COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS CONSOLIDATED ANNUAL ACCOUNTS OF THE EUROPEAN UNION 2014
Date: 2015-07-23
Institutions: Directorate-General for Budget, European Commission
Subjects: balance sheet, consolidated account, financial situation, general budget (EU), implementation of the budget

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 23.7.2015  COM(2015) 377 final   COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS  CONSOLIDATED ANNUAL ACCOUNTS OF THE EUROPEAN UNION 2014  
 
 
Consolidated annual 

accounts of the  

European Union  

Financial year 2014 

 
 
 
 
 
 
 
CONTENTS 

FINANCIAL STATEMENT DISCUSSION AND ANALYSIS ............................................ 3 

NOTE ACCOMPANYING THE CONSOLIDATED ACCOUNTS ...................................... 24 

CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES ................... 25 

BALANCE SHEET ................................................................................................ 27 

STATEMENT OF FINANCIAL PERFORMANCE ............................................................ 28 

CASHFLOW STATEMENT ...................................................................................... 29 

STATEMENT OF CHANGES IN NET ASSETS ............................................................. 30 

NOTES TO THE FINANCIAL STATEMENTS ............................................................... 31 

AGGREGATED REPORTS ON THE IMPLEMENTATION OF THE BUDGET AND 
EXPLANATORY NOTES ..................................................................................... 98 

 
 
 
 
 
 
 
  
 
Annual accounts of the European Union 2014 

FINANCIAL STATEMENT DISCUSSION AND 
ANALYSIS 

3 

 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

1. 

EU: Institutional governance and operations 

The  European  Union  (EU)  is  an  economic  and  political  partnership  of  28  European  countries.  It  was 
established in 1993 by the Maastricht Treaty and succeeded the European Community, the European Coal 
and  Steel  Community  (ECSC)  and  Euratom.  The  latest  major  amendment  to  the  constitutional  basis  of 
the EU, the Treaty of Lisbon, entered into force on 1 December 2009.  

The EU is based on the rule of law. This means that every action taken by the EU is founded on treaties 
that  have  been  approved  voluntarily  and  democratically  by  all  EU  Member  States.  It  has  a  unique 
institutional set-up: 

  European citizens elect directly the Members of the European Parliament (EP); 

  The EU's broad priorities are set by the European Council, which brings together national and EU-

level leaders; 

  Governments defend their country's national interests in the Council of the European Union (the 

'Council'); 

  The  interests  of  the  EU  as  a  whole  are  promoted  by  the  European  Commission  (the 
'Commission'),  whose  President  is  elected  by  the  EP  and  whose  members  are  suggested  for 
appointment  by  national  governments  by  common  accord  with  the  President-elect  and  are 
subject, as a body, to a vote of consent by the EP. 

The EU has its own legal order which is separate from international law and forms an integral part of the 
legal systems of the Member States. The legal order of the EU is based on its own sources of law. Given 
the varied nature of these sources, a hierarchy had to be established among them. Primary legislation is 
at  the  top  of  the  hierarchy  and  is  represented  by  the  Treaties.  This  is  followed  by  international 
agreements  concluded  by  the  EU,  general  legal  principles  and  secondary  legislation,  which  is  based  on 
the Treaties. 

Sources and hierarchy of EU law: 

 

 
 
 

Treaty  on  European  Union  (TEU);  Treaty  on  the  Functioning  of  the  European  Union  (TFEU); 
Charter of Fundamental Rights of the European Union; other Treaties and Protocols 
international agreements; 
general principles of Union law; 
secondary legislation. 

The  institutional  governance  of  the  EU  consists  of  institutions,  agencies  and  other  EU  bodies  which  are 
listed  in  note  10  of  the  notes  to  the  financial  statements.  The  main  institutions  in  the  sense  of  being 
responsible  for  drafting  policies  and  taking  decisions  are  the  EP,  the  European  Council,  the  Council  and 
the Commission.  

European Parliament 

The EP is an important forum  for  political debate and decision-making at the EU  level.  The  Members  of 
the EP are directly elected by voters in all Member States to represent  citizen's interests with regard to 
EU law-making and to make sure other EU institutions are working democratically. 

Over  the  years  and  with  subsequent  changes  in  European  treaties,  the  EP  has  acquired  substantial 
legislative  and  budgetary  powers  that  allow  it  to  set,  together  with  the  representatives  of  the 
governments of the Member States in the Council, the direction in which the European project is heading. 
In doing so,  the EP has sought to promote democracy and human rights  – not only in Europe, but also 
throughout the world.  

The  EP  is  on  an  equal  footing  with  the  Council  in  the  annual  budgetary  procedure.  It  is  involved  in  the 
budgetary process from the preparation stage, notably in laying down the general guidelines and the type 
of  spending,  right  up  to  the  adoption.  It  establishes  the  budget  with  the  Council  and  monitors  its 
implementation. The EP gives a discharge on the implementation of the EU budget on a recommendation 
from the Council. Finally, the EP has to provide its consent to the Multi-annual Financial Framework (MFF) 
which  ensures  that  EU  expenditure  develops  in  an  orderly  manner  and  within  the  limit  of  its  own 
resources. The current President of the EP is Martin Schulz. 

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Annual accounts of the European Union 2014 

The European Council and the Council of the European Union 

The European Council, formed by the Heads of State or Government of the Member States together with 
its President and the President of the Commission, provides the necessary impetus for the development 
of the EU and defines the general political directions and priorities. The current President of the European 
Council is Donald Tusk. 

Jointly with the EP, the Council adopts EU legislation through regulations and directives and  also makes 
decisions  and  non-binding  recommendations.  The  Council  consists  of  a  representative  of  each  Member 
State,  at  ministerial  level,  authorised  to  commit  the  government  of  that  Member  State  by  casting  its 
vote. With the exception of the Foreign Affairs configuration, the Council is chaired by the representative 
of the Member State that holds the Union’s presidency on the basis of equal rotation every six months. A 
committee  consisting  of  the  permanent  representatives  of  the  Governments  of  the  Member  States 
(Coreper) prepares the Council’s work. 

In  its  areas  of  competence,  the  Council  takes  its  decisions  by  a  qualified  majority,  except  where  the 
Treaties  provide  otherwise  (e.g.  unanimity  or  simple  majority).  The  Council  is  one  of  the  two  branches 
(the  other  being  the  EP)  of  the  budgetary  authority  which  adopts  the  EU’s  budget.  The  Council  also 
adopts the decisions, pursuant to a special legislative procedure and acting unanimously, laying down the 
provisions  applying  to  the  own  resources  system  and  the  MFF.  In  the  latter  case,  the  EP  must  give  its 
consent  by  a  majority  of  its  Members.  The  latest  MFF  (2014-2020)  was  adopted  by  the  Council  in 
November 2013. 

European Commission 

The  Commission  is  the  EU's  executive  body.  It  represents  the  interests  of  the  EU  as  a  whole  (not  the 
interests of individual countries). 

The Commission's main roles are to: 

  propose legislation which is then adopted by the co-legislators, the EP and the Council; 
  enforce European law (where necessary with the help of the Court of Justice of the EU); 
 

set objectives and priorities for  action, outlined  yearly in  the Commission Work  Programme and 
work towards delivering them; 

  manage and implement EU policies and the budget; 
 

represent  the  Union  outside  Europe  (negotiating  trade  agreements  between  the  EU  and  other 
countries, for example). 

A new team of 28 Commissioners (one from each EU Member State) is appointed every five years. The 
candidate for President of the Commission is proposed to the EP by the European Council that decides by 
qualified  majority  and  taking  into  account  the  elections  to  the  EP.  The  Commission  President  is  then 
elected by the EP by a majority of its component members (which corresponds to at least 376 out of 751 
votes). Following this election, the President-elect selects the 27 other members of the Commission, on 
the basis of the suggestions made by Member States. The final list of Commissioners-designate has then 
to  be  agreed  between  the  President-elect  and  the  Council.  The  Commission  as  a  whole  needs  the 
Parliament's consent. Prior to this, Commissioners-designate are assessed by the various EP committees. 
The current Commission's term of office runs until 31 October 2019. Its President is Jean-Claude Juncker. 

The  current  Commission  priorities  are  (1)  Jobs,  Growth  and  Investment,  (2)  Digital  Single  Market,  (3) 
Energy Union and Climate, (4) Internal Market, (5) Economic and Monetary Union, (6) EU-US Free Trade, 
(7)  Justice  and  Fundamental  Rights,  (8)  Migration,  (9)  EU  as  a  Global  Actor,  and  (10)  Democratic 
Change. 

The  staff  of  the  Commission  works  in  departments,  known  as  Directorates-General  (DGs)  or  services, 
each responsible for a particular policy area and headed by a Director-General. The DGs draft laws, but 
their  proposals  become  official  only  once  the  College  of  Commissioners  (28  Commissioners'  meeting) 
adopts  them.  The  DGs  also  manage  funding  initiatives  at  EU  level,  carry  out  public  consultations  and 
communication activities. 

The  Commission  also  administers  a  number  of  executive  agencies,  which  help  with  the  management  of 
EU programmes. 

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Annual accounts of the European Union 2014 

2. 

Initiatives and strategies of the Commission 

The new Commission that came into office in November 2014 has defined its work programme for 2015 
and the new initiatives for the Commission until 2019. The work programme sets out the Commission's 
plans  and  identifies  actions  which  will  make  a  positive  difference  for  jobs,  growth  and  investment  in 
2015. This programme focuses on a limited set of concrete new initiatives such as: 

A new boost for jobs, growth and investment 

  EUR 315 billion investment offensive: The legislative follow-up to the Plan announced at the end 
of 2014, unlocking public and private investments in the real economy over the next three years; 

 

Promoting labour integration and employability; and 

  Reviewing the Europe 2020 strategy. 

Digital Single Market package:  

  Creating  the  conditions  for  a  vibrant  digital  economy  and  society  by  complementing  the 

telecommunications regulatory environment; 

  Modernising copyright rules; 

  Simplifying rules for consumers making online and digital purchases; 

  Enhancing cyber-security; and  

  Mainstreaming digitalisation. 

A resilient energy union with a forward looking climate change policy 

  Creation  of  the  European  Energy  Union:  To  ensure  energy  supply  security,  further  integrate 

national energy markets, reduce European energy demand and decarbonise the energy mix; and 

  Multilateral response to climate change. 

A deeper and fairer internal market 

  An internal market strategy; 

  A labour mobility package; 

  Capital markets union action plan; 

  A framework for financial institution resolution; and 

  An aviation package. 

A trade and investment strategy to boost jobs and growth 

An area of justice and fundamental rights 

  EU accession to the European Convention on Human Rights; and 

  European agenda on security. 

A new policy on migration:  

  Developing a new approach on legal migration to make the EU an attractive destination for talent 

and skills; and  

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Annual accounts of the European Union 2014 

 

Improving  the  management  of  migration  into  the  EU  through  greater  cooperation  with  third 
countries, solidarity among our Member States and fighting human trafficking. 

A stronger global actor 

  European Neighbourhood policy; and 

 

Post 2015 sustainable development goals. 

A fair taxation environment 

  An Action Plan on efforts to combat tax evasion and tax fraud, including measures at EU level in 
order to move to a system on the basis of which the country where profits are generated is also 
the  country  of  taxation;  including  automatic  exchange  of  information  on  tax  rulings  and 
stabilising corporate tax bases; and 

  Compulsory exchange of information on tax rulings. 

A Union of democratic change 

  An EU agreement on better law making; 

  A mandatory transparency register; and 

  Review of the genetically modified organism decision making process. 

Deeper  Economic  and  Monetary  Union:  Continued  efforts  to  promote  economic  stability  and  attract 
investors to Europe. 

In  preparing  the  work  programme,  the  Commission  examined  around  450  proposals  that  were  put 
forward  to  the  EP  and  the  Council,  and  is  proposing  to  withdraw  or  amend  80  of  them.  Some  are 
proposed for withdrawal because they do not match the new Commission's priorities. In many cases, the 
Commission  remains  strongly  committed  to  the  objectives  sought  –  but  proposals  are  of  no  use  if  they 
are simply sitting dormant on a negotiating table or if they will be so watered down in negotiations that 
they  can  no  longer  achieve  their  original  purpose.  When  that  is  the  case,  the  Commission  will  propose 
new, better ways of achieving these objectives. 

3. 

EU Budget: From preparation to discharge 

3.1.  Budget and Funding 

The MFF consists of headings with annual limits for commitment appropriations set for each. The sum of 
the ceilings of all headings gives the total ceiling of commitment appropriations. The EU Budget finances 
a wide range of policies and programmes throughout the EU. In accordance with the priorities set by the 
EP and the Council in the MFF, the Commission carries out specific programmes, activities and projects in 
the field. The direct link between the annual budget and the EU policies is ensured through activity-based 
budgeting  (ABB).  The  activity-based  budget  nomenclature  allows  for  clear  identification  of  the  policy 
areas  of  the  EU  and  the  total  amount  of  resources  allocated  to  each  of  these  areas.  The  budget  is 
prepared  by  the  Commission  and  usually  agreed  in  mid-December  by  the  EP  and  the  Council  in 
accordance with the procedure of Art. 314 TFEU. According to the principle of budget equlibrium, the total 
revenue must equal total expenditure for a given financial year. 

The  EU  has  two  main  categories  of  funding:  Own  resources  revenues  and  sundry  revenues.  Own 
resources  revenues  make  up  the  vast  majority  of  EU  funding  and  accrue  automatically  to  the  EU  to 
enable  it  to  finance  its  budget  without  the  need  for  a  subsequent  decision  by  national  authorities.  The 
overall  amount  of  own  resources  needed  to  finance  the  budget  is  determined  by  total  expenditure  less 
sundry revenue. The total amount of own resources cannot exceed 1.23 % of the gross national income 
(GNI) of the EU. Own resources can be divided into traditional own resources (such as custom levies), the 
own resource based on value added tax (VAT) and the resource based on gross national income (GNI). 
Sundry  revenues  arising  from  the  activities  of  the  EU  (e.g.  competition  fines)  normally  represent  less 
than 10 % of total revenue.  

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Annual accounts of the European Union 2014 

As  a  general  principle  the  EU  is  not  allowed  to  borrow  money  on  capital  markets  or  from  financial 
institutions to finance its budget. 

3.2.  How the EU budget is managed and spent 

Primary operational expenditure 

The  EU's  operational  expenditure  covers  the  various  headings  of  the  MFF  and  takes  different  forms, 
depending on how the money is paid out and managed. From 2014 onwards, the Commission classifies 
its expenditure as follows: 

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

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

Shared  management:  under  this  method  budget  implementation  tasks  are  delegated  to 
Member  States.  About  80 %  of  the  expenditure  fall  under  this  mode  covering  such  areas  as 
agricultural spending and structural actions. 

The different financial actors within the Commission 

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

The responsibility of the Authorising Officers covers the entire management process, from determining 
what  needs to be done to achieve  the policy  objectives set by  the institution to managing the activities 
launched  from  both  an  operational  and  budgetary  standpoint.  Each  Authorising  Officer  is  required  to 
prepare  an  Annual  Activity  Report  (AAR)  on  the  activities  under  her/his  responsibility  where  she/he 
reports on policy results and on the reasonable assurance she/he may have that the resources assigned 
to the activities described in her/his report have been used for their intended purpose and in accordance 
with the principles of sound financial management, and that the control procedures put in place give the 
necessary guarantees concerning the legality and regularity of the underlying transactions. On the basis 
of Art. 66 FR, the Commission transmits a summary report (synthesis report) on the individual AARs to 
the  EP  and  the  Council,  by  which  the  Commission  takes  overall  political  responsibility  for  the 
management  of  the  EU  budget  in  line  with  Art.  317  TFEU.  This  report  and  the  AAR  are  available  at: 
http://ec.europa.eu/atwork/planning-and-preparing/synthesis-report/index_en.htm. 

The Accounting Officer executes payment and recovery orders drawn up by Authorising Officers and is 
responsible for managing the treasury, laying down accounting rules and methods, validating accounting 
systems,  keeping  the  accounts  and  drawing  up  the  institution's  annual  accounts.  Furthermore,  the 
Accounting  Officer  is  required  to  sign  the  annual  accounts  declaring  that  they  present  fairly,  in  all 
material aspects, the financial position, the results of the operations and the cashflows.  

Committing to spend the EU budget 

Before a legal commitment (for example a contract or grant agreement) can be entered into with a third 
party, there must be a budget line authorising the activity in question in the annual budget. There must 
also  be  sufficient  funds  on  the  budget  line  to  cover  the  expenditure.  If  these  conditions  are  met,  the 
funds  required  must  be  reserved  in  the  budget  by  means  of  a  budgetary  commitment  made  in  the 
accounting system and only then a legal commitment can be made. No money can be spent from the EU 
budget unless and until the Authorising Officer has adopted a budgetary commitment.  

Once  approved,  the  budgetary  commitment  is  recorded  in  the  budgetary  accounting  system  and  the 
appropriations  are  consumed  accordingly.  This,  however,  has  no  effect  on  the  financial  statements  (or 
general ledger) since no expense has yet been incurred.  

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Annual accounts of the European Union 2014 

Making a payment 

The Commission is a participant in SWIFT (Society for Worldwide Interbank Financial Telecommunication) 
and  makes  more  than  2  million  payments  a  year.  No  payment  can  be  made  unless  a  budgetary 
commitment has already been approved by the Authorising Officer dealing with the operation in question. 

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  legal  commitment.  If  the 
beneficiary does not incur eligible expenditure he has the obligation to return the pre-financing advance 
to the EU. Thus pre-financing paid is not a definitive expense until the relevant conditions are met and so 
is recorded as an asset on the EU balance sheet when the initial payment is made. 

Cost claims will be received by the relevant EU body so as to justify how the pre-financing amount was 
spent  by  the  beneficiary  in  accordance  with  the  legal  commitment.  The  rhythm  of  receipt  of  these  cost 
claims is variable depending on the type of action being funded and the conditions. 

Eligibility  criteria  are  defined  in  the  basic  act,  in  the  calls  for  proposal,  in  other  documents  for  grant 
beneficiaries  and/or  in  the  contractual  clauses  of  the  grant  agreements  or  in  the  grant  decision.  After 
analysis,  the  eligible  amounts  are  taken  into  expenses  and  the  beneficiary  is  informed  about  any  non-
eligible amounts.  

The FR and other applicable legislation, particularly concerning agriculture and cohesion policies, give the 
right to make checks on expenditure up to many years after it was incurred. Where errors, irregularities 
or  fraud  are  detected,  financial  corrections  or  recoveries  are  applied  (see  note  6  of  the  notes  to  the 
financial statements).  

3.3.  Financial reporting and accountability 

The  consolidated  annual  accounts  of  the  EU  provide  financial  information  on  the  activities  of  the 
institutions,  agencies  and  other  bodies  of  the  EU  from  a  budgetary  and  accrual  accounting  perspective. 
These accounts do not comprise the annual accounts of Member States. 

The annual accounts of the EU consist of two separate but linked parts: 

a) 

b) 

the financial statements; and 

the  reports  on  implementation  of  the budget,  which  provide  a  detailed  record  of  budget 
implementation. 

It  is  the  responsibility  of  the  Commission's  Accounting  Officer  to  prepare  the  EU's  financial  statements 
and  ensure  that  they  present  fairly,  in  all  material  aspects,  the  financial  position,  the  result  of  the 
operations and the cashflows of the EU.  

In  addition  to  the  above  annual  accounts,  ad-hoc  reports  on  specific  areas  such  as  the  report  on 
budgetary  and  financial  management,  on  financial  instruments,  on  guarantees  given  and  on  financial 
corrections are also prepared. 

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Annual accounts of the European Union 2014 

Reporting and Accountability in the Commission: 

3.4.  Audit and discharge 

Audit 

The EU’s annual accounts and resource management are audited by the European Court of Auditors (the 
Court), its external auditor, which as part of its activities draws up for the EP and the Council: 

(1) 

an annual report on the activities financed from the general budget; 

(2) 

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

(3) 

special reports giving the findings of audits covering specific areas. 

Discharge 

The final step of a budget lifecycle is the discharge of the budget for a given financial year. The EP is the 
discharge  authority  within  the  EU.  This  means  that  following  the  audit  and  finalisation  of  the  annual 
accounts it falls to the Council to recommend and then to the EP to give a discharge to the Commission 
and other EU bodies for implementing the EU budget for a given financial year. This decision is based on 
an examination of the annual accounts, the Commission's synthesis report and annual evaluation report, 
the  annual  report,  the  audit  opinion  and  special  reports  of  the  Court,  and  replies  of  the  Commission  to 
questions and further information requests. 

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Annual accounts of the European Union 2014 

The discharge represents the political aspect of the external control of budget implementation and is the 
decision by which the EP, acting on a Council recommendation, "releases" the Commission (and other EU 
bodies)  from  its  responsibility  for  management  of  a  given  budget  by  marking  the  end  of  that  budget's 
existence.  This  discharge  procedure  may  produce  three  outcomes:  the  granting,  postponement  or  the 
refusal of the discharge. Integral to the annual budgetary discharge procedure in the EP are the hearings 
with  Commissioners  who  are  questioned  by  the  Members  of  the  EP's  Budgetary  Control  Committee 
regarding  the  policy  areas  under  their  responsibility.  The  final  discharge  report  including  specific 
recommendations  to  the  Commission  for  action  is  adopted  in  Plenary.  The  Council  discharge 
recommendations  are  adopted  by  ECOFIN.  Both,  the  EP's  discharge  report  as  well  as  the  Council 
discharge recommendations are subject to an annual follow up report in which the Commission outlines 
the concrete actions it has taken to implement the recommendations made. 

4. 

Consolidated financial statements of the EU: 
Financial situation 2014 

4.1.  General trends 

Revenue 

Five year trend of revenue in EUR millions: 

160 000

140 000

120 000

100 000

80 000

60 000

40 000

20 000

-
2010

Recovery of expenses

Fines

VAT

TOR

GNI resources

2011

2012

2013

2014

In 2014, GNI resource revenue decreased while other own resource revenue remained at a similar level 
and recovery of expenses (financial corrections and recoveries – see note 3.5 of the notes to the financial 
statements) nearly doubled from EUR 1.8 billion to EUR 3.4 billion – this was due to the advanced stage 
of  closure  of  the  2000-2006  cohesion  programming  period  and  the  related  withdrawals  of  non-eligible 
expenditure made, as well as significant corrections imposed by the Commission in agricultural policy. 

Expenses 

The  main  expense  items  are  transfer  payments  in  the  context  of  the  European  Agricultural  Guarantee 
Fund  (EAGF),  the  European  Agricultural  Fund  for  Rural  Development  (EAFRD)  and  other  rural 
development instruments, European Regional Development Fund (ERDF) and Cohesion Fund (CF) and the 
European  Social  Fund  (ESF).  In  the  financial  year  2014  these  made  up  almost  70 %  of  total  exepnses 
(EUR 113 468 million). 

Expenses  were  generally  at  a  similar  level  to  last  year.  Decreases  were,  however,  noted  for 
ERDF/Cohesion, which was due to the fact that expenses recognised in 2014 relate only to programming 

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Annual accounts of the European Union 2014 

period 2007-2013 whereas no expenses have been booked yet for the current period 2014-2020 due to 
the slow start up of programmes (implementation by Member States has only started in 2015). 

The EU also recognises future payment obligations as expenses that are not yet shown in the cash-based 
budgetary accounts. The increased future payment obligations shown under payables for agriculture and 
rural  development  and  future  payment  obligations  for  pension  rights  acquired  by  Commissioners,  MEPs 
and  staff  generally  lead  to  higher  expenses  and  a  negative  economic  result  (these  payments  will  be 
financed by future budgets and are not included yet in revenue). 

Economic result 

The  economic  result  (deficit)  of 
to 
EUR 11 280 million in 2014. The main reason for this increase is the significant actuarial loss (net amount 
of EUR 9.2 billion) related to the pension and other employee benefits liability which occurred due to the 
decrease  in  interest  rates.  Such  fluctuations  must  be  expected  due  to  the,  internationally  applied, 
accounting  rules  in  place  and  the  current  economic  environment.  Should  interest  rates  increase,  a 
reverse impact would be expected. 

from  EUR 4 365 million 

the  period 

increased 

in  2013 

Furthermore,  as  this  is  an  actuarial  estimate  of  the  value  of  the  total  liability  at  one  point  in  time, 
31 December 2014,  and  is  based  on  various  assumptions  valid  at  this  time,  this  loss  does  not  indicate 
actual charges to the EU  budget,  nor does it impact the amounts to be paid  to pensioners from  the EU 
budget in the immediate coming years. These payments are already estimated in the MFF 2014-2020 and 
will be implemented via the annual budgetary process. 

Assets 

The most significant items on the asset side of the balance sheet are financial assets (investments, loans, 
cash)  and  pre-financing  amounts,  which  make  up  almost  85 %  of  the  assets  of  the  EU.  The  amount  of 
loans  remains  stable  at  around  EUR 60 billion  (see  note  4.3.2  below)  whereas  the  amount  of  financial 
instruments  financed  from  the  EU  budget  increased  by  almost  EUR 2 billion  (see  note  4.3.1  below). 
Included  on  the  asset  side  under  Property,  Plant  and  Equipment  are  assets  concerning  the  Copernicus 
programme (EUR 1.5 billion) and Galileo assets under construction (EUR 1.5 billion). 

In recent years, the EU institutions managed to keep the amounts held as cash and cash equivalents at 
year end at a low level. The high cash balance of EUR 17.5 million at 31 December 2014 is related to the 
budgetary procedure and due to own resources contributions related to VAT and GNI balances, received 
from Member States in December 2014 (see note 2.8.1 of the notes to the financial statements). 

Cash and cash equivalents at year-end 

EUR millions 

25 000

20 000

15 000

10 000

5 000

-

2010

2011

2012

2013

2014

12 

 
 
 
 
 
 
Annual accounts of the European Union 2014 

EUR 163 billion assets and EUR 221 billion liabilities on the 2014 EU balance sheet 

Assets  

Loans

Liabilities 

Pension & other employee benefits

Available for sale financial assets

Pre-financing

Borrowings

Payables

Other advances to Member States

Accrued charges & deferred income

Receivables and recoverables

Cash and cash equivalents

Property, Plant & Equipment

5% 

11% 

10% 

4% 

36% 

28% 

6% 

Other liabilities

2% 

25% 

27% 

20% 

26% 

Liabilities 

The liability side consists primarily of four key items: The pension and other employee benefits liabilities, 
financial  liabilities,  payables  and  accrued  charges.  The  biggest  change  as  compared  to  2013  is  the 
increase  of  the  pension  and  other  employee  benefits  liability  from  EUR 46.8 billion  in  2013  to 
EUR 58.6 billion in 2014 due primarily to the significant decrease in interest rates (see above). 

The  excess  of  liabilities  over  assets  does  not  mean  that  the  EU  institutions  are  in  financial  difficulties, 
rather  it  means  that  certain  liabilities  will  be  funded  by  future  annual  budgets.  Many  expenses  are 
recognised  under  accrual  accounting  rules  in  2014  although  they  may  be  actually  paid  in  2015  or  later 
and  funded  using  future  budgets.  The  most  significant  amounts  to  be  highlighted  are  the  European 
Agricultural Guarantee Fund (EAGF) activities (paid in 2015) and the employee benefits (to be paid over 
the next 30 plus years). 

4.2.  Pre-financing 

The  Commission  makes  every  effort  to  ensure  that  the  levels  of  pre-financing  are  maintained  at  an 
appropriate  level.  A  balance  has  to  be  struck  between  making  sufficient  controls  and  the  timely 
recognition of expenditure. It should be noted that the level of pre-financing is significantly influenced by 
the MFF cycle – for example at the beginning of an MFF period one can expect large advances to be paid 
to Member States under cohesion policy. 

The  total  pre-financing  (excl.  other  advances  to  Member  States)  on  the  EU  balance  sheet  amounts  to 
EUR 45.2 billion, of which 99.8 % relates to Commission activities. Some 76 % of the Commission's pre-
financing is implemented via the shared management mode which means that the implementation of the 
budget is delegated to Member States (the Commission retains a supervisory role). 

13 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

Commission pre-financing by management mode 

Indirect 
management 
12% 

Direct 
management 
12% 

Shared 
management 
76% 

The majority of expenditure under shared management mode covers agricultural spending and structural 
actions. The most significant pre-financing amounts relate to the European Regional Development Fund & 
Cohesion  Fund  (ERDF  &  CF),  the  European  Agricultural  Fund  for  Rural  Development  (EAFRD)  and  the 
European Social Fund (ESF). 

Shared management spending by fund 

ERDF & CF

ESF

EAFRD

EAGF

Other

2% 

38% 

37% 

12% 

11% 

14 

 
 
 
 
 
 
Annual accounts of the European Union 2014 

4.3.  Financial Instruments 

4.3.1. 

Financial instruments financed by the EU budget under direct and indirect 
management 

The  importance  and  volume  of  financial  instruments  for  budget  implementation  increases  from  year  to 
year.  The  basic  concept  behind  this  approach,  in  contrast  to  the  traditional  method  of  budget 
implementation by giving grants and subsidies, is that for each euro spent from the budget via financial 
instruments,  the  final  beneficiary  receives  more  than  EUR  1  as  financial  support  due  to  the  leverage 
effect. This intelligent use of the EU budget aims at maximising the impact of the funds available. 

Available for sale financial assets of financial instruments financed by the EU budget 

EUR millions 

4500

4000

3500

3000

2500

2000

1500

1000

500

0

2010

2011

2012

2013

2014

In general, there are three main types of financial instruments used: 

 

 

Equity instruments; 

Loan instruments; and 

  Guarantee instruments. 

Details of the major instruments are given below: 

Guarantee Fund for external actions (EUR 1 996 million of assets) 

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 
(non-current  part:  EUR  1  489  million)  managed  by  the  EIB  and  intended  to  cover  any  defaulting  loans 
guaranteed by  the EU. The Fund  is endowed  by  payments from the general budget of  the EU  (so as  to 
reach 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 revenue for the EU budget.  

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 corresponds to the target amount of 9 % of the loans outstanding at year-end. 

15 

 
 
 
 
 
 
Annual accounts of the European Union 2014 

Risk-Sharing Finance Facility (EUR 961 million of assets) 

The  Risk-Sharing  Finance  Facility  (RSFF)  is  managed  by  the  EIB  and  the  Commission's  investment 
portfolio 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  RSFF,  of  which  up  to 
EUR 800 million are from the “Cooperation” programme and up to EUR 200 million from the “Capacities” 
programme.  The  EIB  has  committed  itself  to  provide  the  same  amount.  There  will  be  no  new  budget 
contributions to RSFF under the 2014-2020 MFF. At 31 December 2014 the Commission had contributed, 
including  also  EFTA  and  third  country  contributions,  EUR 856 million  to  the  RSFF.  In  2014, 
EUR 375 million  of  the  EU  contribution  to  the  RSFF  was  transferred  to  its  successor  debt  instrument 
under  Horizon  2020.  The  amount  disclosed  as  a  contingent  liability  (note  5.2.1  of  the  notes  to  the 
financial statements) represents the estimated maximum loss at 31 December 2014 that the Commission 
would  suffer  in  case  of  defaults  on  loans  or  guarantees  given  by  the  EIB  within  the  framework  of  the 
RSFF. It should be noted that the Commission's overall risk is limited to the amount it contributes to the 
Facility. 

Horizon 2020 (EUR 643 million of assets) 

Horizon 2020 is a new equity instrument under the 2014-2020 MFF. Seen as a means to drive economic 
growth  and create  jobs,  Horizon  2020  has the political backing of  Europe’s leaders and the Members of 
the EP.  They agreed  that research  is  an investment  in  the  future and  so  put  it at the heart of  the EU’s 
blueprint  for  smart,  sustainable  and  inclusive  growth  and  jobs.  By  coupling  research  and  innovation, 
Horizon 2020 is helping to achieve this with its emphasis on excellent science, industrial leadership and 
tackling societal challenges. The goal is to ensure Europe produces world-class science, removes barriers 
to  innovation  and  makes  it  easier  for  the  public  and  private  sectors  to  work  together  in  delivering 
innovation. Horizon 2020 is managed by the EIF. 

ETF start up (EUR 524 million of assets) 

The European Technology start-up Facility (ETF) covers the Growth & Employment Programme, the Multi-
annual Programme for Enterprise and Entrepreneurship (MAP) Programme and the Competitiveness and 
Innovation  Framework  Programme  (CIP),  under  the  trusteeship  of  the  EIF,  supporting  the  creation  and 
financing of start-up SMEs by investing in suitable specialised venture capital funds. 

Loan Guarantee instrument for TEN-T projects (EUR 235 million of assets) 

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.  The  capital 
contribution to the LGTT instrument for the 2007-2013 financing period was initially set at EUR 1 billion, 
split  evenly  between  the  Commission  and  the  EIB.  The  amending  Regulation  670/2012  reallocated 
EUR 200 million  to  the  Project  Bond  Initiative  and  another  EUR 50 million  to  grant  funding,  so  the  total 
EU contribution still available to the instrument stands at EUR 250 million. 

At  31  December  2014  the  Commission  had  contributed  EUR 212 million  to  the  LGTT.  The  amount 
recognised as a contingent liability (note 5.2.1 of the notes to the financial statements), represents the 
estimated maximum loss at 31 December 2014 that the Commission would suffer in case of defaults on 
loans  given  by  the  EIB  within  the  framework  of  the  LGTT  operations.  It  should  be  noted  that  the 
Commission's overall risk is limited to the amount it contributes to the Instrument. 

16 

 
 
 
 
 
Annual accounts of the European Union 2014 

Financial instruments (FI) by type 

Total 
assets 

Total 
liabilities 

EUR millions 
Guarantees 
given 

Loan/Equity/Technical assistance instruments: 
MEDA Instrument of economic and financial cooperation under 
the Euro-Mediterranean partnership 
European Neighbourhood and Partnership Instrument (ENPI) 

Loan instruments: SME Support Loans 

Equity instruments: 
The High Growth and Innovative SME Facility under 
Competitiviness & Innovation Framework Programme 
COSME - Competitiveness of Enterprises and SME 

European Fund for Southeast Europe (EFSE) 
Enterprise Expansion Fund under the Western Balkan Enterprise 
Development and Innovation Facility  
Enterprise Innovation Fund (EIF) under the Western Balkan 
Enterprise Development and Innovation Facility 
European Technology Start up Facility 1998 (ETF) 

Global Energy Efficiency and Renewable Energy Fund (GEEREF) 

Multi Annual Framework Programme (MAP) Equity Facility 

Marguerite Fund 
European Progress Microfinance Facility (PMF) for employment 
and social inclusion  
SE4F - Green for Growth Fund to the Eastern Neighbourhood 
Region 
European Energy Efficiency Fund  

Technology Transfer Pilot Projects 

Microfinance Initiative for Asia Debt Fund 

SANAD - MENA Fund for Micro-, Small and Medium Enterprises 

Guarantee instruments: 
SME Guarantee Facility under Competitiveness & Innovation 
Framework Programme (CIP SMEG) 
COSME LGF - Competitiveness of Enterprises and SME 

Horizon 2020 - EU Finance for Innovators 

Horizon 2020 - SME Guarantee 

Loan Guarantee Instrument for Ten-T Projects (LGTT) 
Guarantee Facility under the Western Balkan Enterprise 
Development and Innovation Facility 
Multi Annual Program (MAP) for Enterprises 

Natural Capital Financing Facility  

Project Bond Instrument (PBI) 

Private Finance for Energy Efficiency Instrument (PF4EE) 

European Progress Microfinance Mandate (PMF TA) 

Risk Sharing Finance Facility (RSFF) 

SME Guarantee Facility 

 290 

 167 

 457 

 19 

 323 

 31 

 118 

 10 

 21 

 19 

 72 

 183 

 37 

 60 

 52 

 89 

 2 

 10 

 9 

1 035 

 151 

 39 

 478 

 165 

 235 

 21 

 26 

 3 

 149 

 6 

 13 

 961 

 60 

(3) 

(7) 

(9) 

- 

(0) 

- 

- 

 0 

 0 

(0) 

- 

(0) 

- 

- 

- 

- 

(0) 

- 

- 

(1) 

(259) 

(1) 

(11) 

(1) 

(3) 

(2) 

(41) 

- 

(2) 

(0) 

(9) 

(32) 

(15) 

Total 

2 309 

3 820 

(376) 

(386) 

- 

(42) 

(98) 

(267) 

(209) 

(10) 

- 

- 

(138) 

- 

- 

(883) 

- 

(1 647) 

(1 647) 

Guarantee Fund for external actions 

1 996 

(25) 

(19 198) 

17 

 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
  
 
 
 
 
 
Annual accounts of the European Union 2014 

4.3.2.  Borrowing and lending activities managed by the Commission 

The EU is empowered by the EU Treaty to adopt borrowing operations to mobilise the financial resources 
necessary  to  fulfill  specific  mandates.  The  Commission,  acting  on  behalf  of  the  EU,  currently  operates 
three  main  programmes,  Macro-financial  assistance  (MFA),  Balance  of  Payments  (BOP)  assistance  and 
the European Financial Stabilisation Mechanism (EFSM), under which it may grant loans and fund these 
by issuing debt instruments in the capital markets or with financial institutions. 

Borrowing & lending activities 

3%  1% 

15% 

81% 

European Financial
Stabilisation Mechanism

Balance of Payments
Assistance

Macro-Financial
Assistance

Euratom & European Coal
and Steel Community

EU  borrowing  and  lending  activities  are  non-budget  operations.  The  capital  required  to  fund  the  EU 
lending  operations  under  the  above  programmes  is  raised  on  the  capital  markets  or  with  financial 
institutions.  The  EU  is  not  permitted  to  borrow  to  finance  its  ordinary  budgetary  expenses  or  a  budget 
deficit. The size of the borrowings varies from private placements for amounts of up to EUR 500 million to 
benchmark-size bond issues (at least EUR 1 billion). In general funds are raised on-lent back-to-back to 
the beneficiary  country, i.e. with the same  coupon,  maturity and amount.  Notwithstanding the back-to-
back methodology, the debt service of the funding instruments is a legal obligation of the EU, which will 
ensure that all payments are made fully and in a timely manner. The Commission has put procedures in 
place  so  as  to  ensure  the  repayment  of  borrowings  even  in  case  of  a  loan  default.  For  each  country 
programme,  the  EP,  the  Council  and  the  Commission  decisions  determine  the  overall  granted  amount, 
the (maximum) number of instalments to be disbursed, and the maximum (average) maturity of the loan 
package.  Subsequently,  the  Commission  and  the  beneficiary  country  agree  loan/funding  parameters, 
including instalments and the payment of tranches. In addition, except for the first one, all instalments of 
the  loan  depend  on  compliance  with  strict  conditions,  with  agreed  terms  and  conditions  similar  to 
International Monetray Fund (IMF) support, in the context of a joint EU/IMF financial assistance, which is 
another factor influencing the timing of funding. This implies that the timing and maturities of issuances 
are  dependent  on  the  related  EU  lending  activity.  Funding  is  exclusively  denominated  in  euro  and  the 
maturity spectrum is 3 to 30 years.  

Borrowings of the EU constitute direct and unconditional obligations of the EU and are guaranteed by the 
28 Member States. Borrowings undertaken to fund loans to countries outside the EU are covered by the 
Guarantee Fund for external actions. Should a beneficiary Member State default, the debt service will be 
drawn from the available treasury balance of the Commission, if possible. If that would not be possible, 
the Commission would draw the necessary funds from the Member States. EU Member States are legally 
obliged,  according  to  the  EU  own  resources  legislation  (Article  12  of  Council  Regulation  1150/2000),  to 
make  available  sufficient  funds  to  meet  the  EU’s  obligations.  Thus  investors  are  only  exposed  to  the 
credit risk of the EU, not to that of the beneficiary of loans funded. “Back-to-back” lending ensures that 
the EU budget does not assume any interest rate or foreign exchange risk. 

Balance of Payments 

The  BOP  facility,  a  policy-based  financial  instrument,  provides  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. BOP assistance to Latvia 
was granted before the introduction of the Euro on 1 January 2014. The maximum outstanding amount of 

18 

 
 
 
Annual accounts of the European Union 2014 

loans  granted  under  the  instrument  is  limited  to  EUR  50  billion.  Borrowings  related  to  these  BOP  loans 
are  guaranteed  by  the  EU  budget  –  thus  at  31  December  2014,  the  budget  is  exposed  to  a  maximum 
possible risk of EUR 8.6 billion regarding these loans (the EUR 8.4 billion below being the nominal value). 

Total loans granted 
Disbursed at 31.12.2013 
Disbursed in 2014 
Loans disbursed 31.12.2014 
Loans repaid at 31.12.2014 
Outstanding amount at 31.12.2014 

Hungary 
6 500 
5 500 
– 
5 500 
(4 000) 
1 500 

Latvia 
3 100 
2 900 
– 
2 900 
(1 000) 
1 900 

Romania 
8 400 
5 000 
– 
5 000 
– 
5 000 

EUR millions 
Total 
18 000 
13 400 
– 
13 400 
(5 000) 
8 400 

A table showing the reimbursement schedule for these loans is given below. 

Between November 2008 and May 2009, financial assistance amounting to EUR 14.6 billion was granted 
to Hungary, Latvia and Romania, of which EUR 13.4 billion had been disbursed by mid 2011. It should be 
noted  that  the  BOP  assistance  programme  for  Hungary  expired  in  November  2010  (with  EUR 1 billion 
undrawn) and the first two repayments of EUR 2 billion in December 2011 and of another EUR 2 billion in 
November  2014  were  received  as  scheduled.  The  BOP  assistance  programme  for  Latvia  expired  in 
January 2012 (with EUR 200 million undrawn) and the first two repayments of EUR 1 billion in April 2014 
and EUR 1.2 billion in January 2015 were also received on time. The BOP first assistance programme for 
Romania  expired  in  May  2012  with  the  full  amount  granted,  EUR 5 billion,  being  disbursed.  The  first 
repayment of EUR 1.5 billion in January 2015 was received as scheduled. 

In  February  2011,  Romania  requested  a  follow-up  precautionary  financial  assistance  (PFA)  programme 
under the BOP facility to support the re-launch of economic growth. On 12 May 2011 the Council decided 
to  make  available  precautionary  EU  BOP  assistance  (PFA)  for  Romania  of  up  to  EUR 1.4 billion  (Council 
Decision  2011/288/EU),  however  this  expired  at  end-March  2013  without  being  used.  Following 
Romania's second request for PFA, the Council decided to provide new EU BOP PFA of up to EUR 2 billion, 
on  22 October 2013  (Council  Decision  2013/531/EU),  which  will  remain  available  for  activation  until 
30 September 2015. If its activation is requested, this financial assistance shall be provided in the form 
of  a loan with  a maximum  average maturity  of  eight  years. As this PFA  of EUR 2 billion  is currently the 
single active programme under the BOP facility, it is the sole amount still available. 

European Financial Stabilisation Mechanism 

Total loans granted 
Disbursed at 31.12.2013 
Disbursed in 2014 
Loans disbursed at 31.12.2014 
Loans repaid at 31.12.2014 
Loans outstanding at 31.12.2014 

Ireland 
22 500 
21 700 
800 
22 500 
– 
22 500 

Portugal 
26 000 
22 100 
2 200 
24 300 
– 
24 300 

EUR millions 

Total 
48 500 
43 800 
3 000 
46 800 
– 
46 800 

A table showing the reimbursement schedule for these loans is given below. 

On  11  May  2010  the  Council  adopted  the  EFSM  to  preserve  financial  stability  in  Europe  (Council 
Regulation  (EU)  n°  407/2010).  The  mechanism  based  on  Art.  122(2)  TFEU  and  enables  the  granting  of 
financial  assistance  to  a  Member  State  in  difficulties  or  seriously  threatened  with  severe  difficulties 
caused by  exceptional circumstances beyond its control.  The assistance may  take the form  of  a loan or 
credit line. The Commission borrows funds on the capital markets or with financial institutions on behalf 
of the EU and lends these funds to the beneficiary Member State. For each country receiving a loan under 
the EFSM, a quarterly assessment of the fulfilment of the policy conditions attached to the loan is carried 
out before another instalment is disbursed. 

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 no. 407/2010, which restricts the outstanding amount 
of  loans  or  credit  lines  to  the  margin  available  under  the  own  resources  ceiling.  Borrowings  related  to 
loans  disbursed  under  the  EFSM  are  guaranteed  by  the  EU  budget  –  thus  at  31 December 2014,  the 
budget  is  exposed  to  a  maximum  possible  risk  of  EUR 47.5 billion  regarding  these  loans  (the 
EUR 46.8 billion  above  being  the  nominal  value).  As  the  borrowings  under  the  EFSM  are  guaranteed  by 
the EU budget, the EP scrutinises the Commission's EFSM actions and exercises control in the context of 
the budget and discharge procedure. As both EFSM programmes have expired, no available amounts are 
disclosed in the table above. 

19 

 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

The  Council  decided  by  Implementing  Decision  in  December  2010  on  a  loan  to  Ireland  of  maximum 
EUR 22.5 billion,  and  in  May  2011  on  a  loan  to  Portugal  of  maximum  EUR 26 billion.  The  initial 
implementing  decisions  fixed  interest  with  a  margin  to  result  in  conditions  similar  to  those  of  the  IMF 
support.  With  the  adoption  of  Council  Implementing  Decisions  no.  682/2011  and  683/2011  of 
11 October 2011,  the  Council  suppressed  the  interest  margin  retroactively  and  extended  the  maximum 
average  maturity  from  7.5  years  to  12.5  years  and  the  maturity  of  individual  tranches  up  to  30 years. 
With the adoption of  Council Implementing Decisions  no.  313/2013 and 323/2013 of  21 June 2013, the 
Council has further lengthened the maximum average maturity of the EFSM loans to Ireland and Portugal 
by  7  years  to  19.5  years.  The  extension  smoothes  the  debt  redemption  profile  of  both  countries  and 
lowers their refinancing needs in the post-programme period. 

The  last  three  instalments  were  disbursed  in  2014:  EUR 0.8 billion  for  Ireland  and  EUR 1.8 billion  for 
Portugal in March 2014 and finally EUR 0.4 billion for Portugal in November 2014. EUR 1.7 billion of the 
financial  assistance  granted  to  Portugal  has  expired  without  being  requested.  There  are  currently  no 
amounts available under EFSM. 

The  following  table  provides  an  overview  of  the  planned  reimbursement  schedule  in  nominal  value  for 
outstanding EFSM and BOP loan amounts (in EUR million) at the date of signature of these accounts: 

Year 

BOP 

Hungary 

Latvia 

Romania 

2015 
2016 
2017 
2018 
2019 
2021 
2022 
2024 
2025 
2026 
2027 
2028 
2029 
2032 
2038 
2042 
Total 

1.5 

1.15 
1.35 
1.0 

0.5 

0.2 

1.5 

0.7 

3.5 

Total 
0 
1.5 
1.15 
1.35 
1.5 
0 
0 
0 
0.2 
0 
0 
0 
0 
0 
0 
0 
5.7 

EFSM 

Ireland  Portugal 

5.0 

3.9 

3.0 

0.8 

2.0 
1.0 
2.3 

3.0 

1.5 
22.5 

4.75 

0.6 

6.75 
2.7 
1.8 

2.0 
2.0 

0.4 

1.8 
1.5 
24.3 

Total 
5.0 
4.75 
0 
4.5 
0 
9.75 
2.7 
2.6 
0 
4.0 
3.0 
2.3 
0.4 
3.0 
1.8 
3.0 
46.8 

Total 

5.0 
6.25 
1.15 
5.85 
1.5 
9.75 
2.7 
2.6 
0.2 
4.0 
3.0 
2.3 
0.4 
3.0 
1.8 
3.0 
52.5 

Macro-financial Assistance (MFA)  

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. These loans are 
guaranteed by the Guarantee Fund for external actions (see note 2.4 of the financial statements). 

4.3.3. 

Inter-governmental financial stability mechanisms outside the EU Treaty framework: 
European Financial Stability Facility and European Stability Mechanism 

The  European  Financial  Stability  Facility  (EFSF)  was  created  by  the  Eurozone  Member  States  with  the 
mandate to safeguard financial stability in Europe by providing financial assistance to Eurozone Member 
States.  The  EFSF  is  not  an  EU  body  and  is  entirely  separate  from  and  not  consolidated  in  the  EU 
accounts.  It  is  not  guaranteed  by  the  EU  budget.  Consequently  it  has  no  impact  on  the  EU  accounts, 
aside  from  the  possible  sanctions  revenue  described  below.  With  the  entry  into  force  of  the  ESM  (see 
below), the EFSF did not provide new financial assistance after 1 July 2013.  

The  Commission  is  responsible  for  negotiating  the  policy  conditionality  attached  to  the  financial 
assistance  and  the  monitoring  of  compliance  with  that  conditionality.  Regulation  1173/2011  of  the 
Parliament  and  Council  allows  for  the  imposition  of  sanctions  in  the  form  of  fines  on  Member  States 
whose currency is the Euro. These fines, being 0.2 % of the Member State's GDP in the preceding year, 
can be applied in cases where a Member State has not taken appropriate actions to correct an excessive 
budget  deficit,  or  where  there  has  been  manipulation  of  statistics.  Similarly,  Regulation  1174/2011  on 

20 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

macroeconomic imbalances makes provision for an annual fine on a Eurozone Member State of 0.1 % of 
GDP  in  the  cases  where  a  Member  State  has  not  taken  the  requested  corrective  action  or  in  case  an 
insufficient  corrective  action  plan  has  been  submitted.  Regulation  1177/2011  updated  Regulation 
1467/97  on  speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure.  This 
updated  Regulation  also  foresees  the  possibility  of  issuing  fines  to  Eurozone  Member  States  (equal  to 
0.2 %  of  GDP  plus  a  variable  component).  Fines  will  transit  through  the  EU  Budget  and  then  be 
transferred to the EFSF. This would mean that such amounts would appear as both a budget revenue and 
expense, thus having no impact on the overall budget result. Likewise they would have no impact on the 
economic result as presented in the EU financial statements. 

The  European  Stability  Mechanism  ("ESM")  is  an  intergovernmental  organisation  under  public 
international law outside the EU Treaty framework. The ESM Treaty was signed by the then 17 Eurozone 
Member States and became operational in October 2012. The ESM has assumed the tasks fulfilled by the 
EFSM  and  the  EFSF  becoming  the  sole  and  permanent  mechanism  for  responding  to  new  requests  for 
financial assistance to Eurozone Member States. Consequently, the EFSF and the EFSM no longer engage 
in new financing programmes or enter into new loan facility agreements. It must also be noted that the 
EU  budget  will  not  guarantee  ESM  borrowings.  As  this  mechanism  has  its  own  legal  personality  and  is 
funded directly by the Eurozone Member States, it is not an EU body and it has no impact on either the 
EU accounts or the EU budget, aside from the possible sanctions revenue described below.  

Fines collected will pass through the EU budget and be transferred to the ESM once the EFSF is no longer 
operational.  Furthermore,  the  Treaty  on  Stability,  Coordination  and  Governance  foresees  penalty 
payments  on  any  of  the  "Contracting  Parties"  where  that  Member  State  has  not  taken  necessary 
measures to address a breach of deficit criterion. Penalties imposed (which cannot exceed 0.1 % of GDP) 
will be payable to the ESM if applied to Eurozone Member States (thus with no impact on the EU budget 
result, as with the EFSF above), or to the EU budget for non-Euro Member States. In the latter case, the 
sanction amount will be revenue for the EU budget and be reflected as such in its accounts. 

5. 

Economic and financial context of EU budget 
implementation 

Macro-economic environment 

In  the  context  of  the  sovereign  debt  crisis  the  economic  growth  in  the  EU  Member  States  has  slowed 
down from 2012 to 2013 and increased from 2013 to 2014.  This general economic situation of Member 
States is reflected in the own resource revenue of the EU, which led to a slight increase of traditional own 
resources  and  VAT  revenue.  Since  the  GNI  resource  revenue  is  a  residual  component  which  is  directly 
linked  to  the  total  level  of  payment  appropriations  adopted  by  the  Budget  Authority  (and  these 
appropriations have been reduced by Member States in the 2014-2020 MFF), the amount of GNI resource 
revenue decreased in 2014. 

The  reinforcement  of  the  Stability  and  Growth  Pact  in  the  EU  paves  the  way  for  sustainable  public 
finances of the EU Member States concerned. The Fiscal pact aims at consolidating the public finances of 
the Member States and shall enable them to increase their GDP in the years to come. 

The  policy  of  the  European  Central  Bank  (ECB)  of  keeping  interest  rates  at  a  low  level  supports  the 
stabilisation of the Euro-area economy. The ECB contributes within its mandate to the increase of growth 
of the Euro area. 

21 

 
 
 
 
 
Annual accounts of the European Union 2014 

Gross Domestic Product of EU 28 at market prices 

EUR billions, current prices 

14 200
14 000
13 800
13 600
13 400
13 200
13 000
12 800
12 600
12 400
12 200

2010

2011

2012

2013

2014

GNI resource revenue  

EUR billions 

120

100

80

60

40

20

0

2010

2011

2012

2013

2014

Unpaid payment claims 

Due  to  the  macro-economic  environment  in  the  EU,  the  pressure  on  the  national  budgets  of  Member 
States  leads  to  pressure  on  the  payment  appropriations  of  the  EU  budget.  This  development  has  an 
immediate effect on the payment claims received from Member States and other benficiaries. The total of 
unpaid  payment  claims  at  year-end  has  increased  from  EUR 24.3 billion  in  2013  to  EUR 25.8 billion  in 
2014. Although there will always be outstanding claims due to amounts submitted close to the year-end, 
the  main  reason  for  the  excepetional  amounts  noted  in  recent  years  is  the  shortage  of  payment 
appropriations. 

Unpaid payment claims must be financed by future budgets. With this in mind, in May 2015 the EP, the 
Council  and  the  Commission  have  agreed  on  a  payment  plan  to  bring  the  EU  budget  back  on  a 
sustainable  track.  For  the  EU  it  is  crucial  to  consider  the  long-term  needs  budgetary  payment 
appropriations  since  it  is  these  which  are  decided  on  by  the  Budgetary  Authority  and  without  these,  no 
payments can  be made or cash  transferred.  Once  agreed,  appropriations are automatically  transformed 
into available cash of the EU through the monthly own resource collection process.  

Within the Commission, short-term cashflow forecasting is done weekly (sometimes daily) to ensure that 
the  immediate  payment  obligations  of  the  EU  can  be  met,  respecting  the  limits  of  the  payment 
appropriations available in the budget. This short term forecast is the basis used to estimate the amount 
of  own  resources  to  be  called  monthly  from  Member  States.  On  the  first  working  day  of  each  month 
Member States must credit to the Commission’s own resource accounts one-twelfth of the total amount 
of the VAT and GNI-based resource entered in the Union's budget. Depending on the Commission's cash 

22 

 
 
 
 
Annual accounts of the European Union 2014 

position,  Member  States  may  be  asked  in  the  first  quarter  of  the  year  to  bring  forward,  by  one  or  two 
months, the VAT and GNI based resources. Those advances have to be deducted from calls for funds in 
later months, depending on the forecasted cash needs.  

For the medium and long-term, the Commission monitors in detail the payment requirements of the EU 
as part of its regular activities. For example, this is required for the preparation of Commission proposals 
on  the  MFF,  as  part  of  the  annual  budget  preparation  and  when  preparing  amending  budgets.  In  the 
negotiation phase of the MFF, the models used and the assumptions underlying are monitored regularly 
and  updated  when  necessary.  The  results  of  the  model  simulation  are  channelled  into  the  budgetary 
negotiations establishing the MFF payment ceiling. 

Development of payment & commitment appropriations, RAL and unpaid payment claims 
backlog in EUR millions 

23 

 
 
 
 
 
Annual accounts of the European Union 2014 

NOTE ACCOMPANYING THE 
CONSOLIDATED ACCOUNTS 

The  consolidated  annual  accounts  of  the  European  Union  for  the  year  2014  have  been  prepared  on  the 
basis  of  the  information  presented  by  the  institutions  and  bodies  under  Article  148(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 IX 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 fairly, in 
all  material  aspects,  the  financial  position,  the  results  of  the  operations  and  the  cashflows  of  the 
European Union. 

[signed] 

Manfred Kraff 

Accounting Officer of the Commission 

17 July 2015 

24 

 
 
 
 
 
 
Annual accounts of the European Union 2014 

EUROPEAN UNION 
FINANCIAL YEAR 2014 

CONSOLIDATED FINANCIAL STATEMENTS 
AND EXPLANATORY NOTES 

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

25 

 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

CONTENTS 

BALANCE SHEET ............................................................................................. 27 

STATEMENT OF FINANCIAL PERFORMANCE ........................................................ 28 

CASHFLOW STATEMENT .................................................................................. 29 

STATEMENT OF CHANGES IN NET ASSETS ......................................................... 30 

NOTES TO THE FINANCIAL STATEMENTS ........................................................... 31 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

SIGNIFICANT ACCOUNTING POLICIES ............................................................... 32 

NOTES TO THE BALANCE SHEET ....................................................................... 44 

NOTES TO THE STATEMENT OF FINANCIAL PERFORMANCE ................................... 63 

NOTES TO THE CASHFLOW STATEMENT ............................................................. 73 

CONTINGENT ASSETS & LIABILITIES AND OTHER SIGNIFICANT DISCLOSURES ...... 74 

PROTECTION OF THE EU BUDGET ..................................................................... 77 

FINANCIAL RISK MANAGEMENT ........................................................................ 83 

RELATED PARTY DISCLOSURES ........................................................................ 94 

EVENTS AFTER THE BALANCE SHEET DATE ........................................................ 96 

10.   SCOPE OF CONSOLIDATION ............................................................................. 97 

26 

 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

BALANCE SHEET 

Note 

31.12.2014 

31.12.2013 

 EUR millions 

NON-CURRENT ASSETS 
Intangible assets 
Property, plant and equipment 
Investments accounted for using the equity method 
Financial assets 
Pre-financing 
Exchange receivables and non-exchange recoverables 

CURRENT ASSETS 
Financial assets 
Pre-financing 
Exchange receivables and non-exchange recoverables 
Inventories 
Cash and cash equivalents  

TOTAL ASSETS 

NON-CURRENT LIABILITIES 
Pension and other employee benefits 
Provisions 
Financial liabilities 

CURRENT LIABILITIES 
Provisions 
Financial liabilities 
Payables 
Accrued charges and deferred income 

TOTAL LIABILITIES 

NET ASSETS 

Reserves 
Amounts to be called from Member States* 
NET ASSETS 

2.1 
2.2 
2.3 
2.4 
2.5 
2.6 

2.4 
2.5 
2.6 
2.7 
2.8 

2.9 
2.10 
2.11 

2.10 
2.11 
2.12 
2.13 

2.14 
2.15 

 282 
7 937 
 409 
56 438 
18 358 
1 198 

 237 
6 104 
 349 
59 844 
38 072 
 498 

84 623 

105 104 

11 811 
34 237 
14 380 
 128 
17 545 

78 101 
162 724 

(58 616) 
(1 537) 
(51 851) 

5 571 
21 367 
13 182 
 128 
9 510 

49 758 
154 862 

(46 818) 
(1 323) 
(56 369) 

(112 005) 

(104 510) 

 (745) 
(8 828) 
(43 180) 
(55 973) 

(108 726) 
(220 730) 

 (545) 
(3 163) 
(36 213) 
(56 282) 

(96 204) 
(200 714) 

(58 006) 

(45 852) 

4 435 
(62 441) 
(58 006) 

4 073 
(49 925) 
(45 852) 

* The European Parliament adopted a budget on 17 December 2014 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  2015.  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. 

27 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

STATEMENT OF FINANCIAL PERFORMANCE 

Note 

2014 

2013     

(reclassified)* 

EUR millions 

REVENUE 
Revenue from non-exchange transactions 
GNI resources 
Traditional own resources 
VAT resources 
Fines 
Recovery of expenses 
Other 
Total 

Revenue from exchange transactions 
Financial income 
Other 
Total 

EXPENSES** 
Implemented by Member States 

European Agricultural Guarantee Fund 
European Agricultural Fund for Rural Development and 
other rural development instruments 
European Regional Development Fund and            
Cohesion Fund 
European Social Fund 
Other 

3.1 
3.2 
3.3 
3.4 
3.5 
3.6 

3.7 
3.8 

3.9 

Implemented by the Commission and executive agencies  3.10 
3.11 
Implemented by other EU agencies and bodies 
3.11 
Implemented by third countries and international 
organisations 
Implemented by other entities 
Staff and pension costs 
Changes in employee benefits actuarial assumptions 
Finance costs 
Share of net deficit of joint ventures and associates 
Other expenses 

3.11 
3.12 
3.13 
3.14 
3.15 
3.16 

104 688 
17 137 
17 462 
2 297 
3 418 
5 623 
150 625 

2 298 
1 066 
3 364 

110 194 
15 467 
14 019 
2 757 
1 777 
4 045 
148 259 

1 991 
1 443 
3 434 

153 989 

151 693 

(44 465) 
(14 046) 

(45 067) 
(13 585) 

(43 345) 

(47 767) 

(12 651) 
(2 307) 
(15 311) 
(1 025) 
(2 770) 

(1 799) 
(9 662) 
(9 170) 
(2 926) 
 (640) 
(5 152) 

(12 126) 
(1 525) 
(12 519) 
 (656) 
(2 465) 

(1 694) 
(9 058) 
(2 033) 
(2 383) 
 (608) 
(4 572) 

ECONOMIC RESULT OF THE YEAR 

(165 269) 
(11 280) 

(156 058) 
(4 365) 

* Further information is given in note 3.18. 

**  

Implemented by Member States: Shared management 

Implemented by the Commission and executive agencies: Direct Management 

Implemented by other EU agencies and bodies, third countries, international organisations and other 
entities: Indirect management. 

28 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

CASHFLOW STATEMENT 

2014 
(11 280) 

EUR millions 

2013 
(4 365) 

Note 

4.2 

 61 
 408 
(1 298) 
6 844 
(1 898) 

– 
11 798 

 414 
1 146 
6 967 
 (309) 

(1 005) 
 130 

(2 347) 

 (60) 

 48 
 401 
 20 
(1 695) 
 923 

 10 
4 315 

 (196) 
 (330) 
14 655 
(12 154) 

(1 023) 
 (50) 

 (624) 

 43 

(1 536) 

(1 142) 

8 035 

(1 164) 

8 035 
9 510 
17 545 

(1 164) 
10 674 
9 510 

Economic result of the year 
Operating activities 
Amortisation 
Depreciation 
(Increase)/decrease in loans 
(Increase)/decrease in pre-financing 
(Increase)/decrease in exchange receivables and non-
exchange recoverables 
(Increase)/decrease in inventories 
Increase/(decrease) in pension and employee benefits 
liability 
Increase/(decrease) in provisions 
Increase/(decrease) in financial liabilities 
Increase/(decrease) in payables 
Increase/(decrease) in accrued charges and deferred 
income 
Prior year budgetary surplus taken as non-cash revenue 
Other non-cash movements 

Investing activities 
(Increase)/decrease in intangible assets and property, 
plant and equipment  
(Increase)/decrease in investments accounted for using 
the equity method 
(Increase)/decrease in available for sale financial assets 

4.3 

NET CASHFLOW 

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 

2.8 
2.8 

29 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATEMENT OF CHANGES IN NET ASSETS 

Annual accounts of the European Union 2014 

Reserves (A) 

Amounts to be called from Member 
States (B) 

BALANCE AS AT 31.12.2012 
Movement in Guarantee Fund reserve 
Fair value movements 
Other 
Allocation of the 2012 economic result 
2012 budget result credited to Member States 
Economic result of the year 
BALANCE AS AT 31.12.2013 
Movement in Guarantee Fund reserve 
Fair value movements 
Other 
Allocation of the 2013 economic result 
2013 budget result credited to Member States 
Economic result of the year 
BALANCE AS AT 31.12.2014 

Accumulated 
Surplus/(Deficit) 
(39 148) 
 (46) 
- 
 (9) 
(5 334) 
(1 023) 
– 
(45 560) 
 (247) 
– 
 16 
(4 365) 
(1 005) 
– 
(51 161) 

Economic result of 
the year 

(5 329) 
– 
– 
– 
5 329 
– 
(4 365) 
(4 365) 
– 
– 
– 
4 365 
– 
(11 280) 
(11 280) 

Fair value reserve  Other reserves 

3 911 
 46 
– 
 12 
 5 
– 
– 
3 974 
 247 
– 
 (24) 
 (0) 
– 
– 
4 197 

 150 
– 
 (51) 
- 
– 
– 
– 
 99 
– 
 139 
– 
– 
– 
– 
 238 

30 

EUR millions 

Net Assets 
=(A)+(B) 

(40 416) 
– 
 (51) 
 3 
– 
(1 023) 
(4 365) 
(45 852) 
– 
 139 
 (8) 
– 
(1 005) 
(11 280) 
(58 006) 

 
  
 
 
 
 
 
Annual accounts of the European Union 2014 

NOTES TO THE FINANCIAL STATEMENTS 

31 

 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

1. 

