COMMUNICATION FROM THE COMMISSION

Updating of data used to calculate lump sum and penalty payments to be proposed by the Commission to the Court of Justice of the European Union in infringement proceedings

(2022/C 74/02)

I. Introduction

Under the Treaty on the Functioning of the European Union (TFEU), where the Commission refers a Member State to the Court of Justice of the European Union for failing to fulfil an obligation under the Treaties, the Court may impose financial sanctions in two situations:

(a) where the Member State has not taken the necessary measures to comply with an earlier judgment of the Court finding an infringement of EU law (Article 260(2) TFEU);

(b) where the Member State has failed to fulfil its obligation to notify measures transposing a directive adopted under a legislative procedure (Article 260(3) TFEU) (1).

In both cases, the sanction imposed by the Court of Justice may be composed of a lump sum payment, to penalise the continuation of the infringement (2), and a daily penalty payment, to prompt the Member State concerned to bring the infringement to an end as soon as possible after the delivery of the judgment (3). The Commission proposes amounts for the financial sanctions to the Court, which takes the final decision.

The general approach of the Commission when calculating the proposed sanctions is well-established. Since 1997 (4) and as set out in successive Communications (5), it has applied an approach that reflects both the capacity to pay of the Member State concerned and its institutional weight. This is applied through what is known as the ‘n’ factor (6). The ‘n’ factor is combined with other factors – the seriousness of the infringement, and its duration – in the Commission’s calculation of the proposed sanctions.

The calculation of the ‘n’ factor is based on the Gross Domestic Product (GDP) of Member States, and the number of seats for representatives in the European Parliament allocated to each Member State. The method for its calculation was updated several times (7), most recently on 13 April 2021 (8), when the Commission adjusted the method following the withdrawal of the United Kingdom from the Europan Union.

In its Communication of 2010 (9) on the updating of the data used for this calculation, the Commission established that the ‘n’ factor as well as other macroeconomic data should be adjusted every year (10), in order to take into account inflation and GDP movements.

This year’s update (11) is based on developments in the inflation and GDP of each Member State. The relevant statistics that are to be used relating to the rate of inflation and GDP are those established two years prior to the update (‘t-2 rule’), i.e. 2020, as two years is the minimum period of time necessary for gathering relatively stable macroeconomic data. The inflation rate for the reference year is set at 1.6 %.

An important factor affecting this year’s update is the COVID-19 pandemic. Indeed, the pandemic strongly impacted Member States’ GDP in 2020 with a decrease of 4.4 % at EU-27 level and varying impacts at country level, which in turn affect ‘n’ factors.

II. Components of the update

The list of economic criteria to be updated is as follows:

— the standard flat-rate amount for the penalty payment (12), currently fixed at EUR 2 683 (13), to be revised in line with inflation,

— the standard flat-rate amount for the lump sum (14), currently fixed at EUR 895 (15), to be revised in line with inflation,

— the 27 ‘n’ factors, to be revised in line with the GDP of the Member State in question, taking into account the number of seats it has in the European Parliament; the ‘n’ factor is identical for the calculation of lump sum and daily penalty payments,

— minimum lump sum payments (16) to be revised in line with inflation.

III. Updates

The Commission will apply the following updated figures to calculate the amount of the financial sanctions (lump sum or penalty payments) when it brings a case to the Court of Justice under Article 260(2) and (3) TFEU:

1) the standard flat rate for calculating the penalty payment is EUR 2 726;

2) the standard flat rate for calculating the daily amount in order to determine the lump sum is EUR 909;

3) the ‘n’ factors and the minimum lump sums for the 27 Member States are: Member State Special ‘n’ factor Minimum lump sum (EUR 1 000 ) Belgium 0,860 1 940 Bulgaria 0,280 632 Czechia 0,590 1 331 Denmark 0,580 1 308 Germany 5,000 11 277 Estonia 0,120 271 Ireland 0,610 1 376 Greece 0,520 1 173 Spain 2,260 5 097 France 3,750 8 458 Croatia 0,220 496 Italy 3,110 7 014 Cyprus 0,100 226 Latvia 0,140 316 Lithuania 0,210 474 Luxembourg 0,170 383 Hungary 0,470 1 060 Malta 0,080 180 Netherlands 1,340 3 022 Austria 0,750 1 692 Poland 1,450 3 270 Portugal 0,570 1 286 Romania 0,750 1 692 Slovenia 0,170 383 Slovakia 0,320 722 Finland 0,510 1 150 Sweden 0,880 1 985

The Commission will apply the updated figures to decisions it takes to bring a case before the Court of Justice under Article 260 TFEU as from the adoption of this Communication.

