EU Services Directive

Providing Services Cross Border and Establishing

The Services Directive applies where a service provider proposes to provide services cross border from his own Member State or seeks to establish a business in another Member State. The Directive requires EU Members States to give effect to these rights. 

The Directive applies to rules and procedures which the service provider needs to comply with them either to establish i.e. set up in the Member State or to provide services across borders into a Member State. 

Any conditions imposed on incoming service providers must be strictly justified. They must be non-discriminatory with regard to nationality of the Member State, in which a company is incorporated.  They must be necessary for reasons of public policy, public security, public health and protection of the environment and they must be proportionate to obtain the objective concerned. 

Member States are required to examine the procedures and formalities applicable to the provision of services and consider whether these are sufficiently simple.   Where these are not sufficiently simple, they must be simplified.

Prohibited Conditions

The Services Directive sets out requirements which Member States cannot prescribe and are therefore prohibited. These include:

  • requirements based on nationality or residence of the service provider, staff members or board members;
  • prohibitions on having an establishment in more than one state;
  • restrictions on freedom to have its permanent establishment in a particular Member State;
  • the application of an economic test making authorisation subject to economic need or market demand;
  • the obligations to provide financial guarantee or take out insurance from a particular provider
  • an obligation to pre-register for a given time before exercising an activity.

​​​The following are effectively prescribed:-

  • obligation to have an establishment in the territory where the service is provided;
  • requirement to set up infrastructure in the host state;
  • the application of specific contractual arrangements between the service provider and the recipient which prevent or restrict provision of services by the self-employed;
  • obligation to possess specific identity document issued by the competent authority;
  • requirements affecting the use of equipment e.g. requirements to use of specific brands;
  • restriction on recipients which restrict useful services.

Exemptions and Limitations

There are a number of service areas to which the above do not apply so that a Member State can impose additional requirements.   These include:

  • general economic services such as post, electricity, gas, water;
  • services that are covered by existing directives;
  • protection of personal data,  social security schemes, administrative formalities regarding the free movement of persons, 
  • shipment of waste;
  • legal protection of semi conductors;
  • statutory audit of accounts;
  • judicial recovery of debts;
  • visa requirements for third country nationals,
  • actions involving notaries;
  • registration of vehicles leased in other Member States; and
  • obligations determined by private international law.

Recipients have rights to receive services from abroad. Member States are prohibited from placing restrictions on the use of a service provided by a provider established in another Member State.  They must ensure residents obtain information in relation to access to and exercise of services, means of redress in case of dispute and contact details of the organisation which can help.

Obligations of EU States to Facilicate Service Providers

EU states are obliged to simplify administration in relation to the provision of services. States must examine the procedures and formalities applicable to the receipt of and access of services and simplify them where they are insufficiently simple.

The obligations apply to states, professional bodies, organisations and regulatory associations. They must verify that their laws and rules are compatible with directive. They have an obligation to remove buyers and restrictions.

States must provide a single point of contact through which it is all procedures and formalities whether central, regional or local, may be completed.

Home states must provide information about consumer protection, availability of dispute settlement, contract deal for consumer bodies in the provider state.

Host states must accept documents from other states which have an equivalent purpose to those in their own states. States are obliged to cooperate effectively to give effect to the directive. States must designate a liaison point to effect or facilitate the cooperation and sharing of information.

Administrative Simplification

The services directive requires Member States in the European Union to: 

  • simplify administrative procedures;
  • set out a single point of contact with service providers;
  • make information on national requirements and procedures used available to service providers and recipients and provide for the possibility to complete procedures at a distance and by electronic means.  

The Services Directtive provides for administrative simplification and strengthens the rights of providers and recipients of services. Administrative simplification includes the simplification of requirements for service provides. Obligations to submit original documents, certified translations or certified copies must be removed, with limited exceptions. Service providers must be able to carry out any necessary formalities (if any) online through a single point of contact.

Where European Union states require qualification certificates before a service can be provided, they must accept an equivalent certificate from another Member State.  It is not generally permissible to require translations or certified copies.  The European Commission may introduce harmonised forms to replace national certificates This should eliminate delays and procedures which might discourage service providers.

Single Points of Contact

EU Member States are obliged to ensure service providers can complete all procedures, documents and applications through a single point of contact (PSC).   The so called PSC must provide information on how to do business and how to complete the necessary procedures within the host state.  PSCs are likely to take the form of an electronic portal to which service providers can have access to almost all administrative formalities and procedures.  

Member States must ensure:-

  • contact details are supplied to which a recipient in any state can send a complaint or request for information;
  • that the service provider responds to complaints in the shortest possible time;
  • that the service provider demonstrates compliance with obligations in the directive; and
  • that the service provider inform recipients of any code of conduct or membership of a trade association or professional body that provides a recourse of non-judicial means of dispute.

The provision also requires that where judicial decision requires lodging a financial guarantee Member States must recognise financial guarantees lodged with an institution established in other states.

Information to be Provided by States

The information to be provided includes:-

  • requirements service providers have to comply with if they wish to provide a particular service in a Member State;
  • contact details in the relevant authorities; the means of and connections for access;
  • database on providers of services;
  • registers and databases on regulated professions;
  • the means of redress generally available in the event of a dispute;
  • contact details which can provide practical assistance to service providers.

PSCs must reply as quickly as possible to any request for information.  Member States are to require regulatory bodies or recipients to give assistance at the request of service providers on the way the requirements for service providers are applied and interpreted.


Authorisation for establishment may only be required in the recipient state if it is non-discriminatory, justified by an overriding reason relating to public interest and the public interest cannot be protected in any other way. The  Directive provides that they must go no more than absolutely necessary. 

Requirements for granting authorisation cannot duplicate requirements and controls which are equivalent to or comparable with those to which the providers are already subject in another Member State.  Each State’s regulatory body must take into account the equivalent requirements in other Member States.

In order to allow service providers to develop a long term strategy, an authorisation must be for an unlimited period unless it is automatically renewed subject to fulfilment with requirements.  Limitations of time can only be justified by an overriding reason in relation to public interest.

The Services Directive provides that the authorisation procedures must be clear,  must be made public in advance, be dealt with objectively and impartially, must not be complicated, must not be delayed and be easily accessible.  Any charges made must be reasonable and proportionate.   Applications must be processed as quickly as possible and within a reasonable period.

States to Review and Remove Barriers

Member States are required to review their legal system in order to identify all requirements (including professional organisation rules).  They must then assess them on the basis of whether they are in fact necessary in accordance with the above  criteria of non-discrimination, public interest and proportionality.  The following can only be justified if they are objectively justified.  It is likely that most of the below cannot be justified: 

  • quantitative or territorial restrictions e.g. limits on the number of similar businesses that can operate in a territory;
  • obligation for the service provider to take a specific legal form;
  • requirements in relation to shareholdings of companies e.g. requirements that have minimum shareholdings or specific requirements;
  • requirements reserving the provision of certain services to specific providers (requirements to have professional qualifications are not covered by this provision)
  • limitations on having more than one establishment in the territory of the same Member State;
  • obligations for a minimum number of employees;
  • obligations to apply fixed or minimum tariffs;
  • obligations to supply services jointly.