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COM(94) 71 final 
$>ÉiÉ Brussels, 07.03.1994 
AMENDED PROPOSAL FOR A COUNCIL DECISION 
REPLACING DECISION 88/376/EEC, EURATOM 
ON THE SYSTEM OF THE COMMUNITIES* OWN 
RESOURCES 
(presented by the Commission pursuant to Article 189 A (2) 
of the EC-Treaty) 
EXPLANATORY MEMORANDUM 
On 14 September 1993 the Commission presented a proposal for a Council Decision on 
the system of the Communities' own resources.1 
The Council consulted the institutions concerned. The Economic and Social 
Committee delivered its opinion on 30 November 1993 and Parliament delivered its 
opinion on 9 February 1994. 
In accordance with Article 189a(2) of the EC Treaty, the Commission has amended its 
proposal to take into account the opinions delivered by the institutions which have been 
consulted. 
The amendments accepted by the Commission may be summarized as follows: 
changes have been made to the drafting of the second, third, fifth, ninth, 
fifteenth and nineteenth recitals; in particular the reference to the European 
Council of 11 and 12 December 1992 has been omitted, as a similar reference is 
already included in the fourth recital; 
the tenth recital has been retained, but now states that the formula for 
calculating the correction of budgetary imbalances is confirmed (by the new 
Decision itself), rather than indicating that the European Council has already 
confirmed it; 
the sixteenth recital has been amended to omit the reference to the Copenhagen 
European Council and add the phrase "with a view to improving the own 
resources system". Parliament had proposed the phrase, " partly with a view to 
the establishment of a genuine own resources system"; 
the seventeenth recital has been amended to omit the reference to the European 
Council and to stipulate that the Commission has been asked to submit 
proposals for reforming the financing of the Communities. However, the 
Commission cannot undertake to submit these proposals before the 
intergovernmental conferences open in 1996, as requested by Parliament. 
COM(93) 438 final. 
7-' v. 
a new recital has been added which states that the total amount of available own 
resources will be calculated as a percentage of GNP until the appropriate 
institutions adopt a different system; 
Article 3(2) has been amended to stipulate that the total commitment 
appropriations entered in the general budget of the Communities over the period 
1995 to 1999 may not exceed 1.335% of the total GNP of the Community in 
1999, subject to a possible adjustment agreed by the institutions constituting the 
budgetary authority. 
the first sentence of Article 4 has been amended to read as follows: "The United 
Kingdom shall continue to be granted a correction in respect of budgetary 
imbalances."; 
Article 9 has been amended to state that the Commission will present a study on 
the options for reforming the financing of the Communities, possibly before the 
report scheduled for 1999. However, the Commission cannot undertake to 
present this study before the intergovernmental conferences open in 1996, as 
requested by Parliament. 
Finally, the Commission has not accepted Parliament's proposal to add the following 
recital: 
"Whereas the institutions of the European Union agree to elaborate, in connection with 
the 1996 intergovernmental conferences, a new own resources system which should be 
based on the conclusions of the 1994 conference on own resources between Parliament, 
the Council and the Commission, and should be guided by the criteria of direct 
revenue-raising, equal, direct and equitable European taxation, transparency and 
identifiability;" 
Parliament's proposal is not the subject of an agreement between the institutions. 
