Proposal for a Council regulation laying down the multiannual financial framework for the years 2007-2013
Date: 2010-03-03
Institutions: European Commission
Subjects: budgetary discipline (EU), budgetary procedure, financial management, financial regulation, general budget (EU), implementation of the budget, interinstitutional cooperation (EU)

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EUROPEAN COMMISSION 

Brussels, 3.3.2010 
COM(2010) 72 final 

2010/0048 (APP) 

Proposal for a 

COUNCIL REGULATION 

laying down the multiannual financial framework for the years 2007-2013 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The Treaty on the Functioning of the European Union (hereinafter referred to as the "Treaty") 
stipulates  that  a  unanimously  adopted  Council  Regulation  shall  lay  down  a  multiannual 
financial  framework.  The  financial  framework  shall  determine  the  amounts  of  the  annual 
ceilings on commitment appropriations by category of expenditure and of the annual ceiling 
on payment appropriations and it shall lay down any other provisions required for the annual 
budgetary procedure to run smoothly (Article 312). 

to  adopt  a  multiannual  financial  framework  and  provisions  on 

the 
The  practice 
interinstitutional cooperation and budgetary discipline started more than 20 years ago with the 
first  financial  framework  laid  down  in  the  interinstitutional  agreement1.  It  has  immensely 
improved  and  simplified  the  annual  budget  procedure  and  cooperation  between  institutions 
and as a consequence increased the budgetary discipline.  

The Treaty thus recognizes the importance of the financial framework as a cornerstone of the 
budgetary architecture of the European Union and finally encodes this successful practice into 
the system of European Union law.  

The current multiannual financial framework for 2007-2013 was agreed between institutions 
in May 2006 and is laid down in the Interinstitutional Agreement on budgetary discipline and 
sound financial management2 (hereinafter referred to as the "current IIA").  

The  relevant  provisions  of  the  current  IIA  need  to  be  codified  into  a  Council  Regulation 
laying  down  the  multiannual  financial  framework  (hereinafter  referred  to  as  the  "MFF 
regulation").  This  codification  represents  an  alignment  of  the  provisions  of  the  current  IIA 
with  the  requirements  of  the  Treaty.  However,  such  alignment  has  to  take  into  account  the 
change of instrument: regulation instead of an IIA. 

It  is  however  not  possible  or  feasible  to  transpose  all  provisions  of  the  current  IIA  into  the 
MFF  regulation.  The  current  IIA  consists  of  provisions  on  the  financial  framework,  on 
instruments  that  are  not  included  in  the  financial  framework,  on  the  establishment  of  the 
budget and on the interinstitutional cooperation and sound financial management. Some of the 
provisions of the current IIA became obsolete with the entry into force of the Lisbon Treaty, 
many shall be incorporated in the MFF regulation, some in the Financial Regulation.  

A  new  IIA  is  still  necessary  for  those  provisions  that  do  not  fit  into  either  of  these  two 
regulations. This approach is supported by the Treaty that recognizes the importance of good 
interinstitutional cooperation and stipulates (in Article 295) that "The European Parliament, 
the  Council  and  the  Commission  shall  consult  each  other  and  by  common  agreement  make 
arrangements for their cooperation. To that end, they may, in compliance with the Treaties, 
conclude  interinstitutional  agreements  that  can  be  of  binding  nature".  This  confirms  and 

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Interinstitutional  Agreement  on  budgetary  discipline  and  improvement  of  the  budgetary  procedure, 
signed by Parliament, the Council and the Commission on 29 June 1988 (OJ L 185, 15.7.1988, p. 33). 
Interinstitutional  Agreement  of  17  May  2006  between  the  European  Parliament,  the  Council  and  the 
Commission on budgetary discipline and sound financial management (OJ C 139, 14.6.2006, p. 1). 

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recommends the practice of having provisions on interinstitutional cooperation laid down in 
an IIA. 

The  architecture  of  the  legal  instruments  governing  the  EU  budget  is  complemented  by  the 
Financial  regulation.  According  to  the  Treaty,  the  Financial  regulation  shall  "determine  in 
particular the procedure to be adopted for establishing and implementing the budget …". The 
wording  has  not  changed  compared  to  the  Treaty  of  Nice,  only  the  adoption  procedure  has 
changed to ordinary legislative procedure (i.e. co-decision). 

Taking  into  account  all  the  relevant  provisions  and  requirements  of  the  Treaty,  the 
transposition  of  the  provisions  of  the  current  IIA  to  relevant  successive  legal  instruments  is 
based on the following logic: 

1. 

Many of the existing provisions are rendered obsolete by the Lisbon Treaty: 

– 

– 

Provisions related to the distinction between compulsory and non-compulsory 
expenditure and the maximum rate of increase. Likewise, the classification of 
expenditure (now included in Annex III of the current IIA) is obsolete. 

Significant  parts  of  inter-institutional  cooperation  in  the  budgetary  sector  are 
obsolete, due to the changes in the budget procedure introduced by the Lisbon 
Treaty  (no  second  reading,  21  day  conciliation  committee,  possibility  for  the 
Commission to amend the draft budget up to the conciliation committee etc.). 

The  points  directly  related  to  the  financial  framework  are  included  in  the  MFF 
Regulation,  i.e.  all  aspects  related  to  the  annual  adjustments  of  the  financial 
framework, revision of the financial framework, adjusting the financial framework to 
cater for enlargement, duration of the framework and consequences of the absence of 
a framework, annex I giving the ceilings by heading for each year of the framework. 

Some of the existing provisions should be included in the Financial Regulation or 
its Implementing rules, rather than the MFF Regulation or IIA (e.g. provisions on 
financial statements shall be consolidated in the Financial Regulation). 

The  remaining  provisions  –  mainly  issues  related  to  pure  inter-institutional 
cooperation adjusted to the requirements of the Treaty - are included in a new IIA. 
This ensures a proper balance between the two arms of the budgetary authority and 
sufficient  flexibility  to  establish  the  new  budgetary  procedure  while  fulfilling  the 
requirements of the Treaty. 

2. 

3. 

4. 

For  the  sake  of  integrity  the  draft  MFF  Regulation  and  the  Interinstitutional  agreement  on 
cooperation in budgetary matters ("new IIA") are presented together. They complement each 
other and should be negotiated and agreed as one integral package. 

This explanatory memorandum covers both proposals and explains how the text of the current 
IIA was transposed to those two new instruments. To complete the overview, it also includes 
the provisions of the current IIA to be included in the Financial Regulation. 

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2. 

LEGAL ELEMENTS OF THE PROPOSAL 

2.1.  Multiannual Financial Framework Regulation 

Article 1 

The wording of Article 1 reproduces the first sentence of Point 9 of the current IIA. It refers to 
the  Annex  which  sets  out  the  financial  framework  itself.  The  financial  framework  has  not 
been changed, it corresponds to the financial framework as revised for the second phase of the 
EERP  adopted  by  the  Council  and  EP  on  17  December  20093.  The  second  recital  clearly 
specifies that the Regulation incorporates the multiannual financial framework established by 
the current IIA. 

The second sentence of Point 9 of the current IIA (“It [financial framework] constitutes the 
reference framework for the interinstitutional discipline“) and point 10 are rendered obsolete 
by the Treaty that specifies the purpose of the financial framework. Provisions of Point 11 of 
the current IIA are included in recitals 3, 5 and 6. 

Article 2 

The first paragraph of Article 2 reproduces the text of Point 12 of the current IIA. It defines 
the  annual  ceilings  and  lays  down  an  obligation  for  the  institutions  to  respect  the  ceilings 
during the budgetary procedure in compliance with the provisions of the Treaty. The first part 
of  the  second  sentence  of  Point  12  is  left  out  because  it  is  obsolete.  There  is  no  need  to 
provide  special  rules  for  cases,  where  the  Regulation  is  amended.  The  institutions  have  to 
comply with the ceilings which are in force at a certain point of time. 

The second paragraph introduces the possibility to exceed the ceilings, if necessary, when the 
instruments  not  included  in  the  financial  framework  are  mobilised.  The  Emergency  Aid 
Reserve,  the  Solidarity  fund,  the  Flexibility  instrument  and  the  European  Globalisation 
Adjustment fund are now defined in Points 25 – 28 of the current IIA. They are not included 
in the financial framework and ensure that financing in specific circumstances is provided in 
excess of the ceilings of the financial framework, if needed. They increase the flexibility of 
the financial framework and are mobilised jointly by the two arms of budgetary authority. 

In  order  to  maintain  the  current  level  of  flexibility  and  the  roles  of  the  institutions  in  the 
mobilisation of these instruments, the provisions governing them are included in the new IIA. 
This conserves to the maximum extent possible the current practice. 

Article 3 

This  Article  reproduces  the  text  of  Point  15  of  the  current  IIA,  with  the  exception  of  the 
reference to the voting rules established under Point 3 of the current IIA. The compliance with 
the  own  resources  ceiling  must  be  ensured  for  each  year.  Should  the  ceilings  for  payment 
appropriations result in call-in rate for own resources exceeding the own resources ceiling, the 
ceilings  of  the  financial  framework  have  to  be  adjusted.  The  reference  to  Decision 

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Decision  of  the  European  Parliament  and  the  Council  of  17  December  2009  amending  the 
Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management 
as regards the multiannual financial framework / Financing projects in the field of energy in the context 
of the European Economic Recovery Plan (OJ L 347, 24.12.2009, p. 26). 

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2007/436/EC,  Euratom  that  specifies  the  ceilings  for  own  resources  and  commitment 
appropriations is included. 

Article 4 

Reproduces  the  text  of  Point  16  of  the  current  IIA  and  lays  down  the  rules  for  the  annual 
technical adjustments of the financial framework. The term "two arms of budgetary authority" 
is replaced by "the European Parliament and the Council" in the whole text. 

Article 5 

This Article reproduces the text of Point 17 of the current IIA. The wording was only slightly 
adjusted to replace the reference to the current IIA with the reference to the period when the 
cohesion policy envelopes were agreed. The adjustment of cohesion policy envelopes will be 
made in the technical adjustment for the year 2011 to be presented in April 2010. 

Article 6 

The  wording  of  this  Article,  which  lays  down  rules  for  the  adjustments  related  to 
implementation,  corresponds  to  Point  18  of  the  current  IIA,  with  the  exception  of  the 
reference to the voting rules established under Point 3 of the current IIA. 

Article 7 

The wording of this Article, which lays down rules for the adjustments related to excessive 
government deficit, reproduces the text of Point 20 of the current IIA.  

