Free movement of services

On 13 January 2003, the Commission has released a new proposal for a directive on services in the Internal Market (“Draft”) aiming at removing basic barriers to the freedom of establishment and to the free movement of services within the EU.

According to the Draft, the Member States would be prohibited to subject the access to service activities within their territories to certain specific requirements including discriminatory requirements based on nationality or the place of registered office of the service provider, the obligation to have the principal establishment on the territory of a Member State, restrictions on the freedom to choose between establishment in the form of an agency, branch or subsidiary or a requirement of reciprocity.

The Draft would follow the country of origin principle, under which service providers should, in general, be subject only to domestic rules of their Member States. That would cover, amongst others, access to and the conduct of a service activity, including the quality or content of the service, advertising, contracts and the provider’s liability.

The draft is expected to ensure that the Member States do not restrict the freedom to provide services by operators from other Member States. Significantly, the Draft mentions certain arrangements which are to be considered as unlawful restrictions, including e.g. an obligation to have an establishment, an address or a representative within the territory of a Member State.

According to the Draft, ‘single points of contact’ are to be established in the Member States, where a service provider would be able to complete all procedures and formalities needed for access to his service activities, in particular, all necessary declarations, notifications or applications for authorizations from the competent authorities, including applications for inclusion in a register, a roll, a database or for registration with a professional body or association.

The Draft would also feature measures proposed to combat discrimination of recipients of services provided by operators from other Member States. It would be prohibited to subject the recipients to any discriminatory treatment in regard of such services, such as the obligation to obtain authorization from or to make a declaration to authorities, discriminatory taxation of the recipient or of the equipment necessary to obtain the service, limits on tax deductions or financial assistance on the grounds that the provider of the service is established, or the service provided, in another Member State.