# C_2013334EN.01000101.xml

| 15.11.2013 | EN | Official Journal of the European Union | C 334/1 |
| --- | --- | --- | --- |

15.11.2013

EN

Official Journal of the European Union

C 334/1

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS

CONSOLIDATED ANNUAL ACCOUNTS OF THE EUROPEAN UNION — FINANCIAL YEAR 2012

CONSOLIDATED ANNUAL ACCOUNTS OF THE EUROPEAN UNION — FINANCIAL YEAR

2013/C 334/01

CONTENTS

CONTENTS

Note accompanying the consolidated accounts

Note accompanying the consolidated accounts

EU budget: From preparation to discharge

EU budget: From preparation to discharge

| PART I: | Consolidated financial statements and explanatory notes |
| --- | --- |

PART I:

PART I:

Consolidated financial statements and explanatory notes

Balance Sheet

Statement of Financial Performance

Cashflow Statement

Statement of Changes in Net Assets

Notes to the Financial Statements

| PART II: | Aggregated reports on the implementation of the budget and explanatory notes |
| --- | --- |

PART II:

PART II:

Aggregated reports on the implementation of the budget and explanatory notes

Result of the implementation of the EU budget and explanatory notes

Aggregated reports on the implementation of the budget

NOTE ACCOMPANYING THE CONSOLIDATED ACCOUNTS

The consolidated annual accounts of the European Union for the year 2012 have been prepared on the basis of the information presented by the institutions and bodies under Article 148.2 of the Financial Regulation applicable to the general budget of the European Union. I hereby declare that they were prepared in accordance with Title IX of this Financial Regulation and with the accounting principles, rules and methods set out in the notes to the financial statements.

I have obtained from the accounting officers of these institutions and bodies, who certified its reliability, all the information necessary for the production of the accounts that show the European Union's assets and liabilities and the budgetary implementation.

I hereby certify that based on this information, and on such checks as I deemed necessary to sign off the accounts of the European Commission, I have a reasonable assurance that the accounts present fairly, in all material aspects, the financial position, the results of the operations and the cashflow of the European Union.

[signed]

Manfred KRAFF

Accounting Officer of the Commission

24 July 2013

EU BUDGET: FROM PREPARATION TO DISCHARGE

EU BUDGET: FROM PREPARATION TO DISCHARGE

The consolidated annual accounts of the European Union (EU) provide information on the activities of the institutions, agencies and other bodies of the EU from a budgetary and accrual accounting perspective. These accounts do not comprise the annual accounts of Member States.

1.   ANNUAL BUDGET

ANNUAL BUDGET

The EU Budget finances a wide range of policies and programmes throughout the EU. In accordance with the priorities set by the Member States in the multi-annual financial framework (MFF), the Commission carries out specific programmes, activities and projects in the field. These could range from supporting education projects for the mobility of students and teachers, to support for farmers, to productive investments creating or maintaining jobs, to development aid, to projects aimed at supporting better work environment for workers in the EU, to enhance the control of the external borders.

Over 90 % of the EU budget goes to funding such EU policies and activities, which have been agreed by all the Member States. The direct link between the annual budget and the EU policies is ensured through activity-based budgeting (ABB). The activity-based budget nomenclature allows for clear identification of the policy areas of the EU and the total amount of resources allocated to each of these areas.

The policy areas are subdivided into some 200 activities of which over 110 include operating budget headings and are thus reflected in the budget nomenclature as budget chapters. These policy areas are predominantly operational, since their core activities are aimed at benefiting a third-party, each within their respective domains of activity. Other policy areas, however, are horizontal and assure the proper functioning of the Commission, such as ‘Coordination and legal advice’‚ and ‘Budget’. The activity structure provides the common conceptual framework for priority setting, planning, budgeting, monitoring and reporting, with the principal aim of enhancing the economic, efficient and effective use of resources.

The budget is prepared by the Commission and agreed normally in mid-December by the Parliament and the Council in accordance with the procedure of Article 314 of the Treaty on the Functioning of the EU.

2.   HOW IS THE EU FUNDED?

HOW IS THE EU FUNDED?

The EU has two main categories of funding: Own resources revenues and sundry revenues.

2.1   Own resource revenues

Own resource revenues

Own resource revenue accrues automatically to the EU to enable it to finance its budget without the need for a subsequent decision by national authorities. The overall amount of own resources needed to finance the budget is determined by total expenditure less other revenue. The total amount of own resources cannot exceed 1,23 % of the gross national income (GNI) of the EU. Own resources can be divided into traditional own resources, the own resource based on value added tax (VAT) and the resource based on gross national income (GNI).

2.2   Sundry revenues

Sundry revenues

Sundry revenues arising from the activities of the EU normally represent less than 10 % of total revenue. These are, for instance, competition fines and recovery orders to private and public debtors with regard to the management of EU projects. Penalty payments imposed by the Court of Justice on Member States that fail to comply with a given judgment also fall into this category. Any debt not paid at the due date is subject to default interest. Where debts of third parties other than Member States remain unpaid, Commission (and Council) can adopt decisions imposing the obligation to pay which are directly enforceable in accordance with the rules of civil procedure in force in the territory where enforcement is to be carried out. Defaulting debtors are subject to debt collecting procedures launched by the Legal Service of the Commission with the help of external law firms.

3.   HOW THE EU BUDGET IS MANAGED AND SPENT

HOW THE EU BUDGET IS MANAGED AND SPENT

3.1   Primary operational expenditure

Primary operational expenditure

The EU's operational expenditure covers the various headings of the financial framework and takes different forms, depending on how the money is paid out and managed. For the 2012 accounts, the Commission classifies its expenditure as follows:

| | Direct centralised management: this is where the budget is implemented directly by the Commission services. |
| --- | --- |

Direct centralised management: this is where the budget is implemented directly by the Commission services.

Direct centralised management:

| | Indirect centralised management: this refers to cases where the Commission confers tasks of implementation of the budget to bodies of EU law or national law, such as the EU agencies of public law or with public service missions. |
| --- | --- |

Indirect centralised management: this refers to cases where the Commission confers tasks of implementation of the budget to bodies of EU law or national law, such as the EU agencies of public law or with public service missions.

Indirect centralised management:

| | Decentralised management: these are the cases where the Commission delegates certain tasks for implementation of the budget to third countries. |
| --- | --- |

Decentralised management: these are the cases where the Commission delegates certain tasks for implementation of the budget to third countries.

Decentralised management:

| | Shared management: under this method of management budget implementation tasks are delegated to Member States. The majority of the expenditure falls under this mode covering such areas as agricultural spending and Structural Actions. |
| --- | --- |

Shared management: under this method of management budget implementation tasks are delegated to Member States. The majority of the expenditure falls under this mode covering such areas as agricultural spending and Structural Actions.

Shared management:

| | Joint management: under this method, the Commission entrusts certain implementation tasks to an international organisation. |
| --- | --- |

Joint management: under this method, the Commission entrusts certain implementation tasks to an international organisation.

Joint management:

From 2014 onwards, these classifications will change following the coming into force of the updated Financial Regulation.

3.2   The different financial actors within the Commission

The different financial actors within the Commission

The College of Commissioners assumes collective political responsibility but in practice does not exercise itself the budget implementation powers vested in it. It delegates these tasks each year to individual civil servants accountable to the College and subject to the Financial Regulation and the Staff Regulations. The staff concerned – generally Directors-General and Heads of Service - are known as “Authorising Officers by delegation”. They in turn may further delegate budget implementation tasks to “Authorising Officers by sub-delegation”.

College of Commissioners

The responsibility of the Authorising Officers covers the entire management process, from determining what needs to be done to achieve the policy objectives set by the institution to managing the activities launched from both an operational and budgetary standpoint, including adopting legal commitments, monitoring performance, making payments and recovering funds, if necessary. Sound financial management and proper accountability are assured within each of the Services by the separation of management control (in the hands of the authorising officers) from internal audit and compliance control with clear internal control standards (based on international standards), ex-ante and ex-post controls, independent internal auditing on the basis of risk assessments, and regular reporting on activities to the individual Commissioners.

Authorising Officers

Each Authorising Officer is required to prepare an Annual Activity Report (AAR) on the activities under his responsibility. In this AAR, he reports on policy results and on the reasonable assurance he may have that the resources assigned to the activities described in his report have been used for their intended purpose and in accordance with the principles of sound financial management, and that the control procedures put in place give the necessary guarantees concerning the legality and regularity of the underlying transactions. On the basis of Article 66 of the Financial Regulation, the Commission adopts a summary report (synthesis report) on the AAR’s, the overall opinion of the Internal Auditor, by which the Commission takes overall political responsibility for the management of the EU budget in line with Article 317 of the TFEU. This report and the AAR’s are available at: http://ec.europa.eu/atwork/planning-and-preparing/synthesis-report/index_en.htm.

The Accounting Officer executes payment and recovery orders drawn up by authorising officers and is responsible for managing the treasury, laying down accounting rules and methods, validating accounting systems, keeping the accounts and drawing up the institution's annual accounts. Furthermore, the Accounting Officer is required to sign the annual accounts declaring that they present fairly, in all material aspects, the financial position, the results of the operations and the cashflows.

Accounting Officer

3.3   Committing to spend the EU budget

Committing to spend the EU budget

Before a legal commitment (for example a contract or grant agreement) can be entered into with a third party, there must be a budget line authorising the activity in question in the annual budget. There must also be sufficient funds on the budget line to cover the expenditure. If these conditions are met, the funds required must be reserved in the budget by means of a budgetary commitment made in the accounting system.

No money can be spent from the EU budget unless and until the Authorising Officer has adopted a legal commitment.

Once approved, the budgetary commitment is recorded in the budgetary accounting system and the appropriations are consumed accordingly. This, however, has no effect on the financial accounts (or general ledger) since no expense has yet been incurred.

3.4   Making a payment

Making a payment

3.4.1   General rules

General rules

No payment can be made unless a budgetary commitment has already been approved by the Authorising Officer dealing with the operation in question. Once a payment is approved in the accounting system, the next step is for the transfer to be made to the beneficiary’s account. The Commission makes over 1,8 million payments a year. The Commission is a participant in SWIFT (Society for Worldwide Interbank Financial Telecommunication).

3.4.2   Pre-financing, cost statements and eligibility of expenditure

Pre-financing, cost statements and eligibility of expenditure

Pre-financing is a payment intended to provide the beneficiary with a cash advance, i.e. a float. It may be split into a number of payments over a period defined in the particular legal commitment. The float or advance is either used for the purpose for which it was provided during the period defined in the legal commitment or it is repaid – if the beneficiary does not incur eligible expenditures he has the obligation to return the pre-financing advance to the EU. Thus pre-financing paid is not a definitive expense until the relevant conditions are met and so is recorded as an asset on the EU balance sheet when the initial payment is made. The amount of the pre-financing asset is reduced (wholly or partially) by the acceptance of eligible costs and amounts returned.

Some time after the payment of the pre-financing, a cost claim will be received by the relevant EU body so as to justify how the pre-financing amount was spent by the beneficiary in accordance with the legal commitment. The rhythm of these cost claims sent during the year is variable depending on the type of action being funded and the conditions, and they are not necessarily received at year-end.

Eligibility criteria are defined in the basic act, in the calls for proposal, in other information documents for grant beneficiaries and/or in the contractual clauses of the grant agreements or in the grant decision. After analysis, the eligible amounts are taken into expenses and the beneficiary is informed about any non-eligible amounts.

4.   BORROWING AND LENDING ACTIVITIES

BORROWING AND LENDING ACTIVITIES

The EU is empowered by basic acts deriving from the EU Treaty to adopt borrowing programmes to mobilise the financial resources necessary to provide financial assistance to Member States and non-Member States. The European Commission, acting on behalf of the EU, currently operates three main programmes, the European Financial Stabilisation Mechanism (EFSM), Balance of payments (BOP) and Macro Financial Assistance (MFA), under which it may grant loans and fund these by issuing debt instruments in the capital markets or with financial institutions. Since the funds raised are back-to-back operations there is no direct impact on the EU budget, however, from a legal point of view, the debt service of the borrowings remains the obligation of the EU.

5.   PROTECTION OF THE EU BUDGET: FINANCIAL CORRECTIONS AND RECOVERIES

PROTECTION OF THE EU BUDGET: FINANCIAL CORRECTIONS AND RECOVERIES

The Financial Regulation and other applicable legislation, particularly concerning agriculture and cohesion policy, give the right to make checks on expenditure up to many years after it was incurred. Where errors, irregularities or fraud are detected, recoveries or financial corrections are applied. The detection of errors, irregularities or fraud and their corrections are the last stage in the operation of control systems, and are essential in order to demonstrate sound financial management.

In the case of grants, the eligibility of expenditure charged to the budget is verified by the relevant EU services, or in the case of shared management, by the Member States, on the basis of the supporting documents stipulated in the applicable legislation or in the conditions of each grant. With the aim of optimising the relationship between the costs and the benefits of control systems, checks on the supporting documents for final claims in direct centralised management tend to be more intense than those on interim claims, and thus may detect errors in interim payments which are corrected by adjustment of the final payment. Furthermore, the EU and/or the Member State has the obligation to verify the probity of the supporting documents by making checks on the claimant's premises, during the implementation of the action financed and/or afterwards (ex-post). There are various procedures foreseen in the applicable legislation for the process of dealing with errors, irregularities or fraud detected by the Commission and by the Member States – more detailed information is included in note 6 of the financial statements.

6

6.   FINANCIAL REPORTING

FINANCIAL REPORTING

The annual accounts of the EU comprise two separate but linked parts:

| (a) | Financial statements. |
| --- | --- |

(a)

Financial statements.

| (b) | Reports on implementation of the budget, which provide a detailed record of budget implementation. |
| --- | --- |

(b)

Reports on implementation of the budget, which provide a detailed record of budget implementation.

The annual accounts are adopted by the Commission and presented to the Court of Auditors for audit and finally to the European Parliament and Council as part of the discharge process.

In addition to the above annual reporting, monthly budget implementation reports are also prepared.

6.1   Financial Statements

Financial Statements

It is the responsibility of the Commission's Accounting Officer to prepare the EU's financial statements and ensure that they present fairly, in all material aspects, the financial position, the result of the operations and the cashflows of the EU. These are drawn up in accordance with EU Accounting Rules that are based on International Public Sector Accounting Standards (IPSAS). For more information, see note 1 of the financial statements.

1

6.2   Budgetary accounts

Budgetary accounts

It is the responsibility of the Commission's Accounting Officer to prepare the reports on implementation of the budget both on a monthly and annual basis. Only the Commission budget contains administrative appropriations and operating appropriations. The other Institutions have only administrative appropriations. Furthermore, the budget distinguishes between two types of appropriation: non-differentiated appropriations and differentiated appropriations. Non-differentiated appropriations are used to finance operations of an annual nature (which comply with the principle of annuality). Differentiated appropriations were introduced in order to reconcile the principle of annuality with the need to manage multi-annual operations. They are intended to cover mainly multi-annual operations. Differentiated appropriations are split into commitment and payment appropriations:

| — | commitment appropriations: cover the total cost of the legal obligations entered into for the current financial year for operations extending over a number of years. However, budgetary commitments for actions extending over more than one financial year may be broken down over several years into annual instalments. |
| --- | --- |

—

commitment appropriations: cover the total cost of the legal obligations entered into for the current financial year for operations extending over a number of years. However, budgetary commitments for actions extending over more than one financial year may be broken down over several years into annual instalments.

commitment appropriations:

| — | payment appropriations: cover expenditure arising from commitments entered into in the current financial year and/or earlier financial years. |
| --- | --- |

—

payment appropriations: cover expenditure arising from commitments entered into in the current financial year and/or earlier financial years.

payment appropriations:

With the introduction of differentiated appropriations, a gap developed between commitments entered into and payments made: this gap, corresponding to outstanding commitments, represents the time-lag between when the commitments are entered into and when the corresponding payments are made. It is known as the RAL ("Reste à Liquider").

7.   AUDIT AND DISCHARGE

AUDIT AND DISCHARGE

7.1   Audit

Audit

The EU’s annual accounts and resource management are audited by its external auditor, the European Court of Auditors, which draws up an annual report for the European Parliament and the Council. The Court's main task is to conduct an external, independent audit of the EU's annual accounts. As part of its activities, the Court of Auditors produces:

| (1) | an annual report on the activities financed from the general budget, detailing its observations on the annual accounts and underlying transactions; |
| --- | --- |

(1)

an annual report on the activities financed from the general budget, detailing its observations on the annual accounts and underlying transactions;

| (2) | an opinion, based on its audits and given in the annual report in the form of a statement of assurance, on (i) the reliability of the accounts and (ii) the legality and regularity of the underlying transactions involving both revenue collected from taxable persons and payments to final beneficiaries; |
| --- | --- |

(2)

an opinion, based on its audits and given in the annual report in the form of a statement of assurance, on (i) the reliability of the accounts and (ii) the legality and regularity of the underlying transactions involving both revenue collected from taxable persons and payments to final beneficiaries;

| (3) | special reports giving the findings of audits covering specific areas. |
| --- | --- |

(3)

special reports giving the findings of audits covering specific areas.

7.2   Discharge

Discharge

The final step of a budget lifecycle is the discharge of the budget for a given financial year. The European Parliament is the discharge authority within the EU. This means that following the audit and finalisation of the annual accounts it falls to the Council to recommend and then to the European Parliament to give a discharge to the Commission and other EU bodies for implementing the EU budget for the preceding financial year. This decision is based on an examination of the annual accounts, the Commission's annual evaluation report and the annual report of the Court of Auditors and replies of the Commission, and also following questions and further information requests to the Commission.

The discharge represents the political aspect of the external control of budget implementation and is the decision by which the European Parliament, acting on a Council recommendation, "releases" the Commission (and other EU bodies) from its responsibility for management of a given budget by marking the end of that budget's existence. This discharge procedure may produce one of three outcomes: the granting, postponement or the refusal of the discharge. Integral part of the annual budgetary discharge procedure in the European Parliament are the hearings with Commissioners who are questioned by the Members of the European Parliament's Budgetary Control Committee regarding the policy areas under their responsibility. The final discharge report including specific request to the Commission for action is adopted in Plenary. The Council discharge recommendation is adopted by ECOFIN. Both, the European Parliament's discharge report as well as the Council discharge recommendations are subject to an annual follow up report in which the Commission outlines the concrete actions it has taken to implement the requests made by the European Parliament and the Council’s recommendations.

PART I

CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES
   (1)

CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES

1

CONTENTS

CONTENTS

Balance Sheet

Statement of Financial Performance

Cashflow Statement

Statement of Changes in Net Assets

Notes to the Financial Statements:

| 1. | Significant Accounting Policies |
| --- | --- |

1.

| 2. | Notes to the Balance Sheet |
| --- | --- |

2.

| 3. | Notes to the Statement of Financial Performance |
| --- | --- |

3.

| 4. | Notes to the Cashflow Statement |
| --- | --- |

4.

| 5. | Contingent Assets & Liabilities and Other Significant Disclosures |
| --- | --- |

5.

| 6. | Protection of the EU Budget |
| --- | --- |

6.

| 7. | Financial Support Mechanisms |
| --- | --- |

7.

| 8. | Financial Risk Management |
| --- | --- |

8.

| 9. | Related Party Disclosures |
| --- | --- |

9.

| 10. | Events after the Balance Sheet Date |
| --- | --- |

10.

| 11. | Scope of Consolidation |
| --- | --- |

11.

BALANCE SHEET

BALANCE SHEET

| EUR millions |
| --- |
| | Note | 31.12.2012 | 31.12.2011 |
| NON-CURRENT ASSETS |
| Intangible assets | 2.1 | 188 | 149 |
| Property, plant and equipment | 2.2 | 5 978 | 5 071 |
| Investments accounted for using the equity method | 2.3 | 392 | 374 |
| Financial assets | 2.4 | 62 311 | 43 672 |
| Receivables and recoverables | 2.5 | 564 | 289 |
| Pre-financing | 2.6 | 44 505 | 44 723 |
| | | 113 938 | 94 278 |
| CURRENT ASSETS |
| Inventories | 2.7 | 138 | 94 |
| Financial assets | 2.8 | 1 981 | 3 721 |
| Receivables and recoverables | 2.9 | 14 039 | 9 477 |
| Pre-financing | 2.10 | 13 238 | 11 007 |
| Cash and cash equivalents | 2.11 | 10 674 | 18 935 |
| | | 40 070 | 43 234 |
| TOTAL ASSETS | | 154 008 | 137 512 |
| NON-CURRENT LIABILITIES |
| Pension and other employee benefits | 2.12 | (42 503) | (34 835) |
| Provisions | 2.13 | (1 258) | (1 495) |
| Financial liabilities | 2.14 | (57 232) | (41 179) |
| Other liabilities | 2.15 | (2 527) | (2 059) |
| | | (103 520) | (79 568) |
| CURRENT LIABILITIES |
| Provisions | 2.16 | (806) | (270) |
| Financial liabilities | 2.17 | (15) | (51) |
| Payables | 2.18 | (90 083) | (91 473) |
| | | (90 904) | (91 794) |
| TOTAL LIABILITIES | | (194 424) | (171 362) |
| NET ASSETS | | (40 416) | (33 850) |
| Reserves | 2.19 | 4 061 | 3 608 |
| Amounts to be called from Member States (2) | 2.20 | (44 477) | (37 458) |
| NET ASSETS | | (40 416) | (33 850) |

EUR millions

Note

31.12.2012

31.12.2011

NON-CURRENT ASSETS

Intangible assets

2.1

2.1

188

149

Property, plant and equipment

2.2

2.2

5 978

5 071

Investments accounted for using the equity method

2.3

2.3

392

374

Financial assets

2.4

2.4

62 311

43 672

Receivables and recoverables

2.5

2.5

564

289

Pre-financing

2.6

2.6

44 505

44 723

113 938

94 278

CURRENT ASSETS

Inventories

2.7

2.7

138

94

Financial assets

2.8

2.8

1 981

3 721

Receivables and recoverables

2.9

2.9

14 039

9 477

Pre-financing

2.10

2.10

13 238

11 007

Cash and cash equivalents

2.11

2.11

10 674

18 935

40 070

43 234

TOTAL ASSETS

154 008

137 512

NON-CURRENT LIABILITIES

Pension and other employee benefits

2.12

2.12

(42 503)

(34 835)

Provisions

2.13

2.13

(1 258)

(1 495)

Financial liabilities

2.14

2.14

(57 232)

(41 179)

Other liabilities

2.15

2.15

(2 527)

(2 059)

(103 520)

(79 568)

CURRENT LIABILITIES

Provisions

2.16

2.16

(806)

(270)

Financial liabilities

2.17

2.17

(15)

(51)

Payables

2.18

2.18

(90 083)

(91 473)

(90 904)

(91 794)

TOTAL LIABILITIES

(194 424)

(171 362)

NET ASSETS

(40 416)

(40 416)

(33 850)

(33 850)

Reserves

2.19

2.19

4 061

3 608

Amounts to be called from Member States (2)

2

2.20

2.20

(44 477)

(37 458)

NET ASSETS

NET ASSETS

(40 416)

(40 416)

(33 850)

(33 850)

STATEMENT OF FINANCIAL PERFORMANCE

STATEMENT OF FINANCIAL PERFORMANCE

| EUR millions |
| --- |
| | Note | 2012 | 2011 |
| OPERATING REVENUE |
| Own resource and contributions revenue | 3.1 | 130 919 | 124 677 |
| Other operating revenue | 3.2 | 6 826 | 5 376 |
| | | 137 745 | 130 053 |
| OPERATING EXPENSES |
| Administrative expenses | 3.3 | (9 320) | (8 976) |
| Operating expenses | 3.4 | (124 633) | (123 778) |
| | | (133 953) | (132 754) |
| SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES | | 3 792 | (2 701) |
| Financial revenue | 3.5 | 2 157 | 1 491 |
| Financial expenses | 3.6 | (1 942) | (1 355) |
| Movement in pension and other employee benefits liability | | (8 846) | 1 212 |
| Share of net deficit of joint ventures and associates | 3.7 | (490) | (436) |
| ECONOMIC RESULT OF THE YEAR | | (5 329) | (1 789) |

EUR millions

Note

2012

2011

OPERATING REVENUE

Own resource and contributions revenue

3.1

3.1

130 919

124 677

Other operating revenue

3.2

3.2

6 826

5 376

137 745

137 745

130 053

130 053

OPERATING EXPENSES

Administrative expenses

3.3

3.3

(9 320)

(8 976)

Operating expenses

3.4

3.4

(124 633)

(123 778)

(133 953)

(133 953)

(132 754)

(132 754)

SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES

3 792

3 792

(2 701)

(2 701)

Financial revenue

3.5

3.5

2 157

1 491

Financial expenses

3.6

3.6

(1 942)

(1 355)

Movement in pension and other employee benefits liability

(8 846)

1 212

Share of net deficit of joint ventures and associates

3.7

3.7

(490)

(436)

ECONOMIC RESULT OF THE YEAR

ECONOMIC RESULT OF THE YEAR

(5 329)

(5 329)

(1 789)

(1 789)

CASHFLOW STATEMENT

CASHFLOW STATEMENT

| EUR millions |
| --- |
| | Note | 2012 | 2011 |
| Economic result of the year | | (5 329) | (1 789) |
| Operating activities | 4.2 | | |
| Amortisation | | 39 | 33 |
| Depreciation | | 405 | 361 |
| (Increase)/decrease in loans | | (16 062) | (27 692) |
| (Increase)/decrease in receivables and recoverables | | (4 837) | 1 605 |
| (Increase)/decrease in pre-financing | | (2 013) | (1 534) |
| (Increase)/decrease in inventories | | (44) | (3) |
| Increase/(decrease) in provisions | | 299 | 234 |
| Increase/(decrease) in financial liabilities | | 16 017 | 27 781 |
| Increase/(decrease) in other liabilities | | 468 | (45) |
| Increase/(decrease) in payables | | (1 390) | 6 944 |
| Prior year budgetary surplus taken as non-cash revenue | | (1 497) | (4 539) |
| Other non-cash movements | | 260 | (75) |
| Increase/(decrease) in pension and employee benefits liability | | 7 668 | (2 337) |
| Investing activities | 4.3 | | |
| (Increase)/decrease in intangible assets and property, plant and equipment | | (1 390) | (693) |
| (Increase)/decrease in investments accounted for using the equity method | | (18) | 118 |
| (Increase)/decrease in available for sale financial assets | | (837) | (1 497) |
| NET CASHFLOW | | (8 261) | (3 128) |
| Net increase/(decrease) in cash and cash equivalents | | (8 261) | (3 128) |
| Cash and cash equivalents at the beginning of the year | 2.11 | 18 935 | 22 063 |
| Cash and cash equivalents at year-end | 2.11 | 10 674 | 18 935 |

EUR millions

Note

2012

2011

Economic result of the year

Economic result of the year

(5 329)

(5 329)

(1 789)

(1 789)

Operating activities

Operating activities

4.2

4.2

Amortisation

39

33

Depreciation

405

361

(Increase)/decrease in loans

(16 062)

(27 692)

(Increase)/decrease in receivables and recoverables

(4 837)

1 605

(Increase)/decrease in pre-financing

(2 013)

(1 534)

(Increase)/decrease in inventories

(44)

(3)

Increase/(decrease) in provisions

299

234

Increase/(decrease) in financial liabilities

16 017

27 781

Increase/(decrease) in other liabilities

468

(45)

Increase/(decrease) in payables

(1 390)

6 944

Prior year budgetary surplus taken as non-cash revenue

(1 497)

(4 539)

Other non-cash movements

260

(75)

Increase/(decrease) in pension and employee benefits liability

7 668

(2 337)

Investing activities

Investing activities

4.3

4.3

(Increase)/decrease in intangible assets and property, plant and equipment

(1 390)

(693)

(Increase)/decrease in investments accounted for using the equity method

(18)

118

(Increase)/decrease in available for sale financial assets

(837)

(1 497)

NET CASHFLOW

NET CASHFLOW

(8 261)

(8 261)

(3 128)

(3 128)

Net increase/(decrease) in cash and cash equivalents

(8 261)

(3 128)

Cash and cash equivalents at the beginning of the year

2.11

2.11

18 935

22 063

Cash and cash equivalents at year-end

2.11

2.11

10 674

18 935

STATEMENT OF CHANGES IN NET ASSETS

STATEMENT OF CHANGES IN NET ASSETS

| EUR millions |
| --- |
| | Reserves (A) | Amounts to be called from Member States (B) | |
| Fair value reserve | Other reserves | Accumulated Surplus/(Deficit) | Economic result of the year |
| BALANCE AS AT 31.12.2010 | (61) | 3 545 | (48 163) | 17 232 | (27 447) |
| Movement in Guarantee Fund reserve | | 165 | (165) | | 0 |
| Fair value movements | (47) | | | | (47) |
| Other | | 2 | (30) | | (28) |
| Allocation of the 2010 economic result | | 4 | 17 228 | (17 232) | 0 |
| 2010 budget result credited to Member States | | | (4 539) | | (4 539) |
| Economic result of the year | | | | (1 789) | (1 789) |
| BALANCE AS AT 31.12.2011 | (108) | 3 716 | (35 669) | (1 789) | (33 850) |
| Movement in Guarantee Fund reserve | | 168 | (168) | | 0 |
| Fair value movements | 258 | | | | 258 |
| Other | | 21 | (19) | | 2 |
| Allocation of the 2011 economic result | | 6 | (1 795) | 1 789 | 0 |
| 2011 budget result credited to Member States | | | (1 497) | | (1 497) |
| Economic result of the year | | | | (5 329) | (5 329) |
| BALANCE AS AT 31.12.2012 | 150 | 3 911 | (39 148) | (5 329) | (40 416) |

EUR millions

Reserves (A)

Amounts to be called from Member States (B)

Formula

Fair value reserve

Other reserves

Accumulated Surplus/(Deficit)

Economic result of the year

BALANCE AS AT 31.12.2010

BALANCE AS AT 31.12.2010

(61)

(61)

3 545

3 545

(48 163)

(48 163)

17 232

17 232

(27 447)

(27 447)

Movement in Guarantee Fund reserve

165

(165)

0

Fair value movements

(47)

(47)

Other

2

(30)

(28)

Allocation of the 2010 economic result

4

17 228

(17 232)

0

2010 budget result credited to Member States

(4 539)

(4 539)

Economic result of the year

(1 789)

(1 789)

BALANCE AS AT 31.12.2011

BALANCE AS AT 31.12.2011

(108)

(108)

3 716

3 716

(35 669)

(35 669)

(1 789)

(1 789)

(33 850)

(33 850)

Movement in Guarantee Fund reserve

168

(168)

0

Fair value movements

258

258

Other

21

(19)

2

Allocation of the 2011 economic result

6

(1 795)

1 789

0

2011 budget result credited to Member States

(1 497)

(1 497)

Economic result of the year

(5 329)

(5 329)

BALANCE AS AT 31.12.2012

BALANCE AS AT 31.12.2012

150

150

3 911

3 911

(39 148)

(39 148)

(5 329)

(5 329)

(40 416)

(40 416)

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

1.   SIGNIFICANT ACCOUNTING POLICIES

1.1   LEGAL BASIS AND ACCOUNTING RULES

LEGAL BASIS AND ACCOUNTING RULES

The accounts of the European Union (EU) are kept in accordance with Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 (3), on the financial rules applicable to the general budget of the Union (hereinafter referred to as the 'Financial Regulation') and Commission Delegated Regulation (EU) No 1268/2012 of 29 October 2012 (4) laying down detailed rules of application of this Financial Regulation.

3

4

In accordance with article 143 of the Financial Regulation, the EU prepares its financial statements on the basis of accrual-based accounting rules that are based on International Public Sector Accounting Standards (IPSAS). These accounting rules, adopted by the Accounting Officer of the Commission, have to be applied by all the institutions and EU bodies falling within the scope of consolidation in order to establish a uniform set of rules for accounting, valuation and presentation of the accounts with a view to harmonising the process for drawing up the financial statements and consolidation. The accounts are kept in Euro on the basis of the calendar year.

1.2   ACCOUNTING PRINCIPLES

ACCOUNTING PRINCIPLES

The objective of the financial statements is to provide information about the financial position, performance and cashflows of an entity that is useful to a wide range of users. For the EU as a public sector entity, the objectives are more specifically to provide information useful for decision making, and to demonstrate the accountability of the entity for the resources entrusted to it. It is with these goals in mind that the present document has been drawn up.

The overall considerations (or accounting principles) to be followed when preparing the financial statements are laid down in EU accounting rule 2 and are the same as those described in IPSAS 1, that is: fair presentation, accrual basis, going concern, consistency of presentation, aggregation, offsetting and comparative information.

Preparation of the financial statements in accordance with the above mentioned rules and principles requires management to make estimates that affect the reported amounts of certain items in the balance sheet and statement of financial performance, as well as the disclosures of contingent assets and liabilities.

1.3   CONSOLIDATION

CONSOLIDATION

Scope of consolidation

Scope of consolidation

The consolidated financial statements of the EU comprise all significant controlled entities (institutions and agencies), associates and joint ventures, this being 51 controlled entities, 5 joint ventures and 4 associates. The complete list of consolidated entities can be found in note 11.1. In comparison with 2011, the scope of consolidation has been extended by 1 controlled entity (agency). The impact of the additions on the consolidated financial statements is not material.

11.1

Controlled entities

Controlled entities

The decision to include an entity in the scope of consolidation is based on the control concept. Controlled entities are all entities over which the EU has, directly or indirectly, the power to govern the financial and operating policies so as to be able to benefit from these entities' activities. This power must be presently exercisable. Controlled entities are fully consolidated. The consolidation begins at the first date on which control exists, and ends when such control no longer exists.

The most common indicators of control within the EU are: creation of the entity through founding treaties or secondary legislation, financing of the entity from the general budget, the existence of voting rights in the governing bodies, audit by the European Court of Auditors and discharge by the European Parliament. It is clear that an assessment for each entity needs to be made in order to decide whether one or all of the criteria listed above are sufficient to trigger control.

Under this approach, the EU's institutions (except the ECB) and agencies (excluding the agencies of the former 2nd pillar) are considered as under the exclusive control of the EU and are therefore included in the consolidation scope. Furthermore the European Coal and Steel Community in Liquidation (ECSC) is also considered as a controlled entity.

All material inter-company transactions and balances between EU controlled entities are eliminated, while unrealised gains and losses on inter-entity transactions are not material and have therefore not been eliminated.

Joint ventures

Joint ventures

A joint venture is a contractual arrangement whereby the EU and one or more parties (the "venturers") undertake an economic activity which is subject to joint control. Joint control is the contractually agreed sharing of control, directly or indirectly, over an activity embodying service potential.

Participations in joint ventures are accounted for using the equity method initially recognised at cost. The EU's interest in the results of its jointly controlled entities is recognised in the statement of financial performance, and its interest in the movements in reserves is recognised in the reserves. The initial cost plus all movements (further contributions, share of economic results and reserve movements, impairments, and dividends) give the book value of the joint venture in the accounts at the balance sheet date.

Unrealised gains and losses on transactions between the EU and its jointly controlled entities are not material and have therefore not been eliminated. The accounting policies of joint ventures may differ from those adopted by the EU for like transactions and events in similar circumstances.

Associates

Associates

Associates are entities over which the EU has, directly or indirectly, significant influence but not control. It is presumed that significant influence is given if the EU holds directly or indirectly 20 % or more of the voting rights.

Participations in associates are accounted for using the equity method, initially recognised at cost. The EU's share of its associates' results is recognised in the statement of financial performance, and its share of movements in reserves is recognised in the reserves. The initial cost plus all movements (further contributions, share of economic results and reserve movements, impairments, and dividends) give the book value of the associate in the accounts at the balance sheet date. Distributions received from an associate reduce the carrying amount of the asset. Unrealised gains and losses on transactions between the EU and its associates are not material and have therefore not been eliminated.

The accounting policies of associates may differ from those adopted by the EU for like transactions and events in similar circumstances. In cases where the EU holds 20 % or more of an investment capital fund, it does not seek to exert significant influence. Such funds are therefore treated as financial instruments and categorised as available-for-sale financial assets.

Non-consolidated entities the funds of which are managed by the Commission

Non-consolidated entities the funds of which are managed by the Commission

The funds of the Sickness Insurance Scheme for staff of the EU, the European Development Fund and the Participant's Guarantee Fund are managed by the Commission on their behalf, however since these entities are not controlled by the EU they are therefore not consolidated in its accounts – see note 11.2 for further details on the amounts concerned.

11.2

1.4   BASIS OF PREPARATION

BASIS OF PREPARATION

1.4.1   
  Currency and basis for conversion

Currency and basis for conversion

Functional and reporting currency

Functional and reporting currency

The financial statements are presented in millions of euros, the euro being the EU's functional and reporting currency.

Transactions and balances

Transactions and balances

Foreign currency transactions are translated into euros using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of financial performance.

Different conversion methods apply to property, plant and equipment and intangible assets, which retain their value in euros at the rate that applied at the date when they were purchased.

Year-end balances of monetary assets and liabilities denominated in foreign currencies are converted into euros on the basis of the exchange rates applying on 31 December:

Euro Exchange Rates

Euro Exchange Rates

| Currency | 31.12.2012 | 31.12.2011 |
| --- | --- | --- |
| BGN | 1,9558 | 1,9558 |
| CZK | 25,1510 | 25,7870 |
| DKK | 7,4610 | 7,4342 |
| GBP | 0,8161 | 0,8353 |
| HUF | 292,3000 | 314,5800 |
| LVL | 0,6977 | 0,6995 |
| LTL | 3,4528 | 3,4528 |
| PLN | 4,0740 | 4,4580 |
| RON | 4,4445 | 4,3233 |
| SEK | 8,5820 | 8,9120 |
| CHF | 1,2072 | 1,2156 |
| JPY | 113,6100 | 100,2000 |
| USD | 1,3194 | 1,2939 |

Currency

31.12.2012

31.12.2011

BGN

1,9558

1,9558

CZK

25,1510

25,7870

DKK

7,4610

7,4342

GBP

0,8161

0,8353

HUF

292,3000

314,5800

LVL

0,6977

0,6995

LTL

3,4528

3,4528

PLN

4,0740

4,4580

RON

4,4445

4,3233

SEK

8,5820

8,9120

CHF

1,2072

1,2156

JPY

113,6100

100,2000

USD

1,3194

1,2939

Changes in the fair value of monetary financial instruments denominated in a foreign currency and classified as available-for-sale that relate to a translation difference are recognised in the statement of financial performance. Translation differences on non-monetary financial assets and liabilities held at fair value through profit or loss are recognised in the statement of financial performance. Translation differences on non-monetary financial instruments classified as available-for-sale are included in the fair value reserve.

1.4.2   
  Use of estimates

Use of estimates

In accordance with IPSAS and generally accepted accounting principles, the financial statements necessarily include amounts based on estimates and assumptions by management based on the most reliable information available. Significant estimates include, but are not limited to, amounts for employee benefit liabilities, provisions, financial risk on inventories and accounts receivables, accrued income and charges, contingent assets and liabilities, and degree of impairment of intangible assets and property, plant and equipment. Actual results could differ from those estimates. Changes in estimates are reflected in the period in which they become known.

1.5   BALANCE SHEET

BALANCE SHEET

1.5.1   
  Intangible assets

Intangible assets

Acquired computer software licences are stated at historical cost less accumulated amortisation and impairment losses. The assets are amortised on a straight-line basis over their estimated useful lives. Internally developed intangible assets are capitalised when the relevant criteria of the EU accounting rules are met. The costs capitalisable include all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management. Costs associated with research activities, non-capitalisable development costs and maintenance costs are recognised as expenses as incurred.

1.5.2   
  Property, plant and equipment

Property, plant and equipment

All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition or construction of the asset.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits or service potential associated with the item will flow to the EU and its cost can be measured reliably. Repairs and maintenance costs are charged to the statement of financial performance during the financial period in which they are incurred.

Land and works of art are not depreciated as they are deemed to have an indefinite useful life. Assets under construction are not depreciated as these assets are not yet available for use. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

| Type of asset | Straight line depreciation rate |
| --- | --- |
| Buildings | 4 % |
| Plant, machinery and equipment | 10 % to 25 % |
| Furniture | 10 % to 25 % |
| Fixtures and fittings | 10 % to 33 % |
| Vehicles | 25 % |
| Computer hardware | 25 % |
| Other tangible assets | 10 % to 33 % |

Type of asset

Straight line depreciation rate

Buildings

4 %

Plant, machinery and equipment

10 % to 25 %

Furniture

10 % to 25 %

Fixtures and fittings

10 % to 33 %

Vehicles

25 %

Computer hardware

25 %

Other tangible assets

10 % to 33 %

Gains or losses on disposals are determined by comparing proceeds less selling expenses with the carrying amount of the disposed asset and are included in the statement of financial performance.

Leases

Leases

Leases of tangible assets, where the EU has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The rental obligations, net of finance charges, are included in other liabilities (non-current and current.) The interest element of the finance cost is charged to the statement of financial performance over the lease period so as to produce a constant periodic interest rate on the remaining balance of the liability for each period. The assets held under finance leases are depreciated over the shorter of the assets' useful life and the lease term.

Leases where the lessor retains a significant portion of the risks and rewards inherent to ownership are classified as operating leases. Payments made under operating leases are charged to the statement of financial performance on a straight-line basis over the period of the lease.

1.5.3   
  Impairment of non-financial assets

Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation/depreciation and are tested annually for impairment. Assets that are subject to amortisation/depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use.

Intangible assets and property, plant and equipment residual values and useful lives are reviewed, and adjusted if appropriate, at least once per year. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. If the reasons for impairments recognised in previous years no longer apply, the impairment losses are reversed accordingly.

1.5.4   
  Investments

Investments

Participations in Associates and Joint Ventures

Participations in Associates and Joint Ventures

Participations in associates and joint ventures are accounted for using the equity method. The costs of equity are adjusted to reflect the share of increases or reductions in net assets of the associates and joint ventures that are attributable to the EU after initial recognition if there are indications of impairment and written down to the lower recoverable amount if necessary. The recoverable amount is determined as described under 1.5.3. If the reason for impairment ceases to apply at a later date, the impairment loss is reversed to the carrying amount that would have been determined had no impairment loss been recognised.

1.5.3

Investments in Venture Capital Funds

Investments in Venture Capital Funds

Investments in Venture Capital Funds are classified as available-for-sale financial assets (see 1.5.5) and accordingly, are carried at fair value with gains and losses arising from changes in the fair value (including translation differences) recognised in the fair value reserve.

1.5.5

Since they do not have a quoted market price in an active market, investments in Venture Capital Funds are valued on a line-by-line basis at the lower of cost or attributable net asset value (“NAV”). Unrealised gains resulting from the fair value measurement are recognised through reserves and unrealised losses are assessed for impairment so as to determine whether they are recognised as impairment losses in the statement of financial performance or as changes in the fair value reserve.

1.5.5   
  Financial assets

Financial assets

Classification

Classification

The EU classifies their financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available for sale financial assets. The classification of the financial instruments is determined at initial recognition and re-evaluated at each balance sheet date.

(i)   Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by the EU. Derivatives are also categorised in this category. Assets in this category are classified as current assets if they are expected to be realised within 12 months of the balance sheet date.

(ii)   Loans and receivables

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the EU provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in non-current assets, except for maturities within 12 months of the balance sheet date.

(iii)   Held-to-maturity investments

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the EU has the positive intention and ability to hold to maturity. During this financial year, the EU did not hold any investments in this category.

(iv)   Available for sale financial assets

Available for sale financial assets

Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are classified as either current or non-current assets, depending on the time period in which the EU expects to dispose of them which is usually the remaining maturity at the balance sheet date. Investments in unconsolidated entities and other equity investments (e.g. Risk Capital Operations) that are not accounted for using the equity method are also classified as available for sale financial assets.

Initial recognition and measurement

Initial recognition and measurement

Purchases and sales of financial assets at fair value through profit or loss, held-to-maturity and available for sale are recognised on trade-date – the date on which the EU commits to purchase or sell the asset. Loans are recognised when cash is advanced to the borrowers. Financial instruments are initially recognised at fair value. For all financial assets not carried at fair value through profit or loss transactions costs are added to the fair value at initial recognition. Financial assets carried at fair value through profit or losses are initially recognised at fair value and transaction costs are expensed in the statement of financial performance.

The fair value of a financial asset on initial recognition is normally the transaction price (i.e. the fair value of the consideration received). However, when a long-term loan that carries no interest or an interest below market conditions is granted, its fair value can be estimated as the present value of all future cash receipts discounted using the prevailing market rate of interest for a similar instrument with a similar credit rating.

Loans granted on borrowed funds are measured at their nominal amount, which is considered to be the fair value of the loan. The reasoning for this is as follows:

| — | The “market environment” for EU lending is very specific and different from the capital market used to issue commercial or government bonds. As lenders in these markets have the opportunity to choose alternative investments, the opportunity possibility is factored into market prices. However, this opportunity for alternative investments does not exist for the EU which is not allowed to invest money on the capital markets; it only borrows funds for the purpose of lending at the same rate. This means that there is no alternative lending or investment option available to the EU for the sums borrowed. Thus, there is no opportunity cost and therefore no basis of comparison with market rates. In fact, the EU lending operation itself represents the market. Essentially, since the opportunity cost "option" is not applicable, the market price does not fairly reflect the substance of the EU lending transactions. Therefore, it is not appropriate to determine the fair value of EU lending with reference to commercial or government bonds. |
| --- | --- |

—

The “market environment” for EU lending is very specific and different from the capital market used to issue commercial or government bonds. As lenders in these markets have the opportunity to choose alternative investments, the opportunity possibility is factored into market prices. However, this opportunity for alternative investments does not exist for the EU which is not allowed to invest money on the capital markets; it only borrows funds for the purpose of lending at the same rate. This means that there is no alternative lending or investment option available to the EU for the sums borrowed. Thus, there is no opportunity cost and therefore no basis of comparison with market rates. In fact, the EU lending operation itself represents the market. Essentially, since the opportunity cost "option" is not applicable, the market price does not fairly reflect the substance of the EU lending transactions. Therefore, it is not appropriate to determine the fair value of EU lending with reference to commercial or government bonds.

| — | Furthermore as there is no active market or similar transactions to compare with, the interest rate to be used by the EU for fair valuing its lending operations under EFSM, BOP and other such loans, should be the interest rate charged. |
| --- | --- |

—

Furthermore as there is no active market or similar transactions to compare with, the interest rate to be used by the EU for fair valuing its lending operations under EFSM, BOP and other such loans, should be the interest rate charged.

| — | In addition, for these loans, there are compensating effects between loans and borrowings due to their back-to-back character. Thus, the effective interest for the loan equals the effective interest rate for the related borrowings. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the statement of financial performance. |
| --- | --- |

—

In addition, for these loans, there are compensating effects between loans and borrowings due to their back-to-back character. Thus, the effective interest for the loan equals the effective interest rate for the related borrowings. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the statement of financial performance.

Financial instruments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the EU has transferred substantially all risks and rewards of ownership.

Subsequent measurement

Subsequent measurement

| (i) | Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains and losses arising from changes in the fair value of the ‘financial instruments at fair value through profit or loss’ category are included in the statement of financial performance in the period in which they arise. |
| --- | --- |

(i)

Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains and losses arising from changes in the fair value of the ‘financial instruments at fair value through profit or loss’ category are included in the statement of financial performance in the period in which they arise.

| (ii) | Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. In the case of loans granted on borrowed funds, the same effective interest rate is applied to both the loans and borrowings since these loans have the characteristics of 'back-to-back operations' and the differences between the loan and the borrowing conditions and amounts are not material. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the statement of financial performance. |
| --- | --- |

(ii)

Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. In the case of loans granted on borrowed funds, the same effective interest rate is applied to both the loans and borrowings since these loans have the characteristics of 'back-to-back operations' and the differences between the loan and the borrowing conditions and amounts are not material. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the statement of financial performance.

| (iii) | Held to maturity – the EU currently holds no held to maturity investments. |
| --- | --- |

(iii)

Held to maturity – the EU currently holds no held to maturity investments.

| (iv) | Available for sale financial assets are subsequently carried at fair value. Gains and losses arising from changes in the fair value of available for sale financial assets are recognised in the fair value reserve. When assets classified as available for sale financial assets are sold or impaired, the cumulative fair value adjustments previously recognised in the fair value reserve are recognised in the statement of financial performance. Interest on available for sale financial assets calculated using the effective interest method is recognised in the statement of financial performance. Dividends on available for sale equity instruments are recognised when the EU's right to receive payment is established.
  The fair values of quoted investments in active markets are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the EU establishes a fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants.
  In cases where the fair value of investments in equity instruments that do not have quoted market price in an active market cannot be reliably measured, these investments are valued at cost less impairment losses. |
| --- | --- |

(iv)

Available for sale financial assets are subsequently carried at fair value. Gains and losses arising from changes in the fair value of available for sale financial assets are recognised in the fair value reserve. When assets classified as available for sale financial assets are sold or impaired, the cumulative fair value adjustments previously recognised in the fair value reserve are recognised in the statement of financial performance. Interest on available for sale financial assets calculated using the effective interest method is recognised in the statement of financial performance. Dividends on available for sale equity instruments are recognised when the EU's right to receive payment is established.

The fair values of quoted investments in active markets are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the EU establishes a fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants.

In cases where the fair value of investments in equity instruments that do not have quoted market price in an active market cannot be reliably measured, these investments are valued at cost less impairment losses.

Impairment of financial assets

Impairment of financial assets

The EU assesses at each balance sheet date whether there is objective evidence that a financial asset is impaired. A financial asset is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and that loss event (or events) has an impact on the estimated future cash flows of the financial asset that can be reliably estimated.

(a)   Assets carried at amortised cost

Assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables or held-to-maturity investments carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the statement of financial performance. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the statement of financial performance.

(b)   Assets carried at fair value

Assets carried at fair value

In the case of equity investments classified as available for sale financial assets, a significant or permanent (prolonged) decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available for sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the statement of financial performance – is removed from reserves and recognised in the statement of financial performance. Impairment losses recognised in the statement of financial performance on equity instruments are not reversed through the statement of financial performance. If, in a subsequent period, the fair value of a debt instrument classified as available for sale financial asset increases and the increase can be objectively related to an event occurring after the impairment loss was recognised, the impairment loss is reversed through the statement of financial performance.

1.5.6   
  Inventories

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. The cost of finished goods and work in progress comprises raw materials, direct labour, other directly attributable costs and related production overheads (based on normal operating capacity). Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. When inventories are held for distribution at no charge or for a nominal charge, they are measured at the lower of cost and current replacement cost. Current replacement cost is the cost the EU would incur to acquire the asset on the reporting date.

1.5.7   
  Pre-financing amounts

Pre-financing amounts

Pre-financing is a payment intended to provide the beneficiary with a cash advance, i.e. a float. It may be split into a number of payments over a period defined in the particular pre-financing agreement. The float or advance is repaid or used for the purpose for which it was provided during the period defined in the agreement. If the beneficiary does not incur eligible expenditures, he has the obligation to return the pre-financing advance to the EU. The amount of the pre-financing is reduced (wholly or partially) by the acceptance of eligible costs (which are recognised as an expense) and amounts returned.

At year-end, outstanding pre-financing amounts are valued at the original amount(s) paid less: amounts returned, eligible amounts expensed, estimated eligible amounts not yet cleared at year-end, and value reductions.

Interest on pre-financing is recognised as it is earned in accordance with the provisions of the relevant agreement. An estimate of the accrued interest revenue, based on the most reliable information, is made at the year-end and included in the balance sheet.

1.5.8   
  Receivables

Receivables

Receivables are carried at original amount less write-down for impairment. A write-down for impairment of receivables is established when there is objective evidence that the EU will not be able to collect all amounts due according to the original terms of receivables. The amount of the write-down is the difference between the asset’s carrying amount and the recoverable amount. The amount of the write-down is recognised in the statement of financial performance. A general write-down, based on past experience, is also made for outstanding recovery orders not already subject to a specific write-down. See note 1.5.14 below concerning the treatment of accrued income at year-end.

1.5.14

1.5.9   
  Cash and cash equivalents

Cash and cash equivalents

Cash and cash equivalents are financial instruments and defined as current assets. They include cash at hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.

