Authorisation Scheme for Establishment

Authorisation schemes and other requirements are permitted in respect of establishment in another EU state. An establishment involves the pursuit of an economic activity for an indefinite period through a stable infrastructure from where the business or provision of services is actually carried out.

Member States were required to report to the European Commission in relation to authorisation schemes and demonstrate their compatibility with these criteria.  Authorisation refers to licences, permits or requirements which the provider of a service is required to obtain from a regulatory body in the host Member State in order to provide the service.

The authorisation scheme must not discriminate either directly or indirectly against the provider. The scheme must be justified by an overriding reason in relation to the public interest. The objective must be such that cannot be attained by means of a less restrictive measure such as monitoring the activity concerned.

Authorisation Requirement I

The criteria for granting authorisation must be consistent with the above requirements. They must also be clear unambiguous, objective, publicised in advance, transparent and accessible. The authorisation must enable the provider to provide and exercise the service activity throughout the national territory

Any requirement, which is discriminatory directly or indirectly on the grounds of the nationality of the provider, employees, shareholders, directors or managers is not permitted. A provider must not be restricted from having an establishment in more than one EU member state. It must not be required to select a principal or secondary establishment.

An authorisation may only be required in the recipient state if it is non-discriminatory, justified by an overriding reason relating to public interest and the public interest cannot be protected in any other way. The  Directive provides that they must go no more than absolutely necessary.

Authorisation Requirement II

Requirements for granting authorisation cannot duplicate requirements and controls which are equivalent to or comparable with those to which the providers are already subject in another Member State.  Each State’s regulatory body must take into account the equivalent requirements in other Member States.

In order to allow service providers to develop a long-term strategy, an authorisation must be for an unlimited period unless it is automatically renewed subject to fulfilment with requirements.  Limitations of time can only be justified by an overriding reason in relation to public interest.

The Services Directive provides that the authorisation procedures must be clear,  must be made public in advance, be dealt with objectively and impartially, must not be complicated, must not be delayed and be easily accessible.   Any charges made must be reasonable and proportionate.   Applications must be processed as quickly as possible and within a reasonable period.

Potential Justifications for Authorisation

Overriding reasons relating to the public interest may justify authorisation, regulation and licensing. They include reasons recognised as such in the EU Treaty and in EU case law. They may include those relating to public policy such as

  • the protection of minors and vulnerable adults;
  • animal welfare;
  • public security;
  • public safety;
  • public health;
  • preserving the financial equilibrium of the social security system;
  • the protection of consumers, recipients of service and workers;
  • unfair trading;
  • combating fraud;
  • the protection of the environment;
  • intellectual property;
  • animal health;
  • considerations of historical and architectural heritage
  • social policy and
  • cultural policy objectives.

Any licensing, authorisation or regulatory requirements must objectively necessary. It must be objective transparent, accessible and unambiguous. It must afford access for the service provider to the territory of the state unless there is a good reason otherwise.

Authorisation Issues

Any decision to refuse authorisation / licensing must be fully reasoned and subject to judicial review. An authorisation should not be for a limited period unless there are good reasons in the public interest. The authorisation / licensing requirement must not be unduly complicated. The application must be dealt with expeditiously.

The numbers of authorisations required must not be more than necessary. Where the availability of authorisations is limited due to considerations of capacity, any selection must be fair and transparent. Any basis in regulation on economic need or market demand must be considered on a case by case basis.

Competitors may not be involved in the granting of the authorisation. There may not be a requirement to have a guarantees or insurance from a provider in the host state.  There may not be a requirement to have had a previous establishment or registration in the state within a certain period.

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