COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(92)530 final 
Brussels, 11 December 1992 
REPORT ON THE APPLICATION OF 
COUNCIL REGULATION (EECy EURATOM) No 1552/89 
of 29 May 1989 
implementing Decision 88/376/EBC, Euratom 
on the system of the Communities' own resources 
(presented by the Commission) 
CONTENTS 
1. INTRODUCTION 
2. APPLICATION OF THE PRINCIPLES INTRODUCED BY REGULATION 
No 1552/89 
2.1 Establishment of traditional own resources 
2.2 Entry in the accounts 
2.3 Making available of own resources 
2.4 The Commission's control activities 
2.5 Reports from Member States and the operation of the ACOR 
3. CONCLUSIONS 
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REPORT ON THE APPLICATION OF 
COUNCIL REGULATION (EEC, EURATOM) No 1552/89 
of 29 May 1989 
implementing Decision 88/376/EEC, Euratom 
on the system of the Communities' own resources 
Under Article 22 of Regulation No 1552/89 the Commission is required to 
submit a report on the implementation of that Regulation by 
1 December 1992 at the latest and, where appropriate, propose any 
necessary amendments. 
This report sets out the Commission's assessment of the application of 
the Regulation since its entry into force and the conclusions it has 
drawn. On the basis of the report the Commission is presenting 
separately a proposal for amending the Regulation, which also takes 
into account comments by the Court of Auditors and the budgetary 
authority on the implementation of the own resources arrangements. 
1. INTRODUCTION 
1.1 The main difficulties encountered up to 1989 in the implementation 
of the system of traditional own resources - introduced in 19701 - may 
be summed up as follows: 
disagreement between some Member States and the Commission as to 
the relation between the establishment of resources and the 
obligation to make them available. Some Member States made 
available all established entitlements and then later deducted 
those which had not been recovered, while others made available 
only those resources which had been recovered; 
problems in the accounting arrangements for resources made 
available due to a lack of precision in the revenue nomenclature; 
delays by the Member States in sending reports, insufficient data 
in these reports and a general lack of information from the Member 
States, especially relating to fraud cases; 
inability of the Commission to carry out inspections tailored to 
its requirements, as the scope of its control powers was limited to 
inspections in association with national authorities. 
Regulation No 2/71 of 2 January 1971 implementing the Decision of 
21 April 1970 on the replacement of financial contributions fr_>r 
Member States by the Communities' own resources (OJ L 3, 5.1.1971), 
later replaced by Regulation No 2891/77 of 19 December 197? 
(OJ L 336, 27.12.1977) . 
H 
1.2 Regulation No 1552/89 provided solutions to most of the problems 
outlined above with the aim of improving the Member States' handling of 
Community revenue and giving the Commission the means to exercise more 
effective management and control. More specifically, the Regulation: 
defined the concept of establishment, laid down the situations 
where Member States were released from the requirement to recover 
entitlements, made a distinction between the obligation to 
establish own resources and the obligation to make them available 
immediately and required Member States to keep separate accounts 
(B accounts) for amounts which are not made available immediately; 
reinforced the Commission's general right to information and 
extended it to cover fraud; 
provided for independent on-the-spot inspections by the Commission. 
In more general terms, the Regulation laid down more clearly the 
division of powers between the Member States and the Commission in the 
collection of own resources: Member States are responsible for 
recovering own resources on behalf of the Communities in accordance 
with existing Community and national legislation. The Commission's 
role is to check that recovery is properly carried out by the national 
authorities and is as uniform as possible throughout the Member States. 
2. APPLICATION OF THE PRINCIPLES INTRODUCED BY REGULATION No 1552/89 
2•^ Establishment of traditional own resources 
2.1.1 Establishment is the procedure by which a national authority 
acknowledges the Community's entitlement to an amount it has recovered 
from a debtor on behalf of the Communities and records the 
corresponding amount so that it can be entered in the accounts and made 
available to the Commission by the prescribed deadline. 
The following principles apply: 
(a) Member States are required to establish entitlements for each debt 
as soon as the appropriate conditions are met (existence of debt, 
debtor and amount known); 
(b) all own resources must be established, including any amounts which, 
for various reasons, might not be collected. 
2.1.2 In the light of the experience gained in the application of 
Regulation No 1552/89 as regards establishment, the Commission would 
make the following remarks: 
There are differences in the way national authorities handle 
establishment (in normal cases), mainly due to a certain degree of 
latitude left to them by Community legislation as to the 
organization of customs clearance procedures. 
