Proposal for a COUNCIL REGULATION (Euratom, ECSC, EC) determining the powers and obligations of agents authorized by the Commission pursuant to Article 18 (2) and (3) of Regulation (EEC, Euratom) No 1552/89
Date: 1997-01-10
Institutions: European Commission
Subjects: Community budget, auditing, budgetary control, own resources, regulations for civil servants

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  10.01.1997 
COM(96) 717  final 

96/ 0016 (CNS) 

Proposal  for a 

COUNCIL REGULATION (Euratom. ECSC.EQ 

determining the powers and obligations of agents authorized by the  Commission 

pursuant  to Article  18(2) and  (3) of 

Regulation  (EEC, Euratom)  No 1552/89 

(presented  by the Commission) 

/ 

SUMMARY 

The  purpose  of  this  proposal  is  to  replace  Council  Regulation (EEC,  Euratom,  ECSC) 

No  165/74 determining  the powers and obligations of agents authorized by the Commission 

to  undertake  controls  on  the  Community's  own  resources  in  order  to  take  account  of 

developments  in  regulations  and  administrative  practices  at  Community  level  firstly  by 

extending  the  scope  of  the  regulation  to  cover  on-the-spot  inspections  and  secondly  by 

making  it possible  for  the  Commission  to  authorize  both  officials  and  other  categories  of 

staff  for on-the-spot and other inspections. 

1.  Explanatory  Memorandum 

1.1 

Council  Regulation  (EEC,  Euratom)  No  1552/89  of  29  May  1989  implementing 

Decision  88/376/EEC,  Euratom on the system of the Communities'  own resources1 

took  effect  on  1 January  1989.  One  of  its  innovations -  in  Article  18(3) -  was  to 

confer  on  the  Commission  itself  the  right  to  carry  out  inspections  on  the  spot, 

whereas  the  Regulations  it  superseded  '  had  allowed  the  Commission  only  to  be 

associated with inspections organized by the Member States themselves. 

2 3 

As regards the powers and obligations of the officers  authorized by the Commission 

for  own resources  inspections,  Regulation (EEC,  Euratom,  ECSC)  No  165/744 was 

adopted before  the introduction of the new inspection arrangement  and therefore  did 

not  make  provision  for  on-the-spot  inspections  by  the  Commission  itself.  The 

inspections  provided  for  in  Article  18(3) of  Regulation  No  1552/89  therefore  need 

to be covered explicitly. 

1.2 

The  various  formalities  required  when  organizing  and  actually  carrying  out  these 

on-the-spot  inspections  need  to  be  stated  explicitly.  The  proposed  new  Regulation 

lays  down  that  although  the  inspections  carried  out  by  the  Commission  itself  are 

under the direction of  its authorized  agents, contacts  with national  departments  and, 

if necessary,  with  taxable persons  must be handled  through  officers  of  the  Member 

State where the inspection  is conducted. 

The  proposed  regulation  also  includes  provisions  applying  to  Commission  officials 

or other staff  in the execution of VAT and GNP resources controls. 

OJ No L  155, 7.6.1989,  p 1.  This  regulation was  amended by  Council  Regulation  (Euratom,  EC)  No 1355/96  of  8  July  1996, OJ  No  L  175, 
13.7.1996, p 3. 
Council Regulation (EEC, Euratom, ECSC) No 2/71, OJ No L 3, 5.1.1971, p.1. 
Council Regulation (EEC, Euratom, ECSC) No 2891/77, OJ No L 336, 27.12.1977, p 1. 
OJ No L 20, 24.1.1974. p. 1. 

1.3 

As  regards  the  status  of  the  agents  authorized  by  the  Commission  for  inspections 

carried  out 

in  association  with 

the 

responsible  national  departments, 

Regulation No  165/74 

limits 

the  possibility  of  authorization 

to  Commission 

officials.  However,  administrative  structures  at  the  Commission  have  changed 

greatly  since  this  Regulation  was  adopted.  To perform  the  tasks  assigned  to  it,  the 

Commission  now also makes use of  temporary  staff  and  seconded  national  experts. 

