No C 102/8 Official Journal of the European Communities 16. 4. 88 
Proposal for a Council Decision on the system of the Communities' own resources (EEC, 
Euratom, ECSC) 
COM(88) 137 final 
(Submitted by the Commission to the Council on 17 March 1988) 
(88/C 102/07) 
(This proposal amends and replaces COM(87) 420 final of 31 July 1987, sent to the Council on 
4 August 1987) 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Article 201 
thereof, 
Having regard to the Treaty establishing the European 
Atomic Energy Community, and in particular Article 173 
thereof, 
Having regard to the proposal from the Commission, 
Having regard to the opinion of the European 
Parliament, 
Having regard to the opinion of the Economic and 
Social Committee, 
Whereas Article 199 of the Treaty establishing the 
European Economic Community requires that all 
estimated items of revenue and expenditure be included 
in the budget; whereas the budget shall be in balance; 
Whereas the Council Decision of 7 May 1985 on the 
Communities' system of own resources ('), hereinafter 
referred to as 'the Decision of 7 May 1985', raised to 
1,4 °/o the limit on the rate applied to the uniform value 
added tax base previously set at 1 % by the Council 
Decision of 21 April 1970 on the replacement of 
financial contributions from Member States by the 
Communities' own resources (2) hereinafter referred to 
as 'the Decision of 21 April 1970', 
Whereas the resources available within the limit of 1,4 % 
are no longer sufficient to cover the estimates of 
Community expenditure; 
Whereas the Community must be provided with stable 
and guaranteed financial means to be able to operate the 
common policies, improve the present situation and 
ensure a sufficiently lengthy period of budgetary 
security; 
Whereas the Single European Act opens up new possi­
bilities to the Community; whereas Article 8a of the 
Treaty establishing the European Economic Community 
provides for the completion of the internal market by 31 
December 1992; 
C) OJ No L 128, 14. 5. 1985, p. 15. 
(2) OJ No L 94, 28. 4. 1970, p. 19. Whereas the European Council meeting in Brussels on 
11, 12 and 13 February 1988 reached certain 
conclusions; 
Whereas, in accordance with these conclusions, the 
Community will, for each year between now and 1992, 
be assigned a maximum amount of own resources corre­
sponding to 1,2 °/o of the total of the Member States' 
gross national product for the year at market prices, 
hereinafter referred to as 'GNP'; 
Whereas observance of this ceiling is based on main­
tenance of a strict relationship between commitment 
appropriations and payment appropriations, implying an 
overall volume of commitment appropriations corre­
sponding in 1992 to 1,3 % of Member States' GNP; 
Whereas these ceilings should remain applicable until this 
Decision is amended; 
Whereas, with a view to matching the resources paid by 
each Member State more closely with its ability to 
contribute, the composition of Community own 
resources must be amended and enlarged; whereas it is 
necessary for this purpose: 
— to fix at 1,4 % the maximum rate to be applied to 
each Member State's uniform base for value added 
tax, hereinafter referred to as VAT, limited where 
appropriate to 55 % of its GNP, 
— to introduce an additional type of resource to 
balance budget revenue and expenditure, based on 
the sum of Member States' GNP; for this purpose, 
the Commission will introduce a directive on the 
application of the rules governing the establishment 
of GNP, 
— to provide for the possibility of new resources 
connected with economic and tax harmonization in 
the Community; 
Whereas the customs duties on products coming under 
the Treaty establishing the European Coal and Steel 
Community should be included in Community own 
resources; 
16. 4. 88 Official Journal of the European Communities No C 102/9 
Whereas an agreement has been reached by the 
Parliament, the Council and the Commission (budgetary 
discipline); 
Whereas the conclusions of the European Council of 25 
and 26 June 1984 on the correction of budgetary 
imbalances will have to be adjusted to take account of 
the capping of the VAT base and the introduction of an 
additional resource; whereas this adjustment should 
ensure that the VAT share of the United Kingdom will 
be replaced by its share of payments under the third and 
