Proposal for a Council Regulation amending Regulation (EC, Euratom) No 1150/2000 implementing Decision 2000/597/EC, Euratom on the system of the Communities' own resources
Date: 2003-07-01
Institutions: European Commission
Subjects: administrative expenditure, closing of accounts, interest, management accounting, own resources

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 1.7.2003
COM(2003) 366 final

2003/0131 (CNS)

Proposal for a

COUNCIL REGULATION

amending Regulation (EC, Euratom) No 1150/2000 implementing Decision 2000/597/EC,
Euratom on the system of the Communities' own resources

(presented by the Commission)

EXPLANATORY MEMORANDUM

The purpose of this proposal is to update the financial rules in line with both the new Council
Decision of 29 September 20001 and certain protocols attached to the Amsterdam Treaty. The
proposal  also  sets  out  to  improve  the  management  of  traditional  own  resources,  which  are
recovered by the Member States.

The amendments proposed by the Commission are summarised below.

1.

PROVISIONS TO BE AMENDED AS A RESULT OF DECISION 2000/597/EC, EURATOM

Cost of collecting traditional own resources (Article 10(1))

Under  Article  2(3)  of  the  new  Decision  on  own  resources,  the  proportion  to  be
retained by Member States increases from 10% to 25% for entitlements established
after 31 December 2000. Article 10(1) of Council Regulation No 1552/1989,2 in the
consolidated version of Council Regulation No 1150/00 of 22 May 2000,3 is adapted
accordingly.

The  new  Decision  entered  into  force  on  1  March  2002.  However,  the  provision
relating to the percentage to be retained took effect on 1 January 2001 and concerns
payments  of  resources  made  during  or  after  March  2001,  with  the  exception  of
amounts  which  should  have  been  made  available  before  that  date.  Article  3  of  this
proposal therefore provides for Article 10(1) to be applied retrospectively.

2.

NEW PROVISIONS

Arrangements to be applied in the case of "opt-outs" (Article 10a)

Under the Protocols  for  Denmark,  Ireland  and  the  United  Kingdom  attached  to  the
Amsterdam Treaty, relating to Title IV of the TEC (visas, asylum, immigration and
other policies linked with the free movement of persons), these Member States need
not participate in these measures and are therefore not obliged to bear the  financial
consequences,  other  than  the  administrative  costs  of  such  measures.  They  can
therefore obtain an adjustment corresponding to their own resources payments.

1

2

3

Decision on the system of the European Communities' own  resources  -  2000/597/EC,  Euratom,  OJ  L
253, 7.10.2000, p. 42.
OJ L 155, 7.6.1989, p. 1.
OJ L 130/1, 31.05.2000, p. 1.

2

                                                
There is already a recent precedent for this situation in the shape of the Protocol for
the  United  Kingdom  attached  to  the  social  chapter  of  the  Maastricht  Treaty,  as  a
result of which a budgetary mechanism was set up to exempt this Member State from
financial  participation  in  these  operations.  Following  a  change  in  the  United
Kingdom's position on this matter, this budgetary mechanism was never applied.

As  this  adjustment  will  made  to  own  resources,  it  is  logical  that  the  method  of
calculation  and  the  arrangements  for  accommodating  this  exemption  in  the  budget
should be given a specific regulatory basis in the new Regulation on own resources.
Under  the  mechanism  proposed,  the  Commission  will  calculate  the  adjustment
during  the  year  following  the  financial  year  concerned,  at  the  same  time  as  it
determines the GNP balances for that  year. The adjustment and its financing by the
other Member States will be based on the GNP scale for the year in question.

Single rate of interest for late payment (Article 11)

At present, any delay in making entries in the Commission's account gives rise to the
payment of interest at a rate equal to the interest rate applicable on the due date for
short-term  public  financing  operations  on  the  money  market  of  the  Member  State
concerned. This base rate, in most cases the rate for Treasury bonds, is increased by
two  percentage  points  and  a  further  0.25  of  a  percentage  point  for  each  month  of
delay. The increased rate is applied to the entire period of delay.

Difficulties have  cropped up in  actually applying the present  calculation  of  interest
for  late payment,  primarily  because  of  the  non-availability  of  the  interest  rates  that
should be used as the base.

Indeed  the  market  situation  in  some  Member  States  has  sometimes  prompted  the
national authorities responsible not to issue the Treasury bonds, which should serve
as the reference.

To  overcome  these  difficulties  and  to  standardise  the  treatment  of  interest  for  late
payment  within  the  euro  area,  it  is  proposed  that  the  rate  used  by  the  European
Central Bank for its refinancing operations be applied for the twelve Member States
which already belong to the Economic and Monetary  Union (EMU)  and any which
may participate later. This rate is published every month in the Official Journal of the
European Union, C series.

