ARCHIVES HISTORIQUES 
DE LA COMMISSION 
 
 
 
COLLECTION RELIEE DES 
DOCUMENTS "COM" 
 
 
 
 
COM ( 85) 346 
 
 
 
Vol. 1985/0137 
  
 
Disclaimer  
Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the openi ng to the public of the historical archives of the European Econom ic 
Community and the European Atomic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), this f ile is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation.  
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februar 198 3 über die Freigabe der historischen Archive der Europäischen  
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983,  
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003  
(ABI. L 243 vom 27 .9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit  
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5  
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COMMISSION OF THE EUROPEAN COMMUNITIES
C0M(85) 346 final 
Brussels, 26 June 1985
COMMUNICATION FROM THE COMMISSION TO THE COUNCIL
Implementation of the intergovernmental agreement on the financing of the 
1985 budget
C0M(85) 346 final

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL
Implementation of the intergovernmental agreement on the financing of the 
1985 budget
1. Provisions of the 1985 intergovernmental agreement
On 23 April 1985 the Member States undertook to pay the Commission non- 
refundable advances of 1 .982.359.444 ECU to finance the 1985 budget^.
The agreement divides this sum amongst the Member States.
No provisions are included in the agreement concerning the exact way in 
which these advances are to be paid. However, it was noted in the agreement 
that, in certain Member States, the payment of these amounts would require 
the completion of certain internal procedures. For some of them this 
would mean Parliamentary approval. *
2. Practical application of the 1984 intergovernmental agreement
The 1984 agreement, Like the 1985 agreement, did not make detailed 
provisions for the payment of the advances.
Accordingly, the Member States were invited to
1. make one payment only with value date 5 November 1984,
2. convert the sums due in ECU into national currencies at the rate
obtaining on 16 October 1984. This is the rule laid down in Article 30
(2)of the Financial Regulation for the conversion into national 
currencies of sums due from Member States in ECU ; 
and were informed of the Commission's intention to
3. apply Article 12 (2) of Council Regulation No. 2891/77^ to any Member 
State which did not make its payment on 5 November, thus permitting the 
Commission to overdraw on its account with the treasuries of that Member 
State.
All Member States accepted this manner of proceeding. Only one used a 
different exchange rate. Contacts between the Member State· concerned '  
and the‘Commission on this matter are continuing.
(D The 1985 budget adopted on 13 June 1985 fixed the total amount of 
advances to 1.981.614.284 ECU which the Commission must execute.
(2) OJ L 356, 31.12.1977.
(3) OJ L 336, 27.12.1977.

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3. Practical application of the 1985 intergovernmental agreement
Since the 1985 intergovernmental agreement, like the 1984 one, was 
adopted outside the provisions of the Treaties, no specific Community 
regulations determine the rules for payment. The procedure adopted 
for 1984 is not, however, wholly applicable to the 1985 situation, 
since in 1984 the agreement was made at the end of the year and thus 
led to a once-and-for-all payment.
The points that need then to be settled in 1985 are as follows:
1. The payments timetable to be adopted, namely the dates 
on which payments are to be made.
2. The rates to be used for the conversion of the advances from 
ECU into national currencies.
3. The measures to be taken if a Member State does not make its payments 
on the due dates.
There are two possible courses of action :
CT) to apply the rules used for the monthly VAT payment
(a) Payments_timetable
Following the adoption of the budget in June 1985, the Member 
States would pay 7/12 of the amount due on the first working day 
of the following month, namely 1 July and 1/12 on the first working 
day of each subsequent month. This, together with the additional VAT 
payments under the 1985 budget, would mean that the Commission need 
no longer ask the Member States to pay their share of traditional 
own resources one month in advance, unless there was a surge in 
payment demands from, say, the EAGGF.
(b) Ihe_conversion_rates_to be used
The application of the VAT payments timetable to the advances 
would suggest that the VAT exchange rates be used as well.
These rates are those applying on the first working day 
following the 15th of the month preceding the due date for 
payment.

