in road transport 

 Description  

The markets for the provision of national road transport services in Member States other than the 
one of establishment of the operators (cabotage) are not fully liberalised at EU level. Cabotage 
restrictions limit business opportunities for operators abroad.  

Available quantification 

Cabotage  represents  around  3%  of  all  national  transport  activity  in  the  EU.  In  some  Member 
States, like Austria and Belgium, it can be as high as 8% of national transport.  

Analysis 

Due to the persistent gaps between Member States in terms of salary levels and social conditions 
and the non-application of posting rules in most Member States, the EU co-legislators have so far 
decided  to  maintain  certain  restrictions  on  access  to  the  national  markets  by  non-resident 
operators.  

This non application of EU law is not justified. Firstly, posting rules clearly apply to cabotage, 
(Regulation 1072/2009, 17th recital, and 1073/2009, 11th recital). Secondly, directive 96/71/EC 
compels Member States to apply posting rules in their territory, in particular insofar as the rules 
on minimum wage are concerned. 

In  Mobility  Package  I  (currently  under  negotiation  with  EP  and  Council),  the  Commission 
proposed to keep certain restrictions to cabotage activity, given the persistent pay gaps. Both the 
EP and the Council agree that limitations must remain on this type of activity. 

In the long-term, if pay gaps are significantly reduced and posting rules are fully and consistently 
applied in all MS, there may be a case to reassess these remaining restrictions.  

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74. Lack of interoperability in railways 

 Description  

Transport  is  critical  for  improving  economic  and  social  cohesion  and  delivering  the  single 
market. Among the transport modes, rail is unique in its ability to deliver high capacity for both 
passengers  and  goods  in  the  most  environmentally  friendly  manner,  perfectly  fitting  EU 
decarbonisation strategy. 

The delivery of a single European rail area would thus be a significant enhancement to the single 
market, improving the economy through greater passenger and freight flows.  

Barriers to the Single European Rail Area include: 

- 

Incomplete European Rail Traffic Management System (ERTMS) installation. ERTMS is 
essential  in  further  increasing  safety  and  capacity  of  the  rail  system  in  a  harmonised 
manner. 

-  Lengthy, costly and non-transparent national authorisation/certification procedures. 
-  Operational issues, hampering in particular cross-border traffic. 

Available quantification 

Modal share of rail 

Daily  rail  moves  over  4  million  tonnes  of  freight  and  nearly  25  million  passengers.  However, 
these numbers could and should still be significantly higher, as the modal share of rail is too low 
and barely increasing. 

The  Industrial  Policy  Communication  (COM(2017)  479)  mentions  that,  in  the  context  of  EU’s 
leadership  in  a  low-carbon  and  circular  economy,  strong  emphasis  must  be  placed  on  low 
emission mobility. Rail transport  is  critical for  a  more  sustainable  transport  sector; it only 
accounts for 2% of total EU energy consumption in transport, while in 2016 it carried 11.2% of 
freight and 6.6% of passengers of all transport modes (land,  air  and  waterways). Furthermore, 
rail is the safest land transport mode. 

167 

 
 
 
Costs of authorisation of railway vehicles and safety certification of railway operators 

The  numbers  below  are  examples  of  costs  related  to  the  lack  of  harmonisation  of  the  EU  rail 
legislation before implementation of the Fourth Railway Package: 

•  Fees for national safety certificate for railway operators (1 per Member State): from EUR 

0 up to EUR 70,000  

•  Total costs for an additional national vehicle authorisation (1 per Member State):  from 

EUR 900,000 up to EUR 2 million per locomotive type 

•  Duration of the procedure for the authorisation of a railway vehicle:  up to 4 years  

•  Staff involved in interoperability issues in the Member State: from 1 person up to 162  

•  Sometimes  staff  employed  in  the  Member  States  are  on  secondment  from  incumbent 

operators, causing concerns regarding independence and equal treatment. 

These  costs  should  be  reduced  significantly  through  the  full  application  of  the  Fourth  Railway 
Package,  together  with  a drastic reduction  of  the  number  of  national  technical,  operational  and 
safety rules. 

Analysis 

The origins of the above-mentioned barriers mainly lie in the long history of rail. Technical and 
operational rules have developed and diverged over long periods of time and have driven national 
specificities  in  terms  of  network  infrastructure,  systems  and  modes  of  running,  impacting  both 
interoperability and a standardised approach across Europe.  

With the adoption of the Fourth Railway Package technical pillar, significant steps were taken to 
deliver the single European rail area, as well as  streamline and harmonise procedures at Union 
level, replacing heterogeneous procedures at Member State level.  

