# EUR-Lex - 52011PC0739 - EN

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# 52011PC0739

**Amended proposal for a COUNCIL DECISION on the system of own resources of the European Union /* COM/2011/0739 final - 2011/0183 (CNS) */**

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EXPLANATORY MEMORANDUM

1.           Introduction

On 29 June
2011 the Commission proposed replacing the current system of financing for the
EU budget with a new system making full use of the possibilities introduced by
the Lisbon Treaty[1].

The proposals included three main elements
complementing each other: the simplification of Member States' contributions,
the introduction of new own resources and the reform of correction mechanisms.

It also announced that it would present the
relevant detailed regulations or amendments to existing legal acts as well as
the related regulations pursuant to Article 322(2) TFEU by the end of 2011.

Accordingly, this amended proposal for a
Council Decision on the system of own resources of the European Union refines
and completes the proposal made on 29 June[2].

It ensures coherence with the proposed
Council Directive on a common system of financial transaction tax (hereinafter
"the FTT Directive")[3]
adopted on 28 September 2011, the proposals for Council Regulations on making
the own resource based on the FTT available to the EU budget[4] and on calculating and making
available the own resource based on value added tax (VAT)[5] as well as the amended proposal
for a Council Regulation implementing the own resources Decision[6] adopted together with this
proposal.

2.           Content of the revised proposal

The following sections present the main amendments
and proposed additions in relation to the organization of the own resources
system. The proposals only bear on aspects dealing with the two new own resources
based, respectively, on the financial transaction tax and the value added tax.
Other issues, such as corrections, are not affected by these proposals.

2.1.      The legal instruments

The legal form of the financial transaction
tax is defined in the FTT Directive. The Directive proposes all the practical
elements necessary to create and implement the FTT. Logically, the function of
the FTT as an own resource can only be envisaged together with the successful
implementation of the FTT.

In order to ensure that receipts generated
by the FTT can be used effectively to finance a part of the EU budget, rules
need to be defined in the context of the own resources legislation. In
practice, three legal acts enter into play: (i) the own resources Decision
(ORD), which contains the main provisions on own resources such as the list of
own resources and the timing for their implementation; (ii) the Regulation
implementing the ORD, which notably contains rules on control and supervision
for the collection of own resources; (iii) a Regulation on making the FTT-based
own resource available to the EU budget. Whereas the first two legal acts have
already been proposed by the Commission and merely need refinements to ensure
full coherence with the FTT Directive, the proposal for a Council Regulation on
making the FTT-based own resource available to the EU budget is a new piece of
legislation.

In addition, the Commission also proposes a
new legislation on the calculation and the making available of the new own
resource based on VAT. This completes the provisions already included in the
ORD and in the Regulation implementing it, which are slightly adjusted to
ensure consistency with the proposals related to the FTT-based own resource.

2.2.      Proposed changes in the ORD

The proposal made on 29 June 2011 includes
the list of new own resources, together with the timing for their introduction
and relevant limits to their application. It contains in particular a maximum
limit to the rates applicable to the new own resources, whereas the proposed
implementing regulation pursuant to Article 311(4) presents actual rates to be
applied.

This amended proposal simplifies greatly
the way the FTT-based own resource is determined by referring to the rates
defined in the FTT Directive for the purpose of determining the FTT-based own
resource. Possible adjustments to the rates would be made only in the FTT
Directive. This ensures full coherence between the FTT Directive and the rules
set out for the own resources system.

In line with the FTT Directive, it is now
proposed to use the FTT as an own resource as of 1 January 2014. This means
that from the start of its implementation the FTT will partly be used as an own
resource.

Minor changes are also brought to
provisions regarding the new VAT own resource, in order to ensure full
consistency with the provisions set out in the amended proposal for a
Regulation on the implementation of the the ORD and the new proposal on the
making available of this resource. For consistency, the timing for the introduction
of the new VAT resource is aligned to that of the FTT.

Last, changes are brought to provisions
relating to the administration and collection of the own resource to ensure
coherence with the other parts of the legislation.