1.5.10   
  Pension and other employee benefits

Pension and other employee benefits

Pension obligations

Pension obligations

The EU operates defined benefit pension plans. Whilst staff contribute from their salaries one third of the expected cost of these benefits, the liability is not funded. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date. The defined benefit obligation is calculated by actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised immediately in the statement of financial performance. Past-service costs are recognised immediately in statement of financial performance, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period.

Post-employment sickness benefits

Post-employment sickness benefits

The EU provides health benefits to its employees through the reimbursement of medical expenses. A separate fund has been created for the day-to-day administration. Both current employees, pensioners, widowers and their beneficiaries benefit from the system. The benefits granted to the "inactives" (pensioners, orphans, etc.) are classified as "Post-Employment Employee Benefits". Given the nature of these benefits, an actuarial calculation is required. The liability in the balance sheet is determined on a similar basis as that for the pension obligations (see above).

1.5.11   
  Provisions

Provisions

Provisions are recognised when the EU has a present legal or constructive obligation towards third parties as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognised for future operating losses. The amount of the provision is the best estimate of the expenditures expected to be required to settle the present obligation at the reporting date. Where the provision involves a large number of items, the obligation is estimated by weighting all possible outcomes by their associated probabilities (“expected value” method).

1.5.12   
  Financial liabilities

Financial liabilities

Financial liabilities are classified as financial liabilities at fair value through profit or loss or as financial liabilities carried at amortised cost (borrowings). Borrowings are composed of borrowings from credit institutions and debts evidenced by certificates. They are recognised initially at fair value, being their issue proceeds (fair value of consideration received) net of transaction costs incurred, then subsequently carried at amortised cost using the effective interest method; any difference between proceeds, net of transaction costs, and the redemption value is recognised in the statement of financial performance over the period of the borrowings using the effective interest method.

They are classified as non-current liabilities, except for maturities less than 12 months after the balance sheet date. In the case of loans granted on borrowed funds, the effective interest method may not be applied to loans and borrowings, based on materiality considerations. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the statement of financial performance.

Financial liabilities categorised at fair value through profit or loss include derivatives when their fair value is negative. They follow the same accounting treatment as financial assets at fair value through profit or loss, see note 1.5.5.

1.5.5.

1.5.13   
  Payables

Payables

A significant amount of the payables of the EU are not related to the purchase of goods or services – instead they are unpaid cost claims from beneficiaries of grants or other EU funding. They are recorded as payables for the requested amount when the cost claim is received. Upon verification and acceptance of the eligible costs, the payables are valued at the accepted and eligible amount.

Payables arising from the purchase of goods and services are recognised at invoice reception for the original amount and corresponding expenses are entered in the accounts when the supplies or services are delivered and accepted by the EU.

1.5.14   
  Accrued and deferred income and charges

Accrued and deferred income and charges

According to the EU accounting rules, transactions and events are recognised in the financial statements in the period to which they relate. At the end of the accounting period, accrued expenses are recognised based on an estimated amount of the transfer obligation of the period. The calculation of accrued expenses is done in accordance with detailed operational and practical guidelines issued by the Commission which aim at ensuring that the financial statements reflect a true and fair view.

Revenue is also accounted for in the period to which it relates. At year-end, if an invoice is not yet issued but the service has been rendered, the supplies have been delivered by the EU or a contractual agreement exists (i.e. by reference to a treaty), an accrued income will be recognised in the financial statements.

In addition, at year-end, if an invoice is issued but the services have not yet been rendered or the goods supplied have not yet been delivered, the revenue will be deferred and recognised in the subsequent accounting period.

1.6   STATEMENT OF FINANCIAL PERFORMANCE

STATEMENT OF FINANCIAL PERFORMANCE

1.6.1   
  Revenue

Revenue

Non-exchange revenue

Non-exchange revenue

This makes up the vast majority of the EU's revenue and includes mainly direct and indirect taxes and own resource amounts. In addition to taxes the EU may also receive payments from other parties, such as duties, fines and donations.

GNI based resources and VAT resources

GNI based resources and VAT resources

Revenue is recognised for the period for which the European Commission sends out a call for funds to the Member States claiming their contribution. They are measured at their “called amount”. As VAT and GNI resources are based on estimates of the data for the budgetary year concerned, they may be revised as changes occur until the final data are issued by the Member States. The effect of a change in estimate is included when determining the net surplus or deficit for the period in which the change occurred.

Traditional own resources

Traditional own resources

Receivables and related revenues are recognised when the relevant monthly A statements (including duties collected and amounts due that are guaranteed and not contested) are received from the Member States. At the reporting date, revenue collected by the Member States for the period but not yet paid to the European Commission is estimated and recognised as accrued revenue. The quarterly B statements (including duties neither collected nor guaranteed, as well as guaranteed amounts that have been contested by the debtor) received from the Member States are recognised as revenue less the collection costs to which they are entitled (25 %). In addition, a value reduction is recognised for the amount of the estimated recovery gap in the statement of financial performance.

Fines

Fines

Revenue from fines is recognised when the EU's decision imposing a fine has been taken and it is officially notified to the addressee. If there are doubts about the undertaking's solvency, a value reduction on the entitlement is recognised. After the decision to impose a fine, the debtors have two months from the date of notification:

| — | either to accept the decision, in which case they must pay the fine within the time limit laid down and the amount is definitively collected by the EU; |
| --- | --- |

—

either to accept the decision, in which case they must pay the fine within the time limit laid down and the amount is definitively collected by the EU;

| — | or not to accept the decision, in which case they lodge an appeal under EU law. |
| --- | --- |

—

or not to accept the decision, in which case they lodge an appeal under EU law.

However, even if appealed, the principal of the fine must be paid within the time limit of three months laid down as the appeal does not have suspensory effect (Article 278 of the EU Treaty) or, under certain circumstances and subject to the agreement of the Commission's Accounting Officer, it may present a bank guarantee for the amount instead.

If the undertaking appeals against the decision, and has already provisionally paid the fine, the amount is disclosed as a contingent liability. However, since an appeal against an EU decision by the addressee does not have suspensory effect, the cash received is used to clear the receivable. If a guarantee is received instead of payment, the fine remains as a receivable. If it appears probable that the General Court may not rule in favour of the EU, a provision is recognised to cover this risk. If a guarantee had been given instead, then the receivable outstanding is written-down as required. The accumulated interest received by the European Commission on the bank accounts where received payments are deposited is recognised as revenue, and any contingent liability is increased accordingly.

Exchange revenue

Exchange revenue

Revenue from the sale of goods and services is recognised when the significant risk and rewards of ownership of the goods are transferred to the purchaser. Revenue associated with a transaction involving the provision of services is recognised by reference to the stage of completion of the transaction at the reporting date.

Interest income and expense

Interest income and expense

Interest income and expense are recognised in the statement of financial performance using the effective interest method. This is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. When calculating the effective interest rate, the EU estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but do not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest to discount the future cash flows for the purpose of measuring the impairment loss.

Dividend income

Dividend income

Dividend income is recognised when the right to receive payment is established.

1.6.2   
  Expense

Expense

Exchange expenses arising from the purchase of goods and services are recognised when the supplies are delivered and accepted by the EU. They are valued at original invoice cost. Non-exchange expenses are specific to the EU and account for the majority of its expenses. They relate to transfers to beneficiaries and can be of three types: entitlements, transfers under agreement and discretionary grants, contributions and donations.

Transfers are recognised as expenses in the period during which the events giving rise to the transfer occurred, as long as the nature of the transfer is allowed by regulation (Financial Regulation, Staff Regulations, or other regulation) or a contract has been signed authorising the transfer; any eligibility criteria have been met by the beneficiary; and a reasonable estimate of the amount can be made.

When a request for payment or cost claim is received and meets the recognition criteria, it is recognised as an expense for the eligible amount. At year-end, incurred eligible expenses due to the beneficiaries but not yet reported are estimated and recorded as accrued expenses.

1.7   CONTINGENT ASSETS AND LIABILITIES

CONTINGENT ASSETS AND LIABILITIES

1.7.1   
  Contingent assets

Contingent assets

A contingent asset is a possible asset that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the EU. A contingent asset is disclosed when an inflow of economic benefits or service potential is probable.

1.7.2   
  Contingent liabilities

Contingent liabilities

A contingent liability is a possible obligation that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the EU; or a present obligation that arises from past events but is not recognised because: it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation or, in the rare circumstances where the amount of the obligation cannot be measured with sufficient reliability.

2.   NOTES TO THE BALANCE SHEET

NON-CURRENT ASSETS

NON-CURRENT ASSETS

2.1   INTANGIBLE ASSETS

INTANGIBLE ASSETS

| EUR millions |
| --- |
| | Amount |
| Gross carrying amount at 31.12.2011 | 301 |
| Additions | 89 |
| Disposals | (11) |
| Other changes | 0 |
| Gross carrying amount at 31.12.2012 | 379 |
| Accumulated amortisation at 31.12.2011 | (152) |
| Amortisation charge for the year | (39) |
| Disposals | 4 |
| Other changes | (4) |
| Accumulated amortisation at 31.12.2012 | (191) |
| Net carrying amount at 31.12.2012 | 188 |
| Net carrying amount at 31.12.2011 | 149 |

EUR millions

Amount

Gross carrying amount at 31.12.2011

301

Additions

89

Disposals

(11)

Other changes

0

Gross carrying amount at 31.12.2012

Gross carrying amount at 31.12.2012

379

379

Accumulated amortisation at 31.12.2011

(152)

Amortisation charge for the year

(39)

Disposals

4

Other changes

(4)

Accumulated amortisation at 31.12.2012

Accumulated amortisation at 31.12.2012

(191)

(191)

Net carrying amount at 31.12.2012

Net carrying amount at 31.12.2012

188

188

Net carrying amount at 31.12.2011

Net carrying amount at 31.12.2011

149

149

The above amounts relate primarily to computer software.

2.2   PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

Included under assets under construction at 31 December 2012 are EUR 660 million (2011: EUR 219 million) of assets relating to the Galileo project, the EU's Global Navigation Satellite System, being built with the assistance of the European Space Agency (ESA). When completed, the system will comprise 30 satellites, 2 control centres and 16 ground stations. The amount on the balance sheet reflects the capitalisable costs incurred by the Commission on this project since 22 October 2011, the date on which the first two satellites of the system were successfully launched. Prior to this date, and as explained in previous annual accounts, the Commission considered the project to be in a research phase, thus in accordance with the EU accounting rules all costs incurred were expensed. Since the beginning of the project and until the end of the current financial framework, the foreseen budget amounts to EUR 3 837 million. For the next financial framework, a further EUR 5 400 million is foreseen to be spent on; fully deploying the system, exploiting it, delivering Galileo services until 2020 and preparing the next generation of the constellation, and this will be entirely financed by the EU budget. In 2012 an amount of EUR 13 million of non-capitalisable development cost has been recognised as expenses.

At the balance sheet date four satellites in total have been launched since October 2011 and once the subsequent testing of these is complete, this will end the In-Orbit Validation ("IOV") phase of the project. This phase had been jointly funded by the EU and ESA and according to the grant agreement concluded between the two parties, ESA shall make an official transfer of the constructed assets to the EU. This legal transfer will require the ESA Council's agreement, noting that all except two Member States of ESA (Norway and Switzerland), are also EU Member States. At this time, the Commission has no reason to believe that such a transfer would be blocked by member(s) of ESA.

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

| EUR millions |
| --- |
| | Land and buildings | Plant and equipment | Furniture and vehicles | Computer hardware | Other tangible assets | Finance leases | Assets under construction | Total |
| Gross carrying amount at previous year-end | 4 118 | 528 | 229 | 557 | 228 | 2 685 | 645 | 8 990 |
| Additions | 96 | 42 | 22 | 52 | 11 | 511 | 583 | 1 317 |
| Disposals | (26) | (23) | (21) | (54) | (11) | 0 | 0 | (135) |
| Transfers between asset categories | 102 | 8 | 0 | 12 | 0 | (14) | (111) | (3) |
| Other changes | 24 | 3 | 3 | 11 | 3 | (1) | 1 | 44 |
| Gross carrying amount at year-end | 4 314 | 558 | 233 | 578 | 231 | 3 181 | 1 118 | 10 213 |
| Accumulated depreciation at previous year-end | (1 999) | (425) | (166) | (396) | (137) | (796) | | (3 919) |
| Depreciation charge for the year | (138) | (45) | (20) | (67) | (21) | (114) | | (405) |
| Depreciation written back | 0 | 0 | 0 | 0 | 0 | 1 | | 1 |
| Disposals | 3 | 23 | 21 | 51 | 10 | 5 | | 113 |
| Transfers between asset categories | — | 0 | 0 | (11) | 0 | 14 | | 3 |
| Other changes | (3) | (2) | (1) | (13) | (2) | (7) | | (28) |
| Accumulated depreciation at year-end | (2 137) | (449) | (166) | (436) | (150) | (897) | | (4 235) |
| Net carrying amount at 31.12.2012 | 2 177 | 109 | 67 | 142 | 81 | 2 284 | 1 118 | 5 978 |
| Net carrying amount at 31.12.2011 | 2 119 | 103 | 63 | 161 | 91 | 1 889 | 645 | 5 071 |

EUR millions

Land and buildings

Plant and equipment

Furniture and vehicles

Computer hardware

Other tangible assets

Finance leases

Assets under construction

Total

Gross carrying amount at previous year-end

4 118

528

229

557

228

2 685

645

8 990

Additions

96

42

22

52

11

511

583

1 317

Disposals

(26)

(23)

(21)

(54)

(11)

0

0

(135)

Transfers between asset categories

102

8

0

12

0

(14)

(111)

(3)

Other changes

24

3

3

11

3

(1)

1

44

Gross carrying amount at year-end

Gross carrying amount at year-end

4 314

4 314

558

558

233

233

578

578

231

231

3 181

3 181

1 118

1 118

10 213

10 213

Accumulated depreciation at previous year-end

(1 999)

(425)

(166)

(396)

(137)

(796)

(3 919)

Depreciation charge for the year

(138)

(45)

(20)

(67)

(21)

(114)

(405)

Depreciation written back

0

0

0

0

0

1

1

Disposals

3

23

21

51

10

5

113

Transfers between asset categories

—

0

0

(11)

0

14

3

Other changes

(3)

(2)

(1)

(13)

(2)

(7)

(28)

Accumulated depreciation at year-end

Accumulated depreciation at year-end

(2 137)

(2 137)

(449)

(449)

(166)

(166)

(436)

(436)

(150)

(150)

(897)

(897)

(4 235)

(4 235)

Net carrying amount at 31.12.2012

Net carrying amount at 31.12.2012

2 177

2 177

109

109

67

67

142

142

81

81

2 284

2 284

1 118

1 118

5 978

5 978

Net carrying amount at 31.12.2011

Net carrying amount at 31.12.2011

2 119

103

63

161

91

1 889

645

5 071

Charges still to be paid in respect of finance leases and similar entitlements are shown in non-current and current liabilities in the balance sheet (see notes 2.15 and 2.18.1). They break down as follows:

2.15

2.18.1

FINANCE LEASES

FINANCE LEASES

| EUR millions |
| --- |
| Description | Cumulative charges | Future amounts to be paid | Total Value | Subsequent expenditure on assets | Asset value | Depreciation | Net carrying amount |
| (A) | > 1 year | > 1 year | > 5 years | Total Liability
  (B) | (A+B) | (C) | (A+B+C) | (D) | = (A+B+C+D) |
| Land and buildings | 992 | 63 | 342 | 1 686 | 2 091 | 3 083 | 61 | 3 144 | (877) | 2 267 |
| Other tangible assets | 18 | 7 | 11 | 1 | 19 | 37 | — | 37 | (20) | 17 |
| Total at 31.12.2012 | 1 010 | 70 | 353 | 1 687 | 2 110 | 3 120 | 61 | 3 181 | (897) | 2 284 |
| Interest element | | 85 | 307 | 502 | 893 | | | | | |
| Total future minimum lease payments at 31.12.2012 | | 155 | 660 | 2 189 | 3 003 |
| Total future minimum lease payments at 31.12.2011 | | 153 | 608 | 1 859 | 2 620 |

EUR millions

Description

Cumulative charges

Future amounts to be paid

Total Value

Subsequent expenditure on assets

Asset value

Depreciation

Net carrying amount

(A)

> 1 year

> 1 year

> 5 years

Total Liability

(B)

(A+B)

(C)

(A+B+C)

(D)

= (A+B+C+D)

Land and buildings

992

63

342

1 686

2 091

3 083

61

3 144

(877)

2 267

2 267

Other tangible assets

18

7

11

1

19

37

—

37

(20)

17

17

Total at 31.12.2012

1 010

70

353

1 687

2 110

3 120

61

3 181

(897)

2 284

Interest element

85

307

502

893

Total future minimum lease payments at 31.12.2012

155

660

2 189

3 003

Total future minimum lease payments at 31.12.2011

153

608

1 859

2 620

2.3   INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

| EUR millions |
| --- |
| | Note | 31.12.2012 | 31.12.2011 |
| Participations in joint ventures | 2.3.1 | 42 | 62 |
| Participations in associates | 2.3.2 | 350 | 312 |
| Total | | 392 | 374 |

EUR millions

Note

31.12.2012

31.12.2011

Participations in joint ventures

2.3.1

2.3.1

42

62

Participations in associates

2.3.2

2.3.2

350

312

Total

392

374

2.3.1   
  Participations in joint ventures

Participations in joint ventures

| EUR millions |
| --- |
| | GJU | SESAR | ITER | IMI | FCH | Total |
| Amount at 31.12.2011 | 0 | 0 | 0 | 25 | 37 | 62 |
| Contributions | — | 70 | 116 | 98 | 54 | 338 |
| Share of net result | — | (70) | (106) | (91) | (91) | (358) |
| Amount at 31.12.2012 | 0 | 0 | 10 | 32 | 0 | 42 |

EUR millions

GJU

SESAR

ITER

IMI

FCH

Total

Amount at 31.12.2011

0

0

0

25

37

62

Contributions

—

70

116

98

54

338

Share of net result

—

(70)

(106)

(91)

(91)

(358)

Amount at 31.12.2012

Amount at 31.12.2012

0

0

0

0

10

10

32

32

0

0

42

42

Participations in joint ventures are accounted for using the equity method. The following carrying amounts are attributable to the EU based on its percentage of participation:

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Non-current assets | 226 | 211 |
| Current assets | 106 | 123 |
| Non-current liabilities | 0 | 0 |
| Current liabilities | (291) | (314) |
| Revenue | 8 | 8 |
| Expenses | (427) | (379) |

EUR millions

31.12.2012

31.12.2011

Non-current assets

226

211

Current assets

106

123

Non-current liabilities

0

0

Current liabilities

(291)

(314)

Revenue

8

8

Expenses

(427)

(379)

Galileo Joint Undertaking (GJU) in liquidation

Galileo Joint Undertaking (GJU) in liquidation

The Galileo Joint Undertaking (GJU) was put into liquidation at the end of 2006 and the process is still on-going. As the entity was inactive and still undergoing liquidation in 2012, there were no revenues or expenses incurred.

SESAR Joint Undertaking

SESAR Joint Undertaking

The aim of this Joint Undertaking is to ensure the modernisation of the European air traffic management system and the rapid implementation of the European air traffic management Master Plan by coordinating and concentrating all relevant research and development efforts in the EU. At 31 December 2012, the Commission held 46,12 % of the ownership participation in SESAR. The total (indicative) Commission contribution foreseen for SESAR (from 2007 to 2013) is EUR 700 million. The cumulative unrecognised share of losses is EUR 157 million.

ITER International Fusion Energy Organisation (ITER)

ITER International Fusion Energy Organisation (ITER)

ITER involves the EU and China, India, Russia, South Korea, Japan and USA. ITER was created to; manage the ITER facilities, to encourage the exploitation of the ITER facilities, to promote public understanding and acceptance of fusion energy, and to undertake any other activities that are necessary to achieve its purpose. The EU (Euratom) contribution to ITER International is given through the Fusion for Energy Agency, including also the contributions from Member States and from Switzerland. The total contribution is legally considered as a Euratom contribution to ITER since the Member States and Switzerland do not have ownership interests in ITER. As the EU legally holds the participation in the joint venture ITER International, the Commission must recognise the participation in its accounts. At 31 December 2012, the Commission held 44,25 % of the ownership participation in ITER. The total (indicative) Euratom contribution foreseen for ITER (from 2007 to 2041) is EUR 8 949 million.

Joint Technology Initiatives

Joint Technology Initiatives

Public private partnerships in the form of Joint Technology Initiatives, which were implemented through Joint Undertakings within the meaning of Article 187 of the Treaty, have been created in order to implement the objectives of the Lisbon Growth and Jobs Agenda. IMI and FCH are included under this heading but three others, ARTEMIS, Clean Sky and ENIAC, although legally referred to as joint undertakings, from an accounting perspective must be considered as associates (and so included as such in note 2.3.2) because the Commission has a significant influence, not joint control, over them.

2.3.2

IMI Joint Technology Initiative on Innovative Medicines

IMI Joint Technology Initiative on Innovative Medicines

The IMI Joint Undertaking supports pre-competitive pharmaceutical research and development in the Member States and associated countries, aiming at increasing the research investment in the biopharmaceutical sector and promotes the involvement of small and medium-sized enterprises (SME) in its activities. At 31 December 2012, the Commission held 78,58 % of the ownership participation in IMI. The maximum indicative contribution of the Commission shall amount to EUR 1 billion up to 31.12.2017.

FCH Fuel Cells and Hydrogen Joint Undertaking

FCH Fuel Cells and Hydrogen Joint Undertaking

The objective of the FCH Joint Undertaking is to combine resources from the public and private sectors to strengthen research activities with a view to increasing the overall efficiency of European research efforts and accelerate the development and deployment of fuel cell and hydrogen technologies. At 31 December 2012, the Commission held 80,6 % of the ownership participation in FCH. The maximum indicative contribution of the EU shall amount to EUR 470 million up to 31.12.2017. The cumulative unrecognised share of losses is EUR 12 million.

2.3.2   
  Participations in associates

Participations in associates

| EUR millions |
| --- |
| | EIF | ARTEMIS | Clean Sky | ENIAC | Total |
| Amount at 31.12.2011 | 292 | 0 | 0 | 20 | 312 |
| Contributions | — | 22 | 97 | 16 | 135 |
| Share of net surplus/(deficit) | 9 | (22) | (97) | (22) | (132) |
| Other equity movements | 35 | — | — | — | 35 |
| Amount at 31.12.2012 | 336 | 0 | 0 | 14 | 350 |

EUR millions

EIF

ARTEMIS

Clean Sky

ENIAC

Total

Amount at 31.12.2011

292

0

0

20

312

312

Contributions

—

22

97

16

135

135

Share of net surplus/(deficit)

9

(22)

(97)

(22)

(132)

(132)

Other equity movements

35

—

—

—

35

35

Amount at 31.12.2012

Amount at 31.12.2012

336

336

0

0

0

0

14

14

350

350

Participations in associates are accounted for using the equity method. The following carrying amounts are attributable to the EU based on its percentage of participation:

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Assets | 505 | 460 |
| Liabilities | (191) | (162) |
| Revenue | 33 | 28 |
| Deficit | (177) | (182) |

EUR millions

31.12.2012

31.12.2011

Assets

505

460

Liabilities

(191)

(162)

Revenue

33

28

Deficit

(177)

(182)

European Investment Fund (EIF)

European Investment Fund (EIF)

The European Investment Fund (EIF) is the EU's financial institution specialising in providing risk capital and guarantees to SMEs. The Commission has paid in 20 % of its participation, the balance being uncalled corresponding to an amount of EUR 720 million.

| EUR millions |
| --- |
| EIF | Total EIF capital | Commission subscription |
| Total Share Capital | 3 000 | 900 |
| Paid-in | (600) | (180) |
| Uncalled | 2 400 | 720 |

EUR millions

EIF

Total EIF capital

Commission subscription

Total Share Capital

3 000

900

Paid-in

(600)

(180)

Uncalled

Uncalled

2 400

2 400

720

720

ARTEMIS Joint Undertaking

ARTEMIS Joint Undertaking

This entity was created to implement a Joint Technology Initiative with the private sector on Embedded Computing Systems. The maximum indicative contribution of the Commission shall amount to EUR 420 million. The cumulative unrecognised share of losses is EUR 5 million (95,2 % ownership participation).

Clean Sky Joint Undertaking

Clean Sky Joint Undertaking

The aim of this entity is to accelerate the development, validation and demonstration of clean air transport technologies in the EU and in particular to create a radically innovative Air Transport System with the target of reducing the environmental impact of air transport. The maximum indicative contribution of the Commission shall amount to EUR 800 million. The cumulative unrecognised share of losses is EUR 48 million (62,89 % ownership participation).

ENIAC Joint Undertaking

ENIAC Joint Undertaking

The aim of ENIAC is to define a commonly agreed research agenda in the field of nano-electronics in order to set research priorities for the development and adoption of key competences in that area. These objectives will be pursued by pooling resources from the public and private sectors to support R&D activities in the form of projects. The total commitment of the EU shall amount to EUR 450 million. At 31 December 2012, the Commission held 95,90 % of the ownership participation in ENIAC.

2.4   NON-CURRENT FINANCIAL ASSETS

NON-CURRENT FINANCIAL ASSETS

| EUR millions |
| --- |
| | Note | 31.12.2012 | 31.12.2011 |
| Available for sale financial assets | 2.4.1 | 4 870 | 2 272 |
| Loans | 2.4.2 | 57 441 | 41 400 |
| Total | | 62 311 | 43 672 |

EUR millions

Note

31.12.2012

31.12.2011

Available for sale financial assets

2.4.1

2.4.1

4 870

2 272

Loans

2.4.2

2.4.2

57 441

41 400

Total

62 311

43 672

2.4.1   
  Non-current available for sale financial assets

Non-current available for sale financial assets

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Guarantee Fund (5) | 1 327 | 1 475 |
| ECSC in liquidation | 1 102 | — |
| BUFI investments | 832 | — |
| Risk Sharing Finance Facility (RSFF) | 593 | — |
| Loan Guarantee Instrument for TEN-T projects (LGTT) | 52 | — |
| European Chemicals Agency | 52 | — |
| European Bank for Reconstruction & Development | 188 | 188 |
| Risk Capital Operations | 123 | 134 |
| ETF Start up | 305 | 234 |
| Other available for sale investments | 296 | 241 |
| Total | 4 870 | 2 272 |

EUR millions

31.12.2012

31.12.2011

Guarantee Fund (5)

5

1 327

1 475

ECSC in liquidation

1 102

—

BUFI investments

832

—

Risk Sharing Finance Facility (RSFF)

593

—

Loan Guarantee Instrument for TEN-T projects (LGTT)

52

—

European Chemicals Agency

52

—

European Bank for Reconstruction & Development

188

188

Risk Capital Operations

123

134

ETF Start up

305

234

Other available for sale investments

296

241

Total

4 870

2 272

In order to better present the economic reality, from 2012 onwards, all available for sale financial assets, are presented according to their remaining maturity at the balance sheet date. Assets with a maturity of greater than 1 year at the reporting date are shown as non-current, whereas assets maturing before end 2013 are shown as current (see note 2.8). The above 2012 amount for the Guarantee Fund is, unlike in 2011, shown excluding cash and cash equivalents (2011: EUR 302 million) and the related liability (2011: EUR 1 million). Had the current approach been followed in the 2011 accounts, the comparatives would have been as follows:

2.8

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Guarantee Fund (6) | 1 327 | 973 |
| ECSC in liquidation | 1 102 | 982 |
| BUFI investments | 832 | 588 |
| Risk Sharing Finance Facility (RSFF) | 593 | 365 |
| Loan Guarantee Instrument for TEN-T projects (LGTT) | 52 | 47 |
| European Chemicals Agency | 52 | 91 |
| European Bank for Reconstruction & Development | 188 | 188 |
| Risk Capital Operations | 123 | 134 |
| ETF Start up | 305 | 234 |
| Other available for sale investments | 296 | 241 |
| Total | 4 870 | 3 843 |

EUR millions

31.12.2012

31.12.2011

Guarantee Fund (6)

6

1 327

973

ECSC in liquidation

1 102

982

BUFI investments

832

588

Risk Sharing Finance Facility (RSFF)

593

365

Loan Guarantee Instrument for TEN-T projects (LGTT)

52

47

European Chemicals Agency

52

91

European Bank for Reconstruction & Development

188

188

Risk Capital Operations

123

134

ETF Start up

305

234

Other available for sale investments

296

241

Total

4 870

3 843

Guarantee Fund

Guarantee Fund

The Guarantee Fund for external actions covers loans guaranteed by the EU as a result of a Council Decision, in particular European Investment Bank (EIB) lending operations outside the EU and loans under macro-financial assistance (MFA) and Euratom loans outside the EU. It is a long-term instrument to cover any defaulting loans guaranteed by the EU. The Fund is endowed by payments from the general budget of the EU equivalent to 9 % of the capital value of the operations, the proceeds from interest on investments made from the Fund's assets, and sums recovered from defaulting debtors for whom the Fund has had to activate its guarantee. Any yearly surplus arising shall be paid back as revenue for the EU budget.

The EU is required to include a guarantee reserve to cover loans to third countries. This reserve is intended to cover the requirements of the Guarantee Fund and, where necessary, activated guarantees exceeding the amount available in the Fund, so that these amounts may be charged to the budget. This reserve corresponds to the target amount of 9 % of the loans outstanding at year-end.

ECSC in liquidation

ECSC in liquidation

Regarding the ECSC in liquidation amounts, all available for sale financial assets are debt securities denominated in EUR and quoted in an active market. At 31 December 2012 debt securities (expressed at their fair value) reaching final maturity in the course of 2013 amount to EUR 490 million (2011: EUR 481 million).

BUFI investments

BUFI investments

Provisionally cashed fines are since 1 January 2010 managed by the Commission in a specifically created fund (BUFI) and invested in financial instruments categorised as available for sale financial assets.

Risk-Sharing Finance Facility RSFF

Risk-Sharing Finance Facility RSFF

The Risk-Sharing Finance Facility is managed by the EIB and the Commission's investment portfolio is used to provision financial risk for loans and guarantees given by the EIB to eligible research projects. In total, a Commission budget of up to EUR 1 billion is foreseen for the period 2007 to 2013, of which up to EUR 800 million are from the “Cooperation” and up to EUR 200 million from the “Capacities” specific programmes. The EIB has committed itself to provide the same amount.

At 31 December 2012 the Commission had contributed, including also EFTA and third country contributions, EUR 1 006 million to the RSFF. The contributions have been invested by the EIB in bonds (fair value of EUR 754 million at 31 December 2012) and cash & term deposits (EUR 314 million). The amount disclosed as a contingent liability (note 5.2.1), EUR 948 million, represents the estimated maximum loss at 31 December 2012 that the Commission would suffer in case of defaults on loans or guarantees given by the EIB within the framework of the RSFF. It should be noted that the Commission's overall risk is limited to the amount it contributes to the Facility.

5.2.1

Loan Guarantee Instrument for TEN-T Projects (LGTT)

Loan Guarantee Instrument for TEN-T Projects (LGTT)

The Loan Guarantee Instrument for Ten-T Projects issues guarantees so as to mitigate revenue risk in the early years of TEN-Transport projects. Specifically the guarantee would fully cover stand-by credit lines, which would only be drawn upon in cases where project cash flows are insufficient to service senior debt. The instrument is a joint financial product of the Commission and the EIB and the TEN-T regulation has earmarked EUR 500 million from the EU budget to be allocated during the period 2007-2013. The EIB will allocate another EUR 500 million, so in total the amount available will be EUR 1 billion to the instrument.

At 31 December 2012 the Commission had contributed EUR 155 million to the LGTT. This has been invested by the EIB in bonds (fair value of EUR 75 million at 31 December 2012) and term deposits (EUR 88 million). At end 2012, EUR 523 million of loans have been signed and are thus covered by the guarantee. The amount disclosed as a contingent liability (note 5.2.1), EUR 39 million, represents the estimated maximum loss at 31 December 2012 that the Commission would suffer in case of defaults on loans given by the EIB within the framework of the LGTT operations. This represents 7,4 % of the total amounts guaranteed. It should be noted that the Commission's overall risk is limited to the amount it contributes to the Instrument.

5.2.1

European Bank for Reconstruction and Development (EBRD)

European Bank for Reconstruction and Development (EBRD)

As the EBRD is not quoted on any stock exchange and in view of the contractual restrictions included in the EBRD’s articles of incorporation relating, amongst others, to the sale of participating interests, capped at acquisition cost and only authorised to existing shareholders, the Commission's shareholding is valued at cost less any write-down for impairment.

| EUR millions |
| --- |
| EBRD | Total EBRD capital | Commission subscription |
| Total Share Capital | 29 601 | 900 |
| Paid-in | (6 202) | (188) |
| Uncalled | 23 399 | 712 |

EUR millions

EBRD

Total EBRD capital

Commission subscription

Total Share Capital

29 601

900

Paid-in

(6 202)

(188)

Uncalled

Uncalled

23 399

23 399

712

712

Risk Capital Operations

Risk Capital Operations

Under Risk Capital Operations amounts are granted to financial intermediaries to finance equity investments. They are managed by EIB and financed under the European Neighbourhood Policy.

ETF start up

ETF start up

The ETF start-up covers the Growth & Employment programme, the MAP programme, the CIP programme and the Technology Transfer Pilot Project, under the trusteeship of the EIF, supporting the creation and financing of start-up SMEs by investing in suitable specialised venture capital funds. At year-end, a further EUR 122 million relating to ETF Start-up had been committed to, but not yet been drawn down by the other parties.

Other available for sale investments

Other available for sale investments

The main amounts included under other non-current available for sale investments above are the European Fund for South East Europe (EUR 113 million), the Green for Growth Fund (EUR 39 million) and the GEEREF Fund (EUR 68 million).

European Fund for South East Europe

Green for Growth Fund

GEEREF Fund

2.4.2   
  Non-current loans

Non-current loans

| EUR millions |
| --- |
| | Note | 31.12.2012 | 31.12.2011 |
| Loans granted from the EU budget & ECSC | 2.4.2.1 | 162 | 170 |
| Loans granted from borrowed funds | 2.4.2.2 | 57 279 | 41 230 |
| Total | | 57 441 | 41 400 |

EUR millions

Note

31.12.2012

31.12.2011

Loans granted from the EU budget & ECSC

2.4.2.1

2.4.2.1

162

170

Loans granted from borrowed funds

2.4.2.2

2.4.2.2

57 279

41 230

Total

57 441

41 400

2.4.2.1   Loans granted from the European Union budget and the ECSC in Liquidation

Loans granted from the European Union budget and the ECSC in Liquidation

| EUR millions |
| --- |
| | Loans with special conditions | ECSC housing loans | Total |
| Total at 31.12.2011 | 151 | 19 | 170 |
| New loans | — | — | — |
| Repayments | (17) | (4) | (21) |
| Exchange differences | 1 | — | 1 |
| Changes in carrying amount | 11 | 1 | 12 |
| Total at 31.12.2012 | 146 | 16 | 162 |

EUR millions

Loans with special conditions

ECSC housing loans

Total

Total at 31.12.2011

151

19

170

New loans

—

—

—

Repayments

(17)

(4)

(21)

Exchange differences

1

—

1

Changes in carrying amount

11

1

12

Total at 31.12.2012

146

16

162

Loans with special conditions are granted at preferential rates as part of co-operation with non-member countries. All amounts fall due more than 12 months after year-end. The effective interest rates on these loans vary between 7,73 % and 14,507 %.

2.4.2.2   Loans granted from borrowed funds

Loans granted from borrowed funds

| EUR millions |
| --- |
| | MFA | Euratom | BOP | EFSM | ECSC in Liquidation | Total |
| Total at 31.12.2011 | 595 | 451 | 11 625 | 28 344 | 266 | 41 281 |
| New loans | 39 | — | — | 15 800 | — | 15 839 |
| Repayments | (84) | (24) | — | — | (46) | (154) |
| Exchange differences | — | — | — | — | 5 | 5 |
| Changes in carrying amount | (1) | (2) | (2) | 332 | (4) | 323 |
| Total at 31.12.2012 | 549 | 425 | 11 623 | 44 476 | 221 | 57 294 |
| Amount due < 1 year | 15 | — | — | — | — | 15 |
| Amount due > 1 year | 534 | 425 | 11 623 | 44 476 | 221 | 57 279 |

EUR millions

MFA

Euratom

BOP

EFSM

ECSC in Liquidation

Total

Total at 31.12.2011

595

451

11 625

28 344

266

41 281

New loans

39

—

—

15 800

—

15 839

Repayments

(84)

(24)

—

—

(46)

(154)

Exchange differences

—

—

—

—

5

5

Changes in carrying amount

(1)

(2)

(2)

332

(4)

323

Total at 31.12.2012

549

425

11 623

44 476

221

57 294

Amount due < 1 year

15

—

—

—

—

15

Amount due > 1 year

Amount due > 1 year

534

534

425

425

11 623

11 623

44 476

44 476

221

221

57 279

57 279

The large increase in these amounts is due to the EFSM loans disbursed during 2012 and is mirrored by an increase in the EU's borrowings (see note 2.14). For more information on borrowing and lending activities, see note 7.

2.14

7

2.5   NON-CURRENT RECEIVABLES AND RECOVERABLES

NON-CURRENT RECEIVABLES AND RECOVERABLES

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Member States | 545 | 268 |
| Other | 19 | 21 |
| Total | 564 | 289 |

EUR millions

31.12.2012

31.12.2011

Member States

545

268

Other

19

21

Total

564

289

Of the above receivables, EUR 550 million (2011: EUR 273 million) relate to non-exchange transactions.

The increase in amounts due from Member States relates to EAGF and EAFRD rural development non-executed clearance of accounts decisions.

2.6   NON-CURRENT PRE-FINANCING

NON-CURRENT PRE-FINANCING

| EUR millions |
| --- |
| | Note | 31.12.2012 | 31.12.2011 |
| Pre-financing | 2.6.1 | 40 790 | 40 625 |
| Prepaid expenses | 2.6.2 | 3 715 | 4 098 |
| Total | | 44 505 | 44 723 |

EUR millions

Note

31.12.2012

31.12.2011

Pre-financing

2.6.1

2.6.1

40 790

40 625

Prepaid expenses

2.6.2

2.6.2

3 715

4 098

Total

44 505

44 723

2.6.1   
  Pre-financing

Pre-financing

The timing of the recoverability or utilisation of the pre-financing governs whether it is disclosed as current or non-current pre-financing. The utilisation is defined by the project's underlying agreement. All repayments or utilisation due before twelve months of the reporting date is disclosed as current pre-financing.

Guarantees received in respect of pre-financing

Guarantees received in respect of pre-financing

These are guarantees that the Commission requests from beneficiaries that are not Member States, in certain cases when paying out advance payments (pre-financing). There are two values to disclose for this type of guarantee, the “nominal” and the “on-going” values. For the “nominal” value, the generating event is linked to the existence of the guarantee. For the “on-going” value, the guarantee’s generating event is the pre-financing payment and/or subsequent clearings. At 31 December 2012 the "nominal" value of guarantees received in respect of pre-financing amounted to EUR 1 348 million while the "on-going" value of those guarantees was EUR 1 083 million (2011: EUR 1 330 million and EUR 1 083 million respectively).

Certain pre-financing amounts paid out under the 7th Research Framework Programme for research and technological development (FP7) are effectively covered by a Participants Guarantee Fund (PGF) – the amount of pre-financing paid out in 2012 totalled EUR 4 billion (2011: EUR 3,3 billion). This fund is a separate entity from the EU and is not consolidated in these accounts – note 11.2.3.

11.2.3

| EUR millions |
| --- |
| Management Type | 31.12.2012 | 31.12.2011 |
| Direct centralised management | 1 249 | 1 219 |
| Indirect centralised management | 1 042 | 774 |
| Decentralised management | 677 | 697 |
| Shared management | 37 214 | 37 249 |
| Joint management | 592 | 686 |
| Implemented by other Institutions & Agencies | 16 | — |
| Total | 40 790 | 40 625 |

EUR millions

Management Type

31.12.2012

31.12.2011

Direct centralised management

1 249

1 219

Indirect centralised management

1 042

774

Decentralised management

677

697

Shared management

37 214

37 249

Joint management

592

686

Implemented by other Institutions & Agencies

16

—

Total

40 790

40 625

The most significant non-current pre-financing amounts relate to Structural Actions for the 2007-2013 programming period: the regional development fund (ERDF) and the cohesion fund (CF) EUR 23,9 billion, the social fund (ESF) EUR 6,5 billion, the agricultural fund for rural development (EAFRD) EUR 6,1 billion and the fisheries fund (EFF) EUR 0,6 billion. As many of these projects are long-term in nature, it is necessary that the related advances are available for more than one year. Thus these pre-financing amounts are shown as non-current assets.

Pre-financing represents a large portion of the EU's total assets, and thus receives proper and regular attention. It should be noted that the level of pre-financing amounts in the various programmes must be sufficient to ensure the necessary float for the beneficiary to start the project, while also safeguarding the financial interests of the EU and taking into consideration legal, operational and cost-effectiveness constraints. All these elements have been given due consideration by the Commission in an effort to improve the follow-up of pre-financing.

2.6.2   
  Prepaid expenses

Prepaid expenses

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Financial Engineering Instruments | 2 717 | 3 378 |
| Aid Schemes | 998 | 720 |
| Total | 3 715 | 4 098 |

EUR millions

31.12.2012

31.12.2011

Financial Engineering Instruments

2 717

3 378

Aid Schemes

998

720

Total

3 715

4 098

Under the framework of the structural funds programmes 2007-2013, payments can be made from the EU budget to Member States so as to contribute to Financial Engineering Instruments (be it in the form of loans, equity investments or guarantees) set up and managed under the responsibility of the Member States. Monies that are unused by these instruments at year-end are the property of the EU (as with standard pre-financing) and are thus treated as an asset on the Commission’s balance sheet. However, the basic legal acts do not oblige the Member States to provide periodic reports to the Commission on the use made of these advances, and in some cases not even identify them in the statements of expenditure submitted to the Commission. Thus, and on the basis of information received from Member States on the utilisation of funds, an estimation is made at each year-end of the value of this asset.

Amounts included under the Aid Schemes heading are the Commission’s estimate of open advances for various aid schemes (state aid, market measures of EAGF).

CURRENT ASSETS

CURRENT ASSETS

2.7   INVENTORIES

INVENTORIES

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Scientific materials | 81 | 78 |
| Other | 57 | 16 |
| Total | 138 | 94 |

EUR millions

31.12.2012

31.12.2011

Scientific materials

81

78

Other

57

16

Total

138

94

2.8   CURRENT FINANCIAL ASSETS

CURRENT FINANCIAL ASSETS

| EUR millions |
| --- |
| | Note | 31.12.2012 | 31.12.2011 |
| Available for sale financial assets | 2.8.1 | 1 858 | 3 619 |
| Loans | 2.8.2 | 123 | 102 |
| Total | | 1 981 | 3 721 |

EUR millions

Note

31.12.2012

31.12.2011

Available for sale financial assets

2.8.1

2.8.1

1 858

3 619

Loans

2.8.2

2.8.2

123

102

Total

1 981

3 721

2.8.1   
  Current available for sale financial assets

Current available for sale financial assets

Available for sale financial assets are purchased for their investment return or yield, or held to establish a particular asset structure or a secondary source of liquidity and may therefore be sold in response to needs for liquidity or changes in interest rates. The following table provides an overview of available for sale financial assets with a remaining maturity before end 2013:

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Guarantee Fund | 268 | — |
| ECSC in liquidation | 490 | 1 463 |
| BUFI investments | 845 | 1 358 |
| Risk Sharing Finance Facility (RSFF) | 160 | 547 |
| Loan Guarantee Instrument for TEN-T projects (LGTT) | 23 | 97 |
| European Chemicals Agency | 69 | 151 |
| Other available for sale investments | 3 | 3 |
| Total | 1 858 | 3 619 |

EUR millions

31.12.2012

31.12.2011

Guarantee Fund

268

—

ECSC in liquidation

490

1 463

BUFI investments

845

1 358

Risk Sharing Finance Facility (RSFF)

160

547

Loan Guarantee Instrument for TEN-T projects (LGTT)

23

97

European Chemicals Agency

69

151

Other available for sale investments

3

3

Total

1 858

3 619

As explained under note 2.4.1, the presentation of available for sale financial assets has been changed from 2012 onwards. Had the same approach been followed in the 2011 accounts, the comparatives would have been as follows:

2.4.1

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Guarantee Fund | 268 | 201 |
| ECSC in liquidation | 490 | 481 |
| BUFI investments | 845 | 770 |
| Risk Sharing Finance Facility (RSFF) | 160 | 182 |
| Loan Guarantee Instrument TEN-T projects (LGTT) | 23 | 49 |
| European Chemicals Agency | 69 | 60 |
| Other available for sale investments | 3 | 3 |
| Total | 1 858 | 1 746 |

EUR millions

31.12.2012

31.12.2011

Guarantee Fund

268

201

ECSC in liquidation

490

481

BUFI investments

845

770

Risk Sharing Finance Facility (RSFF)

160

182

Loan Guarantee Instrument TEN-T projects (LGTT)

23

49

European Chemicals Agency

69

60

Other available for sale investments

3

3

Total

1 858

1 746

2.8.2   
  Current loans

Current loans

Included under this heading are loans with remaining final maturities less than 12 months after the balance sheet date (see note 2.4.2.2 above for more details). Also included under this heading are term deposits of the European External Action Service (EUR 42 million) and the ECSC in liquidation (EUR 22 million).

2.4.2.2

2.9   CURRENT RECEIVABLES AND RECOVERABLES

CURRENT RECEIVABLES AND RECOVERABLES

| EUR millions |
| --- |
| | Note | 31.12.2012 | 31.12.2011 |
| Fines | 2.9.1 | 4 090 | 3 125 |
| Member States | 2.9.2 | 6 270 | 2 693 |
| Accrued income and deferred charges | 2.9.3 | 3 368 | 3 267 |
| Other receivables & recoverables | 2.9.4 | 311 | 392 |
| Total | | 14 039 | 9 477 |

EUR millions

Note

31.12.2012

31.12.2011

Fines

2.9.1

2.9.1

4 090

3 125

Member States

2.9.2

2.9.2

6 270

2 693

Accrued income and deferred charges

2.9.3

2.9.3

3 368

3 267

Other receivables & recoverables

2.9.4

2.9.4

311

392

Total

14 039

9 477

The total above contains an estimated EUR 13 729 million (2011: EUR 8 955 million) relating to non-exchange transactions.

2.9.1   
  Fines

Fines

This concerns amounts to be recovered relating to fines issued by the Commission of EUR 4 357 million (2011: EUR 3 369 million) less a write-down of EUR 267 million (2011: EUR 244 million).

Guarantees totalling EUR 2 513 million had been received for the fines outstanding at 31 December 2012 (2011: EUR 3 012 million) in respect of these receivables. It should be noted that EUR 1 471 million of the receivables were due for payment after 31 December 2012.

2.9.2   
  Member States

Member States

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| EAGF and Rural Development receivables: |
| EAGF | 1 172 | 1 439 |
| EAFRD | 14 | 23 |
| TRDI | 44 | 37 |
| SAPARD | 136 | 142 |
| Write-down | (814) | (771) |
| Total | 552 | 870 |
| VAT paid and recoverable | 44 | 41 |
| Own resources: |
| Established in the A account | 45 | 29 |
| Established in the separate account | 1 294 | 1 263 |
| Own resourced to be received | 3 617 | — |
| Write-down | (773) | (779) |
| Other | 16 | 114 |
| Total | 4 199 | 627 |
| Other receivables from Member States: |
| Pre-financing recovery expected | 1 220 | 963 |
| Other | 255 | 192 |
| Total | 1 475 | 1 155 |
| Total | 6 270 | 2 693 |

EUR millions

31.12.2012

31.12.2011

EAGF and Rural Development receivables:

EAGF and Rural Development receivables:

EAGF

1 172

1 439

EAFRD

14

23

TRDI

44

37

SAPARD

136

142

Write-down

(814)

(771)

Total

552

870

VAT paid and recoverable

VAT paid and recoverable

44

44

41

41

Own resources:

Own resources:

Established in the A account

45

29

Established in the separate account

1 294

1 263

Own resourced to be received

3 617

—

Write-down

(773)

(779)

Other

16

114

Total

4 199

627

Other receivables from Member States:

Other receivables from Member States:

Pre-financing recovery expected

1 220

963

Other

255

192

Total

1 475

1 155

Total

6 270

2 693

EAGF and Rural Development receivables

EAGF and Rural Development receivables

This item primarily covers the amounts owed by Member States at 31 December, as declared and certified by the Member States at 15 October. An estimation is made for the receivables arising after this declaration and up to 31 December. The Commission also estimates a write-down for the amounts owed by beneficiaries that are unlikely to be recovered. The fact that such an adjustment is made does not mean that the Commission is waiving future recovery of these amounts. A deduction of 20 % is also included in the adjustment, and corresponds to what Member States are allowed to retain to cover administrative costs.

Own resources receivables

Own resources receivables

The significant increase of receivables from Member States is mainly explained by EUR 3 617 million of own resources to be received at 31 December 2012 relating to the Amending Budgets 5 and 6/2012. These Amending Budgets were adopted on 21 November 2012 and 12 December 2012 respectively. According to Article 10 of Regulation (EC, Euratom) No 1150/2000 the entries corresponding to the readjustments of GNI contributions were carried out on the first working day of January 2013.

It should be noted that Member States are entitled to withhold 25 % of traditional own resources as collection costs, thus the above figures are shown net of this deduction. Based on the estimations sent by Member States, a write-down has been deducted from receivables from Member States. However, this does not mean that the Commission is waiving recovery of the amounts covered by this value adjustment.

2.9.3   
  Accrued income and deferred charges

Accrued income and deferred charges

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Accrued income | 3 002 | 2 952 |
| Deferred charges | 351 | 296 |
| Other | 15 | 19 |
| Total | 3 368 | 3 267 |

EUR millions

31.12.2012

31.12.2011

Accrued income

3 002

2 952

Deferred charges

351

296

Other

15

19

Total

3 368

3 267

The main amount under this heading is accrued income:

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Own resources | 2 388 | 2 644 |
| Agricultural assigned revenue November & December | 218 | 111 |
| Cohesion, Regional & Rural Development Funds: financial corrections | 276 | 16 |
| Other accrued income | 120 | 181 |
| Total | 3 002 | 2 952 |

EUR millions

31.12.2012

31.12.2011

Own resources

2 388

2 644

Agricultural assigned revenue November & December

218

111

Cohesion, Regional & Rural Development Funds: financial corrections

276

16

Other accrued income

120

181

Total

3 002

2 952

2.9.4   
  Other receivables and recoverables

Other receivables and recoverables

Included under this heading are mainly recoveries of pre-financing amounts, recovery of expenses as well as other revenue from administrative and operational actions.

2.10   CURRENT PRE-FINANCING

CURRENT PRE-FINANCING

| EUR millions |
| --- |
| | Note | 31.12.2012 | 31.12.2011 |
| Pre-financing | 2.10.1 | 9 548 | 8 089 |
| Prepaid expenses | 2.10.2 | 3 690 | 2 918 |
| Total | | 13 238 | 11 007 |

EUR millions

Note

31.12.2012

31.12.2011

Pre-financing

2.10.1

2.10.1

9 548

8 089

Prepaid expenses

2.10.2

2.10.2

3 690

2 918

Total

13 238

11 007

2.10.1   
  Pre-financing

Pre-financing

| EUR millions |
| --- |
| Management Type | 31.12.2012 | 31.12.2011 |
| Direct centralised management | 3 289 | 3 048 |
| Indirect centralised management | 3 908 | 3 037 |
| Decentralised management | 301 | 330 |
| Shared management | 1 008 | 761 |
| Joint management | 844 | 803 |
| Implemented by other Institutions & Agencies | 198 | 110 |
| Total | 9 548 | 8 089 |

EUR millions

Management Type

31.12.2012

31.12.2011

Direct centralised management

3 289

3 048

Indirect centralised management

3 908

3 037

Decentralised management

301

330

Shared management

1 008

761

Joint management

844

803

Implemented by other Institutions & Agencies

198

110

Total

9 548

8 089

The current pre-financing balance has two distinct components: the gross pre-financing and the accruals made on this pre-financing (made to reflect the related expenditure estimated that has been incurred at year-end). Both elements have to be taken into consideration for a proper analysis of the variation of the current net pre-financing balance from one year to another.