168 

 
 
 
The technical pillar of the Fourth Railway Package235, together with the 2019 revisions of the 
Technical Specifications for Interoperability, introduced important changes concerning all 
barriers mentioned above: 

- 

Incomplete European Rail Traffic Management System (ERTMS) installation: 

o  Enhancement of the role of the European Union Agency for Railways (ERA) as 

o 

the ERTMS system authority; 
In  addition  to  the  measures  included  in  the  Fourth  Railway  Package,  the 
European ERTMS Deployment Plan Implementing Regulation (EU) 2017/6 sets 
out  the  milestones  to  equip  ERTMS  on  the  core  and  comprehensive  trans-
european networks. 

o  The above measures are expected to deliver a breakthrough in the harmonisation 

of the EU railway system. 

-  Lengthy, costly and non-transparent national authorisation/certification procedures:  

o  As of 16 June 2019, ERA has started acting as European authorisation body for 
railway vehicles and as European safety certification body for railway operators. 
o  14,000  national  technical  rules  for  vehicle  authorisations  have  been  reviewed. 
Only 1,000 are still valid under the Fourth Railway Package. Next steps are the 
actual  removal  by  Member  States  of  the  obsolete  national  rules  and  further 
harmonisation to continue reducing the costs of vehicle authorisations. 
In addition, cleaning up still needs to be done for national rules for infrastructure. 
In  terms  of  product  certification,  divergent  interpretations  of  the  legislation  by 
conformity assessment bodies is an issue for the rail supply industry. The Fourth 
Railway  Package  introduces  a  monitoring  system  of  the  performance  of 
conformity  assessment  bodies  to  progressively  ensure  transparent  and  quality 
certification services from conformity assessment bodies.  

o 
o 

-  Operational issues: 

o  Cleaning up also needs to be done for national operational and safety rules that 

hamper smooth cross-border traffic, particularly for freight operations. 
o  Trust building between railway operators of different Member States, among 
others through a more harmonised implementation of safety management 
systems, is another pre-condition for cross-border traffic to improve. 

Focus  should  thus  now  be  on  application  and  enforcement  for  the  Fourth  Railway  Package  to 
produce its full effects, including actual removal of obsolete national rules by Member States.   

In parallel with this, full advantage should be taken of the digital and ERTMS game changers, 
including  automated  train  operations,  in  order  to  further  improve  capacity  and  safety  of  the 
railway  system  while  reducing  costs.  Further  revisions  of  the  Technical  Specifications  for 
Interoperability are planned to reach this goal. 

(235) The 'technical pillar', which was adopted by the European Parliament and the Council in April 2016, 
includes: 

  Regulation (EU) 2016/796 on the European Union Agency for Railways and repealing Regulation 

(EC) n° 881/2004 

  Directive (EU) 2016/797 on the interoperability of the rail system within the European Union 

(Recast of Directive 2008/57/EC) 

  Directive (EU) 2016/798 on railway safety (Recast of Directive 2004/49/EC) 

169 

 
 
 
 
                                                      
75. Lack of harmonised processes for authorisation of railway products and 

for safety certification of railway operators 

Description  

The  rail  transport  industry  makes  a  substantial  contribution  to  the  EU  economy,  directly 
employing  over  1  million  people  and  generating  an  equivalent  number  of  jobs  in  connected 
sectors and ancillary services. It generates an estimated turnover of EUR 74,113 million. 

However,  numerous  national  rules,  ineffective  national  authorities,  lengthy,  costly  and  non-
transparent  certification  and  national  authorisation  procedures  constitute  barriers  to  achieve  the 
single  European  market  for  railway  products. They  are  thus  hampering  the  development  of  the 
European Rail Supply Industry.  

Similarly  non-transparent  procedures  for  safety  certification  of  railway  operators  and  non-
transparent  national  safety  and  operational  rules  are  barriers  to  achieve  the  single  European 
market for railway services. 

Available quantification 

Quantification  of  the  main  barriers  hampering  the  establishment  of  the  Single  European  Rail 
Area is addressed in the previous section. Costs related to authorisation of railway vehicles and 
safety  certification  of  railway  operators  are  particularly  relevant  for  the  European  Rail  Supply 
Industry and for Railway operators (see previous section on the Single European Rail Area). 

76. Lack of rail network coordination  

Description  

Railway undertakings providing EU cross-border transport services use more than one network 
and  deal  with  more  than  one  national  infrastructure  manager.  A  lack  of  cooperation  in  the 
management  of  respective  national  networks  makes  more  difficult  for  railway  undertakings  to 
provide cross-border services and can discourage new entry in neighbouring markets. Examples 
of this lack of EU-wide view are:   

- 
- 

lack of cross-border coordination when works are performed on neighbouring networks;  
fragmentation and national orientation of IT tools used for capacity planning and traffic 
management by the infrastructure managers; 

-  poor  cooperation  on  charging  and  performance  management,  which  may  have  a 

significant impact on the provision of cross-border services. 

Lack of cooperation translates in missing information for businesses, which in turn limits market 
opportunities and efficient use of capacity.  

Available quantification 

The lack of coordination and the consequent unavailability of information relevant to businesses 
has  a  heavy  impact  on  the  performance  of  international  rail  services  in  the  single  European 

170 

 
railway area. This is particularly true for international rail freight services, for which around 50% 
of volumes are cross-border.  

Transport customers rate the quality of international rail services (availability, reliability, speed) 
as much worse than road. Moreover, there has not been considerable improvement, which makes 
rail less attractive and hampers its ability to integrate into a multimodal logistic chain. This has 
also adverse effects on transport sustainability, as a larger role of rail would also be instrumental 
for the decarbonisation of the sector.   

Analysis 

EU legislation leaves flexibility in the level of harmonisation and implementation of rules. 
This  favours  a  national  focused  approach  with  a  negative  impact  on  rail  transport  business 
operated across borders.  

A  number  of  EU  legislative  acts  currently  define  the  general  framework  in  which  rail 
infrastructure  managers  operate  in  the  single  market.  Directive  2012/34/EU  establishing  the 
Single European Railway Area provides for mandatory coordination of infrastructure managers 
but  only  in  very  general  terms,  leaving  to  infrastructure  managers  to  establish  appropriate 
procedures,  aiming  in  particular  to  guarantee  the  optimal  competitiveness  of  international  rail 
services  and  the  efficient  creation  and  allocation  of  infrastructure  capacity  which  crosses  more 
than  one  network  within  the  Union.  Directive  2016/2370  introduced  further  provisions  for  an 
independent, non-discriminatory management of the network.  

The  Rail  Freight  Corridors  Regulation236  lays  down  the  rules  for  the  establishment  and 
organisation  of  international  rail  corridors  for  competitive  rail  freight  in  order  to  develop  a 
European rail network for competitive freight. It introduces a number of instruments (the corridor 
one-stop  shop,  the  pre-arranged  train  path,  priority  rules  for  managing  traffic,  etc.)  and  a 
governance structure that strengthens cooperation and coordination between rail stakeholders and 
Member States. Despite some progress, challenges for rail freight remain in particular in regard 
to  capacity  allocation,  planning  and  coordination  of  infrastructure  works,  traffic  management, 
etc. 

77. Fragmented EU airspace with 27 separate air traffic management systems 

Description  

The  European  Air  Traffic  Management  (ATM)  system  consists  of  27  national  authorities 
overseeing providers of air traffic control services [Air Navigation Service Providers - ANSPs]. 
The  Commission's  Single  European  Sky  (SES)  initiative  sought  to  tackle  the  fragmentation, 
congestion and the related costs by creating a single market for Air Navigation Service Provision. 

Available quantification 

The absence of single market originates extra delays and congestion costs.  

(236) Regulation (EU) No 913/2010. 

171 

 
                                                      
Air traffic increased from 9.5 million flights (26.000 flights per day) in 2013 to 11 million flights 
(>30.000 flight per day) in 2018 and is expected to further increase to 16 million flights by 2040. 

Delays: 

In 2018, 1 out of 4 flights had a delay of more than 15 minutes 

 
  A significant part of the delay is caused by air traffic flow management (ATFM) 

delays 

  0.5 min of delay per flight over 1 year are considered an optimum at EU level as 

anything beyond is not efficient from a system perspective. 

  Since 2017, ATFM delays have increased by 97%, leading to an ATFM delay of 1.73 

minutes/flight in 2018 

Financial and environmental impact of delays: 

 

In 2018, the total economic cost of delays and cancellations was EUR 17.9 billion 
and approximately 350 million passengers had their flights impacted through delays 
or cancellations. The cost was over EUR 3.9 billion higher than in 2017. 

  Since January 2019, air traffic  generated 120 million tonnes of CO2 emissions, 

which is an increase of 3.3%  

Analysis 

The  barrier  lies  in  the  fragmentation  of  the  European  airspace.  Member  States  will  remain 
sovereign over their territory (Chicago Convention) but the SES2+ initiative could address some 
of the barriers created by this situation. 

A  proposal  for  a  revision  of  the  Single  European  Sky  (SES  2+)  was  put  forward  by  the 
Commission in 2013, but has not made progress since then. 

78. Fragmentation of the aviation radio band spectrum 

Description  

The national fragmentation of the European airspace is one of the main factors pertaining for the 
lack of interoperability of the European air traffic management (ATM) network. One particular 
issue  related  to  the  fragmented  EU  airspace  concerns  the  use  of  the  radio  band  spectrum.  The 
delays  incurred  in  the  European-wide  deployment  of  8.33  kHz  voice  channel  spacing  is  an 
obstacle to the efficient use of aviation band spectrum. 

Available quantification 

There  is  no  quantification  of  this  specific  barrier.  Yet,  inability  to  meet  future  demand  for 
frequency assignments will delay or make impossible airspace improvements to increase capacity 
and will lead to increase in delays entailing significant costs.  