2.3.      Proposed changes in the regulation
implementing the ORD

The regulation pursuant to Article 311(4)
TFEU contains all those practical arrangements for the
Union’s resources which should be governed by a more streamlined procedure in
order to make the system sufficiently flexible within the framework and limits
set out by the own resource Decision, with the exception of those aspects of
the own resources system that relate to making own resources available and to
meeting cash requirements.

Provisions of a general nature, applicable
to all types of own resources and for which appropriate parliamentary oversight
is particularly important have also been included in this regulation. This
means in particular aspects of control and supervision of revenues.

Three main changes are included in the amended
proposal.

Explicit reference to the various types of
financial transactions to which the rates would be applied is redundant with
provisions laid down in the FTT Directive and the amended proposal for the ORD.
It is now proposed to specify the share of the minimum rates defined in the FTT
Directive that should be used for the purpose of the FTT-based own resource.
Consequently, this share of the receipts resulting from the application of the
minimum rates defined in the FTT Directive will accrue to the EU budget and the
rest will accrue to the Member States budgets.

The original proposal envisaged the
possibility that the FTT would be collected by economic operators rather than
by the Member States. In line with the FTT Directive, the Member States
administrations will be responsible for collecting the FTT. Therefore,
reference to economic operators is no longer necessary.

Last, regarding the new VAT own resource,
the text now refers explictly to the calculation method (set out in the proposal
on the making available of the new VAT resource) which determines the basis on
which to apply the call rate of the resource.

2.4.      Making the FTT-based and the
VAT-based own resources available to the EU budget

As a complement to the own resources Decision
and the regulation pursuant to Article 311(4) TFEU, a new proposal for a
Council Regulation pursuant to Article 322(2) TFEU comprises the elements
concerning the methods and procedures for making the FTT-based own resources
available to the EU budget.

In addition, a new proposal for a Council
Regulation includes the arrangements on calculating and making available to the
EU budget the own resource based on value added tax (VAT).

These proposals include the rules on the
establishment of the two own resources, treasury and accounting arrangements,
entry in the accounts and corrections, reporting and conservation of supporting
documents. Moreover, regarding specifically the new VAT resource, detailed
provisions on the calculation method are included.

Both proposals draw heavily on experience
accumulated in dealing with traditional own resources (customs duties) and with
the current VAT-based own resource. They aim to provide simple and transparent
rules with a maximum predictability for the Member States.

2011/0183 (CNS)

Amended proposal for a

COUNCIL DECISION

on the system of own resources of the
European Union

(//EC, Euratom)

THE COUNCIL OF
THE EUROPEAN UNION,

Having regard to the
Treaty on the Functioning of the European Union, and in particular the third
paragraph of Article 311 thereof, in conjunction with the Treaty
establishing the European Atomic Energy Community, and in particular Article
106a thereof,

Having regard to the proposal
from the European Commission,

After transmission of the draft legislative
act to the national Parliaments,

Having regard to the
opinion of the European Parliament[7],

Having regard to the
opinion of the Court of Auditors[8],

Having regard to the
opinion of the European Economic and Social Committee[9],

Acting in accordance
with a special legislative procedure,

Whereas:

(1)
The own resources system of the Union must
ensure adequate resources for the orderly development of the policies of the
Union, subject to the need for strict budgetary discipline. The development of
the own resources system can and should also contribute to wider budgetary
consolidation efforts undertaken in Member States and participate, to the
greatest extent possible, in the development of the policies of the Union.

(2)
The public consultation launched to prepare the
EU Budget Review generated many contributions related to the functioning of the
Union's financing system. These indicated a high degree of satisfaction with
traditional own resources and with the existence of a residual resource to
ensure budgetary stability and balanced budgets. However, a large number of
respondents identified a need to eliminate all correction mechanisms and to end
the own resource based on Value Added Tax (VAT). The consultation also
highlighted a wide range of views on introducing new own resources.

(3)
In the communication of 19 October 2010 on the
EU Budget Review[10]
the Commission noted that the introduction of a new
phase in the evolution of the Union's financing could include three closely
linked dimensions – the simplification of Member States' contributions, the
introduction of one or several new own resources and the progressive
phasing-out of all correction mechanisms. As changes were phased in, essential
elements of the Union's financing system should be retained: a stable and sufficient
financing of the Union's annual budget, respect for budgetary discipline and a
mechanism to ensure a balanced budget.