Article 8 

The wording of this Article corresponds to the Points 21-23 of the current IIA.  

The  revisions  of  the  financial  framework  are  adopted  according  to  the  same  rules  as  the 
regulation itself. In order to retain the current level of flexibility of the financial framework as 
regards  the  revisions  below  the  threshold  of  0.03%  of  GNI,  paragraph  3  stipulates  that  the 
financial  framework  may  be  adapted,  if  need  be  and  within  the  threshold  of  0.03%,  in  the 
framework  of  the  annual  budgetary  procedure.  This  does  not  change  the  current  practice 
where  revisions  below  the  same  threshold  were  jointly  decided  by  EP  and  Council,  with 
Council deciding by qualified majority. 

Article 9 

The wording of this Article, which lays down rules for the adjustments in case of a revision of 
the Treaty, reproduces the text of Point 4 of the current IIA. 

Article 10 

The  wording  of  this  Article,  which  lays  down  rules  for  the  adjustments  to  cater  for 
enlargement,  reproduces  the  text  of  Point  29  of  the  current  IIA,  with  the  exception  of  the 
reference to the voting rules established under Point 3 of the current IIA. 

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Article 11 

Article  312(3)  2nd  paragraph  of  the  Treaty  stipulates  that  the  "financial  framework  shall  lay 
down  any  other  provisions  required  for  the  annual  budgetary  procedure  to  run  smoothly". 
Article  11  lays  down  the  general  principles  for  the  interinstitutional  cooperation  in  the 
budgetary procedure. 

The details on the cooperation of the institutions during the budgetary procedure are included 
in the new IIA based on Article 295 of the Treaty, thus ensuring the necessary flexibility for 
the new budgetary procedure to be developed in practice. 

Article 12 

The financing of the Common Foreign and Security Policy has a special standing during the 
budgetary  procedure.  In  order  to  maintain  the  current  balance  and  to  help  the  budgetary 
procedure to run smoothly, the basic rules (the amount entered in one budget chapter covering 
the  real  predictable  needs,  no  funds  entered  in  a  reserve)  and  the  amount  agreed  for  the 
financing of the CFSP (without change) are introduced in the MFF Regulation.  

The wording corresponds to the text of part of the 2nd paragraph and the first sentence of the 
last paragraph of Point 42 of the current IIA. All the other provisions of Points 42 and 43 of 
the current IIA are placed in Points 18 and 19 of the new IIA. The High Representative for 
Foreign Affairs and Security Policy shall be responsible to draw up the forecast for the draft 
budget in the area of CSFP. The text has been changed to reflect that the role of Council or 
Council presidency included in the current IIA is taken over by the High Representative. 

Article 13 

Article  13  corresponds  to  the  text  of  Point  30  of  the  current  IIA  on  the  duration  of  the 
financial  framework  and  consequences  of  the  absence  thereof.  The  obligation  for  the 
Commission  to  present  a  new  financial  framework  before  July  2011  is  maintained.  The 
wording of second paragraph of Point 30 is slightly adjusted to comply with the wording of 
Article 312(4) of the Treaty. 

Article 14 

The final Article of the MFF regulation sets the date of entry into force of the regulation. The 
new  IIA  should  enter  into  force  on  the  same  day.  Both  instruments  cover  the  period  2007-
2013. The years before the entry into force of the regulation are included since the proposals 
concern the alignment of the existing IIA with the requirements of the new Treaty. 

2.2. 

Interinstitutional Agreement on cooperation in budgetary matters 

The  draft  Interinstitutional  agreement  on  cooperation  in  budgetary  matters  ("new  IIA") 
includes all the provisions  of the Interinstitutional agreement of 17  May 2006 on  budgetary 
discipline and sound financial management ("current IIA") that are not 

a) 

directly  linked  to  the  financial  framework  itself  and  as  such  included  in  the 
MFF Regulation, 

b) 

rendered obsolete by the Treaty, 

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c) 

proposed to be included in the Financial Regulation.  

The basic logic is to keep as far as possible the rules that are currently in place and that have 
proven  to  be  efficient  and  to  preserve  the  balance  of  powers  and  the  involvement  of  the 
institutions in the budgetary procedure. 

Introduction – points 1-6 of the new IIA 

The introductory part of the new IIA reproduces the wording of Points 1-8 of the current IIA 
with exception of Point 4 that was transposed to the MFF regulation (Art. 11) and point 7 that 
is obsolete. 

In Point 1 a reference to the Article 295 of the Treaty has been added as the legal basis for the 
Interinstitutional agreement. 

In  Point  3  the  reference  to  the  MFF  Regulation  and  the  Financial  Regulation  has  been 
included. The reference to Article 272(9) of the Treaty establishing the European Community 
is obsolete and has been deleted. The voting rules for decision making procedures specified in 
the IIA are maintained without changes (i.e. qualified majority in the Council and majority of 
its members and three fifths of the vote cast in the EP). 

The structure of the IIA consisting of three parts has been preserved and is described in Point 
5. Part one includes some complementary provisions to the financial framework and mainly 
the provisions on the instruments outside the financial framework. Part II accompanied by the 
Annex  includes  the  provisions  on  the  interinstitutional  cooperation  adjusted  to  the  new 
budgetary procedure. It also includes rules for the inclusion of the amount in legislative acts, 
provisions on the financing of CFSP and on the fisheries agreements. Part III takes over all 
provisions of Part III of the current IIA that remain valid. 

Point 6 sets the date of entry into force of the new IIA that shall be the same as for the MFF 
regulation. The new IIA will at that moment replace the current IIA. 

Part  I  –  provisions  related  to  the  financial  framework  and  special  instruments  not 
included in the financial framework 

A. Provisions related to the financial framework 

Point 7 of the new IIA reproduces the wording of the last paragraph of Point 11 of the current 
IIA.  It  concerns  information  about  operations  not  included  in  the  budget  (i.e.  European 
Development  Fund)  and  about  the  development  of  the  categories  of  own  resources.  This 
provision is not directly linked to the financial framework and as such does not belong to the 
MFF Regulation.  

The  practice  of  providing  this  information  is  maintained  but  it  is  proposed  to  present  it  no 
longer  with  the  technical  adjustment  of  the  financial  framework  but  with  the  documents 
accompanying  the  draft  budget  where  this  more  logically  belongs.  The  timing  of  the 
presentation remains practically the same (end of April/beginning of May). 

Point  8  of  the  new  IIA  concerns  the  margins  beneath  the  ceilings.  The  MFF  Regulation 
establishes  the  ceilings  for  all  headings  that  have  to  be  respected  during  each  annual 
budgetary  procedure  as  required  by  the  Treaty.  However,  the  practice  to  ensure  as  far  as 
possible sufficient margins beneath the ceilings should be preserved. It constitutes an element 

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of  the  interinstitutional  cooperation  and  good  will  of  the  institutions  in  the  budgetary 
procedure and as such belongs in the IIA. The provision is kept without any changes. 

Point  9  of  the  new  IIA  copies  the  text  of  Point  19  of  the  current  IIA  on  the  updating  of 
forecast for payment appropriations after 2013. Again, as this does not directly influence the 
current financial framework, it is appropriate to keep it in the new IIA. 

B. Provisions related to the special instruments not included in the financial framework 

The existing instruments that are not included in the financial framework (the Emergency Aid 
Reserve,  the  Solidarity  Fund,  the  Flexibility  instrument  and  the  European  Globalisation 
Adjustment Fund) are maintained in the IIA. The MFF Regulation includes in Article 2 the 
possibility  to  mobilise  them,  if  necessary,  over  and  above  the  ceilings  established  by  the 
financial framework. 

The  provisions  on  the  objectives  and  purpose  of  the  instruments  and  the  amounts  are 
preserved as in the current IIA as well as the roles of the institutions in their mobilisation, i.e. 
joint decision of the institutions according to the voting rules included in Point 3.  

The  proposed  split  of  the  provisions  on  the  instruments  not  included  in  the  financial 
framework intends to preserve the actual practice. However,  the practice itself has rendered 
some provisions on the mobilisation of those instruments obsolete. The current IIA calls for a 
trilogue procedure to be initiated each time the Commission makes a proposal to mobilise one 
of  these  instruments.  In  fact,  a  trilogue  is  frequently  avoided  as  both  arms  of  the  budgetary 
authority  are  usually  able  to  agree  to  the  Commission's  proposal  without  the  necessity  of  a 
formal trilogue. It is therefore proposed to align the text to the real practice. The obligation to 
call  the  trilogue  each  time  the  proposal  to  mobilise  of  the  instruments  is  replaced  by  the 
obligation to call the trilogue only in the case of disagreement. 

As regards the Flexibility instrument, an amendment is suggested for the presentation of the 
proposal  to  mobilise  the  instrument.  The  current  link  with  "budgetary  instruments"  and  the 
obligation to present it with the [preliminary] draft budget (see Point 27, 4th paragraph of the 
current  IIA)  is  not  needed  and  might  be  counter-productive  (for  instance,  in  the  future,  it 
could be presented directly during the conciliation). The simplified wording would enable to 
present the proposal to use the Flexibility instrument during the Conciliation committee that 
could help to find a compromise solution for the annual budget. It has already been the current 
practice. 

Part II – improvement of interinsitutional cooperation in budgetary procedure 

A. The interinstitutional collaboration procedure 

The  provisions  on  interinstitutional  cooperation  have  been  significantly  amended  to  comply 
with the new budgetary procedure introduced by the Treaty. While they were spread between 
the main text and annex II in the current IIA, it is proposed to include all the provisions on 
interinstitutional cooperation in the same annex. The new annex incorporates the provisions of 
the current procedure that remain valid (e.g. wording of Points 32 and 33 of the current IIA – 
transposed as Points 3-6 of the Annex of the new IIA) and introduce new rules required for 
the  new  budgetary  procedure  and  the  Conciliation  Committee  to  be  functional.  The 
description of the collaboration principles also covers the pragmatic calendar. The provisions 
agreed on amending budgets in the declaration of the three institutions of November 2009 on 
the transitional measures have also been included. Accordingly, this new annex will replace 

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the  declaration  on  the  transitional  measures  for  the  pragmatic  calendar  and  the  amending 
budgets. 

B. Incorporation of financial provisions in legislative acts 

The provisions of the Points 37 and 38 of the current IIA are reproduced in the text of the new 
IIA, Points 15 and 16, without any changes of substance. The only changes are to replace the 
reference to the co-decision procedure with the reference to the ordinary legislative procedure 
and the reference to the EC Treaty with the reference to the Treaty on the functioning of the 
EU. 