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(c) Measures_to_be_taken_if_a_Member_State_does_not_make_its_ga^ments
The Commission could, as it stated in 1984, overdraw on its account 
with any Member State's treasury during the period in which this 
Member State does not keep to the timetable for paying the advances.
(2) To call for payment according to the Commission's cash needs
(a) Payments_t 2metable
The Member States would be asked to pay advances in line with cash forecasts 
drawn up by the Commission.
(b) The_conversi_on_rates_to_be_used
The rate fixed in Article 30 of the Financial Regulation, for the 
conversion into national currencies of sums due from Member States in 
ECU could be used^\
(c) Measures to_be taken_i^_a_Member_State_does_not_make_i_ts_ga^ments 
on_the_due_dates
The same procedure as in paragraph 3(1)(c) would apply.
According to present forecasts the Commission's cash position will be 
835 million ECU in deficit at 30 June 1985 in spite of the early payment 
of traditional own resources.
The early payment in July of traditional own resources normally paid in 
August will just cancel out this deficit; since VAT payable on 1 July (about 
1 700 million ECU, including the additional amount arising from the final 
adoption of the 1985 budget) will not be enough to cover the requirements 
in July, the advances provided for in the intergovernmental agreement
(1) Two other possibilities are the rates used in the establishment of the 
Budget and the rates applying at the moment of payment.
The budget rate is unsuitable since its sole function is in the 
establishment of the budget. Current rates are always used for the 
implementation of the budget and, in particular, for the payment of 
VAT. The use of the rates applying at the actual moment of payment 
is also unsuitable since it would not guarantee equality between 
the Member States.

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will have to be paid immediately.
4. Solution recommended by the Commission
The Commission recommends the VAT payments system, i  .e. the payment of 7/12 
of the advances on 1 July 1985 and 1/1.2 on the first working day of each 
subsequent month. Article 12(2) of Council Regulation No. .2891/77 would 
apply in the event of late payment.
The following reasons can be put forward in support :
- Since it is already evident that advances will need to be paid, the VAT 
payments system might as well be applied.
- The system is well known and equitable. -Moreover, another argument for 
using the VAT rules is that in effect the advances replace VAT.
Had the increased VAT rate of 1.4 % been applied in 1985, the Community 
would not have had to rely on advances.
- The application of the VAT system to the payment of the advances accords 
the most closely with the Financial Regulations .  The application of 
the provisions of the Financial Regulations to the advances follows 
from the fact that they do in effect replace VAT own resources.
- The cash-needs system would constitute a serious step backward, since
it represents a return to the system of financial contributions according 
to the cash-needs of the Commission that was in operation before the 
introduction of VAT own resources. The cash-needs system contradicts 
the financial autonomy of the Community and is thus contrary to the 
Community method of financing the budget. In addition, as the intei—  
governmental advances are only small';· in terms of total budget size, 
the method of payment cannot be permitted to compromise the progress 
made over the past years.
- The VAT system is preferable, as it already exists under Community 
law and ensures regular and automatic payments. The cash-needs 
system on the other hand would offer no guarantee that the Community's 
financial requirements would be covered at all times since the situation at 
any given moment might cause advances to be refused; this is not compatible 
with the Commission's duty, which is to ensure that the budget is properly 
executed.

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- Finally, as regards accounts, it is obvious that under either of the 
systems described in (1) and (2) the Commission will actually use the 
funds available in the national treasuries only as financial requirements 
arise. However, under the system recommended, the funds are already 
available to the Commission when needs arise, i.e. when the budget has 
to be executed. This is the important point.
5. In conclusion, the Commission wishes to put these ideas to the Council, 
so that the measures recommended can be introduced without difficulties. 
Since it is the Commission's responsibility and duty to implement the 
1985 budget in the best conditions possible, it would draw the Council's 
attention to the consequences which any delay in the payment of the 
advances would have for implementation.