A i-
Amended proposal for a COUNCIL DECISION 
replacing decision 88/376 EEC, Euratom 
on the system of the communities' own resources 
(presented by the Commission pursuant to Article 189 A (2) 
of the EC-Treaty) 
Having regard to the opinion of the European Parliament and of the Economic and Social Committee the commission submits its 
proposal amended as follows : 
2 -
THE COUNCIL OF THE EUROPEAN UNION 
Having regard to the Treaty establishing the European 
Community, and in particular Articles 199 and 201 , 
Having regard to the Treaty establishing the European Atomic 
Energy community, and in particular Articles 171(1) and 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, 3 
1 OJ No C 
2 Opinion delivered on 
3 OJ No C 
- 3 -
Whereas Council Decision 88/376/EEC, Euratom of 24 June 1988 
on the system of the Communities' own resources ^ expanded 
and amended the composition of own resources by capping the 
VAT resources base at 55% of gross national product for the 
year at market prices (hereinafter "GNP") with the maximum 
call-in rate being maintained at 1.4%, and by introducing an 
additional resource, based on the total GNP of Member states, 
designed to guarantee budgetary balance between revenue and 
expenditure ; 
Whereas this system has produced a sounder basis for financing 
the Community; whereas, however, the structure of the system 
should make more allowance for each Member State's ability to 
contribute by correcting the regressive aspects of the system 
for the least prosperous Member states; Whereas this system has produced a basis for financing the 
Community; ... 
Whereas the Community must have adequate resources to finance 
its policies; whereas its revenue must match the expenditure 
judged necessary for these policies, for which the priorities 
were set in the financial perspective contained in the 
Interinstitutional Agreement between the European Parliament, 
the Council and the Commission, which will take effect on 
1 January 1995; Whereas the Community must have adequate own resources to 
finance its policies; whereas its own resources are based on 
the expenditure judged necessary for these policies, for which 
the priorities were set in the financial perspective contained 
in the Interinstitutional Agreement between the European 
Parliament, the Council and the Commission, which took effectf 
on 29 October 1993 ; 
4 OJ No L 185, 15.7.1988, p. 24 
- 4 
Whereas the European Council meeting in Edinburgh on 11 and 
12 December 1992 reached certain conclusions; 
Whereas, in accordance with these conclusions, the Community 
will, by 1999 , be assigned a maximum amount of own resources 
corresponding to 1.27% of the total of the Member States'GNP; 
Whereas observance of this ceiling requires that the total 
amount of own resources at the Community's disposal for the 
period 1995 to 1999 does not in any one year exceed a 
specified percentage of the sum of the Community's GNP for the 
year in question; whereas that percentage has been set by 
reference to the expenditure ceilings agreed by the Community 
institutions; Whereas, in accordance with these conclusions, the Community 
should,by 1999 , be assigned a maximum amount of own resources 
corresponding to 1.27% of the total of the Member States' GNP; 
Whereas an overall ceiling of 1.335% of the Member States' GNP 
is set for commitment appropriations; whereas an orderly 
progression of commitment appropriations and payment 
appropriations must be ensured; 
Whereas these ceilings should remain applicable until this 
Decision is amended; 
- 5 -
Whereas, with a view to matching the resources paid by each 
Member State more closely with its ability to contribute, the 
European Council of 11 and 12 December 1992 decided to amend 
the composition of Community own resources: 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 should be amended ; 
- by lowering the ceiling for the uniform rate to be applied 
to the uniform value added tax base of each Member State 
from 1.4% to 1.0% in equal steps between 1995 and 1999; 
- by, if necessary, capping at 50% of GNP from 1995 onwards 
the value added tax base of the Member States whose per 
capita GNP is less than 9 0% of the Community average and by 
reducing the capping of the base from 55% to 50% in equal 
steps over the period 1995-99 for the other Member States; by, capping at 50% of GNP from 1995 onwards the value added 
tax base of the Member States whose per capita GNP is less 
than 9 0% of the Community average and by reducing the 
capping of the base from 55% to 50% in equal steps over the 
period 1995-99 for the other Member States; 
Whereas the European Council of 11 and 12 December confirmed 
the formula for the calculation of the correction of budgetary 
