Advanced EU Law

1. Advanced EU Law Prof. MassimilianoMontini European Internal Market: Freedom to provide services Lecture 12, 28-11-2013

2. Freedom to provide services • Articles 56-62 TFUE regulate the freedom to provide services within the EU • They apply to providers and recipients of services • In addition, several sectoral directives contribute to regulate the provision of services within the EU internal market

3. Art. 56(1) TFEU • ‘Within the framework of the provisions set out below, restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended.’

4. Freedom to provide services: concept • Freedom to provide services refers only to temporarily or occasionally self-employed activities provided by a person in the territory of a Member State which is not the country where he/she is established • In this case, the provider or the recipient keeps his/her connection with the country of origin • It is a different notion from: • Freedom of workers (only for employed persons) • Freedom of establishment (it regards the provider of services permanently established in a different State)

5. Freedom to provide services: subjects • Natural persons can benefit from the rules on freedom to provide services: • They must be citizens of a Member State • They must be already established in a Member State • Art. 56(2) TFEU establishes that ‘the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may extend the provisions of the [freedom to provide services] to nationals of a third country who provide services and who are established within the Union.’

6. Freedom to provide services: subjects • Legal persons regularly formed in a Member State, in accordance with the law of that Member State, having their central administration or business office in the territory of the EU can enjoy the freedom to provide services • This is indirectly determined by Art. 62 TFEU, which states that the provisions of Articles 51 to 54 (establishment) shall apply to the freedom to provide services

7. Freedom to provide services: object • It refers to all economic activities as far as they are provided in exchange of remuneration • Also sport activities (e.g. football players, etc.) may fall within this category, when they are not performed on a permanent basis or are employed activities • The following sectors are excluded: • Transports (specific provisions articles 90-100 TFEU) • liberalisation of banking and insurance services connected with movement of capital, regulated under the free movement of capital (art. 58(2) TFEU)

8. Exceptions: articles 51 e 52 TFUE • On the basis of art. 62 TFEU, the exception under art. 51 TFEU and the restrictions under art. 52 TFUE also apply to freedom to provide services • Therefore, activities involving the exercise of official authority are excluded from the rules on freedom to provide services • Exceptions based on grounds of public policy, public security or public health also apply to freedom to provide services (art. 52 TFEU)

9. Art. 57 TFEU: notion of ‘service’ • ‘Services shall be considered to be ‘services’ within the meaning of the Treaties where they are normally provided for remuneration, in so far as they are not governed by the provisions relating to freedom of movement for goods, capital and persons. • ‘Services’ shall in particular include: (a) activities of an industrial character; (b) activities of a commercial character; (c) activities of craftsmen; (d) activities of the professions. • Without prejudice to the provisions of the Chapter relating to the right of establishment, the person providing a service may, in order to do so, temporarily pursue his activity in the Member State where the service is provided, under the same conditions as are imposed by that State on its own nationals.’

10. Notion of ‘service’ • Based on art. 57 TFEU, ‘Service’ refers to activities which are not employed activities, normally provided for remuneration, from a provider established in a State which is not the State of origin of the recipient • Main elements of the notion of ‘service’: • Self-employed activity • Remuneration • Temporarily or occasionally provided • Cross-border character

11. ‘Service’: residual notion • The Treaty defines the notion of ‘service’ in a residual way: Art. 57 TFEU refers to services as those activities which are NOT governed by provisions relating to free movement of goods, persons and capitals • The Court of Justice has sometimes dealt with the most difficult cases on the definition of the residual notion of service, with respect to the other freedoms of movement with the internal market

12. Remuneration • As far as it concerns the requirement of remuneration, the Court of Justice has clarified that: • Remuneration is usually identified as the amount of money for the provision agreed between the provider and the beneficiary of the service; • The provision of service and the payment can also occur at different times (e.g. payment of insurance) • It can be also paid by a person other than the one who receives the provision (e.g.: firm providing the network for broadcasting of TV programmes)

13. Temporary or occasional basis • The Court highlighted that is the fact that the provision occurs on a temporary or occasional basiswhich makes the freedom to provide services different from the freedom of establishment • Frequency and duration are elements to assess the temporary basis • However, providers may sometimes also have an office or another infrastructure that is needed to perform the provision in the host Member State • Examples: a construction site; advertisement for a lottery.