172 

 
Analysis 

Regarding  the  interoperability  of  the  European  ATM  network,  Commission  Implementing 
Regulation  1079/2012  the  Commission  has  set  specific  rules  for  the  deployment  of  8.33  kHz 
voice channel spacing to ensure the most efficient use of aviation band spectrum.  

Reaching  deployment  implementation  deadlines  by  the  end  of  2018,  the  Commission  has 
organised  a  dedicated  workshop  end  of  2017 to  raise  awareness  and  identify  the  best  practices 
and challenges ahead. Furthermore, it has set up a monitoring process through mandates given to 
the Network Manager and the European Union Aviation Safety Agency.  

The results of the monitoring process implemented have been systematically reported to Member 
States at each Single Sky Committee meetings (comitology). This process has helped to achieve 
by spring 2019 a deployment rate above 85%.  

The Network Manager coordinates and harmonises the processes and procedures to enhance the 
efficiency of aeronautical frequency  management. It also coordinates the early identification of 
needs and resolution of frequency problems. 

Harmonised  frequency  use  in  the  entire  European  airspace  under  Member  States  responsibility 
for specific applications will further optimise the use of limited radio spectrum resources.  

Waste management 

The Communication on “The single market in a changing world” acknowledges that the single 
market has to integrate circularity further. The single market is one of the main vehicles to help 
mainstream  circularity,  by  creating  a  level-playing  field  for  the  EU  manufacturing  sector, 
providing a critical mass for our standards and offering protection towards products coming from 
countries with lower standards. 

Unfortunately, secondary raw materials only meet less than 12% of EU’s demand for materials 
(latest available data from 2016), and variation across Member States is very significant. This is 
mainly due to their difficulties to compete in price, safety, performance and quality with primary 
materials.  A  well-functioning  EU  market  is  critical  to  make  it  possible  for  safe,  performing 
secondary raw materials to compete with primary raw materials.  

173 

 
 
 
79. Lack of data and information on secondary raw materials 

Description  

Improving the quality and harmonisation of raw materials data collection is essential to facilitate 
information  sharing.    There  is  a  lack  of  reliable  data  on  stocks,  and  flows  of  raw  materials, 
including  on  secondary  raw  materials,  which  constitutes      a  barrier  to  access  and  trade  in 
sustainable raw materials for the manufacturing industries in the EU and for all other actors of the 
circular economy. While also relevant within Member States, the issue is particularly relevant for 
cross  border  flows  of  materials,  since  geographical  distance,  language  differences  and 
heterogeneous regulations and approaches to waste management  make it even more difficult to 
identify business partners. Currently, however, the EU data on raw materials, both primary and 
secondary,  are  incomplete,  not  harmonised  and  thus  inconsistent  and  difficult  to  compare. 
Moreover, data are not available from a single source, but rather scattered amongst a variety of 
institutions, including government agencies, universities, NGOs and industry. 

The  recycling  or  raw  materials  at  end-of-life  is  not  yet  sufficient  to  meet  the  EU’s  current 
demands237. The European Green Deal pointed to the need to increase the circularity of secondary 
raw materials and mobilising the potential of the circular economy.    

Available quantification 

For what concerns waste electrical and electronic equipment (WEEE), a study238 239on collection 
rates identified a number of difficulties that Member States face when implementing the WEEE 
Directive. One of the major difficulties is the high rate of unaccounted collection240. 

According  to  Plastics  Recyclers  Europe  (PRE),  an  organization  representing  European  plastics 
recyclers, the European plastics recycling industry lacks sufficient transparency and traceability 
levels.241 

The ProSUM (Prospecting Secondary raw materials in the Urban mine and Mining waste) project 
under Horizon 2020 established the PROSUM Urban Mine Platform242 where time series of raw 
materials put on the market, in use and available for collection and treatment are available, for 
various product/waste categories (WEEE, end-of-life vehicles and batteries), in all EU countries. 
Such datasets are being updated, for example for batteries at the EU aggregated level243. 

237 Raw Materials Scoreboard 2018 

238 The final report of the study is available at 

http://ec.europa.eu/environment/waste/weee/pdf/Final_Report_Art7_publication.pdf 

239 https://publications.europa.eu/en/publication-detail/-/publication/09c7215a-49c5-11e8-be1d-

01aa75ed71a1/language-en 

240 WEEE Compliance Promotion Exorcise https://op.europa.eu/en/publication-detail/-

/publication/09c7215a-49c5-11e8-be1d-01aa75ed71a1/language-en 

241 https://www.plasticsrecyclers.eu/challenges-and-opportunities 

242 http://www.urbanmineplatform.eu/homepage [accessed on 04/02/2020] 

243 https://rmis.jrc.ec.europa.eu/apps/bvc/#/p/dataviewer [accessed on 04/02/2020] 

174 

 
 
                                                      
Analysis 

There is no universally agreed definition of ‘circular use’ of raw materials, the share of secondary 
sources in raw materials supply is one simplified approach to assess circular use244.  