It  is  also  envisaged  that,  with  the  agreement  of  the  Member  State  concerned,  the 

Commission  could  request  the  assistance  of  officials  from  other  Member  States  as 

observers  and  call  in  outside  agencies  under  its  own  responsibility  to  provide 

technical assistance. 

Extending  the  range  of  staff  from  whom  authorized  agents  may  be  drawn  also 

appears justified  when existing  Community law is considered.  There  is no provision 

restricting  participation  to  Commission  officials  (within  the  meaning  of  the  Staff 

Regulations)  in  the  case  of  Community  controls  in  other  areas  —  for  instance, 

ECSC  inspections  under  Decision  379/84/ECSC  and  EAGGF  inspections  under 

Regulation  (EEC)  No 729/70.  Similarly  the  Regulation  implementing  Articles  85 

and  86 of  the  EC Treaty  contains  no such restriction  regarding  investigations  in the 

field  of competition. 

1.4 

It  is  therefore  proposed  that  Regulation  No  165/74  be  replaced  to  take  account  of 

developments  in regulations  and  administrative  practice  by  broadening  its  scope  to 

cover  inspections  on  the  spot  and  by  giving  the  Commission  the  possibility  of 

authorizing  officials  and other categories of staff  for all types of  inspection. 

2.  Article-by-article  commentary 

Article 1 

The  scope  of  Article  1 of  Regulation  No  165/74  has  been  extended  in  the  proposed  new 

Article  1 to cover  inspections on the spot carried  out by  the  Commission  itself,  as provided 

for  in Article  18(3) of Regulation  (EEC, Euratom)  No  1552/89. 

Regulation No  165/74 limits the choice of authorized  agent to Commission officials.  In line 

with  existing  Community  legislation  in  other,  similar  areas  —  where  there  is  no  such 

restriction  — and  to  meet  the  need  for  a  wider potential  circle  of  staff  to  carry  out  the 

specialized  work of  inspections,  it is proposed  that provision be made for  allowing  not only 

permanent officials  within the meaning of the Staff  Regulations but also other servants to be 

audiorized as officers  for  inspections. 

Article 2 

The  first  part  of  the  first  paragraph  of  Article  2  of  Regulation  No  165/74  is superfluous 

since the scope and limits of inspections are clearly laid down in Regulation No  1552/89. 

The  second part of  die first  paragraph,  dealing with the obligation to communicate  a list of 

the  national  inspection  departments,  has  been  rendered  superfluous  by  the  wording  of 

Article  4(1 )(a)  of  Regulation  No  1552/89,  as  amended  by  Council  Regulation  (EC, 

Euratom)  No  1355/96 of 8 July  1996.5 

The proposed  new paragraph  1  of Article 2 reproduces  the second paragraph of Article 2 of 

Regulation  No  165/74,  except  that  the reference  to Regulation No 2/71  has  been  amended 

to  reflect  the  fact  that  it  has  been  successively  replaced  by  Regulations No 2891/77  and 

No  1552/89. 

The  proposed  new  paragraph  2  reproduces 

the  third  paragraph  of  Article 2  of 

Regulation  165/74,  with  the  addition  of  a  reference  to  on-the-spot  inspections  by  the 

Commission. 

The proposed  new  paragraph  3 essentially  reproduces  the  fourth  paragraph  of  Article  2 of 

Regulation No  165/74. 

5  OJ No L 175. 13.7.1996, p. 3. 

Article 3 

Points  (a) and  (b) of  the proposed  new Article 3(1) reproduce  the corresponding  provisions 

of  Regulation  No  165/74,  amended  to cover  on-the-spot  inspections  by  the  Commission. 

Point  (c)  also  amends  the  wording  of  its  counterpart  in  the  old  Regulation  to  cover  both 

types of  inspection,  on-the-spot inspections by the Commission being under the direction of 

its authorized agents (see the proposed new Article 3(3)). 

Paragraph  2,  on  the  direction  of  associated  inspections  of  traditional  own  resources, 

reproduces the corresponding paragraph in Regulation No  165/74; the reference  to the legal 

base is amended. 

