Sex Shop Licensing

November 21st, 2016 by James Goudie KC

In Case C-316/15, R (Hemming) v Westminster City Council the CJEU has ruled that licensing authorities are precluded by the Services Directive from requiring applicants for the grant or renewal  of a sex establishment licence to pay a fee that includes in part the cost of managing and enforcing the relevant authorisation scheme, even if that part is refundable if the application is refused.  The CJEU said:-

“29      In order to comply with Article 13(2) of the Services Directive, the charges referred to must, in the words of that provision, be reasonable and proportionate to the cost of the authorisation procedures and not exceed the cost of those procedures.

30     Since the amount of such charges may, in the light of those requirements, in no case exceed the cost of the authorisation procedure in question, it must be examined whether the costs relating to the management and enforcement of the authorisation scheme as a whole may be covered by the concept of the ‘cost of the procedures’.

31     While the Court has not yet had occasion to interpret that concept in the context of the Services Directive, it has clarified, in another context, that in calculating the amount of duties paid by way of fees or dues, the Member States are entitled to take account, not only of the material and salary costs which are directly related to the effecting of the transactions in respect of which they are incurred, but also of the proportion of the overheads of the competent authority which can be attributed to those transactions (judgment of 2 December 1997, Fantask and Others, C‑188/95, EU:C:1997:580, paragraph 30).

32      In addition, the Court has clarified – indeed, in relation to a provision of EU law expressly allowing the costs relating to the implementation, management and monitoring of a regime for issuing individual licences to be taken into account in calculating administrative costs – that the costs taken into account may not include the expenditure linked to the authority in question’s general supervisory activities (see, to that effect, judgment of 19 September 2006, i-21 Germany and Arcor, C‑392/04 and C‑422/04, EU:C:2006:586, paragraphs 34 and 35).

33      That consideration applies a fortiori as regards Article 13(2) of the Services Directive which, first, is directed only at the ‘cost of the procedures’ and, secondly, pursues the aim of facilitating access to service activities. That aim would not be served by a requirement to prefinance the costs of the management and enforcement of the authorisation scheme concerned, including, inter alia, the costs of detecting and prosecuting unauthorised activities.”


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