Explanatory Memorandum to COM(2016)821 - Enforcement of the Services Directive and laying down of a notification procedure for authorisation schemes and requirements related to services

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dossier COM(2016)821 - Enforcement of the Services Directive and laying down of a notification procedure for authorisation schemes and requirements ...
source COM(2016)821 EN
date 10-01-2017


1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

A deeper and fairer internal market is one of the ten priorities of the European Commission. Building on its strength and exploiting its full potential is key to promoting jobs and growth in the European Union. The Commission in October 2015 adopted a Single Market Strategy with a series of actions to upgrade the single market for more opportunities for people and business, including a legislative proposal to improve the enforcement of the Services Directive by reforming its existing services notification procedure. 1 The European Council called for ambition in delivering the Single Market Strategy 2 and for the different Single Market strategies to be completed and implemented by 2018, recalling that "better implementation and enforcement of existing legislation will further help to reap the benefits of Europe's Single Market ambitions" 3 .

It follows from the Services Directive 4 that certain national rules restricting the freedom of establishment and the freedom to provide services must be non-discriminatory with regard to nationality or residence, proportionate and justified by overriding reasons relating to the public interest. To make sure that new measures imposed by Member States actually fulfil these conditions and thus facilitate the competitiveness and integration of the single market in services, the Services Directive provides that Member States shall notify to the Commission new or changed authorisation schemes or certain new or changed requirements falling under the Directive.

Commission assessments have shown, however, that the current notification procedure under the Services Directive does not always achieve its objective, despite efforts undertaken over the past years to improve its implementation, including guidance provided in the Handbook on the implementation of the Services Directive, exchange of experiences and best practices among national administrations and the publication of data on the use of the existing notification procedure by Member States. As a result, 40% of structured dialogues which the Commission had to launch vis-à-vis Member States in 2015 to ensure compliance with the Services Directive concerned newly introduced national measures. Thus, it appears that the existing notification procedure has not adequately contributed to a correct and full implementation of the Services Directive. 5

The Commission therefore presents a self-standing legislative instrument modernising the current notification procedure under the Services Directive in order to improve the enforcement of the existing provisions of that Directive, by establishing a more effective and efficient procedure preventing the adoption by Member States of authorisation schemes or certain requirements not complying with the Services Directive. The provisions of the present Directive do not amend the existing Services Directive beyond the required revision of its specific provisions on notification procedures.

More specifically, the objectives of this legislative instrument are to increase the efficiency of the notification procedure, to improve the quality and content of the notifications submitted, to cover additional requirements which the application of the Services Directive has shown can constitute important barriers to the internal market for services, and to enhance effective compliance with the notification obligation.

A more effective, efficient and coherent notification procedure will support Member States and prevent the introduction of discriminatory, unjustified and disproportionate authorisation schemes or requirements related to services covered by Services Directive. Such authorisation schemes or requirements result in a less open and less integrated economy, with higher prices and less choice for consumers. They may also curtail entrepreneurship and investment as they are likely to reduce the number of firms being set up and entering the European market. The proposed legislation is thus expected to contribute to more competitive and integrated services markets in Europe, benefitting consumers and entrepreneurs alike.

• Consistency with existing policy provisions in the policy area

This Directive complements the existing notification procedure applicable for goods and information society services established by the Single Market Transparency Directive 6 . The relationship between the two Directives is regulated under both legal instruments.

This Directive also complements existing reporting obligations under the Professional Qualifications Directive 7 . It includes an article clearly defining the relationship between the two legal instruments and the obligations arising thereunder.

This Directive will be implemented using the existing Internal Market Information System established by the IMI Regulation 8 .

• Consistency with other Union policies

This Directive is complementary to a number of other policy initiatives related to services announced in the Single Market Strategy and in particular to the Directive on a proportionality test. The latter will set criteria for Member States when preparing proportionality assessments of draft national laws falling under the Professional Qualifications Directive. Some measures falling under the Professional Qualifications Directive also fall under the Services Directive and its notification obligation. In such cases, the information on the proportionality assessment to be provided under the present notification procedure would have to meet the requirements of the Directive on a proportionality test. Consistency between these instruments is being ensured.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The proposal is based on Articles 53(1), 62 and 114 TFEU.

Articles 53(1), 62 and 114 TFEU give the EU the competence to act with regard to the single market for services. EU rules adopted under Articles 53(1) and 62 TFEU should have the objective of coordination of the provisions laid down by law, regulation or administrative action in Member States concerning the taking-up and pursuit of activities as self-employed persons, in order to facilitate those activities. Article 114 TFEU gives the EU under certain conditions the competence to adopt EU legislation for the establishment and the functioning of the single market.

The notification procedure established by the present Directive aims to protect the freedom of establishment and the free provision of services, which are among the foundations of the Union. In particular, it aims to ensure that certain national restrictions to the freedom of establishment and to the freedom to provide services will comply with the Services Directive, contributing to its better enforcement.

The notification procedure established by the present Directive allows the assessment of national laws, regulations or administrative provisions and provides for an effective preventive action in case of non-compliance with the relevant provisions of the Services Directive. The Services Directive provides in particular for the conditions of non-discrimination, necessity and proportionality which need to be fulfilled by authorisation schemes and certain requirements related to services in the Member States. It also sets out specific rules related to authorisation schemes (for example as regards procedural guarantees) and to certain requirements (for example insurance requirements).

The notification procedure will have the effect of preventing the introduction of single market barriers resulting from a heterogeneous development of national laws and of contributing to the approximation of national laws, regulations or administrative provisions as regards the services covered by the Services Directive. This will improve the functioning of the EU single market for services and promote job creation and growth.

• Subsidiarity (for non-exclusive competence)

The overall objective of this legislative proposal is to ensure the smooth functioning of the EU single market for services, which is not limited to the territory of one Member State, but covers the entire territory of the EU. Given the transnational nature of the EU single market, an efficient and coherent verification of draft national measures with the provisions of the Services Directive, including the management of an appropriate IT tool for that purpose, can only be achieved at EU level. This Directive provides for a notification procedure replacing an already existing notification procedure established by the Services Directive.

• Proportionality

The measures introduced by this Directive are proportionate to its objective of a more effective notification procedure for an improved enforcement of the Services Directive. Compared to the existing procedure, this Directive establishes a more clearly described notification obligation that is closer aligned to the scope of the Services Directive, provides for a well-defined and efficient consultation procedure on draft notified measures, makes notifications transparent to stakeholders, specifies and makes coherent the existing possibility for the Commission to adopt Decisions on notified measures and clarifies the legal consequences for non-notification.

These measures do not extend beyond what is necessary to solve the identified problems and to achieve the identified objectives. They do not entail any obligation on service providers. Nor do they impose any disproportionate costs on Member States: public authorities of the Member States are already obliged to comply with the Services Directive and to notify some measures to the Commission under the Services Directive. The small expected increase in administrative costs for Member States could in practice partially be compensated by a decrease of costs otherwise stemming from infringement cases, the number of which this initiative is supposed to reduce as it aims at avoiding certain barriers in the services sector incompatible with the Services Directive.

• Choice of the instrument

The coherent and transparent notification procedure which permits the verification of the compliance of authorisation schemes or requirements with the Services Directive prior to their adoption by Member States requires a legally binding instrument.

The proposal is based on Articles 53(1), 62 and 114 TFEU. By this proposal the Commission puts forward the adoption of a Directive.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

• Ex-post evaluations/fitness checks of existing legislation

In preparation of this Directive the Commission has carried out an evaluation of the existing notification procedure laid down in the Services Directive. It revealed a number of shortcomings of the existing procedure, in particular as follows: the possibilities for Member States, the Commission and stakeholders to intervene in a proactive manner prior to a national regulation being adopted are limited, the means to address notified requirements falling under this procedure are incoherent, there is a lack of proper proportionality assessments and the legal effects of non-compliance with the notification obligation are not clear. Above all, not all Member States comply with the notification obligation. This is to the detriment of services providers and services recipients and is also liable to make the work of national administrative and judicial authorities more burdensome and complicated.

• Stakeholder consultations

The Commission carried out a public consultation of interested stakeholders in preparation of this Directive between January and April 2016. It also organised in-depth discussions with institutional stakeholders (Member States and other EU institutions) directly concerned by the notification procedure and its planned reform. The results of this consultation exercise have been published and are included in the impact assessment.

A large majority of stakeholders that responded to the public consultation supported a legislative proposal to modernise the existing notification procedure under the Services Directive (70% of public authorities; 60% of businesses). Stakeholders gave various reasons: to bring more clarity on which measures are to be notified and when, to introduce the possibility for a national measure to be examined before it is officially adopted, to introduce clear rules in order to ensure compliance by all Member States with the notification obligation, and to make the notifications transparent to the public.

There was widespred support of stakeholders that responded to the public consultation for a legislative proposal clarifying and aligning the steps of the notification procedure (80% of public authorities and 80% of businesses), making notifications transparent (60% of public authorities and 80% of businesses), notifying measures at draft stage (50% of public authorities; 70% of businesses), providing information on proportionality assessments (60% of public authorities; 50% of businesses), expanding the scope of the notification obligation to other key requirements falling under the Services Directive (60% of public authorities; 75% of businesses), and enhancing compliance of Member States with the notitifaction obligation (80% of public authorities and 80% of businesses).

• Collection and use of expertise

The results of a mutual evaluation process with Member States in 2010-11 9 , performance checks carried out in 2011-12 10 and peer review undertaken in 2012-2013 11 all contributed to the preparation of this proposal for a Directive.

The Court of Auditors examined the existing notification obligation as part of its assessment of the effective implementation of the Services Directive 12 . It identified a number of shortcomings including a lack of clarity of the existing procedure, the absence of an obligation to notify a measure at draft stage and a lack of transparency of the notifications.

• Impact assessment

An impact assessment was carried out in preparation of this initiative. Beyond the status quo (baseline scenario), four policy options have been considered in the impact assessment report. Non-legislative guidelines (option 2) could help to clarify the current procedure and obligations stemming from it, but could not change the design of the existing procedure to make it more effective and efficient.

A legislative initiative could encompass several options. It could aim to increase the effectiveness, content and quality of the notification procedure, introducing the obligation to notify draft legal acts, making the system transparent, clarifying steps and tasks in the procedure and improving the quality of the information submitted as part of a notification (option 3). To make it more effective and relevant, the notification obligation could be extended in scope to cover important regulatory requirements falling under the Services Directive but not the existing notification obligation (option 4). And it could additionally include instruments to enhance the compliance of Member States with the notification obligation– two sub-options exist in this regard (options 5a & 5b).

The option to include services in the Single Market Transparency Directive was discarded due to the fact that the regulation of goods and services in EU law differs fundamentally. The option to merge the obligation under the Professional Qualifications Directive with the notification obligation of the Services Directive was not considered given that the two Directives differ in scope and subject-matter.

The preferred choice is a combination of options 3, 4 and 5a. This would allow best for the identified shortcomings to be addressed and would establish an effective and efficient notification procedure with only a small increase in administrative costs for national public authorities and the Commission.

On 24 June 2016, the Regulatory Scrutiny Board issued a positive opinion on the Impact Assessment carried out by the Commission on this initiative. The Board's recommendations to explain in more detail the shortcomings of the existing notification procedure, to improve the justification for the proposed scope of the revised procedure, to explain better how problem definition and options interlink and to spell out in more detail the content of the preferred option and how it would solve the identified problems were fully taken on board. 13

• Regulatory fitness and simplification

The proposed Directive will contribute to regulatory fitness and simplification by improving the uniform enforcement of existing EU legislation in the single market and by assisting in the prevention of the introduction of certain discriminatory, unjustified or disproportionate barriers in the field of services. It will replace the existing notification procedure established by the Services Directive with a clearer, more coherent, effective and efficient procedure. It will contribute to a more stable regulatory environment as it allows the verification of compliance with the Services Directive of authorisation schemes and certain requirements at draft stage and before their adoption, thus minimising the risk of certain national measures not complying with the Services Directive and necessitating further legal adaptations.

• Fundamental rights

This proposal promotes rights enshrined in the Charter of Fundamental Rights and in particular in Article 16 on freedom to conduct a business.

4. BUDGETARY IMPLICATIONS

The proposal has no impact on the European Union budget.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

The Directive foresees a Commission report on the results of the application of the Directive every three years.

• Explanatory documents

This proposal does not require explanatory documents for the transposition into national law given that it introduces limited changes to an already existing notification procedure established by the Services Directive. The Commission may, however, where necessary present guidance on the application of the revised notification procedure.

• Detailed explanation of the specific provisions of the proposal

Article 1 specifies the subject matter and the scope of the proposed Directive. The aim of the Directive is to ensure the compliance with the Services Directive of Member States' laws, regulations or administrative provisions introducing authorisation schemes or certain requirements falling under the scope of the Services Directive. The services sectors covered by this Directive are thus those covered by the Services Directive.

Article 2 lays down the relevant definitions, in line with both, the definitions under the Treaty as interpreted by the CJEU, and the Services Directive.

Article 3 builds on the notification obligation set out in the Services Directive. It provides for a specific and unconditional obligation for Member States. It also specifies which measures need to be notified and when, what accompanying information must be submitted as part of any notification and the consequences of not respecting certain obligations under this Directive. In order to make the notification procedure efficient and effective and in the interest of all parties concerned, the applicable time limits are set out both in Article 3 and in Article 5. To avoid legal uncertainty and to ensure the smooth operation of the procedure, such time limits start running once the notification has been declared to be complete.

Article 4 specifies which requirements and authorisation schemes falling under the scope of Directive 2006/123/EC are covered by the notification obligation. It provides that Member States have to notify authorisation schemes, certain establishment requirements, certain requirements affecting the freedom to provide services and requirements concerning professional liability insurance and multidisciplinary activities.

Article 5 establishes a consultation period of three months following the notification of a draft measure. The Commission and other Member States have a maximum of two months to comment on a notified measure, followed by a maximum of one month for the notifying Member State to respond to such comments. The need for speed and efficiency must be reconciled with the need for the parties involved to be in a position to make in-depth and constructive comments and for the notifying Member State to address the concerns raised. All parties must implement the procedure in a spirit of sincere cooperation and respect for the other parties' legitimate needs, in the interest of the smooth and effective operation of the notification procedure.

Under Article 6 the Commission may issue an alert to the notifying Member State where after assessing the notified measure it has concerns about its compliance with the Services Directive. The issuing of an alert implies that the Member State concerned shall not adopt the notified measure at issue for three months.

After an alert has been issued, the Commission may pursuant to Article 7, and in line with the existing provision in the Services Directive, adopt a legally binding Decision finding the notified measure to be incompatible with the Services Directive and requesting the notifying Member State to refrain from adopting it.

Article 8 provides for transparency to third parties of notified draft measures, accompanying information and the final adopted measures. Given their knowledge of the markets concerned and the impact of laws, regulations and administrative provisions on them, it is important that third parties can be informed of notified draft measures.

Article 9 provides for the designation of an authority in each Member State responsible at national level for the functioning of the notification procedure laid down in the present Directive.

Article 10 clarifies the relationship between this Directive and Directive (EU) 2015/1535 as well as Directive 2005/36/EC.

Article 11 establishes a periodic review of the application of the Directive.

Article 12 provides for amendments of the Directive 2006/123/EC.

Article 13 provides for an amendment of the Annex to Regulation (EU) No 1024/2012.

Article 14 specifies the period for the transposition of the Directive by Member States.

Article 15 deals with entry into force and application.

Article 16 specifies the addresses of the Directive.