SIGNIFICANT ACCOUNTING POLICIES 

1.1.  LEGAL BASIS AND ACCOUNTING RULES 

The  accounts  of  the  EU  are  kept  in  accordance  with  Regulation  (EU,  Euratom)  No  966/2012  of  the 
European  Parliament  and  of  the  Council  of  25  October  2012  on  the  financial  rules  applicable  to  the 
general  budget  of  the  Union  and  repealing  Council  Regulation  (EC,  Euratom)  No  1605/2002  (OJ L 298, 
26.10.2012,  p. 1)  hereinafter  referred  to  as  the  'Financial  Regulation'  and  Commission  Delegated 
Regulation  (EU)  No  1268/2012  of  29  October  2012  (OJ  L  362,  31.12.2012,  p.  1)  laying  down  detailed 
rules of application of this Financial Regulation. 

In accordance with article 143 of the Financial Regulation, the EU prepares its financial statements on the 
basis  of  accrual-based  accounting  rules  that  are  based  on  International  Public  Sector  Accounting 
Standards (IPSAS). 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 entity, 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.  

The  overall  considerations  (or  accounting  principles)  to  be  followed  when  preparing  the  financial 
statements are laid down in EU accounting rule 2 and are the same as those described in IPSAS 1, that 
is:  fair  presentation,  accrual  basis,  going  concern,  consistency  of  presentation,  aggregation,  offsetting 
and comparative information. The qualitative characteristics of financial reporting according to article 144 
of the Financial Regulation are relevance, reliability, understandability and comparability. 

Preparation  of  the  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 balance 
sheet and statement of financial performance, as well as the disclosures related to financial instruments 
and contingent assets and liabilities. 

1.3.  CONSOLIDATION 

SCOPE OF CONSOLIDATION 

The  consolidated  financial  statements  of  the  EU  comprise  all  significant  controlled  entities  (i.e.  the  EU 
institutions (including the Commission) and the EU agencies), associates and joint ventures, this being 52 
controlled  entities,  7  joint  ventures  and  1  associate.  The  complete  list  of  consolidated  entities  can  be 
found  in  note  10  of  the  EU  accounts.  In  comparison  with  2013,  the  scope  of  consolidation  remains 
unchanged,  noting  that  1  associate  has  now  been  reclassified  as  a  joint  venture  and  following  the 
amalgamation of 2 other associates the resulting entity has been classified as a joint venture. 

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 EU 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. 

32 

 
 
 
Annual accounts of the European Union 2014 

The most common indicators of control within the EU 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  Court  and  discharge  by  the  European  Parliament.  It  is  clear  that  an 
individual  assessment  for  each  entity  needs  to  be  made  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  European  Central  Bank  -  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 (ECSC) in Liquidation 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 such transactions are not material and so have not been eliminated. 

JOINT VENTURES 

A joint venture is a contractual arrangement whereby the EU 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 (see 1.5.4 below). 

ASSOCIATES 

Associates are entities over which the EU has, directly or indirectly, significant influence but not control. 
It is presumed that significant influence exists if the EU holds directly or indirectly 20 % or more of the 
voting rights. Participations in associates are accounted for using the equity method (see 1.5.4 below). 

NON-CONSOLIDATED ENTITIES THE FUNDS OF WHICH ARE MANAGED BY THE COMMISSION 

The funds of the Sickness Insurance Scheme for staff of the EU, the European Development Fund and the 
Participants  Guarantee  Fund  are  managed  by  the  Commission  on  their  behalf,  however  since  these 
entities are not controlled by the EU they are not consolidated in its financial statements. 

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  EU'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 statement of financial performance. 

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: 

33 

 
 
 
 
 
Annual accounts of the European Union 2014 

Euro exchange rates 

Currency 
BGN 
CZK 
DKK 
GBP 
HRK 
HUF 
LVL 

31.12.2014 
1.9558 
27.7350 
7.4453 
0.7789 
7.6580 
315.5400 
- 

31.12.2013 
1.9558 
27.4270 
7.4593 
0.8337 
7.6265 
297.0400 
0.7028 

Currency 
LTL 
PLN 
RON 
SEK 
CHF 
JPY 
USD 

31.12.2014 
3.4528 
4.2732 
4.4828 
9.3930 
1.2024 
145.2300 
1.2141 

31.12.2013 
3.4528 
4.1543 
4.4710 
8.8591 
1.2276 
144.7200 
1.3791 

Changes  in  the  fair  value  of  monetary  financial  instruments  denominated  in  a  foreign  currency  and 
classified  as  available  for  sale  that  relate  to  a  translation  difference  are  recognised  in  the  statement  of 
financial performance. Translation differences on non-monetary financial assets and liabilities held at fair 
value  through  profit  or  loss  are  recognised  in  the  statement  of  financial  performance.  Translation 
differences on non-monetary financial instruments 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  receivable,  accrued  income  and 
charges,  contingent  assets  and  liabilities,  degree  of  impairment of  intangible assets  and  property,  plant 
and equipment and amounts disclosed in the notes concerning financial instruments. Actual results could 
differ  from  those  estimates.  Changes  in  estimates  are  reflected  in  the  period  in  which  they  become 
known. 

1.5.  BALANCE SHEET 

1.5.1. 

Intangible assets 

Acquired  computer  software  licences  are  stated  at  historical  cost  less  accumulated  amortisation  and 
impairment  losses.  The  assets  are  amortised  on  a  straight-line  basis  over  their  estimated  useful  lives. 
The estimated useful lives of intangible assets depend on their specific economic lifetime or legal lifetime 
determined  by  an  agreement.  Internally  developed  intangible  assets  are  capitalised  when  the  relevant 
criteria of the EU accounting rules are met and relate solely to the development phase of the asset. 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. 

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, 
construction or transfer 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  EU  and  its  cost  can  be  measured  reliably.  Repairs  and  maintenance  costs  are 
charged to the statement of financial performance during the financial period in which they are incurred. 

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  less  their  residual  values 
over their estimated useful lives, as follows: 

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Annual accounts of the European Union 2014 

Type of asset 
Buildings 
Plant and equipment 
Furniture and vehicles 
Fixtures and fittings 
Computer hardware 
Other 

Straight line depreciation rate 

4 % to 10 % 
10 % to 25 % 
10 % to 25 % 
10 % to 33 % 
25 % to 33 % 
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 statement of financial performance. 

Leases 

Leases  of  tangible  assets,  where  the  EU  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  financial  liabilities 
(non-current  and  current).  The  interest  element  of  the  finance  cost  is  charged  to  the  statement  of 
financial  performance  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  statement  of 
financial performance on a straight-line basis over the period of the lease. 

1.5.3. 

Impairment of non-financial assets 

Assets  that  have  an  indefinite  useful  life  are  not  subject  to  amortisation/depreciation  and  are  tested 
annually  for  impairment.  Assets  that  are  subject  to  amortisation/depreciation  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  (service)  amount.  The  recoverable  (service)  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  (service)  amount  if  the  asset’s  carrying  amount  is  greater  than  its  estimated 
recoverable  (service)  amount.  If  the  reasons  for  impairments  recognised  in  previous  years  no  longer 
apply, the impairment losses are reversed accordingly. 

1.5.4. 

Investments accounted for using the equity method 

Participations in associates and joint ventures 

Participations in associates and joint ventures are accounted for using the equity method and are initially 
recognised at cost. The EU's interest in the results of its associates and joint ventures is recognised in the 
statement  of  financial  performance,  and  its  share  in  the  movements  in  reserves  is  recognised  in  the 
reserves.  The  initial  cost  together  with  all  movements  (further  contributions,  share  of  economic  results 
and  reserve  movements,  impairments,  and  dividends)  give  the  book  value  of  the  associate  or  joint 
venture in the financial statements at the balance sheet date. Distributions received from an associate or 
joint venture reduce the carrying amount of the asset. 

If the EU's share of deficits of a joint venture equals or exceeds its interest in the joint venture, the EU 
discontinues  recognising  its  share  of  further  losses  ("unrecognised  losses").  The  unrecognised  share  of 
losses  is  the  result  of  a  technical  accounting  exercise  needed  when  using  the  equity  method  of 
accounting. These unrecognised losses do not represent losses for the EU and are due to the fact that the 
expense  recognition  normally  takes  place  before  the  capital  increase  for  the  contribution  in  kind  of  the 
venturers other than the EU.  

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Annual accounts of the European Union 2014 

Unrealised  gains  and  losses  on  transactions  between  the  EU  and  its  associate  or  joint  ventures  are  not 
material and have therefore not been eliminated. The accounting policies of associates or joint ventures 
may differ from those adopted by the EU for like transactions and events in similar circumstances. 

If  there are indications of impairment, a write-down  to the lower  recoverable amount is 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. 

In  cases  where  the  EU  holds  20  %  or  more  of  an  investment  capital  fund,  it  does  not  seek  to  exert 
significant  influence.  Such  funds  are  therefore  treated  as  financial  instruments  and  categorised  as 
available for sale financial assets. 

1.5.5. 

Financial assets 

Classification 

The  EU  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  EU.  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. During this financial year, the EU did not hold any financial assets in this category. 

(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 even if the maturity date of the entire loan dates 
more than 12 months from 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  EU  has  the  positive  intention  and  ability  to  hold  to  maturity.  During  this 
financial year, the EU 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 expects to dispose of them which is usually the remaining 
maturity at the balance sheet date. 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 EU commits to purchase or sell the asset. 
Loans  are  recognised  when  cash  is  advanced  to  the  borrowers.  Financial  instruments  are  initially 
recognised at fair value. For all financial assets not carried at fair value through profit or loss transactions 
costs are added to the fair value at initial recognition. Financial assets carried at fair value through profit 
or  loss  are  initially  recognised  at  fair  value  and  transaction  costs  are  expensed  in  the  statement  of 
financial performance. 

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Annual accounts of the European Union 2014 

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  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 only borrows funds for the purpose of lending at the same rate. 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  EU  for  fair  valuing  its  lending  operations  under  the  European  Financial  Stability 
Mechanism  (EFSM),  Balance  of  Payment  (BOP)  and  other  such  loans,  should  be  the  interest  rate 
charged. 

In  addition,  for  these  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 statement of financial performance. 

Financial instruments are derecognised when the rights to receive cashflows from the investments have 
expired  or  have  been  transferred  and  the  EU  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  statement  of  financial  performance  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 statement of financial performance. 
(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 financial assets are recognised in the fair value reserve. 
When  assets  classified  as  available  for  sale  financial  assets  are  derecognised  or  impaired,  the 
cumulative  fair  value  adjustments  previously  recognised  in  the  fair  value  reserve  are  recognised  in 
the statement of financial performance. Interest on available for sale financial assets calculated using 
the  effective  interest  method  is  recognised  in  the  statement  of  financial  performance.  Dividends  on 
available  for  sale  equity  instruments  are  recognised  when  the  EU's  right  to  receive  payment  is 
established. 

The fair values of quoted investments in active markets are based on current bid prices. If the market for 
a  financial  asset  is  not  active  (and  for  unlisted  securities),  the  EU  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  cashflow  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  a  quoted  market 
price  in  an  active  market  cannot  be  reliably  measured,  these  investments  are  valued  at  cost  less 
impairment losses. 

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Impairment of financial assets 

The EU 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 cashflows 
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  cashflows 
(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  statement  of  financial  performance.  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 
cashflows  of  a  collateralised  financial  asset  reflects  the  cashflows  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 statement of financial performance. 

(b) 

Assets carried at fair value 

In  the  case  of  equity  investments  classified  as  available  for  sale  financial  assets,  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  statement  of  financial 
performance  –  is  removed  from  reserves  and  recognised  in  the  statement  of  financial  performance. 
Impairment  losses  recognised  in  the  statement  of  financial  performance  on  equity  instruments  are  not 
reversed through the statement of financial performance. If, in a subsequent period, the fair value of a 
debt  instrument  classified  as  available  for  sale  financial  asset  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 statement of financial performance. 

Investments in venture capital funds 

Investments in Venture Capital Funds are classified as available for sale financial assets 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.  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.  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  statement  of  financial  performance  or  as 
changes in the fair value reserve. 

1.5.6. 

Inventories 

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

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Annual accounts of the European Union 2014 

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 expenditure, he has the obligation to return the pre-
financing advance to the EU. The amount of the pre-financing may be reduced (wholly or partially) by the 
acceptance of eligible costs (which are recognised as expenses) and amounts returned. 

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. 

Amounts  defined  in  the  Financial  Regulation  as  "financial  instruments  under  shared  management"  are 
from  an  accounting  point  of  view  classified  as  pre-financing  amounts.  These  pre-financing  amounts  are 
valued at the original amounts paid to Member States less an estimation of amounts utilised. 

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.  Exchange receivables and non-exchange recoverables 

As the EU accounting rules require a separate presentation of exchange and non-exchange transactions, 
for  the  purpose  of  drawing  up  the  accounts,  receivables  are  defined  as  stemming  from  exchange 
transactions and recoverables are defined as stemming from non-exchange transactions that do not arise 
out of a contract (sovereign recoverables). 

Receivables  from  exchange  transactions  meet  the  definition  of  financial  instruments  and  are  thus 
classified  as  loans  and  receivables  and  measured  accordingly  (see  1.5.5  above).  The  financial 
instruments notes disclosures concerning receivables from exchange transactions include accrued income 
and deferred charges from exchange transactions as they are not material. 

Recoverables  from  non-exchange  transactions  are  carried  at  original  amount  (adjusted  for  interest  and 
penalties)  less  write-down  for  impairment.  A  write-down  for  impairment  of  recoverables  from  
non-exchange transactions is established when there is objective evidence that the EU will not be able to 
collect all amounts due according to the original terms of  recoverables from non-exchange transactions. 
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 statement of financial performance. 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.  Amounts  displayed  and  disclosed  as  recoverables  from  non-exchanges  transactions  are  not 
financial  instruments  as  they  do  not  arise  from  a  contract.  However,  in  the  notes  to  the  financial 
statements  recoverables  from  non-exchange  transactions  are  disclosed  together  with  receivables  from 
exchange transactions where appropriate. 

1.5.9.  Cash and cash equivalents 

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

1.5.10.  Pension and other employee benefits 

Pension obligations 

The EU 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 

39 

 
 
Annual accounts of the European Union 2014 

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  statement  of  financial  performance.  Past-service  costs  are  recognised 
immediately  in  statement  of  financial  performance,  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  EU  provides  health  benefits  to  its  employees  through  the  reimbursement  of  medical  expenses.  A 
separate  fund  has  been  created  for  its  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 EU 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  expenses  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 are composed of borrowings from credit institutions and 
debts evidenced by certificates. They are recognised initially at fair value, being their issue proceeds (fair 
value of consideration received) net of transaction costs incurred, then subsequently carried at amortised 
cost using the effective interest method; any difference between proceeds, net of transaction costs, and 
the  redemption  value  is  recognised  in  the  statement  of  financial  performance  over  the  period  of  the 
borrowings using the effective interest method.  

Financial liabilities 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  EU  and  then  recharged  to  the  beneficiary  of  the  loan  are  directly  recognised  in  the 
statement of financial performance. 

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.  During  this  financial  year,  the  EU  did  not  hold  any  financial  liabilities  in  this 
category. 

1.5.13.  Payables 

A  significant  amount  of  the  payables  of  the  EU  are  not  related  to  exchange  transactions  such  as  the 
purchase of goods or services – instead they are unpaid cost claims from beneficiaries of grants or other 
EU funding (non-exchange transactions). They are recorded as payables for the requested amount when 
the cost claim is received. Upon verification and acceptance of the eligible costs, the payables are valued 
at the accepted and eligible amount. 

40 

 
 
Annual accounts of the European Union 2014 

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 EU. 

1.5.14.  Accrued and deferred income and charges 

Transactions and events are recognised in the financial statements in the period to which they relate. 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 (e.g. 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. 

Expenses are also accounted for 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  provide  a 
faithful representation of the economic and other phenomena they purport to represent. 

1.6.  STATEMENT OF FINANCIAL PERFORMANCE 

1.6.1.  Revenue 

REVENUE FROM NON-EXCHANGE TRANSACTIONS 

The vast majority of the EU's revenue relates to non-exchange transactions: 

GNI based resources and VAT resources 

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

Traditional own resources 

Recoverables  from  non-exchange  transactions  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 Commission is estimated and recognised as accrued income. 
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. In addition, a value reduction is recognised 
for the amount of the estimated recovery gap. 

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 

41 

 
 
 
Annual accounts of the European Union 2014 

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  recoverable.  If  a  guarantee  is 
received instead of payment, the fine remains as a recoverable. 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  recoverable  outstanding  is  written-down  as  required.  The  accumulated 
interest  received  by  the  Commission  on  the  bank  accounts  where  received  payments  are  deposited  is 
recognised as revenue, and any contingent liability is increased accordingly. 

Since 2010, all provisionally cashed fines are managed by the Commission in a specifically created fund 
(BUFI) and invested in financial instruments categorised as available for sale financial assets. 

REVENUE FROM EXCHANGE TRANSACTIONS 

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 statement of financial performance 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 EU estimates cashflows considering all contractual terms of the 
financial  instrument  (for  example,  prepayment  options)  but  does  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 to discount the future cashflows 
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.  Expenses 

Expenses from non-exchange transactions account for the majority of the EU's expenses. 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 an agreement 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  due  to  the  beneficiaries 
but not yet reported are estimated and recorded as accrued expenses. 

Expenses  from  exchange  transactions  arising  from  the  purchase  of  goods  and  services  are  recognised 
when the supplies are delivered and accepted by the EU. They are valued at original invoice cost.  

42 

 
 
 
 
Annual accounts of the European Union 2014 

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  EU.  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  EU;  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. 

43 

 
 
 
Annual accounts of the European Union 2014 

2.  NOTES TO THE BALANCE SHEET 

ASSETS 

2.1.  INTANGIBLE ASSETS 

Gross carrying amount at 31.12.2013 
Additions 
Disposals 
Transfer between asset categories 
Other changes 
Gross carrying amount at 31.12.2014 
Accumulated amortisation at 31.12.2013 
Amortisation charge for the year 
Disposals 
Transfer between asset categories 
Other changes 
Accumulated amortisation at 31.12.2014 

Net carrying amount at 31.12.2014 
Net carrying amount at 31.12.2013 

EUR millions  

 474 
 104 
 (2) 
0 
 1 
 577 
 (236) 
 (61) 
 2 
0 
0 
 (295) 

 282 
 237 

The above amounts relate primarily to computer software. 

2.2.  PROPERTY, PLANT AND EQUIPMENT 

The  increase  of  property,  plant  and  equipment  is  mainly  due  to  the  fact  that  following  the  signature  of 
the  Copernicus  delegation  agreement  with  the  European  Space  Agency  (ESA)  during  2014,  assets  of 
EUR 1 525 million of the Copernicus programme (former GMES programme) have been transferred from 
ESA to the Commission. In accordance with the Copernicus Regulation adopted in 2014, the EU took over 
the responsibility for the Copernicus programme and thus must recognise the assets on its balance sheet. 
EUR 297 million  relating  to  the  Sentinel  1A  satellite  have  been  recognised  as  assets  under  the  heading 
plant  and  equipment,  and  EUR 1 228 million  relating  to  the  other  satellites  currently  being  constructed 
have  been  recognised  as  assets  under  construction.  Copernicus  is  the  European  Earth  observation 
programme.  It  consists  of  a  space  component  including  six  series  of  earth  observation  satellites  and 
instruments, an in situ component (composed of numerous sensors on the ground, at sea and in the air), 
and  a  service  component.  The  following  services  are  to  be  provided  by  Copernicus:  atmosphere 
monitoring,  climate  change  monitoring, 
land  monitoring,  marine  monitoring,  and  emergency 
management and security applications. 

In  addition,  also  included  as  assets  under  construction  at  31 December 2014  are  EUR 1 478 million 
(2013:  EUR 1 041 million)  of  assets  relating  to  the  Galileo  project,  the  EU's  Global  Navigation  Satellite 
System (GNSS), being built with the assistance of ESA. An amount of EUR 17 million of non-capitalisable 
development costs has been recognised as expenses during the period. 

44 

 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment 

Annual accounts of the European Union 2014 

Land and 
Buildings 
4 660 
Gross carrying amount at 31.12.2013 
 30 
Additions 
 (9) 
Disposals 
 84 
Transfer between asset categories 
 2 
Other changes 
4 768 
Gross carrying amount at 31.12.2014 
(2 399) 
Accumulated depreciation at 31.12.2013 
 (153) 
Depreciation charge for the year 
- 
Depreciation written back 
 4 
Disposals 
- 
Transfer between asset categories 
Other changes 
- 
Accumulated depreciation at 31.12.2014  (2 549) 

Plant and 
Equipment 
 608 
 342 
 (58) 
 98 
 1 
 990 
 (474) 
 (65) 
 16 
 42 
 4 
0 
 (477) 

NET CARRYING AMOUNT AT 31.12.2014 
NET CARRYING AMOUNT AT 31.12.2013 

2 219 
2 261 

 513 
 134 

Furniture and 
Vehicles 

 233 
 18 
 (20) 
 10 
 2 
 242 
 (168) 
 (17) 
0 
 18 
 (1) 
 (1) 
 (168) 

 74 
 65 

 Assets under 
construction 
1 599 
1 779 
 (6) 
 (195) 
 1 
3 176 

Computer 
Hardware 
 596 
 59 
 (49) 
 8 
 10 
 623 
 (461) 
 (74) 
 2 
 47 
 (8) 
 (6) 
 (501) 

Other 

Finance 
leases 

 248 
 31 
 (22) 
 2 
 1 
 261 
 (166) 
 (25) 
 3 
 18 
 (2) 
 (1) 
 (173) 

2 692 
 9 
0 
 (8) 
- 
2 693 
 (863) 
 (95) 
- 
0 
 7 
- 
 (950) 

 122 
 134 

 89 
 83 

1 743 
1 829 

3 176 
1 599 

EUR millions 
Total 

10 635 
2 267 
 (164) 
– 
 17 
12 754 
(4 531) 
 (429) 
 21 
 128 
– 
 (8) 
(4 817) 

7 937 
6 104 

45 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

2.3.  INVESTMENTS ACCOUNTED FOR USING THE EQUITY 

METHOD 

Participations in joint ventures 
Participations in associates 
Total 

Note 
2.3.1 
2.3.2 

31.12.2014 
– 
 409 
 409 

EUR millions 

31.12.2013 
– 
 349 
 349 

Participations in joint ventures and associates are accounted for using the equity method.  

2.3.1. 

Participations in joint ventures 

Participations at 31.12.2013 
Contributions 
Share of net result 
Other equity movements 
Participations at 31.12.2014 
Unrecognised share of loss* 

GJU 
 0 
 0 
 0 
 0 
 0 
– 

SESAR 
 0 
 95 
 (95) 
 0 
 0 
 (230) 

ITER  Clean Sky 
 0 
 125 
 (125) 
 0 
 0 
 (99) 

 0 
 118 
 (118) 
 0 
 0 
 (36) 

IMI 
 0 
 166 
 (166) 
 0 
 0 
 (73) 

ECSEL 
 0 
 75 
 (75) 
 0 
 0 
 (40) 

* For a detailed explanation of unrecognised losses see note 1.5.4. 

EUR millions 
Total 
 0 
 647 
 (647) 
 0 
 0 
 (594) 

FCH 
 0 
 69 
 (69) 
 0 
 0 
 (116) 

The  following  carrying  amounts  are  attributable  to  the  Commission  based  on  its  percentage  of 
participation: 

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

31.12.2014 
 250 
 178 
– 
 (813) 
 2 
 (666) 

EUR millions 
31.12.2013 
 198 
 63 
– 
 (394) 
 1 
 (412) 

GALILEO JOINT UNDERTAKING IN LIQUIDATION 

The Galileo Joint Undertaking (GJU) was put into liquidation at the end of 2006 and the process is still on-
going. The entity was inactive and still undergoing liquidation in 2014.  

SESAR JOINT UNDERTAKING 

At 31 December 2014, the Commission held 43.53 % of the ownership participation in SESAR. 

ITER INTERNATIONAL FUSION ENERGY ORGANISATION (ITER) 

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, it must recognise the participation in its accounts. At 31 December 2014, the Commission 
held 40.61 % of the ownership participation in ITER.  

Joint Technology Initiatives 

Public  private  partnerships  (PPPs)  in  the  form  of  Joint  Technology  Initiatives  (JTIs),  which  were 
implemented  through  Joint  Undertakings  within  the  meaning  of  Article  187  of  the  Treaty,  have  been 
created in order to implement the objectives of the Lisbon Growth and Jobs Agenda. The Clean Sky joint 
undertaking (JU), the IMI JU, the ECSEL JU (amalgamation of the former ARTEMIS & ENIAC JUs) and the 
FCH  JU  are  PPPs  created  in  the  form  of  JTIs.  The  ownership  participation  at  year-end  is  as  follows: 
61.39 % in Clean Sky, 80.47 % in IMI, 95.47 % in ECSEL and 70.85 % in FCH. 

46 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
Annual accounts of the European Union 2014 

2.3.2. 

Participations in associates 

European Investment Fund 

The participation of the Commission in the European Investment Fund (EIF) is treated as associate using 
the  equity  method  of  accounting.  The  EIF  is  the  EU's  financial  institution  specialising  in  providing  risk 
capital and guarantees to SMEs. 

Participation at 31.12.2013 
Contributions 
Share of net result 
Other equity movements 
Participation at 31.12.2014 

EUR millions 
EIF 
 349 
 38 
 7 
 15 
 409 

The  following  carrying  amounts  are  attributable  to  the  Commission  based  on  its  percentage  of 
participation: 

Assets 
Liabilities 
Revenue 
Surplus/(deficit) 

31.12.2014 
 497 
 (87) 
 38 
 21 

EUR millions 
31.12.2013 
 499 
 (240) 
 37 
 (221) 

The  Commission  has  paid  in  20 %  of  its  participation,  the  balance  being  uncalled,  corresponding  to  an 
amount of EUR 809 million. 

Total share capital 
Paid-in 
Uncalled 

2.4.  FINANCIAL ASSETS 

Non-current financial assets 
Available for sale financial assets 
Loans 

Total 

Current financial assets 
Available for sale financial assets 
Loans 

Total 
Total 

Total EIF capital 

4 161 
 (832) 
3 329 

EUR millions 
Commission 
subscription 
1 011 
 (202) 
 809 

Note 

31.12.2014 

31.12.2013 

EUR millions 

2.4.1 
2.4.2 

2.4.1 
2.4.2 

6 550 
49 888 

56 438 

2 856 
8 955 

11 811 
68 249 

5 497 
54 347 

59 844 

2 373 
3 198 

5 571 
65 415 

47 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

2.4.1.  Available for sale financial assets 

EUR millions 
31.12.2013 
1 910 
BUFI investments 
1 773 
Guarantee Fund for external actions* 
1 696 
ECSC in Liquidation 
1 197 
Risk Sharing Finance Facility (RSFF) 
- 
Horizon 2020 
 339 
ETF Start up 
 188 
European Bank for Reconstruction and Development (EBRD) 
 121 
Loan Guarantee Instrument for TEN-T projects (LGTT) 
 124 
Risk Capital Operations 
 67 
Project Bond Initiative 
 116 
European Fund for South East Europe 
 339 
Other available for sale financial assets 
7 870 
Total 
5 497 
Non-current 
2 373 
Current 
*  The  Guarantee  Fund  for  external  actions  holds  EFSM  bonds  (EUR 20 million)  issued  by  the  Commission,  so  these  have  been 
eliminated.  As  it  is  a  long-term  instrument  there  is  a  significant  non-current  part  of  the  available  for  sale  financial  assets,  being 
EUR 1 489 million. 

31.12.2014 
3 068 
1 825 
1 699 
 842 
 514 
 399 
 188 
 186 
 145 
 125 
 117 
 298 
9 406 
6 550 
2 856 

The EU  holds available for  sale  financial assets  mainly in  the form  of  guarantee  instruments and  equity 
instruments.  The  increase  as  compared  to  2013  is  mainly  due  to  more  than  EUR 2 billion  of  new  fines 
being  imposed  in  2014  and  invested  in  the  BUFI  fund,  less  open  fine  cases  settled  during  2014. 
Additionally,  Horizon  2020,  which  is  the  eighth  phase  of  the  Framework  Programmes  for  Research  and 
Technological Development ('FP8'), began in 2014 and had assets of over half a billion euros at year-end. 

Fair value hierarchy of available for sale financial assets: 

Level 1: Quoted prices in active markets 
Level 2: Observable inputs other than quoted prices 
Level 3: Valuation techniques with inputs not based on 
observable market data 
Total 

31.12.2014 
8 183 
 76 
1 147 

EUR millions 
31.12.2013 
6 669 
 76 
1 126 

9 406 

7 870 

During the period there were no transfers between the above mentioned fair value measurement levels. 

Reconciliation  of  financial  assets  measured  using  valuation  techniques  with  inputs  not  based  on 
observable market data (level 3): 

Opening balance at 31.12.2013 
Purchases and sales 
Gains or losses for the period recognised in surplus or deficit 
Gains or losses recognised in net assets 
Transfers into level 3  
Transfers out of level 3  
Other 
Closing balance at 31.12.2014 

European Bank for Reconstruction and Development 

EUR millions 

1 126 
 (57) 
 (2) 
 81 
– 
– 
 (1) 
1 147 

As the European Bank for Reconstruction and Development (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. 

48 

 
 
 
 
 
 
 
 
 
 
 
  
 
 
Annual accounts of the European Union 2014 

Total EBRD capital 

29 674 
(6 202) 
23 472 

31.12.2014 
49 888 
8 955 
58 843 

EUR millions 
Commission 
subscription 
 900 
 (188) 
 712 

EUR millions 
31.12.2013 
54 347 
3 198 
57 545 

Total Share Capital 
Paid-in 
Uncalled 

2.4.2. 

Loans 

Non-current 
Current 
Total 

This heading includes loans granted from borrowed funds (EUR 58 509 million) as well as loans granted 
from  the  budget,  i.e.  loans  with  special  conditions  and  ECSC  in  Liquidation  housing  loans 
(EUR 139 million).  Also  included  are  short-term  deposits  (EUR 195 million),  which  are  categorised  as 
loans.  

Loans granted from borrowed funds 

MFA 

Euratom 

BOP 

EFSM 

ECSC in 

EUR millions 
Total 

Total at 31.12.2013 
New loans 
Repayments 
Exchange differences 
Changes in carrying amount 
Impairment 
Total at 31.12.2014 
Non-current 
Current 

 569 
1 360 
 (96) 
- 
 9 
- 
1 842 
1 762 
 80 

 387 
- 
 (39) 
 1 
– 
- 
 349 
 299 
 50 

11 623 
- 
(3 000) 
- 
 (33) 
- 
8 590 
5 700 
2 890 

44 468 
3 000 
- 
- 
 39 
- 
47 507 
41 800 
5 707 

Liqui-     
dation 
 211 
- 
- 
 15 
 (5) 
- 
 221 
 211 
 10 

57 258 
4 360 
(3 135) 
 16 
 10 
– 
58 509 
49 772 
8 737 

The current/non-current presentation  of  the loans on  the Commission's balance sheet (e.g.  EFSM,  BOP, 
Euratom,  MFA)  has been  improved from  the notion  of  looking solely  at the final  maturity of  the loan to 
the  notion  of  looking  at  the  re-payments  due  at  year-end.  Guarantees  from  third-parties  of 
EUR 349 million  (2013:  EUR 387 million)  have  been  received  covering  Euratom  loans.  At  31.12.2014, 
EUR 250 million relating to a loan facility agreement under MFA  assistance were granted to Ukraine but 
not yet disbursed.  