Data on secondary raw materials in Europe is currently insufficient. Quality improvements and 
harmonisation  of  raw  materials  data  collection  are  necessary  in  order  to  facilitate  information 
sharing  at  the  different  levels  within  the  EU.  The  inability  to  easily  produce  reliable  statistics 
about reserves, resources, stocks, and flows of raw materials is a barrier to providing access to 
sustainable raw materials for the manufacturing industries in the EU. In this area,    the Horizon 
2020 ORAMA project (Optimising quality of information in Raw Materials data collection across 
Europe)  makes  recommendations245  for  improving  the  datasets  and  harmonisation  concerning 
both primary and secondary raw materials.  

Information  about  secondary  raw  materials  relates  to  Pillar  3  of  the  Raw  Materials  Initiative, 
“Resource efficiency and supply of ’secondary raw materials' through recycling”.  

One  of  the  aim  of  this  pillar  is  to  improve  the  availability  of  statistics  on  waste  and  materials 
flows, in relation to the European Union Raw Materials Knowledge Base (EURMKB). 

Recycling  contributes  to  the  security  of  supply  of  raw  materials  and  helps  to  improve  the 
sustainability  of  materials  in  the  EU  economy.  It  is  seen  as  a  risk-reducing  factor  in  the  EU 
criticality assessment.246  

80. Non-harmonised End-of-waste criteria 

Description  

The  revised  Waste  Framework  Directive  (WFD)247  sets  the  onus  on  Member  States  to  take 
appropriate  measures to  ensure  that  waste  which has undergone a recovery  operation  and  meet 
the established conditions is considered to have ceased to be waste. End-of-waste criteria can also 
be  set  at  EU level.  So  far,  Union-wide  criteria  have  been set  up for  iron, steel,  aluminium  and 
copper scrap and glass cullet248.  When end-of-waste criteria are not defined at EU level, Member 
States are free to set up their own set of criteria or apply single-case end-of-waste decisions. In 
case  of  national end-of-waste  criteria  or  single-case  decisions,  these are  usually  not  recognised 
beyond  Member  State  borders.  Article  28  of  the  Waste  Shipment  Regulation  provides  for  a 
dispute  settlement  procedure  mechanism  in  case  Member  States  disagree  on  the  end-of-waste 
status  and  if  they  do  so,  the  waste  status  prevails.  The  uncertainties  to  the  economic  operators 
associated  with this  legal regime  are  reflected  in  the Communication  on the  implementation  of 

244 JRC Report on Critical Raw Materials and the Circular Economy 

245 https://orama-h2020.eu/wp-content/uploads/ORAMA_WP2_DEL2.-2_20181207_UNU_v1.0.pdf 

[accessed on 04/02/2020] 

246 COM(2017)490 

247 Directive 2008/98/EC as amended by Directive (EU) 2018/851 

248 https://ec.europa.eu/environment/waste/framework/end_of_waste.htm 

175 

 
                                                      
 
the  circular  economy  package:  options  to  address  the  interface  between  chemical,  product  and 
waste legislation249 and related public consultations. 

Available quantification 

The  European  Recycling  Industries  (EURIC),  i.e.  the  umbrella  organisation  for  European 
Recycling Industries puts forward five top priorities of the recycling industry for the period 2019-
2024.250  Among  them,  they  stress the  importance  of  realizing  “an  internal  market for  recycling 
through  simpler  and  faster  waste  shipment  procedures,  harmonized  EU  or  national  end-of-
waste  criteria  for  targeted  streams,  a  new  status  of  “secondary  raw  materials”  to  level  the 
playing  field  with  primary  materials,  both  in  terms  of  regulatory  constraints  and  public 
perception.  

Analysis 

The Communication on the implementation of the circular economy package provides options to 
address  the  interface  between  chemical,  product  and  waste  legislation251.  Further  measures 
facilitating  secondary  raw  materials  are  envisaged  in  the  European  Green  Deal  and  the  new 
Circular  Economy  Action  Plan  both  with  regard  to  end-of-waste  criteria  and  the  rules  on  the 
shipments of waste.   

The ongoing revision of the Construction Product Regulation will introduce new requirements to 
increase the sustainability, recyclability and re-use of construction products. This will require the 
introduction of measures for harmonised end of waste criteria at European level in order to allow 
a unified assessment of the performance of construction products. 

With  regard  to  shipments  of  waste,  the  Commission  adopted  in  January  2020  a  report  on  the 
evaluation of the waste shipment regulation (WSR)252. The report shows that the WSR has been 
generally effective in delivering its objectives to protect the environment and human health from 
the adverse effects of waste shipments and to implement the EU’s international commitments on 
the subject. At the same time, different ways of applying and enforcing the WSR, often combined 
with different interpretations of its provisions and different inspection regimes, have hampered its 
optimal implementation throughout the EU. These factors limit or discourage legal shipments 
of good quality waste materials to adequate recycling facilities, which are important for the 
transition to a circular economy in the EU. 

