Proposal for a COUNCIL REGULATION on the implementing measures for the correction of budgetary imbalances in accordance with Articles 4 and 5 of the Council decision of (...) on the system of the European Communities' own resources

(presented by the Commission)

EXPLANATORY MEMORANDUM

The purpose of this proposal is to lay down the implementing measures for the correction of budgetary imbalances laid down in the Council Decision on the system of the Communities' own resources of (.........). The present proposal for a Council Regulation replaces the "Calculation Method" of 29 September 2000 [1].

[1] Calculation, financing, payment and entry in the budget of the correction of budgetary imbalances in accordance with Articles 4 and 5 of the Council Decision on the system of the EU's own resources (Council of the European Union, 10646/00 ADD 2).

2004/0171 (CNS)

Proposal for a COUNCIL REGULATION on the implementing measures for the correction of budgetary imbalances in accordance with Articles 4 and 5 of the Council decision of (...) on the system of the European Communities' own resources

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 279(2),

Having regard to the Treaty establishing the European Atomic Energy Community, and in particular Article 183 thereof,

Having regard to Council Decision 200x/xxx/EC, Euratom of (...) on the system of the European Communities' own resources [2], and in particular Articles 4 and 5 thereof,

[2] OJ L [...], [...], p. [...].

Having regard to the proposal from the Commission [3],

[3] OJ C [...], [...], p. [...].

Having regard to the opinion of the European Parliament, [4]

[4] OJ C [...], [...], p. [...].

Having regard to the opinion of the Court of Auditors, [5]

[5] OJ C [...], [...], p. [...].

Whereas:

(1) According to Council Decision of (...) the correction for budgetary imbalances granted to the UK under Article (4) of Council Decision 2000/597/EC shall be replaced with a generalised system for correcting excessive negative budgetary imbalances.

(2) According to Council Decision of (...), the Council shall lay down the implementing measures for the calculation of these corrections and their financing, in particular the threshold and the maximum available refund volume.

(3) It is appropriate to define the categories of expenditure and revenue to be taken into account for the calculation of the corrections.

(4) It is appropriate to lay down the rules for entering the corrections in the budget.

HAS ADOPTED THIS REGULATION:

Article 1

1. The calculation of the amount of the correction based on the budgetary imbalances of Member States of year t in accordance with Article 4 of Council decision (...) shall be established by:

(a) calculating for each Member State the budgetary imbalance as the difference between:

- the percentage share of that Member State in the sum of the total VAT-based and GNI-based own resources payments relating to year t, and

- the percentage share of that Member State in total allocated expenditure;

(b) multiplying the difference thus obtained by total allocated expenditure;

(c) deducting from the result under (b) the value of that Member State's gross national income (GNI) multiplied by the threshold;

(d) if the result obtained under (c) is positive, multiplying this result by a refund rate, fixed at a maximum of 0.66 and, if necessary, reduced proportionally to respect the maximum available refund volume.

2. The result obtained by steps (a) to (d) above corresponds to the following formula:

>REFERENCE TO A GRAPHIC>

=

>REFERENCE TO A GRAPHIC>

if

>REFERENCE TO A GRAPHIC>

> 0

where RR = 0.66 if

>REFERENCE TO A GRAPHIC>

>REFERENCE TO A GRAPHIC>

MARV and

RR =

>REFERENCE TO A GRAPHIC>

* 0.66 if

>REFERENCE TO A GRAPHIC>

> MARV

Where: TP = Total VAT- and GNI-based payments made by all Member States in respect of year t

TPx = VAT- and GNI-based payments made by Member State x in respect of year t

E = Total allocated expenditure in respect of year t

Ex = Expenditure allocated to Member State x in respect of year t

>REFERENCE TO A GRAPHIC>

= Correction (at refund rate RR) to be granted to Member State x in respect of year t

RNC = Reasonable net contribution (= threshold) expressed in % of GNI

Yx = GNI of year t of Member State x

RR = Refund rate

MARV = Maximum available refund volume

>REFERENCE TO A GRAPHIC>

= Total sum of corrections if RR is equal to 0.66

3. For the purposes of calculating the corrections, VAT-based and GNI-based payments shall not include the payments relating to the corrections.

