European Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, Elżbieta Bieńkowska underlined that unnecessary restrictions on legal form, shareholding and fixed tariffs have been violating single market requirements for professional services in several EU states.

These “hidden barriers” are discriminatory, unnecessary and disproportionate. Allowing companies and individuals to provide their services freely across the EU is supposed to mean more choice for consumers and increase the EU's competiveness.

Background

The Services Directive adopted in 2006 (Directive 2006/123/EC), lists a series of prohibited requirements, including obligation to have the seat of the company in a certain jurisdiction (art. 14). Besides, the Services Directive lists a series of requirements imposed on service providers, among which legal form, shareholding and mandatory tariffs (art. 15).

These requirements are not strictly prohibited but have been identified by the Court of Justice of the EU as creating obstacles to the single market in services. They can only be maintained in so far as they are non-discriminatory, justified by an overriding reason relating to the public interest and proportionate, i.e. no less restrictive measure could be used.

Infringement procedures

The European Commission is taking steps against Austria, Cyprus, Germany and Poland on the grounds that their national rules include excessive and unjustified obstacles in the area of professional services.

Excessive shareholding requirements, such as the requirement that professionals should hold 100% of the voting rights and capital in a company, or should have the corporate seat in a given jurisdiction, can make a second establishment or cross-border provision of services difficult. Compulsory tariffs deprive customers of the possibility to negotiate a price at a quality they decide upon. In order to ensure an adequate quality for such services, the Commission also considers that other less restrictive safeguards already exist.

In June 2015, the Commission sent a letter of formal notice to the three mentioned states as well as to Malta and Spain, urging them to adapt their rules on shareholding requirements or compulsory tariffs. Following the commitments made by Spain and Malta, and by Germany as regards the situation of tax advisors, the Commission is following the situation closely and expects the necessary national reforms to be adopted soon.

Present Commission’s actions

The actions underline the following infringements (with certain procedures and steps):

- seat requirements for patent attorneys, legal form and excessive shareholding requirements for architects, engineers, patent attorneys and veterinarians, and restrictions on multidisciplinary companies for architects, engineers and patent attorney in Austria;

- shareholding requirements for all engineering professions, including civil engineers and architects in Cyprus;

- minimum and maximum tariffs for architects and engineers in Germany and

- minimum tariffs for patent agents in Poland.

The Commission's request to Austria, Cyprus, Germany, and Poland takes the form of a reasoned opinion. These member states now have two months to notify the Commission of measures taken to remedy the situation; otherwise, the Commission may decide to refer them to the Court of Justice of the EU.

The Commission also decided to send a reasoned opinion to Greece due to continuing restrictions in the area of mediators’ training.  

More information on the issue:

- On the February 2016 infringements package key decisions, see MEMO/16/319.
- On the general infringement procedure, see MEMO/12/12.

- General information on the infringement procedures.

- Reference: Commission press release IP-16-323 “Single market: Commission urges four Member States to comply with the Services Directive in the area of regulated professions”; Brussels 25.02.2016. In:

http://europa.eu/rapid/press-release_IP-16-323_en.htm?locale=en