COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS ANNUAL ACCOUNTS OF THE EUROPEAN UNION - FINANCIAL YEAR 2010.
Date: 2011-07-26
Institutions: European Commission
Subjects: balance sheet, general budget (EU), implementation of the budget

EUROPEAN COMMISSION 

Brussels, 26.7.2011 
COM(2011) 473 final 

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

ANNUAL ACCOUNTS OF THE EUROPEAN UNION - FINANCIAL YEAR 2010. 

 
 
 
 
  
 
Annual Accounts of the European Union 2010 

CONTENTS 

Page 

Note accompanying the consolidated accounts 

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 

3 

5 

8 

9 

10 

11 

12 

PART II:  CONSOLIDATED REPORTS ON IMPLEMENTATION OF THE BUDGET OF 

THE EUROPEAN UNION AND EXPLANATORY NOTES 

Reports on implementation of the budget 

Explanatory notes to the reports on implementation of the budget 

96 

98 

 116 

2 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
        
 
 
 
 
 
 
 
 
 
 
    
 
 
 
Annual Accounts of the European Union 2010 

NOTE ACCOMPANYING THE CONSOLIDATED ACCOUNTS 

The consolidated annual accounts of the European Union for the year 2010 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. 

Philippe Taverne 

Accounting Officer of 
the Commission 

3 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

4 

Annual Accounts of the European Union 2010 

ANNUAL ACCOUNTS 
OF THE EUROPEAN UNION 

FINANCIAL YEAR 2010 

PART I 

CONSOLIDATED FINANCIAL STATEMENTS 
OF THE EUROPEAN UNION 
AND EXPLANATORY NOTES 

5 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

6 

Annual Accounts of the European Union 2010 

CONTENTS – PART I 

Page 

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: 

1. 

Significant accounting policies 

2.  Notes to the Balance Sheet 

3.  Notes to the Economic Outturn Account 

4.  Notes to the Cashflow table 

5. 

6. 

7. 

8. 

9. 

Contingent Assets & Liabilities and other disclosures 

Financial corrections and recoveries 

Financial risk management 

Related party disclosures 

Events after the balance sheet date 

10.  Consolidated entities 

11.  Non-consolidated entities 

8 

9 

10          

11 

12 

13 

24 

47 

56 

57 

62 

82 

88 

90 

93 

94 

7 

 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

BALANCE SHEET 

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 

Note 

31.12.2010 

EUR millions 
31.12.2009 
(restated)    

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 

108 
4 813 
2 555 
11 640 
44 118 
40 
63 274 

91 
2 331 
10 078 
13 501 
22 063 
48 064 

72 
4 859 
2 379 
10 764 
41 544 
55 
59 673 

77 
1 791 
9 436 
8 958 
23 372 
43 634 

111 338 

103 307 

(37 172) 
(1 317) 
(11 445) 
(2 104) 
(52 038) 

(214) 
(2 004) 
(84 529) 
(86 747) 

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

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

TOTAL LIABILITIES 

(138 785) 

(145 585) 

NET ASSETS 

(27 447) 

(42 278) 

 Reserves 
 Amounts to be called from Member States* 

2.19 
2.20 

3 484 
(30 931) 

3 323 
(45 601) 

NET ASSETS 

(27 447) 

(42 278) 

See notes 2.5.2, 2.9.2, 2.10.3 and 3.4.1 for details of the restatement of certain 2009 figures 

*  The European Parliament has adopted a budget on 15 December 2010 which provides for the payment of the Union's 
short-term liabilities from own resources to be collected by, or called up from, the Member States in 2011. Additionally, 
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. 

8

 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

ECONOMIC OUTTURN ACCOUNT

OPERATING REVENUE 
Own resource and contributions revenue 
Other operating revenue 

OPERATING EXPENSES 
Administrative expenses 
Operating expenses 

Note 

2010 

EUR millions 

2009 
(restated) 

3.1 
3.2 

122 328 
8 188 

110 537 
7 532 

130 516 

118 069 

3.3 
3.4 

(8 614) 
(103 764) 

(8 133) 
(102 504) 

(112 378) 

(110 637) 

SURPLUS FROM OPERATING ACTIVITIES 

18 138 

7 432 

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

3.5 
3.6 
2.12 
3.7 

1 178 
(661) 
(1 003) 
(420) 

835 
(594) 
(683) 
(103) 

ECONOMIC OUTTURN FOR THE YEAR 

17 232 

6 887 

See notes 2.5.2, 2.9.2, 2.10.3 and 3.4.1 for details of the restatement of certain 2009 figures 

9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

CASHFLOW TABLE 

Note

2010 

EUR millions 
2009 
(restated) 

Economic outturn for the year 

17 232 

6 887 

4.2 

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 

28 
358 
0 
(876) 
(2 574) 
15 
(14) 
(642) 
(4 543) 
(152) 
886 
(74) 
1 
1 964 
(9 355) 
(2 254) 
(149) 

22 
448 
(17) 
(7 199) 
(12 521) 
(10) 
7 
827 
2 962 
128 
7 210 
(48) 
(134) 
(79) 
4 207 
(1 796) 
54 

Increase/(decrease) in employee benefits liability 

(70) 

(313) 

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 

(374) 

(176) 
(540) 

(464) 

(284) 
(239) 

(1 309) 

(352) 

Net increase/(decrease) 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 

(1 309) 
23 372 
22 063 

(352) 
23 724 
23 372 

See notes 2.5.2, 2.9.2, 2.10.3 and 3.4.1 for details of the restatement of certain 2009 figures 

10

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

STATEMENT OF CHANGES IN NET ASSETS 

Reserves (A) 

Amounts to be called from     
Member States (B) 

EUR millions
Net Assets 
=(A)+(B) 

BALANCE AS AT 31 DECEMBER 2008 
Movement in Guarantee Fund reserve 
Fair value movements 
Other (restated) 
Allocation of the economic outturn 2008 
Budget result 2008 credited to Member States
Economic outturn for the year (restated) 
BALANCE AS AT 31 DECEMBER 2009 
(restated) 
Movement in Guarantee Fund reserve 
Fair value movements 
Other 
Allocation of the economic outturn 2009 
(restated) 
Budget result 2009 credited to Member States
Economic outturn for the year 
BALANCE AS AT 31 DECEMBER 2010 

Fair value 
reserve 
41 

28 

Other reserves  Accumulated 
Surplus/(Deficit)

3 074 
196 

(1) 
(15) 

(63 225) 
(196) 

28 
12 701 
(1 796) 

69 

3 254 

(52 488) 

(130) 

273 

4 
14 

(273) 

(21) 
6 873 

(2 254) 

(61) 

3 545 

(48 163) 

Economic outturn 
of the year 
12 686 

(12 686) 

6 887 
6 887 

(6 887) 

17 232 
17 232 

(47 424) 
0 
28 
27 
0 
(1 796) 
6 887 
(42 278) 

0 
(130) 
(17) 
0 

(2 254) 
17 232 
(27 447) 

11

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

Notes to the financial statements 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

Significant accounting policies 

Notes to the Balance Sheet 

Notes to the Economic Outturn Account 

Notes to the Cashflow table 

Contingent assets & liabilities and other disclosures 

Financial corrections and recoveries 

Financial risk management 

Related party disclosures 

Events after the balance sheet date 

10.  Consolidated entities 

11.  Non-consolidated entities 

Page 

13   

24 

47 

56 

57 

62 

82 

88 

90 

93 

94 

12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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  2010 
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. 

1.3 

CONSOLIDATION 

Scope of consolidation  
The consolidated financial statements of the EU comprise all significant controlled entities (institutions and 
agencies), associates and joint ventures, this being 43 controlled entities, 5 joint ventures and 4 associates. 
The complete list of consolidated entities can be found in note  10. In comparison with 2009, the scope of 
13

 
 
 
 
 
 
 
 
 
 
 
consolidation  has  been  extended  by  3  controlled  entities  (one  institution,  two  agencies),  one  associate  and 
one joint venture. The impact of the additions on the consolidated financial statements is not material. 

Annual Accounts of the European Union 2010 

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  of  the  entity  through 
founding treaties or secondary legislation, financing of the entity 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) 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  material  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. 

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  entities 
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. 

Associates 
Associates are entities over which the European Union have, directly or indirectly, significant influence but 
not control. 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 
an  investment  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. 

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Annual Accounts of the European Union 2010 

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. 

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  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. 
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 
BGN 
CZK 
DKK 
EEK 
GBP 
HUF 
LVL 

31.12.2010 
1.9558 
25.0610 
7.4535 
15.6466 
0.8607 
277.9500 
0.7094 

31.12.2009 
1.9558 
26.4730 
7.4418 
15.6466 
0.8881 
270.4200 
0.7093 

Currency 
LTL 
PLN 
RON 
SEK 
CHF 
JPY 
USD 

31.12.2010 
3.4528 
3.9750 
4.2620 
8.9655 
1.2504 
108.6500 
1.3362 

31.12.2009 
3.4528 
4.1045 
4.2363 
10.2520 
1.4836 
133.1600 
1.4406 

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  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 

Intangible assets 

1.5.1 
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. 
Internally developed intangible assets are capitalised when the relevant criteria of the EU accounting rules 
are  met.  The  costs  capitalisable  include  all  directly  attributable  costs  necessary  to  create,  produce,  and 
prepare the asset to be capable of operating in the manner intended by management. Costs associated with 
research activities, non-capitalisable development costs and maintenance costs are recognised as expenses as 
incurred. 

15

 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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% 

Gains or losses on disposals are determined by comparing proceeds less selling expenses with the carrying 
amount of the disposed asset and 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. 

Impairment of non-financial assets 

1.5.3 
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. 

16

 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

Investments 

1.5.4 
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. 

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”). 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. 

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 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 

17

 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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  losses  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.  

Loans granted on borrowed funds are measured at their nominal amount, which is considered to be the fair 
value of the loan. The reasoning for this is as follows: 

–  The “market environment” for EU lending is very specific and different from the capital market used to 
issue  commercial  or  government  bonds.  As  lenders  in  these  markets  have  the  opportunity  to  choose 
alternative  investments,  the  opportunity  possibility  is  factored  into  market  prices.  However,  this 
opportunity for alternative investments does not exist for the EU which is not allowed to invest money on 
the capital markets; it can only borrow funds for the purpose of lending at the same rate (e.g. BOP) or a 
reduced  rate  compared  to  the  commercial  market  (e.g.  EFSM  in  2011).  This  means  that  there  is  no 
alternative  lending  or  investment  option  available  to  the  EU  for  the  sums  borrowed.  Thus,  there  is  no 
opportunity cost and therefore no basis of comparison with market rates. In fact, the EU lending operation 
itself represents the market. Essentially, since the opportunity cost "option" is not applicable, the market 
price does not fairly reflect the substance of the EU lending transactions. Therefore, it is not appropriate 
to determine the fair value of EU lending with reference to commercial or government bonds.  

–  Furthermore as there is no active market or similar transactions to compare with, the interest rate to be 
used  by  the  European  Commission  for  fair  valuing  its  lending  operations  under  EFSM,  BOP  and  other 
such loans, should be the interest rate charged. 

–  In  addition,  for  BOP,  Euratom  and  MFA  loans,  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  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 
(i) 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. 

(ii) 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 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. 

(iii) Held to maturity – the EU currently holds no held to maturity investments. 

(iv) 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. 

18

 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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. 

(a) 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. 

(b) 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. 

Inventories 

1.5.6 
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. 

19

 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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 amount and the recoverable amount,. The amount of the write-down 
is recognised in the economic outturn account. A general write-down, based on past experience, is also made 
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. 

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  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  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 

20

 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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 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. 

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. 

21

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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  278  of  the  EU  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. 

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 

22

 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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. 

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. 
The accounting policies of the European Commission are the same as those applied by the European Union 
and are outlined in the note 1 of the consolidated annual accounts of the EU. 

23

 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

2. NOTES TO THE BALANCE SHEET 

NON CURRENT ASSETS 

2.1 

INTANGIBLE ASSETS 

Gross carrying amount at 31 December 2009 
Additions 
Disposals 
Other changes 

Gross carrying amount at 31 December 2010 

Accumulated amortisation at 31 December 2009 
Amortisation charge for the year 
Disposals 
Other changes 

EUR millions 

Amount 

171 
60 
(2) 
7 

236 

(99) 
(28) 
1 
(2) 

Accumulated amortisation at 31 December 2010 

(128) 

Net carrying amount at 31 December 2010 

Net carrying amount at 31 December 2009 

108 

72 

The above amounts relate primarily to computer software. 

24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

2.2 PROPERTY, PLANT & EQUIPMENT 

Land and 

Plant and  Furniture and Computer 

buildings 

equipment 

vehicles 

hardware 

Other 
tangible 
assets 

Finance leases  Assets under  

TOTAL  

EUR millions 

construction  

Gross carrying amount at 31 December 2009 
Additions 
Disposals 
Transfers between asset categories 
Other changes 

3 972 
47 
(37) 
(1) 
46 

Gross carrying amount at 31 December 2010 

4 027 

Accumulated depreciation at 31 December 2009 
Depreciation charge for the year 
Depreciation written back 
Disposals 
Transfers between asset categories 
Other changes 

(1 742) 
(127) 
- 
31 
1 
(31) 

460 
44 
(125) 
0 
113 

492 

(355) 
(37) 
- 
122 
1 
(113) 

215 
20 
(30) 
0 
21 

226 

(155) 
(21) 
- 
27 
0 
(18) 

475 
42 
(81) 
1 
46 

483 

(359) 
(60) 
2 
77 
0 
(38) 

182 
15 
(27) 
11 
33 

214 

(108) 
(17) 
- 
27 
(1) 
(25) 

2 655 
10 
(1) 
0 
(1) 

2 663 

(612) 
(96) 
- 
0 
0 
0 

231 
114 
- 
(10) 
- 

335 

Accumulated depreciation at 31 December 
2010 

NET CARRYING AMOUNT AT  
31 DECEMBER 2010 
NET CARRYING AMOUNT AT  
31 DECEMBER 2009 

(1 868) 

(382) 

(167) 

(378) 

(124) 

(708) 

2 159 

2 230 

110 

105 

59 

60 

105 

116 

90 

74 

1 955 

2 043 

335 

231 

8 190 
292 
(301) 
1 
258 

8 440 

(3 331) 
(358) 
2 
284 
1 
(225) 

(3 627) 

4 813 

4 859 

25

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Annual Accounts of the European Union 2010 

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: 

Description 

Cumulative 
charges (A) 

Finance Leases 

Future amounts to be paid 

< 1 year 

> 1 year 

> 5 years 

Land and buildings 
Other tangible assets 
Total at 31.12.2010 
Total at 31.12.2009 

843 
22 
865 
799 

56 
9 
65 
59 

271 
11 
282 
270 

1 389 
1 
1 390 
1 466 

Total 
Liability (B) 
1 716 
21 
1 737 
1 795 

Total 
Value 

A+B 

2 559 
43 
2 602 
2 594 

Subsequent 
expenditure 
on assets 
(C) 

 Asset 
value 

Depreciation 

A+B+C 

(E) 

61 
0 
61 
61 

2 620 
43 
2 663 
2 655 

(684) 
(24) 
(708) 
(612) 

EUR millions 
Net 
carrying 
amount 
=A+B+C+
E 
1 936 
19 
1 955 
2 043 

26

 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Commission 2010 

2.3 

LONG-TERM INVESTMENTS 

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

Note 
2.3.1 
2.3.2 
2.3.3 
2.3.4 

31.12.2010 
138 
354 
1 346 
717 
2 555 

EUR millions 

31.12.2009 
196 
382 
1 240 
561 
2 379 

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 joint ventures 

Amount at 31.12.2009 
Contributions 
Share of net result 
Amount at 31.12.2010 

GJU 
0 
0 
0 
0 

SESAR 

80 
41 
(110) 
11 

ITER 
35 
53 
(76) 
12 

IMI 
81 
24 
(27) 
78 

EUR millions

FCH 
0 
64 
(27) 
37 

Total 
196 
182 
(240) 
138 

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

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

31.12.2010 
176 
165 
0 
(208) 
7 
(247) 

EUR millions

31.12.2009 
48 
192 
0 
(44) 
72 
(169) 

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.  As  the  entity  was  inactive  and  still  undergoing  liquidation  in  2010,  there  were  no  revenues  or 
expenditures incurred. The net assets of the GJU and thus the value of the investment at 31 December 2010 
(and 31 December 2009) was EUR 0, being the investment of EUR 585 million less the accumulated share of 
losses, EUR 585 million. 

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  2010,  the 
Commission held 78.8% or EUR 11 million of the ownership participation in SESAR. The total (indicative) 
Commission contribution foreseen for SESAR (from 2007 to 2013) is EUR 700 million. 

ITER International Fusion Energy Organisation (ITER) 
ITER involves the European Union and China, India, Russia, Korea, Japan and USA. ITER was created to; 
manage  the  ITER  facilities,  to  encourage  the  exploitation  of  the  ITER  facilities,  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  since  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 Commission must recognise the participation in its accounts. 
At 31 December 2010, Euratom held 47.2% or EUR 12 million of the ownership participation in ITER. The 
total (indicative) Euratom contribution foreseen for ITER (from 2007 to 2041) is EUR 7 649 million. 

27 

 
 
 
 
  
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

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.  During  2010  two  new  Joint  Technology  Initiatives 
became  operational,  the  ENIAC  Joint  Undertaking  and  the  FCH  Joint  Undertaking.  Although  ENIAC  is 
legally  referred  to  as  a  joint  undertaking,  from  an  accounting  perspective  it  must  be  considered  as  an 
associate (and so is included as such in note 2.3.2) because the Commission has a significant influence, not 
joint control, over this entity (similar to the ARTEMIS and Clean Sky Joint Undertakings). 

IMI Joint Technology Initiative on Innovative Medicines 
The  IMI  Joint  Undertaking  supports  pre-competitive  pharmaceutical  research  and  development  in  the 
Member  States  and  associated  countries,  aiming  at 
the 
biopharmaceutical sector and promotes the involvement of small and medium-sized enterprises (SME) in its 
activities. The ownership interest of the European Union, represented by the Commission, is 97.4% or EUR 
78 million at 31 December 2010. The maximum indicative contribution of the Commission shall amount to 
EUR 1 billion up to 31/12/2017. 

the  research 

investment 

increasing 

in 

FCH Fuel Cells and Hydrogen Joint Undertaking 
The objective of the FCH Joint Undertaking is to combine resources from the public and private sectors to 
strengthen  research  activities  with  a  view  to  increasing  the  overall  efficiency  of  European  research  efforts 
and  accelerate  the  development  and  deployment  of  fuel  cell  and  hydrogen  technologies.  The  ownership 
interest of the European Union, represented by the Commission, is 99.9% or EUR 37 million at 31 December 
2010. The maximum indicative contribution of the EU shall amount to EUR 470 million up to 31/12/2017. 

2.3.2  Participations in Associates 

EIF 

ARTEMIS Clean Sky 

ENIAC 

EUR millions
Total 

Amount at 31 December 2009 
Contributions 
Share of net surplus/(deficit) 
Other equity movements 
Amount at 31 December 2010 

301 
14 
2 
(12) 
305 

7 
19 
(12) 
0 
14 

74 
101 
(161) 
0 
14 

0 
30 
(9) 
0 
21 

382 
164 
(180) 
(12) 
354 

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

Assets 
Liabilities 
Revenue 
Surplus/(Deficit) 

31.12.2010 
447 
(93) 
25 
(180) 

EUR millions

31.12.2009 
420 
(38) 
17 
(6) 

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  2010,  the  Commission  has  subscribed  for  a  total 
amount of EUR 900 million (out of EUR 3 000 million) of the share capital of the EIF. This represents 30% 
of the total EIF share capital. EUR 2 million of the above amount concerns the result for 2010 (profit). No 
dividend was received in 2010. The Commission has paid in 20%, the balance being uncalled corresponding 
to an amount of EUR 720 million. 

      EUR millions 

EIF 

Total EIF capital 

Commission subscription 

Total Share Capital 
Paid-in 
Uncalled 

900 
(180) 
720 

3 000 
(600) 
2 400 

28

 
 
 
 
 
 
 
  
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

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  EU,  represented  by  the  Commission,  at  31  December 
2010 is 96.7% or EUR 14 million. The maximum indicative contribution of the Commission 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 64.7% or EUR 14 million at 31 December 2010. The maximum indicative 
contribution of the Commission to this venture shall amount to EUR 800 million. 

ENIAC Joint Undertaking 
The aim of ENIAC is to define a commonly agreed research agenda in the field of nano-electronics in order 
to set research priorities for the development and adoption of key competences in that area. These objectives 
will  be  pursued  by  pooling  resources  from  the  public  and  private  sectors  to  support  R&D  activities  in  the 
form of projects. The ownership interest of the European Union, represented by the Commission, is 97.8% or 
EUR 21 million at 31 December 2010. The total commitment of the EU shall amount to EUR 450 million. 

2.3.3   Guarantee Fund 

Net assets of the Guarantee Fund 

EUR millions 

31.12.2010 

31.12.2009 

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

Net assets 

1 154 
193 
1 347 
(1) 

1 346 

1 050 
191 
1 241 
(1) 

1 240 

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 EU and loans under 
macro-financial assistance (MFA) and Euratom loans outside the EU. 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 85% 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 as a 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 
746 million corresponds to the target amount of 9% of the loans outstanding at 31 December 2010. The net 
assets of the Fund at 31 December 2010 total EUR 1 346 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 400 
million. Fair-value changes of the available-for-sale debt security portfolio have been recognised in equity in 
2010 totalling a decrease of EUR 30 million (2009: increase of EUR 16 million). 

2.3.4  Available-for-sale assets (long-term) 

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

29

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

Long-term Available-for-sale assets                     

EUR millions

European Bank for Reconstruction and Development 
Risk Capital Operations 
ETF Start up 
European Fund for South East Europe 
Green for Growth Fund 
GEEREF 
Progress Microfinance Facility 
Other investments 

31.12.2010 
188 
137 
199 
102 
20 
56 
14 
1 

31.12.2009 
157 
132 
154 
96 
20 
- 
- 
2 

Total 

717 

561 

European Bank for Reconstruction and Development (EBRD)  
In  May  2010,  the  Board  of  Governors  approved  an immediate  increase  in  the  authorised  paid-in  shares  of 
EUR 1 billion. Payment for the paid-in shares issued was by way of a reallocation of net income previously 
allocated to surplus for other purposes, namely for the payment of such paid-in shares. 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. 

The Commission has subscribed to 3% of the EBRD's total capital of EUR 21 billion. At balance sheet date, 
the called up amount was EUR 187 million, which has been fully paid. Payments outstanding on non-called 
up capital amount to EUR 443 million. 

      EUR millions 

EBRD 

Total EBRD capital 

Commission subscription 

Total Share Capital 
Paid-in 
Uncalled 

20 793 
(6 197) 
14 596 

630 
(187) 
443 

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. 

ETF start up covers 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. 

The European Fund for South East Europe, an investment company with variable share capital (SICAV) 
is also included under this heading. 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. 

The overall objective of the Green for Growth Fund (former Southeast Europe Energy Efficient Fund) is to 
enhance energy efficiency and fostering renewable energies in South East Europe through the provision of 
dedicated financing to businesses and households via partnering with financial institutions and direct finance. 

A  new  investment  of  EUR  56  million  was  made  relating  to  GEEREF.  This  is  a  new  innovative  fund 
providing global risk capital through private investment for energy efficiency and renewable energy projects 
in  developing  countries  and  economies  in  transition.  There  is  also  a  new  investment  in  2010  of  EUR  14 
million in the Progress Microfinance Facility for employment and social inclusion. 

At  year-end,  a  further  EUR  122  million  relating  to  ETF  Start  up  and  SME  Finance  Facility  had  been 
committed to, but not yet been drawn down by the other parties. 

30

 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.4 

LOANS 

 Annual Accounts of the European Union 2010 

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

Note 
2.4.1 
2.4.2 

31.12.2010 
162 
11 478 

EUR millions

31.12.2009 
169 
10 595 

Total 

11 640 

10 764 

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

Total at 31.12.2009 
New loans 
Repayments 
Changes in carrying amount  

Total at 31.12.2010 

Loans with special 
conditions 

143 
2 
(16) 
11 

140 

ECSC housing 
loans 
26 
- 
(5) 
1 

22 

EUR millions
Total 

169 
2 
(21) 
12 

162 

Loans  with  special  conditions  are  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 14.507%. 