On the one hand, the year 2012 marked a further decrease of EUR 3 billion in gross current pre-financing under shared management due to the significant advancement in the closure process of the previous programming period 2000-2006. On the other hand, the accruals on this pre-financing have decreased by EUR 3,3 billion, which led to an overall increase of EUR 0,3 billion in the net current pre-financing. The reason for these movements lies in the overlapping of the previous programming period 2000-2006 (which is now in its closure phase) with the current programming period 2007-2013. Whereas pre-financing related to the previous programming period is estimated to have been entirely used (i.e. net balance zero), the pre-financing of the current programming period is estimated to be only partially used as at 31 December 2012. The remaining part is estimated to be used in 2013 or later.

A similar situation is noted for direct centralised management, where the gross pre-financing has decreased by EUR 741 million, while the net pre-financing has slightly increased by EUR 241 million.

2.10.2   
  Prepaid expenses

Prepaid expenses

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Financial Engineering Instruments | 1 358 | 1 126 |
| Aid Schemes | 2 332 | 1 792 |
| Total | 3 690 | 2 918 |

EUR millions

31.12.2012

31.12.2011

Financial Engineering Instruments

1 358

1 126

Aid Schemes

2 332

1 792

Total

3 690

2 918

2.11   CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS

| EUR millions |
| --- |
| | Note | 31.12.2012 | 31.12.2011 |
| Unrestricted cash: | 2.11.1 | | |
| Accounts with Treasuries and Central Banks | | 2 203 | 7 450 |
| Current accounts | | 967 | 1 099 |
| Imprest accounts | | 38 | 43 |
| Transfers (cash in transit) | | (1) | (5) |
| Total | | 3 207 | 8 587 |
| Cash belonging to financial instruments & term deposits | 2.11.2 | 2 345 | 2 028 |
| Restricted cash | 2.11.3 | 5 122 | 8 320 |
| Total | | 10 674 | 18 935 |

EUR millions

Note

31.12.2012

31.12.2011

Unrestricted cash:

Unrestricted cash:

2.11.1

2.11.1

Accounts with Treasuries and Central Banks

2 203

7 450

Current accounts

967

1 099

Imprest accounts

38

43

Transfers (cash in transit)

(1)

(5)

Total

3 207

8 587

Cash belonging to financial instruments & term deposits

Cash belonging to financial instruments & term deposits

2.11.2

2.11.2

2 345

2 345

2 028

2 028

Restricted cash

Restricted cash

2.11.3

2.11.3

5 122

5 122

8 320

8 320

Total

10 674

18 935

2.11.1   
  Unrestricted cash

Unrestricted cash

Unrestricted cash covers all the funds which the EU keeps in its accounts in each Member State and EFTA country (treasury or central bank), as well as in current accounts, imprest accounts and petty cash.

The significant decrease in unrestricted cash was mainly caused by a decrease in the accounts with treasuries and central banks. The ending balance of 2012 was significantly lower than the ending balance of 2011 due to the high budget execution rate for 2012. Moreover, additional cash resources related to the Amending Budget 5/2012 and the Amending Budget 6/2012 were only received in 2013.

2.11.2   
  Cash belonging to financial instruments & term deposits

Cash belonging to financial instruments & term deposits

Amounts shown under this heading are mainly cash equivalents (EUR 1 845 million) managed by fiduciaries on behalf of the Commission for the purpose of implementing particular financial instruments programmes funded by the EU budget and other term deposits (EUR 500 million). The cash belonging to financial instruments can thus only be used in the financial instruments programme concerned. At year-end, EUR 100 million had been committed to financial instruments managed by fiduciaries, but not yet been drawn down by the other parties.

As explained under note 2.4.1, the presentation of available for sale financial assets and the related cash and cash equivalents has been changed from 2012 onwards. In 2012, this heading includes the cash and cash equivalents of the Guarantee Fund whereas the 2011 total does not include the EUR 302 million cash and cash equivalents of the Guarantee Fund for 2011, which had been shown under non-current available for sale financial assets. Had the new presentation, including showing cash belonging to all financial instruments on a separate line, been followed in the 2011 accounts, the comparatives would have been EUR 963 million for current accounts and EUR 2 466 million for cash belonging to financial instruments & term deposits.

2.4.1

2.11.3   
  Restricted cash

Restricted cash

Restricted cash refers to amounts received in connection with fines issued by the Commission for which the case is still open. These are kept in specific deposit accounts that are not used for any other activities. In case an appeal has been lodged or where it is unknown if an appeal will be made by the other party the underlying amount is shown as contingent liability in note 5.2.

5.2

The decrease in restricted cash is due to two main reasons: on the one hand there were a number of final decisions by the Court of Justice which concerned significant amounts, and on the other hand, there was an increased use made of the specifically created fund for fines (BUFI). Since 1 January 2010 all provisionally cashed fines are managed by the Commission in this fund and invested in financial instruments categorised as available for sale financial assets (see note 2.4 and 2.8).

2.4

2.8

NON-CURRENT LIABILITIES

NON-CURRENT LIABILITIES

2.12   PENSION AND OTHER EMPLOYEE BENEFITS

PENSION AND OTHER EMPLOYEE BENEFITS

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Pensions – Staff | 37 528 | 30 617 |
| Pensions – Others | 968 | 777 |
| Joint Sickness Insurance Scheme | 4 007 | 3 441 |
| Total | 42 503 | 34 835 |

EUR millions

31.12.2012

31.12.2011

Pensions – Staff

37 528

30 617

Pensions – Others

968

777

Joint Sickness Insurance Scheme

4 007

3 441

Total

42 503

34 835

The significant increase in the pension liability is explained by the sizeable decrease in the discount rate applied, resulting in a large actuarial loss for the year.

2.12.1   
  Pensions – Staff

Pensions – Staff

In accordance with Article 83 of the Staff Regulations, the payment of the benefits provided for in the staff pension scheme (PSEO: Pension Scheme of European Officials) constitutes an expenditure in the EU's budget. The scheme is not funded, but the Member States guarantee the payment of these benefits collectively according to the scale fixed for the financing of this expenditure. In addition, officials contribute one third to the long-term financing of this scheme via a compulsory contribution.

The liabilities of the pension scheme were assessed on the basis of the number of staff and retired staff at 31 December 2012 and on the rules of the Staff Regulations applicable at this date. This valuation was carried out in accordance with the methodology of IPSAS 25 (and therefore also EU accounting rule 12). The method used to calculate this liability is the projected unit credit method. The main actuarial assumptions available at the valuation date and used on the valuation were as follows:

| Staff pension liability | 31.12.2012 | 31.12.2011 |
| --- | --- | --- |
| Nominal discount rate | 3,6 % | 4,9 % |
| Expected inflation rate | 2,0 % | 1,8 % |
| Real discount rate | 1,6 % | 3,0 % |
| Probability of marriage: Man/Woman | 84 %/38 % | 84 %/38 % |
| General Salary Growth/pension revaluation | 0 % | 0 % |
| 2008 International Civil Servants Life Table | Yes | Yes |

Staff pension liability

31.12.2012

31.12.2011

Nominal discount rate

3,6 %

4,9 %

Expected inflation rate

2,0 %

1,8 %

Real discount rate

1,6 %

3,0 %

Probability of marriage: Man/Woman

84 %/38 %

84 %/38 %

General Salary Growth/pension revaluation

0 %

0 %

2008 International Civil Servants Life Table

Yes

Yes

Movement in Gross Employee Benefits liability

Movement in Gross Employee Benefits liability

| EUR millions |
| --- |
| | Staff pension liability | Sickness Insurance |
| Gross Liability at previous year-end | 34 233 | 3 711 |
| Service/normal cost | 1 144 | — |
| Interest cost | 1 043 | — |
| Benefits paid | (1 243) | — |
| Actuarial losses | 6 691 | 567 |
| Change due to newcomers | 93 | — |
| Gross Liability at year-end | 41 961 | 4 278 |
| Correction coefficients applied to pensions | 1 022 | N/A |
| Deduction of taxes on pensions | (5 455) | N/A |
| Plan assets | N/A | (271) |
| Net liability at year-end | 37 528 | 4 007 |

EUR millions

Staff pension liability

Sickness Insurance

Gross Liability at previous year-end

Gross Liability at previous year-end

34 233

34 233

3 711

3 711

Service/normal cost

1 144

—

Interest cost

1 043

—

Benefits paid

(1 243)

—

Actuarial losses

6 691

567

Change due to newcomers

93

—

Gross Liability at year-end

Gross Liability at year-end

41 961

41 961

4 278

4 278

Correction coefficients applied to pensions

1 022

N/A

Deduction of taxes on pensions

(5 455)

N/A

Plan assets

N/A

(271)

Net liability at year-end

37 528

4 007

2.12.2   
  Pensions – Others

Pensions – Others

This refers to the liability relating to the pension obligations towards Members and former Members of the Commission, the Court of Justice (and General Court) and the Court of Auditors, the Secretaries General of the Council, the Ombudsman, the European Data Protection Supervisor, and the European Union Civil Service Tribunal. Also included under this heading is a liability relating to the pensions of Members of the European Parliament.

2.12.3   
  Joint Sickness Insurance Scheme

Joint Sickness Insurance Scheme

A valuation is also made for the estimated liability that the EU has regarding its contributions to the Joint Sickness Insurance Scheme in relation to its retired staff. The gross liability has been valued at EUR 4 278 million and plan assets of EUR 271 million are deducted from the gross liability to arrive at the net amount. The discount rate and the general salary growth used in the calculation are the same as those used in the staff pension valuation.

2.13   NON-CURRENT PROVISIONS

NON-CURRENT PROVISIONS

| EUR millions |
| --- |
| | Amount at 31.12.2011 | Additional provisions | Unused amounts reversed | Amounts used | Transfer to current | Change in estimation | Amount at 31.12.2012 |
| Legal cases | 368 | 58 | (241) | (53) | 0 | 0 | 132 |
| Nuclear site dismantling | 1 005 | 0 | 0 | (3) | (29) | 24 | 997 |
| Financial | 100 | 38 | 0 | 0 | (33) | 3 | 108 |
| Other | 22 | 1 | (1) | (1) | 0 | 0 | 21 |
| Total | 1 495 | 97 | (242) | (57) | (62) | 27 | 1 258 |

EUR millions

Amount at 31.12.2011

Additional provisions

Unused amounts reversed

Amounts used

Transfer to current

Change in estimation

Amount at 31.12.2012

Legal cases

368

58

(241)

(53)

0

0

132

Nuclear site dismantling

1 005

0

0

(3)

(29)

24

997

Financial

100

38

0

0

(33)

3

108

Other

22

1

(1)

(1)

0

0

21

Total

1 495

97

(242)

(57)

(62)

27

1 258

Legal cases

Legal cases

This is the estimate of amounts that will probably have to be paid out more than 12 months after the year-end in relation to a number of on-going legal cases. The decrease in legal cases provisions is mainly due to the closure of an EAGF court case in 2012.

Nuclear site dismantlement

Nuclear site dismantlement

In 2008 a consortium of independent experts made an update of their 2003 study into the estimated costs of the decommissioning of the JRC nuclear facilities and waste management programme. Their revised estimate of EUR 1 222 million (previously EUR 1 145 million) is taken as the basis for the provision to be included in the financial statements. In accordance with the EU accounting rules, this estimate is indexed for inflation and then discounted to its net present value (using the Euro zero-coupon swap curve). In view of the estimated duration of this programme (around 20 years), it should be pointed out that there is some uncertainty about this estimate, and the final cost could be different from the amounts currently entered.

Financial provisions

Financial provisions

These concern provisions which represent the estimated losses that will be incurred in relation to the guarantees given under the SME Guarantee Facility 1998, the SME Guarantee Facility 2001 and the SME Guarantee Facility 2007 under CIP and the European Progress Microfinance Facility (Guarantee), where the European Investment Fund (EIF) is empowered to issue guarantees in its own name but on behalf of and at the risk of the Commission. The financial risk linked to the drawn and undrawn guarantees is, however, capped. Non-current financial provisions are discounted to their net present value (using the Euro Swap annual rate).

2.14   NON-CURRENT FINANCIAL LIABILITIES

NON-CURRENT FINANCIAL LIABILITIES

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Non-current borrowings | 57 252 | 41 200 |
| Elimination Guarantee Fund (7) | (20) | (21) |
| Total | 57 232 | 41 179 |

EUR millions

31.12.2012

31.12.2011

Non-current borrowings

57 252

41 200

Elimination Guarantee Fund (7)

7

(20)

(21)

Total

57 232

41 179

Non-current borrowings

Non-current borrowings

| EUR millions |
| --- |
| | MFA | Euratom | BOP | EFSM | ECSC in Liquidation | Total |
| Total at 31.12.2011 | 595 | 451 | 11 625 | 28 344 | 236 | 41 251 |
| New borrowings | 39 | — | — | 15 800 | — | 15 839 |
| Repayments | (84) | (24) | — | — | (46) | (154) |
| Exchange differences | — | — | — | — | 4 | 4 |
| Changes in carrying amount | (1) | (2) | (2) | 332 | — | 327 |
| Total at 31.12.2012 | 549 | 425 | 11 623 | 44 476 | 194 | 57 267 |
| Amount due < 1 year | 15 | — | — | — | — | 15 |
| Amount due > 1 year | 534 | 425 | 11 623 | 44 476 | 194 | 57 252 |

EUR millions

MFA

Euratom

BOP

EFSM

ECSC in Liquidation

Total

Total at 31.12.2011

595

451

11 625

28 344

236

41 251

New borrowings

39

—

—

15 800

—

15 839

Repayments

(84)

(24)

—

—

(46)

(154)

Exchange differences

—

—

—

—

4

4

Changes in carrying amount

(1)

(2)

(2)

332

—

327

Total at 31.12.2012

549

425

11 623

44 476

194

57 267

Amount due < 1 year

Amount due < 1 year

15

15

—

—

—

—

—

—

—

—

15

15

Amount due > 1 year

Amount due > 1 year

534

534

425

425

11 623

11 623

44 476

44 476

194

194

57 252

57 252

This heading includes borrowings due by the EU maturing in over one year. Borrowings include debts evidenced by certificates amounting to EUR 57 026 million (2011: EUR 41 011 million). The changes in carrying amount correspond to the change in accrued interests. For more information on borrowing and lending activities, see note 7.

7

2.15   OTHER NON-CURRENT LIABILITIES

OTHER NON-CURRENT LIABILITIES

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Finance Leasing debts | 2 040 | 1 603 |
| Buildings paid for in instalments | 352 | 367 |
| Other | 135 | 89 |
| Total | 2 527 | 2 059 |

EUR millions

31.12.2012

31.12.2011

Finance Leasing debts

2 040

1 603

Buildings paid for in instalments

352

367

Other

135

89

Total

2 527

2 059

CURRENT LIABILITIES

CURRENT LIABILITIES

2.16   CURRENT PROVISIONS

CURRENT PROVISIONS

| EUR millions |
| --- |
| | Amount at 31.12.2011 | Additional provisions | Unused amounts reversed | Amounts used | Transfers from non- current | Change in estimation | Amount at 31.12.2012 |
| Legal cases | 17 | 218 | (2) | (9) | 0 | 0 | 224 |
| Nuclear site dismantlement | 29 | 0 | 0 | (29) | 29 | 0 | 29 |
| Financial | 165 | 30 | 0 | (43) | 33 | 3 | 188 |
| Other | 59 | 342 | (32) | (5) | 1 | 0 | 365 |
| Total | 270 | 590 | (34) | (86) | 63 | 3 | 806 |

EUR millions

Amount at 31.12.2011

Additional provisions

Unused amounts reversed

Amounts used

Transfers from non- current

Change in estimation

Amount at 31.12.2012

Legal cases

17

218

(2)

(9)

0

0

224

Nuclear site dismantlement

29

0

0

(29)

29

0

29

Financial

165

30

0

(43)

33

3

188

Other

59

342

(32)

(5)

1

0

365

Total

270

590

(34)

(86)

63

3

806

2.17   CURRENT FINANCIAL LIABILITIES

CURRENT FINANCIAL LIABILITIES

This heading relates to borrowings (see note 2.14) that mature during the 12 months following the balance sheet date.

2.14

2.18   PAYABLES

PAYABLES

| EUR millions |
| --- |
| | Note | 31.12.2012 | 31.12.2011 |
| Current portion of non-current liabilities | 2.18.1 | 89 | 81 |
| Payables | 2.18.2 | 21 558 | 22 311 |
| Accrued charges and deferred income | 2.18.3 | 68 436 | 69 081 |
| Total | | 90 083 | 91 473 |

EUR millions

Note

31.12.2012

31.12.2011

Current portion of non-current liabilities

2.18.1

2.18.1

89

81

Payables

2.18.2

2.18.2

21 558

22 311

Accrued charges and deferred income

2.18.3

2.18.3

68 436

69 081

Total

90 083

91 473

2.18.1   
  Current portion of non-current liabilities

Current portion of non-current liabilities

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Finance Leasing debts | 70 | 66 |
| Other | 19 | 15 |
| Total | 89 | 81 |

EUR millions

31.12.2012

31.12.2011

Finance Leasing debts

70

66

Other

19

15

Total

89

81

2.18.2   
  Payables

Payables

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Member States | 23 029 | 22 200 |
| Suppliers and other | 1 704 | 1 611 |
| Estimated non-eligible amounts and pending pre-payments | (3 175) | (1 500) |
| Total | 21 558 | 22 311 |

EUR millions

31.12.2012

31.12.2011

Member States

23 029

22 200

Suppliers and other

1 704

1 611

Estimated non-eligible amounts and pending pre-payments

(3 175)

(1 500)

Total

21 558

22 311

Payables include cost statements received by the Commission under the framework of the grant activities. They are credited for the amount being claimed from the moment the demand is received. If the counterpart is a Member State, they are classified as such. It is the same procedure for invoices and credit notes received under procurement activities. The cost claims concerned have been taken into account for the year-end cut off procedures. Following these cut off entries, estimated eligible amounts have therefore been recorded in the accounts as expenses, while the remaining part is disclosed as “Estimated non-eligible amounts and pending prepayments” (see below). In order not to overestimate assets and liabilities, it was decided to present the net amount under current liabilities.

Member States

Member States

The primary amounts here relate to unpaid cost claims for Structural Fund actions (EUR 5,6 billion for ESF and EUR 15,6 billion for ERDF and CF).

Suppliers and other

Suppliers and other

Included under this heading are sundry payables, amounts owed following grant and procurement activities, as well as amounts payable to public bodies and non-consolidated entities (e.g. the EDF).

Estimated non-eligible amounts and pending prepayments

Estimated non-eligible amounts and pending prepayments

Payables are reduced by that part of the requests for reimbursement received, but not yet checked, that was considered to be ineligible. The largest amounts concern the Structural Actions DGs. Payables are also reduced by the part of requests for reimbursement received corresponding to prepaid expenditure still to pay at year end (EUR 2,4 billion).

2.18.3   
  Accrued charges and deferred income

Accrued charges and deferred income

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Accrued charges | 68 216 | 68 577 |
| Deferred income | 201 | 490 |
| Other | 19 | 14 |
| Total | 68 436 | 69 081 |

EUR millions

31.12.2012

31.12.2011

Accrued charges

68 216

68 577

Deferred income

201

490

Other

19

14

Total

68 436

69 081

The split of accrued charges is as follows:

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Agriculture and Rural Development: |
| EAGF: Direct aid period 16/10 to 31/12 | 33 040 | 33 774 |
| EAGF: Direct Aid – other entitlements | 11 492 | 10 701 |
| EAGF: Sugar restructuring | 0 | 224 |
| EAGF: Other | 1 | 23 |
| EAFRD | 12 497 | 12 127 |
| Total | 57 030 | 56 849 |
| Structural Actions: |
| EFF/FIFG | 66 | 56 |
| ERDF & Cohesion Fund | 4 359 | 4 791 |
| ISPA | 382 | 172 |
| ESF | 1 378 | 1 687 |
| Total | 6 185 | 6 706 |
| Other accrued charges: |
| Research & Development | 1 077 | 1 157 |
| Other | 3 924 | 3 865 |
| Total | 5 001 | 5 022 |
| Total | 68 216 | 68 577 |

EUR millions

31.12.2012

31.12.2011

Agriculture and Rural Development:

Agriculture and Rural Development:

EAGF: Direct aid period 16/10 to 31/12

33 040

33 774

EAGF: Direct Aid – other entitlements

11 492

10 701

EAGF: Sugar restructuring

0

224

EAGF: Other

1

23

EAFRD

12 497

12 127

Total

57 030

56 849

Structural Actions:

Structural Actions:

EFF/FIFG

66

56

ERDF & Cohesion Fund

4 359

4 791

ISPA

382

172

ESF

1 378

1 687

Total

6 185

6 706

Other accrued charges:

Other accrued charges:

Research & Development

1 077

1 157

Other

3 924

3 865

Total

5 001

5 022

Total

68 216

68 577

NET ASSETS

NET ASSETS

2.19   RESERVES

RESERVES

| EUR millions |
| --- |
| | Note | 31.12.2012 | 31.12.2011 |
| Fair value reserve | 2.19.1 | 150 | (108) |
| Guarantee Fund reserve | 2.19.2 | 2 079 | 1 911 |
| Other reserves | 2.19.3 | 1 832 | 1 805 |
| Total | | 4 061 | 3 608 |

EUR millions

Note

31.12.2012

31.12.2011

Fair value reserve

2.19.1

2.19.1

150

(108)

Guarantee Fund reserve

2.19.2

2.19.2

2 079

1 911

Other reserves

2.19.3

2.19.3

1 832

1 805

Total

4 061

3 608

2.19.1   
  Fair value reserve

Fair value reserve

In accordance with the accounting rules, the adjustment to fair value of available for sale financial assets is accounted for through the fair value reserve. In 2012 a net EUR 5 million (2011: EUR 24 million) of accumulated fair value decreases have been taken out of the fair value reserve and recognised in the statement of financial performance relating to available for sale financial assets.

2.19.2   
  Guarantee Fund reserve

Guarantee Fund reserve

This reserve reflects the 9 % target amount of the outstanding amounts guaranteed by the Fund that is required to be kept as assets.

2.19.3   
  Other reserves

Other reserves

The amount relates primarily to the ECSC in liquidation reserve (EUR 1 534 million) for the assets of the Research Fund for Coal and Steel and was created in the context of the winding-up of the ECSC.

2.20   AMOUNTS TO BE CALLED FROM MEMBER STATES

AMOUNTS TO BE CALLED FROM MEMBER STATES

| EUR millions |
| --- |
| | Amount |
| Amounts to be called from Member States at 31.12.2011 | 37 458 |
| Return of 2011 budget surplus to Member States | 1 497 |
| Movement in Guarantee Fund reserve | 168 |
| Other reserve movements | 25 |
| Economic result of the year | 5 329 |
| Total amounts to be called from Members States at 31.12.2012 | 44 477 |
| Split between: | |
| Employee benefits | 42 503 |
| Other amounts | 1 974 |

EUR millions

Amount

Amounts to be called from Member States at 31.12.2011

37 458

Return of 2011 budget surplus to Member States

1 497

Movement in Guarantee Fund reserve

168

Other reserve movements

25

Economic result of the year

5 329

Total amounts to be called from Members States at 31.12.2012

44 477

Split between:

Split between:

Employee benefits

42 503

Other amounts

1 974

This amount represents that part of the expenses already incurred by the Commission up to 31 December 2012 that must be funded by future budgets. Many expenses are recognised under accrual accounting rules in the year N although they may be actually paid in year N+1 and funded using the budget of year N+1. The inclusion in the accounts of these liabilities coupled with the fact that the corresponding amounts are financed from future budgets, results in liabilities greatly exceeding assets at the year-end. The most significant amounts to be highlighted are the EAGF activities. The majority of the amounts to be called are in fact paid by the Member States in less than 12 months after the end of the financial year in question as part of the budget of the following year.

It is essentially only the employee benefits obligations of the Commission towards its staff which are paid out over a longer period, noting that the funding of the pension payments by the annual budgets is guaranteed by the Member States. For information purposes only, an estimate of the split of future employee benefit payments is given below:

| EUR millions |
| --- |
| | Amount |
| Amounts to be paid in 2013 | 1 399 |
| Amounts to be paid after 2013 | 41 104 |
| Total employee benefits liability at 31.12.2012 | 42 503 |

EUR millions

Amount

Amounts to be paid in 2013

1 399

Amounts to be paid after 2013

41 104

Total employee benefits liability at 31.12.2012

42 503

It should also be noted that the above has no effect on the budget result – budget revenue should always equal or exceed budget expenditure and any excess of revenue is returned to Member States.

3.   NOTES TO THE STATEMENT OF FINANCIAL PERFORMANCE

3.1   OWN RESOURCE AND CONTRIBUTIONS REVENUE

OWN RESOURCE AND CONTRIBUTIONS REVENUE

| EUR millions |
| --- |
| | Note | 2012 | 2011 |
| GNI resources | | 98 061 | 88 442 |
| Traditional own resources: Customs duties | | 16 087 | 16 528 |
| Sugar levies | | 157 | 161 |
| VAT resources | | 14 871 | 14 763 |
| Own resource revenue | 3.1.1 | 129 176 | 119 894 |
| Budgetary adjustments | 3.1.2 | 1 439 | 4 533 |
| Contributions of third countries (incl. EFTA) | | 304 | 250 |
| Total | | 130 919 | 124 677 |

EUR millions

Note

2012

2011

GNI resources

98 061

88 442

Traditional own resources: Customs duties

16 087

16 528

Sugar levies

157

161

VAT resources

14 871

14 763

Own resource revenue

Own resource revenue

3.1.1

3.1.1

129 176

129 176

119 894

119 894

Budgetary adjustments

3.1.2

3.1.2

1 439

4 533

Contributions of third countries (incl. EFTA)

304

250

Total

130 919

124 677

3.1.1   
  Own resource revenue

Own resource revenue

Own resources is the primary element of the EU’s operating revenue. Thus the bulk of expenditure is financed by own resources as other revenue represents only a minor part of the total financing. There are three categories of own resources: traditional own resources (“TOR”), the VAT-based resource and the GNI-based resource. Traditional own resources comprise sugar levies and customs duties. A correction mechanism in respect of budgetary imbalances (UK Rebate) as well as a gross reduction in the annual GNI-based contribution of Netherlands and Sweden are also part of the own resources system. Member States retain, by way of collection costs, 25 % of traditional own resources, and the above amounts are shown net of this deduction.

It should be noted that in 2011 the Belgian authorities submitted a refund claim of approximately EUR 126 million (net) concerning amounts transferred to the EU budget under TOR. As inspections carried out by the Commission and audits performed by the Court of Auditors have highlighted some deficiencies in the Belgian clearance and accounting systems, which also impacted the reliability of amounts transferred to the EU budget under TOR, an external audit was conducted. An additional Commission services' inspection evaluating the results of the audit, including the refund claim and the corrective actions taken where necessary, has taken place in the first semester of 2013. The audit conclusions, supported by the Commission's inspection, confirmed that the refund claim is free of material error and that its calculation is reliable. Consequently a provision was booked at 31 December 2012 in the Commission's accounts to cover the reimbursement of the claim to the Belgian authorities, which will be processed in 2013.

3.1.2   
  Budgetary adjustments

Budgetary adjustments

The budgetary adjustments include the budget surplus from 2011 (EUR 1 497 million) which is indirectly refunded to Member States by deduction of the amounts of own resources they have to transfer to the EU in the following year – thus it is a revenue for 2012.

3.2   OTHER OPERATING REVENUE

OTHER OPERATING REVENUE

| EUR millions |
| --- |
| | Note | 2012 | 2011 |
| Fines | 3.2.1 | 1 884 | 868 |
| Agricultural levies | 3.2.2 | 87 | 65 |
| Recovery of expenses: | 3.2.3 | | |
| Direct centralised management | | 63 | 76 |
| Indirect centralised management | | 30 | 17 |
| Decentralised management | | 27 | 106 |
| Joint management | | 8 | 3 |
| Shared management | | 1 376 | 845 |
| Total | | 1 504 | 1 047 |
| Revenue from administrative operations: | 3.2.4 | | |
| Staff | | 1 209 | 1 141 |
| Property, plant and equipment related revenue | | 23 | 94 |
| Other administrative revenue | | 59 | 119 |
| Total | | 1 291 | 1 354 |
| Miscellaneous operating revenue: | 3.2.5 | | |
| Adjustments/provisions | | 280 | 59 |
| Exchange gains | | 335 | 476 |
| Other | | 1 445 | 1 507 |
| Total | | 2 060 | 2 042 |
| Total | | 6 826 | 5 376 |

EUR millions

Note

2012

2011

Fines

Fines

3.2.1

3.2.1

1 884

1 884

868

868

Agricultural levies

Agricultural levies

3.2.2

3.2.2

87

87

65

65

Recovery of expenses:

Recovery of expenses:

3.2.3

3.2.3

Direct centralised management

63

76

Indirect centralised management

30

17

Decentralised management

27

106

Joint management

8

3

Shared management

1 376

845

Total

1 504

1 047

Revenue from administrative operations:

Revenue from administrative operations:

3.2.4

3.2.4

Staff

1 209

1 141

Property, plant and equipment related revenue

23

94

Other administrative revenue

59

119

Total

1 291

1 354

Miscellaneous operating revenue:

Miscellaneous operating revenue:

3.2.5

3.2.5

Adjustments/provisions

280

59

Exchange gains

335

476

Other

1 445

1 507

Total

2 060

2 042

Total

6 826

5 376

3.2.1   
  Fines

Fines

These revenues relate to fines imposed by the Commission for infringement of competition rules. Receivables and related revenues are recognised when the Commission decision imposing a fine has been taken and it is officially notified to the addressee. The increase in fines revenue as compared to 2011 is due to a high value fine case in 2012 relating to TV and computer monitor tubes.

In March 2013 Microsoft has been fined EUR 561 million for failing to promote a range of web browsers, rather than just Internet Explorer, to users in the EU.

3.2.2   
  Agricultural levies

Agricultural levies

These amounts concern primarily milk levies which are a market management tool aimed at penalising milk producers who exceed their reference quantities. As it is not linked to prior payments by the Commission, it is in practice considered as revenue for a specific purpose.

3.2.3   
  Recovery of expenses

Recovery of expenses

This heading represents the recovery orders issued by the Commission and the deduction from subsequent payments recorded in the Commission's accounting system, to recover expenditures previously paid out from the general budget, based on controls, closed audits or eligibility analysis, together with recovery orders issued by Member States to beneficiaries of EAGF expenditure. It also includes the variation of accrued income estimations from the previous year-end to the current.

It should be noted that these figures represent the accounting impact of EU corrective activities only, based on the EU accounting rules in force. For this reason, these figures cannot and do not show the full extent of the recovery of EU expenditure, particularly for the significant spending areas of Structural Actions where specific mechanisms are in place to ensure the return of ineligible monies, most of which do not involve the issuance of a recovery order and therefore do not impact the EU accounting system. Moreover, recoveries of pre-financing amounts are also not included as revenue, in accordance with the EU accounting rules. More details on financial corrections and recoveries of expenses are given in Note 6.

6

Agriculture: EAGF and rural development

Agriculture: EAGF and rural development

In the framework of the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD), amounts accounted for as revenue of the year under this heading are EUR 1 020 million, made up as follows:

| — | conformity corrections decided during the year, EUR 724 million; |
| --- | --- |

—

conformity corrections decided during the year, EUR 724 million;

| — | fraud and irregularities EUR 296 million: being reimbursements declared by Member States and recovered during the year of EUR 195 million plus the net increase in the outstanding amounts declared by Member States to be recovered at year-end concerning fraud and irregularities of EUR 101 million. |
| --- | --- |

—

fraud and irregularities EUR 296 million: being reimbursements declared by Member States and recovered during the year of EUR 195 million plus the net increase in the outstanding amounts declared by Member States to be recovered at year-end concerning fraud and irregularities of EUR 101 million.

Structural Actions

Structural Actions

The recovery of expenditure under the Structural actions included under this heading amounted to EUR 356 million (2011: EUR 109 million). The main amounts in this sub-heading include recovery orders issued by the Commission to recover undue expenditure made in previous years for an amount of EUR 95 million (including EUR 5 million related to EAGGF Guidance) and the variation (increase) of the accrued income at year-end for EUR 261 million.

Recovery orders are issued only in the following cases:

| — | formal financial correction decisions by the Commission following the detection of irregular expenditure in the amounts claimed by Member States |
| --- | --- |

—

formal financial correction decisions by the Commission following the detection of irregular expenditure in the amounts claimed by Member States

| — | adjustments at closure of a programme leading to a reduction in the EU contribution where a Member State has not declared sufficient eligible expenditure to justify the total pre-financing and interim payments already made; such operations may be without a formal Commission decision if accepted by the Member State; |
| --- | --- |

—

adjustments at closure of a programme leading to a reduction in the EU contribution where a Member State has not declared sufficient eligible expenditure to justify the total pre-financing and interim payments already made; such operations may be without a formal Commission decision if accepted by the Member State;

| — | repayment of amounts recovered after closure following the conclusion of legal proceedings which were pending at the time of closure. |
| --- | --- |

—

repayment of amounts recovered after closure following the conclusion of legal proceedings which were pending at the time of closure.

Other recovery orders issued under Structural Actions concern the recovery of pre-financing – see note 6.5. These amounts are not shown as revenue, but credited to the pre-financing heading on the balance sheet.

6.5

3.2.4   
  Revenue from administrative operations

Revenue from administrative operations

This revenue arises from deductions from staff salaries and is made up primarily of two amounts – staff pension contributions and taxes on income.

3.2.5   
  Miscellaneous operating revenue

Miscellaneous operating revenue

An amount of EUR 672 million (2011: EUR 535 million) relates to amounts received from accession countries. Exchange gains, except on financial activities dealt with in note 3.5 below, are also included under this heading. These arise from the everyday activities and related transactions made in currencies other than the Euro, as well as the year-end revaluation required to prepare the accounts. They contain both realised and unrealised gains. There was a net exchange gain for the year of EUR 52 million (2011: EUR 94 million).

3.5

3.3   ADMINISTRATIVE EXPENSES

ADMINISTRATIVE EXPENSES

| EUR millions |
| --- |
| | 2012 | 2011 |
| Staff expenses | 5 708 | 5 416 |
| Depreciation and impairment | 451 | 412 |
| Other administrative expenses | 3 161 | 3 148 |
| Total | 9 320 | 8 976 |

EUR millions

2012

2011

Staff expenses

5 708

5 416

Depreciation and impairment

451

412

Other administrative expenses

3 161

3 148

Total

9 320

8 976

Included under this heading are expenses of EUR 379 million (2011: EUR 358 million) relating to operating leases – amounts committed to be paid during the remaining term of these lease contracts are as follows:

| EUR millions |
| --- |
| | Future amounts to be paid |
| < 1 year | 1- 5 years | > 5 years | Total |
| Buildings | 340 | 947 | 575 | 1 862 |
| IT materials and other equipment | 5 | 7 | 0 | 12 |
| Total | 345 | 954 | 575 | 1 874 |

EUR millions

Future amounts to be paid

< 1 year

1- 5 years

> 5 years

Total

Buildings

340

947

575

1 862

IT materials and other equipment

5

7

0

12

Total

345

954

575

1 874

3.4   OPERATING EXPENSES

OPERATING EXPENSES

| EUR millions |
| --- |
| | Note | 2012 | 2011 |
| Primary operating expenses: | 3.4.1 | | |
| Direct centralised management | | 9 883 | 10 356 |
| Indirect centralised management | | 4 151 | 4 119 |
| Decentralised management | | 1 019 | 766 |
| Shared management | | 106 378 | 104 067 |
| Joint management | | 1 819 | 1 714 |
| Total | | 123 250 | 121 022 |
| Other operating expenses: | 3.4.2 | | |
| Adjustments/provisions | | 427 | 251 |
| Exchange losses | | 281 | 382 |
| Other | | 675 | 2 123 |
| Total | | 1 383 | 2 756 |
| Total | | 124 633 | 123 778 |

EUR millions

Note

2012

2011

Primary operating expenses:

Primary operating expenses:

3.4.1

3.4.1

Direct centralised management

9 883

10 356

Indirect centralised management

4 151

4 119

Decentralised management

1 019

766

Shared management

106 378

104 067

Joint management

1 819

1 714

Total

123 250

121 022

Other operating expenses:

Other operating expenses:

3.4.2

3.4.2

Adjustments/provisions

427

251

Exchange losses

281

382

Other

675

2 123

Total

1 383

2 756

Total

124 633

123 778

3.4.1   
  Primary operating expenses

Primary operating expenses

The EU's operating expenditure covers the various headings of the financial framework and takes different forms, depending on how the money is paid out and managed. The majority of the expenditure falls under the heading “Shared Management” involving the delegation of tasks to Member States, covering such areas as EAGF spending and actions financed through the different Structural Actions (the regional development fund, the social fund, the agricultural fund for rural development, the cohesion fund and the fisheries fund).

The main elements of the operating expenses for above cover the following areas: agriculture and rural development (EUR 57 billion), regional development and cohesion (EUR 39 billion), employment and social affairs (EUR 11 billion), research and communication networks, content and technology (EUR 6 billion) and external relations (EUR 3 billion).

3.4.2   
  Other operating expenses

Other operating expenses

Exchange losses, except on financial activities dealt with in note 3.6 below, occur on the everyday activities and related transactions made in currencies other than the Euro, as well as the year-end revaluation required to prepare the accounts – they are both realised and unrealised.

3.6

The 2011 heading other (under other operating expenses) mainly comprised the correction of fines issued in previous years totalling EUR 1 471 million.

Research and Development costs

Research and Development costs

Included under both administrative expenses (note 3.3) and operating expenses are research and non-capitalised development costs as follows:

3.3

| EUR millions |
| --- |
| | 2012 | 2011 |
| Research costs | 331 | 327 |
| Non-capitalised development costs | 76 | 145 |
| Recognised as an expense | 407 | 472 |

EUR millions

2012

2011

Research costs

331

327

Non-capitalised development costs

76

145

Recognised as an expense

407

472

3.5   FINANCIAL REVENUE

FINANCIAL REVENUE

| EUR millions |
| --- |
| | 2012 | 2011 |
| Dividend income | 12 | 5 |
| Interest income: |
| On pre-financing | 28 | 40 |
| On late payments | 242 | 89 |
| On available for sale financial assets | 100 | 113 |
| On loans | 1 559 | 921 |
| On cash and cash equivalents | 26 | 132 |
| Other | 2 | 5 |
| Total | 1 957 | 1 300 |
| Other financial income: |
| Realised gain on sale of financial assets | 18 | 3 |
| Other | 160 | 178 |
| Total | 178 | 181 |
| Present value adjustments | 0 | 1 |
| Exchange gains | 10 | 4 |
| Total | 2 157 | 1 491 |

EUR millions

2012

2011

Dividend income

Dividend income

12

12

5

5

Interest income:

Interest income:

On pre-financing

28

40

On late payments

242

89

On available for sale financial assets

100

113

On loans

1 559

921

On cash and cash equivalents

26

132

Other

2

5

Total

1 957

1 300

Other financial income:

Other financial income:

Realised gain on sale of financial assets

18

3

Other

160

178

Total

178

181

Present value adjustments

Present value adjustments

0

0

1

1

Exchange gains

Exchange gains

10

10

4

4

Total

2 157

1 491

The increase in financial revenue is mainly explained by an increase of the interest income on loans. This increase is in line with the increased balance of the EFSM loans (see notes 2.4.2 and 7). As these loans are back-to-back loans, a corresponding increase was also noted in interest expenses on loans (see note 3.6 below). The decrease in income on cash and cash equivalents can be explained by significant diminution of market interest rates recorded in 2012. The category which was impacted most is interest from provisionally cashed fines. In this specific category, the combined effect of interest rate decrease and an important number of fines accounts closed in 2012 led to the diminution of interest income by approximately EUR 81 million.

2.4.2

7

3.6

3.6   FINANCIAL EXPENSES

FINANCIAL EXPENSES

| EUR millions |
| --- |
| | 2012 | 2011 |
| Interest expenses: |
| Leasing | 88 | 91 |
| On borrowings | 1 545 | 903 |
| Other | 23 | 30 |
| Total | 1 656 | 1 024 |
| Other financial expenses: |
| Adjustments to financial provisions | 75 | 74 |
| Expenses relating to financial instruments managed by fiduciaries | 43 | 47 |
| Impairment losses on available for sale financial assets | 8 | 12 |
| Realised loss on sale of financial assets | 4 | 5 |
| Other | 143 | 144 |
| Total | 273 | 282 |
| Exchange losses | 13 | 49 |
| Total | 1 942 | 1 355 |

EUR millions

2012

2011

Interest expenses:

Interest expenses:

Leasing

88

91

On borrowings

1 545

903

Other

23

30

Total

1 656

1 024

Other financial expenses:

Other financial expenses:

Adjustments to financial provisions

75

74

Expenses relating to financial instruments managed by fiduciaries

43

47

Impairment losses on available for sale financial assets

8

12

Realised loss on sale of financial assets

4

5

Other

143

144

Total

273

282

Exchange losses

Exchange losses

13

13

49

49

Total

1 942

1 355

3.7   SHARE OF NET DEFICIT OF JOINT VENTURES AND ASSOCIATES

SHARE OF NET DEFICIT OF JOINT VENTURES AND ASSOCIATES

In accordance with the equity method of accounting, the Commission includes in its statement of financial performance its share of the net deficit of its joint ventures and associates (see also notes 2.3.1 & 2.3.2).

2.3.1 & 2.3.2

3.8   REVENUE FROM NON-EXCHANGE TRANSACTIONS

REVENUE FROM NON-EXCHANGE TRANSACTIONS

In 2012 EUR 137 023 million (2011: EUR 130 391 million) revenue from non-exchange transactions have been recognised in the statement of financial performance.

3.9   SEGMENT REPORTING

SEGMENT REPORTING

The segment report gives the split of the operating revenues and expenses by policy area, based on the Activity Based Budget structure, within the Commission. These policy areas can be grouped under three larger headings – Activities within the European Union, Activities outside the European Union and Services & other.

“Activities within the European Union” is the largest of these headings as it covers the many policy areas within the European Union. “Activities outside the European Union” concerns the policies operated outside the EU, such as trade and aid. “Services & other” are the internal and horizontal activities necessary for the functioning of the EU Institutions and bodies. Note that the information relating to Agencies is included under the relevant policy area. Note also that own resources and contributions are not split amongst the various activities as these are calculated, collected and managed by central Commission services.

| EUR millions |
| --- |
| | Activities within the EU | Activities outside the EU | Services & Other | ECSC in Liquidation | Other Institutions | Consolidation eliminations | Total |
| Fines | 1 884 | — | — | — | — | — | 1 884 |
| Agricultural levies | 87 | — | — | — | — | — | 87 |
| Recovery of expenses | 1 444 | 59 | 1 | — | — | — | 1 504 |
| Revenue from administrative operations | 99 | 1 | 992 | — | 664 | (465) | 1 291 |
| Miscellaneous operating revenue | 2 692 | 90 | 440 | 7 | 8 | (1 177) | 2 060 |
| Other operating revenue | 6 206 | 150 | 1 433 | 7 | 672 | (1 642) | 6 826 |
| Staff expenses | (2 256) | (318) | (1 352) | — | (1 802) | 20 | (5 708) |
| Intangible assets & PPE related expenses | (126) | 1 | (113) | — | (213) | — | (451) |
| Other administrative expenses | (1 003) | (311) | (880) | — | (1 594) | 627 | (3 161) |
| Administrative expenses | (3 385) | (628) | (2 345) | — | (3 609) | 647 | (9 320) |
| Direct centralised management | (6 996) | (3 572) | (159) | — | — | 844 | (9 883) |
| Indirect centralised management | (3 762) | (422) | (34) | — | — | 67 | (4 151) |
| Decentralised management | (494) | (525) | — | — | — | — | (1 019) |
| Shared management | (106 464) | 83 | 3 | — | — | — | (106 378) |
| Joint management | (269) | (1 550) | — | — | — | — | (1 819) |
| Other operating expenses | (774) | (3) | (634) | (48) | (8) | 84 | (1 383) |
| Operating expenses | (118 759) | (5 989) | (824) | (48) | (8) | 995 | (124 633) |
| Total operating expenses | (122 144) | (6 617) | (3 169) | (48) | (3 617) | 1 642 | (133 953) |
| Net operating expenses | (115 938) | (6 467) | (1 736) | (41) | (2 945) | 0 | (127 127) |
| Own resource and contributions revenue | | | | | | | 130 919 |
| Surplus from operating activities | | | | | | | 3 792 |
| Net financial revenue | | | | | | | 215 |
| Movement in pension and other employee benefits liability | | | | | | | (8 846) |
| Share of net deficit of joint ventures and associates | | | | | | | (490) |
| Economic result for the year | | | | | | | (5 329) |

EUR millions

Activities within the EU

Activities outside the EU

Services & Other

ECSC in Liquidation

Other Institutions

Consolidation eliminations

Total

Fines

1 884

—

—

—

—

—

1 884

Agricultural levies

87

—

—

—

—

—

87

Recovery of expenses

1 444

59

1

—

—

—

1 504

Revenue from administrative operations

99

1

992

—

664

(465)

1 291

Miscellaneous operating revenue

2 692

90

440

7

8

(1 177)

2 060

Other operating revenue

Other operating revenue

6 206

6 206

150

150

1 433

1 433

7

7

672

672

(1 642)

(1 642)

6 826

6 826

Staff expenses

(2 256)

(318)

(1 352)

—

(1 802)

20

(5 708)

Intangible assets & PPE related expenses

(126)

1

(113)

—

(213)

—

(451)

Other administrative expenses

(1 003)

(311)

(880)

—

(1 594)

627

(3 161)

Administrative expenses

Administrative expenses

(3 385)

(3 385)

(628)

(628)

(2 345)

(2 345)

—

(3 609)

(3 609)

647

647

(9 320)

(9 320)

Direct centralised management

(6 996)

(3 572)

(159)

—

—

844

(9 883)

Indirect centralised management

(3 762)

(422)

(34)

—

—

67

(4 151)

Decentralised management

(494)

(525)

—

—

—

—

(1 019)

Shared management

(106 464)

83

3

—

—

—

(106 378)

Joint management

(269)

(1 550)

—

—

—

—

(1 819)

Other operating expenses

(774)

(3)

(634)

(48)

(8)

84

(1 383)

Operating expenses

Operating expenses

(118 759)

(118 759)

(5 989)

(5 989)

(824)

(824)

(48)

(48)

(8)

(8)

995

995

(124 633)

(124 633)

Total operating expenses

(122 144)

(6 617)

(3 169)

(48)

(3 617)

1 642

(133 953)

Net operating expenses

Net operating expenses

(115 938)

(115 938)

(6 467)

(6 467)

(1 736)

(1 736)

(41)

(41)

(2 945)

(2 945)

0

0

(127 127)

(127 127)

Own resource and contributions revenue

130 919

Surplus from operating activities

Surplus from operating activities

3 792

3 792

Net financial revenue

215

Movement in pension and other employee benefits liability

(8 846)

Share of net deficit of joint ventures and associates

(490)

Economic result for the year

Economic result for the year

(5 329)

(5 329)

SEGMENT REPORTING – ACTIVITIES WITHIN THE EU

SEGMENT REPORTING – ACTIVITIES WITHIN THE EU

| EUR millions |
| --- |
| | Economic & Financial | Enterprise & Industry | Competition | Employment | Agriculture | Transport & Energy | Environment | Research | Information Society |
| Other operating revenue: | | | | | | | | | |
| Fines | 0 | 6 | 1 878 | 0 | 0 | 0 | 0 | 0 | 0 |
| Agricultural levies | 0 | 0 | 0 | 0 | 87 | 0 | 0 | 0 | 0 |
| Recovery of expenses | 0 | 1 | 0 | 48 | 1 025 | 10 | 3 | 21 | 18 |
| Revenue from admin operations | 0 | 18 | 0 | 0 | 0 | 16 | 0 | 7 | 0 |
| Miscellaneous operating revenue | 4 | 93 | 0 | 34 | 239 | 220 | 39 | 845 | 12 |
| OTHER OPERATING REVENUE | 4 | 118 | 1 878 | 82 | 1 351 | 246 | 42 | 873 | 30 |
| Administrative expenses: | (68) | (210) | (89) | (107) | (127) | (412) | (126) | (432) | (131) |
| Staff expenses | (60) | (147) | (83) | (82) | (107) | (281) | (88) | (236) | (107) |
| Intangible assets & PPE expenses | 0 | (8) | 0 | (1) | 0 | (15) | (1) | (15) | 0 |
| Other administrative expenses | (8) | (55) | (6) | (24) | (20) | (116) | (37) | (181) | (24) |
| Operating expenses: | (40) | 394 | (80) | (10 873) | (56 842) | (2 372) | (329) | (4 365) | (1 312) |
| Centralised direct management | (40) | 211 | 0 | (169) | (48) | (1 061) | (307) | (2 906) | (1 285) |
| Centralised indirect management | 0 | 352 | 0 | (3) | 0 | (1 127) | (10) | (1 408) | (22) |
| Decentralised management | 0 | 0 | 0 | (61) | (38) | 0 | 0 | 0 | 0 |
| Shared management | 0 | 0 | 0 | (10 618) | (56 655) | 0 | 0 | 0 | 0 |
| Joint management | 0 | (130) | 0 | (7) | 0 | (123) | 0 | 0 | 0 |
| Other operating expenses | 0 | (39) | (80) | (15) | (101) | (61) | (12) | (51) | (5) |
| TOTAL OPERATING EXPENSES | (108) | 184 | (169) | (10 980) | (56 969) | (2 784) | (455) | (4 797) | (1 443) |
| NET OPERATING EXPENSES | (104) | 302 | 1 709 | (10 898) | (55 618) | (2 538) | (413) | (3 924) | (1 413) |

EUR millions

Economic & Financial

Enterprise & Industry

Competition

Employment

Agriculture

Transport & Energy

Environment

Research

Information Society

Other operating revenue:

Fines

0

6

1 878

0

0

0

0

0

0

Agricultural levies

0

0

0

0

87

0

0

0

0

Recovery of expenses

0

1

0

48

1 025

10

3

21

18

Revenue from admin operations

0

18

0

0

0

16

0

7

0

Miscellaneous operating revenue

4

93

0

34

239

220

39

845

12

OTHER OPERATING REVENUE

4

4

118

118

1 878

1 878

82

82

1 351

1 351

246

246

42

42

873

873

30

30

Administrative expenses:

Administrative expenses:

(68)

(68)

(210)

(210)

(89)

(89)

(107)

(107)

(127)

(127)

(412)

(412)

(126)

(126)

(432)

(432)

(131)

(131)

Staff expenses

(60)

(147)

(83)

(82)

(107)

(281)

(88)

(236)

(107)

Intangible assets & PPE expenses

0

(8)

0

(1)

0

(15)

(1)

(15)

0

Other administrative expenses

(8)

(55)

(6)

(24)

(20)

(116)

(37)

(181)

(24)

Operating expenses:

Operating expenses:

(40)

(40)

394

394

(80)

(80)

(10 873)

(10 873)

(56 842)

(56 842)

(2 372)

(2 372)

(329)

(329)

(4 365)

(4 365)

(1 312)

(1 312)

Centralised direct management

(40)

211

0

(169)

(48)

(1 061)

(307)

(2 906)

(1 285)

Centralised indirect management

0

352

0

(3)

0

(1 127)

(10)

(1 408)

(22)

Decentralised management

0

0

0

(61)

(38)

0

0

0

0

Shared management

0

0

0

(10 618)

(56 655)

0

0

0

0

Joint management

0

(130)

0

(7)

0

(123)

0

0

0

Other operating expenses

0

(39)

(80)

(15)

(101)

(61)

(12)

(51)

(5)

TOTAL OPERATING EXPENSES

(108)

184

(169)

(10 980)

(56 969)

(2 784)

(455)

(4 797)

(1 443)

NET OPERATING EXPENSES

NET OPERATING EXPENSES

(104)

(104)

302

302

1 709

1 709

(10 898)

(10 898)

(55 618)

(55 618)

(2 538)

(2 538)

(413)

(413)

(3 924)

(3 924)

(1 413)

(1 413)

| EUR millions |
| --- |
| | Joint Research Centre | Fisheries | Internal Market | Regional Policy | Taxation & Customs | Education & Culture | Health & Consumer protection | Justice, Freedom & Security | Total Activities within the EU |
| Other operating revenue: | | | | | | | | | |
| Fines | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1 884 |
| Agricultural levies | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 87 |
| Recovery of expenses | 0 | 6 | 0 | 303 | 0 | 6 | 2 | 1 | 1 444 |
| Revenue from admin operations | 39 | 0 | 2 | 0 | 0 | 0 | 16 | 1 | 99 |
| Miscellaneous operating revenue | 78 | 9 | 225 | (3) | 1 | 287 | 363 | 246 | 2 692 |
| OTHER OPERATING REVENUE | 117 | 15 | 227 | 300 | 1 | 293 | 381 | 248 | 6 206 |
| Administrative expenses: | (358) | (47) | (229) | (78) | (113) | (205) | (348) | (305) | (3 385) |
| Staff expenses | (249) | (39) | (150) | (66) | (43) | (110) | (234) | (174) | (2 256) |
| Intangible assets & PPE expenses | (27) | 0 | (8) | 0 | (10) | (1) | (25) | (15) | (126) |
| Other administrative expenses | (82) | (8) | (71) | (12) | (60) | (94) | (89) | (116) | (1 003) |
| Operating expenses: | (82) | (807) | (69) | (38 622) | (14) | (1 808) | (661) | (877) | (118 759) |
| Centralised direct management | (60) | (175) | (36) | (41) | (14) | (229) | (436) | (400) | (6 996) |
| Centralised indirect management | 0 | 0 | 0 | 0 | 0 | (1 478) | (66) | 0 | (3 762) |
| Decentralised management | 0 | 0 | 0 | (395) | 0 | 0 | 0 | 0 | (494) |
| Shared management | 0 | (629) | 0 | (38 186) | 0 | 0 | 0 | (376) | (106 464) |
| Joint management | 0 | 0 | 0 | 0 | 0 | (2) | (7) | 0 | (269) |
| Other operating expenses | (22) | (3) | (33) | 0 | 0 | (99) | (152) | (101) | (774) |
| TOTAL OPERATING EXPENSES | (440) | (854) | (298) | (38 700) | (127) | (2 013) | (1 009) | (1 182) | (122 144) |
| NET OPERATING EXPENSES | (323) | (839) | (71) | (38 400) | (126) | (1 720) | (628) | (934) | (115 938) |

EUR millions

Joint Research Centre

Fisheries

Internal Market

Regional Policy

Taxation & Customs

Education & Culture

Health & Consumer protection

Justice, Freedom & Security

Total Activities within the EU

Other operating revenue:

Fines

0

0

0

0

0

0

0

0

1 884

Agricultural levies

0

0

0

0

0

0

0

0

87

Recovery of expenses

0

6

0

303

0

6

2

1

1 444

Revenue from admin operations

39

0

2

0

0

0

16

1

99

Miscellaneous operating revenue

78

9

225

(3)

1

287

363

246

2 692

OTHER OPERATING REVENUE

117

117

15

15

227

227

300

300

1

1

293

293

381

381

248

248

6 206

6 206

Administrative expenses:

Administrative expenses:

(358)

(358)

(47)

(47)

(229)

(229)

(78)

(78)

(113)

(113)

(205)

(205)

(348)

(348)

(305)

(305)

(3 385)

(3 385)

Staff expenses

(249)

(39)

(150)

(66)

(43)

(110)

(234)

(174)

(2 256)

Intangible assets & PPE expenses

(27)

0

(8)

0

(10)

(1)

(25)

(15)

(126)

Other administrative expenses

(82)

(8)

(71)

(12)

(60)

(94)

(89)

(116)

(1 003)

Operating expenses:

Operating expenses:

(82)

(82)

(807)

(807)

(69)

(69)

(38 622)

(38 622)

(14)

(14)

(1 808)

(1 808)

(661)

(661)

(877)

(877)

(118 759)

(118 759)

Centralised direct management

(60)

(175)

(36)

(41)

(14)

(229)

(436)

(400)

(6 996)

Centralised indirect management

0

0

0

0

0

(1 478)

(66)

0

(3 762)

Decentralised management

0

0

0

(395)

0

0

0

0

(494)

Shared management

0

(629)

0

(38 186)

0

0

0

(376)

(106 464)

Joint management

0

0

0

0

0

(2)

(7)

0

(269)

Other operating expenses

(22)

(3)

(33)

0

0

(99)

(152)

(101)

(774)

TOTAL OPERATING EXPENSES

(440)

(854)

(298)

(38 700)

(127)

(2 013)

(1 009)

(1 182)

(122 144)

NET OPERATING EXPENSES

NET OPERATING EXPENSES

(323)

(323)

(839)

(839)

(71)

(71)

(38 400)

(38 400)

(126)

(126)

(1 720)

(1 720)

(628)

(628)

(934)

(934)

(115 938)

(115 938)

SEGMENT REPORTING – ACTIVITIES OUTSIDE THE EU

SEGMENT REPORTING – ACTIVITIES OUTSIDE THE EU

| EUR millions |
| --- |
| | External Relations | Trade | Development | Enlargement | Humanitarian Aid | Total Activities outside the EU |
| Other operating revenue: | | | | | | |
| Recovery of expenses | 34 | 0 | 2 | 24 | (1) | 59 |
| Revenue from admin operations | 1 | 0 | 0 | 0 | 0 | 1 |
| Miscellaneous operating revenue | 5 | 0 | 87 | (1) | (1) | 90 |
| OTHER OPERATING REVENUE | 40 | 0 | 89 | 23 | (2) | 150 |
| Administrative expenses: | (102) | (72) | (342) | (80) | (32) | (628) |
| Staff expenses | (15) | (65) | (165) | (49) | (24) | (318) |
| Intangible assets & PPE expenses | 1 | 0 | 0 | 0 | 0 | 1 |
| Other administrative expenses | (88) | (7) | (177) | (31) | (8) | (311) |
| Operating expenses: | (2 876) | (11) | (1 091) | (863) | (1 148) | (5 989) |
| Direct centralised management | (1 729) | (6) | (782) | (485) | (570) | (3 572) |
| Indirect centralised management | (350) | 0 | (19) | (53) | 0 | (422) |
| Decentralised management | (218) | 0 | (37) | (270) | 0 | (525) |
| Shared management | 83 | 0 | 0 | 0 | 0 | 83 |
| Joint management | (662) | (5) | (252) | (54) | (577) | (1 550) |
| Other operating expenses | 0 | 0 | (1) | (1) | (1) | (3) |
| TOTAL OPERATING EXPENSES | (2 978) | (83) | (1 433) | (943) | (1 180) | (6 617) |
| NET OPERATING EXPENSES | (2 938) | (83) | (1 344) | (920) | (1 182) | (6 467) |

EUR millions

External Relations

Trade

Development

Enlargement

Humanitarian Aid

Total Activities outside the EU

Other operating revenue:

Recovery of expenses

34

0

2

24

(1)

59

Revenue from admin operations

1

0

0

0

0

1

Miscellaneous operating revenue

5

0

87

(1)

(1)

90

OTHER OPERATING REVENUE

40

40

0

0

89

89

23

23

(2)

(2)

150

150

Administrative expenses:

Administrative expenses:

(102)

(102)

(72)

(72)

(342)

(342)

(80)

(80)

(32)

(32)

(628)

(628)

Staff expenses

(15)

(65)

(165)

(49)

(24)

(318)

Intangible assets & PPE expenses

1

0

0

0

0

1

Other administrative expenses

(88)

(7)

(177)

(31)

(8)

(311)

Operating expenses:

Operating expenses:

(2 876)

(2 876)

(11)

(11)

(1 091)

(1 091)

(863)

(863)

(1 148)

(1 148)

(5 989)

(5 989)

Direct centralised management

(1 729)

(6)

(782)

(485)

(570)

(3 572)

Indirect centralised management

(350)

0

(19)

(53)

0

(422)

Decentralised management

(218)

0

(37)

(270)

0

(525)

Shared management

83

0

0

0

0

83

Joint management

(662)

(5)

(252)

(54)

(577)

(1 550)

Other operating expenses

0

0

(1)

(1)

(1)

(3)

TOTAL OPERATING EXPENSES

(2 978)

(83)

(1 433)

(943)

(1 180)

(6 617)

NET OPERATING EXPENSES

NET OPERATING EXPENSES

(2 938)

(2 938)

(83)

(83)

(1 344)

(1 344)

(920)

(920)

(1 182)

(1 182)

(6 467)

(6 467)

SEGMENT REPORTING – SERVICES & OTHER

SEGMENT REPORTING – SERVICES & OTHER

| EUR millions |
| --- |
| | Press & Communication | Anti-Fraud Office | Co-ordination | Personnel & Admin | Eurostat | Budget | Audit | Languages | Other | Total Services & Other |
| Other operating revenue: | | | | | | | | | | |
| Recovery of expenses | 1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1 |
| Revenue from admin operations | 0 | 7 | 2 | 829 | 0 | 56 | 0 | 98 | 0 | 992 |
| Miscellaneous operating revenue | (2) | 5 | 1 | 53 | 0 | 9 | 0 | 47 | 327 | 440 |
| OTHER OPERATING REVENUE | (1) | 12 | 3 | 882 | 0 | 65 | 0 | 145 | 327 | 1 433 |
| Administrative expenses: | (124) | (51) | (184) | (1 424) | (91) | (58) | (11) | (441) | 39 | (2 345) |
| Staff expenses | (79) | (38) | (159) | (632) | (70) | (45) | (10) | (358) | 39 | (1 352) |
| Intangible assets & PPE expenses | (2) | (1) | 0 | (109) | 0 | 0 | 0 | (1) | 0 | (113) |
| Other administrative expenses | (43) | (12) | (25) | (683) | (21) | (13) | (1) | (82) | 0 | (880) |
| Operating expenses: | (124) | (22) | (2) | (14) | (32) | (341) | 0 | (16) | (273) | (824) |
| Direct centralised management | (90) | (22) | 0 | (12) | (32) | (3) | 0 | 0 | 0 | (159) |
| Indirect centralised management | (34) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (34) |
| Shared management | 0 | 0 | 0 | 0 | 0 | 3 | 0 | 0 | 0 | 3 |
| Other operating expenses | 0 | 0 | (2) | (2) | 0 | (341) | 0 | (16) | (273) | (634) |
| TOTAL OPERATING EXPENSES | (248) | (73) | (186) | (1 438) | (123) | (399) | (11) | (457) | (234) | (3 169) |
| NET OPERATING EXPENSES | (249) | (61) | (183) | (556) | (123) | (334) | (11) | (312) | 93 | (1 736) |

EUR millions

Press & Communication

Anti-Fraud Office

Co-ordination

Personnel & Admin

Eurostat

Budget

Audit

Languages

Other

Total Services & Other

Other operating revenue:

Recovery of expenses

1

0

0

0

0

0

0

0

0

1

Revenue from admin operations

0

7

2

829

0

56

0

98

0

992

Miscellaneous operating revenue

(2)

5

1

53

0

9

0

47

327

440

OTHER OPERATING REVENUE

(1)

(1)

12

12

3

3

882

882

0

0

65

65

0

0

145

145

327

327

1 433

1 433

Administrative expenses:

Administrative expenses:

(124)

(124)

(51)

(51)

(184)

(184)

(1 424)

(1 424)

(91)

(91)

(58)

(58)

(11)

(11)

(441)

(441)

39

39

(2 345)

(2 345)

Staff expenses

(79)

(38)

(159)

(632)

(70)

(45)

(10)

(358)

39

(1 352)

Intangible assets & PPE expenses

(2)

(1)

0

(109)

0

0

0

(1)

0

(113)

Other administrative expenses

(43)

(12)

(25)

(683)

(21)

(13)

(1)

(82)

0

(880)

Operating expenses:

Operating expenses:

(124)

(124)

(22)

(22)

(2)

(2)

(14)

(14)

(32)

(32)

(341)

(341)

0

0

(16)

(16)

(273)

(273)

(824)

(824)

Direct centralised management

(90)

(22)

0

(12)

(32)

(3)

0

0

0

(159)

Indirect centralised management

(34)

0

0

0

0

0

0

0

0

(34)

Shared management

0

0

0

0

0

3

0

0

0

3

Other operating expenses

0

0

(2)

(2)

0

(341)

0

(16)

(273)

(634)

TOTAL OPERATING EXPENSES

(248)

(73)

(186)

(1 438)

(123)

(399)

(11)

(457)

(234)

(3 169)

NET OPERATING EXPENSES

NET OPERATING EXPENSES

(249)

(249)

(61)

(61)

(183)

(183)

(556)

(556)

(123)

(123)

(334)

(334)

(11)

(11)

(312)

(312)

93

93

(1 736)

(1 736)

4.   NOTES TO THE CASHFLOW STATEMENT

4.1   PURPOSE AND PREPARATION OF THE CASHFLOW STATEMENT

PURPOSE AND PREPARATION OF THE CASHFLOW STATEMENT

Cash flow information is used to provide a basis for assessing the ability of the EU to generate cash and cash equivalents, and its needs to utilise those cash flows.

The cashflow statement is prepared using the indirect method. This means that the net surplus or deficit for the financial year is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of revenue or expense associated with investing cash flows.

Cash flows arising from transactions in a foreign currency are recorded in the EU’s reporting currency (Euro), by applying to the foreign currency amount the exchange rate between the euro and the foreign currency at the date of the cash flow.

The cashflow statement presented reports cash flows during the period classified by operating and investing activities (the EU does not have financing activities).

4.2   OPERATING ACTIVITIES

OPERATING ACTIVITIES

Operating activities are the activities of the EU that are not investing activities. These are the majority of the activities performed. Loans granted to beneficiaries (and the related borrowings, when applicable) are not considered as investing (or financing) activities as they are part of the general objectives and thus daily operations of the EU. Operating activities also include investments such as EIF, EBRD and venture capital funds. Indeed, the objective of these activities is to participate in the achievement of policy targeted outcomes.

4.3   INVESTING ACTIVITIES

INVESTING ACTIVITIES

Investing activities are the acquisition and disposal of intangible assets and property, plant and equipment and of other investments which are not included in cash equivalents. Investing activities do not include loans granted to beneficiaries. The objective is to show the real investments made by the EU.

5.   CONTINGENT ASSETS & LIABILITIES AND OTHER SIGNIFICANT DISCLOSURES

5.1   CONTINGENT ASSETS

CONTINGENT ASSETS

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Guarantees received: | | |
| Performance guarantees | 337 | 300 |
| Other guarantees | 43 | 34 |
| Other contingent assets | 14 | 19 |
| Total | 394 | 353 |

EUR millions

31.12.2012

31.12.2011

Guarantees received:

Performance guarantees

337

300

Other guarantees

43

34

Other contingent assets

14

19

Total

394

353

Performance guarantees are requested to ensure that beneficiaries of EU funding meet the obligations of their contracts with the EU.

5.2   CONTINGENT LIABILITIES

CONTINGENT LIABILITIES

| EUR millions |
| --- |
| | Note | 31.12.2012 | 31.12.2011 |
| Guarantees given | 5.2.1 | 22 317 | 24 394 |
| Fines | 5.2.2 | 6 378 | 8 951 |
| EAGF, rural development and pre-accession | 5.2.3 | 1 188 | 2 345 |
| Cohesion policy | 5.2.4 | 546 | 318 |
| Legal cases and other disputes | 5.2.5 | 91 | 251 |
| Other contingent liabilities | | 1 | 2 |
| Total | | 30 521 | 36 261 |
| All contingent liabilities, except those relating to fines, would be financed, should they fall due, by the EU budget in the years to come. |

EUR millions

Note

31.12.2012

31.12.2011

Guarantees given

5.2.1

5.2.1

22 317

24 394

Fines

5.2.2

5.2.2

6 378

8 951

EAGF, rural development and pre-accession

5.2.3

5.2.3

1 188

2 345

Cohesion policy

5.2.4

5.2.4

546

318

Legal cases and other disputes

5.2.5

5.2.5

91

251

Other contingent liabilities

1

2

Total

30 521

36 261

All contingent liabilities, except those relating to fines, would be financed, should they fall due, by the EU budget in the years to come.

All contingent liabilities, except those relating to fines, would be financed, should they fall due, by the EU budget in the years to come.

5.2.1   
  Guarantees given

Guarantees given

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| On loans granted by the EIB from its own resources: |
| 65 % guarantee | 18 683 | 20 362 |
| 70 % guarantee | 1 654 | 1 992 |
| 75 % guarantee | 383 | 534 |
| 100 % guarantee | 594 | 724 |
| Total | 21 314 | 23 612 |
| Other guarantees given | 1 003 | 782 |
| Total | 22 317 | 24 394 |

EUR millions

31.12.2012

31.12.2011

On loans granted by the EIB from its own resources:

On loans granted by the EIB from its own resources:

65 % guarantee

18 683

20 362

70 % guarantee

1 654

1 992

75 % guarantee

383

534

100 % guarantee

594

724

Total

21 314

23 612

Other guarantees given

Other guarantees given

1 003

1 003

782

782

Total

22 317

24 394

The EU budget guarantees loans signed and granted by the EIB from its own resources to third countries at 31 December 2012 (including loans granted to Member States before accession). However, the EU’s guarantee is limited to a percentage of the ceiling of the credit lines authorised: 65 % (for the mandate 2000-2007), 70 %, 75 % or 100 %. For the mandate 2007-2013, the EU’s guarantee is limited to 65 % of the outstanding balances and not on the credit lines authorised. Where the ceiling is not reached, the EU guarantee covers the full amount. At 31 December 2012 the amount outstanding totalled EUR 21 314 million and this, therefore, is the maximum exposure faced by the EU.

The above 2011 amount for the 65 % guarantee does not take the difference in calculation with regard to the 2000-2007 and 2007-2013 mandates into account. Had the 2011 amount been calculated based on this differentiation the amount to be disclosed would have been EUR 17 423 million.

Other guarantees given relate mainly to the Risk-Sharing Finance Facility (EUR 948 million) and the Loan Guarantee Instrument for TEN-T Projects (EUR 39 million). See for more information on these facilities note 2.4.

2.4

5.2.2   
  Fines

Fines

These amounts concern fines imposed by the Commission for infringement of competition rules that have been provisionally paid and where either an appeal has been lodged or where it is unknown if an appeal will be made. The contingent liability will be maintained until a decision by the Court of Justice on the case is final. Interest earned on provisional payments is included in the economic result of the year and also as a contingent liability to reflect the uncertainty of the Commission’s title to these amounts.

5.2.3   
  EAGF, rural development and pre-accession

EAGF, rural development and pre-accession

These are contingent liabilities towards the Member States connected with the EAGF conformity decisions, rural development and pre-accession financial corrections pending judgement of the Court of Justice. The determination of the final amount of the liability and the year in which the effect of successful appeals will be charged to the budget will depend on the length of the procedure before the Court.

5.2.4   
  Cohesion policy

Cohesion policy

These are contingent liabilities towards the Member States in conjunction with actions under cohesion policy awaiting the oral hearing date or pending judgement of the Court of Justice.

5.2.5   
  Legal cases and other disputes

Legal cases and other disputes

This heading relates to actions for damages currently being brought against the Commission and other EU bodies, other legal disputes and the estimated legal costs. It should be noted that in an action for damages under Article 288 EC the applicant must demonstrate a sufficiently serious breach by the institution of a rule of law intended to confer rights on individuals, real harm suffered by the applicant, and a direct causal link between the unlawful act and the harm.

5.3   OTHER SIGNIFICANT DISCLOSURES

OTHER SIGNIFICANT DISCLOSURES

5.3.1   
  Outstanding commitments not yet expensed

Outstanding commitments not yet expensed

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Outstanding commitments not yet expensed | 175 853 | 165 236 |

EUR millions

31.12.2012

31.12.2011

Outstanding commitments not yet expensed

175 853

165 236

The amount disclosed above is the budgetary RAL ("Reste à Liquider") less related amounts that have been included as expenses in the 2012 statement of financial performance. The budgetary RAL is an amount representing the open commitments for which payments and/or de-commitments have not yet been made. This is the normal consequence of the existence of multi-annual programmes. At 31 December 2012 the budgetary RAL totalled EUR 217 810 million (2011: EUR 207 443 million).

5.3.2   
  Significant legal commitments

Significant legal commitments

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Structural Actions | 71 775 | 142 916 |
| Protocol with Mediterranean countries | 264 | 264 |
| Fisheries agreements | 173 | 37 |
| Galileo programme | 143 | 320 |
| GMES programme | 233 | 400 |
| TEN-T | 1 331 | 3 416 |
| Other contractual commitments | 3 884 | 4 493 |
| Total | 77 803 | 151 846 |

EUR millions

31.12.2012

31.12.2011

Structural Actions

71 775

142 916

Protocol with Mediterranean countries

264

264

Fisheries agreements

173

37

Galileo programme

143

320

GMES programme

233

400

TEN-T

1 331

3 416

Other contractual commitments

3 884

4 493

Total

77 803

151 846

These commitments originated because the EU entered into long-term legal commitments in respect of amounts that were not yet covered by commitment appropriations in the budget. This can relate to multi-annual programmes such as Structural Actions or amounts that the EU is committed to pay in the future under administrative contracts existing at the balance sheet date (e.g. relating to the provision of services such as security, cleaning, etc, but also contractual commitments concerning specific projects such as building works).

Structural Actions

Structural Actions

The table below shows a comparison between the legal commitments for which budget commitments have not yet been made and the maximum commitments in relation to the amounts foreseen in the financial framework 2007-2013.

| EUR millions |
| --- |
| | Financial perspective amounts 2007-2013
  (A) | Legal commitments concluded
  (B) | Budget commitments 2007-2011
  (C) | Legal commitments less budget commitments
  (= B – C) | Maximum commitment
  (= A – C) |
| Structural funds | 347 552 | 347 521 | 293 050 | 54 471 | 54 502 |
| Natural Resources | 100 549 | 100 539 | 85 058 | 15 481 | 15 491 |
| Instrument for Pre-Accession Assistance | 11 255 | 9 895 | 9 473 | 422 | 1 782 |
| Total | 459 356 | 457 955 | 387 581 | 70 374 | 71 775 |

EUR millions

Financial perspective amounts 2007-2013

(A)

Legal commitments concluded

(B)

Budget commitments 2007-2011

(C)

Legal commitments less budget commitments

(= B – C)

Maximum commitment

(= A – C)

Structural funds

347 552

347 521

293 050

54 471

54 502

Natural Resources

100 549

100 539

85 058

15 481

15 491

Instrument for Pre-Accession Assistance

11 255

9 895

9 473

422

1 782

Total

459 356

457 955

387 581

70 374

71 775

Protocols with Mediterranean countries

Protocols with Mediterranean countries

These commitments relate to financial protocols with Mediterranean non-member countries. The amount included here is the difference between the total amount of the protocols signed and the amount of the budget commitments entered in the accounts. These protocols are international treaties that cannot be wound up without the agreement of both parties, although the winding-up process is on-going.

Fisheries agreements

Fisheries agreements

These are commitments entered into with third countries for operations under international fisheries agreements.

Galileo programme

Galileo programme

These are amounts are committed to the Galileo programme developing a European Global Navigation Satellite System – see also note 2.2.

2.2

GMES programme

GMES programme

The Commission has entered into a contract with the ESA for the period from 2008 to 2013 for the implementation of the space component of Global Monitoring for Environment and Security (GMES). The total indicative amount for that period is EUR 728 million.

TEN-T commitments

TEN-T commitments

This amount relates to grants in the field of the trans-European transport network (TEN-T) for the period 2007 - 2013. The programme applies to projects identified for the development of a trans-European transport network to support both infrastructure projects and research and innovation projects to foster the integration of new technologies and innovative processes on the deployment of new transport infrastructure. The total indicative amount for this programme is EUR 7 900 million.

The decrease in legal commitments relating to TEN-T is the combined effect of reduced legal commitments following amendment decisions and increased budget commitments.

Other contractual commitments

Other contractual commitments

The amounts included under this disclosure correspond to amounts committed to be paid during the term of the contracts. The largest amounts included here relate to procurement arrangements of the Fusion for Energy Agency in the context of ITER project and to building contracts of the European Parliament.

6.   PROTECTION OF THE EU BUDGET

6.1   BACKGROUND

BACKGROUND

An important consideration in implementing the EU budget is the need to ensure the proper prevention or detection and subsequent correction of errors, irregularities and fraud. The objective of this note is to provide: (1) an overview of the preventive and corrective mechanisms foreseen in the applicable legislation which detail the process of identifying and then dealing with errors, irregularities and fraud detected by EU bodies and by Member States, and (2) a best estimate of the total amounts concerned so as to illustrate in real terms how the EU budget is protected.

Information is not only presented below concerning actions made at the EU level, but is also given on the corrections effected by Member States under shared management following their own controls and audits (for the programming period 2007-2013 only, since for previous programming periods, data presented by Member States is incomplete and/or unreliable). These corrections are not recorded in the Commission's accounting system because Member States can reuse, in most cases, these amounts for other eligible expenditure. Member States figures are reported in table 6.7 below.

6.7

Further details on the amounts presented below and the processes involved can be found in a specific communication prepared by the Commission and sent to the Discharge Authority and Court of Auditors every September as from 2013 – this is available on the DG Budget Europa website.

6.2   PREVENTIVE MECHANISMS OF THE EUROPEAN COMMISSION

PREVENTIVE MECHANISMS OF THE EUROPEAN COMMISSION

In direct management, preventive actions include checks made by the responsible services on eligibility of expenditure being claimed by beneficiaries. These ex-ante controls are embedded in the programmes’ management processes and are intended to provide reasonable assurance on the legality and regularity of expenditure being paid. The Commission services can also provide guidance, particularly on contractual issues, with the aim of ensuring a sound and efficient management of funding and therefore a lower risk of irregularities.

Under the shared management mode (i.e. agricultural and cohesion policy expenditure), Member States are primarily responsible throughout the expenditure life cycle for ensuring that expenditure paid out from the EU budget is legal and regular. Preventive mechanisms also exist at the level of the Commission in its role of supervising body. The Commission may:

| — | interrupt the payment deadline for a maximum period of 6 months for the 2007-2013 programmes if:






  (a) | There is evidence to suggest a significant deficiency in the functioning of the management and control systems of the Member State concerned; or |
| --- | --- | --- |

—

interrupt the payment deadline for a maximum period of 6 months for the 2007-2013 programmes if:

interrupt

(a)

There is evidence to suggest a significant deficiency in the functioning of the management and control systems of the Member State concerned; or

| (b) | The Commission services have to carry out additional verifications following information that expenditure in a certified statement of expenditure is linked to a serious irregularity which has not been corrected. |
| --- | --- |

(b)

The Commission services have to carry out additional verifications following information that expenditure in a certified statement of expenditure is linked to a serious irregularity which has not been corrected.

| — | suspend all or part of an interim payment to a Member State for the 2007-2013 programmes in the following three cases:






  (a) | Where there is evidence of serious deficiency in the management and control system of the programme and the Member State has not taken the necessary corrective measures; or |
| --- | --- | --- |

—

suspend all or part of an interim payment to a Member State for the 2007-2013 programmes in the following three cases:

suspend

(a)

Where there is evidence of serious deficiency in the management and control system of the programme and the Member State has not taken the necessary corrective measures; or

| (b) | Where expenditure in a certified statement of expenditure is linked to a serious irregularity which has not been corrected; or |
| --- | --- |

(b)

Where expenditure in a certified statement of expenditure is linked to a serious irregularity which has not been corrected; or

| (c) | If there has been a serious breach by a Member State of its management and control obligations. |
| --- | --- |

(c)

If there has been a serious breach by a Member State of its management and control obligations.

Where the required measures are not taken by the Member State, the Commission may decide to impose a financial correction. Suspensions and interruptions figures are presented in note 6.4.1 below.

6.4.1

6.3   CORRECTIVE MECHANISMS OF THE EUROPEAN COMMISSION

CORRECTIVE MECHANISMS OF THE EUROPEAN COMMISSION

6.3.1.   
  Financial corrections

Financial corrections

Under shared management, Member States are primarily responsible for preventing, detecting and correcting errors, irregularities or frauds committed by beneficiaries in the first instance, while the Commission ensures an overall supervisory role. Where serious failings in the management and control systems of Member States have led or could lead to individual or systemic errors, irregularities or fraud, the Commission can apply financial corrections. The processing of financial corrections follows these three main steps:

financial corrections

| (1) | Financial corrections
  in progress: these corrections are subject to change since they are not yet formally accepted by the Member States, for example in the case of an audit which has been finalised, but where the Commission is still in the contradictory phase with the Member State concerned. |
| --- | --- |

(1)

Financial corrections
  in progress: these corrections are subject to change since they are not yet formally accepted by the Member States, for example in the case of an audit which has been finalised, but where the Commission is still in the contradictory phase with the Member State concerned.

Financial corrections

in progress

| (2) | Financial correction
  confirmed/decided: these amounts are final, meaning that they have been either confirmed (i.e. agreed) by the Member State concerned or decided via a Commission decision. They are reported in tables 6.4.2.1 below. |
| --- | --- |

(2)

Financial correction
  confirmed/decided: these amounts are final, meaning that they have been either confirmed (i.e. agreed) by the Member State concerned or decided via a Commission decision. They are reported in tables 6.4.2.1 below.

Financial correction

confirmed/decided

6.4.2.1

| (3) | Financial corrections
  implemented: These amounts represent the final step of the process whereby the observed situation of undue expenditure is definitively corrected. Several correction mechanisms are foreseen in the sector-based regulatory frameworks. These figures are reported in tables 6.4.2.2 and 6.4.3.1 below. |
| --- | --- |

(3)

Financial corrections
  implemented: These amounts represent the final step of the process whereby the observed situation of undue expenditure is definitively corrected. Several correction mechanisms are foreseen in the sector-based regulatory frameworks. These figures are reported in tables 6.4.2.2 and 6.4.3.1 below.

Financial corrections

implemented

6.4.2.2

6.4.3.1

6.3.2   
  Recoveries

Recoveries

Under direct management, and in accordance with the Financial Regulation, recovery orders should be established by the authorising officer for amounts unduly paid. Recoveries are then implemented by direct bank transfer from the debtor (e.g. Member State) or by offsetting from other amounts that the Commission owes to the debtor. The Financial Regulation foresees additional procedures to ensure the collection of recovery orders overdue, which are the object of a specific follow up by the Accounting Officer of the Commission.

Under shared management in the area of Agriculture, Member States are obliged to identify errors and irregularities and to recover amounts unduly paid in accordance with national rules and procedures. For the EAGF, amounts recovered from the beneficiaries are credited to the Commission, after deduction applied by Member States of 20 % (on average), who book them as revenue. For EAFRD, recoveries are deducted from the next payment claim before it is sent to the Commission's services, and therefore the relevant amount can be reused for the programme. If a Member State does not pursue the recovery or is not diligent in its actions, the Commission may decide to intervene and to impose a financial correction on the Member State concerned. In the area of Cohesion Policy, Member States (and not the Commission) are primarily responsible for recovering from beneficiaries, amounts unduly paid increased, where applicable, by late payment interest. The amounts recovered by the Member States are disclosed in this note for information purpose, in addition to financial corrections imposed by the Commission. For the 2007-2013 period, Member States are legally required to provide the Commission with clear and structured data on amounts withdrawn from co-financing before the national recovery process is finalised and the amounts effectively recovered from beneficiaries at national level.

6.3.3   
  Recovery of unused pre-financing amounts

Recovery of unused pre-financing amounts

In almost all areas, the EU makes pre-financing, or advance payments to beneficiaries. As explained under note 1.5.7, these are payments intended to provide the beneficiary with a cash advance or float. When a beneficiary has not used (spent) the totality of a pre-financing amount received from the EU, the Commission services issue a recovery order to ensure the return of the monies to the EU budget. This procedure represents an important step in the control system of the EU to ensure that no excess money is kept by the beneficiary without proper expense justification, thus contributing to the protection of the EU budget. These recoveries are presented in table 6.5 below.

1.5.7

6.5

Recoveries of unused pre-financing amounts should not be confused with irregular expenditure recovered. Where Commission services identify and recover such expenditure in relation to pre-financing amounts paid out, these are included in the normal financial correction or recovery processes described under 6.3.1 and 6.3.2 above.

unused

6.3.1

6.3.2

6.3.4   
  Own resource revenue - recoveries

Own resource revenue - recoveries

Regarding own resource revenues, which are the major fund source of the EU budget, recoveries concern the follow-up of: European Commission's inspection reports, European Court of Auditor's audits, financial responsibility cases resulting from Member States' administrative errors or lack of diligence in their recovery action, infringement proceedings, European Court of Justice's rulings and also amounts resulting from spontaneous payments from Member States and interest on late payments related to own resources. These amounts are reported in table 6.6 below.

6.6

6.4   FINANCIAL IMPACT OF PREVENTIVE AND CORRECTIVE MECHANISMS

FINANCIAL IMPACT OF PREVENTIVE AND CORRECTIVE MECHANISMS

6.4.1   
  Interruptions and suspensions in 2012

Interruptions and suspensions in 2012

Interruptions:

Interruptions:

The tables below present for the ERDF, the Cohesion Fund, the ESF and the EFF, a view on the evolution of the interruption cases both in number and in amount. The opening balance includes all the cases still open at end 2011, irrespective of the year when the interruption was notified to the Member State (for this reason certain figures are not directly comparable with those disclosed in the 2011 annual accounts). The new cases only refer to the interruptions notified in the year 2012. The closed cases represent the cases for which the payment of cost claims resumed in 2012, irrespective of the year when the interruption started. The cases still open at end 2012 represent the interruptions that remain active at 31 December 2012, i.e. the payment of cost claims is still interrupted pending corrective measures to be taken by the Member State concerned.

| EUR millions |
| --- |
| 2007-2013 programming period | ERDF / Cohesion Fund |
| Total open cases at 31.12.2011 | New cases 2012 | Closed cases during 2012 | Total open cases at 31.12.2012 |
| Member State | Number of cases | Amount | Number of cases | Amount | Number of cases | Amount | Number of cases | Amount |
| Germany | 3 | 17 | 2 | 163 | | | 5 | 180 |
| Spain | | | 49 | 1 495 | 41 | 1 319 | 8 | 176 |
| France | | | 6 | 51 | 5 | 24 | 1 | 27 |
| Italy (8) | 10 | 265 | 20 | 1 122 | 19 | 860 | 11 | 526 |
| Latvia | | | 5 | 94 | 5 | 94 | 0 | 0 |
| Lithuania | | | 4 | 164 | 4 | 164 | 0 | 0 |
| Hungary | | | 3 | 55 | | | 3 | 55 |
| Poland | | | 5 | 605 | | | 5 | 605 |
| Romania | | | 1 | 41 | | | 1 | 41 |
| Slovenia | | | 1 | 6 | 1 | 6 | 0 | 0 |
| Slovakia | 2 | 71 | | | 2 | 71 | 0 | 0 |
| United Kingdom | | | 1 | 22 | | | 1 | 22 |
| Cross-border | | | 11 | 59 | 8 | 52 | 3 | 6 |
| Total | 15 | 353 | 108 | 3 878 | 85 | 2 592 | 38 | 1 639 |

EUR millions

2007-2013 programming period

ERDF / Cohesion Fund

Total open cases at 31.12.2011

New cases 2012

Closed cases during 2012

Total open cases at 31.12.2012

Member State

Number of cases

Amount

Number of cases

Amount

Number of cases

Amount

Number of cases

Amount

Germany

3

17

2

163

5

5

180

180

Spain

49

1 495

41

1 319

8

8

176

176

France

6

51

5

24

1

1

27

27

Italy (8)

8

10

265

20

1 122

19

860

11

11

526

526

Latvia

5

94

5

94

0

0

0

0

Lithuania

4

164

4

164

0

0

0

0

Hungary

3

55

3

3

55

55

Poland

5

605

5

5

605

605

Romania

1

41

1

1

41

41

Slovenia

1

6

1

6

0

0

0

0

Slovakia

2

71

2

71

0

0

0

0

United Kingdom

1

22

1

1

22

22

Cross-border

11

59

8

52

3

3

6

6

Total

15

353

108

3 878

85

2 592

38

1 639

In addition to these interruption procedures, 119 warning letters (in cases where no payment claim was pending) have been sent in 2012 for ERDF, contributing to the further prevention of irregular amounts.

| EUR millions |
| --- |
| 2007-2013 programming period | ESF |
| Total open cases at 31.12.2011 | New cases 2012 | Closed cases during 2012 | Total open cases at 31.12.2012 |
| Member State | Number of cases | Amount | Number of cases | Amount | Number of cases | Amount | Number of cases | Amount |
| Czech Republic | | | 1 | 47 | | | 1 | 47 |
| Germany | | | 5 | 165 | 4 | 145 | 1 | 19 |
| Spain | 2 | 10 | 8 | 159 | 9 | 160 | 1 | 9 |
| France | 2 | 25 | 9 | 142 | 4 | 91 | 7 | 76 |
| Italy | 4 | 53 | 7 | 207 | 6 | 231 | 5 | 30 |
| Latvia | | | 2 | 26 | 2 | 26 | 0 | 0 |
| Lithuania | | | 1 | 1 | 1 | 1 | 0 | 0 |
| Romania | | | 1 | 21 | 1 | 21 | 0 | 0 |
| Slovakia | | | 1 | 45 | 1 | 45 | 0 | 0 |
| United Kingdom | 2 | 234 | 2 | 69 | 4 | 303 | 0 | 0 |
| Total | 10 | 323 | 37 | 881 | 32 | 1 023 | 15 | 181 |

EUR millions

2007-2013 programming period

ESF

Total open cases at 31.12.2011

New cases 2012

Closed cases during 2012

Total open cases at 31.12.2012

Member State

Number of cases

Amount

Number of cases

Amount

Number of cases

Amount

Number of cases

Amount

Czech Republic

1

47

1

1

47

47

Germany

5

165

4

145

1

1

19

19

Spain

2

10

8

159

9

160

1

1

9

9

France

2

25

9

142

4

91

7

7

76

76

Italy

4

53

7

207

6

231

5

5

30

30

Latvia

2

26

2

26

0

0

0

0

Lithuania

1

1

1

1

0

0

0

0

Romania

1

21

1

21

0

0

0

0

Slovakia

1

45

1

45

0

0

0

0

United Kingdom

2

234

2

69

4

303

0

0

0

0

Total

10

323

37

881

32

1 023

15

181

| EUR millions |
| --- |
| 2007-2013 programming period | EFF |
| Total open cases at 31.12.2011 | New cases 2012 | Closed cases during 2012 | Total open cases at 31.12.2012 |
| Member State | Number of cases | Amount | Number of cases | Amount | Number of cases | Amount | Number of cases | Amount |
| Czech Republic | | | 1 | 1 | 1 | 1 | 0 | 0 |
| Denmark | 1 | 0 | | | 1 | 0 | 0 | 0 |
| Germany | 2 | 1 | | | | | 2 | 1 |
| Estonia | 1 | 0 | 3 | 0 | | | 4 | 0 |
| Spain | 1 | 62 | 2 | 32 | 2 | 84 | 1 | 9 |
| France | 2 | 3 | | | | | 2 | 3 |
| Italy | | | 6 | 38 | | | 6 | 38 |
| Latvia | | | 1 | 0 | | | 1 | 0 |
| Netherlands | | | 3 | 8 | 3 | 8 | 0 | 0 |
| Poland | | | 1 | 2 | 1 | 2 | 0 | 0 |
| Portugal | | | 3 | 16 | 2 | 12 | 1 | 4 |
| Romania | | | 5 | 35 | | | 5 | 35 |
| Slovakia | | | 2 | 2 | | | 2 | 2 |
| Finland | 2 | 0 | 3 | 0 | 5 | 1 | 0 | 0 |
| Sweden | 1 | 0 | 2 | 6 | | | 3 | 6 |
| United Kingdom | 1 | 34 | 4 | 7 | 2 | 33 | 3 | 8 |
| Total | 11 | 100 | 36 | 149 | 17 | 141 | 30 | 108 |

EUR millions

2007-2013 programming period

EFF

Total open cases at 31.12.2011

New cases 2012

Closed cases during 2012

Total open cases at 31.12.2012

Member State

Number of cases

Amount

Number of cases

Amount

Number of cases

Amount

Number of cases

Amount

Czech Republic

1

1

1

1

0

0

0

0

Denmark

1

0

1

0

0

0

0

0

Germany

2

1

2

2

1

1

Estonia

1

0

3

0

4

4

0

0

Spain

1

62

2

32

2

84

1

1

9

9

France

2

3

2

2

3

3

Italy

6

38

6

6

38

38

Latvia

1

0

1

1

0

0

Netherlands

3

8

3

8

0

0

0

0

Poland

1

2

1

2

0

0

0

0

Portugal

3

16

2

12

1

1

4

4

Romania

5

35

5

5

35

35

Slovakia

2

2

2

2

2

2

Finland

2

0

3

0

5

1

0

0

0

0

Sweden

1

0

2

6

3

3

6

6

United Kingdom

1

34

4

7

2

33

3

3

8

8

Total

11

100

36

149

17

141

30

108

Suspensions:

Suspensions:

Concerning ERDF and the Cohesion Fund, suspension decisions were taken for 2 programmes in Germany and in Italy. Both suspensions were still effective at 31 December 2012. Concerning ESF, 2 suspension decisions were adopted in 2012 and concerned the Czech Republic and Slovakia. Suspension was still on-going for Czech Republic at 31 December 2012. There were no suspension decisions taken in 2012 for EFF.

ERDF

Cohesion Fund

ESF

EFF

6.4.2   
  Financial corrections and recoveries made in 2012

Financial corrections and recoveries made in 2012

6.4.2.1   Financial corrections and recoveries confirmed/decided in 2012

Financial corrections and recoveries confirmed/decided in 2012

| EUR millions |
| --- |
| | Financial Corrections | Recoveries | 2012 Total | 2011 Total |
| Agriculture: |
| EAGF | 475 | 162 | 638 | 839 |
| Rural Development | 76 | 145 | 221 | 228 |
| Cohesion Policy: |
| ERDF | 958 | N/A | 958 | 424 |
| Cohesion Fund | 203 | N/A | 203 | 17 |
| ESF | 425 | N/A | 425 | 227 |
| FIFG/EFF | 2 | N/A | 2 | 3 |
| EAGGF Guidance | 31 | 3 | 34 | 1 |
| Other | N/A | 19 | 19 | 50 |
| Internal policy areas | 1 | 252 | 253 | 270 |
| External policy areas | N/A | 107 | 107 | 107 |
| Administration (9) | N/A | 7 | 7 | 8 |
| Total decided/confirmed in 2012 | 2 172 | 695 | 2 867 | |
| Total decided/confirmed in 2011 | 1 406 | 768 | | 2 174 |

EUR millions

Financial Corrections

Recoveries

2012 Total

2011 Total

Agriculture:

EAGF

EAGF

475

162

638

839

Rural Development

Rural Development

76

145

221

228

Cohesion Policy:

ERDF

ERDF

958

N/A

958

424

Cohesion Fund

Cohesion Fund

203

N/A

203

17

ESF

ESF

425

N/A

425

227

FIFG/EFF

FIFG/EFF

2

N/A

2

3

EAGGF Guidance

EAGGF Guidance

31

3

34

1

Other

Other

N/A

19

19

50

Internal policy areas

1

252

253

270

External policy areas

N/A

107

107

107

Administration (9)

9

N/A

7

7

8

Total decided/confirmed in 2012

2 172

695

2 867

Total decided/confirmed in 2011

1 406

768

2 174

6.4.2.2   Financial corrections and recoveries implemented in 2012

Financial corrections and recoveries implemented in 2012

| EUR millions |
| --- |
| | Financial Corrections | Recoveries | 2012 Total | 2011 Total |
| Agriculture: |
| EAGF | 610 | 161 | 771 | 621 |
| Rural Development | 59 | 166 | 225 | 201 |
| Cohesion Policy: |
| ERDF | 2 416 | N/A | 2 416 | 419 |
| Cohesion Fund | 207 | N/A | 207 | 115 |
| ESF | 430 | N/A | 430 | 178 |
| FIFG/EFF | 1 | N/A | 1 | (90) |
| EAGGF Guidance | 17 | 3 | 20 | 1 |
| Other | N/A | 11 | 11 | 48 |
| Internal policy areas | 1 | 229 | 230 | 268 |
| External policy areas | N/A | 99 | 99 | 77 |
| Administration (10) | N/A | 9 | 9 | 2 |
| Total implemented in 2012 | 3 742 | 678 | 4 419 | |
| Total implemented in 2011 | 1 106 | 733 | | 1 840 |

EUR millions

Financial Corrections

Recoveries

2012 Total

2011 Total

Agriculture:

EAGF

EAGF

610

161

771

621

Rural Development

Rural Development

59

166

225

201

Cohesion Policy:

ERDF

ERDF

2 416

N/A

2 416

419

Cohesion Fund

Cohesion Fund

207

N/A

207

115

ESF

ESF

430

N/A

430

178

FIFG/EFF

FIFG/EFF

1

N/A

1

(90)

EAGGF Guidance

EAGGF Guidance

17

3

20

1

Other

Other

N/A

11

11

48

Internal policy areas

1

229

230

268

External policy areas

N/A

99

99

77

Administration (10)

10

N/A

9

9

2

Total implemented in 2012

3 742

678

4 419

Total implemented in 2011

1 106

733

1 840

6.4.2.3   Break-down per Member State of 2012 financial corrections implemented under shared management

Break-down per Member State of 2012 financial corrections implemented under shared management

| EUR millions |
| --- |
| Member State | EAGF | Rural Development | ERDF | Cohesion Fund | ESF | Other | Total 2012 | Total 2011 |
| Belgium | 0 | 3 | 0 | — | 11 | 0 | 14 | 1 |
| Bulgaria | 15 | 7 | 0 | 6 | 1 | — | 30 | 25 |
| Czech Republic | 0 | — | 116 | 8 | — | 0 | 125 | 6 |
| Denmark | 22 | — | 0 | — | — | — | 22 | 0 |
| Germany | (16) | 3 | 23 | — | 0 | 0 | 10 | 1 |
| Estonia | 0 | 1 | 0 | 0 | 0 | — | 1 | 0 |
| Ireland | (1) | 10 | — | — | — | — | 9 | 2 |
| Greece | 85 | 5 | 0 | 13 | 159 | 0 | 262 | 448 |
| Spain | 47 | 2 | 1 952 | 81 | 84 | 7 | 2 172 | 159 |
| France | 64 | 1 | 20 | — | 37 | 2 | 123 | 33 |
| Italy | 209 | 0 | 57 | — | 3 | 7 | 275 | 50 |
| Cyprus | 8 | 0 | — | — | — | 0 | 8 | 3 |
| Latvia | — | — | 1 | 1 | 9 | 0 | 12 | 0 |
| Lithuania | 3 | 4 | 3 | 1 | 0 | 0 | 10 | 0 |
| Luxembourg | 0 | — | 0 | — | — | — | 0 | 0 |
| Hungary | 6 | 0 | 0 | — | — | 0 | 6 | 41 |
| Malta | 0 | — | — | — | — | — | 0 | 0 |
| Netherlands | 17 | 2 | 0 | — | — | 0 | 20 | 53 |
| Austria | 1 | — | — | — | — | 0 | 1 | 0 |
| Poland | 12 | 2 | 45 | 79 | 23 | 0 | 162 | 148 |
| Portugal | 15 | 1 | 117 | 0 | — | 0 | 134 | 26 |
| Romania | 24 | 12 | 22 | — | 81 | — | 139 | 53 |
| Slovenia | 0 | 0 | — | — | — | 0 | 0 | 4 |
| Slovakia | 0 | — | 29 | 17 | 11 | — | 57 | 5 |
| Finland | 1 | 0 | 0 | — | — | 0 | 1 | 0 |
| Sweden | 72 | 2 | 0 | — | 0 | — | 74 | 3 |
| United Kingdom | 27 | 4 | 4 | — | 12 | 2 | 50 | 44 |
| Interreg/Cross-border | — | — | 24 | — | — | — | 24 | 1 |
| Total Implemented | 610 | 59 | 2 416 | 207 | 430 | 19 | 3 742 | 1 106 |

EUR millions

Member State

EAGF

Rural Development

ERDF

Cohesion Fund

ESF

Other

Total 2012

Total 2011

Belgium

0

3

0

—

11

0

14

14

1

Bulgaria

15

7

0

6

1

—

30

30

25

Czech Republic

0

—

116

8

—

0

125

125

6

Denmark

22

—

0

—

—

—

22

22

0

Germany

(16)

3

23

—

0

0

10

10

1

Estonia

0

1

0

0

0

—

1

1

0

Ireland

(1)

10

—

—

—

—

9

9

2

Greece

85

5

0

13

159

0

262

262

448

Spain

47

2

1 952

81

84

7

2 172

2 172

159

France

64

1

20

—

37

2

123

123

33

Italy

209

0

57

—

3

7

275

275

50

Cyprus

8

0

—

—

—

0

8

8

3

Latvia

—

—

1

1

9

0

12

12

0

Lithuania

3

4

3

1

0

0

10

10

0

Luxembourg

0

—

0

—

—

—

0

0

0

Hungary

6

0

0

—

—

0

6

6

41

Malta

0

—

—

—

—

—

0

0

0

Netherlands

17

2

0

—

—

0

20

20

53

Austria

1

—

—

—

—

0

1

1

0

Poland

12

2

45

79

23

0

162

162

148

Portugal

15

1

117

0

—

0

134

134

26

Romania

24

12

22

—

81

—

139

139

53

Slovenia

0

0

—

—

—

0

0

0

4

Slovakia

0

—

29

17

11

—

57

57

5

Finland

1

0

0

—

—

0

1

1

0

Sweden

72

2

0

—

0

—

74

74

3

United Kingdom

27

4

4

—

12

2

50

50

44

Interreg/Cross-border

—

—

24

—

—

—

24

24

1

Total Implemented

610

59

2 416

207

430

19

3 742

1 106

6.4.2.4   Explanation of financial corrections and recoveries movements in 2012

Explanation of financial corrections and recoveries movements in 2012

Agriculture and Rural Development: The financial corrections confirmed/decided are mainly related to Commission conformity and clearance decisions, arising as a result of audits performed by the Commission. The amount effectively implemented is different from the amount decided due to a delay in cashing. For recoveries, amounts are quite stable in comparison to last year figures.

Agriculture and Rural Development:

Cohesion Policy:

Cohesion Policy:

ERDF and the Cohesion Fund: Financial correction amounts both confirmed/decided and implemented have significantly increased compared to last year:

ERDF and the Cohesion Fund:

Amounts decided/confirmed:

Amounts decided/confirmed:

| — | Period 2007-2013: more than half of the EUR 1 161 million financial corrections confirmed/decided in 2012 (EUR 631 million) concern the current programming period 2007-2013 as a result of stricter supervision by the Commission and a growing number of audits completed at this stage of implementation of the programmes. The amount of corrections decided/confirmed in 2012 related to the programming period 2007-2013 is mainly explained by corrections concerning Spain (EUR 267 million), the Czech Republic (EUR 111 million), Greece (EUR 82 million) and Poland (EUR 77 million). These amounts do not include corrections to expenditure declared by beneficiaries at Member State level and therefore not certified to the Commission as a result of its requested action plans. |
| --- | --- |

—

Period 2007-2013: more than half of the EUR 1 161 million financial corrections confirmed/decided in 2012 (EUR 631 million) concern the current programming period 2007-2013 as a result of stricter supervision by the Commission and a growing number of audits completed at this stage of implementation of the programmes. The amount of corrections decided/confirmed in 2012 related to the programming period 2007-2013 is mainly explained by corrections concerning Spain (EUR 267 million), the Czech Republic (EUR 111 million), Greece (EUR 82 million) and Poland (EUR 77 million). These amounts do not include corrections to expenditure declared by beneficiaries at Member State level and therefore not certified to the Commission as a result of its requested action plans.

Period 2007-2013

| — | Period 2000-2006: The remaining amount (EUR 531 million) covers corrections related to the on-going closure process of the programming period 2000-2006. The corrections at closure result from the analysis of winding-up declarations, or the extrapolation of the residual error rate. The main corrections concern Spain (EUR 316 million), Italy (EUR 65 million) and Portugal (EUR 53 million). These corrections should continue in 2013 as the result of the finalisation of the closure exercise, with lower amounts though. |
| --- | --- |

—

Period 2000-2006: The remaining amount (EUR 531 million) covers corrections related to the on-going closure process of the programming period 2000-2006. The corrections at closure result from the analysis of winding-up declarations, or the extrapolation of the residual error rate. The main corrections concern Spain (EUR 316 million), Italy (EUR 65 million) and Portugal (EUR 53 million). These corrections should continue in 2013 as the result of the finalisation of the closure exercise, with lower amounts though.

