This article investigates the usefulness of the impact assessment (IA) method as a tool for the correct transposition of the Services Directive (SD), in particular for the necessity and proportionality tests as required by the SD. After describing the content, context and policy aims of the SD, the characteristics of the necessity and proportionality principles are further explored in general as well as in their specific application to the SD. Next, the article analyses the use of the IA method in improving the regulatory quality. Having done so, the link between SD and IA is re-established by showing how the IA method can help to prove both necessity and proportionality of national regulation. Finally, some policy recommendations are made on the future use of the IA method in transposing and/or implementing the SD.Brussels: European Network for Better Regulation.