fourth resources and that the effect on the United 
Kingdom in respect of a given year of the introduction 
of the fourth resource which is not compensated by this 
change will be offset by an adjustment to the compen­
sation in respect of that year; whereas the contributions 
of Spain and Portugal to the financing of the correction 
should be reduced in accordance with the rebates 
provided for in Articles 187 and 374 of the Act 
concerning the conditions of accession of the Kingdom 
of Spain and the Portuguese Republic and the 
adjustments to the Treaties ('); 
Whereas when the Community budget contains a 
monetary reserve, hereinafter referred to as the 'EAGGF 
monetary reserve', to offset the impact of significant and 
unforeseen fluctuations in the ECU/dollar parity on the 
expenditure under the Guarantee Section of the 
European Agricultural Guidance and Guarantee Fund, 
this Decision must provide for it to be covered by special 
provisions; 
Whereas provisions must be laid down to cover the 
changeover from the system introduced by the Decision 
of 7 May 1985 to that arising from this Decision; 
Whereas the European Council of 11, 12 and 13 
February 1988 provided that this Decision should take 
effect on 1 January 1988, 
HAS LAID DOWN THESE PROVISIONS, WHICH IT 
RECOMMENDS TO THE MEMBER STATES FOR 
ADOPTION: 
Article 1 
The Communities shall be allocated resources of their 
own in accordance with the following Articles in order 
to ensure that their budget is in balance. 
The budget of the Communities shall, irrespective of 
other revenue, be financed entirely from the 
Communities' own resources. Article 2 
1. Revenue from the following shall constitute own 
resources entered in the budget of the Communities: 
(a) levies, premiums, additional or compensatory 
amounts, additional amounts or factors and other 
duties established or to be established by the 
institutions of the Communities in respect of trade 
with non-member countries within the framework of 
the common agricultural policy, and also contri­
butions and other duties provided for within the 
framework of the common organization of the 
markets in sugar; 
(b) Common Customs Tariff duties and other duties 
established or to be established by the institutions of 
the Communities in respect of trade with non-
member countries and customs duties on products 
coming under the Treaty establishing the European 
Coal and Steel Community; 
(c) the application of a uniform rate valid for all 
Member States to the assessment base for value 
added tax which is determined in a uniform manner 
for Member States according to Community rules; 
however the assessment base for any Member State 
to be taken into account for the purposes of this 
Decision shall not exceed 55 % of its GNP; 
(d) the application of a rate — to be determined under 
the budgetary procedure in the light of the total of 
all other revenue — to the sum of all the Member 
States' GNP. 
Revenue deriving from any new charges introduced 
within the framework of a common policy, in 
accordance with the Treaty establishing the European 
Economic Community or the Treaty establishing the 
European Atomic Energy Community, provided the 
procedure laid down in Article 201 of the Treaty estab­
lishing the European Economic Community or in Article 
173 of the Treaty establishing the European Atomic 
Energy Community has been followed, shall constitute 
own resources entered in the budget of the Communities. 
2. The sum of the VAT payments under paragraph 
1 (c) and Article 5 (2) must reach for at least one 
Member State but shall not exceed for any Member 
State an amount corresponding to 1,4 % of its base. 
3. The Member States shall retain, by way of 
collection costs, 10 % of the amounts paid under para­
graphs 1 (a) and 1 (b). 
(') OJ No L 302, 15. 11. 1985, p. 23. 4. The rate fixed under paragraph 1 (d) shall apply to 
the GNP of each Member State. 
NoC 102/10 Official Journal of the European Communities 16. 4. 88 
5. If, at the beginning of the financial year, the budget 
has not been adopted, the previous uniform VAT rate 
and rate applicable to Member States' GNP, without 
prejudice to whatever provisions may be adopted in 
accordance with Article 8 (2) by reason of the entry of 
an EAGGF monetary reserve in the budget, shall remain 
applicable until the entry into force of the new rates. 