Loans effective interest rates (expressed as a range of interest rates) 

Macro Financial Assistance (MFA) 
Euratom 
Balance of Payment (BOP) 
European Financial Stability Mechanism (EFSM) 
ECSC in Liquidation 

31.12.2014 
0.181 %-4.54 % 
0.26 %-5.76 % 
2.375 %-3.625 % 
1.875 %-3.750 % 

31.12.2013 
0.27 %-4.54 % 
0.34 %-5.76 % 
2.375 %-3.625 % 
2.375 %-3.750 % 
5.2354 %-5.8103 %  5.2354 %-5.8103 % 

49 

 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

2.5.  PRE-FINANCING 

Non-current pre-financing 
Pre-financing 
Other advances to Member States 

Total 

Current pre-financing 
Pre-financing 
Other advances to Member States 

Total 
Total 

Note 

31.12.2014 

31.12.2013 

EUR millions 

2.5.1 
2.5.2 

2.5.1 
2.5.2 

15 980 
2 378 

18 358 

29 222 
5 015 

34 237 
52 595 

34 819 
3 253 

38 072 

16 403 
4 963 

21 367 
59 439 

Pre-financing  represents  a  large  portion  of  the  EU's  total  assets,  and  thus  receives  proper  and  regular 
attention. It should be noted that the level of pre-financing amounts in the various programmes must be 
sufficient to ensure the necessary float for the beneficiary to start the project, while also safeguarding the 
financial  interests  of  the  EU  and  taking  into  consideration  legal,  operational  and  cost-effectiveness 
constraints.  All  these  elements  have  been  given  due  consideration  by  the  Commission  in  an  effort  to 
improve the follow-up of pre-financing. 

2.5.1. 

Pre-financing 

Shared Management 

EAFRD & other rural 
development instruments 
ERDF & CF 
ESF 
Other 

Direct Management 
Implemented by:  
Commission 
EU executive agencies 

Indirect Management 

Implemented by: 

Other EU agencies & bodies 
Third countries 
International organisations 
Other entities 

Total 
Non-current 
Current 

Gross 
amount 

Cleared 
via cut-off 

Net amount 
at 
31.12.2014 

Gross 
amount 

Cleared 
via cut-off 

EUR millions 
Net amount 
at 
31.12.2013 

5 644 

(2 115) 

3 529 

6 359 

(1 032) 

5 327 

24 934 
6 884 
4 626 

(2 182) 
 (953) 
(2 535) 

22 752 
5 931 
2 091 

25 701 
6 857 
4 191 

(2 164) 
 (492) 
(2 054) 

23 537 
6 365 
2 137 

13 173 
9 079 

(10 215) 
(6 618) 

2 958 
2 461 

14 841 
8 558 

(9 459) 
(5 108) 

5 382 
3 450 

 548 
1 981 
6 236 
4 370 

 (98) 
(1 169) 
(3 476) 
(2 910) 
77 474  (32 273) 
– 
15 980 
(32 273) 
61 495 

 450 
 812 
2 760 
1 460 

 (21) 
 412 
 (782) 
1 678 
(2 460) 
4 172 
(3 478) 
5 503 
45 202  78 272  (27 050) 
– 
34 819 
15 980 
(27 050) 
43 453 
29 222 

 391 
 896 
1 712 
2 025 
51 222 
34 819 
16 403 

The  decrease  in  total  pre-financing  noted  under  shared  management  and  direct  management  is 
attributed primarily to the closure of programing period 2007-2013 and the gradual set-up of programs 
under  the  period  2014-2020.  Pre-financing  related  to  the  old  programs  is  decreasing  due  to  the 
acceptance of costs, while lower level of advances have been paid out concerning the new programming 
period.  

For  structural  funds  this  transition  between  programming  periods  also  explains  the  movement  between 
current and non-current balances. New pre-financing paid concerning the programming period 2014-2020 
is tipically booked as non-current; these advances are still limited in amount (due to the late adoption of 

50 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Annual accounts of the European Union 2014 

new  programs).  The  programming  period  2007-2013  is  in  its  closing  phase  and  thus  more  amounts 
become due within twelve months. 

Guarantees received in respect of pre-financing 

These  are  guarantees  that  the  Commission  requests  from  beneficiaries  that  are  not  Member  States,  in 
certain  cases  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 2014  the  "nominal" 
value  of  guarantees  received  in  respect  of  pre-financing  amounted  to  EUR 957 million  while  the  "on-
going"  value  of  those  guarantees  was  EUR 605 million  (2013:  EUR 1 124 million  and  EUR 887 million 
respectively). 

Certain pre-financing amounts paid out under the 7th Research Framework Programme for research and 
technological  development  (FP7)  and  under  Horizon  2020  are  effectively  covered  by  a  Participants 
Guarantee Fund (PGF). The PGF is a mutual benefit instrument set up to cover the risks relating to non-
payment  of  amounts  by  the  beneficiaries  during  the  implementation  of  the  indirect  actions  of  FP7  and 
Horizon 2020. All participants of indirect actions receiving a grant from the EU contribute 5 % of the total 
contribution to the PGF's capital.  
At  31 December 2014  pre-financing  amounts  covered  by  the  PGF  totalled  EUR 1.8 billion  (2013: 
EUR 4.5 billion). The decrease relates to the fact that 2014 was the last year for signing FP7 projects with 
less  funds  available  for  new  projects.  The  EU  (represented  by  the  Commission)  acts  as  an  executive 
agent of the participants of the PGF, but the fund is owned by the participants.  

At year-end, the PGF had total assets of EUR 1 640 million (2013: EUR 1 658 million). The assets of the 
PGF also include financial assets that are managed by the Directorate-General for Economic and Financial 
Affairs.  As  the  PGF  is  a  separate  entity  the  assets  of  the  fund  are  not  consolidated  in  these  EU  annual 
accounts. 

2.5.2.  Other advances to Member States 

Advances to Member States for financial instruments 
under shared management 
Non-current 
Current 
Total 
Aid Schemes 
Non-current 
Current 
Total 
Total 

31.12.2014 

EUR millions 
31.12.2013 

2 090 
1 733 
3 823 

 288 
3 282 
3 570 
7 393 

2 118 
2 118 
4 236 

1 135 
2 845 
3 981 
8 216 

Under  the  framework  of  the  structural  funds  programmes  2007-2013  and  also  under  the  European 
Agricultural Fund for Rural Development, advance payments can be made from the EU budget to Member 
States  so  as  to  contribute  to  financial  instruments  (be  it  in  the  form  of  loans,  equity  investments  or 
guarantees)  set  up  and  managed  under  the  responsibility  of  the  Member  States  (i.e.  shared 
management). Monies that are unused by these instruments at year-end are the property of the EU (as 
with  all  pre-financing)  and  are  thus  treated  as  an  asset  on  the  EU’s  balance  sheet.  However,  the  basic 
legal  acts  do  not  oblige  the  Member  States  to  provide  periodic  reports  to  the  Commission  on  the  use 
made  of  these  advances,  and  in  some  cases  not  even  identify  them  in  the  statements  of  expenditure 
submitted to the Commission. Information reported by Member States on unused amounts at end 2014 is 
not  available  in  time  for  inclusion  in  these  accounts.  Thus,  on  the  basis  of  information  received  from 
Member States on unused amounts as  at 31 December 2013 and disbursements  made during 2014, an 
estimation is made at year-end of the value of this asset. Furthermore, this estimation is now based on 
an  extension  of  the  implementation  period  for  these  instruments  from  31 December 2015  to 
31 March 2017.  The  outstanding  balance  for  these  instruments  at  year-end  is  estimated  on  the 
assumption that funds will be used in full and evenly over the remaining period of operation. At the end 
of  this  period  the  Commission  will  examine  the  actual  use  of  funds  and  will  reflect  in  the  accounts 
amounts that have not been used. 

51 

 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

The total contribution requested by Member States to the Commission concerning these instruments was 
EUR 10 904 million,  of  which  EUR 1 088 million  remained  unpaid  at  year  end.  In  2014,  no  amounts 
relating to the 2014-2020 programming period have been paid. 

Similar  to  the  above,  advances  paid  by  the  Member  States  for  various  aid  schemes  (state  aid,  market 
measures of EAGF) that were not used at year end are recorded as assets on the Commission's balance 
sheet. The Commission has estimated the value of these advances based on information provided by the 
Member States; the resulting amounts are included under the Aid Schemes sub-headings above. 

2.6.  EXCHANGE RECEIVABLES AND NON-EXCHANGE 

RECOVERABLES 

Non-current 
Recoverables from non-exchange transactions 
Receivables from exchange transactions 

Total 

Current 
Recoverables from non-exchange transactions 
Receivables from exchange transactions 

Total 
Total 

Note 

31.12.2014 

31.12.2013 

EUR millions 

2.6.1 
2.6.2 

2.6.1 
2.6.2 

1 158 
 40 

1 198 

13 828 
 551 

14 380 
15 578 

 478 
 20 

 498 

12 478 
 704 

13 182 
13 680 

2.6.1.  Recoverables from non-exchange transactions 

Non-current 
Member States 
Accrued income and deferred charges 

Total 

Current 
Member States 
Fines 
Accrued income and deferred charges 
Other recoverables 

Total 
Total 

Note 

31.12.2014 

31.12.2013 

EUR millions 

2.6.1.1 
2.6.1.3 

2.6.1.1 
2.6.1.2 
2.6.1.3 

 305 
 853 

1 158 

10 679 
2 270 
 832 
 48 

13 828 
14 987 

 478 
– 

 478 

5 574 
4 071 
2 741 
 92 

12 478 
12 957 

52 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

2.6.1.1.  Recoverables from Member States 

Established in the A account 
Established in the separate account 
Own resources to be received 
Impairment 
Other 
Own resources recoverables 
European Agricultural Guarantee Fund (EAGF) 
European Agricultural Fund for Rural Development (EAFRD) 
Temporary Rural Development Instrument (TRDI) 
Special Accession Programme for Agriculture and Rural 
Development (SAPARD) 
Impairment 
EAGF and rural development recoverables 
Pre-financing recovery expected 
VAT paid and recoverable 
Other recoverables from Member States 
Total 
Non-current 
Current 

31.12.2014 
2 789 
1 617 
5 413 
(1 144) 
 12 
8 686 
2 250 
 52 
 27 
 166 

 (840) 
1 655 
 437 
 44 
 161 
10 984 
 305 
10 679 

EUR millions 
31.12.2013 
 47 
1 228 
3 054 
 (743) 
 6 
3 592 
2 294 
 82 
 45 
 155 

 (819) 
1 757 
 542 
 68 
 94 
6 053 
 478 
5 574 

The non-current amounts due from Member States relate to non-executed conformity clearance decisions 
for  the  European  Agricultural  Guarantee  Fund  (EAGF)  and  the  European  Agricultural  Fund  for  Rural 
Development (EAFRD) to be implemented in annual instalments and/or deferrals. 

Own resources recoverables 

The significant increase of recoverables established in the A account is explained by EUR 2 756 million of 
custom duties and sugar levies of  November and  December that were recognised as accrued income in 
previous years. 

The amount of own resources to be received relates to the Amending Budgets No 2 to 7/2014 adopted on 
17 December 2014.  According to Article  10  of  Council  Regulation  1150/2000  of  22 May 2000 (OJ L 130, 
31.5.2000,  p. 1)  the  entries  corresponding  to  the  readjustments  of  own  resources  contributions  were 
carried  out  on  the  first  working  day  of  February  2015.  The  adjustments  to  Member  States’  national  EU 
budget contributions based on VAT and GNI take place every year on the first working day of December. 
The adjustment in 2014 included major revisions for GNI dating back to 2002. Thus the adjustment was 
unprecedented in size, totalling EUR 9.5 billion across all EU Member States. 

In order to address this exceptional situation, the Council adopted on 18 December 2014 a Commission 
proposal  allowing  Member  States  to  defer  payment,  interest  free,  under  strict  conditions,  up  to 
1 September 2015. Accordingly, 6 Member States opted to pay their adjustments in 2015. The deferred 
payment amounts to EUR 5.4 billion, as included in the above table. 

EAGF and Rural Development recoverables 

This  item  primarily  covers  the  amounts  owed  by  Member  States  at  31  December,  as  declared  and 
certified  by  the  Member  States  at  15  October.  An  estimation  is  made  for  the  recoverables  arising  after 
this  declaration  and  up  to  31  December.  The  Commision  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. A deduction of 20 % is also 
included  in  the  adjustment,  and  corresponds  to  what  Member  States  are  allowed  to  retain  to  cover 
administrative costs. 

53 

 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

2.6.1.2.  Fines 

This concerns amounts to be recovered relating to fines issued by the Commission of EUR 2 424 million 
(2013:  EUR 4 310 million)  less  a  write-down  of  EUR 155 million  (2013:  EUR 239 million).  Guarantees 
totalling  EUR 1 916 million  were 
(2013: 
EUR 3 244 million).  It  should  be  noted  that  EUR 183 million  of  these  receivables  were  due  for  payment 
after 31 December 2014. 

fines  outstanding  at  year-end 

received 

the 

for 

The  decrease  in  the  balance  of  the  open  fines  at  year  end  is  due  to  the  fact  that  fines  totalling 
EUR 4.1 billion became definitive and so were transferred to the budget during 2014.  

2.6.1.3.  Accrued income and deferred charges 

Own resources accrued income 
Cohesion, Agriculture & Rural Development Funds: financial 
corrections 
Other accrued income 
Impairment on accrued income 
Deferred charges relating to non-exchange transactions 
Total 
Non-current 
Current 

31.12.2014 
– 
1 502 

EUR millions 
31.12.2013 
2 424 
 31 

 83 
– 
 101 
1 686 
 853 
 832 

 201 
– 
 85 
2 741 
– 
2 741 

It  should  be  noted  that  the  own  resources  accrued  income,  mainly  custom  duties  of  November  and 
December, are now disclosed under current recoverables. 

2.6.2.  Receivables from exchange transactions 

Non-current 
Other receivables 
Total 
Current 
Customers 
Impairment on receivables from customers 
Deferred charges relating to exchange transactions 
Other 
Total 
Total 

2.7.  INVENTORIES 

Scientific materials 
Other 
Total 

31.12.2014 

EUR millions 
31.12.2013 

 40 
 40 

 211 
 (103) 
 219 
 224 
 551 
 591 

 20 
 20 

 381 
 (100) 
 352 
 71 
 704 
 724 

31.12.2014 
 66 
 62 
 128 

EUR millions 
31.12.2013 
 81 
 47 
 128 

54 

 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
Annual accounts of the European Union 2014 

2.8.  CASH AND CASH EQUIVALENTS 

Accounts with Treasuries and Central Banks 
Current accounts 
Imprest accounts 
Transfers (cash in transit) 
Other term deposits 

Bank accounts for budget implementation and 
other term deposits 
Cash belonging to financial instruments 

Cash relating to fines 

Cash relating to other institutions, agencies and 
bodies 
Total 

Note 

2.8.1 

2.8.2 

2.8.3 

31.12.2014 
11 840 
 303 
 4 
– 
 28 

12 174 

1 275 

2 738 

1 358 

17 545 

EUR millions 

31.12.2013 
2 505 
 168 
 4 
 (1) 
 29 

2 705 

1 406 

4 165 

1 234 

9 510 

2.8.1.  Bank accounts for budget implementation and other term deposits 

This  heading  covers  the  funds  which  the  Commission  keeps  in  its  accounts  in  each  Member  State  and 
EFTA  country  (treasury  or  central  bank),  as  well  as  in  commercial  bank  current  accounts,  imprest 
accounts and petty cash. 

The high balance at the end of 2014 is mainly due to own resources contributions related to VAT and GNI 
balances  paid  by  Member  States  in  December  2014,  as  well  as  the  amending  budgets  reducing  the 
Member States' contributions, which were adopted in December 2014 and returned to Member States via 
amending budgets in early 2015. 

2.8.2.  Cash belonging to financial instruments 

Amounts shown under this heading primarily concern cash equivalents managed by fiduciaries on behalf 
of  the  Commission  for  the  purpose  of  implementing  particular  financial  instrument  programmes  funded 
by  the  EU  budget.  The  cash  belonging  to  financial  instruments  can  only  be  used  in  the  programme 
concerned. 

2.8.3.  Cash relating to fines 

This is cash received in connection with fines issued by the Commission for which the case is still open. 
These amounts are kept in specific deposit accounts that are not used for any other activities. Where an 
appeal  has  been  lodged  or  where  it  is  unknown  if  an  appeal  will  be  made  by  the  other  party,  the 
underlying amount is shown as contingent liability in note 5.2. 

The decrease in this balance is due to the fact that since 2010, all provisionally cashed fines are managed 
by the Commission in a specifically created fund (BUFI) and invested in financial instruments categorised 
as available for sale (see note 2.4.1). 

55 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

LIABILITIES 

2.9.  PENSION AND OTHER EMPLOYEE BENEFITS 

Pensions – staff  
Pensions – other 
Joint Sickness Insurance Scheme 
Total 

Note 
2.9.1 
2.9.2 
2.9.3 

31.12.2014 
50 897 
1 322 
6 396 
58 616 

EUR millions 

31.12.2013 
40 933 
1 016 
4 869 
46 818 

The  significant  increase  in  the  employee  benefits  liability  is  explained  by  the  sizeable  decrease  in  the 
discount rate applied, resulting in a large actuarial loss for the year (net EUR 9.2 billion). 

As shown below, the real discount rate has decreased dramatically from 1.8 % to 0.7 %, refelecting the 
underlying economic conditions. This change alone accounts for almost all of the  increase in the liability 
since changes in other variables (such as new members, service cost and interest cost) were in line with 
the  previous  year's  figures.  Such  actuarial  fluctuations  must  be  expected  based  on  the,  internationally 
applied, accounting rules in place and the current economic environment – should interest rates increase, 
a reverse impact would be expected.  

Furthermore,  as  this  is  an  actuarial  estimate  of  the  value  of  the  total  liability  at  one  point  in  time, 
31 December 2014,  and  is  based  on  various  assumptions  valid  at  this  time,  this  loss  does  not  indicate 
actual  charges  to  the  EU  budget.  Nor  does  this  valuation  impact  the  amounts  to  be  paid  to  pensioners 
from the EU budget in the immediate coming years – these payments are already estimated in the MFF 
2014-2020 and will be implemented via the annual budgetary process. 

2.9.1. 

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 expense. In addition, officials contribute 
one third to the long-term financing of this scheme via a compulsory contribution from their salaries. 

The liabilities of the pension scheme were assessed on the basis of the number of staff and retired staff 
at 31 December 2014 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 for the staff pension liability used in the valuation were as follows: 

Nominal discount rate  
Expected inflation rate  
Real discount rate 
Probability of marriage: man/woman 
General salary growth/pension revaluation 
International Civil Servants Life Table (ICSLT) 

2.9.2. 

Pensions – Others 

31.12.2014 
2.0 % 
1.3 % 
0.7 % 
81 %/49 % 
(0.2) % 
ICSLT 2013 

31.12.2013 
3.7 % 
1.9 % 
1.8 % 
81 %/49 % 
(0.2) % 
ICSLT 2013 

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. 

56 

 
 
 
  
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

2.9.3. 

Joint Sickness Insurance Scheme 

A valuation is also made for the estimated liability that the EU has regarding the Joint Sickness Insurance 
Scheme  in  relation  to  its  retired  staff.  The  discount  rate  and  the  general  salary  growth  used  in  the 
calculation  are  consistent  with  those  used  in  the  staff  pension  valuation,  thus  the  reasons  for  the 
movements in the liability are similar to those of the staff pension liability. 

Movements in employee benefits liabilities 

Pensions - staff 

Pensions - other 

Gross liability at 31.12.2013 
Service/normal cost  
Interest cost 
Benefits paid 
Actuarial losses* 
Change due to newcomers 
Gross liability at 31.12.2014 
Correction coefficients applied to 
pensions 
Deduction of taxes on pensions 
Plan assets 
Net liability at 31.12.2014 
* Gross actuarial losses before taxes and correction coefficients. 

45 947 
2 153 
1 683 
(1 368) 
8 255 
 461 
57 131 
1 371 

(7 605) 
N/A 
50 897 

5 year trend of pension and other employee benefits liability 

1 289 
 62 
 44 
 (47) 
 191 
 67 
1 606 
N/A 

 (119) 
 (165) 
1 322 

Employee benefits liability 

31.12.2010  31.12.2011  31.12.2012  31.12.2013 
46 818 

37 172 

34 835 

42 503 

EUR millions 

Joint 
Sickness 
Insurance 
Scheme 
5 133 
– 
 49 
 (68) 
1 554 
– 
6 668 
N/A 

N/A 
 (272) 
6 396 

EUR millions 
31.12.2014 
58 616 

2.10.  PROVISIONS 

Amount at 
31.12.2013 

Additional 
provisions 

 487 
 963 

 282 
– 
 135 
1 867 
1 323 
 545 

 567 
– 

 117 
 30 
 94 
 807 
 241 
 566 

Unused 
amounts 
reversed 
 (97) 
– 

 (0) 
– 
 (53) 
 (150) 
 (93) 
 (57) 

Amounts 
used 

Transfer 
to current 

Change in 
estimation 

Amount at 
31.12.2014 

EUR millions 

 (229) 
 (31) 

 (76) 
– 
 (73) 
 (409) 
 (28) 
 (381) 

– 
– 

– 
– 
– 
– 
 (69) 
 69 

 0 
 159 

 9 
– 
 (0) 
 168 
 164 
 4 

 728 
1 091 

 332 
 30 
 102 
2 282 
1 537 
 745 

Legal cases 
Nuclear site 
dismantling 
Financial 
Fines 
Other 
Total 
Non-current 
Current 

Legal cases 

This is the estimate of amounts that will probably have to be paid out after the year-end in relation to a 
number of on-going legal cases. The increase in the provision is due primarily to lost legal cases relating 
to  the  ERDF.  This  significant  increase  was  only  partly  compensated  by  unused  amounts  concerning  the 
settlement of a traditional own resources case concerning sugar levies – see also note 3.2. 

57 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
Annual accounts of the European Union 2014 

Nuclear site dismantlement 

In  2012  a  consortium  of  independent  experts  updated  their  2008  study  on  the  estimated  costs  of  the 
decommissioning  of  the  Joint  Research  Centre  (JRC)  nuclear  facilities  and  waste  management 
programme. Their estimate of EUR 989 million (previously EUR 1 222 million) was taken as the basis for 
this  provision.  In  2014  that  basis  for  the  provision  was  again  updated  as  per  the  "2014  updated  JRC 
Strategy  on  Decommissioning  and  Waste  Management"  (D&WM).  It  represents  the  follow  up  of  the 
comments raised by the Review of the JRC D&WM programme made by external experts. In accordance 
with  EU  accounting  rules,  this  provision  is  indexed  for  inflation  and  then  discounted  to  its  net  present 
value  (using  the  Euro  zero-coupon  swap  curve).  At  31 December 2014,  this  results  in  a  provision  of 
EUR 1 091 million,  split between  amounts expected to  be used  in  2015 (EUR 27 million) and afterwards 
(EUR 1 064 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 recorded. 

Financial provisions 

These concern mainly provisions which represent the estimated losses that will be incurred in relation to 
the guarantees given by the different financial instruments, where the European Investment Fund (EIF) 
and the European Investment Bank (EIB) are empowered to issue guarantees in their 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.  Non-current  financial  provisions  are  discounted  to  their  net  present 
value (using the Euro Swap annual rate). 

2.11.  FINANCIAL LIABILITIES 

Non-current financial liabilities 
Borrowings 
Other financial liabilities 

Total 

Current financial liabilities 
Borrowings 
Other financial liabilities 

Total 
Total 

2.11.1.  Borrowings 

Note 

31.12.2014 

31.12.2013 

EUR millions 

2.11.1 
2.11.2 

2.11.1 
2.11.2 

49 743 
2 108 

51 851 

8 727 
 101 

8 828 
60 680 

54 153 
2 216 

56 369 

3 065 
 99 

3 163 
59 533 

Borrowings 
Elimination: Guarantee Fund for external actions* 
Total 
* The Guarantee Fund for external actions holds EFSM bonds issued by the Commission, so these need to be eliminated. 

31.12.2014 
58 491 
 (20) 
58 470 

EUR millions 
31.12.2013 
57 237 
 (20) 
57 218 

58 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

Borrowings by financial instrument 

MFA 

Euratom 

BOP 

EFSM 

ECSC in 

Total at 31.12.2013 
New borrowings 
Repayments 
Exchange differences 
Changes in carrying amounts 
Total at 31.12.2014 
Non-current 
Current 

 569 
1 360 
 (96) 
- 
 9 
1 842 
1 762 
 80 

 387 
- 
 (39) 
 1 
– 
 349 
 299 
 50 

11 623 
- 
(3 000) 
- 
 (33) 
8 590 
5 700 
2 890 

44 468 
3 000 
- 
- 
 39 
47 507 
41 800 
5 707 

Liquid-     
dation 
 190 
- 
- 
 14 
 (1) 
 203 
 193 
 10 

EUR millions 
Total 

57 237 
4 360 
(3 135) 
 15 
 14 
58 491 
49 754 
8 737 

Borrowings  also  include  debts  evidenced  by  certificates  amounting  to  EUR 58 261 million  (2013: 
EUR 56 981 million). The changes in carrying amount correspond to the change in accrued interests. 

The  current/non-current  presentation  of  the  borrowings  on  the  Commission's  balance  sheet  (e.g.  MFA, 
Euratom, BOP and EFSM ) has been improved from the notion of looking solely at the final maturity of the 
loan to the notion of looking at the re-payments due at year-end. 

Borrowings effective interest rates (expressed as a range of interest rates) 

Macro Financial Assistance (MFA) 
Euratom 
Balance of Payment (BOP) 
European Financial Stability Mechanism (EFSM) 
ECSC in Liquidation 

2.11.2.  Other financial liabilities 

Non-current 
Finance lease liabilities 
Buildings paid for in instalments 
Other 
Total 
Current 
Finance lease liabilities 
Buildings paid for in instalments 
Total 
Total 

Finance lease liabilities 

31.12.2014 
0.181 %-4.54 % 

31.12.2013 
0.27 %-4.54 % 
0.138 %-5.6775 %  0.291 %-5.6775 % 
2.375 %-3.625 % 
2.375 %-3.750 % 
6.92 %-9.78 % 

2.375 %-3.625 % 
1.875 %-3.750 % 
6.92 %-9.78 % 

31.12.2014 

EUR millions 
31.12.2013 

1 674 
 371 
 63 
2 108 

 81 
 20 
 101 
2 209 

1 756 
 369 
 91 
2 216 

 82 
 17 
 99 
2 315 

Land and buildings 
Other tangible assets 
Total at 31.12.2014 
Interest element 
Total future minimum lease payments 
at 31.12.2014 
Total future minimum lease payments at 
31.12.2013 

EUR millions 

Future amounts to be paid 

< 1 year 
 75 
 6 
 81 
 70 
 151 

1-5 years 
 358 
 8 
 366 
 272 
 638 

> 5 years  Total Liability 
1 742 
 14 
1 755 
 734 
2 489 

1 309 
– 
1 309 
 392 
1 700 

 171 

 672 

1 884 

2 727 

59 

 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

2.12.  PAYABLES 

Gross Amount  

Adjustments* 

Net Amount 

EUR millions 

2014 
Cost claims & invoices received from: 
Member States: 

European Agricultural Fund for Rural 
Development & other rural 
development instruments 
European Regional Development Fund 
& Cohesion Fund 
European Social Fund 
Other 

Private and public entities 
Total costs claims & invoices 
received 
European Agricultural Guarantee Fund 
Sundry payables 
Own resources payables 
Other 
Total at 31.12.2014 
2013 
Total costs claims & invoices 
received 
European Agricultural Guarantee Fund 
Sundry payables 
Own resources payables 
Other 
Total at 31.12.2013 
* Estimated non-eligible amounts and pending prepayments. 

 318 

 (23) 

 295 

19 928 

5 893 
 751 
1 718 
28 608 

11 066 
 156 
5 945 
 204 
45 980 

27 257 

11 252 
 147 
 244 
 231 
39 131 

(2 306) 

 (272) 
 (93) 
 (106) 
(2 800) 

N/A 
N/A 
N/A 
N/A 
(2 800) 

(2 918) 

N/A 
N/A 
N/A 
N/A 
(2 918) 

17 622 

5 621 
 658 
1 612 
25 808 

11 066 
 156 
5 945 
 204 
43 180 

24 339 

11 252 
 147 
 244 
 231 
36 213 

Payables  include  cost  statements  received  by  the  Commission  under  the  framework  of  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  through  the  year-end  cut  off  procedures.  Following  these  cut-off  entries,  estimated  eligible 
amounts have therefore been recorded in the accounts as expenses, while the remaining part is disclosed 
as “Estimated non-eligible amounts and pending prepayments” (see below).  

Own resources payables refer to the contribution of Member States to the EU budget to be reimbursed at 
year-end following the last amending budget of 2014 (EUR 5.9 billion). The significant increase compared 
to last year is due to the GNI revisions made at year-end (see also note 2.6.1.1).  

Estimated non-eligible amounts and pending prepayments 

Payables are reduced by that part of the requests for reimbursement received, but not yet checked, that 
was estimated to be non-eligible. The largest amounts concern the Structural Actions DGs. Payables are 
also reduced by the part of requests for reimbursement received concerning other advances to Member 
States (see note 2.5.2) still to pay at year end (EUR 2.0 billion). 

Requests for pre-financing 

In  addition  to  the  above  amounts,  EUR 1.3 billion  of  requests  for  pre-financing  have  been  received  and 
were not yet paid at year-end. According to the EU accounting rules, these amounts are not booked as 
payables. 

60 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

2.13.  ACCRUED CHARGES AND DEFERRED INCOME 

Accrued charges 
Deferred income 
Other 
Total 

The split of accrued charges is as follows: 

European Agricultural Guarantee Fund 
European Agricultural Fund for Rural Development & other 
rural development instruments 
European Regional Development Fund and Cohesion Fund 
European Social Fund 
Other 
Total 

31.12.2014 
55 798 
 56 
 118 
55 973 

31.12.2014 
33 667 
13 414 

3 157 
 976 
4 584 
55 798 

EUR millions 
31.12.2013 
56 085 
 62 
 134 
56 282 

EUR millions 
31.12.2013 
33 491 
12 458 

4 371 
1 109 
4 656 
56 085 

NET ASSETS 

2.14.  RESERVES 

Fair value reserve 
Guarantee Fund reserve 
Other reserves 
Total 

2.14.1.  Fair value reserve 

Note 
2.14.1 
2.14.2 
2.14.3 

31.12.2014 
 238 
2 372 
1 825 
4 435 

EUR millions 

31.12.2013 
 99 
2 125 
1 849 
4 073 

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

Movements of the fair value reserve relating to available for sale financial assets during the period: 

Included in fair value reserve 
Included in the statement of financial performance 
Total 

2014 
 135 
 (10) 
 125 

EUR millions 
2013 
 (25) 
 (25) 
 (50) 

In  addition,  an  amount  of  EUR 15 million  in  the  overall  movement  of  the  fair  value  reserve  relates  to 
investments accounted for using the equity method. 

2.14.2.  Guarantee Fund reserve 

This reserve reflects the 9 % target amount of the outstanding amounts guaranteed by the Fund that is 
required to be kept as assets. 

61 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

2.14.3.  Other reserves 

The amount relates primarily to the ECSC in liquidation reserve (EUR 1 532 million) for the assets of the 
Research Fund for Coal and Steel, which was created in the context of the winding-up of the ECSC. 

2.15.  AMOUNTS TO BE CALLED FROM MEMBER STATES 

Amounts to be called from Member States at 31.12.2013 
Return of 2013 budget surplus to Member States 
Movement in Guarantee Fund reserve 
Other reserve movements 
Economic result of the year 
Total amounts to be called from Member States at 31.12.2014 

EUR millions  

49 925 
1 005 
 247 
 (15) 
11 280 
62 441 

This  amount  represents  that  part  of  the  expenses  incurred  by  the  EU  up  to  31 December  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 (or later) and therefore funded using the budget of year 
N+1  (or  later).  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  European  Agricultural  Guarantee 
Fund  activities.  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 should also be noted that the above has no effect on the budget result – budget revenue should always 
equal or exceed budget expenditure and any excess of revenue is returned to Member States. 