imbalances defined in the Decision 88/376/EEC, Euratom; Whereas the formula for calculation of the correction of 
budgetary imbalances defined in Decision 88/376/EEC, Euratom, 
is confirmed ; 
- 6 -
Whereas, by virtue of Article 127 of the 1979 Act of Accession 
and Articles 187 and 374 of the 1985 Act of Accession, Greece 
until 1985 and Spain and Portugal until 1991 were refunded a 
proportion of their payments of VAT own resources, the 
GNP-based resource and GNP-based financial contributions; 
whereas these refunds constituted expenditure from the general 
budget; 
Whereas any adjustments of VAT and GNP bases for the years 
from 19 81 to 19 91 will entail corrections of the amounts of 
the refunds; whereas arrangements should be made to take 
account of such adjustments in the general budget; 
Whereas the budgetary imbalances should be corrected in such a 
way as not to affect the own resources available for the 
Community's policies; 
Whereas the monetary reserve, hereinafter referred to as the 
'EAGGF monetary reserve', is covered by specific provisions; 
Whereas the conclusions of the European Council of 11 and 
12 December 1992 provided for the creation in the Community 
budget of two reserves, one designed to respond rapidly to 
emergency aid requirements in non-member countries, the other 
to finance a loan guarantee fund; whereas these reserves 
should be covered by specific provisions; Whereas two reserves are to be created in the Community budget 
one designed to respond rapidly to emergency aid requirements 
in non-member countries, the other to finance a loan guarantee 
fund; whereas these reserves should be covered by specific 
provisions; 
- 7 -
Whereas the European Council of Copenhagen of 22 and 
23 June 199 3 underlined the importance of continuing to combat 
fraud and irregularities in connection with the Community 
budget; whereas more detailed provisions should be laid down 
concerning the Commission's role in improving national VAT 
registration, calculation, recovery and control procedures; Whereas the importance of continuing to combat fraud and 
irregularities in connection with the Community budget also 
makes it necessary for more detailed provisions to be laid down 
concerning the Commission's role in improving national VAT 
registration, calculation, recovery and control procedures with 
a view to improving the own resources system; 
Whereas the European Council has asked the Commission to carry 
out a study of possible candidates for a fifth resource; 
Whereas provisions must be laid down to cover the changeover 
from the system introduced by Decision 88/376/EEC, Euratom to 
that arising from this Decision; Whereas the Commission has been asked to consider proposals for 
reforming the Union's finances and a possible fifth resource. 
New consideration 
The total amount of available own resources shall be equivalent 
to a percentage of the gross national product until the 
appropriate institutions adopt a different system. 
Whereas the European Council of 11 and 12 December 1992 
provided that this Decision should take effect on 
1 January 1995; Whereas it is intended that this Decision should take effect on 
1 January 1995; 
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 the 
financing of their budget. 
- 8 -
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 contributions 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; 
- 9 -
(c) the application of a uniform rate valid for all Member 
States to the VAT assessment base which is determined 
in a uniform manner for Member states according to 
Community rules; however, the assessment base to be 
taken into account for the purposes of this Decision 
shall not exceed 50% of GNP in the case of Member 
States whose GNP is less than 90% of the Community 
average; for Member states not fulfilling this 
condition, the assessment base to be taken into account 
shall not exceed: 
54% of their GNP in 1995 
53% of their GNP in 1996 
52% of their GNP in 1997 
51% of their GNP in 1998 
50% of their GNP in 1999 
(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 established in accordance with Community rules laid 
down in Council Directive 89/130/EEC, Euratom.^ 
5 OJ No L 49, 21.2.1989, p. 26 
- 10 -
2. Revenue deriving from any new charges introduced within the 
framework of a common policy, in accordance with the Treaty 
establishing the European Community or the Treaty establishing 
the European Atomic Energy Community, provided the procedure 
laid down in Article 201 of the Treaty establishing the 
European Community or in Article 173 of the Treaty 
establishing the European Atomic Energy Community has been 
followed, shall also constitute own resources entered in the 
budget of the Communities. 
3. Member states shall retain, by way of collection costs, 10% 
of the amounts paid under 1(a) and (b). 
