[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 12.7.2006

SEC(2006) 912

COMMISSION STAFF WORKING DOCUMENT

Annex to the 2005 Report from the Commission on the protection of the European Communities’ financial interests and the fight against fraud

Follow-up of the Commission action plan 2004-2005 - Implementation of Article 280 of the Treaty by the Member States in 2005 {COM(2006) 378 final}

TABLE OF CONTENTS

Follow-up of the Commission action plan 2004-2005 4

Implementation of Article 280 of the EC treaty by the Member States in 2005 18

INTRODUCTION 18

1. Legal instruments that give effect to article 280 of the ec treaty — principal developments 19

1.1. Horizontal developments: 19

1.2. Own resources (including VAT): 24

1.3. Agricultural expenditure (expenditure financed by EAGGF - Guarantee Section): 29

1.4. Structural operations: 34

1.5. Description of key developments: 39

1.6. Complementary measures for the protection of the Community Financial Interests 50

2. RECOVERY OF SUMS UNDULY PAID OR NOT COLLECTED BY THE COMMUNITIES IN THE FIELD OF INDIRECT EXPENDITURE 53

2.1. Preliminary 53

2.2. The administrative recovery procedure (or procedure for recovering amounts wrongly paid) 70

2.3. Enforcement 70

2.4. The administrative contentious procedure 87

2.5. Priority given to public claims 95

2.6. Offsetting 101

3. THE DAS PROCEDURE (STATEMENT OF ASSURANCE BY THE MEMBER STATES) FOR CERTIFYING THE PROPER MANAGEMENT OF PUBLIC EXPENDITURE IN THE MEMBER STATES 108

3.1. Certification of national funds 108

3.1.1. By an internal body 108

3.1.2. By an external body 112

3.2. Control of Community funds (jointly managed funds) 120

3.2.1. EAGGF Guarantee Section 120

3.2.2. Structural Funds 120

COMMISSION STAFF WORKING DOCUMENT

This document is intended to accompany the Commission’s Annual Report for the year 2005[1] on the protection of the European Communities’ financial interests and fight against fraud which is drafted in accordance with Article 280 of the Treaty.

The first part contains a detailed description of the implementation of the 2004-2005 Action Plan for the protection of the Communities’ financial interests and the fight against fraud in 2005. The Action Plan defines the priority actions for the protection of the Community’s financial interests which are intended to implement the first phase of the overall strategic approach 2001-2005 adopted in June 2000. In the second section the services of the Commission make available all the answers given by the Member States to a questionnaire sent to them in preparation for the 2005 Annual Report on the Protection of the Financial Interests of the Member States.

FOLLOW-UP OF THE COMMISSION ACTION PLAN 2004-2005

In the strategic global approach adopted in the 28th of June 2001[2], the Commission has established the political objectives for the period 2001-2005. The Commission has identified 4 priority actions for the protection of the Community’s financial interests:

- a global legislative anti-fraud policy;

- a new cooperation culture;

-an interinstitutional action for the prevention and fight against corruption;

-the reinforcing of the dimension of the penal field

The implementation of the global strategy has been achieved in the action plan 2001-2003[3] and 2004-2005[4].

The following table presents the objectives implementing actions foreseen in the 2004-2005 action Plan.

OBJECTIVES | Measure | LEAD DEPT.[5] | IMPLEMENTATION AND FOLLOW-UP |

1. AN OVERALL ANTIFRAUD LEGISLATIVE POLICY |

1.1. DEVELOPING A CULTURE OF PREVENTION AND TIGHTENING UP LEGAL TEXTS |

Consolidation of the structure and functions of OLAF by reinforcement of its legal framework | Proposals for amendment of Regulations No 1073 and 1074/1999. | OLAF, SG | Action completed. Proposals for amendment of Regulations No 1073 and 1074/1999 have been adopted by the Commission[6]. The Commission is preparing a consolidated proposal. |

Cooperation between the Community and the Member States to protect the Communities’ financial interests. Extension of cooperation mechanisms, exchange of information and assistance to new areas, especially to money laundering and VAT fraud | Proposal for a Regulation based on Article 280 of the EC Treaty on mutual administrative assistance, especially on money laundering and VAT fraud. | OLAF, TAXUD, MARKT, JAI | Action completed. Adoption of the proposal by the Commission[7]. |

Assessment of Regulations No. 1469/1995 and No. 745/1996 [8] (Black list mechanism in EAGGF-Guarantee Section) | Second report on the application of Regulation (EC) No 1469/95 (“black list”) in the EAGGF-Guarantee Section. Proposal for amendment of the regulations concerned. Examination of their field of application. | OLAF, AGRI, SJ | Action postponed to 2006. Adoption of the second report from the Commission to the European Parliament and the Council on the on the application of Regulation (EC) No 1469/95 (“black list”)[9]. |

Defining OLAF’s objectives, taking into account the strategic guidelines and the contributions of the Institutions in the field of anti-fraud action | Preparation of a Commission communication on the main themes for strategic anti-fraud guidelines. | OLAF | Action temporarily withdrawn as far as the Commission communication is concerned. OLAF defines yearly its objectives in line with the SPP-ABM cycle and it reports on its achievements. |

Definitive setting-up of the European Technical and Scientific Centre (ETSC) to finalise Council Decisions 2003/861 and 862/EC [10] | Commission decision. | OLAF, ECFIN | Action completed. The European Technical and Scientific Centre (ETSC) is established within the Commission, attached to the European Anti-fraud Office (OLAF)[11]. The ETSC shall analyse and classify every new type of counterfeit euro coin in line with the provisions of Article 5 of Regulation (EC) 1338/2001. It contributes to the fulfilment of the objectives of the ‘Pericles’ programme pursuant to Article 4 of Council Decision 2001/923/EC of 17 December 2001. It assists the Coin National Analysis Centres (CNAC) and the law-enforcement authorities; and collaborates with the relevant authorities in the analysis of counterfeit euro coins and the strengthening of the protection. |

Continuation and adaptation of the training, exchange and assistance action programme for the protection of the euro against counterfeiting (PERICLES programme[12] ) | Evaluation of the PERICLES programme with a view to a new legislative proposal. Communication on the adaptation of the PERICLES programme. Proposal for a Council Decision amending and extending the Council Decision of 17/12/2001 (PERICLES programme). | OLAF | Action completed. Communication on the he implementation and continuation of the PERICLES programme[13]. Adoption of a proposal for a Council Decision amending and extending Council Decision of 17/12/2001 establishing an exchange, assistance and training programme for the protection of the euro against counterfeiting (the "PERICLES" programme)[14], proposal for a Council Decision extending to the non-participating Member States[15]. Adoption by the Council the 30.1.2006[16]. |

1.2. STRENGTHENING MEANS OF DETECTION, CONTROLS AND SANCTIONS | Proposals for amendment of Regulations No 1073 and 1074/1999 have been adopted by the Commission, COM (2004) 103 and 104 final of 10.02.2004. The Commission is preparing a consolidated proposal. |

Clarification of fraud investigation powers at Community level, particularly in the area of direct expenditure | Proposals for amendment of Article 3(2) of Regulations 1073 and 1074/1999. | OLAF, SG | Action completed. Proposals for amendment of Regulations No 1073 and 1074/1999 have been adopted by the Commission[17]. The Commission is preparing a consolidated proposal. |

Extension of the administrative penalty system to the following areas: - customs - direct expenditure - structural funds | Preliminary examination with a view to including administrative penalties in the regulations concerned. Examination of the need for a specific regulation on fraud and irregularities in connection with contracts involving Community financing | TAXUD, SJ, REGIO, EMPL, AGRI, FISH, OLAF | Action partially completed. Proposal for a Regulation of the European Parliament and the Council laying down the Community Customs Code[18]. The new Financial Regulation (Council Regulation No 1605/2002) provides for the possibility to impose administrative and financial penalties against candidates, tenderers or contractors. |

- OLAF investigations (resistance to checks) | Proposals for amendment of Article 6(6) of Regulations 1073 and 1074/1999. | OLAF, SG | Action completed. Proposals for amendment of Regulations No 1073 and 1074/1999 have been adopted by the Commission[19]. The Commission is preparing a consolidated proposal. |

Technical guidelines for competent authorities in the Member States which may wish to carry out or supervise the process of authenticating euro coins on their territory. | Commission recommendation on methods of authenticating euro coins. | OLAF | Action completed. Commission recommendation of 27 May 2005 concerning authentication of euro coins and handling of euro coins unfit for circulation[20]. |

1.3. ENSURE A MORE EFFECTIVE MANAGEMENT OF ADMINISTRATIVE AND FINANCIAL FOLLOW-UP |

Improvement of the recovery of sums wrongly paid (EAGGF-Guarantee Section, Regulation No. 1258/1999[21] ). | Proposal for amendment of Regulation No. 1258/1999, on financing of the CAP. | AGRI, OLAF | Action completed. The purpose of this proposal is to establish a single legal framework for financing the common agricultural policy. To that end, this proposal sets up two Funds: - European Agricultural Guarantee Fund (EAGF) - European Agricultural Fund for Rural Development (EAFRD) This Regulation creates the legal bases for financing the different measures covered by those two Funds, including the technical assistance necessary for the establishment and monitoring of the CAP[22]. |

Handling the backlog of irregularities reported before 1.1.1999 under Regulation No. 595/1991 [23] (EAGGF/Guarantee Section). Recovery Task Force [24] | Conclusion of work. | OLAF, AGRI | Action ongoing. The Task Force Recovery (TFR) continued its activities in 2005 in order to solve the backlog of all non recovered amounts of irregularity cases communicated before 1999. In 2005 with assistance of the TFR the formal bilateral meetings in the Clearance of Account procedures with all nine member states involved have been completed in order to define the financial liability for the non recovery for a total financial impact of ca. 765 million €. The TFR has also processed the information on 32 “missing” cases exceeding 500.000€ each not audited before. “Article 8 letters” with the proposal on the financial liability for 92 million € have been sent by DG AGRI to all Member States involved. The “SAGE” (Système Automatisé de Gestion et Evaluation) application for in total ca. 3.250 remaining “smaller” cases (each under 500.000€) from before 1999 and a non recovered amount of ca. 200 million € has been completed by all Member States and returned to the TFR (electronic datasets and hardcopy checklists). However, in view of the new financial regulation (EC) nr. 1290/2005 coming into force already on 16th. October 2006, it has become impossible to finalise before that date the formal Clearance of Account procedures for these 3.250 cases. Beginning 2006 DG AGRI and the TFR will decide on the approach concerning processing the data received and define the financial consequences concerning the non recovered amounts. |

OBJECTIVES | Measure | LEAD DEPT. | IMPLEMENTATION AND FOLLOW-UP |

2. NEW CULTURE OF COOPERATION | Postponed to 2006. |

2.1. ENHANCED USE AND ANALYSIS OF INFORMATION (“INTELLIGENCE”) | Adoption of Commission Regulation (EC) No 2035/2005[25] |

Developing operational cooperation between customs administrations. Setting up the FIDE (Customs Investigations Information Files) | Proposal for amendment of Regulation No 515/97 [26] Reinforced coordination to support and manage joint operations. | OLAF, TAXUD, JAI | Postponed to 2006. |

Simplifying the procedure for notifying irregularities based on Regulation (EC) No 1681/94[27] concerning the Structural Funds | Proposal for amendment of Regulation No 1681/1994 | OLAF, DGs authorising Structural Funds | Action completed. Adoption of Commission Regulation (EC) No 2035/2005[28] |

Simplifying the procedure for notifying irregularities based on Regulation (EC) No 1831/94 [29] concerning Cohesion Funds | Proposal for amendment of Regulation No 1831/1994 | OLAF, REGIO | Action completed. Adoption of Commission Regulation (EC) No 2168/2005[30] |

Simplifying the procedure for notifying irregularities based on Regulation (EC) No 595/91 concerning EAGGF-Guarantee expenditure | Proposal for amendment of Regulation No 595/1991 | OLAF, AGRI | Postponed to 2006. |

2.2. DEVELOPING A CLOSER PARTNERSHIP WITH MEMBER STATES AND NON-COMMUNITY COUNTRIES | Commission decision 2005/223/CE OJ L 71/67 of 17.03.2005 |

Strengthening relations with Member States | Update of Commission Decision 94/140/ /EC[31] establishing the COCOLAF. | OLAF, SG, SJ | Action completed[32]. |

Improving information from Member States at Community level on the follow-up given to OLAF’s investigations | Proposals for amendment of Articles 9 (3) of Regulations N°s 1073 and 1074/1999. | SG, OLAF | Action completed. Proposals for amendment of Regulations No 1073 and 1074/1999 have been adopted by the Commission[33]. The Commission is preparing a consolidated proposal. |

Enhancing cooperation structures and exploitation of possibilities for synergy | Inventory of the services that the Commission/OLAF can provide to the institutions and Member States. Implementation of multidisciplinary Service Platform | OLAF | Action temporarily withdrawn. |

Assistance to new Member States to reinforce their own capacities for fighting fraud | Implementation of Transition Facility funds (2004-2006) for the protection of the Community’s financial interests and the fight against fraud Deployment of OLAF Regional Assistants in the new Member States | OLAF, ELARG | Action completed. 2004: transition facility project. Poland: 2004-016-829.01.09 CRIS, EU financial Interests’ protection; Slovenia: 2004-016-710.02.02 Public Internal Financial Control and antifraud coordination. |

Reinforcement of anti-fraud coordination services in candidate countries | Ongoing assistance to Bulgaria and Romania through the Multi-Countries Anti-fraud PHARE Programme for the protection of PHARE financial interests Assistance to anti-fraud coordination in the new candidate countries Deployment of OLAF Regional Assistants in certain candidate countries | OLAF, ELARG | Action completed. The PHARE multi-country anti-fraud programme targeted at protecting the Community’s financial interests for almost all events went ahead as planned and its implementation ended by year 2005 A Networking programme was put in place for Bulgaria and Romania. OLAF contributed to the Inter-Service consultations on the establishment of the negotiating framework for Croatia and Turkey. Establishment of two liaison officers of OLAF in the EU delegations in Romania and Bulgaria to help those countries strengthen their action as regards protection of the Communities’ financial interests. |

Memoranda of understanding with candidate countries and third countries | Conclusion of administrative arrangements with Anti-fraud Coordination Services (AFCOS) of the candidate countries and, where appropriate, with competent services in third countries | OLAF | Action ongoing. Conclusion of administrative arrangements with Anti-fraud Coordination Services (AFCOS): 2004-2005: Romania, Poland, Lithuania, Malta. Before 2004 : Estonia, Slovakia, Czech Republic |

Negotiations conducted with Switzerland on the fight against fraud | Conclusion of negotiations. | OLAF, RELEX | Action completed[34]. The agreement binds the parties (EU and Swiss Confederation) to provide each other with full judicial and administrative assistance in all cases of fraud and other illegal activities, including customs and indirect taxation offences committed when trading goods and services. |

Administrative cooperation and mutual assistance in customs matters with third countries | Negotiations of international mutual administrative assistance agreements in the customs area | OLAF, TAXUD, RELEX | Action completed. Two agreements entered into force in 2004 and 2005, one with India on customs cooperation and mutual administrative assistance in customs matters[35]. A protocol on mutual assistance between administrative authorities in customs matters between the EU and Mexico was adopted on 17-12-2001 by the council and entered into force on 01-01-2005. |

Analysis, cooperation and information exchanges on matters relating to the euro with third countries | Inclusion of anti-counterfeiting clauses in cooperation and association agreements, pursuant to Article 9(2) of Regulation No 1338/2001[36] | OLAF, ECFIN | The action is ongoing. |

2.3. POLICY OF ONGOING EVALUATION OF ANTI-FRAUD ACTIONS |

Inventory of new measures at Community and Member State level in 2003 and 2004 | 2003 and 2004 Annual Report Article 280(5) of the EC Treaty. | OLAF | Action completed[37]. Every year the Commission adopt a Report on the “Protection of the Communities financial interests – Fight against fraud” pursuant article 280 of the Treaty and reports on the measures taken by the member States to protect the Communities’ financial interests. |

OBJECTIVES | Measure | LEAD DEPT. |

3. AN INTERINSTITUTIONAL APPROACH TO PREVENT AND COMBAT CORRUPTION | Proposals for amendment of Regulations No 1073 and 1074/1999 have been adopted by the Commission, COM (2004) 103 and 104 final of 10.02.2004. The Commission is preparing a consolidated proposal. |

3.1. DEVELOP A CULTURE OF COOPERATION AT ALL LEVELS | Proposals for amendment of Regulations No 1073 and 1074/1999 have been adopted by the Commission, COM (2004) 103 and 104 final of 10.02.2004. The Commission is preparing a consolidated proposal. |

Possible definition of practical arrangements for cooperation between OLAF and other Commission departments | Examine the usefulness of adopting a memorandum of understanding (or another type of text) | OLAF, SG, other services | The action is ongoing and is expected to be completed in 2006. A draft memorandum of understanding has been prepared. Negotiations between OLAF and the Secretariat General were completed in October 2005, but the signature of the revised document was not possible until a decision was taken on appointment of OLAF’s Director General. The action is expected to be completed in 2006. |

Facilitate the conducting of internal investigations within other institutions and bodies | Examine the usefulness of proposing protocols / memoranda of understanding with other institutions | OLAF, SG, SJ | Action ongoing. |

Possible definition of practical arrangements for cooperation between OLAF and IDOC | Appropriateness of re-examining the memorandum of understanding agreed upon in 2003, in the light of recent developments. | OLAF, IDOC, ADMIN | Action completed[38]. |

Improvement of transparency in the flow of information between OLAF and other DGs to assure an appropriate follow-up | Creation of high level interdepartmental group | SG, IDOC, ADMIN, IAS, (OLAF) | Action completed. Creation of high level interdepartmental group to ensure that pertinent information is collected from all sources, analysed rapidly and communicated to the College[39]. The group meets regularly, the first meeting was held on 17.2.2004. |

3.2. IMPROVE THE LEGAL FRAMEWORK FOR ADMINISTRATIVE INVESTIGATIONS | Postponed to 2006. |

Clarification of arrangements for performing internal/external investigations and related measures by precise rules | Proposals for amendment of Articles 6, paragraphs 7, 7(a) and 7(b) of Regulations N°s 1073 and 1074/1999 | SG, OLAF | Action completed. Proposals for amendment of Regulations No 1073 and 1074/1999 have been adopted by the Commission[40]. The Commission is preparing a consolidated proposal. |

Compliance with and standardised application of information procedures with regard to the institutions, bodies and offices concerned and the persons involved | Proposals for amendment of Articles 6, paragraphs 5(a), 7(a) and 7(b) of Regulations N°s 1073 and 1074/1999 | SG, OLAF | Action completed. Proposals for amendment of Regulations No 1073 and 1074/1999 have been adopted by the Commission[41]. The Commission is preparing a consolidated proposal. |

OBJECTIVES | Measure | LEAD DEPT. | IMPLEMENTATION AND FOLLOW-UP |

4. ENHANCEMENT OF THE CRIMINAL-LAW JUDICIAL DIMENSION |

Reinforcement of the effectiveness of criminal prosecutions by establishing a European Public Prosecutor | Preparation of a White Book | OLAF, JAI | As the process of ratifying the Constitutional Treaty is still in progress, this action is temporarily withdrawn. |

Follow up the application of the Convention and its protocols to the protection of the Community’s financial interests | Report on the implementation of the Convention by the Member States. | OLAF, JAI, SJ | Action completed[42]. |

Improvement of structured relations with Europol | Conclusion of a protocol | OLAF, Europol | Action completed. Administrative agreement was signed by OLAF and Europol on April 8, 2004 in order to fight international organised crime in the context of fraud, corruption or any other criminal offence. More specific the agreement indicates that OLAF and Europol should cooperate in areas of common interest, exchange strategic and technical information, cooperate in the field of intelligence and technical support, write common reports with mutual consultations, participate in joint investigation teams and cooperate in the field of professional training and working groups. |

Development of the judicial dimension and the function of interlocutor of the police and judicial authorities | Establishment with Member States of a Practical Guide for cooperation with criminal prosecution authorities | OLAF | Postponed to 2006. |

IMPLEMENTATION OF ARTICLE 280 OF THE EC TREATY BY THE MEMBER STATES IN 2005

INTRODUCTION

The protection of the European Communities’ financial interests and the fight against fraud is an area in which responsibility is shared between the Community and the Member States. Consequently, each year the Commission draws up a report in cooperation with the Member States on the measures taken to implement this obligation, according to article 280 of the EC Treaty. This report is adressed to the European Parliament and the Council and is published.

The Commission bases its report on the measures taken by Member States on the replies to the “Article 280” questionnaire. This questionnaire covers the period from 1 January to 31 December 2005.

The present document lists all the answers of Member States to the 2005 questionnaire.

Over time the report had become more and more voluminous. Both the Council and the European Parliament were concerned that its size was increasing and that it’s being annual, horizontal and multisectoral hampered a detailed assessment of all the aspects of the protection of the Community's financial interests by the Member States. Since 2003, the Commission has therefore applied a new approach. After the traditional question asking Member States to report on new measures taken in 2005, the questionnaire focuses on a few major themes. The aim is to gather information on topics which go beyond the measures taken in the course of a calendar year, thereby allowing a more detailed analysis of these topics. The topics change from year to year.

As always, the first part of the questionnaire asks Member States to list the legal instruments that give effect to Article 280 , i.e. measures to combat fraud and all illegal activities affecting the financial interests of the Community in the areas of own resources, agricultural expenditure and structural measures. The Member States has been asked to list only national measures and not those which simply transpose Community legislation, and to do so in brief so as to reduce the volume of the staff working document which incorporates the replies from the 25 Member States. At the end of this first question, Member States have the opportunity of giving a more detailed description of a few measures which they consider to have been the most important in the calendar year. This year, the question on own resources covers not just traditional own resources as in previous years but also VAT. Some Member States indicated to have a reservation about the inclusion of VAT in the questionnaire, so it has been agreed that it is open to Member States to answer this question. Ireland declared in its answer that as a matter of principle, Ireland will not be responding to the question in respect of VAT.

The second question concerns the recovery of sums unduly paid or not collected by the Communities. In 2003 and 2004, the questionnaire focused on joining civil actions to criminal proceedings. The 2005 questionnaire is dealing with certain aspects of administrative and judicial recovery procedures , but not with joining civil actions.

The third part of the questionnaire addresses the procedures which exist in the Member States for certifying the proper implementation of public expenditure . This question comes in the context of the Commission's efforts to obtain a positive statement of assurance on Community expenditure. With this goal in mind, it is useful for the Commission to know what systems for certifying the proper implementation of public expenditure are in place in the Member States.

LEGAL INSTRUMENTS THAT GIVE EFFECT TO ARTICLE 280 OF THE EC TREATY — PRINCIPAL DEVELOPMENTS

Horizontal developments: Have there been any significant new legislative horizontal developments (not just implementing measures) contributing to the implementation of Article 280 of the Treaty in 2005? Member States are asked to list only measures adopted on their own initiative and not those which simply transpose Community legislation. |

If so, please indicate below: the type of legal instrument (e.g. law, regulation, legislative decree), the references of the legal instrument (number/date of publication in Official Gazette, etc.), the legal instrument or code which it amends (if any), the title of the legal instrument or a brief description (no longer than one to two sentences). |

BE | With regard to customs, the law of 7 July 2005 (Moniteur Belge of 14 October 2005) approved the following international acts: 1. The Convention, drawn up on the basis of Article K.3 of the Treaty on European Union, on the use of information technology for customs purposes, done at Brussels on 26 July 1995; 2. The agreement on the provisional application between certain Member States of the European Union of the convention drawn up on the basis of Article K.3 of the Treaty on European Union on the use of information technology for customs purposes, done at Brussels on 26 July 1995; 3. The Protocol, drawn up on the basis of Article K.3 of the Treaty on European Union, on the interpretation, by way of preliminary rulings, by the Court of Justice of the European Communities of the Convention on the use of information technology for customs purposes, done at Brussels on 29 November 1996; 4. The Protocol, drawn up on the basis of Article K.3 of the Treaty on European Union, on the definition of money-laundering in the Convention on the use of information technology for customs purposes and the inclusion of the registration number of the means of transport in the Convention, and the Declarations, done at Brussels on 12 March 1999. |

DK | Within the remit of the Ministry of Justice, a new law was adopted: Act No 11 of 19 May 2005 amending, inter alia, Section 289a of the Criminal Code, which deals with fraud involving public funds, including EU fraud. The amended legal provision maintains the offences covered by the previous Section 289a on EU fraud and extends the provision to cover fraud involving national aid and grant funds. The provision seeks to establish uniform protection against fraud involving public funds, irrespective of whether they are EU or national funds or a combination of the two. The amendment also raises the maximum penalty for particularly serious violations from four to eight years. |

EL | Law 3316/2005 (Government Journal Issue 42/A/22.2.2005) governing the allocation and performance of public contracts for conducting studies and rendering relevant services, and other provisions. Law 3310/2005 (Government Journal Issue 30/A/14.2.2005) governing the measures to ensure the transparency and prevent infringements of the procedure for concluding public contracts as amended by Article 12 of Law 3414/2005. The provisions of this law are implemented in the procedure for concluding and performing public contracts, with a view to ensuring transparency and healthy competition as well as strengthening pluralism and the provision of objective information on equal terms. It amends Law 2328/2005 (Government Journal Issue 159/A). Law 3296/2004 governing natural and legal persons’ income tax, tax inspection, and other provisions, which established the Special Audit Service (YPEE) and abolished the Economic Crimes Enforcement Agency (SDOE) set up by Law 2343/95 (Government Journal Issue 211/A/11.10.1995). Presidential Decree 85 (Government Journal Issue 122/A/25.05.2005) governing the organisation of the YPEE, by which : i) Two new regional business directorates (the Athens and Thessaloniki Special Affairs Directorates) have been set up, which are coordinated by the Staff Directorate for Special Affairs. There are units working in these directorates whose main responsibility is to research and eradicate all forms of fraud in respect of the EU budget. ii) Two new units have been added to the Administrative Support Directorate: a. The International Cooperation and Mutual Assistance Unit, whose responsibility is the coordination of the exchange of information and research within the framework of the implementation of Regulation No 515/97 and bilateral and multilateral agreements on customs cooperation; b. The Audit and Internal Audit Unit, whose responsibility is to discover omissions and errors in the implementation of national and Community legislation. Law 3424/3.12.2005 (Government Journal Issue 305/A/13.12.2005) introduces amendments to the legislation regarding money-laundering (amendment to Law 2331/1995 Government Journal Issue 173/A/24.08.1995). Besides the general focus on criminal activities related to money-laundering, special attention is given, among other aspects, to the protection of the EU’s economic interests. Law 3399/2005 (Government Journal Issue 255/A/17.10.2005) governing the matters falling within the competence of the Department of Agricultural Development and Food - Conformity with the new CAP, and other provisions, ratified and brought into force from 1.01.2005 the joint decision No 324032/24.12.2004 by the Ministers of Finance and of the Economy, the Environment, Land Planning, Public Works and Agricultural Development and Food on the implementation of the regime of cross-compliance and other supplementary measures in the performance of Council Regulation No 1782/2003. |

ES | Royal Decree 939/2005 of 29 July, adopting the General Collection Regulation (B.O.E. of 2 September, which entered into force on 1 January 2006). See point 1.5. Royal Decree 520/2005 of 13 May, adopting the general implementing Regulation of General Tax Law 58/2003 of 17 December, regarding administrative review (B.O.E of 27/5/2005). It lays down the main procedural aspects for the recovery of sums unduly paid. Furthermore, it regulates economic and administrative claims, general economic and administrative procedure, enforcement (general rules regarding administrative decisions and special rules on the implementation of economic-administrative and court decisions) and refund of guarantee costs. The second additional provision determines its supplementary application to the refund of unduly collected incomes from custom debts that will be governed in the first place by EU law, and to the refund of other unduly collected public incomes. Order 3987/2005 of 15 December, partially implementing the General Implementing Regulation of General Tax Law 58/2003 of 17 December, regarding administrative review. It governs the adequacy requirements that must be met by surety and fidelity bond insurances and other taxpayers’ personal or joint guarantee for them to be given as guarantee with a view to obtaining a stay of execution of the challenged acts. Resolution of 14 November 2005 on VAT, regulating the right to tax deduction of grant recipients, pursuant to the European Court of Justice judgment |

FR | Law No 2005-1549 of 12 December 2005 on dealing with criminal recidivism (Article 2): convictions handed down by the criminal courts in a Member State of the European Union are now taken into consideration in case of recidivism under the French Code of Criminal Procedure, in accordance with the provisions of this Law (Official Gazette No 289 of 13 December 2005). |

IE | The legislative provisions governing cash seizures have been significantly extended in the Proceeds of Crime (Amendment) Act 2005 which came into effect on 12th February 2005. These provisions enable Customs and Revenue Officers to seize cash anywhere in the State, which is believed to be the proceeds of crime or intended for criminal conduct. Crime/criminal conduct covers all forms of criminal behaviour including fraud in relation to Own Resources. An explicit power to search for cash at points of entry/exit from the State is also provided under the legislation. |

IT | Act No 11 of 4 February 2005 laying down general rules on Italy’s participation in the European Union’s legislative process and on procedures for complying with Community obligations (Official Gazette No 37, 15 February 2005), modified the process of transposing legislation adopted by the institutions of the European Communities, the European Union and the Court of Justice of the European Communities. Article 280 of the EC Treaty will now be implemented by means of these new provisions. Section 3 of Act No 62 of 18 April 2005 on provisions for complying with obligations deriving from Italy’s membership of the European Community (2004 Community Law Act, Official Gazette No 96, 27 April 2005), gave the Government powers to punish violations of Community law, while, with the aim of simplifying legislation, section 5 granted the Government powers to amend laws on matters covered by Community law. Under section 1(533) of Act No 266 of 23 December 2005 on rules for drawing up the national annual and multi-annual budgets (the 2006 Budget Act, Official Gazette No 302, 29 December 2005), “To receive Community grants and investment aid companies in all sectors shall be required to produce certification to the effect that contributions have been paid as required under section 2(2) of Decree Act No 210 of 25 September 2002, as converted into law and amended by Act No 266 of 22 November 2002.” |

LV | The Law “Amendments of the Criminal law” adds to the Criminal law Article 1771 „Fraud in an Automated Data Processing System” which defines liability of a person who knowingly enters false data into an automated data processing system for acquisition of the property of another person or rights to such property, or acquisition of other material benefits, in order to thereof influence the operation of resources. Article 177 „Fraud” of the Criminal law defines liability of a person who acquires property of another person, or rights to such property, by the use, in bad faith, of trust, or by deceit (fraud). Article 178 „Insurance Fraud” of the Criminal law defines liability of a person who commits intentional destruction, damage or concealment of their property for the purpose of receiving insurance money. |

LT | Modification of the Penal Code of the Republic of Lithuania by Law No X-272. See point 1.5. |

HU | Government Decree No. 55/2005 (III.26.) on the recovery procedure of governmental assistance deriving from or related to the European Union’s resources used illegally, improperly or contrary to an agreement is new legislation. See point 1.5. |

MT | Counterfeiting of the Euro is sanctioned by Articles 49-49F of the Central Bank Act. |

AT | The Legal Persons’ Liability Act (Verbandsverantwortlichkeitsgesetz - VbVG), BGBl I No 151/2005. See point 1.5. |

PT | Law No 55-B/2004 of 30 December 2004 (State budget for 2005): amends Article 63.B of the General Tax Act, approved by Decree-Law No 398/98 of 17 December 1998, on access to bank data and documents and, more specifically, the administration's exemption from banking secrecy rules. The amended article stipulates that the tax authorities are entitled to access any banking data or documents without the consent of the data subject where there is evidence that a tax-related crime has been committed and where there is specific evidence that false declarations have been made. |

SI | The Tax Administration Act (Official Gazette of the Republic of Slovenia, Nos 57/2004, 139/2004, 59/2005), No 516/24.2.2005/17; brought into effect a new tax administration task – the performance of "tax investigations," and defined the concept of a tax investigation as the implementation of acts and measures when there are grounds for suspicion that a violation of taxation regulations has been committed. |

SK | Act No. 300/2005 Coll., the Penal Act, as amended by Act No. 650/2005 Coll. of 2 July 2005, published in section 129/2005 of the Collection of Acts of the Slovak Republic. Act No. 301/2005 Coll., the Penal Code, as amended by Act No. 650/2005 Coll. of 2 July 2005, published in section 130/2005 of the Collection of Acts of the Slovak Republic. The Penal Act and the Penal Code are principle regulations of substantive and procedural law for penal law in the Slovak Republic, whereas damage to the financial interests of the European Communities is arranged as a separate body of a crime (Section 261 of Act No 300/2005, the Penal Act, as amended by Act No 650/2005 Coll.), for which a punishment of imprisonment for 6 months to 12 years can be imposed. Hearings and judgements are in the competence of a Special Court (Section 14 of the Penal Code). Act No 372/1990 Coll. on offences, as amended by Act No 650/2005 Coll. Act No 652/2004 Coll. on national customs bodies and amendments to some acts, as amended by Act No 331/2005 Coll., of 10 December 2004, published in section 276/2004 of the Collection of Acts of the Slovak Republic; Act No 199/2004 Coll. on customs and amendments to some acts (the Customs Act) was amended; this act established the Customs Crime Authority with applicability from 1 January 2005 (Section 11 of Act No 652/04 Coll.), which fulfils tasks in the area of combating infringement of customs regulations or tax regulations and secures other tasks concerning prevention of illegal actions endangering the interests of the European Communities. Act No 626/2005 Coll., amending Act No 473/2003 Coll. on the Agriculture Payment Agency, on support for agricultural trading, published in section 245/2005 of the Collection of Acts of the SR on 29 December 2005 (the amendment only relates to application of sanctions for infringement of the prohibition on illegal employment). |

Own resources (including VAT): Have there been any significant new legislative developments (not just implementing measures) contributing to the implementation of Article 280 of the Treaty in 2005? Member States are asked to list only measures adopted on their own initiative and not those which simply transpose Community legislation. |

If so, please indicate below: the type of legal instrument (e.g. law, regulation, legislative decree), the references of the legal instrument (number/date of publication in Official Gazette, etc.), the legal instrument or code which it amends (if any), the title of the legal instrument or a brief description (no longer than one to two sentences). |

BE | 1) The following were the most significant new developments concerning own resources legislation in 2005: -Article 128 of the programme law of 27 December 2005 (Moniteur Belge of 30 December 2005 –2nd edition) introduced a measure to combat abuse of the law in the field of VAT. It was felt that there was good reason to introduce a specific VAT provision, similar to what is provided for in Article 344 of the income tax code 92, incorporating into national law the concept of abuse of law in cases where the sole purpose of the legal status given by the parties to an act or several different acts executing the same transaction, even if this transaction is genuinely intended and performed, was to avoid VAT. Article 128 of the aforementioned law inserts into Article 59 of the VAT code a paragraph (3) to read as follows: “The authorities will not accept the legal status given by the parties to an act or to several different acts executing a single transaction where they have evidence, by presumption or other means of evidence provided for in paragraph (1), that the sole purpose of this legal status is to avoid VAT, unless the taxable person proves that this status is justified on the grounds of legitimate financial or economic needs”. The aim of this new provision is to combat manoeuvres whose sole purpose is to avoid VAT by means of legal combinations, and to enable the authorities to be certain that VAT due or deductible is based on the normal legal status that should be assigned to the transaction performed between the parties. However, since these are cases of tax avoidance, there is no infringement of the law and there can be no question of refusing the taxable person the right to opt for whichever solution carries the lightest tax burden.” This provision applies to acts concluded from 1 November 2005. 2) The law of 10 August 2005 introduced a new Article 93 undecies (B) in the VAT 2 Code aimed at combating the organisation of insolvency in cases of fraudulent assignment of a set of assets. This article states that: “(1). Without prejudice to the application of Articles 93ter to 93 decies, the assignment of ownership, or beneficial ownership, of a set of assets, including assets needed in order to retain clients, relating to exercise of a profession, responsibility or office or an industrial, commercial or agricultural business, or the assignment of beneficial ownership of these assets, can only be accepted by the collector at the end of the month following that in which an authenticated copy of the act was submitted to the collector responsible for the assignor’s domicile or registered office. (2). The assignee shall be jointly and severally liable for payment of the assignor’s tax debts on expiry of the time specified in (1) above, up to the amount already paid or contributed by him or the amount of the nominal value of the shares or units granted in exchange for the assignment before the expiry of this time. (3). (1) and (2) shall not be applicable if the assignor attaches to the deed of assignment a certificate issued solely for this purpose by the collector referred to in (1) within the thirty days before notification of the creditors’ arrangement is given. This certificate shall only be issued if the assignor submits a request in two copies to the collector responsible for the assignor’s domicile or registered office. The certificate will not be issued by the collector if, at the date of the request, the assignor owes any taxes, interest, tax fines or additional payments or if the request is submitted after an inspection has been announced, during an inspection or after the assignor has sent a request for information on his tax situation. The collector must either issue the certificate or refuse to grant it within thirty days after the request is submitted by the assignor. (4) This article shall not apply to assignments made by a receiver, liquidator or as part of a merger transaction, an unbundling transaction, or the assignment of a totality of assets or of an activity carried on in accordance with the Companies Code. (5) The request and the certificate referred to in this article must be submitted using the standard models specified by the ministry responsible for finance.” The aim of this new provision is, firstly, to prevent a natural or legal person from transferring his business assets without settling his VAT debts and, secondly, to prevent the fraudulent procedure whereby certain tax debtors hastily sell off their business assets as soon as they become aware that their tax situation is subject to special scrutiny. Circular No AREC 7/2005 (IR/I-1/76.268) of 05.12.2005, which is posted on the Fisconet site Federal Public Service for Finance comments on the new provision. |

EL | 1) Document No Ε799/857/Α0034/4.03.05 giving instructions to the customs authorities to audit and make good any irregularities in their old cases in order to assess the related tariffs and fines inside the scheduled deadlines and prevent them from lapsing. 2) Document No L 159/32/A0034/8.06.05 giving instructions to the customs authorities to audit the documentation of own resources in the B accounts and to confirm that fraud and irregularity forms have been drawn up for documents above €10 000, as specified in Article 6(5) of Regulation No 1150/00. 3) Document No Ε1976/726/Α0034/21.11.05 giving instructions to the customs authorities to monitor closely the results of subsequent investigations by the ELYTs (Customs Special Investigations Units) into the assessment of supplementary tax charges and the drawing up of fraud forms in cases where the requirements of Article 6(5) of Regulation No 1150/00 are met. |

IE | With regard to VAT, it was agreed at the Cocolaf meeting in October 2005, that it is open to Member States not to answer this question. Ireland has already indicated its reservation about the inclusion of VAT in this questionnaire. Ireland continues to maintain this reservation. As a matter of principle, Ireland considers that all tax matters must be taken under unanimity. As such, Ireland will not be responding to this question in respect of VAT. |

IT | Act No 248 of 2 December 2005 amending and converting into law Decree Act No 203 of 30 September 2005 on measures to combat tax evasion and urgent tax and financial measures (Official Gazette No 281, 2 December 2005), stepped up the fight against tax evasion by involving the local authorities and supporting the work of the Revenue Agency, the Customs Service and the Guardia di Finanza by increasing their powers of investigation and enforcement. |

LV | The amendments made to the Law on VAT adopted on 20 October 2005 were made in order to: 1) specify the definition of “a person taxable with the value added tax”; 2) to specify the procedure how persons are registered in and excluded from the State Revenue Service Register of Value Added Tax Taxable Persons; 3) define responsibility of persons who avoid presenting their VAT declarations to the State Revenue Service and do not submit documents for tax calculation control. Amendments to Article 10 of the Law On Value Added Tax specify that a taxable person registered with the State Revenue Service has the right to deduct input value added tax for the taxable transactions. This ensures a possibility to control validity of input value added tax deductions. The amendment in paragraph 12 of Article 12 expands possibility of tax authorities to evaluate cases of refund of the tax from the budget. The Regulation of the Cabinet of Ministers No 651 of 30 August 2005 “Procedures for application of the value added tax to import, delivery and acquisition of goods in the territory of the European Union and delivery of services financed by the foreign financial assistance”. The Regulation of the Cabinet of Ministers No 346 of 24 May 2005 “Amendments to the Regulation of the Cabinet of Ministers No 163 of 23 March “Procedure on European Community’s own resources system functioning”. Regulation defines procedure how functioning of European Community’s own resources system including definition, forecasting, collection, transfer and control of own resources and performance of related tasks is ensured. Regulation of the Cabinet of Ministers No 731 of 27 September 2005 “Amendments to the Regulation of the Cabinet of Ministers No 502 of 9 September 2003 “Procedure on how State Revenue Service excludes persons from the State Revenue Service Register of Value Added Tax Taxable Persons””. Regulation envisages a simplified procedure how persons are excluded from the said register of the State Revenue Service. Procedure No 46 approved by the Ministry of Finance on 14 October 2005 lays down arrangements for administration of contributions paid to the budget of the European Community by the Republic of Latvia and procedure No 3 approved by the Ministry of Finance on 18 January 2005 defines procedure how annual report on VAT resource base is elaborated. Instructions of the State Revenue Service, adopted on the 16 May 2005. The aim of the instruction is to ensure performance of joint tax controls by the Member States as set by the EU law and international agreements signed by the State Revenue Service on administrative assistance and exchange of information. |

HU | On 1 January 2005 Article 208 of Act CI of 2004 amending legislation on taxes, contributions and other payments to the budget entered into force, amending Article 88 (5) of Act XCII of 2003 on the rules of taxation. See point 1.5. |

SI | The Act amending the Value Added Tax Act (ZDDV-F, Official Gazette of the Republic of Slovenia No 108/2005); No 434-02/96-13/86; date: 2 December 2005; in its new Article 59a stipulates that the tax administration decides ex officio on the cessation of identification for VAT purposes, if it finds there are no longer grounds for VAT identification. Main reason for supplementing the Act: tax evasion and increasing occurrence of so-called missing traders, as defined in Commission Regulation (EC) No 1925/2004. |

SK | Act No 652/2004 Coll. on national customs bodies and amendments to some acts, as amended by Act No 331/2005 Coll. of 10 December 2004, published in section 276/2004 of the Collection of Acts of the Slovak Republic; Act No 199/2004 Coll. on customs and amendments to some acts (the Customs Act) was amended; this act established the Customs Crime Authority with applicability from 1 January 2005 (Section 11 of Act No 652/04 Coll.), which fulfils tasks in the area of combating infringement of customs regulations or tax regulations and secures other tasks concerning prevention of illegal actions endangering the interests of the European Communities. Act No. 650/2005 Coll. of 2 July 2005, see point 1.1. |

Agricultural expenditure (expenditure financed by EAGGF - Guarantee Section): Have there been any significant new legislative developments (not just implementing measures) contributing to the implementation of Article 280 of the Treaty in 2005? Member States are asked to list only measures adopted on their own initiative and not those which simply transpose Community legislation. |

If so, please give a brief description below. Please indicate: the type of legal instrument (e.g. law, regulation, legislative decree), the references of the legal instrument (number/date of publication in Official Gazette, etc.), the legal instrument or code which it amends (if any), the title of the legal instrument or a brief description (no longer than one to two sentences), whether the measures are general or whether they apply to a specific sector of the EAGGF-Guarantee Section and which one. |

ES | Royal Decree 754/2004 of 24 June, regulating the milk levy scheme. (BOE nr 162, 8-07-2005). Its main purpose is to set up the basic operational requirements of the control system, to assess whether the milk quota's national reference quantities allocated to Spain have been exceeded and how to proceed with the appropriate assessments in case of quota overrun. Furthermore, an information system is set up to ensure harmonisation of all the information the public administrations concerned should have concerning the milk quota scheme. Besides, a coordination board, consisting of representatives of the Autonomous Communities and the Ministry of Agriculture, Fisheries and Food, has been established (with a view to laying down a transitional regime until the full entry into force of the new legal framework, at the end of the levy period 2006-2007). Under the provisions of this Royal Decree and of Regulation (EC) 595/2004, the following FEGA General Instructions have been established: 14/2005 of 7 November, establishing the procedure for carrying out checks on milk deliveries by producers. 16/2005 of 1 December, establishing the procedure for carrying out controls on milk transport from farmers to buyers. It prevents the non-declaration of milk delivered outside the quota. 19/2005 of 2 December, establishing the most efficient control mechanisms over farmers, buyers and milk transport in order to manage the milk levy scheme. The scope of these measures covers the cow’s milk sector. CIRCULAR 31/2005 of 23 December, coordinating the administrative and on-the-spot checks to be carried out on aids granted to producer organizations constituting an operational fund. It lays down the minimum administrative and on-the-spot checks on applications for financial aid to producer organizations constituting an operational fund, as well as the criteria for implementing those checks. The scope of theses measures covers the fruit and vegetables sector. It harmonises check criteria and optimizes coordination between paying agencies. |

IT | Act No 231 of 11 November 2005 amended and converted into law Decree Act No 182 of 9 September 2005, introducing a series of provisions aimed at improving procedures to recover amounts unduly paid in the EAGGF Guarantee Section. |

LV | Decree of the Cabinet of Ministers No 5 of 1 January 2006 „Amendments to the Decree of the Cabinet of Ministers No 5 of 7 January 2004 „Responsible bodies of the European Agricultural Guidance and Guarantee Fund Guarantee Section and Cohesion Fund”. The Decree specifies accreditation criteria for the Paying agency and states that the accreditation criteria are laid down in the Annex of the Commission regulation (EC) No 1663/95 laying down detailed rules for the application of Council Regulation (EEC) No 729/70 regarding the procedure for the clearance of the accounts of the EAGGF Guarantee Section. The measures laid down in the Decree shall be applied to the operation and accreditation of the Paying agency. |

HU | The rules concerning the legal consequences included in Act LXXIII of 2003 on certain matters of procedures related to supports for agriculture and rural development and other measures and the related amendments of law were amended as of 6 May 2005. The most important new rules (Articles 37/A-37/B) are: – A default penalty of a maximum of one hundred thousand Hungarian forints may be imposed on private clients, while other clients may be liable to pay a default penalty of a maximum of two hundred thousand Hungarian forints if such clients, according to the legislation enacted on the basis of the present act, fail, in connection with using the assistance, to produce the receipts and keep the books and records prescribed by law, or if they issue receipts in a manner that is not in accord with the regulations and keep incomplete books and records in a manner that is not in accord with the regulations, [Article 37/B/c)] fail to fulfil their obligation to retain files, [Article 37/B/d)] obstruct auditing by failing to meet their obligation to appear, violating their obligation to cooperate or in any other way [Article 37/B/g)]. – If the client fails to meet its obligations to register, report, report changes or provide information, the Agricultural and Rural Development Agency (ARDA) sets a default penalty at the same time as it calls on the client to perform by a given deadline. Twice the amount of the penalty that had been imposed must be set along with a new deadline in the event that the client failed to meet the deadline prescribed in the previous decision compelling performance. In the event that the obligation is fulfilled, the penalty set on the basis of the present paragraph may be reduced freely. [Article 37/B (3)] – Any natural or legal person not qualifying as a client may be sanctioned for obstructing an inspection. [Article 37/B (4)] When imposing a default penalty, ARDA considers all the circumstances of the matter, the gravity and frequency of the client’s illegal behaviour (activity or default) as well as whether the client or its representative, employee, member or agent who is handling the matter proceeded with due care in the given situation. On the basis of an assessment of the circumstances, ARDA imposes a penalty in accordance with the gravity of the default or decides not to impose a penalty. [Article 37/B (5)]. |

MT | Paying Agency Regulations, 2004 – A legal Notice issued under the AGRICULTURE AND FISHERIES INDUSTRIES(FINANCIAL ASSISTANCE) ACT, (CAP. 146) Government Gazette of Malta No. 17,551 – 12th March 2004 Establishes a Paying Agency, which has the function set out in these regulations. The Paying Agency performs the following three Functions: (a) the authorisation of payments from the aid scheme (b) the execution of payments from the aid schemes by issuing instructions to the bankers of the agency, or, in appropriate cases, a governments payments office, to pay the authorised amount to the claimant or his assignee; and (c) the accounting for payments made under the scheme Furthermore, the Agency shall provide two services, namely (a) an internal audit service, having the tasks referred to in paragraph 3 (i) of the Annex to Commission Regulation1663/95 (b) a technical control service, having the tasks referred to in paragraph 3 (ii) of the Annex of Commission Regulation1663/95. L.N. 389 of 2005, COMPANIES ACT (CAP.386). Art 8. Companies Act (The Prospectus) Regulations, 2005. Government Gazette of Malta No. 17, 846 – 25.11.2005. L.N. 390 of 2005, COMPANIES ACT (CAP.386). Art 7, 8, 10 etc. Companies Act (Amendments to the Second Schedule) Regulations, 2005. Government Gazette of Malta No. 17, 846 – 25.11.2005 L.N. 401 of 2005, SET-OFF AND NETTING ON INSOLVENCY ACT (CAP.459). Financial Collateral Arrangements (Amendment) (No.2) Regulations, 2005. Government gazette of Malta No. 17 , 850 – 09.12.2005 L.N. 7 of 2005, ARBITRATION ACT (CAP.387). Arbitration Act (Amendment of Fourth Schedule) Regulations, 2005. Government Gazette of Malta No. 17, 707 – 14.01.2005. L.N. 414 of 2005, COMMISSIONERS FOR JUSTICE ACT (CAP.291). Petitions (Local Tribunals) Regulations, 2005. Government Gazette of Malta No. 17, 859 – 30.12.2005. L.N. 382 of 2005, FINANCIAL ADMINISTARTION AND AUDIT ACT (CAP.174). Public Contracts (Amendment) Regulations, 2005. Government Gazette No. 17, 845 – 22.11.2005. L.N. 49 of 2005. INCOME TAX ACT (CAP.123) INCOME TAX MANAGEMNET ACT (CAP.372). Sale of Agricultural Produce Rules, 2005. Government Gazette of Malta No. 17, 729 -18.02.2005. L.N.279 of 2005. ARBITRATION ACT (CAP.387). Arbitration Act (Amendment of Fourth Schedule) Regulations, 2005. Government Gazette of Malta No. 17, 799 – 29.07.2005 |