Period 2000-2006:

Amounts implemented:

Amounts implemented:

The amounts reported this year concern the 2000-2006 period almost exclusively and financial corrections that were decided/accepted in previous years. A major correction for Spain (EUR 1,8 billion) has been reported as implemented following the completion of the verification of all closure documents, the full validation of the cost claims submitted by the Member State authorities from which the corrections were deducted, as well as the processing of the partial payment of the remaining balance to Spain. It should be noted that due to the lack of payment appropriations in the 2012 budget, at the end of the year (following the rejection by the budget authority of the proposal for an amending budget with higher payment appropriations), the Commission services could not make a full payment of the balance due to Spain.

ESF:

ESF:

| — | 2000-2006: most of the financial corrections reported relate to either the extrapolation of the residual error rate at closure (following the analysis of the winding-up declarations), or net corrections at closure. The closure audits are still on-going. |
| --- | --- |

—

2000-2006: most of the financial corrections reported relate to either the extrapolation of the residual error rate at closure (following the analysis of the winding-up declarations), or net corrections at closure. The closure audits are still on-going.

2000-2006

| — | 2007-2013: the amounts reported relate to irregular amounts deducted from interim payment claims submitted by Member States during the life cycle of the programme. The increase in the amounts reported result from the joint audit strategy developed for this programming period. |
| --- | --- |

—

2007-2013: the amounts reported relate to irregular amounts deducted from interim payment claims submitted by Member States during the life cycle of the programme. The increase in the amounts reported result from the joint audit strategy developed for this programming period.

2007-2013

6.4.3   
  Cumulative figures for financial corrections and recoveries implemented

Cumulative figures for financial corrections and recoveries implemented

6.4.3.1   Financial corrections implemented – cumulative figures

Financial corrections implemented – cumulative figures

Information is given below showing the cumulative financial corrections reported by programming period:

| EUR millions |
| --- |
| Financial corrections | Programming Period | Cumulated EAGF decisions | Total as at end 2012 | % Implemented / Decided-confirmed | Total not yet implemented As at end 2012 | Implemented at end 2011 |
| 1994-1999 Period | 2000-2006 Period | 2007-2013 Period |
| Agriculture: | — | 93 | 81 | 7 728 | 7 902 | 92,7 % | 623 | 7 139 |
| EAGF | — | — | — | 7 728 | 7 728 | 93,3 % | 558 | 7 024 |
| Rural Development (11) | — | 93 | 81 | — | 174 | 72,8 % | 65 | 115 |
| Cohesion Policy: | 2 535 | 6 359 | 779 | — | 9 673 | 89,7 % | 1 114 | |
| ERDF | 1 764 | 4 626 | 154 | — | 6 544 | 89,6 % | 761 | 4 128 |
| Cohesion Fund | 264 | 464 | 87 | — | 815 | 82,8 % | 169 | 608 |
| ESF | 407 | 1 206 | 538 | — | 2 150 | 96,7 % | 74 | 1 720 |
| FIFG/EFF | 100 | 5 | 0 | — | 105 | 52,2 % | 96 | 104 |
| EAGGF Guidance (11) | 0 | 58 | — | — | 58 | 80,6 % | 14 | 41 |
| Other | — | — | — | 2 | 2 | 100,0 % | — | 0 |
| Total | 2 535 | 6 452 | 861 | 7 730 | 17 577 | 91,0 % | 1 737 | 13 741 |

EUR millions

Financial corrections

Programming Period

Cumulated EAGF decisions

Total as at end 2012

% Implemented / Decided-confirmed

Total not yet implemented As at end 2012

Implemented at end 2011

1994-1999 Period

2000-2006 Period

2007-2013 Period

Agriculture:

Agriculture:

—

93

93

81

81

7 728

7 728

7 902

7 902

92,7 %

92,7 %

623

623

7 139

7 139

EAGF

EAGF

—

—

—

7 728

7 728

7 728

93,3 %

558

7 024

Rural Development (11)

Rural Development (11

—

93

81

—

174

174

72,8 %

65

115

Cohesion Policy:

Cohesion Policy:

2 535

2 535

6 359

6 359

779

779

—

9 673

9 673

89,7 %

89,7 %

1 114

1 114

ERDF

ERDF

1 764

4 626

154

—

6 544

6 544

89,6 %

761

4 128

Cohesion Fund

Cohesion Fund

264

464

87

—

815

815

82,8 %

169

608

ESF

ESF

407

1 206

538

—

2 150

2 150

96,7 %

74

1 720

FIFG/EFF

FIFG/EFF

100

5

0

—

105

105

52,2 %

96

104

EAGGF Guidance (11)

EAGGF Guidance (11

0

58

—

—

58

58

80,6 %

14

41

Other

Other

—

—

—

2

2

2

2

100,0 %

100,0 %

—

0

0

Total

2 535

6 452

861

7 730

17 577

91,0 %

1 737

13 741

The amounts of financial corrections disclosed in this table for Agriculture represent gross amounts related to conformity clearance decisions. However the amounts disclosed in note 6.4.2.2 also take into account financial clearance decisions.

6.4.2.2

Concerning EAGF, the cumulated amount implemented of EUR 7 728 million covers all corrections made as from when the first decision was made in 1999. For Rural Development, the cumulated amount of EUR 174 million covers all corrections and recovery of irregularities as from 2007. It is to be noted that in some cases the date of implementation was deferred by several years, and some decisions are also reimbursed in deferred annual instalments. This is the case for Member States subject to financial assistance in accordance with the European Financial Stability Framework Agreement signed on 7 June 2010. As a consequence, there is an increasing discrepancy between the cumulative amounts decided and implemented.

EAGF

Rural Development

Concerning Cohesion policy:

Cohesion policy

| | Period 2000-2006: The increase of the implementation rate for ERDF for the programming period 2000-2006 in 2012 (from 53 % in 2011 to 92 % in 2012) is explained by the sending to Member States of all but seven ERDF closure letters covering operational programmes by end 2012, followed by the authorisation of partial ERDF 2000-2006 final payment claims (within the limits of available credits). This high implementation rate at end 2012 also applies to ESF. For FIFG, closure documents and final payment claims are still being processed by the Commission services, which explains the low implementation rate for this programming period. |
| --- | --- |

Period 2000-2006: The increase of the implementation rate for ERDF for the programming period 2000-2006 in 2012 (from 53 % in 2011 to 92 % in 2012) is explained by the sending to Member States of all but seven ERDF closure letters covering operational programmes by end 2012, followed by the authorisation of partial ERDF 2000-2006 final payment claims (within the limits of available credits). This high implementation rate at end 2012 also applies to ESF. For FIFG, closure documents and final payment claims are still being processed by the Commission services, which explains the low implementation rate for this programming period.

Period 2000-2006:

ESF

FIFG

| | Period 2007-2013: As a result of stricter supervision by the Commission, a growing number of audits are completed at this stage of implementation of the programmes. The corrections confirmed/decided or implemented will continue to increase in the coming years, as a result of the Commission supervisory role and EU audits. |
| --- | --- |

Period 2007-2013: As a result of stricter supervision by the Commission, a growing number of audits are completed at this stage of implementation of the programmes. The corrections confirmed/decided or implemented will continue to increase in the coming years, as a result of the Commission supervisory role and EU audits.

Period 2007-2013:

Included in the above table are financial corrections that are being challenged by certain Member States (noting that past experience has shown that the Commission has very rarely had to repay amounts following such cases). For more details, see note 5.2.4.

5.2.4

6.4.3.2   Recoveries implemented – cumulative figures

Recoveries implemented – cumulative figures

For recoveries, reliable cumulative information is only available since 2008 when a specific functionality was introduced into the Commission's accounting system to better track and report such recoveries. The information below shows the breakdown of recoveries made per year:

| EUR millions |
| --- |
| Recoveries | Years | Total as at end 2012 | Total as at end 2011 |
| 2008 | 2009 | 2010 | 2011 | 2012 |
| Agriculture: | | | | | | | |
| EAGF | 356 | 148 | 172 | 178 | 161 | 1 015 | 854 |
| Rural Development | 0 | 25 | 114 | 161 | 166 | 466 | 301 |
| Cohesion | 31 | 102 | 25 | 48 | 14 | 219 | 205 |
| Internal policy areas | 40 | 100 | 162 | 268 | 229 | 799 | 570 |
| External policy areas | 32 | 81 | 136 | 77 | 99 | 425 | 326 |
| Administration | 0 | 9 | 5 | 2 | 9 | 25 | 16 |
| Total | 459 | 464 | 614 | 734 | 678 | 2 949 | 2 272 |

EUR millions

Recoveries

Years

Total as at end 2012

Total as at end 2011

2008

2009

2010

2011

2012

Agriculture:

EAGF

EAGF

356

148

172

178

161

1 015

854

Rural Development

Rural Development

0

25

114

161

166

466

301

Cohesion

31

102

25

48

14

219

205

Internal policy areas

40

100

162

268

229

799

570

External policy areas

32

81

136

77

99

425

326

Administration

0

9

5

2

9

25

16

Total

459

464

614

734

678

2 949

2 272

6.5   RECOVERY OF UNUSED PRE-FINANCING AMOUNTS

RECOVERY OF UNUSED PRE-FINANCING AMOUNTS

| EUR millions |
| --- |
| | 2012 | 2011 |
| Agriculture: | | |
| EAGF | 0 | 0 |
| Rural Development | 0 | 0 |
| Cohesion Policy: | | |
| ERDF | 38 | 13 |
| Cohesion Fund | 5 | 2 |
| ESF | 214 | 17 |
| FIFG/EFF | 0 | 0 |
| EAGGF Guidance | 5 | 10 |
| Internal policy areas | 207 | 212 |
| External policy areas | 104 | 72 |
| Administration | 2 | 0 |
| Total recovered | 575 | 327 |

EUR millions

2012

2011

Agriculture:

EAGF

EAGF

0

0

Rural Development

Rural Development

0

0

Cohesion Policy:

ERDF

ERDF

38

13

Cohesion Fund

Cohesion Fund

5

2

ESF

ESF

214

17

FIFG/EFF

FIFG/EFF

0

0

EAGGF Guidance

EAGGF Guidance

5

10

Internal policy areas

207

212

External policy areas

104

72

Administration

2

0

Total recovered

575

327

The above amounts have been deducted in arriving at the pre-financing amounts included under notes 2.6 and 2.10.

2.6

2.10

6.6   RECOVERIES RELATING TO OWN RESOURCE REVENUES

RECOVERIES RELATING TO OWN RESOURCE REVENUES

| EUR millions |
| --- |
| | 2012 | 2011 |
| Amounts recovered: | | |
| — | Principal |

EUR millions

2012

2011

Amounts recovered:

—

Principal

133

63

| — | Interest |
| --- | --- |

—

Interest

160

312

Total recovered

293

375

6.7   ADDITIONAL CORRECTIONS (WITHDRAWALS AND RECOVERIES) REPORTED AS IMPLEMENTED BY MEMBER STATES FOR THE PERIOD 2007-2013

ADDITIONAL CORRECTIONS (WITHDRAWALS AND RECOVERIES) REPORTED AS IMPLEMENTED BY MEMBER STATES FOR THE PERIOD 2007-2013

| EUR millions |
| --- |
| Member State | ERDF/CF | ESF | EFF | Total at end 2012 |
| Belgium | 3 | 11 | — | 14 |
| Bulgaria | 13 | 2 | 0 | 15 |
| Czech Republic | 191 | 37 | — | 228 |
| Denmark | 0 | 0 | 0 | 0 |
| Germany | 290 | 49 | 1 | 340 |
| Estonia | 4 | 0 | 0 | 4 |
| Ireland | 0 | 5 | 0 | 5 |
| Greece | 63 | — | 0 | 63 |
| Spain | 204 | 39 | 9 | 252 |
| France | 42 | 37 | 0 (12) | 79 |
| Italy | 141 | 27 | 0 | 168 |
| Cyprus | 0 | 0 | 0 | 1 |
| Latvia | 10 | — | 0 | 10 |
| Lithuania | 6 | 0 | 0 | 6 |
| Luxembourg | — | 0 | — | 0 |
| Hungary | 26 | — | 0 | 26 |
| Malta | 1 | 0 | — | 1 |
| Netherlands | 1 | 2 | 0 | 3 |
| Austria | 4 | 1 | 0 | 5 |
| Poland | 204 | — | 0 | 204 |
| Portugal | 46 | 28 | 1 | 75 |
| Romania | 43 | — | 0 | 43 |
| Slovenia | 5 | 5 | — | 10 |
| Slovakia | 33 | 4 | 0 | 37 |
| Finland | 1 | 0 | 0 | 1 |
| Sweden | 2 | 1 | 1 | 4 |
| United Kingdom | 38 | 13 | 1 | 52 |
| Cross-border | 8 | — | — | 8 |
| Total implemented | 1 377 | 261 | 14 | 1 652 |

EUR millions

Member State

ERDF/CF

ESF

EFF

Total at end 2012

Belgium

3

11

—

14

14

Bulgaria

13

2

0

15

15

Czech Republic

191

37

—

228

228

Denmark

0

0

0

0

0

Germany

290

49

1

340

340

Estonia

4

0

0

4

4

Ireland

0

5

0

5

5

Greece

63

—

0

63

63

Spain

204

39

9

252

252

France

42

37

0 (12)

12

79

79

Italy

141

27

0

168

168

Cyprus

0

0

0

1

1

Latvia

10

—

0

10

10

Lithuania

6

0

0

6

6

Luxembourg

—

0

—

0

0

Hungary

26

—

0

26

26

Malta

1

0

—

1

1

Netherlands

1

2

0

3

3

Austria

4

1

0

5

5

Poland

204

—

0

204

204

Portugal

46

28

1

75

75

Romania

43

—

0

43

43

Slovenia

5

5

—

10

10

Slovakia

33

4

0

37

37

Finland

1

0

0

1

1

Sweden

2

1

1

4

4

United Kingdom

38

13

1

52

52

Cross-border

8

—

—

8

8

Total implemented

1 377

261

14

1 652

The table above shows the cumulative financial corrections reported by each Member State since the beginning of the 2007-2013 programming period to end 2012. These are in addition to the corrections reported cumulatively by the Commission (see note 6.4.3).

6.4.3

So as to gain additional assurance as to the completeness and reliability of the Member States’ reporting on recoveries and withdrawals, the Commission started an audit of structural actions (ERDF, CF, ESF, EFF) in 2011 with the aim of ensuring that Member States’ reporting is complete and reliable. Based on a risk analysis, a sample of 12 certifying authorities in 10 Member States was selected (13). During 2012, the relevant Commission services obtained reasonable assurance that 11 of the 12 audited certifying authorities have satisfactory arrangements in place for keeping an account of amounts concerning for the recovery and withdrawal of undue payments and for the reporting of them to the Commission.

13

The Commission services will continue this audit in 2013 and beyond in other Member States, following analysis of the annual statements from the Member States on withdrawals and recoveries to be received in 2013.

7.   FINANCIAL SUPPORT MECHANISMS

This note intends to give a complete overview of the currently existing financial support mechanisms in the EU, and so provides further information to that reported under note 2. The information included in the first part of this note (7.1) relates to borrowing and lending activities of the EU managed by the Commission. The information in the second part of this note (7.2) covers intergovernmental financial stability mechanisms outside the EU Treaty framework and thus without an impact on the EU budget.

2

7.1

7.2

7.1   BORROWING AND LENDING ACTIVITIES MANAGED BY THE COMMISSION

BORROWING AND LENDING ACTIVITIES MANAGED BY THE COMMISSION

7.1.1   
  Borrowing and lending activities – Overview

Borrowing and lending activities – Overview

Amounts at carrying value

Amounts at carrying value

| EUR millions |
| --- |
| | MFA | Euratom | BOP | EFSM | ECSC in liquidation | Total 31.12.2012 | Total 31.12.2011 |
| Loans
  (note 2.4.2) | 549 | 425 | 11 623 | 44 476 | 221 | 57 294 | 41 281 |
| Borrowing
  (note 2.14) | 549 | 425 | 11 623 | 44 476 | 194 | 57 267 | 41 251 |
| The above amounts are at carrying value whereas the tables below are presented in nominal values. |

EUR millions

MFA

Euratom

BOP

EFSM

ECSC in liquidation

Total 31.12.2012

Total 31.12.2011

Loans

(note 2.4.2)

2.4.2

549

425

11 623

44 476

221

57 294

57 294

41 281

Borrowing

(note 2.14)

2.14

549

425

11 623

44 476

194

57 267

57 267

41 251

The above amounts are at carrying value whereas the tables below are presented in nominal values.

The EU is empowered by the EU Treaty to adopt borrowing programmes to mobilise the financial resources necessary to fulfill its mandate. The European Commission, acting on behalf of the EU, currently operates three main programmes, Macro-Financial Assistance (MFA), Balance of Payments (BOP) assistance and the European Financial Stabilisation Mechanism (EFSM), under which it may grant loans and fund these by issuing debt instruments in the capital markets or with financial institutions.

The key points or characterisitics to note for these three instruments are:

| — | EU borrowing is raised on the capital markets or with financial institutions and not from the budget, as the EU is not permitted to borrow to finance its ordinary budgetary expenses or a budget deficit. |
| --- | --- |

—

EU borrowing is raised on the capital markets or with financial institutions and not from the budget, as the EU is not permitted to borrow to finance its ordinary budgetary expenses or a budget deficit.

| — | The size of the borrowings varies from small private placements of single or double digit EUR million amounts to benchmark-size operations in the context of the BOP and the EFSM loans. |
| --- | --- |

—

The size of the borrowings varies from small private placements of single or double digit EUR million amounts to benchmark-size operations in the context of the BOP and the EFSM loans.

| — | The funds raised are lent back-to-back to the beneficiary country, i.e. with the same coupon, maturity and amount. Notwithstanding the back-to-back methodology, the debt service of the bond is a legal obligation of the EU, which will ensure that all bond payments are made timely and fully. To this effect, BOP beneficiares are required to deposit reimbursements 7 days in advance of the due dates and EFSM beneficiaries 14 days in advance, which allows the Commission sufficient time to ensure timely payment in all circumstances. |
| --- | --- |

—

The funds raised are lent back-to-back to the beneficiary country, i.e. with the same coupon, maturity and amount. Notwithstanding the back-to-back methodology, the debt service of the bond is a legal obligation of the EU, which will ensure that all bond payments are made timely and fully. To this effect, BOP beneficiares are required to deposit reimbursements 7 days in advance of the due dates and EFSM beneficiaries 14 days in advance, which allows the Commission sufficient time to ensure timely payment in all circumstances.

| — | For each country programme, the Council and Commission Decisions determine the overall granted amount, the instalments to be disbursed, its maximum individual maturity and maximum average maturity of the loan package. Subsequently, the Commission and the beneficiary country agree loan/funding parameters, including instalments and the payment of tranches. In addition, all but the first instalment of the loan depend on compliance with strict conditions, with agreed terms and conditions similar to IMF support, in the context of a joint EU/IMF financial assistance, which is another factor influencing the timing of funding. |
| --- | --- |

—

For each country programme, the Council and Commission Decisions determine the overall granted amount, the instalments to be disbursed, its maximum individual maturity and maximum average maturity of the loan package. Subsequently, the Commission and the beneficiary country agree loan/funding parameters, including instalments and the payment of tranches. In addition, all but the first instalment of the loan depend on compliance with strict conditions, with agreed terms and conditions similar to IMF support, in the context of a joint EU/IMF financial assistance, which is another factor influencing the timing of funding.

| — | This implies that the timing and maturities of issuance are dependent on the related EU lending activity. |
| --- | --- |

—

This implies that the timing and maturities of issuance are dependent on the related EU lending activity.

| — | Funding is exclusively denominated in euro and the maturity spectrum is 5 to 30 years. |
| --- | --- |

—

Funding is exclusively denominated in euro and the maturity spectrum is 5 to 30 years.

| — | Borrowings are direct and unconditional obligations of the EU and guaranteed by the 28 Member States. |
| --- | --- |

—

Borrowings are direct and unconditional obligations of the EU and guaranteed by the 28 Member States.

| — | Should a beneficiary country default, the debt service will be drawn from the available treasury balance of the Commission, if possible. If that would not be possible, the Commission would draw the necessary funds from the Member States. EU Member States are legally obliged, according to the EU own resources legislation (Article 12 of Council Regulation (EC, Euratom) No 1150/2000), to make available sufficient funds to meet the EU’s obligations. Thus investors are only exposed to the credit risk of the EU, not to that of the beneficiary of loans funded. |
| --- | --- |

—

Should a beneficiary country default, the debt service will be drawn from the available treasury balance of the Commission, if possible. If that would not be possible, the Commission would draw the necessary funds from the Member States. EU Member States are legally obliged, according to the EU own resources legislation (Article 12 of Council Regulation (EC, Euratom) No 1150/2000), to make available sufficient funds to meet the EU’s obligations. Thus investors are only exposed to the credit risk of the EU, not to that of the beneficiary of loans funded.

| — | “Back-to-back” lending ensures that the EU budget does not assume any interest rate or foreign exchange risk. |
| --- | --- |

—

“Back-to-back” lending ensures that the EU budget does not assume any interest rate or foreign exchange risk.

Additionally, the Euratom legal entity (represented by the Commission) borrows money to lend to both Member and non-Member States to finance projects relating to energy installations. Finally, the European Coal & Steel Community (ECSC) in liquidation has, following a restructuring of debts of a defaulting debtor, acquired in 2002 and 2007 promissory notes from the EIB (rated AAA). At the balance sheet date, the book value of these promissory notes amounted to EUR 221 million.

Euratom

ECSC

More details on each of these instruments are given below. The effective interest rates (expressed as a range of interest rates) were as follows:

| Loans | 31.12.2012 | 31.12.2011 |
| --- | --- | --- |
| Macro Financial Assistance (MFA) | 0,298 %-4,54 % | 1,58513 %-4,54 % |
| Euratom | 0,431 %-5,76 % | 1,067 %-5,76 % |
| BOP | 2,375 %-3,625 % | 2,375 %-3,625 % |
| EFSM | 2,375 %-3,750 % | 2,375 %-3,50 % |
| ECSC in liquidation | 5,2354 %-5,8103 % | 1,158 %-5,8103 % |

Loans

31.12.2012

31.12.2011

Macro Financial Assistance (MFA)

0,298 %-4,54 %

1,58513 %-4,54 %

Euratom

0,431 %-5,76 %

1,067 %-5,76 %

BOP

2,375 %-3,625 %

2,375 %-3,625 %

EFSM

2,375 %-3,750 %

2,375 %-3,50 %

ECSC in liquidation

5,2354 %-5,8103 %

1,158 %-5,8103 %

| Borrowings | 31.12.2012 | 31.12.2011 |
| --- | --- | --- |
| Macro Financial Assistance (MFA) | 0,298 %-4,54 % | 1,58513 %-4,54 % |
| Euratom | 0,351 %-5,6775 % | 0,867 %-5,6775 % |
| BOP | 2,375 %-3,625 % | 2,375 %-3,625 % |
| EFSM | 2,375 %-3,750 % | 2,375 %-3,50 % |
| ECSC in liquidation | 6,92 %-9,78 % | 1,158 %-9,2714 % |

Borrowings

31.12.2012

31.12.2011

Macro Financial Assistance (MFA)

0,298 %-4,54 %

1,58513 %-4,54 %

Euratom

0,351 %-5,6775 %

0,867 %-5,6775 %

BOP

2,375 %-3,625 %

2,375 %-3,625 %

EFSM

2,375 %-3,750 %

2,375 %-3,50 %

ECSC in liquidation

6,92 %-9,78 %

1,158 %-9,2714 %

7.1.2   
  European Financial Stabilisation Mechanism (EFSM)

European Financial Stabilisation Mechanism (EFSM)

EFSM nominal value

EFSM nominal value

| EUR millions |
| --- |
| | Ireland | Portugal | Total |
| Total loans granted | 22 500 | 26 000 | 48 500 |
| Disbursed at 31.12.2011 | 13 900 | 14 100 | 28 000 |
| Disbursed in 2012 | 7 800 | 8 000 | 15 800 |
| Loans disbursed at 31.12.2012 | 21 700 | 22 100 | 43 800 |
| Loans repaid at 31.12.2012 (14) | 0 | 0 | 0 |
| Loans outstanding at 31.12.2012 | 21 700 | 22 100 | 43 800 |
| Undrawn amounts at 31.12.2012 | 800 | 3 900 | 4 700 |

EUR millions

Ireland

Portugal

Total

Total loans granted

Total loans granted

22 500

22 500

26 000

26 000

48 500

48 500

Disbursed at 31.12.2011

13 900

14 100

28 000

Disbursed in 2012

7 800

8 000

15 800

Loans disbursed at 31.12.2012

Loans disbursed at 31.12.2012

21 700

21 700

22 100

22 100

43 800

43 800

Loans repaid at 31.12.2012 (14)

14

0

0

0

Loans outstanding at 31.12.2012

Loans outstanding at 31.12.2012

21 700

21 700

22 100

22 100

43 800

43 800

Undrawn amounts at 31.12.2012

800

3 900

4 700

On 11 May 2010 the Council adopted the EFSM to preserve financial stability in Europe (Council Regulation (EU) no 407/2010). The mechanism is based on Art. 122.2 of the TFEU and enables the granting of financial assistance to a Member State in difficulties or seriously threatened with severe difficulties caused by exceptional circumstances beyond its control. The assistance may take the form of a loan or credit line. The Commission borrows funds on the capital markets or with financial institutions on behalf of the EU and lends these funds to the beneficiary Member State. For each country receiving a loan under the EFSM, a quarterly assessment on the fulfilment of the policy conditions attached to the loan is carried out before an instalment is disbursed.

o

The ECOFIN Council conclusions of 9 May 2010 restrict the facility to EUR 60 billion but the legal limit is provided in Article 2.2 of the Council Regulation (EU) No 407/2010, which restricts the outstanding amount of loans or credit lines to the margin available under the own resources ceiling. Borrowings related to loans disbursed under the EFSM are guaranteed by the EU budget – thus at 31 December 2012, the budget is exposed to a maximum possible risk of EUR 44 476 million regarding these loans (the EUR 43,8 billion above being the nominal value). As the borrowings under the EFSM are guaranteed by the EU budget, the European Parliament scrutinises the Commission's EFSM actions and exercises control in the context of the budget and discharge procedure.

The Council decided by Implementing decision in December 2010 on a loan to Ireland of maximum EUR 22,5 billion, and in May 2011 on a loan to Portugal of maximum EUR 26 billion. The initial implementing decisions fixed interest with a margin to result in conditions similar to those of the IMF support. With the adoption of Council Implementing Decisions 2011/682/EU and 2011/683/EU of 11 October 2011, the Council suppressed the interest margin retroactively and extended the maximum average maturity from 7,5 years to 12,5 years and the maturity of individual tranches up to 30 years. On 12 April 2013, the ECOFIN agreed to further lengthen the maximum average maturity of the EFSM loans to Ireland and Portugal by 7 years to 19,5 years. The extension would smooth the debt redemption profile of both countries and lower their refinancing needs in the post-programme period.

Under the EFSM, the EU intends to issue further bonds in the last quarter of 2013 for a total amount of EUR 3 billion for loans to Ireland and Portugal. The EFSM will no longer engage in new financing programmes or enter into new loan facility agreements, but will remain active in financing the on-going programmes for Portugal and Ireland (see also note 7.2.2 below).

7.2.2

7.1.3   
  Balance of Payments (BOP)

Balance of Payments (BOP)

The BOP facility, a policy-based financial instrument, provides medium-term financial assistance to Member States of the EU. It enables the granting of loans to Member States which are experiencing, or are seriously threatened with, difficulties in their balance of payments or capital movements. Only Member States which have not adopted the Euro may benefit from this facility. The maximum outstanding amount of loans granted under the instrument is limited to EUR 50 billion. Borrowings related to these BOP loans are guaranteed by the EU budget – thus at 31 December 2012, the budget is exposed to a maximum possible risk of EUR 11 623 million regarding these loans (EUR 11,4 billion below being the nominal value).

BPO nominal value

BPO nominal value

| EUR millions |
| --- |
| | Hungary | Latvia | Romania | Total |
| Total loans granted | 6 500 | 3 100 | 6 400 | 16 000 |
| Disbursed in 2008 | 2 000 | — | — | 2 000 |
| Disbursed in 2009 | 3 500 | 2 200 | 1 500 | 7 200 |
| Disbursed in 2010 | — | 700 | 2 150 | 2 850 |
| Disbursed in 2011 | — | — | 1 350 | 1 350 |
| Disbursed in 2012 | — | — | — | — |
| Loans disbursed 31.12.2012 | 5 500 | 2 900 | 5 000 | 13 400 |
| Loans repaid at 31.12.2012 | (2 000) | — | — | (2 000) |
| Outstanding amount at 31.12.2012 | 3 500 | 2 900 | 5 000 | 11 400 |
| Undrawn amounts 31.12.2012 | 0 | 0 | 1 400 | 1 400 |
| A table showing the reimbursement schedule for these loans is given at the end of this note. |

EUR millions

Hungary

Latvia

Romania

Total

Total loans granted

Total loans granted

6 500

6 500

3 100

3 100

6 400

6 400

16 000

16 000

Disbursed in 2008

2 000

—

—

2 000

Disbursed in 2009

3 500

2 200

1 500

7 200

Disbursed in 2010

—

700

2 150

2 850

Disbursed in 2011

—

—

1 350

1 350

Disbursed in 2012

—

—

—

—

Loans disbursed 31.12.2012

Loans disbursed 31.12.2012

5 500

5 500

2 900

2 900

5 000

5 000

13 400

13 400

Loans repaid at 31.12.2012

(2 000)

—

—

(2 000)

Outstanding amount at 31.12.2012

Outstanding amount at 31.12.2012

3 500

3 500

2 900

2 900

5 000

5 000

11 400

11 400

Undrawn amounts 31.12.2012

0

0

1 400

1 400

A table showing the reimbursement schedule for these loans is given at the end of this note.

Between November 2008 and end 2012, loans amounting to EUR 16 billion were granted to Hungary, Latvia and Romania, of which EUR 13,4 billion had been disbursed by the end of 2012. It should be noted that the BOP assistance programme for Hungary expired in November 2010 (with EUR 1 billion undrawn) and a first repayment of EUR 2 billion was received as scheduled in December 2011. The BOP assistance programme for Latvia expired in January 2012 (with EUR 200 million undrawn). The BOP first assistance programme for Romania expired in May 2012 with all the amount granted being disbursed.

In February 2011, Romania requested a follow-up precautionary financial assistance programme under the BOP Facility to support the re-launch of economic growth. On 12 May 2011 the Council decided to make available precautionary EU BOP assistance for Romania of up to EUR 1,4 billion (Council Decision 2011/288/EU) that if requested, should be provided in a form of a loan with a maximum maturity of seven years. This precautionary assistance expired at end-March 2013 without being drawn.

The following table provides an overview of the planned reimbursement schedule in nominal value for outstanding EFSM and BOP loan amounts at the date of signature of these accounts:

| EUR Billions |
| --- |
| Year | BOP | EFSM | Total |
| Hungary | Latvia | Romania | Total | Ireland | Portugal | Total |
| 2014 | 2.0 | 1.0 | | 3.0 | | | | 3.0 |
| 2015 | | 1.2 | 1.5 | 2.7 | 5.0 | | 5.0 | 7.7 |
| 2016 | 1.5 | | | 1.5 | | 4.75 | 4.75 | 6.25 |
| 2017 | | | 1.15 | 1.15 | | | | 1.15 |
| 2018 | | | 1.35 | 1.35 | 3.9 | 0.6 | 4.5 | 5.85 |
| 2019 | | 0.5 | 1.0 | 1.5 | | | | 1.5 |
| 2021 | | | | | 3.0 | 6.75 | 9.75 | 9.75 |
| 2022 | | | | | | 2.7 | 2.7 | 2.7 |
| 2025 | | 0.2 | | 0.2 | | | | 0.2 |
| 2026 | | | | | 2.0 | 2.0 | 4.0 | 4.0 |
| 2027 | | | | | 1.0 | 2.0 | 3.0 | 3.0 |
| 2028 | | | | | 2.3 | | 2.3 | 2.3 |
| 2032 | | | | | 3.0 | | 3.0 | 3.0 |
| 2038 | | | | | | 1.8 | 1.8 | 1.8 |
| 2042 | | | | | 1.5 | 1.5 | 3.0 | 3.0 |
| Total | 3.5 | 2.9 | 5.0 | 11.4 | 21.7 | 22.1 | 43.8 | 55.2 |

EUR Billions

Year

BOP

EFSM

Total

Hungary

Latvia

Romania

Total

Ireland

Portugal

Total

2014

2.0

1.0

3.0

3.0

2015

1.2

1.5

2.7

5.0

5.0

7.7

2016

1.5

1.5

4.75

4.75

6.25

2017

1.15

1.15

1.15

2018

1.35

1.35

3.9

0.6

4.5

5.85

2019

0.5

1.0

1.5

1.5

2021

3.0

6.75

9.75

9.75

2022

2.7

2.7

2.7

2025

0.2

0.2

0.2

2026

2.0

2.0

4.0

4.0

2027

1.0

2.0

3.0

3.0

2028

2.3

2.3

2.3

2032

3.0

3.0

3.0

2038

1.8

1.8

1.8

2042

1.5

1.5

3.0

3.0

Total

3.5

2.9

5.0

11.4

21.7

22.1

43.8

55.2

7.1.4   
  MFA, EURATOM & ECSC in Liquidation

MFA, EURATOM & ECSC in Liquidation

MFA is a policy-based financial instrument of untied and undesignated balance of payment and/or budget support to partner third-countries geographically close to the EU territory. It takes the form of medium/long term loans or grants or an appropriate combination of both and generally complements financing provided in the context of an IMF-supported adjustment and reform program. At 31 December 2012, a further EUR 100 million of loan agreements have been entered into by the Commission but not yet drawn down by the other party before the year-end. The Commission has not received third-party guarantees for these loans, but they are guaranteed by the Guarantee Fund (see note 2.4).

MFA

2.4

Euratom is a legal entity of the EU and is represented by the European Commission. It grants loans to Member States for the purpose of financing investment projects in the Member States relating to the industrial production of electricity in nuclear power stations and to industrial fuel cycle installations. It also grants loans to non-Member States for improving the level of safety and efficiency of nuclear power stations and installations in the nuclear fuel cycle which are in service or under construction. Guarantees from third-parties of EUR 423 million (2011: EUR 447 million) have been received covering these loans.

Euratom

ECSC loans are granted by the ECSC in liquidation on borrowed funds in accordance with articles 54 and 56 of the ECSC Treaty as well as three unquoted debt securities issued by the EIB as substitute of a defaulted debtor. These debt securities will be held till their final maturity (2017 and 2019) in order to cover the service of related borrowings. The changes in carrying amount correspond to the change in accrued interests plus the amortisation of the year of premiums paid and transaction cost incurred at inception, calculated according to the effective interest rate method.

ECSC loans

7.2   INTER-GOVERMENTAL FINANCIAL STABILITY MECHANISMS OUTSIDE THE EU TREATY FRAMEWORK

INTER-GOVERMENTAL FINANCIAL STABILITY MECHANISMS OUTSIDE THE EU TREATY FRAMEWORK

7.2.1   
  European Financial Stability Facility (EFSF)

European Financial Stability Facility (EFSF)

The European Financial Stability Facility ("EFSF") was created by the Eurozone Member States following the decisions taken on 9 May 2010 by the ECOFIN Council. Its mandate is to safeguard financial stability in Europe by providing financial assistance to Eurozone Member States. The EFSF does not provide new lending after 1 July 2013 (see note 7.2.2 below), in keeping with the current Framework Agreement. In accordance with an agreement by the Euro-area Heads of State/Governments reached in July 2011, the EFSF is authorised to use the following instruments linked to appropriate conditionality:

7.2.2

| — | Provide loans to countries in financial difficulties |
| --- | --- |

—

Provide loans to countries in financial difficulties

| — | Intervene in the debt primary and secondary markets. Intervention in the secondary market will be only on the basis of an ECB analysis recognising the existence of exceptional financial market circumstances and risks to financial stability |
| --- | --- |

—

Intervene in the debt primary and secondary markets. Intervention in the secondary market will be only on the basis of an ECB analysis recognising the existence of exceptional financial market circumstances and risks to financial stability

| — | Act on the basis of a precautionary programme |
| --- | --- |

—

Act on the basis of a precautionary programme

| — | Finance recapitalisations of financial institutions through loans to governments |
| --- | --- |

—

Finance recapitalisations of financial institutions through loans to governments

| — | Provide partial risk protection certificates alongside new issuances of vulnerable Member States |
| --- | --- |

—

Provide partial risk protection certificates alongside new issuances of vulnerable Member States

The EFSF is backed by guarantee commitments from the Eurozone Member States for a total of EUR 780 billion and has a lending capacity of EUR 440 billion. It is not guaranteed by the EU budget. The EFSF is a Luxembourg-registered commercial company owned by euro-area Member States outside the EU Treaty framework and thus is not an EU body and is entirely separate from and not consolidated in the EU accounts. Consequently it has no impact on the EU accounts, aside from the possible sanctions revenue described below.

The Commission is responsible for negotiating the policy conditionality attached to the financial assistance and the monitoring of compliance with that conditionality. Regulation (EU) No 1173/2011 of the Parliament and Council allows for the imposition of sanctions in the form of fines on Member States whose currency is the Euro. These fines, being 0,2 % of the Member State's GDP in the preceding year, can be applied in cases where a Member State has not taken appropriate actions to correct an excessive budget deficit, or where there has been manipulation of statistics. Similarly, Regulation (EU) No 1174/2011 on macroeconomic imbalances makes provision for an annual fine on a Eurozone Member State of 0,1 % of GDP in the cases where a Member State has not taken the requested corrective action or in case an insufficient corrective action plan has been submitted. Regulation (EU) No 1177/2011 updated Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure. This updated Regulation also foresees the possibility of issuing fines to Eurozone Member States (equal to 0,2 % of GDP plus a variable component). According to all three Regulations, any fines collected by the Commission shall be passed to the EFSF, or its successor mechanism. Presently, it is foreseen that such fines will transit through the EU Budget and then be transferred to the EFSF. This would mean that such amounts would appear as both a budget revenue and expense, thus having no impact on the overall budget result. Likewise they would have no impact on the economic result as presented in the EU financial statements.

EFSF nominal value

EFSF nominal value

| EUR millions |
| --- |
| | Ireland | Portugal | Greece (15) | Total |
| Total loans granted | 17 700 | 26 000 | 144 600 | 188 300 |
| Loans disbursed at 31.12.2012 | 12 000 | 18 200 | 108 300 | 138 500 |
| Loans repaid at 31.12.2012 | — | — | — | — |
| Loans outstanding at 31.12.2012 | 12 000 | 18 200 | 108 300 | 138 500 |

EUR millions

Ireland

Portugal

Greece (15)

15

Total

Total loans granted

Total loans granted

17 700

17 700

26 000

26 000

144 600

144 600

188 300

188 300

Loans disbursed at 31.12.2012

12 000

18 200

108 300

138 500

Loans repaid at 31.12.2012

—

—

—

—

Loans outstanding at 31.12.2012

Loans outstanding at 31.12.2012

12 000

12 000

18 200

18 200

108 300

108 300

138 500

138 500

7.2.2   
  European Stability Mechanism (ESM)

European Stability Mechanism (ESM)

The European Council agreed on 17 December 2010 on the need for Eurozone Member States to establish a permanent stability mechanism: the European Stability Mechanism ("ESM"), an intergovernmental organisation under public international law outside the EU Treaty framework. The ESM Treaty was signed by the 17 Eurozone Member States on the 2nd of February 2012 and became operational in October 2012. The ESM has assumed the tasks fulfilled by the EFSM and, as from 1 July 2013, the tasks fulfilled by the EFSF becoming the sole and permanent mechanism for responding to new requests for financial assistance to Eurozone Member States. Consequently, the EFSF and the EFSM will no longer engage in new financing programmes or enter into new loan facility agreements, but will remain active in financing the on-going programmes for Portugal, Ireland and Greece. Loans granted under the EFSM will therefore continue to be disbursed and repaid under EFSM rules and so the related borrowings will still be guaranteed by the EU budget and will remain on the EU balance sheet. The creation of the ESM will thus not have an impact on the existing commitments under the EFSM. It must also be noted that the EU budget will not guarantee ESM borrowings.

The ESM is backed by a robust capital structure, with a total subscribed capital of EUR 700 billion, of which EUR 80 billion in the form of paid-in capital provided by the Eurozone Member States. With such capital, its lending capacity in principle should reach EUR 500 billion. The assistance provided under the ESM will be accompanied by conditionality, appropriate to the assistance instrument chosen. Loans to beneficiary Member States will be conditional on the implementation of a strict economic and fiscal adjustment programme, in line with existing arrangements. As this mechanism has its own legal personality and is funded directly by the Eurozone Member States, it is not an EU body and it has no impact on either the EU accounts or the EU budget, aside from the possible sanctions revenue described below. The Commission is responsible for negotiating the policy conditionality attached to the financial assistance and the monitoring of compliance with that conditionality (as with the EFSF above). Each country receiving financial assistance from the ESM will be subject to regular assessments on the fulfilment of the policy conditionality before each instalment is disbursed.

As stated above, fines collected under Regulations (EU) No 1173/2011, (EU) No 1174/2011 and (EU) No 1177/2011 will pass through the EU budget and be transferred to the ESM once the EFSF is no longer operational. Furthermore, the Treaty on Stability, Coordination and Governance signed by 25 Member States (excluding the UK and Czech Republic) foresees penalty payments on any of the "Contracting Parties" where that Member State has not taken necessary measures to address a breach of deficit criterion. Penalties imposed (which cannot exceed 0,1 % of GDP) will be payable to the ESM if applied to Eurozone Member States (thus with no impact on the EU budget result, as with the EFSF above), or to the EU budget for non-Euro Member States – see Article 8 paragraph 2 of the Treaty. In the latter case, the sanction amount will be revenue for the EU budget and reflected as such in its accounts.

ESM nominal value

ESM nominal value

| EUR millions |
| --- |
| | Spain |
| Total loans granted | 100 000 |
| Loans disbursed at 31.12.2012 | 39 468 |
| Loans repaid at 31.12.2012 | — |
| Loans outstanding at 31.12.2012 | 39 468 |
| Undrawn amounts at 31.12.2012 | 60 532 |

EUR millions

Spain

Total loans granted

Total loans granted

100 000

100 000

Loans disbursed at 31.12.2012

39 468

Loans repaid at 31.12.2012

—

Loans outstanding at 31.12.2012

Loans outstanding at 31.12.2012

39 468

39 468

Undrawn amounts at 31.12.2012

60 532

8.   FINANCIAL RISK MANAGEMENT

The following disclosures with regard to the financial risk management of the EU relate to:

| — | lending and borrowing activities carried out by the European Commission through: European Financial Stabilty Mechanism (EFSM), Balance of Payments (BOP), Macro Financial Assistance (MFA), Euratom actions and the European Coal & Steel Community (in Liquidation); |
| --- | --- |

—

lending and borrowing activities carried out by the European Commission through: European Financial Stabilty Mechanism (EFSM), Balance of Payments (BOP), Macro Financial Assistance (MFA), Euratom actions and the European Coal & Steel Community (in Liquidation);

| — | the treasury operations carried out by the European Commission in order to implement the EU budget, including the receipt of fines; and |
| --- | --- |

—

the treasury operations carried out by the European Commission in order to implement the EU budget, including the receipt of fines; and

| — | the Guarantee Fund for external actions. |
| --- | --- |

—

the Guarantee Fund for external actions.

8.1   TYPES OF RISK

TYPES OF RISK

Market risk is the risk that the fair value or future cashflows of a financial instrument will fluctuate, because of changes in market prices. Market risk embodies not only the potential for loss, but also the potential for gain. It comprises currency risk, interest rate risk and other price risk (the EU has no significant other price risk).

Market risk

| 1. | Currency risk is the risk that the EU's operations or its investments' value will be affected by changes in exchange rates. This risk arises from the change in price of one currency against another. |
| --- | --- |

1.

Currency risk is the risk that the EU's operations or its investments' value will be affected by changes in exchange rates. This risk arises from the change in price of one currency against another.

Currency risk

| 2. | Interest rate risk is the possibility of a reduction in the value of a security, especially a bond, resulting from an increase in interest rates. In general, higher interest rates will lead to lower prices of fixed rate bonds, and vice versa. |
| --- | --- |

2.

Interest rate risk is the possibility of a reduction in the value of a security, especially a bond, resulting from an increase in interest rates. In general, higher interest rates will lead to lower prices of fixed rate bonds, and vice versa.

Interest rate risk

Credit risk is the risk of loss due to a debtor's/borrower's non-payment of a loan or other line of credit (either the principal or interest or both) or other failure to meet a contractual obligation. The default events include a delay in repayments, restructuring of borrower repayments and bankruptcy.

Credit risk

Liquidity risk is the risk that arises from the difficulty of selling an asset, for example, the risk that a given security or asset cannot be traded quickly enough in the market to prevent a loss or meet an obligation.

Liquidity risk

8.2   RISK MANAGEMENT POLICIES

RISK MANAGEMENT POLICIES

Borrowing & Lending activities

Borrowing & Lending activities

The lending and borrowing transactions, as well as related treasury management, are carried out by the EU according to the respective Council Decisions, if applicable, and internal guidelines. Written procedure manuals covering specific areas such as borrowings, loans and treasury management have been developed and are used by the relevant operating units. As a general rule, there are no activities to compensate interest rate variations or foreign currency variations ("hedging" activities) carried-out as lending operations are generally financed by "back-to-back" borrowings, which thus do not generate open interest rate or currency positions. The application of the "back-to-back" character is checked regularly.

The European Commission manages the liquidation of the liabilities and no new loans or corresponding funding is foreseen for the ECSC in liquidation. New ECSC borrowings are restricted to refinancing with the aim of reducing the cost of funds. As far as treasury operations are concerned, the principles of prudent management with a view to limiting financial risks are applied.

Treasury

Treasury

The rules and principles for the management of the Commission's treasury operations are laid down in the Council Regulation (EC, Euratom) No 1150/2000 (amended by Council Regulations (EC, Euratom) No 2028/2004 and (EC, Euratom) No 105/2009) and in the Financial Regulation (Council Regulation (EC, Euratom) No 1605/2002, amended by Council Regulations (EC, Euratom) No 1995/2006, (EC) No 1525/2007 and (EU, Euratom) No 1081/2010) and its Implementing Rules (Commission Regulation (EC, Euratom) No 2342/2002, amended by Commission Regulations (EC, Euratom) No 1261/2005, (EC, Euratom) No 1248/2006 and (EC, Euratom) No 478/2007).

As a result of the above regulations the following main principles apply:

| — | Own resources are paid by the Member States in accounts opened for this purpose in the name of the Commission with the Treasury or the body appointed by each Member State. The Commission may draw on the above accounts solely to cover its cash requirements. |
| --- | --- |

—

Own resources are paid by the Member States in accounts opened for this purpose in the name of the Commission with the Treasury or the body appointed by each Member State. The Commission may draw on the above accounts solely to cover its cash requirements.

| — | Own Resources are paid by Member States in their own national currencies, while the Commission's payments are mostly denominated in EUR. |
| --- | --- |

—

Own Resources are paid by Member States in their own national currencies, while the Commission's payments are mostly denominated in EUR.

| — | Bank accounts opened in the name of the Commission may not be overdrawn. This restriction does not apply to the Commission's own resource accounts in case of a default on loans contracted or guaranteed pursuant to EU Council regulations and decision and under certain conditions in case the cash resource requirements are in excess of the assets of the accounts. |
| --- | --- |

—

Bank accounts opened in the name of the Commission may not be overdrawn. This restriction does not apply to the Commission's own resource accounts in case of a default on loans contracted or guaranteed pursuant to EU Council regulations and decision and under certain conditions in case the cash resource requirements are in excess of the assets of the accounts.

| — | Funds held in bank accounts denominated in other currencies than EUR are either used for payments in the same currencies or periodically converted in EUR. |
| --- | --- |

—

Funds held in bank accounts denominated in other currencies than EUR are either used for payments in the same currencies or periodically converted in EUR.

In addition to the own resources accounts, other bank accounts are opened by the Commission, with central banks and commercial banks, for the purpose of executing payments and receiving receipts other than the Member State contributions to the budget.

Treasury and payment operations are highly automated and rely on modern information systems. Specific procedures are applied to guarantee system security and to ensure segregation of duties in line with the Financial Regulation, the Commission’s internal control standards, and audit principles.

A written set of guidelines and procedures regulates the management of the Commission's treasury and payment operations with the objective of limiting operational and financial risk and ensuring an adequate level of control. They cover the different areas of operation (for example: payment execution and cash management, cashflow forecasting, business continuity, etc.), and compliance with the guidelines and procedures is checked regularly. Additionally, information is exchanged between DG BUDGET and DG ECFIN on risk management and best exposures.

Fines

Fines

Provisionally cashed fines: deposits

Provisionally cashed fines: deposits

Amounts received before 2010 remain in bank accounts with banks specifically selected for the deposit of provisionally cashed fines. The selection of banks is conducted in compliance with tender procedures defined by the Financial Regulation. Placement of funds with specific banks is determined by the internal risk management policy defining the credit rating requirements and the amount of funds which could be placed in proportion to the counterparty equity. Financial and operational risks are identified and evaluated and compliance with internal policies and procedures is checked regularly.

Provisionally cashed fines: BUFI portfolio

Provisionally cashed fines: BUFI portfolio

From 2010 onwards provisionally cashed fines amounts are invested in a specifically created fund, BUFI. The asset management for provisionally cashed fines is carried out by the Commission in accordance with internal guidelines and the asset management guidelines. Procedural manuals covering specific areas such as treasury management have been developed and are used by the relevant operating units. Financial and operational risks are identified and evaluated and compliance with internal guidelines and procedures is checked regularly.

The objectives of the asset management activities are to invest the fines paid to the Commission in such a way as to:

| (a) | ensure that the funds are easily available when needed, while |
| --- | --- |

(a)

ensure that the funds are easily available when needed, while

| (b) | aiming at delivering under normal circumstances a return which on average is equal to the return of the BUFI Benchmark minus costs incurred. |
| --- | --- |

(b)

aiming at delivering under normal circumstances a return which on average is equal to the return of the BUFI Benchmark minus costs incurred.

Investments are restricted basically to the following categories: term deposits with Eurozone Central Banks, Eurozone sovereign debt agencies, fully state-owned or state-guaranteed banks or supranational institutions; bonds, bills and Certificates of Deposit issued by sovereign entities creating a direct Eurozone sovereign exposure or which are issued by supranational institutions.

Bank guarantees

Bank guarantees

Significant amounts of guarantees issued by financial institutions are held by the Commission in relation to the fines it imposes to companies breaching EU competition rules (see note 2.9.1). These guarantees are provided by fined companies as an alternative to making provisional payments. The guarantees are managed in compliance with the internal risk management policy. Financial and operational risks are identified and evaluated and compliance with internal policies and procedures is checked regularly.

2.9.1

Guarantee Fund

Guarantee Fund

The rules and principles for the asset management of the Guarantee Fund (see note 2.4) are laid out in the Convention between the European Commission and the EIB dated 25 November 1994 and the subsequent amendments dated 17 /23 September 1996, 8 May 2002, 25 February 2008 and 9 November 2010. The Guarantee Fund operates only in EUR. It exclusively invests in this currency in order to avoid any foreign currency risk. Management of the assets is based upon the traditional rules of prudence adhered to for financial activities. It is required to pay particular attention to reducing the risks and to ensuring that the managed assets can be sold or transferred without significant delay, taking into account the commitments covered.

2.4

8.3   CURRENCY RISKS

CURRENCY RISKS

Borrowing & Lending activities

Borrowing & Lending activities

Most financial assets and liabilities are in EUR, so in these cases the EU has no foreign currency risk. However, the EU does give loans in USD through the financial instrument Euratom, which are financed by borrowings with an equivalent amount in USD (back-to-back operation). At the balance sheet date the EU has no foreign currency risk with regard to Euratom. The ECSC in liquidation has a small foreign currency net exposure of EUR equivalent 1,35 million arising from EUR equivalent 1,13 million housing loans and EUR equivalent 0,22 million current account balances.