62 

 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

3.  NOTES TO THE STATEMENT OF FINANCIAL 

PERFORMANCE 

REVENUE 

REVENUE FROM NON-EXCHANGE TRANSACTIONS 

3.1.  GNI RESOURCES 

Own resources revenue is the primary element of the EU's operating revenue. Of the three categories of 
own  resources,  traditional  own  resources  ("TOR"),  the  VAT-based  resources  and  the  GNI-based 
resources, the GNI revenue of EUR 104 688 million (2013: EUR 110 194 million) is the most significant. 

3.2.  TRADITIONAL OWN RESOURCES 

Customs duties 
Sugar levies 
Total 

2014 
17 204 
 (67) 
17 137 

EUR millions 
2013 
15 268 
 199 
15 467 

Traditional  own  resources  comprise  custom  duties  and  sugar  levies.  Member  States  retain,  by  way  of 
collection  costs,  20 %  of  traditional  own  resources,  and  the  above  amounts  are  shown  net  of  this 
deduction. 

It should also be noted that following a Court ruling on the sugar levies regulation challenged by certain 
companies and Member States, an amount of EUR 200 million was reimbursed to the concerned parties in 
2014. The related provision, originally booked in 2012, was thus used in 2014. 

3.3.  VAT RESOURCES 

According to the Own Resources Decision No 2007/436/EC, Euratom, the VAT contributions are calculated 
applying a uniform rate of 0.30 % to the harmonised VAT base of each Member State. At the same time 
this  decision  foresaw  a  lower  call  rate  for  Austria  (0.225 %),  Germany  (0.15 %),  and  the  Netherlands 
and Sweden (0.10 %). However this exception was granted for the period 2007-2013 only. Thus in 2014 
the  uniform  rate  of  0.30 %  became  applicable  again  to  all  Member  States  and  will  remain  until  a  new 
Own  Resources  Decision  enters  into  force.  This  explains  the  increase  in  VAT  revenue  from 
EUR 14 019 million in 2013 to EUR 17 462 million in 2014. 

63 

 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

REVENUE FROM NON-EXCHANGE TRANSACTIONS: 
TRANSFERS 

3.4.  FINES 

These  revenues  (EUR 2 297 million)  relate  to  fines  imposed  by  the  Commission  for  breach  of 
infringement rules, mainly related to competition cases. Receivables and related revenues are recognised 
when  the  Commission  decision  imposing  a  fine  has  been  taken  and  it  is  officially  notified  to  the 
addressee. 

The main amount in 2014 concerns the market for automotive bearings. The Commission imposed fines 
for a total amount of EUR 953 million on producers of car and truck bearings for operating a cartel. 

3.5.  RECOVERY OF EXPENSES 

Shared management 
Direct management 
Indirect management 
Decentralised management 
Joint management 
Total 

2014 
3 328 
 45 
 45 
– 
– 
3 418 

EUR millions 

2013 
1 628 
 69 
 6 
 41 
 33 
1 777 

This heading represents mainly the recovery orders issued by the Commission that are cashed or offset 
against  (i.e.  deducted  from)  subsequent  payments  recorded  in  the  Commission's  accounting  system, 
made  so  as  to  recover  expenditure  previously  paid  out  from  the  general  budget.  These  operations  are 
based on controls, audits or eligibility analysis. Recovery orders issued by Member States to beneficiaries 
of EAGF expenditure, as well as the variation of accrued income estimations from the previous year-end 
to the current, are also included.  

It  should  be  noted  that  these  figures  represent  the  accounting  impact  of  EU  corrective  activities  only, 
based on the EU accounting rules in force. For this reason, these figures cannot and do not show the full 
extent  of  the  measures  taken  to  protect  the  EU  budget,  particularly  for  Cohesion  policy  where  specific 
mechanisms are in place to ensure the correction of ineligible expenditure, most of which do not involve 
the issuance of a recovery order. Moreover, recoveries of pre-financing amounts are also not included as 
revenue,  in  accordance  with  the  EU  accounting  rules.  More  details  on  financial  corrections  and  the 
recovery of expenses are given in Note 6. 

Shared management makes up the bulk of the total: 

Agriculture: EAGF and rural development 

In the framework of the EAGF and the EAFRD, amounts accounted for as revenue of the year under this 
heading  are  financial  corrections  of  the  year  and  reimbursements  declared  by  Member  States  and 
recovered during the year, as well as the net increase in the outstanding amounts declared by  Member 
States to be recovered at year-end concerning fraud and irregularities. 

Cohesion policy 

The  main  amounts  related  to  Cohesion  policy  include  recovery  orders  issued  by  the  Commission  to 
recover undue expenditure made in previous years, amounts related to financial corrections implemented 
by  withdrawals  during  the  year,  as  well  as  deductions  from  expenditure  less  the  decrease  in  accrued 
income at year-end. 

64 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

Other  recovery  orders  issued  in  Cohesion  policy  concern  the  recovery  of  pre-financing  –  see  note  6.4. 
These  amounts  are  not  shown  as  revenue,  but  credited  to  the  pre-financing  heading  on  the  balance 
sheet. 

Total  recovery  of  expenses  almost  doubled  compared  to  last  year  due  to  the  advanced  closure  of  the 
2000-2006  Cohesion  programming  period  and  the  related  withdrawals  made,  as  well  as  significant 
corrections imposed by the Directorate-General for Agriculture and Rural Development in 2014. 

3.6.  OTHER REVENUE FROM NON-EXCHANGE 

TRANSACTIONS 

Transfer of assets 
Budgetary adjustments 
Staff taxes and contributions 
Contributions from third countries 
Agricultural levies 
Adjustment of provisions 
Other 
Total 

2014 
1 448 
 794 
1 276 
 336 
 409 
 369 
 990 
5 623 

EUR millions 

2013 
– 
1 187 
1 137 
 373 
 48 
 208 
1 091 
4 045 

Transfer of assets revenue relates to the transfer of satellites under the Copernicus programme (former 
GMES  programme)  from  the  European  Space  Agency  (ESA)  to  the  Commission  (see  note  2.2).  This 
transfer  is  a  non-exchange  transaction  according  to  the  EU  accounting  rules  and  will  occur  in  future 
periods for the remaining Copernicus satellites currently under construction. 

The budgetary adjustments include the budget surplus from 2013 (EUR 1 005 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 2014. 

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

Contributions from third countries are contributions from EFTA countries and accession countries. 

Agricultural  levies  concern  milk  levies  which  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. The increase in milk levies this year is due 
to eight Member States exceeding their milk quotas for deliveries in 2013/2014, meaning that they must 
therefore pay penalties (known as a "superlevy"). The dairy quota regime was abolished on 1 April 2015. 

65 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

REVENUE FROM EXCHANGE TRANSACTIONS 

3.7.  FINANCIAL INCOME 

Interest income on: 
Pre-financing 
Late payments 
Available for sale financial assets 
Loans 
Cash and cash equivalents 
Impaired financial assets 
Other  
Interest income 
Dividend income 
Realised gains on sale of financial assets 
Other financial income 
Total 

2014 

 16 
 387 
 65 
1 722 
 10 
 0 
 1 
2 202 
 6 
 30 
 61 
2 298 

EUR millions 
2013 

 29 
 88 
 71 
1 712 
 21 
- 
 1 
1 922 
 6 
 24 
 40 
1 991 

Interest income on loans relates mainly to loans granted from borrowed funds (see note 2.4.2). 

Net gains or losses on financial assets 

Net gains/(losses) on available for sale financial assets 

2014 
 13 

EUR millions 
2013 
 24 

3.8.  OTHER REVENUE FROM EXCHANGE TRANSACTIONS 

Property, plant and equipment related revenue 
Foreign exchange gains 
Other 
Total 

2014 
 16 
 478 
 571 
1 066 

EUR millions 
2013 
 38 
 336 
1 070 
1 443 

Other revenue from exchange transactions are primarily management fee revenue and revenue relating 
to receivables previously impaired. 

66 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

EXPENSES 

TRANSFER PAYMENTS AND SUBSIDIES BY MANAGEMENT 
MODE 

3.9.  SHARED MANAGEMENT 

Implemented by Member States 
European Agricultural Guarantee Fund 
European Agricultural Fund for Rural Development & other 
rural development instruments 
European Regional Development Fund and Cohesion Fund 
European Social Fund 
Other 
Total 

2014 
44 465 
14 046 

43 345 
12 651 
2 307 
116 814 

EUR millions 
2013 
45 067 
13 585 

47 767 
12 126 
1 525 
120 070 

The structural funds programmes are in the final phase of the programming period 2007-2013, but also 
in the launching phase of the programming period 2014-2020. 

The  largest  part  of  the  decrease  compared  to  2013  concerns  the  European  Regional  Development  Fund 
and  the  Cohesion  Fund.  Expenses  recognised  in  2014  relate  to  programming  period  2007-2013  as  no 
expenses  have  been  booked  yet  for  the  current  period  due  to  the  slow  start  up  of  programmes 
(implementation by Member States has only started in 2015). 

The decrease in European Agricultural Guarantee Fund expenses can be mainly attributed to the impact 
of the financial discipline mechanism. 

The  sub-heading  ‘Other’  mainly  includes:  Asylum  and  Migration  (EUR 0.6 billion),  Internal  Security 
(EUR 0.5 billion),  Fisheries  and  Maritime  Affairs  (EUR 0.5 billion),  the  European  Solidarity  Fund 
(EUR 0.2 billion) and the European Globalisation Adjustment Fund (EUR 0.1 billion). 

3.10.  DIRECT MANAGEMENT 

Implemented by the Commission 
Implemented by EU Executive Agencies 
Total 

2014 
10 431 
4 880 
15 311 

EUR millions 
2013 
8 722 
3 797 
12 519 

These  amounts  mainly  concern  the  implementation  of  Research  Policy  (EUR 8.9 billion)  and  Networks 
Programmes  (EUR 1.5 billion),  as  well  as  European  Neighbourhood  Policy  (EUR 1.5 billion)  and 
Development Co-operation (EUR 1.3 billion) instruments. 

The  increase  of  the  amounts  in  2014  is  due  primarily  to  Development  Co-operation  where  there  was  a 
EUR 0.5 billion  increase  (including  a  EUR 250 million  payment  to  Ukraine),  Energy  (EUR 1.1 billion)  and 
research programs managed by Executive Agencies (EUR 1.1 billion due to an increasing number of on-
going projects). 

3.11.  INDIRECT MANAGEMENT 

Implemented by other EU agencies & bodies 
Implemented by third countries 
Implemented by international organisations 
Implemented by other entities 
Total 

67 

2014 
1 025 
1 005 
1 765 
1 799 
5 594 

EUR millions 

2013 
 656 
 720 
1 745 
1 694 
4 815 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

3.12.  STAFF AND PENSION COSTS 

Staff costs 
Pension costs 
Total 

2014 
5 693 
3 970 
9 662 

EUR millions 
2013 
5 527 
3 531 
9 058 

Pension costs represent elements of the movements that have arisen following the actuarial revaluation 
of the employee benefits liabilities other than actuarial assumptions. 

3.13.  CHANGES IN EMPLOYEE BENEFITS ACTUARIAL 

ASSUMPTIONS 

The  actuarial  loss  of  net  EUR 9.2 billion  shown  under  this  heading  relates  to  the  employee  benefits 
liabilities  recognised  on  the  balance  sheet  (see  note  2.9).  The  exceptionally  high  amount  is  due  to  the 
dramatic decrease in interest rates, which reflects the underlying economic conditions. 

3.14.  FINANCE COSTS 

Interest expenses: 
  Borrowings 
  Other 
Finance leases 
Impairment losses on available for sale financial assets 
Impairment losses on loans and receivables 
Realised loss on sale of financial assets 
Other finance costs 
Total 

2014 

1 712 
 22 
 90 
 3 
1 030 
 17 
 51 
2 926 

EUR millions 
2013 

1 697 
 22 
 99 
 8 
 469 
– 
 87 
2 383 

The  amount  of  interest  expense  on  borrowings  corresponds  to  interest  income  on  loans  (back-to-back 
transactions). 

3.15.  SHARE OF NET RESULT OF JOINT VENTURES AND 

ASSOCIATES 

In  accordance  with  the  equity  method  of  accounting,  the  EU  includes  in  its  statement  of  financial 
performance  its  share  of  the  net  result  of  its  joint  ventures  and  associates  (see  also  notes  2.3.1  and 
2.3.2). 

68 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

3.16.  OTHER EXPENSES 

Administrative and IT expenses 
Property, plant and equipment related expenses 
Foreign exchange losses 
Adjustment of provisions 
Other 
Total 

2014 
2 070 
1 186 
 370 
 688 
 839 
5 152 

EUR millions 

2013 
2 034 
1 105 
 395 
 399 
 640 
4 572 

Expenses relating to research and  development are  included in  administrative and IT expenses and are 
as follows: 

Research costs 
Non-capitalised development costs 
Total 

2014 
 353 
 54 
 406 

EUR millions  
2013 
 335 
 74 
 409 

Included  under  Property,  plant  and  equipment  related  expenses  are  EUR 369 million  (2013: 
EUR 388 million) relating to operating leases. Amounts commited to be paid during the remaining term of 
these lease contracts are as follows: 

Buildings 
IT materials and other equipment 
Total 

Future amounts to be paid 

< 1 year 
 332 
 7 
 339 

1- 5 years 
 988 
 15 
1 003 

> 5 years 
 934 
 0 
 934 

EUR millions 

Total 
2 254 
 22 
2 276 

69 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

3.17.  SEGMENT REPORTING BY MULTI ANNUAL FINANCIAL FRAMEWORK HEADING (MFF) 

Smart and 
inclusive growth 

Sustainable 
growth 

Security and 
citizenship 

Global Europe 

Administration  Not assigned 
to MFF 
heading* 

GNI resources 
Traditional own resources 
VAT 
Fines 
Recovery of expenses 
Other 
Revenue from non-exchange transactions 
Financial income 
Other 
Revenue from exchange transactions 

Total revenue 

Expenses implemented by Member States: 
  EAGF 
  EAFRD & other rural development instruments 
  ERDF & CF 
  ESF 
  Other 
Implemented by the EC and executive agencies 
Implemented by other EU agencies and bodies 
Implemented by third countries and int. org. 
Implemented by other entities 
Staff and Pension costs 
Changes in employee benefits actuarial 
assumptions 
Finance costs 
Share of net deficit of joint ventures / associates 
Other expenses 

Total expenses 
Economic result of the year 

– 
– 
– 
– 
1 136 
1 981 
3 117 
 66 
 119 
 185 

3 302 

– 
– 
(43 345) 
(12 651) 
 (561) 
(9 809) 
 (789) 
 (246) 
(1 317) 
(1 538) 
– 

 (152) 
 (640) 
(1 397) 

(72 444) 
(69 141) 

– 
– 
– 
– 
2 226 
 508 
2 734 
 3 
 (11) 
 (8) 

2 726 

(44 465) 
(14 033) 
– 
– 
 (542) 
 (339) 
 (58) 
 4 
– 
 (324) 
– 

 (25) 
– 
 (60) 

(59 843) 
(57 117) 

– 
– 
– 
– 
 3 
 4 
 6 
 0 
 (4) 
 (4) 

 2 

– 
– 
– 
– 
(1 109) 
(1 114) 
 (473) 
 (8) 
 (5) 
 (362) 
– 

 (1) 
– 
 (115) 

(3 189) 
(3 186) 

– 
– 
– 
– 
 53 
 53 
 106 
 36 
 97 
 134 

 240 

– 
 (12) 
– 
– 
 (94) 
(4 046) 
 (40) 
(2 520) 
 (478) 
 (566) 
– 

 (26) 
– 
 (126) 

(7 908) 
(7 668) 

– 
– 
– 
– 
– 
4 590 
4 590 
 1 
 215 
 216 

4 806 

– 
– 
– 
– 
– 
 9 
– 
 (0) 
 (0) 
(6 066) 
(9 170) 

 (557) 
– 
(3 069) 

(18 853) 
(14 047) 

104 688 
17 137 
17 462 
2 297 
 0 
(1 513) 
140 072 
2 192 
 649 
2 841 

142 913 

– 
– 
– 
– 
– 
 (12) 
 334 
– 
 1 
 (806) 
– 

(2 165) 
– 
 (385) 

(3 032) 
139 880 

* 

"Not-assigned to MFF heading" includes consolidated entities' budget execution and consolidation eliminations, off-budget operations and unallocated immaterial programmes. 

The display of revenue and expenses by MFF heading is based on estimation as not all commitments are linked to an MFF heading. 

EUR millions 

Total 

104 688 
17 137 
17 462 
2 297 
3 418 
5 623 
150 625 
2 298 
1 066 
3 364 

153 989 

(44 465) 
(14 046) 
(43 345) 
(12 651) 
(2 307) 
(15 311) 
(1 025) 
(2 770) 
(1 799) 
(9 662) 
(9 170) 

(2 926) 
 (640) 
(5 152) 

(165 269) 
(11 280) 

70 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.18.  RECLASSIFICATION OF 2013 FIGURES 

Annual accounts of the European Union 2014 

So  as  to  better  present  information  to  the  users  of  these  accounts,  the  layout  of  the  statement  of  financial  performance  has  been  restructured  in  the  2014 
accounts.  As  required  by  the  EU  accounting  rules,  a  reclassification  of  the  2013  figures  is  made,  noting  that  no  amounts  have  been  changed,  only  the 
presentation of the existing figures – revenues, expenses and the result remain as originally published in the 2013 accounts. An overview of the impact of the 
changes is given below: 

Own resource 
and 
contributions 
revenue 

Other 
operating 
revenue 

Total 
operating 
revenue 

Admini- 
strative 
expenses 

Operating 
expenses 

Total 
operating 
expenses 

Surplus from 
operating 
activities 

Financial 
revenue 

Financial 
expenses 

Share of net 
deficit of joint 
ventures and 
associates 

Movement 
pension and 
other 
employee 
benefits 
liability 

EUR millions 

Economic 
result of the 
year 

2013 
(reclassified) 

2013 (published) 
Revenue from non-
exchange transactions 
GNI Resources 
Traditional own resources 
VAT 
Fines 
Recovery of expenses 
Other 
Total 

Revenue from exchange 
transactions 
Financial income 
Other 
Total 
TOTAL REVENUE 

141 241 

8 415 

149 655 

(9 269)  (138 571)  (147 840) 

1 815 

2 038 

(2 045) 

(5 565) 

 (608) 

(4 365) 

110 194 
15 467 
14 019 
– 

1 561 
141 241 

– 
– 
– 
2 757 
1 777 
2 484 
7 018 

110 194 
15 467 
14 019 
2 757 
1 777 
4 045 
148 259 

– 
– 
– 
141 241 

– 
1 397 
1 397 
8 415 

– 
1 397 
1 397 
149 655 

– 
– 
– 
– 
– 
– 
– 

– 
– 
– 
– 

– 
– 
– 
– 
– 
– 
– 

– 
– 
– 
– 

– 
– 
– 
– 
– 
– 
– 

– 
– 
– 
– 

– 
– 
– 
– 
– 
– 
– 

– 
– 
– 
– 

– 
– 
– 
– 
– 
- 
– 

1 991 
 47 
2 038 
2 038 

– 
– 
– 
– 
– 
– 
– 

– 
– 
– 
– 

– 
– 
– 
– 
– 
– 
– 

– 
– 
– 
– 

– 
– 
– 
– 
– 
– 
– 

– 
– 
– 
– 

– 
– 
– 
– 
– 
– 
– 

– 
– 
– 
– 

110 194 
15 467 
14 019 
2 757 
1 777 
4 045 
148 259 

1 991 
1 443 
3 434 
151 693 

71 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
Annual accounts of the European Union 2014 

Own resource 
and 
contributions 
revenue 

Other 
operating 
revenue 

Total 

Admini- 
strative 
expenses 

Operating 
expenses 

Total 
operating 
expenses 

Surplus from 
operating 
activities 

Financial 
revenue 

Financial 
expenses 

Share of net 
deficit of joint 
ventures and 
associates 

Movement 
pension and 
other 
employee 
benefits 
liability 

EUR millions 

Economic 
result of the 
year 

2013 
(reclassified) 

– 

– 

– 

– 
– 
– 

– 

– 

– 

– 
– 

– 
– 

– 
– 

– 

– 

– 

– 
– 
– 

– 

– 

– 

– 
– 

– 
– 

– 
– 

– 

– 

– 

– 
– 
– 

– 

– 

– 

– 
– 

– 
– 

– 
– 

– 

– 

(45 067) 

(45 067) 

(13 585) 

(13 585) 

– 

(47 767) 

(47 767) 

– 
– 
– 

– 

– 

– 

(12 126) 
(1 525) 
(12 519) 

(12 126) 
(1 525) 
(12 519) 

 (656) 

 (656) 

(2 465) 

(2 465) 

(1 694) 

(1 694) 

(5 527) 
– 

– 
– 

(5 527) 
– 

– 
– 

 (469) 
– 

 (469) 
– 

(3 742) 
(4 442) 
(9 269)  (138 571)  (147 840) 

 (699) 

– 

– 

– 

– 
– 
– 

– 

– 

– 

– 
– 

– 
– 

– 
– 

– 

– 

– 

– 
– 
– 

– 

– 

– 

– 
– 

– 
– 

– 
– 

– 

– 

– 

– 
– 
– 

– 

– 

– 

– 
– 

– 

– 

– 

– 
– 
– 

– 

– 

– 

(3 531) 
(2 033) 

– 

– 

– 

– 
– 
– 

– 

– 

– 

– 
– 

(1 914) 
– 

– 
– 

 (131) 
(2 045) 

– 
(5 565) 

– 
 (608) 

– 
 (608) 

– 

– 

(45 067) 

(13 585) 

– 

(47 767) 

– 
– 
– 

– 

– 

– 

– 
– 

– 
– 

(12 126) 
(1 525) 
(12 519) 

 (656) 

(2 465) 

(1 694) 

(9 058) 
(2 033) 

(2 383) 
 (608) 

– 
(4 572) 
–  (156 058) 

141 241 

8 415 

149 655 

(9 269)  (138 571)  (147 840) 

1 815 

2 038 

(2 045) 

(5 565) 

 (608) 

– 

(4 365) 

Expenses implemented by 
Member States: 
European Agricultural 
Guarantee Fund 
European Agricultural Fund 
for Rural Development and 
other rural development 
instruments 
European Regional 
Development Fund and 
Cohesion Fund 
European Social Fund 
Other 
Implemented by the 
Commission and executive 
agencies 
Implemented by other EU 
agencies and bodies 
Implemented by third 
countries and int. 
organisations 
Implemented by other 
entities 
Staff and pension costs 
Changes in employee 
benefits actuarial 
assumptions 
Finance costs 
Share of net deficit of joint 
ventures and associates 
Other expenses 
TOTAL EXPENSES 

Economic result of the 
year 

72 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

4.  NOTES TO THE CASHFLOW STATEMENT 

4.1.  PURPOSE AND PREPARATION OF THE CASHFLOW 

STATEMENT 

Cashflow 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 cashflows. 

The cashflow statement is  prepared  using the indirect method.  This means that the economic result 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 cashflows. 

Cashflows  arising  from  transactions  in  a  foreign  currency  are  recorded  in  the  EU’s  reporting  currency 
(Euro), by applying to the foreign currency amount the exchange rate between the euro and the foreign 
currency at the date of the cashflow. 

The  cashflow  statement  reports  cashflows  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  contribute  to  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. 

73 

 
 
 
 
 
Annual accounts of the European Union 2014 

5. 

CONTINGENT ASSETS & LIABILITIES AND 
OTHER SIGNIFICANT DISCLOSURES 

5.1.  CONTINGENT ASSETS 

Guarantees received: 
   Performance guarantees 
   Other guarantees 
Other contingent assets 
Total 

31.12.2014 

EUR millions 
31.12.2013 

 400 
 27 
 49 
 476 

 441 
 39 
 16 
 496 

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

5.2.  CONTINGENT LIABILITIES 

Guarantees given 
Fines 
EAGF, rural development and pre-accession 
Cohesion policy 
Legal cases and other disputes 
Other contingent liabilities 
Total 

Note 
5.2.1 
5.2.2 
5.2.3 
5.2.4 
5.2.5 

31.12.2014 
20 862 
5 602 
 505 
 9 
 789 
 5 
27 772 

EUR millions 

31.12.2013 
22 162 
5 227 
1 537 
 137 
 689 
 52 
29 805 

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

5.2.1.  Guarantees given 

Guarantees on loans granted by the EIB 
  65% guarantee 
  70% guarantee 
  75% guarantee 
  100% guarantee 
Total 
Other guarantees given 
Total 

31.12.2014 

EUR millions 
31.12.2013 

18 283 
 447 
 168 
 300 
19 198 
1 664 
20 862 

19 077 
1 361 
 257 
 461 
21 156 
1 006 
22 162 

The EU budget guarantees loans signed and granted by the EIB from its own resources to third countries 
at  31 December 2014  (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 %  (for agreements 
signed until 2007), 70 %, 75 % or 100 %. Where the ceiling is not reached, the EU guarantee covers the 
full  amount.  For  agreements  signed  after  2007  (mandates  2007-2013  and  2014-2020),  the  EU’s 
guarantee  is  limited  to  65 %  of  the  outstanding  balances  and  not  to  the  credit  lines  authorised.  At 
31 December 2014  the  amount  outstanding  totalled  EUR 19 198 million  and  this,  therefore,  is  the 
maximum  exposure  faced  by  the  EU.  At  31 December 2014,  about  82 %  of  EIB  lending  operations 
(sovereign  and  sub-sovereign  lending  operations)  are  covered  by  a  comprehensive  guarantee,  while  on 
the remaining operations the EIB benefits from political risk coverage only. 

Other  guarantees  given  relate  mainly  to  the  Risk-Sharing  Finance  Facility  (EUR 883 million),  to  Horizon 
2020 (EUR 365 million) and to the Loan Guarantee Instrument for Ten-T Projects (EUR 209 million). 

74 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

5.2.2. 

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 is included in the economic result of the year and 
also as a contingent liability to reflect the uncertainty of the Commission’s title to these amounts. 

5.2.3.  EAGF, rural development and pre-accession 

These  are  contingent  liabilities  towards  the  Member  States  connected  with  the  EAGF  conformity 
decisions,  rural  development  and  pre-accession  financial  corrections  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. 

5.2.4.  Cohesion policy 

These  are  contingent  liabilities  towards  the  Member  States  in  conjunction  with  actions  under  cohesion 
policy awaiting the oral hearing date or pending judgement of the Court of Justice. 

5.2.5. 

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. 

5.3.  OTHER SIGNIFICANT DISCLOSURES 

5.3.1.  Outstanding budgetary commitments not yet expensed 

Outstanding budgetary commitments not yet expensed 

31.12.2014 
144 741 

EUR millions 
31.12.2013 
178 399 

The  amount  disclosed  above  is  the  budgetary  RAL  ("Reste  à  Liquider")  less  related  amounts  that  have 
been  included  as  expenses  in  the  2014  statement  of  financial  performance.  The  budgetary  RAL  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 2014 the budgetary RAL totalled EUR 189 585 million (2013: EUR 222 410 million). 

5.3.2.  Significant legal commitments 

Structural Actions 
Protocol with Mediterranean countries 
Fisheries agreements 
Galileo  
Copernicus 
Trans-European Transport Networks (TEN-T) 
Other contractual commitments 
Total 

75 

31.12.2014 
433 527 
 264 
 176 
 719 
3 476 
– 
3 127 
441 288 

EUR millions 
31.12.2013 
 150 
 264 
 79 
– 
– 
 850 
3 531 
4 873 

 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

These  commitments  originated  because  the  Commission  entered  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  Commission  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).  The  significant  increase  of  legal  commitments 
relating to Structural Actions is due to the start of the 2014-2020 MFF during the reporting period. 

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 MFF 
2014-2020.  The  future  obligations  represent  the  outstanding  amounts  for  which  the  Commission  is  still 
committed to make payments after 31 December 2014.  

Funds 

Financial 
framework 
2014-2020 (A) 

Legal 
commitments 
concluded (B) 

Budget 

commitments    

(C ) 

Decommit-   
ments (D) 

EUR millions 

Future obligations     

(=A-C-D) 

Legal 
commitments 
less budget 
commitments 
(=B-C+D) 

European Regional Development 
Fund and Cohesion Fund 
European Social Fund 
Fund for European Aid to the 
most Deprived 
HEADING 1B: COHESION 
POLICY FUNDS 
European Agricultural Fund for 
Rural Development  
European Maritime and Fisheries 
Fund 
HEADING 2: NATURAL 
RESOURCES 
Asylum and Migration Fund 

Internal Security Fund 
HEADING 3: SECURITY & 
CITIZENSHIP 

259 799 

133 163 

16 837 

89 624 

3 814 

57 828 

3 723 

9 273 

 501 

353 236 

194 714 

26 611 

99 348 

20 707 

3 295 

5 749 

 140 

 19 

105 097 

20 847 

3 314 

2 752 

2 367 

5 119 

– 

– 

– 

– 

– 

– 

Total 

463 452 

215 561 

29 925 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

116 325 

242 962 

48 555 

3 222 

80 350 

3 313 

168 102 

326 625 

17 413 

96 053 

 121 

5 730 

17 533 

101 783 

– 

– 

– 

2 752 

2 367 

5 119 

185 636 

433 527 

Protocols with Mediterranean countries 

These commitments 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. 

Fisheries agreements 

These  are  commitments  entered  into  with  third  countries  for  operations  under  international  fisheries 
agreements. 

Galileo 

These  are  amounts  committed  to  the  Galileo  programme  developing  a  European  Global  Navigation 
Satellite System – see also note 2.2. 

Copernicus 

Copernicus is the European Earth observation programme – see also note 2.2.  

TEN-T 

The 2013 amount related to grants in the field of the Trans-European Transport Networks (TEN-T) for the 
period  2007-2013.  Since  the  programme  is  finished  there  are  no  new  legal  commitments  without 
budgetary commitments in 2014. 

Other contractual commitments 

The amounts included under this disclosure correspond to amounts committed to be paid during the term 
of the contracts. The largest amounts included here relate to EUR 1 933 million for the Fusion for Energy 
Agency  in  the  context  of  the  ITER  project  and  EUR 547 million  for  mainly  building  contracts  of  the 
European Parliament. 

76 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
Annual accounts of the European Union 2014 

6. 

PROTECTION OF THE EU BUDGET 

6.1.  PROTECTION OF THE EU BUDGET - SUMMARY 

An important consideration in implementing the EU budget is the need to ensure the proper prevention or 
detection  and  subsequent  correction  of  errors,  irregularities  and  fraud.  The  the  Court  provides  in  its 
annual  report  a  statement  of  assurance  on  the  legality  and  regularity  of  transactions  underlying  the 
accounts, as well as observations and statistics on the material level of error in the payments underlying 
the  accounts.  The  statement  of  assurance  accompanies  these  accounts  in  its  publication  in  the  Official 
Journal. 

The Commission protects the EU  budget,  i.e.  EU  spending, from  undue or irregular expenditure via two 
main methods: 

(1) preventive mechanisms; and 

(2)  corrective  mechanisms  (primarily  financial  corrections  imposed  on  or  agreed  with  Member 
States and, to a lesser extent, recoveries from recipients of EU payments). 

The  corrective  mechanisms  are  based  on  a  wide  range  of  measures,  which  apply  both  before  and  after 
the Commission makes (or reimburses) expenditure.  

The objective of this note is to present an overview and best estimates of how the EU budget is protected 
from expenditure in breach of law. This note represents a voluntary disclosure of information that is not 
required by the accounting standards and includes data which is not drawn directly from the accounting 
system (see below). 

More  details  on  these  figures  and  on  the  preventive  and  corrective  mechanisms  laid  down  in  the 
applicable legislation can be found in the Communication on the protection of the EU budget prepared by 
the Commission and sent to the Discharge Authority and the Court every September – this is available on 
the  Europa  website  of  the  Directorate-General  for  Budget.  This  Communication  not  only  provides  more 
details on the figures in this note (in particular break-downs of financial corrections per Member State), it 
also  includes  additional  information  (such  as  data  on  net  financial  corrections  which  lead  to  assigned 
revenue  for  the  EU  budget,  and  the  results  of  the  corrective  work  done  by  Member  States).  Further 
information  on  the  corrective  capacity  is  also  available  in  the  Communication:  Synthesis  of  the 
Commission's management achievements in 2014 (the "Synthesis Report" issued in June 2015) – this is 
also available on the Europa website. 

6.1.1. 

