EU Services Directive (2006/123/EC)

Directive 2006/123/EC, commonly called the Services Directive or the Bolkestein Directive, is a fundamental piece of European single market legislation. It was adopted in December 2006 and required transposition by December 2009. Its aim is to remove the administrative and legal barriers that prevent service providers from establishing in another EU member state or from providing services across borders without establishing a permanent presence. While it is not a procurement directive, it shapes the market environment in which public procurement operates by determining how freely service companies can compete across Europe.

What is the EU Services Directive (2006/123/EC)?

The Directive has two main pillars:

Freedom of establishment. Member states must simplify the authorisation procedures that service companies face when setting up in another country. Authorisation schemes (licences, registrations, approvals) are only permitted where they are non-discriminatory, justified by overriding reasons of public interest, and proportionate to that public interest objective. Point of Single Contact portals must allow all establishment-related procedures to be completed electronically.

Freedom to provide services cross-border. A service provider established in one member state can temporarily provide services in another member state under the rules of its home state (the "country of origin" principle, though in its final form the Directive applies a more nuanced test). Host member states may impose requirements on incoming service providers only where those requirements are non-discriminatory, justified by public policy, public security, public health, or the protection of the environment, and proportionate.

Excluded sectors. The Directive does not apply to all services. Excluded sectors include: financial services, electronic communications, transport services, healthcare, gambling, audiovisual services, and certain social services. These are governed by sector-specific EU legislation instead.

Quality and transparency. The Directive requires service providers to make information about their services, prices, and applicable rules readily available to recipients. It also establishes an alert mechanism through which member states must notify each other of requirements that may be incompatible with the Directive.

The Services Directive interacts directly with procurement: when a contracting authority procures services from a provider established in another EU country, the EU treaty principles of free movement and non-discrimination apply, and the Directive's removal of unjustified establishment barriers means that potential bidders from across the European single market should, in principle, face a level playing field when deciding whether to compete.

Why it matters for bidders

For service companies looking to expand into new European markets, the Services Directive is the legal basis for challenging unjustified national barriers to establishment and cross-border service provision. If a member state requires local establishment as a precondition for bidding on public service contracts, and that requirement is not justified by a genuine public interest, it may be incompatible with the Directive.

For procurement practitioners, the Directive reinforces why technical specifications and qualification requirements must not create disguised barriers to cross-border competition, a principle also embedded in Directive 2014/24/EU.

Example

A Danish consultancy specialising in urban planning wants to provide services to local authorities in Spain without opening a Spanish office. The Services Directive limits Spain's ability to require permanent establishment as a condition for cross-border service provision. The consultancy can bid for Spanish public contracts and perform its work from Denmark, provided its services fall within the Directive's scope and Spain has not imposed requirements that survive the Directive's public interest test.

Frequently Asked Questions

Does the Services Directive apply in the UK after Brexit?

No. The UK is no longer bound by the Services Directive. UK service providers seeking to establish or provide services in EU member states must comply with the national rules of each member state, subject to whatever arrangements the EU-UK Trade and Cooperation Agreement provides (which are more limited than the single market freedoms the Directive supported).

Does the Directive affect how public contracts are specified?

Indirectly, yes. The Directive's prohibition on unjustified restrictions on service provision reinforces the principle, also found in Directive 2014/24/EU, that technical specifications must not reference a particular origin, production method, or trade mark in a way that favours or excludes specific providers. Specifications that create disguised barriers to cross-border competition may breach both instruments.

Which services are excluded from the Directive?

Healthcare, financial services, transport, gambling, audiovisual services, electronic communications, and certain social services are excluded. For procurement purposes, the relevant sector-specific legislation applies to these areas instead.