Treasury

Treasury

Own resources paid by Member States in currencies other than EUR are kept on the own resources accounts, in accordance with the Own Resources Regulation. They are converted into EUR when they are needed to cover for the execution of payments. The procedures applied for the management of these funds are dictated by the above Regulation. In a limited number of cases these funds are directly used for payments to be executed in the same currencies.

A number of accounts in EU currencies other than EUR, and in USD and CHF, are held by the Commission with commercial banks, for the purpose of executing payments denominated in these same currencies. These accounts are replenished depending on the amount of payments to be executed, as a consequence their balances do not represent exposure to currency risk.

When miscellaneous receipts (other than own resources) are received in currencies other than EUR, they are either transferred to Commission's accounts held in the same currencies, if they are needed to cover for the execution of payments, or converted into EUR and transferred to accounts held in EUR. Imprest accounts held in currencies other than EUR are replenished depending on the estimated short term local payments needs in the same currencies. Balances on these accounts are kept within their respective ceilings.

Fines

Fines

Provisionally cashed fines (deposits and BUFI portfolio) and bank guarantees

Provisionally cashed fines (deposits and BUFI portfolio) and bank guarantees

Since all fines are imposed and paid in EUR, there is no foreign currency risk.

Guarantee Fund

Guarantee Fund

The financial assets are in EUR so there is no currency risk.

8.4   INTEREST RATE RISK

INTEREST RATE RISK

Borrowing & Lending activities

Borrowing & Lending activities

Borrowings and loans with variable interest rates

Borrowings and loans with variable interest rates

Due to the nature of its borrowing and lending activities, the EU has significant interest-bearing assets and liabilities. MFA and Euratom borrowings issued at variable rates expose the EU to interest rate risk. However, the interest rate risks that arise from borrowings are offset by equivalent loans in terms and conditions (back-to-back). At the balance sheet date, the EU has loans (expressed in nominal amounts) with variable rates of EUR 0,7 billion (2011: EUR 0,8 billion), with a re-pricing taking place every 6 months.

Borrowings and loans with fixed interest rates

Borrowings and loans with fixed interest rates

The EU also has MFA and Euratom loans with fixed rates totalling EUR 271 million in 2012 (2011: EUR 236 million) and which have a final maturity date between one and five years (EUR 25 million) and more than five years (EUR 246 million). More significantly, the EU has ten loans under the financial instrument BOP with fixed interest rates totalling EUR 11,4 billion in 2012 (2011: EUR 11,4 billion) and with a final maturity between one and five years (EUR 8,4 billion) and more than five years (EUR 3,0 billion). Under the financial instrument EFSM, the EU has 18 loans with fixed interest rates totalling EUR 43,8 billion in 2012 and with a final maturity between one and five years (EUR 9,8 billion) and more than five years (EUR 34 billion).

Due to the nature of its activities, the ECSC in liquidation is exposed to interest rate risk. The interest rate risks that arise from borrowings are generally offset by equivalent loans in terms and conditions. As regards asset management operations, there are bonds with variable interest rates represent 4 % of the ECSC portfolio. Zero coupon bonds represented 8 % of the bond portfolio at the balance sheet date.

Treasury

Treasury

The Commission's treasury does not borrow any money; as a consequence it is not exposed to interest rate risk. It does, however, earn interest on balances it holds on its different banks accounts. The Commission has therefore put in place measures to ensure that interest earned on its bank accounts regularly reflects market interest rates, as well as their possible fluctuation.

Accounts opened with Member States Treasuries or National Central Banks for own resources receipts are non-interest bearing and free of charges. For all other accounts held with National Central Banks the remuneration depends on the specific conditions offered by each bank; interest rates applied are variable and adjusted to market fluctuations.

Overnight balances held on commercial bank accounts earn interest on a daily basis. This is based on variable market rates to which a contractual margin (positive or negative) is applied. For most of the accounts the interest calculation is linked to the EONIA (Euro over night index average), and is adjusted to reflect any fluctuations of this rate. For some other accounts the interest calculation is linked to the ECB marginal rate for its main refinancing operations. As a result no risk exists that the Commission earns interest at rates lower than market rates.

Fines

Fines

Provisionally cashed fines (deposits, BUFI portfolio) and bank guarantees

Provisionally cashed fines (deposits, BUFI portfolio) and bank guarantees

Depositis and bank guarantees are not exposed to interest rate risks. Interest earned by deposits reflect market interest rates as well as their possible fluctuation. There are no bonds with variable interest rates in the BUFI portfolio.

Guarantee Fund

Guarantee Fund

Debt securities within the Guarantee Fund issued at variable interest rates are subject to the volatility effects of these rates, whereas debt securities at fixed rates have a risk with regard to their fair value. Fixed rate bonds represent approximately 67 % of the investment portfolio at the balance sheet date (2011: 83 %).

8.5   CREDIT RISK

CREDIT RISK

Borrowing & Lending activities

Borrowing & Lending activities

Exposure to credit risk is managed firstly by obtaining country guarantees in the case of Euratom, then through the Guarantee Fund (MFA & Euratom), then by the possibility of drawing the necessary funds from the Commission's own resource accounts with the Member States and ultimately through the Budget of the EU. The Own Resource legislation fixes the ceiling for own resource payments at 1,23 % of Member States' GNI and during 2012 0,93 % was actually used to cover payment appropriations. This means that at 31 December 2012 there existed an available margin of 0,3 % to cover these guarantees. The Guarantee Fund for external actions was set up in 1994 to cover default risks related to borrowings which finance loans to countries outside the EU. In any case, the exposure to credit risk is mitigated by the possibility to draw on the Commission's own resource accounts with Member States in excess of the assets on those accounts in case a debtor would be unable to reimburse the amounts due in full. To this end the EU is entitled to call upon all the Member States to ensure compliance with the EU's legal obligation towards its lenders.

As far as treasury operations are concerned, guidelines on the choice of counterparties must be applied. Accordingly, the operating unit will be able to enter into deals only with eligible banks having sufficient counterparty limits.

ECSC's exposure to credit risk is managed through regular analysis of the ability of borrowers to meet interest and capital repayment obligations. Exposure to credit risk is also managed by obtaining collateral as well as country, corporate and personal guarantees. As far as treasury operations are concerned, guidelines on the choice of counterparties must be applied. The operating unit is only allowed to enter into deals with eligible banks having sufficient counterparty limits.

Treasury

Treasury

Most of the Commission's treasury resources are kept, in accordance with Council Regulation (EC, Euratom) No 1150/2000 on own resources, in the accounts opened by Member States for the payment of their contributions (own resources). All such accounts are held with Member States' treasuries or national central banks. These institutions carry the lowest credit (or counterparty) risk for the Commission as the exposure is with its Member States. For the part of the Commission's treasury resources kept with commercial banks in order to cover the execution of payments, replenishment of these accounts is instructed on a just-in-time basis and is automatically managed by the treasury cash management system. Minimum cash levels, proportional to the average amount of daily payments executed from it, are kept on each account. As a consequence the amounts kept overnight on these accounts remain constantly at low levels (overall between EUR 20 million and EUR 100 million on average, spread over more than 20 accounts) and so ensure the Commission's risk exposure is limited. These amounts should be viewed with regard to the overall treasury balances which fluctuate between EUR 1 billion and EUR 35 billion, and with an overall amount of payments executed in 2012 that equals EUR 139,5 billion.

In addition, specific guidelines are applied for the selection of commercial banks in order to further minimise counterparty risk to which the Commission is exposed:

| — | All commercial banks are selected by call for tenders. The minimum short term credit rating required for admission to the tendering procedures is Moody's P-1 or equivalent (S&P A-1 or Fitch F1). A lower level may be accepted in specific and duly justified circumstances. |
| --- | --- |

—

All commercial banks are selected by call for tenders. The minimum short term credit rating required for admission to the tendering procedures is Moody's P-1 or equivalent (S&P A-1 or Fitch F1). A lower level may be accepted in specific and duly justified circumstances.

| — | The credit ratings of the commercial banks where the Commission has accounts are reviewed at least on a monthly basis, or with higher frequency if and when needed. Intensified monitoring measures and daily reviews of commercial banks' ratings were adopted in the context of the financial crisis, and kept in place during 2012. |
| --- | --- |

—

The credit ratings of the commercial banks where the Commission has accounts are reviewed at least on a monthly basis, or with higher frequency if and when needed. Intensified monitoring measures and daily reviews of commercial banks' ratings were adopted in the context of the financial crisis, and kept in place during 2012.

| — | In delegations outside the EU imprest accounts are held with local banks selected by a simplified tendering procedure. Rating requirements depend on the local situation and may significantly differ from one country to another. In order to limit risk exposure, balances on these accounts are kept at the lowest possible levels (taking into account operational needs); they are regularly replenished, and the applied ceilings are reviewed on a yearly basis. |
| --- | --- |

—

In delegations outside the EU imprest accounts are held with local banks selected by a simplified tendering procedure. Rating requirements depend on the local situation and may significantly differ from one country to another. In order to limit risk exposure, balances on these accounts are kept at the lowest possible levels (taking into account operational needs); they are regularly replenished, and the applied ceilings are reviewed on a yearly basis.

Fines

Fines

Provisionally cashed fines: deposits

Provisionally cashed fines: deposits

The banks holding deposits for the fines provisionaly cashed before 2010 are selected in tender procedure in compliance with the risk management policy defining the credit rating requirements and the amount of funds which could be placed in proportion to the counterparty equity.

For commercial banks that have been specifically selected for the deposit of provisionally cashed fines (restricted cash), a minimum long-term rating A (S&P or equivalent) in all the three main rating agencies and a minimum short term rating A-1 (S&P or equivalent) is required as a general rule. Specific measures are applied in case banks in this group are subject to downgrade. In addition the amount deposited with each bank is limited to a certain percentage of its own funds, which varies depending on the rating level of each institution. The calculation of such limit also takes into account the amount of outstanding guarantees issued to the Commission by the same institution. The compliance of outstanding deposits with the applicable policy requirements is reviewed regularly.

Provisionally cashed fines: BUFI portfolio

Provisionally cashed fines: BUFI portfolio

For investments from provisionally cashed fines the Commission takes on exposure to credit risk which is the risk that a counterparty will be unable to pay amounts in full when due. The highest concentration of exposure is towards France and Germany as each of these countries represents respectively 53 % and 24 % of the total volume of the portfolio.

Bank guarantees

Bank guarantees

Significant amounts of guarantees issued by financial institutions are also held by the Commission in relation to the fines it imposes to companies breaching EU competition rules (see note 2.9.1). These guarantees are provided by fined companies as an alternative to making provisional payments. The risk management policy applied for the acceptance of such guarantees has been reviewed in 2012 and a new combination of credit rating requirements and limited percentages per counterpart (proportional to each counterpart's own funds) has been defined in the light of the current financial environment in the EU. It continues to ensure a high credit quality for the Commission. The compliance of the outstanding guarantees with the applicable policy requirements is reviewed regularly.

2.9.1

Guarantee Fund

Guarantee Fund

In accordance with the agreement between the EU and the EIB on the management of the Guarantee Fund, all interbank investments should have a minimum rating from Moody's or equivalent of P-1. As at 31 December 2012 fixed term deposits of EUR 242 million were made with such counterparties (2011: EUR 300 million).

8.6   LIQUIDITY RISK

LIQUIDITY RISK

Borrowing & Lending activities

Borrowing & Lending activities

The liquidity risk that arises from borrowings is generally offset by equivalent loans in terms and conditions (back-to-back operations). For MFA and Euratom, the Guarantee Fund serves as a liquidity reserve (or safety net) in case of payment default and payment delays of borrowers. For BOP, the Council Regulation (EU) No 431/2009 provides for a procedure allowing sufficient time to mobilise funds through the Commission's own resource accounts with the Member States. For EFSM, the Council Regulation (EU) No 407/2010 provides for a similar procedure.

For the asset and liability management of ECSC in liquidation, the Commission manages liquidity requirements based on disbursement forecasts obtained through consultations with the responsible Commission services.

Treasury

Treasury

EU budget principles ensure that overall cash resources for the year are always sufficient for the execution of all payments. In fact, the total Member States contributions equal the amount of payment appropriations for the budgetary year. Member States contributions, however, are received in twelve monthly instalments throughout the year, while payments are subject to certain seasonality. Moreover, in accordance with the Council Regulation (EC, Euratom) No 1150/2000 (Own Resources Regulation), Member States contributions relating to (amending) budgets approved after the 16th of a given month (N) become only available in month N+2, while the related payment appropriations are immediately available. In order to ensure that treasury resources are always sufficient to cover the payments to be executed in any given month, procedures regarding regular cash forecasting are in place, and own resources or additional funding can be called up in advance from Member States if needed, and under certain conditions. In addition to the above, in the context of the Commission's daily treasury operations, automated cash management tools ensure that sufficient liquidity is available on each of the Commission's bank accounts, on a daily basis.

Guarantee Fund

Guarantee Fund

The fund is managed according to the principle that the assets shall have a sufficient degree of liquidity and mobilisation in relation to the relevant commitments. The fund must maintain a minimum of EUR 100 million in a portfolio with a maturity of < 12 months which is to be invested in monetary instruments. As at 31 December 2012 these investments including cash amounted to EUR 250 million. Furthermore a minimum of 20 % of the fund's nominal value shall comprise monetary instruments, fixed-rate bonds with a remaining maturity of no more than one year and floating-rate bonds. As at 31 December 2012 this ratio stood at 52 %.

9.   RELATED PARTY DISCLOSURES

9.1   RELATED PARTIES

RELATED PARTIES

The related parties of the EU are the other EU consolidated entities and the key management personnel of these entities. Transactions between these entities take place as part of the normal operations of the EU and as this is the case, no specific disclosure requirements are necessary for these transactions in accordance with the EU accounting rules.

9.2   KEY MANAGEMENT ENTITLEMENTS

KEY MANAGEMENT ENTITLEMENTS

For the purposes of presenting information on related party transactions concerning the key management of the EU, such persons are shown here under five categories:

| | Category 1: the Presidents of the European Council, the Commission and the Court of Justice |
| --- | --- |

Category 1: the Presidents of the European Council, the Commission and the Court of Justice

Category 1:

| | Category 2: the Vice-president of the Commission and High Representative of the EU for Foreign Affairs and Security Policy and the other Vice-presidents of the Commission |
| --- | --- |

Category 2: the Vice-president of the Commission and High Representative of the EU for Foreign Affairs and Security Policy and the other Vice-presidents of the Commission

Category 2:

| | Category 3: the Secretary-General of the Council, the Members of the Commission, the Judges and Advocates General of the Court of Justice, the President and Members of the General Court, the President and Members of the European Civil Service Tribunal, the Ombudsman and the European Data Protection Supervisor |
| --- | --- |

Category 3: the Secretary-General of the Council, the Members of the Commission, the Judges and Advocates General of the Court of Justice, the President and Members of the General Court, the President and Members of the European Civil Service Tribunal, the Ombudsman and the European Data Protection Supervisor

Category 3:

| | Category 4: the President and Members of the Court of Auditors |
| --- | --- |

Category 4: the President and Members of the Court of Auditors

Category 4:

| | Category 5: the highest ranking civil servants of the Institutions and Agencies |
| --- | --- |

Category 5: the highest ranking civil servants of the Institutions and Agencies

Category 5:

A summary of their entitlements are given below – further information can be found in the Official Journal of the European Union (OJ 187, 8.8.1967, last modified by Council Regulation (EU, Euratom) No 904/2012 (OJ L 269, 4.10.2012) and OJ L 268, 20.10.1977 last modified by Council Regulation (EC, Euratom) No 1293/2004 (OJ L 243, 15.7.2004)). Other information is also available in the Staff Regulations published on the Europa website which is the official document describing the rights and obligations of all officials of the EU. Key management personnel have not received any preferential loans from the EU.

Official Journal of the European Union

KEY MANAGEMENT FINANCIAL ENTITLEMENTS

KEY MANAGEMENT FINANCIAL ENTITLEMENTS

| EUR |
| --- |
| Entitlement (per employee) | Category 1 | Category 2 | Category 3 | Category 4 | Category 5 |
| Basic salary (per month) | 25 351,76 | 22 963,55
  –23 882,09 | 18 370,84
  –20 667,20 | 19 840,51
  –21 126,47 | 11 681,17
  –18 370,84 |
| Residential/Expatriation allowance | 15 % | 15 % | 15 % | 15 % | 16 % |
| Family allowances: |
| Household (% salary) | 2 % + 170,52 | 2 % + 170,52 | 2 % + 170,52 | 2 % + 170,52 | 2 % + 170,52 |
| Dependent child | 372,61 | 372,61 | 372,61 | 372,61 | 372,61 |
| Pre-school | 91,02 | 91,02 | 91,02 | 91,02 | 91,02 |
| Education, or | 252,81 | 252,81 | 252,81 | 252,81 | 252,81 |
| Education outside place of work | 505,39 | 505,39 | 505,39 | 505,39 | 505,39 |
| Presiding judges allowance | N/A | N/A | 500 - 810,74 | N/A | N/A |
| Representation allowance | 1 418,07 | 0 - 911,38 | 500 - 607,71 | N/A | N/A |
| Annual travel costs | N/A | N/A | N/A | N/A | Yes |
| Transfers to Member State: |
| Education allowance (16) | Yes | Yes | Yes | Yes | Yes |
| % of salary (16) | 5 % | 5 % | 5 % | 5 % | 5 % |
| % of salary with no cc | max 25 % | max 25 % | max 25 % | max 25 % | max 25 % |
| Representation expenses | reimbursed | reimbursed | reimbursed | N/A | N/A |
| Taking up duty: |
| Installation expenses | 50 703,52 | 45 927,10
  –47 764,18 | 36 741,68
  –41 334,40 | 39 681,02
  –42 252,94 | reimbursed |
| Family travel expenses | reimbursed | reimbursed | reimbursed | reimbursed | reimbursed |
| Moving expenses | reimbursed | reimbursed | reimbursed | reimbursed | reimbursed |
| Leaving office: |
| Resettlement expenses | 25 351,76 | 22 963,55
  –23 882,09 | 18 370,84
  –20 667,20 | 19 840,51
  –21 126,47 | reimbursed |
| Family travel expenses | reimbursed | reimbursed | reimbursed | reimbursed | reimbursed |
| Moving expenses | reimbursed | reimbursed | reimbursed | reimbursed | reimbursed |
| Transition (% salary) (17) | 40 % - 65 % | 40 % - 65 % | 40 % - 65 % | 40 % - 65 % | N/A |
| Sickness insurance | covered | covered | covered | covered | optional |
| Pension (% salary, before tax) | Max 70 % | Max 70 % | Max 70 % | Max 70 % | Max 70 % |
| Deductions: |
| Community tax | 8 % - 45 % | 8 % - 45 % | 8 % - 45 % | 8 % - 45 % | 8 % - 45 % |
| Sickness insurance (% salary) | 1,8 % | 1,8 % | 1,8 % | 1,8 % | 1,8 % |
| Special levy on salary | 5,5 % | 5,5 % | 5,5 % | 5,5 % | 5,5 % |
| Pension deduction | N/A | N/A | N/A | N/A | 11,6 % |
| Number of persons at year-end | 3 | 8 | 91 | 27 | 109 |

EUR

Entitlement (per employee)

Category 1

Category 2

Category 3

Category 4

Category 5

Basic salary (per month)

Basic salary

25 351,76

22 963,55

–23 882,09

18 370,84

–20 667,20

19 840,51

–21 126,47

11 681,17

–18 370,84

Residential/Expatriation allowance

Residential/Expatriation allowance

15 %

15 %

15 %

15 %

16 %

Family allowances:

Family allowances:

Household (% salary)

2 % + 170,52

2 % + 170,52

2 % + 170,52

2 % + 170,52

2 % + 170,52

Dependent child

372,61

372,61

372,61

372,61

372,61

Pre-school

91,02

91,02

91,02

91,02

91,02

Education, or

252,81

252,81

252,81

252,81

252,81

Education outside place of work

505,39

505,39

505,39

505,39

505,39

Presiding judges allowance

Presiding judges allowance

N/A

N/A

500 - 810,74

N/A

N/A

Representation allowance

Representation allowance

1 418,07

0 - 911,38

500 - 607,71

N/A

N/A

Annual travel costs

Annual travel costs

N/A

N/A

N/A

N/A

Yes

Transfers to Member State:

Transfers to Member State:

Education allowance (16)

16

Yes

Yes

Yes

Yes

Yes

% of salary (16)

16

5 %

5 %

5 %

5 %

5 %

% of salary with no cc

max 25 %

max 25 %

max 25 %

max 25 %

max 25 %

Representation expenses

Representation expenses

reimbursed

reimbursed

reimbursed

N/A

N/A

Taking up duty:

Taking up duty:

Installation expenses

50 703,52

45 927,10

–47 764,18

36 741,68

–41 334,40

39 681,02

–42 252,94

reimbursed

Family travel expenses

reimbursed

reimbursed

reimbursed

reimbursed

reimbursed

Moving expenses

reimbursed

reimbursed

reimbursed

reimbursed

reimbursed

Leaving office:

Leaving office:

Resettlement expenses

25 351,76

22 963,55

–23 882,09

18 370,84

–20 667,20

19 840,51

–21 126,47

reimbursed

Family travel expenses

reimbursed

reimbursed

reimbursed

reimbursed

reimbursed

Moving expenses

reimbursed

reimbursed

reimbursed

reimbursed

reimbursed

Transition (% salary) (17)

17

40 % - 65 %

40 % - 65 %

40 % - 65 %

40 % - 65 %

N/A

Sickness insurance

covered

covered

covered

covered

optional

Pension (% salary, before tax)

Pension

Max 70 %

Max 70 %

Max 70 %

Max 70 %

Max 70 %

Deductions:

Deductions:

Community tax

8 % - 45 %

8 % - 45 %

8 % - 45 %

8 % - 45 %

8 % - 45 %

Sickness insurance (% salary)

1,8 %

1,8 %

1,8 %

1,8 %

1,8 %

Special levy on salary

5,5 %

5,5 %

5,5 %

5,5 %

5,5 %

Pension deduction

N/A

N/A

N/A

N/A

11,6 %

Number of persons at year-end

Number of persons at year-end

3

3

8

8

91

91

27

27

109

109

10.   EVENTS AFTER THE BALANCE SHEET DATE

At the date of signing of these accounts no material issues had come to the attention of the Accounting Officer of the Commission or were reported to him that would require separate disclosure under this section. The annual accounts and related notes were prepared using the most recently available information and this is reflected in the information presented.

11.   SCOPE OF CONSOLIDATION

11.1   CONSOLIDATED ENTITIES

CONSOLIDATED ENTITIES

A.   CONTROLLED ENTITIES (51)

CONTROLLED ENTITIES (51)

1.   Institutions and consultative bodies (11)

Institutions and consultative bodies (11)

| | European Parliament |
| --- | --- |

European Parliament

| | European Council |
| --- | --- |

European Council

| | European Commission |
| --- | --- |

European Commission

| | Committee of the Regions |
| --- | --- |

Committee of the Regions

| | Court of Justice of the European Union |
| --- | --- |

Court of Justice of the European Union

| | European External Action Service |
| --- | --- |

European External Action Service

| | European Data Protection Supervisor |
| --- | --- |

European Data Protection Supervisor

| | European Economic and Social Committee |
| --- | --- |

European Economic and Social Committee

| | European Ombudsman |
| --- | --- |

European Ombudsman

| | European Court of Auditors |
| --- | --- |

European Court of Auditors

| | Council of the European Union |
| --- | --- |

Council of the European Union

2.   EU Agencies (38)

EU Agencies (38)

2.1.   Executive Agencies (6)

Executive Agencies (6)

| | Education, Audiovisual & Culture Executive Agency |
| --- | --- |

Education, Audiovisual & Culture Executive Agency

| | Executive Agency for Health and Consumers |
| --- | --- |

Executive Agency for Health and Consumers

| | Research Executive Agency |
| --- | --- |

Research Executive Agency

| | Executive Agency for Competitiveness and Innovation |
| --- | --- |

Executive Agency for Competitiveness and Innovation

| | Trans-European Transport Network Executive Agency |
| --- | --- |

Trans-European Transport Network Executive Agency

| | European Research Council Executive Agency |
| --- | --- |

European Research Council Executive Agency

2.2.   Decentralised Agencies (32)

Decentralised Agencies (32)

| | European Maritime Safety Agency |
| --- | --- |

European Maritime Safety Agency

| | European Medicines Agency |
| --- | --- |

European Medicines Agency

| | European GNSS Supervisory Authority |
| --- | --- |

European GNSS Supervisory Authority

| | European Chemicals Agency |
| --- | --- |

European Chemicals Agency

| | Fusion for Energy (European Joint Undertaking for ITER and the Development of Fusion Energy) |
| --- | --- |

Fusion for Energy (European Joint Undertaking for ITER and the Development of Fusion Energy)

| | Eurojust |
| --- | --- |

Eurojust

| | European Institute for Gender Equality |
| --- | --- |

European Institute for Gender Equality

| | European Agency for Safety and Health at Work |
| --- | --- |

European Agency for Safety and Health at Work

| | European Centre for Disease Prevention and Control |
| --- | --- |

European Centre for Disease Prevention and Control

| | European Environment Agency |
| --- | --- |

European Environment Agency

| | European Centre for the Development of Vocational training |
| --- | --- |

European Centre for the Development of Vocational training

| | European Agency for Cooperation of Energy Regulators |
| --- | --- |

European Agency for Cooperation of Energy Regulators

| | European Banking Authority |
| --- | --- |

European Banking Authority

| | European Asylum Support Office (18) |
| --- | --- |

European Asylum Support Office (18)

18

| | Office for the Body of European Regulators for Electronic Communication |
| --- | --- |

Office for the Body of European Regulators for Electronic Communication

| | European Agency for the Management of Operational Co-operation at External Borders of the Member States of the EU |
| --- | --- |

European Agency for the Management of Operational Co-operation at External Borders of the Member States of the EU

| | European Food Safety Authority |
| --- | --- |

European Food Safety Authority

| | European Railway Agency |
| --- | --- |

European Railway Agency

| | Community Plant Variety Office |
| --- | --- |

Community Plant Variety Office

| | European Fisheries Control Agency |
| --- | --- |

European Fisheries Control Agency

| | European Monitoring Centre for Drugs and Drug Addiction |
| --- | --- |

European Monitoring Centre for Drugs and Drug Addiction

| | European Police College (CEPOL) |
| --- | --- |

European Police College (CEPOL)

| | European Police Office (EUROPOL) |
| --- | --- |

European Police Office (EUROPOL)

| | European Aviation Safety Agency |
| --- | --- |

European Aviation Safety Agency

| | European Network and Information Security Agency |
| --- | --- |

European Network and Information Security Agency

| | European Union Agency for Fundamental Rights |
| --- | --- |

European Union Agency for Fundamental Rights

| | European Insurance and Occupational Pensions Authority |
| --- | --- |

European Insurance and Occupational Pensions Authority

| | Translation Centre for the Bodies of the European Union |
| --- | --- |

Translation Centre for the Bodies of the European Union

| | European Securities and Markets Authority |
| --- | --- |

European Securities and Markets Authority

| | European Training Foundation |
| --- | --- |

European Training Foundation

| | European Foundation for the Improvement of Living and Working Conditions |
| --- | --- |

European Foundation for the Improvement of Living and Working Conditions

| | EU Office for Harmonisation in the Internal Market (Trade Marks and Designs) |
| --- | --- |

EU Office for Harmonisation in the Internal Market (Trade Marks and Designs)

3.   Other controlled entities (2)

Other controlled entities (2)

| | European Coal and Steel Community (in liquidation) |
| --- | --- |

European Coal and Steel Community (in liquidation)

| | European Institute of Innovation and Technology |
| --- | --- |

European Institute of Innovation and Technology

B.   JOINT VENTURES (5)

JOINT VENTURES (5)

| | ITER International Fusion Energy Organisation |
| --- | --- |

ITER International Fusion Energy Organisation

| | SESAR Joint Undertaking |
| --- | --- |

SESAR Joint Undertaking

| | FCH Joint Undertaking |
| --- | --- |

FCH Joint Undertaking

| | Galileo Joint Undertaking in liquidation |
| --- | --- |

Galileo Joint Undertaking in liquidation

| | IMI Joint Undertaking |
| --- | --- |

IMI Joint Undertaking

C.   ASSOCIATES (4)

ASSOCIATES (4)

| | European Investment Fund |
| --- | --- |

European Investment Fund

| | Clean Sky Joint Undertaking |
| --- | --- |

Clean Sky Joint Undertaking

| | ARTEMIS Joint Undertaking |
| --- | --- |

ARTEMIS Joint Undertaking

| | ENIAC Joint Undertaking |
| --- | --- |

ENIAC Joint Undertaking

11.2   NON-CONSOLIDATED ENTITIES

NON-CONSOLIDATED ENTITIES

Although the EU manages the assets of the below mentioned entities, they do not meet the requirements to be consolidated and so are not included in the EU accounts.

11.2.1   
  The European Development Fund (EDF)

The European Development Fund (EDF)

The European Development Fund (EDF) is the main instrument for providing EU aid for development cooperation to the African, Caribbean and Pacific (ACP) States and Overseas Countries and Territories (OCTs). The 1957 Treaty of Rome made provision for its creation with a view to granting technical and financial assistance, initially limited to African countries with which some Member States had historical links.

The EDF is not funded from the EU’s budget but from direct contributions from the Member States, which are agreed in negotiations at intergovernmental level. The Commission and the EIB manage the resources of the EDF. Each EDF is usually concluded for a period of around five years. Since the conclusion of the first partnership convention in 1964, the EDF programming cycles have generally followed the partnership agreement/convention cycles.

The EDF is governed by its own Financial Regulation (OJ L 78, 19.3.2008) which foresees the presentation of its own financial statements, separately from those of the EU. The EDF annual accounts and resource management are subject to the external control of the European Court of Auditors and the European Parliament. For information purposes, the balance sheet and the statement of financial performance of the 8th, 9th and 10th EDFs are shown below:

Balance sheet – 8th, 9th and 10th EDFs

Balance sheet – 8th, 9th and 10th EDFs

| EUR millions |
| --- |
| | 31.12.2012 | 31.12.2011 |
| Non-current assets | 438 | 380 |
| Current assets | 2 094 | 2 510 |
| Total assets | 2 532 | 2 890 |
| Current liabilities | (1 057) | (1 033) |
| Non-current liabilities | (40) | — |
| Total liabilities | (1 097) | (1 033) |
| Net assets | 1 435 | 1 857 |
| FUNDS & RESERVES |
| Called fund capital | 29 579 | 26 979 |
| Other reserves | 2 252 | 2 252 |
| Economic result carried forward from previous years | (27 374) | (24 674) |
| Economic result of the year | (3 023) | (2 700) |
| Net assets | 1 435 | 1 857 |

EUR millions

31.12.2012

31.12.2011

Non-current assets

438

380

Current assets

2 094

2 510

Total assets

2 532

2 890

Current liabilities

(1 057)

(1 033)

Non-current liabilities

(40)

—

Total liabilities

(1 097)

(1 033)

Net assets

Net assets

1 435

1 435

1 857

1 857

FUNDS & RESERVES

Called fund capital

29 579

26 979

Other reserves

2 252

2 252

Economic result carried forward from previous years

(27 374)

(24 674)

Economic result of the year

(3 023)

(2 700)

Net assets

Net assets

1 435

1 435

1 857

1 857

Statement of financial performance – 8th, 9th and 10th EDFs

Statement of financial performance – 8th, 9th and 10th EDFs

| EUR millions |
| --- |
| | 2012 | 2011 |
| Operating revenue | 124 | 99 |
| Operating expenses | (3 017) | (2 702) |
| Administrative expenses | (107) | (75) |
| DEFICIT FROM OPERATING ACTIVITIES | (3 001) | (2 679) |
| Financial activities | (22) | (21) |
| ECONOMIC RESULT OF THE YEAR | (3 023) | (2 700) |

EUR millions

2012

2011

Operating revenue

124

99

Operating expenses

(3 017)

(2 702)

Administrative expenses

(107)

(75)

DEFICIT FROM OPERATING ACTIVITIES

DEFICIT FROM OPERATING ACTIVITIES

(3 001)

(3 001)

(2 679)

(2 679)

Financial activities

(22)

(21)

ECONOMIC RESULT OF THE YEAR

ECONOMIC RESULT OF THE YEAR

(3 023)

(3 023)

(2 700)

(2 700)

11.2.2   
  The Sickness Insurance Scheme

The Sickness Insurance Scheme

The Sickness Insurance Scheme is the scheme that provides medical assurance to the staff of the various EU bodies. The funds of the Scheme are its own property and are not controlled by the EU, although its financial assets are managed by the Commission. The Scheme is funded by contributions from its members (staff) and from the employers (the Institutions/Agencies/Bodies.) Any surplus remains within the scheme.

The scheme has four separate entities – the main scheme covering staff of the Institutions, Agencies of the EU, and three smaller schemes covering staff in the European University Institute, the European schools and staff working outside the EU such as staff in the EU delegations. The total assets of the Scheme at 31 December 2012 totalled EUR 296 million (2011: EUR 294 million).

11.2.3   
  The Participants Guarantee Fund (PGF)

The Participants Guarantee Fund (PGF)

Certain pre-financing amounts paid out under the 7th Research Framework Programme for research and technological development (FP7) are effectively covered by a Participants Guarantee Fund (PGF) - the amount of pre-financing paid out in 2012 totalled EUR 4 billion (2011: EUR 3,3 billion). This fund is a separate entity from the European Commission and is not consolidated in these accounts.

The PGF is a mutual benefit instrument set up to cover the financial risks incurred by the EU and the participants during the implementation of the indirect actions of FP7, its capital and interests constituting a performance security. All participants of indirect actions taking the form of a grant contribute 5 % of the total EU contribution to the PGF's capital for the duration of the action. As such the participants are the owners of the PGF, the EU (represented by the Commission) acting as their executive agent. At the end of an indirect action, participants shall recover their contribution to the capital in full, except where the PGF incurs losses due to defaulting beneficiaries – in this case participants shall recover, at a minimum, 80 % of their contribution. The PGF thus guarantees the financial interest of both the EU and the participants.

As at 31 December 2012 the PGF had total assets of EUR 1 452 million (2011: EUR 1 171 million). The funds of the PGF are its own property and are not controlled by the EU, and its financial assets are managed by the EIB.

PART II

AGGREGATED REPORTS ON THE IMPLEMENTATION OF THE BUDGET AND EXPLANATORY NOTES
   (19)

AGGREGATED REPORTS ON THE IMPLEMENTATION OF THE BUDGET AND EXPLANATORY NOTES

19

CONTENTS

CONTENTS

1.   Result of implementation of the EU budget and explanatory notes

Result of implementation of the EU budget and explanatory notes

| 1.1 | EU Budget result |
| --- | --- |

1.1

| 1.2 | Reconciliation of Economic result with Budget result |
| --- | --- |

1.2

| 1.3 | Statement of Comparison of Budget and Actual Amounts |
| --- | --- |

1.3

Aggregated reports on the implementation of the budget

Aggregated reports on the implementation of the budget

| 2. | Revenue: Summary of the implementation of budget revenue |
| --- | --- |

2.

Revenue:

3.   Expenditure:

Expenditure:

| 3.1 | Breakdown and changes in commitment and payment appropriations by financial framework heading |
| --- | --- |

3.1

| 3.2 | Implementation of commitment appropriations by financial framework heading |
| --- | --- |

3.2

| 3.3 | Implementation of payment appropriations by financial framework heading |
| --- | --- |

3.3

| 3.4 | Movement in commitments outstanding by financial framework heading |
| --- | --- |

3.4

| 3.5 | Breakdown of commitments outstanding by year of origin by financial framework heading |
| --- | --- |

3.5

| 3.6 | Breakdown and changes in commitment and payment appropriations by policy area |
| --- | --- |

3.6

| 3.7 | Implementation of commitment appropriations by policy area |
| --- | --- |

3.7

| 3.8 | Implementation of payment appropriations by policy area |
| --- | --- |

3.8

| 3.9 | Movement in commitments outstanding by policy area |
| --- | --- |

3.9

| 3.10 | Breakdown of commitments outstanding by year of origin by policy area |
| --- | --- |

3.10

4.   Institutions and Agencies:

Institutions and Agencies:

| 4.1 | Summary of the implementation of budget revenue by Institution |
| --- | --- |

4.1

| 4.2 | Implementation of commitment and payment appropriations by Institution |
| --- | --- |

4.2

| 4.3 | Agency income: budget forecasts, entitlements and amounts received |
| --- | --- |

4.3

| 4.4 | Commitment and payment appropriations by Agency |
| --- | --- |

4.4

| 4.5 | Budget result including Agencies |
| --- | --- |

4.5

1.   RESULT OF IMPLEMENTATION OF THE EU BUDGET

RESULT OF IMPLEMENTATION OF THE EU BUDGET

1.1   EU BUDGET RESULT

EU BUDGET RESULT

| EUR millions |
| --- |
| | 2012 | 2011 |
| Revenue for the financial year | 139 541 | 130 000 |
| Payments against current year appropriations | (137 738) | (128 043) |
| Payment appropriations carried over to year N+1 | (936) | (1 019) |
| Cancellation of unused payment appropriations carried over from year N-1 | 92 | 457 |
| Exchange differences for the year | 60 | 97 |
| Budget result
   (20) | 1 019 | 1 492 |

EUR millions

2012

2011

Revenue for the financial year

139 541

130 000

Payments against current year appropriations

(137 738)

(128 043)

Payment appropriations carried over to year N+1

(936)

(1 019)

Cancellation of unused payment appropriations carried over from year N-1

92

457

Exchange differences for the year

60

97

Budget result
   (20)

Budget result

20

1 019

1 019

1 492

1 492

The budget surplus for the EU (EUR 1 023 million) is returned to the Member States during the following year through deduction of their amounts due for that year.

1.2   RECONCILIATION OF ECONOMIC RESULT WITH BUDGET RESULT

RECONCILIATION OF ECONOMIC RESULT WITH BUDGET RESULT

| EUR millions |
| --- |
| | 2012 | 2011 |
| ECONOMIC RESULT OF THE YEAR | (5 329) | (1 789) |
| Revenue |
| Entitlements established in current year but not yet collected | (2 000) | (371) |
| Entitlements established in previous years and collected in current year | 4 582 | 2 072 |
| Accrued revenue (net) | (38) | (236) |
| Expenses |
| Accrued expenses (net) | (1 933) | 3 410 |
| Expenses prior year paid in current year | (2 695) | (936) |
| Net-effect pre-financing | 1 210 | 1 131 |
| Payment appropriations carried over to next year | (4 666) | (1 211) |
| Payments made from carry-overs & cancellation of unused payment appropriations | 4 768 | 2 000 |
| Movement in provisions | 7 805 | (2 109) |
| Other | (670) | (378) |
| Economic result Agencies and ECSC | (15) | (91) |
| BUDGET RESULT OF THE YEAR | 1 019 | 1 492 |

EUR millions

2012

2011

ECONOMIC RESULT OF THE YEAR

ECONOMIC RESULT OF THE YEAR

(5 329)

(5 329)

(1 789)

(1 789)

Revenue

Revenue

Entitlements established in current year but not yet collected

(2 000)

(371)

Entitlements established in previous years and collected in current year

4 582

2 072

Accrued revenue (net)

(38)

(236)

Expenses

Expenses

Accrued expenses (net)

(1 933)

3 410

Expenses prior year paid in current year

(2 695)

(936)

Net-effect pre-financing

1 210

1 131

Payment appropriations carried over to next year

(4 666)

(1 211)

Payments made from carry-overs & cancellation of unused payment appropriations

4 768

2 000

Movement in provisions

7 805

(2 109)

Other

(670)

(378)

Economic result Agencies and ECSC

Economic result Agencies and ECSC

(15)

(15)

(91)

(91)

BUDGET RESULT OF THE YEAR

BUDGET RESULT OF THE YEAR

1 019

1 019

1 492

1 492

1.3   STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS

STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS

1.3.1   REVENUE

| EUR millions |
| --- |
| | Initial Budget | Final Budget | Actual Revenue |
| 1. | Own resources |

EUR millions

Initial Budget

Final Budget

Actual Revenue

1.

Own resources

127 512

128 655

128 886

Of which Customs duties

Of which Customs duties

19 171

19 171

16 701

16 701

16 261

16 261

Of which VAT

Of which VAT

14 499

14 499

14 546

14 546

14 648

14 648

Of which GNI

Of which GNI

93 719

93 719

97 284

97 284

97 856

97 856

| 3. | Surpluses, balances and adjustments |
| --- | --- |

3.

Surpluses, balances and adjustments

0

1 994

2 041

| 4. | Revenue accruing from persons working with the institutions and with other Union bodies |
| --- | --- |

4.

Revenue accruing from persons working with the institutions and with other Union bodies

1 312

1 312

1 236

| 5. | Revenue accruing from the administrative operation of the institutions |
| --- | --- |

5.

Revenue accruing from the administrative operation of the institutions

60

68

612

| 6. | Contributions and refunds in connection with Union agreements and programmes |
| --- | --- |

6.

Contributions and refunds in connection with Union agreements and programmes

50

50

2 928

| 7. | Interest on late payments and fines |
| --- | --- |

7.

Interest on late payments and fines

123

3 648

3 807

| 8. | Borrowing and lending operations |
| --- | --- |

8.

Borrowing and lending operations

0

0

0

| 9. | Miscellaneous revenue |
| --- | --- |

9.

Miscellaneous revenue

30

30

31

Total

129 088

135 758

139 541

1.3.2   COMMITMENTS BY FINANCIAL FRAMEWORK HEADING

| EUR millions |
| --- |
| | Initial Budget | Final Budget (21) | Commitments |
| 1. | Sustainable growth |

EUR millions

Initial Budget

Final Budget (21)

21

Commitments

1.

Sustainable growth

67 506

70 842

69 000

| 2. | Preservation & mgt of natural resources |
| --- | --- |

2.

Preservation & mgt of natural resources

59 976

62 198

60 817

| 3. | Citizenship, freedom, security, justice |
| --- | --- |

3.

Citizenship, freedom, security, justice

2 065

2 994

2 892

| 4. | The EU as a global player |
| --- | --- |

4.

The EU as a global player

9 406

9 931

9 753

| 5. | Administration |
| --- | --- |

5.

Administration

8 280

9 113

8 822

| 6. | Compensations |
| --- | --- |

6.

Compensations

0

0

0

Total

147 232

155 077

151 284

1.3.3   COMMITMENTS BY POLICY AREA

| EUR millions |
| --- |
| | Initial Budget | Final Budget (22) | Commitments |
| 01 | Economic and financial affairs |

EUR millions

Initial Budget

Final Budget (22)

22

Commitments

01

Economic and financial affairs

611

536

535

| 02 | Enterprise |
| --- | --- |

02

Enterprise

1 148

1 276

1 236

| 03 | Competition |
| --- | --- |

03

Competition

92

96

94

| 04 | Employment and social affairs |
| --- | --- |

04

Employment and social affairs

11 581

11 818

11 782

| 05 | Agriculture and rural development |
| --- | --- |

05

Agriculture and rural development

58 587

60 877

59 514

| 06 | Mobility and transport |
| --- | --- |

06

Mobility and transport

1 664

1 754

1 713

| 07 | Environment and Climate action |
| --- | --- |

07

Environment and Climate action

493

508

496

| 08 | Research |
| --- | --- |

08

Research

5 930

7 618

7 059

| 09 | Information society and media |
| --- | --- |

09

Information society and media

1 678

1 985

1 878

| 10 | Direct research |
| --- | --- |

10

Direct research

411

932

494

| 11 | Maritime affairs and Fisheries |
| --- | --- |

11

Maritime affairs and Fisheries

1 033

1 011

1 007

| 12 | Internal market |
| --- | --- |

12

Internal market

101

107

101

| 13 | Regional policy |
| --- | --- |

13

Regional policy

42 045

42 662

42 647

| 14 | Taxation and customs union |
| --- | --- |

14

Taxation and customs union

143

147

144

| 15 | Education and culture |
| --- | --- |

15

Education and culture

2 697

3 292

3 088

| 16 | Communication |
| --- | --- |

16

Communication

262

271

265

| 17 | Health and consumer protection |
| --- | --- |

17

Health and consumer protection

687

653

639

| 18 | Home affairs |
| --- | --- |

18

Home affairs

1 264

1 322

1 290

| 19 | External relations |
| --- | --- |

19

External relations

4 817

4 969

4 872

| 20 | Trade |
| --- | --- |

20

Trade

104

106

104

| 21 | Development and relations with ACP States |
| --- | --- |

21

Development and relations with ACP States

1 498

1 733

1 719

| 22 | Enlargement |
| --- | --- |

22

Enlargement

1 088

1 166

1 135

| 23 | Humanitarian aid |
| --- | --- |

23

Humanitarian aid

900

1 299

1 294

| 24 | Fight against fraud |
| --- | --- |

24

Fight against fraud

79

79

79

| 25 | Commission's policy coordination & legal advice |
| --- | --- |

25

Commission's policy coordination & legal advice

194

204

196

| 26 | Commission’s administration |
| --- | --- |

26

Commission’s administration

1 017

1 200

1 149

| 27 | Budget |
| --- | --- |

27

Budget

69

63

61

| 28 | Audit |
| --- | --- |

28

Audit

12

12

12

| 29 | Statistics |
| --- | --- |

29

Statistics

134

144

135

| 30 | Pensions and related expenditure |
| --- | --- |

30

Pensions and related expenditure

1 335

1 321

1 318

| 31 | Language Services |
| --- | --- |

31

Language Services

399

477

435

| 32 | Energy |
| --- | --- |

32

Energy

718

764

731

| 33 | Justice |
| --- | --- |

33

Justice

218

233

222

| 40 | Reserves |
| --- | --- |

40

Reserves

759

461

0

| 90 | Other Institutions |
| --- | --- |

90

Other Institutions

3 464

3 983

3 841

Total

147 232

155 077

151 284

1.3.4   EXPENDITURE BY FINANCIAL FRAMEWORK HEADING

| EUR millions |
| --- |
| | Initial Budget | Final Budget (23) | Payments made |
| 1. | Sustainable growth |

EUR millions

Initial Budget

Final Budget (23)

23

Payments made

1.

Sustainable growth

55 337

63 753

61 585

| 2. | Preservation & mgt of natural resources |
| --- | --- |

2.

Preservation & mgt of natural resources

57 034

60 409

59 096

| 3. | Citizenship, freedom, security, justice |
| --- | --- |

3.

Citizenship, freedom, security, justice

1 484

2 477

2 375

| 4. | The EU as a global player |
| --- | --- |

4.

The EU as a global player

6 955

7 182

7 064

| 5. | Administration |
| --- | --- |

5.

Administration

8 278

9 824

8 564

| 6. | Compensations |
| --- | --- |

6.

Compensations

0

0

0

Total

129 088

143 644

138 683

1.3.5   EXPENDITURE BY POLICY AREA

| EUR millions |
| --- |
| | Initial Budget | Final Budget (24) | Payments made |
| 01 | Economic and financial affairs |

EUR millions

Initial Budget

Final Budget (24)

24

Payments made

01

Economic and financial affairs

511

493

484

| 02 | Enterprise |
| --- | --- |

02

Enterprise

1 079

1 395

1 271

| 03 | Competition |
| --- | --- |

03

Competition

92

103

92

| 04 | Employment and social affairs |
| --- | --- |

04

Employment and social affairs

9 075

11 755

11 699

| 05 | Agriculture and rural development |
| --- | --- |

05

Agriculture and rural development

55 880

59 242

57 948

| 06 | Mobility and transport |
| --- | --- |

06

Mobility and transport

1 079

1 156

1 105

| 07 | Environment and Climate action |
| --- | --- |

07

Environment and Climate action

393

409

382

| 08 | Research |
| --- | --- |

08

Research

4 218

6 245

5 307

| 09 | Information society and media |
| --- | --- |

09

Information society and media

1 357

1 776

1 501

| 10 | Direct research |
| --- | --- |

10

Direct research

404

893

466

| 11 | Maritime affairs and Fisheries |
| --- | --- |

11

Maritime affairs and Fisheries

806

757

745

| 12 | Internal market |
| --- | --- |

12

Internal market

98

112

99

| 13 | Regional policy |
| --- | --- |

13

Regional policy

35 538

38 282

38 254

| 14 | Taxation and customs union |
| --- | --- |

14

Taxation and customs union

110

140

130

| 15 | Education and culture |
| --- | --- |

15

Education and culture

2 112

3 059

2 761

| 16 | Communication |
| --- | --- |

16

Communication

253

278

256

| 17 | Health and consumer protection |
| --- | --- |

17

Health and consumer protection

592

652

635

| 18 | Home affairs |
| --- | --- |

18

Home affairs

756

860

835

| 19 | External relations |
| --- | --- |

19

External relations

3 276

3 271

3 233

| 20 | Trade |
| --- | --- |

20

Trade

102

111

105

| 21 | Development and relations with ACP States |
| --- | --- |

21

Development and relations with ACP States

1 310

1 475

1 429

| 22 | Enlargement |
| --- | --- |

22

Enlargement

921

976

943

| 23 | Humanitarian aid |
| --- | --- |

23

Humanitarian aid

842

1 141

1 128

| 24 | Fight against fraud |
| --- | --- |

24

Fight against fraud

74

83

71

| 25 | Commission's policy coordin. & legal advice |
| --- | --- |

25

Commission's policy coordin. & legal advice

193

219

195

| 26 | Commission’s administration |
| --- | --- |

26

Commission’s administration

1 001

1 343

1 149

| 27 | Budget |
| --- | --- |

27

Budget

69

73

61

| 28 | Audit |
| --- | --- |

28

Audit

12

13

12

| 29 | Statistics |
| --- | --- |

29

Statistics

122

148

128

| 30 | Pensions and related expenditure |
| --- | --- |

30

Pensions and related expenditure

1 335

1 321

1 318

| 31 | Language Services |
| --- | --- |

31

Language Services

399

501

433

| 32 | Energy |
| --- | --- |

32

Energy

1 339

782

723

| 33 | Justice |
| --- | --- |

33

Justice

187

206

190

| 40 | Reserves |
| --- | --- |

40

Reserves

90

0

0

| 90 | Other Institutions |
| --- | --- |

90

Other Institutions

3 464

4 376

3 596

Total

129 088

143 644

138 683

In the initial adopted budget, signed by the President of the European Parliament on 1 December 2011, the amount of payment appropriations was EUR 129 088 million and the amount to be financed by own resources totalled EUR 127 512 million. The revenue and expenditure estimates in the initial budget are typically adjusted during the budgetary year, such modifications being presented in amending budgets. Adjustments in the GNI-based own resources ensure that budgeted revenue matches exactly budgeted expenditure. In accordance with the principle of equilibrium, budget revenue and expenditure (payment appropriations) must be in balance.

Revenue:

Revenue:

During 2012 six amending budgets were adopted. Taking them into account, the total final revenue in the 2012 budget amounted to EUR 135 758 million. This was financed by own resources totalling EUR 128 655 million (thus EUR 1 143 million more than initially forecasted) and the remainder by other revenue. The increased need for financing payment appropriations was covered mainly from the inclusion of EUR 3 525 million relating to fines and interest on late payments in the Amending Budget No. 6/2012 under other revenue.

As far as the own resources result is concerned, the collection of traditional own resources was close to the forecasted amounts. Namely because the budget estimates that were modified at the time the Amending Budget No. 4/2012 was established (they were decreased by EUR 1 520 million according to the new macroeconomic forecasts of spring 2012), were once again amended in the Amending Budget No. 6/2012 to take into account the actual rhythm of collection. Thus they were once again decreased by EUR 950 million.

The final Member States' VAT and GNI payments also correspond closely to the final budgetary estimate. The differences between the forecasted amounts and the amounts actually paid are due to the differences between the euro rates used for budgetary purposes and the rates in force at the time when the Member States outside the EMU actually made their payments.