For those Member States not part of the EMU, the base rate applicable  will be that
used by the national central bank for its refinancing operations.

3

Clearance of the separate account (Article 17(2))

Regulation  No  1552/89  introduced  the  principle  of  a  dual  accounting  system  (the
normal  A  account  and  the  separate  B  account)  to  distinguish  between  recovered
debts  and  outstanding  debts.  The  separate  account  allows  Member  States  to  defer
making  established  entitlements  available  until  they  have  actually  been  recovered.
With a view to sound management provision was made for removing items from the
separate  account,  viz.:  the  correction/(partial)  cancellation  procedure,  and  the
specific write-off procedure (where recovery proves impossible).

For  the  Commission,  the  separate  account  is  an  instrument  for  monitoring  the
recovery  of  outstanding  entitlements  and  a  gauge  of  the  efforts  made  by  Member
States towards that recovery.

However, inspections by the Court of Auditors and the Commission have revealed a
number of anomalies in the arrangements for removing items from the clearance of
the  separate  account  which  obscure  the  actual  recovery  situation.  Continuing  to
record amounts when recovery is unlikely undermines the reliability of the separate
account.  The  balance  has  increased  continually  in  recent  years  while  a  large
proportion  of  the  amounts  entered  in  the  account  can  be  considered  irrecoverable.
The Court of Auditors  has  also drawn the Commission's attention  to this  point  and
has  asked  it  to  make  corresponding  provisions  in  its  accounts  so  that  the  balance
gives a more realistic picture of the budgetary situation. The Commission has done
this in recent financial years.4

However, as the recovery of outstanding entitlements is administered by the Member
States, it should be up to them and not the Commission to make the annual estimate
of  the  amount  unlikely  to  be  recovered.  So,  together  with  the  final  quarterly
statement  for  a  given  year,  the  Member  States  should  send  the  Commission  an
estimate of the total amount of entitlements entered in the separate account for which
recovery is unlikely. The Commission would then obtain a more realistic view of the
budgetary situation every year.

In  practice,  only  some  Member  States  apply,  (fairly)  regularly,  the  procedure  for
writing  off  amounts  of  own  resources  exceeding  €10 000  which  have  proved  to  be
irrecoverable. The others do not use this procedure as they consider that they cannot
declare an amount to be definitively irrecoverable.

4

At 31.12.2000 the balance in the B account was €2 035.407 million (SEC (2001) 528 BUDG/C/2). A
provision of €1 286.812 million has been es tablished (SEC (2001) 531 Volume IV).

4

                                                
In  1997  the  Commission  presented  a  proposal  to  improve  the  write-off  procedure.
Under this proposal, Member States were to remove from the separate account any
debt exceeding €50 000 which had not been r ecovered within five years of the date
on which the recovery notice became finally enforceable. The Commission should be
notified of such cases at the same time so that  it could  assess  whether  the Member
States had shown due diligence during the collection procedure.

Although it gave  a favourable opinion of this new  write-off procedure, the  Council
has not stated its final position as no agreement was reached on another point of the
proposal.

The  Commission  considers  that  the  provisions  concerning  the  write-off  procedure
put  forward  in  its  initial  proposal  should  be  resuscitated  so  that  the  balance  in  the
separate  account  gives  a  more  realistic  picture  of  the  situation.  The  procedure
proposed would operate as follows.

-  For  amounts  exceeding  €50 000   the  Member  States  would  remove  from  the
separate account any debt which had not been recovered within five years of the date
on which the recovery notice became finally enforceable, i.e. after an administrative
or judicial appeal  where  applicable,  and would notify  the Commission within  three
months  of  those  amounts  so  written-off  or  not  recovered  within  five  years.  This
notification,  duly  accompanied  by  the  reasons  why  the  amounts  had  not  been
recovered, would be made on a form drawn up by the Commission after consulting
the  Advisory  Committee  on  Own  Resources.  This  notification  would  allow  the
Commission to examine the reasons why the Member State has been unable to make
these amounts available and the measures that it had taken to recover the amounts.

The Commission would be obliged to take a substantiated decision  on  the Member
State's  notification  within  six  months  of  receipt  if  it  considered  that  the  definitive
failure  to  recover  an  amount  was  not  due  to  force  majeure  or  other  reasons  not
attributable  to  the  Member  State  concerned.  The  Member  State  would  then  be
obliged  to  make  the  amount  available  to  the  Commission  by  the  first  working  day
after the 19th day of the second month following the month in which it was notified
of the decision.

