The directive is one of the most complex and controversial pieces of European legislation to be drafted in the past decade. It will allow small Czech companies, from construction to law, to easily offer their services abroad without having to base or register their businesses in each new country.

The directive as it has passed is substantially different from earlier incarnations — the result of compromises made early this year after protests against the directive erupted in several member states, including France and Germany. As a result, more sectors in the service industry have been excluded from liberalization and a contentious provision has been dropped.

Despite these changes, the directive is expected to spur the Czech Republic's gross domestic product (GDP) as much as 1.59 percent over the next five years and bring in as much as 40.6 billion Kč ($1.9 billion). This growth is between 26 percent and 38 percent lower than projected in earlier drafts of the directive, according to a recent study conducted for the Industry and Trade Ministry.

Czech companies in law, accounting and construction ready to export their services are expected to make the largest financial gains from the directive, Tlapa said.

Member states have up to three years to enact the directive into local law.

Businesses near the German and Austrian borders may particularly benefit from the directive as they offer services to more affluent neighbors.

"What will happen on the ground [in the border regions] will depend on the level of innovation and entrepreneurship," said Oliver Drewes, a spokesman for Charlie McCreevy, the European commissioner who oversaw the directive's development.

"In the end, it's not the European Commission that will be creating more businesses," he said. "This directive should take away legal obstacles. If a business is a bit cheaper, a bit faster or a bit better," the consumer will now be free to choose its services.

Some 18,700 new jobs will be created for Czechs as a result of the directive, primarily in the retail trade, wholesale trade and construction industries, which together will account for 60 percent of these new jobs.

Wages are expected to grow, led by education (5 percent), sewage and refuse disposal (4 percent) and legal and accounting services (3 to 4 percent).

Czech exports are expected to increase 12.5 billion Kč, while imports to the country are expected to decline, the ministry's report states, "a result of Czech businesses squeezing out foreign companies." Domestic market share is expected to increase a few percent, with education the largest gainer at 3.9 percent.

The report, prepared by KPMG, acknowledges that "the elimination of obstacles to the free movement of services ... also brings a certain level of risk," in the form of foreign competition.

Several service sectors will be susceptible to foreign competition, particularly the hotel industry, Tlapa said. The report also mentions a slight negative impact on equipment rentals, computer services and recreational activities.

However, these challenges "should not have any substantial impact on the economy," Tlapa said.

In fact, foreign competition should be a net gain for the country as it drives down the price of services for consumers. KPMG expects this fall in prices to boost consumer demand 0.9 percent of GDP, with much of the additional cash going to the construction sector.

Many service sectors — such as finance, telecommunications and transportation — are not included in the liberalization, and after this year's protests, more services were added to the list, including healthcare and temp services. All would have provided an even greater boost to the economy.

"The general understanding is that these services need special attention" and must be regulated more closely, Drewes said.

Also removed from the directive was the controversial country-of-origin principle, which would have allowed companies to operate under the laws of their home countries rather than the regulations of their host states. Western nations feared this would allow workers from the new EU states to undercut their service industries with low wages and less rigorous employment standards.

Tlapa regrets the removal of the country-of-origin principle and the "legal certainty" it would have brought. But he sees the directive itself as a great positive, for both the EU and the Czech Republic's position in it.

Passing the directive, he said, is "proof that the Czech negotiators involved conducted themselves very well on the Brussels battlefield."