Freedom to provide services

Freedom to provide services

The freedom to provide services implies that the service provider registered in any of the EU/EEA contracting states may freely provide cross-border services in Croatia, without compulsory registration of establishment, including the office, if the services are provided on a temporary and occasional basis. Essential point is in this context that the service provider is established in any of the EU/EEA contracting state which is sufficient on the Internal Market.

Freedom to provide services means the absence of a permanent and continuous participation in the economic life of the host Member State.

Criteria for distinguishing between permanent and temporary/intermittent provision of services are part of the jurisprudence of the European Court of Justice.

The freedom to provide services lays down the following criteria for distinguishing permanent and temporary/intermittent providing of services:

·         periodicity of duration

·         frequency (regularity)

·         permanency (continuity)

Differentiation can be defined only on a case by case basis, taking into account all the mentioned legal criteria.

Even if the services are provided over the years the relevant competent authorities cannot clearly conclude that the establishment is necessary and therefore compulsory. That is, the service provider still has the freedom to provide services even if the services are provided over the years. Therefore, the relevant competent authorities cannot clearly conclude that the establishment is necessary and the compulsion could breach the Services Act i.e. the Services Directive. Even if the services are provided temporarily and periodically, a service provider may have some sort of office business infrastructure in Croatia, still not having registered establishment in Croatia.

The freedom to provide services implies that the general time limits should not be institutionally determined in order to distinguish between permanent providing of services (establishment) and occasional/temporary provision of services (no establishment). The establishment requires deeper integration into the economy of a Member State with a permanent infrastructure.

Thus, it can be concluded that the providers of services which are in the domain of the EU Services Directive, have the freedom to provide cross-border services in Croatia, if they have already been registered with establishment in any EU/EEA contracting state. The freedom to provide services guarantees to the services provider the option to make decision when he or she wants to permanently integrate into Croatia services market. This freedom is equal on the whole Internal Market.

The freedom to provide services refers to a wide segment of market services such as professional and business services (PBS), IT sector, creative industries, retail trade, construction, tourism, catering, real estate brokerage, private services in education, culture and social care, various liberal professions (non-regulated professions), as well as the new business models within the collaborative economy and digital platforms. All services not explicitly excluded from the right of establishment and/or the freedom to provide services by the Services Directive fall within the domain of the application of horizontal EU services market liberalization rules.

The freedom to provide services entails the obligation to notify accordingly the local Tax Administration concerning the assigning of personal identification number/tax number and payment of VAT.

In order to facilitate the exercising the right of establishment and the freedom to provide services the EU approvals are issued to natural persons and legal entities.

Did you find this page helpful? Give us your feedback.