(4)
The own resources system should, as far as
possible rely on autonomous own resources in the spirit of the Treaty, rather
than on financial contributions from Member States which they widely perceive
as national expenditures.

(5)
The Lisbon Treaty introduced changes to the
provisions related to the own resources system, which enable reducing the number of existing resources and to creating new
own resources.

(6)
The own resources Decision can only enter into
force once it has been approved by all Member States in accordance with their
respective constitutional requirements, thus fully respecting national
sovereignty.

(7)
Compared to the own resource based on Gross National Income (GNI), the current VAT-based
own resource has little added value. It results from a complex mathematical
calculation thus contributing to the opacity of Member States' contributions to
the budget. The calculation of a harmonised base and the existing of a capping
mechanism make that there is no direct link between the actual VAT basis in a
Member State and its contribution to the Union's annual budget. Ending the
VAT-based own resource in its current form as of 1 January 2014 should simplify
the system of contributions.

(8)
In order to better align Union's financing
instruments with the policy priorities of the Union, to reduce Member States'
contributions to the Union's annual budget and to participate in their
budgetary consolidation efforts, this Decision should include a new
own resources – a resource based on thea financial transaction tax and a new
VAT own resource.

(9)
The key principles, variables and dates for the
adaptation of the legal framework of the Union for the purposes of the new own
resources arising from thea financial transaction
tax and a new VAT own resource should be set out in this Decision. The legal
framework of the underlying taxes is defined in separate legal acts.

(10)
The 1984 Fontainebleau European Council indicated
that expenditure policy is ultimately the essential means of resolving the
question of budgetary imbalances. It acknowledged, nevertheless, that any Member
State sustaining a budgetary burden which is excessive in relation to its
relative prosperity may benefit from a correction at the appropriate time.
Those principles should be confirmed and consistently applied.

(11)
Any correction mechanism should be closely
related to the expenditure policy enshrined in the multiannual financial
framework provided for in Article 312 of the Treaty. Past or current existence
of a correction mechanism does not, by itself, constitute a justification for
maintaining it in the future. A correction should be transparent and easy to
understand, and last only as long as it serves its purpose, as defined by the
Fontainebleau principles. It should avoid creating any incentive not to spend Union
funds properly. These objectives can best be achieved through a system of lump
sum reductions in the GNI-based own resource payments.

(12)
The objective conditions underpinning correction
mechanisms have evolved considerably over time. Nevertheless, a limited number
of Member States are still faced with a budgetary burden that might be
currently considered excessive when compared to their relative prosperity. This
Decision should therefore include temporary corrections in favour of Germany, the Netherlands, Sweden and the United Kingdom. These
corrections should reflect, inter alia, the important developments in the
financing of the Union set out in this Decision, the evolution of expenditures
proposed in the financial framework, including the completion of the phasing-in
of expenditure in those Member States which acceded to the Union in 2004 and
2007, and take account of the high levels of prosperity achieved by Germany, the Netherlands, Sweden and the United Kingdom.

(13)
In order to ensure the necessary parallelism between
the multiannual financial framework and the implementation of correction
mechanisms, the new system of lump sums should replace all pre-existing
correction mechanisms as of 1 January 2014.

(14)
The retention, by way
of collection costs, of 25% of the amounts collected by the Member
States for traditional own resources constitutes a hidden correction mechanism.
In view of the proposal to incorporate the correction mechanisms into lump
sums, the retention should be restricted to 10%, in line with the system in
place until 2000.

(15)
In order to ensure strict budgetary discipline,
and taking into account the Commission Communication of 16 April 2010 on the adaptation of the
ceiling of own resources and of the ceiling for appropriations for commitments
following the decision to apply FISIM for own resources purposes[11], the ceiling of own resources
should be equal to 1.23 % of the sum of the Member States' GNIs at market
prices for appropriations for payments and the ceiling of 1.29 % of the sum of
the Member States' GNIs should be set for appropriations for commitments. In
order to maintain unchanged the amount of financial resources put at the
disposal of the Union, it is appropriate to adapt these ceilings expressed in
percentages of GNI where amendments to Regulation of the European Parliament
and of the Council of [...] on the European system of national and regional
accounts in the European Union[12]
entail a significant change in the level of GNI. Such an adaptation should be
made under the procedure set out under the fourth paragraph of Article 311 of
the Treaty.

