The Free Movement of Services

The Free Movement of Services

Economic Relevance:

• Significance: Services constitute about 70% of the EU’s GDP and are a foundational pillar of the modern economy.

1. Article 56 TFEU:

◦ Prohibition of Restrictions: “Restrictions on freedom to provide services within the Union shall be prohibited.”

◦ Applicability: Applies to cases where the service provider and recipient are not from the same Member State. The service must cross national boundaries.

2. Definition of a Service:

◦ Article 57 TFEU:

1. Remuneration Requirement: Services must be “normally provided for remuneration.” This excludes gifts or services provided free of charge.

2. Residual Category: Free movement of services is a fallback provision. It applies if other freedoms (goods, persons, and capital) do not cover the situation. If these rights fail, Article 56 can be considered.

◦ 'Normally': The term has not been clearly defined, leading to varying interpretations over time.

Case Law and Interpretation:

1. Remuneration:

◦ Deliège [2000]: Belgian Judo player challenged a restriction, arguing that his case involved cross-border elements and remuneration. The case was rejected because there was no remuneration involved.

◦ Grogan [1991]: Irish students advertised abortion services, which were illegal in Ireland. The Court held this did not violate Article 56 because the students were not remunerated.

◦ Belgium v Humbel [1988]: National university education was deemed not a service under Article 56 due to state funding. However, education could be considered a service if it is profit-oriented or primarily funded privately.

◦ Cowan [1989]: A tourist denied compensation due to nationality was held entitled to compensation as a broad interpretation of remuneration.

2. Residual Category:

◦ Saachi: An Italian citizen operated a private TV relay station without a license. The Court examined whether it fell under the free movement of goods or services. It was considered a service based on its intangible nature.

◦ Schindler [1994] and Omega [2004]: These cases deviated from Saachi, focusing on the service element of a good. Despite gambling services being incorporated in lottery tickets, the Court regarded the service provided (gambling) as central to the case.

3. Purely Internal Situations:

◦ Ullens de Schooten [2016]: Even if a dispute is confined to a single Member State, Article 56 may apply if the issue has cross-border effects or implications for other Member States.

◦ The Gibraltar Betting [2017]: Restrictions on gambling services from Gibraltar to the UK were held outside Article 56 as Gibraltar is a British overseas territory, not a Member State.

4. Duration of the Service:

◦ Gebhard [1995]: The Court outlined that the temporary nature of a service is determined by factors such as “regularity, periodicity or continuity.”

◦ Gebhard Formula: Restrictions on the free movement of services must be justified by overriding reasons of public interest and must be proportionate.

Summary

The free movement of services under Article 56 TFEU addresses cross-border provision of services, with a focus on remuneration and the nature of the service. It serves as a residual category, applying when other freedoms do not cover a situation. Key cases have shaped the understanding of what constitutes a service and the application of Article 56 to both internal and cross-border scenarios. The principle of proportionality and the temporary nature of the service are essential in assessing restrictions.