Financial corrections 

Under  shared  management,  Member  States  are  primarily  responsible  for  preventing  or  detecting  and 
addressing  serious  deficiencies  in  the  management  and  control  systems,  while  the  Commission  ensures 
an  overall  supervisory  role.  Where  serious  failings  in  the  management  and  control  systems  of  Member 
States have led or could lead to individual or systemic errors, irregularities or fraud, the Commission can 
apply financial corrections.  The term "financial correction" covers a wide range of actions, resulting from 
the  Commission's  (and  other  EU  bodies')  supervisory  and  audit  role,  including  cases  where  the 
Commission  bases  the  corrective  actions  on  work  done  by  national  authorities.  Where  amounts  unduly 
spent  cannot  be  identified  precisely,  the  Commission  may  apply  extrapolated  or  flat-rate  corrections  in 
accordance with the sector-specific rules.  

Financial corrections are presented under two main categories in this note: 

(1)  Financial  corrections  confirmed/decided  (table  6.2.1):  These  amounts  have  been  either 
confirmed  (i.e.  agreed)  by  the  Member  State  concerned  or  adopted  by  a  Commission  decision. 
Corrections  by  Commission  decision  are  recorded  as  revenue  or  negative  expenses  in  the 
accounting system (see notes 3.5 and 3.9). 

(2)  Financial  corrections  implemented  (table  6.2.2):  These  amounts  represent  the  final  step  of 
the process whereby the observed situation of undue expenditure is definitively corrected. Several 
implementation mechanisms are foreseen in the sector-based regulatory frameworks.  

77 

 
 
Annual accounts of the European Union 2014 

Included  under  both  categories  are  "corrections  at  source"  resulting  from  the  Commission’s  supervisory 
role (see above). These corrections are deducted before cost claims are made or payments are processed 
by the Commission. 

6.1.2.  Recoveries 

Under  shared  management,  and  in  accordance  with  the  Financial  Regulation  and  sector  regulations, 
Member States  (and  not the Commission) are  primarily  responsible for identifying and for recovering in 
accordance  with  national  rules  and  procedures,  from  beneficiaries  amounts  unduly  paid.  For  the  EAGF, 
amounts  recovered  from  the  beneficiaries  are  credited  to  the  EU  budget  as  assigned  revenue,  after 
deduction  applied  by  Member  States  of  20 %  to  cover  administrative  costs.  For  EAFRD  and  Cohesion 
policy,  recoveries  are  taken  into  consideration  in  a  future  reimbursement  claim  received  by  the 
Commission, and therefore can be reused for the programme within the programming period – after the 
end of the eligibility period it is credited to the EU budget as assigned revenue. 

Under direct and indirect management, and 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  or  by  offsetting  from  other  amounts  that  the 
Commission  owes  to  the  debtor.  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.  Commission  services  implement  recoveries  also  "at  source"  by  deducting 
ineligible expenditure (which has been identified in previous or current cost claims) from payments made.  

6.1.3. 

Impact of financial corrections and recoveries 

The  primary  objective  of  financial  corrections  and  recoveries  is  to  ensure  that  EU  funds  are  used  in 
accordance  with  the  legal  framework.  However,  the  methods  used,  and  thus  the  impact  of  corrective 
measures, varies significantly between different areas of spending, and between the different corrective 
measures. Financial corrections and recoveries related to the Common Agricultural Policy (CAP), as well 
as  recoveries  under  EAGF  and  internal  and  external  policies,  result  in  the  return  of  previously  paid 
irregular  amounts  to  the  EU  budget.  Irregular  amounts  detected  under  Cohesion  policy  and  recoveries 
under rural development are, up to now, often corrected by the Member State and consequently replaced 
by other eligible projects – these amounts do not return to the EU budget. However, after the end of the 
eligibility period/after closure of the programme, amounts are credited to the EU budget as revenue. See 
6.2.2 below for more details. 

Furthermore, the corrective capacity is based on a wide range of measures, which apply both before and 
after  the  Commission  makes  (or  reimburses)  expenditure.  Corrections  are  applied  by  the  Commission 
following  cost  claims  made  by  Member  States  and  other  beneficiaries  and/or  payments  made  by  the 
Commission. 

78 

 
 
 
 
Annual accounts of the European Union 2014 

6.2.  FINANCIAL CORRECTIONS AND RECOVERIES 2014 

6.2.1. 

Financial corrections and recoveries confirmed/decided in 2014 

Agriculture: 

EAGF 
Rural Development 

Cohesion Policy: 
ERDF* 
Cohesion Fund 
ESF 
FIFG/EFF 
EAGGF Guidance 
Other 

Internal policy areas 
External policy areas 
Administration 
Total confirmed/decided in 2014 
Total confirmed/decided in 2013 

Financial 
Corrections 

Recoveries 

2014 Total 

EUR millions 
2013 Total 

1 649 
 220 

1 330 
 292 
 342 
 39 
 13 
-  
 5 
N/A 
N/A 
3 890 
2 495 

 213 
 165 

– 
– 
 1 
 29 
 5 
- 
 293 
 127 
 5 
 838 
 941 

1 862 
 385 

1 330 
 292 
 343 
 67 
 18 
- 
 298 
 127 
 5 
4 728 

1 070 
 386 

 338 
 220 
 874 
 34 
 3 
 16 
 396 
 93 
 6 

3 436 

Included in the above amounts for 2014 are financial corrections and recoveries made at source totalling 
EUR 1 137 million  –  Agriculture  EUR 21 million,  Cohesion  EUR 834 million, 
internal  policies 
EUR 207 million, external policies EUR 71 million and administration EUR 4 million. 

Corrections at source for ERDF and Cohesion Fund are disclosed in 2014 for the first time in both tables 
6.2.1 & 6.2.2 – the 2013 comparative amounts do not, therefore, include such corrections. The amounts 
disclosed for these funds in 2014 are cumulative and thus include amounts relating to prior years. 

6.2.2. 

Financial corrections and recoveries implemented in 2014 

Agriculture: 

EAGF 
Rural Development 

Financial 
Corrections 

Recoveries 

2014 Total 

EUR millions 
2013 Total 

 796 
 86 

 150 
 167 

 946 
 252 

 636 
 359 

Cohesion Policy: 
ERDF* 
Cohesion Fund 
ESF 
FIFG/EFF 
EAGGF Guidance 
Other 

1 083 
 236 
 289 
 41 
 13 
-  
 5 
Internal policy areas 
N/A 
External policy areas 
N/A 
Administration 
2 549 
Total implemented in 2014 
3 334 
2 472 
Total implemented in 2013 
* The figures reported for ERDF include amounts not split between ERDF and the Cohesion Fund for the programming period 2007-2013 
due to the multi-funds character of the programmes (EUR 354 million for financial corrections confirmed/decided and EUR 15 million for 
financial corrections implemented). 

1 084 
 236 
 290 
 66 
 18 
- 
 279 
 108 
 5 
3 285 

 1 
- 
 1 
 25 
 5 
- 
 274 
 108 
 5 
 736 
 862 

 622 
 277 
 882 
 28 
 16 
 16 
 401 
 93 
 6 

Included in the above amounts for 2014 are financial corrections and recoveries made at source totalling 
EUR 782 million – Agriculture EUR 6 million, Cohesion EUR 494 million, internal policies EUR 207 million, 
external policies EUR 71 million and administration EUR 4 million.  

79 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

Agriculture and Rural Development:  

Financial corrections relate to weaknesses detected in Member States' management and control systems 
based  on  audits  performed  by  the  Commission  within  the  multiannual  conformity  clearance  procedures. 
In addtion, corrections also come from the annual financial clearance decisions. Financial corrections are 
an  incentive  for  Member  States  to  improve  their  management  and  control  systems  and,  together  with 
recoveries protect the EU budget from expenditure in breach of law.  

The  amount  confirmed/decided  includes  Conformity  clearance  decision  No  2015/103  (EUR 1 243 million 
and EUR 166 million for EAGF and EAFRD respectively), which was established before the year-end by the 
Commission services but formally adopted by the Commission in January 2015 only. These amounts are 
also included as accrued income as at 31 December 2014.  

For EAGF and for EAFRD, financial corrections higher than 0.01 % of the GDP may, at the request of the 
Member  State  concerned,  be  implemented  in  three  annual  instalments.  In  addition,  in  a  few  cases 
(Member  States  subject  to  financial  assistance  in  accordance  with  the  European  Financial  Stability 
Framework Agreement signed on 7 June 2010), the date of implementation was deferred by 18 months. 
These modalities aim at ensuring that the actual reimbursement by the Member States concerned to the 
EU budget can be managed without putting at risk the national budgets. Deferrals and instalments have 
an  impact  of  EUR 566 million  (EAGF:  EUR 515 million  and  EAFRD:  EUR 51 million)  on  the  difference 
observed between the amounts confirmed/decided and the actual implementation. The remaining amount 
is explained by the decision No 2015/103 confirmed in December 2014 but adopted in January 2015 only 
– see above. 

Recoveries  of  irregularities  made  by  paying  agencies  reduce  future  claims  for  reimbursement  by  the 
Commission  to  Member  States.  For  EAGF  the  Commission  records  the  full  amount  paid  to  farmers  as 
spending. It accounts for the difference between payments made to farmers and the amounts reimbursed 
to  paying  agencies  as  assigned  revenue,  available  to  fund  agricultural  spending.  For  EAFRD  the 
Commission records as spending the net eligible amount after deduction of corrections and recoveries.  

Cohesion Policy: 

Under  Cohesion  policy,  financial  corrections  relate  to  weaknesses  detected  in  Member  States' 
management  and  control  systems  based  on  audits  performed  by  the  Commission.  They    are  mainly 
applied when authorities in the Member States withdraw expenditure initially declared and replace it with 
new  expenditure.  In  such  cases,  the  Member  States  do  not  lose  EU  funds.  Member  States  can  also 
declare  additional  projects  and  would in  practice  be  equivalent to  receiving a  lower  co-financing  rate  at 
the  level  of  the  priority  axis/programme  since  the  excluded  ineligible  expenditure  may  need  to  be 
financed by the national public budget. 

Where these measures are not possible or not allowed, financial corrections leading to a loss of EU funds 
for  the  Member  State  concerned  are  applied.  This  may  occur  after  programmes  are  closed  or  where 
Member States are unable to present sufficient eligible expenditure or projects. 

Financial  corrections  implemented  in  2014  referred  to  corrections  confirmed/decided  in  2014  (being 
EUR 1 365 million) or in previous periods (EUR 297 million).  

Cohesion policy financial corrections were implemented as follows in 2014: 

ERDF 

Cohesion 
Fund 

ESF 

FIFG/EFF 

  EUR millions 
Total 

EAGGF 
Guidance 

Decommitment / Deduction 
at closure 2000-2006 
Withdrawal by Member State 
2007-2013 
Recovery orders 
Corrections at source 
Total implemented in 2014 

448 

242 

24 
370 
1 083 

114 

92 

19 
64 
289 

8 

16 

 17 
- 
41 

8 

- 

 5 
- 
13 

714 

372 

 82 
494 
1 662 

136 

22 

17 
60 
236 

80 

 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

6.3.  PREVENTIVE MECHANISMS OF THE COMMISSION 

The  Commission  uses  a  number  of  preventive  mechanisms  to  protect  the  EU  budget.  Under  direct 
management,  preventive  actions  include  checks  made  by  the  responsible  services  on  eligibility  of 
expenditure  being  claimed  by  beneficiaries.  These  ex-ante  controls  are  embedded  in  the  programmes’ 
management processes and are intended to provide reasonable assurance on the legality and regularity 
of  expenditure  being  paid.  The  Commission  services  can  also  provide  guidance,  particularly  on 
contractual issues, with the aim of ensuring a sound and efficient management of funding and therefore a 
lower risk of irregularities. 

Under the shared management mode (i.e. agricultural and cohesion policy expenditure), Member States 
are  primarily  responsible  throughout  the  expenditure  life  cycle  for  ensuring  that  expenditure  paid  out 
from the EU budget is legal and regular. Preventive mechanisms also exist at the level of the Commission 
in its role of supervising body. The Commission may: 

- interrupt the payment deadline for a maximum period of 6 months if: 

(a) There is evidence to suggest a significant deficiency in the functioning of the management and 
control systems of the Member State concerned; or 

(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. 

Once a case is closed (after a lifting letter is sent), the interrupted amount can be processed and paid out 
to  the  Member  State  authorities  under  the  condition  that  sufficient  credits  are  available  and  that  there 
are no other issues affecting the programme. 

- suspend all or part of an interim payment to a Member State in the following three cases: 

(a)  Where  there  is  evidence  of  serious  deficiency  in  the  management  and  control  system  of  the 
programme and the Member State has not taken the necessary corrective measures; or 

(b)  Where  expenditure  in  a  certified  statement  of  expenditure  is  linked  to  a  serious  irregularity 
which has not been corrected; or 

(c)  If  there  has  been  a  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 decide to impose 
a financial correction. 

Interruptions: 

2007-2013 
programming 
period 

Fund 

EUR millions 

Total open cases at 
31.12.2013 

New cases 2014 

Closed cases during 
2014 

Total open cases at 
31.12.2014 

Number of 
cases 

Amount 

Number of 
cases 

Amount 

Number of 
cases 

Amount 

Number of 
cases 

Amount 

 2 
 101 

 1 
1 608 

EAFRD* 
ERDF & Cohesion 
Fund 
 970 
ESF 
 14 
EFF 
4 821 
Total  
* For EAFRD the system of interruptions was aligned with the Cohesion funds in 2014. For EAGF, the interruption mechanism does not 
apply, suspension and reduction mechanisms apply from 2014 onwards. 

 272 
 97 
1 978 

1 323 
 103 
7 732 

 625 
 186 
4 889 

 20 
 10 
 133 

 31 
 13 
 193 

 19 
 15 
 188 

 32 
 8 
 138 

 79 
6 227 

 80 
3 998 

– 
3 837 

 17 
 137 

 15 
 134 

– 
 98 

81 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

Suspensions and reductions: 

Concerning  ERDF  and  the  Cohesion  Fund,  five  suspension  decisions  were  still  in  force  at  the  end  of 
2013  (the decision for lifting  one was taken in  2013  but officially notified in  2014).  Decisions to lift  the 
suspensions  for  two  programmes  were  taken  during  2014.  The  other  three  suspension  decisions 
remained  in  force  at  the  end  of  2014.  Four  new  suspension  decisions  were  adopted  in  2014.  Two  were 
still in force at year-end.   

Concerning  ESF,  one  suspension  decision  adopted  in  2011  was  still  in  force  at  end  of  2014.  Out  of  the 
eleven suspension decisions adopted in 2013, seven remained in force at the end of 2014. During 2014, 
eleven new suspension decisions were adopted and were still effective at end 2014. 

One suspension decision was taken in 2014 for  EFF following a deficiency identified in the management 
and control system of a Member State related to the EU measure to reduce fishing overcapacity. 

There were no suspension decisions taken in 2014 for EAFRD. For EAGF, there was one reduction made 
in  2014  while  there  were  3  reduction  decisions  adopted  for  EAFRD.  At  year-end  there  were  5  EAFRD 
reduction cases ongoing. 

6.4.  RECOVERY OF UNUSED PRE-FINANCING AMOUNTS 

Agriculture: 

EAGF 
Rural Development 

Cohesion Policy: 

ERDF 
Cohesion Fund 
ESF 
FIFG/EFF 
EAGGF Guidance 
Internal policy areas 
External policy areas 
Administration 
Total recovered 

2014 

– 
– 

– 
– 
 9 
 10 
 6 
 278 
 95 
 2 
 400 

EUR millions 
2013 

– 
– 

 68 
 4 
 53 
 7 
 3 
 208 
 91 
 1 
 435 

Recoveries  of  unused  pre-financing  amounts  should  not  be  confused  with  irregular  expenditure 
recovered.  Where  the  Commission  services  identify  and  recover  such  expenditure  in  relation  to  pre-
financing  amounts  paid  out,  these  are  included  in  the  normal  financial  correction  or  recovery  processes 
described above. For more details on prefinancing, see also note 2.5. 

82 

 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

7. 

FINANCIAL RISK MANAGEMENT 

The following disclosures with regard to the financial risk management of the EU relate to: 

- 

- 

- 

- 

Lending  and  borrowing  activities  carried  out  by  the  Commission  through:  EFSM,  BOP,  MFA,  and 
Euratom actions and the ECSC in Liquidation;  

The  treasury  operations  carried  out  by  the  Commission  in  order  to  implement  the  EU  budget, 
including the receipt of fines;  

The Guarantee Fund for external actions; and 

Financial instruments financed by the budget. 

7.1.  TYPES OF RISK 

Market  risk  is  the  risk  that  the  fair  value  or  future  cashflows  of  a  financial  instrument  will  fluctuate, 
because of variations 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). 

(1)  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.  

(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. 

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. 

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. 

7.2.  RISK MANAGEMENT POLICIES  

The implementation of the EU budget relies increasingly on the use of of financial instruments. The basic 
concept  behind  this  new  approach,  in  contrast  to  the  traditional  method  of  budget  implementation  by 
giving  grants  and  subsidies,  is  that  for  each  euro  spent  from  the  budget  via  financial  instruments,  the 
final beneficiary receives more than EUR 1 as financial support due to the leverage effect. This intelligent 
use of the EU budget maximises the impact of the funds available. For more information on the amounts 
concerned, see note 2.4. 

Common to most financial instruments is the fact that the implementation is delegated to either the EIB 
group  (including  EIF)  based  on  an  agreement  between  the  EC  and  the  EIB  or  to  other  financial 
intermediaries. Agreements signed with these intermediaries include strict conditions and obligations on 
the intermediaries so as ensure that EU monies are properly managed and properly reported on. Once a 
financial  contribution  to  one  of  the  instruments  has  been  committed,  the  funds  are  transferred  to  a 
specifically  created  bank  account  of  the  financial  intermediary  (i.e.  a  fiduciary  account).  The  financial 
intermediary  may,  depending  on  the  instrument  in  question,  use  the  funds  on  this  fiduciary  account  to 
provide  loans,  issue  debt  instruments,  etc.  Proceeds  from  financial  instruments  have  to,  as  a  general 
rule, be reimbursed to the EU budget. 

The risk as regards these financial instruments is usually limited to a ceiling as indicated in the underlying 
agreements which is  the budgeted amount foreseen  for  the instrument. As  the Commission  often bears 
the  "first  loss  piece"  and  since  instruments  are  intended  to  finance  riskier  beneficiaries  (who  have 
difficulties in obtaining funding from commercial lenders), it is therefore likely that at least some losses to 
the EU budget will occur. 

83 

 
 
 
 
 
Annual accounts of the European Union 2014 

Borrowing & Lending activities 

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.  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 generally financed by "back-to-back" borrowings, which thus do not generate open 
interest rate or currency positions. The application of the "back-to-back" character is checked regularly. 

Treasury 

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 and its rules of application. 

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

-  Own resources are paid by the Member States into 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. This restriction does 
not  apply  to  the  Commission's  own  resource  accounts  in  case  of  a  default  on  loans  contracted  or 
guaranteed pursuant to EU Council regulations and decision and under certain conditions in case the 
cash resource requirements are in excess of the assets of the accounts. 

Funds held in bank accounts denominated in currencies other 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, information is exchanged between Directorate General for 
the  Budget  and  Directorate-General  for  Economic  and  Financial  Affairs  on  risk  management  and  best 
exposures.  

Fines 

Provisionally cashed fines: deposits 

Amounts received before 2010 remain in bank accounts with banks specifically selected for the deposit of 
provisionally  cashed  fines.  The  selection  of  banks  is  conducted  in  compliance  with  tender  procedures 
defined by the Financial Regulation. Placement of funds with specific banks is determined by the internal 
risk management policy defining the credit rating requirements and the amount of funds which could be 
placed  in  proportion  to  the  counterparty  equity.  Financial  and  operational  risks  are  identified  and 
evaluated and compliance with internal policies and procedures is checked regularly. 

Provisionally cashed fines: BUFI portfolio 

Fines  imposed  and  provisionally  cashed  from  2010  onwards  are  invested  in  a  specifically  created  fund, 
BUFI.  The  main  objectives  of  the  Fund  are  the  reduction  of  risks  associated  with  financial  markets  and 
the equal treatment of all fined entities by offering a guaranteed return calculated on the same basis. The 

84 

 
 
 
 
 
Annual accounts of the European Union 2014 

asset  management  for  provisionally  cashed  fines  is  carried  out  by  the  Commission  in  accordance  with 
internal  asset  management  guidelines.  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  provisionally  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 at least equal to the 

return of the BUFI Benchmark minus costs incurred. 

Investments  are  restricted  essentially  to  the  following  categories:  term  deposits  with  Euro-area  Central 
Banks, Euro-area sovereign debt agencies, fully state-owned or state-guaranteed banks or supranational 
institutions,  and  bonds,  bills  and  Certificates  of  Deposit  issued  by  either  sovereign  or  supranational 
institutions. 

Bank guarantees 

Significant amounts of guarantees issued by financial institutions are held by the Commission in relation 
to  the  fines  it  imposes  on  companies  breaching  EU  competition  rules  (see  note  2.6.1.2).  These 
guarantees  are  provided  by  fined  companies  as  an  alternative  to  making  provisional  payments.  The 
guarantees  are  managed  in  compliance  with  the  internal  risk  management  policy.  Financial  and 
operational  risks  are  identified  and  evaluated  and  compliance  with  internal  policies  and  procedures  is 
checked regularly. 

Guarantee Fund 

The rules and principles for the asset management of the Guarantee Fund are laid out in the Convention 
between the Commission and the 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 euros. 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. 

85 

 
 
 
 
 
Annual accounts of the European Union 2014 

7.2.1.  Reconciliation of carrying amount and fair value of financial instruments 

Reconciliation of the carrying amounts and fair value of financial assets by class 

31.12.2014 

31.12.2013 

EUR millions 

Financial assets at fair value 
Available for sale financial assets 
Cash and cash equivalents 
Total 
Financial assets at amortised cost 
Loans 
Exchange receivables and non-exchange 
recoverables 
Total 
Total 

Carrying 
amount 

9 406 
17 545 
26 951 

58 843 
15 578 

Fair value 

Carrying 
amount 

Fair value 

9 406 
17 545 
26 951 

58 843 
15 578 

7 870 
9 510 
17 380 

57 545 
13 680 

71 225 
88 605 

7 870 
9 510 
17 380 

57 545 
13 680 

71 225 
88 605 

74 421 
101 372 

74 421 
101 372 

Reconciliation of the carrying amounts and fair value of financial liabilities by class 

Financial liabilities at fair value 
Financial liabilities at amortised cost 
Borrowings 
Finance lease liabilities 
Payables 
Other 
Total 

31.12.2014 

31.12.2013 

EUR millions 

Carrying 
amount 
– 

58 470 
1 755 
43 180 
 454 
103 859 

Fair value 

– 

58 470 
1 755 
43 180 
 454 
103 859 

Carrying 
amount 
– 

57 218 
1 838 
36 213 
 477 
95 746 

Fair value 

– 

57 218 
1 838 
36 213 
 477 
95 746 

86 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

7.3.  CURRENCY RISK 

Financial instruments exposure of the EU to currency risk at year end – net position 

Financial assets 
Available for sale financial assets 
Loans* 
Receivables and recoverables 
Cash and cash equivalents 
Total 
Financial liabilities 
Payables 
Total 
Total 

* Excluding back-to-back loans. 

USD 

GBP 

DKK 

SEK 

EUR 

Other 

Total 

USD 

GBP 

DKK 

SEK 

EUR 

Other 

Total 

31.12.2014 

31.12.2013 

EUR millions 

 68 
 2 
 2 

 44 

 116 

 0 

 0 
 116 

 77 
 0 
4 102 
1 157 

5 336 

 (10) 

 (10) 
5 326 

 7 
– 
 50 
 471 

 528 

 0 

 0 
 528 

 9 
– 
 88 
 928 

9 203 
 303 
11 197 
14 180 

1 024 

34 883 

 0 

(43 168) 

 0  (43 168) 
(8 284) 

1 024 

 42 
 28 
 140 
 764 

 974 

 (2) 

 (2) 
 972 

9 406 
 334 
15 578 
17 545 

42 862 

(43 180) 

(43 180) 
 (318) 

 39 
 1 
 1 
 39 

 80 

– 

– 
 80 

 66 
– 
1 050 
 140 
1 256 

 (5) 
 (5) 

1 251 

 13 
– 
 42 
 446 

 501 

– 

– 
 501 

 19 
– 
 79 
 257 

 355 

7 732 
 277 
12 284 
8 225 

28 518 

– 

(36 156) 

– 
 355 

(36 156) 
(7 638) 

– 
 8 
 224 
 403 

 635 

 (52) 

 (52) 
 583 

7 870 
 286 
13 680 
9 510 

31 345 

(36 213) 

(36 213) 
(4 868) 

87 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

If  the  EUR  had  strengthened  against  other  currencies  by  10 %,  then  it  would  have  had  the  following 
impact: 

31.12.2014 
31.12.2013 

31.12.2014 
31.12.2013 

Economic result 

USD 
 (4) 
 (3) 

GBP 
 (483) 
 (107) 

DKK 
 (47) 
 (44) 

SEK 
 (92) 
 (30) 

USD 
 (6) 
 (4) 

GBP 
 (7) 
 (6) 

Net assets 
DKK 
 (1) 
 (1) 

SEK 
 (1) 
 (2) 

EUR millions 

Other 
 0 
– 

EUR millions 

Other 
– 
– 

If the EUR had weakened against these currencies by 10 % then it would have had the following impact: 

31.12.2014 
31.12.2013 

31.12.2014 
31.12.2013 

Economic result 

GBP 
 591 
 131 

DKK 
 58 
 53 

SEK 
 113 
 38 

GBP 
 9 
 7 

Net assets 
DKK 
 1 
 1 

SEK 
 1 
 2 

EUR millions 

Other 
– 
– 

EUR millions 

Other 
– 
– 

USD 
 5 
 4 

USD 
 8 
 4 

Borrowing and lending activities 

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.  

Treasury 

Own  resources  paid  by  Member  States  in  currencies  other  than  EUR  are  kept  on  the  own  resources 
accounts, in accordance with the Own Resources Regulation. They are converted into EUR when they are 
needed  to  cover  for  the  execution  of  payments.  The  procedures  applied  for  the  management  of  these 
funds  are  dictated  by  the  above  referenced  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 
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. 

88 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

Fines 

Provisionally cashed fines (deposits and BUFI portfolio) and bank guarantees 

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

Guarantee Fund 

The financial assets of the Guarantee Fund are in EUR so there is no currency risk. The loans subrogated 
to the EU as result of calls on the Guarantee Fund following payment defaults by a loan beneficiary are 
carried out in their original currency and therefore expose the EU to currency risk. There are no activities 
to compensate foreign currency variations ("hedging" activities)  due to uncertainty relating to the loans 
repayment timing. 

7.4.  INTEREST RATE RISK 

The following table illustrates the interest rate sensitivity of available for sale financial assets assuming a 
possible change in interest rates of +/- 1 %. 

31.12.2014: Available for sale financial assets 

31.12.2013: Available for sale financial assets 

Increase (+) / 
decrease (-) in 
basis points 
+ 100 
- 100 
+ 100 
- 100 

EUR millions 
Effect on 
economic result 
and net assets 
 (138) 
 149 
 (94) 
 95 

The  sensitivity  analysis  only  considers  the  impact  on  the  price  risk  (fair  value)  of  the  available  for  sale 
financial  assets.  The  impact  on  surplus  or  deficit  for  variable  interest  rate  instruments  has  not  been 
considered. 

Borrowing & Lending activities 

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 484 million  (2013:  EUR 583 million),  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 1 692 million  in  2014  (2013: 
EUR 367 million)  and  which  have  a  final  maturity  date  of  less  than  one  year  (EUR 10 million),  between 
one  and  five  years  (EUR 146 million)  and  more  than  five  years  (EUR 1 536 million).  More  significantly, 
the EU has 9 loans under the financial instrument BOP with fixed interest rates totalling EUR 8.4 billion in 
2014  (2013:  EUR 11.4 billion)  and  which  have  a  final  maturity  of  less  than  one  year  (EUR 2.7 billion), 
between  one  and  five  years  (EUR 5.5 billion)  and  more  than  five  years  (EUR 0.2 billion).  Under  the 
financial instrument EFSM, the EU has 21 loans with fixed interest rates totalling EUR 46.8 billion in 2014 
(2013: EUR 43.8 billion) which have a final maturity date of less than one year (EUR 5 million), between 
one and five years (EUR 9.2 billion) and more than five years (EUR 32.5 billion). 

Treasury 

The Commission's treasury does not  borrow any  money; as a consequence it is not exposed to interest 
rate  risk.  Interest  is  however  calculated  on  balances  held  on  the  different  banks  accounts.  The 

89 

 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

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 for own resources receipts are non-interest bearing and 
free  of  charges.  Accounts  held  with  National  Central  Banks  may  be  remunerated  at  the  official  rates 
applied by each institution.  

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.  The  rates  applied  are  in  general  contractually 
floored at zero. As a result no risk exists that the Commission earns interest at rates lower than market 
rates. 

Fines 

Provisionally cashed fines (deposits, BUFI portfolio) and bank guarantees 

Deposits and bank guarantees are not exposed to interest rate risks. Interest earned by deposits reflect 
market interest rates as well as their possible fluctuation. There are no bonds with variable interest rates 
in  the  BUFI  portfolio.  The  interest  rate  sensitivity  parameter,  the  duration  of  the  portfolio,  follows  very 
closely  the  duration  of  the  BUFI  index.  Therefore  any  negative  effects  on  the  asset  valuation  would  be 
matched on the side of the BUFI liability. There remains only a remote exposure to the interest rate risk 
in case such negative effects during the fine's maturity period would result in an overall negative index 
performance. 

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  65 %  of  the  investment  portfolio  at  the  balance  sheet  date 
(2013: 58 %). 

7.5.  CREDIT RISK 

The  amounts  that  represent  the  EU's  exposure  to  credit  risk  at  the  end  of  the  reporting  period  are  the 
carrying amounts of the financial instruments as disclosed in note 2. 

Financial assets that are neither past due nor impaired 

Loans 
Receivables and recoverables 
Total at 31.12.2014 
Loans 
Receivables and recoverables 
Total at 31.12.2013 

Total 

Neither past 
due nor 
impaired 

58 843 
15 578 
74 421 
57 544 
13 680 
71 224 

58 843 
7 968 
66 811 
57 542 
10 029 
67 571 

EUR millions 

Past due but not impaired 

< 1 year 

– 
5 624 
5 624 
 1 
1 091 
1 092 

1-5 years 
– 
1 847 
1 847 
 1 
2 117 
2 118 

> 5 years 
– 
 138 
 138 
– 
 443 
 443 

90 

 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

Credit quality of financial assets that are neither past due nor impaired 

31.12.2014 

31.12.2013 

  Available 
for sale 

Loans & 
Receivables 

Cash 

Total 

Available 
for sale 

Loans & 
Receivables 

EUR millions 

Cash 

Total 

Counterparties with external 
credit rating 
Prime and high grade 
Upper medium grade 
Lower medium grade 
Non-investment grade 
Total 
Counterparties without 
external credit rating 
Group 1 
Group 2 
Total 
Total 

7 511 
 359 
 347 
 42 
8 259 

- 
– 
– 
8 259 

2 951 
25 045 
6 001 
28 191 
62 188 

13 947 
2 932 
 301 
 317 
17 497 

24 409 
28 335 
6 649 
28 550 
87 944 

4 488 
 136 
4 624 
66 812 

 48 
– 
 48 
17 545 

4 537 
 136 
4 673 
92 616 

6 226 
 138 
 322 
 57 
6 743 

– 
– 
– 
6 743 

4 779 
 209 
31 889 
26 786 
63 663 

3 771 
 137 
3 908 
67 571 

7 121 
1 760 
 284 
 256 
9 421 

18 126 
2 107 
32 495 
27 099 
79 827 

 89 
– 
 89 
9 510 

3 860 
 137 
3 997 
83 824 

Not  included  in  the  above  table  are  available  for  sale  financial  assets  in  the  form  of  equity  instruments 
without  external  credit  rating.  The  four  risk  categories  mentioned  above  are  in  principle  based  on  the 
rating categories of external rating agencies and correspond to: 

 

Prime and high grade: Moody P-1, Aaa – Aa3; S&P A-1+, A-1, AAA – AA -; Fitch F1+, F1, AAA – 
AA- 

  Upper medium grade: Moody P-2, A1 – A3; S&P A-2, A+ - A-; Fitch F2, A+ - A- 
 
  Non-investment grade: Moody not prime, Ba1 – C; S&P B, C, BB+ - D; Fitch B, C, BB+ - D 

Lower medium grade: Moody P-3, Baa1 – Baa3, S&P A-3, BBB+ - BBB-; Fitch F-3, BBBB+ - BBB- 

Please  note  that  the  EU  uses  these  external  agencies  rating  categories  as  a  reference  point  notably  for 
financial instruments and commercial banks, but may, after making its own analysis of individual cases, 
keep  amounts  in  one  of  the  above  risk  categories  even  though  one  or  more  of  the  above  mentioned 
rating  agencies  may  have  downgraded  the  corresponding  counterparty.  As  regards  non-rated 
counterparties' group 1 relates to debtors without defaults in the past and group 2 relates to debtors with 
defaults in the past. 