(16)
In order to implement this Decision, it is
necessary to provide for the adoption of specific implementing measures.
Accordingly, provisions of a general nature, applicable to all types of own
resources and for which appropriate parliamentary oversight is particularly
important should be included in a separate implementing regulation. This means
in particular the procedure for calculating and
budgeting the annual budgetary balance and aspects of
control and supervision of revenues. That Rregulation
should also include, where relevant, the precise share in certain
harmonised taxes to be used as own resources, the
tax rates and the rates of call for each of the other own
resources established in thise Decision and technical
issues related to GNI, to allow limited flexibility within the limits set out
in this Decision.

(17)
For reasons of coherence, continuity and legal
certainty, provisions must be laid down to cover the changeover from the system
introduced by Decision 2007/436/EC, Euratom of 7 June 2007 on the system of the European Communities’ own
resources[13] to that arising
from this Decision. Accordingly, following the ending
of the VAT-based own resource, Decision 2007/436/EC, Euratom should
continue to apply for the calculation and adjustment of revenue accruing from
the application of a rate of call to the VAT base, the procedures for making it
available and the arrangements for inspection, depending on the relevant years.
In addition, the calculation of the correction of budgetary imbalances granted
to the United Kingdom for the years until 2012 should be treated in accordance
with the provisions laid down in Decision 2007/436/EC,
Euratom. The correction granted to the United Kingdom for 2013, to be
budgeted in 2014, should be replaced by a lump sum gross reduction in 2014.

(18)
Decision 2007/436/EC, Euratom should be
repealed.

(19)
For the purposes of this Decision, all monetary
amounts should be expressed in euros and in current prices.

(20)
In order to ensure transition to the new system
of own resources and to coincide with the financial year this Decision should
apply from 1 January 2014,

HAS ADOPTED THIS DECISION:

Article 1

Subject matter

This Decision lays down
rules on the allocation of own resources of the Union in order to ensure the
financing of the Union's annual budget.

Article 2

Categories of own
resources

1. Revenue from the
following shall constitute own resources entered in the budget of the Union:

(a) traditional own resources consisting of levies,
premiums, additional or compensatory amounts, additional amounts or factors,
Common Customs Tariff duties and other duties established or to be established
by the institutions of the Union in respect of trade with non-member countries,
customs duties on products under the expired Treaty establishing the European
Coal and Steel Community as well as contributions and other duties provided for
within the framework of the common organisation of the markets in sugar;

(b) the
financial transaction tax to be levied pursuant to in
accordance with Council Directive [legislative act]
(EU) No [.../...][14],
with the applicable tax rates in the amount of a share not
exceeding the minimum rates set out in Article 8(3) of that Directivenot
exceeding ...%;

(c) a share of
the Value Added Tax (VAT) on supplies of goods and services, intra-Community
acquisitions of goods and importation of goods subject to a standard rate of
VAT in every Member State to be levied pursuant to Council Directive 2006/112/EC[15], with the rate applicable in accordance with Regulation
(EU) No .../... in the amount of a share not exceeding 2% of the net value of supplies of goods and services, intra-Community
acquisitions of goods and importation of goods subject to a standard rate of
VAT in every Member State determined according to Union rulestwo
percentage points of the standard rate.;

(d) the
application of a uniform rate, to be determined pursuant to the budgetary
procedure in the light of the total of all other revenue, to the sum of Gross
National Income (GNI) of all the Member States.

2. Revenue deriving
from any new charges introduced within the framework of a common policy, in
accordance with the Treaty, provided that the procedure laid down in Article
311 of the Treaty has been followed, shall also constitute own resources
entered in the budget of the Union.

3. Member States shall
retain, by way of collection costs, 10% of the amounts referred to in point (a)
of paragraph 1.

4. If, at the beginning
of the financial year, the budget has not been adopted, the previous GNI rates
of call shall remain applicable until the entry into force of the new rates.

Article 3

Own resources
ceiling

1. The total amount of
own resources allocated to the Union to cover annual appropriations for
payments shall not exceed 1.23 % of the sum of all the Member States' GNIs.

