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Cite as: [2000] ECR I-07919, [2000] ECR I-7919, [2000] EUECJ C-58/98

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JUDGMENT OF THE COURT

3 October 2000 (1)

(Freedom to provide services - Directive 64/427/EEC - Skilled services in the building trade - National rules requiring foreign skilled trade undertakings to be entered on the trades register - Proportionality)

In Case C-58/98,

REFERENCE to the Court under Article 177 of the EC Treaty (now Article 234 EC) by the Amtsgericht Heinsberg, Germany, for a preliminary ruling in the proceedings before that court against

Josef Corsten

on the interpretation of Article 59 of the EC Treaty (now, after amendment, Article 49 EC), Articles 60, 65 and 66 of the EC Treaty (now Articles 50 EC, 54 EC and 55 EC) and Council Directive 64/427/EEC of 7 July 1964 laying down detailed provisions concerning transitional measures in respect of activities of self-employed persons in manufacturing and processing industries falling within ISIC Major Groups 23-40 (Industry and small craft industries) (OJ, English Special Edition 1963-1964, p. 148),

THE COURT,

composed of: G.C. Rodríguez Iglesias, President, J.C. Moitinho de Almeida, D.A.O. Edward (Rapporteur), L. Sevón and R. Schintgen (Presidents of Chambers), P.J.G. Kapteyn, C. Gulmann, H. Ragnemalm and M. Wathelet, Judges,

Advocate General: G. Cosmas,

Registrar: H.A. Rühl, Principal Administrator,

after considering the written observations submitted on behalf of:

- Kreis Heinsberg (the commune of Heinsberg), by J. Nießen, Kreisrechtsrat, acting as Agent,

- the German Government, by E. Röder, Ministerialrat at the Federal Ministry of the Economy, and C.-D. Quassowski, Regierungsdirektor at the same Ministry, acting as Agents,

- the Austrian Government, by C. Stix-Hackl, Gesandte in the Federal Ministry of Foreign Affairs, acting as Agent,

- the Commission of the European Communities, by B. Mongin and M. Niejahr, of its Legal Service, acting as Agents,

having regard to the Report for the Hearing,

after hearing the oral observations of Kreis Heinsberg and the Commission at the hearing on 5 October 1999,

after hearing the Opinion of the Advocate General at the sitting on 30 November 1999,

gives the following

Judgment

By order of 13 February 1998, received at the Court on 27 February 1998 and supplemented on 22 June 1998, the Amtsgericht (Local Court) Heinsberg referred to the Court for a preliminary ruling under Article 177 of the EC Treaty (nowArticle 234 EC) a question on the interpretation of Article 59 of the EC Treaty (now, after amendment, Article 49 EC), Articles 60, 65 and 66 of the EC Treaty (now Articles 50 EC, 54 EC and 55 EC) and Council Directive 64/427/EEC of 7 July 1964 laying down detailed provisions concerning transitional measures in respect of activities of self-employed persons in manufacturing and processing industries falling within ISIC Major Groups 23-40 (Industry and small craft industries) (OJ, English Special Edition 1963-1964, p. 148).

The question was raised in proceedings brought before that court against Mr Corsten, who was charged with having infringed German legislation against black market work.

Community law

The first paragraph of Article 59 of the Treaty provides:

'Within the framework of the provisions set out below, restrictions on freedom to provide services within the Community shall be progressively abolished during the transitional period in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended.

Article 66 of the Treaty provides that Article 55 of the EC Treaty (now Article 45 EC), Articles 56 and 57 of the EC Treaty (now, after amendment, Article 46 EC and Article 47 EC) and Article 58 of the EC Treaty (now Article 48 EC), which appear in the third part of the Treaty, Title III, Chapter 2, entitled 'Right of establishment, are to apply to freedom to provide services.

Under Article 56(1) of the Treaty:

'The provisions of this Chapter and measures taken in pursuance thereof shall not prejudice the applicability of provisions laid down by law, regulation or administrative action providing for special treatment for foreign nationals on grounds of public policy, public security or public health.

On 18 December 1961, the Council adopted, on the basis of Articles 54(1) and 63(1) of the EC Treaty (now, after amendment, Article 44(1) EC and Article 52(1) EC), two General Programmes for the abolition of restrictions on freedom of establishment and on freedom to provide services (Journal Officiel 1962 No 2, pp. 36 and 32). In order to facilitate implementation of those programmes the Council adopted Directive 64/427 on 7 July 1964.

That directive provides essentially for a system of mutual recognition of occupational experience acquired in the Member State of origin and is applicable both to establishment and provision of services in another Member State.

Under Article 3 of Directive 64/427:

'Where, in a Member State, the taking up or pursuit of any activity referred to in Article 1(2) [activities of self-employed persons in manufacturing and processing industries falling within ISIC Major Groups 23-40 (Industry and small craft industries)] is dependent on the possession of general, commercial or professional knowledge and ability, that Member State shall accept as sufficient evidence of such knowledge and ability the fact that the activity in question has been pursued in another Member State for any of the following periods:

(a) six consecutive years either in an independent capacity or as a person responsible for managing an undertaking; or

(b) three consecutive years either in an independent capacity or as a person responsible for managing an undertaking, where the beneficiary can prove that for the occupation in question he has received at least three years' previous training, attested by a certificate recognised by the State, or regarded by the competent professional body as fully satisfying its requirements; or

(c) three consecutive years in an independent capacity, where the beneficiary can prove that he has pursued the occupation in question for at least five years in a non-independent capacity; or

(d) five consecutive years in a managerial capacity, not less than three years of which were in technical posts with responsibility for one or more departments of the undertaking, where the beneficiary can prove that for the occupation in question he has received at least three years' previous training, attested by a certificate recognised by the State or regarded by the competent professional body as fully satisfying its requirements.

In the cases referred to in subparagraphs (a) and (c) pursuit of the activity shall not have ceased more than 10 years before the date when the application provided for in Article 4(3) is made.

Article 4 of Directive 64/427 provides:

'For the purpose of applying Article 3:

1. Member States in which the taking up and pursuit of any occupation referred to in Article 1(2) is subject to the possession of general, commercial or professional knowledge or ability shall, with the assistance of the Commission, inform the other Member States of the main characteristics of that occupation (description of the activities covered by the occupation).

2. The competent authority designated for this purpose by the country whence the beneficiary comes shall certify what professional activities were actually pursued by the beneficiary and the duration of those activities. Certificates shall be drawn up having regard to the official description of the occupation in question supplied by the Member State in which the beneficiary wishes to pursue such occupation, whether permanently or temporarily.

3. The host Member State shall grant authorisation to pursue the activity in question on application by the person concerned, provided that the activity certified conforms to the main features of the description of the activity communicated pursuant to paragraph 1 and provided that any other requirements laid down by the rules of that State are satisfied.

It should also be noted that Directive 64/427, which was in force at the time material for the main proceedings, was repealed by Directive 1999/42/EC of the European Parliament and of the Council of 7 June 1999 establishing a mechanism for the recognition of qualifications in respect of the professional activities covered by the Directives on liberalisation and transitional measures and supplementing the general systems for the recognition of qualifications (OJ 1999 L 201, p. 77).

National law

In Germany, skilled trades are regulated by the Handwerksordnung (Skilled Trades Order, hereinafter 'the Order), the version in force at the time relevant to the main proceedings being that of 20 December 1993 (BGBl. 1993 I, p. 2256). Pursuant to the first sentence of Paragraph 1(1) thereof, only natural or legal persons or associations of persons who are entered on the Handwerksrolle (Skilled Trades Register, hereinafter 'the Register) are authorised to pursue a skilled trade activity in an independent capacity. Such registration corresponds to grant of authorisation to carry on the activity.

Paragraph 7 of the Order provides that: 'Any person who has passed the master's examination in the skilled trade to be carried on by him or in a related craft or trade shall be entered on the Skilled Trades Register ...

Paragraph 8 provides that: 'In exceptional cases authorisation to be entered on the Skilled Trades Register shall be granted if the applicant is able to show the knowledge and skill required to pursue the skilled trade to be carried on by him in an independent capacity.