4. The uniform rate referred to in 1(c) shall correspond to 
the rate resulting from: 
(a) the application to the VAT assessment base for the 
Member States of: 
1.32% in 1995 
1.24% in 1996 
1.16% in 1997 
1.08% in 1998 
1.00% in 1999, and 
- 11 -
(b) the deduction of the gross amount of the reference 
compensation referred to in Article 4(2). The gross 
amount shall be the compensation amount adjusted for 
the fact that the United Kingdom is not participating 
in the financing of its own compensation and the 
Federal Republic of Germany's share is reduced by 
one-third. It shall be calculated as if the reference 
compensation amount were financed by Member States 
according to their VAT assessment bases established in 
accordance with Article 2(1)(c). 
5. The rate fixed under paragraph 1(d) shall apply to the GNP 
of each Member State. 
6. 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 the 
provisions adopted in accordance with Article 7(2) as regards 
the EAGGF monetary reserve, the reserve to finance the Loan 
Guarantee Fund and the reserve for emergency aid in non-member 
countries, shall remain applicable until the entry into force 
of the new rates. 
7. For the purposes of applying this Decision, GNP shall mean 
gross national product for the year at market prices. 
- 12 -
Article 3 
1. The total amount of own resources assigned to the 
Communities may not exceed 1.27% of the total GNP of the 
Community for payment appropriations. 
The total amount of own resources assigned to the Communities 
may not, for any of the years during the period 1995 to 1999, 
exceed the following percentages of the total GNP of the 
Community for the year in question: 
- 1995 
- 1996 
- 1997 
- 1998 
- 1999 1.21, 
1.22, 
1.24, 
1.26, 
1.27. 
2. The commitment appropriations entered in the general budget 
of the Communities over the period 1995 to 1999 must follow an 
orderly progression resulting in a total amount which does not 
exceed 1.335 % of the total GNP of the Community in 1999. An 
orderly ratio between commitment appropriations and payment 
appropriations shall be maintained to guarantee their 
compatibility and to enable the ceiling mentioned in 
paragraph 1 to be observed in subsequent years. 2. The commitment appropriations entered in the general budget 
general budget of the Communities over the period 1995 to 1999 
must follow an orderly progression resulting in a total amount 
which, subject to an adjustment agreed by the institutions 
constituting the budgetary authority, must not exceed 1.335% of 
the total GNP of the Community in 1999. 
3. The overall ceilings referred to in paragraphs 1 and 2 
shall continue to apply until such time as this Decision is 
amended. 
- 13 -
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. The United Kingdom shall continue to be granted a correction in 
respect of budgetary imbalances. 
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. 
- 14 -
2. The reference compensation shall be the correction 
resulting from application of (a), (b) and (c) below, 
corrected by the effects arising for 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; 
- 15 -
(d) subtracting the payments by the United Kingdom taken 
into account in the first indent of 1(a) from those 
taken into account in the first indent of 2(a); 
(e) subtracting the amount calculated at (d) from the 
amount calculated at (c). 
3. The basic amount shall be 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 -
2. The correction shall be granted to the United Kingdom by a 
reduction in its payments resulting from the application of 
Article 2. The costs borne by the other Member States shall 
be added to their payments resulting from the application for 
each Member State of Article 2. 
3. The Commission shall perform the calculations required for 
the application of Article 4 and this 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. However, the revenue needed to cover in 
full or in part the EAGGF monetary reserve, the reserve to 
finance the Loan Guarantee Fund and the reserve for emergency 
aid in non-member countries, entered in the budget of the 
Communities, shall not be called up from the Member States 
until the reserves are implemented. Provisions for the 
operation of these reserves shall be adopted as necessary in 
accordance with Article 7(2). 
