Implementation of 2006/123/EC Directive on services in the

internal market – problems and

doubts concerning travel services from the view of the tourism legislator 2nd IFTTA Europe Work-shop Palma de Mallorca, 1-3 April, 2009 Dr Gyenizse Dorottya Hungary Ministry of Local Government Tourism Department

Topics

The implementation of 2006/123/EC Directive on services in the internal market Issues and problems need to be solved Overview of the Hungarian legislation and national implementation process (concrete examples)

2006/123/EC Directive on services in the internal market

Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market is in force since 27th December 2006 after 3 years preparatory process. Implementation period: till 31th

December, 2009.

The Directive falls under the framework of the 'Lisbon Strategy' and proposes four main objectives for creating an internal services market: •to ease freedom of establishment for providers and the freedom of provision of services in the EU; •to strengthen rights of recipients of services as users of the latter; •to promote the quality of services; •to establish effective administrative cooperation among the Member States.

2006/123/EC Directive on services in the internal market Scope

The services covered by the Directive: business services such as management consultancy, certification and testing; facilities management, including office maintenance; advertising; recruitment services; the services of commercial agents, legal or fiscal advice; real estate services such as estate agencies; construction, including the services of architects; distributive trades; the organisation of trade fairs; car rental; and travel agencies. Consumer services are also covered, such as those in the field of tourism, including tour guides; leisure services, sports centres and amusement park.

2006/123/EC Directive on services in the internal market

•The Directive requires the Member States to examine and, if need be, simplify the procedures and formalities applicable to accessing a service activity and to exercise them. In particular, the Directive includes: putting in place points of single contact at which a provider may complete all the necessary formalities to fulfil various duties and the obligation to make this possible on-line.

•In order to facilitate the establishment and free movement of services throughout the European Union, the Directive: - lays down a legal obligation requiring the Member States to cooperate with the relevant authorities of other Member States in order to ensure efficient control of service activities in the Union while avoiding a multiplication of monitoring. - constitutes the basis for developing an electronic system for the exchange of information between Member States, which is vital for establishing effective administrative cooperation between them.

2006/123/EC Directive on services in the internal market

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Main important provisions Definitions

- „Service" means any self-employed economic activity, normally provided for remuneration - "Member State of establishment" means the Member State in whose territory the provider of the service concerned is established "Member State where the service is provided" means the Member State where the service is supplied by a provider established in another Member State

Possibilities for providing services: I. By establishment II. Cross-border services (movement of services)

2006/123/EC Directive on services in the internal market I. Freedom of establishment for providers

Member States shall not make access to a service activity or the exercise thereof subject to an authorisation scheme unless the following conditions are satisfied: (a) the authorisation scheme does not discriminate against the provider in question; (b) the need for an authorisation scheme is justified by an

overriding reason relating to the public interest;

(c) the objective pursued cannot be attained by means of a less restrictive measure, in particular because a former inspection would take place too late to be genuinely effective.

2006/123/EC Directive on services in the internal market II. Free movement of services

• Member States shall respect the right of providers to provide services in a Member State other than that in which they are established.

• The Member State in which the service is provided shall ensure free access to and free exercise of a service activity within its territory. Member States shall not make access to or exercise of a service activity in their territory subject to compliance with any requirements which do not respect the following principles: (a) non-discrimination: the requirement may be neither directly nor indirectly discriminatory with regard to nationality or, in the case of legal persons, with regard to the Member State in which they are established; (b) necessity: the requirement must be justified for reasons of

public policy, public security, public health or the protection of the environment;

(c) proportionality: the requirement must be suitable for attaining the objective pursued, and must not go beyond what is necessary to attain that objective.

Problems of the national implementation regarding tourism services – travel activities

•Altering register systems and procedures, altering administrative procedures, attitudes in the Member States •Implementation problems in practice throughout 27 Member States’ administrative systems and authorities • Authorization (licence): France, Italy, Spain, Portugal, Belgium, Austria, Ireland, Greece, Poland, Romania, Hungary, Czech Republic, Slovakia, Malta, Cyprus •Decision of the Member States on keeping authorization schemes=> justify for the European Commission •If it is not an authorization: registration, notification etc. =>

it is

not a pre-condition of starting the activity (post-supervision) - in particular, that authorisation schemes should be permissible only where an a posteriori inspection would not be effective because of the impossibility of ascertaining the defects of the services concerned a posteriori, due account being taken of the risks and dangers which could arise in the absence of a prior inspection.