Paragraph 9 authorises the Federal Minister for the Economy to determine the conditions under which nationals of the other Member States may obtain such exceptional authorisation to be entered on the Register apart from the cases provided for in Paragraph 8(1) of the Order. On the basis of that provision theFederal Minister for the Economy adopted on 4 August 1966 regulations governing the conditions for entering nationals of other Member States on the Skilled Trades Register (BGBl. 1966 I, p. 469, hereinafter 'the Regulations). The Regulations transposed into German law the provisions of Articles 3 and 4(2) and (3) of Directive 64/427.

Paragraph 1 of the Regulations, as amended on 20 December 1993 (BGBl. 1993 I, p. 2256), provides:

'Exceptional authorisation to be entered on the Skilled Trades Register in respect of a skilled trade listed in Annex A to the Handwerksordnung, apart from the skilled trades referred to in points 17, 89 to 91 and 93 to 95, except in the cases provided for in Paragraph 8(1) of the Handwerksordnung, shall be granted to a national of the Member States of the European Economic Community or of another State which is party to the Agreement on the European Economic Area, where

1. the applicant has pursued the activity in question in another Member State under the following conditions:

(a) either for at least six consecutive years in an independent capacity or as a person responsible for managing an undertaking;

(b) or for at least three consecutive years in an independent capacity or as a person responsible for managing an undertaking, having received training for the occupation in question of at least three years;

(c) or for at least three consecutive years in an independent capacity and for at least five years in a non-independent capacity:

(d) or for at least five consecutive years in a managerial capacity, not less than three years of which were in technical posts with responsibility for one or more departments of the undertaking, having received training for the occupation in question of at least three years, and where

2. The activity pursued corresponds to the official description of the occupation in question in respect of which derogation is applied for.

According to the order for reference, the procedure for obtaining authorisation to pursue skilled trade activities and for being entered on the Register is as follows: the competent authority in the Member State of origin must issue the tradesman with a certificate showing the length of time for which he has been carrying on his trade and his qualifications. He must then in person deliver the certificate, translated into German if appropriate, to the competent Chamber in Germany. The Chamber checks that the conditions set out in the Regulations have been fulfilledand forwards the certificate to the Regierungspräsident (President of the Land, the competent administrative authority) together with an application by the tradesman for exceptional authorisation. A fee of between DEM 300 and 500 is payable for authorisation. If the exceptional authorisation is granted by the Regierungspräsident, it is sent to the tradesman's home address. With the exceptional authorisation, he can then apply to the competent Chamber to be entered on the Skilled Trades Register, having also produced a recent extract from the Business Register and paid a second fee. A skilled tradesman's card is then sent to him at his business address. From that point on, the foreign tradesman is authorised to carry on skilled trade activities in Germany in an independent capacity.

The main proceedings and the question referred to the Court

As part of a construction project, Mr Corsten, a self-employed architect, contracted with an undertaking established in the Netherlands to lay composition floors in Germany. The undertaking entrusted with the work lawfully carried out such work in the Netherlands but was not entered on the Skilled Trades Register in Germany. The undertaking charged a price per square metre for laying composition floors that was considerably lower than the price that would have been charged by German skilled trade undertakings for the same work.

By decision of 2 January 1996, the competent German Workplace Inspectorate imposed an administrative penalty of DEM 2 000 on Mr Corsten for breach of the German legislation against black market work. Under that legislation, an administrative penalty may be imposed on anyone who entrusts to an undertaking not entered on the Register the execution of skilled trade work in an independent capacity. It is common ground that in Germany the laying of composition floors falls into that category.

Mr Corsten challenged that decision before the Amtsgricht Heinsberg.

The Amtsgericht Heinsberg was in doubt as to the compatibility of the German rules, in particular with regard to the requirement of entry on the Register, with Community law on freedom to provide services. Accordingly, it decided to stay proceedings and refer the following question to the Court of Justice for a preliminary ruling:

'[Is it] compatible with Community law on the freedom to provide services for a Netherlands undertaking, which in the Netherlands satisfies all the conditions for carrying on a commercial activity, to have to satisfy further - albeit purely formal - conditions in order to carry on that activity in Germany[?]

The question referred to the Court

It should be noted at the outset that the question raised by the national court does not directly concern Mr Corsten's situation, but concerns rather that of the Netherlands undertaking which he had commissioned to do skilled trade work in Germany. It is clear from the file that had that undertaking not been subject to the requirement to be entered on the Register in Germany, so that it was free to carry out the work as agreed without completing such a formality, Mr Corsten could not have been charged with infringing the legislation against black market work.

The question must therefore be understood as asking, essentially, whether Community law on freedom to provide services precludes legislation in a Member State which makes the performance on its territory of skilled trade activities by providers of services established in other Member States subject to the condition that those providers of services be entered on that Member State's trades register.

Kreis Heinsberg disputes the accuracy of the national court's description of the procedure for obtaining authorisation to carry on skilled trade activities and for being entered on the Register. According to Kreis Heinsberg, the tradesman must first apply for exceptional authorisation to be entered on the Register to the authority which issues such authorisation, in this case the local authority of the competent district. The latter would hear the competent Chamber of Skilled Trades before taking its decision. Once exceptional authorisation was granted, the tradesman would take it to the Chamber of Skilled Trades concerned, which would then proceed to enter him on the Register.

According to Kreis Heinsberg, the entire procedure usually takes from four to six weeks - a perfectly reasonable period of time. It also maintains that, contrary to the findings of the national court, the tradesman is not required to present a recent extract from the Business Register or to pay a second fee when being entered on the Skilled Trades Register.

The Court would point out, first of all, that it has no jurisdiction to decide whether the interpretation given by the national court of provisions of national law is correct or to give a ruling on the conformity of those provisions with Community law. It is the task of the Court solely to interpret provisions of Community law in order to give the national court all the guidance on matters of Community law that it needs in order to decide the case before it.

In that regard what is important, and indeed is undisputed, is that the procedure for obtaining authorisation to carry on craft and trade activities and for being entered on the Register involves several stages. An undertaking applying to be entered on the Register must apply not only to the competent Chamber of Skilled Trades but also to the competent administrative authority. Thus the 'exceptional authorisation issued by the administrative authority to the undertaking does not entitle the latter to carry on a particular craft or trade activity but constitutesmerely authorisation to be entered, exceptionally, on the Register of the competent Chamber.

Persons applying to be entered on the Register must normally have passed the examination provided for under national law (Meisterprüfung). Only as an exception does German law permit that requirement to be waived in order to allow other categories of persons to be entered, including nationals of other Member States, for the purpose of complying with Community law.

Examination as to whether the conditions referred to in the Regulations are satisfied takes place before the exceptional authorisation to be entered on the Register is granted.

The German Government maintains that the requirement of entry on the Register under the Order, with consequent compulsory membership of the Chamber of Skilled Trades for the undertakings concerned, is not contrary to secondary Community law. It submits that Directive 64/427 concerned only the recognition of activities as part of examination of the substantive conditions relating to the exercise, for the first time, of an activity in another Member State, but did not regulate the procedure for being entered on the trades register.

The Commission, having first summarised the conditions under which the competent authorities of the host State are to issue authorisation to pursue the activity in question, in accordance with Article 4 of Directive 64/427, points out that it contains no other provision as regards the procedure following grant of authorisation. It adds that Article 4(3) even confers expressly on the host State the option of imposing additional requirements for the grant of authorisation. However, the Commission notes that that State does not have complete freedom in this matter, but is required to lay down the procedure for the grant of authorisation in such a way as to ensure that Directive 64/427 is not deprived of its effectiveness.

On that point, it must be borne in mind that Directive 64/427 was intended to make it easier to attain freedom of establishment and freedom to provide services in a broad range of industrial and small trade activities in the manufacturing and processing industries, pending harmonisation of conditions for taking up those activities in the different Member States, which is an essential prerequisite for complete liberalisation in that field (Joined Cases C-193/97 and C-194/97 De Castro Freitas and Escallier [1998] ECR I-6747, paragraph 19).

Although in the absence of such harmonisation with regard to the activities at issue in the main proceedings the Member States retain, in principle, the power to define the conditions governing access to such activities, they must none the less, when exercising their powers in this area, respect both the basic freedoms guaranteed by Article 52 of the EC Treaty (now, after amendment, Article 43 EC) and Article 59 of the Treaty and the effectiveness of a directive laying down transitional measures(De Castro Freitas and Escallier, cited above, paragraph 23). That applies not only to the substantive conditions governing access to those activities, but also to the requirements of a procedural nature provided for by national law.

Given the nature of the activities at issue in the main proceedings, it is therefore necessary to consider whether the requirement of entry on the Register and the administrative procedure relating to it are compatible with the principle of freedom to provide services and do not compromise the effectiveness of Directive 64/427, and of Article 4 thereof in particular.

It is settled case-law that Article 59 of the Treaty requires not only the elimination of all discrimination on grounds of nationality against providers of services who are established in another Member State but also the abolition of any restriction, even if it applies to national providers of services and to those of other Member States alike, which is liable to prohibit, impede or render less advantageous the activities of a provider of services established in another Member State where he lawfully provides similar services (see Case C-76/90 Säger v Dennemeyer [1991] ECR I-4221, paragraph 12; Case C-43/93 Vander Elst v Office des Migrations Internationales [1994] ECR I-3803, paragraph 14; Case C-272/94 Guiot [1996] ECR I-1905, paragraph 10; Case C-3/95 Reisebüro Broede v Sandker [1996] ECR I-6511, paragraph 25; Case C-222/95 Parodi v Banque H. Albert de Bary [1997] ECR I-3899, paragraph 18; and Joined Cases C-369/96 and C-376/96 Arblade and Others [1999] ECR I-8453, paragraph 33).

In that respect, the requirement imposed on an undertaking established in one Member State which wishes, as a provider of a service, to carry on a skilled trade activity in another Member State to be entered on the latter's trades register constitutes a restriction within the meaning of Article 59 of the Treaty.

It is also settled case-law that, even if there is no harmonisation in the field, such a restriction on the fundamental principle of freedom to provide services can be based only on rules justified by overriding requirements relating to the public interest and applicable to all persons and undertakings operating in the territory of the State where the service is provided, in so far as that interest is not safeguarded by the rules to which the provider of such a service is subject in the Member State where he is established (see, in particular, Case 279/80 Webb [1981] ECR 3305, paragraph 17; Case C-180/89 Commission v Italy [1991] ECR I-709, paragraph 17; Case C-198/89 Commission v Greece [1991] ECR I-727, paragraph 18; Säger, cited above, paragraph 15; Vander Elst, cited above, paragraph 16; Guiot, cited above, paragraph 11; and Arblade, cited above, paragraph 34).

The German Government states that the entire qualification system for skilled tradesmen, which is based on the requirement of a 'Meisterprüfung certificate and compulsory membership of the Chamber of Skilled Trades, is aimed at maintaining the level of service and occupational skills in the skilled trades sector. Such interests constitute overriding requirements relating to the public interest and would not besafeguarded by the provisions of the Member State in which the provider of a service is established.

Kreis Heinsberg claims that the Register fulfils the purpose of a public register containing information on skilled tradesmen working in an independent capacity within the area of the Chamber of Skilled Trades concerned. Thus the Register is intended to enable the authorities and the public to know which undertakings have obtained authorisation to carry on skilled trade activities in an independent capacity within the area of the Chamber of Skilled Trades concerned and accordingly to entrust skilled trade services to providers who are able to supply services of quality.

It must be acknowledged, as the Commission pointed out, that the objective of guaranteeing the quality of skilled trade work and of protecting those who have commissioned such work is an overriding requirement relating to the public interest capable of justifying a restriction on freedom to provide services.

However, in accordance with the principle of proportionality, the application of national rules to providers of services established in other Member States must be appropriate for securing attainment of the objective which they pursue and must not go beyond what is necessary in order to attain it (see, in particular, Säger, cited above, paragraph 15, and Arblade, cited above, paragraph 35).

Rules such as the national rules at issue in the main proceedings, even though they apply regardless of the nationality of the providers of services and appear apt to ensure attainment of objectives which all seek to maintain the quality of the services provided, go beyond what is necessary to attain such objectives.

The examination prior to the grant of exceptional authorisation to be entered on the Register can be one of form alone, since it must be confined to ascertaining whether the conditions laid down in Article 3 of Directive 64/427 are met. It follows from Article 4 thereof that, when conducting that examination, the authorities of the host Member State are in principle bound by the findings concerning the activities which have been pursued by the provider of services concerned and their duration, as contained in the certificate issued by the State from which the provider comes. At the stage when he is entered on the Register no additional examination is carried out.

The reasons for the requirement of entry on the Register being purely of an administrative nature, such considerations cannot justify derogation by a Member State from the rules of Community law, especially where the derogation in question amounts to preventing or restricting the exercise of one of the fundamental freedoms of Community law (see, in particular, Case C-18/95 Terhoeve v Inspecteur van de Belastingdienst Particulieren/Ondernemingen Buitenland [1999] ECR I-345, paragraph 45, and Arblade, cited above, paragraph 37).

As the Austrian Government rightly noted, a Member State may not make the provision of services in its territory subject to compliance with all the conditions required for establishment and thereby deprive of all practical effectiveness the provisions of the Treaty whose object is, precisely, to guarantee the freedom to provide services (see Säger, cited above, paragraph 13).

In the main proceedings, the national law of the host Member State makes no distinction, as regards undertakings of other Member States wishing to provide skilled trade services in the host State, between those who are established only in the Member State from which they come and those who are also established, within the meaning of Article 52 of the Treaty, in the host Member State. Those two categories of undertaking are subject in the same way to the requirement of entry on the Register before they can carry out skilled trade work in the host Member State.

Even if the requirement of entry on that Register, entailing compulsory membership of the Chamber of Skilled Trades for the undertakings concerned and therefore payment of the related subscription, could be justified in the case of establishment in the host Member State, which is not the situation in the main proceedings, the same is not true for undertakings which intend to provide services in the host Member State only on an occasional basis, indeed perhaps only once.

The latter are liable to be dissuaded from going ahead with their plans if, because of the compulsory requirement that they be entered on the Register, the authorisation procedure is made lengthier and more expensive, so that the profit anticipated, at least for small contracts, is no longer economically worthwhile. For those undertakings, therefore, the freedom to provide services, a fundamental principle of the Treaty, and likewise Directive 64/427 are liable to become ineffective.

In consequence, the authorisation procedure instituted by the host Member State should neither delay nor complicate exercise of the right of persons established in another Member State to provide their services on the territory of the first State where examination of the conditions governing access to the activities concerned has been carried out and it has been established that those conditions are satisfied.

Moreover, any requirement of entry on the trades register of the host Member State, assuming it was justified, should neither give rise to additional administrative expense nor entail compulsory payment of subscriptions to the chamber of trades.

In view of all the foregoing considerations, the reply to the question referred to the Court must be that Article 59 of the Treaty and Article 4 of Directive 64/427 preclude rules of a Member State which make the carrying out on its territory of skilled trade work by providers of services established in other Member States subject to an authorisation procedure which is likely to delay or complicate exercise of the right to freedom to provide services, where examination of the conditionsgoverning access to the activities concerned has been carried out and it has been established that those conditions are satisfied. Furthermore, any requirement of entry on the trades register of the host Member State, assuming it was justified, should neither give rise to additional administrative expense nor entail compulsory payment of subscriptions to the chamber of trades.

Costs

On those grounds,

THE COURT,

in answer to the question referred to it by the Amtsgericht Heinsberg by order of 13 February 1998, supplemented on 22 June 1998, hereby rules:

Article 59 of the EC Treaty (now, after amendment, Article 49 EC) and Article 4 of Council Directive 64/427/EEC of 7 July 1964 laying down detailed provisions concerning transitional measures in respect of activities of self-employed persons in manufacturing and processing industries falling within ISIC Major Groups 23-40 (Industry and small craft industries) preclude rules of a Member State which make the carrying out on its territory of skilled trade work by providers of services established in other Member States subject to an authorisation procedure which is likely to delay or complicate exercise of the right to freedom to provide services, where examination of the conditions governing access to the activities concerned has been carried out and it has been established that those conditions are satisfied. Furthermore, any requirement of entry on the trades register of the host Member State, assuming it was justified, should neither give rise to additional administrative expense nor entail compulsory payment of subscriptions to the chamber of trades.

Rodríguez IglesiasMoitinho de Almeida Edward

Sevón
Schintgen Kapteyn

Gulmann
Ragnemalm Wathelet

Delivered in open court in Luxembourg on 3 October 2000.

R. Grass G.C. Rodríguez Iglesias

Registrar President

1: Language of the case: German.