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Detailed European Union Law lecture notes for second year
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5.12.22 – EU law – week 10Free movement of services
Trade in services
Article 57 TFEU – “‘services’ within the meaning of the treaties where they are normally provided for
remuneration, in so far as they are not governed by the provisions relating to freedom of movement of
goods, capital and persons”
Art 57 TFEU: business services, legal services, tourism services, household support, agent services, sport (if
commercial), TV and radio services, advertising, insurance, healthcare
C-155/73 Saachi: a television signal?
‘By reason of its nature, be regarded as provision of services’
But ‘trade in material, sound recordings, film apparatus and other products used for the diffusion of
television signals are subject to the rules relating to freedom of movement for goods.’
WTO modes of trade in services
1. ‘Cross-border supply’, such as international phone calls, where services are supplied from one
country to another (service travels)
2. ‘Consumption abroad’ where recipients consume a service in another country, as tourists do when
they go abroad (recipient travels)
3. ‘Commercial presence’ where a non-national entrepreneur or company seeks to establish
subsidiaries or branches to provide services in another country (e.g. foreign banks setting up
operations in a country) (establishment travels)
4. ‘Presence of natural persons’ where individuals travel from their own country in order to supply
services in another (service provider travels e.g., fashion models, medics or consultants)
FM services and establishment
i) Conduct an economic activity in a stable and continuous way in another member state
(freedom of establishment: article 49 TFEU)
ii) Offer and provide their services in other member states on a temporary on a temporary basis
while remaining in their country of origin (freedom to provide services: article 56 TFEU) under
the same conditions as nationals
NOTE: freedom of establishment and freedom of services are mutually exclusive, but they can both apply
to different aspects of the same overall activity
, Freedom of establishment
Article 49 TFEU: “restrictions on the freedom of establishment of nationals of a MS in the territory of
another MS shall be prohibited”
NOTE: if a person works as an employee in another country as per Lawrie Blum, s/he is a worker (art 45
TFEU applies)
Meaning of establishment
Factortame: “the actual pursuit of an economic activity through a fixed establishment in another MS for an
indefinite period”
Another MS: transnational element, article 49 “cannot be applied to activities which are confined in all
respect within a single MS (Hofner and Elsner). Unless it can even potentially affect cross border trade
Nationals:
-Natural or legal persons: terms of incorporation fall under 49 TFEU. Discriminatory restrictions will be
more closely scrutinized (National Grid indus. Contra SEVIC, Vale Construzioni)
-Primary establishment (the natural/legal person itself as a whole) or secondary (e.g., agencies,
subsidiaries, branches)
Freedom of services
Article 56 TFEU: “restrictions on freedom to provide services within the union shall be prohibited in respect
of nationals of MS who are established in a MS other than that of the person for whom the services are
intended”
Meaning of services, I: art 57 TFEU
Remuneration: emphasis = commercial and economic nature of services (as opposed to social)
Must involve payment or exchange of money (even if it may be occasionally provided for free):
- Financial gain is not a prerequisite (e.g., gambling may result to loss)
- No need for profit-seeking (e.g., public healthcare can fall under services if exchange of money
takes place) – Smits and Peerbooms)
- Excludes voluntary activities (Grogan) or not-for-profit education activities (Wirth)
Meaning of services II
Services are an input to a goal
Include: activities of industrial or commercial character, or of craftsmen, or of the professions
Meaning of services III
Temporarily: as opposed to “fixed establishment for definite period.” (Factortame)
Criteria to determine whether temporary: “duration, regularity, periodicity and continuity of the provision
of the services” (Gebhard)
CJ looks at 3 elements to decide between establishment and services:
1. Facts (see Gebhard criteria)
2. Intent (intent to stay permanently or move)
3. Activity (nature of services) (Hatzopoulos)
Establishment or service?
Gebhard C55/94:
- Article 49 TFEU: establishment = broad concept; stability; continuity; a firmer commitment to
provide services over a period of time
- Article 56 TFEU: temporary pursuit of activities, must involve payment (C 159/90 Grogan)
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