6. By way of derogation from paragraph 1 (c) if, on 1 
January of the financial year in question, the rules for 
determining the uniform basis for assessing VAT are not 
yet applied in all the Member States, the financial contri­
bution to the budget of the Communities to be made by 
a Member State not yet applying this uniform basis shall 
be determined according to the proportion of its gross 
national product at market prices to the sum total of the 
gross national product of the Member States at market 
prices in the first three years of the five-year period 
preceding the year in question. This derogation shall 
cease to have effect as soon as the rules for determining 
the uniform basis for assessing valued added tax are 
applied in all Member States. 
Article 3 
1. The total amount of own resources assigned to the 
Communities may not exceed 1,20 % of the total GNP 
of the Community. 
2. The commitment appropriations entered in the 
general budget of the Communities may not exceed 
1,30 % of the total GNP of the Community. 
Article 4 
The United Kingdom shall be granted a correction in 
respect of budgetary imbalances. This correction shall 
consist of a basic amount and an adjustment. The 
adjustment shall correct the basic amount to a reference 
compensation amount. 
1. The basic amount shall be established by: 
(a) calculating the difference, in the preceding 
financial year, between 
— the percentage share of the United Kingdom 
in the sum total of the payments referred to in 
Article 2 (1) (c) and (d) made during the 
financial year, including adjustments at the 
uniform rate in respect of earlier financial 
years, 
and 
— the percentage share of the United Kingdom 
in total allocated expenditure; (b) applying the difference thus obtained to total 
allocated expenditure; 
(c) multiplying the result by 0,66. 
2. The reference compensation is the correction resulting 
from application of (a), (b) and (c) below, corrected 
by the benefits accruing to the United Kingdom from 
the changeover to capped VAT and the payments 
referred to in Article 2 (1) (d). 
It shall be established by: 
(a) calculating the difference, in the preceding 
financial year, between 
— the percentage share of the United Kingdom 
in the sum total of VAT payments which 
would have been made during that financial 
year, including adjustments in respect of 
earlier financial years, for the amounts 
financed by the resources referred to in Article 
2 (1) (c) and (d) if the uniform VAT rate had 
been applied to non-capped bases, and 
— the percentage share of the United Kingdom 
in total allocated expenditure; 
(b) applying the difference thus obtained to total 
allocated expenditure; 
(c) multiplying the result by 0,66; 
(d) taking the difference between the payments by the 
United Kingdom taken into account in the first 
indent of paragraph 2 (a) and the first indent of 
paragraph 1 (a); 
(e) subtracting the amount calculated at (d) from the 
amount calculated at (c). 
3. The basic amount is adjusted in such a way as to 
correspond to the reference compensation amount. 
Article 5 
1. The cost of the correction shall be borne by the 
other Member States in accordance with the following 
arrangements: 
the distribution of the cost shall first be calculated by 
reference to each Member State's share of the payments 
referred to in Article (2) (1) (d), the United Kingdom 
being excluded; it shall then be adjusted in such a way as 
to restrict the share of the Federal Republic of Germany 
to two thirds of the share resulting from this calculation. 
16. 4. 88 Official Journal of the European Communities No C 102/11 
2. The correction shall be granted to the United 
Kingdom by a reduction in its VAT payments. 
The costs borne by the other Member States shall be 
added to their VAT payments. 
3. The Commission shall perform the calculations 
required for the application of Article 4 and the present 
Article. 
4. If, at the beginning of the financial year, the budget 
has not been adopted, the correction granted to the 
United Kingdom and the costs borne by the other 
Member States as entered in the last budget finally 
adopted shall remain applicable. 
Article 6 
The revenue referred to in Article 2 shall be used 
without distinction to finance all expenditure entered in 
the budget of the Communities without prejudice to 
whatever provisions may be adopted in accordance with 
Article 8 (2) by reason of the entry of an EAGGF 
monetary reserve in the budget. 