2.4.2  Loans granted from borrowed funds 

Total at 31.12.2009 
New loans 
Repayments 
Exchange differences 
Changes in carrying amount  

Total at 31.12.2010 

Amount due < 1 year 

Amount due > 1 year 

MFA 

587 
- 
(84) 
- 
- 

503 

- 

503 

Euratom 
loans 
484 
- 
(17) 
2 
- 

469 

- 

469 

BOP 

9 303 
2 850 
- 
- 
93 

12 246 

2 004 

10 242 

ECSC in 
liquidation 
261 
- 
- 
7 
(4) 

264 

- 

264 

EUR millions
Total 

10 635 
2 850 
(101) 
9 
89 

13 482 

2 004 

11 478 

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

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

31.12.2010 

0.99%-4.54%
0.96313%-5.76%
2.375%-3.625%
0.556%-5.8103%

31.12.2009  
0.9625%-4.54%
1.071%-5.76%
3.125%-3.625%
0.346%-5.8103%

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. At 31 December 2010, EUR 300 million of 
loan agreements have been entered into by the Commission but not yet drawn down by the other party before 
the  year-end.  The  Commission  has  not  received  third-party  guarantees  for  these  loans,  but  they  are 
guaranteed by the Guarantee Fund (see note 2.3.3). 

31

 
 
                     
 
 
 
 
 
 
 
             
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

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. Guarantees from third-
parties of EUR 466 million (2009: EUR 481 million) have been received in respect of these loans. 

Balance of Payment (BOP) loans 
The BOP facility, a policy based financial instrument, has been reactivated during the current economic and 
financial  crisis  to  provide  medium-term  financial  assistance  to  Member  States  of  the  EU.  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 outstanding amount of loans to be granted is EUR 50 billion. These 
loans are guaranteed by the EU general budget. 

Between  November  2008  and  end  2010,  loans  amounting  to  EUR  14.6  billion  were  granted  to  Hungary, 
Latvia  and  Romania,  of  which  EUR  12.05  billion have  been  disbursed  by  the end  of  2010.  The  following 
table shows the disbursement and maturity dates for the different BOP loan instalments already disbursed: 

Hungary 

Latvia 

Romania 

EUR millions
Total 

Disbursed in 2008: 

- With maturity Nov. 2011 

Disbursed in 2009: 

- With maturity April 2014 
- With maturity Nov. 2014 
- With maturity Jan. 2015 
- With maturity April 2016 

Disbursed in 2010: 

- With maturity Sept. 2017 
- With maturity May 2019 
- With maturity Oct. 2025 

Loans disbursed at 31.12.10 

Total loans granted 

2 000 

- 
2 000 
- 
1 500 

- 
- 
- 

5 500 

6 500 

Undrawn amounts at 31.12.10 

Expired 

- 

1 000 
- 
1 200 
- 

- 
500 
200 

2 900 

3 100 

200 

- 

- 
- 
1 500 
- 

1 150 
1 000 
- 

3 650 

5 000 

1 350 

2 000 

1 000 
2 000 
2 700 
1 500 

1 150 
1 500 
200 

12 050 

14 600 

1 550 

It should be noted that the BOP assistance programme for Hungary expired in November 2010.  

EFSM 
Since disbursements under the European Financial Stability Mechanism ("EFSM") only took place after 31 
December 2010, the details on these loans are given in Note 9. 

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. 

32

 
 
 
 
 
             
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.5 

LONG-TERM PRE-FINANCING 

 Annual Accounts of the European Union 2010 

Pre-financing (see note 2.5.1) 
Prepaid expenditure (see note  2.5.2) 
Total Long-term Pre-financing  

31.12.2010 

40 298 
3 820 
44 118 

EUR millions

31.12.2009 
(Restated) 
39 750 
1 794 
41 544 

2.5.1   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) 

31.12.2010 
40 298 
9 123 

EUR millions

31.12.2009 
39 750 
9 077 

Total Pre-financing  

49 421 

48 827 

Guarantees received in respect of pre-financing: 
These  are  guarantees  that  the  European  Commission  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 2010 the "nominal" value of guarantees received in 
respect of pre-financing amounted to EUR 1 227 million while the "on-going" value of those guarantees was 
EUR 1 059 million (2009: EUR 936 million and EUR 724 million respectively). 

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)  –  the 
amount of pre-financing paid out in 2010 totalled EUR 3.2 billion (2009: 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  PGF  thus  guarantees  the  financial  interest  of  both  the 
Commission and the participants. At 31 December 2010 EUR 866 million has been contributed to the PGF 
by the participants (2009: EUR 561 million) – see also note 11. 

LONG-TERM PRE-FINANCING                     

EUR millions

Management type 

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

31.12.2010 
1 695 
620 
441 
37 055 
487 
0 

31.12.2009 
1 148 
486 
347 
37 199 
568 
2 

Total 

40 298 

39 750 

33

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

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. 

2.5.2   Prepaid expenditure 

Financial Engineering Instruments 

Total 

31.12.2010 

3 820 

3 820 

EUR millions

31.12.2009 
(Restated) 
1 794 

1 794 

Under the framework of the cohesion and rural development programmes 2007-2013, payments can be made 
from the EU Budget to Member States so as to contribute to Financial Engineering Instruments (be it in the 
form of loans, guarantees or equity investments) set up and managed under the responsibility of the Member 
State.  However,  the  basic  legal  acts  do  not  oblige  the  Member  States  to  provide  periodic  reports  to  the 
Commission on the use of these funds. It has been noted that while such payments had, up to and including 
2010, been originally accounted for as expenses in the Commission's accounting system,not all the monies 
have been used by the Instrument.It is, therefore more appropriate to classify them as assets on the balance 
sheet (prepaid expenditure).  

It  has  also  been  noted  that,  given  the  intended  purpose  of  these  amounts,  their  use  cannot  be  determined 
simply by examining a basic source of information like the account statements of the Instrument since, for 
example,  the  amounts  used  as  guarantees  remain  blocked  on  the  Instruments'  bank  accounts  and  the  loans 
reimbursed to the Instrument become available for new loans. Since the Member States are not required to 
report specifically on these funds, and since it would not be cost-effective for the Commission to collect such 
information  itself,  so  as  to  properly  reflect  in  the  financial  statements  the  use  of  these  amounts  during  the 
programming  period,  it  has  been  necessary  to  make  estimations.  The  most  reliable  method  available,  and 
thus the approach used, is charging the expenses to the economic outturn account on a straight line basis over 
the programming period up to 31/12/2015, that being the last date when such expenditure is allowable.    

To achieve this objective, the Commission requested the necessary information from Member States during 
early  2011  so  as  to  estimate  and  then  recognise  the  unused  amounts  on  the  balance  sheet  at  31  December 
2010. This total amount is split between amounts that the Member States expect to use during 2011 (shown 
in note 2.9.2) and amounts that will be used after 2011, shown in the table above. 

In  accordance  with  the  EU  accounting  rules,  and  internationally  accepted  accounting  practice,  since  the 
above constitutes a change in accounting policy and the amounts concerned are material, the 2009 balance 
sheet  has  been  restated  in  these  financial  statements  so  as  to  present  comparable  figures  showing  the 
situation as it would have looked had the same accounting treatment been followed last year. The impact on 
2008  was  estimated  to  be  only  EUR  18  million,  and  consequently  this  amount  was  adjusted  against  the 
accumulated deficit in 2009 and no restatement of the 2009 opening balance was made. The impact of this 
restatement on the original 2009 balance sheet is shown below: 

34

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

2009 balance sheet 
originally presented  

Change in 
accounting policy 

2009 balance sheet 
restated 

39 750
-
39 750

9 077
-
9 077

3 912

100 859

(145 585)

(44 726)

3 323
(52 506)
4 457
(44 726)

-
1 794
1 794

-
359
359

295

2 448

-

2 448

-
18
2 430
2 448

39 750
1 794
41 544

9 077
359
9 436

4 207

103 307

(145 585)

(42 278)

3 323
(52 488)
6 887
(42 278)

Long-term pre-financing: 
Pre-financing 
Pre-paid expenditure 

Short-term pre-financing: 
Pre-financing 
Pre-paid expenditure 

Short-term receivables: 
Accrued 
deferred charges 

income 

& 

Total assets 

Total liabilities 

Net Assets 

Accumulated  Result  & 
Reserves 
Reserves 
Accumulated deficit 
Result current year 

2.6 

LONG-TERM RECEIVABLES 

Member States 
ECSC staff loans 
Guarantees and deposits 
Other 

Total   

EUR millions 

31.12.2010 

31.12.2009 

14 
9 
14 
3 

40 

26 
10 
17 
2 

55 

Amounts to be received from Member States refer to amounts due to the ECSC in liquidation from former 
accession countries. From the total tong-term receivables EUR 14 million (2009: EUR 26 million) relates to 
non-exchange transactions. 

CURRENT ASSETS 

2.7 

INVENTORIES 

Description 

31.12.2010 

Scientific materials 
Other 

TOTAL 

71 
20 

91 

35

EUR millions 

31.12.2009 
62 
15 

77 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

2.8  

SHORT-TERM INVESTMENTS 

Short-term Available-for-sale assets                     

ECSC in liquidation 
Risk Sharing Finance Facility 
Loan Guarantee Instrument for TEN-T projects 
BUFI investments 
Other 

31.12.2010 
1 283 
419 
111 
515 
3 

EUR millions

31.12.2009 
1 483 
244 
61 
0 
3 

Total 

2 331 

1 791 

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. 

Regarding the ECSC in liquidation amounts, all AFS investments are debt  securities denominated in EUR 
and quoted in an active market. At 31 December 2010 debt securities (expressed at their fair value) reaching 
final maturity in the course of 2010 amount to EUR 294 million (2009: EUR 242 million). 

While  there  have  been  acquisitions  in  both  the  Risk  Sharing  Finance  Facility  and  the  Loan  Guarantee 
Instrument for TEN-T Projects (see also note 5.1.2), the large increase from the previous year is due mainly 
to  the  investment  of  provisionally  cashed  fines  amounts  in  a  specifically  created  fund  managed  by  DG 
ECFIN (BUFI). In previous years, these amounts would have been held in specific bank accounts – see note 
2.11, restricted cash. 

2.9  

SHORT-TERM PRE-FINANCING 

Pre-financing (see note 2.9.1) 
Prepaid expenditure (see note  2.9.2) 
Total short-term pre-financing  

2.9.1  Pre-financing 

31.12.2010 

9 123 
955 
10 078 

EUR millions

31.12.2009 
(Restated) 
9 077 
359 
9 436 

Management type 

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

31.12.2010 
3 038 
2 368 
536 
2 177 
894 
110 

EUR millions 
31.12.2009 
2 924 
1 990 
700 
2 550 
832 
81 

Total 

9 123 

9 077 

The  decrease  in  short-term  pre-financing  under  shared  management  is  due  to  the  winding  down  of  the 
Solidarity Fund. Although pre-financing instalments were paid in 2010 for new projects (programmes related 
to the period 2007-2013), they were classified under long-term assets as explained in note 2.5. The increase 
in short-term pre-financing under the indirect and direct centralised management type is due to the increased 
activities, mainly in the research and development fields. 

36

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.9.2   Prepaid expenditure 

 Annual Accounts of the European Union 2010 

Financial Engineering Instruments 

Total 

31.12.2010 

955 

955 

EUR millions

31.12.2009 
(Restated) 
359 

359 

As  explained  under  note  2.5.2,  these  amounts  relate  to  payments  made  to  Member  States  under  the 
framework of the cohesion and rural develoment programmes 2007-2013, so as to establish or contribute to 
Financial  Engineering  Instruments,  but  which  have  not  yet  been  used  by  the  instrument  at  year-end.  The 
above amounts are expected to be used during 2011. 

2.10   SHORT-TERM RECEIVABLES 

Loans and term deposits 
Current receivables 
Sundry receivables  
Accrued income and deferred charges 

31.12.2010 

2 170 
6 786 
20 
4 525 

EUR millions 

31.12.2009 
restated 
216 
4 519 
16 
4 207 

Total   

13 501 

8 958 

The total short-term receivables contain an estimated EUR 11 009 million (2009: 8 415 million) relating to 
non-exchange transactions. 

2.10.1  Loans and term deposits 

These amounts concern primarily BOP loans of EUR 2 004 million with remaining final maturities less than 
12  months  after  the  balance  sheet  date  (see  note  2.4  above).  Also  included  under  this  heading  are  term 
deposits of EUR 166 million, primarily relating to the ECSC in liquidation. 

2.10.2   Current receivables 

Account Group 

At 31.12.2010 

At 31.12.2009 

Gross amount  Write down

Net Value  Gross amount Write down  Net Value 

Customers 
Fines 
Member States 
Others 

Total   

207 
4 584 
4 011 
96 

8 898 

(79) 
(406) 
(1 625) 
(2) 

(2 112) 

128 
4 178 
2 386 
94 

6 786 

277 
3 370 
2 198 
76 

5 921 

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

(1 402) 

201 
3 237 
1 007 
74 

4 519 

EUR millions

Customers 
These  are  recovery  orders  entered  in  the  accounts  at  31  December  2010  as  established  entitlements  to  be 
recovered and not already included under other headings on the assets side of the balance sheet.  

Fines 
This concerns amounts to be recovered relating to fines issued by the Commission. The increase in the write-
down  from  last  year  is  primarily  explained  by  the  reduction  during  2011  of  fines  decided  before  31 
December 2010. Additionally, the write-down takes into account 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.  Guarantees  totalling  EUR  2  585  million  had  been  received  for  the  fines  outstanding  at  31 

37

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

December 2010 (2009: EUR 2 952 million) in respect of these receivables. It should be noted that EUR 1 
771 million of the above amounts were due for payment after 31 December 2010. 

Receivables from Member States 
EAGF and Rural Development receivables 
This item primarily covers the amounts owed by beneficiaries of EAGF at 31 December 2010, as declared 
and  certified  by  the  Member  States  at  15  October  2010,  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  2010.  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. Please note also that the 
write-down method has been adjusted in 2010 with an impact on both income and expenditure which has a 
neutral effect on the net amount – see note 3.2.3. Following the new method, the receivables are booked for 
the nominal value and the value reduction is based on statistical analysis (recovery rate). 

Own resources receivables 
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  811  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 30 million of recovery of expenses and EAGF advances 
of EUR 199 million compared to EUR 72 million and EUR 8 million respectively in 2009. 

EAGF and Rural Development receivables 

EUR millions 

31.12.2010 

31.12.2009 

EAGF 
TRDI 
SAPARD 
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 

2.10.3  Accrued income and deferred charges 

Accrued income 
Deferred charges 
Other 

Total   

38

1 130 
19 
146 
(814) 
481 
46 

81 
1 285 
(811) 
391 
946 
913 

2 386 

627 
- 
- 
(350) 
277 
38 

89 
1 260 
(841) 
25 
533 
159 

1 007 

31.12.2010 

3 445 
1 061 
19 

4 525 

EUR millions 

31.12.2009 
restated 
3 655 
525 
27 

4 207 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The main amount under this heading is accrued income: 

 Annual Accounts of the European Union 2010 

Own resources 
Agricultural assigned revenue Nov & Dec 
EAGF: non-executed conformity correction 
decisions 
Cohesion, Regional & Rural Development 
Funds: financial corrections 
Other accrued income 

Total accrued income   

31.12.2010 
2 657 
72 
520 

43 

153 

3 445 

EUR millions 

31.12.2009 
2 209 
940 
0 

404 

102 

3 655 

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

The most significant amounts included as deferred charges relate to funds transferred by Member States into 
Financial  Engineering  Instruments  which  were  yet  to  be  declared  to  or  reimbursed  by  the  Commission  at 
year-end. At 31 December 2010 these amounted to EUR 858 million (2009: EUR 295 million). It should be 
noted  that  the  amount  for  2009  has  been  restated  -  see  note  2.5.2  for  more  details.  Also  included  under 
deferred charges are amounts totalling EUR 182 million of which the main amounts are anticipated payments 
of  EUR  50  million  paid  under  bilateral  fisheries  agreements  with  third  countries,  EUR  41  million  for  the 
European school and EUR 44 million for office rental.  

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 

31.12.2010 

31.12.2009 

EUR millions 

10 123 
1 150 
39 
1 
1 670 
12 983 
9 080 

22 063 

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

23 372 

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. 

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. At year-end, EUR 131 
million had been committed to, but not yet been drawn down by the other parties. 

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. 

39

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

NON CURRENT LIABILITIES 

2.12  EMPLOYEE BENEFITS 

Pensions – Staff  
Pensions – others  
Joint Sickness Insurance Scheme 

31.12.2010 
32 801 
840 
3 531 

EUR millions 

31.12.2009 
33 316 
663 
3 263 

Total 

37 172 

37 242 

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 to 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 liabilities of the pension scheme were assessed on the basis of the number of staff and retired staff at 31 
December 2010 and on the rules of the Staff Regulations applicable at this date. This valuation was carried 
out  in  accordance  with  the  methodology  of  IPSAS  25  (and  therefore  also  EU  accounting  rule  12).  The 
method  used  to  calculate  this  liability  is  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 
2008 International Civil Servants Life Table 

31.12.2010 

31.12.2009 

4.6% 
2.1% 
2.4% 
84%/38% 
0% 
Yes 

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

Liabilities cover the rights previously defined for the following persons:  
1.  Staff in active employment at 31/12/2010 in all Institutions and Agencies included in the scheme;  
2.  Staff in a deferred situation, i.e. who have temporally or definitively left the Institutions but leaving their 

pension rights in the pension scheme (and having accumulated at least 10 years of service); 

3.  Former officials and other servants benefiting from a retirement pension;  
4.  Former officials and other servants benefiting from a invalidity pension; 
5.  Former officials and other servants benefiting from an invalidity allowance; 
6.  The recipients of a survivor pension (widows or widowers, orphans, dependants).  

The principal points to note are (see also table below for main movements):  
- 

The gross actuarial liability was valued at EUR 36 639 million at 31 December 2010 (2009: EUR 37 
215 million). Added to this is a co-efficient corrector effect of EUR 1 063 million (2009: EUR 1 079 
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 
2010 has thus been estimated at EUR 32 801 million. 
The number of members of the staff pension scheme increased by 1 578 individuals. 

- 

40

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.12.2   Pensions – Others 

 Annual Accounts of the European Union 2010 

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 Members of the 
European Parliament. 

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. The gross liability has been valued at EUR 3 791 
million and plan assets of EUR 260 million are deducted from the gross liability to arrive at the net amount. 
The discount rate and the general salary growth used in the calculation are the same as those used in the staff 
pension valuation. 

Movement in Gross Employee Benefits liability 

Gross Liability at 31 December 2009 
Service/normal cost  
Interest cost 
Benefits paid 
Actuarial gains 
Change due to newcomers 

Staff pension 
liability 
37 215 
1 331 
1 709 
(1 131) 
(2 566) 
81 

EUR millions 

Sickness 
Insurance 
3 535 
 188 
 169 
(95) 
(6) 
- 

Gross Liability at 31 December 2010 

36 639 

3 791 

2.13  LONG-TERM PROVISIONS 

Amount at 
31.12.2009 

Additional 
provisions 

Legal cases 
Nuclear site 
dismantlement 
Financial 
Other 

Total 

413 
908 

76 
72 

1 469 

30 
0 

38 
18 

86 

Unused 
amounts 
reversed 
(136) 
0 

0 
(9) 

(145) 

Amounts 
used 

Transfer to 
short-term 

Change in 
estimation 

EUR millions
Amount at 
31.12.2010 

(1) 
(3) 

0 
(55) 

(59) 

0 
(21) 

(30) 
(6) 

(57) 

0 
21 

2 
0 

23 

306 
905 

86 
20 

1 317 

Legal cases 
This is the estimate of amounts that will probably have to be paid out after 2011 in relation to a number of 
ongoing  legal  cases.  The  largest  portion,  EUR  300  million,  concerns  court  cases  pending  at  31  December 
2010 in relation to financial corrections for EAGF 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 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 (using the Euro zero-coupon swap curve). At 31 December 2010, 
this  resulted  in  a  total  provision  of  EUR  926  million  split  between  amounts  expected  to  be  paid  in  2011 
(EUR 21 million) and afterwards (EUR 905 million). In view of the estimated duration of this programme 
(around 20 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. 

41

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

Financial provisions 
These  concern  provisions  which  represent  the  estimated  losses  that  will  be  incurred  in  relation  to  the 
guarantees given under the SME Guarantee Facility 1998, the SME Guarantee Facility 2001 and the SME 
Guarantee  Facility  2007  under  CIP,  where  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.  Long-term  financial  provisions  are  discounted  to 
their net present value (using the Euro Swap annual rate). 

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 12 million (2009: EUR 60 
million) split between amounts expected to be settled in 2011 (EUR 10 million) and later (EUR 2 million). 

2.14  LONG-TERM FINANCIAL LIABILITIES 

Total at 31.12.2009 
New borrowings 
Repayments 
Exchange differences 
Changes in carrying amount  

Total at 31.12.2010 

Amount due < 1 year 

Amount due > 1 year 

MFA 

587 
- 
(84) 
- 
- 

503 

- 

503 

Euratom 
loans 
484 
- 
(17) 
2 
- 

469 

- 

469 

BOP 

9 303 
2 850 
- 
- 
93 

12 246 

2 004 

10 242 

ECSC in 
liquidation 
225 
- 
- 
6 
- 

231 

- 

231 

EUR millions
Total 

10 599 
2 850 
(101) 
8 
93 

13 449 

2 004 

11 445 

This  heading  includes  borrowings  due  by  the  European  Union  maturing  in  over  one  year.  Borrowings 
include debts evidenced by certificates amounting to EUR 13 211 million (2009: EUR 10 324 million). The 
changes in carrying amount correspond to the change in accrued interests. 

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

Borrowings 

31.12.2010 

31.12.2009 

Macro Financial Assistance (MFA) 
Euratom 
BOP 
ECSC in liquidation 

0.99%-4.54%
0.987%-5.6775%
2.375%-3.625%
0.556%-9.2714%

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

2.15  OTHER LONG-TERM LIABILITIES 

Finance Leasing debts 
Buildings paid for in instalments 
Other  

Total   

31.12.2010 
1 672 
382 
50 

EUR millions

31.12.2009 
1 736 
395 
47 

2 104 

2 178 

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. 

42

 
 
 
 
 
             
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

CURRENT LIABILITIES 

2.16  SHORT-TERM PROVISIONS 

Amount at 
31.12.2009

Additional 
provisions 

Legal cases 
Nuclear site 
dismantlement 
Financial 
Other 

Total 

30 
22 

128 
33 

213 

7 
0 

21 
10 

38 

Unused 
amounts 
reversed 
(7) 
0 

(3) 
(5) 

(15) 

Amounts 
used 

(1) 
(22) 

(38) 
(20) 

(81) 

Transfers 
from long 
term 
0 
21 

30 
6 

57 

Change in 
estimation 

EUR millions
Amount at 
31.12.2010

0 
0 

2 
0 

2 

29 
21 

140 
24 

214 

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

2.17  SHORT-TERM FINANCIAL LIABILITIES 

This  heading  includes  BOP  borrowings  of  EUR  2  004  million  (see  note  2.14)  that  mature  during  the  12 
months following the balance sheet date (2009: EUR 40 million relating to MFA).  

2.18  ACCOUNTS PAYABLE 

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

31.12.2010 
78 
17 615 
97 
66 739 

EUR millions 

31.12.2009 
71 
15 260 
133 
78 420 

Total   

84 529 

93 884 

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 
Estimated non-eligible amounts 

Total   

31.12.2010 

31.12.2009 

EUR millions 

65 
13 

78 

59 
12 

71 

31.12.2010 
17 035 
1 292 
(712) 

EUR millions 

31.12.2009 
14 903 
944 
(587) 

17 615 

15 260 

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 

43

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

accrued  charges  (see  note  2.18.3  below),  while  the  non-eligible  parts  remain  open  on  the  “Estimated  non-
eligible amounts” accounts. In order not to overestimate assets and liabilities, it was decided to present the 
net amount under current liabilities. 

Member States 
The primary amounts here relate to EUR 16 924 million (2009: EUR 11 160 million) in unpaid cost claims 
for Structural Fund actions. 

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). 

Estimated non-eligible amounts 
Payables are reduced by EUR 712 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:  

31.12.2010 
66 326 
407 
6 

EUR millions 

31.12.2009 
76 435 
1 976 
9 

66 739 

78 420 

31.12.2010 

31.12.2009 

EUR millions 

EAGF accrued charges: 

Expenses 16/10/2010 to 31/12/2010 
Direct Aid 
Sugar restructuring 
Others 
Total EAGF: 

Structural Actions accrued charges: 

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

Other accrued charges: 

R&D 
Other 
Total Others: 

Total accrued charges   

33 015 
10 703 
400 
(303) 
43 815 

10 792 
116 
3 337 
1 557 
74 
2 182 
18 058 

1 267 
3 186 
4 453 

66 326 

32 087 
12 195 
735 
(55) 
44 962 

9 076 
347 
11 777 
980 
3 
5 411 
27 594 

1 687 
2 192 
3 879 

76 435 

There is a general trend of decreasing expenditure for the Structural Actions, due to the fact that the 2000-
2006 programmes are now in the closing phase.  

The large amount of deferred income at 31 December 2009 was due to the advance payment of 2010 own 
resources contributions by two Member States. 

44

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

NET ASSETS & RESERVES 

2.19  RESERVES 

Fair value reserve 
Other reserves: 

Guarantee Fund 
Revaluation reserve 
Borrowing and lending activities 
Other 
Total 

Total   

2.19.1   Fair value reserve 

31.12.2010 

31.12.2009 

EUR millions 

(61) 

1 746 
57 
1 525 
217 
3 545 

3 484 

69 

1 472 
57 
1 511 
214 
3 254 

3 323 

In accordance with the accounting rules, the adjustment to fair value of available-for-sale assets is accounted 
for through the fair value reserve. In 2010 amounts of EUR 48 million have been taken out of the fair value 
reserve and recognised in the economic outturn account relating to available-for-sale assets. 

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. 

2.20  AMOUNTS TO BE CALLED FROM MEMBER STATES 

Amounts to be called from Member States at 31 December 2009 (restated) 

Return of 2009 budget surplus to Member States 
Movement in Guarantee Fund reserve 
Other reserve movements 
ECSC in liquidation: transfer 2009 result to reserves 
Economic outturn (surplus) for the year 

Total amounts to be called from Members States at 31 December 2010 

Split between: 

Employee Benefits 
Other amounts 

EUR millions 

Amount 

45 601 
2 254 
273 
21 
14 
(17 232) 

30 931 

37 172 
(6 241) 

This amount, which is not classified as a receivable from the Member States, is equivalent to the sum of the 
accumulated deficit resulting from previous years (EUR 48 163 million) and the economic surplus for 2010 
45

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

(EUR 17 232 million). The purpose of “amounts to be  called from Member States” is to reflect the actual 
situation of an annual budget process which funds multi-annual actions. The reserves (EUR 3 484 million), 
which have to be used in accordance with their own specific regulations and rules, are deliberately not taken 
into account for this purpose.  

In essence, this amount represents that part of the expenses already incurred by the EU up to 31 December 
2010 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 2010 was EUR 33 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.  

It is essentially only the employee benefits obligations of the Commission 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 2011  
Long-term: amounts to be paid after 2011 

EUR millions 
Amount 
1 278 
35 894 

Total employee benefits liability at 31.12.2010 

37 172 

There was a EUR 14.7 billion decrease in the amounts to be called from Members States compared to last 
year. This decrease is due mainly to: (1) a EUR 9.4 billion decrease in accounts payable (see note 2.18), (2) 
an increase of EUR 2 billion in short-term financial liabilities (note 2.17), (3) an increase of EUR 2.6 billion 
in long-term pre-financing, and (4) a EUR 4.6 billion increase in short-term receivables (note 2.10). 

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. 

46

 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

3. NOTES TO THE ECONOMIC OUTTURN ACCOUNT 

3.1  OWN RESOURCE AND CONTRIBUTIONS REVENUE 

Own resource revenue: 
GNI resources 
VAT resources 
Traditional own resources: 

Custom duties 
Sugar levies 
Total traditional own resources 

Note 
3.1.1 

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

3.1.2 

2010 

91 178 
12 517 

16 065 
150 
16 215 
2 135 
283 

EUR millions
2009 

81 978 
12 795 

14 002 
130 
14 132 
1 399 
233 

Total 

122 328 

110 537 

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  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. 

Compared to 2009, there has been a EUR 9.2 billion increase in the GNI based own resource revenue, which 
reflects the need to finance higher payments appropriations in 2010. There was a EUR 2 billion increase in 
custom duties caused primarily by an increase in imports. 

3.1.2  Budgetary adjustments 

The budgetary adjustments include the budget surplus from 2009 (EUR 2 254  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  2010.  Additionally,  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 112 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. 

47

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
3.2  OTHER OPERATING REVENUE 

 Annual Accounts of the European Union 2010 

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 

2010 

3 077 
25 

49 
11 
71 
1 776 
1 907 

1 073 
13 
121 
1 207 

157 
460 
1 355 
1 972 

8 188 

EUR millions
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 

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 25 million (2009: EUR 99 million plus sugar levies of EUR 606 
million).  Milk  levies  are  a  market  management  tool  aimed  at  penalising  milk  producers  who  exceed  their 
reference quantities. As it is not 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 continued 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,  thus 
revenues are zero for 2010. 

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. 

48

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual Accounts of the European Union 2010 

The main amount, EUR 1 775 million, relates to shared management and is made up of EUR 1 331 million 
concerning the European Agricultural Guarantee Fund (EAGF), EUR 19 million for TRDI, EUR 146 million 
for SAPARD and EUR 279 million for Structural Actions. 

(a) Agriculture: EAGF 
In the framework of EAGF, amounts accounted for as revenue of the year under this heading are EUR 1 331 
million, made up as follows: 
- 
- 

conformity corrections decided during the year, EUR 1 032 million;  
fraud and irregularities EUR 299 million: reimbursements declared by Member States and recovered 
during the year, EUR 178 million, plus the increase in the outstanding amounts declared by Member 
States to be recovered at year-end concerning fraud and irregularities, EUR 121 million (EUR 1 130 
million minus the write-down adjustment of EUR 382 million at year-end 2010 compared to EUR 627 
million at year-end 2009) – see also note 2.10.2.  

(b) Structural Actions   
The recovery of expenditure under the Structural actions included under this heading amounted to EUR 279 
million (2009: EUR 613 million). The main amounts in this sub-heading are the recovery orders issued by 
the Commission to recover undue expenditure made in previous years for an amount of EUR 610 million and 
the decrease of the accrued income at year-end of EUR 377 million. 

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. 

3.2.4  Revenue from administrative operations 

This revenue arises 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  430  million  (2009:  EUR  376  million)  relates  to  amounts  received  from  accession 
countries. 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. There was a net exchange gain for the year of EUR 21 million (2009: EUR 185 million). 

3.3 

ADMINISTRATIVE EXPENSES 

Staff expenses 
Depreciation and impairment 
Other administrative expenses 
Total 

2010 
5 171 
384 
3 059 
8 614 

EUR millions

2009 
4 898 
436 
2 799 
8 133 

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). 

49

 
 
 
 
 
 
 
 
 
 
 
 
3.4  OPERATING EXPENSES 

 Annual Accounts of the European Union 2010 

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 

2010 

10 123 
4 045 
933 
85 432 
1 868 
102 401 

68 
439 
856 
1 363 

EUR millions
2009 
restated 

8 744 
3 605 
137 
87 251 
1 655 
101 392 

199 
432 
481 
1 112 

103 764 

102 504 

The  European  Union's  operating  expenditure  covers  the  various  headings  of  the  financial  framework  and 
takes  different  forms,  depending  on  how  the  money  is  paid  out  and  managed.  The  majority  of  the 
expenditure  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). 

For shared management, the decrease in 2010 is due mainly to the closing of the programmes for the period 
2000-2006  (ESF)  and  to  the  fact  that  for  FEAGA  the  execution  has  diminished  in  2010  compared  to  the 
previous  year.  This  decrease  is  partly  compensated  by  the  Structural  Actions  for  the  programming  period 
2007-2013, which already reached a normal level in 2009, after a slow start-up. The increase of expenditure 
under centralised management is due to research and development actions. 

As explained in note 2.5.2, in 2010 the Commission changed its accounting policy for certain expenditure 
under  cohesion  and  rural  development.  Since  the  amounts  concerned  are  material,  the  Commission  is 
required  by  its  accounting  rules  to  restate  the  relevant  2009  figures  so  as  to  present  comparable  figures 
showing the situation as it would have looked had the same accounting treatment been followed last year. 
The impact of this restatement on the original 2009 economic outturn is shown below: 

Operating revenue 

Operating expenses: 
Primary operating 
expenses: 

Shared management 
Total operating expenses 

Surplus  from  operating 
activities 

Economic Outturn 

2009 accounts 
originally presented 
118 069

Change in 
accounting policy 
-

EUR millions 

2009 accounts 
restated 

118 069

2 430
2 430

2 430

2 430

(87 251)
(110 637)

7 432

6 887

(89 681)
(113 067)

5 002

4 457

50

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.4.2  Other operating expenses 

 Annual Accounts of the European Union 2010 

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.  

Under  the  “other”  sub-heading  there  was  a  significant  increase  in  amounts  written  down  on  Commission 
debtors – EUR 365 million compared to EUR 26 million in 2009. This is due mainly to specific reductions 
made relating to fines decisions (EUR 273 million) and EAGF & Rural development write downs totalling 
EUR 82 million. 

Research and Development costs: 
Included as expenses in 2010 were the following costs: 

Research costs 
Non-capitalised development costs 

Recognised as an expense 

EUR millions 
2010 
295 
157 

452 

3.5 

FINANCIAL REVENUE 

Dividend income  
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 

2010 
1 

42 
382 
0 
100 
394 
110 
2 
1 030 

11 
83 
94 
1 
52 
1 178 

EUR millions

2009 

14 

59 
132 
2 
100 
265 
158 
3 
719 

10 
76 
86 
10 
6 
835 

51

 
 
 
 
 
 
 
 
 
 
 
 
 
3.6 

FINANCIAL EXPENSES 

 Annual Accounts of the European Union 2010 

Interest expenses: 

Leasing 
On swaps 
On borrowings 
Other 
Total 

Other financial expenses: 

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

Exchange losses 
Total 

2010 

EUR millions

2009 

93 
0 
380 
23 
496 

60 
55 
5 
1 
42 
163 
2 
661 

95 
2 
248 
20 
365 

39 
73 
15 
0 
57 
184 
45 
594 

3.7 

SHARE OF NET DEFICIT OF JOINT VENTURES & ASSOCIATES 

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

3.8 

REVENUE FROM NON-EXCHANGE TRANSACTIONS 

In  2010  EUR  129  597  million  revenue  from  non-exchange  transactions  have  been  recognised  in  the 
economic outturn account. 

3.9 

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  can  be  grouped  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.  

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 
with the net result in the economic outturn account.  

52

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SEGMENT REPORTING – SUMMARY 

  Activities within 
the EU 

Activities outside 
the EU 

Services & Other 

ECSC in 
Liquidation 

Other Institutions

Consolidation 
eliminations 

EUR millions 

TOTAL 

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 

3 077
25
1 849
60
2 445
7 456

(1 945)

(88)
(904)
( 2 937)

(7 115)
(3 821)
(113)
(85 173)
(382)
(947)
(97 551)
(100 488)
(93 032)

0
0
89
36
10
135

(824)

(13)
(318)
(1 155) 

(3 597)
(213)
(820)
(29)
(1 486)
(23)
(6 168)
(7 323)
(7 188)

0 
0 
1 
912 
575 
1 488 

(1 073) 

(119) 
(902) 
(2 094) 

(180) 
(45) 
0 
(230) 
0 
(448) 
(903) 
(2 997) 
(1 509) 

0
0
0
0
3
3

0

0
0
0

0
0
0
0
0
(59)
(59)
(59)
(56)

0
0
0
347
1
348

(1 353)

(164)
( 1 234)
(2 751)

0
0
0
0
0
(2)
(2)
(2 753)
(2 405)

0
0
(32)
(148)
(1 062)
(1 242)

24

0
299
323

769
34
0
0
0
116
919
1 242
0

3 077 
25 
1 907 
1 207 
1 972 
8 188 

(5 171) 

(384) 
(3 059) 
(8 614) 

(10 123) 
(4 045) 
(933) 
(85 432) 
(1 868) 
(1 363) 
(103 764) 
(112 378) 
(104 190) 
122 328 
18 138 
517 
(1 003) 
(420) 
17 232 

53 

 
 
 
 
 
 
 
 
 
 
 
 
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 

SEGMENT REPORTING – ACTIVITIES WITHIN THE EU 

Economic & 
Financial affairs 

Enterprise & 
Industry 

Competition 

Employment 

Agriculture 

Transport & 
Energy 

Environment 

Research 

Information Society 

EUR millions 

0
0
0
0
4
4
(57)
(51)
0
(6)
(105)
(105)
0
0
0
0
0
(162)
(158)

12
0
1
0
402
415
(178)
(128)
(8)
(42)
(650)
(347)
(90)
0
0
(166)
(47)
(829)
(414)

  Joint Research 

Fisheries 

Centre 

3 065
0
0
0
0
3 065
(82)
(75)
0
(7)
(305)
1
0
0
0
0
(306)
(387)
2 678
Internal Market

0 

0 
15 
0 
39 
54 
(108) 
(82) 
(0) 
(26) 
(6 077) 
(176) 
(7) 
(24) 
(5 850) 
(3) 
(17) 
(6 185) 
(6 131) 

0

25
1 603
0
135
1 763
(115)
(95)
0
(20)
(56 176)
(31)
0
0
(56 037)
0
(108)
(56 291)
(54 528)

0

0
12
1
184
197
(268)
(190)
(11)
(67)
(3 328)
(1 312)
(1 750)
(5)
0
(197)
(64)
(3 596)
(3 399)

0

0
1
1
39
41
(110)
(80)
(1)
(29)
(224)
(207)
0
0
0
0
(17)
(333)
(292)

Regional Policy 

Taxation & 
Customs 

Education & 
Culture 

Health & 
Consumer 
protection 

0

0
32
1
624
657
(391)
(218)
(2)
(171)
(3 238)
(2 436)
(714)
0
0
0
(88)
(3 630)
(2 973)
Justice, Freedom 
& Security 

0
0
0
38
77
115
(341)
(242)
(27)
(72)
(85)
(63)
0
0
0
0
(22)
(426)
(311)

0
0
9
0
7
16
(44)
(35)
0
(9)
(523)
(254)
0
0
(267)
0
(2)
(567)
(551)

0
0
0
0
174
174
(162)
(113)
(4)
(45)
(51)
(10)
0
0
0
0
(41)
(213)
(39)

0 
0 
150 
0 
1 
151 
(71) 
(59) 
0 
(12) 
(22 677) 
(46) 
(8) 
(84) 
(22 524) 
(15) 
0 
(22 748) 
(22 597) 

54 

0
0
0
0
0
0
(94)
(38)
(2)
(54)
(16)
(16)
0
0
0
0
0
(110)
(110)

0
0
9
0
166
175
(195)
(100)
(1)
(94)
(1 445)
(175)
(1 254)
0
0
(1)
(15)
(1 640)
(1 465)

0
0
1
9
337
347
(323)
(197)
(24)
(102)
(615)
(411)
(76)
0
0
0
(128)
(938)
(591)

0
0
2
9
249
260
(273)
(140)
(8)
(125)
(929)
(348)
0
0
(495)
0
(86)
(1 202)
(942)

0 

0 
14 
1 
7 
22 
(125) 
(102) 
0 
(23) 
(1 107) 
(1 179) 
78 
0 
0 
0 
(6) 
(1 231) 
(1 209) 

Total Activities 
within the EU 

3 077 
25 
1 849 
60 
2 445 
7 456 
(2 937) 
(1 945) 
(88) 
(904) 
(97 551) 
(7 115) 
(3 821) 
(113) 
(85 173) 
(382) 
(947) 
(100 488) 
(93 032) 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 

SEGMENT REPORTING – ACTIVITIES OUTSIDE THE EU 

EUR millions 

External Relations 

Trade 

Development 

Enlargement 

Humanitarian Aid 

Total Activities outside the EU 

15
36

5
56
(862)
(577)
(13)
(272)
(2 766)
(1 722)
(171)
(259)
(29)
(574)

(11)
(3 628)

(3 572)

0
0

0
0
(57)
(49)
0
(8)
(7)
(5)
0
0
0
(2)

0
(64)

(64)

10 
0 

1 
11 
(165) 
(144) 
0 
(21) 
(1 387) 
(866) 
(16) 
(95) 
0 
(405) 

(5) 
(1 552) 

(1 541) 

61
0

5
66
(44)
(37)
0
(7)
(1 063)
(531)
(26)
(466)
0
(38)

(2)
(1 107)

(1 041)

3
0

(1)
2
(27)
(17)
0
(10)
(945)
(473)
0
0
0
(467)

(5)
(972)

(970)

89 
36 

10 
135 
(1 155) 
(824) 
(13) 
(318) 
(6 168) 
(3.597) 
(213) 
(820) 
(29) 
(1.486) 

(23) 
(7 323) 

(7 188) 

SEGMENT REPORTING – SERVICES & OTHER 

Press & 
Communication

Anti-Fraud 
Office 

Co-ordination 

Personnel & 
Administration

Eurostat 

Budget 

Audit 

Languages 

Other 

EUR millions 
Total Services & 
Other 

0
0
0
0
(85)
(62)
0
(23)
(37)
(37)
0
0
0
(122)
(122)

0
51
37
88
(52)
(39)
0
(13)
(234)
(4)
0
(230)
0
(286)
(198)

0
0
0
0
(10)
(9)
0
(1)
0
0
0
0
0
(10)
(10)

0
90
53
143
(403)
(316)
(2)
(85)
(15)
0
0
0
(15)
(418)
(275)

0
0
455
455
46
46
0
0
(430)
0
0
0
(430)
(384)
71

1 
912 
575 
1 488 
(2 094) 
(1.073) 
(119) 
(902) 
(903) 
(180) 
(45) 
(230) 
(448) 
(2 997) 
(1 509) 

1
2
(2)
1
(108)
(67)
(2)
(39)
(136)
(91)
(45)
0
0
(244)
(243)

0
5
(1)
4
(54)
(38)
(1)
(15)
(17)
(17)
0
0
0
(71)
(67)

0
0
8
8
(168)
(140)
0
(28)
(2)
(1)
0
0
(1)
(170)
(162)

0
764
25
789
(1 260)
(448)
(114)
(698)
(32)
(30)
0
0
(2)
(1 292)
(503)

55 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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 needs 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 European Union’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 9 080 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. 

56

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

5. CONTINGENT ASSETS & LIABILITIES AND OTHER DISCLOSURES 

CONTINGENT ASSETS 

Guarantees received: 

Performance guarantees 
Other guarantees 
Other contingent assets 
Total Contingent Assets 

31.12.2010 

31.12.2009 

EUR millions

301 
30 
8 
339 

252 
27 
18 
297 

Performance  guarantees  are  sometimes  requested  to  ensure  that  beneficiaries  of  EU  funding  meet  the 
obligations of their contracts with the EU. Other contingent assets relate primarily to possible reimbursement 
of taxes related to Commission buildings. 

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

Note 
5.1 
5.2 
5.3 
5.4 
5.5 

31.12.2010 
22 171 
9 627 
1 772 
458 
4 
34 032 

EUR millions

31.12.2009 
19 330 
11 969 
1 945 
416 
12 
33 672 

5.1  GUARANTEES GIVEN 

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

EUR millions 

Risk Sharing 
31.12.2010 

Non-risk Sharing 

31.12.2010 

Public  
authority 

Private 
 company

Outstanding 
31.12.2010 
Total 

Outstanding 
31.12.2009 

65% guarantee 

3 625 

12 443 

2 149 

70% guarantee 

75% guarantee 

100% guarantee 

87 

0 

0 

2 132 

635 

683 

62 

60 

106 

18 217 

2 281 

695 

789 

14 945 

2 596 

850 

821 

Total 

3 712 

15 893 

2 377 

21 982 

19 212 

The EU budget guarantees loans signed and granted by the EIB from its own resources to third countries at 
31  December  2010  (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 2010 the amount 
outstanding totalled EUR 21 982 million and this, therefore, is the maximum exposure faced by the EU. 

57

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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. 

5.1.2  Other guarantees given 

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

161 
11 
17 
0 
189 

94 
6 
17 
1 
118 

31.12.2010 

EUR millions 

31.12.2009 

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

At  31  December  2010  the  Commission  had  contributed  EUR  515  million  to  the  RSFF.  This  has  been 
invested by the EIB in bonds (EUR 419 million at 31 December 2010), term deposits (EUR 55 million) and 
cash equivalents (EUR 33 million). At end 2010, EUR 2 212 million of loans have been signed and are thus 
covered  by  the  Facility.  A  default  of  EUR  5  million  occurred  during  2009  and  thus  was  charged  to  the 
Facility.  The  amount  included  as  a  contingent  liability  above,  EUR  161  million,  represents  the  estimated 
maximum  loss  at  31  December  2010  that  the  Commission  would  suffer  in  case  of  defaults  on  loans  or 
guarantees given by the EIB within the framework of the RSFF. This represents 7.3% of the total amounts 
guaranteed. It should be noted that the Commission's overall risk is limited to the amount it contributes to the 
Facility. 

Loan Guarantee Instrument for Ten-T Projects (LGTT) 
The Loan Guarantee Instrument for Ten-T Projects (LGTT) issues guarantees so as 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 is a joint financial product of the Commission and the EIB and the TEN-T regulation 
has earmarked EUR 500 million from the EU budget to be allocated during the period 2007-2013. The EIB 
will  allocate  another  EUR  500  million,  so  in  total  the  amount  available  will  be  EUR  1  billion  to  the 
instrument.  

At  31  December  2010  the  Commission  had  contributed  EUR  155  million  to  the  LGTT.  This  has  been 
invested by the EIB in bonds (EUR 111 million at 31 December 2010), term deposits (EUR 36 million) and 
cash (EUR 5 million). At end 2010, EUR 140 million of loans have been signed and are thus covered by the 
guarantee. The amount included as a contingent liability, EUR 11 million, represents the estimated maximum 
loss at 31 December 2010 that the Commission would suffer in case of defaults on loans given by the EIB 
within  the  framework  of  the  LGTT  operations.  This  represents  7.9%  of  the  total  amounts  guaranteed.  It 
should be noted that the Commission's overall risk is limited to the amount it contributes to the Instrument. 

The assets of the RSFF and LGTT instruments are included on the Commission's balance sheet as short-term 
Available-for-sale assets (see note 2.8) and cash (note 2.11). 

58

 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

MEDA 
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 2010, the fund amounts to EUR 27 million that are shown as cash and cash 
equivalents – see note 2.11. The Commission guarantee shown as contingent liability covers EUR 17 million 
of the loans given by the organisations mentioned above. 

5.2 

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 561 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. 

5.3 

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. 

5.4 

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. 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. 

5.5  OTHER CONTINGENT LIABILITIES 

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

OTHER SIGNIFICANT DISCLOSURES 

5.6 

COMMITMENTS AGAINST APPROPRIATIONS NOT YET CONSUMED 

Commitments against appropriations not yet consumed 

31.12.2010 
155 642 

EUR millions 

31.12.2009 
134 689 

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 2010 the budgetary RAL totalled EUR 194 395 million. The 
amount disclosed above is this budgetary RAL less related amounts that have been included as expenses in 
the 2010 economic outturn account. 

59

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.7 

SIGNIFICANT LEGAL COMMITMENTS 

Annual Accounts of the European Union 2010 

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

31.12.2010 
210 638 
263 
130 
513 
390 
3 530 
3 920 
219 384 

EUR millions 

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

These commitments originated because the Commission 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. 

5.7.1  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. 

Financial 
perspective 
amounts 
2007-2013 
(A) 
347 550 
100 549 
10 958 

Legal 
commitments 
concluded
(B) 

Budget 
commitments 
2007-2010
(C) 

346 475
100 549
7 357

189 574
54 759
4 086

Legal 
commitments 
less budget 
commitments 
(=B-C) 
156 901 
45 790 
3 271 

459 057 

454 381

248 419

205 962 

EUR millions 
Maximum 
commitment 
(=A-C) 

157 976
45 790
6 872

210 638

Cohesion policy funds 
Natural Resources 
Instrument for Pre-
Accession Assistance 
Total 

5.7.2  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 winding-up process is on-going. 

5.7.3  Fisheries agreements 

These  are  commitments  totalling  EUR  130  million  entered  into  with  third  countries  for  operations  under 
international fisheries agreements. 

5.7.4  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. 

60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

It  should  be  noted  that  the  Commission  has,  up  to  end  2010  and  including  the  previous  investment  in  the 
GJU,  paid  EUR  1  178  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 ("FOC") of the Galileo programme (from 2008 to 2013) is EUR 2 408 million. 

5.7.5  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 2010, EUR 166 million of expenses have been 
incurred by ESA. 

5.7.6  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. 

5.7.7  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 83 million concerning the renovation costs of buildings 
of the Court of Justice, EUR 76 million concerning building related contracts of the Council, as well as EUR 
434  million  relating  to  building  contracts  of  the  Parliament  and  EUR  446  million  from  the  Commission 
(concerning primarily two major building projects in Luxembourg). The other significant amount included 
here is EUR 2 654 million relating to procurement arrangements of the Fusion for Energy Agency (European 
Joint Undertaking for ITER and the Development of Fusion Energy) in the context of the ITER project. 

5.8  OPERATING LEASE COMMITMENTS 

Description 

Buildings 
IT materials and other equipment 

< 1 year 
350 
12 

Future amounts to be paid 
> 5 years 
1- 5 years 
749 
1 235 
0 
38 

Total 

362 

1 273 

749 

EUR millions

Total 

2 334 
50 

2 384 

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  2010,  EUR  363  million  was  recognised  as  an  expense  in  the  economic  outturn  account  in  respect  of 
operating leases.   

61

 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

6. FINANCIAL CORRECTIONS AND RECOVERIES 

INTRODUCTION 

6.1 
This note provides an overview of the correction of errors and irregularities detected, in particular in that part 
of  the  EU  budget  that  is  implemented  under  the  shared  management  mode  (i.e.  some  80%  of  the  total 
budget). Under shared management, the Commission relies on Member States for the implementation of EU 
programmes  i.e.  the  EU  contribution  is  paid  to  the  Member  States,  generally  to  a  specific  paying  agency, 
which is then responsible for the payments made to beneficiaries. As a result, Member States are the primary 
responsible  for  the  prevention,  detection  and  correction  of  errors  and  irregularities  committed  by  the 
beneficiaries,  while  the  European  Commission  ensures  an  overall  supervisory  role  (i.e.  verifying  the 
effective functioning of Member States' management and control systems). 

6.1.1  Financial corrections  
Financial corrections are the main tool used for the correction of errors and irregularities in the context of 
shared management. Financial corrections are made by the European Commission so as to exclude from EU 
funding  expenditure  that  is  not  in  accordance  with  applicable  rules  and  regulations.  Financial  corrections 
may also be applied following the detection of serious deficiencies in the management and control systems 
of Member States. The final objective of this correction mechanism is to ensure that all expenditure declared 
by the Member State (i.e.  on the basis  of which the  EU contribution is paid) is regular. The issuance of  a 
recovery  order  by  the  Commission  to  recover    amounts  unduly  paid  is  just  one  of  the  means  of 
implementation of financing corrections. 

The processing of financial corrections follows these three main steps: 
(1)  The  amount  of  the  financial  correction  is  being  established  through  legal  and  contradictory  procedure 
("in progress"); 
(2)  The  amount  of  the  financial  correction  is  established  with  certainty  and  is  definitive,  either  "decided" 
through a Commission decision, or "confirmed" (i.e. accepted) by the Member State; 
(3) the amount is "implemented", by any of the following means: (a) following the issuance of a recovery 
order by the Commission, the amount is either paid by the Member State to the Commission, or offset by the 
Commission from future Commission payments to the concerned Member State; or (b) once the correction is 
accepted,  the  Member  State  deducts  (withdraws)  this  amount  from  a  subsequent  payment  claim  to  the 
Commission,  before  recovery  proceedings  are  completed  at  national  level  (withdrawal),  or  once  the 
recovery  proceedings  are  completed  at  national  levels  and  amounts  are  effectively  recovered  from  the 
beneficiary (recovery at national level); in both cases (withdrawal or recovery at national level deducted by 
the  Member  State  from  a  subsequent  payment  claim),  the  replacement  of  irregular  expenditure  by  other 
eligible expenditure is allowed by the applicable regulations. According to accrual accounting principles, the 
validation of the recovery order or of the payment request, depending on the case, by the authorising officer 
in  the  accounting  system  is  a  necessary  step  to  establish  the  implementation  of  financial  corrections. 
However  at  programme  closure  when  no  re-use  of  the  funds  is  possible  by  the  Member  State,  the 
Commission implements the financial correction by decommitment. 

(1) Financial corrections in progress: 
The amount disclosed under financial corrections in progress is based on audit findings of the Commission 
and  those  of  the  Court  of  Auditors  or  OLAF,  all  of  which  are  followed  up  by  the  relevant  Directorate 
General  through  on-going  contradictory  procedures  with  the  concerned  Member  States.  This  is  a  best  and 
prudent 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  2010.  This  amount  will  certainly  be  subject  to 
change  following  the  contradictory  procedures,  under  which  Member  States  are  given  the  opportunity  to 
present further evidence to support their claims. 

(2) Financial correction decided/confirmed: 
In  the  area  of  Agriculture  and  Rural  Development  for  the  2007-2013  period,  the  EAGF  (i.e.  European 
Agricultural  Guarantee  Fund)  and  the  EAFRD  (i.e.  European  Agricultural  Fund  for  Rural  Development) 
have  replaced  the  EAGGF  (i.e.  European  Agricultural  Guidance  and  Guarantee  Fund)  (2000-2006). 
Financial corrections' decisions are mainly launched as a result of the verification of the expenditure declared 
by the Member States that is subject to following clearance of accounts procedures: 

62

 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

-  An  annual  financial  clearance  decision  is  adopted  by  the  Commission  to  formally  accept  the  paying 
agencies' annual accounts on the basis of management verifications and certifications; 
-  A  multi-annual  conformity  clearance  decision  is  adopted  by  the  Commission  on  the  conformity  of  the 
expenditure declared by Member States with applicable EU rules and regulations; 
- A financial clearance decision on payment execution is adopted by the Commission as  a result of which 
financial corrections may be established for payments that do not respect legal or regulatory deadlines. 
In  the  area  of  Cohesion  Policy,  financial  corrections  decided/confirmed  are  the  result  of  EU  controls  and 
audits by the Commission, the European Court of Auditors or OLAF.  

(3) Implementation of Financial corrections: 
In  the  case  of  the  EAGF,  financial  corrections  are  always  implemented  by  deduction  in  the  monthly 
declarations.  For  the  EAFRD,  the  amounts  recovered  by  the  Member  States  themselves,  as  well  as  the 
financial corrections decided, may be re-used. 
Financial corrections under Cohesion Policy are implemented as follows: 
-  The  Member  State  accepts  the  correction  required  or  proposed  by  the  Commission:  the  Member  State 
applies itself the financial correction, through deduction from a subsequent payment claim (see withdrawals 
and recoveries in section 6.1.1 (3) above). All amounts corrected by the Member States may then be re-used 
for other eligible operations, which have incurred regular expenditure. In these cases there is no impact in the 
Commission's  accounts,  as  the  level  of  EU  funding  to  a  specific  programme  is  not  reduced.  The  EU's 
financial interests are thus protected against irregularities and fraud. 
-  The  Member  State  disagrees  with  the  correction  required  or  proposed  by  the  Commission,  following  a 
formal  contradictory  procedure  with  the  Member  State  that  includes  the  suspension  of  payments  to  the 
programme;  in  this  case,  the  Commission  has  three  months  from  the  date  of  a  formal  hearing  with  the 
Member State (six months for 2007-2013 programmes) to adopt a formal financial correction decision and 
issues a recovery order to obtain repayment from the Member State. These cases lead to a net reduction of 
the EU contribution to the specific operational programme affected by the financial correction (no possibility 
for the Member State to re-use the corrected amount for other eligible operations). 
-  At  programme  closure  when  no  re-use  of  the  funds  is  possible  by  the  Member  State,  the  amount  of  the 
financial  correction  is  either  deducted  from  the  final  cost  claim  submitted  by  the  Member  State  or 
decommitted by the Commission. 

6.1.2  Recoveries  
Recovery  of amounts  is  just  a  mean  of  implementing financial  corrections  that  merit  a  separate  disclosure 
given the importance attached to it by the Budget Authority. 
In accordance with the Financial Regulation recovery orders should be established by the authorising officer 
for  amounts  unduly  paid.  Recoveries  are  then  implemented  by  direct  bank  transfer  from  the  debtor  (e.g. 
Member  State)  or  by  offsetting  from  other  amounts  that  the  Commission  owes  to  the  Member  State.  The 
Financial  Regulation  foresees  additional  procedures  to  ensure  the  collection  of  recovery  orders  overdue, 
which are the object of a specific follow up by the Accounting Officer of the Commission. 
In  the  area  of  Agriculture,  Member  States  are  obliged  to  identify  errors  and  irregularities  and  to  recover 
amounts unduly paid in accordance with national rules and procedures. For the EAGF, amounts recovered 
from the beneficiaries are credited to the Commission, after deduction applied by Member States of 20% (on 
average), who book them as revenue in the economic outturn account. For EAFRD, recoveries are deducted 
from the next payment claim before it is sent to the Commission's services, and therefore the relevant 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 and to impose a financial correction on the Member State 
concerned. 
In  the  area  of  Cohesion  Policy,  Member  States  (and  not  the  Commission)  are  primarily  responsible  for 
recovering, from beneficiaries, amounts unduly paid increased, where applicable, by late payment interest. 
The amounts recovered by the Member States are disclosed in this note as additional information, in addition 
to financial corrections imposed by the Commission. For the 2007-2013 period, Member States are legally 
required to provide the Commission with clear and structured data on amounts withdrawn from co-financing 
before the national recovery process is finalised and the amounts effectively recovered from beneficiaries at 
national level. 

6.1.3  Suspensions and interruptions of payments  
In accordance with sector legislation the Commission may also: 
- interrupt the payment deadline for a maximum period of 6 months for 2007-2013 programmes if: 

63

 
 
 
 
Annual Accounts of the European Union 2010 

(a) There is evidence of a significant deficiency in the functioning of the management and control 
systems of the Member State concerned; 
(b)  The  Commission  services  have  to  carry  out  additional  verifications  following  information  that 
expenditure in a certified statement of expenditure is linked to a serious irregularity which has not 
been corrected. 

-  suspend  all  or  part  of  an  interim  payment  to  a  Member  State  for  both  2000-2006  and  2007-2013 
programmes in the following three cases: 

(a) Serious deficiency in the management and control system of the programme; or 
(b) Expenditure in a certified statement of expenditure is linked to a serious irregularity which has 
not been corrected; or 
(c) Serious breach by a Member State of its management and control obligations. 

Where the required measures are not taken by the Member State, the Commission may impose a financial 
correction. 

6.1.4  Other management types 
Concerning the part of the EU budget that is managed under the direct management mode, expenditure that 
is not in accordance with applicable rules and regulations is either the subject of a recovery order established 
by the Commission or deducted from the subsequent cost statement. If the deduction is directly made by the 
beneficiary  in  the  cost  statement,  the  information  cannot  be  registered  in  the  Commission's  accounting 
system. The recovery of amounts unduly paid under the decentralised and indirect centralised management 
modes is responsibility of Member States, third countries or agencies. The joint management mode applies 
also corrective tools that are defined in the agreements concluded with international organisations. 

Note: All figures are rounded into millions of Euros. It should be noted that due to the rounding of figures, 
some financial figures in the tables may not add up. Amounts shown as 0 represent figures of less than EUR 
500 000. Amounts that equal to zero are shown as a dash (-). 

FINANCIAL CORRECTIONS AND RECOVERIES UNDER AGRICULTURE AND 

6.2 
RURAL DEVELOPMENT 

6.2.1  Financial corrections and recoveries decided in 2010 

EAGF financial corrections decided in 2010 

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

Rural Development financial corrections decided in 2010 

Rural development financial corrections: 
TRDI 2000-2006 
SAPARD 2000-2006 
EAFRD 2007-2013 
Subtotal 

Recoveries confirmed in 2010 

EAGF - irregularities 
TRDI - recoveries 
SAPARD - recoveries 
EAFRD - irregularities 
Subtotal 

64

2010 

EUR millions
2009 

 33 
1 022 
1 055 

 103
 359
 462

2010 

EUR millions
2009 

 49 
 3 
 20 
 73 

 11
 14
 -
 25

2010 

EUR millions
2009 

178 
10 
5 
 98 
 292 

163
 -
-
47
210

 
 
 
 
 
 
 
  
  
 
 
  
  
 
 
  
Annual Accounts of the European Union 2010 

Total financial corrections and recoveries decided/confirmed in 2010 

EAGF: 
Financial corrections 
Recoveries 
Subtotal EAGF 
Rural Development: 
Financial corrections 
Recoveries 
Subtotal Rural Development 
Total 
A breakdown of the EAGF amounts per Member State is disclosed in Annex 1. 

2010 

1 055 
178 
1 233 

73 
114 
 187 
1 420 

EUR millions
2009

462
163
625

25
47
72
697

All  the  above  amounts  are  included  in  the  economic  outturn  account  of  the  Commission.  The  increase  in 
conformity  clearance  procedures  in  2010  follows  a  previous  decrease  between  2008  and  2009.  This  is 
primarily due to the absence of non-executed clearance decisions at end 2009. In fact 2008 included a non-
executed  clearance  decision  for  an  amount  of  EUR  178  million,  which  explained  the  decrease  observed 
between  2008  and  2009.  Similarly,  2010  figures  include  a  non-executed  clearance  decision  totalling  EUR 
471 million which was adopted before the year-end and for which financial execution will be in 2011. This 
explains the increase between 2009 and 2010. 

Recoveries confirmed include for the first time in 2010 amounts from EAFRD, for a total of EUR 98 million, 
which explains the increase compared to 2009. 

6.2.2  Financial corrections and recoveries implemented in 2010 

EAGF financial corrections implemented in 2010 

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

Rural development financial corrections implemented in 2010 

Rural development financial corrections: 
TRDI 2000-2006 
SAPARD 2000-2006 
EAFRD 2007-2013 
Subtotal 

Recoveries implemented in 2010 

EAGF - irregularities 
TRDI - recoveries 
SAPARD - recoveries 
EAFRD - irregularities 
Subtotal 

65

2010 

EUR millions

2009 

 33 
 728 
 761 

 103
 600
 703

2010 

EUR millions

2009 

 49 
 3 
 0 
 53 

 11
 14
 0
 25

2010 

EUR millions
2009 

172 
10 
5 
 98 
 286 

148
 -
 -
47
195

 
 
  
 
 
 
 
 
 
  
  
 
 
  
  
 
 
  
Total financial corrections and recoveries implemented in 2010 

Annual Accounts of the European Union 2010 

EAGF: 
Financial corrections 
Recoveries 
Subtotal EAGF 
Rural Development: 
Financial corrections 
Recoveries 
Subtotal Rural Development 
Total 
A breakdown of the EAGF amounts per Member State is disclosed in Annex 2. 

2010 

761 
172 
934 

53 
114 
 167 
1 101 

EUR millions
2009

703
148
851

25
47
72
923

Concerning the financial execution of clearance decisions, the amounts are generally stable and show little 
variation from one year to the next. Concerning the EAFRD, which became operational in the programming 
period  2007-2013,  the  first  wave  of  EU  controls  and  audits  has  started.  Financial  correction  amounts  are 
expected to be reported in the coming years (see note 6.2.4 on financial corrections in progress). 
As already mentioned above under recoveries confirmed, recoveries implemented include for the first time in 
2010  amounts  from  EAFRD  totalling  EUR  98  million,  which  primarily  explains  the  increase  compared  to 
2009. This figure is expected to increase in the coming years for the reason mentioned above. 

6.2.3  Financial corrections – cumulative figures 

EAGF financial corrections implemented in 2010 – cumulative figure 1999 - 2010 

EAGF Clearance of accounts procedures 
Total 

EUR millions

2010 

 6 258 
6 258 

2009 

5 719
 5 719

This  amount represents  the  total  financial  impact  of  clearance  of  accounts  procedures  since  this  corrective 
mechanism has been implemented, i.e. from 1999 onwards. 

Other financial corrections implemented in 2010 – cumulative figure 2000 - 2010 

Other financial corrections: 
TRDI 2000-2006 
SAPARD 2000-2006 
EAFRD 2007-2013 
Subtotal 

As at end 
2010 

EUR millions
As at end 
2009 

 61 
 17 
 21 
 98 

 11
 14
 0
 25

The cumulative figure for EAGF clearance of accounts corrections represents the amounts formally decided 
by means of Commission's decisions. Clearance decisions No. 1 to No. 34 have been taken into account in 
the 2010 figure. It should be noted that all conformity clearance decisions have been formally taken while 
financial clearance decisions usually take a longer time to proceed and will impact the coming years. 

66

 
  
 
 
 
 
 
  
 
 
  
  
 
 
Annual Accounts of the European Union 2010 

6.2.4  Financial corrections in progress 

EAGF financial corrections in progress as at 31.12.2010 

Financial 
corrections 
in progress 
as at 
31.12.2009 

New 
financial 
corrections 
in progress 
in 2010 

Financial 
corrections 
decided in 
2010 

EUR millions 
Financial 
corrections 
in progress 
as at 
31.12.2010 

Adjustments 
on financial 
corrections 
decided or 
in progress 
as at 
31.12.2009 

EAGF - future conformity and financial decisions 
Total EAGF financial corrections in progress 
The amount of EAGF financial corrections in progress end of 2010 shows the consolidation of the estimation 
method for future conformity decisions. 
Other financial corrections in progress as at 31.12.2010 

(1 029) 
(1 029) 

2 763 
2 763 

(115) 
(115) 

 670 
 670 

2 288
2 288

Financial 
corrections 
in progress 
as at 
31.12.2009 

New 
financial 
corrections 
in progress 
in 2010 

Financial 
corrections 
decided in 
2010 

TRDI 2000-2006 
SAPARD 2000-2006 
EAFRD 2007-2013 
Total other financial corrections in progress 
SAPARD and TRDI programmes are entering in a closure phase which explains the amount of financial 
corrections in progress. In addition audits and controls at EU level have been launched for EAFRD, which 
explains most of the amount. 
EAGF recoveries in progress as at 31.12.2010 

(49) 
(3) 
(57) 
(109) 

 12 
 4 
 114 
 130 

 45 
 54 
 55 
 154 

 7
 68
 123
 198

EUR millions 
Financial 
corrections 
in progress 
as at 
31.12.2010 

Adjustments 
on financial 
corrections 
decided or 
in progress 
as at 
31.12.2009 
 0 
 13 
 11 
 24 

EUR millions
Financial 
corrections 
in progress 
as at 
31.12.2010 

Adjustments 
on financial 
corrections 
decided or 
in progress 
as at 
31.12.2009 
 55 
 55 

Financial 
corrections 
in progress 
as at 
31.12.2009 

New 
financial 
corrections 
in progress 
in 2010 

Financial 
corrections 
decided in 
2010 

 323
EAGF - irregularities 
Total recoveries in progress 
 323
As irregularities confirmed and implemented are disclosed in note 6.2.1 and 6.2.2, it is important to show in 
this section how the future amounts of irregularities progress. 
Other recoveries in progress as at 31.12.2010 

(178)
(178)

 276
 276

 170
 170

Financial 
corrections 
in progress 
as at 
31.12.2009 

New 
financial 
corrections 
in progress 
in 2010 

Financial 
corrections 
decided in 
2010 

TRDI 2000-2006 
SAPARD 2000-2006 
EAFRD 2007-2013 
Total recoveries in progress 

 5
 88
 8
 101

 6
 52
 60
 118

(10)
(5)
(98)
(114)

67

Adjustments 
on financial 
corrections 
decided or 
in progress 
as at 
31.12.2009 
 7 
(41) 
 52 
 18 

EUR millions
Financial 
corrections 
in progress 
as at 
31.12.2010 

 7
 94
 22
 123

 
 
 
  
  
  
  
 
6.3 

FINANCIAL CORRECTIONS UNDER COHESION POLICY 

Annual Accounts of the European Union 2010 

In  the  Agriculture  and  Rural  development  policy,  recoveries  (not  related  to  financial  corrections)  are 
common.  However,  under  the  Cohesion  policy,  recovery  orders  are  almost  exclusively  used  to  implement 
those financial corrections decided by the Commission and that result in a net reduction of the EU funding. 

The results of the Member States' own checks of the Cohesion policy expenditure are reported in note 6.5. 
Note  also  that  the  amount  of  financial  corrections  2009  for  the  programming  period  2000-2006  linked  to 
TRDI  and  SAPARD  are  now  disclosed  in  the  section  Agriculture  and  Rural  development  (see  note  6.2), 
together with EAFRD. 

6.3.1  Financial corrections confirmed in 2010 

Financial corrections decided/confirmed in 2010 

Cohesion policy (EU work) 
- 1994-1999 programmes 
- 2000-2006 programmes 
- 2007-2013 programmes 
Subtotal 
A breakdown of these amounts per Member State is disclosed in Annex 3. 

2010 

EUR millions

2009 

 136 
 788 
 2 
 925 

 521
1 865
 0
2 386

Financial corrections confirmed/decided in 2010 and their implementation in 2010 

ERDF CF 

ESF  FIFG 

EUR millions
TOTAL 

EAGGF 
Guidance 

 -

 -

 -

 2

 0

 - 

 0 

 11

 4
 -
 4

 -
 0
 0

 3 
 - 
 3 

 3 
 0 
 3 

 118
 5
 125

Financial Corrections 1994-99: 
       Implemented by decommitment/deduction 
at closure 
       Implemented by recovery order 
       Not yet implemented 
Subtotal 1994-99 period  
Financial Corrections 2000-2006: 
       Implemented by decommitment/deduction 
at closure 
       Implemented by Member States 
       Implemented by recovery order 
       Not yet implemented       
Subtotal  2000-2006 period 
Financial Corrections 2007-2013: 
       Implemented by decommitment/deduction 
at closure 
       Implemented by Member States 
       Implemented by recovery order 
       Not yet implemented       
Subtotal  2007-2013 period 
Total financial corrections confirmed in 2010 
Total financial corrections decided in 2009 
Out of the total amount of EUR 925 million confirmed in 2010, EUR 2 million were confirmed in previous years but have 
not been reported before and EUR 44 million represent adjustments on previously-reported amounts. 

 1
 -
 0
 1
 494
2 061

 1
 -
 0
 1
 49
 180

 -
 -
 -
 -
 258
 86

 - 
 - 
 - 
 - 
 91 
 46 

 - 
 - 
 - 
 - 
 33 
 13 

-
 0
 246
 258

 -
 0
 368
 368

 - 
 30 
 - 
 30 

 87 
 - 
 2 
 89 

 35
 -
 8
 43

 - 

 - 

 - 

 - 

 -

 -

 -

 2

 128
 6
 136

 11

 122
 30
 624
 788

 -

 2
 -
 0
 2
 925
2 386

The  amount  of  financial  corrections  confirmed/decided  in  the  year  and  implemented  by  issuance  of  a 
recovery order by the Commission (i.e. cash reimbursed to the Commission) is EUR 158 million, EUR 128 
million  for  the  1994-99  period,  and  EUR  30  million  for  the  2000-06  period  (2009:  EUR  146  million).  It 
should  be  noted  that  implementation  by  means  of  a  recovery  order  represent  only  a  limited  amount  of 
financial corrections (i.e. 20% of the amount implemented in 2010) since the applicable sectoral legislation 

68

 
 
 
 
 
  
  
 
 
  
 
 
 
  
  
 
 
 
 
  
  
 
 
 
 
  
  
 
 
Annual Accounts of the European Union 2010 

foresees the possibility for the Member State to accept the financial correction proposed by the Commission 
and then to replace the irregular expenditure by a regular one- thus meaning that no recovery order needs to 
be issued by the Commission. Recovery orders are  only issued by the Commission in the cases where the 
Member  State  refuses  the  financial  correction,  or  at  the  stage  of  programme  closure  when  it  is  no  longer 
possible for the Member State to submit other expenditure to replace the irregular one. 

For ERDF, the large difference between confirmed/decided corrections in 2009 and 2010 is due to a large 
correction in Spain (approximately EUR 1.5 billion), which was confirmed by the Member State at the end 
of 2009. This correction concluded an important action plan initiated in 2004 concerning management and 
second  level  verifications  on  public  procurement  issues  across  twenty  Spanish  programmes.  It  increased 
significantly  the  amounts  of  corrections  reported  in  2009.  From  2010  onwards,  the  amounts  linked  to  the 
2000-2006 period will decrease as the closure period is winding down. Corrections reported will be linked to 
finalisation  of  procedures  started  in  previous  years,  as  well  as  to  the  results  of  closure  proceedings  and 
audits. 

Concerning the ESF, the lower amount of financial corrections for the programming period 1994-1999 is due 
to  the  fact  that  Commission's  services  are  reaching  the  end  of  the  closure  process.  For  the  programming 
period  2000-2006,  2010  was  the  year  in  which  the  vast  majority  of  the  programmes  have  submitted  their 
closure documents. Therefore amounts of financial corrections will only be identified and confirmed after the 
ongoing analysis made by the Commission's services of the Member States documents is completed. 

Regarding  FIFG,  the  audit  performed  on  central  authorities  in  Spain  at  the  end  of  2009  led  to  the 
confirmation in 2010 of an amount of EUR 87 million which was deducted by the Member State from the 
final cost statement received at end 2010. 

6.3.2  Financial corrections implemented in 2010 

Financial corrections implemented in 2010 

Cohesion policy (EU work) 
- 1994-1999 programmes 
- 2000-2006 programmes 
- 2007-2013 programmes 
Subtotal 
A breakdown of these amounts per Member State is disclosed in Annex 4. 

2010 

EUR millions

2009 

 476 
259 
 2 
737 

 300
 384
 0
 684

It should be noted that the above amounts, in particular for the programming period 2000-06, do not include 
financial corrections reported by the Member States in final payment claims received by the Commission in 
2010,  which  are  in  the  process  of  being  validated.  At  this  stage,  the  financial  correction  is  indeed 
implemented by the Member State who certifies the deduction of the financial correction amount from the 
final payment claim amount. However, in the context of programme closure, the validation of the claim by 
the  authorising  officer  in  the  accounting  system  is  subject  to  longer  regulatory  deadlines  before  it  can  be 
fully processed and payments be  made by the Commission. Payments  claims received before the year-end 
2010  and  not  yet  authorised  include  financial  corrections  deducted  for  a  total  amount  of  EUR  2,3  billion 
(ERDF:  EUR  2  155  millions;  Cohesion  Fund:  EUR  105  millions;  and  ESF:  EUR  24  millions).  Payment 
claims will be processed end of 2011 and beginning of 2012. 

69

 
 
 
 
 
 
  
  
 
 
 
Financial corrections implemented in 2010 (confirmed/decided in 2010 and in previous years) 

Annual Accounts of the European Union 2010 

ERDF 

CF 

ESF 

FIFG 

EUR millions
Total 
2010 

EAGGF 
Guidance 

Financial Corrections 1994-99 period: 
       Confirmed in 2010 
       Confirmed previous years 
Subtotal 1994-99 period  
Financial Corrections 2000-2006: 
       Confirmed in 2010 
       Confirmed previous years 
Subtotal  2000-2006 period 
Financial Corrections 2007-2013: 
       Confirmed in 2010 
       Confirmed previous years 
Subtotal  2007-2013 period 
Total financial corrections implemented in 2010 
Total financial corrections implemented in 2009 

 120
 342
 462

 0
79
80

 1
 -
 1
542
 334

 0
 4
 4

 11
 6
 18

 -
 -
 -
 21
 89

 4
 1
 5

 35
 1
 36

 1
 -
 1
 42
 206

 3 
 - 
 3 

 87 
 - 
 87 

 - 
 - 
 - 
 90 
 50 

Out of the amount of EUR 737 million reported as financial correction implemented in 2010, EUR 1 million was 
implemented in previous years but has not been reported before. 

 2
 1
 3

 30
 8
 38

 -
 -
 -
 41
 5

 129
 347
 476

 164
95
259

 1
 -
 1
737
 684

Concerning ERDF, it should be noted that the large correction in Spain totalling EUR 1.5 billon referred to 
in note 6.3.1 was certified by the Member State in February 2010 as accounted for in the local accounting 
systems  of  the  relevant  programmes.  This  amount  was  then  deducted  from  the  20  final  payment  claims 
introduced  in  September  2010.  However  these  payment  claims  being  still  under  authorising  process,  they 
have  not  been  taken  into  account  in  the  above  implementation  figures.  So  are  the  majority  of  the  claims 
received for the 2000-06 closure. 

Concerning the ESF, all financial corrections confirmed in 2010 for the programming period 1994-1999 have 
been implemented in the same year. Moreover there are no outstanding amounts of financial corrections to 
be  implemented  concerning  that  programming  period.  The  amounts  of  financial  corrections  for  the 
programming period 2000-2006 confirmed in previous years will be identified and cleared within the closure 
process that is ongoing. 

6.3.3  Financial corrections – cumulative figures and implementation rate 

Financial corrections confirmed/decided – cumulative figures 

1994-1999 
Period 

2000-2006 
Period 

2007-2013 
Period 

ERDF 
1 758 
Cohesion Fund 
 273 
ESF 
 397 
FIFG 
 100 
EAGGF Guidance 
 124 
2 652 
Total 
A breakdown of the total amount per Member State is disclosed in Annex 3. 

4 165
 490
1 174
 96
 41
5 965

 1
 -
 1
 -
 -
 2

Total as at 
end 2010 
5 924
 763
1 572
 195
 165
8 619

EUR millions 
Total as at 
end 2009 
5 430 
 506 
1 522 
 104 
 132 
7 694 

70

 
  
  
  
  
  
  
  
 
 
 
  
 
 
 
 
 
  
 
 
 
 
 
 
  
Financial corrections implemented – cumulative figures 

Annual Accounts of the European Union 2010 

1994-1999 
Period 

2000-2006 
Period 

2007-2013 
Period 

Total as at 
end 2010 

ERDF 
Cohesion Fund 
ESF 
FIFG 
EAGGF Guidance 
Total 
A breakdown of the total amount per Member State is disclosed in Annex 4. 

1 736 
 266 
 395 
 100 
 124 
2 621 

1 972
 227
1 146
 94
 41
3 480

 1
 -
 1
 -
 -
 2

3 709 
 493 
1 542 
 194 
 165 
6 102 

EUR millions
Total as at 
end 2009 

3 167
 472
1 500
 104
 124
5 366

Most  of  the  programmes  and  irregularities  for  the  programming  period  1994-99  are  closed  cases,  and 
amounts are therefore expected to decrease in the future. Many deductions were withdrawn by the Member 
States from their final payment requests for 2000-06 programmes however the payment claims are still under 
validation,  which  explains  why  they  are  not  included  in  the  above  amounts.  They  will  be  reported  as 
implemented  when  the  payments  will  be  validated,  in  2011  and  in  2012  for  the  most  complex  files.  The 
corrections for the current programming period 2007-13 should increase as a result of the current controls on 
the spot. 

Included  in  the  above  table  are  financial  corrections  that  are  being  challenged  by  certain  Member  States 
(noting that past experience has shown that the Commission has very rarely had to repay amounts following 
such cases). 

Financial corrections confirmed/decided as at 31 December 2010 but not yet implemented and 
implementation rates as at 31 December 2010 (cumulative figures) 

Financial corrections 1994-1999 programmes 
Financial corrections confirmed/decided 
Financial corrections implemented 

Financial corrections confirmed/decided but not yet implemented 
Rate of implementation 
Financial corrections 2000-2006 programmes 
Financial corrections confirmed/decided 
Financial corrections implemented 
Financial corrections confirmed/decided but not yet implemented 
Rate of implementation 
Financial corrections 2007-2013 programmes 
Financial corrections confirmed/decided 
Financial corrections implemented 
Financial corrections confirmed/decided but not yet implemented 
Rate of implementation 
Total financial corrections 
Financial corrections confirmed/decided 
Financial corrections implemented 
Financial corrections confirmed/decided but not yet implemented 
Rate of implementation 

ERDF 

CF 

ESF 

FIFG 

EAGGF 
Guidance 

EUR millions 
Total 
2009 

Total 
2010 

1 758 
1 736 

 22 
99% 

4 165 
1 972 
 2 192 
47% 

 1 
 1 
 0 
69% 

5 924 
3 709 
 2 214 
63% 

 273 
 266 

 8 
97% 

 490 
227 
 263 
46% 

 - 
 - 
 - 
N/A 

 764 
 493 
 271 
65% 

 397 
 395 

 2 
100% 

1 174 
1 146 
 28 
98% 

 1 
 1 
 0 
98% 

1 571 
1 542 
 30 
98% 

 100 
 100 

 - 
100% 

 96 
 94 
 2 
98% 

 - 
 - 
 - 
N/A 

 195 
 194 
 2 
99% 

 124 
 124 

 0 
100% 

 41 
 41 
 - 
100% 

 - 
 - 
 - 
N/A 

 165 
 165 
 0 
100% 

2 652 
2 621 

 31 
99% 

5 965 
3 480 
 2 485 
58% 

 2 
 2 
 0 
84% 

8 619 
6 102 
 2 516 
71% 

2 516 
2 145 

 371 
85% 

5 177 
3 221 
1 956 
62% 

 - 
 - 
 - 
N/A 

7 694 
5 366 
2 327 
70% 

The level of implementation during the programming period 1994-1999 is explained by the issuance during 
2010 of most of the recovery orders needed to implement the financial corrections decisions adopted at the 
end of 2009 (pending at closure of the accounts 2009), or the new corrections confirmed/ decided during the 
year. 

Concerning  the  programming  period  2000-2006,  the  low  implementation  rate  is  explained  by  the  ongoing 
closure  process  whereby  payment  claims  received  end  of  2010  are  not  yet  authorised,  and  the  related 
financial  corrections  for  a  total  amount  of  EUR  2,3  billion  cannot  be  taken  into  account  in  the  2010 
implementation figures. 

71

 
  
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
Annual Accounts of the European Union 2010 

6.3.4  Financial corrections in progress 

Financial 
corrections in 
progress as at 
31.12.2009 

New financial 
corrections in 
progress in 
2010 

Financial 
corrections 
decided in 
2010 

EUR millions 
Financial 
corrections in 
progress as at 
31.12.2010 

Adjustments 
on financial 
corrections 
decided or in 
progress as at 
31.12.2009 

 135
 206
 9
 -
4
 354

 430
 149
 326
 2
 63
971

Structural and Cohesion 
funds (1994-1999, 2000-
2006 and 2007-2013 
programmes)  
197
ERDF 
 262
Cohesion Fund 
 284
ESF 
 0
FIFG 
 4
EAGGF Guidance 
 747
Total 
Concerning the ERDF, many of the procedures in progress in the previous years were finalised in 2010 with 
the  application  of  financial  corrections  or  the  adjustments  of  the  amounts.  Furthermore,  2010  was 
characterised as a transition year for the two programming periods; the conclusion of procedures for 2000-
2006 leading to a decrease of amounts in progress and the initiation of new procedures (somewhat less at this 
stage) for 2007-2013. Thus, the amounts of financial corrections in progress this year are lower compared to 
last year. 
Concerning the ESF, most of the EUR 9 million of new cases refers to the 2000-2006 programming period as 
all  the  operational  programmes  concerned  are  reaching  their  closure  phase.  The  processing  of  financial 
corrections will be dealt with in the closure process. Nevertheless, half of the on-going procedures concern 
the  2007-2013  programming  period.  These  were  estimated  to  be  at  EUR  1  (provisional  amount)  as  the 
amount to be corrected still needs to be identified. 

(156) 
(72) 
(10) 
 0 
(31) 
(269) 

(212)
(21)
(42)
(1)
(33)
(309)

In addition to the above-mentioned figure, an amount of EUR 1 437 million has been reported by Member 
States and represents potential recoveries 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. However the prospects of recovery in individual cases cannot be assessed with sufficient accuracy 
based on the information forwarded by Member States. In addition there is a risk of overlap with the figures 
above-disclosed  which  is  difficult  to  quantify  as  Member  States  are  not  obliged  to  distinguish  in  their 
reporting between potential recoveries resulting from EU's work and those resulting from their own controls. 

Interruptions and suspension of payments 

6.3.5 
Concerning the ERDF, 49 interruption decisions for payment deadlines were taken in 2010 for a total amount 
of EUR 2 156 million. Payments were released for 41 cases representing EUR 2 057 million. 8 cases were 
still ongoing at year-end, covering an amount of EUR 99 million. 

Concerning the ESF, 12 interruption decisions for payment deadlines were taken in 2010 for a total amount 
of EUR 255 million, all relating to the programming period 2007-2013. Payments were released for 6 cases, 
representing EUR 94 million. 6 cases are still ongoing for an amount of EUR 161 million. 

72

 
 
  
 
 
 
  
 
 
 
 
 
The breakdown of interruption cases per Member State in 2010 is as follows: 

Annual Accounts of the European Union 2010 

Interruptions - closed cased as at 31.12.2010 
Germany 
Spain 
Italy 
Luxembourg 
Hungary 
Portugal 
Romania 
United Kingdom 
Subtotal closed cases 
Interruptions - open cases as at 31.12.2010 
Belgium 
Bulgaria 
Germany 
Italy 
Austria 
United Kingdom 
Subtotal open cases 
Total interruptions 
Data disclosed in this table represent the situation as at 15 February 2011 

ERDF 

ESF 

EUR millions
Total 

 175
1 477
 84
-
 33
 103
-
 184
2 057

-
 15
 43
-
-
 41
 99
2 156

- 
 74 
- 
 1 
- 
- 
 18 
- 
 94 

 3 
- 
 69 
 72 
 17 
- 
 161 
 255 

 175
1 552
 84
 1
 33
 103
 18
 184
2 151

 3
 15
 112
 72
 17
 41
 260
2 411

In addition 6 suspension decisions were taken during 2010 for the ESF (Belgium, Spain, and France), and 
payments were resumed before the year-end for Spain only. 

6.4  OTHER RECOVERIES 

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  for  the  part  of  the  budget 
which is not executed under shared management. 

Other recoveries confirmed in 2010 

Other management types: 
- external actions 
- internal policies 
Total other recoveries confirmed 

Other recoveries implemented in 2010 

Other management types: 
- external actions 
- internal policies 
Total other recoveries implemented 

2010 

EUR millions 
2009 

 137 
 188 
 325 

 136 
 163 
 299 

2010 

 81
 202
 283

EUR millions 
2009 

 81
 202
 283

6.5  RECOVERY AND FINANCIAL CORRECTION ACITIVITIES BY MEMBER 

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 recorded in the Commission's accounting system because 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 

73

 
 
  
 
  
 
 
  
 
 
 
 
 
  
  
 
 
  
  
 
 
 
Annual Accounts of the European Union 2010 

individual  years  and  cumulatively  for  the  period  2000-2006,  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. 

As the period 2000-2006 is now in its closure phase, a phase during which proof of deduction is requested in 
relation  to  all  irregularities,  Member  States  are  not  required  to  separately  submit  to  the  Commission 
information  on  withdrawals,  recoveries  and  pending  recoveries  for  the  year  2010.  Nevertheless,  this 
additional information was received in March 2011 from Greece, Belgium, Hungary, Portugal and for Inter-
regional programmes. This information is taken into account in this section.  

Based  on  data  received  so  far,  in  terms  of  EU  contribution,  Member  States  have  reported  a  total  of  some 
EUR  5.1  billion  of  cumulative  financial  corrections  resulting  from  their  national  audit  work  for  the  2000-
2006 programmes (of which withdrawals total some EUR 4 billion and recoveries approximately EUR 1.1 
billion). 

The  on-the-spot  audit  work  undertaken  by  DG  Regional  Policy  under  the  2008  Action  Plan  to  audit  the 
national  systems  of  Member  States  for  recoveries  related  to  the  2000-2006  programming  period  was 
completed  in  2010  for  the  six  remaining  Member  States,  having  covered  thus  all  25  concerned  Member 
States (there was no reporting obligation for Bulgaria and Romania for the 2000-2006 period). The results of 
this exercise, as well as the audits carried out by the Court of Auditors, in the last two annual reports, showed 
that  Member  States'  authorities  generally  follow  the  requirements,  although  significant  weaknesses  still 
existed in respect of the completeness  of data and the system for recording and reporting irregularities  for 
some  2000-2006  programmes  in  Italy,  Spain,  France  and  the  Netherlands.  To  a  lesser  extent,  weaknesses 
also existed in programmes in the UK, Slovenia, Finland, Sweden and Latvia. Even if improvements have 
been identified in all Member States during the years 2007-2010 by the Commission audits, the Commission 
remains  prudent  at  closure  and  requested  all  programmes  authorities  to  report  on  the  follow-up  (including 
financial corrections) that was made at national level for all irregularities registered for each programme. The 
Commission will not close programmes until it assesses this information as being consistent and complete. 

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 in the 2000-2006 
reporting, 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  the  Member  State's  acceptance  of  the  financial 
correction.  Therefore,  the  possible  overlap  remains  only  an  estimation.  A  comparison,  Member  State  by 
Member State, between the Member States' figures for 2010 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 65 million (2009: EUR 465 million). 

In  the  2007-2013  programming  period,  there  is  a  regulatory  requirement  for  Member  States  to  report 
annually  on  recoveries  and  withdrawals  through  IT  systems  SFC  2007.  This  means  that  the  Commission 
receives  data  electronically  directly  from  the  Member  States  at  31  March  each  year.  In  its  guidance  to 
Member States, the Commission also proposed to separately identify corrections resulting from EU bodies' 
work,  in  order  to  avoid  any  overlap  in  reporting.  As  reported  by  Member  States  to  the  Commission  at  31 
March  2011, the  total  amounts  (EU  share)  recovered  by  Member  States  from  beneficiaries  and  withdrawn 
from  certified  expenditure  presented  to  the  Commission  in  2010  (recoveries,  for  EUR  35  million),  or 
withdrawn  from  2010  payment  claims  before  the  recovery  process  is  completed  at  national  level 
(withdrawals, for EUR 189 million), as well as the pending recoveries (EUR 41 million) at the end of 2010, 
are EUR 265 million: 

74

 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

EU 27 
2007-2013 

Withdrawals 
resulting 
from MS 
work 

Withdrawals 
resulting 
from EU 
bodies 

Total 
withdrawals

Recoveries 
resulting 
from MS 
work 

Recoveries 
resulting 
from EU 
bodies 

Total 
Recoveries 

EUR million 

Total 
pending 
recoveries 
declared 
in 2010 

Total 
declared 
by MS 

ERDF/CF* 

ESF 

EFF 

151 

31 

0 

5 

2 

0 

156

33

0

29 

4 

1 

Total 
* figures as reported by Member States at 31 March 2011 in SFC 2007 
**reports have not been sent for 10 programmes and have been requested from the responsible authorities. 

183 

189

34 

7 

2 

0 

0 

2 

31 

4 

1 

35 

25

15

0

41

212

52

1

265

The Commission has planned an audit on recoveries as from the second semester of 2011 so as to review, for 
all Funds, the corrective mechanism systems put in place by certifying authorities and to assess the assurance 
the  Commission  can  place  on  the  reported  figures,  using  a  sample  of  programmes  and  Member  States 
selected on the basis of a risk analysis. 

75

 
 
 
 
Note 6 – Annex 1: Total financial corrections and recoveries decided in 2010 for EAGF - 
Breakdown per Member State 

Annual Accounts of the European Union 2010 

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 decided               

Financial 
clearance 

Conformity 
clearance 

Irregularities 
declared 

Total 2010 

Total 2009 

EUR millions 

 4

 3

 0

 3

 12

 0

 7

 14

 23

 28

 35

 0

 0

 2

 0

 1

 0

 5

 1

 2

 16

 6

 1

 0

 1

 2

 11

 178

 4 

 20 

 1 

 12 

 28 

 0 

 7 

 477 

 83 

 67 

 78 

 1 

 0 

 2 

 1 

 8 

 0 

 51 

 2 

 52 

 58 

 55 

 5 

 0 

 2 

 5 

 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

 213 

1 233 

 109

 625

 0

 0

 0

 0

- 1

 -

- 1

 4

 8

- 1

 4

 -

 0

 0

 0

 0

 0

- 1

 0

 0

 2

 11

 0

 0

 0

 0

 8

 33

 -

 17

 1

 10

 16

 -

 0

 460

 52

 39

 39

 1

 -

 0

 1

 8

 -

 47

 1

 50

 40

 38

 4

 0

 2

 3

 194

1 022

76

 
Note 6 – Annex 2: Total financial corrections and recoveries implemented in 2010 for EAGF - 
Breakdown per Member State 

Annual Accounts of the European Union 2010 

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 

Total 2010 

EUR millions 
Total 2009 

Financial 
clearance 
and non-
respected 
payment 
deadlines 

Conformity 
clearance 

Irregularitie
s declared 
by Member 
States 
(repaid to 
EU) 

 3

 5

 1

 3

 10

 0

 5

 10

 30

 30

 23

 0

 0

 1

 0

 2

 0

 5

 1

 1

 18

 6

 1

 1

 1

 2

 12

 172

 3 

 6 

 1 

 12 

 26 

 0 

 5 

 150 

 130 

 120 

 33 

 1 

 0 

 4 

 1 

 26 

 0 

 51 

 3 

 97 

 24 

 16 

 1 

 1 

 2 

 5 

 215 

 934 

 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

 0

 0

 0

 0

- 1

 -

- 1

 4

 8

- 1

 4

 -

 0

 0

 0

 0

 0

- 1

 0

 0

 2

 11

 0

 0

 0

 0

 8

 33

 0

 -

 0

 10

 16

 -

 1

 136

 92

 90

 5

 1

 -

 2

 1

 24

 -

 46

 3

 95

 4

 -

 -

 0

 2

 3

 195

 728

77

 
 
Note 6 – Annex 3: Total financial corrections confirmed in 2010 for Structural Actions 
Breakdown per Member State 

Annual Accounts of the European Union 2010 

Member State 

Cumulative 
end 2009 

Financial corrections confirmed in 2010 

ERDF 

CF 

ESF 

FIFG 

EAGGF 
Guidance 

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 

 4
- 
- 
- 
- 
- 
 0
 4
- 
- 
- 
- 
- 
- 
- 
- 
- 
 43
- 
- 
- 
- 
 0
 0
- 
 0
 2
 0
 4
- 
- 
- 
- 
- 
- 
- 
- 
 1
 0
- 
- 
- 
- 
- 
 36
- 

 3
- 
- 
 0
- 
- 
- 
- 
- 
- 
- 
- 
 1
- 
- 
 1
- 
 89
- 
- 
- 
- 
 0
- 
- 
- 
 87
- 
 1
- 
 0
- 
- 
- 
- 
- 
- 
 0
- 
- 
- 
- 
 0
- 
- 
- 

 3 
-  
-  
 1 
-  
 0 
 1 
 0 
 0 
-  
-  
-  
 1 
-  
-  
 0 
-  
 30 
-  
-  
-  
-  
-  
-  
-  
-  
-  
 9 
 2 
-  
-  
-  
-  
-  
-  
-  
-  
-  
 18 
-  
-  
-  
-  
-  
 1 
-  

2 516 
 5 
 3 
 339 
 42 
 526 
 548 
 84 
 505 
 5 
 177 
 2 
 137 
 1 
 1 
 131 
 10 
5 178 
 10 
 2 
 0 
 0 
 12 
 0 
 42 
 920 
2 503 
 261 
 825 
-  
 4 
 2 
 2 
 52 
-  
 2 
-  
 134 
 126 
 10 
 2 
 39 
 0 
 11 
 217 
 1 

 125
- 
- 
 0
- 
 1
 116
- 
 0
- 
- 
- 
 2
- 
- 
 6
 0
 368
 0
- 
 4
- 
 0
 0
 2
 40
 170
 16
 97
- 
- 
- 
- 
 0
- 
- 
- 
 0
 0
- 
- 
 0
- 
 0
 29
 9

 0
- 
- 
- 
- 
 0
 0
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
 258
- 
 18
 7
- 
- 
- 
 1
 0
 104
- 
- 
- 
 1
 0
- 
- 
- 
- 
- 
 111
 13
 2
- 
 2
- 
- 
- 
- 

78

EUR millions 

Cumulative 
end 2010 

2 652
 5
 3
 340
 42
 528
 664
 88
 505
 5
 177
 2
 141
 1
 1
 138
 10
5 965
 10
 21
 11
 0
 13
 0
 44
 961
2 865
 287
 930
 0
 4
 2
 2
 52
 0
 2
 0
 246
 157
 12
 2
 41
 1
 11
 283
 10

Total 
Year 
2010 
 136 
 0 
 0 
 1 
 0 
 2 
 117 
 4 
 0 
 0 
 0 
 0 
 4 
 0 
 0 
 7 
 0 
 788 
 0 
 18 
 11 
 0 
 1 
 0 
 2 
 40 
 363 
 26 
 105 
 0 
 1 
 0 
 0 
 0 
 0 
 0 
 0 
 112 
 31 
 2 
 0 
 2 
 0 
 0 
 65 
 9 

 
 
Annual Accounts of the European Union 2010 

 1
- 
- 
- 
 0
- 
- 
 0
- 
- 
 0
- 
- 
- 
- 
 0
 1
- 
- 
- 
 0
 0
- 
- 
- 
- 
- 
- 
- 
 49

 0
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
 91

 -  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
 33 

 2 
-  
-  
-  
 0 
-  
 0 
 0 
-  
-  
 0 
-  
-  
-  
-  
 0 
 1 
-  
-  
-  
 0 
 1 
-  
-  
-  
-  
-  
-  
-  
 925 

 2
- 
- 
- 
 0
- 
 0
 0
- 
- 
 0
- 
- 
- 
- 
 0
 1
- 
- 
- 
 0
 1
- 
- 
- 
- 
- 
- 
- 
8 619

2007-2013 
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 confirmed 

 0 
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
7 694 

 1
- 
- 
- 
- 
- 
 0
- 
- 
- 
- 
- 
- 
- 
- 
- 
 0
- 
- 
- 
 0
 0
- 
- 
- 
- 
- 
- 
- 
 494

 0
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
 -
 258

79

 
 
Note 6 – Annex 4: Total financial corrections implemented in 2010: Structural Actions 
Breakdown per Member State 

Annual Accounts of the European Union 2010 

Member State 

Cumulative 
end 2009 

Financial corrections implemented in 2010 

ERDF 

CF 

ESF 

FIFG 

EAGGF 
Guidance 

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 

 5
- 
- 
- 
- 
- 
 0
 4
- 
 1
- 
- 
- 
- 
- 
- 
- 
 36
0
- 
- 
- 
- 
0
- 
- 
0
- 
0
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
36
- 

 3
- 
- 
 0
- 
- 
- 
- 
- 
- 
- 
- 
 1
- 
- 
 1
- 
 87
- 
- 
- 
- 
- 
- 
- 
- 
 87
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 

 3 
-  
-  
 1 
-  
 0 
 1 
 0 
-  
-  
-  
-  
 1 
-  
-  
 0 
-  
 38 
-  
-  
-  
-  
-  
-  
-  
-  
 8 
 9 
 2 
-  
-  
-  
-  
-  
-  
 1 
-  
-  
 18 
-  
-  
-  
-  
-  
 1 
-  

2 144 
 6 
 4 
 300 
 40 
 521 
 293 
 85 
 483 
 4 
 177 
 2 
 118 
 1 
 1 
 108 
 2 
3 222 
 8 
 2 
 0 
 0 
 10 
 0 
 26 
 904 
 940 
 239 
 686 
 0 
 3 
 1 
 2 
 41 
 0 
 0 
 0 
 90 
 95 
 8 
 2 
 1 
 0 
 11 
 151 
 0 

 462
- 
- 
 37
- 
 1
 363
- 
 21
- 
- 
- 
 20
 0
- 
 11
 7
80
- 
- 
 - 
- 
 0
 - 
 - 
 - 
- 
- 
 79
- 
 - 
- 
- 
- 
- 
- 
- 
 - 
 - 
- 
- 
 - 
 - 
 - 
 - 
 0

 4
- 
- 
- 
- 
 3
 1
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
18
- 
- 
 - 
- 
- 
- 
- 
 - 
16
- 
- 
- 
 1
 0
- 
- 
- 
- 
- 
- 
 1
 0
- 
- 
- 
- 
- 
- 

80

EUR millions 

Cumulative 
end 2010 

2 621
 6
 4
 338
 40
 525
 658
 89
 504
 5
 177
 2
 141
 1
 1
 120
 9
3 480
 8
2
0
 0
 10
 0
 26
 904
1 051
 248
 768
 0
 4
 1
 2
41
 0
 1
 0
 90
 113
8
 2
1
 0
 11
 188
0

Total 
Year 
2010 
 476 
-  
-  
 38 
-  
 4 
 365 
 4 
 21 
 1 
-  
-  
 23 
 0 
-  
 13 
 7 
259 
0 
-  
 - 
-  
 0 
0 
 -  
 -  
111 
9 
 82 
-  
 1 
 0 
-  
-  
-  
 1 
-  
-  
 18 
 0 
-  
 -  
-  
-  
 37 
 0 

 
Annual Accounts of the European Union 2010 

 1
- 
- 
- 
 0
- 
- 
 0
- 
- 
 0
- 
- 
- 
- 
- 
 1
- 
- 
- 
- 
 0
- 
- 
- 
- 
- 
- 
- 
42

 0
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
 90

 - 
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
 41 

 2 
-  
-  
-  
 0 
-  
 0 
 0 
-  
-  
 0 
-  
-  
-  
-  
-  
 1 
-  
-  
-  
 0 
 1 
-  
-  
-  
-  
-  
-  
-  
737 

 2
- 
- 
- 
 0
- 
 0
 0
- 
- 
 0
- 
- 
- 
- 
- 
 1
- 
- 
- 
 0
 1
- 
- 
- 
- 
- 
- 
- 
6 102

2007-2013 
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 

 0 
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
-  
5 366 

 1
- 
- 
- 
- 
- 
 0
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
 0
 0
- 
- 
- 
- 
- 
- 
- 
542

 0
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
- 
21

81

 
 
 
 
Annual Accounts of the European Union 2010 

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  (amended  by  Council  Regulations  2028/2004  and  105/2009)  and  in  the 
Financial  Regulation  (Council  Regulation  1605/2002,  amended  by  Council  Regulations  1995/2006, 
1525/2007  and  1081/2010)  and  its  Implementing  Rules  (Commission  Regulation  2342/2002,  amended  by 
Commission Regulations 1261/2005, 1248/2006 and 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. 

–  Funds held in bank accounts denominated 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  Commission's  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:  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.  

BUFI – provisionally cashed fines 
From 2010 onwards provisionally cashed fines amounts are invested in a specifically created fund managed 
by  DG  ECFIN,  BUFI.  Fines  amounts  received  before  2010  remain  in  specific  bank  accounts.  The  asset 
management  for  provisionally  cashed  fines  is  carried  out  by  the  Commission  in  accordance  with  internal 
82

 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

guidelines  and  the  asset  management  guidelines  which  are  included  in  the  SLA  signed  in  December  2009 
between  DG  BUDG  and  DG  ECFIN.  Procedural  manuals  covering  specific  areas  such  as  treasury 
management  have  been  developed  and  are  used  by  the  relevant  operating  units.  Financial  and  operational 
risks  are  identified  and  evaluated  and  compliance  with  internal  guidelines  and  procedures  is  checked 
regularly. 

The objectives of the asset management activities are to invest the fines paid to the Commission in such a 
way as to: 
(a) ensure that the funds are easily available when needed, while 
(b) aiming at delivering under normal circumstances a return which on average is equal to the return of the 
BUFI Benchmark minus costs incurred. 

Investments are restricted basically to the following categories: term deposits with euro-zone Central Banks, 
euro-zone sovereign debt agencies, fully state-owned or state-guaranteed banks or supranational institutions; 
bonds,  bills  and  Certificates  of  Deposit  issued  by  sovereign  entities  creating  a  direct  euro-zone  sovereign 
exposure or which are issued by supranational institutions. 

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,  25  February 
2008  and  9  November  2010.  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.  

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 

83

 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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 and CHF, 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,  as  a  consequence  their 
balances do not represent exposure to currency risk. 

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  into  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. 

BUFI – provisionally cashed fines 
Since all 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 1.43 million arising 
from EUR equivalent 1.39 million housing loans and EUR equivalent 0.04 million current account balances.  

Interest rate risk 

7.2.2 
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. 

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 on its bank accounts 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 EONIA (Euro over night index average), and is adjusted to 
reflect  any  fluctuations  of  this  rate.  For  some  other  accounts  the  interest  calculation  is  linked  to  the  ECB 
marginal rate for its main refinancing operations. As a result no risk exists that the Commission earns interest 
at rates lower than market rates. 

BUFI – provisionally cashed fines 
There are no bonds with variable interest rates in the BUFI portfolio. Zero coupon bonds represented 69% of 
the bond portfolio at the balance sheet date. 

84

 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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 0.86 billion (2009: EUR 0.96 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 2010 (2009: EUR 
110 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  ten  loans  under  the  financial  instrument 
BOP with fixed interest rates totalling EUR 12.05 billion in 2010 (2009: EUR 9.2 billion) and with a final 
maturity up to one year (EUR 2 billion), between one and five years (EUR 5.7 billion) and more than five 
years (EUR 4.35billion). 

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 93% of the investment portfolio at the balance sheet date (2009: 97%). 

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 92% of the securities portfolio at the 
balance sheet date (2009: 97%). 

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 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 20 million and EUR 
100 million on average, spread over more than 20 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 2010 that 
totalled EUR 120 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 accepted in specific and duly justified circumstances. 

85

 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

–  For commercial banks that have been specifically selected for the deposit of provisionally cashed fines 
(restricted cash), 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,  are  now 
managed under the new system and no longer 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.  Intensified  monitoring  measures  were 
adopted in the context of the financial crisis, and kept in place during 2010. 

BUFI – provisionally cashed fines 
For investments from provisionally cashed fines we take on exposure to credit risk which is the risk that a 
counterparty  will  be  unable  to  pay  amounts  in  full  when  due.  The  highest  concentration  of  exposure  is 
towards  France  and  Germany  as  each  of  these  countries  represents  respectively  69%  and  25%  of  the  total 
volume of the portfolio. 
The main investment limits are for benchmark countries (currently France and Germany, rated AAA/Aaa): 
up to 100% of the portfolio. For other authorised issuers (a minimum rating of Aa2 (Moody's or equivalent) 
is required): up to 25% of the portfolio. 

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 
2010 fixed the ceiling for the GNI resource at 1.23% of Member States' GNI and during 2010 1.12% was 
actually  used  to  cover  payment  appropriations.  This  means  that  at  31  December  2010  there  existed  an 
available  margin  of  0.11%  to  cover  this  guarantee.  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,  Romania  and  Latvia.  These  countries  represent 
approximately 42%, 30% and 22% 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  2010  all  investments  (EUR  124  million)  were  made  with  such  counterparties  (2009:  EUR  153 
million).  As  at  31  December  2010,  the  fund  invested  in  five  short-term  financial  instruments  and  all  such 
investments (EUR 69 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.  68%  of  the  total  amount  of  outstanding  loans  is  covered  by 
guarantees  from  a  Member  State  or  equivalent  bodies  (e.g.  public  institutions).  11%  of  loans  outstanding 
86

 
 
 
 
Annual Accounts of the European Union 2010 

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. 

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, and 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 2010 these investments amounted to EUR 192 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 2010 this ratio stood at 32%. 

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. 

87

 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

8. RELATED PARTY DISCLOSURES 

RELATED PARTIES 

8.1 
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 these consolidated entities is given in note 10. 

KEY MANAGEMENT ENTITLEMENTS 

8.2 
For the purposes of presenting information on related party transactions concerning the key management of 
the European Commission, such persons are shown here under five categories: 

Category 1: the Presidents of the European Council, the Commission and 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. 

88

 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

KEY MANAGEMENT FINANCIAL ENTITLEMENTS 

EUR 

Entitlement (per employee) 
Basic salary (per month) 

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 

Number of persons at 31/12/2010 

Category 1 

Category 2 

Category 3 

Category 4 

Category 5 

25 351.76 

15% 

22 963.55 – 
23 882.09 
15% 

18 370.84 – 
20 667.20 
15% 

19 840.51 – 
21 126.47 
15% 

11 681.17 – 
18 370.84 
16% 

2% + 170.52 
372.61 
91.02 
252.81 
505.39 
N/A 
1 418.07 
N/A 

2% + 170.52 
372.61 
91.02 
252.81 
505.39 
N/A 
0 - 911.38 
N/A 

2% + 170.52 
372.61 
91.02 
252.81 
505.39 
500 - 810.74 
500 - 607.71 
N/A 

2% + 170.52 
372.61 
91.02 
252.81 
505.39 
N/A 
N/A 
N/A 

2% + 170.52 
372.61 
91.02 
252.81 
505.39 
N/A 
N/A 
Yes 

Yes 
5% 
max 25% 
reimbursed 

50 703.52 

reimbursed 
reimbursed 

25 351.76 

reimbursed 
reimbursed 
40% - 65% 
covered 
Max 70% 

8% - 45% 
1.8% 
5.07% 
N/A 
3 

Yes 
5% 
max 25% 
reimbursed 

45 927.10 – 
47 764.18 
reimbursed 
reimbursed 

22 963.55 – 
23 882.09 
reimbursed 
reimbursed 
40% - 65% 
covered 
Max 70% 

8% - 45% 
1.8% 
5.07% 
N/A 
7 

Yes 
5% 
max 25% 
reimbursed 

36 741.68 – 
41 334.40 
reimbursed 
reimbursed 

18 370.84 – 
20 667.20 
reimbursed 
reimbursed 
40% - 65% 
covered 
Max 70% 

8% - 45% 
1.8% 
5.07% 
N/A 

91 

Yes 
5% 
max 25% 
N/A 

Yes 
5% 
max 25% 
N/A 

39 681.02 –  
42 252.94 
reimbursed 
reimbursed 

19 840.51 –  
21 126.47 
reimbursed 
reimbursed 
40% - 65% 
covered 
Max 70% 

8% - 45% 
1.8% 
5.07% 
N/A 

27 

reimbursed 

reimbursed 
reimbursed 

reimbursed 

reimbursed 
reimbursed 
N/A 
optional 
Max 70% 

8% - 45% 
1.8% 
5.07% 
11.3% 
89 

* with correction coefficient (“cc”) applied 
** paid for the first 3 years following departure 

89

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

9. EVENTS AFTER THE BALANCE SHEET DATE 

At the date of transmission 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. 

Balance of Payments (BOP) lending operations 

In March 2011 a further EUR 1.2 billion was disbursed to Romania under the BOP facility, with a maturity 
date  of  April  2018  and  in  June  2011  the  last  amount  of  EUR  150  million  was  paid  out.  Furthermore,  in 
February  2011,  Romania  requested  a  follow-up  precautionary  financial  assistance  programme  under  the 
Balance  of  Payments  Facility  to  support  the  re-launch  of  economic  growth.  On  12  May  2011  the  Council 
decided to make available precautionary EU BOP assistance for Romania of up to EUR 1.4 billion (Council 
Decision 2011/288/EU). Currently, Romania does not intend to request the disbursement of any instalment 
under the precautionary financial assistance programme since the amounts would only be requested in case 
of  unforeseen  market  deterioration  in  the  economic  and/or  financial  situation  due  to  factors  outside  the 
control of the Romanian authorities, leading to the opening of an acute financing gap. Should the financial 
assistance be activated, it would be provided in form of a loan with a maximum maturity of seven years. The 
table below shows the reimbursement schedule of the EUR 13.4 billion disbursed at the date of authorisation 
for issue of the annual accounts. 

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. When activated, the Commission would 
borrow funds on the capital markets or with financial institutions on behalf of the EU and lend these funds to 
the beneficiary Member State. The ECOFIN Council conclusions of 9 May 2010 restrict the facility to EUR 
60  billion  but  the  legal  limit  is  provided  in  Article  2.2  of  the  Council  Regulation,  which  restricts  the 
outstanding amount of loans or credit lines to the margin available under the own resources ceiling. 

On  21  November  2010,  Ireland  requested  financial  assistance  under  the  above  referenced  Regulation.  The 
Council Implementing Decision (2011/77/EU) of 7 December 2010 agreed to grant Ireland a loan amounting 
to a maximum of EUR 22.5 billion with a maximum average maturity of 7½ years. The loan will be made 
available in a maximum of 13 instalments. The first tranche of EUR 5 billion under the first instalment was 
paid to Ireland on 12 January 2011 with a final maturity in December 2015. The second tranche of the first 
instalment of EUR 3.4 billion was paid to Ireland on 24 March 2011 with a final maturity in April 2018. A 
second instalment of EUR 3 billion, with a maturity date of June 2021, was paid out on the 31 May 2011.  

On 7 April 2011, Portugal also requested financial assistance under the EFSM and so on 17 May 2011 the 
Council  agreed  to  grant  a  loan  amounting  to  a  maximum  of  EUR  26  billion  (see  Council  Implementing 
Decision (2011/344/EU)), with a maximum average maturity of 7½ years. The loan shall be made available 
during three years, in a maximum of 14 installments. The first tranche of the first installment, amounting to 
EUR 1.75 billion, was disbursed on 31 May 2011, with a maturity date of June 2021. On 1 June 2011, the 
second tranche of the first installment, EUR 4.75 billion was disbursed, with a maturity of June 2016. The 
table below shows the reimbursement schedule of the EUR 17.9 billion disbursed at the date of authorisation 
for issue of the annual accounts. 

90

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Financial Stabilisation Mechanisms without impact on the EU accounts 

Annual Accounts of the European Union 2010 

It  is  worth  noting  that  although  it  has  no  impact  on  either  the  EU  accounts  or  the  EU  budget,  another 
financial assistance package, the European Financial Stability Facility (EFSF), was established by the euro 
area Member States and other participating Member States. This Facility expires in June 2013. 

The above mentioned EFSM loans to Ireland and Portugal were granted in conjunction with a loan facility 
from  the  EFSF  with  an  aggregate  net  disbursement  amount  of  EUR  17.7  billion  for  Ireland  and  EUR  26 
billion  for  Portugal,  and  with  assistance  from  the  International  Monetary  Fund  of  respectively  SDR  19.5 
billion (approximately EUR 22.5 billion  based on the rate in force at the time of the agreement) and SDR 
23.7 billion (approximately EUR 26 billion) under an Extended Fund Facility. In addition, Ireland was also 
granted  bilateral  loans  from  the  United  Kingdom  of  GBP  3.3  billion  (approximately  EUR  3.8  billion), 
Sweden EUR 600 million and Denmark EUR 400 million. 

Additionally,  the  European  Council  decided  on  the  24  June  2011  to  establish  a  new  permanent  crisis 
mechanism, the European Stability Mechanism (ESM). It will become operational as of mid-2013 and will 
replace  the  European  Financial  Stability  Facility  (EFSF)  and  the  European  Financial  Stabilisation 
Mechanism  (EFSM).  This  mechanism  will  allow  for  the  provision  of  financial  assistance  to  euro  area 
Member  States  in  financial  distress.  Assistance  will  be  conditional  on  the  implementation  of  a  strict 
economic and fiscal adjustment programme, in line with existing arrangements. As this mechanism will have 
its own legal personality and will be funded directly by the euro area Member States, there is no impact on 
either the EU accounts or the EU budget. 

91

 
 
 
 
 
 
Annual Accounts of the European Union 2010 

Outstanding loan amounts to be reimbursed per year as at date of authorisation for issue of the annual accounts 

Instalment 

2011 

2014 

2015 

2016 

2017 

2018 

2019 

2021 

2025 

Total 

EUR Billions 

Loan and 
Beneficiary 

BOP 
Hungary 

Latvia 

Romania 

Total BOP 
EFSM 
Ireland 

Portugal 

1st 
2nd 
3rd 
1st 
2nd 
3rd 
4th 
5th 
6th 
1st 
2nd 
3rd 
4th 
5th 
Precautionary 
assistance 

1st (T1) 
1st (T2) 
2nd 
1st (T1) 
1st (T2) 

2.0 

2.0 

1.0 

1.5 

1.2 

1.5 

2.7 

5.0 

2.0 

3.0 

0.5 

1.0 

0.2 

1.15 

1.2 
0.15 

1.5 

1.15 

1.35 

1.5 

0.0 

0.2 

13.4 

3.4 

0.0 
1.15 

3.4 
4.75 

0.0 
1.5 

3.0 
1.75 

4.75 
4.75 

0.0 
0.2 

17.9 
31.3 

4.75 

4.75 
6.25 

92

Total EFSM 
Overall total 

0.0 
2.0 

0.0 
3.0 

5.0 
7.7 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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 
European Council* 

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 Institute for Gender Equality* 

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) 
European Police Office (EUROPOL)* 

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. JOINT VENTURES 
ITER International Fusion Energy Organisation 
SESAR Joint Undertaking 
FCH Joint Undertaking* 

C. ASSOCIATES 
European Investment Fund  
Clean Sky Joint Undertaking 

* 

Consolidated for the first time in 2010 

Galileo Joint Undertaking in liquidation 
IMI Joint Undertaking 

ARTEMIS Joint Undertaking 
ENIAC Joint Undertaking* 

93

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

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 EDF programming cycles have generally followed 
the partnership agreement/convention cycles. 

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 

31.12.2010 

31.12.2009 

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 

353 

2 151 

2 504 

(1 046) 

(1 046) 

1 458 

23 879 
2 252 
(21 908) 
(2 765) 
1 458 

196 

1 389 

1 585 

(860) 

(860) 

725 

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

94

 
 
 
 
 
 
 
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
 
Annual Accounts of the European Union 2010 

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

 OPERATING REVENUE 

 OPERATING EXPENSES 

  DEFICIT FROM OPERATING ACTIVITIES 

 FINANCIAL ACTIVITIES 

2010 

140 

(3 000) 

(2 860) 

95 

EUR millions
2009 

49 

(3 192) 

(3 143) 

49 

  ECONOMIC OUTTURN OF THE YEAR 

(2 765) 

(3 094) 

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 2010 totalled EUR 286 million (2009: EUR 297 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 
2010 the PGF had total assets of EUR 879 million (2009: EUR 580 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. 

95

 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

ANNUAL ACCOUNTS 
OF THE EUROPEAN UNION 

FINANCIAL YEAR 2010 

PART II 

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

96

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

CONTENTS – PART II 

Part II: Consolidated reports on implementation of the budget of the European Union and 

explanatory notes 

Page 

Reports on implementation of the budget: 

1. Budget outturn 

2. Statement of Comparison of Budget and Actual Amounts 

Revenue: 

3. Consolidated summary of the implementation of budget revenue 

Expenditure: 

4. Breakdown and changes in commitment and payment appropriations by 

financial framework heading 

5. Implementation of commitment appropriations by financial framework heading 

6. Implementation of payment appropriations by financial framework heading 

7. Movement in commitments outstanding by financial framework heading 

8. Breakdown of commitments outstanding by year 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 

Institutions: 

14. Consolidated summary of implementation of budget revenue by Institution 

15. Implementation of commitment appropriations by financial framework heading 

Agencies: 

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

17. Commitment and payment appropriations by Agency 

18. Budget outturn including Agencies 

Explanatory notes to the reports on implementation of the budget: 

1. Budgetary principles, structure and appropriations 

2. Explanation of the reports on the implementation of the budget 

99 

100 

102 

103 

103 

103 

104 

105 

106 

107 

108 

109 

110 

111 

112 

113 

114 

115 

117 

120 

97

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

PART II 

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 

98

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual Accounts of the European Union 2010 

RESULT OF IMPLEMENTATION OF THE EU BUDGET 

              1: EU BUDGET OUTTURN 2010 

EUR millions 

EUROPEAN UNION 

2010 

2009 

Revenue for the financial year 

127 795 

117 626

Payments against current year appropriations 

(121 213) 

(116 579)

Payment appropriations carried over to year N+1 

(2 797) 

(1 759)

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

741 

2 791

Exchange differences for the year  

Budget Outturn* 

23 

4 549 

185

2 264

* Of which EFTA amounts total EUR 9 million in 2010 and EUR 11 million in 2009. 

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. 

99

 
 
 
 
 
 
 
 
 
2. STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS  
REVENUE 

Title 

Original Budget 

Final Budget 

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 

Total 

1 
121 507 
0 
1 178 

69 

30 

123 
0 
30 
122 937 

2 
119 270 
2 254 
1 180 

69 

30 

123 
0 
30 
122 956 

Entitlements 
established 
3 

119 950 
1 624 
1 129 

407 

3 781 

15 301 
122 
47 
142 362 

Revenue 

4 
119 869   
1 460 
1 123 

388 

3 512 

1 408 
0 
36 
127 795 

Original Budget 

EXPENDITURE – BY FINANCIAL FRAMEWORK HEADING 
Difference 
Final-Actual 
4=2-3 

Final Budget (*) 

Payments made 

1 

3 

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 

Total 

47 727 
58 136 
1 398 
7 788 
7 889 
0 
122 937 

* including appropriations carried over and assigned revenue 

2 
52 103 
59 630 
1 617 
8 101 
9 076 
0 
130 527 

Difference  
Final-Actual 
5=2-4 

Receipts as % of 
budget 
6=4/2 

EUR millions 

Outstanding 

7=3-4 

- 599 
794 
58 

-319 

-3 482 

-1 285 
0 
-6 
-4 839 

100.50 % 
64.79 % 
95.12 % 

563.54% 

11 707.30% 

1 144.36% 
0 
119.95% 
103.94% 

81 
164 
7 

19 

269 

13 893 
122 
10 
14 566 

EUR millions 

% 

5=3/2 

Appropriations 
carried over 
6 

Appropriations 
lapsing 
7=2-3-6 

48 828 
56 647 
1 373 
7 487 
7 896 
0 
122 231 

3 275 
2 983 
244 
615 
1 180 
0 
8 296 

93.71% 
95.00% 
84.93% 
92.41% 
87.00% 
0.00% 
93.64% 

1 905 
2 382 
199 
114 
957 
0 
5 557 

1 370 
601 
44 
501 
223 
0 
2 739 

100 

 
 
  
 
 
 
 
 
  
 
 
 
 
 
 
 
 
2. STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS AMOUNTS/EXPENDITURE 
BY POLICY AREA 

Policy Area 

Original Budget   Final Budget (*) 

Payments made 

Difference 
Final-Actual 

% 

1 

2 

3 

4=2-3 

5=3/2 

Appropriations 
carried over to 
2011 
6 

EUR millions 

Appropriations 
lapsing 

7=2-3-6 

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 Maritime affairs and Fisheries 
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 

Total 
* including appropriations carried over and assigned revenue 

406 
638 
91 
8 572 
57 077 
3 262 
371 
4 138 
1 597 
392 
819 
73 
28 768 
107 
1 443 
210 
542 
798 
3 658 
82 
1 608 
1 204 
820 
73 
188 
1 013 
68 
11 
120 
1 214 
389 
249 
2 937 
122 937 

401 
771 
104 
8 543 
58 421 
3 369 
438 
5 369 
1 986 
789 
827 
80 
30 709 
136 
1 783 
231 
664 
840 
3 867 
90 
1 819 
1 152 
978 
82 
215 
1 239 
77 
12 
148 
1 210 
486 
193 
3 496 
130 527 

289 
658 
92 
7 481 
55 611 
2 859 
358 
4 507 
1 786 
438 
656 
71 
30 623 
126 
1 572 
206 
590 
745 
3 683 
77 
1 708 
1 130 
971 
73 
189 
1 044 
65 
11 
126 
1 205 
427 
0 
2 857 
122 231 

101 

112 
113 
12 
1 062 
2 810 
510 
80 
863 
200 
351 
172 
9 
87 
10 
211 
25 
74 
95 
185 
13 
111 
22 
7 
10 
26 
195 
12 
2 
22 
4 
60 
193 
639 
8 296 

72.11% 
85.35% 
88.79% 
87.57% 
95.19% 
84.85% 
81.79% 
83.93% 
89.94% 
55.51% 
79.23% 
88.66% 
99.72% 
92.53% 
88.16% 
89.24% 
88.84% 
88.70% 
95.23% 
85.06% 
93.90% 
98.06% 
99.30% 
88.34% 
87.95% 
84.24% 
83.82% 
86.62% 
84.99% 
99.63% 
87.75% 
0.00% 
81.72% 
93.64% 

67 
99 
10 
43 
2 325 
187 
24 
848 
197 
344 
39 
7 
79 
9 
205 
14 
45 
71 
84 
6 
55 
16 
6 
7 
22 
177 
11 
1 
17 
0 
57 
0 
484 
5 557 

44 
14 
2 
1 019 
485 
323 
56 
14 
3 
7 
133 
2 
8 
1 
6 
11 
30 
24 
101 
7 
56 
6 
1 
3 
4 
19 
1 
0 
6 
4 
3 
193 
155 
2 739 

 
 
  
 
 
 
 
3. SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE 2010 

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 

Total 

Initial 

121 507 
0 
1 178 

69 
30 

123 
0 
30 
122 937 

Final 

Current year  Carried over 

Total 

On entitlements 
of Current year

119 270 
2 254 
1 180 

69 
30 

123 
0 
30 
122 956 

119 861 
1 624 
1 122 

305 
3 507 

3 460 
47 
28 
129 955 

89 
0 
7 

102 
275 

11 841 
76 
19 
12 407 

119 950 
1 624 
1 129 

407 
3 781 

15 301 
122 
47 
142 362 

119 846 
1 460 
1 116 

290 
3 360 

621 
0 
24 
126 717 

EUR millions 

Receipts as   Outstanding 
% of budget 

Revenue 
On entitlements 
Carried 
22 
0 
7 

Total 

119 869 
1 460 
1 123 

100.50% 
64.79% 
95.12% 

98 
153 

786 
0 
13 
1 078 

388 
3 512 

563.54% 
11 707.30% 

1 408 
0 
36 
127 795 

1 144.36% 

119.95% 
103.94% 

81 
164 
7 

19 
269 

13 893 
122 
10 
14 566 

Chapter 

Income appropriations 

Entitlements established 

Detail Title 1: Own resources 

11. Sugar levies 
12. Customs duties 
13. VAT 
14. GNI 
15. Correction of budgetary imbalances 
16. Reduction of GNI based contributions of NL & S 

Total 

Initial 

123 
14 080 
13 951 
93 353 
0 
0 
121 507 

Final 

Current year  Carried over 

Total 

On entitlements 
of Current year

123 
15 596 
13 277 
90 273 
0 
0 
119 270 

146 
15 507 
13 393 
90 948 
-128 
-3 
119 861 

0 
89 
0 
0 
0 
0 
89 

146 
15 595 
13 393 
90 948 
-128 
-3 
119 950 

146 
15 491 
13 393 
90 948 
-128 
-3 
119 846 

Revenue 
On entitlements 
Carried 
0 
22 
0 
0 
0 
0 
22 

 Total  

146 
15 514 
13 393 
90 948 
-128 
-3 
119 869 

Receipts as   Outstanding 
% of budget 

118.00% 
99.47% 
100.87% 
100.75% 
- 
- 
100.50% 

0 
81 
0 
0 
0 
0 
81 

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. United Kingdom correction-intermediate calculation 
Total 

0 
0 
0 
0 
0 
0 
0 

2 254 
0 
0 
0 
0 
0 
2 254 

2 254 
-880 
241 
-4 
9 
4 
1 624 

0 
0 
0 
0 
0 
0 
0 

2 254 
-880 
241 
-4 
9 
4 
1 624 

2 254 
-917 
113 
-4 
9 
4 
1 460 

0 
0 
0 
0 
0 
0 
0 

2 254 
-917 
113 
-4 
9 
4 
1 460 

100.00% 
- 
- 
- 
- 
- 
64.79% 

0 
37 
128 
0 
0 
0 
164 

102 

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

Financial Framework 
Heading 

Appropriations 
adopted 

Modifications 
(Transfers and 
AB) 

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 

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 

Total 

1 
64 249 
59 499 

1 674 

8 141 
7 889 
0 
141 453 

2 

3 

0 
0 

80 

0 
19 
0 
99 

65 
253 

0 

0 
11 
0 
329 

4 
1 929 
2 560 

151 

277 
473 
0 
5 390 

5=3+4 
1 994 
2 813 

151 

277 
484 
0 
5 719 

6=1+2+5 

66 243 
62 312 

1 906 

8 418 
8 392 
0 
147 270 

7 
47 727 
58 136 

1 398 

7 788 
7 889 
0 
122 937 

8 

1 074 
-1 116 

9 
932 
62 

10 
2 370 
2 549 

11=9+10 
3 302 
2 611 

12=7+8+11 
52 103 
59 630 

42 

1 
19 
0 
19 

8 

169 

177 

1 617 

90 
682 
0 
1 774 

222 
486 
0 
5 797 

313 
1 168 
0 
7 571 

8 101 
9 076 
0 
130 527 

5. IMPLEMENTATION OF COMMITMENT APPROPRIATIONS BY FINANCIAL FRAMEWORK HEADING 

Financial Framework 
Heading 

Commitment 
appropriations 
authorised 

Commitments made 

Appropriations carried over to 2011 

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 budget 
appropriations

From carry 
overs 

Assigned 
revenue 
(EFTA) 

Total 

% 

1 

2 

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

Total

66 243 
62 312 

1 906 

8 418 
8 392 
0 
147 270 

63 590 
59 406 

1 717 

8 083 
7 758 
0 
140 554 

3 

65 
253 

0 

0 
10 
0 
328 

4 

5=2+3+4 

6=5/1 

7 

8 

9=7+8 

10=9/1 

11 

12 

13 

799 
592 

78 

164 
229 
0 
1 861 

64 453 
60 251 

97.30% 1 130 
96.69% 1 968 

182 1 312 
2 1 970 

1.98% 
3.16% 

1 795 

94.20%

73 

24

97 

5.11% 

8 247 
7 997 
0 
142 744 

97.97%
95.30%
0.00%

113 
244 
0 
96.93% 3 528 

42
9
0

154 
254 
0 
259 3 787 

1.83% 
3.02% 
0.00% 
2.57% 

477 
91 

13 

16 
140 
0 
738 

0 
0 

0 

0 
1 
0 
1 

1 
0 

0 

0 
0 
0 
1 

14=11+
12+13 
478 
91 

15=14/1 

0.72% 
0.15% 

13 

0.69% 

17 
141 
0 
740 

0.20% 
1.68% 
0.00% 
0.50% 

103 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 

% 

From the 
year’s 
appropria-
tions 
12 

From 
carry-
overs 

13 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9 

10=7+
8+9 

11=10/1 

156 

373 

90 

2 

10 

0 

1 624 

1 905 

3.66% 

1 963 

2 382 

3.99% 

101 

199 

12.33% 

76 

114 

1.41% 

281 

0 

957 

10.54% 

0 

0.00% 

709 

586 

42 

491 

144 

0 

651 

15 

2 

9 

80 

0 

631 

4 045 

5 557 

4.26% 

1 972 

756 

11 

2 739 

2.10% 

Total 

% 

Assigned 
revenue 
(EFTA) 

14 

10 

0 

0 

0 

0 

0 

15=12
+ 
13+14 
1 370 

16= 
15/1 

2.63% 

601 

1.01% 

44 

2.74% 

501 

6.18% 

223 

2.46% 

0 

0.00% 

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

6 Compensations 

52 103 

47 811 

59 630 

56 014 

282 

47 

735 

48 828 

93.71% 

587 

56 647 

95.00% 

1 617 

1 299 

6 

67 

1 373 

84.93% 

8 101 

7 259 

9 076 

7 088 

0 

0 

81 

602 

0 

147 

7 487 

92.41% 

205 

0 

7 896 

87.00% 

0 

0.00% 

Total 

130 527 

119 472 

1 018 

1 741 

122 231 

93.64% 

125 

46 

8 

36 

666 

0 

881 

104 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7. MOVEMENTS IN COMMITMENTS OUTSTANDING - BY FINANCIAL FRAMEWORK HEADING 

Commitments outstanding at the end of the previous year 

Commitments of the year 

Financial Framework 
Heading 

Commitments 
carried forward 
from previous year 

Decommitments 
/Revaluations/ 
Cancellations 

Payments  

Commitments 
outstanding at 
year-end 

Commitments made 
during the year 

Payments 

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

Total

136 903 
19 541 

1 662 

18 462 

704 
0 
177 272 

-2 058 
-181 

-173 

-890 

-83 
0 
-3 385 

-43 678 
-10 280 

-452 

-5 231 

-607 
0 
-60 249 

91 167 
9 079 

1 037 

12 340 

15 
0 
113 638 

64 453 
60 251 

1 795 

8 247 

7 997 
0 
142 744 

-5 150 
-46 367 

-921 

-2 255 

-7 289 
0 
-61 982 

Cancellation of 
commitments 
which cannot be 
carried over 
-3 
0 

0 

0 

-1 
0 
-5 

EUR millions 

Commitments 
outstanding at 
year-end 

Total Commitments 
outstanding at year-
end 

59 300 
13 883 

874 

5 992 

708 
0 
80 757 

150 467 
22 963 

1 911 

18 332 

723 
0 
194 395 

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

Financial Framework Heading 

<2004 

2004 

2005 

2006 

2007 

2008  

2009  

2010  

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

Total 

781
44
13
786
0
1 623

617
13
12
412
0
1 055

1 461
47
23
584
0
2 116

13 421 
1 517 
42 
1 474 
0 
16 455 

2 879
138
151
1 727
0
4 895

23 288
688
218
3 164
0
27 359

48 719
6 633
577
4 193
14
60 136

59 300 
13 883 
874 
5 992 
708 
80 757 

EUR millions 
Total 

150 467 
22 963 
1 911 
18 332 
723 
194 395 

105 

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

Policy Area 

Approps 
adopted 
1 

Modifications 
(Transfer /AB) 
2 

Commitment appropriations 
Carried over  Assigned 
revenue 
4 

3 

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 Maritime affairs and Fisheries 
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 

Total 

449 
795 
91 
11 274 
58 081 
4 950 
471 
5 142 
1 628 
383 
1 001 
74 
38 897 
135 
1 500 
218 
677 
1 066 
4 264 
79 
1 647 
1 022 
820 
78 
188 
1 014 
68 
11 
141 
1 214 
389 
749 
2 937 
141 453 

-6 
0 
0 
85 
-2 
3 
-1 
0 
0 
0 
1 
1 
99 
0 
0 
2 
1 
1 
65 
-1 
-49 
-6 
245 
0 
2 
2 
-7 
0 
-5 
-4 
0 
-334 
9 
99 

0 
0 
0 
40 
252 
0 
0 
0 
0 
4 
1 
0 
21 
0 
0 
0 
0 
0 
0 
0 
0 
1 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
10 
329 

13 
112 
4 
16 
2 548 
136 
24 
770 
189 
460 
3 
3 
4 
4 
317 
4 
26 
61 
121 
3 
139 
18 
5 
0 
9 
96 
6 
1 
17 
0 
72 
0 
213 
5 390 

Total 
additional 
5=3+4 
13 
112 
4 
56 
2 800 
136 
24 
770 
189 
464 
3 
3 
25 
4 
317 
4 
26 
61 
121 
3 
139 
19 
5 
0 
9 
96 
6 
1 
17 
0 
72 
0 
223 
5 719 

Total 
authorised 
6=1+2+5 
455 
907 
95 
11 414 
60 879 
5 089 
494 
5 912 
1 817 
847 
1 005 
78 
39 020 
139 
1 817 
223 
703 
1 128 
4 450 
81 
1 737 
1 035 
1 070 
78 
199 
1 111 
67 
12 
153 
1 210 
462 
415 
3 170 
147 270 

Approps 
adopted 
7 
406 
638 
91 
8 572 
57 077 
3 262 
371 
4 138 
1 597 
392 
819 
73 
28 768 
107 
1 443 
210 
542 
798 
3 658 
82 
1 608 
1 204 
820 
73 
188 
1 013 
68 
11 
120 
1 214 
389 
249 
2 937 
122 937 

Modifications 
(Transfer/ AB)
8 

Payment appropriations 
Assigned 
revenue 
10 

Carried 
over 
9 

-29 
-7 
0 
-790 
-1 229 
-152 
26 
28 
96 
-11 
-9 
-2 
1 925 
18 
-3 
3 
73 
-23 
67 
-1 
57 
-79 
107 
2 
2 
4 
-7 
0 
4 
-4 
0 
-56 
9 
19 

6 
13 
8 
748 
26 
92 
24 
38 
14 
35 
15 
6 
13 
7 
14 
15 
28 
7 
50 
6 
41 
9 
46 
7 
16 
123 
10 
1 
7 
0 
24 
0 
325 
1 774 

18 
126 
4 
14 
2 548 
167 
18 
1 165 
279 
374 
3 
3 
4 
4 
329 
4 
21 
58 
92 
3 
114 
19 
4 
0 
9 
99 
6 
1 
17 
0 
72 
0 
224 
5 797 

EUR millions 

Total 
authorised 
12=7+8+11 

401 
771 
104 
8 543 
58 421 
3 369 
438 
5 369 
1 986 
789 
827 
80 
30 709 
136 
1 783 
231 
664 
840 
3 867 
90 
1 819 
1 152 
978 
82 
215 
1 239 
77 
12 
148 
1 210 
486 
193 
3 496 
130 527 

Total 
additional 
11=9+10 
24 
140 
12 
762 
2 573 
259 
42 
1 203 
293 
409 
17 
9 
17 
11 
343 
18 
50 
65 
142 
9 
154 
28 
50 
7 
25 
222 
16 
1 
24 
0 
97 
0 
549 
7 571 

106 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10. IMPLEMENTATION OF COMMITMENT APPROPRIATIONS BY POLICY AREA  

EUR millions 

Policy Area 

Commitment 
appropriations 
authorised 

From the 
year’s 
approps 

Commitments made 
Assigned 
revenue 

From 
carry-
overs 

Total 

% 

Appropriations carried over to 2011 

Assigned 
revenue 

Carry-
overs: 
decision

Total 

% 

1 

2 

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 Maritime affairs and Fisheries 
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 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 

Total 

455 
907 
95 
11 414 
60 879 
5 089 
494 
5 912 
1 817 
847 
1 005 
78 
39 020 
139 
1 817 
223 
703 
1 128 
4 450 
81 
1 737 
1 035 
1 070 
78 
199 
1 111 
67 
12 
153 
1 210 
462 
415 
3 170 
147 270 

440 
785 
90 
11 329 
58 048 
4 797 
447 
5 141 
1 624 
383 
975 
75 
38 958 
131 
1 497 
216 
659 
1 038 
4 293 
77 
1 591 
1 014 
1 055 
77 
189 
1 013 
61 
11 
130 
1 205 
388 
0 
2 821 
140 554 

3 

0 
0 
0 
40 
252 
0 
0 
0 
0 
4 
1 
0 
21 
0 
0 
0 
0 
0 
0 
0 
0 
1 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
9 
328 

From the 
year’s 
budget 
approps 
11 

Appropriations lapsing 
Assigned 
revenue 
(EFTA) 

From 
carry-
overs 

Total 

% 

12 

13 

14=11+12+
13 

15=14/1 

4 

5=2+3+4 

6=5/1 

7 

8 

9=7+8 

10=9/1 

11 
60 
2 
9 
580 
67 
11 
404 
68 
75 
2 
2 
2 
2 
144 
2 
17 
32 
66 
1 
96 
8 
3 
0 
4 
58 
3 
0 
9 
0 
44 
0 
81 
1 861 

1 
52 
2 
7 
1 967 
69 
13 
366 
121 
385 
1 
1 
2 
2 
173 
2 
9 
29 
55 
1 
44 
10 
2 
0 
4 
38 
3 
0 
8 
0 
29 
0 
133 
3 528 

451 
845 
92 
11 378 
58 880 
4 864 
459 
5 545 
1 692 
462 
977 
76 
38 981 
133 
1 641 
217 
676 
1 070 
4 359 
78 
1 686 
1 023 
1 058 
77 
193 
1 070 
63 
11 
139 
1 205 
431 
0 
2 911 
142 744 

99.07% 
93.14% 
96.87% 
99.69% 
96.72% 
95.57% 
92.78% 
93.79% 
93.12% 
54.49% 
97.20% 
98.23% 
99.90% 
95.51% 
90.33% 
97.52% 
96.10% 
94.84% 
97.96% 
97.05% 
97.07% 
98.87% 
98.90% 
98.77% 
97.10% 
96.32% 
94.71% 
96.29% 
90.74% 
99.63% 
93.39% 
0.00% 
91.83% 
96.93% 

107 

0
0
0
19
0
146
0
0
0
0
2
0
21
0
0
0
0
24
31
0
6
0
0
0
0
0
0
0
0
0
0
0
9
259

1 
52 
2 
26 
1 967 
215 
13 
366 
121 
385 
3 
1 
23 
2 
173 
2 
9 
53 
86 
1 
49 
10 
2 
0 
4 
38 
3 
0 
8 
0 
29 
0 
142 
3 787 

0.32% 
5.68% 
2.15% 
0.23% 
3.23% 
4.23% 
2.60% 
6.19% 
6.66% 
45.46% 
0.31% 
1.64% 
0.06% 
1.15% 
9.52% 
0.83% 
1.24% 
4.71% 
1.93% 
1.57% 
2.83% 
0.98% 
0.20% 
0.02% 
2.21% 
3.44% 
4.02% 
2.55% 
5.10% 
0.00% 
6.24% 
0.00% 
4.47% 

2.57% 

3 
10 
1 
10 
31 
10 
23 
1 
4 
0 
25 
0 
16 
5 
3 
4 
19 
5 
5 
1 
2 
2 
10 
1 
1 
3 
1 
0 
6 
4 
2 
415 
117 
738 

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 
0 
0 
0 
0 
0 
0 
0 
1 
1 

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 
0 
0 
0 
0 
0 
0 
0 
0 
1 

3 
11 
1 
10 
31 
10 
23 
1 
4 
0 
25 
0 
16 
5 
3 
4 
19 
5 
5 
1 
2 
2 
10 
1 
1 
3 
1 
0 
6 
4 
2 
415 
117 
740 

0.60% 
1.18% 
0.98% 
0.09% 
0.05% 
0.20% 
4.62% 
0.02% 
0.22% 
0.04% 
2.48% 
0.13% 
0.04% 
3.34% 
0.15% 
1.65% 
2.66% 
0.45% 
0.11% 
1.37% 
0.10% 
0.16% 
0.90% 
1.21% 
0.69% 
0.24% 
1.27% 
1.16% 
4.16% 
0.37% 
0.37% 
100.00% 
3.70% 
0.50% 

 
 
  
 
 
 
 
 
 
 
11. IMPLEMENTATION OF PAYMENT APPROPRIATIONS BY BUDGET 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 2011 
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 Maritime affairs and Fisheries 
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 

401 
771 
104 
8 543 
58 421 
3 369 
438 
5 369 
1 986 
789 
827 
80 
30 709 
136 
1 783 
231 
664 
840 
3 867 
90 
1 819 

1 152 
978 
82 
215 

1 239 
77 
12 
148 
1 210 
486 
193 
3 496 

282 
594 
83 
7 353 
55 009 
2 710 
329 
4 136 
1 675 
338 
652 
64 
30 611 
117 
1 416 
192 
552 
721 
3 589 
70 
1 585 

1 113 
922 
67 
171 

889 
52 
10 
113 
1 205 
362 
0 
2 490 

5 
11 
7 
121 
22 
88 
19 
25 
13 
31 
2 
5 
11 
6 
13 
12 
27 
6 
42 
5 
35 

8 
45 
5 
14 

110 
10 
1 
6 
0 
23 
0 
286 

2 
53 
2 
7 
580 
62 
10 
345 
98 
69 
1 
1 
2 
2 
143 
2 
11 
18 
52 
1 
88 

10 
4 
0 
4 

44 
3 
0 
7 
0 
41 
0 
80 

289 
658 
92 
7 481 
55 611 
2 859 
358 
4 507 
1 786 
438 
656 
71 
30 623 
126 
1 572 
206 
590 
745 
3 683 
77 
1 708 

1 130 
971 
73 
189 

1 044 
65 
11 
126 
1 205 
427 
0 
2 857 

72.11% 
85.35% 
88.79% 
87.57% 
95.19% 
84.85% 
81.79% 
83.93% 
89.94% 
55.51% 
79.23% 
88.66% 
99.72% 
92.53% 
88.16% 
89.24% 
88.84% 
88.70% 
95.23% 
85.06% 
93.90% 

98.06% 
99.30% 
88.34% 
87.95% 

84.24% 
83.82% 
86.62% 
84.99% 
99.63% 
87.75% 
0.00% 
81.72% 

5 
14 
7 
18 
25 
17 
16 
29 
16 
39 
3 
6 
10 
7 
15 
12 
29 
8 
42 
5 
29 

7 
5 
7 
16 

122 
8 
1 
6 
0 
25 
0 
331 

48 
12 
0 
19 
332 
70 
0 
0 
0 
0 
35 
0 
67 
1 
5 
0 
6 
23 
2 
0 
0 

0 
0 
0 
1 

1 
0 
0 
0 
0 
0 
0 
9 

9 

14 
73 
2 
6 
1 968 
100 
7 
819 
181 
305 
1 
1 
2 
2 
186 
2 
10 
41 
40 
1 
26 

9 
1 
0 
5 

54 
3 
0 
10 
0 
31 
0 
144 

10=7+8+
9 
67 
99 
10 
43 
2 325 
187 
24 
848 
197 
344 
39 
7 
79 
9 
205 
14 
45 
71 
84 
6 
55 

16 
6 
7 
22 

177 
11 
1 
17 
0 
57 
0 
484 

11=10/1 

16.82%
12.81%
9.46%
0.51%
3.98%
5.56%
5.44%
15.80%
9.91%
43.58%
4.74%
8.81%
0.26%
6.98%
11.51%
6.09%
6.70%
8.48%
2.16%
7.01%
3.03%

1.39%
0.61%
8.55%
10.39%

14.27%
14.49%
11.77%
11.21%
0.00%
11.65%
0.00%
13.85%

41 
11 
1 
392 
482 
313 
51 
1 
2 
3 
121 
1 
5 
0 
4 
8 
28 
23 
93 
6 
50 

5 
1 
1 
2 

6 
1 
0 
5 
4 
2 
193 
117 

0 
3 
1 
627 
3 
4 
4 
13 
1 
4 
12 
1 
2 
1 
2 
3 
1 
1 
8 
1 
5 

2 
0 
1 
2 

13 
0 
0 
1 
0 
1 
0 
38 

3 
1 
0 
0 
0 
6 
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 
0 
0 

% 

16=15/1 

11.07% 
1.84% 
1.74% 
11.93% 
0.83% 
9.59% 
12.78% 
0.27% 
0.15% 
0.91% 
16.03% 
2.53% 
0.03% 
0.49% 
0.33% 
4.67% 
4.45% 
2.82% 
2.61% 
7.92% 
3.07% 

0.55% 
0.09% 
3.11% 
1.66% 

1.50% 
1.69% 
1.61% 
3.79% 
0.37% 
0.60% 
100.00% 
4.43% 

15=12+  
13+14 
44 
14 
2 
1 019 
485 
323 
56 
14 
3 
7 
133 
2 
8 
1 
6 
11 
30 
24 
101 
7 
56 

6 
1 
3 
4 

19 
1 
0 
6 
4 
3 
193 
155 

Total  130 527 

119 472 

1 018 

1 741 

122 231 

93.64%

881 

631 

4 045 

5 557 

4.26% 1 972 

756 

11 

2 739 

2.10% 

108 

 
 
  
 
 
 
 
 
12. MOVEMENTS 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 
year 

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 Maritime affairs and Fisheries 
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 

Total 

424 
768 
9 
26 278 
17 155 
6 713 
750 
8 407 
2 411 
158 
1 620 
15 
93 232 
83 
591 
91 
706 
1 049 
9 034 
19 
3 391 
3 173 
513 
32 
18 

168 
10 
1 
101 
0 
24 
328 
177 272 

-5 
-20 
-2 
-1 501 
-227 
-99 
-29 
-200 
-65 
-17 
-64 
-1 
-114 
-14 
-50 
-9 
-68 
-92 
-327 
-1 
-95 
-300 
-19 
-4 
-2 

-15 
0 
0 
-6 
0 
-1 
-38 
-3 385 

-74 
-301 
-7 
-7 071 
-9 400 
-2 180 
-225 
-3 019 
-1 031 
-90 
-428 
-12 
-30 104 
-53 
-283 
-65 
-337 
-220 
-2 398 
-12 
-1 131 
-939 
-334 
-18 
-16 

-143 
-10 
-1 
-46 
0 
-23 
-278 
-60 249 

451 
845 
92 
11 378 
58 880 
4 864 
459 
5 545 
1 692 
462 
977 
76 
38 981 
133 
1 641 
217 
676 
1 070 
4 359 
78 
1 686 
1 023 
1 058 
77 
193 

1 070 
63 
11 
139 
1 205 
431 
2 911 
142 744 

-215 
-357 
-85 
-410 
-46 211 
-679 
-133 
-1 488 
-755 
-348 
-227 
-59 
-518 
-72 
-1 288 
-141 
-253 
-525 
-1 285 
-65 
-577 
-191 
-637 
-55 
-173 

-901 
-55 
-10 
-79 
-1 205 
-403 
-2 579 
-61 982 

344 
447 
0 
17 706 
7 528 
4 435 
496 
5 188 
1 315 
51 
1 128 
2 
63 013 
15 
258 
18 
300 
737 
6 309 
6 
2 166 
1 934 
160 
10 
1 

11 
0 
0 
49 
0 
0 
11 
113 638 

109 

Cancellation of 
commitments 
which cannot be 
carried over 
0 
0 
0 
-1 
0 
0 
0 
0 
0 
-1 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 

0 
0 
0 
0 
0 
0 
0 
-5 

EUR millions 

Commitments 
outstanding at 
year-end 

Total 
Commitments 
outstanding at 
year-end 

236 
488 
8 
10 967 
12 669 
4 184 
325 
4 057 
937 
112 
750 
17 
38 462 
60 
353 
76 
423 
545 
3 074 
13 
1 109 
832 
421 
22 
20 

169 
8 
1 
59 
0 
28 
332 
80 757 

581 
935 
8 
28 673 
20 197 
8 619 
821 
9 245 
2 252 
163 
1 877 
20 
101 475 
76 
610 
94 
723 
1 282 
9 383 
19 
3 275 
2 766 
581 
32 
20 

179 
8 
1 
108 
0 
28 
344 
194 395 

 
 
  
 
 
 
 
 
 
 
13. BREAKDOWN OF COMMITMENTS OUTSTANDING BY THE COMMITMENT'S YEAR OF ORIGIN 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 Maritime affairs and Fisheries 
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 

Total 

<2004 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

EUR millions 
Total 

63 
17 
0 
2 616 
1 199 
175 
40 
423 
73 
7 
282 
0 
10 452 
0 
28 
0 
17 
13 
636 
0 
203 
208 
0 
0 
0 
0 
0 
0 
4 
0 
0 
0 
16 455 

32 
57 
0
701 
0
381 
101 
792 
179 
4
23 
0
729 
0
27 
0
29 
98 
1 074 
1
262 
392 
7
2
0
0
0
0
5
0
0
0
4 895 

40 
112 
0 
4 288 
494 
797 
138 
1 369 
337 
14 
130 
0 
16 566 
2 
57 
1 
74 
167 
1 588 
1 
523 
623 
27 
3 
0 
2 
0 
0 
6 
0 
0 
0 
27 359 

196 
229 
0
9 590 
5 825 
2 854 
183 
2 091 
664 
26 
634 
2
33 307 
13 
121 
17 
164 
446 
2 158 
4
873 
559 
124 
5
0
7
0
0
31 
0
0
11 
60 136 

236 
488 
8 
10 967 
12 669 
4 184 
325 
4 057 
937 
112 
750 
17 
38 462 
60 
353 
76 
423 
545 
3 074 
13 
1 109 
832 
421 
22 
20 
169 
8 
1 
59 
0 
28 
332 
80 757 

581 
935 
8 
28 673 
20 197 
8 619 
821 
9 245 
2 252 
163 
1 877 
20 
101 475 
76 
610 
94 
723 
1 282 
9 383 
19 
3 275 
2 766 
581 
32 
20 
179 
8 
1 
108 
0 
28 
344 
194 395 

0
16 
0
137 
4
62 
4
183 
12 
0
36 
0
522 
0
12 
0
4
0
450 
0
126 
52 
2
0
0
0
0
0
1
0
0
0
1 623 

0 
3 
0 
26 
2 
61 
7 
117 
8 
0 
4 
0 
553 
0 
3 
0 
7 
1 
187 
0 
46 
28 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1 055 

13 
13 
0
350 
4
105 
24 
213 
42 
1
19 
0
884 
0
10 
0
4
12 
215 
0
133 
72 
0
0
0
0
0
0
2
0
0
0
2 116 

110 

 
 
  
 
 
14. SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE BY INSTITUTION 

On entitlements of 
Current year 
154 
87 
126 376 
44 
19 
15 
20 
1 
1 

Revenue 
On entitlements 
Carried 
89 
6 
983 
0 
0 
0 
0 
0 
0 

126 717 

1 078 

EUR millions 
Receipts as   Outstanding 

Total  % of budget 

243 
93 
127 359 
44 
19 
15 
20 
1 
1 

127 795 

186.52% 
172.12% 
103.80% 
110.33% 
94.72% 
147.07% 
294.94% 
96.40% 
68.01% 

103.94% 

24 
8 
14 534 
0 
0 
0 
0 
0 
0 

14 566 

Institution 

Income appropriations 
Final 

Initial 

Entitlements established 
Carried 

Total 

Current year

European Parliament 
European Council and Council 
Commission 
Court of Justice 
Court of Auditors 
Economic and Social Committee 
Committee of the Regions 
Ombudsman 
European Data Protection Supervisor 

Total 

129 
54 
122 675 
40 
20 
10 
7 
1 
1 

122 937 

130 
54 
122 692 
40 
20 
10 
7 
1 
1 

122 956 

158 
94 
129 603 
44 
19 
15 
20 
1 
1 

129 955 

109 
7 
12 291 
0 
0 
0 
0 
0 
0 

12 407 

267 
101 
141 894 
44 
19 
15 
20 
1 
1 

142 362 

111 

 
 
  
 
 
 
 
 
15. IMPLEMENTATION OF COMMITMENT AND PAYMENT APPROPRIATIONS BY INSTITUTION 
Commitment appropriations 

Institution 

Commitment 
appropriations 
authorised 

From the 
year's 
approps 

Commitments made 
From 
assigned 
revenue 

From 
carry-
overs 

Total 

% 

Appropriations carried over to 2011 

From 
assigned 
revenue 

Carry-overs 
by decision

Total 

% 

1 

2 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9=7+8 

10=9/1 

European Parliament 
European Council and Council 
Commission 
Court of Justice 
Court of Auditors 
Economic and Social Committee
Committee of the Regions 
Ombudsman 
European Data Protection 
Supervisor 

1 752 
703 
144 100 
331 
149 
127 
91 
9 
7 

1 552 
593 
137 733 
324 
138 
121 
79 
8 
6 

Total

147 270 

140 554 

9 
0 
319 
0 
0 
0 
0 
0 
0 

328 

24 
41 
1 780 
1
0
4
11 
0
0

1 586 
634 
139 833 
325 
138 
125 
90 
8 
6 

90.50% 
90.08% 
97.04% 
97.89% 
93.02% 
98.00% 
99.39% 
89.65% 
82.73% 

101 
29 
3 395 
1 
0 
0 
0 
0 
0 

9
0
250 
0
0
0
0
0
0

111 
29 
3 645 
1 
0 
0 
0 
0 
0 

6.31% 
4.14% 
2.53% 
0.44% 
0.26% 
0.14% 
0.02% 

1 861 

142 744 

96.93% 

3 528 

259 

3 787 

2.57%

From the 
year's 
budget 
appropriati
ons 
11 

55 
41 
621 
6 
10 
2 
1 
1 
1 

738 

Appropriations lapsing 
from carry-overs  Assigned 
revenue 
(EFTA) 

EUR millions 

Total 

% 

12 

13 

14=11+1
2+13 

15=14/1 

1
0
0
0
0
0
0
0
0

1

0 
0 
1 
0 
0 
0 
0 
0 
0 

1 

56 
41 
622 
6 
10 
2 
1 
1 
1 

3.19% 
5.79% 
0.43% 
1.66% 
6.72% 
1.87% 
0.59% 
10.35% 
17.27% 

740 

0.50% 

EUR millions 

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 2011 
Total 

% 

5=2+3+4 

6=5/1 

7 

8 

10=7+8+9  11=10/1 

From 
assigned 
revenue 
9 

Institution 

Payment 
appropriations 
authorised 

European Parliament 
European Council and Council 
Commission 
Court of Justice 
Court of Auditors 
Economic and Social Committee
Committee of the Regions 
Ombudsman 
European Data protection 
Supervisor 

1 

1 938 
748 
127 031 
350 
210 
134 
97 
10 
8 

1 321 
543 
116 982 
307 
122 
112 
73 
8 
4 

165 
34 
732 
15 
60 
5 
5 
1 
1 

20 
43 
1 661 
1
0
4
12 
0
0

1 507 
620 
119 374 
323 
182 
121 
89 
8 
5 

77.74% 
82.89% 
93.97% 
92.40% 
86.90% 
90.36% 
92.03% 
84.26% 
61.11% 

From the 
year's 
approps 
12 

55 
41 
1 855 
6
10 
2
1
1
1

111 
31 
3 901 
1
0
1
0
0
0

351 
81 
5 073 
18 
17 
9
7
1
1

18.10% 
10.76% 
3.99% 
5.24% 
7.94% 
6.95% 
6.91% 
5.23% 
16.79% 

Appropriations lapsing 
Assigned 
revenue 
(EFTA) 
14 

From 
carry-
overs 
13 

Total 

15=12+13+
14 

25 
7
718 
3
1
1
0
0
1

756 

0
0
11 
0
0
0
0
0
0

11 

% 

16=15/1 

4.16% 
6.35% 
2.03% 
2.36% 
5.15% 
2.68% 
1.06% 
10.50% 
22.10% 

81 
48 
2 584 
8 
11 
4 
1 
1 
2 

Total

130 527 

119 472 

1 018 

1 741 

122 231 

93.64%

4 045 

5 557 

4.26%

1 972 

2 739 

2.10% 

231 
50 
550 
17 
16 
8 
7 
1 
1 

881 

9 
0 
622 
0 
0 
0 
0 
0 
0 

631 

112 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 Institute for Gender Equality 
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 

137 
93 

18 

8 
75 
58 
16 

51 
11 
73 
6 
9 
242 
32 
51 

174 

208 

8 

20 
24 
15 

56 

20 
13 
21 

49 

16 
29 

34 

7 

10 

109 
84 

19 

8 
386 
48 
16 

46 
10 
74 
6 
16 
273 
32 
45 

179 

221 

8 

22 
24 
14 

59 

19 
12 
21 

49 

16 
29 

36 

7 

10 

106 
84 

19 

8 
386 
49 
16 

46 
10 
74 
6 
16 
236 
32 
45 

179 

209 

8 

22 
24 
14 

51 

19 
12 
21 

49 

16 
29 

34 

7 

10 

4 
0 

0 

0 
0 
0 
0 

0 
0 
0 
0 
0 
37 
0 
0 

0 

12 

0 

0 
0 
0 

8 

0 
0 
0 

0 

0 
0 

3 

0 

0 

EUR millions 

Funding 
Commission 
Policy Area 
06 
18 

15 

18 
02 
17 
18 

07 
11 
17 
04 
06 
08 
18 
06 

12 

02 

09 

18 
06 
04 

31 

15 
17 
04 

15 

06 
08 

08 

17 

06 

Total 

1 677 

1 993 

1 929 

64 

Type of revenue 

Forecasted 
income budget 

Entitlements 
established 

Amounts 
received 

EUR millions 
Outstanding 

Commission Subsidy 
Fee income 
Other income 

Total 

1 061 
443 
173 

1 677 

1 040 
765 
188 

1 993 

1 037 
751 
141 

1 929 

3 
14 
47 

64 

113 

 
 
 
 
 
 
 
 
 
 
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 

European Police Office 
Community Fisheries Control Agency 
European Food Safety Authority 
European Institute for Gender Equality 
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 

Appro-
priations 

Commit-
ments 
made 

144 

95 
21 

12 
75 
58 

16 

52 

93 

10 

76 

6 

74 

551 

34 
55 
366 
210 

8 

20 

24 
16 

56 
19 
13 
22 

49 

16 

29 

34 
7 

10 

122 

89 
19 

10 
71 
56 

16 

44 

91 

10 

74 

4 

67 

550 

31 
53 
158 
201 

8 

20 

24 
15 

43 
19 
12 
21 

49 

15 

29 

33 
7 

10 

Carried to 
2010 

22 

3 
2 

2 
0 
0 

0 

8 

0 

0 

0 

0 

7 

1 

3 
0 
0 
0 

0 

0 

0 
0 

0 
0 
0 
0 

0 

0 

0 

0 
0 

0 

Payment appropriations 
Payments 
made 

Carried to 
2010 

Appro-
priations 

157 

118 
21 

13 
96 
76 

17 

58 

93 

11 

84 

6 

63 

302 

38 
53 
396 
248 

10 

27 

29 
20 

60 
21 
14 
27 

55 

17 

32 

37 
8 

11 

108 

82 
17 

8 
77 
56 

15 

44 

68 

10 

71 

2 

45 

192 

28 
46 
150 
196 

8 

19 

23 
15 

43 
20 
11 
22 

48 

15 

30 

32 
7 

9 

48 

27 
3 

3 
12 
16 

1 

13 

22 

1 

11 

2 

18 

56 

9 
1 
35 
45 

2 

8 

5 
4 

4 
1 
0 
4 

6 

2 

2 

3 
1 

1 

Total 

2 271 

1 972 

49 

2 217 

1 516 

366 

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 

673 
283 
1 314 
2 271 

656 
264 
1 052 
1 972 

3 
2 
44 
49 

688 
365 
1 165 
2 217 

649 
249 
618 
1 516 

19 
93 
254 
366 

114 

 
 
 
 
 
18. BUDGET OUTTURN INCLUDING AGENCIES 

EUROPEAN 
UNION 

AGENCIES 

Elimination of 
subsidies to 
agencies 

EUR millions 

TOTAL 

Revenue for the financial year 

127 795

1 929

(1 037) 

128 687

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 

(121 213)

(1 320)

1 037 

(121 495)

(2 797)

(366)

741

22
4 549

181

0
424

0 

0 

0 
0 

(3 164)

922

22
4 972

115 

 
 
 
 
 
 
PART II 

Explanatory notes to the consolidated reports on 
implementation of the budget 

1.  

BUDGETARY PRINCIPLES, STRUCTURE AND APPROPRIATIONS 

2.  

EXPLANATION OF THE REPORTS ON THE IMPLEMENTATION OF 
THE BUDGET 

116 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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. 

117 

 
 
 
 
 
 
 
 
 
 
 
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 

Only the Commission budget contains administrative appropriations and operating appropriations. The other 
Institutions  have  only  administrative  appropriations.  Furthermore,  the  budget  distinguishes  between  two 
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. 

–  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 Union'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). 

118 

 
 
 
 
 
 
 
 
 
 
 
 
 
–  Appropriations  carried  over  from  previous  year  or  made  available  again  also  supplement  the  current 
budget. These are (i) 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; (ii) 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  (iii) 
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 (i) refunds where the amounts are assigned revenue on the budget 
line  which  incurred  the  initial  expenditure  and  may  be  carried  over  without  limit;  (ii)  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;  (iii) 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);  (iv)  Work  for 
third  parties:  As  part  of  their  research  activities,  the  EU  research  centres  may  work  for  outside  bodies, 
(Article 161(2) of the Financial Regulation). 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  (v)  Appropriations  made  available  again  as  a  result  of  repayment  of 
payments  on  account:  These  are  EU  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. 

119 

 
 
 
 
 
 
 
 
 
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 
2009  and  15  October  2010,  provided  that  the  accounting  officer  was  notified  of  the  commitment  and 
authorisation  by  31  January  2011.  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  2010  budget 
implementation statements and those carried over to the following year in the 2009 budget implementation 
statements.  The  payment  appropriations  for  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 2009.  

120 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 

2010 

EUR millions
2009 
restated 

ECONOMIC OUTTURN FOR THE YEAR 

17 232 

6 887 

Revenues 

Entitlements established in current year but not yet collected 
Entitlements established in previous years and collected in current 
year 
Accrued revenue (net) 

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 of unused payment 
appropriations 
Movement in provisions 
Other 

Economic outturn agencies + ECSC 

BUDGET OUTTURN FOR THE YEAR* 

(3 132) 
1 346 

(371) 

(7 426) 
(386) 
(678) 
(2 798) 
1 760 

(323) 
(257) 

(418) 

4 549 

(2 806) 
2 563 

436 

2 951 
(432) 
(9 458) 
(1 759) 
4 573 

(329) 
(153) 

(209) 

2 264 

Reconciling items - Revenue 
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.  

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 Commission.  

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.  

121 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 (Table 2) 

In the initial adopted budget, signed by the President of the European Parliament on 17 December 2009, the 
amount  of  payment  appropriations  was  EUR  122  937  million  and  the  amount  to  be  financed  by  own 
resources  totalled  EUR  121  507  million.  The  revenue  and  expenditure  estimates  in  the  initial  budget  are 
typically  adjusted  during  the  budgetary  year,  such  modifications  being  presented  in  amending  budgets. 
Adjustments  in  the  GNI-based  own  resources  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. 

Revenue: 
During 2010 eight amending budgets were adopted. Taking them into account, the total final revenue in the 
2010 budget amounted to EUR 122 956 million. This was financed by own resources totalling EUR 119 270 
million  (thus  EUR  2  237  million  less  than  initially  forecasted)  and  the  remainder  by  other  revenue.  The 
reduced  need  for  own  resources  stemmed  mainly  from  the  inclusion  of  EUR  2  254  million  relating  to  the 
surplus of the previous year. 

As far as the own resources are  concerned, the collection of traditional own resources  matched almost the 
forecasted amounts, namely because the budget estimates were modified at the time the Amending Budget 
No. 4/2010 was established (they were increased by EUR 1 516 million). This adjustment was based on the 
new macroeconomic forecasts of spring 2010, which were more optimistic than the previous ones. 

The final Member States' VAT and GNI payments also correspond closely to the final budgetary estimate. 
The  differences  between  the  forecasted  amounts  and  the  amounts  actually  paid  are  due  to  the  differences 
between the euro rates used for budgetary purposes and the rates in force at the time when the Member States 
outside the EMU actually made their payments. 

Expenditure: 
The year 2010, the fourth year of the current programming period, saw programmes reaching their cruising 
speed and the start of the final closure of old programmes. At the end of the year outstanding commitments 
made before 2007 represent some 10% of the total RAL. 

For commitments, the initial budget and hence the political targets set were carried out virtually as planned. 
The  implementation  rate,  excluding  the  unused  reserve  of  EUR  415  million  for  European  Globalisation 
Adjustment  Fund  and  EUR  28  million  of  unused  provisional  appropriations  (amounts  placed  in  reserve 
pending  the  fulfilment  of  certain  conditions,  which  remain  in  reserve  at  the  end  of  the  budgetary  year) 
reached 99.4%. Adjustments during the year concerned EUR 80 million for the European Solidarity Fund, 
unforeseeable  expenditure  by  nature,  and  for  administrative  expenditure  EUR  10  million  related  to  the 

122 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
setting-up  of  the  European  External  Action  Service  and  EUR  10  million  for  the  European  Parliament 
following the entry into force of the Lisbon treaty. The total implementation of EUR 140 554 left EUR 554 
million unused. After the carryover of EUR 259 million to 2011, the largest item being Energy Projects to 
aid Economic Recovery for EUR 147 million, an amount of EUR 295 million lapsed. 

The implementation rate for payments, excluding un-mobilised Emergency Aid Reserve (EUR 193 million) 
and  provisional  appropriations  (EUR  48  million),  was  97.4  %  of  the  budget,  total  appropriations  were 
amended during the course of the year only for the increases of administrative expenditure mentioned above.  

Contrary to previous years, there was no reduction in payment appropriations via an amending budget at the 
year-end. The main adjustment was carried out via the global transfer which reinforced Regional policy by 
EUR 1 125 million by reducing appropriations for Rural Development. The Commission reinforced also the 
Cohesion  Fund  with  some  EUR  600  million  via  internal  transfers.  The  unused  voted  appropriations, 
excluding reserves, amounted to EUR 3 243 million and after the carryover of EUR 1 513 million, a total of 
EUR 1 730 million spread across the Multi-annual Financial Framework ("MFF") headings lapsed. 

A more detailed analysis of budgetary adjustments, their relevant context, their justification and their impact 
is  presented  in  Commission's  Report  on  Budgetary  and  Financial  Management  2010,  Part  A  overview  at 
budget level and Part B dealing with each MFF 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.  

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. 

– 

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 established entitlements during the quarter in question, 
rectifications of the base (corrections/cancellations) during the quarter in question, 
amounts written off (which cannot be made available according to Article 17(2) of Reg. 1150/2000), 
the amounts recovered during the quarter in question, 
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. 

123 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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. 

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). 

124 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.4 

EXPENDITURE (Tables 4 to 13) 

2.4.1  Financial Framework 2007-2013 

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 

7 039

7 380

7 525

7 882

8 334 

8 670

9 095

6. Compensations 

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

This  section  describes  the  main  categories  of  EU  expenditure,  classified  by  heading  of  the  financial 
framework  2007-2013.  The  2010  financial  year  was  the  fourth  covered  by  the  financial  framework  2007-
2013.  The  overall  ceiling  on  commitments  appropriations  for  2010  comes  to  EUR  140  978  million, 
equivalent to 1.18% of GNI. The corresponding ceiling on the appropriations for payments comes to EUR 
134  289  million,  i.e.  1.12  %  of  GNI.  The  above  table  shows  the  financial  framework  at  current  prices 
estimated for 2013. 

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 

125 

 
 
 
 
 
 
 
 
 
 
 
 
 
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  European  Development  Fund  (EDF)  into  the  financial  framework,  the  European 
Council and the European Parliament agreed to leave it outside. 

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. 

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. 

126