Although the Member States now establish entitlements in disputed 
cases, both the Commission and the Court of Auditors have observed 
substantial differences between Member States regarding the date of 
establishment in such cases. 
As regards the financial implications of errors committed by 
national authorities, Member States do not establish the 
entitlements concerned in such cases and have refused to introduce 
rules on the subject in customs legislation (Customs Code), taking 
the view that this matter should be resolved by own resources 
legislation. 
To sum up, the introduction of Regulation No 1552/89 marked an 
important step forward in defining the concept of establishment, 
leading to more uniformity in the procedures applied by the Member 
States. However, some differences remain in the way cases are handled 
in practice and the Commission therefore feels that certain adjustments 
are required to Article 2 of the Regulation. 
2.2 Entry in the accounts 
2.2.1 Entry in the accounts of traditional own resources is the area 
most affected by the changes introduced under Regulation No 1552/89, 
which provides for separate accounts for established entitlements which 
have not yet been recovered, the so-called "B accounts". 
The B accounts were introduced to improve the monitoring of the 
recovery of such amounts, particularly in cases of fraud and 
irregularities. 
The Commission takes the view that national authorities are required by 
the Regulation to keep genuine ad hoc accounts on the same principles 
as the so-called "A accounts" for amounts which have been recovered or 
for which security has been provided. 
Most of the Member States have had to set up such accounts, as they 
were not covered by their existing national accounting system. 
6 
In a statement on Article 6(2)(b) of Regulation No 1552/89 recorded in 
the Council Minutes of 29 May 1989, "the Member States undertake to 
make every effort required to adjust their internal procedures so that 
they can comply with the new obligations imposed on them as soon as 
possible". The purpose of this statement was to ensure that Member 
States which, for technical reasons, could not introduce the separate 
accounts on the first date of application of Regulation No 1552/89 
would be given a transitional period. It was agreed in the Advisory 
Committee on Own Resources that separate accounts would be introduced 
from 1 January 1990, and most of the Member States have done so. 
2.2.2 Two Member States, Denmark and the Netherlands, do not keep 
separate accounts (although the Netherlands does have one for 
agricultural levies). Nevertheless, these two countries make available 
all established entitlements immediately. 
This practice is acceptable provided that amounts not recovered are 
deducted in accordance with the provisions on corrections to the base 
(Article 2(2)) and on amounts whose recovery is impossible 
(Article 17(2)). 
One Member State, Greece, has not adopted the Commission's 
interpretation and merely records amounts whose recovery is in doubt in 
quarterly statements. The Commission is making representations to urge 
the Greek authorities to introduce satisfactory arrangements for 
keeping separate accounts. 
All the other Member States keep genuine daily accounts in compliance 
with the Regulation either at a central department or in the collection 
offices. 
2.2.3 The Commission feels that improvements can still be made to the 
arrangements for keeping A and B accounts: 
- the monthly statements (A account) and quarterly statements 
(B account) sent to the Commission by the Member States should be 
completed on the basis of a standard model; 
it should be possible to carry out a final check on the annual 
summary of the twelve monthly statements before they are 
incorporated in the revenue and expenditure account; 
the accounts should be closed at the end of the month in similar 
conditions in all the Member States, which is not yet the case; 
the deadline for entry in the accounts - one month and 19 days -
could be shortened; 
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- the flat-rate or other deductions applied by some Member States 
when special-status areas are included in their customs territory 
but do not form part of the Community customs territory should be 
subject to identical conditions and should be clearly indicated in 
the monthly statements. 
2.3 Making available of own resources 
2.3.1 Both the Commission and the Court of Auditors have observed 
delays in the making available of traditional own resources and 
mistakes in the amounts concerned. Under present legislation interest 
should be paid in the event of such delays and the Commission has 
regularly demanded such interest from the Member States concerned. In 
many cases the payment of interest has itself been unjustifiably late, 
which may be explained by the fact that no penalties can then be 
imposed. 
2.3.2 As regards principles, Regulation No 1552/89 introduced the 
possibility of releasing Member States from the obligation to make 
amounts available in cases where recovery is impossible for reasons 
which cannot be attributed to the national authorities concerned 
("specific cases"). These exemptions are in addition to those 
previously covered by the concept of force majeure. 