The  amounts  displayed  above  under  Loans  and  receivables  categorised  in  non-investment  grade  relate 
primarily to financial support loans disbursed by the Commission to Member States in financial difficulties 
and  recoverables  against  certain  Members  States  based  on  own  resources  regulations  or  other  legal 
basis. The amount under cash relates to own resources bank accounts opened in the  Treasury or in the 
central  banks  of  Member  States  to  hold  the  own  resources  contributions  as  foreseen  in  the  regulation. 
The Commission may draw on these accounts solely to cover cash requirements arising from execution of 
the budget. 

Borrowing & Lending activities 

Exposure to credit risk is managed firstly by  obtaining country guarantees in the case of Euratom, then 
through  the  Guarantee  Fund  (MFA  &  Euratom),  then  by  the  possibility  of  drawing  the  necessary  funds 
from  the  Commission's  own  resources  accounts  with  the  Member  States  and  ultimately  through  the 
Budget of the EU. The Own Resources legislation fixes the ceiling for own resources payments at 1.23 % 
of Member States' GNI and during 2014 1.06 % was actually used to cover payment appropriations. This 
means that at 31 December 2014 there existed an available margin of 0.17 % to cover these guarantees. 
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 EU. In any case, the exposure to credit risk is mitigated by 
the possibility to draw on the Commission's own resources accounts with Member States in excess of the 
assets on those accounts 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. 

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. 

Treasury 

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 

91 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

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  made  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 1 million  and  EUR 20 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 
daily overall treasury balances which fluctuated in 2014 between EUR 100 million and EUR 34 billion, and 
with an overall amount of payments executed in 2014 that equals EUR 142 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.  A  lower  level  may  be 
accepted in specific and duly justified circumstances. 

The  credit  ratings  of  the  commercial  banks  where  the  Commission  has  accounts  are  reviewed  on  a 
daily  basis.  Intensified  monitoring  measures  and  daily  reviews  of  commercial  banks'  ratings  were 
adopted in the context of the financial crisis, and kept in place during 2014. 

In  delegations  outside  the  EU,  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. 

Fines 

Provisionally cashed fines: deposits 

Banks holding deposits for the fines provisionally cashed before 2010 are selected by tender procedure in 
compliance with the risk management policy which defines the credit rating requirements and the amount 
of funds which could be placed in proportion to the counterparty equity. 

For commercial banks that have been specifically selected for the deposit of provisionally cashed fines, a 
minimum  long-term  rating  A  (S&P  or  equivalent)  and  a  minimum  short  term  rating  A-1  (S&P  or 
equivalent) is  required  as  a  general  rule. Specific measures  are  applied  in  case  banks  in  this  group are 
subject  to  downgrade.  In  addition,  the  amount  deposited  with  each  bank  is  limited  to  a  certain 
percentage  of  its  own  funds,  which  varies  depending  on  the  rating  level  of  each  institution.  The 
calculation  of  such  limits  also  takes  into  account  the  amount  of  outstanding  guarantees  issued  to  the 
Commission  by  the  same  institution.  The  compliance  of  outstanding  deposits  with  the  applicable  policy 
requirements is reviewed regularly. 

Provisionally cashed fines: BUFI portfolio 

For investments from provisionally cashed fines, the Commission takes 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 these  countries represents 43 % and 27 % respectively  of 
the total nominal volume of the portfolio. 

Bank guarantees 

Significant  amounts  of  guarantees  issued  by  financial  institutions  are  also  held  by  the  Commission  in 
relation to the fines it imposes on companies breaching EU competition rules (see note  2.6.1.2). These 
guarantees are provided by fined companies as an alternative to making provisional payments. The risk 
management policy applied for the acceptance of such guarantees has been reviewed in 2012 and a new 
combination of credit rating requirements and limited percentages per counterpart (proportional to each 
counterpart's own funds) has been defined in the light of the current financial environment in the EU. It 
continues  to  ensure  a  high  credit  quality  for  the  Commission.  The  compliance  of  the  outstanding 
guarantees with the applicable policy requirements is reviewed regularly. 

92 

 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

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 2014  fixed  term  deposits  of  EUR 147 million  were  made  with  such  counterparties  (2013: 
EUR 151 million). 

7.6.  Liquidity risk 

Maturity analysis of financial liabilities by remaining contractual maturity 

Borrowings 
Finance lease liabilities 
Payables 
Other 
Total at 31.12.2014 
Borrowings 
Finance lease liabilities 
Payables 
Other 
Total at 31.12.2013 

Borrowing & Lending activities 

< 1 year 
8 727 
 81 
43 180 
 20 
52 008 
3 065 
 82 
36 213 
 17 
39 377 

1-5 years 
15 386 
 366 
– 
 97 
15 849 
21 454 
 353 
– 
 84 
21 891 

> 5 years 
34 357 
1 309 
– 
 336 
36 002 
32 699 
1 403 
– 
 375 
34 477 

EUR millions 
Total 
58 470 
1 755 
43 180 
 454 
103 859 
57 218 
1 838 
36 213 
 477 
95 746 

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 
Commission's  own  resources  accounts  with  the  Member  States.  For  EFSM,  the  Council  Regulation 
407/2010 provides for a similar procedure. 

Treasury 

EU  budget  principles  ensure  that  overall  cash  resources  for  a  given  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. Moreover, in 
accordance  with  the  Council  Regulation  1150/2000  (Own  Resources  Regulation),  Member  States 
contributions relating to (amending) budgets approved after the 16th of a given month (N) only become 
available in month N+2, while the related payment appropriations are immediately available. In order to 
ensure  that  available  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  or 
additional  funding  can  be  called  up  in  advance  from  Member  States  if  needed,  up  to  certain  limits  and 
under  certain  conditions.  Seasonality  of  expenditure  and  overall  budgetary  restrictions  in  recent  years 
have resulted in the need for increased monitoring of the rhythm of payments over the year. 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. 

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  less  than  twelve  months  which  is  to  be  invested  in 
monetary  instruments.  As  at  31 December 2014  these  investments,  including  cash,  amounted  to 
EUR 148 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 2014 this ratio stood at 49 %. 

93 

 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

8.  RELATED PARTY DISCLOSURES 

8.1.  RELATED PARTIES 

The  related  parties  of  the  EU  are  the  EU  consolidated  entities  and  the  key  management  personnel  of 
these entities. 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. 

8.2.  KEY MANAGEMENT ENTITLEMENTS 

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

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

Category 2: the Vice-president of the Commission and High Representative of the EU 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  of  the  European  Union,  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 European Court of Auditors 

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

A  summary  of  their  entitlements  is  given  below  –  further  information  can  be  found  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. 

94 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

KEY MANAGEMENT FINANCIAL ENTITLEMENTS 

Entitlement (per employee) 
Basic salary (per month) 

Category 1 
25 352 

Category 2 
22 964  
 - 23 882 

Category 3 
18 371  
 - 20 667 

Category 4 
19 840  
 - 21 126 

Category 5 
11 775  
 - 18 518 

Residential/Expatriation allowance  

15% 

15% 

15% 

15% 

0-4%-16% 

EUR 

Family allowances: 
Household (% salary) 
Dependent child 
Pre-school 
Education, or 
Education outside place of work 
Presiding judges allowance 

2% + 171.88  2% + 171.88  2% + 171.88  2% + 171.88  2% + 171.88 
375.59 
91.75 
254.83 
509.66 
N/A 

375.59 
91.75 
254.83 
509.66 
N/A 

375.59 
91.75 
254.83 
509.66 
N/A 

375.59 
91.75 
254.83 
509.66 
N/A 

375.59 
91.75 
254.83 
509.66 
554.17 - 
607.71 

Representation allowance 

1 418.07 

0 - 911.38 

554.17 - 
607.71 

N/A 

N/A 

Annual travel costs 

N/A 

N/A 

N/A 

N/A 

N/A 

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: 
Tax on salary 
Sickness insurance (% salary) 
Special levy on salary 
Pension deduction 

Yes 
5% 
max 25% 
Reimbursed 

Yes 
5% 
max 25% 
Reimbursed 

Yes 
5% 
max 25% 
Reimbursed 

Yes 
5% 
max 25% 
N/A 

Yes 
5% 
max 25% 
N/A 

50 703.52 

Reimbursed 
Reimbursed 

45 927.10 
- 47 764.18 
Reimbursed 
Reimbursed 

36 741.68 
- 41 334.40 
Reimbursed 
Reimbursed 

39 681.02 
- 42 252.94 
Reimbursed 
Reimbursed 

Reimbursed 

Reimbursed 
Reimbursed 

25 352 

Reimbursed 
Reimbursed 
40% - 65% 
Covered 
Max 70% 

22 964  
 - 23 882 
Reimbursed 
Reimbursed 
40% - 65% 
Covered 
Max 70% 

18 371  
 - 20 667 
Reimbursed 
Reimbursed 
40% - 65% 
Covered 
Max 70% 

19 840   Reimbursed 

 - 21 126 
Reimbursed 
Reimbursed 
40% - 65% 
Covered 
Max 70% 

Reimbursed 
Reimbursed 
N/A 
Covered 
Max 70% 

8% - 45% 
1.7% 
7% 
N/A 

8% - 45% 
1.7% 
7% 
N/A 

8% - 45% 
1.7% 
7% 
N/A 

8% - 45% 
1.7% 
7% 
N/A 

8% - 45% 
1.7% 
6-7% 
10.9-
10.1%*** 
112 

Number of persons at year-end 

3 

8 

93 

28 

* With correction coefficient ("CC") applied. 

** Paid for the first 3 years following departure. 

*** 10.9 % for the first half of 2014 and 10.1 % for the second half of 2014. 

95 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

9. 

EVENTS AFTER THE BALANCE SHEET DATE 

At the date of signing of these accounts, no 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 accounts and related notes were prepared using the most recently available information and 
this is reflected in the information presented. 

96 

 
 
 
Annual accounts of the European Union 2014 

10.  SCOPE OF CONSOLIDATION 

A. CONTROLLED ENTITIES (52) 
1. Institutions and consultative bodies (11) 
European Parliament 
European Council 
European Commission 
Committee of the Regions 
Court of Justice of the European Union 
European External Action Service 

European Data Protection Supervisor 
European Economic and Social Committee 
European Ombudsman 
European Court of Auditors 
Council of the European Union 

2. EU Agencies (39) 
2.1. Executive Agencies (6) 
Education, Audiovisual & Culture Executive Agency  Executive Agency for Small and Medium-sized 

Consumers, Health, Agriculture and Food Executive 
Agency 
Research Executive Agency 

Enterprises 
Innovation & Networks Executive Agency 

European Research Council Executive Agency 

European Food Safety Authority 
European Railway Agency 
Community Plant Variety Office 
European Fisheries Control Agency 
European Monitoring Centre for Drugs and Drug 
Addiction 
European Police College (CEPOL) 
European Police Office (EUROPOL) 
European Aviation Safety Agency 

2.2. Decentralised Agencies (33) 
European Maritime Safety Agency 
European Medicines Agency 
European GNSS Supervisory Authority 
European Chemicals Agency 
Fusion for Energy (European Joint Undertaking for 
ITER and the Development of Fusion Energy) 
Eurojust 
European Institute for Gender Equality 
European Agency for Safety and Health at Work 
European Centre for Disease Prevention and Control  European Network and Information Security Agency 
European Environment Agency 
European Centre for the Development of Vocational 
training 
European Agency for Cooperation of Energy 
Regulators 
European Banking Authority 
European Asylum Support Office 
Office for the Body of European Regulators for 
Electronic Communication 
European Agency for the Management of Operational 
Co-operation at External Borders of the Member 
States of the EU 
EU-LISA (European Agency for the operational 
management of large-scale IT systems in the area of 
freedom, security and justice) 

European Union Agency for Fundamental Rights 
European Insurance and Occupational Pensions 
Authority 
Translation Centre for the Bodies of the European 
Union 
European Securities and Markets Authority 
European Training Foundation 
European Foundation for the Improvement of Living 
and Working Conditions 
EU Office for Harmonisation in the Internal Market 
(Trade Marks and Designs) 

3. Other controlled entities (2) 
European Coal and Steel Community (in liquidation)  European Institute of Innovation and Technology 

B. JOINT VENTURES (7) 
ITER International Fusion Energy Organisation 
SESAR Joint Undertaking 
Fuel Cells and Hydrogen 2 Joint Undertaking 
Clean Sky 2 Joint Undertaking 
C. ASSOCIATES (1) 
European Investment Fund  

Galileo Joint Undertaking in liquidation 
Innovative Medicines Initiative 2 Joint Undertaking 
ECSEL Joint undertaking* 

* 

The ECSEL joint undertaking is the result of an amalgamation of the ARTEMIS and ENIAC joint undertakings that occured during 
the financial year 2014. 

97 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

EUROPEAN UNION 
FINANCIAL YEAR 2014 

AGGREGATED REPORTS ON THE 
IMPLEMENTATION OF THE BUDGET AND 
EXPLANATORY NOTES 

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

98 

 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

CONTENTS 

EU BUDGET RESULT...................................................................................... 100 

RECONCILIATION OF ECONOMIC RESULT WITH BUDGET RESULT ........................ 101 

STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS ..................... 102 

NOTES TO THE AGGREGATED REPORTS ON THE IMPLEMENTATION  
OF THE BUDGET ........................................................................................... 105 

1. THE EU BUDGET CYCLE ............................................................................. 105 

1.1.  MULTIANNUAL FINANCIAL FRAMEWORK 2014-2020 .......................................... 105 

1.2.  POLICY AREAS ............................................................................................. 106 

1.3.  ANNUAL BUDGET .......................................................................................... 106 

2. NOTES TO THE EU BUDGET RESULT ............................................................ 108 

2.1.  CALCULATION OF THE BUDGET RESULT ........................................................... 108 

2.2.  IMPLEMENTATION OF THE 2014 EU BUDGET .................................................... 109 

3. NOTES TO THE RECONCILIATION OF ECONOMIC RESULT WITH  
    BUDGET RESULT ...................................................................................... 110 

4. IMPLEMENTATION OF EU BUDGET REVENUE ................................................. 111 

4.1.  SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE ............................... 111 

4.2.  REVENUE IMPLEMENTATION .......................................................................... 113 

5. IMPLEMENTATION OF EU BUDGET EXPENDITURE .......................................... 116 

5.1.  MFF: BREAKDOWN & CHANGES IN COMMITMENT & PAYMENT APPROPRIATIONS ... 116 

5.2.  MFF: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS .............................. 117 

5.3.  MFF: IMPLEMENTATION OF PAYMENT APPROPRIATIONS..................................... 118 

5.4.  MFF: MOVEMENTS IN COMMITMENTS OUTSTANDING (RAL) ............................... 119 

5.5.  MFF: BREAKDOWN OF COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN .......... 120 

5.6.  POLICY AREA: BREAKDOWN AND CHANGES IN COMMITMENT AND  

PAYMENT APPROPRIATIONS ........................................................................... 121 

5.7.  POLICY AREA: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS ................. 123 

5.8.  POLICY AREA: IMPLEMENTATION OF PAYMENT APPROPRIATIONS ........................ 125 

5.9.  POLICY AREA: MOVEMENTS IN COMMITMENTS OUTSTANDING ........................... 126 

5.10. POLICY AREA: BREAKDOWN OF COMMITMENTS OUTSTANDING BY  

YEAR OF ORIGIN .......................................................................................... 127 

5.11. IMPLEMENTATION OF 2014 EXPENDITURE ....................................................... 128 

6. IMPLEMENTATION OF THE INSTITUTIONS AND AGENCIES BUDGET ................. 129 

6.1.  INSTITUTIONS: SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE ......... 129 

6.2.  INSTITUTIONS: IMPLEMENTATION OF COMMITMENT AND  

PAYMENT APPROPRIATIONS ........................................................................... 130 

6.3.  AGENCIES INCOME: BUDGET FORECASTS, ENTITLEMENTS AND  

AMOUNTS RECEIVED .................................................................................... 132 

6.4.  COMMITMENT & PAYMENT APPROPRIATIONS BY AGENCY ................................... 134 

6.5.  BUDGET RESULT INCLUDING AGENCIES .......................................................... 135 

99 

 
 
 
Annual accounts of the European Union 2014 

EU BUDGET RESULT 

Revenue for the financial year 
Payments against current year's budget appropriations 
Payment appropriations carried over to  year N+1 
Cancellation of unused payment appropriations carried 
over from year N-1 
Evolution of assigned revenue 
Exchange differences for the year 
Budget result* 

Note 
4.1 
5.3 

2.2 

2014 
143 940 
(141 193) 
(1 787) 
 25 

 336 
 110 
1 432 

* Of which EFTA result is EUR (3) million in 2014 and EUR (4) million in 2013. 

EUR millions 

2013 
149 504 
(147 567) 
(1 329) 
 34 

 403 
 (42) 
1 002 

100 

 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

RECONCILIATION OF ECONOMIC RESULT WITH BUDGET 
RESULT 

ECONOMIC RESULT OF THE YEAR 

Revenue 
Entitlements established in current year but not yet collected 
Entitlements established in previous years and collected in 
current year 
Accrued revenue (net) 
Expenses 
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 result Agencies and ECSC 

BUDGET RESULT OF THE YEAR 

2014 
(11 280) 

EUR millions 
2013 
(4 365) 

(6 573) 
4 809 

(4 877) 

9 223 
 (821) 
 457 
(1 979) 
1 858 

12 164 
(1 719) 

 170 

1 432 

(2 071) 
3 357 

 (134) 

3 216 
(1 123) 
 (902) 
(1 528) 
1 538 

4 136 
(1 027) 

 (93) 

1 002 

For further explanations on the reconciliation of economic with budget result see note 3. 

101 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

STATEMENT OF COMPARISON OF BUDGET AND ACTUAL 
AMOUNTS 

BUDGET REVENUE 

  Initial adopted 
budget 

Amending 
budgets 

Final adopted 
budget 

EUR millions 
Revenue 

1.  Own resources 

   Of which Customs duties 
   Of which VAT 
   Of which GNI 

3.  Surpluses, balances and adjustments 
4.  Revenue accruing from persons 

working with the institutions and 
with other Union bodies 
5.  Revenue accruing from the 

administrative operation of the 
institutions 

6.  Contributions and refunds in 

connection with Union agreements 
and programmes 

7.  Interests on late payments and fines 
8.  Borrowing and lending operations 
9.  Miscellaneous revenue 
Total 

133 960 
16 186 
17 882 
99 767 
– 
1 275 

 54 

 60 

 123 
 2 
 30 
135 505 

For details of the 2014 revenue implementation see note 4. 

(5 572) 
 (12) 
 (192) 
(5 154) 
5 101 
– 

128 388 
16 174 
17 690 
94 614 
5 101 
1 275 

128 867 
16 499 
17 746 
94 863 
5 100 
1 251 

– 

– 

 54 

 578 

 60 

3 225 

3 850 
 151 
– 
3 530 

3 973 
 153 
 30 
139 034 

4 607 
 297 
 15 
143 940 

102 

 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

BUDGET EXPENDITURE: COMMITMENTS BY MULTIANNUAL FINANCIAL 
FRAMEWORK (MFF) HEADING 

Initial 
adopted 
budget 

Amending 
budgets  & 
transfers 

Final 
adopted 
budget 

Additional 
appropri- 
ations* 

Total 
appropria-
tions 
available 

EUR millions 

Commitments 
made 

1. Smart and inclusive growth  63 986 
16 484 
  1a: Competitiveness for 

growth and jobs 

  1b: Economic, social and 

47 502 

territorial cohesion 

– 
– 

– 

63 986 
16 484 

3 625 
2 645 

67 611 
19 129 

45 972 
18 018 

47 502 

 980 

48 482 

27 954 

2. Sustainable growth: natural 

59 267 

 (76) 

59 191 

2 105 

61 296 

48 263 

resources 

  of which: market related 
expenditure and direct 
payments 

3. Security and citizenship 
4. Global Europe 
5. Administration 
  of which: Administrative 

43 778 

– 

43 778 

1 724 

45 502 

44 293 

2 172 
8 325 
8 405 
3 532 

– 
 98 
 (1) 
 (0) 

2 172 
8 423 
8 405 
3 531 

 84 
 577 
 766 
 400 

2 256 
9 000 
9 171 
3 931 

1 507 
8 489 
8 884 
3 789 

expenditure of the 
institutions 
 29 
6. Compensations 
– 
8. Negative reserve 
 64 
9. Special Instruments 
113 208 
Total 
* Additional appropriations include appropriations carried over from last year, assigned revenue and appropriations becoming available 
as a result of decommitments. 

 29 
– 
– 
– 
 29 
 485 
 50  142 690 

 29 
– 
 456 
142 640 

 29 
– 
 577 
149 939 

– 
– 
 92 
7 249 

103 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

BUDGET EXPENDITURE: PAYMENTS BY MULTIANNUAL FINANCIAL 
FRAMEWORK (MFF) HEADING 

Initial 
adopted 
budget 

Amending 
budgets  & 
transfers 

Final 
adopted 
budget 

Additional 
appropri- 
ations* 

Total 
appropria-
tions 
available 

EUR millions 

Payments 
made 

1. Smart and inclusive growth  62 393 
11 441 
  1a: Competitiveness for 

3 470 
 415 

65 863 
11 857 

3 836 
3 451 

69 699 
15 308 

67 683 
13 331 

growth and jobs 

  1b: Economic, social and 

50 951 

3 055 

54 006 

 385 

54 392 

54 352 

territorial cohesion 

2. Sustainable growth: natural 

56 459 

 (500) 

55 959 

2 003 

57 962 

56 584 

resources 

  of which: market related 
expenditure and direct 
payments 

3. Security and citizenship 
4. Global Europe 
5. Administration 
  of which: Administrative 

43 777 

 (1) 

43 776 

1 738 

45 514 

44 287 

1 677 
6 191 
8 406 
3 532 

 (17) 
 734 
 0 
 (0) 

1 660 
6 925 
8 406 
3 531 

 88 
 556 
1 634 
 944 

1 747 
7 481 
10 040 
4 475 

1 711 
7 206 
8 819 
3 729 

expenditure of the 
institutions 
 29 
6. Compensations 
– 
8. Negative reserve 
 465 
9. Special Instruments 
142 497 
Total 
* Additional appropriations include appropriations carried over from last year, assigned revenue and appropriations becoming available 
as a result of decommitments. 

 29 
– 
– 
– 
 (157) 
 193 
3 530  139 034 

 29 
– 
 350 
135 505 

 29 
– 
 536 
147 495 

– 
– 
 344 
8 460 

For details of the 2014 expenditure implementation see note 5 and for the explanation note 5.11. 

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Annual accounts of the European Union 2014 

NOTES TO THE AGGREGATED REPORTS ON THE 
IMPLEMENTATION OF THE BUDGET  

1. 

THE EU BUDGET CYCLE 

The  budgetary  accounts  are  kept  in  accordance  with  the  Financial  Regulation  (FR)  and  its  rules  of 
application.  The  general  budget,  the  main  instrument  of  the  Union's  financial  policy,  is  the  instrument 
which  provides  for  and  authorises  the  Union's  revenue  and  expenditure  every  year.  In  accordance  with 
the  FR,  there  are  two  main  elements: the  multi  annual financial  framework  (MFF),  which sets  the  main 
ceilings for a period of 7 years, and the annual budget procedure. 

1.1.  MULTIANNUAL FINANCIAL FRAMEWORK 2014-2020 

1. Smart and inclusive growth 

1.a Competitiveness for growth 
and jobs 
1.b Economic, social and 
territorial cohesion 

2. Sustainable growth: natural 
resources 

of which: market related 
expenditure and direct 
payments 

3. Security and citizenship 
4. Global Europe 
5. Administration 

of which: Administrative 
expenditure of the institutions 

2014 
63 973 
16 560 

2015 
66 813 
17 666 

2016 
69 304 
18 467 

2017 
72 342 
19 925 

2018 
75 271 
21 239 

2019 
78 752 
23 082 

EUR millions 
Total 
508 921 
142 130 

2020 
82 466 
25 191 

47 413 

49 147 

50 837 

52 417 

54 032 

55 670 

57 275 

366 791 

59 303 

59 599 

59 909 

60 191 

60 267 

60 344 

60 421 

420 034 

43 779 

44 313 

44 624 

44 859 

44 885 

44 912 

44 937 

312 309 

2 179 
8 335 
8 721 
7 056 

2 246 
8 749 
9 076 
7 351 

2 378 
9 143 
9 483 
7 679 

2 514 
9 432 
9 918 
8 007 

2 656 
9 825 
10 346 
8 360 

2 801 
10 268 
10 786 
8 700 

2 951 
10 510 
11 254 
9 071 

17 725 
66 262 
69 584 
56 224 

6. Compensations 
Commitment appropriations: 

 29 
142 540 

– 
146 483 

– 
150 217 

– 
154 397 

– 
158 365 

– 
162 951 

 29 
167 602  1 082 555 

– 

Total payment appropriations:  135 866 

141 901 

144 685 

142 771 

149 074 

153 362 

156 295  1 023 954 

The above table shows the MFF ceilings at current prices. 2014 was the first financial year covered by the 
new  MFF  2014-2020.  The  overall  ceiling 
for  2014  was 
EUR 142 540 million,  equivalent  to  1.06 %  of  GNI,  while  the  corresponding  ceiling  for  payment 
appropriations was EUR 135 866 million, or 1.01 % of GNI. 

for  commitments  appropriations 

New  flexibility  provisions  have  been  agreed  for  the  2014-2020  MFF.  One  of  the  new  provisions  is  a 
possibility to mobilise a contingency margin (in exceptional circumstances). This allows for the mobilising 
of  appropriations  above  the  ceilings  for  a  given  year,  with  corresponding  reductions  in  other  years  in 
order not to increase the total amount of payment and commitment appropriations over the whole 2014-
2020  period.  The  contingency  margin  was  mobilised  in  2014  in  order  to  provide  EUR  3 168 million  in 
payment appropriations over and above the payment ceiling for 2014. 

The  reprogramming  of  unused  2014  commitment  appropriations  to  2015  and  2016  (according  to  MFF 
Art. 19) was agreed in April 2015 with a revision of the MFF ceilings and a related amending budget for 
2015.  The  main  impacts  in  2015  were  under  Heading  1(b)  (EUR 11.2 billion)  and  Heading  2 
(EUR 5 billion), while for 2016 the main change is to Heading 2 (EUR 4.4 billion). 

An explanation of the various headings of the MFF is given below: 

Heading 1 – Smart and inclusive growth 

This heading is divided into two separate, but interlinked components 

 

Competitiveness  for  growth  and  jobs,  encompassing  expenditure  on  research  and  innovation, 
education  and  training,  European  Connecting  Facility,  social  policy,  the  internal  market  and 
accompanying policies. 

105 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

 

Economic, social and territorial cohesion, 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 – Sustainable growth: natural resources 

Heading 2 includes the common agricultural and fisheries policies, rural development and environmental 
measures, in particular Natura 2000. 

Heading 3 – Security and citizenship 

Heading 3 (Security and citizenship) reflects the growing importance attached to certain fields where the 
EU  has  been  assigned  particular  tasks  –  justice  and  home  affairs,  border  protection,  immigration  and 
asylum  policy,  public  health  and  consumer  protection,  culture,  youth,  information  and  dialogue  with 
citizens. 

Heading 4 – Global Europe 

Heading 4 covers all external action, including development cooperation, humanitarian aid, pre-accession 
and neigbourhood instruments. The EDF remains outside of the EU budget and is not part of the MFF. 

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. 

Heading 6 - Compensations 

In accordance with the political agreement that 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. 

1.2.  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  Directorate  General,  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. 

1.3.  ANNUAL BUDGET 

Every  year,  the  Commission  estimates  all  the  Institutions'  revenue  and  expenditure  for  the  year  and 
draws up a draft budget which it sends to the budgetary authority. On the basis of this draft budget, the 
Council  sets  out  its  position,  which  is  then  the  subject  of  negotiations  between  the  two  arms  of  the 
budgetary  authority.  The  President  of  Parliament  declares  that  the  joint  draft  has  been  finally  adopted, 
thus  making  the  budget  enforceable.  During  the  year  in  question,  amending  budgets  are  adopted.  The 
task of executing the budget is mainly the responsibility of the Commission. 

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Annual accounts of the European Union 2014 

The  budget  structure  for  the  Commission  consists  of  administrative  and  operational  appropriations.  The 
other  Institutions  have  only  administrative  appropriations.  Furthermore,  the  budget  distinguishes 
between  two  types  of  appropriations:  non-differentiated  and  differentiated.  Non-differentiated 
appropriations  are  used  to  finance  operations  of  an  annual  nature  (which  comply  with  the  principle  of 
annuality). Differentiated appropriations are used in order to reconcile the principle of annuality with the 
need  to  manage  multi-annual  operations.  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  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. 

Origin of Appropriations 

The main source of appropriations is the Union's adopted 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: 

–  Budget appropriations from initial adopted budget and amending budgets 
–  Appropriations carried over from previous year 
–  Assigned  revenue  which  is  made  up  of  refunds,  EFTA  appropriations,  revenue  from  third 
parties/other countries, work for third parties and appropriations made available again as a result of 
repayment of payments on account. 

Composition of Total Available Budget 

Initial adopted budget = appropriations voted in year N-1; 

– 
–  Amending budgets adopted; 
–  Additional  appropriations  =  assigned  revenue  +  appropriations  carried  over  from  the  previous 

financial year or made available again following decommitments. 

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Annual accounts of the European Union 2014 

2.  NOTES TO THE EU BUDGET RESULT 

2.1.  CALCULATION OF THE BUDGET RESULT 

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

The amounts of own resources entered in the accounts are those credited during 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,  of  the  budget  result  for  the  previous  financial  year.  The  other 
revenue entered in the accounts is the amount actually received during the course of the year. 

For  the  purposes  of  calculating  the  budget  result  for  the  year,  expenditure  comprises  payments  made 
against the year's appropriations plus any of the appropriations for that year that are carried over to the 
following year. Payments made against the year's appropriations means payments that are made by the 
accounting officer by  31 December of the financial  year.  For the EAGF,  payments are those effected  by 
the Member States between 16 October N-1 and 15 October N, provided that the accounting officer was 
notified of the commitment and authorisation by 31 January N+1. EAGF expenditure may be subject to a 
conformity decision following controls in the Member States. 

The budget result comprises two elements: the result of the EU 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 result represents the difference between: 

 

 

total revenue received for the financial year; and 

total payments made against current 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 evolution of assigned revenue; and 

the net exchange-rate gains or losses recorded during the 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  as  additional  appropriations  for  the  financial 
year.  This  explains  the  difference  between  carryovers  from  the  previous  year  in  the  2014  budget 
implementation  statements  and  those  carried  over  to  the  following  year  in  the  2013  budget 
implementation  statements.  Appropriations  made  available  again  following  the  repayment  of  payments 
on account are disregarded when calculating the budget result. 

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 of appropriations carried over automatically and by decision. 

108 

 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

2.2.  IMPLEMENTATION OF THE 2014 EU BUDGET 

Budget surplus of EUR 1.4 billion: 

–  The  surplus  comes  primarily  from  the  revenue  side  (EUR 1.2 billion),  from  over-execution  of 

custom duties (EUR 0.5 billion) and additional, non-budgeted, fines (EUR 0.6 billion); 

–  The  minor  surplus  on  the  expenditure  side  (EUR 142 million)  comes  mainly  from  the  other 

institutions as the Commission implementation rate is practically 100 %; 

–  The remaining EUR 110 million of surplus comes from exchange rate gains. 