Expenditure:

Expenditure:

The year 2012 was the sixth and penultimate year of the current programming period 2007-2013. All major programmes were at cruising speed, and the inflow of payment claims increased significantly, as is normal as the cycle draws to a close. In the general context of fiscal consolidation in the Member States, the voted budget for 2012 was rather conservative. This, combined with a significant amount of unpaid payment claims from 2011, and the mounting requests for reimbursements, created a high pressure on payment appropriations, which had to be addressed during the year through careful budgetary management, and ultimately through an amending budget.

For commitments, the authorised budget, and hence the political targets set, were fully implemented (99,6 %). The most notable adjustments by means of amending budgets during the year concerned increases of EUR 650 million for ITER, in line with the December 2011 agreement on its financing, and EUR 688 million for the mobilisation of the European Union Solidarity Fund, unforeseeable expenditure by its very nature. Commitments were reduced by EUR 142 million in Amending Budget 6/2012, by returning unused amounts to the margin, in particular in relation to the reserve for international fisheries agreements, and animal disease eradication and monitoring programmes.

The total level of payment appropriations was increased at the end of the year through Amending Budget 6/2012 for an amount EUR 6 billion, increasing the initial budget by 4,8 %. The shortage of payments affected nearly all headings, and in particular heading 1b Cohesion for Growth and Employment. It must also be recalled that the EUR 6 billion agreed was EUR 3 billion less that the amount requested by the Commission. Finally, the year 2012 ended with outstanding payment claims of EUR 16,2 billion for the current programming period of Cohesion Policy (2007-2013), and a further EUR 1,1 billion related to the closure of 2000-2006 programmes. These amounts will need to be paid in 2013. As in the case of commitments, the budget line for the European Union Solidarity Fund was reinforced by EUR 688 million in payment appropriations during the course of the year. The unused voted payment appropriations amounted to EUR 1 102 million (2011: EUR 1 582 million) and after the carryover to 2013, a total of EUR 166 million (2011: EUR 562 million) lapses.

A more detailed analysis of budgetary adjustments, their relevant context, their justification and their impact is presented in Commission's Report on Budgetary and Financial Management 2012, Part A "Overview at budget level" and Part B dealing with each heading of the multi-annual financial framework.

EXPLANATORY NOTES ON THE IMPLEMENTATION OF THE EU BUDGET

EXPLANATORY NOTES ON THE IMPLEMENTATION OF THE EU BUDGET

1.   GENERAL OVERVIEW

GENERAL OVERVIEW

The budgetary accounts are kept in accordance with Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 (OJ L 298, 26.10.2012), on the financial rules applicable to the general budget of the Union (hereinafter referred to as the 'Financial Regulation') and Commission Delegated Regulation (EU) No 1268/2012 of 29 October 2012 laying down detailed rules of application of this Financial Regulation.The general budget, the main instrument of the Union's financial policy, is the instrument which provides for and authorises the Union's revenue and expenditure every year.

Every year, the Commission estimates all the Institutions' revenue and expenditure for the year and draws up a draft budget which it sends to the budgetary authority. On the basis of this draft budget, the Council draws its position which is then the subject of negotiations between the two arms of the budgetary authority. The President of Parliament declares that the joint draft has been finally adopted making the budget enforceable. The task of executing the budget is mainly the responsibility of the Commission.

The budget structure consists for the Commission of administrative and operational appropriations. The other Institutions have only administrative appropriations. Furthermore, the budget distinguishes between two types of appropriation: non-differentiated appropriations and differentiated appropriations. Non-differentiated appropriations are used to finance operations of an annual nature (which comply with the principle of annuality). Differentiated appropriations were introduced in order to reconcile the principle of annuality with the need to manage multi-annual operations. They are intended to cover mainly multi-annual operations. Differentiated appropriations are split into commitment and payment appropriations:

budget structure

| — | commitment appropriations: cover the total cost of the legal obligations entered into for the current financial year for operations extending over a number of years. However, budgetary commitments for actions extending over more than one financial year may be broken down over several years into annual instalments where the basic act so provides. |
| --- | --- |

—

commitment appropriations: cover the total cost of the legal obligations entered into for the current financial year for operations extending over a number of years. However, budgetary commitments for actions extending over more than one financial year may be broken down over several years into annual instalments where the basic act so provides.

commitment appropriations

| — | payment appropriations: cover expenditure arising from commitments entered into in the current financial year and/or earlier financial years. |
| --- | --- |

—

payment appropriations: cover expenditure arising from commitments entered into in the current financial year and/or earlier financial years.

payment appropriations

Origin of Appropriations

Origin of Appropriations

The main source of appropriations is the Union's budget for the current year. However, there are other types of appropriations resulting from the provisions of the Financial Regulation. They come from previous financial years or outside sources:

| — | Initial budget appropriations adopted for the current year can be supplemented with transfers between lines and by amending budgets. |
| --- | --- |

—

Initial budget appropriations adopted for the current year can be supplemented with transfers between lines and by amending budgets.

Initial budget appropriations

transfers

| — | Appropriations carried over from previous year or made available again also supplement the current budget. These are (i) non-differentiated payment appropriations which may be carried over automatically for one financial year only; (ii) appropriations carried over by decision of the Institutions in one of two cases: if the preparatory stages have been completed or if the legal base is adopted late. Appropriations made available again as a result of decommitments: This involves the re-entry of commitment appropriations concerning structural funds which have been decommitted. Amounts can be re-entered by way of exception in the event of error by the Commission or if they are indispensable for completion of the programme. |
| --- | --- |

—

Appropriations carried over from previous year or made available again also supplement the current budget. These are (i) non-differentiated payment appropriations which may be carried over automatically for one financial year only; (ii) appropriations carried over by decision of the Institutions in one of two cases: if the preparatory stages have been completed or if the legal base is adopted late. Appropriations made available again as a result of decommitments: This involves the re-entry of commitment appropriations concerning structural funds which have been decommitted. Amounts can be re-entered by way of exception in the event of error by the Commission or if they are indispensable for completion of the programme.

Appropriations carried over

| — | Assigned revenue which is made up of






  (i) | refunds where the amounts are assigned revenue on the budget line which incurred the initial expenditure and may be carried over without limit; |
| --- | --- | --- |

—

Assigned revenue which is made up of

Assigned revenue

(i)

refunds where the amounts are assigned revenue on the budget line which incurred the initial expenditure and may be carried over without limit;

| (ii) | EFTA appropriations: The agreement on the European Economic Area (EEA) provides for financial contribution by its members to certain activities in the EU budget. The budget lines concerned and the amounts projected are published in Annex III of the EU budget. The lines concerned are increased by the EFTA contribution. Appropriations not used at the year-end are cancelled and returned to the EEA countries; |
| --- | --- |

(ii)

EFTA appropriations: The agreement on the European Economic Area (EEA) provides for financial contribution by its members to certain activities in the EU budget. The budget lines concerned and the amounts projected are published in Annex III of the EU budget. The lines concerned are increased by the EFTA contribution. Appropriations not used at the year-end are cancelled and returned to the EEA countries;

| (iii) | Revenue from third parties/ other countries that have concluded agreements with the EU involving a financial contribution to EU activities. The amounts received are considered to be revenue from third parties which is allocated to the budget lines concerned (often in the field of research) and may be carried over without limit; |
| --- | --- |

(iii)

Revenue from third parties/ other countries that have concluded agreements with the EU involving a financial contribution to EU activities. The amounts received are considered to be revenue from third parties which is allocated to the budget lines concerned (often in the field of research) and may be carried over without limit;

| (iv) | Work for third parties: As part of their research activities, the EU research centres may work for outside bodies. Like the revenue from third parties, the work for third parties is assigned to specific budget lines and may be carried over without limit; and |
| --- | --- |

(iv)

Work for third parties: As part of their research activities, the EU research centres may work for outside bodies. Like the revenue from third parties, the work for third parties is assigned to specific budget lines and may be carried over without limit; and

| (v) | Appropriations made available again as a result of repayment of payments on account: These are EU funds which have been repaid by the beneficiaries and may be carried over without limit. |
| --- | --- |

(v)

Appropriations made available again as a result of repayment of payments on account: These are EU funds which have been repaid by the beneficiaries and may be carried over without limit.

Composition of Appropriations Available

Composition of Appropriations Available

| — | Initial budget = appropriations voted in December of year N-1; |
| --- | --- |

—

Initial budget = appropriations voted in December of year N-1;

| — | ; |
| --- | --- |

—

Formula;

| — | . |
| --- | --- |

—

Formula.

1.1   BUDGET RESULT FOR THE YEAR

BUDGET RESULT FOR THE YEAR

The amounts of own resources entered in the accounts are those credited in the course of the year to the accounts opened in the Commission's name by the governments of the Member States. Revenue comprises also, in the case of a surplus, the budget result for the previous financial year. The other revenue entered in the accounts is the amount actually received in the course of the year.

For the purposes of calculating the budget result for the year, expenditure comprises payments made against the year's appropriations for payments plus any of the appropriations for that year that are carried over to the following year. Payments made against the year's appropriations for payments means payments that are made by the accounting officer by 31 December of the financial year. In the case of the European Agricultural Guarantee Fund, the payments are those effected by the Member States between 16 October N-1 and 15 October N, provided that the accounting officer was notified of the commitment and authorisation by 31 January N+1. EAGF expenditure may be subject to a conformity decision following controls in the Member States.

The budget result comprises two elements: the result of the EU and the result of the participation of the EFTA countries belonging to the EEA. In accordance with Article 15 of Regulation (EC, Euratom) No 1150/2000 on own resources, this result represents the difference between:

| — | total revenue received for that year; |
| --- | --- |

—

total revenue received for that year;

| — | and total payments made against that year's appropriations plus the total amount of that year's appropriations carried over to the following year. |
| --- | --- |

—

and total payments made against that year's appropriations plus the total amount of that year's appropriations carried over to the following year.

The following are added to or deducted from the resulting figure:

| — | the net balance of cancellations of payment appropriations carried over from previous years and any payments which, because of fluctuations in the euro rate, exceed non-differentiated appropriations carried over from the previous year; |
| --- | --- |

—

the net balance of cancellations of payment appropriations carried over from previous years and any payments which, because of fluctuations in the euro rate, exceed non-differentiated appropriations carried over from the previous year;

| — | the balance of exchange-rate gains and losses recorded during the year. |
| --- | --- |

—

the balance of exchange-rate gains and losses recorded during the year.

The budget result is returned to the Member States the following year through deduction of their amounts due for that financial year.

The budget result is returned to the Member States the following year through deduction of their amounts due for that financial year.

Appropriations carried over from the previous financial year in respect of contributions by and work for third parties, which by definition never lapse, are included with the additional appropriations for the financial year. This explains the difference between carryovers from the previous year in the 2012 budget implementation statements and those carried over to the following year in the 2011 budget implementation statements. The payment appropriations for re-use and appropriations made available again following the repayment of payments on account are disregarded when calculating the result for the year.

The payment appropriations carried over include: automatic carryovers and carryovers by decision. The cancellation of unused payment appropriations carried over from the previous year shows the cancellations on appropriations carried over automatically and by decision. It also includes the decrease in assigned revenue appropriations carried over to the next year in comparison with 2011.

1.2   RECONCILIATION OF THE ECONOMIC RESULT WITH THE BUDGET RESULT

RECONCILIATION OF THE ECONOMIC RESULT WITH THE BUDGET RESULT

The economic result of the year is calculated on the basis of accrual accounting principles. The budget result is however based on modified cash accounting rules, in accordance with the Financial Regulation. As both are the result of the same underlying transactions, it is a useful control to ensure that they are reconcilable. The table below shows this reconciliation, highlighting the key reconciling amounts, split between revenue and expenditure items.

Reconciling items - Revenue

Reconciling items - Revenue

The actual budgetary revenue for a financial year corresponds to the revenue collected from entitlements established in the course of the year and amounts collected from entitlements established in previous years. Therefore the entitlements established in the current year but not yet collected are to be deducted from the economic result for reconciliation purposes as they do not form part of budgetary revenue. On the contrary the entitlements established in previous years and collected in current year must be added to the economic result for reconciliation purposes.

entitlements established in the current year but not yet collected

entitlements established in previous years and collected in current year

The net accrued revenue mainly consists of accrued revenue for agricultural levies, own resources and interests and dividends. Only the net-effect, i.e. accrued revenue for current year minus reversal accrued revenue from previous year, is taken into consideration.

net accrued revenue

Reconciling items - Expenditure

Reconciling items - Expenditure

The net accrued expenses mainly consist of accruals made for year-end cut-off purposes, i.e. eligible expenses incurred by beneficiaries of Community funds but not yet reported to the Commission.

net accrued expenses

While accrued expenses are not considered as budgetary expenditure, the payments made in the current year relating to invoices registered in prior years are part of current year's budgetary expenditure.

current year relating to invoices registered in prior years

The net effect of pre-financing is the combination of (1) the new pre-financing amounts paid in the current year and recognised as budgetary expenditure of the year and (2) the clearing of the pre-financing paid in current year or previous years through the acceptance of eligible costs. The latter represent an expense in accrual terms but not in the budgetary accounts since the payment of the initial pre-financing had already been considered as a budgetary expenditure at the time of its payment.

net effect of pre-financing

Besides the payments made against the year's appropriations, the appropriations for that year that are carried to the next year also need to be taken into account in calculating the budget result for the year (in accordance with Article 15 of Regulation No 1150/2000). The same applies for the budgetary payments made in the current year from carry-overs and the cancellation of unused payment appropriations.

carried to the next year

carry-overs and the cancellation of unused payment appropriations

The movement in provisions relates to year-end estimates made in the accrual accounts (employee benefits mainly) that do not impact the budgetary accounts. Other reconciling amounts comprise different elements such as asset depreciation, asset acquisitions, capital lease payments and financial participations for which the budgetary and accrual accounting treatments differ.

movement in provisions

Other reconciling amounts

2.   BUDGETARY IMPLEMENTATION REPORTS: REVENUE

BUDGETARY IMPLEMENTATION REPORTS: REVENUE

The budgetary implementation reports are presented following these explanatory notes.

The vast majority of revenue comes from own resources. This is laid down in Article 311 of the Treaty on the Functioning of the EU, which states that: "Without prejudice to other revenue, the budget shall be financed wholly from own resources." The main bulk of budgetary expenditure is financed by own resources. Other revenue represents only a minor part of total financing.

Own resources can be divided into the following categories:

| (1) | Traditional own resources (TOR) consist of customs duties and sugar levies. These own resources are levied on economic operators and collected by Member States on behalf of the EU. However, Member States keep 25 % as a compensation for their collection costs. Customs duties are levied on imports of products coming from third countries, at rates based on the Common Customs Tariff. Sugar levies are paid by sugar producers to finance the export refunds for sugar. TOR usually account for ± 13 % of own resource revenue. |
| --- | --- |

(1)

Traditional own resources (TOR) consist of customs duties and sugar levies. These own resources are levied on economic operators and collected by Member States on behalf of the EU. However, Member States keep 25 % as a compensation for their collection costs. Customs duties are levied on imports of products coming from third countries, at rates based on the Common Customs Tariff. Sugar levies are paid by sugar producers to finance the export refunds for sugar. TOR usually account for ± 13 % of own resource revenue.

| (2) | The own resource based on value added tax (VAT) is levied on Member States' VAT bases, which are harmonised for this purpose in accordance with EU rules. The same percentage is levied on the harmonised base of each Member State. However, the VAT base to take into account is capped at 50 % of each Member State’s GNI. The VAT-based resource usually accounts for around 12 % of own resource revenue. |
| --- | --- |

(2)

The own resource based on value added tax (VAT) is levied on Member States' VAT bases, which are harmonised for this purpose in accordance with EU rules. The same percentage is levied on the harmonised base of each Member State. However, the VAT base to take into account is capped at 50 % of each Member State’s GNI. The VAT-based resource usually accounts for around 12 % of own resource revenue.

| (3) | The resource based on gross national income (GNI) is used to balance budget revenue and expenditure, i.e. to finance the part of the budget not covered by any other sources of revenue. The same percentage rate is levied on each Member States' GNI, which is established in accordance with EU rules. The GNI-based resource usually accounts for ± 75 % of own resource revenue. |
| --- | --- |

(3)

The resource based on gross national income (GNI) is used to balance budget revenue and expenditure, i.e. to finance the part of the budget not covered by any other sources of revenue. The same percentage rate is levied on each Member States' GNI, which is established in accordance with EU rules. The GNI-based resource usually accounts for ± 75 % of own resource revenue.

The allocation of own resources is made in accordance with the rules laid down in the Council Decision 2007/436/EC, Euratom of 7 June 2007 on the system of the European Communities' own resources (ORD 2007). On 1 March 2009 the ORD 2007 entered into force. However it took effect on 1 January 2007. Consequently the retroactive effects have been taken in account in the budgetary year 2009.

2.1   TRADITIONAL OWN RESOURCES

TRADITIONAL OWN RESOURCES

Traditional own resources: All established amounts of traditional own resources must be entered in one or other of the accounts kept by the competent authorities.

| — | In the ordinary account provided for in Article 6(3)(a) of Regulation (EC, Euratom) No 1150/2000: all amounts recovered or guaranteed. |
| --- | --- |

—

In the ordinary account provided for in Article 6(3)(a) of Regulation (EC, Euratom) No 1150/2000: all amounts recovered or guaranteed.

| — | In the separate account provided for in Article 6(3)(b) of Regulation (EC, Euratom) No 1150/2000: all amounts not yet recovered and/or not guaranteed; amounts guaranteed but challenged may also be entered in this account. |
| --- | --- |

—

In the separate account provided for in Article 6(3)(b) of Regulation (EC, Euratom) No 1150/2000: all amounts not yet recovered and/or not guaranteed; amounts guaranteed but challenged may also be entered in this account.

For the separate account, the Member States quarterly statement to the Commission includes:

| — | the balance to be recovered during the previous quarter, |
| --- | --- |

—

the balance to be recovered during the previous quarter,

| — | the established entitlements during the quarter in question, |
| --- | --- |

—

the established entitlements during the quarter in question,

| — | rectifications of the base (corrections/cancellations) during the quarter in question, |
| --- | --- |

—

rectifications of the base (corrections/cancellations) during the quarter in question,

| — | amounts written off (which cannot be made available according to Article 17(2) of Regulation (EC, Euratom) No 1150/2000), |
| --- | --- |

—

amounts written off (which cannot be made available according to Article 17(2) of Regulation (EC, Euratom) No 1150/2000),

| — | the amounts recovered during the quarter in question, |
| --- | --- |

—

the amounts recovered during the quarter in question,

| — | the balance to be recovered at the end of the quarter in question. |
| --- | --- |

—

the balance to be recovered at the end of the quarter in question.

Traditional own resources must be entered in the Commission's account with the Treasury or the body appointed by the Member State at the latest on the first working day following the 19th day of the second month following the month during which the entitlement was established (or recovered in the case of the separate account). Member States retain, by way of collection costs, 25 % of traditional own resources. The contingent own resources entitlements are adjusted on the basis of the likelihood of their recovery.

2.2   VAT-BASED RESOURCES AND GNI-BASED RESOURCES

VAT-BASED RESOURCES AND GNI-BASED RESOURCES

VAT-based own resources derive from the application of a uniform rate, for all Member States, to the harmonised VAT base determined in accordance with the rules of Article 2(1)(b) of the ORD 2007. The uniform rate is fixed at 0,30 % except for the period 2007-2013 in which the rate of call for Austria is fixed at 0,225, for Germany at 0,15 % and for Netherlands and Sweden at 0,10 %. The VAT base is capped at 50 % of GNI for all Member States.

The GNI-based resource is a variable resource intended to supply the revenue required, in any given year, to cover expenditure exceeding the amount collected from traditional own resources, VAT resources and miscellaneous revenue. The revenue derives from the application of a uniform rate to the aggregate GNI of all the Member States. VAT and GNI-based resources are determined on the basis of forecasts of VAT and GNI bases made when the draft budget is being prepared. These forecasts are subsequently revised; the figures are updated during the budget year in question by means of an amending budget.

The actual figures for the VAT and GNI bases are available in the course of the year following the budget year in question. The Commission calculates the differences between the amounts due by the Member States by reference to the actual bases and the sums actually paid on the basis of the (revised) forecasts. These VAT and GNI balances, either positive or negative, are called in by the Commission from the Member States for the first working day of December of the year following the budget year in question. Corrections may still be made to the actual VAT and GNI bases during the subsequent four years, unless a reservation is issued. The balances calculated earlier are adjusted and the difference is called in at the same time as the VAT and GNI balances for the previous budget year.

When conducting controls of VAT statements and GNI data, the Commission may notify reservations to the Member States regarding certain points which may have consequences to their own resources contributions. These points, for example, may result from an absence of acceptable data, or a need to develop a suitable methodology. These reservations have to be seen as potential claims on the Member States for uncertain amounts as their financial impact cannot be estimated with accuracy. When the exact amount can be determined, the corresponding VAT and GNI-based resources are called either in connection with VAT and GNI balances or by individual calls for funds.

2.3   UK CORRECTION

UK CORRECTION

This mechanism reduces the own resources payments of the UK in proportion to what is known as its "budgetary imbalance" and increases the own resources payments of the other Member States correspondingly. The budgetary imbalance correction mechanism in favour of the United Kingdom was instituted by the European Council in Fontainebleau (June 1984) and the resulting Own Resources Decision of 7 May 1985. The purpose of the mechanism was to reduce the budgetary imbalance of the UK through a reduction in its payments to the EU. Germany, Austria, Sweden and Netherlands benefit from a reduced financing of the correction (restricted to one fourth of their normal share).

2.4   GROSS REDUCTION

GROSS REDUCTION

The European Council of 15 and 16 December 2005 concluded that the Netherlands and Sweden shall benefit from gross reductions in their annual GNI-based contributions during the period 2007-2013. Thus this mechanism of compensation stipulates that the Netherlands shall benefit from a gross reduction in its annual GNI contribution of EUR 605 million and Sweden from a gross reduction in its annual GNI contribution of EUR 150 million, measured in 2004 prices.

3.   BUDGETARY IMPLEMENTATION REPORTS: EXPENDITURE

BUDGETARY IMPLEMENTATION REPORTS: EXPENDITURE

The budgetary implementation reports can be found after these explanatory notes.

3.1   Financial Framework 2007-2013

Financial Framework 2007-2013

| EUR millions |
| --- |
| | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 |
| 1. | Sustainable Growth |

EUR millions

2007

2008

2009

2010

2011

2012

2013

1.

Sustainable Growth

53 979

57 653

61 696

63 555

63 974

67 614

70 147

| 2. | Preservation & management of natural resources |
| --- | --- |

2.

Preservation & management of natural resources

55 143

59 193

56 333

59 955

59 888

60 810

61 289

| 3. | Citizenship, freedom, security & justice |
| --- | --- |

3.

Citizenship, freedom, security & justice

1 273

1 362

1 518

1 693

1 889

2 105

2 376

| 4. | EU as a global player |
| --- | --- |

4.

EU as a global player

6 578

7 002

7 440

7 893

8 430

8 997

9 595

| 5. | Administration |
| --- | --- |

5.

Administration

7 039

7 380

7 525

7 882

8 091

8 523

9 095

| 6. | Compensations |
| --- | --- |

6.

Compensations

445

207

210

0

0

0

0

Commitment appropriations

Commitment appropriations

124 457

124 457

132 797

132 797

134 722

134 722

140 978

140 978

142 272

142 272

148 049

148 049

152 502

152 502

Total payment appropriations

122 190

129 681

120 445

134 289

133 700

141 360

143 911

This section describes the main categories of EU expenditure, classified by heading of the financial framework 2007-2013. The 2012 financial year was the sixth covered by the financial framework 2007-2013. The overall ceiling on commitments appropriations for 2012 comes to EUR 148 049 million, equivalent to 1,13 % of GNI. The corresponding ceiling on the appropriations for payments comes to EUR 141 360 million, i.e. 1,08 % of GNI. The above table shows the financial framework at current prices.

Heading 1 –   Sustainable growth

Heading 1 –

Sustainable growth

This heading is divided into two separate, but interlinked components:

| — | 1a. Competitiveness for growth and employment, encompassing expenditure on research and innovation, education and training, trans-European networks, social policy, the internal market and accompanying policies. |
| --- | --- |

—

1a. Competitiveness for growth and employment, encompassing expenditure on research and innovation, education and training, trans-European networks, social policy, the internal market and accompanying policies.

| — | 1b. Cohesion for growth and employment, designed to enhance convergence of the least developed Member States and regions, to complement the EU strategy for sustainable development outside the less prosperous regions and to support inter regional cooperation. |
| --- | --- |

—

1b. Cohesion for growth and employment, designed to enhance convergence of the least developed Member States and regions, to complement the EU strategy for sustainable development outside the less prosperous regions and to support inter regional cooperation.

Heading 2 –   Preservation and management of natural resources

Heading 2 –

Preservation and management of natural resources

Heading 2 includes the common agricultural and fisheries policies, rural development and environmental measures, in particular Natura 2000. The amount earmarked for the common agricultural policy reflects the agreement reached at the European Council in October 2002.

Heading 3 –   Citizenship, freedom, security and justice

Heading 3 –

Citizenship, freedom, security and justice

The new heading 3 (Citizenship, freedom, security and justice) reflects the growing importance attached to certain fields where the EU has been assigned new tasks – justice and home affairs, border protection, immigration and asylum policy, public health and consumer protection, culture, youth, information and dialogue with citizens. It is split in two components:

| — | 3a. Freedom, Security and Justice |
| --- | --- |

—

3a. Freedom, Security and Justice

| — | 3b. Citizenship |
| --- | --- |

—

3b. Citizenship

Heading 4 –   The EU as a global player

Heading 4 –

The EU as a global player

Heading 4 covers all external action, including pre-accession instruments. Whereas the Commission had proposed to integrate the European Development Fund (EDF) into the financial framework, the European Council and the European Parliament agreed to leave it outside.

Heading 5 –   Administration

Heading 5 –

Administration

This heading covers administrative expenditure for all institutions, pensions and the European Schools. For the Institutions other than the Commission, these costs make up the total of their expenditure, but the Agencies and other bodies make both administrative and operational expenditure.

Heading 6 –   Compensations

Heading 6 –

Compensations

In accordance with the political agreement that the new Member States should not become net-contributors to the budget at the very beginning of their membership, compensation was foreseen under this heading. This amount was available as transfers to them to balance their budgetary receipts and contributions.

3.2   Policy areas

Policy areas

As part of its use of Activity Based Management (ABM) the Commission implements Activity Based Budgeting (ABB) in its planning and management processes. ABB involves a budget structure where budget titles correspond to policy areas and budget chapters to activities. ABB aims to provide a clear framework for translating the Commission's policy objectives into action, either through legislative, financial or any other public policy means. By structuring the Commission's work in terms of activities, a clear picture is obtained of the Commission's undertakings and simultaneously a common framework is established for priority setting. Resources are allocated to priorities during the budget procedure, using the activities as the building blocks for budgeting purposes. By establishing such a link between activities and the resources allocated to them, ABB aims to increase efficiency and effectiveness in the use of resources in the Commission.

A policy area may be defined as a homogeneous grouping of activities constituting parts of the Commission's work, which are relevant for the decision-making process. Each policy area corresponds, in general, to a DG, and encompassing an average of about 6 or 7 individual activities. Policy areas are mainly operational, since their core activities aim at benefiting a third-party beneficiary within their respective domains of activity. The operational budget is completed with the necessary administrative expenditure for each policy area.

4.   INSTITUTIONS AND AGENCIES

INSTITUTIONS AND AGENCIES

The budgetary implementation reports can be found after these explanatory notes.

The consolidated reports on the implementation of the general budget of the EU include, as in previous years, the budget implementation of all Institutions since within the EU budget a separate budget for each Institution is established. Agencies do not have a separate budget inside the EU budget and they are partially financed by a Commission budget subsidy.

Concerning the EEAS, it should be noted that, in addition to its own budget, it also receives contributions from the Commission of EUR 212 million (2011: EUR 202 million) and the EDF of EUR 53 million (2011: EUR 50 million). These budget credits are put at the disposal of the EEAS (as assigned revenue) so as to cover primarily the costs of Commission staff working in the EU delegations, these delegations being administratively managed by the EEAS.

In order to provide all relevant budgetary data for the Agencies, the budgetary part of the consolidated annual accounts include separate reports on the implementation of the individual budgets of the traditional agencies consolidated.

AGGREGATED REPORTS ON THE IMPLEMENTATION OF THE BUDGET
   (25)

AGGREGATED REPORTS ON THE IMPLEMENTATION OF THE BUDGET

25

2.   SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE

SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE

| EUR millions |
| --- |
| Title | Income appropriations | Entitlements established | Revenue | Receipts as % of budget | Outstanding |
| Initial | Final | Current year | Carried over | Total | On entitlements current year | On entitlements carried over | Total |
| 1. | Own resources |

EUR millions

Title

Income appropriations

Entitlements established

Revenue

Receipts as % of budget

Outstanding

Initial

Final

Current year

Carried over

Total

On entitlements current year

On entitlements carried over

Total

1.

Own resources

127 512

128 655

128 902

29

128 931

128 883

2

128 886

100,18 %

45

| 3. | Surpluses, balances and adjustments |
| --- | --- |

3.

Surpluses, balances and adjustments

0

1 994

1 939

102

2 041

1 939

102

2 041

102,34 %

0

| 4. | Revenue accruing from persons working with the institutions & with other EU bodies |
| --- | --- |

4.

Revenue accruing from persons working with the institutions & with other EU bodies

1 312

1 312

1 235

6

1 241

1 230

6

1 236

94,15 %

5

| 5. | Revenue from administrative operations of institutions |
| --- | --- |

5.

Revenue from administrative operations of institutions

60

68

619

22

641

594

18

612

896,16 %

29

| 6. | Contributions and refunds in connection with community agreements & programmes |
| --- | --- |

6.

Contributions and refunds in connection with community agreements & programmes

50

50

3 163

291

3 453

2 776

152

2 928

5 856,15 %

525

| 7. | Interest on late payments and fines |
| --- | --- |

7.

Interest on late payments and fines

123

3 648

1 821

12 761

14 582

13

3 795

3 807

104,37 %

10 775

| 8. | Borrowing and lending operations |
| --- | --- |

8.

Borrowing and lending operations

0

0

63

159

222

0

0

0

222

| 9. | Miscellaneous revenue |
| --- | --- |

9.

Miscellaneous revenue

30

30

29

10

39

26

5

31

101,61 %

9

Total

129 088

135 758

137 771

13 379

151 150

135 460

4 080

139 541

102,79 %

11 610

Detail Title 1:   Own resources

Detail Title 1:

Own resources

| Chapter | Income appropriations | Entitlements established | Revenue | Receipts as % of budget | Outstanding |
| --- | --- | --- | --- | --- | --- |
| Initial | Final | Current year | Carried over | Total | On entitlements current year | On entitlements carried over | Total |
| 11. | Sugar levies |

Chapter

Income appropriations

Entitlements established

Revenue

Receipts as % of budget

Outstanding

Initial

Final

Current year

Carried over

Total

On entitlements current year

On entitlements carried over

Total

11.

Sugar levies

123

123

193

0

193

193

0

193

156,04 %

0

| 12. | Customs duties |
| --- | --- |

12.

Customs duties

19 171

16 701

16 277

29

16 306

16 258

2

16 261

97,37 %

45

| 13. | VAT |
| --- | --- |

13.

VAT

14 499

14 546

14 648

0

14 648

14 648

0

14 648

100,70 %

0

| 14. | GNI |
| --- | --- |

14.

GNI

93 719

97 284

97 856

0

97 856

97 856

0

97 856

100,59 %

0

| 15. | Correction of budgetary imbalances |
| --- | --- |

15.

Correction of budgetary imbalances

0

0

(74)

0

(74)

(74)

0

(74)

0

| 16. | Reduction GNI-based contributions NL, S |
| --- | --- |

16.

Reduction GNI-based contributions NL, S

0

0

2

0

2

2

0

2

0

Total

127 512

128 655

128 902

29

128 931

128 883

2

128 886

100,18 %

45

Detail Title 3:   Surpluses, balances and adjustments

Detail Title 3:

Surpluses, balances and adjustments

| Chapter | Income appropriations | Entitlements established | Revenue | Receipts as % of budget | Outstanding |
| --- | --- | --- | --- | --- | --- |
| Initial | Final | Current year | Carried over | Total | On entitlements current year | On entitlements carried over | Total |
| 30. | Surplus from previous year |

Chapter

Income appropriations

Entitlements established

Revenue

Receipts as % of budget

Outstanding

Initial

Final

Current year

Carried over

Total

On entitlements current year

On entitlements carried over

Total

30.

Surplus from previous year

0

1 497

1 497

0

1 497

1 497

0

1 497

100,00 %

0

| 31. | VAT balances |
| --- | --- |

31.

VAT balances

0

218

223

23

246

223

23

246

112,94 %

0

| 32. | GNI balances |
| --- | --- |

32.

GNI balances

0

280

204

80

284

204

80

284

101,42 %

0

| 34. | Adjustment for non-participation in JHAP |
| --- | --- |

34.

Adjustment for non-participation in JHAP

0

0

(3)

0

(3)

(3)

0

(3)

0

| 35. | UK correction-adjustments |
| --- | --- |

35.

UK correction-adjustments

0

0

3

0

3

3

0

3

0

| 36. | UK correction- intermediate calculation |
| --- | --- |

36.

UK correction- intermediate calculation

0

0

15

0

15

15

0

15

0

Total

0

1 994

1 939

102

2 041

1 939

102

2 041

102,34 %

0

3.1   BREAKDOWN & CHANGES IN COMMITMENT & PAYMENT APPROPRIATIONS BY FINANCIAL FRAMEWORK HEADING

BREAKDOWN & CHANGES IN COMMITMENT & PAYMENT APPROPRIATIONS BY FINANCIAL FRAMEWORK HEADING

| EUR millions |
| --- |
| Financial Framework Heading | Commitment appropriations | Payment appropriations |
| Appropriations adopted | Modifications (Transfers & AB) | Carried over | Assigned revenue | Total additional | Total authorised | Appropriations adopted | Modifications (Transfers & AB) | Carried over | Assigned revenue | Total additional | Total authorised |
| 1 | 2 | 3 | 4 | | | 7 | 8 | 9 | 10 | | |
| 1 | Sustainable growth |

EUR millions

Financial Framework Heading

Commitment appropriations

Payment appropriations

Appropriations adopted

Modifications (Transfers & AB)

Carried over

Assigned revenue

Total additional

Total authorised

Appropriations adopted

Modifications (Transfers & AB)

Carried over

Assigned revenue

Total additional

Total authorised

1

2

3

4

Formula

Formula

7

8

9

10

Formula

Formula

1

Sustainable growth

67 506

636

36

2 664

2 700

70 842

55 337

5 137

187

3 092

3 279

63 753

| 2 | Preservation and management of natural resources |
| --- | --- |

2

Preservation and management of natural resources

59 976

(126)

23

2 325

2 348

62 198

57 034

982

78

2 315

2 393

60 409

| 3 | Citizenship, freedom, security and justice |
| --- | --- |

3

Citizenship, freedom, security and justice

2 065

688

41

199

240

2 994

1 484

729

47

216

263

2 477

| 4 | The EU as global player |
| --- | --- |

4

The EU as global player

9 406

(2)

178

349

527

9 931

6 955

(178)

52

354

405

7 182

| 5 | Administration |
| --- | --- |

5

Administration

8 280

0

22

811

833

9 113

8 278

0

711

835

1 546

9 824

| 6 | Compensations |
| --- | --- |

6

Compensations

Total

147 232

1 196

300

6 348

6 649

155 077

129 088

6 670

1 074

6 812

7 886

143 644

3.2   IMPLEMENTATION OF COMMITMENT APPROPRIATIONS BY FINANCIAL FRAMEWORK HEADING

IMPLEMENTATION OF COMMITMENT APPROPRIATIONS BY FINANCIAL FRAMEWORK HEADING

| EUR millions |
| --- |
| Financial Framework Heading | Commitment appropriations authorised | Commitments made | Appropriations carried over | Appropriations lapsing |
| From the year’s appropriations | From carryovers | From assigned revenue | Total | % | Assigned revenue | Carryovers by decision | Total | % | From the year’s budget appropriations | From carry overs | Assigned revenue | Total | % |
| 1 | 2 | 3 | 4 | | | 7 | 8 | | | 11 | 12 | 13 | | |
| 1 | Sustainable growth |

EUR millions

Financial Framework Heading

Commitment appropriations authorised

Commitments made

Appropriations carried over

Appropriations lapsing

From the year’s appropriations

From carryovers

From assigned revenue

Total

%

Assigned revenue

Carryovers by decision

Total

%

From the year’s budget appropriations

From carry overs

Assigned revenue

Total

%

1

2

3

4

Formula

Formula

7

8

Formula

Formula

11

12

13

Formula

Formula

1

Sustainable growth

70 842

67 653

36

1 311

69 000

97,40 %

1 354

28

1 381

1,95 %

461

0

0

461

0,65 %

| 2 | Preservation and management of natural resources |
| --- | --- |

2

Preservation and management of natural resources

62 198

59 825

23

969

60 817

97,78 %

1 356

2

1 357

2,18 %

24

0

0

24

0,04 %

| 3 | Citizenship, freedom, security and justice |
| --- | --- |

3

Citizenship, freedom, security and justice

2 994

2 741

41

110

2 892

96,62 %

89

0

89

2,96 %

13

0

0

13

0,42 %

| 4 | The EU as a global player |
| --- | --- |

4

The EU as a global player

9 931

9 364

178

211

9 753

98,21 %

138

2

140

1,41 %

38

0

0

38

0,38 %

| 5 | Administration |
| --- | --- |

5

Administration

9 113

8 184

22

617

8 822

96,81 %

195

0

195

2,14 %

96

0

0

96

1,05 %

| 6 | Compensations |
| --- | --- |

6

Compensations

Total

155 077

147 766

300

3 218

151 284

97,55 %

3 131

31

3 162

2,04 %

631

0

0

631

0,41 %

3.3   IMPLEMENTATION OF PAYMENT APPROPRIATIONS BY FINANCIAL FRAMEWORK HEADING

IMPLEMENTATION OF PAYMENT APPROPRIATIONS BY FINANCIAL FRAMEWORK HEADING

| EUR millions |
| --- |
| Financial Framework Heading | Payment Appropriations authorised | Payments made | Appropriations carried over | Appropriations lapsing |
| From the year’s appropriations | From carryovers | From assigned revenue | Total | % | Automatic carryovers | Carryovers by decision | Assigned revenue | Total | % | From the year’s appropriations | From carryovers | Assigned revenue | Total | % |
| 1 | 2 | 3 | 4 | | | 7 | 8 | 9 | | | 12 | 13 | 14 | | |
| 1 | Sustainable growth |

EUR millions

Financial Framework Heading

Payment Appropriations authorised

Payments made

Appropriations carried over

Appropriations lapsing

From the year’s appropriations

From carryovers

From assigned revenue

Total

%

Automatic carryovers

Carryovers by decision

Assigned revenue

Total

%

From the year’s appropriations

From carryovers

Assigned revenue

Total

%

1

2

3

4

Formula

Formula

7

8

9

Formula

Formula

12

13

14

Formula

Formula

1

Sustainable growth

63 753

60 288

168

1 129

61 585

96,60 %

128

26

1 963

2 117

3,32 %

32

19

0

51

0,08 %

| 2 | Preservation & management of natural resources |
| --- | --- |

2

Preservation & management of natural resources

60 409

57 960

72

1 064

59 096

97,83 %

32

4

1 251

1 287

2,13 %

20

5

0

26

0,04 %

| 3 | Citizenship, freedom, security & justice |
| --- | --- |

3

Citizenship, freedom, security & justice

2 477

2 192

46

136

2 375

95,86 %

8

1

80

88

3,57 %

13

1

0

14

0,57 %

| 4 | The EU as a global player |
| --- | --- |

4

The EU as a global player

7 182

6 741

31

291

7 064

98,35 %

26

4

63

92

1,28 %

6

20

0

26

0,37 %

| 5 | Administration |
| --- | --- |

5

Administration

9 824

7 475

628

461

8 564

87,18 %

706

1

373

1 081

11,01 %

95

83

0

178

1,81 %

| 6 | Compensations |
| --- | --- |

6

Compensations

Total

143 644

134 656

946

3 081

138 683

96,55 %

900

36

3 730

4 666

3,25 %

166

128

0

295

0,21 %

3.4   MOVEMENTS IN COMMITMENTS OUTSTANDING - BY FINANCIAL FRAMEWORK HEADING

MOVEMENTS IN COMMITMENTS OUTSTANDING - BY FINANCIAL FRAMEWORK HEADING

| EUR millions |
| --- |
| Financial Framework Heading | Commitments outstanding at the end of the previous year | Commitments of the year |
| Commitments carried forward from previous year | Decommitments /Revaluations/ Cancellations | Payments | Commitments outstanding at year-end | Commitments made during the year | Payments | Cancellation of commitments which cannot be carried over | Commitments outstanding at year-end | Total Commitments outstanding at year-end |
| 1 | Sustainable growth |

EUR millions

Financial Framework Heading

Commitments outstanding at the end of the previous year

Commitments of the year

Commitments carried forward from previous year

Decommitments /Revaluations/ Cancellations

Payments

Commitments outstanding at year-end

Commitments made during the year

Payments

Cancellation of commitments which cannot be carried over

Commitments outstanding at year-end

Total Commitments outstanding at year-end

1

Sustainable growth

159 707

(850)

(54 901)

103 957

69 000

(6 684)

(1)

62 314

166 271

| 2 | Preservation and management of natural resources |
| --- | --- |

2

Preservation and management of natural resources

25 302

(137)

(12 983)

12 182

60 817

(46 113)

0

14 703

26 886

| 3 | Citizenship, freedom, security and justice |
| --- | --- |

3

Citizenship, freedom, security and justice

2 130

(332)

(547)

1 251

2 892

(1 827)

0

1 065

2 316

| 4 | The EU as a global player |
| --- | --- |

4

The EU as a global player

19 567

(827)

(4 870)

13 870

9 753

(2 193)

(1)

7 558

21 429

| 5 | Administration |
| --- | --- |

5

Administration

737

(90)

(628)

19

8 822

(7 936)

4

890

909

| 6 | Compensations |
| --- | --- |

6

Compensations

Total

207 443

(2 234)

(73 930)

131 279

151 284

(64 754)

1

86 531

217 810

3.5   BREAKDOWN OF COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN - BY FINANCIAL FRAMEWORK HEADING

BREAKDOWN OF COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN - BY FINANCIAL FRAMEWORK HEADING

| EUR millions |
| --- |
| Financial Framework Heading | < 2006 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | Total |
| 1 | Sustainable growth |

EUR millions

Financial Framework Heading

< 2006

2006

2007

2008

2009

2010

2011

2012

Total

1

Sustainable growth

1 222

6 765

499

2 978

11 444

30 896

50 154

62 314

166 271

| 2 | Preservation & management of natural resources |
| --- | --- |

2

Preservation & management of natural resources

66

739

66

144

286

1 893

8 987

14 703

26 886

| 3 | Citizenship, freedom, security and justice |
| --- | --- |

3

Citizenship, freedom, security and justice

14

5

28

86

241

314

562

1 065

2 316

| 4 | The EU as a global player |
| --- | --- |

4

The EU as a global player

672

650

710

1 291

2 199

3 464

4 884

7 558

21 429

| 5 | Administration |
| --- | --- |

5

Administration

0

0

0

0

0

0

19

890

909

Total

1 975

8 159

1 304

4 498

14 171

36 568

64 606

86 531

217 810

3.6   BREAKDOWN AND CHANGES IN COMMITMENT AND PAYMENT APPROPRIATIONS BY POLICY AREA

BREAKDOWN AND CHANGES IN COMMITMENT AND PAYMENT APPROPRIATIONS BY POLICY AREA

| EUR millions |
| --- |
| Policy Area | Commitment appropriations | Payment appropriations |
| Approps adopted | Modifications (Transfer /AB) | Carried over | Assigned revenue | Total additional | Total authorised | Approps adopted | Modifications (Transfer/ AB) | Carried over | Assigned revenue | Total additional | Total authorised |
| 1 | 2 | 3 | 4 | | | 7 | 8 | 9 | 10 | | |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

Commitment appropriations

Payment appropriations

Approps adopted

Modifications (Transfer /AB)

Carried over

Assigned revenue

Total additional

Total authorised

Approps adopted

Modifications (Transfer/ AB)

Carried over

Assigned revenue

Total additional

Total authorised

1

2

3

4

Formula

Formula

7

8

9

10

Formula

Formula

01

Economic and financial affairs

611

(94)

0

19

19

536

511

(42)

7

17

24

493

| 02 | Enterprise |
| --- | --- |

02

Enterprise

1 148

(4)

0

132

132

1 276

1 079

121

21

174

195

1 395

| 03 | Competition |
| --- | --- |

03

Competition

92

(1)

0

5

5

96

92

(1)

7

5

12

103

| 04 | Employment and social affairs |
| --- | --- |

04

Employment and social affairs

11 581

191

34

12

46

11 818

9 075

2 601

66

12

78

11 755

| 05 | Agriculture and rural development |
| --- | --- |

05

Agriculture and rural development

58 587

(22)

0

2 311

2 311

60 877

55 880

989

70

2 303

2 373

59 242

| 06 | Mobility and transport |
| --- | --- |

06

Mobility and transport

1 664

(1)

0

91

91

1 754

1 079

(40)

6

110

116

1 156

| 07 | Environment and Climate action |
| --- | --- |

07

Environment and Climate action

493

(1)

0

17

17

508

393

(20)

18

17

35

409

| 08 | Research |
| --- | --- |

08

Research

5 930

643

0

1 045

1 045

7 618

4 218

632

30

1 366

1 396

6 245

| 09 | Information society and media |
| --- | --- |

09

Information society and media

1 678

(2)

0

309

309

1 985

1 357

33

13

373

387

1 776

| 10 | Direct research |
| --- | --- |

10

Direct research

411

0

0

521

521

932

404

1

44

444

488

893

| 11 | Maritime affairs and Fisheries |
| --- | --- |

11

Maritime affairs and Fisheries

1 033

(48)

23

3

26

1 011

806

(56)

4

3

7

757

| 12 | Internal market |
| --- | --- |

12

Internal market

101

(2)

0

7

7

107

98

1

7

7

13

112

| 13 | Regional policy |
| --- | --- |

13

Regional policy

42 045

569

40

8

48

42 662

35 538

2 686

49

8

57

38 282

| 14 | Taxation and customs union |
| --- | --- |

14

Taxation and customs union

143

(1)

0

5

5

147

110

18

7

5

12

140

| 15 | Education and culture |
| --- | --- |

15

Education and culture

2 697

(8)

0

602

603

3 292

2 112

280

16

651

667

3 059

| 16 | Communication |
| --- | --- |

16

Communication

262

1

0

8

8

271

253

3

14

8

22

278

| 17 | Health and consumer protection |
| --- | --- |

17

Health and consumer protection

687

(68)

0

34

34

653

592

16

12

33

45

652

| 18 | Home affairs |
| --- | --- |

18

Home affairs

1 264

(1)

3

56

59

1 322

756

29

7

68

75

860

| 19 | External relations |
| --- | --- |

19

External relations

4 817

(51)

44

158

202

4 969

3 276

(188)

17

166

183

3 271

| 20 | Trade |
| --- | --- |

20

Trade

104

(1)

0

3

3

106

102

0

6

3

9

111

| 21 | Development & relations ACP States |
| --- | --- |

21

Development & relations ACP States

1 498

(2)

127

110

237

1 733

1 310

21

33

111

144

1 475

| 22 | Enlargement |
| --- | --- |

22

Enlargement

1 088

3

8

68

75

1 166

921

(1)

4

51

55

976

| 23 | Humanitarian aid |
| --- | --- |

23

Humanitarian aid

900

378

0

21

21

1 299

842

259

7

34

40

1 141

| 24 | Fight against fraud |
| --- | --- |

24

Fight against fraud

79

0

0

0

0

79

74

2

7

0

7

83

| 25 | Com. pol.coordination and legal advice |
| --- | --- |

25

Com. pol.coordination and legal advice

194

(1)

0

11

11

204

193

(1)

16

11

27

219

| 26 | Commission’s administration |
| --- | --- |

26

Commission’s administration

1 017

62

0

120

120

1 200

1 001

74

146

122

268

1 343

| 27 | Budget |
| --- | --- |

27

Budget

69

(12)

0

7

7

63

69

(12)

9

7

16

73

| 28 | Audit |
| --- | --- |

28

Audit

12

0

0

1

1

12

12

0

1

1

1

13

| 29 | Statistics |
| --- | --- |

29

Statistics

134

(6)

0

16

16

144

122

(1)

6

22

27

148

| 30 | Pensions and related expenditure |
| --- | --- |

30

Pensions and related expenditure

1 335

(14)

0

0

0

1 321

1 335

(14)

0

0

0

1 321

| 31 | Language Services |
| --- | --- |

31

Language Services

399

(9)

0

87

87

477

399

(9)

24

87

111

501

| 32 | Energy |
| --- | --- |

32

Energy

718

(1)

0

47

47

764

1 339

(622)

6

60

66

782

| 33 | Justice |
| --- | --- |

33

Justice

218

0

0

15

15

233

187

2

3

14

17

206

| 40 | Reserves |
| --- | --- |

40

Reserves

759

(298)

0

0

0

461

90

(90)

0

0

0

0

| 90 | Other Institutions |
| --- | --- |

90

Other Institutions

3 464

0

22

498

519

3 983

3 464

0

393

519

912

4 376

Total

147 232

1 196

300

6 348

6 649

155 077

129 088

6 670

1 074

6 812

7 886

143 644

3.7   IMPLEMENTATION OF COMMITMENT APPROPRIATIONS BY POLICY AREA

IMPLEMENTATION OF COMMITMENT APPROPRIATIONS BY POLICY AREA

| EUR millions |
| --- |
| Policy Area | Commitment appropriations authorised | Commitments made | Appropriations carried over | Appropriations lapsing |
| From the year’s approps | From carryovers | Assigned revenue | Total | % | Assigned revenue | Carryovers: decision | Total | % | From year’s budget approps | From carryovers | Assigned revenue | Total | % |
| 1 | 2 | 3 | 4 | | | 7 | 8 | | | 11 | 12 | 13 | | |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