C. Expenditure relating to fisheries agreements 

It is proposed to align the provisions of the current IIA on the expenditure relating to fisheries 
agreements  with  the  new  budgetary  rules.  The  proposed  change  in  wording  reflects  those 
parts  of  the  existing  text  which  are  still  relevant  and  they  are  purely  related  to  good 
cooperation  and  keeping  the  institutions  informed  of  developments.  The  new  wording  is 
included in the body of the new IIA and replaces the Annex IV of the current IIA. 

D. Financing of the Common Foreign and Security policy  

All the provisions of Points 42 and 43 of the current IIA (except those included in Article 12 
of  the  MFF  Regulation)  are  maintained  in  the  new  IIA  (points  18  and  19).  The  Council 
Presidency  or  the  Council  is  replaced  by  the  High  Representative  for  Foreign  Affairs  and 
Security Policy and the Council second reading with the Conciliation Committee. 

Part III – Sound financial management of EU funds 

This part reproduces the text of the same part of the current IIA with exception of Points 45 
and  47  that  are  obsolete.  The  provisions  of  Point  44  are  to  be  included  in  the  Financial 
regulation and the relevant basic acts regarding the structural and cohesion funds. 

A. Financial programming 

The provisions on financial programming correspond to the wording of Point 46 of the current 
IIA, the only two minor changes being deleting the reference to the "preliminary" draft budget 
and  replacing  the  reference  to  Annex  II,  Part  D  for  the  ceilings  for  pilot  projects  and 
preparatory actions with the reference to Article 32 of the Implementing rules of the Financial 
regulation. 

B. Agencies and European schools 

While the first part is identical to Point 47 of the current IIA, it is proposed to incorporate in a 
second part the provisions agreed jointly by the three institutions on 12 November 2009 on 
the  implementation  of  this  procedure  in  order  to  keep  one  single  set  of  rules  for  the 
cooperation in the budgetary field in this IIA. 

C. New financial instruments 

The provisions relating to the new financial instruments (Point 49 of the current IIA) are taken 
over  with  the  only  change  being  the  suppression  of  the  reference  to  "preliminary"  draft 
budget.  

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2.3. 

Financial Regulation 

Some of the provisions of the current IIA are already included in the Financial Regulation or 
its Implementing rules or would logically be better placed there.  

This regards the following provisions of the current IIA: 

– 

– 

– 

– 

– 

– 

Point  14  of  the  current  IIA  will  be  introduced  in  the  FR  (new  Article  47b)  as  it 
concerns  both  the  budget  and  the  MAFF.  It  is  not  included  in  the  MFF  Regulation 
because Article 310 of the TFEU foresees such provision for budgetary discipline in 
relation to the multiannual financial framework. It is therefore important to have the 
same link to the budget as well, as was the case in the current IIA. 

Provisions  on  financial  statements  (Point  39)  are  dealt  with  in  Article  28  of  the 
Financial Regulation an in Article 22 of its Implementing rules. 

The second part of Point 40 ("the two arms of the budgetary authority undertake to 
respect  the  allocations  of  commitment  appropriations  provided  for  in  the  relevant 
basic  acts  for  structural  operations,  rural  development  and  European  Fund  for 
fisheries") – this provision will be introduced in a new Article 155a of the Financial 
regulation  (in  Part  II  –  special  provisions)  which  specifically  concerns  structural 
operations, rural development and European Fisheries Fund. 

The  ceilings  for  the  preparatory  actions  and  pilot  projects  now  included  in  Part  D, 
Annex II of the current IIA are not included in the new IIA as they are already laid 
down in Article 32 of the Implementing rules of the Financial Regulation. 

New  provisions  introduced  in  Article  317  TFEU  concerning  the  control  and  audit 
obligations of the Member States in the implementation of the budget, together with 
Point  44  of  the  current  IIA,  require  an  in-depth  analysis  and  will  therefore  be 
proposed together with the triennial revision of the Financial Regulation. 

Point  45  of  the  current  IIA  setting  up  the  rules  for  the  revision  of  the  Financial 
regulation  is  obsolete.  The  rules  for  the  adoption  of  the  Financial  regulation  are 
foreseen in the Treaty. 

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2010/0048 (APP) 

Proposal for a 

COUNCIL REGULATION 

laying down the multiannual financial framework for the years 2007-2013 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  functioning  of  the  European  Union,  and  in  particular 
Article 312 thereof, 

Having regard to the proposal from the European Commission4, 

Having regard to the consent of the European Parliament5, 

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

Since  1988  the  multiannual  financial  framework  and  related  provisions  were  laid 
down in interinstitutional agreements. The multiannual financial framework for 2007-
2013  was  established  by  Interinstitutional  Agreement  of  17  May  2006  between  the 
European  Parliament,  the  Council  and  the  Commission  on  budgetary  discipline  and 
sound  financial  management6.  Taking  into  account  that  practice,  Article  312  of  the 
Treaty provides that the multiannual financial framework needs to be laid down in the 
form  of  a  regulation.  It  is  therefore  necessary  to  incorporate  the  relevant  provisions 
from the Interinstitutional agreement of 17 May 2006 into a regulation. 

It is also necessary to incorporate the multiannual financial framework established by 
the Interinstitutional agreement of 17 May 2006 into this regulation. 

The financial framework should establish the ceilings for commitments and payments. 
Those  ceiling  should  respect  the  ceilings  of  commitments  and  own  resources  laid 
down  in  Council  Decision  2007/436/EC,  Euratom  of  7  June  2007  on  the  system  of 
European  Communities'  own  resources7.  Amounts  of  expenditure  in  terms  of 
appropriations  for  commitments  should  be  established  for  each  of  the  years  2007  to 
2013 and for each heading or subheading. Overall annual totals of expenditure should 
terms  of  both  appropriations  for  commitments  and 
be  also  established 
appropriations for payments. 

in 

4 
5 
6 
7 

OJ C , , p. . 
OJ C , , p. . 
OJ C 139, 14.6.2006, p. 1. 
OJ L 163, 23.6.2007, p. 17. 

EN 

11 

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(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

(10) 

(11) 

Special  instruments,  the  Emergency  Aid  Reserve,  the  Solidarity  fund,  the  Flexibility 
instrument  and  the  European  Globalisation  Adjustment  fund,  are  necessary  to  allow 
the Union to react to specified unforeseen circumstances or to allow the financing of 
clearly  identified  expenditure  which  could  not  be  financed  within  the  limits  of  the 
ceilings  available  for  one  or  more  other  headings  as  laid  down  in  the  financial 
framework. It is therefore necessary to provide for a possibility to enter in the budget 
commitment appropriations over and above the ceilings set out in financial framework 
where it is necessary to use special instruments. 

The financial framework should be laid down in 2004 prices. The rules for technical 
adjustments  of  the  financial  framework  to  recalculate  the  ceilings  and  remaining 
margins in the current prices should also be laid down. 

The financial framework should not take account of budget items financed by revenue 
earmarked within the meaning of Article 18 of the Council Regulation (EC, Euratom) 
No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general 
budget of the European Communities8. 

The ceilings for commitment appropriations for Heading 1b Cohesion for growth and 
employment and the methodology to establish country envelopes were agreed by the 
European  Council  in  its  meeting  of  15-16  December  2005.  The  estimates  of  Gross 
Domestic  Product  (hereinafter  "GDP")  used  to  establish  the  national  envelopes  were 
based  on  the  statistics  published  in  April  2005  as  specified  in  Point  41  of  the  final 
Presidency proposal on the Financial Perspective 2007-2013 attached to the European 
Council conclusions adopted in its meeting of 15-16 December 2005. Point 42 of that 
document  stipulates  that  in  2010  the  envelopes  need  to  be  adjusted  if  the  actual 
cumulated GDP growth for the 2007-2009 differs more than +/- 5% from the forecast 
used in 2005. 

Rules  should  be  laid  down  for  other  situations  that  may  require  adjustment  of  the 
financial framework. These  adjustments  may  be related to the implementation of the 
budget, excessive government deficit, revision of the Treaty or enlargements. 

It  is  necessary  to  provide  for  revisions  of  the  financial  framework  in  case  of 
unforeseen circumstances that cannot be financed within the established ceilings of the 
financial framework. The Commission in a proposal for a revision should examine the 
scope for reallocation within or between the headings and of possible offsetting of any 
raising of the ceiling for one heading by the lowering of the ceiling for another. The 
flexibility of the financial framework to react to unforeseen circumstances should be 
ensured  by  introducing  a  possibility  to  adapt  the  financial  framework  during  the 
budgetary process within a margin for unforeseen expenditure by up to 0.03% of the 
Gross National Income of the Union. 

It  is  necessary  to  provide  for  general  rules  on  interinstitutional  cooperation  in  the 
budgetary procedure. 

In order to help the budgetary procedure to run smoothly, it is necessary to provide for 
the  basic  rules  for  the  budgeting  of  the  expenditure  for  the  Common  Foreign  and 
Security policy and overall amount for the period covered by the financial framework. 

8 

OJ L 248, 16.9.2002, p. 1. 

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12 

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(12)  Detailed arrangements on interinstitutional cooperation in the budgetary procedure and 
on the budgeting of the expenditure for the Common Foreign and Security policy are 
laid  down  in  the  Interinstitutional  Agreement  of  […]  2010  between  the  European 
Parliament, the Council and the Commission on cooperation in budgetary matters9. 

(13)  The Commission should present a proposal for a new multiannual financial framework 
before July 2011 to enable the institutions to adopt it sufficiently in advance before the 
start of the following financial framework. The financial framework laid down in this 
Regulation should continue to apply if the new  framework  is  not  adopted  before  the 
end of the term of the financial framework laid down in this Regulation, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Multiannual Financial Framework 

The multiannual financial framework for the period 2007-2013 (hereinafter referred to as 'the 
financial framework') is set out in the Annex.  

Article 2 

Compliance with the ceilings of the financial framework 

Each of the absolute amounts set out in the financial framework represents an annual 
ceiling  of  expenditure  under  the  general  budget  of  the  European  Union.  The 
European Parliament, the Council and the Commission shall comply with the annual 
expenditure  ceilings,  set  out  in  the  financial  framework,  during  each  budgetary 
procedure and when implementing the budget for the year concerned.  

The  commitment  appropriations  may  be  entered  in  the  budget  over  and  above  the 
ceilings  of  the  relevant  headings  laid  down  in  the  financial  framework  where  it  is 
necessary to use the resources from the Emergency Aid Reserve, the Solidarity fund, 
the  Flexibility  instrument  or  the  European  Globalisation  Adjustment  fund  in 
accordance  with  Council  Regulation  (EC)  No  2012/200210,  Regulation  (EC)  No 
1927/2006 of the European Parliament and of the Council11 and the Interinstitutional 
Agreement of […] 2010. 

