Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 2004/2003 on the regulations governing political parties at European level and the rules regarding their funding
Date: 2007-06-27
Institutions: European Commission
Subjects: EU financing, legal status, party financing, political parties

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.6.2007 
COM(2007) 364 final 

2007/0130 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EC) No 2004/2003 on the regulations governing political 

parties at European level and the rules regarding their funding 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1) 

CONTEXT OF THE PROPOSAL 

•  Ground for and objectives of the proposal 

Article  191  of  the  EC  Treaty  recognises  the  crucial  role  played  by  political  parties  at 
European level, and provides the legal basis for the Regulation on political parties adopted by 
the  European  Parliament  and  the  Council  in  2003.  With  a  view  to  strengthening  and 
optimising  the  democratic  infrastructure  of  the  Union,  this  proposal  aims  at  improving  and 
adjusting the existing Regulation in light of the experience gained in the past four years1. 

The Regulation has shown itself to be successful in providing the necessary framework for the 
activities and the funding of political parties at European level. The number of political parties 
at European level receiving funding via the Regulation has increased from eight to a total of 
ten, representing a very broad spectrum of political forces in Europe. Funding is provided by 
Budget  line  402  under  Chapter  40  of  Title  IV,  in  Section  I  (Parliament)  of  the  EU  Budget. 
Despite the success of the Regulation thus far, it is only natural that there is a need to adjust 
the framework in the light of experience. The purpose of this proposal is thus to introduce a 
limited  number  of  changes  to  Regulation  (EC)  No  2004/2003  on  the  regulations  governing 
political parties at European level and the rules regarding their funding, which was adopted in 
June 2003. 

•  General context 

It  remains  a  firm  political  objective  of  the  European  Union  to  promote  a  European  public 
sphere to stimulate an informed participation of citizens in the democratic life of the Union. 
One  of  the  important  lessons  of  the  Commission's  promotion  of  democracy,  dialogue  and 
debate  through  "Plan  D"  is  that  there  is  both  a  demand  and  an  opportunity  for  measures  to 
strengthen and expand political dialogue.  

In  its  White  Paper  on  a  European  Communication  Policy,  the  Commission  emphasised  the 
important role of political parties in developing a European Public Sphere. The consultation 
on the White Paper confirmed the importance of a greater involvement of political parties at 
the  European  level  generating  cross-border  public  debates  across  Europe.  This  could  also 
contribute  to  support  an  increase  in  the  levels  of  participation  in  the  European  elections. 
Likewise, the Communication of the Commission "European elections 2004" highlighted that 
European political parties may also play a role in promoting an enhanced participation of EU 
citizens in the democratic process at the European and national level2. 

There is no simple way – and certainly not one single solution – to meet the democratic and 
participatory aspirations of citizens. It remains clear that these aspirations must be promoted 
by  a  very  wide  range  of  initiatives  and  measures,  with  a  particular  value  in  bottom-up 
initiatives driven by the active involvement of citizens. It is important to ensure the broadest 

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OJ L 297, 15.11.2003, p. 1. 
COM(2006) 790: European elections 2004: Commission report on the participation of European Union 
citizens  in  the  Member  State  of  residence  (Directive  93/109/EC)  and  on  the  electoral  arrangements 
(Decision 76/787/EC as amended by Decision 2002/772/EC, Euratom). 

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possible participation of citizens - including not least young people - in the democratic life of 
the Union, to ensure that all voices are heard. 

The European level can help to stimulate and facilitate the achievement of these objectives. 
This  was  and  remains  the  underlying  reason  for  the  establishment  of  political  parties  at 
European  level,  playing  a  crucial  role  in  bridging  the  gap  between  politics  at  national  and 
European level and in giving voice to the peoples of Europe.  

2) 

EVALUATION OF THE CURRENT REGULATION BY THE EUROPEAN PARLIAMENT 

Article 12 of the Regulation called for the European Parliament to publish a report evaluating 
the application of the Regulation. Article 12 stated that the report should "…indicate, where 
appropriate,  possible  amendments  to  be  made  to  the  funding  system".  The  European 
Parliament adopted a Resolution drawing its conclusions on 23 March 20063.  

The  European  Parliament's  Resolution  identified  a  number  of  problems  concerning  the 
functioning of the Regulation and included recommendations for amendments to be made. 

