European Union Law: The Free Movement of Services

EU solidarity

The broad concept of EU solidarity is said to be the underlying aspiration of the integration of the people of Europe and is guaranteed by the following freedoms:

Central to the European Union is the concept of unification of nations with the emphasis representing recognition of the autonomy of individual states.

Free Movement of Services & the Internal Market

Article 56 of the EC Treaty guarantees companies from any European Union Member State to be able to establish themselves in another European Union Member State and provide services on the territory of another European Union Member State or on that one which they are thus established in.

Companies established in one EU Member State are therefore able to provide services in any of the other EU Member States.

The internal market is the market within the European Union, a market not based simply on the individual Member States but across all Member States and is achieved through the free movement of services and the free movement of goods throughout the European Union.

Benefits of the Internal Market

Since the creation of the internal market and in the ten years following the first completion of the first Single Market programme in 1993 the following tangible benefits were recorded:

  • 2.5 million extra jobs created due to the removal of national barriers
  • Increase of wealth in the single market up to EUR 9 billion – EUR 6,000 per family
  • Increased competition – better prices and better products available for consumers

Barriers to trade between Member States

Central to the creation of the internal market is the removal of barriers affecting trade between European Union Member States. For example certain Member States imposing conditions on the provision of services or goods meaning that it is difficult for provides of services or goods from other Member States to enter the market in that Member State would be seen as a significant barrier to trade.

Following the creation of the internal market there have been significant improvements in relation to the free movement of goods but there has been less development in relation to the free movement of services.

The following are reasons why it is still difficult for service providers to establish themselves in other Member States and provide services in those Member States:

    Requirements relating to authorisation or professional qualifications, Restrictions on the use of a certain legal form for the service provider or on the partnerships between different professions. The number of authorisations required, The length and complexity of the procedures, Discretionary powers of local authorities and duplication of conditions already fulfilled in the Member State of origin Problems which are both directly or indirectly linked to the selling of services across borders between Member States also arise as a result from differences in contract law, fixed or recommended prices for certain services, requirements relating to payment and reimbursement of VAT subject in different Member States to different rates, classification systems and procedures.

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For more information on:

  • Effect on Consumers
  • Effect on SME’s
  • Directorate General for Enterprise and Industry