EN COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 28.5.2004 SEC(2004) 675 final PRELIMINARY DRAFT AMENDING BUDGET No 8

TO THE GENERAL BUDGET FOR 2004 GENERAL STATEMENT OF REVENUE (presented by the Commission) PRELIMINARY DRAFT AMENDING BUDGET No 8

TO THE GENERAL BUDGET FOR 2004 GENERAL STATEMENT OF REVENUE Having regard to: - the Treaty establishing the European Community, and in particular Article 272 thereof, - the Treaty establishing the European Atomic Energy Community, and in particular Article 177 thereof, - the Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities, and in particular Article 37 thereof, The European Commission hereby presents to the budgetary authority the preliminary draft amending budget No 8 to the 2004 budget for the reasons set out in the explanatory memorandum. TABLE OF CONTENTS EXPLANATORY MEMORANDUM 1.Introduction 2.Revision of the forecasts of Import Duties, VAT bases & GNI 3.Correction of budgetary imbalances in favour of the United Kingdom (2000 and 2003)

3.1.Calculation of the corrections 3.1.1.Update of the correction for 2003 3.1.2.Final calculation of the correction for 2000 3.2.Entry in the 2004 budget of the updated estimate for 2003 and the final amount of the 2000 correction 3.2.1.Amount to be budgeted (chapter 15) 3.2.2.Financing of the corrections to be budgeted (chapter 15) 3.2.3.Result of the definitive calculation of the financing of the 2000 correction (chapter 35) GENERAL STATEMENT OF REVENUE The general statement of revenue is forwarded separately via the SEI‑BUD system. A language version is attached as a technical annex by way of example. EXPLANATORY MEMORANDUM 1.Introduction The Preliminary Draft Amending Budget No 8 to the Budget for 2004 covers the following points: –The revision of the forecasts of Agricultural Duties, Customs Duties, VAT bases and GNI and the budgeting of the UK corrections as well as their financing, resulting in a change in the distribution between Member States of the contributions to the Communities' own resources. –Article 7 of the Council Decision 2000/597/EC, Euratom on the system of the European Communities' own resources states that " …surplus from the Guarantee Fund arising from external measures, transferred to the revenue account in the budget, shall be regarded as constituting own resources ". In addition to the revision of the forecasts of own resources, this PDAB enters the repayment of the surplus from the Guarantee Fund for external measures related to 2003. This amounts to € 223 160 000. The following summary table shows the distribution of own resources between Member States as budgeted in the Amending Budget (AB) 1/2004 (that adapts the 2004 budget to the accession of 10 new Member States on 1 May 2004), in the PDAB 7/2004 and as affected by the PDAB 8/2004. amounts in euro AB 1/2004 Financing by MS (total own resources) PDAB 7/2004 Financing by MS (total own resources) PDAB 8/2004 Financing by MS (total own resources) PDAB 8/2004 Financing by MS (total own resources) Difference PDAB 8/2004 vs. PDAB 7/2004 Difference PDAB 8/2004 vs. AB 1/2004 (1) (2) (3) (4) = (3) in % (5) = (3) – (2) (6) = (3) – (1) BE 3 746 633 291 3 592 492 644 3 734 143 338 4.00 % 141 650 694 -12 489 953 CZ 544 180 062 517 005 093 553 658 570 0.59 % 36 653 477 9 478 508 DK 2 059 502 022 1 953 265 586 1 933 350 558 2.07 % -19 915 028 -126 151 464 DE 21 862 157 382 20 673 315 915 20 477 217 068 21.95 % -196 098 847 -1 384 940 314 EE 57 103 718 54 335 346 57 682 994 0.06 % 3 347 648 579 276 EL 1 737 153 959 1 648 712 733 1 689 325 589 1.81 % 40 612 856 -47 828 370 ES 8 196 835 735 7 781 068 653 8 077 038 039 8.66 % 295 969 386 -119 797 696 FR 16 789 029 661 15 906 825 633 15 941 680 589 17.09 % 34 854 956 -847 349 072 IE 1 265 596 215 1 201 207 761 1 205 526 218 1.29 % 4 318 457 -60 069 997 IT 13 664 366 165 12 935 536 635 13 208 025 402 14.16 % 272 488 767 -456 340 763 CY 89 217 635 84 835 926 84 550 436 0.09 % -285 490 -4 667 199 LV 66 864 257 63 382 758 64 579 847 0.07 % 1 197 089 -2 284 410 LT 125 870 309 119 910 611 125 454 445 0.13 % 5 543 834 -415 864 LU 218 035 105 206 638 258 218 354 843 0.23 % 11 716 585 319 738 HU 559 899 012 533 579 968 548 711 285 0.59 % 15 131 317 -11 187 727 MT 34 657 146 33 060 852 33 469 206 0.04 % 408 354 -1 187 940 NL 5 455 232 508 5 198 545 914 5 120 425 047 5.49 % -78 120 867 -334 807 461 AT 2 213 930 520 2 091 147 956 2 098 850 690 2.25 % 7 702 734 -115 079 830 PL 1 344 201 846 1 275 133 727 1 239 542 057 1.33 % -35 591 670 -104 659 789 PT 1 439 237 572 1 365 