The recommendations can be divided into three categories: 

a)  Recommendations  to  revise  the  financial  provisions  of  the  Regulation  in  order  to  align 
them with the special needs of the political parties at European level  

This category covers in particular allowing the building up of financial reserves, on the basis 
of funding deriving from sources outside the EU Budget; easing restrictions on the transfer of 
funding  between  the  different  budget  categories;  ensuring  the  financial  security  needed  for 
long-term planning; and allowing the carrying-over of a certain percentage of appropriations 
from one year to the first quarter of the following year. 

b)  Recommendations  for  the  Commission  to  submit  proposals  on  supporting  European 
political foundations that are affiliated with the political parties at European level 

This recommendation focuses on the need to stimulate the development of European political 
foundations  to  underpin  and  facilitate  the  European  political  parties'  efforts  to  promote 
political  information  and  debate  and  specifically  calls  on  the  Commission  to  present  a 
proposal on how to support European political foundations. 

c)  Various  recommendations  to  revise  further  aspects  of  the  Regulation  in  line  with  the 
recommendations of relevant stakeholders  

This includes notably the problems arising from the absence of a uniform legal status for the 
European political parties. In addition, the report raises the lack of clarity concerning the rules 
governing  the  participation  of  political  parties  at  European  level  in  election  campaigns. 
Furthermore,  Parliament's  Report  calls  for  European  political  youth  organisations  to  be 
considered in this context.  

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OJ C 292E, 1.12.2006, p. 127. 

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3) 

LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

The  Commission  has  carefully  considered  the  European  Parliament's  recommendations  in 
drawing up this proposal. 

It should be emphasised that Parliament itself has taken a number of initiatives to address the 
shortcomings  identified  in  Parliament's  Resolution,  by  amending  on  1  February  2006  the 
Bureau Decision of 29 March 2004 laying down the procedures for implementing Regulation 
(EC)  No  2004/20034.  This  implies  that  this  proposal  to  modify  the  Regulation  is  aimed  at 
addressing exclusively those shortcomings which require changes to the Regulation itself, and 
which  cannot  be  undertaken  by  Parliament  on  its  own.  As  mentioned  before  the  relevant 
Budget line is included in the Parliament section of the EU Budget and the Parliament is the 
Authorising Officer. 

The modifications proposed by the Commission can be divided into three main points. On the 
issue  of  improving  the  financial  provisions  governing  the  funding  of  the  political  parties  at 
European  level,  it  is  proposed  to  modify  those  provisions  in  two  respects.  Firstly,  it  is 
proposed to allow the political parties to carry over by way of derogation from the no-profit 
rule laid down in Article 109 of the Financial Regulation a certain percentage (25%)  of the 
annual  total  income  from  one  year  to  the  first  quarter  of  the  following  year.  This  provision 
will  enable  the  parties  to  better  respond  to  changing  political  circumstances  and  priorities, 
difficult to predict when preparing the annual budgets and work programmes of the parties.  

Secondly,  it  is  proposed  to  allow  the  political  parties  at  European  level  to  build  financial 
reserves  by  saving  income  generated  by  the  parties  themselves  in  excess  of  a  new  reduced 
minimum  co-funding  level  of  15%.  New  Article  9(8),  which  also  constitutes  a  derogation 
from the no-profit rule laid down in Article 109 of the Financial Regulation, will allows the 
parties a greater degree of financial security and planning, while at the same time providing 
the parties with a strong incentive to strengthen their own resources and thus decrease  their 
reliance on public funding from European level. In order to assure an appropriate balance, it is 
proposed to allow parties to build up savings corresponding to 100% of their average annual 
income.  If  a  party  exceeds  this  level  of  savings,  the  level  of  future  public  subsidies  will  be 
reduced correspondingly. 

On  the  issue  of  political  foundations  at  European  level  the  Commission  considers  that  such 
foundations  do  have  an  important  role  to  play  in  underpinning  and  promoting  the  activities 
and  objectives  of  the  political  parties  at  European  level.  European  political  foundations  can 
underpin  and  complement  the  activities  of  the  political  parties  by  undertaking  a  range  of 
activities  that  contribute  to  the  debate  on  European  public  policy  issues  and  European 
integration,  including  by  acting  as  catalysts  for  new  ideas,  analysis  and  policy  options. 
European political foundations may thus bring together all sorts of relevant actors – including 
national  political  foundations,  and  academics  –  who  have  the  potential  to  enrich  the  public 
debate and to develop new and innovative policy proposals.  

Political  foundations  already  play  an  important  role  in  national  political  systems  in  many 
Member  States,  inter  alia  because  of  the  possibilities  for  political  foundations  to  undertake 

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OJ C 150, 28.6.2006, p. 9. 