Commitment appropriations authorised

Commitments made

Appropriations carried over

Appropriations lapsing

From the year’s approps

From carryovers

Assigned revenue

Total

%

Assigned revenue

Carryovers: decision

Total

%

From year’s budget approps

From carryovers

Assigned revenue

Total

%

1

2

3

4

Formula

Formula

7

8

Formula

Formula

11

12

13

Formula

Formula

01

Economic and financial affairs

536

517

0

18

535

99,66 %

2

0

2

0,33 %

0

0

0

0

0,01 %

| 02 | Enterprise |
| --- | --- |

02

Enterprise

1 276

1 144

0

92

1 236

96,84 %

40

0

40

3,13 %

0

0

0

0

0,03 %

| 03 | Competition |
| --- | --- |

03

Competition

96

91

0

3

94

97,42 %

2

0

2

2,43 %

0

0

0

0

0,15 %

| 04 | Employment and social affairs |
| --- | --- |

04

Employment and social affairs

11 818

11 742

34

7

11 782

99,70 %

6

24

30

0,25 %

6

0

0

6

0,05 %

| 05 | Agriculture and rural development |
| --- | --- |

05

Agriculture and rural development

60 877

58 550

0

964

59 514

97,76 %

1 347

2

1 349

2,22 %

13

0

0

13

0,02 %

| 06 | Mobility and transport |
| --- | --- |

06

Mobility and transport

1 754

1 651

0

61

1 713

97,65 %

29

0

29

1,67 %

12

0

0

12

0,68 %

| 07 | Environment & Climate action |
| --- | --- |

07

Environment & Climate action

508

486

0

10

496

97,58 %

7

0

7

1,47 %

5

0

0

5

0,95 %

| 08 | Research |
| --- | --- |

08

Research

7 618

6 573

0

486

7 059

92,66 %

559

0

559

7,34 %

0

0

0

0

0,00 %

| 09 | Information society and media |
| --- | --- |

09

Information society and media

1 985

1 675

0

203

1 878

94,60 %

106

0

107

5,37 %

1

0

0

1

0,03 %

| 10 | Direct research |
| --- | --- |

10

Direct research

932

411

0

83

494

53,04 %

438

0

438

46,95 %

0

0

0

0

0,01 %

| 11 | Maritime affairs and Fisheries |
| --- | --- |

11

Maritime affairs and Fisheries

1 011

982

23

1

1 007

99,60 %

1

0

1

0,12 %

3

0

0

3

0,28 %

| 12 | Internal market |
| --- | --- |

12

Internal market

107

99

0

2

101

94,46 %

5

0

5

4,72 %

1

0

0

1

0,82 %

| 13 | Regional policy |
| --- | --- |

13

Regional policy

42 662

42 601

40

6

42 647

99,96 %

2

3

5

0,01 %

10

0

0

10

0,02 %

| 14 | Taxation and customs union |
| --- | --- |

14

Taxation and customs union

147

142

0

2

144

97,76 %

3

0

3

2,20 %

0

0

0

0

0,04 %

| 15 | Education and culture |
| --- | --- |

15

Education and culture

3 292

2 689

0

399

3 088

93,79 %

204

0

204

6,19 %

1

0

0

1

0,02 %

| 16 | Communication |
| --- | --- |

16

Communication

271

262

0

4

265

97,92 %

4

0

4

1,60 %

1

0

0

1

0,48 %

| 17 | Health & consumer protection |
| --- | --- |

17

Health & consumer protection

653

616

0

24

639

97,96 %

10

0

10

1,53 %

3

0

0

3

0,51 %

| 18 | Home affairs |
| --- | --- |

18

Home affairs

1 322

1 253

3

35

1 290

97,57 %

21

0

21

1,62 %

11

0

0

11

0,80 %

| 19 | External relations |
| --- | --- |

19

External relations

4 969

4 765

44

63

4 872

98,06 %

95

0

95

1,91 %

1

0

0

1

0,02 %

| 20 | Trade |
| --- | --- |

20

Trade

106

103

0

2

104

98,26 %

1

0

2

1,58 %

0

0

0

0

0,16 %

| 21 | Development & relations ACP |
| --- | --- |

21

Development & relations ACP

1 733

1 494

127

99

1 719

99,19 %

12

2

14

0,78 %

0

0

0

0

0,03 %

| 22 | Enlargement |
| --- | --- |

22

Enlargement

1 166

1 090

8

37

1 135

97,38 %

30

0

30

2,61 %

0

0

0

0

0,01 %

| 23 | Humanitarian aid |
| --- | --- |

23

Humanitarian aid

1 299

1 277

0

17

1 294

99,61 %

4

0

4

0,34 %

1

0

0

1

0,05 %

| 24 | Fight against fraud |
| --- | --- |

24

Fight against fraud

79

79

0

0

79

99,81 %

0

0

0

0,03 %

0

0

0

0

0,16 %

| 25 | Policy coord and legal advice |
| --- | --- |

25

Policy coord and legal advice

204

191

0

5

196

96,51 %

5

0

5

2,51 %

2

0

0

2

0,98 %

| 26 | Commission’s administration |
| --- | --- |

26

Commission’s administration

1 200

1 078

0

71

1 149

95,78 %

50

0

50

4,15 %

1

0

0

1

0,08 %

| 27 | Budget |
| --- | --- |

27

Budget

63

56

0

4

61

95,47 %

3

0

3

4,42 %

0

0

0

0

0,11 %

| 28 | Audit |
| --- | --- |

28

Audit

12

11

0

0

12

96,23 %

0

0

0

3,04 %

0

0

0

0

0,73 %

| 29 | Statistics |
| --- | --- |

29

Statistics

144

124

0

11

135

93,94 %

5

0

5

3,38 %

4

0

0

4

2,68 %

| 30 | Pensions + related expenditure |
| --- | --- |

30

Pensions + related expenditure

1 321

1 318

0

0

1 318

99,79 %

0

0

0

0,00 %

3

0

0

3

0,21 %

| 31 | Language Services |
| --- | --- |

31

Language Services

477

390

0

45

435

91,20 %

42

0

42

8,78 %

0

0

0

0

0,03 %

| 32 | Energy |
| --- | --- |

32

Energy

764

716

0

16

731

95,67 %

32

0

32

4,15 %

1

0

0

1

0,17 %

| 33 | Justice |
| --- | --- |

33

Justice

233

216

0

6

222

95,30 %

10

0

10

4,12 %

1

0

0

1

0,58 %

| 40 | Reserves |
| --- | --- |

40

Reserves

461

0

0

0

0

0,00 %

0

0

0

0,00 %

461

0

0

461

100,00 %

| 90 | Other Institutions |
| --- | --- |

90

Other Institutions

3 983

3 376

22

444

3 841

96,43 %

54

0

54

1,36 %

88

0

0

88

2,21 %

Total

155 077

147 766

300

3 218

151 284

97,55 %

3 131

31

3 162

2,04 %

631

0

0

631

0,41 %

3.8   IMPLEMENTATION OF PAYMENT APPROPRIATIONS BY POLICY AREA

IMPLEMENTATION OF PAYMENT APPROPRIATIONS BY POLICY AREA

| EUR millions |
| --- |
| Policy Area | Payment Appropriations authorised | Payments made | Appropriations carried over | Appropriations lapsing |
| From the year's approps | From carryovers | Assigned revenue | Total | % | Automatic carryovers | Carryovers by decision | Assigned revenue | Total | % | From the year's approps | From carryovers | Assigned revenue | Total | % |
| 1 | 2 | 3 | 4 | | | 7 | 8 | 9 | | | 12 | 13 | 14 | | |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

Payment Appropriations authorised

Payments made

Appropriations carried over

Appropriations lapsing

From the year's approps

From carryovers

Assigned revenue

Total

%

Automatic carryovers

Carryovers by decision

Assigned revenue

Total

%

From the year's approps

From carryovers

Assigned revenue

Total

%

1

2

3

4

Formula

Formula

7

8

9

Formula

Formula

12

13

14

Formula

Formula

01

Economic and financial affairs

493

463

6

15

484

98,13 %

6

0

2

8

1,64 %

0

1

0

1

0,23 %

| 02 | Enterprise |
| --- | --- |

02

Enterprise

1 395

1 180

19

72

1 271

91,12 %

19

0

103

121

8,70 %

1

2

0

3

0,18 %

| 03 | Competition |
| --- | --- |

03

Competition

103

83

6

2

92

89,72 %

7

0

3

10

9,78 %

0

0

0

1

0,50 %

| 04 | Employment and social affairs |
| --- | --- |

04

Employment and social affairs

11 755

11 629

63

7

11 699

99,53 %

13

24

5

43

0,36 %

9

4

0

13

0,11 %

| 05 | Agriculture & rural development |
| --- | --- |

05

Agriculture & rural development

59 242

56 829

66

1 053

57 948

97,82 %

23

4

1 250

1 276

2,15 %

13

4

0

18

0,03 %

| 06 | Mobility and transport |
| --- | --- |

06

Mobility and transport

1 156

1 031

5

69

1 105

95,57 %

6

0

41

47

4,03 %

3

1

0

5

0,40 %

| 07 | Environment & Climate action |
| --- | --- |

07

Environment & Climate action

409

355

17

10

382

93,39 %

17

1

6

24

5,89 %

1

2

0

3

0,72 %

| 08 | Research |
| --- | --- |

08

Research

6 245

4 827

25

455

5 307

84,97 %

23

0

911

934

14,95 %

0

5

0

5

0,08 %

| 09 | Information society and media |
| --- | --- |

09

Information society and media

1 776

1 375

12

114

1 501

84,54 %

14

0

259

273

15,36 %

1

1

0

2

0,10 %

| 10 | Direct research |
| --- | --- |

10

Direct research

893

357

40

69

466

52,13 %

48

0

375

423

47,35 %

0

5

0

5

0,52 %

| 11 | Maritime affairs and Fisheries |
| --- | --- |

11

Maritime affairs and Fisheries

757

742

2

1

745

98,45 %

3

0

1

5

0,64 %

5

2

0

7

0,91 %

| 12 | Internal market |
| --- | --- |

12

Internal market

112

92

6

2

99

88,71 %

5

0

5

11

9,47 %

1

1

0

2

1,82 %

| 13 | Regional policy |
| --- | --- |

13

Regional policy

38 282

38 200

48

6

38 254

99,93 %

12

0

2

14

0,04 %

12

1

0

14

0,04 %

| 14 | Taxation and customs union |
| --- | --- |

14

Taxation and customs union

140

121

7

2

130

92,66 %

7

0

3

10

7,04 %

0

0

0

0

0,30 %

| 15 | Education and culture |
| --- | --- |

15

Education and culture

3 059

2 379

14

368

2 761

90,23 %

13

0

284

296

9,69 %

1

2

0

2

0,08 %

| 16 | Communication |
| --- | --- |

16

Communication

278

240

13

3

256

92,16 %

14

0

5

19

6,84 %

1

1

0

3

1,00 %

| 17 | Health and consumer protection |
| --- | --- |

17

Health and consumer protection

652

596

11

28

635

97,34 %

11

0

5

16

2,48 %

0

1

0

1

0,18 %

| 18 | Home affairs |
| --- | --- |

18

Home affairs

860

769

6

61

835

97,15 %

4

1

7

12

1,44 %

11

2

0

12

1,41 %

| 19 | External relations |
| --- | --- |

19

External relations

3 271

3 073

10

150

3 233

98,83 %

13

0

16

30

0,90 %

2

7

0

9

0,27 %

| 20 | Trade |
| --- | --- |

20

Trade

111

98

6

1

105

94,79 %

4

0

2

5

4,86 %

0

0

0

0

0,34 %

| 21 | Development and relations ACP |
| --- | --- |

21

Development and relations ACP

1 475

1 319

19

90

1 429

96,87 %

10

0

21

31

2,11 %

1

14

0

15

1,03 %

| 22 | Enlargement |
| --- | --- |

22

Enlargement

976

914

3

27

943

96,68 %

3

3

25

31

3,21 %

0

1

0

1

0,12 %

| 23 | Humanitarian aid |
| --- | --- |

23

Humanitarian aid

1 141

1 093

6

29

1 128

98,84 %

7

0

5

12

1,01 %

1

0

0

2

0,15 %

| 24 | Fight against fraud |
| --- | --- |

24

Fight against fraud

83

66

5

0

71

85,23 %

8

2

0

10

11,95 %

0

2

0

2

2,82 %

| 25 | Com. Pol. coord.& legal advice |
| --- | --- |

25

Com. Pol. coord.& legal advice

219

176

14

5

195

88,73 %

15

1

6

21

9,62 %

1

2

0

4

1,64 %

| 26 | Commission’s administration |
| --- | --- |

26

Commission’s administration

1 343

963

136

51

1 149

85,59 %

111

0

72

183

13,60 %

1

10

0

11

0,81 %

| 27 | Budget |
| --- | --- |

27

Budget

73

49

9

3

61

83,74 %

7

0

4

11

15,45 %

0

1

0

1

0,80 %

| 28 | Audit |
| --- | --- |

28

Audit

13

11

1

0

12

91,60 %

0

0

0

1

7,06 %

0

0

0

0

1,34 %

| 29 | Statistics |
| --- | --- |

29

Statistics

148

115

5

8

128

86,27 %

5

0

13

19

12,64 %

1

1

0

2

1,08 %

| 30 | Pensions and related expenses |
| --- | --- |

30

Pensions and related expenses

1 321

1 318

0

0

1 318

99,79 %

0

0

0

0

0,00 %

3

0

0

3

0,21 %

| 31 | Language Services |
| --- | --- |

31

Language Services

501

370

22

41

433

86,56 %

20

0

46

66

13,17 %

0

1

0

1

0,27 %

| 32 | Energy |
| --- | --- |

32

Energy

782

706

5

12

723

92,51 %

6

0

48

53

6,82 %

4

1

0

5

0,66 %

| 33 | Justice |
| --- | --- |

33

Justice

206

183

1

6

190

92,16 %

4

1

8

13

6,13 %

2

2

0

4

1,71 %

| 40 | Reserves |
| --- | --- |

40

Reserves

0

0

0

0

0

0,00 %

0

0

0

0

0,00 %

0

0

0

0

0,00 %

| 90 | Other Institutions |
| --- | --- |

90

Other Institutions

4 376

2 934

340

322

3 596

82,19 %

442

0

197

638

14,59 %

88

53

0

141

3,22 %

Total

143 644

134 656

946

3 081

138 683

96,55 %

900

36

3 730

4 666

3,25 %

166

128

0

295

0,21 %

3.9   MOVEMENTS IN COMMITMENTS OUTSTANDING BY POLICY AREA

MOVEMENTS IN COMMITMENTS OUTSTANDING BY POLICY AREA

| EUR millions |
| --- |
| Policy Area | Commitments outstanding at end of the previous year | Commitments of the year | Total commitments outstanding at year-end |
| Commitments carried forward from previous year | Decommitments /Revaluations/Cancellations | Payments | Commitments outstanding at year-end | Commitments made during the year | Payments | Cancellation commitments which cannot be carried over | Commitments outstanding at year-end |
| 01 | Economic & financial affairs |

EUR millions

Policy Area

Commitments outstanding at end of the previous year

Commitments of the year

Total commitments outstanding at year-end

Commitments carried forward from previous year

Decommitments /Revaluations/Cancellations

Payments

Commitments outstanding at year-end

Commitments made during the year

Payments

Cancellation commitments which cannot be carried over

Commitments outstanding at year-end

01

Economic & financial affairs

582

(9)

(143)

429

535

(341)

0

194

623

| 02 | Enterprise |
| --- | --- |

02

Enterprise

2 155

(31)

(850)

1 274

1 236

(421)

0

814

2 088

| 03 | Competition |
| --- | --- |

03

Competition

7

0

(6)

0

94

(86)

0

8

8

| 04 | Employment & social affairs |
| --- | --- |

04

Employment & social affairs

29 625

(40)

(11 226)

18 359

11 782

(473)

0

11 309

29 668

| 05 | Agriculture & rural development |
| --- | --- |

05

Agriculture & rural development

22 357

(76)

(11 972)

10 308

59 514

(45 975)

0

13 539

23 847

| 06 | Mobility and transport |
| --- | --- |

06

Mobility and transport

2 809

(100)

(879)

1 830

1 713

(226)

0

1 487

3 317

| 07 | Environment & Climate action |
| --- | --- |

07

Environment & Climate action

898

(11)

(243)

645

496

(138)

0

358

1 003

| 08 | Research |
| --- | --- |

08

Research

9 200

(170)

(2 983)

6 047

7 059

(2 324)

0

4 734

10 781

| 09 | Information society & media |
| --- | --- |

09

Information society & media

2 269

(51)

(782)

1 436

1 878

(720)

0

1 158

2 594

| 10 | Direct research |
| --- | --- |

10

Direct research

184

(13)

(114)

57

494

(352)

0

142

199

| 11 | Maritime affairs and Fisheries |
| --- | --- |

11

Maritime affairs and Fisheries

2 062

(33)

(538)

1 490

1 007

(207)

0

800

2 290

| 12 | Internal market |
| --- | --- |

12

Internal market

22

(2)

(16)

4

101

(83)

0

18

21

| 13 | Regional policy |
| --- | --- |

13

Regional policy

108 413

(498)

(36 781)

71 133

42 647

(1 473)

(1)

41 174

112 307

| 14 | Taxation and customs union |
| --- | --- |

14

Taxation and customs union

92

(13)

(55)

24

144

(75)

0

69

93

| 15 | Education and culture |
| --- | --- |

15

Education and culture

1 921

(53)

(839)

1 028

3 088

(1 921)

0

1 167

2 195

| 16 | Communication |
| --- | --- |

16

Communication

122

(13)

(86)

24

265

(170)

0

95

119

| 17 | Health and consumer protection |
| --- | --- |

17

Health and consumer protection

719

(81)

(317)

321

639

(318)

0

321

642

| 18 | Home affairs |
| --- | --- |

18

Home affairs

1 458

(235)

(268)

954

1 290

(567)

0

723

1 677

| 19 | External relations |
| --- | --- |

19

External relations

10 232

(528)

(2 379)

7 324

4 872

(854)

0

4 018

11 343

| 20 | Trade |
| --- | --- |

20

Trade

20

(1)

(13)

6

104

(93)

0

12

18

| 21 | Development/relations ACP |
| --- | --- |

21

Development/relations ACP

3 281

(119)

(970)

2 192

1 719

(459)

0

1 260

3 453

| 22 | Enlargement |
| --- | --- |

22

Enlargement

2 864

(16)

(769)

2 079

1 135

(175)

(1)

960

3 039

| 23 | Humanitarian aid |
| --- | --- |

23

Humanitarian aid

670

(4)

(417)

248

1 294

(711)

0

583

831

| 24 | Fight against fraud |
| --- | --- |

24

Fight against fraud

34

(7)

(15)

12

79

(56)

0

23

35

| 25 | Policy coord. & legal advice |
| --- | --- |

25

Policy coord. & legal advice

19

(3)

(15)

0

196

(179)

0

17

17

| 26 | Commission’s administration |
| --- | --- |

26

Commission’s administration

184

(12)

(161)

11

1 149

(988)

0

160

171

| 27 | Budget |
| --- | --- |

27

Budget

9

(1)

(9)

0

61

(52)

0

8

8

| 28 | Audit |
| --- | --- |

28

Audit

1

0

(1)

0

12

(11)

0

1

1

| 29 | Statistics |
| --- | --- |

29

Statistics

115

(9)

(45)

61

135

(82)

0

53

114

| 30 | Pensions & related expenditure |
| --- | --- |

30

Pensions & related expenditure

0

0

0

0

1 318

(1 318)

0

0

0

| 31 | Language Services |
| --- | --- |

31

Language Services

24

(1)

(22)

0

435

(411)

0

24

24

| 32 | Energy |
| --- | --- |

32

Energy

4 522

(12)

(622)

3 888

731

(102)

0

629

4 518

| 33 | Justice |
| --- | --- |

33

Justice

181

(34)

(67)

80

222

(122)

0

99

179

| 90 | Other Institutions |
| --- | --- |

90

Other Institutions

397

(57)

(325)

15

3 841

(3 272)

4

573

588

Total

207 443

(2 234)

(73 930)

131 279

151 284

(64 754)

1

86 531

217 810

3.10   BREAKDOWN OF COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN BY POLICY AREA

BREAKDOWN OF COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN BY POLICY AREA

| Policy Area | < 2006 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 01 | Economic and financial affairs |

Policy Area

< 2006

2006

2007

2008

2009

2010

2011

2012

Total

01

Economic and financial affairs

11

35

10

0

20

167

185

194

623

| 02 | Enterprise |
| --- | --- |

02

Enterprise

10

5

17

97

101

546

498

814

2 088

| 03 | Competition |
| --- | --- |

03

Competition

0

0

0

0

0

0

0

8

8

| 04 | Employment and social affairs |
| --- | --- |

04

Employment and social affairs

384

1 507

57

267

1 241

5 457

9 446

11 309

29 668

| 05 | Agriculture and rural development |
| --- | --- |

05

Agriculture and rural development

7

456

0

2

152

1 437

8 254

13 539

23 847

| 06 | Mobility and transport |
| --- | --- |

06

Mobility and transport

15

27

124

103

271

494

797

1 487

3 317

| 07 | Environment & Climate action |
| --- | --- |

07

Environment & Climate action

9

12

57

88

138

151

189

358

1 003

| 08 | Research |
| --- | --- |

08

Research

114

73

177

381

814

1 728

2 760

4 734

10 781

| 09 | Information society and media |
| --- | --- |

09

Information society and media

12

8

31

83

207

372

724

1 158

2 594

| 10 | Direct research |
| --- | --- |

10

Direct research

0

3

1

10

10

11

21

142

199

| 11 | Maritime affairs and Fisheries |
| --- | --- |

11

Maritime affairs and Fisheries

51

271

5

18

71

411

663

800

2 290

| 12 | Internal market |
| --- | --- |

12

Internal market

0

0

0

0

0

1

3

18

21

| 13 | Regional policy |
| --- | --- |

13

Regional policy

836

5 328

21

1 875

7 437

20 613

35 024

41 174

112 307

| 14 | Taxation and customs union |
| --- | --- |

14

Taxation and customs union

0

0

0

0

0

4

20

69

93

| 15 | Education and culture |
| --- | --- |

15

Education and culture

2

0

47

77

150

255

497

1 167

2 195

| 16 | Communication |
| --- | --- |

16

Communication

0

0

0

0

1

6

17

95

119

| 17 | Health and consumer protection |
| --- | --- |

17

Health and consumer protection

9

3

7

43

42

83

133

321

642

| 18 | Home affairs |
| --- | --- |

18

Home affairs

4

0

17

64

208

249

412

723

1 677

| 19 | External relations |
| --- | --- |

19

External relations

266

235

498

846

1 236

1 725

2 518

4 018

11 343

| 20 | Trade |
| --- | --- |

20

Trade

0

0

0

0

0

2

4

12

18

| 21 | Development and relations ACP States |
| --- | --- |

21

Development and relations ACP States

113

63

71

193

365

578

810

1 260

3 453

| 22 | Enlargement |
| --- | --- |

22

Enlargement

69

86

129

236

310

513

735

960

3 039

| 23 | Humanitarian aid |
| --- | --- |

23

Humanitarian aid

0

1

1

9

16

58

163

583

831

| 24 | Fight against fraud |
| --- | --- |

24

Fight against fraud

0

0

1

1

2

2

6

23

35

| 25 | Commission's policy coordination & legal advice |
| --- | --- |

25

Commission's policy coordination & legal advice

0

0

0

0

0

0

0

17

17

| 26 | Commission’s administration |
| --- | --- |

26

Commission’s administration

0

0

0

0

0

0

11

160

171

| 27 | Budget |
| --- | --- |

27

Budget

0

0

0

0

0

0

0

8

8

| 28 | Audit |
| --- | --- |

28

Audit

0

0

0

0

0

0

0

1

1

| 29 | Statistics |
| --- | --- |

29

Statistics

2

2

1

1

3

17

36

53

114

| 30 | Pensions and related expenditure |
| --- | --- |

30

Pensions and related expenditure

0

0

0

0

0

0

0

0

0

| 31 | Language Services |
| --- | --- |

31

Language Services

0

0

0

0

0

0

0

24

24

| 32 | Energy |
| --- | --- |

32

Energy

60

43

28

101

1 365

1 671

621

629

4 518

| 33 | Justice |
| --- | --- |

33

Justice

0

0

1

4

12

18

45

99

179

| 90 | Other Institutions |
| --- | --- |

90

Other Institutions

0

0

0

0

0

0

15

573

588

Total

1 975

8 159

1 304

4 498

14 171

36 568

64 606

86 531

217 810

4.1   SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE BY INSTITUTION

SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE BY INSTITUTION

| EUR millions |
| --- |
| Institution | Income appropriations | Entitlements established | Revenue | Receipts as % of budget | Outstanding |
| Initial | Final | Current year | Carried | Total | On entitlements of current year | On entitlements Carried | Total |
| European Parliament | 147 | 147 | 174 | 26 | 200 | 172 | 4 | 176 | 119,41 % | 25 |
| European Council and Council | 58 | 58 | 99 | 11 | 109 | 88 | 10 | 98 | 168,80 % | 11 |
| Commission | 128 761 | 135 431 | 137 081 | 13 342 | 150 423 | 134 783 | 4 066 | 138 849 | 102,52 % | 11 573 |
| Court of Justice | 44 | 44 | 51 | 0 | 51 | 51 | 0 | 51 | 115,64 % | 0 |
| Court of Auditors | 21 | 21 | 19 | 0 | 19 | 19 | 0 | 19 | 90,58 % | 0 |
| Economic and Social Committee | 12 | 12 | 16 | 0 | 16 | 16 | 0 | 16 | 133,47 % | 0 |
| Committee of the Regions | 8 | 8 | 20 | 0 | 20 | 20 | 0 | 20 | 250,50 % | 0 |
| Ombudsman | 1 | 1 | 1 | 0 | 1 | 1 | 0 | 1 | 97,10 % | 0 |
| European Data Protection Supervisor | 1 | 1 | 1 | 0 | 1 | 1 | 0 | 1 | 77,36 % | 0 |
| European External Action Service | 35 | 35 | 309 | 0 | 310 | 309 | 0 | 309 | 889,83 % | 0 |
| Total | 129 088 | 135 758 | 137 771 | 13 379 | 151 150 | 135 460 | 4 080 | 139 541 | 102,79 % | 11 610 |

EUR millions

Institution

Income appropriations

Entitlements established

Revenue

Receipts as % of budget

Outstanding

Initial

Final

Current year

Carried

Total

On entitlements of current year

On entitlements Carried

Total

European Parliament

147

147

174

26

200

172

4

176

119,41 %

25

European Council and Council

58

58

99

11

109

88

10

98

168,80 %

11

Commission

128 761

135 431

137 081

13 342

150 423

134 783

4 066

138 849

102,52 %

11 573

Court of Justice

44

44

51

0

51

51

0

51

115,64 %

0

Court of Auditors

21

21

19

0

19

19

0

19

90,58 %

0

Economic and Social Committee

12

12

16

0

16

16

0

16

133,47 %

0

Committee of the Regions

8

8

20

0

20

20

0

20

250,50 %

0

Ombudsman

1

1

1

0

1

1

0

1

97,10 %

0

European Data Protection Supervisor

1

1

1

0

1

1

0

1

77,36 %

0

European External Action Service

35

35

309

0

310

309

0

309

889,83 %

0

Total

129 088

135 758

137 771

13 379

151 150

135 460

4 080

139 541

102,79 %

11 610

4.2   IMPLEMENTATION OF COMMITMENT AND PAYMENT APPROPRIATIONS BY INSTITUTION

IMPLEMENTATION OF COMMITMENT AND PAYMENT APPROPRIATIONS BY INSTITUTION

Commitment appropriations

Commitment appropriations

| EUR millions |
| --- |
| Institution | Commitment appropriations authorised | Commitments made | Appropriations carried over | Appropriations lapsing |
| From the year's approps | From carryovers | From assigned revenue | Total | % | From assigned revenue | Carryovers by decision | Total | % | From the year's budget approps | from carryovers | Assigned revenue | Total | % |
| 1 | 2 | 3 | 4 | | | 7 | 8 | | | 11 | 12 | 13 | | |
| European Parliament | 1 862 | 1 693 | 22 | 116 | 1 831 | 98,32 % | 6 | 0 | 6 | 0,34 % | 25 | 0 | 0 | 25 | 1,33 % |
| European Council and Council | 612 | 490 | 0 | 42 | 532 | 86,89 % | 36 | 0 | 36 | 5,92 % | 44 | 0 | 0 | 44 | 7,19 % |
| Commission | 151 094 | 144 390 | 279 | 2 774 | 147 443 | 97,58 % | 3 077 | 31 | 3 108 | 2,06 % | 543 | 0 | 0 | 543 | 0,36 % |
| Court of Justice | 351 | 344 | 0 | 1 | 345 | 98,36 % | 1 | 0 | 1 | 0,28 % | 5 | 0 | 0 | 5 | 1,36 % |
| Court of Auditors | 143 | 137 | 0 | 0 | 138 | 96,12 % | 0 | 0 | 0 | 0,30 % | 5 | 0 | 0 | 5 | 3,59 % |
| Economic & Social Committee | 133 | 125 | 0 | 4 | 128 | 96,62 % | 0 | 0 | 0 | 0,25 % | 4 | 0 | 0 | 4 | 3,13 % |
| Committee of the Regions | 99 | 85 | 0 | 12 | 97 | 98,43 % | 0 | 0 | 0 | 0,03 % | 2 | 0 | 0 | 2 | 1,54 % |
| Ombudsman | 10 | 9 | 0 | 0 | 9 | 95,86 % | 0 | 0 | 0 | 0,02 % | 0 | 0 | 0 | 0 | 4,12 % |
| European Data Protection Supervisor | 8 | 7 | 0 | 0 | 7 | 95,21 % | 0 | 0 | 0 | 0,00 % | 0 | 0 | 0 | 0 | 4,79 % |
| European External Action Service | 767 | 486 | 0 | 268 | 754 | 98,37 % | 10 | 0 | 10 | 1,26 % | 3 | 0 | 0 | 3 | 0,37 % |
| Total | 155 077 | 147 766 | 300 | 3 218 | 151 284 | 97,55 % | 3 131 | 31 | 3 162 | 2,04 % | 631 | 0 | 0 | 631 | 0,41 % |

EUR millions

Institution

Commitment appropriations authorised

Commitments made

Appropriations carried over

Appropriations lapsing

From the year's approps

From carryovers

From assigned revenue

Total

%

From assigned revenue

Carryovers by decision

Total

%

From the year's budget approps

from carryovers

Assigned revenue

Total

%

1

2

3

4

Formula

Formula

7

8

Formula

Formula

11

12

13

Formula

Formula

European Parliament

1 862

1 693

22

116

1 831

98,32 %

6

0

6

0,34 %

25

0

0

25

1,33 %

European Council and Council

612

490

0

42

532

86,89 %

36

0

36

5,92 %

44

0

0

44

7,19 %

Commission

151 094

144 390

279

2 774

147 443

97,58 %

3 077

31

3 108

2,06 %

543

0

0

543

0,36 %

Court of Justice

351

344

0

1

345

98,36 %

1

0

1

0,28 %

5

0

0

5

1,36 %

Court of Auditors

143

137

0

0

138

96,12 %

0

0

0

0,30 %

5

0

0

5

3,59 %

Economic & Social Committee

133

125

0

4

128

96,62 %

0

0

0

0,25 %

4

0

0

4

3,13 %

Committee of the Regions

99

85

0

12

97

98,43 %

0

0

0

0,03 %

2

0

0

2

1,54 %

Ombudsman

10

9

0

0

9

95,86 %

0

0

0

0,02 %

0

0

0

0

4,12 %

European Data Protection Supervisor

8

7

0

0

7

95,21 %

0

0

0

0,00 %

0

0

0

0

4,79 %

European External Action Service

767

486

0

268

754

98,37 %

10

0

10

1,26 %

3

0

0

3

0,37 %

Total

155 077

147 766

300

3 218

151 284

97,55 %

3 131

31

3 162

2,04 %

631

0

0

631

0,41 %

Payment appropriations

Payment appropriations

| EUR millions |
| --- |
| Institution | Payment appropriations authorised | Payments made | Appropriations carried over | Appropriations lapsing |
| From year's approps | From carryovers | From assigned revenue | Total | % | Automatic carryovers | Carryovers by decision | From assigned revenue | Total | % | From year's approps | From carryovers | Assigned revenue | Total | % |
| 1 | 2 | 3 | 4 | | | 7 | 8 | 9 | | | 12 | 13 | 14 | | |
| European Parliament | 2 092 | 1 388 | 214 | 22 | 1 623 | 77,58 % | 305 | 0 | 108 | 413 | 19,76 % | 25 | 31 | 0 | 56 | 2,67 % |
| European Council and Council | 661 | 444 | 36 | 44 | 524 | 79,31 % | 46 | 0 | 41 | 87 | 13,13 % | 44 | 6 | 0 | 50 | 7,56 % |
| Commission | 139 268 | 131 722 | 605 | 2 759 | 135 087 | 97,00 % | 458 | 36 | 3 533 | 4 028 | 2,89 % | 78 | 76 | 0 | 154 | 0,11 % |
| Court of Justice | 369 | 326 | 16 | 1 | 343 | 92,92 % | 18 | 0 | 1 | 19 | 5,15 % | 5 | 2 | 0 | 7 | 1,93 % |
| Court of Auditors | 156 | 125 | 11 | 0 | 136 | 87,11 % | 13 | 0 | 0 | 13 | 8,41 % | 5 | 2 | 0 | 7 | 4,48 % |
| Economic & Social Committee | 141 | 117 | 7 | 4 | 127 | 90,15 % | 8 | 0 | 1 | 9 | 6,19 % | 4 | 1 | 0 | 5 | 3,66 % |
| Committee of the Regions | 108 | 77 | 7 | 12 | 96 | 89,53 % | 8 | 0 | 0 | 8 | 7,37 % | 2 | 2 | 0 | 3 | 3,10 % |
| Ombudsman | 10 | 8 | 1 | 0 | 9 | 89,11 % | 1 | 0 | 0 | 1 | 6,74 % | 0 | 0 | 0 | 0 | 4,15 % |
| European Data protection Supervisor | 9 | 6 | 1 | 0 | 7 | 81,28 % | 1 | 0 | 0 | 1 | 10,68 % | 0 | 0 | 0 | 1 | 8,05 % |
| European External Action Service | 831 | 444 | 49 | 238 | 731 | 88,06 % | 42 | 0 | 46 | 88 | 10,58 % | 3 | 8 | 0 | 11 | 1,36 % |
| Total | 143 644 | 134 656 | 946 | 3 081 | 138 683 | 96,55 % | 900 | 36 | 3 730 | 4 666 | 3,25 % | 166 | 128 | 0 | 295 | 0,21 % |

EUR millions

Institution

Payment appropriations authorised

Payments made

Appropriations carried over

Appropriations lapsing

From year's approps

From carryovers

From assigned revenue

Total

%

Automatic carryovers

Carryovers by decision

From assigned revenue

Total

%

From year's approps

From carryovers

Assigned revenue

Total

%

1

2

3

4

Formula

Formula

7

8

9

Formula

Formula

12

13

14

Formula

Formula

European Parliament

2 092

1 388

214

22

1 623

77,58 %

305

0

108

413

19,76 %

25

31

0

56

2,67 %

European Council and Council

661

444

36

44

524

79,31 %

46

0

41

87

13,13 %

44

6

0

50

7,56 %

Commission

139 268

131 722

605

2 759

135 087

97,00 %

458

36

3 533

4 028

2,89 %

78

76

0

154

0,11 %

Court of Justice

369

326

16

1

343

92,92 %

18

0

1

19

5,15 %

5

2

0

7

1,93 %

Court of Auditors

156

125

11

0

136

87,11 %

13

0

0

13

8,41 %

5

2

0

7

4,48 %

Economic & Social Committee

141

117

7

4

127

90,15 %

8

0

1

9

6,19 %

4

1

0

5

3,66 %

Committee of the Regions

108

77

7

12

96

89,53 %

8

0

0

8

7,37 %

2

2

0

3

3,10 %

Ombudsman

10

8

1

0

9

89,11 %

1

0

0

1

6,74 %

0

0

0

0

4,15 %

European Data protection Supervisor

9

6

1

0

7

81,28 %

1

0

0

1

10,68 %

0

0

0

1

8,05 %

European External Action Service

831

444

49

238

731

88,06 %

42

0

46

88

10,58 %

3

8

0

11

1,36 %

Total

143 644

134 656

946

3 081

138 683

96,55 %

900

36

3 730

4 666

3,25 %

166

128

0

295

0,21 %

4.3   AGENCIES INCOME: BUDGET FORECASTS, ENTITLEMENTS AND AMOUNTS RECEIVED

AGENCIES INCOME: BUDGET FORECASTS, ENTITLEMENTS AND AMOUNTS RECEIVED

| EUR millions |
| --- |
| Agency | Forecasted income budget | Entitlements established | Amounts received | Outstanding | Funding Commission Policy Area |
| European Agency for the Cooperation of Energy Regulators | 7 | 7 | 7 | 0 | 06 |
| European Asylum Support Office | 7 | 2 | 2 | 0 | 18 |
| European Aviation Safety Agency | 150 | 116 | 115 | 1 | 06 |
| Frontex | 90 | 76 | 76 | 0 | 18 |
| European Centre for the Development of Vocational Training | 19 | 20 | 20 | 1 | 15 |
| European Police College | 8 | 9 | 9 | 0 | 18 |
| European Chemicals Agency | 33 | 35 | 35 | 0 | 02 |
| European Centre for Disease prevention and control | 58 | 58 | 58 | 0 | 17 |
| European Monitoring Centre for Drugs and Drug Addiction | 16 | 16 | 16 | 0 | 18 |
| European Banking Authority | 21 | 19 | 19 | 0 | 12 |
| European Insurance and Occupational Pensions Authority | 16 | 14 | 14 | 0 | 12 |
| European Environment Agency | 42 | 52 | 51 | 1 | 07 |
| European Police office | 84 | 83 | 83 | 0 | 18 |
| European Securities and Markets Authority | 20 | 19 | 19 | 0 | 12 |
| Community Fisheries Control Agency | 10 | 10 | 10 | 0 | 11 |
| European Food Safety Authority | 77 | 77 | 77 | 0 | 17 |
| European Institute for Gender Equality | 8 | 8 | 8 | 0 | 04 |
| European GNSS supervisory authority | 13 | 21 | 21 | 0 | 06 |
| Fusion for Energy | 344 | 379 | 379 | 0 | 08 |
| Eurojust | 33 | 33 | 33 | 0 | 18 |
| European Maritime Safety Agency | 59 | 54 | 53 | 0 | 06 |
| Office For Harmonisation in the Internal Market | 175 | 176 | 176 | 0 | 12 |
| European Medicines Agency | 222 | 254 | 224 | 31 | 02 |
| European Network and Information Security Agency | 8 | 8 | 8 | 0 | 09 |
| European Regulators for Electronic Communications office | 3 | 3 | 3 | 0 | 09 |
| European Union Agency for Fundamental Rights | 21 | 21 | 21 | 0 | 18 |
| European Railway Agency | 26 | 26 | 26 | 0 | 06 |
| European Agency for Safety and Health at Work | 15 | 15 | 15 | 0 | 04 |
| European Institute of Innovation and Technology | 78 | 77 | 77 | 0 | 15 |
| Translation Centre for the Bodies of the EU | 48 | 49 | 45 | 4 | 15 |
| European Training Foundation | 21 | 20 | 20 | 0 | 15 |
| Community Plant Variety Office | 13 | 13 | 13 | 0 | 17 |
| European Foundation for the Improvement of Living and Working Conditions | 21 | 21 | 21 | 0 | 04 |
| Education, Audiovisual & Culture Executive Agency | 50 | 50 | 50 | 0 | 15 |
| Executive Agency for Competitiveness and Innovation | 16 | 17 | 17 | 0 | 06 |
| European Research Council Executive Agency | 39 | 39 | 39 | 0 | 08 |
| Research Executive Agency | 46 | 47 | 47 | 0 | 08 |
| Executive Agency for Health and Consumers | 7 | 7 | 7 | 0 | 17 |
| Trans-European Transport Network Executive Agency | 10 | 10 | 10 | 0 | 06 |
| Total | 1 936 | 1 963 | 1 925 | 38 | |

EUR millions

Agency

Forecasted income budget

Entitlements established

Amounts received

Outstanding

Funding Commission Policy Area

European Agency for the Cooperation of Energy Regulators

7

7

7

0

06

European Asylum Support Office

7

2

2

0

18

European Aviation Safety Agency

150

116

115

1

06

Frontex

90

76

76

0

18

European Centre for the Development of Vocational Training

19

20

20

1

15

European Police College

8

9

9

0

18

European Chemicals Agency

33

35

35

0

02

European Centre for Disease prevention and control

58

58

58

0

17

European Monitoring Centre for Drugs and Drug Addiction

16

16

16

0

18

European Banking Authority

21

19

19

0

12

European Insurance and Occupational Pensions Authority

16

14

14

0

12

European Environment Agency

42

52

51

1

07

European Police office

84

83

83

0

18

European Securities and Markets Authority

20

19

19

0

12

Community Fisheries Control Agency

10

10

10

0

11

European Food Safety Authority

77

77

77

0

17

European Institute for Gender Equality

8

8

8

0

04

European GNSS supervisory authority

13

21

21

0

06

Fusion for Energy

344

379

379

0

08

Eurojust

33

33

33

0

18

European Maritime Safety Agency

59

54

53

0

06

Office For Harmonisation in the Internal Market

175

176

176

0

12

European Medicines Agency

222

254

224

31

02

European Network and Information Security Agency

8

8

8

0

09

European Regulators for Electronic Communications office

3

3

3

0

09

European Union Agency for Fundamental Rights

21

21

21

0

18

European Railway Agency

26

26

26

0

06

European Agency for Safety and Health at Work

15

15

15

0

04

European Institute of Innovation and Technology

78

77

77

0

15

Translation Centre for the Bodies of the EU

48

49

45

4

15

European Training Foundation

21

20

20

0

15

Community Plant Variety Office

13

13

13

0

17

European Foundation for the Improvement of Living and Working Conditions

21

21

21

0

04

Education, Audiovisual & Culture Executive Agency

50

50

50

0

15

Executive Agency for Competitiveness and Innovation

16

17

17

0

06

European Research Council Executive Agency

39

39

39

0

08

Research Executive Agency

46

47

47

0

08

Executive Agency for Health and Consumers

7

7

7

0

17

Trans-European Transport Network Executive Agency

10

10

10

0

06

Total

1 936

1 963

1 925

38

| EUR millions |
| --- |
| Type of revenue | Forecasted income budget | Entitlements established | Amounts received | Outstanding |
| Commission Subsidy | 1 304 | 1 276 | 1 272 | 5 |
| Fee income | 465 | 490 | 460 | 30 |
| Other income | 168 | 197 | 193 | 4 |
| Total | 1 936 | 1 963 | 1 925 | 38 |

EUR millions

Type of revenue

Forecasted income budget

Entitlements established

Amounts received

Outstanding

Commission Subsidy

1 304

1 276

1 272

5

Fee income

465

490

460

30

Other income

168

197

193

4

Total

1 936

1 963

1 925

38

4.4   COMMITMENT & PAYMENT APPROPRIATIONS BY AGENCY

COMMITMENT & PAYMENT APPROPRIATIONS BY AGENCY

| EUR millions |
| --- |
| Agency | Commitment appropriations | Payment appropriations |
| Appropriations | Commitments made | Carried over | Appropriations | Payments made | Carried over |
| European Agency for the Cooperation of Energy Regulators | 7 | 7 | 0 | 8 | 5 | 2 |
| European Asylum Support Office | 7 | 5 | 0 | 6 | 2 | 2 |
| European Aviation Safety Agency | 164 | 132 | 27 | 176 | 117 | 53 |
| Frontex | 90 | 89 | 1 | 128 | 99 | 22 |
| European Centre for the Development of Vocational Training | 22 | 21 | 1 | 22 | 19 | 3 |
| European Police College | 9 | 8 | 0 | 11 | 8 | 2 |
| European Chemicals Agency | 99 | 96 | 0 | 113 | 94 | 15 |
| European Centre for Disease prevention and control | 58 | 55 | 0 | 69 | 55 | 10 |
| European Monitoring Centre for Drugs and Drug Addiction | 17 | 16 | 0 | 17 | 16 | 0 |
| European Banking Authority | 21 | 18 | 0 | 22 | 13 | 7 |
| European Insurance and Occupational Pensions Authority | 16 | 14 | 0 | 16 | 11 | 4 |
| European Environment Agency | 69 | 52 | 16 | 73 | 45 | 27 |
| European Police Office | 85 | 84 | 1 | 100 | 79 | 17 |
| European Securities & Markets Authority | 20 | 17 | 0 | 22 | 15 | 4 |
| Community Fisheries Control Agency | 9 | 9 | 0 | 11 | 10 | 1 |
| European Food Safety Authority | 79 | 78 | 0 | 90 | 80 | 9 |
| European Institute for Gender Equality | 8 | 7 | 0 | 11 | 8 | 2 |
| European GNSS supervisory authority | 106 | 58 | 47 | 55 | 33 | 22 |
| Fusion for Energy | 1 482 | 1 482 | 0 | 384 | 362 | 7 |
| Eurojust | 35 | 34 | 1 | 41 | 35 | 5 |
| European Maritime Safety Agency | 57 | 53 | 1 | 61 | 53 | 2 |
| Office For Harmonisation in the Internal Market | 429 | 189 | 0 | 461 | 180 | 37 |
| European Medicines Agency | 226 | 222 | 0 | 262 | 215 | 41 |
| European Network and Information Security Agency | 8 | 8 | 0 | 9 | 9 | 1 |
| European Regulators for Electronic Communications Office | 3 | 3 | 0 | 3 | 2 | 1 |
| European Union Agency for Fundamental Rights | 21 | 21 | 0 | 28 | 23 | 5 |
| European Railway Agency | 26 | 25 | 0 | 30 | 26 | 2 |
| European Agency for Safety & Health at Work | 17 | 15 | 1 | 20 | 15 | 5 |
| European Institute of Innovation and Technology | 97 | 95 | 0 | 83 | 71 | 7 |
| Translation Centre for the Bodies of the EU | 48 | 42 | 0 | 52 | 41 | 4 |
| European Training Foundation | 20 | 20 | 0 | 21 | 20 | 1 |
| Community Plant Variety Office | 14 | 13 | 0 | 14 | 12 | 0 |
| European Foundation for the Improvement of Living and Working Conditions | 22 | 21 | 0 | 26 | 20 | 5 |
| Education, Audiovisual & Culture Executive Agency | 50 | 49 | 0 | 55 | 48 | 6 |
| Executive Agency for Competitiveness and Innovation | 17 | 16 | 0 | 18 | 16 | 1 |
| European Research Council Executive Agency | 39 | 38 | 0 | 41 | 38 | 2 |
| Research Executive Agency | 46 | 44 | 0 | 50 | 43 | 4 |
| Executive Agency for Health and Consumers | 7 | 7 | 0 | 8 | 7 | 1 |
| Trans-European Transport Network Executive Agency | 10 | 10 | 0 | 11 | 9 | 1 |
| Total | 3 559 | 3 175 | 97 | 2 627 | 1 952 | 338 |

EUR millions

Agency

Commitment appropriations

Payment appropriations

Appropriations

Commitments made

Carried over

Appropriations

Payments made

Carried over

European Agency for the Cooperation of Energy Regulators

7

7

0

8

5

2

European Asylum Support Office

7

5

0

6

2

2

European Aviation Safety Agency

164

132

27

176

117

53

Frontex

90

89

1

128

99

22

European Centre for the Development of Vocational Training

22

21

1

22

19

3

European Police College

9

8

0

11

8

2

European Chemicals Agency

99

96

0

113

94

15

European Centre for Disease prevention and control

58

55

0

69

55

10

European Monitoring Centre for Drugs and Drug Addiction

17

16

0

17

16

0

European Banking Authority

21

18

0

22

13

7

European Insurance and Occupational Pensions Authority

16

14

0

16

11

4

European Environment Agency

69

52

16

73

45

27

European Police Office

85

84

1

100

79

17

European Securities & Markets Authority

20

17

0

22

15

4

Community Fisheries Control Agency

9

9

0

11

10

1

European Food Safety Authority

79

78

0

90

80

9

European Institute for Gender Equality

8

7

0

11

8

2

European GNSS supervisory authority

106

58

47

55

33

22

Fusion for Energy

1 482

1 482

0

384

362

7

Eurojust

35

34

1

41

35

5

European Maritime Safety Agency

57

53

1

61

53

2

Office For Harmonisation in the Internal Market

429

189

0

461

180

37

European Medicines Agency

226

222

0

262

215

41

European Network and Information Security Agency

8

8

0

9

9

1

European Regulators for Electronic Communications Office

3

3

0

3

2

1

European Union Agency for Fundamental Rights

21

21

0

28

23

5

European Railway Agency

26

25

0

30

26

2

European Agency for Safety & Health at Work

17

15

1

20

15

5

European Institute of Innovation and Technology

97

95

0

83

71

7

Translation Centre for the Bodies of the EU

48

42

0

52

41

4

European Training Foundation

20

20

0

21

20

1

Community Plant Variety Office

14

13

0

14

12

0

European Foundation for the Improvement of Living and Working Conditions

22

21

0

26

20

5

Education, Audiovisual & Culture Executive Agency

50

49

0

55

48

6

Executive Agency for Competitiveness and Innovation

17

16

0

18

16

1

European Research Council Executive Agency

39

38

0

41

38

2

Research Executive Agency

46

44

0

50

43

4

Executive Agency for Health and Consumers

7

7

0

8

7

1

Trans-European Transport Network Executive Agency

10

10

0

11

9

1

Total

3 559

3 175

97

2 627

1 952

338

| Type of expenditure | Commitment appropriations | Payment appropriations |
| --- | --- | --- |
| Appropriations | Commitments made | Carried over | Appropriations | Payments made | Carried over |
| Staff | 813 | 781 | 2 | 829 | 777 | 18 |
| Administrative expenses | 305 | 292 | 1 | 377 | 277 | 79 |
| Operational expenses | 2 442 | 2 102 | 95 | 1 421 | 899 | 242 |
| Total | 3 559 | 3 175 | 97 | 2 627 | 1 952 | 338 |

Type of expenditure

Commitment appropriations

Payment appropriations

Appropriations

Commitments made

Carried over

Appropriations

Payments made

Carried over

Staff

813

781

2

829

777

18

Administrative expenses

305

292

1

377

277

79

Operational expenses

2 442

2 102

95

1 421

899

242

Total

3 559

3 175

97

2 627

1 952

338

4.5   BUDGET RESULT INCLUDING AGENCIES

BUDGET RESULT INCLUDING AGENCIES

| EUR millions |
| --- |
| | European Union | Agencies | Elimination of subsidies to agencies | Total |
| Revenue for the financial year | 139 541 | 1 925 | (1 272) | 140 194 |
| Payments against current year appropriations | (137 738) | (1 739) | 1 272 | (138 205) |
| Payment appropriations carried over to year N+1 | (936) | (338) | 0 | (1 274) |
| Cancellation of unused appropriations carried over from year N-1 | 92 | 171 | 0 | 263 |
| Exchange differences for the year | 60 | (8) | 0 | 52 |
| Budget Result | 1 019 | 12 | 0 | 1 031 |

EUR millions

European Union

Agencies

Elimination of subsidies to agencies

Total

Revenue for the financial year

139 541

1 925

(1 272)

140 194

140 194

Payments against current year appropriations

(137 738)

(1 739)

1 272

(138 205)

(138 205)

Payment appropriations carried over to year N+1

(936)

(338)

0

(1 274)

(1 274)

Cancellation of unused appropriations carried over from year N-1

92

171

0

263

263

Exchange differences for the year

60

(8)

0

52

52

Budget Result

Budget Result

1 019

1 019

12

12

0

0

1 031

1 031

---

(1)  It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables below may appear not to add-up.

1

(2)  The European Parliament has adopted a budget on 13 December 2012 which provides for the payment of the Union's short-term liabilities from own resources to be collected by, or called up from, the Member States in 2013. Additionally, under Article 83 of the Staff Regulations (Council Regulation (EEC, Euratom, ECSC) No 259/68 of 29 February 1968 as amended), the Member States shall jointly guarantee the liability for pensions.

2

(3)  OJ L 298, 26.10.2012, p. 1.

3

(4)  OJ L 362, 31.12.2012, p. 1.

4

(5)  The Guarantee Fund holds EFSM bonds issued by the Commission, so these have been eliminated.

5

(6)  The Guarantee Fund holds EFSM bonds issued by the Commission, so these have been eliminated.

6

(7)  The Guarantee Fund holds EFSM bonds issued by the Commission, so these need to be eliminated.

7

(8)  The opening balance includes an adjustment of figures reported in 2011.

8

(9)  Figure for Administration was not reported before.

9

(10)  Figure for Administration was not reported before.

10

(11)  Certain amounts previously disclosed as financial corrections are now reported under recoveries.

11

(12)  Audit conclusions show that substantive improvements are needed in the French certifying authority reporting EFF recovery figures.

12

(13)  Conclusions of this audit, based on the final reports and follow-up implemented by the concerned Member States, were communicated to the Discharge Authority.

13

(14)  A table showing the reimbursement schedule for these loans is given at the end of note 7.1.3.

14

7.1.3

(15)  2nd programme.

15

(16)  With correction coefficient (“cc”) applied

16

(17)  Paid for the first 3 years following departure

17

(18)  Consolidated for the first time in 2012

18

(19)  It should be noted that due to the rounding of figures into millions of euros, some financial data in these budgetary tables may appear not to add-up.

19

(20)  Of which EFTA result is EUR (4) million in 2012 and EUR (5) million in 2011.

20

(21)  Including amending budgets, appropriations carried over and assigned revenue.

21

Including amending budgets, appropriations carried over and assigned revenue.

(22)  Including amending budgets, appropriations carried over and assigned revenue.

22

Including amending budgets, appropriations carried over and assigned revenue.

(23)  Including amending budgets, appropriations carried over and assigned revenue.

23

Including amending budgets, appropriations carried over and assigned revenue.

(24)  Including amending budgets, appropriations carried over and assigned revenue.

24

Including amending budgets, appropriations carried over and assigned revenue.

(25)  It should be noted that due to the rounding of figures into millions of euros, some financial data in these budgetary tables may appear not to add-up.

25

---