The  main  obstacles  to  the  efficient  implementation  of  the  WSR  are  the  complex  and  time-
consuming  (often  paper  based)  notification  procedures  as  well  as  different  interpretations  of 
waste classifications by the Member States. This can result in heavy and cumbersome processes 
for economic actors willing to ship waste within or outside the EU. 

The rules governing the movements of waste are relevant for the transition to a circular economy. 
However,  the  WSR  was  not  specifically  designed  to  ensure  that  the  transition  to  circular 

249 COM(2018)32, SWD(2018)20 

250 European Recycling Industries ‘TOP 5 PRIORITIES OF THE RECYCLING INDUSTRY FOR THE 

PERIOD 2019-2024’, 2019 

251 COM(2018)32, SWD(2018)20 

252 SWD (2020) 26 final COMMISSION STAFF WORKING DOCUMENT EVALUATION of 
Regulation (EC) No 1013 /2006 of the European Parliament and of the Council of 14 June 2006 on 
shipments of waste 

176 

 
                                                      
economy is facilitated, as the emergence of circular economy as a new overarching EU political 
priority occurred only after the adoption of the WSR. 

81. Absence of standardised system to demonstrate the performance of 

recycled materials  

Description  

The quality of the recycled materials depends on the quality of waste collection and sorting and 
of  the  treatment  processes  that  are  applied.  This  is  the  case  for  all  types  of  waste,  including 
municipal,  commercial  or  industrial  waste.  In  order  to  achieve  a  better  market  for  recycled 
materials, industrial users should be aware and confident that recycled materials offer equivalent 
safety, functional quality and availability as the primary ones. At the same time, prices should be 
competitive. 

Within the Single Market, there is currently no standardised way to track the exact composition 
and  quality  of  waste  material  used  for  recycling;  however,  regional,  national  and  industry  lead 
standards  exist  for  various  wastes  and  materials.  Recyclers  need  to  adapt  to  the  local  waste 
collection processes and the quality standards required by the users of the recycled materials in 
products. This makes it very difficult for manufacturers interested in using recycled materials to 
compare the quality and the performance of the recycled materials available on the market. While 
this  problem  is  obviously  also  relevant  within  Member  States,  differences  of  procedures  and 
processes across Member States render cross border transactions significantly more difficult.  

The lack of standardised system also applies to the chain of processes to be applied to waste. For 
example,  in  the  case  of  Critical  Raw  Materials  (CRMs)  that  are  used  in  a  wide  range  of 
applications including electr(on)ic equipment and batteries, low quantities and/or concentrations 
of CRMs   currently turn their recovery from end-of-life products technically and economically 
difficult,  or  even  unfeasible.  There  is  indeed  the  need  to  support  economically  viable  and 
treatment 
environmentally  sound  state-of-the-art  waste  management  approaches  and 
technologies, including by mapping existing standards and current gaps. 

Available quantification 

According  to  Plastics  Recyclers  Europe  (PRE),  an  organization  representing  European  plastics 
recyclers,  unstandardized  and  unharmonized  collection  and  sorting  schemes  across  Europe  are 
important  factors  having  an  impact  on  the  quality  of  the  sorted  waste  that  is  subsequently 
recycled  and  the  market  uptake  of  recycled  materials.  This  can  create  quality  fluctuations  that 
hampers  the  recyclers’  ability  to  compete  with  virgin  materials.  The  uncertainty  in  the  supply 
chain makes converters hesitant to rely upon secondary raw materials.253  

The  SCRREEN  (Solutions  for  CRitical  Raw  materials-  a  European  Expert  Network)  project 
under H2020 has made proposals on the prevalence, recyclability, cost and financing of recycling 
of critical raw materials from WEEE.254 

253 https://www.plasticsrecyclers.eu/challenges-and-opportunities 

254 http://scrreen.eu/results/ 

177 

 
                                                      
In addition, unrecyclable products due to the presence of recycling disruptors in the composition 
of  the  product  (e.g.  non-recyclable  packaging,  composite  materials,  presence  of  hazardous 
substances) is an issue that arises at the design phase of the products and may not be addressed 
adequately through waste management practices but rather through producer responsibility. 255  

Analysis 

The  absence  of  clear  and  standardised  information  on  technical  performance  and  chemical 
composition is a serious obstacle to the development of efficient markets for secondary materials. 
Standardisation  gaps  for  recycled  materials  are  one  of  the  factors  that  hamper  the  recovery  of 
high-value materials from complex products at the end of their life and subsequently the quality 
of the secondary raw materials. Other important factors concern design of products that prevent 
or hamper recycling and shortcomings in the separate collection, sorting and treatment methods.  