- For amounts not exceeding €50 000 , the responsibility for recovery would remain
with  Member  States,  who  would  be  absolved  of  the  obligation  to  make  these
amounts  available  to  the  Commission  if  they  were  recovered  subsequent  to  having
been declared or deemed irrecoverable recovered. However, the Commission would
reserve the right to examine the procedures for clearance of cases below the €50 000
threshold during its inspection visits.

The  1997  proposal  would  now  be  withdrawn  as  some  of  its  provisions  -  those
relating to the write-off procedure - are incorporated in the current proposal.

5

Abolition of annual statements (Article 7)

Article 6(4) establishes the monthly statement as the key document in the system of
accounts for traditional own resources. This document is therefore used as the basis
for the Commission's inspection of whether the accounts have been properly kept. In
practice,  the  annual  summary  statements  forwarded  by  the  Member  States  are
nothing  more  than  a  summary  of  the  monthly  statements.  Member  States  should
therefore  no  longer  be  required  to  send  annual  summary  statements.  The  monthly
statements will remain the only formal statement for the purpose of any corrections.

Correction for budgetary imbalances (Articles 6 and 10)

In  accordance  with  Articles 4  and  5  of  the  Decision  on  own  resources,  the  United
Kingdom  receives  a  correction  for  budgetary  imbalances  which  is  financed  by  the
other  Member  States,  although  Germany,  Austria,  the  Netherlands  and  Sweden  are
granted  adjustments  to  their  financial  contributions.  Although  this  mechanism  is
already set out in detail in that decision, the correction should still be mentioned in
the provisions which take it into account.

Annual report under Article 17(5)

Member States inform the Commission of their inspection  activities  concerning the
collection of traditional own resources in an annual report.5 The Commission makes
a summary of those national annual reports for the budgetary authority.

In  1999,  with  a  view  to  improving  the  information  given  to  Parliament  and  the
Council, the Commission adopted a new approach by drawing up an overview of the
situation  based  on  facts  obtained  from  the  Member States.  It  considered  it
appropriate  in  those  circumstances  to  incorporate  the  summary  of  annual  activity
reports in the report on the protection of the Union's financial interests and the fight
against fraud (provided for by Article 280(5) of the Treaty).

For  timetabling  reasons,  the  Member  States'  annual  reports  must  be  sent  to  the
Commission by 1 March of the year following the financial year concerned.

5

This report also gives an account of inspection  findings and the questions of principle concerning the
most important problems arising out of the application of this Regulation and, in particular, matters in
dispute.

6

                                                
2003/0131 (CNS)

Proposal for a

COUNCIL REGULATION

amending Regulation (EC, Euratom) No 1150/2000 implementing Decision 2000/597/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 279 (2),

Having  regard  to  the  Treaty  establishing  the  European  Atomic  Energy  Community,  and  in
particular Article 183 thereof,

Having  regard  to  Council  Decision  2000/597/EC,  Euratom  of  29  September  2000  on  the
system of the Communities' own resources,6 and in particular Article 8(2) thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,7

Having regard to the opinion of the Court of Auditors,8

Whereas:

(1)

(2)

The  Berlin  European  Council  of  24  and  25  March  1999  issued  a  number  of
conclusions  concerning  the  system  of  the  Communities'  own  resources  which  led  to
the adoption of Decision 2000/597/EC, Euratom on 29 September 2000.

Under  Article  2(3)  of  Decision  2000/597/EC,  Euratom,  the  percentage  retained  by
Member  States  by  way  of  collection  costs  should  be  set  at  25%  of  the  amounts
referred  to  in  paragraphs  1(a)  and  (b)  of  that  Article  which  are  established  after
31 December  2000  with  the  exception  of  those  amounts  that  to  comply  with  own
resources regulations should have been made available to the Communities before 28
February 2001 for which the rate of 10% will continue to apply.

6

7

8

OJ L 253, 7.10.2000, p. 42.
OJ -- , , p. .
OJ -- , , p. .

7

                                                
(3)

(4)

(5)

(6)

(7)

The Berlin European Council decided that, in  sharing out the  financial burden  borne
by the other Member States for the correction for budgetary imbalances  in  favour of
the  United  Kingdom,  the  shares  of  Austria,  Germany,  the  Netherlands  and  Sweden
should be adjusted so that their financial contribution is limited to one quarter of their
normal contribution.

In  accordance  with  the  Amsterdam  Treaty  and  Protocols  4  and  5  attached  thereto,
Denmark,  the  United  Kingdom  and  Ireland  need  not  participate  in  measures  falling
under Title IV of the EC Treaty (visas, asylum, immigration and other policies linked
with the free movement of persons) and are not therefore obliged to bear the financial
consequences as a result of measures taken, other than the administrative costs. They
can therefore obtain an adjustment to the  own  resources paid for  each  year in which
they do not participate.

Given that the Member States are under an equal obligation to pay interest in the event
of delays in entering own resources in the accounts and that difficulties are currently
being  encountered  in  the  determination  of  the  interest  rates  to  be  applied  which,  in
practice,  lead  to  differences  between  the  rates  notified  by  the  Member  States
participating in  the Economic and Monetary Union which  are  difficult to  justify,  the
reference rate for these States must be standardised on the basis of the rate used by the
European  Central  Bank  for  its  refinancing  operations,  which  is  comparable  to  those
proposed as reference rates for Member States outside the euro area.

The  dual  account  system  introduced  in  1989  was  set  up  to  distinguish  between
recovered  and  outstanding  duties.  This  system  has  only  partly  met  its  objectives.
Audits  by  the  European  Court  of  Auditors  and  the  Commission  have  highlighted
recurrent anomalies in the keeping of the separate account which prevent the account
from reflecting the real situation as regards recovery. The separate account should be
cleansed of those amounts where recovery is unlikely and the retention of which gives
an  inaccurate  balance.  In  addition,  from  the  cost-effectiveness  angle,  Member  States
will no longer incur the administrative costs involved in monitoring these amounts.

In  response  to  a  request  of  the  Court  of  Auditors  and  in  order  to  ensure  that  the
separate  account  provides  a  better  picture  of  the  actual  budgetary  situation,  the
Member States are to send the Commission, together with the final quarterly statement
for  a  given  year,  an  estimate  of  the  total  amount  of  entitlements  contained  in  the
separate account for which recovery is unlikely,

8

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EC, Euratom) No 1150/2000 is hereby amended as follows:

1.

In Article 1:

The  reference  to  "Decision  94/728/EC,  Euratom"  is  replaced  by  "Decision
2000/597/EC, Euratom".

2.

In Article 2:

The  reference  to  "Decision  94/728/EC,  Euratom"  is  replaced  by  "Decision
2000/597/EC, Euratom".

3.

In Article 5:

The  reference  to  "Decision  94/728/EC,  Euratom"  is  replaced  by  "Decision
2000/597/EC, Euratom".

4.

In Article 6:

4.1.

Paragraph 3(c) is replaced by the following:

"(c) VAT resources, the financing of the correction for budgetary imbalances and the
additional resources shall, however, be recorded in the accounts as specified in point
(a) as follows:

–  the twelfth referred to in Article 10(3) shall be recorded on the first working day

of each month,

–  the balances referred to in Article 10(4) and (7) and the adjustments referred to in
Article  10(6)  and  (8)  shall  be  recorded  annually,  except  for  the  particular
adjustments referred to in the first indent of Article 10(6), which shall be recorded
in  the  accounts  on  the  first  working  day  of  the  month  following  agreement
between the Member State concerned and the Commission."

4.2.

The following is added at the end of paragraph 4(b):

"Together  with  the  final  quarterly  statement  for  a  given  year,  Member  States  shall
forward  an  estimate  of  the  total  amount  of  entitlements  contained  in  the  separate
account at 31 December of that year for which recovery has become unlikely."

9

5.

The first  paragraph of Article  7 is  deleted  and the second  paragraph  is  replaced  by
the following:

"Article 7

After  31  December  of  the  third  year  following  a  given  year,  no  further  corrections
shall be made to the sum of the monthly statements sent in by Member States under
Article  6(4)(a)  for  the  year  in  question,  except  on  points  notified  before  this  date
either by the Commission or by the Member State concerned. "

6.

In Article 9:

6.1.

The following new paragraph 2 is inserted after the first paragraph:

"2. The Commission shall receive, by electronic means, on the day on which they are
entered, a statement of account showing the entry of the own resources".

6.2.

The present paragraph 2 becomes paragraph 3 and reads:

"3. The amounts credited shall be accounted  for  in euro in accordance  with  Article
16 of the Financial Regulation dated 25th June 20029 applicable to the general budget
of  the  European  Communities  and  the  implementing  rules,  named  "Financial
Regulation." "

7.

In Article 10:

7.1.

The first subparagraph of paragraph 1 is replaced by the following:

"1.  After  deduction  of  25%  by  way  of  collection  costs  in  accordance  with
Article 2(3) of Decision 2000/597/EC, Euratom, entry of the own resources referred
to in Article 2(1)(a) and (b) of that Decision shall be made at the latest on the first
working day following the 19th day of the second month following the month during
which  the  entitlement  was  established  in  accordance  with  Article  2  of  this
Regulation. "

9

OJ L 248, 16.09.02, p. 1

10

                                                
7.2.

The first and second subparagraphs of paragraph 3 are replaced by the following:

"3.  VAT  resources,  the  financing  of  the  correction  for  budgetary  imbalances,  the
additional resource - excluding an  amount corresponding to  the  EAGGF (European
Agricultural Guidance and Guarantee Fund) monetary reserve, to the reserve relating
to  loans  and  loan  guarantees  and  to  the  reserve  for  emergency  aid  -  and,  where
appropriate, GNP financial contributions shall be credited on the first working day of
each  month,  the  amounts  being  one-twelfth  of  the  relevant  totals  in  the  budget,
converted  into  national  currencies  at  the  rates  of  exchange  of  the  last  day  of
quotation of the calendar year preceding the budget year, as published in the Official
Journal of the European Union, "C" Series.

For the specific needs of paying EAGGF Guarantee Section expenditure, pursuant to
Regulation  (EEC)  No  1765/92  and  depending  on  the  Community's  cash  position,
Member  States may be invited  by the Commission to  bring  forward by  one  or  two
months in the first quarter of the financial year the entry of one-twelfth or a fraction
of one-twelfth of the amounts in the budget for VAT resources, the financing of the
correction  for  budgetary  imbalances  and/or  the  additional  resource,  but  excluding
own resources to cover the EAGGF monetary reserve, the reserve for loan guarantees
and the reserve for emergency aid."

7.3.

7.4.

In  the  sixth  subparagraph  of  paragraph  3,  the  reference  to  "Decision  94/728/EC,
Euratom"  is  replaced  by  "Decision  2000/597/EC,  Euratom"  the  following  is  added
after  the  reference  to  Decision  94/729/EC:  "repealed  and  replaced  by  Council
Regulation (EC) No 2040/2000 of 26 September 200010".

In  the  seventh  subparagraph  of  paragraph  3,  the  text  “article  6  of  the  Financial
Regulation of 21st December 1977 applicable to the general budget of the European
Communities (13), hereafter named “Financial Regulation” is replaced by “Article 8
of the Financial Regulation”

7.5.

The ninth subparagraph of paragraph 3 is replaced by the following:

"Any change in the uniform rate of VAT resources, in the correction  for  budgetary
imbalances  and  in  its  financing  referred  to  in  Articles  4  and  5  of  Decision
2000/597/EC, Euratom, in the rate of the additional resource and, where appropriate,
in  the  GNP  financial  contributions  shall  require  the  final  adoption  of  an  a
supplementary amending budget and shall give rise to readjustments of the twelfths
which have been entered since the beginning of the financial year."

10

OJ L 244, 29.9.2000 p. 27.

11

                                                
7.6.

The tenth subparagraph of paragraph 3 is replaced by the following:

"These readjustments shall be carried out when the first entry is made following the
final adoption of the amending or supplementary budget, if it is  adopted before the
16th  of  the  month.  Otherwise  they  shall  be  carried  out  when  the  second  entry
following  final  adoption  is  made.  By  way  of  derogation  from  Article  8  of  the
Financial Regulation, these readjustments shall be entered in the accounts in respect
of the financial year of the amending or supplementary budget in question. "

7.7.

The eleventh subparagraph of paragraph 3 is replaced by the following:

"Calculation of the twelfths for January of each financial year shall be based on the
amounts  provided  for  in  the  draft  budget,  with  the  exception  of  the  amounts  for
financing  the  EAGGF  monetary  reserve,  referred  to  in  Article  78(3)  of  the  ECSC
Treaty, Article 272(3) of the EC Treaty and Article 177(3) of the EAEC Treaty and
converted  into  national  currencies  at  the  rates  of  exchange  of  the  first  day  of
quotation following 15 December of the calendar year preceding the budget year; the
adjustment shall be made with the entry for the following month."

7.8.

The twelfth subparagraph of paragraph 3 is replaced by the following:

"If the budget has not been finally adopted before the beginning of the financial year,
the  Member  States  shall  enter  on  the  first  working  day  of  each  month,  including
January,  one-twelfth  of  the  amount  of  VAT  own  resources,  of  the  financing  of  the
correction for budgetary imbalances, of the additional resource, with the exception of
the amounts for financing the EAGGF monetary reserve, and, where appropriate, of
the  GNP  financial  contributions  entered  in  the  last  budget  finally  adopted;  the
adjustment shall be made on the first due date following final adoption of the budget
if it is adopted before the 16th of the month. Otherwise, the adjustment shall be made
on the second due date following final adoption of the budget."

12

7.9.

Paragraph 4 is replaced by the following:

"4.  Each  Member  State  shall,  on  the  basis  of  the  annual  statement  on  the  VAT
resources  base  provided  for  in  Article  7(1)  of  Regulation  (EEC,  Euratom)
No 1553/89, be debited with an amount calculated from the information contained in
the  said  statement  by  applying  the  uniform  rate  adopted  for  the  previous  financial
year  and  credited  with  the  12  payments  made  during  that  financial  year.  However
each  Member  State's  VAT  own  resources  base  to  which  the  above  rate  is  applied
may not exceed 50% of its GNP, as referred to in the first sentence of paragraph 7 of
this  Article.  The  Commission  shall  work  out  the  balance  and  shall  inform  the
Member States in time for them to enter it in the account referred to in Article 9(1) of
this Regulation on the first working day of December of the same year. "

7.10.

The first subparagraph of paragraph 6 is replaced by the following:

"Any corrections to the VAT resources base under Article 9(1) of Regulation (EEC,
Euratom) No 1553/89 shall give rise for each Member State concerned whose base,
allowing  for  these  corrections,  does  not  exceed  the  percentages  determined  by
Articles  2(1)(c)  and  10(2)(b)  of  Decision  2000/597/EC,  Euratom…"  (remainder
unchanged)

7.11.

The second subparagraph of paragraph 6 is replaced by the following:

"The changes to GNP referred to in paragraph 8 of this Article shall also give rise to
an  adjustment  of  the  balance  of  any  Member  State  whose  base,  allowing  for  those
corrections, is capped at the percentages determined by Articles 2(1)(c) and 10(2)(b)
of  Decision  2000/597/EC,  Euratom.  The  adjustments  to  be  made  to  the  VAT
balances  by  the  first  working  day  of  December  of  each  year  under  the  first
subparagraph  of  this  paragraph  shall  also  give  rise  to  the  calculation  by  the
Commission of further adjustments to the GNP financial contributions. The exchange
rates to be employed in calculating these further adjustments shall be those used for
the initial calculation referred to in paragraph 5. "

8.

A new Article 10a is inserted as follows:

"Article 10a

1. Where, pursuant to the Treaty, a Member State does not take part in the financing
of a specific Union action or policy, it shall be entitled to an adjustment, calculated in
accordance with paragraph 2, of the amount it has paid in own resources in respect of
each year in which it has not taken part. This adjustment shall be made only once and
it shall be final in the event of subsequent modification of the GNP figure.

13

2. The  Commission  shall  calculate  the  adjustment  during  the  year  following  the
financial  year  concerned,  at  the  same  time  as  it  determines  the  GNP  balances
provided for in Article 10 of this Regulation.

The calculation shall be made on the basis of the figures relating to the financial year
in question:

–  aggregate GNP at market prices and its components, as supplied by the Member

States in accordance with Article 3(2) of Directive 89/130/EEC/Euratom;

–  the budgetary outturn of operational expenditure corresponding to the measure or

policy in question.

The adjustment shall be equal to the product of multiplying the total amount of the
expenditure  in  question,  with  the  exception  of  that  financed  by  participating  third
countries,  by  the  percentage  that  the  GNP  of  the  Member  State  entitled  to  the
adjustment  represents  of  the  GNP  of  all  Member  States.  The  adjustment  shall  be
financed  by  the  participating  Member  States  according  to  a  scale  determined  by
dividing their respective GNP by the GNP of all the participating Member States. For
the purposes of calculating the adjustment, amounts shall be converted between the
national currency and the euro at the exchange rate on the last day of quotation of the
calendar year preceding the budget year concerned.

There shall be no subsequent revision of this adjustment in the event of subsequent
modification of the GNP figure.

3. The Commission shall inform  the  Member  States  in good  time  of  the  amount  of
the adjustment so that they can credit it to the account referred to in Article 9(1) of
this Regulation on the first working day of December."

9.

Article 11 is replaced by the following:

"Article 11

1. Any delay in making the entry in the account referred to in Article 9(1) shall give
rise to the payment of interest by the Member State concerned.

2. In the case of Member States belonging to the Economic and Monetary Union, the
interest  rate  shall  be  equal  to  the  rate  as  published  in  the  Official  Journal  of  the
European  Union,  C  series  which  the  European  Central  Bank  applied  to  its
refinancing  operations,  on  the  first  day  of  the  month  in  which  the  due  date  fell,
increased  by  two  percentage  points.  This  rate  shall  be  increased  by  0.25  of  a
percentage point for each month of delay. The increased rate shall be applied to the
entire period of delay.

14

3. In the case of Member States which do not belong to the Economic and Monetary
Union,  the  rate  shall  be  equal  to  the  rate  applied  for  three-month  public  financing
operations  in  the  national  currency  on  the  money  market  of  the  Member  State
concerned, on the final working day of the month preceding the due date, increased
by two percentage points. This rate shall be increased by 0.25 of a percentage point
for each month of delay. The increased  rate  shall be  applied  to  the  entire  period of
delay.

4. Article 9(2) and (3) shall apply mutatis mutandis."

10.

Article 12(5) is replaced by the following:

"The  Member  States,  or  the  body  designated  by  them  in  accordance  with
Article 9(1), shall execute the Commission's payment orders as quickly as possible,
and  within  not  more  than  three  working  days  of  receipt,  and  shall  send  the
Commission a statement of account by electronic means within not more than three
working days of completing each transaction. "

Remainder of the paragraph unchanged

11.

In Title VI and in Article 15:

In  the  first  subparagraph,  the  reference  of  the  « decision  94/728/CE,  Euratom »  is
replaced by « decision 2000/597/CE, Euratom » and that of article 7, paragraph 1 and
paragraph  2,  point  b,  of  the  Financial  Regulation  by  Article  9  of  the  Financial
Regulation ».

In the second subparagraph, the reference in Article 7, paragraph 1, of the Financial
Regimentation  is  replace  by  « Article  9,  paragraphs  2  and  4  of  the  Financial
Regulation »".

12.

In Article 16:

12.1.

The second subparagraph is replaced by the following:

"Any appreciable differences in relation to original estimates may give rise to a letter
of  amendment  to  the  preliminary  draft  budget  for  the  following  financial  year  or  a
supplementary and an amending budget for the current financial year."

13.

In Article 17:

13.1.

Paragraph 2 is replaced by the following:

"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 either:

(a) for reasons of force majeure; or
(b) for other reasons which cannot be attributed to them.

15

Amounts  of  established  entitlements  shall  be  declared 
irrecoverable  by  a
substantiated  decision  of  the  competent  administrative  authority  finding  that  they
cannot be recovered.

Amounts of established entitlements shall be deemed irrecoverable, at the latest, after
a  period  of  five  years  from  the  date  on  which  the  amount  has  been  established  in
accordance with Article 2 or, in the event of an administrative or judicial appeal, the
final decision has been given/published.

If part payment or payments have been received, the period of five  years shall start
from the date of the last payment made where this does not clear the debt.

Amounts  declared  or  deemed  irrecoverable  shall  be  removed  from  the  separate
account  referred  to  in  Article  6(3)(b).  They  shall  be  shown  in  an  annex  to  the
quarterly  statement  referred  to  in  Article  6(4)(b)  and,  where  applicable,  in  the
quarterly  statement  referred  to  in  Article  6(5).  This  statement  shall  differentiate
between those amounts removed because they have been declared irrecoverable and
those deemed irrecoverable. "

13.2.

The following new paragraph 3 is inserted with the following text:

"3. Within three months of the administrative decision mentioned in paragraph 2 or
in accordance with the time limits referred to in that paragraph, Member States shall
provide the Commission with information on those cases where paragraph 2 has been
applied provided the established entitlements involved exceed €50 000.

This report, which shall be made on a form to be produced by the Commission after
consulting  the  committee  referred  to  in  Article  20,  shall  include  all  the  facts
necessary for a full examination of the reasons referred to in paragraph 2 a) and b)
which prevented the Member State concerned from making available the amounts in
question  and  the  recovery  measures  the  Member  State  took  in  the  case  or  cases  in
question."

13.3.

The following new paragraph 4 is inserted with the following text:

"4. The Commission must decide within six months of receipt of the report provided
for  in  paragraph 3  whether  it  considers  that  the  conditions  set  out  in  the  first
subparagraph of paragraph 2 have not been met and that the Member  State has  not
shown all due diligence in seeking to recover the entitlements. In such instances, the
Member State concerned shall be obliged to enter in the account referred to in Article
6(3)(a)  an  amount  corresponding  to  the  unrecovered  entitlements  and  to  make  that
amount available to the Commission no later than the first working day after the 19th
day  of  the  second  month  following  the  month  during  which  the  Member  State  in
question was notified of the decision.

16

When it considers that the conditions set out in the first subparagraph of paragraph 2
have  been  met,  the  Commission  shall  notify  the  Member  State  concerned  of  its
agreement that the requirement to make available the amounts in question be waived.

Where the Commission finds it necessary to request additional information, the six-
month  time-limit  shall  run  from  the  date  of  receipt  of  the  requested  supplementary
information."