The preceding subparagraph shall be without prejudice to the 
treatment of contributions by certain Member States to 
supplementary programmes provided for in Article 13OL of the 
Treaty establishing the European Community. - 17 -
Article 7 
1. The Community own resources referred to in Article 2(1)(a) 
and (b) shall be collected by the Member States in accordance 
with the national provisions imposed by law, regulation or 
administrative action, which shall,where appropriate, be 
adapted to meet the requirements of Community rules. The 
Commission shall examine at regular intervals the national 
provisions communicated to it by the Member States, transmit 
to the Member States the adjustments it deems necessary in 
order to ensure that they comply with Community rules and 
report to the budget authority. Member States shall make the 
resources under Article 2(1)(a) to (d) available to the 
Commission. 
- 18 -
2. Without prejudice to the auditing of the accounts and to 
checks that they are lawful and regular and as laid down in 
Article 206a of the Treaty establishing the European 
Community, such auditing and checks being mainly concerned 
with the reliability and effectiveness of national systems and 
procedures for determining the base for own resources accruing 
from VAT and GNP and without prejudice 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, the making 
available to the Commission and payment of the revenue 
referred to in Articles 2 and 5. 
On the basis of these provisions, the Commission shall examine 
the VAT registration, calculation, recovery and control 
procedures applied in the Member States and shall, if 
necessary, make recommendations for enhancing the 
effectiveness of these procedures. 
- 19 -
Article 8 
The mechanism for the graduated refund of own resources 
accruing from VAT or GNP-based financial contributions 
introduced for Greece up to 19 85 by Article 127 of the 1979 
Act of Accession and for Spain and Portugal up to 1991 by 
Articles 187 and 374 of the 19 85 Act of Accession 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 the two 
lastnamed Member States in accordance with Article 5(2) of 
this Decision. In the latter case the rate of refund shall be 
that applicable for the year in respect of which the 
correction is granted. Corrections of refunds resulting from 
any adjustments of VAT and GNP bases for the years from 19 81 
to 1991 shall be entered as negative or positive revenue, as 
appropriate, in the general budget. 
Article 9 
The Commission shall submit, by the end of 1999, a report on 
the operation of the system established by this Decision. 
Together With this report or separately, it shall also present 
a report on the findings of a study of the possibilities for 
creating a fifth own resource. The Commission shall submit, by the end of 1999, a report on 
the operation of the system established by this Decision. 
Together with this report or separately, it shall also present 
a report on the possibilities for reforming the financing of 
the Union, including a possible fifth resource. 
- 20 -
Article 10 
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 constitutional 
requirements. 
This Decision shall enter into force on the first day of the 
month following receipt of the last of the notifications 
referred to in the second subparagraph. It shall take effect 
on 1 January 1995. 
2. (a) Subject to (b), Decision 88/376/EEC, Euratom shall be 
repealed as of 1 January 1995. Any references to the 
Decision of 21 April 1970, to Decision 85/257/EEC, 
Euratom or to Decision 88/376/EEC, Euratom shall be 
construed as references to this Decision. 
- 21 -
(b) Article 3 of Decision 85/257/EEC, Euratom shall 
continue to apply to the calculation and adjustment of 
revenue accruing from the application of rates to the 
uncapped uniform VAT base for 19 87 and earlier years. 
Articles 2, 4 and 5 of Decision 88/376/EEC, Euratom 
shall continue to apply to the calculation and 
ajustment of revenue accruing from the application of a 
uniform rate valid for all Member states to the VAT 
base determined in a uniform manner and limited to 55% 
of the GNP of each Member State and to the calculation 
of the correction of budgetary imbalances granted to 
the United Kingdom for the years 1988 to 1994. When 
Article 2 (7) has to be applied, the value added tax 
payments shall be replaced by financial contribution in 
the calculations referred to in this paragraph for any 
Member State concerned ;( this system shall also apply 
to the payment of adjustments of corrections for 
earlier years. 
Done at Brussels, 
For the Council 
The President 
ISSN 0254-1475 
COM(94) 71 final 
DOCUMENTS 
EN 01 
Catalogue number : CB-CO-94-078-EN-C 
ISBN 92-77-65942-4 
Office for Official Publications of the European Communities 
1^2985 Luxembourg