Recycling of key raw materials in the EU can be more material-efficient and reach higher quality  
.  This  would  foster  re-use  and  circularity  for  all  the  products  containing  them.  The  EU  Raw 
Materials Initiative and the Renewed Industrial Policy Strategy of 2017 promote improved access 
to key raw materials for manufacturing industries, both through primary extraction and through 
recycling and reuse. 

Existing standards on WEEE treatment, mandated by the Commission to CENELEC, such as the 
EN  50625  series  on  collection,  logistics  and  treatment  of  WEEE  or  more  specifically  on  the 
TS50628-5  on  final  treatment  requirements  for  copper  and  precious  metals  can  improve  the 
quality of the entire treatment chain from proper handling during collection to the final recovery 
of valuable fractions, compounds and materials.  

82. Insufficient enforcement of European environmental legislation on the 

shipment of waste 

Description  

Illegal  shipment  and  processing  of  waste  by  Member  States  is  a  crucial  obstacle  to  build  an 
effective waste recycling industry. According to Europol, environmental crime is highly lucrative 
–  it  can  be  as  profitable  as  illegal  drug  trafficking  –  but  the  sanctions  are  much  lower.  These 
factors make it highly attractive for organised crime groups. Involvement in the illegal trafficking 
of waste is now routine for many organised crime groups. The existence of such illegal practices 
is not only highly damaging to the environment but also has an impact on the level playing field 
of the waste management operators and damages the image and consumer trust in those ethical 
and  circular  businesses  that  base  their  production  and  management  choices  on  honesty  and 
sustainability.  

Available quantification 

The prevalence of illegal shipments of waste is indeed a source of serious concern, as reflected in 
the evaluation report of the waste shipment regulation published by the European Commission in 

255 EURITS contribution to the European Green Deal Roadmap, 20 January 2020 

178 

 
                                                      
January  2020256.  In  its  latest  EU  Serious  and  Organised  Crime  Threat  Assessment  report257, 
Europol points out to the involvement of criminal actors in illicit waste trafficking. Addressing 
waste trafficking  was  identified  for  the  first  time  as  a  priority  in  the  overall  EU  policy  against 
organised  crime  for  the  period  2018-2021258.  Violations  of  EU  waste  legislation  are  also 
identified  as  areas  where  more  efforts  are  foreseen  as  part  of  the  2018  Commission 
Communication  on  EU  actions  to  improve  environmental  compliance  and  governance259.  Data 
are difficult to obtain on illegal shipments of waste, as for any other illegal activities. One source 
of  data  are  the  annual  reports  by  Member  States  that  contain  information  on  illegal  waste 
shipments260.  Overall,  an  increased  amount  of  illegal  cases  is  reported,  however  there  is 
significant variation in the amount of reported cases per Member States, as well as in the level of 
detail of the reported information 

Analysis 

An analysis of the root causes of the insufficient enforcement of the EU legislation on shipment 
of waste is provided in the evaluation report of the waste shipment regulation published by the 
European  Commission  in  January  2020.  This  issue  will  be  addressed  as  part  of  the  ongoing 
review of the waste shipment regulation  

Concerning  WEEE,  the  main  challenges  and  best  practices  regarding  implementation  of  the 
WEEE  Directive,  including  shipments  of  waste,  were  assessed  in  an  extensive  compliance 
promotion exercise is 2017261.  

83. Heterogeneity of extended producer responsibility schemes in Member 

States 

Description  

Extended  producer  responsibility  (EPR)  is  one  of  the  foundations  of  the  EU  waste  legislation, 
and it links product design and end-of-life management, as producers are to pay the cost of the 
management of waste from their products. Several products are subject to EPR  as a result of EU 

256 SWD (2020) 26 final COMMISSION STAFF WORKING DOCUMENT EVALUATION of Regulation 
(EC) No 1013 /2006 of the European Parliament and of the Council of 14 June 2006 on shipments of 
waste 

257 https://www.europol.europa.eu/activities-services/main-reports/european-union-serious-andorganised-

crime-threat-assessment-2017 

258 http://data.consilium.europa.eu/doc/document/st-9450-2017-init/en/pdf 

259 COM(2018)10 

260 Commission Staff Working Document SWD (2018) 468 final accompanying the 2018 report from the 
Commission to the European Parliament and the Council on the Implementation of Regulation (EC) 
No 1013/2006 of 14 June 2006 on shipments of waste, gives an overview of this information for the 
period 2013-2015: https://eur-lex.europa.eu/resource.html?uri=cellar:44a84bd6-ee4e-11e8b690-
01aa75ed71a1.0001.02/DOC_2&format=PDF. More recent annual reports have been submitted since 
then, covering the period until 2017 

261 WEEE Compliance Promotion Exorcise https://op.europa.eu/en/publication-detail/-

/publication/09c7215a-49c5-11e8-be1d-01aa75ed71a1/language-en 

179 

 
                                                      
legislation.  Some  Member  States  also  impose  EPR  on  a  range  of  additional  products.  The 
implementation of the EU obligations regarding EPR by the Member States has led to a diversity 
of  systems  and  varying  results  in  terms  of  costs,  performances  and  transparency.  As  a 
consequence, there is no real European level playing-field and the obliged industry and the waste 
operators  have  to  adapt  to  27  different  systems,  with  different  fee  calculation  methods, 
administrative procedures, repartition of roles and general governance. 