AT | Agricultural expenditure – Amendment to the specific Directive. |

PL | On 10 February 2005 the Minister for Finance and the President of the Agricultural Market Agency signed a Memorandum of Understanding on the detailed rules governing cooperation between the Customs Service and the Agricultural Market Agency on the circulation of documents and information on work related to trade in goods which are covered by export refunds under the common agricultural policy and processed goods which are not caught by Annex I to the Treaty establishing the European Community. The Memorandum of Understanding is annexed to the Memorandum of Understanding dated 24 July 2003 between the Minister for Finance and the President of the Agricultural Market Agency on cooperation between the Customs Service and the Agricultural Market Agency on the import and export of goods covered by the common agricultural policy. The Memorandum of Understanding was concluded with a view to streamlining the circulation of documents and exchanges of information between the Customs Service and the Agricultural Market Agency. It also includes detailed arrangements for cooperation on producer authorisations, checks on registered formulae and checks on the pre-financing of export refunds and on food stores and planning procedures. On 16 February 2005 the Order laying down procedural rules for customs bodies under the common agricultural policy was amended. The information contained in the Order was updated as regards the horizontal rules and individual agricultural sectors. |

PT | The following legislation was adopted on Portugal's own initiative in 2005 in certain specific sectors. The respective pieces of legislation contain provisions on control and associated systems, recovery of undue payments and for penalties for infringements: Cross compliance Ministerial Order No 36/2005 of 17 January 2005 (Official Gazette, Series I B, No 11, 17.1.2005) – lays down national rules for implementing the control system for cross compliance. Ministerial Order No 23/2005 of 7 April (Azores Region Official Gazette No 14, 7.4.2005) – lays down the rules for implementing the control system for cross compliance in the Autonomous Region of the Azores. Animal identification Order No 9133/2005 (2nd series) of 12 April 2005 (Official Gazette, Series II, No 80, 26.4.2005) – on the creation by INGA of a centralised national computerised database on the sheep and goat population, called Sistema Nacional de Identificação e Registo de Animais (SNIRA - O/C) (National System for the identification and registration of animals (sheep and goats)). Order No 10 178/2005 (2nd series) of 22 April 2005 (Official Gazette, Series II, No 88, 6.5.2005) – on the creation by INGA of a national computerised database containing a register of pig holdings and movements of pigs, called Sistema Nacional de Identificação e Registo de Animais (SNIRA - Suínos) (National System for the identification and registration of animals (pigs)). Olive oil Decree-Law No 231/2005 of 29 December2005 (Official Gazette, Series I A, No 249, 29.12.2005) – abolishes the Control Agency for Community assistance to the olive oil sector (ACACSA) and assigns tasks relating to the Community olive oil aid scheme to the Financing and Supporting Institute for the Development of Agriculture and Fisheries (IFADAP) and the National Institute of Agricultural Intervention and Guarantee (INGA), in accordance with their respective responsibilities. The tasks of monitoring oil mills and the destination of the olive oil obtained from the processed olives and their by-products will be carried out by the Food and Economic Safety Authority (ASAE), which was set up by Decree-Law No 237/2005 of 30 December 2005 (Official Gazette, Series I A, No 250, 30.12.2005). Rural development Ministerial Order No 176/2005 of 14 February 2005 (Official Gazette, Series I B, No 31, 14.2.2005) – approves the implementing rules for area plans as part of the "agri-environmental measures" scheme under the Rural Development Plan (RURIS). Ministerial Order No 229/2005 of 28 February 2005 (Official Gazette, Series I B, No 41, 28.2.2005) – on cases where beneficiaries fall short on more than one commitment. It amends Ministerial Order No 1212/2003 of 16 October 2003 approving the implementing rules for the "agri-environmental measures" scheme and Ministerial Order No 46-A/2001 of 25 January 2001 approving the implementing rules for the compensatory payments scheme, both under the Rural Development Plan (RURIS). |

Structural operations: Have there been any significant new legislative developments (not just implementing measures) contributing to the implementation of Article 280 of the Treaty in 2005? Member States are asked to list only measures adopted on their own initiative and not those which simply transpose Community legislation. |

If so, please give a brief description below. Please indicate: the type of legal instrument (e.g. law, regulation, legislative decree), the references of the legal instrument (number/date of publication in Official Gazette, etc.), the legal instrument or code which it amends (if any), the title of the legal instrument or a brief description (no longer than one to two sentences), whether the measures are general or whether they apply to a specific fund and, if so, which one. |

EE | Regulation No 63 by the Minister of Finance of 19 September 2005 "Conditions and policies for the recovery and repayment of structural aid and the transmission of information concerning the illicit use of structural aid" (Appendix to the State Gazette, 04.10.2005, 101, 1556). The regulation governs the reporting of infringements of rules occurring during the provision or use of aid from Structural Funds and the Cohesion Fund and the recovery of aid. Subsection 10 of section 3 of regulation No 59 by the Minister of Finance of 19 August 2005 “General conditions and procedure for disbursement of structural aid” gives the paying agency the right to stop payments. The amendment to the Structural Aid Act came into force on 1 July 2005. Monitoring of Structural Fund resources became two-tiered – the implementing unit (second level intermediate body) monitors the final recipient and the implementing agency (first level intermediate body) monitors the implementation unit. Thus legal persons governed by private law – the implementing agencies – have been given the authorisation to carry out monitoring. 2) The bases were added for rescinding the decision to approve an application for aid, if the final recipient is not able to carry out the project. |

EL | 1) Joint Ministerial Decision No 190622/16.12.2005 (Government Journal Issue 1850/B/29.12.2005) by the Ministers of Employment and Social Protection and Finance and the Economy on the recovery of undue or illegal payments from national or EU resources within the framework of the European Social Fund. This Decision determines the recovery procedure for illegal or undue payments to final recipients from the national budget for the implementation of programmes funded by the ESF within the framework of the third CSF, where the obligation of recovery is determined by the Ministry of Employment and Social Protection’s special ESF Co-funding Implementation Service, which is acting in its capacity as final beneficiary of the “Promotion of Employment and Continuous Training” OP. |

LV | The Law on Management of European Union Structural Funds adopted on the 8 of December 2005 which sets up the procedure on appeal against decisions of administrative authorities to approve or reject projects. Field of application: European Union Structural Funds. The Regulation of the Cabinet of Ministers No 784 of 18 October, 2005 “Amendments to the Regulation of Cabinet of Ministers No 200 of 30 March, 2004 “Regulation on Management of the European Union Structural Funds””, which simplifies the procedure on how to amend projects. |

HU | I) – In March 2005 the following Government Decrees were introduced to expedite payment of European Union funds: Government Decree No. 53/2005 (III. 26.) on the amendment of Government Decree No. 1/2004 (I. 5.) on the institutions responsible for the utilisation of aids from the European Union’s Structural Funds and Cohesion Fund. Government Decree No. 54/2005 (III. 26.) on the regulations concerning guarantees applying to EQUAL Community Initiative Programme and the Operational Programmes of the National Development Plan. The measures defined in Government Degree No. 55/2005. (III.26.) regard the Structural Funds, the Cohesion Fund, the Schengen Fund, temporary assistance and pre-accession instruments. II) – The new or amended rules of Government Decree No. 217/1998 (XII. 30) on the operational order of the state budget (Hungarian abbreviation: Ámr) are the following: Article 87 (2) a) of Ámr (the amendment entered into force on 29 March 2005) ‘With the beneficiary obtaining a subsidy for development – with the exception of the stipulations specified in Paragraph (12) – the precondition for concluding the contract is a) the beneficiary’s written statement in the form of a notarised private document that shows that the beneficiary does not have any overdue public debt owed to the local government’s tax authority or duty-office (hereinafter collectively called tax authorities) with jurisdiction over the registered office and the place where the aid project is implemented and has no debt under the title of the European Union’s traditional own resources or that it has received permission from the competent tax authority for payment relief (deferment, instalment payment)’ [Article 87 (2) a) of Ámr] (the amendment entered into force on 29 March 2005) [Article 88 (2) of Ámr] (effective as of 29 March 2005) ‘In addition to the sanctions listed in Paragraph (1), the beneficiary can, by decision of the head of the agency supervising the chapter, be excluded for a specified period – of no more than five years – from the subsidy system of the affected appropriations if at least one of the following conditions exists: a) the obligation or partial obligation stated in the contract is not implemented or is implemented only partly, in the case of numerically established obligations by a percentage of less than 75% (66% in case of an in-kind contribution for the site or a direct subsidy for purchasing the site), b) the beneficiary performs a task that is different from the approved objective, c) the beneficiary failed to meet its reporting obligation specified in Article 87 (5) of the decree within the specified deadline.’ [Article 88 (3) of Ámr] (effective as of 8 June 2005) ‘In the case of subsidies provided from the Structural Funds or the Cohesion Fund, exclusion form the subsidy system stipulated in Paragraph (2) shall cover all subsidy systems financed from the Structural Funds and the Cohesion Fund. In the case of a subsidy allocated from the Cohesion Fund, according to the decision of the head of the agency supervising the chapter, exclusion shall also apply if the European Commission withdraws the subsidy or a part of it awarded from the Cohesion Fund for reasons that can be attributed to the beneficiary.’ [Article 92 (4) of Ámr] (effective as of 1 January 2005) ‘The Tax and Financial Control Administration, the Directorate General of the Hungarian Customs and Finance Guard and its agencies shall, in accordance with Article 8 (8) of this Decree, supply numerical data on the basis of information obtained from the Treasury to the remitting agent and the National Assistance Monitoring System (NAMS) in the event that the beneficiary has any expired and unpaid public debt more than 60 days overdue, if it has any debt under the title of the European Union’s traditional own resources, or if it has paid such debt or received permission for payment relief (deferment, instalment). Information is provided electronically on a regular basis to the decision-making body and/or remitting agent and NAMS. Concerning operational programmes, data is provided directly to the Unified Monitoring and Information System (UMIS)’. III) – On the basis of Article 90 (4) of the Act CLIII of 2005 on the budget of the Republic of Hungary in 2006, Act XXXVIII of 1992 on public finances was supplemented by the following Article 13/C: ‘Article 13/C (1) If an obligation to repay a European Union subsidy has been determined or if a direct deduction has been made from the account of some programme or project co-financed by the European Union, repayment or replacement shall be made from the budget of the chapter responsible for the irregularity or, if there is none, the chapter disbursing the irregularly used resource. (2) Repayment or replacement as defined in Paragraph (1) shall be made from an appropriation that has an objective identical to that of the European Union subsidy that has been irregularly utilized. If this is not possible, repayment or replacement shall be made from an appropriation specified by the Government. The present provision is an exception to the provision described in Article 24 (9). (3) In the event that the sum involved in the irregularity is subsequently recovered or refunded, this sum shall be refunded to the appropriation specified in Paragraph (2) of the chapter specified in Paragraph (1).’ |

MT | The Managing Authority takes due responsibility in terms of financial management and control in the course of programming and implementing EU Structural Funds Program, as also, in the monitoring of projects that have been approved for funding. Subsequently, it rigorously applies both National Legislation as well as EU Commission Regulations to counter fraud affecting the financial interest of both national as well as EU financial interests. To date, there has been only one development in terms of National Legislation that gives effect to Article 280 of the EC Treaty. This is Chapter 174 of the Laws of Malta relating to Financial Administration and Audit Act, as amended by Act I of 2004. This Act regulates the receipt, control and disbursement of public monies (this includes money that government pays out or disburses from funds received from the EU). It also provides for the audit of accounts in relation to public money. Part X of the Act entitled ‘ Audit and Inspection’ identifies measures to be followed to counter fraud and irregularities. This act applies to Public Money in general, and does not relate to specific structural funds. |

PL | In 2005 the Ordinance of the Minister for Economy and Labour dated 22 September 2004 on how, what and when to report on implementation of the National Development Plan, the procedure for monitoring implementation of the National Development Plan, and the settlement procedure was updated. The proposed amendments clarified the powers of scrutiny of bodies involved in implementing programmes jointly funded by the EU Structural Funds and clarified monitoring procedures regarding the strategy for using the Cohesion Fund (type of legal instrument: <}83{>Ordinance; references of the legal instrument: Official Gazette 2005/224, item 1926; title of the legal instrument: Ordinance of the Minister for Economy and Labour dated 31 October 2005 amending the Ordinance on how, what and when to report on implementation of the National Development Plan, the procedure for monitoring implementation of the National Development Plan, and the settlement procedure). |

FI | Decree of the Ministry of Social Affairs and Health, issued in Helsinki 19 April 2005, concerning the powers of the State Provincial Office of Eastern Finland in Structural Fund matters. Entry into force: 1 May 2005. Decree No 260/2005 / published 29 April 2005 / Statute Book of Finland, issue No 50, acts N.258–263. The Ministry of Social Affairs and Health delegate powers in matters related to the structural funds to the State Provincial Office of Eastern Finland. The delegation concerns both the European Social Fund and the European Regional Development Fund in Eastern Finland’s Objective 1 area. |

Description of key developments: Member States are invited to describe the two or three most important measures (whether legislative or administrative) taken in the course of 2005 about which they would wish to provide more detailed information. These should be measures adopted on Member States’ own initiative and not measures which simply transpose Community legislation. |

In particular, Member States are asked to indicate: - the type of measure (law, regulation, etc.) and its references (number, date of adoption and/or publication, name of programme, etc.), - its scope (horizontal scope, specific field), - why it was needed, - the improvements made to the existing system. |

BE | Circular COL 4/2005 of the Association of Public Prosecutors of the Court of Appeal (Brussels, 1 February 2005 – confidential document). On cooperation between the police and the customs and excise authorities concerning the application of special investigation methods. The circular provides for application of a uniform procedure in all districts and clarifies certain concepts relating to special investigation methods. In June and December 2005 the Department of European Programmes of the Ministry of the Walloon region updated the CD-ROM for functional administrations. This CD-ROM contains the Community provisions (general provisions, eligibility, publicity requirements, use of the Euro, management and control), regional provisions (implementing arrangements, control), programming documents, records of meetings, annual reports and a list of useful websites. The CD-ROM was distributed to the functional administrations (intermediate bodies) and the offices (cabinets) of the Ministers concerned. The European Social Fund Agency provides operators with an administrative and financial guide to the Community, national and regional legislation relevant to the handling of ESF financial dossiers. In 2005 the guide was updated for two administrative matters: the revaluation of EPA (Walloon Region) and publicity requirements. The ministers of justice and foreign affairs issued a framework memorandum on “integral security” concerning the best integral and integrated security policy, which was adopted by the Council of Ministers on 30 and 31 March 2004 and signed by all the members of the government. The strategic objectives of this security policy are set out in the introduction. Tackling fraud against the European Union’s financial interests is one of the priorities of this policy. In 2005 a network was set up for this purpose under the Federal Public Services for Justice and the Economy. |

EE | Creation of the legal bases for the suspension of payments pursuant to the Minister of Finance’s regulation No 59 of 19 August “General conditions and procedure for disbursement of structural aid”. The aforesaid provision allows payments to be suspended if the paying agency has information on record that the control systems do not comply with the requirements of European Commission Regulation (EC) No 438/2001 or that the protection of the European Union’s financial interests is not guaranteed for the purposes of Council Regulation (EC) No 2988/95. In this case the paying agency may stop the aid payments, informing, without delay, the implementation unit (second level intermediate body), the implementing agency (first level intermediate body) and the management authority. The provision is necessary so that in the event of shortcomings in the control systems the paying agency has the right to stop payments and to require the implementation of measures to correct the problem. The Minister of Finance's regulation No 63 of 19 September 2005 "Conditions and procedure for the recovery and repayment of structural aid and the transmission of information concerning the improper use of structural aid" imposed a duty on implementation units to inform the financial control department of the Ministry of Finance (AFCOS – OLAF’s cooperation partner) within two weeks of the irregularity, the suspicion of fraudulent conduct or shortcomings in the control system. AFCOS oversees the paying agency and managing authority and, if necessary, other relevant agencies, whose competence includes contributing to the rectification of irregularities. With immediate reporting of irregularities it can be ascertained whether all necessary measures have been implemented and, if necessary, contributed to preventing irregularities and solving problems. The need for measures is because previously information concerning irregularities was provided only once per quarter, while several cases required a faster reaction at the level of the auditing authority and the paying agency. The regulation also laid down a national financial limit of 2500 EUR for infringement reports; a report does not have to be submitted if the infringement is under this limit. A copy of the decision to recover aid has to be submitted to the Ministry of Finance, regardless of the amount to be recovered. |

EL | - Law 3316/2005 (Government Journal Issue 42/A/22.2.2005) on the allocation and performance of public contracts for conducting studies and rendering relevant services, and other provisions. This law governs the concluding and performance of all public contracts (horizontal scope) for conducting studies and rendering other services by engineering and other liberal professions where the studies are not conducted and the services not rendered by the staff of the appointed authority. - The measure was required to tighten the structure of the procedure, while simultaneously improving the quality of public works studies and completing the reform of the institutional framework governing public works. - The following improvements were made: a. Introduction of criteria of suitability for candidate consultants, in accordance with Community legislation. b. Introduction of strict prerequisites for the amendment of the study while the work is in progress. c. Allocation to the most advantageous tender applying the criteria. d. Consolidation in one piece of legislation of the whole institutional framework for the award of contracts for studies and relevant services. e. The price bid is not to be a function of the budget for the work. |

ES | Royal Decree 939/2005 of 29 July, adopting the General Collection Regulation (B.O.E. of 2 September, which entered into force on 1 January 2006). Its scope covers the European Union’s and other international or supranational bodies’ own resources (Article 5.2. of the Regulation). It lays down rules for the collection of public resources by the different administrations (state, regional and local, state’s autonomous bodies and resources of other foreign public administrations and supranational institutions), putting the stress on the function and not on the institution that carries it out in order to be more flexible with a view to future organizational changes. Agreement between the Ministry of Finance and the Ministry of Justice of 3 October 2005, regarding the setting-up of a joint monitoring centre to improve efficiency in the fight against fiscal offences. It will improve coordination between the Finance and Justice Ministries in the fight against fiscal fraud. Internal restructuring at the Directorate General for Community Funds (Dirección General de Fondos Comunitarios) Through the Royal Decree 765/2005 of 24 June, a set of internal restructuring measures at the Community Funds DG have been implemented, integrating in the Inspection and Control Sub directorate General the Community funds’ internal control tasks, thus ensuring a clearer distinction between the payment and control tasks. |

FR | First, a decree was adopted on 15 September 2005 on the "customs information system" (CIS) (Official Gazette No 226 of 28 September 2005): the CIS is designed to increase the efficiency of the customs authorities' cooperation and control procedures within the meaning of the Convention of 18 December 1997 on mutual assistance and cooperation between customs administrations, by way of faster dissemination of information on fraud between the Member States. The system's purpose is to help prevent, detect and prosecute transactions which contravene Community customs or agricultural legislation and serious infringements of national laws. Second, export certificates in the milk products sector (EAGGF Guarantee Section) are to be made electronic: a supplementing agreement to the agreement between DGDDI and ONILAIT was signed on 18 February 2005 setting up an electronic export certificates pilot project. Certificates issued in the milk sector for presentation to the customs authorities will no longer be issued on paper. Before electronic certificates are phased in, a pilot project is being set up at customs offices and at the offices of participating traders. The aim is to make exchanges more secure and to counter the presentation of false export certificates, or of certificates with falsified data. Instead of paper certificates, certificates will be stored on ONILAIT's database, to which customs officers, exporters and customs agents will have secure access. |

IE | 1. Further to last year’s report, the Revenue Commissioners took delivery of a new Mobile Container Scanner on 27 October 2005 which was brought into service following a period of commissioning and testing. The deployment of this scanner is expected to significantly improve the effectiveness of the Irish Customs Service in detecting the smuggling of contraband in maritime traffic arriving at all Irish Ports, including traffic from 3rd Countries. 2. Ireland signed up to the Anti-Contraband and Anti-Counterfeiting Agreement between the EC, together with certain Member States, and Philip Morris International on 19 April 2005. It is expected that this agreement should assist the Irish Customs Service in tackling the smuggling of cigarettes and the evasion of duties and taxes. |

IT | Sections 3 et seq. of Act No 248/05 (referred to in point 1.2) have radically changed the system for recovering tax revenue and revenue from assets payable to the public bodies in the area or the companies in which they have holdings. Different rules have been laid down regarding recovery procedures and recovery has been entrusted to the Revenue Agency, which acts through the company Riscossioni Spa. In accordance with directives issued by the Ministry of Economic Affairs and Finance, on 18 July 2005 the Guardia di Finanza (the body responsible for enforcing economic and financial law), the Revenue Agency and the Customs Service signed a Memorandum of Understanding concerning the fight against VAT fraud enabling them to set technical meetings to exchange information and coordinate operations at national and regional level. Furthermore, the Guardia di Finanza has been given a specific role in the fight against crime in this field. |