This provision shall be without prejudice to the 
treatment of contributions by certain Member States to 
supplementary programmes provided for in Article 130 L 
of the EEC Treaty. 
Article 7 
Any surplus of the Communities' own resources over the 
actual expenditure during a financial year shall be 
carried over to the following financial year. 
Article 8 
1. The Community own resources referred to in 
Article 2 shall be established and collected by the 
Member States in accordance with national provisions 
imposed by law, regulation of administration action, 
which shall, where necessary, be adapted to meet the 
requirements of Community rules. Member States shall 
make these resources available to the Commission. 
2. Without prejudice to the auditing of accounts 
provided for in Article 206a of the Treaty establishing 
the European Economic Community, or to the 
inspection arrangements made pursuant to Article 209 (c) 
of that Treaty, the Council shall, acting unanimously on 
a proposal from the Commission and after consulting the 
European Parliament, adopt the provisions necessary to 
apply this Decision and to make possible the inspection 
of the collection, making available to the Commission 
and payment of the revenue referred to in Article 2 and 
in Article 5. Article 9 
The mechanism for the graduated refund of own 
resources accruing from value added tax or GNP-based 
financial contributions introduced for the Kingdom of 
Spain and the Portuguese Republic up to 1991 by 
Articles 187 and 374 of the Act concerning the 
conditions of accession of the Kingdom of Spain and the 
Portuguese Republic and the adjustments to the Treaties 
shall apply to the own resources accruing from VAT and 
the GNP-based resource referred to in Article 2 (1) (c) 
and (d) of this Decision. It shall also apply to payments 
by these two Member States in accordance with Article 5 
(2) of this Decision. 
Article 10 
The Commission shall submit by the end of 1991 a 
report on the operation of the system, including a re­
examination of the correction of budgetary imbalances 
granted to the United Kingdom, established by this 
Decision. 
Article 11 
1. Member States shall be notified of this Decision by 
the Secretary-General of the Council of the European 
Communities; it shall be published in the Official Journal 
of the European Communities. 
Member States shall notify the Secretary-General of the 
Council of the European Communities without delay of 
the completion of the procedures for the adoption of this 
Decision in accordance with their respective constitu­
tional requirements. 
This Decision shall enter into force on the first day of 
the month following receipt of the last of the notifi­
cations referred to in the second subparagraph. It shall 
take effect on 1 January 1988. 
2. (a) Subject to points (b) and (c) above, the Decision 
of 7 May 1985 shall be repealed on 1 January 
1988. To the extent necessary, any references to 
the Decision of 21 April 1970 or to the Decision 
of 7 May 1985 shall be construed as references to 
this Decision 
(b) Article 3 of the Decision of 7 May 1985 shall 
continue to apply to the calculation and 
adjustment of revenue accruing from the appli­
cation of rates to the uncapped uniform 
assessment basis for value added tax in 1987 and 
earlier years. 
For 1988 the deduction in favour of the United 
Kingdom in respect of previous financial years 
shall be calculated in accordance with points (b) 
(i), (ii) and (iii) of Article 3 (3) of the Decision of 
7 May 1985. The distribution of the cost of 
financing it shall be calculated in accordance with 
Article 5 (1) of this Decision. The amounts corre-
No C 102/12 Official Journal of the European Communities 16. 4. 88 
sponding to the deduction and the distribution of 
the cost of financing it shall be assigned to the 
VAT payments in accordance with Article 5 (2) of 
this Decision. When Article 2 (6) has to be 
applied, the value added tax payments shall be 
replaced by financial contributions in the calcu­
lations referred to above for any Member State 
concerned. This system shall also apply to the payments of adjustments of corrections for earlier 
years. 
(c) Article 4 (2) of the Decision of 7 May 1985 shall 
continue to apply to the financial contributions 
needed to finance the completion of the 
supplementary programme for the operation of 
the HFR reactor of 1984 to 1987.