Services: Commission refers Austria to Court of Justice and closes a case against Cyprus

At the same time, the Commission is closing a case against Cyprus as it has addressed the Commission's concerns and removed restrictions on engineering companies.

Austrian legislation imposes a number of requirements on regulated professions:

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  seat requirements for architects, engineers and patent attorneys;

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  legal form and excessive shareholding requirements for architects, engineers, patent attorneys and veterinarians;

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  restrictions on multidisciplinary companies for architects, engineers and patent attorneys.

The Commission holds the view that these requirements create unjustified obstacles to the provision of services by these professions and run counter to the freedom to provide services (Articles 49 and 56 of Treaty on the Functioning of the EU, TFEU) and to the Services Directive (Articles 14, 15 and 25 of Directive 2006/123/EC).

Austria was requested to remedy the breach of EU law, first in a letter of formal notice sent in June 2015, then in a reasoned opinion in February 2016 and, following an exchange with the Austrian authorities, a complementary reasoned opinion in November 2016. As the Austrian authorities maintain their position, the Commission has decided to refer Austria to the Court of Justice of the EU.

In addition, the Commission has also decided to close a case against Cyprus regarding a 100% shareholding requirement imposed on engineering companies which are incorporated in Cyprus. The provision under the Cypriot law meant that all shareholders of such companies had to be qualified professionals and all voting rights had to belong to them. The Commission considered that such restrictions were disproportionate and ran counter to the freedom of establishment and the Services Directive (Directive 2006/123/EC). Following the Commission's decision in November 2016 to refer the case to the Court of Justice of the EU, Cyprus amended the law allowing a simple majority of capital shares and voting rights to be held by professionals. On this basis, the Commission decided to close the case today.

Background:

The objective of the Services Directive (Directive 2006/123/EC) is to realise the full potential of services markets in Europe by removing excessive legal and administrative barriers to trade. Excessive shareholding and seat requirements or restrictions on multidisciplinary activities can make it difficult for professionals to provide services cross-border or even domestically. Member States can only impose restrictions on service providers if they are non-discriminatory, justified and proportionate and no other less restrictive safeguards are possible.

In further details:

-Article 14 of the Services Directive lists a series of prohibited requirements, including the obligation to have the seat of the company in a certain jurisdiction.

-Article 15 of the Services Directive lists a series of requirements that may only be imposed on service providers under certain conditions. Requirements - such as legal form, shareholding - 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 in the sense that no less restrictive measure could be used to achieve the same objective.

-Article 25 of the Services Directive requires Member States to ensure that providers are not made subject to requirements which oblige them to exercise a given specific activity exclusively or which restrict different activities from being exercised jointly or in partnership.

For More Information

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  On the key decisions in the November 2017 infringements package, see full MEMO/17/xy.

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  On the general infringements procedure, see MEMO/12/12(an info graph).

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  On the EU infringements procedure.

IP/17/4772