Services Directive

The freedom to provide services represents one of the four economic freedoms, which is of particular importance for the open and euroized economy of Montenegro, strongly oriented towards the service sector and with a development model based on attracting foreign investments. Montenegro, as a member of the WTO, a signatory to several free trade agreements, and a country that is negotiating membership in the EU and continuously improves the business environment by reducing business barriers, has already significantly liberalized access to the service sector.

One of the obligations of future membership in the Union is the further liberalization of the services market towards the EU and the EEA (European Economic Area EU28+3), both in terms of the freedom of the right of establishment and the freedom to provide services on the territory of Montenegro that are temporarily or occasionally provided by those service providers who is the country of establishment of the EEA countries, without the obligation of establishment in Montenegro.

Gradual adaptation to future membership and functioning in the EU single market (including Norway, Iceland and Liechtenstein through the EEA), Montenegro has the obligation to fulfill all conditions for the full implementation of Directive 2006/123/EC of the European Parliament and the Council of December 12, 2006. year on services in the internal market until the day of accession to the EU as part of negotiations in negotiation chapter 3.

The main objective of adopting the Services Directive was to make progress towards a true internal market for services so that both companies and consumers can take full advantage of the opportunities offered by this largest sector of the European economy. The Services Directive is a major step forward in ensuring that both providers and users of services can more easily benefit from the fundamental freedoms guaranteed in Articles 49 to 61 TFEU – freedom of establishment and freedom to provide cross-border services. In order to achieve this, the provisions of the Directive are aimed at simplifying administrative procedures, removing obstacles for service activities, as well as improving mutual trust between member states and the trust of providers and consumers in the internal market.

Cross-border provision of services implies that the service provider, registered in any EU member state (that is, EEA state) can freely provide cross-border services in other states, without the obligation to register the seat of business, i.e. business accommodation, if the services are provided on a temporary and occasional basis. Freedom to provide services means the absence of permanent and continuous participation in the economic life of the host Member State.

Establishment includes the actual performance of economic activity through permanent residence for an indefinite period of time.

The Services Directive is mandatory for all countries of the European Economic Area (EEA) and entails the harmonization of the institutional and regulatory framework to enable:

• simple and non-discriminatory rules for the private sector of services
• fewer obstacles to starting a business, entering the market and competition
• simplification and digitization of licensing procedures for service providers
• ensuring cross-border provision of services

Two scenarios
1. Freedom of business residence (on a permanent basis) - obligation to register in Montenegro
2. Freedom to provide cross-border services (on an occasional and temporary basis, without the obligation of business residence, registration and issuance of a license in Montenegro).

Basic rules
The Services Directive introduces important horizontal rules:

• as simple as possible (Article 5), previously published, clear, proportional and non-discriminatory rules, without duplicating identical requirements (Article 10)
• permits should not exist, unless they are necessarily justified (Article 9)
• the permit is valid on the territory of the state (Article 10)
• Cross-border recognition of identical liability insurance (Article 23)
• no bans on the marketing of professions (Article 24), except due to professional rules
• no restrictions on multidisciplinarity (Article 25)
• encouraging voluntary norms (Article 26)
• non-discrimination of consumers (Article 20) and security of service provision.

Prohibited conditions
The conditions listed in Article 14 of the Services Directive are prohibited and must be removed in all regulations governing services:

• discrimination based on citizenship
• domicile or residence
• examination of the economic need
• prohibition of multiple business residences
• prohibition of registration in registers and business associations
• restriction on the selection of primary and secondary housing
• the obligation of prior registration and performance of activities
• obligation to include local competitors.

Conditions to be investigated
The conditions referred to in Articles 15 and 16 of the Services Directive should be removed from all regulations governing services, unless in exceptional cases they can be justified on grounds of non-discrimination, proportionality and necessity:

• fixed minimum and maximum tariffs
• territorial and numerical limitations of permits
• restrictions on ownership shares and legal form
• requirements for the minimum number of employees
• obligation to provide multiple types of services
• bans on more than one business occupancy
• commitment to a specific form of business infrastructure
• obligation of business residency for cross-border service providers
• complicated procedure for approval and/or registration in the professional chamber
• obligation of address or special identification document
• application of restrictive contractual agreements
• non-recognition of professional insurance.

Economic benefits of implementing the Services Directive

• easier access to the market for new entrepreneurs
• encourage (only) employment and cross-border mobility of professionals
• an opportunity to generate income
• quality and innovation of services
• contribution to higher economic growth.

Competent authorities and regulations
Ministry of Economic Development
Rimski trg 46, Podgorica
+382 20 482 423

psc@mek.gov.me 

Services Directive
Services Act
Information from the European Commission