Article 3 

Respect of own resources ceiling 

For each of the years covered by the financial framework, the total appropriations for 
payments  required,  after  annual  adjustment  and  taking  account  of  any  other 
adjustments  or  revisions,  may  not  be  such  as  to  produce  a  call-in  rate  for  own 

OJ C … 
OJ L 311, 14.11.2002, p. 3. 
OJ L 406, 30.12.2006, p. 1. 

1. 

2. 

1. 

9 
10 
11 

EN 

13 

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resources  that  exceeds  the  own  resources  ceiling  set  out  in  Decision  2007/436/EC, 
Euratom. 

2. 

Where necessary the ceilings set in the financial framework shall be lowered in order 
to  ensure  compliance  with  the  own  resources  ceiling  set  out  in  Decision 
2007/436/EC, Euratom. 

Article 4 

Technical adjustments 

1. 

Each  year  the  Commission,  acting  ahead  of  the  budgetary  procedure  for  year  n+1, 
shall make the following technical adjustments to the financial framework: 

2. 

3. 

4. 

1. 

2. 

a) 

b) 

revaluation,  at  year  n+1  prices,  of  the  ceilings  and  of  the  overall  figures  for 
appropriations for commitments and appropriations for payments; 

calculation of the margin available under the own resources ceiling set out in 
Decision 2007/436/EC, Euratom. 

The Commission shall make the technical adjustments referred to in paragraph 1 on 
the basis of a fixed deflator of 2% a year.  

The results of the technical adjustments referred to in paragraph 1 and the underlying 
economic  forecasts  shall  be  communicated  to  the  European  Parliament  and  the 
Council. 

No  further  technical  adjustments  may  be  made  in  respect  of  the  year  concerned, 
either during the year or as ex-post corrections during subsequent years. 

Article 5 

Adjustment of cohesion policy envelopes 

In its technical adjustment for the year 2011, if it is established that cumulated Gross 
Domestic  Product  ("GDP")  of  any  Member  State  for  the  years  2007-2009  has 
diverged by more than +/- 5 % from the cumulated GDP estimated in 2005 for the 
establishment of cohesion policy envelopes for Member States for the period 2007-
2013,  the  Commission  shall  adjust  the  amounts  allocated  from  funds  supporting 
cohesion to the Member State concerned for that period. 

The  total  net  effect,  whether  positive  or  negative,  of  the  adjustments  referred  to  in 
paragraph  1  may  not  exceed  EUR  3  billion.  If  the  net  effect  is  positive,  total 
additional  resources  shall  be  limited  to  the  level  of  under-spending  against  the 
ceilings for sub-heading 1b for the years 2007-2010.  

The required adjustments shall be spread in equal proportions over the years 2011-
2013  and  the  corresponding  ceilings  of  the  financial  framework  shall  be  modified 
accordingly. 

EN 

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Article 6 

Adjustments related to implementation 

When  notifying  the  European  Parliament  and  the  Council  of  the  results  of  the  technical 
adjustments  to  the  financial  framework,  the  Commission  shall  present  any  proposals  for 
adjustments to the total appropriations for payments which it considers necessary, in the light 
of  implementation,  to  ensure  an  orderly  progression  in  relation  to  the  appropriations  for 
commitments. The decisions on those proposals shall be taken before 1 May of year n. 

Article 7 

Adjustments related to excessive government deficit 

In the case of the lifting of a suspension of budgetary commitments concerning the Cohesion 
Fund in the context of an excessive government deficit procedure, the Council, on a proposal 
from the Commission and in compliance with the relevant basic act, shall decide on a transfer 
of suspended commitments to the following years. Suspended commitments of year n cannot 
be re-budgeted beyond year n+2. 

Article 8 

Revision of the financial framework 

1. 

2. 

3. 

4. 

5. 

6. 

In  case  of  unforeseen  circumstances  the  financial  framework  may,  on  a  proposal 
from  the  Commission,  be  revised  in  compliance  with  the  own  resources  ceiling  set 
out in the Decision 2007/436/EC, Euratom. 

As  a  general  rule,  any  proposal  for  revision  referred  to  in  paragraph  1  shall  be 
presented and adopted before the start of the budgetary procedure for the year or the 
first of the years concerned. 

Any  adaptation  of  the  financial  framework  by  up  to  0.03%  of  the  Gross  National 
Income of the Union within the margin for unforeseen expenditure may be adopted 
jointly  by  the  European  Parliament  and  the  Council  within  the  framework  of  the 
budgetary procedure. 

Any  proposal  for  revision  of  the  financial  framework  shall  examine  the  scope  for 
reallocating expenditure between the programmes covered by the heading concerned 
by  the  revision,  with  particular  reference  to  any  expected  under-utilisation  of 
appropriations.  Where  feasible,  the  objective  shall  be  that  a  significant  amount,  in 
absolute terms and as a percentage of the new expenditure planned, shall be within 
the existing ceiling for the heading. 

Any  proposal  for  revision  of  the  financial  framework  shall  examine  the  scope  for 
offsetting any raising of the ceiling for one heading by the lowering of the ceiling for 
another. 

