Even though various commercial Smart City solutions are widely available on the market, we are still witnessing their rather limited adoption, where solutions are typically bound to specific verticals or remain in pilot stages. In this paper we argue that the lack of a Smart City regulatory framework is one of the major obstacles for a wider adoption of Smart City services in practice. Such framework should be accompanied by examples of good practice which stress the necessity of adopting interoperable Smart City services. Development and deployment of Smart City services can incur significant costs to cities, service providers and sensor manufacturers, and thus it is vital to adjust national legislation to ensure legal certainty to all stakeholders, and at the same time to protect interests of the citizens and the state. Additionally, due to a vast number of heterogeneous devices and Smart City services, both existing and future, their interoperability becomes vital for service replicability and massive deployment leading to digital transformation of future cities. The paper provides a classification of technical and regulatory characteristics of IoT services for Smart Cities which are mapped to corresponding roles in the IoT value chain. Four example use cases are chosen—Smart Parking, Smart Metering, Smart Street Lighting and Mobile Crowd Sensing—to showcase the legal implications relevant to each service. Based on the analysis, we propose a set of recommendations for each role in the value chain related to regulatory requirements of the aforementioned Smart City services. The analysis and recommendations serve as examples of good practice in hope that they will facilitate a wider adoption and longevity of IoT-based Smart City services.