Paragraph  3  of  the  proposal  is  the  counterpart  to  paragraph  2:  on-the-spot  inspections 

carried out by  the Commission are under  the direction of  its authorized  agents. They  must, 

however,  seek  the  assistance  of  officers  designated  by  the  Member  State  in  question  to 

establish contacts with the national departments where the inspections are carried out and,  if 

necessary,  with the taxpayers concerned. 

Article 4 

In paragraph  1 of Article 4,  the term  "collecting"  is inserted  and  "officials"  is replaced  by 

"authorized agents", which is defined  in the proposed new Article 1. 

Since  the  substance  of  Article  4(2)  of  Regulation  No  165/74  is  now  incorporated  in 

Regulation No  1552/89, there is no need for this provision in the implementing  regulation. 

The  proposed  new  paragraph  2  spells  out  the  formalities  (designating  national  officers 

participating,  informing  the Commission,  etc.)  which  the Member  States  must carry  out  in 

preparation for an on-the-spot inspection by the Commission. 

Article 5 

The changes made do not affect  the substance. They involve: 

(1) 

amending the references  to the applicable Regulation; 

(2) 

replacing the term  "Communities" by  "Community"; 

(3) 

the inclusion of on-the-spot inspections. 

Article 6 

The  proposed  new  paragraph  1  incorporates  Article  6(1)  of  Regulation  No  165/74, 

amended  to  cover  on-the-spot  inspections  by  the  Commission.  In  addition,  the  time  limit 

for  producing  reports  on  inspection  findings  and  the  time  given  to  the  Member  States  to 

submit  their  observations  is extended  from  2  to  3  months.  Experience  has  shown  that  the 

complexity  of the issues covered and the need for  effective  coordination within  departments 

warrant  extending  the  time  limit  for  both  the  Commission  and  the  Member  States.  Under 

the  proposal  the  Commission  may  also,  for  duly  substantiated  reasons,  request  Member 

States to submit their  observations  on specific  points;  in this case the time  limit will be  one 

month.  Member  States  may  decline  to  respond,  in  which  case  they  must  inform  the 

Commission of their reasons. 

Article 7 

The  provision  in  Article 7  of  Regulation  No  165/74  which  states  that  the  Regulation  does 

not  apply  to  VAT  own  resources  is  deleted,  since  Article  11(2)  of  Council  Regulation 

(EEC,  Euratom)  No  1553/89  of  29 May  1989 on  the  definitive  uniform  arrangements  for 

the  collection  of  own  resources  accruing  from  value  added  tax  states  that  Regulation 

No  165/74 also applies to VAT resources controls. 

6  OJ No L 155, 7-6.1989, p. 9 

However,  since  these  controls  are  carried  out  by  the  Commission  in  the  relevant  national 

departments,  in  accordance  with  Article  11(1)  of  Council  Regulation  (EEC,  Euratom) 

No  1553/89,  the  provisions  in  this  proposal  for  a  regulation  relating  to  on-the-spot 

inspections,  as  defined  by  Article  18(3)  of  Council  Regulation 

(EEC,  Euratom) 

No  1552/89, cannot apply to VAT resources controls. 

The  new  text  of  Article 7  stipulates,  therefore,  which  of  the  provisions  of  the  regulation 

apply to officials  or other servants of the Commission  in the performance  of VAT resources 

controls. 

These provisions also apply to checks on calculations and basic statistics  in the field  of  GNP 

which  the  Commission  may  carry  out  at  the  national  statistics  institutes  in  the  Member 

States pursuant to Article  19 of Regulation No 1552/89. 

Regulation No  165/74 

Proposal  for  a Regulation 
replacing Reg.  165/74 

Article  1 

Article 1 

The  Commission  shall  be  associated  with 
the  measures  of  control  referred  to  in 
Article  14 of  Regulation  (EEC,  Euratom, 
ECSC)  No 2/71  in the person of  those of 
its  officials  whom 
it  has  specifically 
appointed for  this purpose. 

1.  For the purposes of: 

(a)  inspection measures  with  which  the 
as 
associated, 
is 
in  Article  18(2)  of 
Euratom) 
(EEC, 

Commission 
provided  for 
Regulation 
No 1552/89; 

(b)  inspection measures  carried  out  by 
the  Commission  itself on the spot,  as 
in  Article  18(3)  of 
provided  for 
Regulation 
Euratom) 
(EEC, 
No  1552/89; 

the  Commission  shall  be  represented  by 
the  officials  or  other  servants  whom  it 
has 
this 
to  as 
purpose,  hereinafter  referred 
"authorized agents ". 

specifically  authoiized 

for 

the 
National  experts 
Commission  may  be  present  at  such 
inspection measures. 

seconded 

to 

the  Member 

the 
2.  The  Commission  may,  with 
agreement  of 
State 
concerned,  request  officers  from  other 
Member  States to  act  as  observers,  and 
employ outside agencies, acting under its 
responsibility, 
technical 
assistance. 

to  provide 

Tfie  Commission  shall  ensure  that  these 
officers  and  agencies  provide  all  the 
necessary  assurances  with  respect  to 
technical competence, independence and 
professional secrecy. 

Article  2 

Article  2 

Deleted 

and 

establishment 

The  measures  of  control  referred  to  in 
Article  1  shall  be  all  those  required  for 
the  making 
the 
available  of  own  resources,  both  being 
provided 
(EEC, 
Euratom,  ECSC)  No 2/71. They  shall be 
carried  out  by  the  departments,  agencies 
or  national  authorities,  a  list  of  which 
shall be notified  to the Commission at the 
latter's  request. 

in  Regulation 

for 

Member  States and the Commission shall 
regularly  maintain those contacts  likely to 
facilitate  the  implementation  of  Article 
14(2)  of  Regulation  (EEC,  Euratom, 
ECSC) No 2/71. 

1.  Member  States  and  the  Commission 
to 
shall  maintain  regular  contacts 
facilitate  the  implementation  of  the 
provisions referred to in Article 1. 

has 

requested 

Each  inspection  visit,  with  which  the 
Commission 
to  be 
associated,  shall  be  preceded  by  contacts 
between  the  Member  States  concerned 
and the Commission  in order to lay down 
detailed procedures. 

For  each  visit,  the  Commission  officials 
must  be  given  written  terms  of  reference 
by  the  Commission  stating  their  identity 
and official  capacity. 

2.  Every 

the 
inspection  with  which 
Commission  is associated or which it 
carries out  itself on  the spot  shall  be 
preceded  by  contacts  between  the 
Member State  concerned  and 
the 
Commission  in  order  to  lay  down 
detailed procedures. 

shall  give 

The  Commission 
its 
authorized  agents  written  terms  of 
reference  for  every  such  inspection, 
stating 
identity  and  official 
capacity. 

their 

10 

Article  3 

Article  3 

1.  When  the  Commission  is  associated 
with  the  measures  of  control  carried 
out  by 
the 
the  Member  States, 
officials  which  it has appointed: 

1.  The authorized agents: 

(a)  shall  conduct  themselves  during  the 
inspections  in  a  manner  compatible 
with  the rules  and  usages  prescribed 
for  officials  of  the  Member  States 
with which they are associated; 

(a)  shall  conduct  themselves  during  all 
inspections  in  a  manner  compatible 
with  the rules  and  usages  prescribed 
for  officials  of  the  Member State 
concerned; 

(b)  shall  be  bound  by  professional 
secrecy,  under  the  conditions  laid 
down in Article 5 below; 

(b)  shall  be  bound  by  professional 
secrecy, as laid down  in Article 5; 

civil 

(c)  shall  be  entitled  to  have  contact  with 
debtors  only  through  the  responsible 
the 
national 
the 
that 
understanding 
competent  national  administration  to 
determine  where  such  contacts  may 
take place. 

servant, 
it 

on 
is  for 

(c)  may  have  contact  with 

taxable 
the  officers 
persons  only 
responsible  in 
the  Member  State 
where the inspections are carried out. 

through 

in 

involved 

2.  As regards organization of work and, 
more  generally,  relations  with  the 
the 
departments 
measures,  the  measures  of  control 
shall  be  under  the  direction  of  the 
department 
the 
designated 
Member  State  pursuant  to  Article  2 
to  carry  out  the  measures  of  control 
provided 
in  Article  14  of 
Regulation  (EEC,  Euratom,  ECSC) 
No 2/71. 

for 

by 

departments 
with 

2.  As  regards  the  organization  of  work 
and,  more  generally,  relations  with 
concerned, 
the 
inspections 
the 
Commission  is  associated  shall  be 
under  the direction  of  the  department 
the  Member  State 
designated  by 
pursuant to Article 4(1). 

which 

3. 

relations  with 

Inspections  which  the  Commission 
itself carries out on the  spot shall be 
under the  direction  of  its authorized 
agents;  as  regards  the  organization 
the 
of  work, 
departments  concerned  and,  where 
necessary,  with  the  taxable  persons 
establish 
concerned, 
appropriate contacts with  the officers 
designated  by 
the  Member State 
concerned pursuant to Article 4(2). 

shall 

they 

Article  4 

Article  4 

11 

or 

for 

establishing 

departments 

1.  The  Member  States  shall  ensure  that 
agencies 
the 
and 
responsible 
making  available  their  own resources 
and  the  authorities  which  they  have 
instructed  to  carry  out  measures  of 
the 
control  in  this  respect  afford 
by 
officials 
the 
assistance 
Commission 
their 
necessary 
duties. 

appointed 
every 
for  carrying  out 

or 

1.  The  Member  States  shall  ensure  that 
agencies 
departments 
the 
establishing, 
for 
responsible 
collecting  and making  available  own 
resources  and  the  authorities  which 
they  have  instructed  to  carry  out 
inspections  in  this  respect  afford  the 
authorized  agents 
Commission's 
every  assistance  necessary 
for 
carrying out their task. 

2.  Such officials  may be associated  with 
national  measures  of  control  relating 
to: 

Deleted 

(a)  establishment, 

based 

on 
information  available 
the 
national  departments,  of  own 
resources,  accounting 
therefor 
and making available thereof; 

to 

the  operations 
(b)  conformity  of 
making 
and 
establishing 
available own resources  with the 
Community  rules  laid  down  in 
the  Decision  of  21 April  1970 
and  Regulation  (EEC,  Euratom, 
ECSC) No 2/71; 

(c)  the  existence  of  the  supporting 
documents  provided 
in 
Article  3  of  Regulation  (EEC, 
Euratom,  ECSC)  No  2/71,  and 
their  conformity  with  the  above 
operations. 

for 

In  the case of inspections  carried out 
by  the  Commission on  the  spot,  the 
Member  State 
in  question  shall 
inform the  Commission in good  time 
of the identity and official capacity of 
the  officers it has  designated to  take 
part  in the  inspection and to provide 
the  Commission's  authorized  agents 
with  every  assistance  necessary  for 
carrying out their task. 

Article  5 

12 

Article  5 

1.  AU 

subject 

information  gathered  on 
the 
measures of  control dealt with  in this 
Regulation 
to 
shaU  be 
professional  secrecy.  It  may  not  be 
communicated  to  persons  other  than 
those  within  the  institutions  of  the 
institutions 
Communities  or 
whose duty  it  is to know,  or be used 
for  purposes  other  than  those  which 
are  laid  down  in  Regulation  (EEC, 
Euratom,  ECSC)  No  2/71  unless 
prior  consent  has  been  given  by  the 
Member  State  which  originally 
provided the  information. 

the 

1.  All 

in 

information  gathered 

the 
context  of 
inspection  measures 
covered  by  this  Regulation  shall  be 
subject  to  professional  secrecy.  It 
may  not  be  divulged  to  any persons 
except those in  the  institutions  of  the 
Community or  of  the Member  States 
whose  duty  it  is  to  know,  nor  used 
for  purposes  other  than  those  laid 
down  in Regulation  (EEC, Euratom) 
No  1552/89, unless prior  consent has 
been  given  by  the  Member  State 
which 
the 
information. 

originally 

provided 

2.  This  Article  shall  apply 
officials 
and 
Communities. 

servants 

to  all 
the 

of 

2.  This Article shall apply to all  officials 
and servants of the Community. 

Article  6 

Article  6 

Save as otherwise provided  in Article 5: 

Save as otherwise provided in Article 5: 

The results of the measures of control 
carried  out  shall  be  brought  to  the 
the  Member  State 
attention  of 
concerned  through  the  appropriate 
channels  within  a  period  of  two 
months,  and  the  Member  State  may 
submit  its  observations  within  the 
two  months  following  receipt  of  the 
communication. 

The  findings  of  inspections carried 
out  shall  be  communicated  to  the 
Member  State  concerned  through  the 
appropriate  channels  within 
three 
months,  and  the  Member  State  may 
submit  its  observations  within  three 
months of receiving them. 

However,  the  Commission may,  for 
duly  substantiated  reasons,  request 
the  Member  State  to  submit 
its 
observations on specific points within 
one month of receiving the inspection 
findings.  The  Member  State  may 
decline 
the 
Commission's request,  in which case 
it shall inform the  Commission of its 
reasons. 

accede 

to 

to 

13 

2.  Following the procedure provided  for 
in  paragraph  1,  these  results  and 
observations  shall be  made known  to 
the  other  Member  States  within  the 
the 
on 
Committee 
Advisory 
Communities'  Own Resources. 

2.  Following the procedure provided  for 
in  paragraph  1,  these  results  and 
observations  shall  be  made  known  to 
the  other  Member  States  within  the 
the 
on 
Committee 
Advisory 
Communities'  Own Resources. 

Article  7 

Article 7 

Subject  to provisions  to be adopted  at  the 
appropriate  time  pursuant  to  Article  1 of 
Regulation  (EEC,  Euratom,  ECSC)  No 
2/71,  this  Regulation  shall  not  apply  to 
own resources derived from Value Added 
Tax. 

The provisions laid down in Articles  2(2), 
2(3),  3(1) (a), 3(1) (b), 3(3),  4(1),  5 and 6 
shall also apply to inspections carried out 
by  officials  or  other  servants  of  the 
Commission  pursuant  to  Article 11(1)  of 
Regulation  (EEC,  Euratom)  No  1553/89 
and  Article 19  of  Regulation 
(EEC, 
Euratom) No 1552/89. 

Article 8 

Article 8 

Regulation 
No 165/74 is repealed. 

(EEC,  Euratom, 

ECSC) 

References  to  the  repealed  Regulation 
shall  be  construed  as  references  to  this 
Regulation. 

Aj-ticle  9 

This  Regulation  shall  enter  into  force  on 
the  day  following  its  publication  in  the 
the  European 
of 
Official 
Communities. 

Journal 

This  Regulation  shall  enter  into  force  on 
the  day  following  its  publication  in  the 
the  European 
of 
Official 
Communities. 

Journal 

This  Regulation  shall  be  binding  in  its  entirety  and  directly 
applicable in all Member States. 

1^ 

Proposal  for  a Council Regulation  (Euratom,  ECSC,  EC) 
determining  the powers and  obligations  of agents authorized  by the  Commission 
pursuant to Article  18(2)  and  18(3)  of 
Regulation  (EEC, Euratom)  No  1552/89 

THE COUNCIL OF THE EUROPEAN UNION 

Having  regard  to  the Treaty  establishing  the  European  Coal  and  Steel  Community,  and  in 

particular Article 78h thereof, 

Having regard to the Treaty establishing the European Community,  and in particular  Article 

209 thereof, 

Having  regard  to  the Treaty  establishing  the European  Atomic  Energy  Community,  and  in 

particular  Article  183 thereof, 

Having regard  to Council  Decision  94/728/EC,  Euratom of 31 October  1994 on the system 

of the Communities'  own resources 

,  and in particular Article 8(2) thereof, 

Having  regard  to  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,2 as amended  by Council  Regulation  (Euratom,  EC) No  1355/96 of  8 July  1996,3 

and  in particular  Article  18 thereof, 

Having regard to the Commission's  proposal,4 

Having regard  to the opinion of the European  Parliament, 

1  OJ No L 293.  12.11.1994, p. 9. 
2  OJ No L 155, 7.6.1989. p. 1. 
3  OJ No L 175, 13.7.1996, p  3. 
4  OJNo 
5  OJNo 

K 

Having regard to the opinion of the Court of Auditors, 

Whereas  Article  18(1) of  Regulation  (EEC,  Euratom)  No  1552/89 requires  Member  States 

to  conduct  the  checks  and  enquiries  concerning  the establishment  and  making  available  of 

the own resources referred  to in Article 2(l)(a) and (b) of Decision 94/728/EC,  Euratom, 