Within many Member States and for different waste streams, tensions exist between the obliged 
industry,  the  compliance  schemes,  the  public  authorities  and  the  private  waste  collection  or 
treatment sector, mainly on questions of a level playing field, market access, service to citizens, 
cost-efficiency  and  transparency  regarding  the  use  of  the  collected  funds.  Free-riding  is  also 
prevalent in almost all Member States, in particular in the area of online sales. For example, for 
some products like lighting appliances, online free riding reaches 80 %, according to the sector 
itself.  The  current  situation  leads  to  uneven  competition  between  online  sellers  and  between 
online and offline sellers.  

Available quantification 

The EPR obligation is rooted in the Waste Framework Directive (WFD) and a number of specific 
waste streams directives. The recent revision of the WFD increased the level of harmonisation by 
introducing minimum requirements for EPR schemes addressing their  governance, transparency 
and  efficiency  aspects.  The  impact  of  these  measures  will  become  visible  in  the  coming  few 
years.  

At EU level, four Directives introduce EPR as a policy approach: the Packaging and Packaging 
Waste Directive (94/62/EC), the ELV Directive 2000/53/EC, WEEE Directive 2012/19/EU and 
the Batteries Directive 2006/66/EC.   

180 

 
Source:  Development  of  Guidance  on  extended  producer  responsibility  (EPR),  FINAL  REPORT,  European  Commission  –  DG 
Environment 2014 

Analysis 

Extended producer responsibility (EPR) schemes are a means of ensuring that the “polluter pays” 
principle is applied to waste management. The Waste Framework Directive states that the costs 
of waste management are to be borne by waste producers or holders or partly or wholly by the 
producer of the product from which the waste comes from.  

In  principle, full  cost coverage  is required in  an  EPR-system,  based  on  article  8a  of the Waste 
Framework  Directive,  but  the  scope  of  costs  to  be  covered  differs  from  one  Member  State  to 
another  and  according  to  the  type  of  product/waste.  It  also  varies  in  function  of  the  level  of 
service  provided  and  the  quality  of  collection  and  treatment.  Another  issue  is  the  lack  of 
transparency within the producer responsibility organizations (PROs) leading to efficiency losses. 
Member States and the obliged industry need to agree on common goals, on efficient reporting 
processes  and  ensure  that  the  collected fees  are  used in the  most cost-efficient way  taking  into 
account the environmental objectives.  

Within EPR schemes, the lack of modulated fees adjusted to the full net costs of the end-of-life 
management  of  individual  products  may  reduce the incentives  to adopt  circular  solutions.  EPR 
schemes aggregate costs and calculate recycling performances for a whole sector or for the whole 
pool  of  members.  Hence,  currently,  where  there  is  no  eco-modulation  of  fees  in  place,  the 
applicable  fees  do  not  create  incentives  to  improve  design  to  facilitate  recycling.    With  an 
ambitious bonus-malus fee modulation, EPR systems can help fostering the recycling market by 
taking  out    non-recyclable  products  out  of  the  market,  or  by  rewarding  easy  to  disassemble 

181 

 
 
products. Article 8a of the revised Waste Framework Directive now requires Member States to 
implement the modulation of fees for EPR collective schemes.  

The enforcement of EPR rules remains a challenge in the case of online sales due to the lack of 
awareness  and  confusion  of  obligations  among  some  online  sellers,  the  wide  variation  in 
regulation  between  different  countries  and  regions,  the  difficulties  of  enforcement  activity  and 
coordination  across  jurisdictions  and  the  deliberate  avoidance  of  compliance  by  some  online 
sellers. This leads to important free-riding practices. Therefore, the role of the online platforms 
for the EPR compliance of their sellers should be clarified. 

The  new  EPR  requirements  included  in  the  Waste  Framework  Directive  aim  at  correcting  the 
lack of harmonization and the uneven implementation of EPR across the EU. The requirements 
oblige Member States to define clearly the roles and responsibilities, establish measurable targets, 
establish  reporting  systems,  ensure  equal  treatment,  put  in  place  the  modulation  of  fees  taking 
into account durability, re-usability, recyclability, hazardousness, ensure that necessary costs are 
covered in a cost-efficient way and ensure transparency and dialogue with the actors involved.  

182