Problems of the national implementation regarding tourism services – travel activities Hungary’s aim:

- Maintain pre-authorization (licence) for travel actvities in case of establishment (public interest: consumer protection, financial security) - Notification in case of cross-border services – not a pre-

condition (DANGER!) Difficulties in implementation in lack of common interpretation at Community level

•Free movement of services: cross-border providers – problems with Member States’ different professional requirements and systems (eg. requirements for travel agencies, inspection of existing different financial guarantee

systems)

•What is establishment? (eg. infrastructre, time condition…) •Internet selling!

Problems of the national implementation regarding tourism services – travel activities Internet selling – cross border services?

2000/31/EC directive on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce)

• Service provider: any natural or legal person providing an information society service; • Established service provider: a service provider who effectively pursues an economic activity using a fixed establishment for an indefinite period. The presence and use of the technical means and technologies required to provide the service do not, in themselves, constitute an establishment of the provider; • Member States may not, for reasons falling within the coordinated field, restrict the freedom to provide information society services from another Member State. DEROGATION: the protection of consumers as reason of justification (other possibility as in Service Directive)

Problems of the national implementation regarding tourism services – travel activities Internet selling – cross border services?

• Each Member State shall ensure that the information society services provided by a service provider established on its territory comply with the national provisions applicable in the Member State in question which fall within the coordinated field (requirements concerning qualifications, authorisation or notification, requirements concerning the behaviour of the service provider, requirements regarding the quality or content of the service including those applicable to advertising and contracts or requirements concerning the liability of the service provider).

•Internet websides, dynamic packaging providers, advertisment providers selling and and advertising package travel and travel services: WHO WILL CONTROL THEM? COMPETENCES OF

MEMBER STATES AND NATIONAL AUTHORITIES

•Member States authorization schemes will defer: WHO WILL ENSURE adequate security and measures? Competition issues (distortion)!

Hungarian implementation process General implementation (general rules)

Act on services: general legal framework on services, basis definitions, authorization

authorities and stakeholders

schemes, proceedings etc. – proposal for the Parliament Acts on modification of the effected legal acts and regulations (according to the screening) – by Parliament, by Government, by Ministers (till the end of December 2009) – NEW SYSTEM for Cross border service: pursue service activity without establishment, on temporary or casual

Establishment:

pursue economic activity permanently and constantly setting up business establishment, branch or store etc. – authorities must evaluate case by case (quite difficult in implementation, uncertain situations)

Hungarian implementation process 1. Travel activities: Government Decree on Travel Organization and Agency Activities (213/1996.)

Definitions, main purposes of the activities, technical and personal requirements of the activity, registration procedure, administrative requirements, financial security (bank guarantee, insurance, deposit), inspections, sanctions (cancellation from the register, fine)

Screening results:

- maintain pre-registration for travel companies in case of establishment - notification in case of cross-border services - competences of authority - simplification of procedures - electronic administration

Hungarian implementation process Government Decree on Travel Contracts and Travel Agency Contracts (281/2008.)

Latest revision of the Decree in 2008: 2005/29/EC Directive concerning unfair business-to-consumer commercial practices in the internal market ; more adequate implementation of the Package Travel Directive; Working Group of revision; still problems

at EU level!

Dynamic Packaging: as EU Commission has not made a final proposal for the revision of 90/314/EEC Directive yet, we did not amend the scope of the legal act, applying only to ‘travel package’ definition (and one-element service) – due to competition issues Package definition is connected with financial security (activity rules)

Hungarian legislation overview 2. Tour guide services: Minister Decree on tour guides (41/1995.)

Implementation September) New of competent authorities) standardization 2005/36/EC only one procedure to the client) the activity and the srvice provider proceeding: Directive concerning application of monument list – waiting ) on involving the recognition of professional qualifications (deadline 2008 List of historical monuments (European Commission’s opinion – official letter sent to Internal Market DG Recognition of other EU Member States’ professional qualification in case of cross-border services – pre notification once a year at the competent authority (problem: no information at EU level about national

3. Accomodation services: new legal act is under negotiation

New license will be introduced: accomodation-licence for the establishments (different authorities are involved, but Authorization is connected with the establishment not with civil organizations

Conclusions – doubts…

Serious changes at the travel market of the EU27 Distortion at the market because of the non-full harmonization and different implementation at national level legislation – examination of different systems (economic and legal decisions of the enterprises) Shifting business acvtivities to EU Members where less strict rules will be in force or non registration???

Internet selling and activities: no clear provisions at EU level who is responsible for supervision In case of insolvency: EU citizenship vs. National citizenship – finally Member State must be involved transporting their citizens back to home (even tour operator was not registered there)

Thank you for your kind attention!

Dr Dorottya Gyenizse Ministry of Local Government Tourism Department Hungary E-mail: [email protected]

[email protected]