(1) The 2011 Commission Communication on the implementation of Article 260(3) TFEU (OJ C 12, 15.1.2011, p. 1) and and the 2017 Commission Communication ‘EU law: Better results through better application’ (OJ C 18, 19.1.2017, p. 10.) emphasise that the Commission applies the same method as established by the 2005 Communication (Communication on the application of Article 228 of the EC Treaty (SEC(2005) 1658)) for the calculation of the financial sanctions under Article 260(3) TFEU.

(2) Communication from the President: Re-cast Communication on the application of Article 228 of the EC Treaty (SEC(2005) 1658), point 10.3

(3) SEC(2005) 1658, point 14.

(4) Method of calculating the penalty payments provided for pursuant to Article 171 of the EC Treaty (OJ C 63, 28.2.1997, p. 2).

(5) See in particular Communication from the Commission - Implementation of Article 260(3) of the Treaty (OJ C 12, 15.1.2011, p.1) and Communication from the Commission - EU law: Better results through better application (OJ C 18, 19.1.2017, p. 10).

(6) SEC(2005) 1658, point 14. The ‘n’ factor is calculated as follows Where: GDP n = GDP of Member State concerned, in millions of euros; GDP avg = average GDP of all Member States; Seat n = number of seats of the Member State concerned in the European Parliament; Seat avg = average number of seats in European Parliament of all Member States.

(7) Communication from the Commission - Modification of the calculation method for lump sum payments and daily penalty payments proposed by the Commission in infringements proceedings before the Court of Justice of the European Union C(2019) 1396 final (OJ C 70, 25.2.2019, p. 1).

(8) Communication from the Commission ‘Adjustment of the calculation for lump sum and penalty payments proposed by the Commission in infringement proceedings before the Court of Justice of the European Union, following the withdrawal of the United Kingdom’ C(2021) 2283 final, (OJ C 129, 13.4.2021, p. 1).

(9) SEC(2010) 923/3.

(10) See updates in in 2011 [SEC(2011) 1024 final], in 2012 [C(2012) 6106 final], in 2013 [C(2013) 8101 final], in 2014 [C(2014) 6767 final], in 2015 [C(2015) 5511 final], in 2016 [C(2016) 5091 final], in 2017 [C(2017) 8720 final], in 2018 [C(2018) 5851 final], in 2019 [C(2019) 6434 final], and in 2020 [C(2020) 6043 final] for the yearly adjustment of economic data.

(11) The GDP data for this year’s update were extracted on 10 January 2022. Inflation is measured using the implicit GDP deflator.

(12) The amount of the daily penalty payment is calculated by multiplying the standard flat-rate amount, first by factors for seriousness and duration, and then by the ‘n’ factor.

(13) C(2021) 2283 final.

(14) The daily amount for the lump sum is calculated by multiplying the standard flat-rate amount (different from the one for daily penalty payments) by a factor for seriousness and the ‘n’ factor. The lump sum is then calculated based on the number of days the infringement persists (either from the first Court ruling until compliance or until judgment for cases under Article 260(2) TFEU, or from the date of transposition of the Directive until compliance or until judgment for cases under Article 260(3) TFEU). The lump sum calculated on that basis should apply when the result of the above-mentioned calculation exceeds the minimum lump sum.

(15) C(2021) 2283 final.

(16) The minimum fixed lump sum payment is determined for each Member State according to the special ‘n’ factor. The minimum fixed lump sum will be proposed to the Court when the summed-up daily lump sum payments do not exceed the minimum fixed lump sum.