Because of the very restrictive interpretation of force majeure by the 
Court of Justice, the Member States have only made use of this 
possibility on very rare occasions since the Regulation entered into 
force. 
The "specific cases" constitute one of the categories for the clearance 
of the B account and must be shown in the quarterly statements. 
Moreover, such cases must be reported to the Commission if they involve 
more than ECU 10 000. 
In practice the amounts presented in the clearance of the B account are 
minimal and so far very few cases have been reported (since the 
Regulation came into force) where amounts of more than ECU 10 000 have 
not been recovered. 
The cases involving more than ECU 10 000 reported by Germany, the 
Netherlands and the United Kingdom have been the result of bankruptcies 
where there were no assets, the disappearance of debtors or 
insufficient guarantees. 
This might suggest that cases where recovery is utterly impossible are 
rare; the Commission reserves the right to look into this matter in 
greater depth. 
3 
2.3.3 In view of the limited number of cases of non-recovery report 
to the Commission, it has not been possible to draw up criteria for 
assessing responsibility when amounts are not recovered. 
Nevertheless, the Commission still believes that it is in the interests 
of the Community and the Member States that the national authorities, 
having been delegated the task of collecting own resources, should be 
financially liable for any errors they commit. 
2.4 The Commission's control activities 
2.4.1 Under the principles laid down in Decision 88/376 and the 
measures provided for in Article 18 of Regulation No 1552/89, 
responsibility for the inspection of traditional own resources is 
shared between the Commission and national authorities according to the 
following criteria: 
the Member States are responsible for checking the establishment, 
entry in the accounts and making available of own resources; 
the Commission's role is essentially to promote the uniform and 
consistent application of Community rules throughout the Community 
and to guarantee the proper collection of own resources. To this 
end, the Commission has the right: 
to be associated with inspection measures undertaken by the 
national authorities ("joint inspections"); 
to carry out its own on-the-spot inspection measures. 
2.4.2 Joint inspections were the first form of Community inspection 
to be introduced after the creation of own resources under the Council 
Decision of 21 April 1970. These inspections are carried out by the 
Commission in accordance with the provisions of Regulation No 165/74 
determining the powers and obligations of officials appointed by the 
Commission. They have always produced good results, although the 
subject and venue are chosen by the national authorities. 
Joint inspections may be extended on request when justifiable reasons 
are given for additional inspections. 
In order to extend the Community's control powers beyond the practical 
limitations imposed by joint inspections, the Council conferred on the 
Commission the right to carry out its own on-the-spot inspections under 
Regulation No 1552/89. 
After giving the national authorities advance notice, the Commission 
may carry out on-the-spot checks, deciding for itself the subject, 
place and date. However, it is obvious that, for the sake of 
efficiency, national civil servants must also take part in these 
inspections. The Commission would point out that up to now it has had 
the full cooperation of all national authorities in this matter. 
The general control strategy pursued by the Commission is based 
essentially on the selection of priority subjects which are of general 
and widespread importance so as to make the most of the inevitably 
limited number of staff assigned to control duties and to take into 
account the fact that inspections, being relatively few in number, must 
usually take the form of sample checks. In 1991 most man-days of 
inspectors were spent in monitoring the introduction of the B account 
in the Member States. 
The Commission will shortly be presenting an ad hoc report under 
Article 18(5) on the criteria used in making the selection, the 
subjects accorded priority and the results of Community inspections. 
2.4.3 On the basis of the experience gained over the three years of 
the application of Regulation No 1552/89, it can be concluded that: 
there is no need to make any changes to the existing rules on the 
Commission's rights and powers of inspection; 
the Commission's control activities should be pursued and 
intensified by, among other things, targeting inspections at 
high-risk areas. 
2.5 Reports by the Member States and the operation of the Advisory 
Committee on Own Resources (ACOR) 
2.5.1 Under present legislation Member States are required to report 
to the Commission every year on the establishment and entry in the 
accounts of own resources (Article 7) and every six months on the 
outcome of their inspections and on comprehensive information and 
questions of principle concerning the most important problems arising 
from the application of the Regulation, in particular matters in 
dispute (Article 17(3)). 
y^ A^ 
The main purpose of these reports is to enable the Member States to 
give an account of the measures they have taken to ensure that they 
have performed properly their delegated task of collecting own 
resources. 
On the whole Member States have fulfilled their obligations to send in 
reports. However, improvements should be made to current practice, in 
particular as regards the presentation and content of reports. 
In future a clearer distinction should be made between, on the one 
hand, accounting information which is provided annually to enable the 
Commission to finalize in good time the figures for receipts to be 
included in the revenue and expenditure account and, on the other hand, 
information on the management and control of recovery by the Member 
States. 
The latter category of information, which could quite easily be 
supplied annually rather than every six months as at present, should 
provide a detailed ad hoc account of the control and recovery 
activities of the national authorities and contain more references to 
internal implementation reports of the authorities concerned. 
As regards the reports of cases of fraud and irregularities involving 
more than ECU 10 000 under Article 6(3) of the Regulation, the content 
of these reports is still far from uniform and does not always include 
certain information which would be useful for targeting inspections at 
high-risk areas, for example the particular customs arrangements 
involved or the customs tariff reference. 
Furthermore, there is at present no systematic link between these 
reports and the monthly and quarterly accounting statements, although 
some Member States do produce this kind of information. The Commission 
feels that this practice should become the general rule to make it 
possible to monitor the clearance of a sample of cases of fraud and 
irregularities which have a major financial impact on own resources. 
2.5.2 Over the three years of the application of Regulation 
No 1552/89, the Advisory Committee on Own Resources has played the role 
assigned to it by the Regulation, in particular in 
examining the forecasts of own resources; 
considering reports on inspections carried out by the Commission; 
holding detailed discussions on general questions relating to own 
resources legislation. 
The Committee has met more often than in the past (on average six times 
a year) as the Commission had to secure agreement on a common 
interpretation of the new rules introduced by the Regulation. For 
example, the delegations reached agreement on a definition of the 
detailed arrangements for introducing the B accounts. 
The Advisory Committee on Own Resources has confirmed its role as an 
effective means of improving cooperation between the national 
authorities and the Commission in the practical application of the 
system of traditional own resources. This role should be strengthened 
in future. 
3. CONCLUSIONS 
3.1 Over the last three years progress has been made in the application 
of Regulation No 1552/89. However, there are still some problems and 
disparities in the procedures for collecting traditional own resources, 
as outlined above, which need to be ironed out. 
These disparities and problems may result in unequal treatment of 
Community taxpayers, as regards the tax burden, and perhaps even 
diversions of trade. 
3.2 The disparities and problems in the application of the Regulation 
can be ironed out through coordinated action by the Commission and the 
Member States without the need for amendments to legislation where 
Community legislation is clear and its interpretation is not disputed 
by any Member State. 
The Commission plans to take the necessary steps in this direction in 
cooperation with the Advisory Committee on Own Resources. 
3.3 However, it is clear from the Commission's assessment of the 
application of Regulation No 1552/89 and remarks by the Court of 
Auditors and the budgetary authority that the system for collecting own 
resources could be improved by introducing a number of amendments to 
make existing provisions clearer and more precise, to streamline 
certain procedures and to make national authorities more aware of their 
responsibilities as the bodies delegated the task of collecting 
Community own resources. 
The most important improvements would be: 
as regards establishment, to specify the date more clearly to 
ensure that, for all the Member States, it is within the acceptable 
period laid down by Community legislation; 
V 
as regards accounting, to ensure that the accounting statements 
sent by the national authorities to the Commission have a standard 
form and content in order to guarantee the quality of the figures 
in the revenue and expenditure account and balance sheet to be 
presented to the budgetary authority; 
as regards the making available of own resources: 
* to introduce more effective penalties for delays in making 
available amounts due, 
* to allow an analysis of the reasons for failure to recover own 
resources so that criteria can be drawn up defining the 
financial liability of the authorities responsible for 
collection; 
as regards the reports from the Member States on the action they 
take to collect own resources: 
* to provide for more uniform and comprehensive information on 
fraud and irregularities involving amounts of more than 
ECU 10 000, 
* to monitor the recovery procedure more effectively, in 
particular in cases of fraud and irregularities involving more 
than ECU 10 000, 
* to improve the Community's ability to assess the quality and 
results of the recovery and inspection activities of the 
national authorities through comprehensive annual reports 
presented according to a standard model. 
The Commission is accordingly presenting a proposal for amending to 
Regulation No 1552/89 which provides for the changes it deems 
necessary. 
ISSN 0254-1475 
COM(92) 530 final 
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