Free Movement of Services in the EU

Much of the interaction today within the EU are now service related transactions, versus the transaction of goods.

The provisions of Article 56 of the Treaty on the Functioning of the European Union (TFEU), restrictions on the provision of services within the EU shall not be restricted as to between nationals of the Union.  However, nationals of countries outside the EU can be restricted by the EU.

As defined by Article 57 TFEU, services are defined extremely broadly in order to capture most eceonomic activity, such as:

  • Activities of an industrial or commercial character
  • Activities of the professions
  • Activities of craftsmen

The treaty also covers services provided “free of charge” if they are traditionally compensated.  This creates a challenge for some quasi-public areas, such as education, healthcare and other traditionally quasi-governmental services.

The regulation of the service are covered by the domestic rules, and any EU national shall be permitted to perform the services if they meet the same requirements on a temporary basis. The work of the EU to harmonize the requirements over time, but some areas – such as the law – will be slower to integrate.  The EU has been attempting to harmonize through directives, and these directive take precedence over the provisions of the TFEU.

Article 61 TFEU takes precedence over Article 18 TFEU in the case of most specialized services, and should be referred to in the event of a potential conflict.

As is the case in most of the TFEU provisions, there are exceptions as covered under Article 62 TFEU.  Restrictions on the freedom of movement of services may be restricted based on the needs of:

  • Public Policy
  • Public Security
  • Public Health
  • Public Authority
  • Rule of Reason (van Binsbergen C-33/74)

Economic objectives are not permitted. Under the provisions of Binsbergen, the ECJ developed a test that requires that:

  • The restriction must not be subject to harmonization with EU law
  • The restriction must be in the public interest such as consumer protection, fraud prevention, etc.
  • The national rule must apply without distinction or discrimination
  • The measure must be proportionate and the least restrictive method to achieve the aim

The movement of services apply to both public and non-public organizations, particularly if the services are provided cross-border where the services are prepared remotely.

 

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