306 164 1 326 825 420 1.42 % -38 480 744 -112 412 152 SI 190 863 480 181 113 733 176 601 415 0.19 % -4 512 318 -14 262 065 SK 239 926 878 228 122 139 223 430 208 0.24 % -4 691 931 -16 496 670 FI 1 488 720 549 1 408 095 670 1 420 210 787 1.52 % 12 115 117 -68 509 762 SE 2 684 146 933 2 536 489 343 2 604 459 430 2.79 % 67 970 087 -79 687 503 UK 12 845 366 179 11 930 558 555 11 133 414 092 11.93 % -797 144 463 -1 711 952 087 Total EU-25 98 918 728 139 93 519 687 573 93 296 527 573 100.00 % -223 160 000 -5 622 200 566 2.Revision of the forecasts of Import Duties, VAT bases & GNI According to established practice the Commission proposes to revise the financing of the budget on the basis of more recent economic forecasts, adopted at a meeting of the Advisory Committee on Own Resources (ACOR) that is normally held in April each year. The revision concerns the forecast of agricultural duties and customs duties to be collected in the current budgetary year as well as of the current year’s VAT bases and GNI. The forecast in the AB 1/2004 was established at the 128th ACOR meeting on 23 April 2003. The present revised forecasts were adopted at the meeting of the 131st ACOR meeting on 20 April 2004. The use of updated forecasts of own resources improves the accuracy of the payments that Member States are asked to make during the budgetary year and reduces the unavoidable forecasting errors from the previous year.

As compared to the forecasts agreed in April 2003 for the AB 1/2004, the 4 aggregates subject to revision in the present PDAB are revised as follows: ·Total EU-25 agricultural duties for 2004 are now forecast at € 865.1 million (after deduction of 25 % in collection costs), which represents an increase by +0.71 % relative to the forecast of € 859.0 million in the AB 1/2004. Forecast agricultural duties for EU-15 countries were unchanged. It is only the forecast agricultural duties for the Acceding Countries which were revised upward by +22.0 % from € 27.9 million to € 34.0 million. The main reason for this revision is a substantial growth of extra EU-25 imports of Acceding Countries from 2002 to 2003 (from € 51.1 million to € 54.5 million), while the weighted average tariff decreased only slightly from 1.74 % down to 1.72 %. ·Total EU-25 customs duties for 2004 are now forecast at € 9 981.8 million (after deduction of 25 % in collection costs), which represents a decrease by -1.7 % relative to the forecast of € 10 154.9 million in the AB 1/2004. The main reasons for this decrease are a substantial reduction of the forecast growth rate 2003-2004 of extra EU-15 imports for EU-15 countries (from 6.1 % down to 4.8 %) and to a lesser extent a reduction of the EU-15 weighted average tariff from 1.59 % down to 1.55 %. The forecast of EU-15 customs duties was consequently revised downward by -1.9 % from € 9 850.0 million to € 9 665.0 million. It has to be noted (though it had a more reduced impact) that, on the contrary, forecast customs duties of Acceding Countries were revised upward by +3.9 % from € 305.0 million to € 317.0 million (see explanation in paragraph above, as customs duties and agricultural duties were forecast jointly for Acceding Countries). ·The EU-25 uncapped VAT base at current market prices is forecast to amount to € 46 713.0 million in 2004 at a 1 % rate, which represents an increase of +0.9 % compared to the € 46 301.4 million entered in the AB 1/2004. The EU-25 capped VAT base at current market prices is forecast to amount to € 45 507.3 million in 2004 at a 1 % rate, which represents an increase of +0.1 % compared to the € 45 454.3 million entered in the AB 1/2004. ·The EU-25 GNI at current market prices is forecast to amount to € 98 980.9 million in 2004 at a 1 % rate, which represents a decrease by -0.9 % compared to the € 99 890.9 million entered in the AB 1/2004. The exchange rates of 31 December 2003 have been used for converting the forecast VAT bases and GNI into euro (for the thirteen Member States that are not members of the euro zone). This avoids distortions since it is this rate which is used to convert budget estimates from euro into national currency when the amounts are called in (as stipulated in Article 10(3) of Council Regulation No 1150/2000). The revised forecasts of agricultural duties, customs duties, uncapped VAT bases and GNI for 2004, as adopted at the 131st ACOR meeting on 20 April 2004, are set out in the following table: Revised forecasts of customs duties, VAT bases & GNI for 2004 (in €) Agricultural duties (75 %) Customs duties (75 %) Uncapped VAT base (at a 1 % rate) GNI (at a 1 % rate) Capped VAT base (at a 1 % rate) BE 16 125 000 1 147 275 000 1 132 980 000 2 825 190 000 1 132 980 000 CZ 5 775 000 53 850 000 281 456 667 527 080 000 263 540 000 DK 5 175 000 195 750 000 751 886 000 1 928 917 000 751 886 000 DE 101 550 000 2 057 175 000 9 451 381 000 21 696 270 000 9 451 381 000 EE 900 000 8 625 000 32 106 000 51 379 333 25 689 667 EL 8 475 000 141 675 000 897 770 000 1 646 135 000 823 067 500 ES 26 850 000 726 825 000 4 571 090 000 7 841 620 000 3 920 810 000 FR 93 375 000 842 250 000 7 575 510 000 16 112 960 000 7 575 510 000 IE 525 000 102 825 000 657 675 000 1 179 773 000 589 886 500 IT 51 150 000 1 035 900 000 5 511 310 000 13 338 450 000 5 511 310 000 CY 900 000 8 475 000 63 280 000 80 204 000 40 102 000 LV 600 000 5 550 000 27 868 667 63 588 000 27 868 667 LT 2 025 000 18 750 000 51 188 000 113 443 333 51 188 000 LU 150 000 12 525 000 160 257 000 220 670 000 110 335 000 HU 8 850 000 82 500 000 252 283 333 487 954 667 243 977 334 MT 600 000 5 325 000 18 386 667 29 386 667 14 693 334 NL 142 050 000 1 061 025 000 2 220 805 000 4 599 995 000 2 220 805 000 AT 7 575 000 153 750 000 1 065 330 000 2 289 350 000 1 065 330 000 PL 9 900 000 92 625 000 646 871 333 1 213 073 333 606 536 667 PT 14 325 000 82 200 000 841 380 000 1 319 570 000 659 785 000 SI 1 650 000 15 300 000 96 658 667 170 330 667 85 165 334 SK 2 775 000 25 950 000 95 476 667 210 905 333 95 476 667 FI 2 625 000 72 750 000 641 720 000 1 471 320 000 641 720 000 SE 10 350 000 266 850 000 1 210 952 000 2 788 731 000 1 210 952 000 UK 350 850 000 1 766 100 000 8 457 364 000 16 774 645 000 8 387 322 500 Total EU-25 865 125 000 9 981 825 000 46 712 986 001 98 980 941 333 45 507 318 170 3.Correction of budgetary imbalances in favour of the United Kingdom (2000 and 2003) The correction of budgetary imbalances in favour of the UK to be budgeted in the present PDAB concerns two years (2000 and 2003). As the UK correction of a certain year is to be financed in the following year, all 25 Member States participate in the financing of the 2003 correction. The financing of the 2000 correction does, on the other hand, only concern the 15 countries that were Member States in 2001. The 2003 correction is subject to the rules of the new Council Decision on the system of the European Communities’ own resources (2000/597/EC, Euratom) and its accompanying working document (“The Calculation Method”), whereas the rules of the previous Own resources Decision and its accompanying working document still apply to the 2000 correction. The new “Calculation Method” neutralises the net gains (the “windfall gains”) of the UK that result from the increase in the percentage of traditional own resources (TOR) retained by Member States. Adjustments are also foreseen as a consequence of the present as well as future enlargements of the Union. Furthermore, according to the new Own Resources Decision the share of Austria, Germany, the Netherlands and Sweden in the financing of the UK correction is reduced to one fourth of their normal share. The reduction is financed by the other Member States, excluding the UK. The new financing rules consequently have an impact on the so-called frozen rate. Since the two corrections to be budgeted in this PDAB are financed according to different rules and by different Member States, two frozen rates consequently have to be calculated (presented after table 1 in part A of the general statement of revenue). The resulting uniform rate of call of VAT is the difference between the maximum rate of call (0.50 % of the capped VAT base) and the sum of the two frozen rates. 3.1.Calculation of the corrections According to the “Calculation Method” the Commission shall propose an update of the provisional estimate of the correction if it has ground to believe that the initial calculation will differ significantly from the definitive calculation of the correction. In the present PDAB it is proposed that the 2003 correction, previously entered in the initial budget 2004, be updated. Furthermore, the result of the final calculation of the 2000 correction and its financing is also budgeted in this PDAB. 3.1.1.Update of the correction for 2003 The current estimate does differ significantly compared to the estimate of the 2003 correction entered in the budget 2004. An update of the 2003 correction, to be inserted in the present PDAB, is therefore proposed. The following table summarises the changes compared to the estimate entered in the budget 2004 (rounded figure).

Table 1 BUDGET 2004 PDAB 8/2004 DIFFERENCE UK correction 2003 (1) (2) (3) = (2) - (1) 1. Percentage share of the UK in the total sum of uncapped VAT bases 19.27 % 18.50 % - 0.77 % 2. Percentage share of the UK in total allocated expenditure 8.88 % 7.68 % -1.21 % 3. (1) – (2) 10.38 % 10.82 % 0.44 % 4. Total allocated expenditure 78 012 899 288 82 025 811 437 4 012 912 148 5. (3) x (4) 8 101 226 495 8 875 351 609 774 125 114 6. Original amount of the UK rebate = 0.66 x (5) 5 346 809 487 5 857 732 062 510 922 575 7. UK advantage 620 520 210 447 826 885 -172 693 325 8. Core UK rebate = (6)–(7) 4 726 289 277 5 409 905 177 683 615 900 9. TOR windfall gains 66 539 370 18 346 139 -48 193 232 10. Amount of the UK correction = (8) – (9) 4 659 749 907 5 391 559 038 731 809 132 Table 1 shows that, as a result of these changes, the updated figure for the 2003 UK correction is approximately € 731.8 million higher compared to the previously budgeted amount. The difference is due to the combined effect of five factors, which could be quantified as follows: ·The decrease in the UK’s share of European Union expenditure increases the correction by around € 622.3 million. ·The increase in total expenditure allocated to the Member States compared to the previous estimate increases the correction by around € 286.6 million. ·The decrease in the so-called UK advantage increases the correction by around € 172.7 million. The “advantage” is the benefit that the UK derives from the current own resources system as compared to the previous ones (due to the introduction of the GNP/GNI resource and the capping of the VAT bases). ·The decrease in the so-called TOR windfall gains (see third paragraph of the introduction to the UK correction above) increases the correction by around € 48.2 million. ·The increase in the UK’s share of European Union revenue (measured as its share in the total EU uncapped VAT base) decreases the correction by around € 397.9 million. The revised estimate for the UK correction for the year 2003 consequently amounts to € 5 391 559 038, which corresponds to an increase by € 731 809 132 as compared to the first provisional estimate entered in the 2004 budget. 3.1.2.Final calculation of the correction for 2000 The result of the final calculation of the correction for 2000 amounts to € 4 132 577 623, i.e. a decrease of € 293 991 119 as compared to the previously budgeted amount in the supplementary and amending budget (SAB) 3/2001. The following table summarises the changes compared to the provisional estimate entered in the SAB 3/2001. Table 2 SAB 3/2001 PDAB 8/2004 Difference UK correction 2000 (1) (2) (3) = (2) - (1) 1. UK's share of uncapped VAT payments 19.41 % 18.71 % -0.70 % 2. UK's share of allocated expenditure 10.19 % 10.43 % 0.24 % 3. (1) - (2) 9.22 % 8.28 % -0.94 % 4. Total allocated expenditure 72 690 934 529 74 700 969 031 2 010 034 502 5. (3) x ( 4) 6 701 173 504 6 183 698 001 -517 475 503 6. 0.66 x (5) 4 422 774 513 4 081 240 681 -341 533 832 7. UK advantage -3 794 230 -51 336 943 -47 542 713 8. Reference compensation = (6) - (7) 4 426 568 742 4 132 577 623 -293 991 119 The difference relative to the previously budgeted amount is due to the combined effect of four factors, which could be quantified as follows: ·The decrease in the UK’s share of European Union revenue (measured as its share in the total EU uncapped VAT base) decreases the correction by around € 336.6 million. ·The increase in the UK’s share of European Union expenditure decreases the correction by around € 114.7 million. ·The increase in total expenditure allocated to the Member States increases the correction by around € 109.8 million. ·The decrease in the so-called UK advantage increases the correction by around € 47.5 million. The “advantage” is the benefit that the UK derives from the current own resources system as compared to the previous ones (due to the introduction of the GNP/GNI resource and the capping of the VAT bases). 3.2.Entry in the 2004 budget of the updated estimate for 2003 and the final amount of the 2000 correction 3.2.1.Amount to be budgeted (chapter 15)