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different  and  more  long-term  activities  from  political  parties  at  European  level,  who  for 
obvious reasons place more emphasis on responding to the day-to-day politics of the Union. 
Amongst  the  activities  that  political  foundations  could  undertake  the  following  could  be 
highlighted: 

–  observing,  analysing  and  contributing  to  the  debate  on  European  public  policy 

issues and the process of European integration; 

–  supporting  European  seminars,  training,  conferences  and  studies  on  such  issues 

between key stakeholders; 

–  serving as a framework for national political foundations and academics to work 
including  youth  organisations  and  other 

level, 
together  at  European 
representatives of civil society.  

Since the political foundations are closely affiliated with the European political parties, it is 
proposed  that  they  must  submit  their  application  for  funding  through  the  political  party  at 
European  level  with  which  they  are  linked  (cf.  new  Article  4(4)).  In  order  to  ensure 
transparency – and in line with the principle of activity based budgeting – the appropriations 
for  political  foundations  at  European  level  could  be  established  as  a  separate  budget  line 
under Chapter 40 of Title IV, in Section I (Parliament) of the EU Budget. 

Finally,  it  is  proposed  to  establish  clearly  that  appropriations  received  from  the  EU  budget 
may  also  be  used  for  the  financing  of  campaigns  conducted  by  the  political  parties  at 
European  level  in  the  context  of  European  Parliament  elections,  provided  that  this  does  not 
constitute  a  direct  or  indirect  financing  of  national  political  parties  or  their  candidates.  This 
amendment follows logically from the fact that – in accordance with the existing Regulation – 
political  parties  at  European  level  must  have  participated  in  the  elections  to  the  European 
Parliament or have expressed the intention to do so.  

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2007/0130 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EC) No 2004/2003 on the regulations governing political 

parties at European level and the rules regarding their funding 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

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

Having regard to the proposal from the Commission5, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty6, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

Article 12 of Regulation (EC) No 2004/2003 stipulates that the European Parliament 
shall  publish  a  report  on  the  application  of  the  Regulation,  including  –  where 
appropriate – possible amendments to be made to the funding system. 

In  its  Resolution  of  23  March  2006  on  the  application  of  Regulation  (EC)  No 
2004/20037,  the  European  Parliament  considered  that  that  Regulation  should  be 
improved on a number of points in light of experience gained since its entry into force 
in 2003. 

Provisions  to  provide  financial  support  for  political  foundations  at  European  level 
should  be  laid  down  in  the  context  of  this  Regulation,  as  political  foundations  at 
European level affiliated with the political parties at European level may through their 
activities support and underpin the objectives of the European political parties notably 
in terms of contributing to the debate on European public policy issues and European 
integration, including by acting as catalysts for new ideas, analysis and policy options.  

It  remains  an  important  objective  to  ensure  the  broadest  possible  participation  of 
citizens  in  the  democratic  life  of  the  Union.  In  this  context  political  youth 
organisations can play a special role in fostering interest for and concrete knowledge 
about  the  political  system  of  Union  amongst  young  people,  actively  promoting  their 
participation in democratic activities at European level. 

(5) 

The  rules  governing  the  financing  of  political  parties  at  European  level  should  be 
adapted  to  take  better  account  of  the  special  conditions  under  which  political  parties 

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OJ C 
OJ C 292E, 1.12.2006, p. 6. 

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operate, including shifting political challenges and agendas creating budgetary impacts 
that  the  political  parties  cannot  predict  when  drawing  up  their  annual  work 
programmes and budgets. To that end a limited access to carrying over funding from 
one year to the first quarter of the following year should be introduced. 

(6) 

(7) 

In  order  to  enhance  the  parties'  long-term  financial  planning  capabilities,  to  take 
account of the varying funding needs from one year to another, and to strengthen the 
incentives  of  the  parties  to  rely  not  only  on  public  funding,  the  political  parties  at 
European level should be allowed to establish limited financial reserves based on own-
resources generated from other sources than the budget of the European Union. 

In order to create conditions conducive for the funding of political parties at European 
level,  while  encouraging  them  to  ensure  adequate  long-term  financial  planning,  the 
minimum co-funding requirement should be adjusted. 

(8)  With a view to further enhancing and promoting the European nature of the elections 
to  the  European  Parliament,  it  should  be  established  clearly  that  appropriations 
received  from  the  EU  budget  may  also  be  used  for  the  financing  of  campaigns 
conducted  by  the  political  parties  at  European  level  in  the  context  of  European 
Parliament  elections,  provided  that  this  does  not  constitute  a  direct  or  indirect 
financing of national political parties or their candidates.  

HAVE ADOPTED THIS REGULATION: 

Article 1 

Regulation (EC) No 2004/2003 is amended as follows: 

(1) 

In Article 2, the following point 4 is added: 

"Political foundations at European level" means an entity or network of entities 
"4. 
which has legal personality in a Member State, is affiliated with a political party at 
European  level  and  which  through  its  activities  underpins  and  complements  the 
objectives of the European political party by performing, in particular, the following 
tasks: 

–  observing,  analysing  and  contributing  to  the  debate  on  European  public  policy 

issues and the process of European integration; 

–  organising  and  supporting  seminars,  training,  conferences  and  studies  on  such 
issues  between  relevant  stakeholders,  including  youth  organisations  and  other 
representatives of civil society; 

–  serving  as  a  framework  for  national  political  foundations,  academics,  and  other 

relevant actors to work together at European level."  

(2) 

Article 3 is amended as follows: 

The following second and third paragraphs are added after point (d): 

"A political foundation at European level shall satisfy the following conditions: 

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(a) it must be affiliated with one of the political parties at European level recognised 
in accordance with Article 3, as certified by the latter; 

(b) it must observe, in particular in its programme and in its activities, the principles 
on  which  the  European  Union  is  founded,  namely  the  principles  of  liberty, 
democracy, respect for human rights and fundamental freedoms, and the rule of law. 

Within  the  framework  of  this  Regulation,  it  remains  for  each  political  party  and 
foundation at European level to define the specific modalities for their relationship, 
including an appropriate degree of separation between the daily management as well 
as the governing structures of the political foundation at European level on the one 
hand,  and  on  the  other  hand  the  political  party  at  European  level  with  which  the 
former is affiliated." 

(3) 

In Article 4, the following paragraphs 4, 5, 6, and 7 are added: 

"4.  A  political  foundation  at  European  level  may  apply  for  funding  through  the 
political party at European level with which it is affiliated. 

Funding for a political foundation at European level shall be allocated on the 
5. 
basis of the former’s affiliation with a political party at European level, applying the 
provisions of Article 10(1). Article 9 shall apply to the funds thus allocated. 

Funding allocated to a political foundation at European level may only be used 
6. 
for  the  purpose  of  financing  the  activities  of  the  former  in  accordance  with  the 
provisions of Article 2(4). 

The  provisions  of  paragraphs  1  and  3  shall  apply  mutatis  mutandis  to  the 
7. 
political foundations at European level when assessing applications for funding from 
the general budget of the European Union." 

(4) 

In Article 5, the following paragraphs 4, 5, and 6 are added: 

"4.  The  provisions  of  paragraph  2  shall  apply  mutatis  mutandis  to  the  political 
foundations at European level. 

5. 
If  the  political  party  at  European  level  with  which  a  political  foundation  at 
European  level  is  affiliated  forfeits  its  status,  the  political  foundation  at  European 
level in question shall be excluded from funding under this Regulation. 

6. 
If  the  European  Parliament  finds  that  any  of  the  conditions  referred  to  in 
Article  3(c)  are  no  longer  satisfied,  the  political  foundation  at  European  level  in 
question shall be excluded from funding under this Regulation." 

(5) 

Article 6 is replaced by the following: 

"Article 6 
Obligations linked to funding 

A political party at European level as well as a political foundation at European 

1. 
level shall: 

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(a)  publish  its  revenue  and  expenditure  and  a  statement  of  its  assets  and  liabilities 
annually; 

(b)  declare  its  sources  of  funding  by  providing  a  list  specifying  the  donors  and  the 
donations received from each donor, with the exception of donations not exceeding 
EUR 500. 

It shall not accept: 

(a) 

anonymous donations, 

(b) 

donations from the budgets of political groups in the European Parliament, 

(c) 
donations from any undertaking over which the public authorities may exercise 
directly  or  indirectly  a  dominant  influence  by  virtue  of  their  ownership  of  it,  their 
financial participation therein, or the rules which govern it, 

(d) 
donations exceeding EUR 12 000 per year and per donor from any natural or 
legal  person  other  than  the  undertakings  referred  to  in  c)  and  without  prejudice  to 
paragraphs 2 and 3. 

2. 
Contributions  to  a  political  party  at  European  level  from  national  political 
parties which are members of a political party at European level shall be admissible. 
They may not exceed 40 % of that party's annual budget.  