2. The total annual
amount of appropriations for commitments entered in the Union's budget shall
not exceed 1.29 % of the sum of all the Member States' GNIs.

An orderly ratio
between appropriations for commitments and appropriations for payments shall be
maintained to guarantee their compatibility and to enable the ceiling pursuant
to paragraph 1 to be respected in subsequent years.

Article 4

Correction
mechanisms

1. The uniform rate
fixed under Article 2(1)(d) shall apply to the GNI of each Member State.

2. For the period of
2014–2020, a gross reduction in annual GNI contributions shall be granted to
the following Member States:

–
EUR 2500 million for Germany,

–
EUR 1050 million for the Netherlands,

–
EUR 350 million for Sweden,

–
EUR 3600 million for the United- Kingdom.

Article 5

Financing the
correction mechanisms

The cost of the
corrections set out in Article 4 shall be borne by the Member States in
proportion to each Member State's share of the payments referred to in Article
2(1)(d).

Article 6

Universality
principle

The revenue referred to
in Article 2 shall be used without distinction to finance all expenditure
entered in the Union's annual budget.

Article 7

Surplus carry-over

Any surplus of the
Union's revenue over total actual expenditure during a financial year shall be
carried over to the following financial year.

Article 8

Collecting own resources
and making them available or paying them to the Commission

1. The Union's own
resources referred to in Article 2(1)(a), (b) and , from 1 January 2018 at the latest, those
referred to in Article 2(1) (c), shall be collected by the Member States in accordance with
the national provisions imposed by law, regulation or administrative action,
which shall, where appropriate, be adapted to meet the requirements of Union
rules.

The Commission shall
examine the relevant national provisions communicated to it by Member States,
transmit to Member States the adjustments it deems necessary in order to ensure
that they comply with Union rules and report, if necessary, to the budgetary
authority.

2. The Union's own
resources referred to in Article 2(1)(b) shall be collected from 1 January 2018
at the latest in accordance with the relevant Union legislation supplemented,
where necessary, by the national provisions imposed by law, regulation or
administrative action. These national provisions shall, where appropriate, be
adapted to meet the requirements of Union rules.

The Commission shall
examine the relevant national provisions communicated to it by Member States,
transmit to Member States the adjustments it deems necessary in order to ensure
that they comply with Union rules and report, if necessary, to the budgetary
authority.

3.2. Member States shall make the resources provided for in Article 2(1)(a),
(b), (c) and (d) available to the Commission, in accordance with
regulations adopted under Article 322(2) of the Treaty.

The resources
provided for in Article 2(1)(b) shall be made available or paid to the
Commission in accordance with the regulation adopted under Article 322(2) of
the Treaty.

Article 9

Implementing
measures

The Council shall, in accordance with the procedure
set out in the fourth paragraph of Article 311 of the Treaty, lay down
implementing measures as regards the following elements of the own resources
system:

(a) the share in the taxes referred
to in tax rates of the own resources established under
Articles 2(1)(b) and (c) and the rate of call of the own resource
established under Article 2(1)(d);

(b) the reference GNI, the provisions to
adjust GNI and the provisions to recalculate the
ceilings for payments and commitments in case of significant changes to
GNI, for the purposes of applying Articles
2(1)(d) and 3;

(c) the procedure for calculating and
budgeting the annual budgetary balance as set out in Article 7;

(d) the
provisions and arrangements necessary for controlling and supervising the
revenue referred to in Article 2, including any supplementary reporting
requirements.

Article 10

Final and
transitional provisions

1. Subject to paragraph 2, Decision
2007/436/EC, Euratom is repealed. Any references to the Council Decision of 21
April 1970 on the replacement of financial contributions from Member States by
the Communities' own resources[16],
to Council Decision 85/257/EEC, Euratom of 7 May 1985 on the Communities'
system of own resources[17],
to Council Decision 88/376/EEC, Euratom of 24 June 1988 on the system of the
Communities' own resources[18],
to Council Decision 94/728/EC, Euratom of 31 October 1994 on the system of the
Communities' own resources[19],
to Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of
the Communities' own resources[20]
or to Decision 2007/436/EC, Euratom shall be construed as references to this
Decision and shall be read in accordance with the correlation table set out in
the Annex to this Decision.

