The Freedom to Provide Services or sometimes referred to as free movement of services along with the Freedom of Establishment form the core of the European Union's functioning. With the free movement of workers, citizens, goods and capital, they constitute fundamental rights that give companies and citizens the right to provide services without restrictions in any member country of the EU regardless of nationality and jurisdiction.
After WWII the creation of the European project led to the opening of borders, especially for citizens since these control were almost absent before 1914. The Treaties of Rome laid down the foundations of the so-called "four freedoms in the EU. Initially they were basic for workers, for the free provision of services and the free movement of goods, later on capital movement was included.
The right to provide services has proven to be increasingly important as the European economy shifts towards a more service-based economy. Today, it is estimated that the services sector represents about two-thirds of the European economy and it is responsible for 90% of the overall creation of jobs in the EU. Adding to that, the shift to a digital economy means that many things that used to be goods now become services. The Commission is well aware of that and in 2015 launched a proposal for a so-called "Digital Single Market" with the aim of bringing down barriers to unlock digital opportunities.
Legal Basis
The freedom to provide services involves the elimination of discrimination on the grounds of nationality and the adoption of measures to make it easier its exercise including the harmonisation of national access rules or mutual recognition. The exercise of both freedoms applies, according to Article 54 of the TFEU, to Self-employed persons and professionals or legal who are legally operating in one Member State. It consists in the right:
carry out an economic activity in a stable and continuous basis in another EU Member State (freedom of establishment based on Article 49 TFEU); offer and provide services in other Member States on a temporary basis while remaining in their country of origin (freedom to provide services: Article 56 TFEU).
Services, nonetheless, according to settled case law, need to have an economic base, that it, a reward for what is being offered by the recipient. This concept is introduced in Grogan (C-159/90) where the court rules on the "economic nature" of the provision of services. The case concerns a company that provides free information for women in Ireland wanting to have an abortion in the UK. The court finds out that the company has no right to claim its freedom to provide services as in this case, as the case would concern "freedom to provide information". This is intrinsically linked to the lack of payment and therefore of an economic link.
Services provided by governments or public entities are called "Services of General Interest". In practice, this means services that are considered to be "essential" and therefore subject to specific public services obligations. This type of services can be divided into three categories:
Services of general economic interest: basic services that are carried out in return for payment. These services fall within the scope of application of EU law and therefore must consider Internal market and competition rules (e.g. postal services). There may be derogation to these rules if necessary to protect citizens' access to basic services. Non-economic services: services whereby recipients do not pay directly to service provider. They are not subject to European law (e.g. police, judicial authorities, army). Social services of general interest: services that accommodate the needs of vulnerable citizens being both of an economic or non-economic nature (e.g. social security schemes, employment services and social housing). In the treaties, more specifically the Treaty on the Functioning of the European Union (TFEU), the freedom to provide services is based on Articles 49–66. The main articles related to both, the right of legal and natural persons to establish themselves in another EU country and there provide services (freedom of establishment), and the right to provide cross-border services without having the need of establishing an office (freedom to provide services) can be found at: