Proposal for a Council Regulation (EC, Euratom) amending Council Regulation (EEC, Euratom) No 1552/89 implementing Decision 94/728/EC, Euratom on the system of the Communities' own resources
Date: 1997-07-03
Institutions: European Commission
Subjects: administrative procedure, budgetary control, financial management, fraud against the EU, own resources

COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels,  03.07.1997 
COM(97) 343  final 

97/0188 (CNS) 

Proposal  for  a 

COUNCIL REGULATION (EC,  EURATOM) 

AMENDING COUNCIL REGULATION (EEC, EURATOM) NO 1552/89 

IMPLEMENTING DECISION 94/728/EC,  EURATOM 

ON THE SYSTEM  OF THE COMMUNITIES'  OWN  RESOURCES 

(presented  by  the  Commission) 

- 2-

EXPLANATORY  MEMORANDUM 

1. 

INTRODUCTION 

Pursuant  to  Decision  94/728/EC,  Euratom,  Regulation  (EEC,  Euratom)  No  1552/89 
delegates  collection  of traditional  own  resources  to  the  Member  States  which  are  then 
obliged  to  make  every  effort  to  ensure  that  these  resources  are  properly  established, 
entered in the accounts, collected and made available. 

However,  the management  of the procedure  for  collecting  own resources  surfers  from  a 
number  of  shortcomings,  as  is  frequently  observed  in  the  control  activities  of  the 
Commission and the Court of Auditors and the reports of the European Parliament. 

As  part  of  the  management  of  own  resources,  one  of  the  operational  conclusions  of 
phase III of the SEM 2000 initiative ( "Sound and Efficient Management),  approved by 
the Madrid European  Council  of  15-16 December  1995, underlined the need to  improve 
the  financial  management  of  own  resources  by  tightening  the  rules  governing  their 
collection. 

This proposal aims to meet this objective by introducing two measures covering both the 
conditions for  the establishment of own resources contained  in Article  2  of  Regulation 
(EEC, Euratom) No  1552/89 and the procedure for  writing off these resources set out in 
Article  17(2)  of  that  Regulation  under  which  Member  States  must  ask  to  be  released 
from  their  obligation  to  make  available the  amounts  established  when  recovery  has  not 
been possible. 

2. 

PROPOSED AMENDMENT OF ARTICLE 2 

Community  rules  on  own  resources  do  not  contain  any  specific  provisions  on  what 
happens  when  own resources  cannot  be established  through  entry  of the  entitlements in 
the  accounts  as  a result  of  an  error  on the  part  of the  customs  authorities  themselves. 
This  situation  flows,  in  particular,  from  Article  220(2)(b)  of  the  Community  Customs 
Code  when  the  error  on  the  part  of  the  authorities  could  not  reasonably  have  been 
detected  by  the  person  liable  for  payment,  the  latter  for  his  part  having  acted  in  good 
faith  and complied with all the provisions laid down by the legislation  in force  as regards 
the customs declaration. 

The  same  situation  also  arises  when,  as  a  result  of  an  error  on  the  part  of  the 
administration,  the  debtor  is  not  informed  of  the  amount  of  duty  within  the  three-year 
period laid down in Article 221 of the Code. 

The Commission made a proposal concerning this loophole in the rules when  Regulation 
(EEC,  Euratom)  No  1552/89  was  being  amended  in  1992.1  However,  the  Council  did 
not  incorporate  this  proposal  in Council  Regulation  (EC,  Euratom)  No  1355/96  which 
amended the abovementioned  regulation. 

However,  following  the  review  of the  Member  States'  financial  liability  for  their  errors 
and  the  relevant  discussions  under  SEM  2000,  the  Commission  considers  it  necessary, 
for  reasons  of  financial  transparency,  to  re-table  a  specific  proposal  to  make  Member 
States  financially  liable for  administrative  errors  involving  more than  ECU  2 000  which 
make  entry  in  the  accounts  impossible  with  regard  to  the  debtor  in  accordance  with 
Community customs legislation. 

The  procedure  which  the  Member  States  must  follow  is  to  enter  the  amount  in  the 
account  referred  to in Article 6(2)(a), without  any obligation to notify  the debtor,  and to 
make  available  debts  exceeding  ECU  2 000  which  cannot  be  entered  into  the  accounts 
provided that the debtor is known and the amount of the debt can be calculated. 

3 

PROPOSED AMENDMENT OF ARTICLE  17(2) 

3.1 

Practical  application  of the current  rules for writing  off  debts 

The  way  that  the  rules  contained  in  Article  17(2)  are  applied  in  practice  is  still 
unsatisfactory  as regards  both  the  quality  of the  accounting  information  supplied  to  the 
Commission and the actual implementation of the procedure. 

Primarily,  as the Court  of Auditors noted  in its annual report  for  1995, the entry of these 
amounts in the accounts is inconsistent,  hampering the Commission's  controls.  Secondly, 
since  Regulation  No  1552/89  entered  into  force  in-January  1989,  only  five  Member 
States  (Germany,  Spain,  France,  the  Netherlands  and  the  United  Kingdom)  have 
reported to the Commission cases of amounts written  off. 

Furthermore,  the  German  authorities  informed  the  Commission  in  their  letter  of 
11 January  1996  that,  under  national  rules,  a  debt  was  not  considered  definitively 
irrecoverable  until  a  period  of  thirty  years  had  elapsed.  They  therefore  withdrew  four 
cases which, in view of their legislation, had been submitted  by error. 

1 

Proposal  for  a Regulation amending  Regulation No  1552/89 (C0M(92)  519 final)  submitted to the Council  on  11 December  1992, version 
amended following the opinion of the European Parliament and the Court of Auditors and sent to the Council on 3 November  1994 (COM(94) 
458 final). 

4-

Some  Member  States  are  thus  forced  by  national  statutes  of  limitation  to  continue 
recovery procedures for Community purposes without any hope of success. The Member 
States which have failed  to submit the necessary assessment data may also experience the 
same  difficulties. 

In  the  Commission's  view,  the  varying  interpretations  of  the  phrase  "recovery  ... 
impossible in the long term" in Article  17(2) of Regulation No  1552/89 and the  different 
ways in which the procedure  provided  for  is applied  constitute  a problem  of  substance 
which has to be remedied: 

• 

• 

the balance  of the B account  at  Community  level gives a picture which  is not  strictly 
accurate, since it includes amounts which there is virtually no hope of ever recovering; 

the  Member  States  are  subject  to  unequal  treatment  in  the  assessment  of  their 
recovery  effort; 

•  administrative  costs are incurred  in continuing recovery  procedures  over  a number  of 

years with no hope of actual success. 

3.2 

Principles underlying the proposed  amendment 

The  proposal  retains  as  a  basic  principle  the  current  procedure  for  writing  off  debts 
introduced  by  Regulation  No  1552/89.  Member  States  are  thus  released  from  the 
obligation to make available to the Commission those amounts which prove irrecoverable 
for  reasons of force majeure  or reasons which cannot be attributed to them. 

However,  for  reasons of fairness, the Commission must be able to assess the effort  made 
by  all  the  Member  States  to  ensure  recovery  of traditional  own  resources.  It  therefore 
proposes the inclusion  of a cut-off  date for the examination  of entitlements which might 
never  actually  be  recovered  but  which  have  yet  to  be  formally  recognized  as 
irrecoverable.  The unrecovered  amounts  must be removed  from  the  B account  (written 
off)  within a period of five years: 
•  from the date of establishment, or 
•  from  the date  on which the debtor is notified  of the final  decision (in the  event  of an 

administrative or judicial appeal). 

This time limit does not affect  current procedures under national law since, in accordance 
with the principle of subsidiarity, it takes effect  on the expiry of national procedures. 

In order to simplify  administration  and thus boost  the effectiveness  of the procedure, the 
Commission  proposes  that,  in  return  for  this  time  limit,  the  Member  States  should 
concentrate their efforts  on the highest amounts of duty. Without prejudice to the reports 
of  cases  of fraud  and  irregularities  (second  subparagraph  of  Article  6(4)  of  Regulation 
No  1552/89), it is therefore  proposed  that the threshold for  the notification of cases to 
be Commission be raised from ECU  10 000 to ECU 50 000. 

By extrapolating the cases already reported  and the contents of the IRENE data base,2 it 
can  be  estimated  that  55%  of  the  cases  covered  by  the  existing  procedure  would  be 
examined  under the new threshold;  however,  these would  account  for  some 90% of the 
amounts involved.  As with the current procedure, the Commission would  still be  able to 
check  why  smaller  amounts  had  not  been  recovered  during  its  on-the-spot  checks  of 
clearance from the B account. 

Similarly, and in connection with the introduction of the time limit mentioned  above, the 
Commission  is  prepared  to  waive  potential  Community  entitlements  in  cases  where 
amounts are written off but  recovered  late in those Member  States which  apply  a longer 
statute of limitation than the Community. 

3.3 

Procedure to be followed 

As  soon  as  the  time  limit  has  expired,  the  following  procedure  will  be  applied:  the 
unrecovered  amounts will always be removed from  the separate account  and  included  in 
the quarterly  statement  of this separate  account  sent to  the Commission  (Article  6(3 )(b) 
of Regulation  No  1552/89)  and,  where  applicable,  in the  updated  fraud  report  (Article 
6(4)) within three months of cancellation. 

For  cases  involving  own  resources  in  excess  of  the  ECU  50  000  threshold,  the 
Member  States have three months to report  amounts written  off or not recovered  within 
the  time limits laid  down  and  give  reasons  in each  case.  On  the  basis  of this  report  the 
Commission  must  then  evaluate  the  measures  which  the  Member  State  has  taken  to 
ensure recovery and the detailed  reasons why it failed.  The necessary  information  will be 
set out in the report  drawn  up by the Commission  after  consulting the Member  States on 
the reports made under Article  17(3). 

When it considers that an amount  has not  been recovered  for  reasons  attributable  to  the 
Member  State concerned  (negligence  on the part  of the national  authorities  or  failure  of 
the  Member  State  to  comply  with  binding  Community  provisions  on  matters  such  as 
guarantees), the Commission  will take a decision  within  six months of the report  from 
the Member  States and ask for  the amounts to be made available in accordance with  the 
rules. 

The IRENE base is a computer  data base containing the Member  States' half-yearly  reports  of cases of fraud and irregularities  concerning 
the collection of own resources  and the exchange of information between  the Commission  and the Member  States  in  the  form  of  mutual 
assistance  reports  to prevent  and prosecute  infringements  against  customs  and agricultural  legislation; 2 000  fraud  reports  were  made in 
1996. 

-<<  - o ~ 6-

If it  feels  that  the  Member  Slate  concerned  has  made a sufficient  effort,  to  no  avail,  to 
protect  the  Community's  financial  interests,  the  Commission  will  remain  silent  and  this 
may be considered  as tacit authorization  six months after  the initial  notification. 

4. 

Amendments  proposed  to  the  current  wording  of  Regulation  (EEC, 
Euratom) No 1552/89 

Regulation No 1552/89 - current 
wording 

Amendment proposed 

TITLE Vn 

TITLE VII 

Provisions concerning  inspection 
measures 

Article 2 

Provisions concerning  inspection 

measures 

Article 2 

lc. In 

in 

the 

cases  where 

the  accounts  for 

competent 
administrative  authorities  do  not  make 
an  entry 
the 
customs  debt  on  the  basis  of  the 
customs  regulations,  even  though  the 
debtor  is  known  and  the  amount  due 
may  be  calculated,  and  the  amount 
involved  exceeds  ECU  2  000,  an  ad 
hoc  entry  is  made  in  the  account 
referred  to  in  Article  6(2)(a)  without 
notification  of 
the 
purposes  of  the  establishment  referred 
to in paragraph  1. 

the  debtor  for 

Article 17 

Member  States  shall  take  all  requisite 
measures  to  ensure  that  the  amount 
entitlements 
corresponding 
established  under  Article  2  are  made 
available 
as 
specified  in this Regulation. 

the  Commission 

the 

to 

to 

Article 17 

(unchanged) 

7-

force  majeure, 

2.  Member  States  shall  be  free  of  the  2. 
obligation to place at the disposal  of the 
Commission the amounts  corresponding 
to  established  entitlements  solely  if,  for 
reasons  of 
these 
amounts  have  not  been  collected.  In 
addition,  Member  States  may  disregard 
this  obligation  to  make  such  amounts 
available  to  the  Commission  in  specific 
cases  if,  after  thorough  assessment  of 
all  the  relevant  circumstances  of  the 
individual  case,  it  appears that  recovery 
is  impossible  in  the  long  term  for 
reasons  which  cannot  be  attributed  to 
them. 

the  Commission 
to 

Member  States  shall  be  released  from 
the  obligation  to  place  at  the  disposal 
the  amounts 
of 
corresponding 
established 
entitlements which prove irrecoverable: 
(a)  either for reasons efforce  majeure 
(b) or  in  specific  cases  for  reasons 
which cannot be attributed  to them. 

The  unrecovered  amounts  shall  be 
removed  from  the  separate  account 
referred  to in Article 6(2)(b). They shall 
be  included  in  the  quarterly  statement 
in  Article  6(3)(b)  and, 
referred 
where  applicable, 
the  quarterly 
statement  referred  to in Article 6(4): 

to 

in 

- 

ECU 

exceed 

These  cases  must  be  mentioned  in  the 
report provided for in paragraph 3 if the 
amounts 
10 000, 
converted  into  national  currency  at  the 
rate  applying  on  the  first  working  day 
of  October  of  the  previous  calendar 
this  report  must  contain  an 
year; 
the 
indication  of 
Member  State  was  unable  to  make 
available  the  amounts  in  question.  The 
Commission  has six months in which to 
forward,  if appropriate,  its comments to 
the Member State concerned. 

the  reasons  why 

that 

they 

as soon as an administrative  decision 
confirms 
cannot  be 
recovered; 
at  the  latest,  after  a  period  of  five 
years  from  the  date  on  which  the 
amount  has  been 
in 
accordance  with  Article  2  or,  in  the 
event of an administrative  or judicial 
appeal,  from  notification  of the final 
decision. 

notified 

3.  Within 

of 

the 
three  months 
administrative  decision  mentioned  in 
paragraph  2  or  in  accordance  with  the 
time  limit  referred  to  in  the  second 
indent  of  that  paragraph,  the  Member 
States  shall  provide  the  Commission 
information  on  cases  where 
with 
paragraph  2  is  being  applied  if  the 
established 
involved 
entitlements 
exceed  ECU  50 000,  converted  into 
national  currency  at  the  rate  applying 
on the first working  day  of October  of 
the previous calendar year. 

This  report,  to  be  made  on  a  model 
produced  by  the  Commission  after 
consulting  the  committee  referred  to in 
Article 20, must enable the Commission 
to  assess  the  reasons  referred  to  in 
paragraphs 
(b)  which 
prevented  the Member  State  concerned 
from  making  available  the  amounts  in 
question  and the measures taken by the 
Member  State to ensure recovery. 

2(a) 

and 

4.  The Commission must  adopt  a decision 
within  six  months  of  receipt  of  the 
report  provided  for  in paragraph 3 if it 
considers  that  the  conditions  set  out in 
the  first  subparagraph  of  paragraph  2 
have  not  been  met.  In  this  case,  the 
Member  State  concerned  is  obliged  to 
make  available  to  the  Commission  the 
amount 
(he 
corresponding 
unrecovered  entitlements  at  the  latest 
on  the first working  day  after  the  19th 
day  of the  second  month  following  the 
month  during  which  it  was  notified  of 
the decision. 

to 

If the Commission remains silent for  six 
months,  the  Member  State  is  released 
from  its  obligation  to  make  available 
the amounts written  off. 

-9 

3.  As  from  1  July  1996,  Member  States  5. 
shall inform  the  Commission,  by  means 
of  annual  reports,  of  the  details  and 
results  of  their  inspections  and  of  the 
overall  data  and  questions  of  principle 
important 
the  most 
concerning 
problems  arising  out  of  the  application 
of  this  Regulation  and,  in  particular, 
matters  in  dispute.  The  report  shall  be 
sent  to  the  Commission  by  30  April  of 
the  year  following  the financial year  in 
question. 

A  specimen  of  the  report  and  duly 
substantiated  amendments  thereto  shall 
be  drawn  up  by  the  Commission  after 
consulting  the Committee  referred  to in 
Article  20.  Any  appropriate  time  limits 
for  implementation  shall  be  provided 
for. 

(unchanged) 

(unchanged) 

By  30  June  of  the  same financial year 
the  Commission  shall  send 
the 
European Parliament and to the Council 
a  summary  report  on  the  notifications 
by the Member  States under this Article 
and Article 6(3). 

to 

By 30 September  of the same  financial 
year  the  Commission  shall  send  to  the 
European  Parliament 
the 
to 
the 
Council  a  summary  report  on 
notifications  by  the  Member  States 
under this Article and Article 6(4). 

and 

-  10-

PROPOSAL  FOR A COUNCIL REGULATION (EC, EURATOM) 
amending Council  Regulation  (EEC, Euratom) No 1552/89  implementing 
Decision 94/728/EC, Euratom 
on the system of the Communities' own resources 

THE COUNCIL OF THE EUROPEAN UNION, 

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(1) 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 Court of Auditors, 

Whereas  in  the  light  of  experience  gained  in  applying  Council  Regulation  (EEC, 
Euratom)  No  1552/89  of 29 May  1989 implementing Decision  94/728/EC, Euratom  on 
the  system  of  the  Communities'  own  resources,4  it  appears  that  the  provisions  of  that 
Regulation must be  adjusted; 

Whereas the transparency  of the own  resources  system must^be improved  by  specifying 
the  conditions  for  satisfying  the obligation  to  establish the own resources referred  to  in 
Article  2  of  Decision  94/728/EC,  Euratom,  in  particular  in  cases  where  the  competent 
administrative  authorities  do  not  make an entry  in the accounts for  the customs  debt  on 
the basis of the customs legislation; 

Whereas it  is important  to  strengthen  the procedure for  waiving entitlements  when  their 
actual  recovery is doubtful;  whereas there should  be a time limit,  on expiry of which  the 
amounts  not  recovered  despite the efforts  made by the Member  States  may be removed 
from  the  separate  account  referred  to  in Article  6(2)(b)  of Regulation  (EEC,  Euratom) 
No  1552/89; 

Whereas, for amounts exceeding ECU 50 000, the Member  States are required to  inform 
the Commission, which then  has six months to  announce its opposition; whereas,  in this 
event, the Member State concerned is obliged to make available the amount in question; 

3  OJ No L 293, 12.11.1994, p. 9. 
4  OJNoL  155, 7.6.1989, p.  1, as amended by Council Regulation (Euratom, EC) No 3464/93 of 10 December  1993 (OJ No L 317, 18121993, 
p.  1), Council Regulation (EC, Euratom)  No 2729/94 of 31 October  1994 (OJ No L 293, 12.11 1994, p.  5) and Council Regulation (Euratom, 
EC) No 1355/96 of 8 July 1996 (OJ No L 175, 13.7.1996, p. 3), 

HAS  ADOPTED  THIS  REGULATION 

Article I 

Regulation  (EEC, Euratom) No  1552/89 is amended as follows. 

1.  In Article 2, the following paragraph  lc shall be added: 

"lc. 

In cases where the competent administrative  authorities do not make an entry  in the 
accounts  for the customs debt on the basis of the customs  regulations,  even  though  the 
debtor  is  known  and  the  amount  due  may  be  calculated,  and  the  amount  involved 
exceeds  ECU  2  000,  an  ad  hoc  entry  is  made  in  the  account  referred  to  in  Article 
6(2)(a) without notification  of the debtor for  the purposes  of the establishment  referred 
to in paragraph  1." 

2. 

In Article 17 

paragraph 2 shall be replaced by the following: 

(a)  "2.  Member  States  shall be  released  from  the  obligation  to  place  at  the  disposal  of 
the  Commission  the  amounts  corresponding  to  established  entitlements  which  prove 
irrecoverable: 
(a)  either for  reasons of force  majeure 
(b)  or in specific cases for reasons which cannot be attributed to them. 

The  unrecovered  amounts  shall  be  removed  from  the  separate  account  referred  to  in 
Article 6(2)(b). They shall be included in the quarterly  statement  referred  to in Article 
6(3)(b) and, where applicable, in the quarterly statement referred to in Article 6(4): 
-  as soon as an administrative decision confirms that they cannot be recovered; 
-  at  the  latest,  after  a  period  of five years  from  the  date  on  which  the  amount  has 
been  notified  in accordance  with Article  2 or,  in the  event  of an  administrative  or 
judicial appeal, from  notification  of the final decision. 

Paragraph 3 shall be replaced by the following: 

(b)  "3.  Within  three months  of the administrative  decision  mentioned  in  paragraph  2 or 
in accordance  with  the time  limit  referred  to  in the  second  indent  of  that  paragraph, 
the  Member  States  shall  provide  the  Commission  with  information  on  cases  where 
paragraph  2  is  being  applied  if  the  established  entitlements  involved  exceed 
ECU 50 000,  converted  into  national  currency  at  the  rate  applying  on  the  first 
working day of October of the previous calendar year. 

This report, to be made on a model produced by the  Commission  after  consulting the 
committee referred to in Article 20, must enable the Commission to assess the reasons 
referred  to  in paragraphs  2(a)  and  (b) which  prevented  the  Member  State  concerned 
from  making  available  the  amounts  in  question  and  the  measures  taken  by  the 
Member State to ensure recovery." 

-  12-

The following  paragraph  4 shall be added: 

(c) 

"4.  The  Commission  must  adopt  a  decision  within  six  months  of  receipt  of  the 
report  provided  for  in  paragraph  3  if  it  considers  that  the  conditions  set  out  in 
the  first  subparagraph  of  paragraph  2  have  not  been  met.  In  this  case,  the 
Member  State  concerned  is  obliged  to  make  available  to  the  Commission  the 
amount  corresponding  to  the  unrecovered  entitlements  at  the  latest  on  the  first 
working  day  after  the  19th day  of the  second  month  following  the  month  during 
which  it was  notified  of the  decision. 

If the  Commission  remains  silent  for  six  months,  the  Member  State  is  released 
from  its obligation  to make available  the amounts  written  off." 

Paragraph  3  is  renumbered  paragraph  5  and  its  final  subparagraph  is  replaced  by  the 
following: 

"By  30  September  of the  same  financial  year  the  Commission  shall  send  to  the  European 
Parliament  and to the  Council  a  summary  report  on the notifications  by the  Member  States 
under this Article and Article  6(4)." 

Article  2 

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  directly  applicable  in all  Member  States. 

Done at  Brussels, 

-  13 -

ISSN 0254-1475 

COM(97) 343  final 

DOCUMENTS 

EN 

01  06  09 

Catalogue  number  :  CB-CO-97-337-EN-C 

ISBN  92-78-21960-6 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg