COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS ANNUAL ACCOUNTS OF THE EUROPEAN UNION FINANCIAL YEAR 2009          Consolidated financial statements and consolidated reports on implementation of the budget
Date: 2010-07-20
Institutions: European Commission
Subjects: Community budget, report

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EUROPEAN COMMISSION 

Brussels, 20.7.2010 
SEC(2010) 963 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS 

ANNUAL ACCOUNTS OF THE EUROPEAN UNION 
FINANCIAL YEAR 2009 

Consolidated financial statements and consolidated 
reports on implementation of the budget 

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TABLE OF CONTENTS 

NOTE ACCOMPANYING THE CONSOLIDATED ACCOUNTS ........................................ 3 

IMPLEMENTING AND ACCOUNTING FOR THE EU BUDGET ....................................... 4 

PART I – CONSOLIDATED FINANCIAL STATEMENTS OF THE EUROPEAN UNION 

AND EXPLANATORY NOTES............................................................................... 11 

BALANCE SHEET.................................................................................................................. 12 

ECONOMIC OUTTURN ACCOUNT .................................................................................... 13 

CASHFLOW TABLE .............................................................................................................. 14 

STATEMENT OF CHANGES IN NET ASSETS................................................................... 15 

NOTES TO THE FINANCIAL STATEMENTS .................................................................... 16 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

10. 

11. 

SIGNIFICANT ACCOUNTING POLICIES............................................................. 17 

NOTES TO THE BALANCE SHEET ...................................................................... 32 

NOTES TO THE ECONOMIC OUTTURN ACCOUNT ......................................... 58 

NOTES TO THE CASHFLOW TABLE................................................................... 69 

CONTINGENT ASSETS & LIABILITIES AND OTHER DISCLOSURES........... 70 

FINANCIAL CORRECTIONS AND RECOVERIES FOLLOWING THE 
DETECTION OF IRREGULARITIES...................................................................... 79 

FINANCIAL RISK MANAGEMENT ...................................................................... 96 

RELATED PARTY DISCLOSURES...................................................................... 105 

EVENTS AFTER THE BALANCE SHEET DATE ............................................... 107 

CONSOLIDATED ENTITIES ................................................................................ 108 

NON-CONSOLIDATED ENTITIES ...................................................................... 109 

PART II – CONSOLIDATED REPORTS ON THE IMPLEMENTATION OF THE 

BUDGET OF THE EUROPEAN UNION AND EXPLANATORY NOTES ........ 111 

CONSOLIDATED REPORTS ON IMPLEMENTATION OF THE BUDGET................... 112 

EXPLANATORY NOTES TO THE CONSOLIDATED REPORTS ON 

IMPLEMENTATION OF THE BUDGET.............................................................. 131 

1. 

2. 

BUDGETARY PRINCIPLES, STRUCTURES AND APPROPRIATIONS.......... 132 

EXPLANATION OF THE REPORTS ON THE IMPLEMENTATION OF THE 
BUDGET.................................................................................................................. 136 

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NOTE ACCOMPANYING THE CONSOLIDATED ACCOUNTS 

The  consolidated  annual  accounts  of  the  European  Union  for  the  year  2009  have  been 
prepared on the basis of the information presented by the institutions and bodies under Article 
129.2 of the Financial Regulation applicable to the general budget of the European Union. I 
hereby  declare  that  they  were  prepared  in  accordance  with  Title  VII  of  this  Financial 
Regulation and with the accounting principles, rules and methods set out in the notes to the 
financial statements. 

I have obtained from the accounting officers of these institutions and bodies, who certified its 
reliability,  all  the  information  necessary  for  the  production  of  the  accounts  that  show  the 
European Union's assets and liabilities and the budgetary implementation. 

I hereby certify that based on this information, and on such checks as I deemed necessary to 
sign  off  the  accounts  of  the  European  Commission,  I  have  a  reasonable  assurance  that  the 
accounts  present  a  true  and  fair  view  of  the  financial  position  of  the  European  Union  in  all 
material aspects. 

(signed) 
Philippe Taverne 
Accounting Officer 
of the Commission 

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IMPLEMENTING AND ACCOUNTING FOR THE EU BUDGET 

1. 

ANNUAL BUDGET PREPARATION 

The  European  Union  (EU)  Budget  finances  a  wide  range  of  policies  and  programmes 
throughout  the  EU.  In  accordance  with  the  priorities  set  by  the  Member  States,  the 
Commission carries out specific programmes, activities and projects in the field. These could 
range from supporting education projects for the mobility of students and teachers, to projects 
aimed at supporting better work environment for workers in the EU, to enhance the control of 
the external borders. 

Over 90% of the EU budget goes to funding such EU policies and activities, which have been 
agreed  by  all  the  Member  States.  The  direct  link  between  the  annual  budget  and  the  EU 
policies  is  ensured  through  activity-based  budgeting  (ABB).  The  activity-based  budget 
nomenclature, first introduced in the 2004 budget, allows for clear identification of the policy 
areas  of  the  European  Union  and  the  total  amount  of  resources  allocated  to  each  of  these 
areas. 

The policy areas are subdivided into some 200 activities of which over 110 include operating 
budget headings and are thus reflected in the budget nomenclature as budget chapters. These 
policy areas are predominantly operational, since their core activities are aimed at benefiting a 
third-party  beneficiary,  each  within  their  respective  domains  of  activity.  Other  policy  areas, 
however,  are  horizontal  and  assure  the  proper  functioning  of  the  Commission,  such  as 
‘Coordination  and  legal  advice’‚  and  ‘Budget’.  The  activity  structure  provides  the  common 
conceptual  framework  for  priority  setting,  planning,  budgeting,  monitoring  and  reporting, 
with the principal aim of enhancing the efficient, economic and effective use of resources. 

The internal procedure for the adoption of the draft budget starts with its preparation by the 
Commission  before  it  is  passed  to  the  Council  who  can  make  amendments  if  considered 
necessary.  The  updated  budget  then  goes  to  the  European  Parliament,  which  may  propose 
amendments or accept or reject the current draft. Once all amendments and updates are agreed 
(including,  if  necessary,  an  entirely  new  draft  proposed  by  the  Commission)  the  budget  is 
adopted in mid-December by the Parliament. The President of Parliament declares the budget 
adopted and it can then be implemented. 

2. 

HOW IS THE EU FUNDED? 

The EU has two main categories of funding: Own resources revenues and sundry revenues. 

2.1  Own resource revenues and receivables 

Own  resource  revenue  accrues  automatically  to  the  EU  to  enable  it  to  finance  its  budget 
without the need for a subsequent decision by national authorities. The overall amount of own 
resources needed to finance the budget is determined by total expenditure less other revenue. 
The total amount of own resources cannot exceed 1.24 % (1.23% from 2010 onwards) of the 
gross  national  income  (GNI)  of  the  EU.  Own  resources  can  be  divided  into  the  following 
categories: 

(1) 

Traditional own resources (TOR) consist of customs duties and sugar levies. 
These  own  resources  are  levied  on  economic  operators  and  collected  by 
Member States on behalf of the EU. However, Member States keep 25% as a 

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(2) 

(3) 

compensation for their collection costs. Customs duties are levied on imports 
of  products  coming  from  third  countries,  at  rates  based  on  the  Common 
Customs Tariff. Sugar levies are paid by sugar producers to finance the export 
refunds for sugar. TOR usually account for +/- 13% of own resource revenue. 

The  own  resource  based  on  value  added  tax  (VAT)  is  levied  on  Member 
States' VAT bases, which are harmonised for this purpose in accordance with 
EU  rules.  The  same  percentage  is  levied  on  the  harmonised  base  of  each 
Member State. However, the VAT base to take into account is capped at 50% 
of each Member State’s GNI. The VAT-based resource usually accounts for 
around 12% of own resource revenue. 

The resource based on gross national income (GNI) is used to balance budget 
revenue and expenditure, i.e. to finance the part of the budget not covered by 
any  other  sources  of  revenue.  The  same  percentage  rate  is  levied  on  each 
Member States' GNI, which is established in accordance with EU rules. The 
GNI-based resource usually accounts for +/- 75% of own resource revenue. 

With regard to payment of these amounts, separate accounts contain traditional own resources 
which,  under  Article  6(3)(b)  of  Regulation  No  1150/2000,  have  been  established  by  the 
Member  States  but  not  made  available  to  the  EU  as  they  have  not  yet  been  recovered  or 
guaranteed or because they have been challenged. Each Member State sends the Commission 
a  quarterly  statement  of  these  accounts,  with  the  following  particulars  for  each  type  of 
resource: 

–  the previous quarter's outstanding balance, 

–  the amounts recovered during the quarter in question, 

–  rectifications of the base (corrections/cancellations) during the quarter in question, 

–  amounts written off, 

–  the balance to be recovered at the end of the quarter in question. 

When  the  traditional  own  resources  from  the  separate  account  are  recovered,  they  must  be 
made  available  to  the  Commission  at  the  latest  on  the  first  working  day  following  the  19th 
day of the second month following the month during which the entitlement was recovered. 

A  write-down  of  the  entitlements  in  the  separate  account  must  be  made  to  reflect  the 
situations when actual recovery is unlikely. This write-down is based on estimations made by 
Member  States  themselves  in  accordance  with  Article  6(4)(b)  of  Council  Regulation  (EC, 
Euratom) No 1150/2000 which states "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." 

Based on the estimations sent by Member States, a write-down is deducted from the item for 
receivables from Member States on the asset side of the balance sheet. However, this does not 
mean  that  the  Commission  is  waiving  recovery  of  the  amounts  covered  by  this  value 
adjustment. Even where recovery looks very unlikely, if not virtually impossible, this does not 
necessarily  mean  that  the  amounts  in  question  are  lost  to  the  EU  budget  as  traditional  own 
resources. This is because non-recovered entitlements are lost only if the Member State has 
exhausted  all  the  avenues  it  is  required  to  pursue  in  order  to  secure  recovery.  Where  the 
Member State fails to do this, it is held financially liable and required to pay the amount into 
the EU budget in accordance with Article 17(2) of Regulation No 1150/2000. 

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2.2 

Sundry revenues 

Sundry  revenues  arising  from  the  activities  of  the  European  Union  normally  represent  less 
than 10% of total revenue. These are, for instance, competition fines and recovery orders to 
private and public debtors with regard to the management of EU projects. Penalty payments 
imposed by the Court of Justice on Member States that fail to comply with a given judgment 
also fall into this category. The Commission manages hundreds of thousands of projects each 
year and needs to establish about 13,000 recovery orders per year. Any debt not paid at the 
due date is subject to default interest. Where debts of third parties other than Member States 
remain  unpaid,  Commission  (and  Council)  decisions  imposing  the  obligation  to  pay  are 
directly  enforceable  in  accordance  with  the  rules  of  civil  procedure  in  force  in  the  territory 
where  enforcement  is  to  be  carried  out.  Defaulting  debtors  are  subject  to  debt  collecting 
procedures launched by the Legal Service with the help of external law firms. 

3. 

HOW THE EU BUDGET IS MANAGED AND SPENT 

3.1 

Primary operational expenditure 

The  European  Union's  operational  expenditure  covers  the  various  headings  of  the  financial 
framework and takes different forms, depending on how the money is paid out and managed. 
In accordance with the Financial Regulation, the Commission implements the general budget 
using the following methods: 

Direct  centralised  management:  this  is  where  the  budget  is  implemented  directly  by  the 
Commission services. 

Indirect centralised management: this refers to cases where the Commission confers tasks 
of implementation of the budget to bodies of EU law or national law, such as the EU agencies 
of public law or with public service missions. 

Decentralised  management:  these  are  the  cases  where  the  Commission  delegates  certain 
tasks for implementation of the budget to third countries. 

Shared  management:  under  this  method  of  management  budget  implementation  tasks  are 
delegated  to  Member States.  The majority of the  expenditure  falls  under  this  mode  “Shared 
Management”  involving  the  delegation  of  tasks  to  Member  States,  covering  such  areas  as 
agricultural spending and Structural Actions  

Joint  management:  under  this  method,  the  Commission  entrusts  certain  implementation 
tasks to an international organisation. 

3.2 

The different financial actors 

The  College  of  Commissioners  assumes  collective  political  responsibility  but  in  practice 
does not exercise itself the budget implementation powers vested in it. It delegates these tasks 
each year to individual civil servants accountable to the College and subject to the Financial 
Regulation and the Staff Regulations. The staff concerned – generally Directors-General and 
Heads  of  Service  -  are  known  as  “Authorising  Officers  by  delegation”.  They  in  turn  may 
further delegate budget implementation tasks to “Authorising Officers by sub-delegation”. 

The responsibility of the Authorising Officers covers the entire management process, from 
determining  what  needs  to  be  done  to  achieve  the  policy  objectives  set  by  the  institution  to 
managing  the  activities  launched  from  both  an  operational  and  budgetary  standpoint, 

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including  signing  legal  commitments,  monitoring  performance,  making  payments  and  even 
recovering  funds,  if  necessary.  Authorising  officers  must  also  arrange  for  evaluations  to  be 
carried  out  to  analyse  the  viability  of  their  proposals  (ex  ante  evaluation)  and  to  gauge  the 
success  and  cost-effectiveness  of  programmes  already  underway  (interim  and  ex-post 
evaluations).  The  results  of  these  evaluations  are  used  to  help  improve  the  decision-making 
process  and  increase  the  transparency,  accountability  and  cost-effectiveness  of  EU 
intervention. 

Sound  financial  management  and  proper  accountability  are  assured  within  each  DG  by  the 
separation of management control (in the hands of the authorising officers) from internal audit 
and compliance control with clear internal control standards (inspired by COSO international 
standards),  ex-ante  and  ex-post  controls,  independent  internal  auditing  on  the  basis  of  risk 
assessments, and regular reporting on activities to the individual Commissioners. 

The  Accounting  Officer  executes  payment  and  recovery  orders  drawn  up  by  authorising 
officers  and  is  responsible  for  managing  the  treasury,  laying  down  accounting  rules  and 
methods, validating accounting systems, keeping the accounts and drawing up the institution's 
annual  accounts.  Furthermore,  the  Accounting  Officer  is  required  to  sign  the  accounts 
declaring that they provide a true and fair view of the financial position. 

The Internal Auditor, who is not a financial actor in the strict sense of the term, is appointed 
by an institution or body to verify the proper operation of budgetary implementation systems 
and procedures and to advise on risk management issues. He issues independent opinions on 
the  quality  of  management  and  control  systems  and  provides  recommendations  on  how  to 
improve operational procedures and promote sound financial management. 

3.3 

Committing to spend the EU budget 

Once  the  budget  is  approved,  DG  Budget  makes  funding  available,  via  the  Commission’s 
accounting  system,  to  the  different  Commission  departments  and  the  Institutions  and  other 
bodies  in  accordance  with  their  policy  responsibilities  under  a  system  called  activity  based 
budgeting.  For  example,  the  responsibility  for  managing  budget  lines  to  do  with  the 
environment  would  be  delegated  by  the  Commission  to  the  head  –  or  Director-General  -  of 
DG  Environment  (who  in  this  context  becomes  known  as  the  Authorising  Officer  by 
Delegation for the budget lines in question). 

Before a legal  commitment (for example a contract  or grant  agreement) can be  entered into 
with a third party, there must be a budget line authorising the activity in question in the annual 
budget.  There  must  also  be  sufficient  funds  on  the  budget-line  in  question  to  cover  the 
expenditure. If these conditions are met, the funds required must be reserved in the budget by 
means of a budgetary commitment made in the accounting system. 

No money can be spent from the EU budget unless and until the Commission or another EU 
body and the possible recipient of EU money have entered into a written legal commitment. 
Under  centralised  direct  management,  this  legal  commitment  takes  the  form  of  either  a 
contract with a contractor or a grant agreement with a beneficiary. 

Once  approved,  the  budgetary  commitment  is  recorded  in  the  budgetary  accounting  system 
and the appropriations are consumed accordingly. This, however, has no effect on the general 
accounts  (or  general  ledger)  since  no  charge  has  yet  been  incurred.  This  is  because  the 
accounting system of the European Union comprises two separate but linked elements: 

(a) 

(b) 

budget accounts, which provide a detailed record of budget implementation; 

general accounts, used to prepare the balance sheet and economic outturn. 

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3.4  Making a payment 

3.4.1  General rules 

No payment can be made unless a budgetary commitment has already been approved by the 
Authorising Officer dealing with the operation in question.  

Once a payment is approved in the accounting system, the next step is for the transfer to be 
made to the beneficiary’s account. 

The Commission makes over 1.7 million payments a year. The Commission is a participant in 
SWIFT (Society for Worldwide Interbank Financial Telecommunication).  

3.4.2  Pre-financing, cost statements and eligibility of expenditure 

Pre-financing  is  a  payment  intended  to  provide  the  beneficiary  with  a  cash  advance,  i.e.  a 
float. It may be split into a number of payments over a period defined in the particular pre-
financing  agreement.  The  float  or  advance  is  either  used  for  the  purpose  for  which  it  was 
provided during the period defined in the agreement or it is repaid – if the beneficiary does 
not incur eligible expenditures he has the obligation to return the pre-financing advance to the 
European  Union.  Thus  pre-financing  paid  is  not  a  definitive  expense  until  the  relevant 
contractual conditions are met and so is recorded as an asset on the EU balance sheet when 
the  initial  payment  is  made.  The  amount  of  the  pre-financing  asset  is  reduced  (wholly  or 
partially) by the acceptance of eligible costs and amounts returned.  

Pre-financing  is  valued  at  its  estimated  recoverable  amount,  taking  into  consideration  the 
existence of a related guarantee attached to the pre-financing. The expected irrecoverable pre-
financing is recognised as a charge in the economic outturn account and a decrease in the pre-
financing  carrying  value  in  the  balance  sheet.  Interest  is  generally  earned  on  pre-financing 
paid out (notable exceptions include amounts paid to Member States or as pre-accession aid). 

Some  time  after  the  payment  of  the  pre-financing,  a  cost  claim  will  be  received  by  the 
relevant EU body so as to justify how the pre-financing amount was spent by the beneficiary 
in  accordance  with  the  contract.  The  rhythm  of  these  cost  claims  sent  during  the  year  is 
variable depending on the type of action being funded and the contractual conditions, and they 
are not necessarily received at year-end. 

Eligibility criteria are defined in the basic act, in the calls for proposal, in other information 
documents  for  grant  beneficiaries  and/or  in  the  contractual  clauses  of  the  grant  agreements. 
After  analysis,  the  eligible  expenses  are  taken  into  charges  and  the  beneficiary  is  informed 
about any non eligible amounts. “Eligibility to be checked” amounts thus represent received 
cost claims for which the eligibility has not yet been checked and therefore where the event 
giving rise to the expense has not yet occurred. 

3.4.3  Accounting treatment at year-end (cut-off) 

With  regard  to  open  pre-financing  amounts  at  year-end,  these  are  valued  at  the  original 
amount(s)  paid  less:  amounts  returned,  eligible  amounts  cleared,  estimated  eligible  amounts 
not yet cleared at year-end, and value reductions. 

Cost claims not yet received at year-end are taken into account in the year-end accounting cut-
off  procedures.  In  particular  an  assessment  has  to  be  made  concerning  eligible  expenses 
incurred by beneficiaries of EU funds but not yet reported to the EU. Different methods are 
used depending on the type of activities and information available so as to arrive at the best 
estimate  of  these  amounts.  Following  these  cut-off  entries,  estimated  eligible  amounts  are 

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recorded  as  accrued  charges,  while  the  estimated  non-eligible  parts  remain  open  on  the 
“eligibility to be checked” accounts. These amounts are shown under current liabilities so as 
not to overestimate assets and liabilities. 

3.5 

Recoveries following irregularities detected 

The Financial Regulation and other applicable legislation, particularly concerning agriculture 
and cohesion policy, give the right to make checks on expenditure up to many years after it 
was incurred. Where irregularities are detected, recoveries or financial corrections are applied. 
The  detection  of  irregularities  and  their  corrections  are  the  last  stage  in  the  operation  of 
control systems, and are essential in order to demonstrate sound financial management. 

The eligibility of expenditure charged to the budget is verified by the relevant EU services, or 
in  the  case  of  shared  management,  by  the  Member  States,  on  the  basis  of  the  supporting 
documents stipulated in the applicable legislation or in the conditions of each grant. With the 
aim  of  optimising  the  relationship  between  the  costs  and  the  benefits  of  control  systems, 
checks  on  the  supporting  documents  for  final  claims  tend  to  be  more  intense  than  those  on 
interim  claims,  and  thus  may  detect  errors  in  interim  payments  which  are  corrected  by 
adjustment of the final payment. Furthermore, the EU and/or the Member State has the right 
to  verify  the  probity  of  the  supporting  documents  by  making  checks  on  the  claimant's 
premises, during the implementation of the action financed and/or afterwards (ex-post). There 
are  various  procedures  foreseen  in  the  applicable  legislation  for  the  process  of  dealing  with 
irregularities  detected  by  the  Commission  and  by  the  Member  States  –  more  detailed 
information is included in note 6. 

4. 

YEAR-END REPORTING 

4.1 

Annual accounts 

It is the responsibility of the Commission's Accounting Officer to prepare the annual accounts 
and  ensure  that  they  present  a  true  and  fair  view  of  the  financial  position  of  the  EU.  The 
annual  accounts  comprise  the  financial  statements  and  the  reports  on  implementation  of  the 
budget. They are adopted by the Commission and presented to the Court of Auditors for audit 
and finally to the Council and Parliament for discharge. 

4.2 

Annual Activity reports 

Each  Authorising  Officer  is  required  to  prepare  an  Annual  Activity  Report  (AAR)  on  the 
activities  under  his  responsibility.  In  this  AAR,  he  reports  on  policy  results  and  on  the 
reasonable assurance he may have that the resources assigned to the activities described in his 
report  have  been  used  for  their  intended  purpose  and  in  accordance  with  the  principles  of 
sound financial management, and that the control procedures put in place give the necessary 
guarantees concerning the legality and regularity of the underlying transactions. 

5. 

AUDIT AND DISCHARGE 

5.1 

Audit 

The EU’s annual accounts and resource management are overseen by its external auditor, the 
European  Court  of  Auditors,  which  draws  up  an  annual  report  for  the  Council  and  the 
European  Parliament.  The  Court's  main  task  is  to  conduct  an  external,  independent  audit  of 

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the  European  Union's  annual  accounts.  As  part  of  its  activities,  the  Court  of  Auditors 
produces: 

(1) 

(2) 

an annual report on the activities financed from the general budget, detailing 
its observations on the annual accounts and underlying transactions; 

an opinion, based on its audits and given in the annual report in the form of a 
statement  of  assurance,  on  (i)  the  reliability  of  the  accounts  and  (ii)  the 
legality and regularity of the underlying transactions involving both revenue 
collected from taxable persons and payments to final beneficiaries; 

(3) 

special  reports  giving  the  findings  of  audits  covering  specific  areas  of 
management. 

The  Court  of  Auditors  is  entitled  to  access  all  documents  required  during  the  course  of  its 
audit.  The  Court  audits  all  areas  of  EU  activities,  right  down  to  examining  the  legality  and 
regularity  of  individual  transactions  and  payments.  It  also  audits  the  annual  accounts 
themselves,  reviewing  individual  balance  sheet  and  economic  outturn  accounts  where 
necessary as well as the overall presentation of the financial statements. Thus the Court can 
offer  its  opinion  not  only  on  the  figures  presented,  but  also  on  the  system  and  controls  in 
place. 

5.2 

Discharge 

The  final  control  is  the  discharge  of  the  budget  for  a  given  financial  year.  The  European 
Parliament is the discharge authority within the EU. This means that following the audit and 
finalisation  of  the  annual  accounts  it  falls  to  the  Council  to  recommend  and  then  to  the 
Parliament to decide whether to grant discharge to the Commission and other EC bodies for 
executing the EU budget for the preceding financial year. This decision is based on a review 
of  the  accounts  and  the  annual  report  of  the  Court  of  Auditors  (which  includes  an  official 
statement  of  assurance)  and  replies  of  the  Commission,  and  also  following  questions  and 
further information requests to the Commission. 

The discharge represents the political aspect of the external control of budget implementation 
and is the decision by which the European Parliament, acting on a Council recommendation, 
"releases"  the  Commission  from  its  responsibility  for  management  of  a  given  budget  by 
marking the end of that budget's existence. This discharge procedure may produce one of two 
outcomes:  the  granting  or  postponement  of  the  discharge.  When  granting  discharge  the 
Parliament may highlight observations they consider important, often recommending actions 
that  the  Commission  should  take  concerning  these  matters.  The  Commission  sets  out  the 
measures taken in a follow-up report and an action plan which it sends to both the Parliament 
and the Council. 

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PART  I  –  CONSOLIDATED  FINANCIAL  STATEMENTS  OF  THE  EUROPEAN 

UNION AND EXPLANATORY NOTES 

Balance Sheet 

Economic Outturn Account 

Cashflow Table 

Statement of changes in Net Assets 

Notes to the financial statements 

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BALANCE SHEET 

Note 

31.12.2009 

EUR millions 
31.12.2008 

NON-CURRENT ASSETS: 
 Intangible assets 
 Property, plant and equipment 
 Long-term investments 
 Loans 
 Long-term pre-financing 
 Long-term receivables 

CURRENT ASSETS: 
 Inventories 
 Short-term investments 
 Short-term pre-financing 
 Short-term receivables 
 Cash and cash equivalents  

TOTAL ASSETS 

NON-CURRENT LIABILITIES: 
 Employee benefits 
 Long-term provisions 
 Long-term financial liabilities 
 Other long-term liabilities 

CURRENT LIABILITIES: 
 Short-term provisions 
 Short-term financial liabilities 
 Accounts payable 

TOTAL LIABILITIES 

NET ASSETS 

2.1 
2.2 
2.3 
2.4 
2.5 
2.6 

2.7 
2.8 
2.9 
2.10 
2.11 

2.12 
2.13 
2.14 
2.15 

2.16 
2.17 
2.18 

72 
4 859 
2 379 
10 764 
39 750 
55 
57 879 

77 
1 791 
9 077 
8 663 
23 372 
42 980 

100 859 

(37 242) 
(1 469) 
(10 559) 
(2 178) 
(51 448) 

(213) 
(40) 
(93 884) 
(94 137) 

56 
4 881 
2 078 
3 565 
29 023 
45 
39 648 

85 
1 553 
10 262 
11 920 
23 724 
47 544 

87 192 

(37 556) 
(1 341) 
(3 349) 
(2 226) 
(44 472) 

(348) 
(119) 
(89 677) 
(90 144) 

(145 585) 

(134 616) 

(44 726) 

(47 424) 

3 323 

3 115 

(37 242) 
(10 807) 

(44 726) 

(37 556) 
(12 983) 

(47 424) 

 Reserves 
 Amounts to be called from Member States: 

2.19 
2.20 

Employee benefits* 
Other amounts** 

NET ASSETS 

* Under Article 83 of the Staff Regulations (Council Regulation 259/68 of 29 February 1968 
as amended), the Member States shall jointly guarantee the liability for pensions. 

** The European Parliament has adopted a budget on 17 December 2009 which provides for 
the payment of the EU's short-term liabilities from own resources to be collected by, or called 
up from, the Member States in 2010. 

EN 

12 

   EN 

 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC OUTTURN ACCOUNT 

OPERATING REVENUE 
Own resource and contributions revenue 
Other operating revenue 

OPERATING EXPENSES 
Administrative expenses 
Operating expenses 

EUR millions 

Note 

2009 

2008 

3.1 
3.2 

110 537 
7 532 

112 713 
9 731 

118 069 

122 444 

3.3 
3.4 

(8 133) 
(104 934) 

(7 720) 
(97 214) 

(113 067) 

(104 934) 

SURPLUS FROM OPERATING ACTIVITIES 

5 002 

17 510 

Financial revenue 
Financial expenses 
Movement in employee benefits liability 
Share of net deficit of associates & joint ventures 

3.5 
3.6 
2.12 
3.7 

835 
(594) 
(683) 
(103) 

698 
(467) 
(5 009) 
(46) 

ECONOMIC OUTTURN FOR THE YEAR 

4 457 

12 686 

EN 

13 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CASHFLOW TABLE 

Note

2009 

EUR millions 
2008* 

Economic outturn for the year 

4 457 

12 686 

Operating activities 
Amortisation 
Depreciation 
(Reversal of) impairment losses on investments 
(Increase)/decrease in loans 
(Increase)/decrease in long-term pre-financing 
(Increase)/decrease in long-term receivables 
(Increase)/decrease in inventories 
(Increase)/decrease in short-term pre-financing 
(Increase)/decrease in short-term receivables 
Increase/(decrease) in long-term provisions 
Increase/(decrease) in long-term financial liabilities 
Increase/(decrease) in other long-term liabilities 
Increase/(decrease) in short-term provisions 
Increase/(decrease) in short-term financial liabilities 
Increase/(decrease) in accounts payable 
Prior year budgetary surplus taken as non cash revenue 
Other non-cash movements 

4.2 

22 
447 
(16) 
(7 199) 
(10 727) 
(10) 
8 
1 185 
3 257 
128 
7 210 
(48) 
(135) 
(79) 
4 207 
(1 796) 
37 

19 
302 
3 
(1 759) 
(15 008) 
82 
3 
10 321 
131 
262 
1 775 
237 
(21) 
(16) 
(5 703) 
(1 529) 
37 

Increase/(decrease) in employee benefits liability 

(314) 

4 076 

Investing activities 

4.3 

(Increase)/decrease in intangible assets and property, plant and 
equipment  
(Increase)/decrease in long-term investments 
(Increase)/decrease in short-term investments 

NET CASHFLOW 

(463) 

(284) 
(239) 

(352) 

Net increase in cash and cash equivalents 
Cash and cash equivalents at the beginning of the year 

Cash and cash equivalents at year-end 

2.11 

2.11 

(352) 
23 724 

23 372 

* The 2008 accounts included the cash of the Guarantee Fund as cash not investments 

(689) 

(108) 
(133) 

4 968 

4 968 
18 756 

23 724 

EN 

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STATEMENT OF CHANGES IN NET ASSETS 

BALANCE AS AT 31 DECEMBER 2007 
Movement in Guarantee Fund reserve 
Fair value movements 
Other 
Allocation of the economic outturn 2007 
Budget result 2007 credited to Member States 
Economic outturn for the year 
BALANCE AS AT 31 DECEMBER 2008 
Movement in Guarantee Fund reserve 
Fair value movements 
Other 
Allocation of the economic outturn 2008 
Budget result 2008 credited to Member States 
Economic outturn for the year 
BALANCE AS AT 31 DECEMBER 2009 

Reserves (A) 

Amounts to be called from Member 
States (B) 

Net Assets 
=(A)+(B) 

EUR millions

Fair value 
reserve 
7 

34 

41 

28 

Other reserves

Accumulated 
Surplus/(Deficit)

2 799 
158 

113 
4 

3 074 
196 

(1) 
(15) 

(68 888) 
(158) 

(108) 
7 458 
(1 529) 

(63 225) 
(196) 

10 
12 701 
(1 796) 

69 

3 254 

(52 506) 

Economic outturn 
of the year 
7 462 

(7 462) 

12 686 
12 686 

(12 686) 

4 457 
4 457 

(58 620) 
0 
34 
5 
0 
(1 529) 
12 686 
(47 424) 
0 
28 
9 
0 
(1 796) 
4 457 
(44 726) 

EN 

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EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS 

EN 

16 

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1. 

SIGNIFICANT ACCOUNTING POLICIES 

1.1 

LEGAL BASIS AND ACCOUNTING RULES 

The consolidated accounts of the European Union cover the accounts of the European Union, 
the  European  Atomic  Energy  Community  and  the  European  Coal  &  Steel  Community  (in 
Liquidation). These accounts are kept in accordance with Council Regulation (EC, Euratom) 
No 1605/2002 of 25 June 2002 (OJ L 248 of 16 September 2002), on the Financial Regulation 
applicable  to  the  general  budget  of  the  European  Union  and  Commission  Regulation  (EC, 
Euratom)  No  2342/2002  of  23 December  2002  laying  down  detailed  rules  for  the 
implementation of this Financial Regulation. 

In accordance with article 133 of the Financial Regulation, the European Union has prepared 
its 2009 consolidated financial statements on the basis of accrual-based accounting rules that 
are  derived  from  International  Public  Sector  Accounting  Standards  (IPSAS)  or  by  default, 
International  Financial  Reporting  Standards  (IFRS).  These  accounting  rules,  adopted  by  the 
Accounting  Officer  of  the  Commission,  have  to  be  applied  by  all  the  institutions  and  EU 
bodies falling within the scope of consolidation in order to establish a uniform set of rules for 
accounting, valuation and presentation of the accounts with a view to harmonising the process 
for drawing up the financial statements and consolidation. The accounts are kept in Euro on 
the basis of the calendar year. 

1.2 

ACCOUNTING PRINCIPLES 

The  objective  of  the  financial  statements  is  to  provide  information  about  the  financial 
position, performance and cashflows of an entity that is useful to a wide range of users. For 
the EU as a public sector, the objectives are more specifically to provide information useful 
for  decision  making,  and  to  demonstrate  the  accountability  of  the  entity  for  the  resources 
entrusted  to it. It is  with  these  goals  in  mind that the present  document has been drawn up. 
Article  124  of  the  Financial  Regulation  sets  out  the  accounting  principles  to  be  applied  in 
drawing up the financial statements: 

–  going concern basis; 

–  prudence; 

–  consistent accounting methods; 

–  comparability of information; 

–  materiality; 

–  no netting; 

–  reality over appearance; 

–  accrual-based accounting. 

Preparation of the consolidated financial statements in accordance with the above mentioned 
rules and principles requires management to make estimates that affect the reported amounts 
of  certain  items  in  the  consolidated  balance  sheet  and  in  the  consolidated  economic  outturn 
account, as well as the related disclosures of contingent assets and liabilities. 

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1.3 

CONSOLIDATION 

Impact of the Lisbon Treaty 

Following  the  entering  into  force  of  the  Lisbon  Treaty  on  1  December  2009  the  annual 
accounts are now entitled the "Annual accounts of the European Union". Regarding the scope 
of  consolidation  this  change  has  had  no  impact.  The  agencies  set-up  under  the  former  2nd 
pillar  of  the  EU  do  not  meet  the  criteria  to  be  consolidated,  nor  does  the  European  Central 
Bank (ECB), even if it is considered as an European Institution in the Lisbon Treaty. All these 
entities  thus  remain  outside  the  scope  of  consolidation,  as  was  the  case  in  previous  years.  

Regarding  the  agencies  of  the  former  3rd  pillar  of  the  European  Union  two  of  them,  who 
receive a subsidy from the General Budget of the  European Union, are  consolidated as was 
done  in  previous  years  (see  also  note  10).  The  remaining  agency  under  this  pillar,  Europol, 
will become an EU body from 2010 onwards. 

Scope of consolidation  

The  consolidated  financial  statements  of  the  EU  comprise  all  significant  controlled  entities 
(institutions  and  agencies),  associates  and  joint  ventures,  this  being  40  controlled  entities,  3 
associates and 4 joint ventures. The complete list of consolidated entities can be found in note 
10. In comparison with 2008, the scope of consolidation has been extended by two executive 
agencies,  two  associates  and  one  joint  venture,  whilst  one  agency  has  been  liquidated  at  31 
December 2008. The impact of the additions on the consolidated financial statements is not 
material. 

Controlled entities 

The decision to include an entity in the scope of consolidation is based on the control concept. 
Controlled entities are all entities over which the European Union has, directly or indirectly, 
the power to govern the financial and operating policies so as to be able to benefit from these 
entities'  activities.  This  power  must  be  presently  exercisable.  Controlled  entities  are  fully 
consolidated.  The  consolidation  begins  at  the  first  date  on  which  control  exists,  and  ends 
when such control no longer exists. 

The  most  common  indicators  of  control  within  the  European  Union  are:  creation  through 
founding treaties or secondary legislation, financing from the general budget, the existence of 
voting rights in the governing bodies, audit by the European Court of Auditors and discharge 
by the European Parliament. It is clear that an assessment at entity level needs to be done in 
order to decide whether one or all of the criteria listed above are sufficient to trigger control. 

Under  this  approach,  the  EU's  institutions  (except  the  ECB)  and  agencies  (excluding  the 
agencies of the former 2nd pillar and Europol) are considered as under the exclusive control of 
the EU and are therefore included in the consolidation scope. Furthermore the European Coal 
and Steel Community in Liquidation (ECSC) is also considered as a controlled entity.  

All  inter-company  transactions  and  balances  between  EU  controlled  entities  are  eliminated, 
while  unrealised  gains  and  losses  on  inter-entity  transactions  are  not  material  and  have 
therefore not been eliminated. 

EN 

18 

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Associates 

Associates are entities over which the European Union have, directly or indirectly, significant 
influence  but  not  control  over  financial  and  operating  policy  decisions.  It  is  presumed  that 
significant influence is given if the European Commission holds directly or indirectly 20% or 
more of the voting rights. 

Participations in associates are accounted for using the equity method, initially recognised at 
cost. The European Union's share of its associates' results is recognised in the EU economic 
outturn account, and its share of movements in reserves is recognised in the EU reserves. The 
initial cost plus all movements (further contributions, share of results and reserve movements, 
impairments,  and  dividends)  give  the  book  value  of  the  associate  in  the  EU  accounts  at  the 
balance sheet date. Distributions received from an associate reduce the carrying amount of the 
asset.  Unrealised  gains  and  losses  on  transactions  between  the  European  Union  and  its 
associates are not material and have therefore not been eliminated. 

The accounting policies of associates may differ from those adopted by the European Union 
for like transactions and events in similar circumstances. In cases where the European Union 
holds  20%  or  more  of  a  venture  capital  fund,  the  EU  does  not  seek  to  exert  significant 
influence. Such funds are therefore treated as financial instruments categorised as available-
for-sale and the equity method is not applied. 

Joint ventures 

A joint venture is a  contractual arrangement whereby  the  European  Union  and  one  or  more 
parties (the "venturers") undertake an economic activity which is subject to joint control. Joint 
control  is  the  contractually  agreed  sharing  of  control,  directly  or  indirectly,  over  an  activity 
embodying service potential. 

Participations in joint ventures are accounted for using the equity method initially recognised 
at  cost.  The  European  Union's  interest  in  the  results  of  its  jointly  controlled  entities  is 
recognised in the EU economic outturn account, and its interest in the movements in reserves 
is  recognised  in  the  EU  reserves.  The  initial  cost  plus  all  movements  (further  contributions, 
share of results and reserve movements, impairments, and dividends) give the book value of 
the joint venture in the EU accounts at the balance sheet date. 

Unrealised  gains  and  losses  on  transactions  between  the  European  Union  and  its  jointly 
controlled  entity  are  not  material  and  have  therefore  not  been  eliminated.  The  accounting 
policies  of  joint  ventures  may  differ  from  those  adopted  by  the  European  Union  for  like 
transactions and events in similar circumstances. 

Non-consolidated entities the funds of which are managed by the Commission 

The funds of the Sickness Insurance Scheme for staff of the European Union, the European 
Development Fund and the Participant's Guarantee Fund are managed by the Commission on 
their behalf, however since these entities are not controlled by the European Union they are 
therefore  not  consolidated  in  its  accounts  –  see  note 11  for  further  details  on  the  amounts 
concerned. 

EN 

19 

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1.4 

BASIS OF PREPARATION 

1.4.1  Currency and basis for conversion 

Functional and reporting currency 

The  financial  statements  are  presented  in  millions  of  euros,  the  euro  being  the  European 
Union's functional and reporting currency. 

Transactions and balances 

Foreign currency transactions are translated into euros using the exchange rates prevailing at 
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement 
of  foreign  currency  transactions  and  from  the  translation  at  year-end  exchange  rates  of 
monetary  assets  and  liabilities  denominated  in  foreign  currencies  are  recognised  in  the 
economic outturn account. 

Different conversion methods apply to the following headings: 

–  property,  plant  and  equipment  and  intangible  assets,  which  retain  their  value  in 

euros at the rate that applied at the date when they were purchased; and 

–  pre-financing  amounts  paid  under  the  European  Agricultural  Guarantee  Fund, 
which are converted at the exchange rates applying on the 10th day of the month 
following the month in which they are granted. 

Year-end  balances  of  monetary  assets  and  liabilities  denominated  in  foreign  currencies  are 
converted into euros on the basis of the exchange rates applying on 31 December: 

EURO Exchange Rates 

Currency 

31.12.2009 

31.12.2008 

Currency 

31.12.2009 

31.12.2008 

BGN 
CZK 
DKK 
EEK 
GBP 
HUF 
LVL 

1.9558 
26.4730 
7.4418 
15.6466 
0.8881 
270.4200 
0.7093 

1.9558 
26.8750 
7.4506 
15.6466 
0.9525 
266.7000 
0.7083 

LTL 
PLN 
RON 
SEK 
CHF 
JPY 
USD 

3.4528 
4.1045 
4.2363 
10.2520 
1.4836 
133.1600 
1.4406 

3.4528 
4.1535 
4.0225 
10.8700 
1.4850 
126.1400 
1.3917 

Changes  in  the  fair  value  of  monetary  securities  denominated  in  a  foreign  currency  and 
classified  as  available-for-sale  that  relate  to  a  translation  difference  are  recognised  in  the 
economic  outturn  account.  Translation  differences  on  non-monetary  financial  assets  and 
liabilities  held  at  fair  value  through  profit  or  loss  are  recognised  in  the  economic  outturn 
account. Translation differences on non-monetary financial assets classified as available-for-
sale are included in the fair value reserve. 

1.4.2  Use of estimates 

In  accordance  with  IPSAS  and  generally  accepted  accounting  principles,  the  financial 
statements necessarily include amounts based on estimates and assumptions by management 
based  on  the  most  reliable  information  available.  Significant  estimates  include,  but  are  not 

EN 

20 

   EN 

 
 
 
 
 
 
limited  to,  amounts  for  employee  benefit  liabilities,  provisions,  financial  risk  on  inventories 
and  accounts  receivables,  accrued  income  and  charges,  contingent  assets  and  liabilities,  and 
degree  of  impairment  of  intangible  assets  and  property,  plant  and  equipment.  Actual  results 
could differ from those estimates. Changes in estimates are reflected in the period in which 
they become known. 

1.5 

BALANCE SHEET 

1.5.1 

Intangible assets 

Acquired  computer  software  licences  are  stated  at  historical  cost  less  accumulated 
amortisation  and  impairment  losses.  The  assets  are  amortised  on  a  straight-line  basis  over 
their estimated useful lives, being 4 years. Internally produced intangible assets are currently 
expensed in the economic outturn account. Costs associated with developing or maintaining 
computer  software  programmes  are  recognised  as  expenses  as  incurred,  as  are  scientific 
research and development costs. 

1.5.2  Property, plant and equipment 

All property, plant and equipment are stated at historical cost less accumulated depreciation 
and impairment losses. Historical cost includes expenditure that is directly attributable to the 
acquisition or construction of the asset. 

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, 
as  appropriate,  only  when  it  is  probable  that  future  economic  benefits  or  service  potential 
associated  with  the  item  will  flow  to  the  European  Union  and  its  cost  can  be  measured 
reliably. Repairs and maintenance costs are charged to the economic outturn account during 
the  financial  period  in  which  they  are  incurred.  As  the  European  Union  does  not  borrow 
money to fund the acquisition of property, plant and equipment, there are no borrowing costs 
related to such purchases. 

Land and works of art are not depreciated as they are deemed to have an indefinite useful life. 
Assets  under  construction  are  not  depreciated  as  these  assets  are  not  yet  available  for  use. 
Depreciation on other assets is calculated using the straight-line method to allocate their cost 
to their residual values over their estimated useful lives, as follows: 

Depreciation rates 

Type of asset 

Buildings 
Plant, machinery and equipment 
Furniture 
Fixtures and fittings 
Vehicles 
Computer hardware 
Other tangible assets 

Straight line 
depreciation rate 

4% 
10% to 25% 
10% to 25% 
10% to 33% 
25% 
25% 
10% to 33% 

EN 

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Gains  and  losses  on  disposals  are  determined  by  comparing  proceeds  less  selling  expenses 
with the carrying  amount  of the  disposed asset. These are included in the economic outturn 
account. 

Leases 

Leases  of  tangible  assets,  where  the  European  Union  has  substantially  all  the  risks  and 
rewards  of  ownership,  are  classified  as  finance  leases.  Finance  leases  are  capitalised  at  the 
inception of the lease at the lower of the fair value of the leased asset and the present value of 
the  minimum  lease  payments.  Each  lease  payment  is  allocated  between  the  liability  and 
finance charges so as to achieve a constant rate on the finance balance outstanding. The rental 
obligations, net of finance charges, are included in other liabilities (long and short-term.) The 
interest element of the finance cost is charged to the economic outturn account over the lease 
period  so  as  to  produce  a  constant  periodic  interest  rate  on  the  remaining  balance  of  the 
liability for each period. The assets held under finance leases are depreciated over the shorter 
of the assets' useful life and the lease term. 

Leases  where  the  lessor  retains  a  significant  portion  of  the  risks  and  rewards  inherent  to 
ownership  are  classified  as  operating  leases.  Payments  made  under  operating  leases  are 
charged to the economic outturn account on a straight-line basis over the period of the lease. 

1.5.3 

Impairment of non-financial assets 

Assets  that  have  an  indefinite  useful  life  are  not  subject  to  amortisation  and  are  tested 
annually for impairment. Assets that are subject to amortisation are reviewed for impairment 
whenever  events  or  changes  in  circumstances  indicate  that  the  carrying  amount  may  not  be 
recoverable.  An  impairment  loss  is  recognised  for  the  amount  by  which  the  asset’s  carrying 
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair 
value less costs to sell and its value in use. 

Intangible  assets  and  property,  plant  and  equipment  residual  values  and  useful  lives  are 
reviewed,  and  adjusted  if  appropriate,  at  least  once  per  year.  An  asset’s  carrying  amount  is 
written down immediately to its recoverable amount if the asset’s carrying amount is greater 
than its estimated recoverable amount. If the reasons for impairments recognised in previous 
years no longer apply, the impairment losses are reversed accordingly. 

1.5.4 

Investments 

Participations in Associates and Joint Ventures 

Participations in associates and joint ventures are accounted for using the equity method. The 
costs of equity are adjusted to reflect the share of increases or reductions in net assets of the 
associates  and  joint  ventures  that  are  attributable  to  the  European  Union  after  initial 
recognition if there are indications of impairment and written down to the lower recoverable 
amount  if  necessary.  The  recoverable  amount  is  determined  as  described  under 1.5.3.  If  the 
reason for impairment  ceases to apply at a later date, the impairment loss is reversed to the 
carrying amount that would have been determined had no impairment loss been recognised. 

EN 

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Investments in Venture Capital Funds 

Classification and measurement 

Investments in Venture Capital Funds are classified as available-for-sale assets (see 1.5.5) and 
accordingly,  are  carried  at  fair  value  with  gains  and  losses  arising  from  changes  in  the  fair 
value (including translation differences) recognised in the fair value reserve. 

Fair value considerations 

Since  they  do  not  have  a  quoted  market  price  in  an  active  market,  investments  in  Venture 
Capital Funds are valued on a line-by-line basis at the lower of cost or attributable net asset 
value (“NAV”) as reported by the fund manager up to the balance sheet date, thus excluding 
any attributable unrealised gain that may be prevailing in the underlying investment portfolio. 
Investments  in  Venture  Capital  Funds  still  at  an  early  stage  are  valued  based  on  the  same 
principles, except in the case of unrealised losses due only to administrative expenses where 
these unrealised losses are not taken into account. 

Unrealised gains resulting  from  the fair value measurement  are  recognised  through reserves 
and  unrealised  losses  are  assessed  for  impairment  so  as  to  determine  whether  they  are 
recognised  as  impairment  losses  in  the  economic  outturn  account  or  as  changes  in  the  fair 
value  reserve.  The  fair  valued  attributable  NAV  is  determined  through  applying  either  the 
European Union's percentage ownership in the fund to the NAV reflected in the most recent 
report or, to the extent available, the precise share  value at the same  date,  submitted by the 
respective Fund Manager. 

1.5.5  Financial assets 

Classification 

The  European  Union  classifies  their  financial  assets  in  the  following  categories:  financial 
assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; 
and  available-for-sale  financial  assets.  The  classification  of  the  financial  instruments  is 
determined at initial recognition and re-evaluated at each balance sheet date. 

(i) Financial assets at fair value through profit or loss 

A financial asset is classified in this category if acquired principally for the purpose of selling 
in the short term or if so designated by the European Union. Derivatives are also categorised 
in this category. Assets in this category are classified as current assets if they are expected to be 
realised within 12 months of the balance sheet date. 

(ii) Loans and receivables 

Loans and receivables are non-derivative financial assets with fixed or determinable payments 
that  are  not  quoted  in  an  active  market.  They  arise  when  the  EU  provides  money,  goods  or 
services directly to a debtor with no intention of trading the receivable. They are included in 
non-current assets, except for maturities within 12 months of the balance sheet date. 

(iii) Held-to-maturity investments 

Held-to-maturity  investments  are  non-derivative  financial  assets  with  fixed  or  determinable 
payments and fixed maturities that the European Union has the positive intention and ability 

EN 

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to  hold  to  maturity.  During  this  financial  year,  the  European  Union  did  not  hold  any 
investments in this category. 

(iv) Available-for-sale financial assets 

Available-for-sale  financial  assets  are  non-derivatives  that  are  either  designated  in  this 
category or not classified in any of the other categories. They are classified as either current or 
non-current assets, depending on the time period in which the EU intends to dispose of them. 
Investments  in  unconsolidated  entities  and  other  equity  investments  (e.g.  Risk  Capital 
Operations) that are not accounted for using the equity method are also classified as available-
for sale-financial assets. 

Initial recognition and measurement 

Purchases and sales of financial assets at fair value through profit or loss, held-to-maturity and 
available-for-sale  are  recognised  on  trade-date  –  the  date  on  which  the  European  Union 
commits  to  purchase  or  sell  the  asset.  Loans  are  recognised  when  cash  is  advanced  to  the 
borrowers. Financial instruments are initially recognised at fair value plus transaction costs for 
all financial assets not carried at fair value through profit or loss. Financial assets carried at fair 
value  through  profit  or  loss  are  initially  recognised  at  fair  value  and  transaction  costs  are 
expensed in the economic outturn account. 

The fair value of a financial asset on initial recognition is normally the transaction price (i.e. 
the fair value of the consideration received). However, when a long-term loan that carries no 
interest or an interest below market conditions is granted, its fair value can be estimated as the 
present value of all future cash receipts discounted using the prevailing market rate of interest 
for a similar instrument with a similar credit rating.  

In  the  case  of  loans  granted  on  borrowed  funds,  'back-to-back  operations',  the  differences 
between  the  loan  and  the  borrowing  conditions  and  amounts  are  not  material  and  the 
"opportunity cost" is not applicable since the EU is not allowed to invest money in the capital 
markets. For these reasons, these loans are measured at their nominal amount. he transaction 
costs  incurred  by  the  EU  and  then  recharged  to  the  beneficiary  of  the  loan  are  directly 
recognised in the economic outturn account. 

Financial  instruments  are  derecognised  when  the  rights  to  receive  cash  flows  from  the 
investments  have  expired  or  have  been  transferred  and  the  European  Union  has  transferred 
substantially all risks and rewards of ownership. 

Subsequent measurement 

Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains 
and  losses  arising  from  changes  in  the  fair  value  of  the  ‘financial  instruments  at  fair  value 
through profit or loss’ category are included in the economic outturn account in the period in 
which they arise. 

Loans  and  receivables  and  held-to-maturity  investments  are  carried  at  amortised  cost  using 
the  effective  interest  method.  In  the  case  of  loans  granted  on  borrowed  funds,  the  same 
effective interest rate is applied to both the loans and borrowings since these loans have the 

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characteristics  of  'back-to-back  operations'  and  the  differences  between  the  loan  and  the 
borrowing conditions and amounts are not material. The transaction costs incurred by the EU 
and  then  recharged  to  the  beneficiary  of  the  loan  are  directly  recognised  in  the  economic 
outturn account. 

Available-for-sale  financial  assets  are  subsequently  carried  at  fair  value.  Gains  and  losses 
arising  from  changes  in  the  fair  value  of  available-for-sale  assets  are  recognised  in  the  fair 
value  reserve.  When  assets  classified  as  available-for-sale  are  sold  or  impaired,  the 
cumulative  fair  value  adjustments  previously  recognised  in  the  fair  value  reserve  are 
recognised  in  the  economic  outturn  account.  Interest  on  available-for-sale  financial  assets 
calculated using the effective interest method is recognised in the economic outturn account. 
Dividends  on  available-for-sale  equity  instruments  are  recognised  when  the  EU's  right  to 
receive payment is established. 

The fair values of quoted investments in active markets are based on current bid prices. If the 
market  for  a  financial  asset  is  not  active  (and  for  unlisted  securities),  the  European  Union 
establishes a fair value by using valuation techniques. These include the use of recent arm’s 
length transactions, reference to other instruments that are substantially the same, discounted 
cash flow analysis, option pricing models and other valuation techniques commonly used by 
market participants.  

In  cases  where  the  fair  value  of  investments  in  equity  instruments  that  do  not  have  quoted 
market price in an active market cannot be reliably measured, these investments are valued at 
cost less impairment losses. 

Impairment of financial assets  

The European Union assesses at each balance sheet date whether there is objective evidence 
that  a  financial  asset  is  impaired.  A  financial  asset  is  impaired  and  impairment  losses  are 
incurred if, and only if, there is objective evidence of impairment as a result of one or more 
events that occurred after the initial recognition of the asset and that loss event (or events) has 
an  impact  on  the  estimated  future  cash  flows  of  the  financial  asset  that  can  be  reliably 
estimated. 

(i) Assets carried at amortised cost 

If  there  is  objective  evidence  that  an  impairment  loss  on  loans  and  receivables  or  held-to-
maturity  investments  carried  at  amortised  cost  has  been  incurred,  the  amount  of  the  loss  is 
measured  as  the  difference  between  the  asset’s  carrying  amount  and  the  present  value  of 
estimated  future  cash  flows  (excluding  future  credit  losses  that  have  not  been  incurred) 
discounted at the financial asset’s original effective interest rate. The carrying amount of the 
asset is reduced and the amount of the loss is recognised in the economic outturn account. If a 
loan  or  held-to-maturity  investment  has  a  variable  interest  rate,  the  discount  rate  for 
measuring  any  impairment  loss  is  the  current  effective  interest  rate  determined  under  the 
contract.  The  calculation  of  the  present  value  of  the  estimated  future  cash  flows  of  a 
collateralised financial asset reflects the cash flows that may result from foreclosure less costs 
for  obtaining  and  selling  the  collateral,  whether  or  not  foreclosure  is  probable.  If,  in  a 
subsequent  period,  the  amount  of  the  impairment  loss  decreases  and  the  decrease  can  be 
related objectively to an event occurring after the impairment was recognised, the previously 
recognised impairment loss is reversed through the economic outturn account. 

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(ii) Assets carried at fair value 

In  the  case  of  equity  investments  classified  as  available-for-sale,  a  significant  or  permanent 
(prolonged) decline in the fair value of the security below its cost is considered in determining 
whether the securities are impaired. If any such evidence exists for available-for-sale financial 
assets, the cumulative loss – measured as the difference between the acquisition cost and the 
current fair value, less any impairment loss on that financial asset previously recognised in the 
economic outturn account – is removed from reserves and recognised in the economic outturn 
account. Impairment losses recognised in the economic outturn account on equity instruments 
are  not  reversed  through  the  economic  outturn  account.  If,  in  a  subsequent  period,  the  fair 
value  of  a  debt  instrument  classified  as  available-for-sale  increases  and  the  increase  can  be 
objectively  related  to  an  event  occurring  after  the  impairment  loss  was  recognised,  the 
impairment loss is reversed through the economic outturn account. 

1.5.6 

Inventories 

Inventories are stated at the lower of cost and net realisable value. Cost is determined using 
the  first-in,  first-out  (FIFO)  method.  The  cost  of  finished  goods  and  work  in  progress 
comprises raw materials, direct labour, other directly attributable costs and related production 
overheads (based on normal operating capacity). Net realisable value is the estimated selling 
price  in  the  ordinary  course  of  business,  less  the  costs  of  completion  and  selling  expenses. 
When  inventories  are  held  for  distribution  at  no  charge  or  for  a  nominal  charge,  they  are 
measured at the lower of cost and current replacement cost. Current replacement cost is the 
cost the European Union would incur to acquire the asset on the reporting date. 

1.5.7  Pre-financing amounts 

Pre-financing  is  a  payment  intended  to  provide  the  beneficiary  with  a  cash  advance,  i.e.  a 
float. It may be split into a number of payments over a period defined in the particular pre-
financing agreement. The float or advance is repaid or used for the purpose for which it was 
provided during the period defined in the agreement. If the beneficiary does not incur eligible 
expenditures, he has the obligation to return the pre-financing advance to the European Union. 
The amount of the pre-financing is reduced (wholly or partially) by the acceptance of eligible 
costs and amounts returned, and this amount is recognised as an expense. 

At year-end, outstanding pre-financing amounts are valued at the original amount(s) paid less: 
amounts  returned,  eligible  amounts  expensed,  estimated  eligible  amounts  not  yet  cleared  at 
year-end, and value reductions. 

Interest on pre-financing is recognised as it is earned in accordance with the provisions of the 
relevant  agreement.  An  estimate  of  the  accrued  interest  revenue,  based  on  the  most  reliable 
information, is made at the year-end and included in the balance sheet. 

1.5.8  Receivables 

Receivables are carried at original amount less write-down for impairment. A write-down for 
impairment of receivables is established when there is objective evidence that the European 
Union  will  not  be  able  to  collect  all  amounts  due  according  to  the  original  terms  of 
receivables.  The  amount  of  the  write-down  is  the  difference  between  the  asset’s  carrying 

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26 

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amount  and  the  recoverable  amount,  being  the  present  value  of  expected  future  cash  flows, 
discounted at the market rate of interest for similar borrowers. The amount of the write-down 
is  recognised  in  the  economic  outturn  account. Also  recognised  is  a  general  write-down  for 
outstanding  recovery  orders  not  already  subject  to  a  specific  write-down.  See  note  1.5.14 
below concerning the treatment of accrued income at year-end. 

1.5.9  Cash and cash equivalents 

Cash  and  cash  equivalents  are  financial  instruments  and  defined  as  current  assets.  They 
include  cash  at  hand,  deposits  held  at  call  with  banks,  other  short-term  highly  liquid 
investments with original maturities of three months or less, and bank overdrafts. 

1.5.10  Employee benefits 

Pension obligations 

The European Union operates defined benefit pension plans. Whilst staff contribute from their 
salaries  one  third  of  the  expected  cost  of  these  benefits,  the  liability  is  not  funded.  The 
liability  recognised  in  the  balance  sheet  in  respect  of  defined  benefit  pension  plans  is  the 
present value of the defined benefit obligation at the balance sheet date. The defined benefit 
obligation is calculated by actuaries using the projected unit credit method. The present value 
of  the  defined  benefit  obligation  is  determined  by  discounting  the  estimated  future  cash 
outflows  using  interest  rates  of  government  bonds  that  are  denominated  in  the  currency  in 
which the benefits will be paid, and that have terms to maturity approximating to the terms of 
the related pension liability. 

Actuarial  gains  and  losses  arising  from  experience  adjustments  and  changes  in  actuarial 
assumptions are recognised immediately in the economic outturn account. Past-service costs 
are recognised immediately in economic outturn account, unless the changes to the pension plan 
are  conditional  on  the  employees  remaining  in  service  for  a  specified  period  of  time  (the 
vesting period). In this case, the past-service costs are amortised on a straight-line basis over 
the vesting period. 

Post-employment sickness benefits 

The European Union provides health benefits to its employees through the reimbursement of 
medical  expenses.  A  separate  fund  ("RCAM")  has  been  created  for  the  day-to-day 
administration. Both current employees, pensioners, widowers and their beneficiaries benefit 
from  the  system.  The  benefits  granted  to  the  "inactives"  (pensioners,  orphans,  etc.)  are 
classified  as  "Post-Employment  Employee  Benefits".  Given  the  nature  of  these  benefits,  an 
actuarial calculation is required. The liability in the balance sheet is determined on a similar 
basis as that for the pension obligations (see above). 

1.5.11  Provisions 

Provisions  are  recognised  when  the  European  Union  has  a  present  legal  or  constructive 
obligation  towards  third  parties  as  a  result  of  past  events,  it  is  more  likely  than  not  that  an 
outflow of resources will be required to settle the obligation, and the amount can be reliably 
estimated.  Provisions  are  not  recognised  for  future  operating  losses.  The  amount  of  the 
provision is the best estimate of the expenditures expected to be required to settle the present 
obligation  at  the  reporting  date.  Where  the  provision  involves  a  large  number  of  items,  the 

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obligation  is  estimated  by  weighting  all  possible  outcomes  by  their  associated  probabilities 
(“expected value” method). 

1.5.12  Financial liabilities 

Financial liabilities are classified as financial liabilities at fair value through profit or loss or 
as  financial  liabilities  carried  at  amortised  cost  (borrowings).  Borrowings  are  composed  of 
borrowings from credit institutions and debts evidenced by certificates. They are recognised 
initially at fair value, being their issue proceeds (fair value of consideration received) net of 
transaction  costs  incurred,  then  subsequently  carried  at  amortised  cost  using  the  effective 
interest method; any difference between proceeds, net of transaction costs, and the redemption 
value is recognised in the economic outturn account over the period of the borrowings using 
the effective interest method.  

They are classified as non-current liabilities, except for maturities less than 12 months after 
the balance sheet date. In the case of loans granted on borrowed funds, the effective interest 
method may not be applied to loans and borrowings, based on materiality considerations. The 
transaction costs incurred by the European Union and then recharged to the beneficiary of the 
loan are directly recognised in the economic outturn account. 

Financial  liabilities  categorised  at  fair  value  through  profit  or  loss  include  derivatives  when 
their fair value is negative. They follow the same accounting treatment as financial assets at 
fair value through profit or loss, see note 1.5.5. 

1.5.13  Payables 

A  significant  amount  of  the  payables  of  the  EU are  not  related  to  the  purchase  of  goods  or 
services  –  instead  they  are  unpaid  cost  claims  from  beneficiaries  of  grants  or  other  EU 
funding.  They  are  recorded  as  payables  for  the  requested  amount  when  the  cost  claim  is 
received and, after verification, accepted as eligible by the relevant financial agents. At this 
stage they are valued at the accepted and eligible amount. 

Payables arising from the purchase of goods and services are recognised at invoice reception 
for  the  original  amount  and  corresponding  expenses  are  entered  in  the  accounts  when  the 
supplies or services are delivered and accepted by the European Union. 

1.5.14  Accrued and deferred income and charges 

According to the European Union accounting rules, transactions and events are recognised in 
the  financial  statements  in  the  period  to  which  they  relate.  At  the  end  of  the  accounting 
period,  accrued  expenses  are  recognised  based  on  an  estimated  amount  of  the  transfer 
obligation of the period. The calculation of the accrued expenses is done in accordance with 
detailed operational and practical guidelines issued by the Commission which aim at ensuring 
that the financial statements reflect a true and fair view. 

Revenue is also accounted for in the period to which it relates. At year-end, if an invoice is 
not yet issued but the service has been rendered, the supplies have been delivered by the EU 
or  a  contractual  agreement  exists  (i.e.  by  reference  to  a  treaty),  an  accrued  income  will  be 
recognised in the financial statements. 

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28 

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In addition, at year-end, if an invoice is issued but the services have not yet been rendered or 
the goods supplied have not yet been delivered, the revenue will be deferred and recognised in 
the subsequent accounting period. 

1.6 

ECONOMIC OUTTURN ACCOUNT 

1.6.1  Revenue 

Non-exchange revenue 

This makes up the vast majority of the EU's revenue and includes mainly direct and indirect 
taxes and own resource  amounts.  In addition to taxes the European Union may also receive 
payments from other parties, such as duties, fines and donations. 

GNI based resources and VAT resources 

Revenue is recognised for the period for which the European Union sends out a call for funds 
to the Member States claiming their contribution. They are measured at their “called amount”. 
As  VAT  and  GNI  resources  are  based  on  estimates  of  the  data  for  the  budgetary  year 
concerned, they may be revised as changes occur until the final data are issued by the Member 
States.  The  effect  of  a  change  in  estimate  is  included  when  determining  the  net  surplus  or 
deficit for the period in which the change occurred. 

Traditional own resources 

Receivables  and  related  revenues  are  recognised  when  the  relevant  monthly  A  statements 
(including  duties  collected  and  amounts  due  that  are  guaranteed  and  not  contested)  are 
received  from  the  Member  States.  At  the  reporting  date,  revenue  collected  by  the  Member 
States for the period but not yet paid to the European Union is estimated and recognised as 
accrued  revenue.  The  quarterly  B  statements  (including  duties  neither  collected  nor 
guaranteed, as well as guaranteed amounts that have been contested by the debtor) received 
from the Member States are recognised as revenue less the collection costs to which they are 
entitled  (25%).  In  addition,  a  value  reduction  is  recognised  for  the  amount  of  the  estimated 
recovery gap in the economic outturn account. 

Fines  

Revenue from fines is recognised when the EU's decision imposing a fine has been taken and 
it is officially notified to the addressee. If there are doubts about the undertaking's solvency, a 
value  reduction  on  the  entitlement  is  recognised.  After  the  decision  to  impose  a  fine,  the 
debtors have two months from the date of notification: 

–  either to accept the decision, in which case they must pay the fine within the time 

limit laid down and the amount is definitively collected by the EU; 

–  or not to accept the decision, in which case they lodge an appeal under EU law.  

However, even if appealed, the principal of the fine must be paid within the time limit of three 
months  laid  down  as  the  appeal  does  not  have  suspensory  effect  (Article  242  of  the  EC 
Treaty)  or,  under  certain  circumstances  and  subject  to  the  agreement  of  the  Commission's 
Accounting Officer, it may present a bank guarantee for the amount instead. 

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If the undertaking appeals against the decision, and has already provisionally paid the fine, the 
amount is disclosed as a contingent liability. However, since an appeal against an EU decision 
by  the  addressee  does  not  have  suspensory  effect,  the  cash  received  is  used  to  clear  the 
receivable. If a guarantee is received instead of payment, the fine remains as a receivable. If it 
appears  probable  that  the  General  Court  may  not  rule  in  favour  of  the  EU,  a  provision  is 
recognised  to  cover  this  risk.  If  a  guarantee  had  been  given  instead,  then  the  receivable 
outstanding is written-down as required. The accumulated interest received by the European 
Union on the bank accounts where received payments are deposited is recognised as revenue, 
and any contingent liability is increased accordingly. 

Exchange revenue 

Revenue  from  the  sale  of  goods  and  services  is  recognised  when  the  significant  risk  and 
rewards of ownership of the goods are transferred to the purchaser. Revenue associated with a 
transaction  involving  the  provision  of  services  is  recognised  by  reference  to  the  stage  of 
completion of the transaction at the reporting date. 

Interest income and expense 

Interest  income  and  expense  are  recognised  in  the  economic  outturn  account  using  the 
effective  interest  method.  This  is  a  method  of  calculating  the  amortised  cost  of  a  financial 
asset or a financial liability and of allocating the interest income or interest expense over the 
relevant  period.  When  calculating  the  effective  interest  rate,  the  European  Union  estimates 
cash  flows  considering  all  contractual  terms  of  the  financial  instrument  (for  example, 
prepayment options) but do not consider future credit losses. The calculation includes all fees 
and  points  paid  or  received  between  parties  to  the  contract  that  are  an  integral  part  of  the 
effective interest rate, transaction costs and all other premiums or discounts. 

Once a financial asset or a group of similar financial assets has been written down as a result 
of an impairment loss, interest income is recognised using the rate of interest used to discount 
the future cash flows for the purpose of measuring the impairment loss. 

Dividend income 

Dividend income is recognised when the right to receive payment is established. 

1.6.2  Expenditure 

Exchange expenses arising from the purchase of goods and services are recognised when the 
supplies  are  delivered  and  accepted  by  the  European  Union.  They  are  valued  at  original 
invoice cost. Non-exchange expenses are specific to the European Union and account for the 
majority of its expenditure. They relate to transfers to beneficiaries and can be of three types: 
entitlements, transfers under agreement and discretionary grants, contributions and donations. 

Transfers are recognised as expenses in the period during which the events giving rise to the 
transfer  occurred,  as  long  as  the  nature  of  the  transfer  is  allowed  by  regulation  (Financial 
Regulation, Staff Regulations, or other regulation) or a contract has been signed authorising 
the  transfer;  any  eligibility  criteria  have  been  met  by  the  beneficiary;  and  a  reasonable 
estimate of the amount can be made. 

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When a request for payment or cost claim is received and meets the recognition criteria, it is 
recognised  as  an  expense  for  the  eligible  amount.  At  year-end,  incurred  eligible  expenses 
already  due  to  the  beneficiaries  but  not  yet  reported  are  estimated  and  recorded  as  accrued 
expenses. 

1.7 

CONTINGENT ASSETS AND LIABILITIES 

1.7.1  Contingent assets 

A contingent asset is a possible asset that arises from past events and of which the existence 
will be confirmed only by the occurrence or non-occurrence of one or more uncertain future 
events not wholly within the control of the European Union. A contingent asset is disclosed 
when an inflow of economic benefits or service potential is probable. 

1.7.2  Contingent liabilities 

A  contingent  liability  is  a  possible  obligation  that  arises  from  past  events  and  of  which  the 
existence  will  be  confirmed  only  by  the  occurrence  or  non-occurrence  of  one  or  more 
uncertain  future  events  not  wholly  within  the  control  of  the  European  Union;  or  a  present 
obligation that arises from past events but is not recognised because: it is not probable that an 
outflow  of  resources  embodying  economic  benefits  or  service  potential  will  be  required  to 
settle the obligation or, in the rare circumstances where the amount of the obligation cannot 
be measured with sufficient reliability. 

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2. 

NOTES TO THE BALANCE SHEET 

NON CURRENT ASSETS 

2.1 

INTANGIBLE ASSETS 

EUR millions 
Amount 

Gross carrying amount at 31 December 2008 
Additions 
Disposals 
Transfers between asset categories 
Other changes 

Gross carrying amount at 31 December 2009 

Accumulated amortisation at 31 December 2008 
Amortisation charge for the year 
Disposals 
Transfers between asset categories 
Other changes 

Accumulated amortisation at 31 December 2009

Net carrying amount at 31 December 2009 

Net carrying amount at 31 December 2008 

134 
39 
(3) 
0 
1 

171 

78 
22 
(1) 
0 
0 

99 

72 

56 

The amounts relate primarily to computer software. 

2.2 

PROPERTY, PLANT AND EQUIPMENT 

In some countries the value of the land cannot be distinguished from the value of the building 
since  both  were  purchased  as  a  whole.  The  value  of  the  land,  which  is  not  subject  to 
depreciation, will not be evaluated separately unless it becomes necessary, i.e. for subsequent 
expenditure such as construction of a new property or a partial sale. 

Assets  related  to  the  European  Geostationary  Navigation  Overlay  Service  (EGNOS)  are 
included  under  plant  and  equipment  at  31  December  2009  following  their  transfer  to  the 
Commission during 2009. These assets have a net book value at this date of EUR 11 million 
(a gross value of EUR 40 million less accumulated depreciation of EUR 29 million). 

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PROPERTY, PLANT & EQUIPMENT 

Land and 

Plant and  Furniture and Computer 

buildings 

equipment 

vehicles 

hardware 

Other 
tangible 
assets 

Finance leases  Assets under  

  EUR millions 
TOTAL  

construction  

Gross carrying amount at 31 December 2008 
Additions 
Disposals 
Transfers between asset categories 
Other changes 

3 902 
39 
(1) 
31 
1 

Gross carrying amount at 31 December 2009 

3 972 

Accumulated depreciation at 31 December 2008 
Depreciation charge for the year 
Depreciation written back 
Disposals 
Transfers between asset categories 
Other changes 

Accumulated depreciation at 31 December 
2009 

NET CARRYING AMOUNT AT  
31 DECEMBER 2009 
NET CARRYING AMOUNT AT  
31 DECEMBER 2008 

1 616 
127 
0 
(1) 
0 
0 

1 742 

2 230 

2 286 

368 
89 
(15) 
(2) 
20 

460 

300 
66 
0 
(13) 
(1) 
3 

355 

105 

68 

EN 

205 
20 
(20) 
0 
10 

215 

149 
16 
0 
(14) 
0 
4 

155 

60 

56 

33 

466 
57 
(56) 
0 
8 

475 

349 
60 
(2) 
(52) 
0 
4 

359 

116 

117 

151 
17 
(6) 
3 
17 

182 

92 
17 
0 
(5) 
1 
3 

108 

74 

59 

2 621 
29 
0 
0 
5 

2 655 

448 
163 
0 
0 
0 
1 

612 

2 043 

2 173 

122 
141 
0 
(32) 
0 

231 

231 

122 

7 835 
392 
(98) 
0 
61 

8 190 

2 954 
449 
(2) 
(85) 
0 
15 

3 331 

4 859 

4 881 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charges still to be paid in respect of finance leases and similar entitlements are shown in long-term and short-term liabilities in the balance sheet (see 
also notes 2.15 and 2.18.1). They break down as follows: 

Finance Leases 

Description 

Cumulative 
charges (A) 

Future amounts to be paid 

< 1 year 

> 1 year 

> 5 years 

Land and buildings 
Other tangible assets 
Total at 31.12.2009 
Total at 31.12.2008 

785 
14 
799 
738 

51 
8 
59 
52 

257 
13 
270 
250 

1 465 
1 
1 466 
1 520 

Total 
Liability (B) 
1 773 
22 
1 795 
1 822 

Total 
Value 

A+B 

2 558 
36 
2 594 
2 560 

Subsequent 
expenditure 
on assets 
(C) 

 Asset 
value 

Depreciation 

A+B+C 

(E) 

61 
0 
61 
61 

2 619 
36 
2 655 
2 621 

(598) 
(14) 
(612) 
(448) 

EUR 
millions 
Net 
carrying 
amount 
=A+B+C+
E 
2 021 
22 
2 043 
2 173 

EN 

34 

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2.3 

LONG-TERM INVESTMENTS 

Participations in Associates 
Participations in Joint Ventures 
Guarantee Fund 
Available-for-Sale assets 
Total Investments 

Note 
2.3.1 
2.3.2 
2.3.3 
2.3.4 

31.12.2009 
382 
196 
1 240 
561 
2 379 

EUR millions

31.12.2008 
278 
145 
1 091 
564 
2 078 

This heading covers investments made with a view to supporting the activities of the EU. It 
also includes the net assets of the Guarantee Fund. 

2.3.1  Participations in Associates 

EIF 

ARTEMIS 

Clean Sky 

Total 

  EUR millions

Amount at 31 December 2008 
Acquisitions 
Share of net surplus/(deficit) 
Other equity movements 
Amount at 31 December 2009 

278 
26 
(2) 
(1) 
301 

0 
10 
(3) 
0 
7 

0 
75 
(1) 
0 
74 

278 
111 
(6) 
(1) 
382 

Participations  in  associates  are  accounted  for  using  the  equity  method  –  for  further 
explanation see note 1.3. The following carrying amounts are attributable to the EU based on 
its percentage of participation in associates:  

Assets 
Liabilities 
Revenue 
Surplus/(Deficit) 

31.12.2009 
420 
(38) 
17 
(6) 

EUR millions

31.12.2008 
295 
(17) 
23 
10 

European Investment Fund (EIF) 

The  European  Investment  Fund  (EIF)  is  the  European  Union's  financial  institution 
specialising  in  providing  risk  capital  and  guarantees  to  SMEs.  At  31  December  2009,  the 
Commission  has  subscribed  for  a  total  amount  of  EUR  861  million  (out  of  EUR  2  940 
million) of the share capital of the EIF. This represents 29.29% of the total EIF share capital. 
The Commission has paid in 20%, the balance being uncalled corresponding to an amount of 
EUR 689  million – see  also note 5.13.2. Under an agreement  between the Commission and 
the  European  Investment  Bank  (EIB)  signed  in  2005,  the  Commission  is  entitled  to  sell  its 
shares at any time to the EIB at the price corresponding to the EIF valuation divided by the 
total  number  of  issued  shares.  The  value  of  the  put  option  is close  to  nil  since  the  formula 
used for determining the sale price of the shares is similar to the one used to determine the net 
equity of the EIF. The EU's shareholding is valued at 29.29% of the EIF's net assets, which at 
31 December 2009 amounted to EUR 301 million (2008: EUR 278 million), of which EUR 2 
million  concerns  the  result  for  2009  (loss).  A  dividend  of  EUR  4  million  relating  to  the 
financial year 2008 was received in 2009. 

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Joint Technology Initiatives 

Public  private  partnerships  in  the  form  of  Joint  Technology  Initiatives,  which  were 
implemented  through  Joint  Undertakings  within  the  meaning  of  Article  171  of  the  Treaty 
have  been  created  in  order  to  implement  the  objectives  of  the  Lisbon  Growth  and  Jobs 
Agenda. Joint Technology Initiatives are public-private partnerships set up at European level 
to  address  strategic  areas  where  research  and  innovation  are  essential  to  European 
competitiveness. A new element of the 7th Framework programme for research, technological 
development  and  demonstration  activities,  Joint  Technology  Initiatives  support  large-scale 
multinational  research  activities.  They  bring  together  private  and  public  partners  to  define 
common  objectives  of  wide  societal  relevance  and  to  combine  funding  and  knowledge  in 
order  to  fulfil  these  objectives.  Joint  Technology  Initiatives  are  a  new  way  of  working 
together towards reaching the goals set by EU leaders in the Lisbon strategy on growth and 
employment. During 2009 the first three Joint Technology Initiatives became operational, the 
ARTEMIS Joint Undertaking and the Clean Sky Joint Undertaking described below and the 
IMI  Joint  Undertaking,  classified  as  joint  venture  and  described  under  note  2.3.2.  Although 
ARTEMIS  &  Clean  Sky  are  legally  referred  to  as  joint  undertakings,  from  an  accounting 
perspective they must be considered as associates because the Commission has a significant 
influence over these entities. 

ARTEMIS Joint Undertaking  

This entity was created to implement a Joint Technology Initiative with the private sector on 
Embedded  Computing  Systems.  The  ownership  interest  of  the  European  Union,  represented 
by  the  Commission,  is  at  31  December  2009  100%  or  EUR  7  million.  The  maximum 
indicative contribution of the EU shall amount to EUR 420 million. 

Clean Sky Joint Undertaking 

The aim of this entity is to accelerate the development, validation and demonstration of clean 
air  transport  technologies  in  the  EU  and  in  particular  to  create  a  radically  innovative  Air 
Transport System with the target of reducing the environmental impact of air transport. The 
ownership interest of the European Union, represented by the Commission, is at 31 December 
2009  99.41%  or  EUR  74  million.  The  maximum  indicative  contribution  of  the  EU  to  this 
venture shall amount to EUR 800 million. 

2.3.2 Participations in joint ventures 

Amount at 31.12.2008 
Acquisitions 
Share of net result 

Amount at 31.12.2009 

GJU 
0 
0 
0 

0 

SESAR 
103 
28 
(51) 

80 

ITER 
42 
39 
(46) 

35 

IMI 
0 
81 
0 

81 

EUR millions
Total 
145 
148 
(97) 

196 

Participations  in  joint  ventures  are  accounted  for  using  the  equity  method  –  for  further 
explanation see note 1.3. The following carrying amounts are attributable to the EU based on 
its percentage of participation in joint ventures: 

EN 

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Non-current assets 
Current assets 
Non-current liabilities 
Current liabilities 
Revenue 
Expenses 

31.12.2009 
48 
192 
0 
(44) 
72 
(169) 

EUR millions

31.12.2008 
0 
154 
0 
(9) 
37 
(93) 

Galileo Joint Undertaking (GJU) in liquidation 

The  Galileo  Joint  Undertaking  (GJU)  was  put  into  liquidation  at  the  end  of  2006  and  the 
process is still ongoing. The net assets of the GJU in liquidation at year-end amounted to EUR 
0. As the entity was inactive and still undergoing liquidation in 2009, there were no revenues 
or  expenditures  incurred.  The  value  of  the  investment  at  31  December  2009  (and  31 
December 2008) was EUR 0, being the investment of EUR 585 million less the accumulated 
share of losses, EUR 585 million. 

The  European  GNSS  Supervisory  Authority  (GSA),  an  EU  agency  created  in  2004  and 
consolidated  in  the  EU  accounts,  originally  took  over  responsibility  from  the  GJU  on  1 
January  2007.  Following  the  entry  into  force  of  Regulation  (EC)  No.  683/2008,  the 
Commission took the role of Programme Manager of the European GNSS Programmes from 
the  GSA.  The  transfer  of  these  activities  and  tasks  from  the  GSA  to  the  Commission  took 
effect on 1 January 2009. 

SESAR Joint Undertaking 

The aim of this Joint Undertaking is to ensure the modernisation of the European air traffic 
management  system  and  the  rapid  implementation  of  the  European  air  traffic  management 
Master Plan by coordinating and concentrating all relevant research and development efforts 
in  the  EU.  At  31  December  2009,  the  Commission  holds  87.4%  or  EUR  80  million  (2008: 
EUR  103  million)  of  the  ownership  participation  in  SESAR.  The  total  (indicative)  EU 
contribution foreseen for SESAR (from 2007 to 2013) is EUR 700 million. 

ITER International Fusion Energy Organisation (ITER International) 

ITER International involves the EU and China, India, Russia, Korea, Japan and USA. ITER 
was created to manage the ITER facilities, to encourage the exploitation of the ITER facilities 
by  the  laboratories,  other  institutions  and  personnel  in  the  fusion  energy  research  and 
development  programmes  of  the  members,  to  promote  public  understanding  and  acceptance 
of  fusion  energy,  and  to  undertake  any  other  activities  that  are  necessary  to  achieve  its 
purpose.  

The EU (Euratom) contribution to ITER International is given through the Fusion for Energy 
Agency, including also the contributions from Member States and from Switzerland. The total 
contribution is legally considered as a Euratom contribution to ITER and the Member States 
and  Switzerland  do  not  have  ownership  interests  in  ITER.  As  the  EU  legally  holds  the 
participation in the joint venture ITER International, the EU must recognise the participation 
in its consolidated accounts. 

EN 

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At 31 December 2009, Euratom holds 47% or EUR 35 million (2008: EUR 42 million) of the 
ownership  participation  in  ITER.  The  total  (indicative)  Euratom  contribution  foreseen  for 
ITER (from 2007 to 2041) is EUR 7 649 million. 

IMI Joint Technology Initiative on Innovative Medicines 

The  IMI  Joint  Undertaking,  the  third  Joint  Technology  Initiative  that  became  operational 
during  2009,  shall  support  pre-competitive  pharmaceutical  research  and  development  in  the 
Member States and associated countries, aiming at increasing the research investment in the 
biopharmaceutical  sector  and  shall  promote  the  involvement  of  small  and  medium-sized 
enterprises (SME) in its activities. The ownership interest of the European Union, represented 
by  the  Commission,  is  at  31  December  2009  99.1%  or  EUR  81  million.  The  maximum 
indicative contribution of the EU shall amount to EUR 1 billion up to 31/12/2017. 

2.3.3  Guarantee Fund 

Net assets of the Guarantee Fund 

EUR millions 

31.12.2009 

31.12.2008 

Available-for-sale assets 
Cash and cash equivalents 
Total assets 
Total liabilities 

Net assets 

1 050 
191 
1 241 
(1) 

1 240 

887 
205 
1 092 
(1) 

1 091 

The Guarantee Fund for external actions covers loans guaranteed by the EU as a result of a 
Council Decision, in particular European Investment  Bank  (EIB)  lending  operations  outside 
the  European  Union  and  loans  under  macro-financial  assistance  (MFA  loans)  and  Euratom 
loans outside the European Union. It is a long-term instrument to cover any defaulting loans 
guaranteed by the EU and can therefore be seen as a long-term investment. This is evidenced 
by the fact that nearly 76% of the available-for-sale assets have a maturity of between 1 and 
10 years. The Fund is endowed by payments from the general budget of the EU equivalent to 
9%  of  the  capital  value  of  the  operations,  the  proceeds  from  interest  on  investments  made 
from the Fund's assets, and sums recovered from defaulting debtors for whom the Fund has 
had  to  activate  its  guarantee.  Any  yearly  surplus  arising  shall  be  paid  back  to  a  special 
heading in the statement of revenue in the general budget of the EU.  

The  EU  is  required  to  include  a  guarantee  reserve  to  cover  loans  to  third  countries.  This 
reserve  is  intended  to  cover  the  requirements  of  the  Guarantee  Fund  and,  where  necessary, 
activated guarantees exceeding the amount available in the Fund, so that these amounts may 
be charged to the budget. This reserve of EUR 1 472 million corresponds to the target amount 
of  9%  of  the  loans  outstanding  at  31  December  2009.  The  net  assets  of  the  Fund  at  31 
December  2009  total  EUR  1  240  million.  The  difference  between  the  net  assets  and  the 
amount of the reserve corresponds to the amount to be paid by the EU budget to the Fund, i.e. 
EUR  232  million.  Fair-value  changes  of  the  available-for-sale  debt  security  portfolio  have 
been recognised in equity in 2009 totalling EUR 16 million (2008: EUR 15 million.). 

2.3.4  Available-for-sale assets 

This heading includes investments and participations purchased to help beneficiaries develop 
their business activities. 

EN 

38 

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Long-term Available-for-sale assets  

Amounts at 31.12.2008 
Acquisitions 
Disposals/withdrawals 
Revaluation surplus/ 
(deficit) t/f to equity 
Exchange loss 
Impairment loss 

EBRD 
157 
0 
0 
0 

0 
0 

Amounts at 31.12.2009

157 

RCO 
204 
11 
(26) 
(14) 

(42) 
(1) 

132 

ETF Start up
133 
52 
(4) 
(14) 

0 
(13) 

154 

EFSE 
67 
26 
0 
3 

0 
0 

96 

Other 
3 
19 
0 
0 

0 
0 

22 

EUR millions
Total 
564 
108 
(30) 
(25) 

(42) 
(14) 

561 

European Bank for Reconstruction and Development (EBRD) 

The  Commission  has  subscribed  to  3%  of  the  EBRD's  total  capital  of  EUR  20  billion.  At 
balance  sheet  date,  the  called  up  amount  was  EUR  157  million,  which  has  been  fully  paid. 
Payments  outstanding  on  non-called  up  capital  amount  to  EUR  443  million  (see  also  note 
5.13.1).  As  the  EBRD  is  not  quoted  on  any  stock  exchange  and  in  view  of  the  contractual 
restrictions included in the EBRD’s articles of incorporation relating, amongst others, to the 
sale  of  participating  interests,  capped  at  acquisition  cost  and  only  authorised  to  existing 
shareholders,  the  Commission's  shareholding  is  valued  at  cost  less  any  write-down  for 
impairment. 

Risk Capital Operations (RCO) 

Under risk capital operations amounts are granted to financial intermediaries to finance equity 
investments.  They  are  managed  by  European  Investment  Bank  and  financed  under  the 
European Neighbourhood Policy. 

Other investments 

The  most  significant  amounts  concern  the  Growth  &  Employment  programme,  the  MAP 
programme and the CIP programme, under the trusteeship of the EIF, supporting the creation 
and  financing  of  start-up  SMEs  by  investing  in  suitable  specialised  venture  capital  funds 
(EUR 154 million). Also included is EUR 96 million relating to the European Fund for South 
East  Europe,  an  investment  company  with  variable  share  capital  (SICAV).  The  overall 
objective  of  EFSE  is  to  foster  economic  development  and  prosperity  in  South  East  Europe 
through  the  sustainable  provision  of  additional  development  finance  via  local  financial 
intermediaries. A new investment of EUR 19 million relating to the Southeast Europe Energy 
Efficient Fund (SE4F) has been included in 2009. 

2.4 

LOANS 

This heading covers loan amounts owed to the European Union maturing in over one year: 

Loans granted from the EU budget & ECSC 
Loans granted from borrowed funds 

Total loans 

Note 

2.4.1 
2.4.2 

31.12.2009 

169 
10 595 

10 764 

EUR millions
31.12.2008 

179 
3 386 

3 565 

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39 

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2.4.1  Loans granted from the European Union budget and the ECSC in liquidation 

Total at 31.12.2008 
Repayments 
Changes in carrying amount  

Loans with special 
conditions 
150 
(19) 
12 

Total at 31.12.2009 

143 

ECSC in Liquidation 

Total 

EUR millions

29 
(5) 
2 

26 

179 
(24) 
14 

169 

Loans with Special Conditions 

This  item  covers  loans  with  special  conditions  granted  at  preferential  rates  as  part  of  co-
operation with non-member countries. All amounts fall due more than 12 months after year-
end. The effective interest rates on these loans vary between 7.73% and 12.36%. 

Housing loans of the ECSC in liquidation (ECSC) 

Housing loans are loans granted by the ECSC from its own funds in accordance with articles 
54  and  54.2  of  the  ECSC  Treaty.  These  loans  are  granted  at  a  fixed  rate  of  1%  and 
consequently,  considered  as  loans  at  preferential  rates.  The  effective  interest  rates  on  these 
loans are 2.806% - 22.643%. For practicable reasons and based on materiality considerations, 
the transaction price is used as the fair value of these loans at inception, independently from 
any preferential interest rate granted. 

2.4.2  Loans granted from borrowed funds 

MFA loans 

Euratom 
Loans 

BOP 

Total at 31.12.2008 
New loans 
Repayments 
Exchange differences 
Change in carrying amount 
Total at 31.12.2009 

Amount due < 1 year 

Amount due > 1 year 

663 
25 
(95) 
0 
(6) 
587 

40 

547 

494 
7 
(11) 
(1) 
(5) 
484 

0 

484 

2 004 
7 200 
0 
0 
99 
9 303 

0 

9 303 

ECSC in 
Liquidation 
338 
0 
(88) 
16 
(5) 
261 

0 

261 

EUR millions 
Total 

3 499 
7 232 
(194) 
15 
83 
10 635 

40 

10 595 

Macro Financial Assistance (MFA) loans 

MFA  is  a  policy-based  financial  instrument  of  untied  and  undesignated  balance-of-payment 
and/or  budget  support  to  partner  third-countries  geographically  close  to  the  EU  territory.  It 
takes the form of medium/long term loans or grants or an appropriate combination of both and 
generally complements financing provided in the context of an IMF-supported adjustment and 
reform program. The Commission has not received third-party guarantees for these loans, but 
they are guaranteed by the Guarantee Fund (see note 2.3.3). 

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40 

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Euratom loans 

Euratom is a legal entity of the EU and is represented by the European Commission. It grants 
loans to Member States for the purpose of financing investment projects in the Member States 
relating to the industrial production of electricity in nuclear power stations and to industrial 
fuel cycle installations. It also grants loans to non-Member States for improving the level of 
safety  and  efficiency  of  nuclear  power  stations  and  installations  in  the  nuclear  fuel  cycle 
which are in service or under construction.  

The Commission has received EUR 481 million (2008: EUR 486 million) of guarantees from 
third-party guarantors in respect of these loans. 

Balance of Payment (BOP) loans 

The  BOP  facility,  a  policy  based  financial  instrument,  has  been  reactivated  to  provide 
medium-term  financial  assistance  to  Member  States  of  the  EU  during  the  current  economic 
and financial crisis. It enables the granting of loans to Member States which are experiencing, 
or  are  seriously  threatened  with,  difficulties  in  their  balance  of  payments  or  capital 
movements.  Only  Member  States  which  have  not  adopted  the  Euro  may  benefit  from  this 
facility.  The  maximum  total  amount  of  loans  authorised  is  EUR  50  billion  and  these  are 
guaranteed by the EU general budget. 

Between November 2008 and end 2009, loans amounting to EUR 14.6 billion were granted. 
BOP financial assistance of EUR 6.5 billion has been made available for Hungary, of which 
EUR 2 billion was disbursed in 2008, the maturity date being in December 2011. A further 
EUR 3.5 billion was disbursed in 2009 (maturity: November 2014 and April 2016). A BOP 
loan of EUR 3.1 billion was made available to Latvia, EUR 2.2 billion being disbursed during 
2009,  with  maturity  dates  of  April  2014  and  January  2015  and  EUR  0.5  billion  being 
disbursed in March 2010 (maturity date May 2019). EUR 5 billion was also made available to 
Romania  of  which  EUR  1.5  billion  was  disbursed  in  2009,  with  a  maturity  date  of  January 
2015 and a further EUR 1 billion was disbursed in March 2010 (maturity date May 2019). 

ECSC in liquidation loans  

This  item  mainly  includes  loans  granted  by  the  ECSC  in  liquidation  on  borrowed  funds  in 
accordance  with  articles  54  and  56  of  the  ECSC  Treaty  as  well  as  three  unquoted  debt 
securities issued by the European Investment Bank (EIB) as substitute of a defaulted debtor. 
These debt securities will be held till their final maturity (2017 and 2019) in order to cover the 
service  of  related  borrowings.  The  changes  in  carrying  amount  correspond  to  the  change  in 
accrued  interests  plus  the  amortisation  of  the  year  of  premiums  paid  and  transaction  cost 
incurred at inception, calculated according to the effective interest rate method. 

The effective interest rates (expressed as a range of interest rates) were as follows: 

Loans 

Macro Financial Assistance (MFA) 
Euratom 
BOP 
ECSC in liquidation.  

31.12.2009 

31.12.2008  

3.022%-5.29%
0.9625%-4.54%
3.428% -5.76%
1.071%-5.76%
3.25%
3.125%-3.625%
0.346%-5.8103% 3.072%-5.8103% (*)

(*) higher bound value related to a fixed rate loan covered by an interest rate swap 

EN 

41 

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2.5 

LONG-TERM PRE-FINANCING 

The  timing  of  the  recoverability  or  utilisation  of  the  pre-financing  governs  whether  it  is 
disclosed as current or long-term pre-financing asset. The utilisation is defined by the project's 
underlying agreement. All repayments or utilisation due before twelve months of the reporting 
date  is  disclosed  as  short–term  pre-financing  and  therefore  as  current  assets,  the  balance  is 
long-term. 

TOTAL PRE-FINANCING 

Long-term Pre-financing (see below) 
Short-term Pre-financing (see note 2.9) 

31.12.2009 
39 750 
9 077 

EUR millions

31.12.2008 
29 023 
10 262 

Total Pre-financing  

48 827 

39 285 

Guarantees received in respect of pre-financing: 

These  are  guarantees  that  the  European  Union  in  certain  cases  requests  from  beneficiaries 
when paying out advance payments (pre-financing). There are two values to disclose for this 
type  of  guarantee,  the  “nominal”  and  the  “on-going”  values.  For  the  “nominal”  value,  the 
generating  event  is  linked  to  the  existence  of  the  guarantee.  For  the  “on-going”  value,  the 
guarantee’s generating event is the pre-financing payment and/or subsequent clearings. At 31 
December  2009  the  "nominal"  value  of  guarantees  received  in  respect  of  pre-financing 
amounted  to  EUR  936  million.  The  "on-going"  value  of  those  guarantees  was  EUR  724 
million.  At  31  December  2008  these  values  were  EUR  968  million  and  EUR  769  million 
respectively. This difference effectively acts as a cover for pre-financing that has been cleared 
and charged to expenses, but which may have to be recovered in the future. 

Certain  pre-financing  amounts  paid  out  under  the  7th  Research  Framework  Programme  for 
research  and  technological  development  (FP7)  are  effectively  covered  by  a  Participants 
Guarantee Fund (PGF) – at 31 December 2009 the amount of pre-financing paid out totalled 
EUR  2.7  billion.  This  is  a  mutual  benefit  instrument  set  up  to  cover  the  financial  risks 
incurred by the EU and the participants during the implementation of the indirect actions of 
FP7, its capital and interests constituting a performance security. All participants of indirect 
actions  taking  the  form  of  a  grant  (and  thus  a  pre-financing  in  the  Commission's  books) 
contribute 5% of the total EU contribution to the PGF's capital for the duration of the action. 
As such the participants are the owners of the PGF, the EU (represented by the Commission) 
acting as their executive agent. At the end of an indirect action, participants shall recover their 
contribution  to  the  capital  in  full,  except  where  the  PGF  incurs  losses  due  to  defaulting 
beneficiaries – in this case participants shall recover, at a minimum, 80% of their contribution. 
The Participants Guarantee Fund thus guarantees the financial interest of both the EU and the 
participants.  As  at  31  December  2009  a  total  amount  of  EUR  561  million  has  been 
contributed to the PGF by the participants (2008: EUR 274 million) – see also note 11.   

EN 

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LONG-TERM PRE-FINANCING 

Management type 

Direct centralised management 
Indirect centralised management 
Decentralised management 
Shared management 
Joint management 
Implemented by other Institutions & Agencies 

31.12.2009 
1 148 
486 
347 
37 199 
568 
2 

EUR millions

31.12.2008 
1 351 
275 
90 
26 764 
543 
0 

Total Long-Term Pre-financing  

39 750 

29 023 

The  most  significant  long-term  pre-financing  amounts  relate  to  Structural  Actions  for  the 
2007-2013  programming  period:  the  regional  development  fund  (ERDF),  the  social  fund 
(ESF), the agricultural fund for rural development (EAFRD), the cohesion fund (CF) and the 
fisheries  fund.  As  many  of  these  projects  are  long-term  in  nature,  it  is  necessary  that  the 
related advances are available for more than one year. Thus these pre-financing amounts are 
shown  as  long-term  assets.  The  amount  of  the  above  long-term  pre-financing  for  which  the 
EU is entitled to receive interest from beneficiaries amounts to EUR 1 607 million. 

The  increase  in  2009  is  due  mainly  to  the  payment  of  a  third  tranche  of  pre-financing  to 
Member States for a total amount of EUR 5 billion: EUR 2.6 billion for CF, EUR 1.8 billion 
for ERDF and EUR 0.6 million for ESF. In addition, extra recovery package payments for a 
total amount of EUR 6.2 billion were made for each programme, as a result of the economic 
crisis:  EUR  3.9  billion  for  CF  and  ERDF  and  EUR  2.3  billion  for  ESF.  The  rise  of  the 
amounts  concerning  decentralised  management  results  mainly  from  the  pre-financing 
payments made to candidate countries under IPA programmes. 

2.6 

LONG-TERM RECEIVABLES 

Due from Member States 
ECSC staff loans 
Other 
Guarantees and deposits 

Total 

31.12.2009 

EUR millions 
31.12.2008 

26 
10 
2 
17 

55 

24 
13 
2 
6 

45 

Amounts to be received from Member States refer to amounts due to the ECSC in liquidation 
from former accession countries. 

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CURRENT ASSETS 

2.7 

INVENTORIES 

Scientific material 
Other 

TOTAL 

31.12.2009 

62 
15 

77 

EUR millions 

31.12.2008 
73 
12 

85 

The  stock  of  the  scientific  equipment  is  held  and  managed  by  the  JRC.  A  major  part  is  the 
stock  of  reference  materials,  nuclear  and  non-nuclear,  located  in  Geel.  This  stock  has  a 
strategic  nature  and  is  maintained  to  be  able  to  cope  with  unpredictable  future  requests  in 
crisis  situations.  Other  stock  includes  the  stock  of  the  EGNOS  project,  the  stock  of 
publications held and/or managed by the Publications Office and supplies of vaccinations. 

2.8 

SHORT-TERM INVESTMENTS 

Short-term investments consist of available-for-sale financial assets, which are purchased for 
their investment return or yield, or held to establish a particular asset structure or a secondary 
source of liquidity and may therefore be sold in response to needs for liquidity or changes in 
interest rates. In 2008 there were also held for trading assets of EUR 7 million shown under 
this heading. 

Available-for-sale assets 

ECSC in 
Liquidation 

Other 

Amounts at 31.12.2008 
Acquisitions 
Disposals and withdrawals 
Adjustment to amortised cost 
Change in carrying amount  
Revaluation surplus transferred to equity 

Amounts at 31.12.2009 

1 464 
560 
(573) 
(1) 
8 
25 

1 483 

82 
255 
(32) 
0 
3 
0 

308 

EUR millions

Total 

1 546 
815 
(605) 
(1) 
11 
25 

1 791 

Regarding  the  ECSC  in  liquidation  amounts,  all  AFS  investments  are  debt  securities 
denominated  in  EUR  and  quoted  in  an  active  market.  At  31  December  2009  debt  securities 
(expressed at their fair value) reaching final maturity in the course of 2010 amount to EUR 
242 million (2008: EUR 126 million). 

The increase in other amounts is due to new acquisitions by the Risk Sharing Finance Facility, 
RSFF,  (EUR  195  million)  and  the  Loan  Guarantee  Instrument  for  TEN-T  Projects,  LGTT, 
(EUR 60 million). 

EN 

44 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
2.9 

SHORT-TERM PRE-FINANCING 

Management type 

Direct centralised management 
Indirect centralised management 
Decentralised management 
Shared management 
Joint management 
Implemented by other Institutions & Agencies 

31.12.2009 
2 924 
1 990 
700 
2 550 
832 
81 

EUR millions

31.12.2008 
3 055 
930 
326 
5 304 
608 
39 

Total Short-Term Pre-financing  

9 077 

10 262 

The  decrease  in  short-term  pre-financing  is  due  to  the  fact  that  for  the  Structural  Actions 
under  shared  management,  some  projects  being  funded  are  in  the  process  of  winding  down 
(programmes  related  to  the  period  2000-2006),  while  for  the  new  projects  (programmes 
related to the period 2007-2013) a third pre-financing instalment was paid in 2009, but was 
classified  under  long-term  assets  as  explained  in  note  2.5.  The  increase  in  short-term  pre-
financing  under  the  indirect  centralised  management  type  is  due  to  the  transfer  of  activities 
from  the  Commission  to  new  executive  agencies,  mainly  in  the  research  and  development 
fields.  The  amount  of  short-term  pre-financing  for  which  the  European  Union  is  entitled  to 
receive interest from beneficiaries amounts to EUR 4 629 million. 

2.10  SHORT-TERM RECEIVABLES 

Short-term loans 
Current receivables 
Sundry receivables  
Accrued income and deferred charges 

Total 

31.12.2009 

EUR millions
31.12.2008 

216 
4 519 
16 
3 912 

8 663 

114 
6 128 
23 
5 655 

11 920 

2.10.1  Short-term loans 

These amounts concern loans of EUR 41 million with remaining final maturities less than 12 
months  after  the  balance  sheet  date  (EUR  40  million  relating  to  MFA  loans,  see  note  2.4 
above). Also included under this heading are term deposits of the ECSC in liquidation: 

Term Deposits 

Amounts at 31.12.2008 
Increase 
Accrued amounts 

Amounts at 31.12.2009 

EUR millions 
Total 

0 
174 
1 

175 

EN 

45 

   EN 

 
 
 
 
 
 
 
 
 
 
2.10.2  Current receivables 

Account Group 

31.12.2009 
Gross amount  Write down

Net Value  Gross amount  Write down  Net Value 

EUR millions

31.12.2008 

Customers 
Fines 
Member States 
Others 

Total 

Customers 

277 
3 370 
2 198 
76 

5 921 

(76) 
(133) 
(1 191) 
(2) 

(1 402) 

201 
3 237 
1 007 
74 

4 519 

243 
4 590 
2 576 
111 

7 520 

(79) 
(96) 
(1 204) 
(13) 

(1 392) 

164 
4 494 
1 372 
98 

6 128 

These  are  recovery  orders  entered  in  the  accounts  at  31  December  2009  as  established 
entitlements to be recovered and not already included under other headings on the assets side 
of the balance sheet.  

Fines 

Amounts  to  be  recovered  relating  to  fines  issued  by  the  Commission  totalled  EUR  3  370 
million. A write-down of EUR 133 million was applied to this amount. The increase in this 
write-down is explained by the fact that some new fines issued could not be, in the context of 
the  economic  and  financial  crisis,  covered  by  provisional  payments  or  bank  guarantees. 
Additionally,  for  some  fines  summary  proceedings  are  still  pending  before  the  European 
Court of Justice. Guarantees totalling EUR 2 952 million had been received by 31 December 
2009 (2008: EUR 2 403 million) in respect of these receivables, indicating that the recipient 
of the fine wishes to appeal it. It should be noted that EUR 290 million of the above amounts 
were not due for payment at 31 December 2009. 

Receivables from Member States 

31.12.2009 

EUR millions
31.12.2008 

EAGF receivables 

EAGF receivables 
Write-down 
Total 

VAT paid and recoverable from Member States 
Own resources 

Established in the A account 
Established in the separate account 
Write-down 
Other 
Total 

Other receivables from Member States 

Total 

627 
(350) 
277 
38 

89 
1 260 
(841) 
25 
533 
159 

1 007 

684 
(392) 
292 
36 

97 
1 260 
(812) 
16 
561 
483 

1 372 

EN 

46 

   EN 

 
 
 
 
 
 
 
 
 
 
–  EAGF receivables 

This  item  covers  the  amounts  owed  by  beneficiaries  of  EAGF  at  31  December  2009,  as 
declared and certified by the Member States at 15 October 2009, and less 20% of the amount, 
which the Member States are allowed to retain to cover administrative costs. An estimation is 
made  for  the  receivables  arising  after  this  declaration  and  up  to  31  December  2009.  The 
Commission  also  estimates  a  write-down  for  the  amounts  owed  by  beneficiaries  that  are 
unlikely  to  be  recovered.  The  fact  that  such  an  adjustment  is  made  does  not  mean  that  the 
Commission is waiving future recovery of these amounts. 

–  Own resources 

It  should  be  noted  that  Member  States  are  entitled  to  withhold  25%  of  traditional  own 
resources as collection costs, thus the above figures are shown net of this deduction. Based on 
the estimations sent by Member States, a write-down of EUR 841 million has been deducted 
from receivables from Member States. However, this does not mean that the Commission is 
waiving recovery of the amounts covered by this value adjustment. 

–  Other receivables from Member States 

Other receivables from Member States include EUR 72 million of recovery of expenses and 
EAGF  advances  of  EUR  8  million  compared  to  EUR  120  million  and  EUR  244  million 
respectively in 2008. 

2.10.3  Accrued income and deferred charges 

Accrued income 
Deferred charges 
Other 

Total 

31.12.2009 
3 655 
230 
27 

EUR millions
31.12.2008 
5 402 
223 
30 

3 912 

5 655 

The main amount under this heading is accrued income of EUR 3 655 million: 

Accrued Income 

Own resources 
Agricultural assigned revenue Nov & Dec 
Sugar restructuring 
EAGF: non-executed conformity correction 
decisions 
Cohesion & Regional development Funds: 
financial corrections 
Fisheries fund 
Other accrued income 

31.12.2009 
2 209 
940 
0 
0 

404 

0 
102 

EUR millions

31.12.2008 

2 576 
1 261 
911 
368 

146 

32 
108 

Total accrued income 

3 655 

5 402 

Other  accrued  income  is  primarily  late  interest  income,  accrued  bank  interest  and  accrued 
interest on pre-financing amounts.  

EN 

47 

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Also included under this heading are deferred charges totalling EUR 230 million of which the 
main  amounts  are  anticipated  payments  of  EUR  53  million  paid  under  bilateral  fisheries 
agreements with third countries, EUR 36 million for the European school, EUR 44 million for 
office rental, EUR 22 million for office transformation and EUR 17 million interest on fixed 
asset leases. 

2.11  CASH AND CASH EQUIVALENTS 

Unrestricted cash: 

Accounts with Treasuries & Central Banks 
Current accounts 
Imprest accounts 
Transfers (cash in transit) 
Short-term deposits and other cash equivalents 
Total 

Restricted cash 

Total 

2.11.1  Unrestricted cash 

31.12.2009 

EUR millions
31.12.2008 

10 958 
1 967 
42 
9 
1 486 
14 462 
8 910 

23 372 

15 039 
1 415 
35 
26 
1 456 
17 971 
5 753 

23 724 

Unrestricted  cash  covers  all  the  funds  which  the  EU  keeps  in  its  accounts  in  each  Member 
State  and  EFTA  country  (treasury  or  central  bank),  as  well  as  in  current  accounts,  imprest 
accounts, short-term bank deposits and petty cash. 

The lower balance with Treasuries and Central Banks this year-end is due to the fact that EUR 
3.5  billion  had  to  be  repaid  to  Member  States  in  early  2010  following  Amending  Budget 
10/2009,  compared  to  a  figure  of  EUR  6.6  billion  last  year.  The  related  liability  is  shown 
under current payables – see also note 2.18.2 below. Also impacting the cash balance at year-
end is cash from assigned revenue not yet used of EUR 2.7 billion (2008: EUR 5.1 billion) 
which  cannot  be  refunded  to  Member  States  and  EUR  1.4  billion  (2008:  EUR  1.7  billion), 
which was withheld to cover payment appropriations carried over to 2010. The budget outturn 
of  EUR  2.3  billion  also  has  to  be  repaid  to  Member  States  through  deduction  from  their 
amounts due for 2010. 

Amounts shown as short-term deposits relate primarily to monies managed by fiduciaries on 
behalf of the EU for the purpose of implementing particular programmes funded by the EU 
budget. 

2.11.2  Restricted cash 

Restricted cash refers to amounts received in connection with fines issued by the Commission 
for which the case is still open. These are kept in specific deposit accounts that are not used 
for any other activities. 

EN 

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NON CURRENT LIABILITIES 

2.12  EMPLOYEE BENEFITS 

Pensions – Staff  
Pensions – Others  
Joint Sickness Insurance Scheme 

31.12.2009 
33 316 
663 
3 263 

EUR millions
31.12.2008 
32 867 
696 
3 993 

Total 

37 242 

37 556 

2.12.1  Pensions – Staff 

In accordance with Article 83 of the Staff Regulations, the payment of the benefits provided 
for in the staff pension scheme (PSEO: Pension Scheme of European Officials) constitutes a 
charge on the EU's budget. The scheme is not funded, but the Member States guarantee the 
payment  of  these  benefits  collectively  according  to  the  scale  fixed  for  the  financing  of  this 
expenditure.  In  addition,  officials  contribute  one  third  to  the  long-term  financing  of  this 
scheme via a compulsory contribution. The amount of this contribution is revised every year 
and updated as needed to guarantee that these contributions (currently 11.3% of basic salary) 
are sufficient to finance each year one third of the rights acquired during the year. 

The liabilities of the  pension  scheme were assessed on the basis of the number  of  staff  and 
retired staff at 31 December 2009 and on the rules of the Staff Regulations applicable at this 
date. This valuation took into account the benefits linked to seniority, invalidity and survival 
(different types of pensions as well as invalidity allowance). It was carried out in accordance 
with  the  methodology  of  IPSAS  25  (and  therefore  also  EU  accounting  rule  12).  This 
accounting  standard  requires  the  employer  to  determine  its  commitment  valued  on  an 
actuarial basis, taking into account both the contractual benefits during the active lifetime of 
employees, and the foreseeable increases in salaries. The actuarial valuation method used to 
calculate this liability is known as the projected unit credit method.  

The main actuarial assumptions available at the valuation date and used on the valuation were 
as follows: 

Actuarial Assumptions 
Nominal discount rate  
Expected inflation rate  
Real discount rate 
Probability of marriage: Man/Woman 
General Salary Growth/pension revaluation 

31.12.2009 
4.5% 
2.5% 
2.0% 
84%/38% 
0% 

31.12.2008 
3.9% 
1.8% 
2.1% 
84%/38% 
0.3% 

The 2008 International Civil Servants Life Table was used in the calculation. The departure 
on retirement is supposed to occur at the time when the official benefits from his full rights, 
taking  into  account  the  reduction  for  early  retirement  and  the  Barcelona  Incentive  for  late 
retirement,  at  the  latest  at  65  years  old.  The  calculations  of  gross  pensions  and  family 
allowances are based on the Staff Regulations. 

EN 

49 

   EN 

 
 
 
 
 
 
 
 
 
 
 
Liabilities cover the rights previously defined for the following persons: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

Staff in active employment at 31 December 2009 in all the Institutions and Agencies 
included in the pension scheme; 

Staff  in  a  deferred  situation,  i.e.  who  have  temporally  or  definitively  left  the 
Institutions but leaving their pension rights in the pension scheme (exclusively those 
having accumulated at least 10 years of service; 

Former officials and other servants benefiting from a retirement pension; 

Former officials and other servants benefiting from a invalidity pension; 

Former officials and other servants benefiting from an invalidity allowance; 

The recipients of a survivor pension (widows or widowers, orphans, dependants). 

The main movement since 31 December 2008 were as follows:. 

Movement in Staff Pension Liability 

Amount  

EUR millions

Gross pension liability as at 31 December 2008 

Service cost 
Interest cost 
Benefits paid 
Actuarial gains 
Change due to newcomers 

Gross pension liability as at 31 December 2009 

The principal points to note are: 

36 495 
1 360 
1 456 
(1 035) 
(1 248) 
187 
37 215 

–  The  gross  actuarial  liability  was  valued  at  EUR  37  215  million  at  31  December 
2009 (2008: EUR 36 495 million). Added to this is a co-efficient corrector effect 
of EUR 1 079 million (2008: EUR 1 277 million). Taxes payable by beneficiaries 
are deducted from the total gross liability to arrive at the net liability included on 
the balance sheet (since tax is deducted on the payment of pensions and credited 
to the EU's revenue in the year of payment.) This net liability (gross liability less 
taxes) at 31 December 2009 has thus been estimated at EUR 33 316 million. 

–  The  members  of  the  staff  pension  scheme  increased  by  5  082  individuals.  This 
increase  concerns  mainly  Temporary  Agents,  Contractual  Agents  and  MEP's 
assistants, the latter being included for the first time in the scheme. 

2.12.2  Pensions – Others 

This  refers  to  the  liability  relating  to  the  pension  obligations  towards  Members  and  former 
Members  of  the  Commission,  the  Court  of  Justice  (and  General  Court)  and  the  Court  of 
Auditors,  the  Secretaries  General  of  the  Council,  the  Ombudsman,  the  European  Data 
Protection Supervisor, and the European Union Civil Service Tribunal. Also included under 
this heading is a liability relating to the pensions of certain Members of Parliament. 

EN 

50 

   EN 

 
 
 
 
 
2.12.3  Joint Sickness Insurance Scheme 

A valuation is also made for the estimated liability that the EU has regarding its contributions 
to the Joint Sickness Insurance Scheme in relation to its retired staff. This gross liability has 
been  valued  at  EUR  3  535  million.  Plan  assets  of  EUR  272  million  are  deducted  from  this 
gross liability to arrive at the net amount. The calculations take into account active officials 
and pensioners from the various EU Institutions and Agencies, and their families, and active 
Members and pensioners from the Commission, the Court of Auditors, the Court of Justice, 
the  Council,  the  European  Data  Protection  Supervisor  and  the  European  Ombudsman.  The 
discount rate and the general salary growth used in the calculation are the same as those used 
in  the  staff  pension  valuation  (see  above).  Actuarial  gains  due  to  changes  in  actuarial 
assumptions are the main reason for the small decrease in the liability. 

Movement in Joint Sickness Insurance Liability 

Amount  

EUR millions

Gross liability as at 31 December 2008 

Normal cost 
Interest cost 
Benefits paid 
Actuarial gains 

Gross liability as at 31 December 2009 
Less Plan assets 
Net Liability as at 31 December 2009 

2.13  LONG-TERM PROVISIONS 

4 248 
168 
169 
(85) 
(965) 
3 535 
(272) 
3 263 

31.12.2008  Additional 
provisions 

Legal cases 
Nuclear site 
dismantlement 
Financial 
Other 

421 

819 

12 
89 

54 

0 

67 
45 

Total 

1 341 

166 

Unused 
amounts 
reversed 
(50) 

0 

0 
(12) 

(62) 

Amounts 
used 

Transfer 
to/from 
short-term 

Change in 
estimation 

EUR millions
31.12.2009 

(12) 

0 

0 
(37) 

(49) 

0 

(22) 

(3) 
(13) 

(38) 

0 

111 

0 
0 

413 

908 

76 
72 

111 

1 469 

Legal cases 

This is the estimate of amounts that will probably have to be paid out after 2010 in relation to 
a number of ongoing legal cases. The largest portion, EUR 409 million, concerns court cases 
pending at 31 December 2009 in relation to financial corrections for EAGF expenditure and 
other court cases concerning agricultural expenditure. 

Nuclear site dismantlement 

In  2008  a  consortium  of  independent  experts  made  an  update  of  their  2003  study  into  the 
estimated costs of the decommissioning of the JRC nuclear facilities and waste management 
programme. Their revised estimate of EUR 1 222 million (previously EUR 1 145 million) is 

EN 

51 

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taken as the basis for the provision to be included in the financial statements. In accordance 
with the EU accounting rules, this estimate is indexed for inflation and then discounted to its 
net present value. At 31 December 2009, this resulted in a total provision of EUR 930 million 
split  between  amounts  expected  to  be  paid  in  2010  (EUR  22  million)  and  afterwards  (EUR 
908  million.).  In  view  of  the  estimated  duration  of  this  programme  (around  30  years),  it 
should  be  pointed  out  that  there  is  some  uncertainty  about  this  estimate,  and  the  final  cost 
could be different from the amounts currently entered. 

Financial provisions 

Under  the  SME  Guarantee  Facility  1998,  the  SME  Guarantee  Facility  2001  and  the  SME 
Guarantee  Facility  2007  under  CIP,  the  European  Investment  Fund  (EIF)  is  empowered  to 
issue  guarantees  in  its  own  name  but  on  behalf  of  and  at  the  risk  of  the  Commission.  The 
financial  risk  linked  to  the  drawn  and  undrawn  guarantees  is,  however,  capped.  As  at  the 
balance  sheet  date,  financial  provisions  correspond  for  both  facilities  to  the  payment 
obligations towards financial intermediaries minus the net payment demands made up to that 
date. Long-term financial provisions are discounted to their net present value. 

Other provisions 

The main amount here concerns the estimates of the EU’s contributions to various  Member 
States  under  the  Emergency  Veterinary  Fund  for  certain  animal  disease  outbreaks,  totalling 
EUR  60  million  (2008:  EUR  101  million)  split  between  amounts  expected  to  be  settled  in 
2010 (EUR 25 million) and afterwards (EUR 35 million). 

2.14  LONG-TERM FINANCIAL LIABILITIES 

2.14.1  Borrowings 

Name 

31.12.2008 

New 
borrowings 

Repayments 

Exchange 
differences 

MFA 
BOP 
EURATOM 
ECSC in 
liquidation 

663 
2 004 
494 
282 

25 
7 200 
7 
- 

(95) 
- 
(11) 
(67) 

Total 

3 443 

7 232 

(173) 

- 
- 
(1) 
18 

17 

Change in 
carrying 
amount 
(6) 
99 
(5) 
(8) 

EUR millions 
31.12.2009 

587 
9 303 
484 
225 

80 

10 599 

Split of borrowings between long-term & short-term 

EUR millions

Borrowings 
MFA 
BOP 
EURATOM 
ECSC in liquidation  

Total 

EN 

Maturity< 1 year 

Maturity > 1 year 

547 
9 303 
484 
225 

10 559 

40 
- 
- 
- 

40 

52 

Total at 31.12.2009 
587 
9 303 
484 
225 

10 599 

   EN 

 
 
 
 
 
 
 
This  heading  includes  borrowings  due  by  the  European  Union  maturing  in  over  one  year. 
Borrowings include debts evidenced by certificates amounting to EUR 10 324 million (2008: 
EUR  3  131  million).  The  changes  in  carrying  amount  correspond  to  the  change  in  accrued 
interests plus, in the case of ECSC in liquidation’s borrowings, the amortisation of the year of 
any  material  transaction  costs  incurred  at  inception,  calculated  according  to  the  effective 
interest rate method. The effective interest rates (expressed as a range of interest rates) were 
as follows: 

Borrowings 

Macro Financial Assistance (MFA) 
Euratom 
BOP 
ECSC in liquidation 

31.12.2009 

31.12.2008 

0.9625%-4.54%
0.9031%-5.6775%
3.125%-3.625%
0.346%-9.2714%

3.022%-5.29%
3.348%-5.6775%
3.25%
4.939%-11.875% (*)

(*) higher bound value related to a fixed rate borrowing covered by an interest rate swap 

2.15  OTHER LONG-TERM LIABILITIES 

Finance Leasing debts 
Buildings paid for in instalments 
Other  

Total 

31.12.2009 
1 736 
395 
47 

EUR millions

31.12.2008 
1 770 
403 
53 

2 178 

2 226 

This item covers primarily leasing liabilities due in more than one year (see note 2.2 above). 
Also included are amounts relating to certain buildings that the Commission bought where the 
purchase  price  will  be  paid  off  in  instalments  -  these  are  not  leasing  contracts  since  title 
passed to the Commission immediately. 

CURRENT LIABILITIES 

2.16  SHORT-TERM PROVISIONS 

31.12.2008  Additional 
provisions 

Unused 
amounts 
reversed 

Amounts 
used 

Legal cases 
Nuclear site 
dismantlement 
Financial 
Other 

Total 

16 
89 

202 
41 

348 

18 
0 

14 
7 

39 

(3) 
0 

(50) 
(23) 

(76) 

(1) 
(28) 

(41) 
(5) 

(75) 

Transfers 
to/ from 
other 
headings 

0 
22 

3 
13 

38 

EUR millions
31.12.2009

Change in 
estimation 

0 
(61) 

0 
0 

(61) 

30 
22 

128 
33 

213 

This heading includes the portion of provisions which fall due for payment in less than one 
year's time. 

EN 

53 

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2.17  SHORT-TERM FINANCIAL LIABILITIES 

This heading includes borrowings (see note 2.14.1) of EUR 40 million that mature during the 
12  months  following  the  balance  sheet  date  (2008:  EUR  94  million  plus  EUR  25  million 
relating to held for trading liabilities). 

2.18  ACCOUNTS PAYABLE 

Current portion of long-term liabilities 
Current payables 
Sundry payables  
Accrued charges and deferred income 

31.12.2009 
71 
15 260 
133 
78 420 

EUR millions
31.12.2008 
64 
12 026 
115 
77 472 

Total 

93 884 

89 677 

2.18.1  Current portion of long-term liabilities 

Finance leasing liabilities 
Other  

Total 

2.18.2  Current payables 

Type 
Member States 
Suppliers and other 
Eligibility to be checked 

Total 

31.12.2009 
59 
12 

EUR millions

31.12.2008 
52 
12 

71 

64 

31.12.2009 
14 903 
944 
(587) 

EUR millions

31.12.2008 
11 386 
1 175 
(535) 

15 260 

12 026 

Current payables include cost statements received by the EU under the framework of the grant 
activities.  They  are  credited  for  the  amount  being  claimed  from  the  moment  the  demand  is 
received.  If  the  counterpart  is  a  Member  State,  they  are  classified  as  such.  It  is  the  same 
procedure for invoices and credit notes received under procurement activities. The cost claims 
concerned have been taken into account for the year-end cut off procedures. Following these 
cut  off  entries,  estimated  eligible  amounts  have  therefore  been  recorded  as  accrued  charges 
(see  note  2.18.3  below),  while  the  non-eligible  parts  remain  open  on  the  “eligibility  to  be 
checked” accounts. In order not to overestimate assets and liabilities, it has been decided to 
present the net amount to be paid under the current liabilities. 

Member States 

The primary amounts here relate to EUR 11 160 million (2008: EUR 4 660 million) in unpaid 
cost claims for Structural Fund actions. Also included here is EUR 3 524 million due back to 
Member  States  following  a  amending  budget  made  at  the  end  of  2009  (2008:  EUR  6  627 
million) - this was paid to Member States in February 2010. 

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Suppliers and other 

Included under this heading are amounts owed following grant and procurement activities, as 
well as amounts payable to public bodies and non-consolidated entities, (e.g. the EDF). 

Eligibility to be checked 

Payables are reduced by EUR 587 million, being that part of the requests for reimbursement 
received,  but  not  yet  checked,  that  was  considered  to  be  ineligible.  The  largest  amounts 
concern the Structural Actions DGs. 

2.18.3  Accrued charges and deferred income 

Accrued charges 
Deferred income 
Other 

Total 

The split of accrued charges is as follows: 

31.12.2009 
76 435 
1 976 
9 

EUR millions

31.12.2008 
77 260 
50 
162 

78 420 

77 472 

Accrued Charges 

31.12.2009 

31.12.2008 

EUR millions

EAGF accrued charges: 

Expenses 16/10/2009 to 31/12/2009 
Direct Aid 
Sugar restructuring 
Others 
Total EAGF: 

Structural Actions accrued charges: 

EAFRD & EAGGF-G 
ERDF & innovative actions 
Cohesion fund 
ISPA 
ESF 
Total Structural Funds: 

Other accrued charges: 

R&D 
Other 
Total Others: 

Total accrued charges 

32 087 
12 195 
735 
(55) 
44 962 

9 076 
11 777 
980 
3 
5 411 
27 247 

1 687 
2 539 
4 226 

76 435 

30 415 
12 682 
3 787 
(13) 
46 871 

7 004 
10 687 
2 810 
4 
4 596 
25 101 

1 978 
3 310 
5 288 

77 260 

After  a  slow  start-up  in  previous  years,  the  Structural  Actions'  2007-2013  programmes 
reached a normal level in 2009, thus explaining the increases under that heading above. This 
increase is compensated by a decrease in accrued charges for sugar restructuring, as it appears 
part of these funds would not actually be used. 

The  significant  increase  in  deferred  income  is  due  to  the  advance  payment  of  2010  own 
resources contributions by two Member States. 

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NET ASSETS 

2.19  RESERVES 

Fair value reserve 
Other reserves: 

Guarantee Fund 
Revaluation reserve 
Borrowing and lending activities 
Other 
Total 

Total 

31.12.2009 

31.12.2008 

EUR millions

69 

1 472 
57 
1 511 
214 
3 254 

3 323 

41 

1 276 
57 
1 528 
213 
3 074 

3 115 

2.19.1  Fair value reserve 

In  accordance  with  the  accounting  rules,  the  adjustment  to  fair  value  of  available-for-sale 
assets is accounted for through the fair value reserve. 

2.19.2  Other reserves 

Guarantee Fund 

See also note 2.3.3 concerning the operation of the Guarantee Fund. This reserve reflects the 
9% target amount of the outstanding amounts guaranteed by the Fund that is required to be 
kept as assets. 

Revaluation reserve 

The  revaluation  reserve  comprises  the  revaluations  of  property,  plant  and  equipment.  The 
balance at the year-end of EUR 57 million relates to a revaluation of Commission land and 
buildings, which had already occurred before the transition to the new accounting rules. 

Borrowing and lending activities reserve 

The amount relates to the ECSC in liquidation reserve for the assets of the Research Fund for 
Coal and Steel. This reserve was created in the context of the winding-up of the ECSC. 

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2.20  AMOUNTS TO BE CALLED FROM MEMBER STATES 

Amounts to be called from Member States at 31 December 2008 

Return of 2008 budget surplus to Member States 
Movement in Guarantee Fund reserve 
Other reserve movements 
ECSC in liquidation: allocation of 2008 result 
Economic outturn (surplus) for the year 

Total amounts to be called from Members States at 31 December 2009 

Split between: 

Employee Benefits 
Other amounts 

EUR millions 

Amount 

50 539 
1 796 
196 
(10) 
(15) 
(4 457) 

48 049 

37 242 
10 807 

This  amount  represents  that  part  of  the  expenses  already  incurred  by  the  EU  up  to  31 
December 2009 that must be funded by future budgets. Many expenses are recognised under 
accrual accounting  rules  in the  year N although they may be actually paid in  year  N+1  and 
funded  by  using  the  budget  of  year  N+1.  The  inclusion  in  the  accounts  of  these  liabilities 
coupled with the fact that the corresponding amounts are financed from future budgets, results 
in  liabilities  greatly  exceeding  assets  at  the  year-end.  The  most  significant  amounts  to  be 
highlighted are the EAGF activities. The amount of payments due to the Member States for 
the period 16 October to 31 December 2009 was EUR 32 billion. The majority of the amounts 
to be called are in fact paid by the Member States in less than 12 months after the end of the 
financial year in question as part of the budget of the following year. 

There was a decrease in the other amounts to be called from Members States compared to last 
year, EUR 10.8 billion compared to EUR 13 billion in 2008. This decrease is due mainly to 
the increase of EUR 9.5 billion increase in pre-financing (notes 2.5 & 2.9) offset by the EUR 
4.2 billion increase in accounts payable (see note 2.18) and the EUR 3.3 billion decrease in 
short-term receivables (note 2.10). 

It is essentially only the employee benefits obligations of the EU towards its staff which are 
paid out over a longer period, noting that the funding of the pension payments by the annual 
budgets is guaranteed  by the Member  States.  For information  purposes only,  an estimate of 
the split of future employee benefit payments is given below: 

Short-term: amounts to be paid in 2010  
Long-term: amounts to be paid after 2010 

EUR millions 
Amount 
1 214 
36 028 

Total employee benefits liability at 31.12.2009 

37 242 

It should also be noted that the above has no effect on the budget outturn – budget revenue 
should always equal or exceed budget expenditure and any excess of revenue is returned to 
Member States. 

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3. 

NOTES TO THE ECONOMIC OUTTURN ACCOUNT 

3.1  OWN RESOURCE AND CONTRIBUTIONS REVENUE 

Note 
3.1.1 

Own resource revenue: 
GNI resources 
VAT resources 
Traditional own resources: 
Agricultural duties 
Custom duties 
Sugar levies 
Total traditional own resources 

Budgetary adjustments 
Contributions of third countries (incl. EFTA countries) 

3.1.2 

2009 

81 978 
12 795 

0 
14 002 
130 
14 132 
1 399 
233 

EUR millions

2008 

74 479 
19 008 

1 184 
15 196 
702 
17 082 
1 930 
214 

Total 

110 537 

112 713 

Own  resources  revenue  is  the  primary  element  of  the  European  Union's  operating  revenue. 
Thus the bulk of expenditure is financed by own resources as other revenue represents only a 
minor part of the total financing. 

3.1.1  Own resource revenue 

There  are  three  categories  of  own  resources:  traditional  own  resources,  the  VAT-based 
resource  and  the  GNI-based  resource.  Traditional  own  resources,  in  turn,  comprise  sugar 
levies and customs duties. A correction mechanism in respect of budgetary imbalances (UK 
Rebate) as well as a gross reduction in the annual GNI-based contribution of Netherlands and 
Sweden are also part of the own resources system. Member States retain, by way of collection 
costs,  25%  of  traditional  own  resources,  and  the  above  amounts  are  shown  net  of  this 
deduction. 

VAT-based  own resources derive from the application of a uniform rate, fixed at 0.30%, to 
the harmonised VAT base for all Member States, (except for the period 2007-2013 in which 
the rate of call for Austria is fixed at 0.225%, for Germany at 0.15% and for Netherlands and 
Sweden at 0.10%), a base which is capped at 50% of GNI for all Member States. The GNI-
based  resource  is  a  variable  resource  intended  to  supply  the  revenue  required,  in  any  given 
year,  to  cover  expenditure  exceeding  the  amount  collected  from  traditional  own  resources, 
VAT based resources and miscellaneous revenue. The revenue derives from the application of 
a uniform rate to the aggregate GNI of all the Member States. 

Compared to 2008, there has been a EUR 6.2 billion decrease in the VAT resource revenue, 
which was more than offset by an increase of EUR 7.5 billion in the GNI based own resource 
revenue. These movements are explained mainly by the different provisions laid down in the 
Council Decision No. 2007/436/EC, Euratom of 7 June 2007 on the system of the European 
Union's  own  resources  (ORD  2007)  that  replaced  those  of  the  previous  own  resources 
decision from 2000. There is no agricultural duties revenue recorded in 2009 since, following 
the  entry  into  force  in  2009  of  the  ORD  2007,  these  duties  are  now  considered  as  custom 
duties.  There  has  been  a  EUR  1.1  billion  decrease  in  custom  duties  caused  by  a  significant 

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reduction for EU-27 in imports in value terms in 2009 compared with 2008 and a EUR 572 
million decrease in sugar levies because in 2008 there had been an extra revenue coming from 
the one-off amounts from additional sugar quotas. 

3.1.2  Budgetary adjustments 

The budgetary adjustments include the budget surplus from 2008 (EUR 1 796 million) which 
is indirectly refunded to Member States by deduction of the amounts of own resources they 
have to transfer to the EU in the following year – thus it is a revenue for 2009. According to 
the  ORD  2007,  the  United  Kingdom  is  granted  a  correction  in  respect  of  budgetary 
imbalances.  As  this  amount  is  financed  by  the  other  Member  States  there  should  be  no  net 
effect on the budgetary or economic outturn. However, an amount of EUR 319 million was 
registered  under  this  heading  being  the  differences  in  the  Euro  rates  used  for  budgetary 
purposes (see Article 10 (3) of Regulation No 1150/2000) and the rates in force at the time 
when those Member States not part of the EMU actually made their payments. 

3.2  OTHER OPERATING REVENUE 

Fines 
Agricultural levies 
Recovery of expenses: 

Direct centralised management 
Indirect centralised management 
Decentralised management 
Shared management 
Total 

Note 
3.2.1 
3.2.2 
3.2.3 

Revenue from administrative operations: 

3.2.4 

Staff 
Property, plant and equipment related revenue 
Other administrative revenue 
Total 

Miscellaneous operating revenue: 

3.2.5 

Adjustments/provisions 
Exchange gains 
Other 
Total 

Total 

3.2.1  Fines 

2009 
2 648 
705 

63 
6 
41 
1 066 
1 176 

1 010 
33 
165 
1 208 

150 
618 
1 027 
1 795 

7 532 

EUR millions

2008 
3 171 
2 299 

61 
4 
90 
1 349 
1 504 

974 
25 
149 
1 148 

71 
269 
1 269 
1 609 

9 731 

These  revenues  relate  to  fines  imposed  by  the  Commission  for  infringement  of  competition 
rules.  Receivables  and  related  revenues  are  recognised  when  the  Commission  decision 
imposing a fine has been taken and it is officially notified to the addressee. 

3.2.2  Agricultural levies 

These  amounts  concern  milk  levies  of  EUR  99  million  (2008:  EUR  338  million)  and  sugar 
levies of EUR 606 million (2008: EUR 1 961 million). Milk levies are a market management 
tool  aimed  at  penalising  milk  producers  who  exceed  their  reference  quantities.  As  it  is  not 

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linked  to  prior  payments  by  the  Commission,  it  is  in  practice  considered  as  revenue  for  a 
specific  purpose.  Milk  quotas  are  being  phased  out,  which  explains  the  decrease  in  levies 
revenue. From the 2008/2009 agricultural year onwards quotas will be increased annually by 
1% until their abolition in 2015. 

Sugar levies relate to the sugar restructuring fund, whereby the reform of the sugar sector has 
lowered the internal price of sugar in order to reduce the gap between the EU price and the 
international price. To encourage the less competitive sugar producers to leave the market, a 
self-financing  restructuring  fund  was  created,  financed  by  revenue  stemming  from  a 
temporary  tax  levied  on  sugar  producers,  which  is  treated  as  assigned  revenue.  While  the 
scheme's  payments  will  continue  until  September  2012  all  the  revenue  related  to  the  sugar 
restructuring fund has already been declared by Member States at 31 December 2009. 

3.2.3  Recovery of expenses 

This  heading  represents  the  recovery  orders  issued  by  the  Commission  and  the  deduction 
from  subsequent  payments  recorded  in  the  Commission's  accounting  system,  to  recover 
expenditures previously paid out from the general budget, based on controls, closed audits or 
eligibility analysis, together with recovery orders issued by Member States to beneficiaries of 
EAGF  expenditure.  It  also  includes  the  variation  of  accrued  income  estimations  from  the 
previous year-end to the current. It does not, however, show the full extent of the recovery of 
EU  expenditure,  particularly  for  the  significant  spending  areas  of  Structural  Actions  where 
specific mechanisms are in place to ensure the return of ineligible monies, most of which do 
not involve the issuance of a recovery order. Recoveries of pre-financing amounts are also not 
included as revenue, in accordance with the EU accounting rules. 

The main amount, EUR 1 066 million, relates to shared management and is made up of EUR 
453  million  concerning  the  European  Agricultural  Guarantee  Fund  (EAGF)  and  EUR  613 
million for Structural Actions. 

(a) Agriculture: EAGF 

In  the  framework  of  agriculture,  amounts  accounted  for  as  revenue  of  the  year  under  this 
heading are EUR 453 million, made up as follows: 

–  conformity corrections decided during the year, EUR 347 million; 

–  fraud and irregularities EUR 106 million: reimbursements declared by Member States and 
recovered during the year, EUR 163 million, less the decrease in the outstanding amounts 
declared by Member States to be recovered at year-end concerning fraud and irregularities, 
EUR 57 million (EUR 627 million at year-end 2009 compared to EUR 684 million at year-
end 2008) – see also note 2.10.2. 

At  31  December  2009  the  amount  of  EAGF  expenditure  subject  to  future  corrections 
following audits which were not yet finalised totalled EUR 2.8 billion (see note 6.4.1.). 

(b) Structural Actions:  

The  recovery  of  expenditure  under  the  Structural  Actions  included  under  this  heading 
amounted to EUR 613 million (2008: EUR 349 million). This sub-heading includes recovery 
orders issued by the Commission to recover undue expenditure made in previous years for an 
amount of EUR 406 million, and the variation (increase) of the accrued income at year-end 
for EUR 206 million. 

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Recovery orders are issued only in the following cases: 

–  formal  financial  correction  decisions  by  the  Commission  following  the  detection  of 

irregular expenditure in the amounts claimed by Member States 

–  adjustments at closure of a programme leading to a reduction in the EU contribution where 
a  Member  State  has  not  declared  sufficient  eligible  expenditure  to  justify  the  total  pre-
financing  and  interim  payments  already  made;  such  operations  may  be  without  a  formal 
Commission decision if accepted by the Member State; 

–  repayment  of  amounts  recovered  after  closure  following  the  conclusion  of  legal 

proceedings which were pending at the time of closure. 

Other recovery orders issued under Structural Actions concern the recovery of pre-financing. 
These  amounts  are  not  shown  as  revenue,  but  credited  to  the  pre-financing  heading  on  the 
balance sheet. 

At  31  December  2009,  EUR  1.1  billion  is  estimated  as  the  amount  of  potential  financial 
corrections in the process of being decided - see note 6.4.2 for more details. 

3.2.4  Revenue from administrative operations 

This  revenue  arises  mainly  from  deductions  from  staff  salaries  and  is  made  up  primarily  of 
two amounts – pension contributions and taxes on income. 

3.2.5  Miscellaneous operating revenue 

An  amount  of  EUR  376  million  (2008: EUR 321 million) relates to amounts received from 
accession  countries.  The  main  reason  for  the  increase  in  miscellaneous  operating  revenues 
compared with last year is the increase in exchange gains (see below). This was slightly offset 
by the decrease in old pre-financing amounts included on the balance sheet for the first time, 
the counter-part of which appears under this heading (EUR 5 million compared to EUR 241 
million in 2008). 

Exchange gains, except on financial activities dealt with in note 3.5 below, are also included 
under this heading. These arise from the everyday activities and related transactions made in 
currencies  other  than  the  Euro,  as  well  as  the  year-end  revaluation  required  to  prepare  the 
accounts. They contain both realised and unrealised gains. 

Looking at the net position, there was a net exchange gain for the year of EUR 185 million 
(2008:  net  loss  of  EUR  504  million).  This  is  split  between  unrealised  and  realised  amounts 
and the Commission accounted almost all of the amounts: 

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Net Unrealised Exchange Rate Gain:  

The  net  gain  of  EUR  132  million  is  the  result  of  the  year  end  revaluation  of  outstanding 
balances in foreign currencies. Most of the gain (EUR 87 million) is related to the GBP and 
SEK currencies, both of which appreciated against the EUR in 2009.  

Significant balances in foreign currencies, including GBP and SEK, are held at year end by 
the Commission on its own resources bank accounts. In accordance with Council Regulation 
1150/2000 these funds are kept by the Commission on its own resources accounts, where they 
are  paid  by  Member  States,  and  are  drawn  on  to  the  extent  necessary  to  cover  the 
Commission's cash requirements arising out of the implementation of the budget. 

Net Realised Exchange Rate Gain:  

Most of the overall exchange rate gain of EUR 53 million arises from accounting transactions 
related  to  the  own  resources  paid  in  national  currencies  other  than  EUR  by  non  Euro-zone 
Member States. It results from the difference between the accounting exchange rate at which 
these amounts are accounted for by the Commission when they are received, and the market 
exchange  rate  at  which  they  are  converted  to  EUR  before  being  used  to  cover  the 
Commission's payments. The accounting exchange rate for any given month is fixed, on the 
basis  of  the  market  exchange  rate  of  the  penultimate  day  of  the  preceding  month.  Own 
resources  are  accounted  for  at  such  exchange  rates  when  they  are  received  and  are  then 
converted in EUR at market exchange rates at later dates.  

In the course of 2009 several European currencies, including in particular GBP and RON have 
significantly  appreciated  in  value.  As  a  result  of  this  the  market  exchange  rates  applied  in 
certain  periods  for  the  conversion  of  Commission's  own  resources  in  these  currencies  were 
regularly  higher than the accounting  rates at which they were accounted for when  received. 
The  remaining  part  of  the  difference  is  related  to  other  accounting  transactions  including 
payments executed by the Commission in other currencies than EUR. 

The change in overall exchange rate differences between 2008 and 2009 from a net loss to a 
net gain is a result of the significant change in currency rates in the course of those two years. 
During 2008 several European currencies depreciated significantly versus EUR, while in 2009 
this trend partly reversed. 

3.3 

ADMINISTRATIVE EXPENSES 

Staff expenses 
Depreciation and impairment 
Other administrative expenses 
Total 

2009 
4 898 
436 
2 799 
8 133 

EUR millions
2008 
4 563 
330 
2 827 
7 720 

These are administrative expenses incurred as part of the activities of the EU and include staff 
costs, depreciation and other costs associated with the running of the institutions and agencies 
(such as rental costs, maintenance costs, supplies, training costs, etc). 

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3.4  OPERATING EXPENSES 

Primary operating expenses: 

Direct centralised management 
Indirect centralised management 
Decentralised management 
Shared management 
Joint management 
Total 

Other operating expenses: 
Adjustments/provisions 
Exchange losses 
Other 
Total 

Total 

3.4.1  Primary operating expenses 

Note 
3.4.1 

3.4.2 

2009 

8 744 
3 605 
137 
89 681 
1 655 
103 822 

199 
432 
481 
1 112 

EUR millions

2008 

7 998 
3 077 
1 278 
81 839 
1 188 
95 380 

278 
773 
783 
1 834 

104 934 

97 214 

The  European  Union’s  operating  expenditure  covers  the  various  headings  of  the  financial 
perspective and takes different forms, depending on how the money is paid out and managed. 
The  majority  of  the  expenditure,  86%,  falls  under  the  heading  “Shared  Management” 
involving the delegation of tasks to Member States, covering such areas as EAGF spending 
and actions financed through the different Structural Actions (the regional development fund, 
the  social  fund,  the  agricultural  fund  for  rural  development,  the  cohesion  fund  and  the 
fisheries fund). 

The  increase  in  2009  is  due  mainly  to  the  Structural  Actions  for  the  programming  period 
2007-2013. After a slow start-up in previous years, these programmes reached a normal level 
in 2009, while the actions for 2000-2006 are winding-up. 

3.4.2  Other operating expenses 

Exchange  losses,  except  on  financial  activities  dealt  with  in  note  3.6  below,  occur  on  the 
everyday activities and related transactions made in currencies other than the Euro, as well as 
the  year-end  revaluation  required  to  prepare  the  accounts  –  they  are  both  realised  and 
unrealised. 

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3.5 

FINANCIAL REVENUE 

Dividend income (from Venture Capital Funds) 
Interest income: 

On pre-financing 
On late payments 
On swaps 
On available for sale assets 
On loans 
On cash & cash equivalents 
Other 
Total 

Other financial income: 

Realised gain on sale of financial assets 
Other 
Total 

Present value adjustments 
Exchange gains 
Total 

3.6 

FINANCIAL EXPENSES 

Interest expenses: 

Leasing 
On swaps 
On borrowings 
Other 
Total 

Other financial expenses: 

Adjustments to financial provisions 
Financial charges on budgetary instruments 
Realised loss on sale of financial assets 
Impairment losses on financial assets 
Other 
Total 

Present value adjustments 
Exchange losses 
Total 

2009 
14 

59 
132 
2 
100 
265 
158 
3 
719 

10 
76 
86 
10 
6 
835 

EUR millions
2008 

22 

50 
26 
13 
102 
105 
349 
3 
648 

4 
11 
15 
3 
10 
698 

2009 

EUR millions
2008 

95 
2 
248 
20 
365 

39 
73 
0 
15 
57 
184 
0 
45 
594 

91 
10 
90 
9 
200 

12 
50 
8 
11 
56 
137 
118 
12 
467 

SHARE  OF  NET  SURPLUS/(DEFICIT)  OF  ASSOCIATES  &  JOINT 

3.7 
VENTURES 

In accordance with the equity method of accounting, the EU includes in its economic outturn 
account its share of the net surplus/deficit of its associates and joint ventures (see also notes 
2.3.1 & 2.3.2). 

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3.8 

SEGMENT REPORTING 

The  segment  report  gives  the  split  of  the  operating  revenues  and  expenses  by  policy  area, 
based on the Activity Based Budget structure, within the Commission. These policy areas are 
grouped for financial statement presentation purposes under three larger headings – Activities 
within the European Union, Activities outside the European Union and Services & other. 

“Activities within the European Union” is the largest of these headings as it covers the many 
policy  areas  within  the  European  Union.  “Activities  outside  the  European  Union”  concerns 
the policies operated outside the EU, such as trade and aid. “Services & other” are the internal 
and horizontal activities necessary for the functioning of the EU Institutions and bodies. 

The  consolidated  agencies  are  integrated  into  the  different  policy  areas.  Other  Institutions, 
aside  from  the  Commission  are  grouped  in  a  specific  policy  area.  The  various  policy  areas 
represent  gross  figures  before  consolidation  eliminations  and  the  consolidation  eliminations 
are done globally in one column. 

Note that own resources and contributions are not split amongst the various activities as these 
are calculated, collected and managed by central Commission services. They are shown here 
so as to allow for comparison of the net result with the economic outturn account. 

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SEGMENT REPORTING – SUMMARY 

  Activities within 
the EU 

Activities outside 
the EU 

Services & Other 

ECSC in 
Liquidation 

Other Institutions

Consolidation 
eliminations 

EUR millions 

TOTAL 

2 648
705
1 110
79
1 930
6 472

(1 732)

(70)
(658)
(2 460)

(6 279)
(2 971) 
(32)
(89 546)
(368)
(726)
(99 922)
(102 382)
(95 910)

0
0
64
37
81
182

(737)

(18)
(311)
(1 066)

(2 843)
(616)
(105)
(9)
(1 287)
(9)
(4 869)
(5 935)
(5 753)

0 
0 
2 
840 
707 
1 549 

(1 151) 

(118) 
(853) 
(2 122) 

(278) 
(4) 
0 
(126) 
0 
(468) 
(876) 
(2 998) 
(1 449) 

0
0
0
0
2
2

0

0
0
0

0
0
0
0
0
(61)
(61)
(61)
(59)

0
0
0
377
1
378

(1 287)

(230)
(1 225)
(2 742)

0
0
0
0
0
0
0
(2 742)
(2 364)

0
0
0
(125)
(926)
(1 051)

9

0
248
257

656
(14)
0
0
0
152
794
1 051
0

Other operating revenue: 
Fines 
Agricultural levies 
Recovery of expenses 
Revenue from admin operations 
Other operating revenue 
OTHER OPERATING REVENUE 
Administrative expenses: 
Staff expenses 
Intangible  assets  and  PPE  related 
expenses 
Other administrative expenses 

Operating expenses: 
Direct centralised management 
Indirect centralised management 
Decentralised management 
Shared management 
Joint management 
Other operating expenses 

TOTAL OPERATING EXPENSES 
NET OPERATING EXPENSES 
Own resource and contributions revenue 
Surplus from operating activities 
Net financial income 
Movement in employee benefits liability 
Share of associates/joint venture results 

Economic outturn for the year 

EN 

66 

2 648 
705 
1 176 
1 208 
1 795 
7 532 

(4 898) 

(436) 
(2 799) 
(8 133) 

(8 744) 
(3 605) 
(137) 
(89 681) 
(1 655) 
(1 112) 
(104 934) 
(113 067) 
(105 535) 
110 537 
5 002 
241 
(683) 
(103) 

4 457 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
Other operating revenue: 
Fines 
Agricultural levies 
Recovery of expenses 
Revenue from administrative operations 
Other operating revenue 
OTHER OPERATING REVENUE 
Administrative expenses: 
Staff expenses 
Intangible assets and PPE related expenses 
Other administrative expenses 
Operating expenses: 
Centralised direct management 
Centralised indirect management 
Decentralised management 
Shared management 
Joint management 
Other operating expenses 
TOTAL OPERATING EXPENSES 
NET OPERATING EXPENSES 

Other operating revenue: 
Fines 
Agricultural levies 
Recovery of expenses 
Revenue from administrative operations 
Other operating revenue 
OTHER OPERATING REVENUE 
Administrative expenses: 
Staff expenses 
Intangible assets and PPE related expenses 
Other administrative expenses 
Operating expenses: 
Centralised direct management 
Centralised indirect management 
Decentralised management 
Shared management 
Joint management 
Other operating expenses 
TOTAL OPERATING EXPENSES 
NET OPERATING EXPENSES 

EN 

SEGMENT REPORTING – ACTIVITIES WITHIN THE EU 

Economic & 
Financial affairs 

Enterprise & 
Industry 

Competition 

Employment 

Agriculture 

Transport & 
Energy 

Environment 

Research 

EUR millions 
Information Society 

0
0
3
0
7
10
(53)
(46)
0
(7)
(35)
(35)
0
0
0
0
0
(88)
(78)

8
0
5
9
261
283
(243)
(161)
(15)
(67)
(358)
(159)
(39)
0
0
(68)
(92)
(601)
(318)

  Joint Research 

Fisheries 

Centre 

2 626
0
0
0
0
2 626
(74)
(68)
0
(6)
(16)
0
0
0
0
0
(16)
(90)
 2 536
Internal Market

0 
0 
60 
0 
33 
93 
(102) 
(75) 
(1) 
(26) 
(8 153) 
(182) 
0 
(3) 
(7 952) 
0 
(16) 
(8 255) 
(8 162) 

0
705
492
0
84
1 281
(108)
(88)
0
(20)
(55 539)
(43)
0
(8)
(55 427)
0
(61)
(55 647)
(54 366)

2
0
3
17
203
225
(265)
(178)
(9)
(78)
(1 726)
(607)
(667)
(11)
0
(285)
(156)
(1 991)
(1 766)

10
0
1
0
35
46
(100)
(74)
(1)
(25)
(192)
(173)
(4)
0
0
0
(15)
(292)
(246)

Regional Policy 

Taxation & 
Customs 

Education & 
Culture 

Health & 
Consumer 
protection 

0 
0 
6 
1 
513 
520 
(292) 
(197) 
(2) 
(93) 
(3 646) 
(2 647) 
(922) 
0 
0 
0 
(77) 
(3 938) 
(3 418) 
Justice, Freedom 
& Security 

0
0
0
45
159
204
(308)
(226)
(28)
(54)
(143)
(29)
0
0
0
0
(114)
(451)
(247)

0
0
23
0
8
31
(39)
(32)
0
(7)
(544)
(282)
0
0
(260)
0
(2)
(583)
(552)

0 
0 
497 
0 
(1) 
496 
(69) 
(55) 
0 
(14) 
(25 789) 
(37) 
(17) 
(10) 
(25 710) 
(15) 
0 
(25 858) 
(25 362) 

2
0
0
0
190
192
(161)
(105)
(4)
(52)
(36)
(7)
0
0
0
0
(29)
(197)
(5)

67 

0
0
0
0
1
1
(49)
(40)
(2)
(7)
(65)
(65)
0
0
0
0
0
(114)
(113)

0
0
4
1
156
161
(177)
(88)
(1)
(88)
(1 341)
(157)
(1 179)
0
0
0
(5)
(1 518)
(1 357)

0
0
1
1
136
138
(177)
(120)
(4)
(53)
(495)
(395)
(40)
0
0
0
(60)
(672)
(534)

0 
0 
3 
1 
140 
144 
(116) 
(83) 
(3) 
(30) 
(624) 
(353) 
0 
0 
(197) 
0 
(74) 
(740) 
(596) 

0 
0 
12 
4 
5 
21 
(127) 
(96) 
0 
(31) 
(1 220) 
(1 108) 
(103) 
0 
0 
0 
(9) 
(1 347) 
(1 326) 

Total Activities 
within the EU 

2 648 
705 
1 110 
79 
1 930 
6 472 
(2 460) 
(1 732) 
(70) 
(658) 
(99 922) 
(6 279) 
(2 971) 
(32) 
(89 546) 
(368) 
(726) 
(102 382) 
(95 910) 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other operating revenue: 
Recovery of expenses 
Revenue from administrative operations 
Other operating revenue 

OTHER OPERATING REVENUE 
Administrative expenses: 
Staff expenses 
Intangible assets and PPE related expenses 
Other administrative expenses 
Operating expenses: 
Direct centralised management 
Indirect centralised management 
Decentralised management 
Shared management 
Joint management 
Other operating expenses 

TOTAL OPERATING EXPENSES 
NET OPERATING EXPENSES 

Other operating revenue: 
Recovery of expenses 
Revenue from administrative operations 
Other operating revenue 
OTHER OPERATING REVENUE 
Administrative expenses: 
Staff expenses 
Intangible assets and PPE related expenses 
Other administrative expenses 
Operating expenses: 
Direct centralised management 
Indirect centralised management 
Shared management 
Other operating expenses 
TOTAL OPERATING EXPENSES 
NET OPERATING EXPENSES 

EN 

SEGMENT REPORTING – ACTIVITIES OUTSIDE THE EU 

EUR millions 

External Relations 

Trade 

Development 

Enlargement 

Humanitarian Aid 

Total Activities outside the EU 

14
37

81
132
(799)
(511)
(18)
(270)
(2 924)
(1 514)
(563)
(185)
(26)
(634)

(2)
(3 723)

(3 591)

0
0

0
0
(50)
(45)
0
(5)
(12)
(6)
0
0
0
(6)

0
(62)

(62)

9
0

(1)
8
(146)
(129)
0
(17)
(939)
(610)
(1)
(122)
17
(218)

(5)
(1 085)

(1 077)

39
0

1
40
(45)
(36)
0
(9)
(142)
(296)
(52)
202
0
6

(2)
(187)

(147)

2
0

0
2
(26)
(16)
0
(10)
(852)
(417)
0
0
0
(435)

0
(878)

(876)

64 
37 

81 
182 
(1 066) 
(737) 
(18) 
(311) 
(4 869) 
(2 843) 
(616) 
(105) 
(9) 
(1 287) 

(9) 
(5 935) 

(5 753) 

SEGMENT REPORTING – SERVICES & OTHER 

Press & 
Communication

Anti-Fraud 
Office 

Co-ordination 

Personnel & 
Administration

Eurostat 

Budget 

Audit 

Languages 

Other 

Total Services & 
Other 

1
0
(2)
(1)
(96)
(61)
(2)
(33)
(98)
(94)
(4)
0
0
(194)
(195)

0
6
0
6
(49)
(36)
0
(13)
(13)
(13)
0
0
0
(62)
(56)

0
0
6
6
(148)
(129)
0
(19)
0
0
0
0
0
(148)
(142)

1
692
54
747
(1 360)
(564)
(116)
(680)
(36)
(32)
0
0
(4)
(1 396)
(649)

68 

0
0
(1)
(1)
(65)
(60)
0
(5)
(30)
(29)
0
0
(1)
(95)
(96)

0
50
(2)
48
(51)
(38)
0
(13)
(261)
(109)
0
(126)
(26)
(312)
(264)

0
0
0
0
(8)
(8)
0
0
0
0
0
0
0
(8)
(8)

0
92
47
139
(380)
(290)
0
(90)
(14)
(1)
0
0
(13)
(394)
(255)

0 
0 
605 
605 
35 
35 
0 
0 
(424) 
0 
0 
0 
(424) 
(389) 
216 

2 
840 
707 
1 549 
(2 122) 
(1 151) 
(118) 
(853) 
(876) 
(278) 
(4) 
(126) 
(468) 
(2 998) 
(1 449) 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4. 

NOTES TO THE CASHFLOW TABLE 

4.1 

PURPOSE AND PREPARATION OF THE CASHFLOW TABLE 

Cash  flow  information  is  used  to  provide  a  basis  for  assessing  the  ability  of  the  EU  to 
generate cash and cash equivalents, and its need to utilise those cash flows. 

The cashflow table is prepared using the indirect method. This means that the net surplus or 
deficit  for  the  financial  year  is  adjusted  for the  effects  of  transactions  of  a  non-cash  nature, 
any deferrals or accruals of past or future operating cash receipts or payments, and items of 
revenue or expense associated with investing cash flows. Cash flows arising from transactions 
in a foreign currency are recorded in the EU's reporting currency (Euro), by applying to the 
foreign currency amount the exchange rate between the euro and the foreign currency at the 
date of the cash flow. 

The cashflow table presented reports cash flows during the period classified by operating and 
investing activities (the EU does not have financing activities). 

4.2  OPERATING ACTIVITIES 

Operating activities are the activities of the EU that are not investing activities. These are the 
majority  of  the  activities  performed.  Loans  granted  to  beneficiaries  (and  the  related 
borrowings, when applicable) are not considered as investing (or financing) activities as they 
are part of the general objectives and thus daily operations of the EU. Operating activities also 
include  investments  such  as  EIF,  EBRD  and  venture  capital  funds.  Indeed,  the  objective  of 
these activities is to participate in the achievement of policy targeted outcomes. 

4.3 

INVESTING ACTIVITIES 

Investing  activities  are  the  acquisition  and  disposal  of  intangible  assets  and  property,  plant 
and equipment and of other investments which are not included in cash equivalents. Investing 
activities  do  not  include  loans  granted  to  beneficiaries.  The  objective  is  to  show  the  real 
investments made by the EU. 

It should be noted that EUR 8 910 million of cash and cash equivalent balances held by the 
Commission are not available for use by the EU. This is the cash received as payment of fines 
levied,  where  the  other  party  is  appealing  the  imposition  of  the  fine.  These  amounts  are 
clearly disclosed as “restricted cash” under note 2.11 above. 

EN 

69 

   EN 

 
 
 
 
 
 
 
 
 
5. 

CONTINGENT ASSETS & LIABILITIES AND OTHER DISCLOSURES 

CONTINGENT ASSETS 

Guarantees received 
Contingent assets relating to cases of fraud & irregularities 
Financial corrections in progress (awaiting final decision) 
Other contingent assets 
Total Contingent Assets 

Note 
5.1 
5.2 
5.3 
5.4 

31.12.2009 

31.12.2008 

EUR millions

279 
1 944 
0 
18 
2 241 

260 
2 010 
4 390 
43 
6 703 

CONTINGENT LIABILITIES 

Contingent Liabilities 
Guarantees given 
Fines – appeals to the Court of Justice 
EAGF – court judgements pending 
Amounts relating to legal cases and other disputes 
Other contingent liabilities 
Total Contingent Liabilities 

Note 
5.5 
5.6 
5.7 
5.8 
5.9 

31.12.2009 
19 330 
11 969 
1 945 
416 
12 
33 672 

EUR millions

31.12.2008 
17 510 
10 198 
1 609 
281 
18 
29 616 

All contingent liabilities would be financed, should they fall due, by the EU budget in the years to come. The EU budget is financed by 
the Member States. 

EN 

70 

   EN 

 
 
 
 
 
 
 
 
CONTINGENT ASSETS 

5.1  GUARANTEES RECEIVED 

Performance guarantees 
Other 
Total 

31.12.2009 

EUR millions 
31.12.2008 

252 
27 
279 

239 
21 
260 

Performance guarantees are sometimes requested to ensure that beneficiaries of EU funding 
meet the obligations of their contracts with the EU. 

5.2 

FRAUD AND IRREGULARITIES 

The table below presents the potential amount of recoveries which may be made by Member 
States following the detection of irregular claims on structural funds. It is based on the formal 
reports  submitted  by  the  Member  States  in  accordance  with  Commission  Regulation  No 
1681/94, with amounts broken down by Member State. 

Contingent assets: fraud & irregularities cases 

Member State 
Austria 
Belgium 
Czech Republic 
Denmark 
Estonia 
Finland 
France 
Germany 
Greece 
Hungary 
Ireland 
Italy 
Latvia 
Lithuania 
Malta 
Netherlands 
Poland 
Portugal 
Slovakia 
Slovenia 
Spain 
Sweden 
United Kingdom 
TOTAL 

31.12.2009 

EUR millions 
31.12.2008 

8 
2 
13 
2 
3 
2 
15 
468 
25 
6 
1 
436 
5 
5 
1 
15 
18 
82 
39 
7 
277 
2 
347 
1 779 

13 
16 
13 
10 
2 
3 
12 
581 
62 
5 
1 
441 
4 
2 
1 
14 
13 
114 
9 
1 
279 
2 
257 
1 855 

The figures given in this table represent a theoretical maximum rather than the amounts that 
will actually be made available to the EU budget, for the following reasons: 

•  The Member States do not always report the results of their recovery operations. 

EN 

71 

   EN 

 
 
 
 
 
 
•  Although  Member  States  must  inform  the  Commission  of  the  likelihood  of 
recovery,  it  is  impossible  to  determine  exactly  what  proportion  of  the  amounts 
still to be recovered will actually be recovered. National laws sometimes provide 
for  a  30-year  limitation  period,  which  may  well  make  the  national  authorities 
delay  formally  writing  off  the  debt  even  if  the  chances  of  recovery  are  only 
theoretical.  For  structural  operations,  Member  States  must  now  send  the 
Commission once a year a statement of the amounts awaiting recovery (Article 8 
of Regulation No 438/2001) to give a better picture of the actual situation. 

•  Even  if  the  Member  State  concerned  launches  recovery  proceedings  in  time,  a 
positive outcome is not guaranteed. This is particularly true where recovery orders 
are contested in the courts. 

•  Individual projects are co-financed as part of multi-annual programmes. As long 
as a multi-annual programme has not been closed, it is impossible to put an exact 
figure  on  the  amounts  to  be  recovered  because  the  funding  used  for  irregular 
expenditure  may,  in  certain  circumstances,  be  reallocated  to  other,  legitimate 
projects  and  because  subsequent  instalments,  in  particular  final  payments,  can 
sometimes be used as a means of adjusting for earlier irregular expenditure. The 
figures  in  these  tables  are  provisional  figures  based  on  the  reports  received  and 
processed up to the end of February 2010. These figures may be changed in line 
with further reports arriving late. 

The  prospects  of  recovery  in  individual  cases  cannot  be  assessed  with  sufficient  accuracy 
from  the  information  forwarded  by  the  Member  States.  The  main  movements  since  2008 
concern  increases  relating  to  the  "EU10"  countries.  The  implementation  of  the  Cohesion 
Policy  started  fully  in  2004  and  ever  since,  due  to  increasing  implementation  and  increased 
controls  on  the  co-financed  operations,  the  reported  number  of  irregularities  has  been 
increasing.  Another  main  variation  in  relation  to  2008  concerns  the  United  Kingdom  which 
has been reporting an increased number of irregularities following extensive audits carried out 
on the financed operations. 

Also included under this heading is EUR 165 million in relation to EAGF (2008: EUR 153 
million).  Member  States  communicated  to  the  Commission  the  amounts  that  have  been 
recorded in their "debtors' ledger", and also amounts that still were at a preliminary stage of 
checking. It is these preliminary amounts that are disclosed under this heading. 

5.3 

FINANCIAL CORRECTIONS IN PROGRESS, AWAITING FINAL DECISION 

This information, which concerns the recovery of EU expenditure, is now disclosed, together 
with related information, in note 6 of these financial statements. 

5.4  OTHER CONTINGENT ASSETS 

This heading includes other smaller contingent asset amounts not classifiable under the above 
headings. 

EN 

72 

   EN 

 
 
 
 
 
 
 
 
CONTINGENT LIABILITIES 

5.5  GUARANTEES GIVEN 

5.5.1  On loans granted by the European Investment Bank (EIB) from its own resources 

Risk Sharing 
31.12.2009 

Non-risk Sharing 

31.12.2009 

Public  
authority 

Private 
company 

EUR millions 

Outstanding 
31.12.2009 
Total 

Outstanding 
31.12.2008 

65% guarantee 

70% guarantee 

75% guarantee 

100% guarantee 

3 127 

109 

0 

0 

9 126 

1 981 

617 

625 

2 692 

506 

233 

196 

14 945 

2 596 

850 

821 

12 429 

2 908 

1 049 

1 008 

Total 

3 236 

12 349 

3 627 

19 212 

17 394 

The  EU  budget  guarantees  loans  signed  and  granted  by  the  EIB  from  its  own  resources  to 
third  countries  at  31  December  2009  (including  loans  granted  to  Member  States  before 
accession). However, the EU’s guarantee is limited to a percentage of the ceiling of the credit 
lines  authorised:  65%,  70%,  75%  or  100%.  Where  the  ceiling  is  not  reached,  the  EU 
guarantee covers the full amount. At 31 December 2009 the amount outstanding totalled EUR 
19 212 million and this, therefore, is the maximum exposure faced by the EU. 

For  loans  covered  by  the  EU  budget  guarantee,  the  EIB  also  obtains  guarantees  from  third 
parties  (States,  public  or  private  financial  institutions);  in  these  cases  the  Commission  is  a 
secondary  guarantor.  The  EU  budget  guarantee  covers  only  the  political  risk  of  guarantees 
provided under the title of "risk-sharing". The other risks are covered by the EIB should the 
primary guarantor not honour the undertakings given. For guarantees provided under the title 
of "non-risk sharing", all the risks are covered by the EU budget should the primary guarantor 
not honour its undertakings given. If the primary guarantor is a public authority these risks are 
confined as a rule to the political risk, but when the guarantees are provided by an institution 
or a private company, the EU budget might also have to cover the commercial risk. 

5.5.2  Other guarantees given 

Risk Sharing Finance Facility (RSFF) 
MEDA: Moroccan guarantees 
Loan Guarantee Instrument for Ten-T Projects (LGTT) 
Other 
Total 

31.12.2009 

31.12.2008 

EUR millions 

94 
17 
6 
1 
118 

48 
66 
1 
1 
116 

Under  Risk  Sharing  Finance  Facility  (RSFF),  the  Commission's  contribution  is  used  to 

EN 

73 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
provision  financial  risk  for  loans  and  guarantees  given  by  the  EIB  to  eligible  research 
projects. In total a Commission budget of up to EUR 1 billion is foreseen for the period 2007 
to  2013,  of  which  up  to  EUR  800  million  are  from  the  “Cooperation”  and  up  to  EUR  200 
million from the “Capacities” specific programmes. The EIB has committed itself to provide 
the same amount. An amount of EUR 94 million has been blocked by the Commission as a 
"Capital  Allocation".  This  Capital  Allocation  covers  unexpected  losses  on  the  loans  and 
guarantees given by the EIB within the framework of the RSFF. It is the maximum loss the 
Commission might suffer in case of defaults on loans or guarantees given. It is the ceiling of 
the  guarantee  given  by  the  Commission  with  respect  to  the  RSFF  and  thus  considered  as  a 
contingent liability by the EU. 

As part of the MEDA programme, the Commission created a guarantee mechanism through a 
specific Fund, which will benefit two Moroccan organisations, namely the Caisse Centrale de 
Garantie and the Fonds Dar Ad-Damane. As at 31 December 2009, EUR 17 million fell under 
the Commission guarantee. 

The  Loan  Guarantee  Instrument  for  Ten-T  Projects  (LGTT)  (2007-2013)  aims  to  issue 
guarantees to mitigate revenue risk in the early years of TEN-Transport projects. Specifically 
the  guarantee  would  fully  cover  stand-by  credit  lines,  which  would  only  be  drawn  upon  in 
cases where project cash flows are insufficient to service senior debt. The instrument will be a 
joint  financial  product  of  the  Commission  and  the  EIB  and  EUR  500  million  from  the  EU 
budget  will  be  allocated.  The  EIB  will  allocate  another  EUR  500  million  so  in  total  the 
amount available will be EUR 1 billion. The amount included here, EUR 6 million, represents 
the contribution to the provisioning of unexpected losses in relation to the LGTT operations. 

5.6 

FINES 

These  amounts  concern  fines  imposed  by  the  Commission  for  infringement  of  competition 
rules that have been provisionally paid and where either an appeal has been lodged or where it 
is  unknown  if  an  appeal  will  be  made.  The  contingent  liability  will  be  maintained  until  a 
decision by the Court of Justice on the case is final. Interest earned on provisional payments 
(EUR  460  million)  is  included  in  the  economic  result  for  the  year  and  also  as  a  contingent 
liability to reflect the uncertainty of the Commission’s title to these amounts. 

5.7 

EAGF – COURT JUDGEMENTS PENDING 

These  are  contingent  liabilities  towards  the  Member  States  connected  with  the  EAGF 
conformity  decisions,  pending  judgement  of  the  Court  of  Justice.  The  determination  of  the 
final  amount  of  the  liability  and  the  year  in  which  the  effect  of  successful  appeals  will  be 
charged  to  the  budget  will  depend  on  the  length  of  the  procedure  before  the  Court.  An 
estimate of the probable amounts to be paid has been included as a long-term provision on the 
balance sheet – see note 2.13. 

5.8 

AMOUNTS RELATED TO LEGAL CASES AND OTHER DISPUTES 

This  heading  relates  to  actions  for  damages  currently  being  brought  against  the  EU,  other 
legal disputes and the estimated legal costs.  

EN 

74 

   EN 

 
 
 
 
 
 
 
 
 
Amounts are related to disputes involving suppliers, contractors and former staff. It should be 
noted that in an action for damages under Article  288  EC  the  applicant  must  demonstrate  a 
sufficiently  serious  breach  by  the  institution  of  a  rule  of  law  intended  to  confer  rights  on 
individuals, real harm suffered by the applicant, and a direct causal link between the unlawful 
act and the harm. 

5.9  OTHER CONTINGENT LIABILITIES 

This  heading  includes  other  smaller  contingent  liability  amounts  not  classifiable  under  the 
above headings. 

5.10  UNDRAWN COMMITMENTS FINANCIAL ACTIVITIES 

OTHER SIGNIFICANT DISCLOSURES 

Undrawn commitments financial activities 

31.12.2009 
5 733 

EUR millions 

31.12.2008 
4 885 

These  are  lending  and  equity  investment  agreements  entered  into  by  the  Commission  (not 
covered  by  the  RAL)  but  not  yet  drawn  down  by  the  other  party  before  the  year-end.  The 
main amounts relate to Balance of Payments loan agreements signed in 2008 and 2009 but not 
yet disbursed before year-end (EUR 5.4 billion at 31 December 2009). 

5.11  BUDGETARY COMMITMENTS MADE, PAYMENTS STILL PENDING 

Budgetary commitments made, payments still pending 

31.12.2009 
134 689 

EUR millions 

31.12.2008 
120 023 

The budgetary RAL ("Reste à Liquider") is an amount representing the open commitments for 
which  payments  and/or  de-commitments  have  not  yet  been  made.  This  is  the  normal 
consequence  of  the  existence  of  multi-annual  programmes.  At  31  December  2009  the 
budgetary RAL totalled EUR 177 272 million. The amount above is this budgetary RAL less 
related amounts that have been included as expenses in the 2009 economic outturn account, 
giving the total above. 

5.12  SIGNIFICANT LEGAL COMMITMENTS 

Structural Actions 
Protocol with Mediterranean countries 
Fisheries agreements 
Galileo programme 
GMES programme 
TEN-T 
Other contractual commitments 
Total 

31.12.2009 
275 761 
263 
249 
1 517 
556 
4 289 
1 325 
283 960 

EUR millions 

31.12.2008 
332 995 
263 
401 
2 023 
624 
4 571 
983 
341 860 

EN 

75 

   EN 

 
 
 
 
 
 
 
 
 
 
 
These  commitments  originated  because  the  EU  decided  to  enter  into  long-term  legal 
commitments in respect of amounts that were not yet covered by commitment appropriations 
in  the  budget.  This  can  relate  to  multi-annual  programmes  such  as  Structural  Actions  or 
amounts  that  the  European  Union  is  committed  to  pay  in  the  future  under  administrative 
contracts existing at the balance sheet date (e.g. relating to the provision of services such as 
security, cleaning, etc, but also contractual commitments concerning specific projects such as 
building works). Not all multi-annual programmes contain commitments requiring inclusion 
under this heading since expenditure in future years is conditional on the annual decisions by 
the budgetary authority or changes in the rules concerned. 

5.12.1  Structural Actions 

The  table  below  shows  a  comparison  between  the  legal  commitments  for  which  budget 
commitments  have  not  yet  been  made  and  the  maximum  commitments  in  relation  to  the 
amounts  foreseen  in  the  financial  framework  2007-2013.  Structural  Actions  represent  aid 
planned  for  the  period  2007-2013.  The  format  and  objectives  of  the  Financial  Framework 
period that started in 2007 are different to those of the prior period. 

Financial 
perspectiv
e amounts 
2007-2013 
(A) 
346 543 
100 624 
10 958 

Legal 
commitments 
concluded
(B)

Budget 
commitments 
2007-2009
(C)

346 136
98 388
5 195

140 318
39 533
2 513

Legal 
commitments 
less budget 
commitments 
(=B-C) 
205 818 
58 855 
2 682 

EUR millions
Maximum 
commitment 
(=A-C)

206 225
61 091
8 445

458 125 

449 719

182 364

267 355 

275 761

Cohesion policy funds 
Natural Resources 
Instrument for Pre-
Accession Assistance 

Total 

5.12.2  Protocols with Mediterranean countries 

These  commitments  total  EUR  263  million  and  relate  to  financial  protocols  with 
Mediterranean  non-member  countries.  The  amount  included  here  is  the  difference  between 
the total amount of the protocols signed and the amount of the budget commitments entered in 
the accounts. These protocols are international treaties that cannot be wound up without the 
agreement of both parties, although the process (of winding them up) is on-going. 

5.12.3  Fisheries agreements 

These  are  commitments  totalling  EUR  249  million  entered  into  with  third  countries  for 
operations under international fisheries agreements. 

5.12.4  Galileo programme 

Galileo is a global navigation satellite system (GNSS) currently being built by the European 
Union and European Space Agency (ESA). The Galileo programme is now financed entirely 
from the EU budget and it is the Commission who manages the programme on behalf of the 
EU.  It  is  expected  that  the  first  phase  of  the  programme,  the  In-Orbit  Validation  ("IOV") 
phase, will be completed during 2012 and the transfer of the created assets to the Commission 
will take place then. 

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It  should  be  noted  that  the  Commission  has,  up  to  end  2009  and  including  the  previous 
investment  in  the  GJU,  paid  EUR  1  028  million  towards  the  IOV  phase  of  the  Galileo 
programme.  As  this  programme  is  currently  still  in  the  research  phase,  under  the  EU 
accounting  rules,  the  money  spent  has  been  expensed  and  no  intangible  assets  have  been 
recognised. The total (indicative) Commission contribution foreseen for the next phase of the 
Galileo programme (from 2008 to 2013) is EUR 2 645 million. 

5.12.5  GMES programme 

The Commission has entered into a contract with the ESA for the period from 2008 to 2013 
for  the  implementation  of  the  space  component  of  Global  Monitoring  for  Environment  and 
Security (GMES). The total indicative amount for that period is EUR 624 million. In 2009 an 
amount of EUR 68 million was paid out to ESA. 

5.12.6  TEN-T commitments 

This amount relates to grants in the field of the trans-European transport network (TEN-T) for 
the period 2007 - 2013. The programme applies to projects identified for the development of a 
trans-European  transport  network  to  support  both  infrastructure  projects  and  research  and 
innovation projects to foster the integration of new technologies and innovative processes on 
the  deployment  of  new  transport  infrastructure.  The  total  indicative  amount  for  this 
programme is EUR 8 013 million. 

5.12.7  Other contractual commitments 

The  amounts  included  correspond  to  amounts  committed  to  be  paid  during  the  term  of  the 
contracts.  Included  here  is  the  outstanding  contractual  obligation  of  EUR  93  million 
concerning building related contracts of the Council, as well as EUR 441 million relating to 
building  contracts  of  the  Parliament.  The  other  significant  amounts  included  here  are  EUR 
480  million  relating  to  procurement  arrangements  between  the  Fusion  for  Energy  Agency 
(European  Joint  Undertaking  for  ITER  and  the  Development  of  Fusion  Energy)  and  ITER 
International and EUR 165 million concerning procurement arrangements signed between the 
Fusion for Energy Agency, the Japan Atomic Energy Agency (JAEA) and ITER International. 

5.13  CONTRIBUTIONS TO RELATED ORGANISATIONS 

This  sum  represents  payments  outstanding  on  non-called-up  capital  subscribed  by  the 
Commission. 

5.13.1  Uncalled share capital: EBRD 

EBRD 

Capital 
Paid-in 
Uncalled 

EN 

Total EBRD capital 

Commission subscription 

EUR millions 

19 794 
(5 198) 
14 596 

77 

600 
(157) 
443 

   EN 

 
 
 
 
 
 
 
5.13.2  Uncalled share capital: EIF 

EIF 

Total EIF capital 

Commission subscription 

Capital 
Paid-in 
Uncalled 

2 940 
(588) 
2 352 

861 
(172) 
689 

EUR millions 

Following  the  issuance  of  1  000  new  shares  by  the  EIF  in  2007,  during  2009  the  EU 
subscribed  for  a  further  75  shares  with  a  nominal  amount  of  EUR  1  million  per  share,  of 
which 20% of the nominal amount and the premium were paid in 2009. The participation of 
the EU is limited to 900 shares (of EUR 900 million). See also note 2.3.1. 

5.14  OPERATING LEASE COMMITMENTS 

Description 

Buildings 
IT materials and other equipment 

< 1 year 
334 
6 

Future amounts to be paid 
> 5 years 
1- 5 years 
842 
1 236 
0 
7 

Total 

340 

1 243 

842 

EUR millions

Total 

2 412 
13 

2 425 

This heading covers buildings and other equipment rented under operating leasing contracts 
that do not meet the conditions for entry on the assets side of the balance sheet. The amounts 
indicated correspond to commitments still to be paid during the term of the contracts. 

In 2009, EUR 364 million was recognised as an expense in the economic outturn account in 
respect of operating leases. 

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6. 

FINANCIAL  CORRECTIONS  AND  RECOVERIES  FOLLOWING  THE 
DETECTION OF IRREGULARITIES 

In  implementing  the  EU  budget  it  is  necessary  to  ensure  the  prevention,  detection  and 
correction of irregularities and fraud. The objective of this note is to give an overview of the 
various  procedures  foreseen  in  the  applicable  legislation  for  the  process  of  dealing  with 
irregularities  detected  by  the  Commission  and  by  the  Member  States,  and  to  present  a  best 
estimate  of  the  total  amounts  concerned.  This  is  the  last  stage  in  the  operation  of  control 
systems and is essential in order to demonstrate sound financial management. 

6.1 

INTRODUCTION 

6.1.1  Overview of the financial correction & recovery process by management type 

Recoveries  and  financial  corrections  can  result  from  controls  and  audits  at  any  level  of  the 
control system, from audits at EU level (Commission, European Court of Auditors, OLAF) or 
by the Member States in the case of shared management. Although irregularities may occur at 
any stage of a project, they can be discovered at the final stage when the beneficiary sends in 
his final claim, which is in most cases checked on the spot and/or certified by an independent 
auditor.  A  distinction  ought  to  be  made,  however,  between  recoveries  and  financial 
corrections, reflecting differences in the management mode, as outlined in the relevant sector 
legislation. 

Recoveries 

Article  71  (3)  of  the  Financial  Regulation  requires  that  amounts  wrongly  paid  shall  be 
recovered. A recovery, in this context, is the actual recovery of monies by the Commission or 
by the Member State due to the detection of undue or irregular expenditure. 

Financial Corrections 

As  outlined  in  the  relevant  sector  legislation  in  many  areas  of  EU  expenditure  (primarily 
under  shared  management),  the  correction  of  irregularities  is  dealt  with  using  a  mechanism 
called  financial  correction.  The  purpose  of  financial  corrections,  made  either  by  the 
Commission  or  the  Member  State,  is  to  restore  a  situation  where  100%  of  the  expenditure 
declared  for  financing  or  for  co-financing  (cohesion  policy)  is  in  line  with  the  applicable 
national and EU rules and regulations. 
In  shared  management,  Member  States  are  primarily  responsible  for  making  the  financial 
corrections required in connection with the individual or systematic irregularities detected in 
operational programmes. The Commission is responsible for ensuring that the systems put in 
place  by  the  national  authorities  are  effective  and,  when  not,  the  Commission  shall  impose 
financial corrections on Member States. 

When undue payments to beneficiaries can be identified as a result of EU controls, financial 
corrections  can  be  seen  as  the  first  step  in  an  actual  recovery  process  since  the  applicable 
legislation  requires  Member  States  to  follow  up  financial  corrections  imposed  on  them  and 
recover monies themselves from the final beneficiaries. In the case of audits from the national 

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authorities, the Member States also have the legal obligation to pursue recoveries at the level 
of the final beneficiary. 

A  summary  by  management  type  of  the  different  procedures  of  recovery  and  financial 
correction activities and their impact on the EU accounts is given below. 

6.1.2  Direct management 

When  the  Commission  manages  the  budget  in  a  direct  way,  ineligible  expenditure  is  either 
recovered from the beneficiary or deducted from the next cost statement. If the deduction is 
made by the beneficiaries before sending the cost statement, the information is not included in 
the  accounting  system.  This  is  very  often  the  case  since  most  beneficiaries  are  required  to 
provide a certified or audited final cost statement to the Commission before they can receive 
their final payment. This certified statement should correct any irregularities noted. 

6.1.3  Shared management 

Approximately 80% of the EU budget is managed jointly by the European Commission and 
Member  States  and  includes  principally  expenditure  on  agriculture  and  rural  development, 
Cohesion Policy and Fisheries. 

For expenditure subject to shared management, implementation tasks and responsibilities are 
delegated  to  Member  States  who  are  primarily  responsible  for  detecting  and  correcting 
irregularities committed by beneficiaries and, as a consequence, for ensuring the regularity of 
expenditure declared to the Commission. Member States thus make financial corrections and, 
where undue payments to beneficiaries can be identified as a result of their own audit work or 
of  EU  controls,  they  are  legally  required  to  initiate  recovery  proceedings  against  these 
beneficiaries. 

The  European  Commission  has  an  overall  supervisory  role:  it  verifies  the  effective 
functioning  of  Member  States'  management  and  control  systems  and  takes  corrective 
measures when it concludes that this is not the case, in order to assume its responsibility for 
the  implementation  of  the  budget  (Article  53(4)  of  the  Financial  Regulation).  The 
Commission  may  also  take  a  formal  decision  itself  to  apply  financial  corrections  to  the 
Member  State  where  the  Member  State  has  failed  itself  to  make  the  required  corrections  or 
where there are serious failings in the management and control systems which could lead to 
systemic irregularities. 

The  Commission  shall  impose  financial  corrections  in  relation  to  individual  irregularities 
detected but has also the power to apply extrapolated or flat-rate corrections. Extrapolation is 
used  when  there  are  results  of  a  representative  sample  of  files  available  in  relation  to  a 
systemic  irregularity.  Flat  rate  corrections  are  applied  in  the  case  of  individual  breaches  or 
systemic irregularities where the financial impact is not precisely quantifiable and where the 
administrative cost of establishing a precise amount would be disproportionate. In both cases, 
even where recoveries from beneficiaries are not possible, these corrections are an important 
means to improve weaknesses in the Member States' systems and thus to prevent or detect and 
recover irregular payments made to beneficiaries. 

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6.1.4  Other management types 

For  expenditure  subject  to  decentralised  management  and  indirect  centralised  management, 
the  responsibility  for  recovering  payments  incorrectly  made  is  delegated  to  Member  States, 
third  countries  or  agencies.  For  expenditure  subject  to  joint  management,  corrective 
mechanisms  are  defined  in  the  agreements  concluded  with  international  organisations.  As 
with  shared  management,  in  cases  when  the  rules  of  EU  expenditure  schemes  have  been 
incorrectly applied, the Commission can make financial corrections. 

6.1.5  Summary of recoveries and financial corrections in 2009 

Summary of recoveries & financial corrections confirmed/decided in 2009 

 Financial Corrections 

EAGGF/EAGF/EAFRD 

Cohesion policy (EU work) 
- 1994-1999 programmes 
- 2000-2006 programmes 
- Subtotal financial corrections 

Total financial corrections 

 Recoveries 

EAGGF/EAGF/EAFRD (detected by MS) 

Cohesion policy (EU work) 

Other management types 

Total Recoveries  

Note 

6.2.2 

6.2.4 
6.2.4 

Note 

6.3 

6.3 

6.3 

EUR millions 

2008

 917

 414
1 173
1 587

2 504

2008

 360

 31

 72

 463

2009 

 462 

 521 
1 890 
2 411 

2 873 

2009 

 163 

 102 

 181 

 446 

Total protection EU budget 

3 319 

2 967

This table does not include the recoveries and withdrawals made in the Cohesion Policy by 
Member  States  following  their  own  controls.  Despite  their  obligation  to  provide  the 
Commission  with  information  on  withdrawals  and  recoveries,  they  are  not  obliged,  by  the 
legislation  for  the  2000-2006  programmes,  to  separately  identify  recoveries  resulting  from 
their own controls. For this reason and to avoid the overlap with the financial corrections, the 
recoveries  and  withdrawals  made  by  Member  States  (2009  EUR  1  233  million)  are  not 
included (see note 6.5). 

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Summary of recoveries & financial corrections implemented during 2009  

Financial Corrections 

EAGGF/EAGF/EAFRD 
Cohesion funds 
- 1994-99 programmes 
- 2000-2006 programmes 
- Subtotal financial corrections 

Total financial corrections 

Recoveries 

EAGGF/EAGF/EAFRD 
Cohesion funds 
Other management types 

Total Recoveries 

  Note

Confirmed 
in 2009 

  6.2.2

  6.2.4
  6.2.4

 274 

 163 
 313 
 476 

 750 

EUR millions

Confirmed 
before 
2009 

Total 

 429

 703

 137
 96
 233

 300
 409
 709

 662

1 412

EUR millions

  Note

Confirmed 
in 2009 

Confirmed 
before 
2009 

Total 

6.3. 
6.3. 
6.3. 

 117 
 102 
 147 

 366 

 31
 0
 34

 65

 148
 102
 181

 431

Total protection EU budget 

1 116 

 727

1 843

6.2 

FINANCIAL CORRECTIONS UNDER SHARED MANAGEMENT 

In shared management, financial corrections have three main steps:  

The  amount  is  still  in  the  process  of  being  finalised  through  legal  and  contradictory 
procedures ("in progress" – see note 6.4 below); 

(1) 

(2) 

The amount is established and finalised ("decided" through a Commission decision, or 
"confirmed": agreed with the Member States in shared management); and, 

The  amount  is  actually  recovered  either  via  cash  received  from  the  Member  State 
(decided  correction)  or  via  a  deduction  (withdrawal/recovery)  by  the  Member  State 
from  a  future  payment  claim  ("implemented");  for  financial  corrections  not  yet 
implemented see note 6.2.4. 

6.2.1 Agriculture and rural development 

Under  EAGF  and  EAFRD,  which  have  replaced  the  EAGGF  Guarantee  section,  the 

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applicable legislation foresees that financial corrections are implemented by the Commission 
through the clearance of accounts procedure. 

Clearance of accounts procedure 
The clearance of accounts procedure is operated by the Commission and includes an annual 
financial  clearance  of  accounts  of  each  paying  agency  and  a  multi-annual  conformity 
clearance  covering  the  conformity  of  the  expenditure  declared  by  a  Member  State  with  EU 
rules. In the case of EAGF, all these amounts are booked in the economic outturn account of 
the  Commission  as  revenue.  For  EAFRD,  the  amounts  recovered  by  the  Member  States 
themselves, as well as those resulting from the annual financial clearance of accounts, are, as 
a general rule, re-usable for the programme.  

Financial  clearance:  the  Commission  adopts  an  annual  clearance  of  accounts  decision,  by 
which  it  formally  accepts  the  paying  agencies  annual  accounts  on  the  basis  of  management 
verifications, and of the certificates and reports from the certification bodies. 

Conformity clearance is designed to exclude expenditure from EU financing which has not 
been  made  in  conformity  with  EU  rules.  The  conformity  clearance  is,  therefore,  not  a 
mechanism  by  which  irregular  payments  are  recovered  directly  from  the  final  beneficiaries, 
rather  a  strong  incentive  for  the  Member  States  to  improve  their  management  and  control 
systems  and  thus  to  prevent  or  detect  and  recover  irregular  payments  to  final  beneficiaries. 
Furthermore, a conformity correction does not relieve the Member State of its responsibility 
to pursue identified irregularities. Conformity clearance does not follow an annual cycle as it 
covers expenditure incurred in more than one financial year. 

Financial clearance of payments executed that do not respect the regulatory deadlines: The 
respect  for  the  fixed  deadlines  for  payments  to  beneficiaries  by  Member  States  is 
systematically  controlled  three  times  a  year  in  accordance  with  Article  9  of  Regulation 
883/06. In case of non respect of the deadlines, the Commission effects reductions, subject to 
certain allowances for special cases and exceptional circumstances, as well as proportionality. 
These  financial  corrections  are  treated  as  'negative  payments'  and  accounted  for  in  the 
economic outturn account as a reduction of expenses. 

6.2.2  Agriculture and rural development financial corrections in 2009 

Total financial corrections decided in 2009 for agriculture and rural development 

Clearance of accounts procedure: 
Financial clearance and non-respected payment deadlines 
Conformity clearance 

Total 

EUR millions

2009 

2008 

103 
359 

462 

58
859

917

The  above  amounts  concern  EAGF,  as  for  EAFRD  there  was  only  approximately  EUR  0.4 
million of financial corrections in 2009. These amounts are included in the economic outturn 
account. For a split of the above amounts per Member State see Annex 1. 

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The decrease in  conformity  clearance between 2008 and 2009 was due to non  implemented 
conformity clearance decisions at the end of 2008, for a total amount of EUR 368 million. 

Financial corrections implemented in 2009 for agriculture and rural development 

Clearance of accounts procedure 
Financial clearance and non-respected payment deadlines 
Conformity clearance 

Total 

For a split of the above amounts per Member State see Annex 2. 

6.2.3  Cohesion policy 

EUR millions

2009 implementation 

 103
 600

 703

The  legislation  applicable  to  cohesion  policy  foresees  that  actions  to  execute  financial 
corrections are taken both by Member States and the Commission: 

•  Member States may execute financial corrections in two ways. Either they: 

–  withdraw the expenditure affected from the programme immediately by deducting 
it  from  the  next  statement  of  expenditure  submitted  to  the  Commission,  thereby 
immediately  releasing  the  EU  funding  for  commitment  to  other  operations;  or 
they 

–  leave the expenditure for the time being in the programme pending the outcome of 
proceedings to recover the unduly paid amount from the beneficiaries. Recovery 
is  made  either  by  obtaining  repayment  of  the  sums  concerned  or  setting  off  the 
sums to be repaid against further payments due to the same beneficiary. See 6.5 
below for details on such recoveries. 

–  Member  States  are  required  to  supply  the  Commission  with  data  on  financial 
corrections in the form of both the amounts withdrawn from co-financing and the 
amounts recovered. The two sets of data are distinct and complementary, as only 
expenditure withdrawn without waiting for the outcome of recovery proceedings 
is included in withdrawals, and only expenditure which has not been withdrawn 
at the outset, but has been left in the declared expenditure until it is recovered, is 
included  in  recoveries,  once  recovery  has  taken  place.  Member  States  are  not 
obliged  to  identify  separately  corrections  resulting  from  EU  work  and  the  ones 
resulting  from  their  own  audit  work.  This  reporting  request  has  only  been 
introduced for the 2007-2013 programme period. 

•  Financial corrections following EU audit and controls, are executed as follows: 

–  Where the Member State agrees to make a correction as a result of an EU control 
or audit activity, it may withdraw the already declared irregular expenditure from 
the  next  payment  claim  (which  is  cumulative  for  each  programme  or  Cohesion 
Fund  project  separately)  and  re-use  the  EU  funding  released  for  other  eligible 
expenditure  under  the  programme  concerned,  but  not  related  to  the  operation(s) 
that were the subject of the correction. 

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–  The  Commission  issues  recovery  orders  to  execute  financial  corrections  in  the 

following cases:  

•  After formal financial corrections decisions; 

•  At the closure of a programme; and,  

•  After  programme  closure 

following 

recovery  by  Member  states 

from 

beneficiaries. 

In such cases, recovery orders have an impact on the Commission's accounts. 

–  No  recovery  order  is  issued  by  the  Commission  in  other  cases  of  financial 
corrections,  notably  when  Member  States  accept  and  implement  the  financial 
correction.  In  such  cases,  the  information  is  not  included  in  the  Commission's 
accounting system. 

6.2.4  Cohesion policy financial corrections in 2009 

Note that the table below does not include the results  of the  Member States' own checks of 
Structural Actions expenditure: 

Financial corrections confirmed in 2009 

  ERDF  CF ESF FIFG

EAGGF 
Guidance 

TOTAL 

EUR millions

Financial Corrections 1994-99 period: 

Implemented 
Not yet implemented 

Subtotal 1994-99 period  
Financial Corrections 2000-2006: 

Implemented 
Not yet implemented 
Subtotal 2000-2006 period 

Total financial corrections 2009 

87
358
445

84
1 532
1 616

2 061

10
0
10

63
13
76

86

21
0
21

141
18
159

180

Total financial corrections 2008 

 949  92  522

41
0
41

2
3
5

46

 19

4 
0 
4 

25 
9 
34 

38 

 5 

163
358
521

315
1 575
1 890

2 411

1 587

N.B.:  included  in  figures  confirmed  in  2009  are  financial  corrections  decided/confirmed  in 
2008 not previously reported which amount to EUR 90 millions. 

The increase  in  the amounts  confirmed  between  2009  and  2008  for the ERDF is due  to the 
rigorous  actions  implemented  under  the  Action  Plan  to  strengthen  the  Commission's 
supervisory  role  under  shared  management  of  structural  actions  (COM(2010)52)  and  the 
acceptance of a major financial correction for Spain in November 2009. 

The  decrease  of  amounts  confirmed  relating  to  the  ESF  in  2009  compared  to  the  amounts 
reported for 2008 is due to the implementation of the above-mentioned Commission Action 
Plan  in  2008  aiming  at  accelerating  the  decision  procedures  on  financial  corrections  in 

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progress,  which  subsequently  lowered  the  number  of  corrections  to  be  taken  in  2009.  It  is 
noted that, out of the amount of EUR 522 million of financial corrections confirmed in 2008, 
implementation of financial corrections for the ESF amount to EUR 518 million for that year. 

The figures presented in the previous tables are established on an accrual basis, meaning that 
while some of these amounts have been already implemented in 2009 (EUR 709 million for 
all funds), the remaining will be implemented in subsequent years. 

Financial corrections confirmed – cumulative figures  

EUR millions 

2000-2006 
Period 

1994-1999 
Period 

Total 

31.12.2009

31.12.2009

31.12.2009 

 233
3 797
1 130
 7
 36

5 203

 273
1 633
 392
 97
 121

2 516

 506 
5 430 
1 522 
 104 
 157 

7 719 

Cohesion Fund 
ERDF 
ESF 
FIFG 
EAGGF Guidance 

Total 

For a split of the above amounts per Member State see Annex 3. 

Financial corrections confirmed as at 31 December 2009 but not yet implemented as at 
31 December 2009 (cumulative figures) 

The  recovery  or  financial  correction  is  "not  yet  implemented"  when  it  has  been  decided  or 
the  amount  has  not  yet  been  recovered,  deducted  or  withdrawn. 
confirmed,  but 

To be implemented as at 31.12.2009 

  ERDF CF ESF FIFG  EAGGF 
Guidance 

TOTAL

Financial Corrections 1994-99 period: 
Financial Corrections 2000-2006: 

 359  11
1 904  23

Total to be implemented as at 31.12.2009 

2 263  34

 1
 22

 23

 0 
 3 

 3 

 0 
 9 

 9 

 371
1 961

2 332

EUR millions

low  amount 

implemented  concerning  2009  decisions 

The 
to  ERDF. 
Concerning  the  programming  period  1994-1999,  most  of  the  financial  corrections  not  yet 
implemented  during  2009  are  financial  correction  decisions  adopted  during  the  4th  Quarter 
2009. The implementation will take place during the first quarter 2010. 

related 

is 

Concerning  the  programming  period  2000-2006,  where  the  Member  State  agrees  to  make  a 
correction  as  a  result  of  EU  control,  so  as  to  implement  the  financial  correction,  it  may 
withdraw the amount of irregular expenditure in the following declaration of expenditure and 

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replace  it  with  other  eligible  expenditure  under  the  same  programme.  As  the  ceiling  for 
payments has been reached for most of the ERDF programmes and Cohesion Fund projects 
(2000-2006), the deduction of the ineligible expenditure will be reflected only in the closure 
documents 
final 
implementation report) to be submitted by the Member State in the forthcoming months. 

(final  certification  of  expenditure,  winding-up  declaration  and 

Financial corrections implemented in 2009 (confirmed in 2009 and in previous years) 

  ERDF CF ESF FIFG  EAGGF 

Guidance  TOTAL

EUR millions

Financial Corrections 1994-99 period: 

Confirmed in 2009 
Confirmed previous years 

Subtotal 1994-99 period  
Financial Corrections 2000-2006: 
Confirmed in 2009 
Confirmed previous years 

Subtotal 2000-2006 period 

 87  10
 131
 0
 218  10

 21
 0
 21

 82  63  141
 44
 34  16
 116  79  185

 40 
 6 
 46 

 2 
 2 
 4 

Total financial corrections implemented in 2009

 334  89  206

 50 

For a split of the above amounts per Member State see Annex 4. 

 5
 0
 5

 25
 0
 25

 30

 163
 137
 300

 313
 96
 409

 709

6.3 

RECOVERIES MADE BY THE COMMISSION OR BY MEMBER STATES 

This heading concerns the recovery of amounts unduly paid because of errors or irregularities 
detected  either  by  the  Commission,  Member  States,  the  European  Court  of  Auditors,  or 
OLAF. 

Recoveries confirmed in 2009 

Shared management 
Agriculture: EAGGF/EAGF 
Cohesion Policy  
Subtotal 
Other management types: 
- external actions 
- internal policies 
Subtotal 
Total 

EUR millions 
2008 

2009

 163
 102
 265

 81
 100
 181
 446

 360 
 31 
 391 

 32 
 40 
 72 
 463 

EN 

87 

   EN 

 
 
  
  
  
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
Recoveries implemented during 2009 

Shared management 
Agriculture: EAGGF/EAGF 
Cohesion Policy 
Subtotal 
Other management types: 
- external actions 
- internal policies 
Subtotal 

Total 

Confirmed in 
2009

Confirmed before 
2009 

EUR millions

Total

 117
 102
 219

 60
 87
 147

 366

 31 
 0 
 31 

 21 
 13 
 34 

 65 

 148
 102
 250

 81
 100
 181

 431

6.3.1  Agriculture: Recovery of irregularities detected by Member States  

Member  States  are  obliged  to  identify  and  recover  sums  lost  as  a  result  of  irregularities 
following their national rules and procedures. For actions financed by EAGF, if they succeed 
in recovering from the beneficiaries, they credit the recovered sums to the Commission and 
these  are  booked  in  the  economic  outturn  account  as  revenue.  For  EAFRD,  recoveries  are 
deducted  from  the  next  payment  claim,  and  therefore  the  relevant  EAFRD  amount  can  be 
reused for the programme. If a Member State does not pursue the recovery or is not diligent in 
its actions, the Commission may decide to intervene via the conformity clearance procedure 
and to impose a financial correction on the Member State concerned. 

The  reduction  of  income  from  irregularities  is  mainly  due  to  the  positive  effects  of  more 
effective  control  systems  in  the  Member  States  including  the  impact  of  the  50%  clearance 
procedure (Article 32 (5) of Council Regulation (EC) No 1290/2005). 

6.3.2  Cohesion Policy 

Member States are primarily responsible for preventing, detecting and correcting irregularities 
and  recovering  amounts  unduly  paid  together  with  interest  on  late  payments,  where 
appropriate.  The  amounts  of  recoveries  executed  by  Member  States  are  not  included  in  the 
table above (see explanation in point 6.5). The amount of recoveries included in this heading 
concerns recoveries directly made by the Commission. 

6.3.3  Other Management types 

The recoveries of irregularities detected in other management types are implemented by the 
issue  of  a  recovery  order  or  by  a  deduction  on  a  subsequent  payment.  In  a  case  where  the 
beneficiary is requested to send a corrected final cost statement, the amount of the irregularity 
is not necessarily included in the Commission's accounting system. 

EN 

88 

   EN 

 
  
  
  
  
 
  
 
  
 
  
  
  
  
 
  
 
 
  
 
  
  
  
  
  
 
 
 
 
 
 
 
6.4 

FINANCIAL CORRECTIONS IN PROGRESS FOLLOWING EU CONTROLS 

6.4.1  Agriculture 

EUR millions 

Financial 
corrections 
in progress 
as at 
31.12.2008 

New 
financial 
corrections 
in progress 
in 2009 

Financial 
corrections 
decided in 
2009 

Adjustments 
on financial 
corrections 
decided or 
in progress 
as at 
31.12.2008 

Financial 
corrections 
in progress 
as at 
31.12.2009 

EAGGF 

1 733 

657

-317

690 

2 763

The  Commission  determines  each  year  the  measures  and  the  Member  States  that  will  be 
audited for conformity on the basis of an annual risk analysis carried out across the range of 
agricultural expenditure. The conformity clearance procedure takes some years; by the end of 
2009, the conformity work on expenditure incurred prior to 2003 had largely been completed. 
The audits for the years 2003 to 2009 are ongoing. 

In accordance with its accounting policies and generally accepted accounting principles, the 
Commission can use estimates for the preparation of the annual accounts. This is the case for 
the amount of expenditure which is likely to be excluded from EU financing by such future 
conformity decisions. This estimate takes into account the most reliable information available. 
Since EAGF corrections are decided per financial year of expense it is therefore possible to 
calculate  the  average  of  corrections  per  financial  year  closed  and  to  extrapolate  this 
percentage  to  more  recent  financial  years  for  which  the  controls  are  still  ongoing.  The 
reliability  of  this  estimate  is  assessed  on  the  basis  of  the  comparison  with  the  amounts  of 
'corrections in progress' for the years where this information is available and checked against 
the results of the conformity audits carried out in the year in question. Moreover, it should be 
noted  that  the  average  of  corrections  per  financial  year  closed  is  relatively  stable,  being 
between 1.1% and 1.9%. 

The amount of EUR 2 763 million is an estimation of the amount to be received under future 
conformity decisions for audits covering expenditure for the years 2003-2009 years. Of this 
amount, EUR 2.1 billion represents financial corrections in progress for which the amount is 
calculated  based  on  current  ongoing  audit  cases  (which  mainly  concern  2003  to  2007 
expenditure years). 

The  increase  of  the  estimate  above  is  due  to  the  increase,  compared  to  earlier  years,  of  the 
average rate of corrections versus expenditure from 1.1% to 1.5%. The latest figures available 
of 'corrections in progress' for 2003, 2004, 2005, 2006, and 2007 confirm this rate and even 
show  a  higher  average  correction  rate  than  1.5%.  The  financial  consequences  of  the 
introduction in 2005 of the SPS (Single Payment Scheme) are at this stage difficult to predict. 
On the one hand it could be considered that there will be fewer corrections in the number of 
cases; on the other hand flat rate corrections on the SPS measures can have more impact in 
financial terms. As the amounts are not yet definitive, they are not recognised on the balance 
sheet. 

EN 

89 

   EN 

 
 
 
 
6.4.2  Structural Actions 

EUR millions 

Financial 
corrections 
in progress 
as at 
31.12.2008 

New 
financial 
corrections 
in progress 
in 2009 

Financial 
corrections 
confirmed 
in 2009 

Adjustments 
on financial 
corrections 
confirmed 
or in 
progress as 
at 
31.12.2008 

Financial 
corrections 
in progress 
as at 
31.12.2009 

Structural 
and  Cohesion 
funds  (1994-1999  and  2000-
2006 programmes)  
ERDF 
Cohesion Fund 
ESF 
FIFG 
EAGGF Guidance + EAFRD   

Total 

1 771
 178
 630
 35
 4

2 618

 89
 98
 2
 0
 221

 410

-1 087
- 80
- 56
- 33
- 38

-1 294

- 343 
- 47 
- 250 
 0 
 4 

- 636 

 430
 149
 326
 2
 191

1 098

The  amount  above  is  based  on  audit  findings  of  the  Commission  and  those  of  the  Court  of 
Auditors or OLAF, all  of which are being followed up by the relevant DGs through formal 
legal proceedings and on-going contradictory procedures with the concerned Member States. 
This is a best estimate, taking into account the state of play of the follow up of the audits and 
the  issuance  of  final  position  letters  (or  pre-suspension  letters)  at  31  December  2009.  This 
amount will be subject to change following the contradictory procedure for suspensions and 
financial corrections, under which Member States are given the opportunity to present further 
evidence to support their claims. 

RECOVERY  AND  FINANCIAL  CORRECTION  ACTIVITIES  BY  MEMBER 

6.5 
STATES FOR STRUCTURAL ACTIONS OR COHESION POLICY 

In the area of cohesion policy, the corrections effected by Member States following their own 
or EU audits are not registered in the Commission's accounting system since Member States 
can  reuse  these  amounts  for  other  eligible  expenditure.  Nonetheless,  Member  States  are 
requested  to  provide  the  Commission  with  updated  information  on  withdrawals,  recoveries 
and  pending  recoveries  of  Structural  Funds  both  for  2009  and  cumulatively  for  the  periods 
2000-2006 and 2007-2013, and covering all four funds (ERDF, ESF, EAGGF Guidance and 
FIFG).  However,  they  are  not  obliged  to  separately  identify  corrections  resulting  from  EU 
work. For this reason the financial corrections made by Member States are not added to the 
Commission's. 

The withdrawals and recoveries in 2009, based on the data reported by Member States in line 
with their obligation under Regulations 438/2001 and 448/2001, amount to EUR 986 million 
and 247 million respectively, for a total of EUR 1 233 million. These figures take account of 
the results of the first analysis by the Commission which has led to corrections of certain data. 

EN 

90 

   EN 

 
 
 
 
 
 
  
 
 
  
 
  
 
  
 
  
 
  
 
 
 
 
The  on-the-spot  review  of  the  Member  States'  data  carried  out  by  the  Commission  during 
2009  in  nine  Member  States  (10  Member  States  in  2008)  showed  that  the  systems  for 
recording  and  reporting  data  are  not  yet  completely  reliable  in  all  Member  States,  although 
there is evidence that the quality is improving and that there has been some improvement in 
comparison  with  previous  years.  In  addition,  the  figures  are  incomplete,  particularly  as 
regards the data for the whole programme period, as some of the large Member States have 
not yet communicated corrections carried out in the earlier years of the period. However, even 
with regard to completeness, there has been some improvement in comparison with previous 
years and Member States have agreed to provide full information at closure. 

There is a risk of overlap for the 2000-2006 period between the figures reported for financial 
corrections resulting from the work of EU bodies (audits by the Commission and the Court of 
Auditors and OLAF investigations) and those reported by Member States resulting from their 
own work. This is because a large proportion of the financial corrections resulting from the 
work  of  EU  bodies  is  accepted  by  the  Member  States  and  implemented  by  them  without  a 
formal  Commission  decision  by  withdrawing  the  expenditure  concerned  from  their 
expenditure  declarations.  As  Member  States  are  not  obliged  to  distinguish  between 
corrections resulting from EU bodies' work from those due to their own controls and audits, 
the  extent  of  this  overlap  cannot  be  precisely  quantified.  Furthermore,  the  actual 
implementation by the Member State may not be in the same year as when the Member State 
accepts the financial correction. Therefore, the possible overlap remains only an estimation. A 
comparison Member State by Member State between the Member States' figures for 2009 and 
the  amounts  of  corrections  resulting  from  EU  bodies'  work  which  Member  States  have 
accepted for the same year, suggests that the amount of the overlap cannot exceed EUR 465 
million. For 2008, the overlap could not exceed EUR 600 million. 

In the 2007-2013 programme period, the Commission has incorporated the annual reporting 
in  its  IT  systems.  This  will  mean  that  it  will  receive  data  electronically  directly  from  the 
Member  States.  Member  States  are  also  required  by  sector  regulation  to  separately  identify 
corrections resulting from EU bodies' work, in order to avoid any overlap. 

EN 

91 

   EN 

 
 
 
Note  6  –  Annex  1:  Total  financial  corrections  and  recoveries  decided  in  2009  for 
agriculture and rural development 

Split per Member State 

Member State 

Financial 
clearance 

Conformity 
clearance 

EUR millions 
Total 

Irregularities 
declared 

Belgium 
Bulgaria 
Czech Republic 
Denmark 
Germany 
Estonia 
Ireland 
Greece 
Spain 
France 
Italy 
Cyprus 
Latvia 
Lithuania 
Luxembourg 
Hungary 
Malta 
Netherlands 
Austria 
Poland 
Portugal 
Romania 
Slovenia 
Slovakia 
Finland 
Sweden 
United Kingdom 

0
0
0
0
0
0
-2
2
7
3
-3
0
0
0
0
6
0
1
0
0
0
5
0
0
2
0
83

Total decided 

103

12
0
0
101
2
0
3
18
62
73
5
0
0
2
0
13
0
30
2
11
9
0
1
0
0
0
12

359

2
5
0
4
15
0
2
1
38
35
13
0
0
1
0
2
0
5
1
2
8
9
0
1
0
2
14

163

15 
5 
1 
104 
17 
0 
4 
21 
106 
111 
15 
0 
0 
4 
0 
22 
0 
36 
3 
13 
18 
14 
2 
1 
2 
2 
109 

625 

N.B.: the figures above are rounded into millions of Euro and amounts shown as 0 represent 
actual figures of less than EUR 500 000 

EN 

92 

   EN 

 
 
 
 
Note  6  –  Annex  2:  Total  financial  corrections  and  recoveries  implemented  in  2009  for 
agriculture and rural development 

Split per Member State 

Financial 
clearance 
and non-
respected 
payment 
deadlines 

Conformity 
clearance 

EUR millions 

Irregularities 
declared by 
Member 
States 
(repaid to 
EU) 

Total 

0
0
0
0
0
0
-2
2
7
3
-3
-
0
0
0
6
-
1
0
0
0
5
0
0
2
0
83

103

12
-
-
101
1
0
5
189
23
46
167
0
0
0
-
-
-
2
-
-
0
-
1
0
0
12
41

600

2
1
0
4
16
0
2
5
30
34
13
0
0
2
0
3
0
6
1
2
7
7
0
0
1
2
9

148

14 
1 
0 
105 
18 
0 
5 
196 
59 
82 
177 
1 
0 
2 
0 
9 
0 
9 
1 
2 
7 
12 
2 
0 
2 
14 
133 

851 

Member State 

Belgium 
Bulgaria 
Czech Republic 
Denmark 
Germany 
Estonia 
Ireland 
Greece 
Spain 
France 
Italy 
Cyprus 
Latvia 
Lithuania 
Luxembourg 
Hungary 
Malta 
Netherlands 
Austria 
Poland 
Portugal 
Romania 
Slovenia 
Slovakia 
Finland 
Sweden 
United Kingdom 

Total 
implemented 

N.B.: the figures above are rounded into millions of Euro and amounts shown as 0 represent 
actual figures of less than EUR 500 000 

EN 

93 

   EN 

 
 
 
 
Note 6 – Annex 3: Total financial corrections confirmed in 2009 for Structural Actions 

Split per Member State 

EUR millions 

Cumulative 
2008 

Financial corrections confirmed in 2009 

Cumulative 
2009 

Member State 

ERDF  CF  ESF  FIFG 

1994-1999 
Belgium 
Denmark 
Germany 
Ireland 
Greece 
Spain 
France 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United Kingdom 
INTERREG 
2000-2006 
Belgium 
Bulgaria 
Czech Republic 
Denmark 
Germany 
Estonia 
Ireland 
Greece 
Spain 
France 
Italy 
Cyprus 
Latvia 
Lithuania 
Luxembourg 
Hungary 
Malta 
Netherlands 
Austria 
Poland 
Portugal 
Romania 
Slovenia 
Slovakia 
Finland 
Sweden 
United Kingdom 
INTERREG 

1 995 
 5 
 3 
 286 
 42 
 526 
 244 
 83 
 442 
 1 
 168 
 2 
 113 
 1 
 1 
 77 
 1 
3 313 
 5 
- 
- 
- 
 10 
- 
 26 
 867 
1 246 
 249 
 608 
- 
 3 
 1 
- 
- 
- 
 1 
- 
 37 
 95 
 2 
 2 
 1 
- 
 11 
 149 
- 

 445
-
 0
 49
 0
-
 250
 0
 63
 0
 1
 0
 19
-
 0
 54
 9
1 616
 2
-
-
-
 0
 0
 16
 37
1 200
 3
 135
-
 1
-
-
 4
-
 0
-
 85
 31
-
-
 38
 0
-
 63
 1

Total confirmed 

5 308 

2 061

 10
-
-
-
-
-
 5
-
-
-
-
-
 5
-
-
-
-
 76
-
 2
 0
-
-
-
-
 2
 22
-
-
-
-
 1
-
 41
-
-
-
-
 0
 8
-
-
-
-
-
-

 86

 21
 0
-
-
-
-
 17
 0
-
 4
-
-
-
 0
-
-
-
 159
 3
-
-
 0
 2
-
-
 14
 24
 9
 80
-
 0
-
 2
 7
-
-
-
 12
 0
-
 0
-
-
 0
 5
-

 180

 41
-
-
-
-
-
 32
-
-
-
 9
-
-
-
-
-
-
 5
-
-
-
 0
-
-
-
-
 3
 0
 2
-
-
-
-
-
-
-
-
 0
-
-
-
-
 0
-
-
-

 46

EAGGF 
Guidance 
 4 
- 
- 
 4 
- 
 0 
 0 
- 
- 
- 
- 
 0 
- 
 0 
- 
- 
- 
 34 
- 
- 
- 
- 
- 
- 
- 
- 
 8 
- 
- 
- 
- 
- 
- 
 0 
- 
 1 
- 
 11 
- 
 14 
- 
- 
 0 
- 
- 
- 

 38 

TOTAL 

 521 
 0 
 0 
 53 
 0 
 0 
 304 
 1 
 63 
 4 
 9 
 0 
 24 
 0 
 0 
 54 
 9 
1 890 
 5 
 2 
 0 
 0 
 2 
 0 
 16 
 53 
1 257 
 12 
 217 
- 
 1 
 1 
 2 
 52 
- 
 1 
- 
 108 
 31 
 22 
 0 
 38 
 0 
 0 
 68 
 1 

2 411 

2 516 
 5 
 3 
 339 
 42 
 526 
 548 
 84 
 505 
 5 
 177 
 2 
 137 
 1 
 1 
 131 
 10 
5 203 
 10 
 2 
 0 
 0 
 12 
 0 
 42 
 920 
2 503 
 261 
 825 
- 
 4 
 2 
 2 
 52 
- 
 2 
- 
 145 
 126 
 24 
 2 
 39 
 0 
 11 
 217 
 1 

7 719 

N.B.: the figures above are rounded into millions of Euro and amounts shown as 0 represent 
actual figures of less than EUR 500 000 

EN 

94 

   EN 

 
 
 
  
  
Note 6 – Annex 4: Total financial corrections implemented in 2009: Structural Actions 

Split per Member State 
EUR millions 

Decisions implemented in 2009 

Member State 

ERDF 

CF 

ESF 

FIFG 

1994-1999 period 
Belgium 
Denmark 
Germany 
Ireland 
Greece 
Spain 
France 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United Kingdom 
INTERREG 
2000-2006 period 
Belgium 
Bulgaria 
Czech Republic 
Denmark 
Germany 
Estonia 
Ireland 
Greece 
Spain 
France 
Italy 
Cyprus 
Latvia 
Lithuania 
Luxembourg 
Hungary 
Malta 
Netherlands 
Austria 
Poland 
Portugal 
Romania 
Slovenia 
Slovakia 
Finland 
Sweden 
United Kingdom 
INTERREG 

Total implemented 

 218 
- 
 2 
 109 
 0 
- 
 3 
 1 
 41 
 0 
 7 
 0 
 1 
- 
 0 
 52 
 2 
 116 
- 
- 
- 
- 
- 
- 
- 
 47 
 7 
 1 
 10 
- 
- 
- 
- 
- 
- 
- 
- 
 42 
 9 
- 
- 
- 
- 
- 
- 
 0 

 334 

 10
-
-
-
-
-
 5
-
-
-
-
-
 5
-
-
-
-
 79
-
 3
 0
-
-
 0
-
 5
 14
-
-
-
-
 1
-
 40
-
-
-
-
 9
 6
-
-
-
-
-
-

 89

 21 
 0 
- 
- 
- 
- 
 17 
 0 
- 
 4 
- 
- 
- 
 0 
- 
- 
- 
 185 
 3 
- 
- 
- 
- 
- 
- 
 14 
 38 
 0 
 80 
- 
 0 
- 
 2 
 1 
- 
- 
- 
 42 
- 
- 
- 
- 
- 
- 
 5 
- 

 206 

 46
-
-
 0
 0
-
 32
 5
-
-
 9
-
-
-
-
-
-
 4
-
-
-
-
-
-
-
-
 0
-
 4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

 50

EAGGF 
Guidance 
 5 
- 
- 
 4 
- 
 0 
 0 
- 
- 
- 
- 
 0 
- 
 0 
- 
- 
- 
 25 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
 0 
- 
- 
- 
 11 
- 
 14 
- 
- 
 0 
- 
- 
- 

 30 

TOTAL 

 300
 0
 2
 113
 1
 0
 57
 6
 41
 4
 16
 0
 6
 0
 0
 52
 2
 409
 3
 3
 0
-
-
 0
-
 66
 59
 2
 93
-
 0
 1
 2
 41
-
-
-
 95
 18
 20
-
-
 0
-
 5
 0

 709

N.B.: the figures above are rounded into millions of Euro and amounts shown as 0 represent 
actual figures of less than EUR 500 000 

EN 

95 

   EN 

 
 
7. 

FINANCIAL RISK MANAGEMENT 

The  following  disclosures  with  regard  to  the  financial  risk  management  of  the  European 
Union (EU) relate to: 

–  the treasury operations carried out by the European Commission in order to implement the 

EU budget; 

–  lending and borrowing activities carried out by the European Commission through Macro 

Financial Assistance (MFA), Balance of Payments (BOP) and Euratom actions;  

–  the Guarantee Fund for external actions; and 

–  lending  and  borrowing,  as  well  as  treasury  activities  carried  out  by  the  European  Union 

through the European Coal & Steel Community (in Liquidation). 

7.1. 

RISK MANAGEMENT POLICIES 

7.1.1.  Treasury operations 

The rules and principles for the management of the Commission's treasury operations are laid 
down in the Council Regulation 1150/2000 (as amended by Council Regulation 2028/2004) 
and  in  the  Financial  Regulation  (Council  Regulation  1605/2002,  amended  by  Council 
Regulation  1995/2006)  and  its  Implementing  Rules  (Commission  Regulation  2342/2002, 
amended by Commission Regulation 478/2007). 

As a result of the above regulations the following main principles apply: 

–  Own resources are paid by the Member States in accounts opened for this purpose in the 
name of the Commission with the Treasury or the body appointed by each Member State. 
The Commission may draw on the above accounts solely to cover its cash requirements. 

–  Own  Resources  are  paid  by  Member  States  in  their  own  national  currencies,  while  the 

Commission's payments are mostly denominated in EUR. 

–  Bank accounts opened in the name of the Commission may not be overdrawn. 

–  The balances of accounts held in other currencies than EUR are either used for payments in 

the same currencies or periodically converted in EUR. 

In  addition  to  the  own  resources  accounts,  other  bank  accounts  are  opened  by  the 
Commission,  with  central  banks  and  commercial  banks,  for  the  purpose  of  executing 
payments and receiving receipts other than the Member State contributions to the budget.  

Treasury  and  payment  operations  are  highly  automated  and  rely  on  modern  information 
systems.  Specific  procedures  are  applied  to  guarantee  system  security  and  to  ensure 
segregation of duties in line with the Financial Regulation, the Commission’s internal control 
standards, and audit principles. 

A  written  set  of  guidelines  and  procedures  regulates  the  management  of  the  treasury  and 
payment operations with the objective of limiting operational and financial risk and ensuring 
an  adequate  level  of  control.  They  cover  the  different  areas  of  operation  (for  example: 

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payment  execution  and  cash  management,  cashflow  forecasting,  business  continuity,  etc.), 
and  compliance  with  the  guidelines  and  procedures  is  checked  regularly.  Additionally, 
meetings are held between DG BUDGET and DG ECFIN to discuss information sharing on 
risk management and best practices.  

7.1.2  Borrowing and lending activities (MFA, BOP and Euratom)  

The lending and borrowing transactions, as well as related treasury management, are carried 
out  by  the  EU  according  to  the  respective  Council  Decisions,  if  applicable,  and  internal 
guidelines. Written procedure manuals covering specific areas such as borrowings, loans and 
treasury  management  have  been  developed  and  are  used  by  the  relevant  operating  units. 
Financial  and  operational  risks  are  identified  and  evaluated  and  compliance  to  internal 
guidelines  and  procedures  is  checked  regularly.  As  a  general  rule,  there  are  no  activities  to 
compensate  interest  rate  variations  or  foreign  currency  variations  ("hedging"  activities) 
carried-out as lending operations are financed by "back-to-back" borrowings, which thus do 
not generate open interest rate or currency positions.  

7.1.3 Guarantee Fund 

The rules and principles for the asset management of the Guarantee Fund (see note 2.3.3) are 
laid out in the Convention between the European Commission and the European Investment 
Bank (EIB) dated 25 November 1994 and the subsequent amendments dated 17/23 September 
1996,  8  May  2002  and  25  February  2008.  The  Guarantee  Fund  operates  only  in  EUR.  It 
exclusively invests in this currency in order to avoid any foreign currency risk. Management 
of the assets is based upon the traditional rules of prudence adhered to for financial activities. 
It is required to pay particular attention to reducing the risks and to ensuring that the managed 
assets  can  be  sold  or  transferred  without  significant  delay,  taking  into  account  the 
commitments covered. 

7.1.4  ECSC in liquidation 

The  European  Commission  manages  the  liquidation  of  the  liabilities  and  no  new  loans  or 
corresponding  funding  is  foreseen  for  the  ECSC  in  liquidation.  New  ECSC  borrowings  are 
restricted  to  refinancing  with  the  aim  of  reducing  the  cost  of  funds.  As  far  as  treasury 
operations  are  concerned,  the  principles  of  prudent  management  with  a  view  to  limiting 
financial risks are applied. 

7.2  MARKET RISK 

Market  risk  is  the  risk  that  the  fair  value  or  future  cashflows  of  a  financial  instrument  will 
fluctuate,  because  of  changes  in  market  prices.  Market  risk  embodies  not  only  the  potential 
for loss, but also the potential for gain. It comprises currency risk, interest rate risk and other 
price risk. The EU has no significant other price risk. 

7.2.1  Currency risk 

Currency risk is the risk that the EU's operations or its investments' value will be affected by 
changes in exchange rates. This risk arises from the change in price of one currency against 
another.  

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7.2.1.1 Treasury operations 

Own  resources  paid  by  Member  States  in  currencies  other  than  EUR  are  kept  on  the  own 
resources  accounts,  in  accordance  with  the  Own  Resources  Regulation.  They  are  converted 
into  EUR  when  they  are  needed  to  cover  for  the  execution  of  payments.  The  procedures 
applied for the management of these funds are dictated by the above Regulation. In a limited 
number  of  cases  these  funds  are  directly  used  for  payments  to  be  executed  in  the  same 
currencies. 

A  number  of  accounts  in  EU  currencies  other  than  EUR,  and  in  USD,  are  held  by  the 
Commission with commercial banks, for the purpose of executing payments denominated in 
these same currencies. These accounts are replenished depending on the amount of payments 
to be executed; their overnight balances are kept at very low levels in order to minimise any 
exposure to fluctuations in foreign currency exchange rates. 

When miscellaneous receipts (other than own resources) are received in currencies other than 
EUR, they are either transferred to Commission's accounts held in the same currencies, if they 
are  needed  to  cover  for  the  execution  of  payments,  or  converted  in  EUR  and  transferred  to 
accounts  held  in  EUR.  Imprest  accounts  held  in  currencies  other  than  EUR  are  replenished 
depending on the estimated short term local payments needs in the same currencies. Balances 
on these accounts are kept within their respective ceilings. 

Since all provisionally cashed fines are imposed and paid in EUR, there is no foreign currency  
risk. 

7.2.1.2 Borrowing and lending activities (MFA, BOP and Euratom)  

Most  financial  assets  and  liabilities  are  in  EUR,  so  in  these  cases  the  EU  has  no  foreign 
currency  risk.  However,  the  EU  does  give  loans  in  USD  through  the  financial  instrument 
Euratom, which are financed by borrowings with an equivalent amount in USD (back-to-back 
operation).  At  the  balance  sheet  date  the  EU  has  no  foreign  currency  risk  with  regard  to 
Euratom. 

7.2.1.3 Guarantee Fund 

The financial assets are in EUR so there is no currency risk. 

7.2.1.4 ECSC in liquidation 

The  ECSC  in  liquidation  has  a  small  foreign  currency  net  exposure  of  EUR  equivalent  2.2 
million  arising  from  EUR  equivalent  1.5  million  housing  loans  and  EUR  equivalent  0.7 
million current account balances.  

7.2.2 

Interest rate risk 

Interest rate risk is the possibility of a reduction in the value of a security, especially a bond, 
resulting from an increase in interest rates. In general, higher interest rates will lead to lower 
prices of fixed rate bonds, and vice versa. 

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7.2.2.1 Treasury operations 

The Commission's treasury does not borrow any money; as a consequence it is not exposed to 
interest  rate  risk.  It  does,  however,  earn  interest  on  balances  it  holds  on  its  different  banks 
accounts. The Commission has therefore put in place measures to ensure that interest earned 
regularly reflects market interest rates, as well as their possible fluctuation. Accounts opened 
with Member States Treasuries or National Central Banks for own resources receipts are non-
interest bearing and free of charges. For all other accounts held with National Central Banks 
the  remuneration  depends  on  the  specific  conditions  offered  by  each  bank;  interest  rates 
applied are variable and adjusted to market fluctuations.  

Overnight balances held on commercial bank accounts earn interest on a daily basis. This is 
based on variable market rates to which a contractual margin (positive or negative) is applied. 
For  most  of  the  accounts  the  interest  calculation  is  linked  to  the  ECB  marginal  rate  for  its 
main refinancing operations, and is adjusted to reflect any fluctuations of this rate. For some 
other  accounts  the  interest  calculation  is  linked  to  the  Euro  over  night  index  average.  As  a 
result no risk exists that the Commission earns interest at rates lower than market rates. 

7.2.2.2 Borrowing and lending activities (MFA, BOP and Euratom) 

Borrowings and loans with variable interest rates 

Due  to  the  nature  of  its  borrowing  and  lending  activities,  the  EU  has  significant  interest-
bearing  assets  and  liabilities.  MFA  and  Euratom  borrowings  issued  at  variable  rates  expose 
the  EU  to  interest  rate  risk.  However,  the  interest  rate  risks  that  arise  from  borrowings  are 
offset by equivalent loans in terms and conditions (back-to-back). At the balance sheet date, 
the  EU  has  loans  (expressed  in  nominal  amounts)  with  variable  rates  of  EUR  0.96  billion 
(2008: EUR 1.05 billion), with a re-pricing taking place every 6 months.  

Borrowings and loans with fixed interest rates 

The EU also has MFA and Euratom loans with fixed rates totalling EUR 110 million in 2009 
(2008:  EUR  85  million)  and  which  have  a  final  maturity  date  between  one  and  five  years 
(EUR 25 million) and more than five years (EUR 85 million). 

More  significantly,  the  EU  has  six  loans  under  the  financial  instrument  BOP  with  fixed 
interest rates totalling EUR 9.2 billion in 2009 (2008: EUR 2 billion) and with a final maturity 
between one and five years (EUR 5 billion) and more than five years (EUR 4.2 billion). 

7.2.2.3 Guarantee Fund 

Debt securities within the Guarantee Fund issued at variable interest rates are subject to the 
volatility effects of these rates, whereas debt securities at fixed rates have a risk with regard to 
their fair value. Fixed rate bonds represent approximately 97% of the investment portfolio at 
the balance sheet date (2008: 96%). 

7.2.2.4 ECSC in liquidation 

Due to the nature of its activities, the ECSC in liquidation is exposed to interest rate risk. The 
interest rate risks that arise from borrowings are generally offset by equivalent loans in terms 
and  conditions.  As  regards  asset  management  operations,  fixed  rate  bonds  represent 
approximately 97% of the securities portfolio at the balance sheet date (2008: 97%). 

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7.3 

CREDIT RISK 

Credit risk is the risk of loss due to a debtor's/borrower's non-payment of a loan or other line 
of  credit  (either  the  principal  or  interest  (coupon)  or  both)  or  other  failure  to  meet  a 
contractual  obligation.  The  default  events  include  a  delay  in  repayments,  restructuring  of 
borrower repayments, and bankruptcy. 

7.3.1  Treasury operations 

Most of the Commission's treasury resources are kept, in accordance with Council Regulation 
1150/2000  on  own  resources,  in  the  accounts  opened  by  Member  States  for  the  payment  of 
their contributions (own resources). All such accounts are held with Member States' treasuries 
or national central banks. These institutions carry the lowest credit (or counterparty) risk for 
the Commission as the exposure is with its Member States. 

For the part of the Commission's treasury resources kept with commercial banks in order to 
cover the execution of payments, replenishment of these accounts is instructed on a just-in-
time basis and is automatically managed by the treasury cash management system. Minimum 
cash levels, proportional to the average amount of daily payments executed from it, are kept 
on  each  account.  As  a  consequence  the  amounts  kept  overnight  on  these  accounts  remain 
constantly at low levels (overall between EUR 50 million and EUR 150 million on average, 
spread over more than 30 accounts) and so ensure the Commission's risk exposure is limited. 
These amounts should be viewed with regard to the overall treasury balances which fluctuate 
between EUR 1 billion and EUR 35 billion, and with an overall amount of payments executed 
in 2009 that totalled EUR 130 billion. 

In addition, specific guidelines are applied for the selection of commercial banks in order to 
further minimise counterparty risk to which the Commission is exposed: 

–  All  commercial  banks  are  selected  by  call  for  tenders.  The  minimum  short  term  credit 
rating  required  for  admission  to  the  tendering  procedures  is  Moody's  P-1  or  equivalent 
(S&P  A-1  or  Fitch  F1).  A  lower  level  may  be  required  in  specific  and  duly  justified 
circumstances. 

–  For commercial banks that have been specifically selected for the deposit of provisionally 
cashed fines, a minimum long-term rating of S&P AA or equivalent is also required as a 
general  rule  and  specific  measures  are  applied  in  case  banks  in  this  group  are  subject  to 
downgrade. 

–  In the course of 2009 the Commission's treasury services have put in place an alternative 
system  for  the  management  of  provisionally  cashed  fines,  with  the  specific  objective  of 
reducing risk in this area. Further to Commission's Decision C(2009) 4264 fines imposed 
from  the  1st  January  2010,  will  be  managed  under  the  new  system  and  no  longer  be 
deposited with commercial banks. 

–  Imprest  accounts  are  held  with  local  banks  selected  by  a  simplified  tendering  procedure. 
Rating  requirements  depend  on  the  local  situation  and  may  significantly  differ  from  one 
country to another. In order to limit risk exposure, balances on these accounts are kept at 
the  lowest  possible  levels  (taking  into  account  operational  needs);  they  are  regularly 
replenished, and the applied ceilings are reviewed on a yearly basis. 

–  The  credit  ratings  of  the  commercial  banks  where  the  Commission  has  accounts  are 
reviewed  at  least  on  a  monthly  basis,  or  with  higher  frequency  if  and  when  needed. 

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Intensified  monitoring  measures  were  adopted  in  the  context  of  the  financial  crisis,  and 
kept in place during the whole 2009. 

7.3.2  Borrowing and lending activities (MFA, BOP and Euratom) 

Exposure  to  credit  risk  is  managed  firstly  by  obtaining  country  guarantees  in  the  case  of 
Euratom,  then  through  the  Guarantee  Fund  (MFA  &  Euratom)  and  ultimately  through  the 
Budget of the EU (BOP, and should the other measures not be sufficient, MFA & Euratom). 
The Own Resource legislation in force during 2009 fixed the ceiling for the GNI resource at 
1.24%  of  Member  States'  GNI  and  during  2009  1.01%  was  actually  used  to  cover  payment 
appropriations.  This  means  that  at  31  December  2009  there  existed  an  available  margin  of 
0.23% to cover this guarantee. It should be noted that from 2010 onwards the ceiling falls to 
1.23%.  The  Guarantee  Fund  for  external  actions  was  set  up  in  1994  to  cover  default  risks 
related  to  borrowings  which  finance  loans  to  countries  outside  the  European  Union.  In  any 
case, the exposure to credit risk is mitigated by the possibility to call on the EU budget in case 
a debtor would be unable to reimburse the amounts due in full. To this end the EU is entitled 
to  call  upon  all  the  Member  States  to  ensure  compliance  with  the  EU's  legal  obligation 
towards its lenders. 

The  main  beneficiaries  of  these  loans  are  Hungary,  Latvia  and  Romania.  These  countries 
represent approximately 54%, 21% and 18% respectively of the total volume of loans. As far 
as  treasury  operations  are  concerned,  guidelines  on  the  choice  of  counterparties  must  be 
applied.  Accordingly,  the  operating  unit  will  be  able  to  enter  into  deals  only  with  eligible 
banks having sufficient counterparty limits. 

7.3.3  Guarantee Fund 

In  accordance  with  the  agreement  between  the  EU  and  the  EIB  on  the  management  of  the 
Guarantee  Fund,  all  interbank  investments  should  have  a  minimum  rating  from  Moody's  or 
equivalent  of  P-1.  As  at  31  December  2009  all  investments  (EUR  153  million)  were  made 
with  such  counterparties  (2008:  EUR  183  million).  As  at  31  December  2009,  the  fund 
invested in four short-term financial instruments and all such investments (EUR 37 million) 
were  made  with  counterparties  having  a  minimum  rating  of  P-1  Moody's  or  equivalent.  All 
the  securities  held  in  the  available  for  sale  portfolio  are  in  line  with  the  management 
guidelines. 

7.3.4  ECSC in liquidation 

Exposure to credit risk is managed through regular analysis of the ability of borrowers to meet 
interest  and  capital  repayment  obligations.  Exposure  to  credit  risk  is  also  managed  by 
obtaining  collateral  as  well  as  country,  corporate  and  personal  guarantees.  52%  of  the  total 
amount  of  outstanding  loans  is  covered  by  guarantees  from  a  Member  State  or  equivalent 
bodies (e.g. public institutions). 36% of loans outstanding have been granted to banks or have 
been  guaranteed  by  banks.  As  far  as  treasury  operations  are  concerned,  guidelines  on  the 
choice  of  counterparties  must  be  applied.  The  operating  unit  is  only  allowed  to  enter  into 
deals with eligible banks having sufficient counterparty limits. 

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7.4 

LIQUIDITY RISK 

Liquidity risk is the risk that arises from the difficulty of selling an asset, for example, the risk 
that a given security or asset cannot be traded quickly enough in the market to prevent a loss 
or meet an obligation. 

7.4.1  Treasury operations 

EU budget principles ensure that overall cash resources for the year are always sufficient for 
the execution of all payments. In fact, the total Member States contributions equal the amount 
of payment appropriations for the budgetary year. Member States contributions, however, are 
received  in  twelve  monthly  instalments  throughout  the  year,  while  payments  are  subject  to 
certain seasonality. 

In  order  to  ensure  that  treasury  resources  are  always  sufficient  to  cover  the  payments  to  be 
executed in any given month, procedures regarding regular cash forecasting are in place, and 
own  resources  can  be  called  up  in  advance  from  Member  States  if  needed,  under  certain 
conditions. 

In  addition  to  the  above,  in  the  context  of  the  Commission's  daily  treasury  operations, 
automated cash management tools ensure that sufficient liquidity is available on each of the 
Commission's bank accounts, on a daily basis. 

7.4.2  Borrowing and lending activities (MFA, BOP and Euratom) 

The liquidity risk that arises from borrowings is generally offset by equivalent loans in terms 
and conditions (back-to-back operations). For MFA and Euratom, the Guarantee Fund serves 
as  a  liquidity  reserve  (or  safety  net)  in  case  of  payment  default  and  payment  delays  of 
borrowers.  For  BOP,  the  Council  Regulation  431/2009  provides  for  a  procedure  allowing 
sufficient time to mobilise funds through the EU budget. 

7.4.3  Guarantee Fund 

The fund is managed according to the principle that the assets shall have a sufficient degree of 
liquidity and mobilisation in relation to the relevant commitments. The fund must maintain a 
minimum of EUR 100 million in a portfolio with a maturity of < 12 months which is to be 
invested  in  monetary  instruments.  As  at  31  December  2009  these  investments  amounted  to 
EUR 190 million. Furthermore a minimum of 20% of the fund's nominal value shall comprise 
monetary instruments, fixed-rate bonds with a remaining maturity of no more than one year 
and floating-rate bonds. As at 31 December 2009 this ratio stood at 27%. 

7.4.4  ECSC in liquidation 

The liquidity risk that arises from borrowings is generally offset by equivalent loans in terms 
and conditions (back-to-back operations). For the asset and liability management of ECSC in 
liquidation, the Commission manages liquidity requirements based on disbursement forecasts 
obtained through consultations with the responsible Commission services. 

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7.5 

FAIR VALUE DISCLOSURES 

7.5.1  Borrowing and lending activities (MFA, BOP and Euratom) 

Initial situation: 

It  should  be  noted  that  the  above  mentioned  loans  are  initially  recognised  at  their  nominal 
amount  in  accordance  with  the  EU  accounting  rule  11.  Had  the  private  sector  accounting 
standard IAS 39 been applied instead this would have meant recognising the loans initially at 
their  fair  value.  The  difference  between  the  two  accounting  treatments  for  the  BOP  loans 
only, at their date of issuance, is shown in the following table: 

EU Accounting 
rule 11 (nominal 
amount) 

IAS 39  
(fair value) 

7 200 

2 000 

6 649 

1 767 

EUR millions 

Difference  in 
accounting 
treatments 
551 

233 

Valuation of BOP loans at issuance 
in 2009 
Valuation of BOP loans at issuance 
in 2008 

The reasons for applying the accounting treatment under EU accounting rule 11 are: 

–  There  are  compensating  effects  between  loans  and  borrowings  due  to  their  back-to-back 
character. Thus, the effective interest for the loan equals the effective interest rate for the 
related borrowings. 

–  The initial difference reflects the opportunity cost that one would have obtained through an 
alternative investment at the capital market. As the EU is not allowed to invest money on 
the capital markets, this opportunity cost "option" is not applicable and so does not fairly 
reflect the substance of the transactions. 

–  The  initial  difference  shown  above  would  be  compensated  by  the  interest  income  in  the 

following years. 

Current situation at 31/12/2009: 

The estimated fair value is determined as follows:  

–  For loans: using a discounted cash flow model by applying country specific yield curves 

appropriate for the remaining term to maturity. 

–  For  borrowings  using  a  discounted  cash  flow  model  by  applying  AAA  yield  curves 

appropriate for the remaining term to maturity. 

–  Variable  interest  rate  loans  are  assumed  to  approximate  their  nominal  amount  since  re-

pricing at market interest rates takes place every 6 months. 

The  following  table  shows  the  estimated  fair  value  at  the  year-end  of  the  MFA,  BOP  and 
Euratom fixed interest loans in a way that permits it to be compared with the corresponding 
book value in the balance sheet: 

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Fair value 
Book value 
Difference 

Loans given 
31/12/2009 

Loans given 
31/12/2008 

Borrowings 
31/12/2009 

8 785
9 416
(631)

1 863
2 091
(228)

9 626 
9 416 
210 

EUR millions 

Borrowings 
31/12/2008 

2 118
2 091
27

At the balance sheet date BOP accounted for 98.8% of these loans and borrowings. The above 
table reflects the fact that since the EU has a credit rating of AAA and market interest rates 
are  currently  higher  than  the  rates  the  EU  borrowed  at,  the  fair  value  of  its  borrowings  are 
higher  than  the  nominal  amount.  Since  Hungary,  Latvia  and  Romania,  being  the  main 
recipients of these loans, have ratings lower than AAA, even though the market interest rates 
are currently higher than the EU has charged, the fair value of the loans given is lower than 
the nominal amount.  

7.5.2  ECSC in liquidation 

The estimated fair value of loans and borrowings is determined using a discounted cash flow 
model. According to this model, expected future cash flows are discounted by applying AAA 
yield  curves  appropriate  for  the  remaining  term  of  maturity.  The  estimated  fair  value  of 
floating  rate  loans  are  assumed  to  approximate  their  carrying  amount  since  re-pricing  at 
market interest rates takes place every 3 or 6 months. The estimated fair value of fixed interest 
bearing loans and borrowings could not be obtained and disclosed as the necessary data for 
calculating these values was not available. 

The  available-for-sale  securities  are  presented  at  fair  value  which  is  the  market  price  plus 
accrued interests. There are no financial instruments measured at fair value using a valuation 
technique that is not supported by observable market prices or rates. The nominal value less 
impairment  provision  of  trade  receivables  and  the  nominal  value  of  trade  payables  are 
assumed  to  approximate  their  fair  values.  The  fair  value  of  cash  and  cash  equivalents 
including  currents  accounts  and  short-term  deposits  (of  less  than  three  months)  is  their 
carrying amount. 

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8. 

RELATED PARTY DISCLOSURES 

8.1 

RELATED PARTIES 

The related parties of the EU are its consolidated entities and the key management personnel 
of  these  entities  (see  below).  Transactions  between  these  entities  take  place  as  part  of  the 
normal operations of  the EU and as this is the case, no specific disclosure requirements are 
necessary  for  these  transactions  in  accordance  with  the  EU  accounting  rules.  A  list  of  the 
consolidated entities is given in note 10. 

8.2  KEY MANAGEMENT ENTITLEMENTS 

For  the  purposes  of  presenting  information  on related  party  transactions  concerning  the  key 
management of the European Union, such persons are shown here under five categories: 

Category 1: the President of the European Council, the President of the Commission and the 
President of the Court of Justice 

Category 2: the Vice-president of the Commission and High Representative of the European 
Union  for  Foreign  Affairs  and  Security  Policy  and  the  other  Vice-presidents  of  the 
Commission 

Category  3:  the  Secretary-General  of  the  Council,  the  Members  of  the  Commission,  the 
Judges  and  Advocates  General  of  the  Court  of  Justice,  the  President  and  Members  of  the 
General  Court,  the  President  and  Members  of  the  European  Civil  Service  Tribunal,  the 
Ombudsman and the European Data Protection Supervisor 

Category 4: the President and Members of the Court of Auditors 

Category 5: the highest ranking civil servants of the Institutions and Agencies 

A  summary  of  their  entitlements  are  given  below  –  further  information  can  be  found  in  the 
Official Journal of the European Union (L187 8/8/1967 last modified by Council Regulation 
(EC, Euratom) No. 202/2005 of 18/1/2005 (L33 5/2/2005) and L268 20/10/1977 last modified 
by Council Regulation (EC, Euratom) no. 1293/2004 of 30/4/2004 (L243 15/7/2004)). Other 
information is also available in the Staff Regulations published on the Europa website which 
is the official document describing the rights and obligations of all officials of the EU. Key 
management personnel have not received any preferential loans from the EU. 

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KEY MANAGEMENT FINANCIAL ENTITLEMENTS 

EUR 

Entitlement (per employee) 

Category 1 

Category 2 

Category 3 

Category 4 

Category 5 

Basic salary (per month) 

24 874.61 

Residential/Expatriation allowance  
Family allowances: 

Household (% salary) 
Dependent child 
Pre-school 
Education, or 
Education outside place of work 

Presiding judges allowance 
Representation allowance 
Annual travel costs 
Transfers to Member State: 
Education allowance* 
% of salary* 
% of salary with no cc 
Representation expenses 
Taking up duty: 

Installation expenses 

Family travel expenses 
Moving expenses 

Leaving office: 

Resettlement expenses 

Family travel expenses 
Moving expenses 
Transition (% salary)** 
Sickness insurance 

Pension (% salary, before tax) 
Deductions: 

Community tax 
Sickness insurance (% salary) 
Special levy on salary 
Pension deduction 

15% 

2% + 167.31 
365.60 
89.31 
248.06 
496.12 
N/A 
1 418.07 
N/A 

Yes 
5% 
max 25% 
reimbursed 

49 749.22 

reimbursed 
reimbursed 

24 874.61 

reimbursed 
reimbursed 
40% - 65% 
covered 
Max 70% 

8% - 45% 
1.8% 
4.64% 
N/A 

22 531.36 – 
23 432.62 
15% 

18 025.08 – 
20 278.22 
15% 

19 467.10 – 
20 728.85 
15% 

11 461.32 – 
18 025.09 
16% 

2% + 167.31 
365.60 
89.31 
248.06 
496.12 
N/A 
0 - 911.38 
N/A 

2% + 167.31 
365.60 
89.31 
248.06 
496.12 
500 - 810.74 
500 - 607.71 
N/A 

2% + 167.31 
365.60 
89.31 
248.06 
496.12 
N/A 
N/A 
N/A 

2% + 167.31 
365.60 
89.31 
248.06 
496.12 
N/A 
N/A 
Yes 

Yes 
5% 
max 25% 
reimbursed 

45 062.72 – 
46 865.24 
reimbursed 
reimbursed 

22 531.36 – 
23 432.62 
reimbursed 
reimbursed 
40% - 65% 
covered 
Max 70% 

Yes 
5% 
max 25% 
reimbursed 

36 050.16 – 
40 556.44 
reimbursed 
reimbursed 

18 025.08 – 
20 278.22 
reimbursed 
reimbursed 
40% - 65% 
covered 
Max 70% 

Yes 
5% 
max 25% 
N/A 

Yes 
5% 
max 25% 
N/A 

38 934.20 –  
41 457.70 
reimbursed 
reimbursed 

19 467.10 –  
20 728.85 
reimbursed 
reimbursed 
40% - 65% 
covered 
Max 70% 

reimbursed 

reimbursed 
reimbursed 

reimbursed 

reimbursed 
reimbursed 
N/A 
optional 
Max 70% 

8% - 45% 
1.8% 
4.64% 
N/A 

8% - 45% 
1.8% 
4.64% 
N/A 

8% - 45% 
1.8% 
4.64% 
N/A 

8% - 45% 
1.8% 
4.64% 
11.3% 

Number of persons at 31/12/2009 

3 

7 

91 

27 

81 

* with correction coefficient (“cc”) applied 

** paid for the first 3 years following departure 

EN 

106 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9. 

EVENTS AFTER THE BALANCE SHEET DATE 

At  the  date  of  adoption  of  these  accounts,  aside  from  the  information  provided  below,  no 
other material issues had come to the attention of the Accounting Officer of the Commission 
or were reported to him that would require separate disclosure under this section. The annual 
accounts  and  related  notes  were  prepared  using  the  most  recently  available  information  and 
this is reflected in the information presented. 

European Financial Stabilisation Mechanism (EFSM) 

On 11 May 2010 the Council adopted a European Financial Stabilisation Mechanism (EFSM) 
to  preserve  financial  stability  in  Europe  (Council  Regulation  (EU)  n°  407/2010).  The 
mechanism  is  based  on  Art.  122.2  of  the  Treaty  and  enables  the  granting  of  financial 
assistance  to  a  Member  State  in  difficulties  or  seriously  threatened  with  severe  difficulties 
caused by exceptional occurrences beyond its control. The assistance may take the form of a 
loan or credit line guaranteed by the EU budget. In case of activation, the Commission would 
borrow funds on the capital markets or with financial institutions on behalf of the EU and then 
lend these funds to the beneficiary Member State. The ECOFIN Council conclusions restrict 
the  facility  to  EUR  60  billion.  The  EFSM  has  been  established  in  addition  to  the  existing 
Balance of Payment facility that provides financial assistance to non-euro Member States. 

It is worth noting that although it has no impact on either the EU accounts or the EU budget, a 
similar  financial  assistance  package,  the  European  Financial  Stability  Facility  (EFSF),  was 
also established by the euro area Member States and other participating Member States. This 
potential assistance to euro-area Member States would be given via a special purpose vehicle 
(SPV) and the participating Member States are providing guarantees of up to EUR 440 billion 
for this SPV. This facility expires in June 2013. 

Finally,  but  again  not  affecting  the  EU  accounts  or  budget,  in  addition  to  the  above,  the 
International  Monetary  Fund  (IMF)  will  also  participate  in  the  above  actions  and  this  is 
expected to provide a further EUR 250 million in possible assistance. 

EN 

107 

   EN 

 
 
 
 
 
10. 

CONSOLIDATED ENTITIES 

A. CONTROLLED ENTITIES 
1. Institutions and consultative bodies 
Committee of the Regions 
Council of the European Union 
Court of Justice of the European Union 
European Commission 
European Court of Auditors 

European Data Protection Supervisor 
European Economic and Social Committee 
European Ombudsman 
European Parliament 

2. EU Agencies 
European Agency for Safety and Health at Work 
European Aviation Safety Agency 
European Centre for Disease Prevention and Control 
European Centre for the Development of Vocational 
Training 
European Environment Agency 
European Food Safety Authority 
European Foundation for the Improvement of Living and 
Working Conditions 
European Maritime Safety Agency 
European Medicines Agency 
European Chemicals Agency 
Fusion for Energy (European Joint Undertaking for ITER 
and the Development of Fusion Energy) 
Eurojust** 

European Union Agency for Fundamental Rights 
European Network and Information Security Agency 
European Training Foundation 
European Agency for the Management of Operational Co-
operation at External Borders of the Member States of the EU 
Translation Centre for the Bodies of the European Union 
European GNSS Supervisory Authority 
Office for Harmonisation in the Internal Market (Trade Marks 
and Designs)  
European Railway Agency 
Community Plant Variety Office 
Community Fisheries Control Agency 
European Monitoring Centre for Drugs and Drug Addiction 

European Police College (CEPOL)** 

Executive Agency for Competitiveness and Innovation 
Education, Audiovisual & Culture Executive Agency 
European Research Council Executive Agency* 

Executive Agency for Health and Consumers 
Trans-European Transport Network Executive Agency 
Research Executive Agency* 

3. Other controlled entities 
European Coal and Steel Community (in liquidation) 

B. ASSOCIATES 
European Investment Fund  
Clean Sky Joint Undertaking* 

ARTEMIS Joint Undertaking* 

C. JOINT VENTURES 
ITER International Fusion Energy Organisation 
SESAR Joint Undertaking 

Galileo Joint Undertaking in liquidation 
IMI Joint Undertaking* 

* 
** 

Consolidated for the first time in 2009 
Decentralised body of the EU falling under the former pillar "Police & Judicial Co-operation in criminal matters" 

EN 

108 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11. 

NON-CONSOLIDATED ENTITIES 

Although  the  EU  manages  the  assets  of  the  below  mentioned  entities,  they  do  not  meet  the 
requirements to be consolidated and so are not included in the European Union accounts. 

11.1  THE EUROPEAN DEVELOPMENT FUND (EDF) 

The  European  Development  Fund  (EDF)  is  the  main  instrument  for  providing  European 
Union  aid  for  development  cooperation  to  the  African,  Caribbean  and  Pacific  (ACP)  States 
and Overseas Countries and Territories (OCTs). The 1957 Treaty of Rome made provision for 
its  creation  with  a  view  to  granting  technical  and  financial  assistance,  initially  limited  to 
African countries with which some Member States had historical links. 

The EDF is not funded from the European Union's budget but from direct contributions from 
the  Member  States,  which  are  agreed  in  negotiations  at  intergovernmental  level.  The 
Commission and the EIB manage the resources of the EDF. Each EDF is usually concluded 
for a period of around five years. Since the conclusion of the first partnership convention in 
1964, 
the  partnership 
agreement/convention cycles. 

the  EDF  programming  cycles  have  generally 

followed 

The  EDF  is  governed  by  its  own  Financial  Regulation  (OJ  L  78  of  19/03/2008)  which 
foresees the presentation of its own financial statements, separately from those of the EU. The 
EDF  annual  accounts  and  resource  management  are  subject  to  the  external  control  of  the 
Court  of  Auditors  and  the  Parliament.  For  information  purposes,  the  balance  sheet  and  the 
economic outturn account of the 8th, 9th and 10th EDFs are shown below: 

BALANCE SHEET – 8th, 9th and 10th EDFs 

31.12.2009 

31.12.2008 

EUR millions

  NON-CURRENT ASSETS 

 CURRENT ASSETS 

  TOTAL ASSETS 

  CURRENT LIABILITIES 

  TOTAL LIABILITIES 

  NET ASSETS 

 FUNDS & RESERVES 
 Called fund capital 
 Other reserves 
 Economic outturn carried forward from previous years
 Economic outturn of the year 

  NET ASSETS 

196 

1 389 

1 585 

(860) 

(860) 

725 

20 381 
2 252 
(18 814) 
(3 094) 
725 

269 

957 

1 226 

(709) 

(709) 

517 

17 079 
2 252 
(15 784) 
(3 030) 
517 

EN 

109 

   EN 

 
 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
 
ECONOMIC OUTTURN ACCOUNT – 8th, 9th and 10th EDF 

 OPERATING REVENUE 

 OPERATING EXPENSES 

  DEFICIT FROM OPERATING ACTIVITIES 

 FINANCIAL ACTIVITIES 

2009 

49 

(3 192) 

(3 143) 

49 

EUR millions
2008 

23 

(3 066) 

(3 043) 

13 

  ECONOMIC OUTTURN OF THE YEAR 

(3 094) 

(3 030) 

11.2  THE SICKNESS INSURANCE SCHEME 

The Sickness Insurance Scheme is the scheme that provides medical assurance to the staff of 
the various European Union bodies. The funds of the Scheme are its own property and are not 
controlled  by  the  European  Union,  although  its  financial  assets  are  managed  by  the 
Commission. The Scheme is funded by contributions from its members (staff) and from the 
employers (the Institutions/Agencies/bodies.) Any surplus remains within the Scheme. 

The  scheme  has  four  separate  entities  –  the  main  scheme  covering  staff  of  the  Institutions, 
Agencies of the European  Union,  and three smaller schemes covering  staff in the European 
University of Florence, the European schools and staff working outside the EU such as staff 
in the EU delegations. The total assets of the Scheme at 31 December 2009 totalled EUR 297 
million (2008: EUR 288 million). 

11.3  THE PARTICIPANTS GUARANTEE FUND (PGF) 

Certain  pre-financing  amounts  paid  out  under  the  7th  Research  Framework  Programme  for 
research  and  technological  development  (FP7)  are  effectively  covered  by  a  Participants 
Guarantee Fund (PGF). This is a mutual benefit instrument set up to cover the financial risks 
incurred by the EU and the participants during the implementation of the indirect actions of 
FP7, its capital and interests constituting a performance security. All participants of indirect 
actions  taking  the  form  of  a  grant  contribute  5%  of  the  total  EU  contribution  to  the  PGF's 
capital for the duration of the action. As such the participants are the owners of the PGF, and 
the  EU  (represented  by  the  Commission)  acts  only  as  their  executive  agent.  As  at  31 
December 2009 the PGF had total assets of EUR 580 million (2008: EUR 283 million). The 
funds of the PGF are its own property and are not controlled by the European Union, even if 
its financial assets are managed by the Commission. 

EN 

110 

   EN 

 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
PART  II  –  CONSOLIDATED  REPORTS  ON  THE  IMPLEMENTATION  OF  THE 
BUDGET OF THE EUROPEAN UNION AND EXPLANATORY NOTES 

EN 

111 

   EN 

 
CONSOLIDATED REPORTS ON IMPLEMENTATION OF THE BUDGET 

* It should be noted that due to the rounding of figures into millions of euros, some financial 
data in these budgetary tables may appear not to add-up 

EN 

112 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED REPORTS ON IMPLEMENTATION OF THE BUDGET: 

1. Budget outturn 

2. Statement of Comparison of Budget and Actual Amounts 

114 

115 

Revenue: 

3. Consolidated summary of the implementation of budget revenue 

117 

Expenditure: 

4. Breakdown and changes in commitment and payment appropriations by 

financial framework heading 

118 

5. Implementation of commitment appropriations by financial framework heading 

118 

6. Implementation of payment appropriations by financial framework heading 

118 

7. Movement in commitments outstanding by financial framework heading 

119 

8. Breakdown of commitments outstanding by year of origin by financial 

framework heading 

9. Breakdown and changes in commitment and payment appropriations by 

policy area 

10. Implementation of commitment appropriations by policy area 

11. Implementation of payment appropriations by policy area 

12. Movement in commitments outstanding by policy area 

13. Breakdown of commitments outstanding by year of origin by policy area 

120 

121 

122 

123 

124 

125 

Institutions: 

14. Consolidated summary of implementation of budget revenue by Institution  126 

15. Implementation of commitment and payment appropriations by Institution 

127 

Agencies: 

16. Agency income: budget forecasts, entitlements and amounts received 

17. Commitment and payment appropriations by Agency 

18. Budget outturn including Agencies 

128 

129 

130 

EN 

113 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RESULT OF IMPLEMENTATION OF THE BUDGET 

1: BUDGET OUTTURN 2009 

TOTAL 
2009 

EUR millions 

TOTAL 
2008 

Revenue for the financial year 

117 626 

121 584

Payments against current year appropriations 

(116 579) 

(115 550)

Payment appropriations carried over to year N+1 

Cancellation of unused payment appropriations carried over from 
year N-1 

Exchange differences for the year  

Budget Outturn* 

(1 759) 

2 791 

185 

2 264 

(3 914)

188

(498)

1 810

* Of which EFTA amounts total EUR 11 million in 2009 and EUR 14 million in 2008 

The budget surplus for the European Union is returned to the Member States during the following year 
through deduction of their amounts due for that year. 

EN 

114 

   EN 

 
 
 
 
 
 
2. STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS  

REVENUE 

Original Budget 

Final Budget 

Title 

1. Own resources 
3. Surpluses, balances and adjustments 
4. Revenue accruing from persons working with the 
institutions and with other Community bodies 
5. Revenue accruing from the administrative 
operation of the institutions 
6. Contributions and refunds in connection with 
community agreements and programmes 
7. Interest on late payments and fines 
8. Borrowing and lending operations 
9. Miscellaneous revenue 

1 
114 736 
0 

1 120 

77 

10 

123 
0 
30 

2 
110 238 
410 

1 120 

85 

368 

757 
0 
58 

Entitlements 
established 
3 

110 462 
330 

1 033 

436 

4 834 

12 774 
80 
85 

Revenue 

4 
110 373 
330 

1 025 

335 

4 559 

933 
4 
66 

Total 

116 096 

113 035 

130 032 

117 626 

EXPENDITURE – BY FINANCIAL FRAMEWORK HEADING 

Difference  
Final-Actual 
5=2-4 

Receipts as % of 
budget 
6=4/2 

EUR millions 

Outstanding 

7=3-4 

-135 
80 

94 

-250 

-4 191 

-176 
-4 
-8 

-4 590 

100.12 % 
80.56 % 

91.59 % 

394.05 % 

1 238.97% 

123.25 % 
- 
114.11% 

104.06% 

89 
0 

7 

101 

275 

11 841 
76 
19 

12 407 

EUR millions 

Original Budget 

Final Budget (*) 

Payments made 

Financial Framework Heading 

1. Sustainable growth 
2. Preservation & management of natural resources 
3. Citizenship, freedom, security and justice 
4. The EU as a global partner 
5. Administration 
6. Compensations 

1 

46 000 
52 566 
1 296 
8 324 
7 701 
209 

* including appropriations carried over and assigned revenue 

Total 

116 096 

2 
47 520 
57 107 
2 174 
8 804 
8 754 
209 

124 569 

3 

44 684 
55 877 
1 993 
7 983 
7 615 
209 

118 361 

EN 

115 

Difference 
Final-Actual 
4=2-3 

% 

5=3/2 

Appropriations 
carried over 
6 

Appropriations 
lapsing 
7=2-3-6 

2 837 
1 230 
181 
821 
1 139 
0 

6 208 

94.03 % 
97.85 % 
91.66 % 
90.67 % 
86.99 % 
100.00 % 

95.02 % 

2 381 
986 
75 
220 
857 
0 

4 519 

456 
244 
106 
601 
281 
0 

1 688 

EN 

 
  
 
 
 
 
  
 
 
 
 
 
 
 
 
2. STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS (CONTINUED) 

EXPENDITURE – BY POLICY AREA 

Original Budget   Final Budget (*) 

Payments made 

1 

2 

3 

Difference 
Final-Actual 
4=2-3 

% 

5=3/2 

Appropriations 
carried over 
6 

Appropriations 
lapsing 
7=2-3-6 

EUR millions 

Policy Area 

01 Economic and financial affairs 
02 Enterprise 
03 Competition 
04 Employment and social affairs 
05 Agriculture and rural development 
06 Energy and transport 
07 Environment 
08 Research 
09 Information society and media 
10 Direct research 
11 Fisheries and maritime affairs 
12 Internal market 
13 Regional policy 
14 Taxation and customs union 
15 Education and culture 
16 Communication  
17 Health and consumer protection  
18 Area of freedom, security and justice 
19 External relations 
20 Trade 
21 Development and relations with ACP States 
22 Enlargement 
23 Humanitarian aid 
24 Fight against fraud 
25 Commission’s policy coordination and legal advice 
26 Commission’s administration 
27 Budget 
28 Audit 
29 Statistics 
30 Pensions and related expenditure 
31 Language Services 
40 Reserves 
90 Other Institutions 

487 
601 
90 
11 203 
51 478 
2 481 
496 
4 960 
1 356 
366 
927 
66 
24 570 
106 
1 363 
211 
582 
678 
3 579 
79 
1 680 
1 661 
797 
74 
188 
986 
278 
11 
101 
1 160 
389 
244 
2 848 

345 
705 
107 
9 929 
56 413 
2 480 
409 
5 644 
1 552 
735 
715 
76 
26 793 
131 
1 654 
229 
632 
830 
3 805 
88 
1 872 
1 437 
859 
80 
212 
1 226 
285 
12 
138 
1 136 
479 
229 
3 334 

327 
558 
95 
8 906 
55 209 
2 253 
356 
4 826 
1 375 
411 
592 
66 
26 740 
120 
1 495 
204 
526 
744 
3 673 
77 
1 698 
1 308 
800 
71 
185 
1 034 
271 
10 
120 
1 117 
422 
0 
2 771 

Total 

116 096 

124 569 

118 361 

* including appropriations carried over and assigned revenue 

EN 

116 

18 
147 
12 
1 023 
1 204 
227 
52 
818 
177 
324 
122 
10 
53 
11 
159 
25 
106 
86 
131 
10 
174 
128 
59 
9 
27 
192 
14 
1 
18 
19 
58 
229 
563 

6 208 

94.82 % 
79.21 % 
88.32 % 
89.70 % 
97.87 % 
90.84 % 
87.17 % 
85.50 % 
88.58 % 
55.87 % 
82.87 % 
86.89 % 
99.80 % 
91.54 % 
90.38 % 
89.22 % 
83.25 % 
89.64 % 
96.55 % 
88.09 % 
90.68 % 
91.08 % 
93.13 % 
88.65 % 
87.27 % 
84.34 % 
95.19 % 
90.05 % 
87.27 % 
98.36 % 
87.91 % 
0.00 % 
83.12 % 

14 
89 
10 
755 
954 
177 
30 
789 
173 
314 
19 
7 
15 
9 
153 
16 
35 
16 
72 
8 
138 
18 
47 
7 
20 
164 
12 
1 
15 
0 
53 
0 
392 

4 
58 
2 
268 
249 
51 
22 
30 
5 
10 
103 
3 
38 
3 
6 
8 
71 
70 
59 
3 
37 
110 
12 
2 
7 
28 
1 
0 
3 
19 
5 
229 
171 

95.02 % 

4 519 

1 688 

EN 

 
  
 
 
 
3. SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE 2009 

Title 

Income appropriations 

Entitlements established 

1. Own resources 
3. Surpluses, balances and adjustments 
4. Revenue accruing from persons working with the 
institutions and with other Community bodies 
5. Revenue from administrative operations of institutions 
6. Contributions and refunds in connection with 
community agreements and programmes 
7. Interest on late payments and fines 
8. Borrowing and lending operations 
9. Miscellaneous revenue 

Initial 

114 736 
0 
1 120 

77 
10 

123 
0 
30 

Final 

Current year  Carried over 

Total 

On entitlements 
of Current year

110 238 
410 
1 120 

85 
368 

757 
0 
58 

109 103 
330 
1 026 

345 
4 430 

2 836 
53 
53 

1 358 
0 
7 

90 
404 

9 938 
27 
32 

110 462 
330 
1 033 

436 
4 834 

12 774 
80 
85 

109 098 
330 
1 020 

309 
4 277 

193 
1 
47 

EUR millions 

Receipts as   Outstanding 
% of budget 

Revenue 
On entitlements 
Carried 
1 275 
0 
6 

Total 

110 373 
330 
1 025 

100.12 % 
80.56 % 
91.59 % 

26 
282 

740 
3 
20 

335 
4 559 

394.05 % 
1238.97 % 

933 
4 
66 

123.25 % 

114.11 % 

89 
0 
7 

101 
275 

11 841 
76 
19 

12 407 

Total 

116 096 

113 035 

118 175 

11 857 

130 032 

115 274 

2 351 

117 626 

104.06 % 

Chapter 

Income appropriations 

Entitlements established 

Detail Title 1: Own resources 

Initial 

Final 

Current year  Carried over 

Total 

On entitlements 
of Current year

Revenue 
On entitlements 
Carried 

 Total  

Receipts as   Outstanding 
% of budget 

10. Agricultural duties 
11. Sugar levies 
12. Custom duties 
13. VAT 
14. GNI 
15. Correction of budgetary imbalances 
16. Reduction of GNI based contributions of NL & SW 

1 404 
147 
17 656 
19 616 
75 914 
0 
0 

0 
139 
14 441 
13 668 
81 989 
0 
0 

-350 
104 
13 505 
13 743 
82 413 
-315 
4 

350 
28 
980 
0 
0 
0 
0 

0 
132 
14 485 
13 743 
82 413 
-315 
4 

-350 
104 
13 499 
13 743 
82 413 
-315 
4 

350 
28 
897 
0 
0 
0 
0 

0 
132 
14 397 
13 743 
82 413 
-315 
4 

94.40 % 
99.69 % 
100.54 % 
100.52 % 
- 
- 

Total 

114 736 

110 238 

109 103 

1 358 

110 462 

109 098 

1 275 

110 373 

100.12 % 

0 
0 
89 
0 
0 
0 
0 

89 

Chapter 

Income appropriations 

Entitlements established 

Detail Title 3: Surpluses, balances and adjustments 

Initial 

Final 

Current year  Carried over 

Total 

On entitlements 
of Current year

Revenue 
On entitlements 
Carried 

Total 

Receipts as   Outstanding 
% of budget 

30. Surplus from previous year 
31. VAT balances 
32. GNI balances 
34. Adjustment for non-participation in JHAP 
35. United Kingdom correction - adjustments 
37. Adjustment own resources decision 2007/436/EC 

Total 

0 
0 
0 
0 
0 
0 
0 

1 796 
-954 
-432 
0 
0 
0 
410 

1 796 
-946 
-431 
6 
-6 
-89 
330 

0 
0 
0 
0 
0 
0 
0 

1 796 
-946 
-431 
6 
-6 
-89 
330 

1 796 
-946 
-431 
6 
-6 
-89 
330 

0 
0 
0 
0 
0 
0 
0 

1 796 
-946 
-431 
6 
-6 
-89 
330 

100.00 % 
99.17 % 
99.70 % 
- 
- 
- 
80.56 % 

EN 

117 

0 
0 
0 
0 
0 
0 
0 

EN 

 
  
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4. BREAKDOWN & CHANGES IN COMMITMENT & PAYMENT APPROPRIATIONS  
BY FINANCIAL FRAMEWORK HEADING 

Financial Framework 
Heading 

Appropriations 
adopted 

Modifications 
(Transfers and 
AB) 

1 Sustainable growth 
2 Preservation and 
management of natural 
resources 
3 Citizenship, freedom, 
security and justice 
4 The EU as a global partner 
5 Administration 
6 Compensations 

1 
60 196 

56 121 

1 515 

8 104 
7 701 
209 

2 
2 003 

585 

617 

0 
-100 
0 

Total 

133 846 

3 105 

Commitment appropriations 

Payment appropriations 

Carried over  

Assigned 
revenue 

Total 
additional 

Total authorised 

Appropriations 
adopted 

Modifications 
(Transfers and AB) 

Carried 
over 

Assigned 
revenue 

Total 
additional 

Total 
authorised 

EUR millions 

3 

19 

0 

83 

271 
8 
0 

381 

4 
1 705 

6 011 

113 

339 
416 
0 

5=3+4 
1 724 

6 012 

196 

610 
424 
0 

6=1+2+5 

63 923 

62 718 

2 328 

8 714 
8 025 
209 

7 
46 000 

52 566 

1 296 

8 324 
7 701 
209 

8 

-795 

-2 290 

725 

-224 
-101 
0 

9 
176 

829 

23 

378 
725 
0 

10 
2 139 

11=9+10 
2 315 

12=7+8+11 
47 520 

6 002 

6 831 

57 107 

131 

326 
429 
0 

153 

704 
1 154 
0 

2 174 

8 804 
8 754 
209 

8 585 

8 966 

145 917 

116 096 

-2 686 

2 132 

9 026 

11 158 

124 569 

5. IMPLEMENTATION OF COMMITMENT APPROPRIATIONS BY FINANCIAL FRAMEWORK HEADING 

Financial Framework 
Heading 

Commitment 
appropriations 
authorised 

Commitments made 

Appropriations carried over to 2010 

Appropriations lapsing 

EUR millions 

From the year’s 
appropriations 

From carry-
overs 

From 
assigned 
revenue 

Total 

% 

Assigned 
revenue 

Carry-
overs by 
decision 

Total 

% 

From the 
year’s 
appropriations

From carry 
overs 

Assigned 
revenue 
(EFTA) 

Total 

% 

1 

2 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9=7+8 

10=9/1 

11 

12 

13 

1 Sustainable growth 
2 Preservation and management of 
natural resources 
3 Citizenship, freedom, security and 
justice 
4 The EU as a global partner 
5 Administration 
6 Compensations 

63 923 
62 718 

2 328 

8 714 
8 025 
209 

61 630 
56 413 

2 118 

8 038 
7 398 
209 

Total

145 917 

135 806 

19 
0 

83 

271 
8 
0 

381 

796 
5 072 

62 444 
61 484 

97.69 %
98.03 %

63 

173 
255 
0 

2 264 

97.27 %

8 481 
7 662 
209 

97.34 %
95.48 %
100.00 %

908 
940 

50 

166 
161 
0 

64
972 
253 1 193 

1.52 % 
1.90 % 

0

0
11
0

50 

2.15 % 

166 
172 
0 

1.91 % 
2.14 % 
0.00 % 

6 358 

142 545 

97.69 % 2 225 

328 2 553 

1.75 % 

505 
41 

14 

66 
191 
0 

817 

0 
0 

0 

0 
0 
0 

0 

1 
0 

0 

0 
0 
0 

2 

EN 

118 

14=11+
12+13 
507 
41 

15=14/1 

0.79 % 
0.07 % 

14 

0.59 % 

66 
191 
0 

0.76 % 
2.38 % 
0.00 % 

819 

0.56 % 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6. IMPLEMENTATION OF PAYMENT APPROPRIATIONS BY FINANCIAL FRAMEWORK HEADING 

EUR millions 

Appropriations carried over to 2010 

Appropriations lapsing 

Financial 
Framework 
Heading 

Payment  
Approp-
riations 
authorised 

1 

From the 
year’s 
appropria-
tions 
2 

Payments made 

From 
carry-
overs 

From 
assigned 
revenue 

Total 

% 

Automatic 
carry-
overs 

Carry-
overs by 
decision 

Assigned 
revenue 

Total 

% 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9 

10=7+
8+9 

11=10/1 

684 

44 684 

94.03 % 

129 

808 

1 443 

2 381 

5.01 % 

1 Sustainable 
growth 
2 Preservation and 
management of 
natural resources 
3 Citizenship, 
freedom, security 
and justice 
4 The EU as a 
global partner 
5 Administration 

6 Compensations 

47 520 

43 866 

57 107 

50 026 

2 174 

1 915 

8 804 

7 564 

8 754 

209 

6 745 

209 

133 

773 

15 

224 

637 

0 

5 078 

55 877 

97.85 % 

63 

1 993 

91.66 % 

195 

7 983 

90.67 % 

233 

0 

7 615 

86.99 % 

209 

100.00 % 

Total 

124 569 

110 325 

1 782 

6 253 

118 361 

95.02 % 

EN 

47 

7 

43 

651 

0 

877 

119 

From the 
year’s 
appropria-
tions 
12 

From 
carry-
overs 

13 

401 

188 

98 

43 

56 

7 

Total 

% 

Assigned 
revenue 
(EFTA) 

14 

12 

0 

1 

0 

0 

0 

15=12
+ 
13+14 
456 

16= 
15/1 

0.96 % 

244 

0.43 % 

106 

4.88 % 

601 

6.83 % 

281 

3.21 % 

0 

0.00 % 

15 

2 

46 

11 

0 

924 

986 

1.73 % 

67 

75 

3.46 % 

131 

220 

2.50 % 

447 

154 

196 

0 

857 

9.79 % 

0 

0.00 % 

193 

0 

88 

0 

882 

2 760 

4 519 

3.63 % 

1 326 

350 

13 

1 688 

1.36 % 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7. MOVEMENT IN COMMITMENTS OUTSTANDING BY FINANCIAL FRAMEWORK HEADING 

Commitments outstanding at the end of the previous year 

Commitments of the year 

Financial Framework 
Heading 

1 Sustainable growth 
2 Preservation and 
management of natural 
resources 
3 Citizenship, freedom, 
security and justice 
4 The EU as a global 
partner 
5 Administration 
6 Compensations 

Commitments 
carried forward 
from previous 
years 
119 797 

14 123 

1 535 

18 840 

750 
0 

Decommitments 
/Revaluations/ 
Cancellations 

Payments  

Commitments 
outstanding at 
year-end 

Commitments made 
during the year 

Payments 

-647 

-189 

-144 

-876 

-90 
0 

-39 892 

-7 370 

-560 

-5 455 

-646 
0 

79 259 

6 564 

830 

12 509 

15 
0 

62 444 

61 484 

2 264 

8 481 

7 662 
209 

-4 792 

-48 507 

-1 433 

-2 528 

-6 970 
-209 

Cancellation of 
commitments 
which cannot be 
carried over 
-10 

-0 

0 

-1 

-1 
0 

EUR millions 

Commitments 
outstanding at 
year-end 

Total Commitments 
outstanding at year-
end 

57 642 

12 977 

832 

5 953 

692 
0 

136 901 

19 541 

1 662 

18 462 

706 
0 

Total

155 045 

-1 946 

-53 923 

99 177 

142 545 

-64 438 

-12 

78 095 

177 272 

8. BREAKDOWN OF COMMITMENTS OUTSTANDING BY THE COMMITMENT'S YEAR OF ORIGIN BY FINANCIAL 
FRAMEWORK HEADING 

Financial Framework Heading 

<2003 

2003 

2004 

2005 

2006 

2007  

2008  

2009  

1 Sustainable growth 
2 Preservation & management of natural resources 
3 Citizenship, freedom, security and justice 
4 The EU as a global partner 
5 Administration 

626
73
18
991
0

624
23
15
431
0

Total 

1 709

1 093

1 268
27
36
711
0

2 042

2 814 
98 
45 
1 020 
0 

3 977 

18 348
1 912
86
2 632
0

22 978

11 584
167
257
2 455
1

14 463

43 995
4 264
373
4 270
14

52 915

57 642 
12 977 
832 
5 953 
692 

78 095 

EN 

120 

EUR millions 
Total 

136 901 
19 541 
1 662 
18 462 
706 

177 272 

EN 

 
  
 
 
 
 
 
 
 
 
 
9. BREAKDOWN AND CHANGES IN COMMITMENT AND PAYMENT APPROPRIATIONS BY POLICY AREA 

Policy Area 

01 Economic and financial affairs 
02 Enterprise 
03 Competition 
04 Employment and social affairs 
05 Agriculture and rural development 
06 Energy and transport 
07 Environment 
08 Research 
09 Information society and media 
10 Direct research 
11 Fisheries and maritime affairs 
12 Internal market 
13 Regional policy 
14 Taxation and customs union 
15 Education and culture 
16 Communication  
17 Health and consumer protection  
18 Area of freedom, security and justice 
19 External relations 
20 Trade 
21 Development and relations with ACP States 
22 Enlargement 
23 Humanitarian aid 
24 Fight against fraud 
25 Commission’s policy coordination and legal advice 
26 Commission’s administration 
27 Budget 
28 Audit 
29 Statistics 
30 Pensions and related expenditure 
31 Language Services 
40 Reserves 
90 Other Institutions 

Approps 
adopted 
1 

442 
663 
90 
11 188 
54 682 
2 740 
483 
4 665 
1 512 
371 
1 014 
66 
37 901 
131 
1 401 
214 
624 
924 
4 072 
80 
1 894 
1 081 
797 
78 
188 
981 
278 
11 
133 
1 160 
389 
744 
2 848 

Modifications 
(Transfer /AB)
2 
-17 
-2 
-0 
51 
586 
1 998 
-23 
70 
-71 
0 
-35 
-0 
629 
-1 
-2 
-0 
49 
1 
-12 
-2 
93 
0 
110 
0 
-2 
12 
-9 
-0 
-1 
-24 
-10 
-241 
-43 

Total 

133 846 

3 105 

0 
0 
0 
2 
0 
1 
0 
0 
0 
0 
0 
0 
24 
0 
0 
0 
0 
75 
0 
0 
265 
6 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
8 

381 

Commitment appropriations 
Carried over  Assigned 
revenue 
4 

3 

Payment appropriations 
Assigned 
revenue 
10 

Total 
additional 
5=3+4 
20 
96 
4 
16 
5 993 
121 
27 
654 
168 
424 
6 
2 
30 
3 
292 
4 
22 
107 
107 
2 
443 
51 
8 
0 
8 
99 
5 
1 
11 
0 
77 
0 
164 

Total 
authorized 
6=1+2+5 
445 
757 
94 
11 255 
61 260 
4 589 
488 
5 388 
1 609 
795 
985 
68 
38 560 
134 
1 691 
217 
695 
1 032 
4 168 
81 
2 430 
1 132 
915 
78 
194 
1 093 
274 
11 
143 
1 136 
456 
503 
2 970 

Approps 
adopted 
7 
487 
601 
90 
11 203 
51 478 
2 481 
496 
4 960 
1 356 
366 
927 
66 
24 570 
106 
1 363 
211 
582 
678 
3 579 
79 
1 680 
1 661 
797 
74 
188 
986 
278 
11 
101 
1 160 
389 
244 
2 848 

Modifications 
(Transfer/ AB)
8 
-179 
-22 
-0 
-1 305 
-2 030 
-171 
-126 
-411 
-71 
-5 
-222 
-0 
2 027 
13 
-38 
-3 
-1 
110 
91 
1 
-21 
-296 
49 
0 
-2 
13 
-9 
-0 
14 
-24 
-10 
-15 
-43 

Carried 
over 
9 
16 
20 
13 
18 
972 
21 
20 
46 
16 
38 
4 
7 
192 
9 
17 
17 
30 
14 
50 
6 
32 
16 
6 
6 
18 
126 
10 
1 
7 
0 
24 
0 
361 

20 
96 
4 
14 
5 993 
120 
27 
654 
168 
424 
6 
2 
6 
3 
292 
4 
22 
31 
107 
2 
178 
45 
8 
0 
8 
99 
5 
1 
11 
0 
77 
0 
156 

21 
105 
4 
13 
5 993 
150 
19 
1 049 
252 
337 
6 
2 
3 
3 
312 
3 
22 
28 
84 
2 
180 
56 
7 
0 
8 
101 
5 
1 
16 
0 
77 
0 
167 

EUR millions 

Total 
authorized 
12=7+8+11 

345 
705 
107 
9 929 
56 413 
2 480 
409 
5 644 
1 552 
735 
715 
76 
26 793 
131 
1 654 
229 
632 
830 
3 805 
88 
1 872 
1 437 
859 
80 
212 
1 226 
285 
12 
138 
1 136 
479 
229 
3 334 

Total 
additional 
11=9+10 
37 
125 
17 
31 
6 964 
171 
39 
1 095 
267 
374 
10 
10 
195 
12 
328 
20 
52 
43 
134 
9 
213 
72 
13 
6 
25 
227 
16 
1 
23 
0 
101 
0 
528 

8 585 

8 966 

145 917 

116 096 

-2 686 

2 132 

9 026 

11 158 

124 569 

EN 

121 

EN 

 
  
 
 
 
 
10. IMPLEMENTATION OF COMMITMENT APPROPRIATIONS BY POLICY AREA  

EUR millions 

Commitments made 
Assigned 
revenue 

Total 

% 

Assigned 
revenue 

Appropriations carried over to 2010 

Policy Area 

Commitment 
appropriations 
authorised 

01 Economic and financial affairs 
02 Enterprise 
03 Competition 
04 Employment and social affairs 
05 Agriculture and rural development 
06 Energy and transport 
07 Environment 
08 Research 
09 Information society and media 
10 Direct research 
11 Fisheries and maritime affairs 
12 Internal market 
13 Regional policy 
14 Taxation and customs union 
15 Education and culture 
16 Communication  
17 Health and consumer protection  
18 Area of freedom, security and justice 
19 External relations 
20 Trade 
21 Development & relations with ACP 
States 
22 Enlargement 
23 Humanitarian aid 
24 Fight against fraud 
25 Commission’s policy coordination and 
legal advice 
26 Commission’s administration 
27 Budget 
28 Audit 
29 Statistics 
30 Pensions and related expenditure 
31 Language Services 
40 Reserves 
90 Other Institutions 

1 
445 
757 
94 
11 255 
61 260 
4 859 
488 
5 388 
1 609 
795 
985 
68 
38 560 
134 
1 691 
217 
695 
1 032 
4 168 
81 
2 430 

1 132 
915 
78 
194 

1 093 
274 
11 
143 
1 136 
456 
503 
2 970 

From the 
year’s 
approps 
2 

421 
657 
90 
11 186 
54 989 
4 727 
451 
4 732 
1 440 
365 
974 
65 
38 495 
125 
1 397 
212 
665 
916 
4 052 
76 
1 982 

1 079 
906 
77 
183 

985 
268 
10 
129 
1 117 
375 
0 
2 659 

From 
carry-
overs 
3 
0 
0 
0 
2 
0 
1 
0 
0 
0 
0 
0 
0 
24 
0 
0 
0 
0 
75 
0 
0 
265 

6 
0 
0 
0 

0 
0 
0 
0 
0 
0 
0 
8 

4 
19 
41 
2 
8 
5 065 
76 
9 
352 
115 
67 
2 
1 
5 
1 
169 
2 
11 
17 
53 
1 
78 

35 
7 
0 
4 

63 
3 
0 
4 
0 
49 
0 
100 

5=2+3+4 
440 
698 
92 
11 196 
60 054 
4 803 
460 
5 084 
1 556 
433 
976 
66 
38 523 
126 
1 566 
214 
675 
1 008 
4 105 
78 
2 325 

1 120 
913 
77 
187 

1 048 
272 
11 
133 
1 117 
424 
0 
2 767 

6=5/1 
98.90 % 
92.12 % 
97.29 % 
99.47 % 
98.03 % 
98.86 % 
94.25 % 
94.35 % 
96.68 % 
54.39 % 
99.07 % 
96.60 % 
99.90 % 
94.45 % 
92.61 % 
98.32 % 
97.17 % 
97.67 % 
98.51 % 
96.18 % 
95.68 % 

98.96 % 
99.79 % 
98.64 % 
96.65 % 

95.92 % 
99.07 % 
96.77 % 
92.73 % 
98.36 % 
93.01 % 
0.00 % 
93.16 % 

7 

2 
55 
2 
6 
928 
44 
19 
301 
52 
357 
4 
1 
2 
2 
123 
1 
11 
15 
54 
1 
100 

10 
1 
0 
4 

36 
2 
0 
7 
0 
28 
0 
56 

Carry-
overs: 
decision
8 

0
0
0
40
252
0
0
0
0
4
1
0
20
0
0
0
0
0
0
0
0

1
0
0
0

0
0
0
0
0
0
0
10

Total 

% 

9=7+8 
2 
55 
2 
46 
1 180 
44 
19 
301 
52 
361 
4 
1 
22 
2 
124 
1 
11 
15 
54 
1 
100 

10 
1 
0 
4 

36 
2 
0 
7 
0 
28 
0 
66 

10=9/1 
0.35 % 
7.32 % 
1.96 % 
0.41 % 
1.93 % 
0.91 % 
3.83 % 
5.59 % 
3.25 % 
45.37 % 
0.45 % 
1.62 % 
0.06 % 
1.22 % 
7.30 % 
0.64 % 
1.59 % 
1.42 % 
1.29 % 
1.63 % 
4.11 % 

0.91 % 
0.11 % 
0.00 % 
1.97 % 

3.34 % 
0.74 % 
1.93 % 
4.94 % 
0.00 % 
6.25 % 
0.00 % 
2.22 % 

From the 
year’s 
approps 
11 

3 
4 
1 
13 
26 
11 
9 
3 
1 
2 
5 
1 
15 
6 
1 
2 
9 
9 
8 
2 
5 

1 
1 
1 
3 

8 
1 
0 
3 
19 
3 
503 
137 

817 

% 

Total 

Appropriations lapsing 
Assigned 
revenue 
(EFTA) 
13 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 

From 
carry-
overs 
12 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 

=11+12+13  15=14/1 
0.76 % 
0.56 % 
0.75 % 
0.12 % 
0.04 % 
0.24 % 
1.92 % 
0.06 % 
0.07 % 
0.24 % 
0.48 % 
1.78 % 
0.04 % 
4.33 % 
0.08 % 
1.04 % 
1.24 % 
0.91 % 
0.20 % 
2.20 % 
0.21 % 

3 
4 
1 
13 
26 
12 
9 
3 
1 
2 
5 
1 
15 
6 
1 
2 
9 
9 
8 
2 
5 

0 
0 
0 
0 

0 
0 
0 
0 
0 
0 
0 
0 

0 

0 
0 
0 
0 

0 
0 
0 
0 
0 
0 
0 
0 

2 

1 
1 
1 
3 

8 
1 
0 
3 
19 
3 
503 
137 

819 

0.12 % 
0.10 % 
1.36 % 
1.38 % 

0.74 % 
0.19 % 
1.30 % 
2.33 % 
1.84 % 
0.74 % 
100.00% 
4.62 % 

0.56 % 

Total 

145 917 

135 806 

381 

6 358 

142 545 

97.69 % 

2 225 

328

2 553 

1.75 % 

EN 

122 

EN 

 
  
 
 
 
 
 
 
11. IMPLEMENTATION OF PAYMENT APPROPRIATIONS BY POLICY AREA 

EUR millions 

Policy Area 

Payment 
Appro-
priations 
authorised 
1 

From the 
year's 
approps 
2 

From 
carry-
overs 
3 

Payments made 
Assigned 
revenue 

Total 

% 

4 

5=2+3+4 

6=5/1 

Automatic 
carry-
overs 
7 

Carry-
overs by 
decision
8 

Appropriations carried over to 2010 
Assigned 
revenue 

Total 

% 

From the 
year's 
approps 
12 

Appropriations lapsing 
Total 
Assigned 
From 
revenue 
carry-
(EFTA)
overs 
14 
13 

01 Economic and financial affairs 
02 Enterprise 
03 Competition 
04 Employment and social affairs 
05 Agriculture and rural development 
06 Energy and transport 
07 Environment 
08 Research 
09 Information society and media 
10 Direct research 
11 Fisheries and maritime affairs 
12 Internal market 
13 Regional policy 
14 Taxation and customs union 
15 Education and culture 
16 Communication  
17 Health and consumer protection  
18 Area of freedom, security and justice 
19 External relations 
20 Trade 
21 Development and relations with ACP 
States 
22 Enlargement 
23 Humanitarian aid 
24 Fight against fraud 
25 Commission’s policy coordination and 
legal advice 
26 Commission’s administration 
27 Budget 
28 Audit 
29 Statistics 
30 Pensions and related expenditure 
31 Language Services 
40 Reserves 
90 Other Institutions 

345 
705 
107 
9 929 
56 413 
2 480 
409 
5 644 
1 552 
735 
715 
76 
26 793 
131 
1 654 
229 
632 
830 
3 805 
88 
1 872 

1 437 
859 
80 
212 

1 226 
285 
12 
138 
1 136 
479 
229 
3 334 

300 
514 
82 
8 886 
49 365 
2 177 
328 
4 490 
1 268 
321 
588 
59 
26 564 
111 
1 310 
189 
484 
718 
3 576 
71 
1 588 

1 250 
788 
67 
167 

875 
259 
10 
107 
1 117 
354 
0 
2 344 

15 
16 
11 
13 
780 
16 
16 
36 
13 
34 
3 
6 
174 
8 
15 
13 
28 
7 
38 
5 
27 

11 
5 
4 
14 

108 
9 
0 
6 
0 
22 
0 
327 

13 
28 
2 
7 
5 064 
61 
12 
300 
94 
56 
2 
1 
1 
1 
171 
2 
14 
19 
59 
1 
83 

48 
7 
0 
3 

50 
2 
0 
7 
0 
45 
0 
100 

327 
558 
95 
8 906 
55 209 
2 253 
356 
4 826 
1 375 
411 
592 
66 
26 740 
120 
1 495 
204 
526 
744 
3 673 
77 
1 698 

1 308 
800 
71 
185 

1 034 
271 
10 
120 
1 117 
422 
0 
2 771 

94.82 % 
79.21 % 
88.32 % 
89.70 % 
97.87 % 
90.84 % 
87.17 % 
85.50 % 
88.58 % 
55.87 % 
82.87 % 
86.89 % 
99.80 % 
91.54 % 
90.38 % 
89.22 % 
83.25 % 
89.64 % 
96.55 % 
88.09 % 
90.68 % 

91.08 % 
93.13 % 
88.65 % 
87.27 % 

84.34 % 
95.19 % 
90.05 % 
87.27 % 
98.36 % 
87.91 % 
0.00 % 
83.12 % 

6 
13 
8 
17 
26 
17 
18 
44 
15 
32 
4 
6 
13 
7 
14 
15 
28 
6 
43 
6 
40 

9 
6 
7 
15 

113 
9 
1 
6 
0 
21 
0 
315 

0 
0 
0 
732 
0 
75 
6 
0 
0 
2 
11 
0 
0 
0 
0 
0 
0 
0 
6 
0 
0 

1 
40 
0 
0 

0 
0 
0 
0 
0 
0 
0 
10 

9 

9 
76 
2 
6 
929 
85 
7 
745 
158 
280 
4 
1 
2 
2 
140 
2 
7 
9 
24 
1 
98 

8 
1 
0 
4 

51 
3 
0 
8 
0 
32 
0 
67 

10=7+8+
9 
14 
89 
10 
755 
954 
177 
30 
789 
173 
314 
19 
7 
15 
9 
153 
16 
35 
16 
72 
8 
138 

18 
47 
7 
20 

164 
12 
1 
15 
0 
53 
0 
392 

11=10/1 

4.10 %
12.57 %
9.40 %
7.60 %
1.69 %
7.12 %
7.40 %
13.97 %
11.13 %
42.73 %
2.69 %
9.47 %
0.06 %
6.53 %
9.27 %
7.17 %
5.58 %
1.89 %
1.90 %
8.56 %
7.37 %

1.25 %
5.42 %
8.51 %
9.32 %

13.35 %
4.29 %
7.43 %
10.63 %
0.00 %
11.02 %
0.00 %
11.75 %

3 
52 
1 
263 
58 
41 
19 
16 
2 
6 
102 
1 
20 
1 
3 
5 
68 
63 
46 
2 
31 

106 
12 
1 
3 

10 
1 
0 
2 
19 
3 
229 
137 

1 
4 
2 
5 
192 
5 
3 
10 
2 
4 
1 
1 
18 
1 
2 
4 
2 
7 
12 
1 
5 

5 
0 
2 
4 

18 
1 
0 
1 
0 
2 
0 
34 

0 
2 
0 
0 
0 
4 
0 
4 
0 
0 
0 
0 
0 
0 
1 
0 
0 
0 
0 
0 
0 

0 
0 
0 
0 

0 
0 
0 
0 
0 
0 
0 
0 

% 

16=15/1 

1.08 % 
8.22 % 
2.28 % 
2.70 % 
0.44 % 
2.04 % 
5.44 % 
0.53 % 
0.30 % 
1.40 % 
14.45 % 
3.64 % 
0.14 % 
1.92 % 
0.35 % 
3.61 % 
11.16 % 
8.47 % 
1.54 % 
3.35 % 
1.95 % 

7.67 % 
1.45 % 
2.84 % 
3.42 % 

2.30 % 
0.52 % 
2.52 % 
2.09 % 
1.64 % 
1.07 % 
100.00% 
5.13 % 

15=12+  
13+14 
4 
58 
2 
268 
249 
51 
22 
30 
5 
10 
103 
3 
38 
3 
6 
8 
71 
70 
59 
3 
37 

110 
12 
2 
7 

28 
1 
0 
3 
19 
5 
229 
171 

Total  124 569 

110 325 

1 782 

6 253 

118 361 

95.02 %

877 

882 

2 760 

4 519 

3.63 % 1 326 

350 

13 

1 688 

1.36 % 

EN 

123 

EN 

 
  
 
 
 
 
12. MOVEMENT IN COMMITMENTS OUTSTANDING BY POLICY AREA  

Commitments outstanding at the end of the previous year 

Commitments of the year 

Policy Area 

Commitments 
carried forward 
from previous 
years 

Decommitments 
/Revaluations/ 
Cancellations 

Payments  

Commitments 
outstanding at 
year-end 

Commitments 
made during the 
year 

Payments 

01 Economic and financial affairs 
02 Enterprise 
03 Competition 
04 Employment and social affairs 
05 Agriculture and rural development 
06 Energy and transport 
07 Environment 
08 Research 
09 Information society and media 
10 Direct research 
11 Fisheries and maritime affairs 
12 Internal market 
13 Regional policy 
14 Taxation and customs union 
15 Education and culture 
16 Communication  
17 Health and consumer protection  
18 Area of freedom, security and justice 
19 External relations 
20 Trade 
21 Development/relations ACP States 
22 Enlargement 
23 Humanitarian aid 
24 Fight against fraud 
25 Commission's policy coordination & 
legal advice 
26 Commission’s administration 
27 Budget 
28 Audit 
29 Statistics 
30 Pensions and related expenditure 
31 Language Services 
90 Other Institutions 

329 
653 
13 
24 080 
12 408 
4 302 
682 
8 253 
2 255 
146 
1 347 
17 
81 674 
90 
563 
88 
614 
866 
8 785 
21 
2 818 
3 905 
422 
29 
21 

173 
10 
1 
92 
0 
24 
366 

-17 
-25 
-1 
-90 
-98 
-139 
-36 
-103 
-24 
-10 
-99 
-2 
-225 
-13 
-48 
-8 
-58 
-81 
-183 
-2 
-54 
-543 
-23 
-3 
-4 

-18 
-1 
-0 
-4 
0 
-2 
-34 

-129 
-238 
-11 
-8 675 
- 6 854 
-1 471 
-225 
-3 319 
-947 
-87 
-364 
-13 
-25 542 
-54 
-232 
-68 
-289 
-308 
-2 492 
-14 
-790 
-989 
-248 
-16 
-16 

-136 
-9 
-0 
-44 
0 
-22 
-321 

183 
390 
1 
15 315 
5 457 
2 692 
421 
4 831 
1 283 
49 
884 
2 
55 907 
23 
283 
13 
268 
477 
6 110 
5 
1 974 
2 373 
151 
10 
1 

19 
0 
0 
45 
0 
0 
11 

440 
698 
92 
11 196 
60 054 
4 803 
460 
5 084 
1 556 
433 
976 
66 
38 523 
126 
1 566 
214 
675 
1 008 
4 105 
78 
2 325 
1 120 
913 
77 
187 

1 048 
272 
11 
133 
1 117 
424 
2 767 

-199 
-321 
-83 
-231 
-48 355 
-782 
-131 
-1 507 
-428 
-324 
-229 
-53 
- 1 198 
-67 
-1 263 
-136 
-237 
-436 
-1 181 
-63 
-908 
-320 
-551 
-55 
-169 

-898 
-262 
-10 
-77 
-1 117 
-400 
-2 450 

Cancellation of 
commitments 
which cannot be 
carried over 
-0 
-0 
-0 
-0 
-0 
-0 
-0 
-7 
-1 
-0 
-1 
-0 
-0 
-1 
-0 
-0 
-0 
-0 
-0 
-0 
-0 
-0 
-0 
0 
-0 

-1 
-0 
-0 
-0 
0 
-0 
0 

EUR millions 

Commitments 
outstanding at 
year-end 

Total 
Commitments 
outstanding at 
year-end 

241 
377 
8 
10 964 
11 699 
4 021 
329 
3 569 
1 127 
109 
747 
13 
37 325 
59 
303 
77 
438 
572 
2 924 
14 
1 417 
800 
362 
22 
19 

149 
10 
1 
56 
0 
24 
317 

424 
767 
9 
26 279 
17 155 
6 714 
750 
8 400 
2 411 
158 
1 631 
15 
93 232 
82 
586 
90 
706 
1 049 
9 034 
19 
3 391 
3 173 
513 
32 
19 

168 
10 
1 
101 
0 
24 
328 

Total 

155 045 

-1 946 

-53 923 

99 177 

142 545 

-64 438 

-12 

78 095 

177 272 

EN 

124 

EN 

 
  
 
 
 
 
 
 
13. BREAKDOWN OF COMMITMENTS OUTSTANDING BY THE COMMITMENT'S YEAR OF ORIGIN BY POLICY AREA 

Policy Area 

<2003 

2003 

2004 

2005 

2006 

2007  

2008  

2009  

01 Economic and financial affairs 
02 Enterprise 
03 Competition 
04 Employment and social affairs 
05 Agriculture and rural development 
06 Energy and transport 
07 Environment 
08 Research 
09 Information society and media 
10 Direct research 
11 Fisheries and maritime affairs 
12 Internal market 
13 Regional policy 
14 Taxation and customs union 
15 Education and culture 
16 Communication  
17 Health and consumer protection  
18 Area of freedom, security and justice 
19 External relations 
20 Trade 
21 Development and relations with ACP States 
22 Enlargement 
23 Humanitarian aid 
24 Fight against fraud 
25 Commission's policy coordination & legal advice 
26 Commission’s administration 
27 Budget 
28 Audit 
29 Statistics 
30 Pensions and related expenditure 
31 Language Services 
90 Other Institutions 

0
12 
0
133 
35 
80 
1
84 
3
1
39 
0
412 
0
12 
0
4
5
579 
0
131 
174 
2
0
0
0
0
0
1
0
0
0

0
8
0
17 
0
31 
7
235 
16 
1
17 
0
476 
0
8
0
9
1
166 
0
56 
45 
0
0
0
0
0
0
0
0
0
0

Total 

1 709 

1 093 

EN 

0
7
0
28 
2
100 
17 
238 
29 
0
9
0
1 085 
0
7
0
14 
9
330 
0
103 
62 
0
0
0
0
0
0
0
0
0
0

2 042 

125 

17 
19 
0 
466 
26 
172 
43 
440 
113 
5 
34 
0 
1 825 
0 
23 
0 
8 
19 
386 
0 
215 
164 
0 
0 
0 
0 
0 
0 
3 
0 
0 
0 

3 977 

93 
37 
0
4 283 
1 737 
302 
66 
841 
195 
8
301 
0
13 108 
1
43 
0
23 
32 
987 
0
346 
561 
4
0
0
0
0
0
7
0
0
0

22 978 

32 
88 
0
1 363 
4
743 
112 
1 232 
329 
8
32 
0
7 765 
6
54 
2
45 
156 
1 439 
2
442 
566 
25 
4
0
5
0
0
9
0
0
0

14 463 

41 
219 
1
9 024 
3 653 
1 264 
175 
1 761 
598 
26 
451 
2
31 235 
16 
136 
11 
164 
256 
2 222 
3
682 
801 
120 
5
0
13 
0
0
25 
0
-0
11 

52 915 

241 
377 
8 
10 964 
11 699 
4 021 
329 
3 569 
1 127 
109 
747 
13 
37 325 
59 
303 
77 
438 
572 
2 924 
14 
1 417 
800 
362 
22 
19 
149 
10 
1 
56 
0 
24 
317 

78 095 

EUR millions 
Total 

424 
767 
9 
26 279 
17 155 
6 714 
750 
8 400 
2 411 
158 
1 631 
15 
93 232 
82 
586 
90 
706 
1 049 
9 034 
19 
3 391 
3 173 
513 
32 
19 
168 
10 
1 
101 
0 
24 
328 

177 272 

EN 

 
  
 
14. SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE BY INSTITUTION 

Institution 

Income appropriations 
Final 

Initial 

Entitlements established 
Carried 

Total 

Current year

European Parliament 
Council 
Commission 
Court of Justice 
Court of Auditors 
Economic and Social Committee 
Committee of the Regions 
Ombudsman 
European Data protection Supervisor 

99 
53 
115 869 
38 
19 
10 
7 
1 
1 

99 
53 
112 808 
38 
19 
10 
7 
1 
1 

164 
96 
117 818 
41 
19 
16 
20 
1 
1 

Total 

116 096 

113 035 

118 175 

86 
12 
11 758 
0 
1 
0 
0 
0 
0 

11 857 

250 
108 
129 576 
41 
19 
16 
20 
1 
1 

130 032 

On entitlements of 
Current year 
137 
90 
114 950 
41 
18 
16 
20 
1 
1 

Revenue 
On entitlements 
Carried 
4 
12 
2 335 
0 
0 
0 
0 
0 
0 

141 
102 
117 285 
41 
19 
16 
20 
1 
1 

142.54 % 
192.94 % 
103.97 % 
106.26 % 
98.50 % 
164.23 % 
309.74 % 
112.93 % 
78.73 % 

115 274 

2 351 

117 626 

104.06 % 

109 
6 
12 291 
0 
0 
0 
0 
0 
0 

12 407 

EUR millions 
Receipts as   Outstanding 

Total  % of budget 

EN 

126 

EN 

 
  
 
 
 
 
15. IMPLEMENTATION OF COMMITMENT AND PAYMENT APPROPRIATIONS BY INSTITUTION 

Commitment appropriations 

From the 
year's 
approps 
2 

From 
carry-
overs 
3 

Commitments made 
From 
assigned 
revenue 
4 

5=2+3+4 

Total 

% 

Appropriations carried over to 2010 

From 
assigned 
revenue 
7 

Carry-overs 
by decision

Total 

% 

8 

9=7+8 

10=9/1 

From the 
year's 
approps 
11 

Appropriations 
carried over 

Appropriations lapsing 
Assigned 
revenue 
(EFTA) 
13 

12 

1 418 
551 
133 147 
311 
173 
117 
75 
8 
5 

8 
0 
373 
0 
0 
0 
0 
0 
0 

42 
41 
6 258 
1
0
3
12 
0
0

1 467 
593 
139 779 
313 
173 
120 
87 
8 
5 

6=5/1 

91.94 % 
92.33 % 
97.78 % 
98.50 % 
92.19 % 
98.02 % 
98.37 % 
91.98 % 
81.44 % 

16 
38 
2 169 
1
0
0
0
0
0

10 
0 
318 
0 
0 
0 
0 
0 
0 

26 
38 
2 487 
1 
0 
0 
0 
0 
0 

1.65 %
5.88 %
1.74 %
0.37 %
0.21 %
0.33 %
0.08 %

Total

145 917 

135 806 

381 

6 358 

142 545 

97.69 %

2 225 

328 

2 553 

1.75 %

Payment appropriations 

Payments made 

From the 
year's 
approps 
2 

From 
carry-
overs 
3 

From 
assigned 
revenue 
4 

Total 

% 

Automatic 
carry-overs 

Carry-overs 
by decision 

Appropriations carried over to 2010 
Total 

% 

5=2+3+4 

6=5/1 

7 

8 

10=7+8+9  11=10/1 

From 
assigned 
revenue 
9 

1 237 
510 
107 981 
293 
112 
110 
69 
8 
4 

186 
108 
1 455 
13 
11 
4
5
1
1

43 
41 
6 154 
1 
0 
3 
12 
0 
0 

1 466 
659 
115 590 
307 
123 
117 
86 
8 
5 

81.50 % 
86.44 % 
95.34 % 
92.47 % 
61.35 % 
91.69 % 
90.09 % 
84.57 % 
64.24 % 

10 
0
872 
0
0
0
0
0
0

22 
42 
2 693 
1 
0 
1 
1 
0 
0 

212  11.78 % 
83  10.86 % 
3.40 % 
4 127 
19 
5.84 % 
62  30.76 % 
5.95 % 
6.75 % 
7.57 % 
15.02 % 

8
6
1
1

19 
9
316 
2
2
1
2
0
0

882 

2 760 

4 519  3 .63 %

1 326 

350 

Institution 

Commitment 
appropriations 
authorised 

European Parliament 
Council 
Commission 
Court of Justice 
Court of Auditors 
Economic and Social Committee
Committee of the Regions 
Ombudsman 
European Data protection 
Supervisor 

1 

1 596 
642 
142 947 
318 
188 
122 
88 
9 
7 

Institution 

Payment 
appropriations 
authorised 

European Parliament 
Council 
Commission 
Court of Justice 
Court of Auditors 
Economic and Social Committee
Committee of the Regions 
Ombudsman 
European Data protection 
Supervisor 

1 

1 799 
762 
121 235 
332 
200 
128 
95 
10 
8 

102 
12 
680 
4 
14 
2 
1 
1 
1 

817 

From the 
year's 
approps 
12 

102 
12 
1 189 
4
14 
2
1
1
1

EUR millions 

Total 

% 

14=11+1
2+13 

15=14/1 

6.42 % 
102 
1.80 % 
12 
0.48 % 
682 
1.14 % 
4 
7.59 % 
14 
1.65 % 
2 
1.56 % 
1 
1 
8.02 % 
1  18.56 % 

819 

0.56 % 

EUR millions 

0
0
0
0
0
0
0
0
0

0

0 
0 
2 
0 
0 
0 
0 
0 
0 

2 

Appropriations lapsing 
Assigned 
revenue 
(EFTA) 
14 

From 
carry-
overs 
13 

Total 

15=12+13+
14 

% 

16=15/1 

0
0
13 
0
0
0
0
0
0

13 

6.72 % 
121 
2.70 % 
21 
1.25 % 
1 517 
1.69 % 
6 
7.89 % 
16 
2.37 % 
3 
3.17 % 
3 
1 
7.86 % 
2  20.75 % 

1 688 

1.36 % 

EN 

Total

124 569 

110 325 

1 782 

6 253 

118 361 

95.02 %

EN 

180 
41 
562 
18 
61 
6 
6 
1 
1 

877 

127 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16. AGENCIES INCOME: BUDGET FORECASTS, ENTITLEMENTS AND 
AMOUNTS RECEIVED 

Agency 

Forecasted 
income budget 

Entitlements 
established 

Amounts 
received 

Outstanding 

European Aviation Safety Agency 
Frontex 
European Centre for the Development of Vocational 
Training 
European Police College 
European Chemicals Agency 
European Centre for Disease prevention and control 
European Monitoring Centre for Drugs and Drug 
Addiction 
European Environment Agency 
Community Fisheries Control Agency 
European Food Safety Authority 
European GNSS supervisory authority 
Fusion for Energy 
Eurojust 
European Maritime Safety Agency 
Office For Harmonisation in the Internal Market 
European Medicines Agency 
European Network and Information Security Agency 
European Union Agency for Fundamental Rights 
European Railway Agency 
European Agency for Safety and Health at Work 
Translation Centre for the Bodies of the EU 
European Training Foundation 
Community Plant Variety Office 
European Foundation for the Improvement of Living and 
Working Conditions 
Education, Audiovisual & Culture Executive Agency 
Executive Agency for Competitiveness and Innovation 
European Research Council Executive Agency 

Research Executive Agency  

Executive Agency for the Public Health Programme 

Trans-European Transport Network Executive Agency 

122 
89 

19 

9 
70 
51 
15 

40 
10 
69 
44 
174 
28 
53 

225 

194 

8 

17 
21 
14 

63 

20 
13 
20 

48 

13 
14 

22 

6 

9 

102 
80 

18 

7 
71 
49 
16 

42 
10 
65 
41 
174 
28 
51 

194 

198 

8 

13 
21 
13 

52 

19 
12 
20 

48 

13 
13 

22 

6 

9 

92 
80 

17 

7 
71 
49 
15 

42 
10 
65 
41 
143 
28 
51 

194 

196 

8 

13 
21 
13 

45 

19 
12 
20 

48 

13 
13 

21 

6 

9 

10 
0 

1 

0 
0 
0 
0 

0 
0 
0 
0 
31 
0 
0 

0 

1 

0 

0 
0 
0 

7 

0 
0 
0 

0 

0 
0 

0 

0 

0 

EUR millions 

Funding 
Commission 
Policy Area 
06 
18 

15 

18 
02 
17 
18 

07 
11 
17 
06 
08 
18 
06 

12 

02 

09 

18 
06 
04 

31 

15 
17 
04 

15 

06 
08 

08 

17 

06 

Total 

1 501 

1 415 

1 363 

52 

Type of revenue 

Forecasted 
income budget 

Entitlements 
established 

Amounts 
received 

EUR millions 
Outstanding 

Commission Subsidy 
Fee income 
Other income 

Total 

824 
415 
262 

1 501 

796 
399 
220 

1 415 

796 
388 
179 

1 363 

-0 
11 
41 

52 

EN 

128 

   EN 

 
 
 
 
 
 
 
17.  AGENCIES:  COMMITMENT  &  PAYMENT  APPROPRIATIONS  BY 
AGENCY  

EUR millions 

Agency 

European Aviation Safety Agency 
Frontex 
European Centre for the Development of 
Vocational Training 
European Police College 
European Chemicals Agency 
European Centre for Disease prevention and control 

European Monitoring Centre for Drugs and Drug 
Addiction 
European Environment Agency 
Community Fisheries Control Agency 
European Food Safety Authority 
European GNSS supervisory authority 
Fusion for Energy 
Eurojust 
European Maritime Safety Agency 
Office For Harmonisation in the Internal Market 
European Medicines Agency 
European Network and Information Security 
Agency 
European Union Agency for Fundamental Rights 
European Railway Agency 
European Agency for Safety and Health at Work 
Translation Centre for the Bodies of the EU 
European Training Foundation 
Community Plant Variety Office 
European Foundation for the Improvement of 
Living and Working Conditions 
Education, Audiovisual & Culture Executive 
Agency 
Executive Agency for Competitiveness and 
Innovation 
European Research Council Executive Agency 

Research Executive Agency 
Executive Agency for the Public Health Programme 

Trans-European Transport Network Executive 
Agency 

Commitment appropriations 

Payment appropriations 

Appro-
priations 

Commit-
ments 
made 

Carried to 
2010 

Appro-
priations 

Payments 
made 

Carried to 
2010 

136 

90 
21 

13 
70 
51 

16 

42 

10 

71 

145 

404 

28 
49 
338 
194 

8 

17 

21 
15 

63 
21 
14 
21 

48 

13 

14 

22 
6 

9 

107 

82 
19 

10 
67 
48 

16 

42 

10 

69 

119 

400 

26 
46 
146 
185 

8 

17 

21 
13 

36 
20 
12 
21 

46 

12 

13 

23 
6 

8 

27 

2 
1 

2 
0 
0 

0 

0 

0 

0 

26 

4 

1 
0 
0 
0 

0 

0 

0 
1 

0 
2 
0 
1 

0 

0 

0 

0 
0 

0 

150 

119 
22 

14 
83 
67 

17 

48 

11 

87 

120 

206 

31 
57 
367 
230 

10 

24 

25 
19 

66 
23 
14 
26 

54 

15 

21 

22 
7 

10 

96 

77 
18 

6 
57 
44 

15 

40 

10 

67 

68 

133 

23 
46 
140 
181 

8 

17 

20 
13 

36 
20 
12 
20 

46 

12 

17 

18 
5 

8 

52 

25 
2 

5 
20 
18 

1 

7 

1 

10 

52 

60 

6 
2 
31 
40 

2 

7 

5 
5 

4 
2 
0 
6 

6 

1 

2 

4 
1 

1 

Total 

1 972 

1 647 

68 

1 964 

1 272 

377 

Type of expenditure 

Payment appropriations 

Appropriations 

Carried to 2010  Appropriations 

Payments made  Carried to 2010 

Commitment appropriations 
Commitments 
made 

Staff 
Administrative expenses 
Operational expenses 

Total 

547 
246 
1 179 
1 972 

508 
238 
901 
1 647 

0 
0 
67 
68 

561 
331 
1 072 
1 964 

500 
232 
540 
1 272 

15 
83 
279 
377 

EN 

129 

   EN 

 
 
18. BUDGET OUTTURN INCLUDING AGENCIES 

EUROPEAN 

UNION 

AGENCIES 

Elimination of 
subsidies to 
agencies 

EUR millions 

TOTAL 

Revenue for the financial year 

117 626

1 363

(796) 

118 193

Payments against current year 
appropriations 

Payment appropriations carried 
over to year N+1 

Cancellation of unused 
appropriations carried over from 
year N-1 

Exchange differences for the year  

Budget Outturn 

(116 579)

(1 082)

796 

(116 865)

(1 759)

(377)

2 791

185

2 264

188

(5)

87

0 

0 

0 

0 

(2 136)

2 979

180

2 351

EN 

130 

   EN 

 
 
 
 
EXPLANATORY  NOTES  TO  THE  CONSOLIDATED  REPORTS  ON 

IMPLEMENTATION OF THE BUDGET 

1. 

2. 

Budgetary principles, structure and appropriations 

Explanation of the reports on the implementation of the budget 

EN 

131 

   EN 

 
1. 

BUDGETARY PRINCIPLES, STRUCTURE AND APPROPRIATIONS 

1.1 

LEGAL BASIS AND THE FINANCIAL REGULATION 

The  budgetary  accounts  are  kept  in  accordance  with  Council  Regulation  (EC,  Euratom)  No 
1605/2002  of  25  June  2002  (OJ  L  248  of  16 September  2002)  on  the  Financial  Regulation 
applicable  to  the  general  budget  of  the  European  Union  and  Commission  Regulation  (EC, 
Euratom)  No  2342/2002  of  23 December  2002  laying  down  detailed  rules  for  the 
implementation of this Financial Regulation. The general budget, the main instrument of the 
EU's  financial  policy,  is  the  instrument  which  provides  for  and  authorises  the  EU's  revenue 
and expenditure every year. 

Every  year,  the  Commission  estimates  all  the  Institutions'  revenue  and  expenditure  for  the 
year and draws up a preliminary draft budget which it sends to the budgetary authority. On the 
basis of this preliminary draft budget, the Council draws up a draft budget which is then the 
subject  of  negotiations  between  the  two  arms  of  the  budgetary  authority.  The  President  of 
Parliament declares that the budget has been finally adopted making the budget enforceable. 
The task of executing the budget is mainly the responsibility of the Commission. 

1.2 

BUDGETARY PRINCIPLES 

The general budget of the European Union is governed by a number of basic principles: 

–  Unity  and  budget  accuracy:  all  expenditure  and  revenue  must  be  in  a  single  budget, 

booked on a budget line and expenditure may not exceed authorised appropriations; 

–  universality: this principle comprises two rules: 

–  the rule of non-assignment, meaning that budget revenue must not be earmarked 
for specific items of expenditure (total revenue must cover total expenditure); 

–  the gross budget rule, meaning that revenue and expenditure are entered in full in 

the budget without any adjustment against each other; 

–  annuality: appropriations are authorised for a single year so must be used during that year; 

–  equilibrium:  the  revenue  and  expenditure  shown  in  the  budget  must  be  in  balance 

(estimated revenue must equal payment appropriations); 

–  specification: each appropriation is assigned to a specific purpose and a specific objective; 

–  unit of account: the budget is drawn up and implemented in euros, as are the accounts; 

–  sound  financial  management:  budget  appropriations  are  used  in  accordance  with  the 

principle of sound financial management, i.e. economy, efficiency and effectiveness; 

–  transparency:  the  budget  and  amending  budgets  and  final  accounts  are  published  in  the 

Official Journal of the European Union. 

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1.3 

BUDGET STRUCTURE 

The budget consists of: 

(a) 

(b) 

a general statement of revenue; 

 separate  sections  giving  the  statements  of  revenue  and  expenditure  of  each 
Institution: Section I: Parliament; Section II: Council; Section III: Commission; 
Section  IV:  Court  of  Justice;  Section  V:  Court  of  Auditors;  Section  VI: 
Economic  and  Social  Committee;  Section  VII:  Committee  of  the  Regions; 
Section VIII: Ombudsman; Section IX : European Data Protection Supervisor. 

Each  Institution's  items  of  revenue  and  expenditure  are  classified  according  to  their  type  or 
the use to which they are assigned under titles, chapters, articles and items. A part of the funds 
of the ECSC in liquidation were placed at the disposal of the operational budget of the ECSC 
in  liquidation.  This  operational  budget  was  adopted  annually  by  the  Commission,  after 
consultation with the Council and the European Parliament. The last budget was drawn up for 
the  period  of  1st  January  to  23  July  2002.  As  from  24  July  2002,  the  revenue  and  charges 
connected with the operational budget are included in the revenue and expenditure account of 
the ECSC in liquidation. The remaining commitments to be fulfilled are shown on the liability 
side of the balance sheet. 

1.4 

STRUCTURE OF THE BUDGETARY ACCOUNTS 

1.4.1 General overview 

two 

the  Commission  budget  contains  administrative  appropriations  and  operating 
Only 
appropriations.  The  other  Institutions  have  only  administrative  appropriations.  Furthermore, 
the  budget  distinguishes  between 
types  of  appropriation:  non-differentiated 
appropriations and differentiated appropriations. Non-differentiated appropriations are used to 
finance operations of an annual nature (which comply with the principle of annuality). They 
cover all the administrative chapters of the budget of the Commission Section and the whole 
of  every  other  section,  EAGF  appropriations  of  an  annual  nature  and  certain  technical 
appropriations  (repayments,  borrowing  and  lending  guarantees,  etc.)  In  the  case  of  non-
differentiated appropriations, the amount of commitment appropriations is the same as that of 
payment appropriations. 

Differentiated appropriations were introduced in order to reconcile the principle of annuality 
with  the  need  to  manage  multi-annual  operations.  They  are  intended  to  cover  multi-annual 
operations and comprise all the other appropriations in all Chapters except Chapter 1 of the 
Commission Section. 

Differentiated appropriations are split into commitment and payment appropriations: 

–  commitment  appropriations:  cover  the  total  cost  of  the  legal  obligations  entered  into  for 
the  current  financial  year  for  operations  extending  over  a  number  of  years.  However, 
budgetary  commitments  for  actions  extending  over  more  than  one  financial  year  may,  in 
accordance  with  Article  76(3)  of  the  Financial  Regulation,  be  broken  down  over  several 
years into annual instalments where the basic act so provides. 

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–  payment appropriations: cover expenditure arising from commitments entered into in the 

current financial year and/or earlier financial years. 

1.4.2  Origin of Appropriations 

The main source of appropriations is the EU's budget for the current year. However, there are 
other types of appropriations resulting from the provisions of the Financial Regulation. They 
come from previous financial years or outside sources: 

-  Initial  budget  appropriations  adopted  for  the  current  year  can  be  supplemented  with 
transfers  between  lines  in  accordance  with  the  rules  laid  down  in  Articles  22  to  24  of  the 
Financial Regulation (No 1605/2002 of 25 June 2002) and by amending budgets (covered by 
Articles 37 and 38 of the Financial Regulation). 

- Appropriations carried over from previous year or made available again also supplement 
the current budget. These are: 

–  non-differentiated  payment  appropriations  which  may  be  carried  over 
automatically  for  one  financial  year  only  in  accordance  with  Article  9(4)  of  the 
Financial Regulation; 

–  appropriations carried over by decision of the Institutions in one of two cases: if 
the  preparatory  stages  have  been  completed  (Article  9(2)(a)  of  the  Financial 
Regulation) or if the legal base is adopted late (Article 9(2)(b)). Both commitment 
and payment appropriations may be carried over (Article 9(3)); and 

–  appropriations made available again as a result of decommitments: This involves 
the  re-entry  of  commitment  appropriations  concerning  structural  funds  which 
have  been  decommitted.  Amounts  can  be  re-entered  by  way  of  exception  in  the 
event of error by the Commission or if they are indispensable for completion of 
the programme (Article 157 of the Financial Regulation). 

- Assigned revenue which is made up of: 

–  Refunds  where  the  amounts  are  assigned  revenue  on  the  budget  line  which 

incurred the initial expenditure and may be carried over without limit, 

–  EFTA  appropriations:  The  agreement  on  the  European  Economic  Area  provides 
for  financial  contribution  by  its  members  to  certain  activities  in  the  EU  budget. 
The budget lines concerned and the amounts projected are published in Annex III 
of  the  EU  budget.  The  lines  concerned  are  increased  by  the  EFTA  contribution. 
Appropriations  not  used  at  the  year-end  are  cancelled  and  returned  to  the  EEA 
countries; 

–  Revenue from third parties/ other countries that have concluded agreements with 
the  European  Union  involving  a  financial  contribution  to  EU  activities.  The 
amounts  received  are  considered  to  be  revenue  from  third  parties  which  is 
allocated to the budget lines concerned (often in the field of research) and may be 
carried over without limit (Article 10 and Article 18(1)(a) and (d) of the Financial 
Regulation); 

–  Work  for  third  parties:  As  part  of  their  research  activities,  the  EU’s  research 
centres may work for outside bodies, (Article 161(2) of the Financial Regulation). 

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Like  the  revenue  from  third  parties,  the  work  for  third  parties  is  assigned  to 
specific budget lines and may be carried over without limit (Article 10 and Article 
18(1)(d) of the Financial Regulation); and 

–  Appropriations  made  available  again  as  a  result  of  repayment  of  payments  on 
account:  These  are  EU's  funds  which  have  been  repaid  by  the  beneficiaries  and 
may  be  carried  over  without  limit.  In  the  area  of  Structural  Funds  the  re-
inscription  is  based  on  a  Commission  Decision  (Article  18(2)  of  the  Financial 
Regulation and Article 228 of its Implementing Rules). 

1.4.3  Composition of Appropriations Available 

Final  budget  appropriations  =  initial  budget  appropriations  adopted  +  amending  budget 
appropriations + transfers; 

–  Additional  appropriations  =  assigned  revenue  (see  above)  +  appropriations  carried  over 

from the previous financial year or made available again following decommitments; 

–  Total appropriations authorised = final budget appropriations + additional appropriations; 

–  Appropriations  for  the  year  (as  used  to  calculate  the  budgetary  result)  =  final  budget 

appropriations + assigned revenue. 

1.5 

BUDGET IMPLEMENTATION 

The implementation of the budget is governed by the Financial Regulation, Article 48(1) of 
which  states:  "The  Commission  shall  implement  ...  the  budget  in  accordance  with  this 
Regulation, on its own responsibility and within the limits of the appropriations authorised." 
Article 50 states that the Commission shall confer on the Institutions the requisite powers for 
the implementation of the sections of the budget relating to them. 

1.6  OUTSTANDING COMMITMENTS (RAL) 

With the introduction of differentiated appropriations, a gap developed between commitments 
entered  into  and  payments  made:  this  gap,  corresponding  to  outstanding  commitments, 
represents  the  time-lag  between  when  the  commitments  are  entered  into  and  when  the 
corresponding payments are made. 

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2. 

EXPLANATION OF THE REPORTS ON THE IMPLEMENTATION OF THE 
BUDGET 

2.1 

BUDGET OUTTURN FOR THE YEAR (Table 1) 

2.1.1  General 

The amounts of own resources entered in the accounts are those credited in the course of the 
year  to  the  accounts  opened  in  the  Commission's  name  by  the  governments  of  the  Member 
States. Revenue comprises also, in the case of a surplus, the budget outturn for the previous 
financial year. The other revenue entered in the accounts is the amount actually received in 
the course of the year. 

For  the  purposes  of  calculating  the  budget  outturn  for  the  year,  expenditure  comprises 
payments made against the year's appropriations for payments plus any of the appropriations 
for  that  year  that  are  carried  over  to  the  following  year.  Payments  made  against  the  year's 
appropriations for payments means payments that are made by the accounting officer by 31 
December of the financial year. In the case of the European Agricultural Guarantee Fund, the 
payments are those effected by the Member States between 16 October 2008 and 15 October 
2009, provided that the accounting officer was notified of the commitment and authorisation 
by  31  January  2010.  EAGF  expenditure  may  be  subject  to  a  conformity  decision  following 
controls in the Member States. 

The budget outturn comprises two elements: the result of the European Union and the result 
of the participation of the EFTA countries belonging to the EEA. In accordance with Article 
15  of  Regulation  No  1150/2000  on  own  resources,  this  outturn  represents  the  difference 
between: 

–  total revenue received for that year; 

–  and  total  payments  made  against  that  year's  appropriations  plus  the  total  amount  of  that 

year's appropriations carried over to the following year. 

The following are added to or deducted from the resulting figure: 

–  the  net  balance  of  cancellations  of  payment  appropriations  carried  over  from  previous 
years  and  any  payments  which,  because  of  fluctuations  in  the  euro  rate,  exceed  non-
differentiated appropriations carried over from the previous year; 

–  the balance of exchange-rate gains and losses recorded during the year. 

The  budget  outturn  is  returned  to  the  Member  States  the  following  year  through 
deduction of their amounts due for that financial year. 

Appropriations  carried  over  from  the  previous  financial  year  in  respect  of  contributions  by 
and work for third parties, which by definition never lapse, are included with the additional 
appropriations for the financial year. This explains the difference between carryovers from the 
previous  year  in  the  2009  budget  implementation  statements  and  those  carried  over  to  the 
following year in the 2008 budget implementation statements. The payment appropriations for 

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re-use  and  appropriations  made  available  again  following  the  repayment  of  payments  on 
account are disregarded when calculating the outturn for the year. 

The  payment  appropriations  carried  over  include:  automatic  carryovers  and  carryovers  by 
decision. The cancellation of unused payment appropriations carried over from the previous 
year shows the cancellations on appropriations carried over automatically and by decision. It 
also includes the decrease in assigned revenue appropriations carried over to the next year in 
comparison with 2008. 

2.1.2  Reconciliation of the budget outturn with the economic outturn 

The economic outturn for the year is calculated on the basis of accrual accounting principles. 
The budget outturn is however based on modified cash accounting rules, in accordance with 
the  Financial  Regulation.  As  both  are  the  result  of  the  same  underlying  transactions,  it  is  a 
useful control to ensure that they are reconcilable. The table below shows this reconciliation, 
highlighting the key reconciling amounts, split between revenue and expenditure items. 

RECONCILIATION: ECONOMIC RESULT – BUDGET OUTTURN 2009 

2009 

EUR millions
2008 

ECONOMIC OUTTURN FOR THE YEAR 

4 457 

12 686 

Revenues 

Entitlements established in current year but not yet collected 
Entitlements established in previous years and collected in current 
year 
Accrued revenue (net) 

(2 806) 
2 563 

(4 685) 
3 485  

436 

(724) 

Expenditure 

Accrued expenses (net) 
Expenses prior year paid in current year 
Net-effect pre-financing 
Payment appropriations carried over to next year 
Payments made from carry-overs & cancellation unused payment 
appropriations 
Movement in provisions 
Other 

Economic outturn agencies + ECSC 

BUDGET OUTTURN FOR THE YEAR 

Reconciling items - Revenue 

5 381 
(432) 
(9 458) 
(1 759) 
4 573 

(329) 
(153) 

(209) 

2 264 

6 353 
(219) 
(16 446) 
(3 914) 
1 182 

4 316 
(88) 

(136) 

1 810 

The actual budgetary revenue for a financial year corresponds to the revenue collected from 
entitlements  established  in  the  course  of  the  year  and  amounts  collected  from  entitlements 
established  in  previous  years.  Therefore  the  entitlements  established  in  the  current  year 
but  not  yet  collected  are  to  be  deducted  from  the  economic  outturn  for  reconciliation 
purposes  as  they  do  not  form  part  of  budgetary  revenue.  On  the  contrary  the  entitlements 
established in previous years and collected in current year must be added to the economic 
outturn for reconciliation purposes. 

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The  net  accrued  revenue  mainly  consists  of  accrued  revenue  for  agricultural  levies,  own 
resources  and  interests  and  dividends.  Only  the  net-effect,  i.e.  accrued  revenue  for  current 
year minus reversal accrued revenue from previous year, is taken into consideration. 

Reconciling items - Expenditure 

The net accrued expenses mainly consist of accruals made for year-end cut-off purposes, i.e. 
eligible expenses incurred by beneficiaries of EU funds but not yet reported to the EU. 

While accrued expenses are not considered as budgetary expenditure, the payments made in 
the  current  year  relating  to  invoices  registered  in  prior  years  are  part  of  current  year's 
budgetary expenditure. 

The net effect of pre-financing is the combination of (1) the new pre-financing amounts paid 
in the current year and recognised as budgetary expenditure of the year and (2) the clearing of 
the  pre-financing  paid  in  current  year  or  previous  years  through  the  acceptance  of  eligible 
costs. The latter represent an expense in accrual terms but not in the budgetary accounts since 
the  payment  of  the  initial  pre-financing  had  already  been  considered  as  a  budgetary 
expenditure at the time of its payment. 

Besides the payments made against the year's appropriations, the appropriations for that year 
that are carried to the next year also need to be taken into account in calculating the budget 
outturn for the year (in accordance with Article 15 of Regulation No 1150/2000). The same 
applies  for  the  budgetary  payments  made  in  the  current  year  from  carry-overs  and  the 
cancellation of unused payment appropriations. 

The  movement  in  provisions  relate  to  year-end  estimates  made  in  the  accrual  accounts 
(employee  benefits  mainly)  that  do  not  impact  the  budgetary  accounts.  Other  reconciling 
amounts  comprise  different  elements  such  as  asset  depreciation,  asset  acquisitions,  capital 
lease  payments  and  financial  participations  for  which  the  budgetary  and  accrual  accounting 
treatments differ. 

Finally  the  economic  outturns  of  the  agencies  and  the  ECSC  that  are  included  in  the 
consolidated economic outturn need to be excluded since their budgetary execution is not part 
of the consolidated budget outturn. 

2.2 

COMPARISON OF BUDGET AND ACTUAL AMOUNTS 2008 (Table 2) 

In  the  initial  adopted  budget,  signed  by  the  President  of  the  European  Parliament  on  18 
December  2008,  the  amount  of  payment  appropriations  was  fixed  at  EUR  116  096  million 
and the amount to be financed by own resources totalled EUR 114 736 million. It should be 
noted that the revenue and expenditure estimates in the initial budget are subject to adjustment 
during  the  budgetary  year,  such  modifications  being  presented  in  amending  budgets. 
Adjustments in the Member States GNI-based own resources payments ensure that budgeted 
revenue  matches  exactly  budgeted  expenditure.  In  accordance  with  the  principle  of 
equilibrium, budget revenue and expenditure (payment appropriations) must be in balance. 

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Revenue: 

During  2009  ten  amending  budgets  were  adopted.  Their  impact  on  the  revenue  side  of  the 
2009 budget resulted in a final revenue of EUR 113 035 million. This was financed by own 
resources  totalling  EUR  110  238  million  (thus  EUR  4  498  million  less  than  initially 
forecasted) and the remainder by other revenue. The reduced need for own resources was due 
mainly to the inclusion of EUR 1 796 million relating to the surplus of the previous year as 
well  as  the  combined  effect  of  a  decrease  in  payment  appropriations  and  an  increase  in  the 
forecast  of  revenue  in  the  Amending  Budget  No  10/2009.  This  latter  case  resulted  in  a 
supplementary reduction of the own resources by EUR 2 888 million. 

As far as the own resources are concerned, it should be noted that the collection of traditional 
own resources was very close to the forecasted amount. This is explained by the fact that the 
budgetary  estimates  were  modified  at  the  time  the  Amending  Budget  No.  6/2009  was 
established (they were decreased by EUR 5 226 million) and further at the time the Amending 
Budget  No  10/2009  was  established  (this  time  they  were  increased  by  EUR  600  million). 
These  adjustments  were  based  on  one  hand  on  the  new  macroeconomic  forecasts  of  spring 
2009, being less optimistic than the previous ones and on the other hand on the evolution of 
the actual collection of contributions. 

The final Member States' VAT and GNI payments also corresponded very closely to the final 
budgetary estimate. The differences between the forecasted amounts and the amounts actually 
paid  are  explained  by  the  differences  in  the  euro  rates  used  for  budgetary  purposes  and  the 
rates in force at the time when the non-EMU Member States actually made their payments. 

Expenditure: 

The  year  2009  saw  the  EU  Budget  still  in  transition,  from  one  multi-annual  Financial 
Framework  to  the  next.  Commitment  appropriations  reflected  the  spending  orientations 
agreed for the new programming period 2007 – 2013, whereas the part of the payment claims 
still related to the previous 2000 – 2006 Financial Framework was close to 12%.  

For  commitments,  the  initial  budget  and  hence  the  political  targets  set  were  carried  out 
virtually  as  planned.  The  implementation  rate  excluding  the  unused  reserves  (EUR  447 
million for Globalisation Fund and EUR 56 million for Emergency Aid) reached 99.6% of the 
budget,  it  being  slightly  adjusted  during  the  year.  Heading  2,  Natural  Resources, 
commitments  were  increased  by  EUR  259  million  (being  a  recovery  plan  increase  of  EUR 
600  million  for  rural  development,  an  end  of  year  reduction  of  EUR  390  million,  and  blue 
tongue measures increase of EUR 49 million). Heading 5, Administration, decreased by EUR 
55 million. These represent together an increase of only 0.15 % from the initial budget, if the 
increase  of  EUR  615  million  for  the  European  Solidarity  Fund  is  not  taken  into  account 
(because of its nature as a reserve for unforeseeable expenditure).   
The implementation rate for payments, excluding unused Emergency Aid reserve, was 95% of 
the initial budget and 97% of the final budget. The main reductions in payment appropriations 
were made via amending budgets in Heading 1a, Competitiveness, totalling EUR 738 million 
(of which Research counted for EUR 448 million), in Heading 2, Natural Resources, EUR 2 
632 million (Rural Development EUR 2 192 million) and Enlargement EUR 244 million. 

The  unused  voted  appropriations,  excluding  reserves,  totalled  EUR  2  395  million  and  was 
made up by mainly: the European Social Fund (Convergence EUR 674 million and Regional 

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Competitiveness  EUR  248  million),  the  Instrument  for  Pre-accession  (EUR  142  million), 
Commission Administration (EUR 394 million) and Competiveness (EUR 377 million spread 
throughout Heading 1a). 

A  more  detailed  analysis  of  budgetary  adjustments,  their  relevant  context,  their  justification 
and  their  impact  is  presented  in  the  Commission's  Report  on  Budgetary  and  Financial 
Management 2009,  Part  A  overview at  budget  level and Part B dealing with each Financial 
Framework Heading. 

2.3 

REVENUE (Table 3) 

The  revenue  of  the  general  budget  of  the  European  Union  can  be  divided  into  two  main 
categories: own resources and other revenue. This is laid down in Article 311 of the Treaty on 
the  Functioning  of  the  European  Union,  which  states  that:  "Without  prejudice  to  other 
revenue,  the  budget  shall  be  financed  wholly  from  own  resources."  The  main  bulk  of 
budgetary expenditure is financed by own resources. Other revenue represents only a minor 
part of total financing. 

There are three categories of own resources: traditional own resources, the VAT resource and 
the  GNI  resource.  Traditional  own  resources,  in  turn,  comprise  sugar  levies  and  customs 
duties. A correction mechanism in favour of the United Kingdom as well as a gross reduction 
in  the  annual  GNI-based  contribution  of  Netherlands  and  Sweden  are  also  part  of  the  own 
resources system. 

The allocation of own resources is made in accordance with the rules laid down in the Council 
Decision  No.  2007/436/EC,  Euratom  of  7  June  2007  on  the  system  of  the  European 
Communities'  own  resources  (ORD  2007).  On  1  March  2009  the  ORD  2007  entered  into 
force.  However  it  took  effect  on  1  January  2007.  Consequently  the  retroactive  effects  have 
been taken in account in the budgetary year 2009. 

2.3.1  Traditional own resources 

Traditional  own  resources:  All  established  amounts  of  traditional  own  resources  must  be 
entered in one or other of the accounts kept by the competent authorities. 

–  In  the  ordinary  account  provided  for  in  Article  6(3)(a)  of  Regulation  No  1150/2000:  all 

amounts recovered or guaranteed. 

–  In  the  separate  account  provided  for  in  Article  6(3)(b)  of  Regulation  No  1150/2000:  all 
amounts not yet recovered and/or not guaranteed; amounts guaranteed but challenged may 
also be entered in this account. 

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For the separate account, the Member States send the Commission a quarterly statement that 
includes: 

–  the balance to be recovered during the previous quarter, 

–  the amounts recovered during the quarter in question, 

–  rectifications of the base (corrections/cancellations) during the quarter in question, 

–  amounts written off, 

–  the balance to be recovered at the end of the quarter in question. 

Traditional own resources must be entered in the Commission's account with the Treasury or 
the body appointed by the Member State 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 (or recovered in the case of the separate account). Member States retain, by way 
of  collection  costs,  25%  of  traditional  own  resources.  The  contingent  own  resources 
entitlements are adjusted on the basis of the likelihood of their recovery. 

2.3.2  VAT-based resources and GNI-based resources 

VAT-based  own  resource  derive  from  the  application  of  a  uniform  rate,  for  all  Member 
States, to the harmonised VAT base determined in accordance with the rules of Article 2(1)(b) 
of  the  ORD  2007.  The  uniform  rate  is  fixed  at  0.30%  except  for  the  period  2007-2013  in 
which the rate of call for Austria is fixed at 0.225, for Germany at 0.15% and for Netherlands 
and Sweden at 0.10%. The VAT base is capped at 50% of GNI for all Member States. 

VAT-based  own  resources  derive  from  the  application  of  a  uniform  rate,  for  all  Member 
States, to the harmonised VAT base determined in accordance with the rules of Article 2(1)(c) 
of the Council Decision of 29 September 2000. The VAT base is capped at 50% of GNI for 
all Member States. 

The GNI-based resource is a variable resource intended to supply the revenue required, in any 
given  year,  to  cover  expenditure  exceeding  the  amount  collected  from  traditional  own 
resources,  VAT  resources  and  miscellaneous  revenue.  The  revenue  derives  from  the 
application of a uniform rate to the aggregate GNI of all the Member States. VAT and GNI-
based resources are determined on the basis of forecasts of VAT and GNI bases made when 
the preliminary draft budget is being prepared. These forecasts are subsequently revised; the 
figures are updated during the budget year in question by means of an amending budget. 

The  actual  figures  for  the  VAT  and  GNI  bases  are  available  in  the  course  of  the  year 
following the budget year in question. The Commission calculates the differences between the 
amounts due by the Member States by reference to the actual bases and the sums actually paid 
on  the  basis  of  the  (revised)  forecasts.  These  VAT  and  GNI  balances,  either  positive  or 
negative, are called in by the Commission from the Member States for the first working day 
of December of the year following the budget year in question. Corrections may still be made 
to  the  actual  VAT  and  GNI  bases  during  the  subsequent  four  years,  unless  a  reservation  is 
issued. The balances calculated earlier are adjusted and the difference is called in at the same 
time as the VAT and GNI balances for the previous budget year. 

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When  conducting  controls  of  VAT  statements  and  GNI  data,  the  Commission  may  notify 
reservations to the Member States regarding certain points which may have consequences to 
their own resources contributions. These points, for example, may result from an absence of 
acceptable data, or a need to develop a suitable methodology. These reservations have to be 
seen as potential claims on the Member States for uncertain amounts as their financial impact 
cannot  be  estimated  with  accuracy.  When  the  exact  amount  can  be  determined,  the 
corresponding VAT and GNI-based resources are called either in connection with VAT and 
GNI balances or by individual calls for funds. 

2.3.3  UK correction 

This  mechanism  reduces  the  own  resources  payments  of  the  UK  in  proportion  to  what  is 
known  as  its  "budgetary  imbalance"  and  increases  the  own  resources  payments  of  the  other 
Member States correspondingly. The budgetary imbalance correction mechanism in favour of 
the  United  Kingdom  was  instituted  by  the  European  Council  in  Fontainebleau  (June  1984) 
and  the  resulting  Own  Resources  Decision  of  7  May  1985.  The  purpose  of  the  mechanism 
was to reduce the budgetary imbalance of the UK through a reduction in its payments to the 
EU.  Germany,  Austria,  Sweden  and  Netherlands  benefit  from  a  reduced  financing  of  the 
correction (restricted to one fourth of their normal share). 

2.3.4  Gross reduction for Netherlands and Sweden 

According to ORD 2007, the Netherlands and Sweden benefit from a gross reduction in their 
annual  GNI-based  contributions  for  the  period  2007-2013.  The  gross  reduction,  being  EUR 
605 million for the Netherlands and EUR 150 million for Sweden (in 2004 prices), is adjusted 
to current prices by applying the GDP deflator for the EU expressed in EUR and it is granted 
after the calculation of the correction in favour of the United Kingdom and its financing. 

2.3.5  Adjustment relating to the implementation of the ORD 2007 for years 2007 and 2008 

Article 11 of the ORD 2007 stipulates that once the Decision enters into force, it shall take 
effect on 1 January 2007. This means that the financing for the years 2007 and 2008 had to be 
recalculated according to the new rules. The adjustment (the differences between the old and 
the new ORD for years 2007 and 2008) was entered in the Amending Budget No. 3/2009 and 
was implemented in one single payment on 1 June 2009. 
Further  information  on  the  implementation  of  revenue  can  be  found  in  the  Report  on 
Budgetary and Financial Management 2009. 

2.4 

EXPENDITURE (Tables 4 to 13) 

2.4.1  Financial Framework 2007-2013 
This  section  describes  the  main  categories  of  EU  expenditure,  classified  by  heading  of  the 
financial  framework  2007-2013.  The  2009  financial  year  was  the  third  covered  by  the 
financial framework 2007-2013. The overall ceiling on commitments appropriations for 2009 
comes  to  EUR  134  722  million,  equivalent  to  1.13%  of  GNI.  The  corresponding  ceiling  on 
the  appropriations  for  payments  comes  to  EUR  120  445  million,  i.e.  1.01  %  of  GNI.  The 
above table shows the financial framework at current prices estimated for 2013.   

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2007 

2008 

2009 

2010 

2011 

2012 

2013 

EUR millions

1. Sustainable Growth 

53 979

57 653

61 696

63 555

63 974 

66 964

69 957

2. Preservation & management of 
natural resources 

3. Citizenship, freedom, security & 
justice 

55 143

59 193

56 333

59 955

60 338 

60 810

61 289

1 273

1 362

1 518

1 693

1 889 

2 105

2 376

4. EU as a global player 

6 578

7 002

7 440

7 893

8 430 

8 997

9 595

5. Administration 

6. Compensations 

7 039

7 380

7 525

7 882

8 334 

8 670

9 095

445

207

210

0

0 

0

0

Commitment appropriations: 

124 457

132 797

134 722

140 978

142 965 

147 546

152 312

Total payment appropriations: 

122 190

129 681

120 445

134 289

134 280 

141 360

143 331

Heading 1 – Sustainable growth 

This Heading divided into two separate, but interlinked components: 

–  1a.  Competitiveness  for  growth  and  employment,  encompassing  expenditure  on  research 
and innovation, education and training, trans-European networks, social policy, the internal 
market and accompanying policies. 

–  1b.  Cohesion  for  growth  and  employment,  designed  to  enhance  convergence  of  the  least 
developed  Member  States  and  regions,  to  complement  the  EU  strategy  for  sustainable 
development outside the less prosperous regions and to support inter regional cooperation. 

Heading 2 – Preservation and management of natural resources 

Heading  2  includes  the  common  agricultural  and  fisheries  policies,  rural  development  and 
environmental measures, in particular Natura 2000. The amount earmarked for the common 
agricultural  policy  reflects  the  agreement  reached  at  the  Brussels  European  Council  in 
October 2002. 

Heading 3 – Citizenship, freedom, security and justice 

The  new  heading  3  (Citizenship,  freedom,  security  and  justice)  reflects  the  growing 
importance attached to certain fields where the EU has been assigned new tasks – justice and 
home affairs, border protection, immigration and asylum policy, public health and consumer 
protection,  culture,  youth,  information  and  dialogue  with  citizens.  It  is  split  in  two 
components: 3a. Freedom, Security and Justice & 3b. Citizenship 

Heading 4 – The EU as a global player 

Heading  4  covers  all  external  action,  including  pre-accession  instruments.  Whereas  the 
Commission  had  proposed  to  integrate  the  EDF  into  the  financial  framework,  the  European 
Council and the European Parliament agreed to leave it outside. 

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Heading 5 - Administration 

This heading covers administrative expenditure for all institutions, pensions and the European 
Schools. For the Institutions other than the Commission, these costs make up the total of their 
expenditure,  but  the  Agencies  and  other  bodies  make  both  administrative  and  operational 
expenditure. 

Heading 6 - Compensations 

In  accordance  with  the  political  agreement  that  the  new  Member  States  should  not  become 
net-contributors to the budget at the very beginning of their membership, compensation was 
foreseen under this heading. This amount was available as transfers to them to balance their 
budgetary receipts and contributions. 

2.4.2  Policy areas 

As  part  of  its  use  of  Activity  Based  Management  (ABM),  the  Commission  implements 
Activity Based Budgeting (ABB) in its planning and management processes. ABB involves a 
budget  structure  where  budget  titles  correspond  to  policy  areas  and  budget  chapters  to 
activities.  ABB  aims  to  provide  a  clear  framework  for  translating  the  Commission's  policy 
objectives into action, either through legislative, financial or any other public policy means. 
By structuring the Commission's work in terms of activities, a clear picture is obtained of the 
Commission's  undertakings  and  simultaneously  a  common  framework  is  established  for 
priority  setting.  Resources  are  allocated  to  priorities  during  the  budget  procedure,  using  the 
activities as the building blocks for budgeting purposes. By establishing such a link between 
activities  and  the  resources  allocated  to  them,  ABB  aims  to  increase  efficiency  and 
effectiveness in the use of resources in the Commission. 

A policy area may be defined as a homogeneous grouping of activities constituting parts of 
the Commission's work, which are relevant for the decision-making process. Each policy area 
corresponds,  in  general,  to  a  DG,  and  encompassing  an  average  of  about  6  or  7  individual 
activities.  Policy  areas  are  mainly  operational, since  their  core  activities  aim  at  benefiting  a 
third-party beneficiary within their respective domains of activity. The operational budget is 
completed with the necessary administrative expenditure for each policy area. 

Further information on the implementation of expenditure can be found in the Commission's 
Report on Budgetary and Financial Management 2009. 

2.5 

INSTITUTIONS AND AGENCIES (Tables 14 to 18) 

The consolidated reports on the implementation of the general budget of the European Union 
include,  as  in  previous  years,  the  budget  implementation  of  all  Institutions  since  within  the 
EU  budget  a  separate  budget  for  each  Institution  is  established.  Agencies  do  not  have  a 
separate budget inside the EU budget and they are partially financed by a Commission budget 
subsidy.  

In  order  to  provide  all  relevant  budgetary  data  for  the  Agencies,  the  budgetary  part  of  the 
consolidated annual accounts include separate reports on the implementation of the individual 
budgets of the traditional agencies consolidated. 

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