Any  revision  shall  maintain  an  appropriate  relationship  between  commitments  and 
payments. 

EN 

15 

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Article 9 

Adjustment of the financial framework in case of a revision of the Treaty 

Should a Treaty revision with budgetary implications occur during the financial framework, 
the necessary adjustments to the financial framework shall be made accordingly. 

Article 10 

Adjustment of the financial framework in case of enlargement 

If  new  Member  States  accede  to  the  Union  during  the  period  covered  by  the  financial 
framework, the financial framework shall, on the proposal from the Commission, be adjusted 
to take account of the expenditure requirements resulting from the outcome of the accession 
negotiations. 

Article 11 

Interinstitutional cooperation in the budgetary procedure 

The  European  Parliament,  the  Council  and  the  Commission  (hereinafter  the  "institutions") 
shall take any measures to facilitate the annual budgetary procedure.  

The  institutions  shall  cooperate  in  good  faith  throughout  the  procedure  with  a  view  to 
reconciling 
through  appropriate 
interinstitutional  contacts  to  monitor  the  progress  of  the  work  and  analyse  the  degree  of 
convergence at all stages of the procedure. 

institutions  shall  cooperate 

their  positions.  The 

The institutions shall ensure that their respective calendars of work are coordinated as far as 
possible in order to enable proceedings to be conducted in a coherent and convergent fashion, 
leading to the final adoption of the budget.  

Trilogues may be held at all stages of the procedure and at different levels of representation, 
depending  on  the  nature  of  the  expected  discussion.  Each  institution,  in  accordance  with  its 
own rules of procedure, shall designate its participants for each meeting, define its mandate 
for the negotiations and inform the other institutions of arrangements for the meetings in good 
time. 

Article 12 

Financing of the Common foreign and security policy  

The  total  amount  of  operating  Common  foreign  and  security  policy  (hereinafter  "CFSP") 
expenditure shall be entered entirely in one budget chapter, entitled CFSP. That amount shall 
cover the real predictable needs, assessed in the framework of the establishment of the draft 
budget, on the basis of forecasts drawn up annually by the High Representative of the Union 
for Foreign Affairs and Security Policy, and a reasonable margin for unforeseen actions. No 
funds may be entered in a reserve.  

EN 

16 

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At least EUR 1 740 million shall be available for the CFSP over the period 2007-2013. 

Article 13 

Consequences of the absence of a financial framework 

Before 1 July 2011, the Commission shall present a proposal for a new multiannual financial 
framework. 

If  no  Council  regulation  determining  a  new  multiannual  financial  framework  has  been 
adopted  before  31  December  2013,  the  ceilings  for  the  last  year  covered  by  the  existing 
financial  framework  and  other  provisions  of  this  Regulation  shall  continue  to  apply  until  a 
regulation determining a new financial framework is adopted. 

If new Member States accede to the Union after 2013, and if necessary, the extended financial 
framework shall be adjusted in order to take into account the results of accession negotiations. 

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

Article 14 

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

Done at Brussels,  

For the Council 
The President 

EN 

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ANNEX  

FINANCIAL FRAMEWORK 2007-2013 

COMMITMENT APPROPRIATIONS

1. Sustainable Growth

1a Competitiveness for Growth and Employment
1b Cohesion for Growth and Employment

2. Preservation and Management of Natural Resources
of which: market related expenditure and direct payments

3. Citizenship, freedom, security and justice

3a Freedom, Security and Justice
3b Citizenship

4. EU as a global player
5. Administration (1)
6. Compensations

(EUR million - constant 2004 prices)

2007

50 865

8 404

42 461

51 962

43 120

1 199

600

599

6 199

6 633

419

2008

53 262

9 595

43 667

54 685

42 697

1 258

690

568

6 469

6 818

191

2009

55 879

12 018

43 861

51 023

42 279

1 375

785

590

6 739

6 816

190

2010

56 435

12 580

43 855

53 238

41 864

1 503

910

593

7 009

6 999

2011

55 400

11 306

44 094

52 528

41 453

1 645

1 050

595

7 339

7 255

2012

56 866

12 122

44 744

51 901

41 047

1 797

1 200

597

7 679

7 400

2013

58 256

12 914

45 342

51 284

40 645

1 988

1 390

598

8 029

7 610

Total
2007-2013
386 963

78 939

308 024

366 621

293 105

10 765

6 625

4 140

49 463

49 531

800

TOTAL COMMITMENT APPROPRIATIONS

117 277

122 683

122 022

125 184

124 167

125 643

127 167

864 143

as a percentage of GNI

1,08%

1,09%

1,06%

1,06%

1,03%

1,02%

1,01%

1,048%

TOTAL PAYMENT APPROPRIATIONS

115 142

119 805

109 091

119 245

116 884

120 575

119 784

820 526

as a percentage of GNI
Margin available
Own Resources Ceiling as a percentage of GNI

1,06%

0,18%

1,24%

1,06%

0,18%

1,24%

0,95%

0,29%

1,24%

1,01%

0,23%

1,24%

0,97%

0,27%

1,24%

0,98%

0,26%

1,24%

0,95%

0,29%

1,24%

1,00%

0,24%

1,24%

(1) The expenditure on pensions included under the ceiling for this heading is calculated net of the staff contributions to the relevant scheme, within the limit of € 500 million at 
2004 prices for the period 2007-2013.

EN 

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