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Cyprus in hot water over barriers to professional services

EU Commissioner Elżbieta Bieńkowska

The European Commission is launching infringement procedures against six EU countries including Cyprus, because their national rules include excessive and unjustified obstacles in the area of professional services.

The Commission announced on Thursday that it considers requirements imposed on certain service providers in Austria, Cyprus, Germany, Malta, Poland and Spain run counter to the Services Directive.

“There are still barriers in a number of Member States preventing companies and individuals from providing their services freely across the EU – be it restrictions on legal form and shareholding, professional qualification requirements, or fixed tariff,” Elżbieta Bieńkowska, European Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, sai.

“Freedom to provide services is one of the foundations of the single market. Today I am not just waving a yellow card. I am sending a message of opportunity: a dynamic single market for professional services will lead to a more competitive European economy for the benefit of all of us.”

Excessive shareholding requirements – such as the requirement that the professionals should hold 100 per cent of the voting rights and capital in a company, or should have its corporate seat in a given jurisdiction – can make a second establishment or cross-border provision of services in these member states difficult.

Compulsory minimum tariffs are not necessary to ensure high-quality services of either domestic or foreign services providers, whilst depriving consumers of more competitively priced services.

The Commission asked these states to adapt their rules governing such shareholding requirements and prohibitions of multidisciplinary practices (for architects and engineers in Austria, Cyprus and Malta, for patent agents in Austria) as well as repeal minimum compulsory tariffs (for procurators in Spain, architects, engineers and tax advisors in Germany, patent agents in Poland and veterinarians in Austria).

A Letter of Formal Notice is a first step in an infringement procedure and constitutes an official request for information. The Member States now have two months to respond to the arguments put forward by the Commission.

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