CY | As far as administrative measures are concerned, a circular on “Irregularities reporting” has been issued by the Paying Authority on 25/07/2005 and has been addressed to the Internal Audit Service, the Managing Authority, and Intermediate Bodies & Final Beneficiaries. Scope: to set a standardized procedure for reporting cases of irregularities identified by the different players to the Paying Authority, which has the responsibility for subsequent reporting to OLAF The Circular was issued to ensure that a common policy is in place, setting reporting deadlines and standardized reports with the information required by OLAF |

LV | - The Law “Amendments of the Criminal law” which amends The Criminal Law adopted on 8 July 1998. It adds to the Criminal law Article 1771 „Fraud in an Automated Data Processing System”, as well as Article 177 „Fraud” and Article 178 „Insurance Fraud”. The amendments were necessary in order to define liability of persons who have committed illegal actions by means of fraud or insurance fraud in order to obtain the property of another or to receive insurance money. - Law on Criminal Procedure is adopted in order to speed up and simplify the criminal process and the proceedings in courts. - The amendments made to the Law on VAT adopted on 20 October 2005 which specify the definition of “a person taxable with the value added tax” as well as the procedure how persons are registered in and excluded from the State Revenue Service Register of Value Added Tax Taxable Persons and they define responsibility of persons who avoid presenting their VAT declarations to the State Revenue Service and do not submit documents for tax calculation control. These amendments also specify that a taxable person registered with the State Revenue Service has the right to deduct input value added tax for the taxable transactions and expand possibility of tax authorities to evaluate cases of refund of the tax from the budget. |

LT | The setting up of the work group (in 2005) for the development and improvement of the system for the management and analysis of risk related to the use of support from the EU Structural Funds under the Objective 1 Programme and from the EU Cohesion Fund and national co-financing funds. The work group was set up under Order No 1K-072 of the Minister of Finance of the Republic of Lithuania of 15 March 2005 (Off. Gaz., 2005, No 45-1462). The work group was set up mainly for the purpose of presenting proposals on the development and improvement of the system for the management and analysis of risk related to the use of EU structural support. Law No X-272 amending Articles 48, 60, 145, 147, 157, 212, 213, 214, 215, 226, 249, 251, 252, 256, 267, 270, 272, 274 and 280 of and the Annex to the Penal Code of the Republic of Lithuania and supplementing it with Articles 1471, 1991, 1992, 2671, 2701, 3081 was passed on 23 June 2005. The Law was published in the Official Gazette Valstybės žinios No 81-2945 on 30 June 2005. Article 1991 on customs fraud establishes criminal liability for failure to declare to the customs authorities of the Republic of Lithuania or any other EU Member State goods subject to declaration and brought into the Republic of Lithuania from an EU Member State worth more than 250 MSL or for avoidance of customs control in any other way. Article 1992 on unlawful operations in dutiable goods establishes criminal liability for the acquisition, storage, transporting, dispatching, using or selling of dutiable goods worth more than 250 MSL by violating the established procedures. |

HU | In this section, the following legal measures will be described: I) Government Decree No. 55/2005. (III. 26.) II) Act CXL of 2004 III) Act CI of 2004 IV) Amendment of Government Decree No. 217/1998 (XII. 30.) on the operational procedures of public finances I) - Government Decree No. 55/2005 (III. 26.) on the procedure for recovering EU subsidies and the associated state subsidies improperly used or used contrary to the law or the terms of contract entered into force on 29 March 2005, but its provisions must also be applied – if the contract was concluded after 1 January 2003 – to the collection (in the form of taxes) of receivables arising from grant contracts made before the decree entered into effect, including contracts made using pre-accession instruments. The Government Decree was issued pursuant to Article 13/A (10) of Act XXXVIII of 1992 on public finances (Hungarian abbreviation: Áht), and its objective is to provide a detailed description of the implementation of rules related to subsidies as set forth in Article 13/A (4)-(9) of Áht. 1) The scope of the act covers – managing authorities and intermediary bodies specified in Government Decree No. 1/2004 (I. 5.) on the institutions responsible for the domestic utilisation of grants coming from the European Union Structural Funds and Cohesion Fund as well as the competent ministries and bodies with national jurisdiction, – the competent authorities specified in Government Decree No. 179/2004 (V. 26.) on the establishment of the financial planning, implementation and control procedures for utilising the Schengen Fund, as well as the professional intermediary bodies and competent ministries and bodies with national jurisdiction, – the institutions falling within the scope of Government Decree No. 119/2004 (IV. 29.) on the financial planning, implementation, audit and control procedures for the use of aids from EU pre-accession funds and transition facilities, – the entities receiving subsidies (beneficiaries) from the programmes or projects, and – tax authorities responsible for the collection of payment liabilities qualified as public dues to be recovered in the form of taxes. 2) Key provisions: a) Termination of contract – If the competent authority establishes that the subsidy has been used illegally or in a manner differing from their intended purpose and terminates the contract for this reason, the competent authority (entitled to enforce the claim) shall proceed to enforce the claim relating to the repayment obligation to which the beneficiary is subject in accordance with the provisions of specific other legislation. – The competent authority may also terminate the contract if bankruptcy, liquidation, dissolution, ex officio cancellation, or property settlement proceedings are initiated against the beneficiary or if enforcement or tax settlement proceedings against the beneficiary are in progress. b) Repayment obligation – If the beneficiary fails, entirely or in part, to meet its repayment obligation within the term set in the grant contract and the submitted prompt collection order fails to produce any result, measures must be taken to enforce the applicable guarantees in accordance with the grant contract. – From among the guarantees defined in the grant contract, primarily those must be enforced by which the reclaimed amount can be most quickly collected. Collection of the claim by enforcing other guarantees may only be initiated if the above mentioned procedures fail to deliver any result. – If the claim cannot be enforced from the guarantees, the body entitled to enforce the claim will refer to the competent tax authority to initiate recovery of the claimed amount in the form of taxes and concurrently notify the beneficiary that it has taken this step. If the tax enforcement turns into a court enforcement, the tax authority will notify the body entitled to enforce the claim of this. – The body entitled to enforce the claim, as the referring party, is obliged to pay in advance the minimum enforcement cost specified in Article 161 (2) of Act XCII of 2003 on taxation procedures (hereinafter referred to as ‘Art.’). c) Further procedures in case of failure to recover claimed amounts in the form of taxes After receiving the tax authority’s notice of unsuccessful collection in the form of taxes, the body entitled to enforce the claim is obliged to take further measures to enforce further security guarantees, if any exist. If these guarantees cannot be enforced either, the managing or competent authority will request that liquidation or tax settlement proceedings be ordered against the beneficiary. – The organisation authorised to enforce the claim is obliged to participate in any bankruptcy, liquidation, dissolution, ex officio cancellation, and property settlement or enforcement proceedings that have already begun. II) - Act CXL of 2004 on the general rules of administrative procedures and services (hereinafter referred to as ‘Ket’), promulgated on 28 December 2004 in issue no. 203/2004 of the Hungarian Official Gazette, entered into force on 1 November 2005 and entailed the reform of national public administrative procedure. The Hungarian Parliament adopted the act in order to strengthen and make transparent the service function of public administrative proceedings concerning citizens and organisations on the broadest base, to meet the requirements of operation as an EU Member State, to enforce the rights and obligations of clients as well as to provide a guarantee framework for the specific procedural rules by enforcing the primary character of the general rules. As we refer several times to Ket in the questions below, we will not describe any rule in detail here. III) - Article 208 of Act CI of 2004 amending legislation on taxes, contributions and other payments to the budget, which entered into force on 1 January 2005, amended Article 88 (5) of Act XCII of 2003 on taxation procedures. The amendment was promulgated on 15 November 2004 in issue no. 169/2004 of the Hungarian Official Gazette. The Hungarian Parliament adopted the above mentioned amendment in order to ensure the rational utilisation of the control potential – namely, human resources deployed for controls by the customs authority and the state tax authority – of the authorities relating to taxes (particularly the valued added tax) that fall within the scope of the state tax authority in order to find and reduce various tax abuses and frauds as well as to improve the efficiency of audits. In conformity with the authorisation provided in the legislative measure referred to above, the customs authority and the state tax authority; in order to ensure and increase community and national revenues and find abuses (frauds), continuously aims at increasing the efficiency of control and the number and depth of tax audits as well as at widening the sphere of audit types. IV) - Pursuant to the authorisation provided for in Article 149 (2) c) of Government Decree No. 217/1998 (XII. 30.) on the operational procedures of public finances, Annex 23 containing the declaration relating to the accountability of executive officers was amended as follows: ‘A) I, the undersigned, head of the budget organisation, in full awareness of my legal liability, do hereby declare that pursuant to Article 97 of Act XXXVIII of 1992 on public finances, in the year in the budgetary organisation I manage, I have provided for the organisation and efficient operation of preliminary and follow-up executive control built into the process. I have provided for: - the organisation and efficient operation of internal control.’ |

MT | The Managing Authority has drafted a Manual of Procedure, available to the public, online. It has been designed as a guide to all key players involved in the management and implementation of Malta’s Single Programming Document 2004-2006. This Manual of Procedures is continually updated with improved development and comprehensively addresses issues relating to: The roles and responsibilities of all entities involved; Compliance with Community Policies; Programming procedures; Aid schemes; Technical Assistance; Contracting; Monitoring; Reporting; Evaluation; Financial Management and Payments; Drawdown of Funds from the European Commission; Audit and Control; Reporting of Irregularities; Retention of Documents; Communication; and Delegation of Authority. The Ministry of Finance has continued to introduce measures related to the implementation of accrual accounting in Government. The introduction of accrual accounting will be a major change in the way the internal financial business of Government is conducted. This financial reform process will cross Ministerial and Departmental boundaries and have a major impact on the way each Department will conduct its day-to-day financial administration. Accrual Accounting will provide more meaningful financial information, so as to enhance the quality of the Government’s financial decision-making process. It will provide a better and more comprehensive understanding of the overall financial health of the Government, providing a basis for long term financial planning, in such areas as asset replacement planning, management of debtors and creditors and cash flow predictions. Furthermore, a comprehensive programme has been undertaken and consisted of some of the following activities: Training programs in accounting for employees, formulation of the Government accrual accounting standards and other management proce