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Cyprus referred to EU court of justice over internal market failures

The European Commission has referred Cyprus to the EU Court of Justice because it has failed to remove excessive and unjustified obstacles to the provision of services in the internal market, namely shareholding requirements for all engineering professions.

According to a Commission announcement, Cyprus was among nine EU member states that had been asked to remove excessive and unjustified obstacles to cross-border activities.

“The European Commission is taking further steps with regard to Austria, Belgium, Cyprus, Denmark, Germany, Hungary, Italy, Lithuania, and Spain on the grounds that their national rules include excessive and unjustified obstacles to the provision of services across the internal market,” a statement said.

The Commission considers that requirements imposed on certain service providers in the states in question run counter to the Services Directive (Directive 2006/123/EC).

Cyprus was referred to the ECJ over shareholding requirements for all engineering professions, including civil engineers and architects.

“Services account for more than two thirds of economic activity and jobs in the EU Single Market. By making it easier for services providers to work across the EU, we generate new job opportunities, greater choice and lower prices for consumers,” Commissioner for Internal Market Elzbieta Bienkowska said.

She added that member states had to remove the many unjustified barriers that still prevented professionals and companies from providing their services in different members of the bloc.

“That is why I have made enforcement of already agreed EU laws a key priority of our Single Market Strategy.”

A number of practical restrictions on services make establishment and cross-border provision of services across the EU difficult: requiring corporate seats in a given jurisdiction; excessive shareholder requirements such as the requirement for professionals to hold 100 per cent of the voting rights or capital in a company; compulsory minimum tariffs; as well as disproportionate authorisation requirements or exclusivity rights.

Such obstacles to market entrants are not necessary to ensure high-quality services of domestic or foreign service providers, and in practice often deprive consumers of competitively priced services, the Commission said.

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