Directive 2006/123/EC on services in the Internal Market (Services Directive) establishes the framework for the free movement of services within the internal market of the European Union.

The purpose of the Directive is to increase economic growth in the internal market services sector, improve the competitiveness of the economy, enhance the quality and security of services, significantly expand the choice for services users, and increase the transparency requirements in all EU Member States. Proper implementation of this directive should also increase the number of jobs available.

The Services Directive obliges Member States to cooperate with each other at the administrative level in order to ensure effective supervision of providers and their services in all Member States.

Services Directive  requires the establishment  of the electronic Point of Single Contact with all the necessary information for the provision of regulated service activities, including the possibility for execution of procedures for acquiring permits, if necessary.

 Services Directive also defines the level of assistance to be provided to recipients of services. It requires service providers to provide  all information on requirements and possibilities for compensation in the event of the improper provision of a service, as well as the contacts of the relevant organisations, e.g. professional associations, including European Consumer Network centres, where service users can get practical help.

The Services Directive is a horizontal act  which shows other competent authorities   regulating different services, the way to regulate a particular service with no prohibited requirements, no disproportionate and unnecessary conditions, but in such a way that the service remains safe and of good quality.

The many market services covered by the Services Directive include the following:

• commercial activities,
• construction services,
• crafts,
• tourism, hospitality, leisure,
• sports, fitness,
• professional activities (architects, engineers, lawyers, veterinarians, etc.),
• real estate business,
• agricultural and forestry activities,
• education (private schools, universities, language schools),
• the social services of private providers (retirement homes, childcare, home care, household assistance, etc.),
• services related to the field of culture (private museums and libraries, theatres, concerts, the organisation of outdoor events, etc.),
• ancillary health care services.

The Services Directive does not cover services such as:

• financial services,
• electronic communication and network services,
• transport services, with some exceptions of a commercial nature (driving schools, leisure flying, etc.),
• temporary employment agency services,
• health services, with the exception of veterinarians and market support services,
• audiovisual services and radio broadcasting,
• lotteries,
• social services (social housing, public childcare, state support to families in need of assistance) by contractors authorised by the state or charities certified by the state as appropriate. The services of private contractors are covered by the Services Directive,
• personal protection,
• notaries,
• bailiffs.

This Directive also aims to eliminate unjustified and disproportionate legal and administrative burdens that unnecessarily impede free movement, i.e. the operation of companies also across borders, in other Member States when they wish to provide their services for a limited time, on a temporary/cross-border basis in another Member States.

If  service providers establish themselves in another Member State where it plans to provide its services, it becomes a legal entity in the host country and all rules of the host country shall apply.

However, if the provider is established in its home country and wishes to operate in another MS only temporarily, the rules on the free movement of services or the freedom to provide services are applicable. The case law of the European Court of Justice demands that the duration, frequency, frequency of repetition, and continuity of service are taken into account in the assessment of the temporary character of such provision of services.

There should be fewer requirements for the cross-border provision of services than for the establishment of the provider, and the conditions already fulfilled by the provider in its home Member State must be recognized.

The imposition of certain requirements, in addition to those already prohibited under Article 14 of the Services Directive, is prohibited (Article 16), e.g. re-entry in registers, re-registration with a professional association, a ban on the need for certain basic infrastructure (e.g. offices), the requirements for certain equipment and materials for the provision of services, re-obtaining permits, preventing the provision of services to self-employed persons, unless  an effective measure to protect an important public interest is needed.

All requirements relating to services within Services Directive must be non-discriminatory (nationality, company headquarters), necessary to effectively protect a public interest, and proportionate (the mildest requirement necessary to achieve the protection of the public interest).

Cross-border activities are not possible in the following fields:

• services of general economic interest: the postal sector, electricity, the gas sector, water distribution and supply, wastewater disposal, waste management,
• the secondment of workers,
• personal data protection,
• attorneys' services,
• the judicial recovery of debts,
• professional qualifications,
• social security.