HAVET & VANHUFFEL – Association d’avocats
1. Subject matter of the case
The Court of Justice of the European Union (CJEU) was asked to interpret Directive 2006/123/EC of 12 December 2006 on services in the internal market in the context of the regulations governing tourist accommodation in the Brussels-Capital Region. The case primarily concerns the compatibility with that Directive of a prior authorisation scheme requiring, in particular, a certificate of urban planning compliance and, in certain circumstances, a planning permit to operate residential property for tourist accommodation purposes.
2. Facts and procedural background
Smartflats, a company operating in the short-term rental market in Brussels, submitted a prior declaration on 10 September 2020 to operate tourist accommodation. Its application was declared inadmissible in November 2021 because the file was incomplete, and no registration number had been issued.
Smartflats encountered difficulties in obtaining the fire safety certificate, partly because the authorities considered that a certificate of urban planning compliance was also required. Despite several attempts, the company was unable to obtain the necessary documents. In November 2022, the authorities therefore ordered it to cease operating the accommodation immediately. Smartflats nevertheless continued its activities.
In July 2023, Smartflats brought proceedings before the French-speaking Brussels Court of First Instance, seeking to have the cessation order lifted. Its application was dismissed in November 2023, and the Brussels-Capital Region obtained an order making the prohibition subject to a penalty payment. Smartflats then appealed to the Brussels Court of Appeal, arguing, in particular, that the requirements relating to fire safety and urban planning compliance were contrary to Directive 2006/123 on services.
The Court of Appeal considered that the authorisation scheme pursued legitimate objectives, including the protection of tourists and the urban environment. However, it questioned whether the scheme was proportionate and whether the applicable rules were sufficiently clear. In particular, the distinction between residential accommodation and a hotel establishment could give rise to uncertainty, especially where municipal authorities had discretion to determine whether a planning permit was required.
The Court of Appeal asked the CJEU to clarify whether Directive 2006/123 applies to urban planning rules when they affect access to tourist accommodation activities, and whether the Brussels prior declaration and registration scheme is proportionate. It also sought clarification as to whether the requirement for a certificate of urban planning compliance satisfies the principles of clarity, objectivity and legal certainty, as well as the procedural safeguards required by EU law. Finally, it asked whether, if that requirement were unlawful, only that condition should be disapplied or whether the entire authorisation scheme should be set aside.
3. The Court’s reasoning
The first question concerns whether Directive 2006/123 applies to national legislation on spatial planning and urban development, which determines, among other things, the permitted use of buildings. In principle, general urban planning rules that apply to both professionals and private individuals fall outside the scope of the Directive where they do not specifically regulate access to a service activity or the exercise of such an activity. However, the Court points out that this exclusion does not apply where urban planning rules form part of an authorisation scheme specifically governing tourist accommodation activities.
In the Brussels-Capital Region, operating tourist accommodation requires a prior declaration and registration with the competent regional authorities. Registration requires, among other things, the submission of a certificate of urban planning compliance. Where premises originally intended for residential use are operated as a hotel establishment, a planning permit may also be required to change their designated use. The Court therefore considers that these urban planning requirements fall within the scope of the Services Directive when they determine access to tourist accommodation activities.
The third question concerns the compatibility of the prior authorisation scheme with Articles 9 and 10 of Directive 2006/123. Under Article 9, such a scheme must be non-discriminatory, justified by an overriding reason relating to the public interest and proportionate to the objective pursued. The Court acknowledges that protecting tourists and the urban environment, including housing, may constitute overriding reasons in the public interest capable of justifying a prior authorisation scheme.
However, the existence of legitimate objectives does not automatically make the scheme compliant with EU law. Under the principle of proportionality, the scheme must be suitable for achieving those objectives and must not go beyond what is necessary. It must therefore be assessed whether less restrictive measures, such as a declaration system accompanied by ex post checks, could provide an equivalent level of protection. This assessment is for the national court, to which the Court provides guidance for examining the specific circumstances.
As regards tourist safety, the Belgian authorities rely, in particular, on the need for prior checks concerning fire safety, the criminal records of operators, insurance coverage and compliance with minimum standards of habitability and sanitation. The Court nevertheless clarifies that, where other regulations already ensure compliance with safety, habitability and sanitation standards, their existence must be taken into account when assessing whether a prior authorisation scheme is necessary. Similarly, the existence of declaration systems and ex post checks in the Flemish and Walloon Regions indicates that a comparable level of protection may be achievable through less restrictive means.
The Court accepts that a prior authorisation scheme may help prevent residential properties from being converted into tourist accommodation and curb increases in rents. However, the necessity of such a scheme must be supported by objective evidence, such as studies demonstrating a significant impact of tourist accommodation on housing supply or rental levels. The scheme’s geographical scope must also be examined: applying it uniformly throughout the Brussels-Capital Region could be disproportionate if rental market pressures affect only certain municipalities or neighbourhoods. Finally, the Court considers that the objective of protecting housing does not justify imposing this requirement on properties constituting the operator’s principal residence where their temporary or partial use for tourist accommodation does not affect the long-term rental market.
Article 10(1) and (2) of the Services Directive requires authorisation criteria to be, among other things, clear, objective, unambiguous, transparent and accessible. The Court explains that national rules and ministerial circulars may guide the assessment carried out by municipal authorities, even if those circulars are not legally binding. However, the national court must determine whether these instruments enable operators to predict the circumstances in which tourist accommodation activities will result in a change in the designated use of a property. If municipalities have discretionary powers allowing them to decide on the basis of considerations of expediency alone, without sufficiently precise criteria, the scheme does not satisfy the requirements of the Directive.
The Court recalls that applications for certificates of urban planning compliance must be processed within a reasonable time limit that is fixed and made public in advance. Any refusal must state the reasons for the decision and be open to appeal before a court or another competent body. These safeguards apply to the procedure for issuing the certificate itself, not merely to the procedure for obtaining authorisation to operate tourist accommodation. Furthermore, if the general authorisation scheme complies with the Directive but the requirement for an urban planning certificate does not, the national court must determine whether that requirement can be severed from the remainder of the scheme. If it can, only that condition must be disapplied; otherwise, the entire scheme must be disapplied.
The CJEU concludes that Directive 2006/123 applies to urban planning rules that form part of the prior authorisation scheme for tourist accommodation. It accepts that such a scheme may be justified by the protection of tourists and housing, provided that it is necessary and proportionate. Authorisation criteria must be transparent, accessible, clear and objective, and procedures must provide effective safeguards concerning time limits, the obligation to state reasons and the right to appeal. Finally, where a specific requirement of the scheme is incompatible with the Directive, it must be disapplied if it can be severed from the remainder of the scheme. The judgment thus establishes a balance between the powers of national authorities in matters of urban planning and housing policy and the need to respect the freedom to provide services within the internal market.
For these reasons, the Court (Second Chamber) rules as follows:
1) Article 2 of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market, read in conjunction with recital 9 thereof,
must be interpreted as meaning that:
that Directive applies to national legislation on spatial planning and urban development which determines, in particular, the designated use of buildings and formally applies both to providers of services and to persons acting in a private capacity, where, in conjunction with the provisions of other national legislation establishing a prior authorisation scheme governing access to tourist accommodation activities, it forms one of the components of that scheme.
2) Article 9(1)(b) and (c) of Directive 2006/123
must be interpreted as meaning that:
it does not preclude national legislation which, on grounds relating to the protection of tourists and the urban environment, including housing, subjects tourist accommodation activities to a prior authorisation scheme, provided that, taking into account, in particular, its geographical scope and its impact on the residential needs of the urban areas in which it applies, that scheme is necessary to achieve those objectives and those objectives cannot be achieved by a less restrictive measure, particularly because an ex post check would take place too late to be genuinely effective.
3) Article 10(1) and (2)(d) to (g) of Directive 2006/123
must be interpreted as meaning that:
it does not preclude national legislation which subjects tourist accommodation activities to a prior authorisation scheme requiring, in particular, the submission of a certificate of urban planning compliance relating to the property concerned, the issue of which is conditional, under national spatial planning and urban development legislation, upon the grant of a planning permit where the use of that property for tourist accommodation involves a change in its designated use from ‘residential accommodation’ to ‘hotel establishment’, and where the use of such residential accommodation for tourist accommodation may be classified as a ‘hotel establishment’, provided that the conditions for issuing that certificate and, where applicable, a planning permit comply with the requirements laid down in that provision and that those obligations can be fulfilled under transparent and accessible conditions. The fact that the municipal authority has discretion in classifying the property concerned is not incompatible with Article 10(1) and (2) of Directive 2006/123, provided that such discretion is sufficiently circumscribed by those requirements and subject to safeguards capable of preventing its arbitrary exercise.
4) Article 10(6) and Article 13(3) of Directive 2006/123
must be interpreted as meaning that:
national legislation which subjects tourist accommodation activities to a prior authorisation scheme requiring the submission of a certificate issued by the competent municipal authorities confirming that the accommodation complies with the applicable spatial planning and urban development rules must provide, for the processing of an application for such a certificate, a reasonable time limit that is fixed and made public in advance, an obligation on those authorities to state reasons for any decision refusing to issue the certificate, and the possibility of appealing against such a decision.
5) Article 9(1) and Article 10(2) of Directive 2006/123
must be interpreted as meaning that:
where a prior authorisation scheme governing access to tourist accommodation activities complies with the obligations laid down in Article 9(1), but the requirement to submit a certificate of urban planning compliance forming part of that scheme does not comply with the obligations laid down in Article 10(2), those provisions require that only that condition be rendered inapplicable, provided that it can be severed from the remainder of the prior authorisation scheme.
To access the judgment, follow the link: https://infocuria.curia.europa.eu/tabs/document/C/2024/C-0813-24-00000000RP-01-P-01/ARRET/328428-EN-1-html.