Concept of Service

Concept of Service in Europe

The concept of “service” in relation to the E.U. Services Directive

The following is an examination of the concept of “service” regarding the European Union Servicies Directive [1]:

The concept of “service”: Services covered

As a basic rule, the Services Directive applies to all services which are not explicitly excluded from it.

To start with, it is important to understand the concept of “service” and the scope of activities it covers. The concept of “service” is, in line with the EC Treaty and the related case law of the ECJ, defined in a broad manner8 It encompasses any self-employed economic activity which is normally provided for remuneration, as referred to in Article 50 of the EC Treaty.

Thus, within the meaning of the EC Treaty and the Services Directive, in order to constitute a “service” an activity has to be a self-employed activity, i.e. it has to be supplied by a provider (which could be a natural or a legal person) outside the ties of a contract of employment9. Moreover, the activity must normally be provided for remuneration; in other words, it must be of an economic nature. This has to be assessed on a case-by-case basis for each activity. The mere fact that an activity is provided by the State, by a State body or by a non-profit organisation does not mean that it does not constitute a service within the meaning of the EC Treaty and the Services Directive10. Rather, according to ECJ case law, “the essential characteristic of remuneration lies in the fact that it constitutes consideration for the service in question”11. Whether the remuneration is provided for by the recipient of the service or by a third party is not relevant12. However, it should be noted that the ECJ has – in the context of education services provided under the national education system – ruled that a teaching or enrolment fee, which pupils or their parents must sometimes pay under the national education scheme in order to make a certain contribution to the operating expenses of the system, does not as such constitute remuneration if the system is still essentially funded by the public purse13.

More Details about the concept of “service”

Consequently, Member States will have to ensure that the rules of the Services Directive apply to a wide variety of activities, whether provided to business or to consumers. Without being exhaustive, the following can be mentioned as examples of services covered by the Directive: the activities of most of the regulated professions14 (such as legal and fiscal advisers, architects, engineers, accountants, surveyors), craftsmen, business-related services (such as office maintenance, management consultancy, the organisation of events, recovery of debts, advertising and recruitment services), distributive trades (including retail and wholesale of goods and services), services in the field of tourism (such as services of travel agencies), leisure services (such as services provided by sports centres and amusement parks), construction services, services in the area of installation and maintenance of equipment, information services (such as web portals, news agency activities, publishing, computer programming activities), accommodation and food services (such as hotels, restaurants, catering services), services in the area of training and education, rental (including car rental) and leasing services, real estate services, certification and testing services, household support services (such as cleaning services, private nannies or gardening services), etc.

In the context of framework legislation implementing the Directive, it would be advisable for Member States to follow the same approach i.e. to define the scope of such framework legislation as applying to all service activities other than those explicitly excluded.

Resources

Notes

  1. Information on the concept of “service” based on the EU Services Directive Handbook, UK Government

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