Lecture Notes: Free Movement of Services in the EU

Introduction

• Right of establishment covers rights for companies.
• Focus on free movement of services: Articles 56 and 57 of the Treaty on the Functioning of the European Union (TFEU).

Free Movement of Services

Key Articles

• Article 56: Principle of free movement of services on a temporary basis. Applies when a person established in one member state moves to another to provide/receive services temporarily.
• Article 57: Defines services and applies the principle of equal treatment to service providers.

Historical Context

• Free movement of services seen as subordinate to other freedoms (goods, persons, capital).
• Applies only when the situation is not governed by other freedoms.

Three Situations for Free Movement of Services

1. Service Provider Movement: Providers may move to offer professional services (e.g. lawyers, doctors) temporarily in another member state.
2. Service Receiver Movement: Receivers (e.g. patients, tourists, students) may move to another member state.
3. Service Movement: Services can be provided online (e.g. internet gambling) without physical movement of providers/receivers.

Significant Case Law

Open Investments Case (1993)

• Dutch Ministry of Finance prohibited unsolicited calls for financial services without prior client approval.
• Court of Justice ruled that Article 56 covers services offered by phone from one member state to receivers in others.

Louisa Carboni Case (1998)

• Two Italians fined for currency regulations while traveling for medical treatment.
• Court ruled freedom to receive services is a necessary part of the right to provide services, including medical treatment and education.

Implications for Turkish Nationals

• Turkish nationals' rights under agreements differ. Turkish tourists may not receive the same free movement rights as EU citizens.

Definitions According to Article 57

• Service Elements:
  • Service
  • Remuneration
  • Temporary nature of the service.
• Examples of services: educational, health care, tourism, transmission of signals, and sports activities as expanded by case law.

Rights of Service Providers and Receivers

Rights of Entry and Residence

• Governed by the Citizens’ Rights Directive for service providers in another member state for less than three months.
• Long-term stays rely on treaty provisions.
• Right of entry includes individuals, companies, and their workforce (may include third-country nationals under certain conditions).

Right of Access to Market

• Article 57 prohibits discrimination against service providers and receivers based on nationality.
• Article 56 prohibits direct discrimination based on place of establishment.
• Indistinctly applicable measures (e.g. additional burdens on foreign service providers) are also prohibited unless justifiable by public interests.
• Example: Commission vs. Germany: German insurance requirements were found to breach Articles 56 and 57, as they increased costs for foreign companies.

Conclusion

• Understanding the nuances of free movement of services is critical for compliance and strategic operation within the EU.
• Relevant case law plays a significant role in interpreting these rights.