2. Articles 2, 4, 5 and 8(2) of Decisions
94/728/EC, Euratom, 2000/597/EC, Euratom and 2007/436/EC, Euratom shall
continue to apply to the calculation and adjustment of revenue accruing from
the application of a rate of call to the VAT base determined in a uniform
manner and limited to between 50 % and 55 % of the GNP or GNI of each Member
State, the procedures for making it available and the arrangements for
inspection, depending on the relevant year, and to the calculation of the
correction of budgetary imbalances granted to the United Kingdom for the years
until 2012.

3. Member States
shall continue to retain, by way of collection costs, 10 % of the amounts
referred to in Article 2(1)(a) which should have been made available by the
Member States before 28 February 2001 in accordance with the applicable Union
rules.

Member States shall
continue to retain, by way of collection costs, 25 % of the amounts referred to
in Article 2(1)(a) which should have been made available by the Member States
between 1 March 2001 and 28 February 2014 in accordance with the applicable Union
rules.

4. For the purposes of this Decision, all monetary amounts shall be
expressed in euros and in current prices.

Article 11

Entry into force

Member States shall be
notified of this Decision by the Secretary-General of the Council.

Member States shall
notify the Secretary-General of the Council without delay of the completion of
the procedures for the adoption of this Decision in accordance with their
respective constitutional requirements.

This Decision shall
enter into force on the first day of the month following receipt of the last of
the notifications referred to in the second paragraph.

It shall apply from 1
January 2014.

Article 12

Publication

This Decision shall be
published in the Official Journal of the European Union.

Done at Brussels,

For
the Council

The
President

ANNEX

Correlation
table

Decision 2007/436/EC || This Decision

Article 1 || Article 1

Article 2(1)(a) || Article 2(1)(a)

Article 2(1)(b) || -

Article 2(1)(c) || Article 2(1)(c)

Article 2(2) || Article 2(2)

Article 2(3) || Article 2(3)

Article 2(4) || -

Article 2(5) || Article 4(1)

Article 2(6) || Article 2(4)

Article 2(7) ||

Article 3(1) || Article 3(1)

Article 3(2) || Article 3(2)

Article 3(3) || -

Article 4 || -

Article 5(1) || Article 5(1)

Article 5(2) || -

Article 5(3) || -

Article 5(4) || -

Article 6 || Article 6

Article 7 || Article 7

Article 8(1) || Article 8

Article 9 || -

Article 10(1) || Article 10(1)

Article 10(2) || Article 10(2)

Article 10(3) || Article 10(3)

Article 11 || Article 11

Article 12 || Article 12

[1]               See COM(2011)510, COM(2011)511, COM(2011)512 and
SEC(2011)876 of 29 June 2011.

[2]               Additions to the original proposal are
highlighted in bold and are underlined. Provisions to be eliminated are
identified using strikethrough.

[3]               Proposal for a Council Directive on a common system
of financial transaction tax and amending Directive 2008/7/EC, COM(2011)594 of
28.9.2011.

[4]               Proposal for a Council Regulation on the methods and
procedure for making available the own resource based on the financial
transaction tax, COM(2011)738 of 9.11.2011.

[5]               Proposal for a Council Regulation on the methods and
procedure for making available the own resource based on the value added tax, COM(2011)737
of 9.11.2011.

[6]               Amended proposal for a Council Regulation laying down
implementing measures for the system of own resources of the European Union, COM(2011)740
of 9.11.2011.

[7]               Opinion delivered on XX.6.2011

[8]               OJ C

[9]               OJ C

[10]             COM(2010)700 of 19.10.2010.

[11]             COM(2010)162 final.

[12]             OJ ...

[13]             OJ L 163, 23.6.2007, p. 17

[14]             OJ L [...], [...], p. 1.

[15]             OJ L 347, 11.12.2006, p. 1.

[16]             OJ L 94, 28.4.1970, p. 19.

[17]             OJ L 128, 14.5.1985, p. 15.

[18]             OJ L 185, 15.7.1988, p. 24.

[19]             OJ L 293, 12.11.1994, p. 9.

[20]             OJ L 253, 7.10.2000, p. 42.