The Notification Obligation under the Services Directive. BUDAPEST, 26 June 2015 Emy GUSTAVSSON DG GROW

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1 The Notification Obligation under the Services Directive BUDAPEST, 26 June 2015 Emy GUSTAVSSON DG GROW

2 Objective of the Services Directive Remove barriers to the establishment of service providers and the temporary provision of cross-border services. Build on and consolidate ECJ case law on Art. 49 and 56 of the TFEU. Freedom of establishment: screening, simplification, removal and lightening of restrictions to the access to and the exercise of service activities. Freedom to provide services: strong limitation of application of host Member States' requirements to crossborder services.

3 Important definitions (Art. 4) The concept of a "service" - Self-employed economic activity normally provided for remuneration (see also Art. 57 TFEU) - Outside the ties of an employment contract - Economic nature Other important definitions: Recipient, authorisation scheme, requirement, overriding reasons relating to the public interest, etc.

4 Scope of the Services Directive (I)

5 Scope of the Services Directive (II) Horizontal "framework" Directive: covers all service activities unless they are explicitly excluded. Examples of services which are covered: - Construction and crafts - Business services (consultancy, advertising etc.) - Real estate services - Most regulated professions - Retail - Tourism

6 Scope of the Services Directive (III) Services which are not covered by the Directive: General exceptions are described in Article 1. These are for example; criminal law and labour law. Specific exceptions of service activities are described in Article 2(2). These are for examples; financial services, electronic communication services, health care services, audiovisual services, gambling services, etc.

7 Scope of the Services Directive (IV) The Directive complements the existing EU acquis: specific provisions of EU law prevail in case of conflict (Art. 3). Examples: Directive 2005/36/EC recognition of professional qualifications and Directive 98/5/EC on establishment of lawyers.

8 The notification obligations Freedom of establishment - Article 15 "Member States shall notify the Commission of any laws, regulations or administrative provisions [ ]" Freedom to provide services - Article 16 and 39(5) "[ ] Member States shall transmit to the Commission any changes in their requirements, including new requirements [ ]" No obligation to notify draft legislation.

9 Freedom of establishment (I) Limited number of requirements which should be notified (see list in Art. 15(2)), for example; - Quantitative and territorial restrictions - Legal form and shareholding requirements - Fixed minimum and maximum tariffs - Fixed minimum number of employees - An obligation on the provider to supply other specific services jointly with his services.

10 Freedom of establishment (II) The notified requirements must be: (1) non-discriminatory; (2) justified by overriding reasons of public interest; and (3) proportionate according to Article 15(3). Requirements are notified in accordance with Article 15(7)

11 Freedom of establishment (III) In addition to the notification obligation in Article 15, national legislation must comply with; Article 9-15: Authorisation schemes Article 14: Prohibited requirements (black list)

12 Temporary provision of services (I) (Almost) all requirements which affect the access to or the exercise of service activities must be notified according to Article 16(1). Exceptions to the temporary provision of services in Article 17; services of general economic interest such as the postal sector and treatment of waste.

13 Temporary provision of services (II) The notified requirements must be; (1) non-discriminatory; (2) justified by overriding reasons of public interest; and (3) proportionate according to Article 16(1) and 16(3).

14 Temporary provision of services (III) The list of requirements in Article 16(2) are examples which in principle are very difficult to justify according to the four public interest objectives in Article 16(3). These are for example: - an obligation to have an establishment in their territory; - an obligation to obtain an authorisation; - a ban to set up a certain form of infrastructure in their territory. All Article 16 requirements are notified according to Article 39(5).

15 The assessment a.) Non-discrimination "the requirement may be neither directly nor indirectly discriminatory with regard to nationality or in the case of legal persons, with regard to Member State in which they are established;"

16 The assessment b.) Necessity - Article 15 (establishment) "requirements must be justified by an overriding reason relating to the public interest" - Article 16 (temporary provision of services) "the requirement must be justified for reasons of public policy, public security, public health, and the protection of the environment. See description of overriding reasons of public interest in Article 4(8) and recital 40.

17 The assessment C.) Proportionality "the requirement must be suitable for attaining the objective pursued, and must not go beyond what is necessary to attain that objective." Even if a requirement is non-discriminatory and could be justified by overriding reasons of public interest, the ultimate test of whether the application of the requirement is in compliance with Article 15 and/or 16 is the proportionality test.

18 Relationship with notifications under Directive 98/34 (TRIS) A notification made under Directive 98/34 fulfils the obligation under Article 15(7) of the Services Directive. Overlaps are possible if a notification of a draft national measure; - relates to an information society service or a technical regulation on products, and - contains one (or more) requirement(s) in Article 15(2) of the Services Directive.

19 Legal consequences Possibility to issue Commission decision on establishment requirements which could create barriers to the freedom of establishment according to Article 15(7). No such possibility regarding temporary service provision. The Commission could also launch EU-pilots and infringement procedures against Member States based on the notification.

20 Next steps The Competitiveness Council adopted conclusions 2 March 2015 calling upon the Commission to increase the effectiveness of the notification procedure under the Services Directive. The Commission is now assessing how to improve the current notification procedure under the Services Directive.

21 Useful links and contact Commissions website on the Services Directive Commission's Handbook on the implementation of the Services Directive -dir/guides/handbook_en.pdf Contact: