Rapporteur:

Marcin NOWACKI

Referral	6.9.2024, Polish Presidency of the Council of the European Union
Legal basis	Article 304 of the Treaty on the Functioning of the European Union
Section responsible	Single Market, Production and Consumption
Adopted in section	12.2.2025
Adopted at plenary session	26.2.2025
Plenary session No	594
Outcome of vote (for/against/abstentions)	205/9/10

1.   Conclusions and recommendations

1.1.

The European Economic and Social Committee (EESC) highlights the need to harmonise the Services Directive and the Professional Qualifications Directive to address fragmentation in the EU services sector. This should include practical solutions to reconcile the free movement of services with the concept of permanent establishment in another Member State, clarifying and simplifying the application of these principles to reduce legal uncertainty and administrative complexity. These efforts would eliminate barriers to cross-border service provision, ensure fair competition and increase access to affordable and diverse services for consumers, while promoting worker mobility.

1.2.

A ‘100 Professions Package’ should be introduced to tackle the most significant regulatory barriers across the Member States. This initiative would facilitate cross-border service provision, enhance worker mobility and boost competition and growth in key sectors.

1.3.

Simplifying administrative procedures, such as licensing, certification and compliance processes is essential in order to reduce costs and legal uncertainties, particularly for SMEs. Streamlined processes would enable SMEs to operate effectively across borders within the single market.

1.4.

Digitalisation should play a central role in modernising administrative processes. A single digital declaration portal and the digitisation of A1 forms would not only reduce administrative burdens for SMEs but also streamline cross-border services, ensuring faster, more accessible services for businesses and consumers alike. Offline solutions should be developed to support vulnerable groups and promote inclusivity.

1.5.

Targeted, sector-specific reforms are necessary to address barriers in industries such as construction, retail and financial services. These reforms, alongside broader regulatory alignment, would unlock cross-border opportunities, boost productivity and strengthen market integration. The EESC underlines that labour protection, collective bargaining and collective agreements must not be seen as undue burdens.

1.6.

The EESC stresses the need for data collection on the services sector, particularly in relation to SMEs, to support policy-making and remove single market barriers. A digital infrastructure is vital for reducing administrative burdens and promoting cross-border services. Additionally, improving transparency and consistency in the European Commission’s decision-making, especially with regard to infringements and clear compliance communication, will help SMEs navigate the market and enhance accountability.

1.7.

A comprehensive sector-specific action plan for the integration of the services market should be included in the updated Single Market Strategy. This plan should outline specific, actionable steps with clear timelines to address existing barriers, create quality jobs and drive substantial progress.

2.   Background to the opinion

2.1.

The services sector, contributing around 70 % of the EU’s GDP and employment, is a cornerstone of the economy but remains underexploited in cross-border trade (1). National legislation frequently restricts service provision from other Member States, often citing public policy or safety concerns. The EESC underlines that labour protection, collective bargaining and collective agreements cannot be seen as undue burdens or hurdles, but are there to ensure a level-playing field for local and foreign service providers.

2.2.

Despite the ambitions of the single market, the sector lags behind the goods market integration, limiting citizens’ access to diverse and competitive services, increasing costs and reducing choice. This fragmentation also hinders professionals from expanding their activities, restricting the sector’s growth and the benefits of full integration.

2.3.

The Services Directive was introduced as a cornerstone of efforts to integrate the services market, while maintaining the high quality of the services. However, its implementation has only partially succeeded in achieving its intended goals (2). The existing barriers are particularly burdensome for small and medium-sized enterprises (SMEs), limiting their ability to provide services across borders and reducing the overall contribution of the services sector to the EU economy.

2.4.

The financial services sector faces barriers, such as inconsistent regulations on leasing, insurance, banking and cross-border payments. Cross-border retail banking is limited, with lending at just 7 % in the euro area, highlighting slow integration (3). This hampers consumers and SMEs, which rely on these services. Harmonised regulations in areas such as insurance and credit would reduce costs and boost market access (4).

2.5.

More than 5 700 professions are regulated within the EU, each subject to unique national requirements that complicate cross-border service provision (5). According to data from 2023, the number of regulated professions varies significantly across the EU Member States, ranging from as few as 88 in Lithuania to as many as 415 in Hungary (6). Among these, approximately 140 non-medical professions are regulated exclusively in one Member State, which demonstrates the extent of the fragmentation and the need for harmonisation to enable the mutual recognition of qualifications and professional mobility across the EU (7).

2.6.

The Professional Qualifications Directive is essential for the mutual recognition of qualifications and for professional mobility within the EU (8). However, its misapplication can create barriers for professionals that qualified in other Member States. The EU should align its education and training systems with the evolving needs of the labour market to ensure that workers acquire the necessary skills. The EESC advocates a consistent and transparent application of the Directive to uphold its primary aim of supporting mutual recognition.

3.   General comments

3.1.

The EESC underscores the need to address both cross-cutting and sector-specific barriers within the framework of the Services Directive. While overarching harmonisation efforts are essential, targeted measures in key sectors such as construction, industrial goods production with associated services (e.g., installation, maintenance and repairs), retail services and tourism are critical to unlocking their potential.

3.2.

The EESC stresses the urgent need to achieve financial integration in the EU services sector. Fragmentation from national regulations restricts the effective use of EUR 33 trillion in private savings, with 34,1 % held in current accounts, indicating that a significant portion is not being utilised. As advocated by Enrico Letta, a Savings and Investments Union is crucial to mobilise these funds, close investment gaps and boost competition (9).

3.3.

In construction, inconsistent standards for materials, labour qualifications and permits hinders efficiency and cross-border opportunities. Retail services face fragmented licensing and consumer protection rules, while tourism is held back by varying national standards. Additionally, the retail sector is obstructed by national packaging and labelling requirements (10). Services of general interest and the non-profit sector require improved recognition in cross-border relations. To address the challenges the EESC proposes: — Harmonisation of professional services regulations: Simplify and standardise requirements in the legal, accounting and architectural professions. This includes legal forms of operation, where for certain professions it is necessary to establish legal statuses that define the forms of enterprise operation. — Unified standards in construction services: Create EU-wide rules for labour qualifications, permits, and materials to reduce delays and costs in cross-border projects. — Regulatory easing in retail services: Simplify licensing and harmonise consumer protection laws to increase market access opportunities. — Transport and logistics integration: Address inconsistent administrative requirements, while ensuring that occupational health and safety rules and workers’ rights are complied with.

3.4.

Despite strong growth in online purchases in the EU (11), the e-commerce market is constrained by inconsistent consumer protection laws, varying refund policies, and differing warranty and return procedures. VAT discrepancies and compliance demands complicate cross-border sales and increase costs, especially for SMEs. Geographical blockages, such as IP-based restrictions, hinder a single market for businesses and limit consumer access and choice.

3.5.

The EESC emphasises that the posting of workers, accounting for 2,6 million workers in the EU, is an integral element of the freedom to provide services. Ensuring equitable access for workers across the Member States is not only a matter of economic efficiency but also one of social fairness.

3.6.

The EESC proposes the introduction of a ‘100 Professions Package’ aimed at addressing significant regulatory barriers to cross-border service provision. This package would specifically seek to deregulate professions that are currently over-regulated.

3.7.

The EESC notes that the implementation of ‘posted workers’ legislation remains inconsistent across the Member States, leading to significant administrative burdens and legal uncertainties. Specifically, Directives 96/71/EC and 2018/957 (12), which aim to regulate fair working conditions for posted workers, are applied unevenly.

3.8.

The EESC points out that the A1 form, required under Regulation (EC) No 883/2004 (13) for verifying posted workers’ social security status, continues to pose significant barriers for cross-border service provision. Although the A1 is only declaratory and not required for immediate presentation under Directive 2014/67/EU (14), certain national control authorities in Member States continue to demand its immediate submission. The EESC calls for the harmonisation of A1 procedures and strongly supports the digitalisation of the A1 process throughout all Member States to streamline procedures and enhance accessibility, while ensuring that vulnerable individuals are not disadvantaged.

3.9.

The EESC highlights the challenges companies face when employing third-country nationals for cross-border services within the EU. Despite valid EU work permits and A1 certificates under Article 13 of Regulation (EC) No 883/2004, authorities in receiving Member States often demand additional permits. These issues stem from differing interpretations of ‘posting’ under Article 12 and of ‘simultaneous or alternating activities’ under Article 13 of Regulation (EC) No 883/2004, as well as Directive 2011/98/EU’s exclusion of posted third-country nationals under Article 3(2)(c). This regulatory fragmentation undermines the single market and the freedom to provide services, key to EU integration (15). Therefore, the EESC supports the Commission’s proposal to establish a single digital declaration portal for companies.

3.10.

The EESC emphasises the importance of leveraging and modernising key EU tools, such as SMOT, IMI and SOLVIT, to remove single market barriers and support cross-border services. A digitally integrated framework for EU tools is essential to reduce administrative burdens and better serve businesses, particularly SMEs, while empowering citizens (16).

3.11.

The EESC stresses the need for a detailed action plan for services to be included in the new Single Market Strategy. This action plan should outline sector-specific activities and a clear schedule for their implementation, ensuring that commitments are actionable and progress can be effectively monitored. Without such a structured approach, there is a risk that the integration of the services market will remain vague, limiting the potential for meaningful progress and long-term economic growth.

3.12.

The EESC acknowledges the GDPR’s role in safeguarding data but notes that inconsistent enforcement across the EU causes legal uncertainty, impeding innovation and cross-border digital services. Strict rules limit data use, while a lack of interoperability standards hampers information-sharing. Gaps in regulations for machine learning, non-personal data and autonomous vehicle testing further stifle innovation. As noted in Mario Draghi’s report, digital companies are deterred from operating across the EU due to fragmented requirements, multiple regulators and ‘gold-plating’ (17). At the same time, he calls for high labour standards to be maintained and enhanced across the EU and social protection measures to be improved.

3.13.

The EESC highlights the need to strengthen transparency and consistency in the European Commission’s activities. A particular concern is the recurring tendency of Member States to impose national requirements that go beyond what is stipulated in EU Directives. A more coordinated and streamlined regulatory framework could enhance the services sectors’ competitiveness, support business growth, and drive innovation while maintaining high labour standards and social protection.

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(1)  European Commission, Single market for services: https://single-market-economy.ec.europa.eu/single-market/services_en.

(2)  European Commission, The Services Directive: https://single-market-economy.ec.europa.eu/single-market/services/directive_en.

(3)  European Central Bank, Financial integration in Europe: where do we stand after the banking union’s first decade?: https://www.bankingsupervision.europa.eu/press/speeches/date/2024/html/ssm.sp240430~68c9861180.en.html.

(4)  European Commission, Decision on the establishment of a Commissioners’ Project Group on the European Saving and Investments Union: https://commission.europa.eu/document/download/d610a29d-84e2-476f-9155-291545fdc6e3_en?filename=Decision%20on%20the%20establishment%20of%20a%20Commissioners%27%20Project%20Group%20on%20the%20European%20Saving%20and%20Investments%20Union.pdf.

(5)  Blix, Mårten, ‘Where Are the Fruits? The Untapped Single Market for Services in the EU.’, 2023, p. 2.

(6)   European Court of Auditors.

(7)  Blix, Mårten, ‘Where Are the Fruits? The Untapped Single Market for Services in the EU.’, 2023, p. 2.

(8)  European Union, Recognition of professional qualifications in practice: https://single-market-economy.ec.europa.eu/single-market/services/free-movement-professionals/recognition-professional-qualifications-practice_en.

(9)  Enrico Letta, ‘Much More than a Market: Report by Enrico Letta’, 2024, https://www.consilium.europa.eu/media/ny3j24sm/much-more-than-a-market-report-by-enrico-letta.pdf.

(10)  Matters under discussion in the Single Market Enforcement Taskforce (SMET), European Commission, https://ec.europa.eu/internal_market/smet/index_en.htm.

(11)  European Council, ‘E-commerce in the EU’, https://www.consilium.europa.eu/en/infographics/e-commerce/.

(12)  Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services (OJ L 18, 21.1.1997, p. 1) https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:31996L0071, and Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018 amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services (OJ L 173, 9.7.2018, p. 16) https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32018L0957.

(13)   OJ L 166, 30.4.2004, p. 1.

(14)   OJ L 159, 28.5.2014, p. 11.

(15)  Black Book of Barriers on the Internal Market, Non-recognition of Polish work permits issued to Ukrainian employees of a Polish entrepreneur, Ministry of Economic Development and Technology, p. 13. https://www.gov.pl/web/rozwoj-technologia/czarna-ksiega-barier-na-ktore-polskie-firmy-napotykaja-w-panstwach-ue.

(16)

  

(1)	Single Market Obstacles Tool (SMOT), https://fosmo.youreurope.europa.eu/.

(2)	European Commission, Internal Market Information System (IMI),. Internal Market Information System (IMI) – The EU Single Market – European Commission.

(3)	European Commission, SOLVIT, https://ec.europa.eu/solvit/index_en.htm.

(17)  European Commission, ‘The future of European competitiveness’, https://commission.europa.eu/topics/strengthening-european-competitiveness/eu-competitiveness-looking-ahead_en#paragraph_47059.