13.4.

Paragraph 3 becomes paragraph 5 and reads as follows:

"5. Member States 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  concerning  the  most  important  problems  arising  out  of  the  application  of
this Regulation and, in particular, matters in dispute. The reports shall be sent to the
Commission  by  1  March  of  the  year  following  the  financial  year  in  question.  The
summary  report  on  the  notifications  by  Member  States  under  this  Article  shall  be
contained in the Commission report referred to in Article 280(5) of the Treaty.

A  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."

14.

In Article 18:

14.1.

In  paragraph  1  the  reference  to  "Decision  94/728/EC,  Euratom"  is  replaced  by
"Decision 2000/597/EC, Euratom".

15.

In Article 21:

15.1.

Paragraph 1(c) is replaced by the following:

"the inspection measures and controls laid down in Article 18(2) and (3)."

16.

A new Title IX is inserted as follows:

"TITLE IX

Transitional provisions:

Article 21a

The rate provided for in Article 11 of Regulation No 1150/2000/EC, Euratom shall
continue to apply for the calculation of interest for late payment where the due date
falls before the end of the month in which this Regulation enters into force."

17

The provisions of Regulation (EC, Euratom) No 1150/2000  shall  remain  in  force  insofar  as
they are not specifically amended by this Regulation.

Article 2

Article 3

This  Regulation  shall  enter  into  force  on  the  day  following  that  of  its  publication  in  the
Official  Journal  of  the  European  Union.  It  shall  take  effect  as  stipulated  in  Article  10  of
Decision 2000/597/EC, Euratom.

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

Done at Brussels,

For the Council
The President

18

1.

2.

3.

4.

5.

5.0

5.1

FINANCIAL STATEMENT

[…]

DATE: […]
APPROPRIATIONS:
[…]

BUDGET HEADING:
1000 – 1100 - 1200
TITLE:
Proposal for a regulation amending Regulation (EC, Euratom) No 1150/2000 implementing Decision
2000/597/EC, Euratom on the system of the Communities' own resources
LEGAL BASIS:
Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the Communities' own
resources
AIMS:
1) The first objective is to incorporate certain provisions included in the Council Decision 2000/597/EC,
Euratom (and particularly, the new rate corresponding to the collection expenses for own resources that
Member  States  can  retain  namely  25%  of  the  amounts  established  instead  of  the  previous  10%).  This
measure involves a loss of traditional own resources but this will be compensated for by an increase in
the payments made in the framework of the fourth resource. This situation was taken into account when
adopting the own resources Decision.
2)  The  second  objective  is  to  enable  Member  States  to  write-off  amounts  not  recovered  by  a  specific
deadline (5 years) following the date on which the demand for payment became definitively enforceable.
Moreover,  amounts  written-off  in  excess  of  €50,000  should  be  communicated  to  the  Commission  in
order for it to check whether the Member State in question had been diligent with regard to recovery. The
impact of such a measure in not easily calculable ; but, even though a theoretical loss could result from
this  measure,  the  examination  of  the  diligence  displayed  by  Member  States  could  well  increase
resources.
FINANCIAL IMPLICATIONS

12 MONTH
PERIOD

(EUR million)
[…]

CURRENT
FINANCIAL
YEAR
[n]
(EUR million)
[…]

FOLLOWING
FINANCIAL
YEAR
[n+1]
(EUR million)
[…]

CHARGED TO THE EC BUDGET

NATIONAL AUTHORITIES
OTHER

EXPENDITURE
-
(REFUNDS/INTERVENTIONS)
-
-
REVENUE
-
(LEVIES/CUSTOMS DUTIES)
NATIONAL
-

OWN RESOURCES OF THE EC

5.0.1 ESTIMATED EXPENDITURE
5.1.1 ESTIMATED REVENUE
5.2 METHOD OF CALCULATION:

P.M.

P.M.

P.M.

[n+2]
[…]
[…]

[n+3]
[…]
[…]

[n+4]
[…]
[…]

[n+5]
[…]
[…]

6.0

6.1

[…]
CAN THE PROJECT BE FINANCED FROM APPROPRIATIONS ENTERED IN THE
RELEVANT CHAPTER OF THE CURRENT BUDGET?
CAN THE PROJECT BE FINANCED BY TRANSFER BETWEEN CHAPTERS OF
THE CURRENT BUDGET?

6.2 WILL A SUPPLEMENTARY BUDGET BE NECESSARY?
6.3 WILL APPROPRIATIONS NEED TO BE ENTERED IN FUTURE BUDGETS?
OBSERVATIONS:
[…]

NO

NO
NO
NO

19