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Network News • 04-06-2021

EU freedom principles and proportionality clause

Author: George Mangion - Senior Partner, PKF Malta
Published on The Malta Business Weekly - 24 June 2021

Indeed, the principle of proportionality is one of the general principles of Union law. Established case law from the European Court of Justice (ECJ) says that for measures, which are liable to hinder or to make less attractive, the exercise of fundamental freedoms to be permissible, these should fulfil four conditions:

  • be applied in a non-discriminatory manner;
  • be justified by public interest objectives;
  • be suitable for securing the attainment of the objective which they pursue; and
  • not go beyond what is necessary in order to attain that objective.

Consequently, before introducing new or amending existing laws, regulations or administrative provisions, which restrict access to, or the pursuit of, regulated professions, EU member states should carry out a proportionality assessment to assess the impact of the relevant provisions.

Case law confirms that any unjustified restriction resulting from national law, which restricts the freedom of establishment (for example, a branch or subsidiary company) or the freedom to provide services is prohibited. This prohibition extends to discrimination on grounds of nationality or residence. The requirement of proportionality dictates that the measure in question should be suitable to secure the attainment of the objective pursued, that is, it should genuinely reflect a concern to attain that objective in a consistent and systematic manner. Furthermore, the national measure should effectively contribute to achieving the objective pursued.

The Maltese context

In a Maltese context the Mutual Recognition of Qualifications Act, (Cap 451) prescribes rules for the recognition of qualifications in Malta. This Act applies to the professions and professional activities listed in the Schedule, which include qualifications necessary for entry to professions such as that of a teacher, an accountant or auditor, engineer and advocate.

No existing legislative, regulatory or administrative provisions restricting access to, or the pursuit of, a regulated profession may be amended before the competent Ministry undertakes a proportionality assessment, which is substantiated by qualitative and quantitative elements. Such an assessment shall be carried out in an objective and independent manner.

Article 4 provides that new or existing legal, regulatory or administrative provisions, which restrict access to or the pursuit of a regulated profession, shall not directly or indirectly discriminate on the basis of nationality or residence. An exception to this under EU law is that provisions are allowed to cater for genuine occupational requirements, for example, a requirement to speak Maltese in view of interaction with Maltese-speaking persons.

Article 5 provides that any restrictions have to be justifiable by grounds of:

  • public interest,
  • on the basis of public policy,
  • public security,
  • public health, or
  • by overriding reasons in the public interest.

Grounds of a purely economic nature or purely administrative reasons are not acceptable as overriding reasons in the public interest, to justify a restrictive measure.

Furthermore, any measures introduced or regulation amended should not go beyond what is necessary to attain its objective.

Before new provisions are introduced or existing ones are amended, the following shall be taken into consideration:

  • the nature of the risks to service recipients, including consumers, professionals or third parties;
  • whether existing rules, for example, laws on product safety or consumer protection are insufficient to attain the objective in question;
  • the impact on the free movement of persons and services in the EU on consumer choice and on the quality of the service;
  • the possibility of using less restrictive means to achieve the public interest objective;
  • the effect of new or amended provisions, when combined with other provisions restricting access to, or the pursuit of, the profession;
  • the connection between the scope of activities covered by a profession or reserved to it and the professional qualification required;
  • the connection between the complexity of the tasks concerned and the need for those carrying them out to possess specific professional qualifications, in particular as regards the level, the nature and the duration of the training or experience required;
  • the possibility of obtaining the professional qualification by alternative routes;
  • whether, and why, the activities reserved to certain professions can or cannot be shared with other professions;
  • the degree of autonomy in exercising a regulated profession and the impact of organisational and supervision arrangements on the attainment of the objective pursued, and
  • the scientific and technological developments which may effectively reduce or increase the asymmetry of information between professionals.

PKF Malta is a fast-growing, progressive firm specialising in audit and assurance, tax, advisory services and internal audit insurance. We provide services to a wide array of clients in a variety of sectors. PKF Malta has always enjoyed an excellent reputation, stemming from its dedication, professionalism and enthusiasm to serve its clients. Our firm provides a dedicated team of experts holding ample experience to deliver high-quality solutions bespoke to our clients’ goals.

Author: George Mangion - Senior Partner, PKF Malta
Published on The Malta Business Weekly - 24 June 2021
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