Article 2

1. The threshold referred to in Article 1 shall be equal to 0.35 % of the GNI of the relevant Member State.

2. The maximum available refund volume (MARV) referred to in Article 1 shall be equal to euro 7.5 billion.

Article 3

1. The distribution of the total cost of the corrections in accordance with Article 5 of Council decision (...) shall be calculated in proportion to each Member State's share in total EU GNI in year t.

2. The correction shall be granted to any Member State by a reduction in its payments resulting from the application of Article 2(1)(c) of Council decision (...).

3. The cost of the corrections borne by all Member States shall be added to their payments resulting from the application for each Member State of Article 2(1)(c) of Council decision (...).

Article 4

1. The concept of expenditure to be used in the calculation of the corrections shall correspond to actual payments (execution of appropriations for payments) made in the year in question (year t) under that year's appropriations for payments as well as payments under carryovers of non-executed appropriations for payments to the following year (from year t to year t+1). Only utilised appropriations for payments, i.e. the amount of payments actually made, shall be taken into account.

2. The allocation of expenditure across the Member States shall be governed by the following rules:

In general, payments shall be allocated to the Member State in which the principal recipient resides. However, in those cases where the Commission is aware that the recipient in question acts as an intermediary, the payments shall be allocated whenever this is possible to the Member State(s) in which the final beneficiary(ies) is(are) resident, in accordance with their shares in these payments.

Total allocated expenditure shall be based on total expenditure of the general budget of the European Union, excluding the following two main categories of expenditure:

- Expenditure on external policies, including pre-accession or enlargement-related expenditure in non-member countries as well as other expenditure benefiting recipients outside the Union, such as development co-operation expenditure, research expenditure spent outside the EU, administrative expenditure paid to recipients outside the Union, etc.

- Expenditure that cannot be allocated or identified due to conceptual or other difficulties, such as expenditure on representation, on missions and on formal and other meetings as well as payments related to cross-border Community initiatives, promotion of inter-regional co-operative operations and other cross-border actions.

Article 5

1. The amount of the corrections shall be budgeted in two steps:

(a) The result of the first provisional calculation of the amount of the corrections for year t shall be entered in the preliminary draft budget of year t+1. The calculation shall be based on the most recent data available for both revenue and expenditure.

(b) The result of the definitive calculation of the amount of the corrections for year t shall be budgeted in an amending budget of year t+3. The calculation shall be based on the data on VAT bases, GNI and allocated expenditure relating to year t as known at 31 December of year t+2, which shall, where applicable, be converted into euro according to the annual average exchange rate of the year t.

In order to calculate the share of each Member State in the sum of the total VAT-based and GNI-based own resources payments the budget of year t shall be recalculated on the basis of the outturn of appropriations for payments for year t, reduced by other revenue relating to year t (not including the balance of the previous exercise or other balances or adjustments of balances relating to previous years) and the actual amount of traditional own resources made available in year t. The remaining amount shall be financed by the VAT-based own resource up to the uniform rate of call of VAT and by the GNI-based resource for the residual amount necessary to balance the budget.

2. The financing of the corrections referred to in paragraph (1)(a) above shall be calculated on the basis of the latest data on Member States GNI for year t, available when the preliminary draft budget is drawn up.

3. A definitive calculation shall also be made in respect of the financing of the corrections for year t referred to in paragraph (1)(b) above. The calculation shall be based on Member States' GNI in year t, as known at 31 December of year t+2, which shall, where applicable, be converted into euro according to the annual average exchange rate of the year t. The definitive financing data shall be compared with the payments relating to the corrections for year t already entered in the budget in year t+1. The balances per Member State shall be entered in an appropriate budgetary chapter of the amending budget referred to under paragraph (1)(b) above and converted into national currency according to the annual average exchange rate of the year t.

Article 6

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union. It shall take effect as stipulated in Article 10 of Council decision (...).

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President