3. 
Contributions to a political foundation at European level from national political 
foundations, which are members of a political foundation at European level, as well 
as from political parties at European level, shall be admissible. They may not exceed 
40 % of that foundation's annual budget". 

(6) 

Article 7 is replaced by the following: 

"Article 7 

Prohibition of funding 

The  funding  of  political parties  at European  level  from  the  general  budget  of 
1. 
the  European  Union  or  from  any  other  source  may  not  be  used  for  the  direct  or 
indirect  funding  of  other  political  parties,  and  in  particular  national  parties,  which 
shall continue to be governed by national rules. 

2. 
The funding of political foundations at European level from the general budget 
of the European Union may not be used for the direct or indirect funding of political 
parties either at European or national level or of foundations at national level." 

(7) 

Article 8 is replaced by the following: 

"Article 8 
Nature of expenditure 

Without  prejudice  to  the  funding  of  political  foundations,  appropriations  received 
from the general budget of the European Union in accordance with this Regulation 

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may only be used to meet expenditure directly linked to the objectives set out in the 
political programme referred to in Article 4(2)(b). 

Such expenditure shall include administrative expenditure and expenditure linked to 
technical  assistance,  meetings,  research,  cross-border  events,  studies,  information 
and publications. 

Such  expenditure  may  also  include  financing  campaigns  conducted  by  the  political 
parties at European level in the context of the elections to the European Parliament, 
in  which  they  participate  as  required  in  Article  3(d).  In  accordance  with  Article  7 
these  appropriations  shall  not  constitute  a  direct  or  indirect  financing  of  national 
political parties or their candidates." 

(8) 

Article 9 is amended as follows: 

(a)  Paragraph 1 is replaced by the following: 

"1.  Appropriations  for  funding  of  political  parties  at  European  level  as  well  as 
political  foundations  at  European  level  shall  be  determined  under  the  annual 
budgetary  procedure  and  shall  be  implemented  in  accordance  with  the  Financial 
Regulation 
its 
Implementing Rules applicable to the general budget of the European Communities 
Commission Regulation (EC, Euratom) No 2342/2002**). 

(EC,  Euratom)  No  1605/2002*)  and 

(Council  Regulation 

The  implementing  procedures  of  this  Regulation  are  laid  down  by  the  authorising 
officer. 
___________________ 

* 

OJ L 248, 16.9.2002, p. 1. 

**  OJ L 357, 31.12.2002, p. 1." 

(b)  Paragraph 3 is replaced by the following: 

"3.  Control  of  funding  granted  under  this  Regulation  shall  be  exercised  in 
accordance  with  Regulation  (EC,  Euratom)  No  1605/2002  and  Regulation  (EC, 
Euratom) No 2342/2002. 

Control shall also be exercised on the basis of annual certification by an external and 
independent  audit.  This  certification  shall  be  transmitted,  within  six  months  of  the 
end of the financial year concerned, to the European Parliament. 

(c)  The following paragraphs 7, 8, and 9 are added: 

"7. 
If  a  political  party  at  European  level  realises  a  surplus  of  income  over 
expenditure  at  the  end  of  a  financial  year  for  which  it  received  an  operating  grant, 
part of that surplus up to 25% of the total income for that year may, by derogation to 
the  no-profit  rule  laid  down  in  Article  109  of  Regulation  (EC,  Euratom)  No 
1995/2006, be carried over to the following year under the condition that it will be 
used before the end of the first quarter of this following year. 

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8. 
For  the  purposes  of  verifying  the  no-profit  rule,  the  own  resources,  in 
particular donations and membership fees, aggregated in the annual operations of a 
political party at European level, which exceeds the 15% of eligible costs to be borne 
by the beneficiary shall not be taken into account. 

9. 
The  provisions  of  paragraph  8  shall  not  apply  if  the  financial  reserves  of  a 
political party at European level exceed 100 % of the average annual income of the 
former." 

(9) 

In Article 10, paragraph 2 is replaced by the following:  

"2.  Funding charged to the general budget of the European Union shall not exceed 
85% of the budget of a political party or foundation at European level. The burden of 
proof shall rest with the relevant political party at European level.  

(10) 

Article 12 is replaced by the following: 

"Article 12 
Evaluation 

The European Parliament shall publish a report no later than 15 February 2011 on the 
application  of  this  Regulation  and  the  activities  funded.  The  report  shall  indicate, 
where appropriate, possible amendments to be made to the funding system." 

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

Article 2 

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

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President   

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