Whereas,  on  the  basis  of  Article  18(2)  of  that  Regulation,  Member  States  are  required  to 

associate  the  Commission,  at  its  request,  with  these  inspection  measures;  whereas  this 

obligation  covers  inspection  measures  initiated  by  the  Member  States  and  additional 

inspections  undertaken  in  response  to  a  reasoned  request  from  the  Commission;  whereas, 

on the basis  of  Article  18(3),  the Commission  may  itself  carry  out  inspection  measures  on 

the spot; 

Whereas  Council  Regulation  (EEC,  Euratom,  ECSC)  No  165/74  of  21 January  19747 

determined  the  powers  and  obligations  of  officials  appointed  by  the  Commission  in 

connection  with  inspections;  whereas  this  regulation,  which  preceded  Regulation  (EEC, 

Euratom)  No  1552/89,  concerns  only  inspection  measures  carried  out  in  association  with 

the  Member  States;  whereas  Article  18(3)  of  Regulation  No  1552/89  introduces  a  new 

inspection procedure  giving  the Commission  the power  to carry  out on-the-spot  inspections 

on its own initiative; 

Whereas  the  scope  of  Regulation  (EEC,  Euratom,  ECSC)  No  165/74  should  therefore  be 

extended  to  cover  this  new  inspection procedure  by  laying  down  the  arrangements  for  the 

conduct  of  on-the-spot  and  associated  inspections  and  defining  the  conditions  which 

authorized agents must observe in the performance  of their task; 

Whereas  the  inspection  measures  referred  to  in Article  18(2) and  (3)  of  Regulation  (EEC, 

Euratom)  No  1552/89 are without prejudice  to inspections undertaken by  Member  States  in 

accordance with their own provisions  laid down by law, regulation or administrative action; 

6  OJNo 
7  OJ No L 20. 24.1.1974. p. 1. 

/<r 

Whereas  certain  provisions  of  the  Regulation  also  apply  to  inspections  conducted  by  the 

Commission in the area of VAT own resources and inspections relating to GNP; 

Whereas  in  view  of  the  scale  of  the  changes  to  be  made,  Regulation  (EEC,  Euratom, 

ECSC) No  165/74 should be replaced, 

HAS ADOPTED THIS REGULATION: 

Article 1 

1.  For the purposes  of: 

(a) 

inspection measures with which the Commission is associated,  as provided  for  in 

the second indent of Article  18(2) of Regulation (EEC, Euratom) No  1552/89; 

(b) 

inspection  measures  carried  out  by  the  Commission  itself  on  die  spot,  as 

provided  for  in Article  18(3) of Regulation (EEC, Euratom) No  1552/89; 

the  Commission  shall  be  represented  by  the  officials  or  other  servants  whom  it  has 

specifically  authorized for this purpose, hereinafter  referred  to as "authorized agents". 

National  experts  seconded  to  the  Commission  may  be  present  at  such  inspection 

measures. 

2.  The  Commission  may,  with  the  agreement  of  the  Member  State  concerned,  request 

officers  from  other  Member  States  to  act  as  observers,  and  employ  outside  agencies, 

acting under  its responsibility,  to provide technical assistance. 

The Commission shall ensure that these officers  and agencies provide all  the necessary 

assurances  with  respect  to  technical  competence,  independence  and  professional 

secrecy. 

I? 

• 

Article 2 

1.  Member  States  and  the  Commission  shall  maintain  regular  contacts  to  facilitate  the 

implementation of the provisions referred  to in Article 1. 

2.  Every  inspection with which the Commission is associated or which  it carries out itself 

on the spot shall be preceded by contacts between the Member State concerned  and  the 

Commission in order to lay down detailed procedures. 

3.-  The  Commission  shall  give  its  authorized  agents  written  terms  of  reference  for  every 

such inspection,  stating their identity and official  capacity. 

Article  3 

1.  The authorized agents: 

(a)  shall  conduct  themselves  during  all  inspections  in a  manner  compatible  with  the  rules 

and usages prescribed  for officials  of the Member State concerned; 

(b)  shall be bound by professional  secrecy, as laid down  in Article 5; 

(c)  may  have  contact  with  taxable  persons  only  through  the  officers  responsible  in  the 

Member State where the inspections are carried out. 

2.  As  regards  the  organization  of  work  and,  more  generally,  relations  with  the 

departments  concerned,  inspections  with which  the  Commission  is associated  shall  be 

under  the  direction  of  the  department  designated  by  the  Member  State  pursuant  to 

Article 4(1). 

n 

3. 

Inspections  which  the  Commission  itself  carries  out  on  the  spot  shall  be  under  the 

direction  of  its  authorized  agents;  as  regards  the organization  of  work,  relations  with 

the departments  concerned  and,  where necessary,  with  the  taxable persons  concerned, 

they  shall  establish  appropriate  contacts  with 

the  officers  designated  by 

the 

Member State concerned pursuant to Article 4(2). 

Article  4 

1.  The  Member  States  shall  ensure  that  the  departments  or  agencies  responsible  for 

establishing,  collecting  and  making  available  own resources  and  the  authorities  which 

they  have  instructed  to  carry  out  inspections  in  this  respect  afford  the  Commission's 

authorized agents every assistance necessary for carrying out their task. 

2. 

In the case of inspections carried out by the Commission on the spot, the Member  State 

in  question  shall  inform  the  Commission  in  good  time  of  the  identity  and  official 

capacity  of  the officers  it has designated  to  take part  in  the  inspection  and  to  provide 

the  Commission's  authorized  agents  with  every  assistance  necessary  for  carrying  out 

their task. 

Article  5 

1.  All  information  gathered  in  the  context  of  inspection  measures  covered  by  this 

Regulation  shall  be  subject  to  professional  secrecy.  It  may  not  be  divulged  to  any 

persons  except  those  in  the  institutions  of  the  Community  or  of  the  Member  States 

whose  duty  it  is  to  know,  nor  used  for  purposes  other  than  those  laid  down  in 

Regulation  (EEC,  Euratom)  No  1552/89,  unless  prior  consent  has  been  given  by  the 

Member State which originally provided the  information. 

2.  This Article shall apply to all officials  and servants of the Community. 

o4b 

• 

Article 6 

Save as otherwise provided in Article 5: 

1.  The  findings  of  inspections  carried  out  shall  be  communicated  to  the  Member  State 

concerned through the appropriate channels within three months, and the Member  State 

may submit its observations within three months of receiving them. 

However,  the  Commission  may,  for  duly  substantiated  reasons,  request  the  Member 

State  to  submit  its  observations  on  specific  points  within  one  month  of  receiving  the 

inspection  findings.  The  Member  State  may  decline  to  accede  to  the  Commission's 

request,  in which case it shall inform  the Commission of its reasons. 

2.  On  completion  of  the  procedure  laid  down  in  paragraph  1,  the  findings  and 

observations  shall  be  made  known  to  the  other  Member  States  within  the  Advisory 

Committee on the Communities'  Own Resources. 

Article 7 

The provisions  laid  down  in Articles 2(2),  2(3),  3(l)(a),  3(l)(b),  3(3),  4(1),  5 and  6  shall 

also  apply  to  inspections  carried  out  by  officials  or  other  servants  of  the  Commission 

pursuant  to  Article  11(1)  of  Regulation  (EEC,  Euratom)  No  1553/89  and  Article  19  of 

Regulation (EEC,  Euratom) No  1552/89. 

Article 8 

Regulation (EEC,  Euratom,  ECSC) No  165/74 is repealed. 

References  to the repealed Regulation shall be construed as references  to this Regulation. 

Article 9 

This  Regulation  shall enter  into force  on the day  following  its publication  in the  Official 

Journal of the European Communities. 

This Regulation shall be binding in its entirety and directiy applicable in all Member States. 

<2& 

ISSN 0254-1475 

COM(96) 717  final 

DOCUMENTS 

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01 

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