14. Cross-border character • The provider must be established in a different Country other than the Country of the beneficiary • There are the following 4 hypothesis: • The provider moves to a Member State other than the one where he/she is established (e.g. a lawyer defending his client in front of a Court in another Member State) • The beneficiary moves to the State where the provider is established (e.g.: tourists) • The service moves (e.g.: financial and banking services) • Provider and beneficiary move together in another Member State, in case they are both established in the same Member State (e.g: groups of tourists and their guide)

15. Discriminatory measures • The principle of non-discrimination on grounds of nationality also applies to freedom to provide services • Therefore, the person providing a service may pursue his activity in the Member State where the service is provided, under the same conditions as are imposed by that State on its own nationals • Art. 56(1) TFUE also bans all forms of ‘restriction’ to freedom to provide services • In addition, Art. 61 TFUE states that ‘as long as restrictions on freedom to provide services have not been abolished, each Member State shall apply such restrictions without distinction on grounds of nationality or residence to all persons providing services.’

16. The contribution of the Court of Justice • The Court of Justice, once more, highly contributed to realize freedom to provide services: • By affirming the direct effect of articles 56 and 57 TFEU ( Case Van Binsbergen, 33/74) • By restating that also dissimulated discrimination are banned (Case De Coster, C-17/00)

17. Mandatory Conditions for providers (I) • Concerning indistinctly applicable measures, the Court highlighted the exceptional character of the possibility to derogate to the principle of the freedom to provide services • Besides exceptions based on public security, public health and public order, freedom of services can be derogated by: • National rules pursuing a ‘general interest’ and which apply to natural and legal persons performing an economic activity in the host Country;

18. Mandatory Conditions for providers (II) • As far as the general interest is not already ensured by the rules applying to the provider of services in his/her country of origin (where he/she is established); • When such national rules are objectively necessary to reach the goal established (general interest) and when such a goal cannot be achieved through less restrictive measures. • Only when all these conditions occur cumulatively, it is possible to adopt measures derogating to the freedom to provide services.

19. Directive 2006/123/CE concerning services in the internal market • This Directive establishes a general legal framework promoting the exercise of the freedom of establishment for service providers and the free movement of services, while maintaining a high quality of services. • It is based on the following four pillars: • to ease freedom of establishment for providers and the freedom of provision of services in the EU; • to strengthen rights of recipients of services; • to promote the quality of services; • to establish effective administrative cooperation among Member States.

20. Several types of services are excluded from the scope of this Directive, in particular: financial services; telecommunication networks; transport; healthcare services; gambling activities; certain social services. This Directive covers a wide group of service activities, such as: construction and craft industries; retail trade; the majority of regulated professions (lawyers, architects, engineers and accountants, for example); business services (office maintenance, management consultancy for example); tourism; real estate services; private education. Directive 2006/123/CE concerning services in the internal market

21. Directive 2006/123/CE concerning services in the internal market • The Directive is to apply in the following two cases: • During the permanent establishment of undertakings, specifically when a particular entrepreneur or undertaking wishes to set up a permanent establishment (a company or branch) in its own country or in another EU country; • During cross-border service provision, specifically when an undertaking already established in an EU country wishes to provide services in another EU country, without creating a permanent establishment or when a consumer resident in an EU country wishes to be provided with a service from a supplier in another EU country.

22. Directive 2006/123/CE concerning services in the internal market: exceptions • Art. 16 of the Directive 2006/123/EC, inter alia, identifies derogations in reason of which Member States cannot apply freedom of establishment ‘Member States shall not make access to or exercise of a service activity in their territory subject to compliance with any requirements which do not respect the following principles: (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 the Member State in which they are established;

23. Directive 2006/123/CE concerning services in the internal market: exceptions (b) necessity: the requirement must be justified for reasons of public policy, public security, public health or the protection of the environment; (c) proportionality: the requirement must be suitable for attaining the objective pursued, and must not go beyond what is necessary to attain that objective.