The total amount of the UK corrections to be budgeted in the present PDAB 8/2004 is the sum of: ·The total amount of the revised estimate for the 2003 correction (€ 5 391 559 038, in replacement of the € 4 659 749 907 budgeted in the Budget 2004), and ·The difference between the final amount of the 2000 correction and the amount previously budgeted (in the SAB 3/2001). The amount to be entered in the present PDAB is therefore equal to: € 5 391 559 038 + (- € 293 991 119) = € 5 097 567 919. 3.2.2.Financing of the corrections to be budgeted (chapter 15) According to the “Calculation Method” the correction for year n shall be financed according to the GNP/GNI key of year n + 1. The total amount of the revised estimate for 2003 is therefore financed according to the revised GNI key of the present PDAB and the result is budgeted in chapter 15. Concerning the final correction for 2000, the 1994 “Calculation Method” states that in addition to the final calculation of the amount of the UK correction, a definitive calculation should also be made for the financing. The final correction for 2000 is therefore budgeted in two steps. The difference between the final amount of the 2000 correction and the amount previously budgeted (in the SAB 3/2001) is entered in chapter 15 according to the GNI key of the present PDAB. The entire financing is then recalculated according to the final GNP and VAT bases of the year 2000 and compared with the payments already entered in the present as well as the previous budgets. The difference per Member State is entered in chapter 35 (see below Result of the definitive calculation of the financing of the 2000 correction – chapter 35). The definitive calculation of the 2000 correction is an adjustment of the previous estimate budgeted and financed in 2001. As a consequence, it does not concern the 10 new Member States. The budgeting in chapter 15 of the two different UK corrections according to the GNI keys of the present PDAB is summarised below.



Table 3 - Financing of UK corrections in chapter 15 UK correction 2000a UK correction 2003 Total of chapter 15 (1) (2) (3) = (1) + (2) BE -11 795 938 271 066 206 259 270 268 CZ --- 50 571 316 50 571 316 DK -8 053 754 185 072 230 177 018 476 DE -53 651 236 355 741 367 302 090 131 EE --- 4 929 651 4 929 651 EL -6 873 062 157 940 375 151 067 313 ES -32 740 901 752 373 534 719 632 633 FR -67 276 001 1 545 977 063 1 478 701 062 IE -4 925 874 113 194 720 108 268 846 IT -55 691 665 1 279 773 409 1 224 081 744 CY --- 7 695 268 7 695 268 LV --- 6 101 026 6 101 026 LT --- 10 884 455 10 884 455 LU - 921 357 21 172 445 20 251 088 HU --- 46 817 389 46 817 389 MT --- 2 819 539 2 819 539 NL -19 206 233 75 423 495 56 217 262 AT -9 558 660 37 537 166 27 978 506 PL --- 116 389 760 116 389 760 PT -5 509 564 126 607 709 121 098 145 SI --- 16 342 578 16 342 578 SK --- 20 235 562 20 235 562 FI -6 143 162 141 167 543 135 024 381 SE -11 643 712 45 725 232 34 081 520 UK 293 991 119 - 5 391 559 038 - 5 097 567 919 Total 0 0 0 a Budgeting of the difference as compared to the amount previously budgeted in the SAB 3/2001. 3.2.3.Result of the definitive calculation of the financing of the 2000 correction (chapter 35) The definitive calculation of the financing of the 2000 correction is based on the final amount of the correction and on the actual GNP and VAT bases of n + 1 (2001) as they appear at the end of n + 3 (2003). The amounts budgeted in chapter 35 corrects for: ·The differences as regards the “direct effect”, i.e. the difference between what each Member State should pay for the final amount of the 2000 correction according to the final 2001 GNP financing key on the one hand and the amounts previously budgeted in respect of the 2000 correction, as well as ·the differences as regards the “indirect effect”, i.e. the difference between the implicit effect of the final amount of the 2000 correction on Member States’ payments due to its impact on the uniform rate of VAT (and the corresponding effects on each Member State’s VAT and GNP/GNI payments) on the one hand and the implicit effects of the amounts previously budgeted in respect of the 2000 correction. The budgeting of the 2000 UK correction concerns two different years: –The first provisional amount was budgeted in the 2001 budget and refinanced in the SAB 3/2001, –the difference between the final amount and the amount previously budgeted (in the SAB 3/2001) is inserted in chapter 15 of the present PDAB (and financed according to the current 2004 GNI key).