Revenue: 

–  Revenue, totalling EUR 143.9 billion, was EUR 4.9 billion higher than the final adopted budget due 

primarily to assigned revenue under headings 5 and 6 – see table 4.1 below; 

–  Fines  revenue  of  EUR 4.2 billion  was  used  to  finance  the  increased  need  for  payment 

appropriations; 

–  There  was  an  exceptionally  high  revision  of  GNI  own  resources  made  in  2014  (EUR 9.5 billion) 
covering the period back to 2002. This, however, had a negligible impact on the budget revenue 
for  2014 since amounts were effectively  adjusted  between  Member States (some are  to receive 
refunds, others have to pay) and, moreover, most amounts have been deferred until 2015. 

Expenditure: 

– 

Initial  payment  appropriations  (EUR 135.5 billion)  were  exceptionally  low  –  6 %  lower  than  the 
final  adopted  budget  for  2013.  Amending  budgets  eventually  increased  the  final  adopted 
appropriations to EUR 139 million – see table 5.1; 

–  Total payments amounted to EUR 142.5 billion, (2013: EUR 148.5 billion) – see table 5.3.; 

–  Under-implementation  of  payments  (after  carry-overs)  of  EUR 32 million  is  one  of  the  lowest 

recorded, confirming the tight constraints imposed on payment appropriations. 

Commitments & RAL: 

–  Available  commitment  appropriations  of  EUR 149.9 billion  were  only  implemented  at  an  overall 
level of 76 % and a large amount of appropriations were carried over or reprogrammed to 2015 – 
see table 5.2; 

–  Outstanding  commitments  ("RAL")  decreased  significantly  from  EUR 222.4 bilion  at  end  2013  to 
EUR 189.6 billion  at  end  2014  –  see  table  5.9.  This  reflects  the  low  implementation  of 
commitments  at  the  start  of  new  programming  period  –  had  all  appropriations  for  the  new 
programmes been committed in 2014, the RAL would have remained at a similar level as 2013. 

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  2014,  Part  A 
"Overview at budget level" and Part B dealing with each heading of the multi-annual financial framework. 

109 

 
 
 
 
Annual accounts of the European Union 2014 

3.  NOTES TO THE RECONCILIATION OF ECONOMIC 

RESULT WITH BUDGET RESULT 

In accordance with the Financial Regulation, the economic result of the year is calculated on the basis of 
accrual accounting principles, while the budget result is based on modified cash accounting rules. As the 
economic result and the budget result both cover the same underlying transactions, it is a useful control 
to ensure that they are reconcilable.  

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 result 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 result for reconciliation purposes.  

The net accrued revenue mainly consists of accrued revenue for agriculture, 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  

Net  accrued  expenses  mainly  consists  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,  payments  made  in  the  current  year  relating  to 
invoices registered in prior years are part of current year's budgetary expenditure. 

The  net  effect  of  pre-financing  is  the  combination  of  (1)  the  new  pre-financing  amounts  paid  in  the 
current  year  and  recognised  as  budgetary  expenditure  of  the  year  and  (2)  the  clearing  of  the  pre-
financing  paid  in  current  year  or  previous  years  through  the  acceptance  of  eligible  costs.  The  latter 
represent an expense in accrual terms but not in the budgetary accounts since the payment of the initial 
pre-financing had already been considered as a budgetary expenditure at the time of its payment.  

Besides the  payments made against the year's appropriations,  the appropriations for  that year that  are 
carried  forward  to  the  next  year  also need  to  be  taken  into  account  in  calculating  the  budget  result  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 from previous years, and the cancellation of unused 
payment appropriations. 

The  movement  in  provisions  relates  to  year-end  estimates  made  in  the  financial  statements  (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. 

110 

 
 
 
4. 

IMPLEMENTATION OF EU BUDGET REVENUE 

Annual accounts of the European Union 2014 

4.1.  SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE 

Title 

Income appropriations 

Entitlements established 

Initial 
adopted 
budget 
133 960 
– 

Final adopted 
budget 

Current  year Carried  over 

128 388 
5 101 

128 853 
10 507 

Total 

128 899 
10 507 

On 
entitlements 
current year 
128 841 
5 100 

Revenue 
On 
entitlements 
carried over 
 25 
– 

Receipts as  
% of budget 

EUR millions 
Outstanding 

Total 

128 867 
5 100 

100.37% 
99.98% 

 32 
5 407 

1 275 

1 275 

1 248 

1 260 

1 240 

 11 

1 251 

98.14% 

 46 
– 

 12 

 54 

 54 

 578 

 21 

 599 

 563 

 15 

 578 

1075.46% 

 60 

 60 

3 267 

 228 

3 496 

3 120 

 105 

3 225 

5374.97% 

 271 

 123 

3 973 

2 206 

10 416 

12 622 

1 131 

3 475 

4 607 

115.95% 

8 016 

8.  Borrowing and lending 

 2 

 153 

 46 

 255 

 301 

 43 

 254 

 297 

193.72% 

 3 

operations 

9.  Miscellaneous revenue 

  Total 

 30 
135 505 

 30 
139 034 

 15 
146 721 

 10 
10 988 

 25 
157 709 

 13 
140 052 

 2 
3 888 

 15 
143 940 

50.01% 
103.53% 

 10 
13 769 

1.  Own resources 
3.  Surpluses, balances and 

adjustments 

4.  Revenue accruing from persons 
working with the institutions 
and other Union bodies 
5.  Revenue accruing from the 

administrative operation of the 
institutions 

6.  Contributions and refunds in 

connection with Union 
agreements and programmes 
7.  Interests on late payments and 

fines 

11.  Sugar levies 
12.  Customs duties 
13.  VAT 
14.  GNI 
15.  Correction of budgetary 

imbalances 

  Total 

Chapter 

Income appropriations 

Entitlements established 

Detail Title 1: Own resources 

Initial budget 
voted 

Final adopted 
budget 

Current  year Carried  over 

 125 
16 186 
17 882 
99 767 
– 

 (90) 
16 174 
17 690 
94 614 
– 

 (69) 
16 485 
17 746 
94 863 
 (172) 

– 
 46 
– 
– 
– 

Total 

 (69) 
16 531 
17 746 
94 863 
 (172) 

On 
entitlements 
current year 
 (69) 
16 473 
17 746 
94 863 
 (172) 

Revenue 
On 
entitlements 
carried over 
– 
 25 
– 
– 
– 

 Total  

 (69) 
16 499 
17 746 
94 863 
 (172) 

77.12% 
102.01% 
100.32% 
100.26% 
0.00% 

133 960 

128 388 

128 853 

 46 

128 899 

128 841 

 25 

128 867 

100.37% 

111 

EUR millions 

Receipts as  
% of budget 

Outstanding 

 8 

 21 

– 
 32 
– 
– 
– 

 32 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUR millions 

Receipts as  
% of budget 

Outstanding 

Total 

1 005 
 (79) 
4 212 
 (2) 

100.00% 
97.59% 
100.87% 
0.00% 

 (18) 

0.00% 

 (19) 

0.00% 

– 
 (205) 
5 613 
– 

– 

– 

5 100 

99.98% 

5 407 

Chapter 

30.  Surplus from previous year 
31.  VAT balances 
32.  GNI balances 
34.  Adjustment for non-
participation in JHAP 

35.  United Kingdom correction - 

adjustments 

36.  United Kingdom correction - 
Intermediate calculation 

  Total 

Annual accounts of the European Union 2014 

Initial budget 
voted 

Income appropriations 

Entitlements established 

Final adopted 
budget 

Detail Title 3: Surpluses, balances and adjustments on own resources 
Revenue 
On 
entitlements 
carried over 
– 
– 
– 
– 

On 
entitlements 
current year 
1 005 
 (79) 
4 212 
 (2) 

1 005 
 (284) 
9 825 
 (2) 

1 005 
 (284) 
9 825 
 (2) 

1 005 
 (81) 
4 176 
– 

Current  year Carried  over 

– 
– 
– 
– 

– 
– 
– 
– 

Total 

– 

– 

– 

– 

– 

 (18) 

 (19) 

5 101 

10 507 

– 

– 

– 

 (18) 

 (19) 

 (18) 

 (19) 

10 507 

5 100 

– 

– 

– 

112 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

4.2.  REVENUE IMPLEMENTATION 

4.2.1.  Overview of 2014 revenue 

In  the  initial  adopted  EU  budget,  signed  by  the  President  of  the  European  Parliament  on 
20 November 2013, the amount of payment appropriations was EUR 135 505 million and the amount to 
be  financed  by  own  resources  totalled  EUR 133 960 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. 

During 2014,  seven amending budgets were  adopted.  Taking them into account,  the total final  adopted 
revenue  for  2014  amounted  to  EUR 139 034 million.  This  was  financed  by  own  resources  totalling 
EUR 128 388 million  (thus  EUR 5 572 million  less  than  initially  forecasted)  and  the  remainder  by  other 
revenue. The increased need for financing payment appropriations was covered mainly by income coming 
from fines. Moreover, the surplus from the previous financial year and extraordinary income coming from 
the  VAT  and  GNI  adjustments  of  previous  years  reduced  substantially  Member  States'  GNI  balancing 
contribution. 

The Amending Budgets No. 2 and No. 3/2014 included fines and related interest on undertakings totalling 
EUR 3 850 million  that  were  known  at  the  time  when  the  corresponding  Draft  Amending  Budgets  were 
established. By 31 December 2014, other fines became definitive, either after a definitive judgement or 
because companies did not appeal new fine decisions. 

Revenue, contributions and refunds in connection with EU agreements and programmes total an amount 
of EUR 3 225 million. The principal amounts concern the EAGF and EAFRD (and in particular the clearance 
of  accounts  and  irregularities),  the  participation  of  third  countries  in  research  programs  and  other 
contributions  and  refunds  to  EU  programs/activities.  A  substantial  part  of  this  total  is  made  up  of 
earmarked  revenue,  which  typically  gives  rise  to  the  entering  of  additional  appropriations  on  the 
expenditure side. 

As far as the own resources result is concerned, the collection of traditional own resources was close to 
the  forecasted  amounts.  This  is  primarily  because  the  budget  estimates  that  were  modified  at  the  time 
the  Draft  Amending  Budget  No.  4/2014  was  established  (they  were  decreased  by  EUR 646 million 
according to the new forecasts of spring 2014), were once again amended in the Draft Amending Budget 
No.  6/2014  to  take  into  account  the  actual  rhythm  of  collection.  Thus  they  were  increased  by 
EUR 420 million. 

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. 

The adjustment in 2014 included major revisions for the GNI dating back to 2002. Thus the adjustment 
was unprecedented in size totalling EUR 9.5 billion across all EU Member States. In order to address the 
exceptional  situation,  the  Council  adopted  on  18  December  a  Commission  proposal  (Council  Regulation 
(EU, Euratom) No 1377/2014 of 18 December 2014) allowing Member States to defer payment, interest 
free,  under  strict  conditions,  up  to  1  September  2015.  Accordingly  6  Member  States  opted  to  pay  their 
adjustments in 2015. The deferred payment amounts to EUR 5.4 billion. 

The  amount  of  own  resources  to  be  received  relates  to  the  Amending  Budgets  Numbers  2  to  7/2014 
adopted on 17 December 2014. According to Article 10 of Council Regulation 1150/2000 of 22 May 2000 
(OJ L 130,  31.5.2000,  p. 1)  the  entries  corresponding  to  the  readjustments  of  own  resources 
contributions  were  carried  out  on  the  first  working  day  of  February  2015.  The  adjustments  to  Member 
States’  national  EU  budget  contributions  based  on  VAT  and  GNI  takes  place  every  year  on  the  first 
working day of December. 

113 

 
 
 
 
Annual accounts of the European Union 2014 

4.2.2.  Own resources revenue 

The vast majority of revenue comes from own resources. This is laid down in Article 311 of the Treaty on 
the  Functioning  of  the  EU,  which  states  that:  "Without  prejudice  to  other  revenue,  the  budget  shall  be 
financed wholly from own resources." The bulk of budgetary expenditure is financed by own resources.  

Own resources can be divided into the following categories: 

(1) Traditional own resources (TOR) consist of customs duties and sugar levies. These own resources are 
levied on economic operators and collected by Member States on behalf of the EU. However, Member 
States keep 25 % as a compensation for their collection costs (20 % as of 2014). Customs duties are 
levied on imports of products coming from third countries, at rates based on the Common Customs 
Tariff. Sugar levies are paid by sugar producers to finance the export refunds for sugar. TOR usually 
account for +/- 13 % of own resource revenue. 

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

(3) The resource based on gross national income (GNI) is used to balance budget revenue and 

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

The  allocation  of  own  resources  is  made  in  accordance  with  the  rules  laid  down  in  the  Council  Decision 
No. 2007/436/EC, Euratom of 7 June 2007 on the system of the EU's own resources (ORD 2007). A new 
decision establishing the system of the EU’s own resources has been adopted for the 2014-2020 period 
(ORD 2014: Council Decision No. 2014/335/EU, Euratom of 26 May 2014). The 2014 ORD will enter into 
force after it has been ratified by all Member States according to their constitutional rules (expected for 
beginning of 2016). Until then, the 2007 ORD remains valid.  The retroactive effects (the ORD 2014  will 
apply from 1 January 2014) will be taken into account in the budgetary year when the decision will enter 
into force. 

4.2.3. 

Traditional own resources 

Traditional  own  resources:  All  established  traditional  own  resource  amounts  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 quarterly statement to the Commission 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 Regulation 
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 
(20 % according to the 2014 ORD). The contingent own resources entitlements are adjusted on the basis 
of the likelihood of their recovery. 

114 

 
 
Annual accounts of the European Union 2014 

4.2.4.  VAT-based resources and GNI-based resources 

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)(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 was 
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. According to the 2014 ORD, the rate of call will remain at 
0.3 %, except for the period 2014-20 the rate of call for Germany, the Netherlands and Sweden will be 
fixed at 0.15 %. 

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  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. 
The  Council  adopted  on  18  December  2014  Regulation  (EU,  Euratom)  No  1377/2014  which  allows 
Member States, under certain conditions, to defer making available the amounts of VAT and GNI balances 
until the first working day of September of the following year. 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. 

4.2.5.  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). 

4.2.6.  Gross reduction 

The  European  Council  of  15  and  16  December  2005  concluded  that  the  Netherlands  and  Sweden  shall 
benefit  from  gross  reductions  in  their  annual  GNI-based  contributions  during  the  period  2007-2013. 
Reflecting  these  conclusions,  the  2007  ORD  provides  that  the  Netherlands  shall  benefit  from  a  gross 
reduction  in  its  annual  GNI  contribution  of  EUR 605 million  and  Sweden  from  a  gross  reduction  in  its 
annual  GNI  contribution  of  EUR 150 million,  measured  at  2004  prices.  The  European  Council  of  7-8 
February  2013  concluded  that  Denmark,  the  Netherlands  and  Sweden  are  to  benefit  from  gross 
reductions in their annual contributions based on gross national income (GNI) for the period 2014-2020 
only  and  that  Austria  is  to  benefit  from  gross  reductions  in  its  annual  GNI-based  contributions  for  the 
period  2014-2016  only.  Denmark,  the  Netherlands  and  Sweden  shall  benefit  from  gross  reductions  in 
their  annual  GNI-based  contribution  of  EUR 130 million,  EUR 695 million  and  EUR 185 million 
respectively.  Austria  shall  benefit  from  a  gross  reduction  in  its  annual  GNI-based  contribution  of 
EUR 30 million in 2014, EUR 20 million in 2015 and EUR 10 million in 2016 (all amounts in 2011 prices). 
These  provisions  were  taken  up  in  the  2014  ORD  and  will  be  applied  (retroactively)  after  its  entry  into 
force. 

115 

 
 
 
5. 

IMPLEMENTATION OF EU BUDGET EXPENDITURE 

Annual accounts of the European Union 2014 

5.1.  MFF: BREAKDOWN & CHANGES IN COMMITMENT & PAYMENT APPROPRIATIONS 

Commitment appropriations 

Payment appropriations 

Initial adopted 
budget 

Budget appropriations 
Amending 
budgets & 
Transfers 
2 

Additional 
appropriations 

Final adopted 
budget 

Carry-overs   Assigned 
revenue 

Total 
appropri- 
ations 
available 

Budget appropriations 

Initial adopted 
budget 

Final adopted 
budget 

Additional 
appropriations 
Carry-overs   Assigned 
revenue 

1 
63 986 

3=1+2 

 (0) 

63 986 

4 
 150 

5 
3 474 

6=3+4+5 
67 611 

7 
62 393 

9=7+8 

65 863 

10 

 289 

11 
3 548 

12=9+10+11 

69 699 

16 484 

47 502 

– 

– 

16 484 

 0 

2 645 

19 129 

11 441 

 415 

11 857 

47 502 

 150 

 830 

48 482 

50 951 

3 055 

54 006 

59 267 

 (76) 

59 191 

43 778 

– 

43 778 

2 172 
8 325 
8 405 
3 532 

2 172 
8 423 
8 405 
3 531 

– 

– 

 3 
 6 
 1 
 1 

2 105 

61 296 

56 459 

 (500) 

55 959 

1 724 

45 502 

43 777 

 (1) 

43 776 

 81 
 571 
 765 
 399 

2 256 
9 000 
9 171 
3 931 

1 677 
6 191 
8 406 
3 532 

 (17) 
 734 
 0 
– 

1 660 
6 925 
8 406 
3 531 

 128 

 161 

 35 

 13 

 10 
 35 
 772 
 452 

3 323 

15 308 

 224 

54 392 

1 968 

57 962 

1 724 

45 514 

 78 
 521 
 862 
 492 

1 747 
7 481 
10 040 
4 475 

Amending 
budgets & 
Transfers 
8 
3 470 

EUR millions 

Total 
appropri- 
ations 
available 

MFF Heading 

1.  Smart and inclusive 

growth 

1a: Competitiveness 
for growth and jobs 
1b: Economic, social 
and territorial 
cohesion 
2.   Sustainable growth: 
natural resources 

of which: market 
related expenditure 
and direct payments 
3.  Security and citizenship 
4.  Global Europe 
5.  Administration 

of which: 
Administrative 
expenditure of the 
institutions 

6.  Compensations 
8.  Negative reserve 
9.  Special Instruments 

  Total 

 29 
– 
 456 
142 640 

 0 
 98 
 (1) 
– 

– 
– 
 29 
 50 

 29 
– 
 485 
142 690 

– 
– 
 18 
 179 

– 
– 
 74 
7 070 

 29 
– 
 577 
149 939 

 29 
– 
 350 
135 505 

– 
– 
 (157) 
3 530 

 29 
– 
 193 
139 034 

– 
– 
 270 
1 410 

– 
– 
 74 
7 050 

 29 
– 
 536 
147 495 

116 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.2.  MFF: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS 

Annual accounts of the European Union 2014 

MFF Heading 

Total 
appropriation
s available 

From final 
adopted budget 

From 
carry-
overs 

From 
assigned 
revenue 

Total 

% 

Commitments made 

Appropriations carried over to 2015 
% 

Total 

Assigned 
revenue 

Carry-overs 
by decision 

Appropriations lapsing 

From final 
adopted 
budget 

From 
carry-
overs 

Assigned 
revenue 
(EFTA) 

Total 

% 

EUR millions 

1 

67 611 
19 129 

2 

44 260 
16 466 

3 

 150 
 0 

4 

5=2+3+4 

6=5/1 

7 

8 

9=7+8 

10=9/1 

11 

12 

13 

1 561 
1 552 

45 972 
18 018 

67.99% 
94.19% 

1 913 
1 092 

8 480  10 392 
1 092 

– 

15.37% 
5.71% 

11 246 
 18 

1.  Smart and inclusive growth 
1a: Competitiveness for 
growth and jobs 
1b: Economic, social and 
territorial cohesion 
2.  Sustainable growth: natural 

resources 

of which: market related 
expenditure and direct 
payments 

3.  Security and citizenship 
4.  Global Europe 
5.  Administration 

of which: Administrative 
expenditure of the 
institutions 

6.  Compensations 
8.  Negative reserve 
9.  Special Instruments 

  Total 

48 482 

27 794 

 150 

 9 

27 954 

57.66% 

 820 

8 480 

9 300 

19.18% 

11 228 

61 296 

46 866 

45 502 

42 910 

2 256 
9 000 
9 171 
3 931 

1 463 
8 280 
8 313 
3 445 

– 

– 

 3 
 6 
 1 
 1 

 29 
– 
 577 
149 939 

 29 
– 
 45 
109 256 

– 
– 
 18 
 179 

1 397 

48 263 

78.74% 

 708 

2 866 

3 575 

5.83% 

9 458 

1 383 

44 293 

97.34% 

 341 

 868 

1 209 

2.66% 

 0 

 41 
 203 
 571 
 343 

1 507 
8 489 
8 884 
3 789 

66.81% 
94.32% 
96.87% 
96.40% 

 40 
 368 
 195 
 56 

 254 
 136 
 4 
 4 

 294 
 504 
 199 
 60 

13.02% 
5.60% 
2.17% 
0.00% 

 455 
 7 
 88 
 82 

– 
– 
– 

 29  100.00% 
0.00% 
11.06% 
3 772  113 208  75.50% 

– 
 64 

– 
– 
 74 
3 297 

– 
– 
 361 

0.00% 
– 
0.00% 
– 
 435 
75.37% 
12 101  15 399  10.27% 

– 
– 
 78 
21 333 

117 

14=11+1
2+13 
 0  11 247 
 19 
 0 

15=14/1 

16.63% 
0.10% 

–  11 228 

23.16% 

– 

– 

– 
 0 
– 
– 

9 458 

15.43% 

 0 

0.00% 

 455 
 7 
 88 
 82 

20.17% 
0.07% 
0.96% 
2.09% 

0.00% 
– 
0.00% 
– 
– 
13.57% 
 0  21 333  14.23% 

– 
– 
 78 

– 
– 

– 

– 

– 

– 
– 
– 
– 

– 
– 
– 
– 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.3.  MFF: IMPLEMENTATION OF PAYMENT APPROPRIATIONS 

Annual accounts of the European Union 2014 

MFF Heading 

Total 
appropriati
ons 
available 

From final 
adopted 
budget 

From 
carry-overs 

Payments made 
From 
assigned 
revenue 

Total 

% 

Automatic 
carry-overs 

Appropriations carried over 
Total 
Assigned 
revenue 

Carry-
overs by 
decision 

% 

From final 
adopted 
budget 

EUR millions 

From 
carry-overs 

Appropriations lapsing 
Assigned 
revenue 
(EFTA) 

Total 

% 

1 

2 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9 

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

12 

13 

14 

1.  Smart and 

69 699 

65 730 

 267 

1 686 

67 683 

97.11% 

 121 

15 308 

11 740 

 108 

1 483 

13 331 

87.09% 

 104 

 0 

 0 

1 860 

1 980 

2.84% 

1 838 

1 943 

12.69% 

 12 

 12 

 22 

 20 

15=12+ 
13+14 
 36 

16= 15/1 

0.05% 

 33 

0.22% 

 2 

0.00% 

 9 

0.02% 

 2 

0.00% 

 5 

0.31% 

 8 
 161 
 132 

0.10% 
1.61% 
2.94% 

– 
– 
 0 

0.00% 
0.00% 
0.02% 

 2 

 2 

– 

– 

– 

 0 

 0 
– 
– 

– 
– 
– 

54 392 

53 990 

 159 

 203 

54 352 

99.93% 

 16 

– 

 21 

 38 

0.07% 

 0 

 2 

57 962 

55 050 

 33 

1 502 

56 584 

97.62% 

 34 

 868 

 467 

1 369 

2.36% 

45 514 

42 891 

 12 

1 383 

44 287 

97.30% 

 16 

 868 

 341 

1 226 

2.69% 

1 747 

1 648 

 8 

 55 

1 711 

97.94% 

 8 

7 481 
10 040 
4 475 

6 880 
7 643 
3 027 

 29 
– 
 536 

 29 
– 
 157 

 29 
 697 
 402 

– 
– 
 270 

 297 
 480 
 300 

7 206 
8 819 
3 729 

96.32% 
87.84% 
83.33% 

 34 
 673 
 418 

– 
– 
 38 

 29  100.00% 
0.00% 
86.70% 

– 
 465 

– 
– 
 0 

 0 

 9 
 4 
 4 

– 
– 
 36 

 23 

 31 

1.75% 

 224 
 382 
 192 

 267 
1 060 
 614 

3.57% 
10.55% 
13.72% 

– 
– 
 35 

– 
– 
 71 

0.00% 
0.00% 
13.28% 

 7 

 0 

 4 

 2 
 86 
 82 

– 
– 
 0 

 2 

 1 

 2 

 6 
 75 
 50 

– 
– 
 0 

147 495  137 136 

1 304 

4 057  142 497  96.61% 

 870 

 917 

2 991 

4 778 

3.24% 

 112 

 106 

 2 

 220 

0.15% 

118 

inclusive growth 

1a: 
Competitiveness 
for growth and 
jobs 
1b: Economic, 
social and 
territorial 
cohesion 
2.  Sustainable 

growth: natural 
resources 

of which: 
market related 
expenditure and 
direct payments 

3.  Security and 
citizenship 
4.  Global Europe 
5.  Administration 

of which: 
Administrative 
expenditure of 
the institutions 

6.  Compensations 
8.  Negative reserve 
9.  Special 

Instruments 
Total 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.4.  MFF: MOVEMENTS IN COMMITMENTS OUTSTANDING (RAL) 

Annual accounts of the European Union 2014 

Commitments outstanding at the end of the previous year 

Commitments of the year 

MFF Heading 

1. 

Smart and inclusive growth 

1a: Competitiveness for growth 
and jobs 
1b: Economic, social and territorial 
cohesion 

Commitments 
carried forward 
from previous 
year 

166 761 
29 657 

Decommitments 
/Revaluations/ 
Cancellations 

Payments  

Commitments 
outstanding at 
year-end 

Commitments 
made during the 
year 

Payments 

Cancellation of 
commitments 
which cannot be 
carried over 

Commitments 
outstanding at 
year-end 

(2 037) 
 (808) 

(60 662) 
(8 167) 

104 062 
20 681 

45 972 
18 018 

(7 021) 
(5 164) 

38 947 
12 850 

137 105 

(1 229) 

(52 494) 

83 381 

27 954 

(1 857) 

2.   Sustainable growth: natural 

27 978 

 (275) 

(11 930) 

15 773 

48 263 

(44 655) 

resources 

of which: market related 
expenditure and direct payments 

Security and citizenship 

3. 
4.  Global Europe 
Administration 
5. 

of which: Administrative 
expenditure of the institutions 

Compensations 

6. 
8.  Negative reserve 
9. 

Special Instruments 
Total 

 40 

3 092 
23 285 
 892 
 557 

– 
– 
 401 
222 410 

 (3) 

 (21) 

 16 

44 293 

(44 266) 

 (306) 
 (721) 
 (182) 
 (156) 

– 
– 
 (0) 
(3 522) 

 (944) 
(5 490) 
 (709) 
 (402) 

– 
– 
 (401) 
(80 136) 

1 841 
17 075 
 1 
– 

– 
– 
– 
138 753 

1 507 
8 489 
8 884 
3 789 

 29 
– 
 64 
113 208 

 (767) 
(1 716) 
(8 110) 
(3 328) 

 (29) 
– 
 (64) 
(62 361) 

119 

EUR millions 

Total 
Commitments 
outstanding at 
year-end 

143 009 
33 532 

26 096 

109 477 

3 609 

19 382 

 27 

 740 
6 772 
 765 
 453 

– 
– 
 0 
50 832 

 43 

2 582 
23 846 
 766 
 453 

– 
– 
 0 
189 585 

 (4) 
 (4) 

 (0) 

 (0) 

– 

– 
 (1) 
 (9) 
 (8) 

– 
– 
– 
 (14) 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.5.  MFF: BREAKDOWN OF COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN 

Annual accounts of the European Union 2014 

MFF Heading 

<2008 

2008 

2009 

2010 

2011 

11 007 
3 001 

2012 

27 951 
5 451 

2013 

2014 

55 870 
8 230 

38 947 
12 850 

EUR millions 
Total 

143 009 
33 532 

8 007 

22 500 

47 640 

26 096 

109 477 

 193 

 0 

 261 
2 800 
– 
– 

– 
– 
– 
14 261 

3 524 

11 459 

3 609 

19 382 

 9 

 497 
4 686 
 0 
– 

– 
– 
– 
36 658 

 7 

 807 
5 928 
 1 
– 

– 
– 
 0 
74 066 

 27 

 740 
6 772 
 765 
 453 

– 
– 
 0 
50 832 

 43 

2 582 
23 846 
 766 
 453 

– 
– 
 0 
189 585 

1. 

Smart and inclusive growth 

1a: Competitiveness for growth 
and jobs 
1b: Economic, social and territorial 
cohesion 

2.   Sustainable growth: natural 

resources 

of which: market related 
expenditure and direct payments 

Security and citizenship 

3. 
4.  Global Europe 
Administration 
5. 

of which: Administrative 
expenditure of the institutions 

Compensations 

6. 
8.  Negative reserve 
9. 

Special Instruments 
Total 

2 915 
 255 

2 660 

 338 

 0 

 14 
 944 
– 
– 

– 
– 
– 
4 211 

 414 
 211 

 203 

 50 

– 

 31 
 539 
– 
– 

– 
– 
– 
1 034 

1 578 
1 260 

 318 

 93 

– 

 73 
 842 
– 
– 

– 
– 
– 
2 586 

4 327 
2 274 

2 053 

 116 

 0 

 158 
1 336 
– 
– 

– 
– 
– 
5 937 

120 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

5.6.  POLICY AREA: BREAKDOWN AND CHANGES IN COMMITMENT AND PAYMENT 

APPROPRIATIONS 

Commitment appropriations 

Payment appropriations 

Policy Area 

01  Econom. & fin. affairs 
02  Enterprise and Industry 
03  Competition 
04  Empl., social aff. & incl. 
05  Agriculture & rural dev. 
06  Mobility and transport 
07  Environment 
08  Research & Innovation 
09  Commun. networks, 

content and technology 

10  Direct research 
11  Maritime aff & Fisheries 
12  Intern. market & serv. 
13  Regional & urban policy 
14  Taxation & cust. union 
15  Education and culture 
16  Communication 
17  Health & consum. prot. 
18  Home affairs 
19  Foreign pol. instr. 
20  Trade 
21  Develop. & Cooperation 
22  Enlargement 
23  Human. aid & Civil prot. 
24  Fight against fraud 
25  Commission's policy 
coord. & legal advice 
26  Commission’s admin. 
27  Budget 
28  Audit 
29  Statistics 
30  Pensions & related exp. 
31  Language Services 
32  Energy 
33  Justice 
34  Climate action 
40  Reserves 
90  Other Institutions 

  Total 

Initial adopted 
budget 

Budget appropriations 
Amending 
budgets & 
Transfers 
2 

1 

Final adopted 
budget 

3=1+2 

 213 
2 536 
 94 
13 839 
58 047 
2 867 
 407 
6 215 
1 637 

 425 
1 066 
 117 
33 073 
 157 
2 820 
 246 
 618 
1 201 
 733 
 121 
5 084 
1 520 
1 006 
 78 
 194 

1 001 
 96 
 12 
 132 
1 450 
 388 
 933 
 203 
 121 
 456 
3 532 
142 640 

 20 
 (10) 
 (1) 
 90 
 (22) 
 (7) 
 1 
 (53) 
 (26) 

 (23) 
 (76) 
 1 
 81 
 0 
 57 
 2 
 (2) 
 0 
 (55) 
 (2) 
 121 
 (45) 
 158 
 (2) 
 (0) 

 (40) 
 (11) 
 (0) 
 0 
 44 
 3 
 24 
 2 
 0 
 (179) 
 (0) 
 50 

 233 
2 526 
 93 
13 929 
58 025 
2 860 
 408 
6 162 
1 612 

 401 
 991 
 118 
33 154 
 158 
2 877 
 248 
 616 
1 202 
 678 
 119 
5 204 
1 475 
1 164 
 77 
 194 

 961 
 84 
 12 
 132 
1 494 
 391 
 958 
 205 
 122 
 277 
3 531 
142 690 

Additional 
appropriations 

Carried 
over 

Assigned 
revenue 

Total 
appropriation
s 
available 

4 

– 
– 
– 
 168 
– 
– 
– 
– 
– 

– 
– 
 0 
– 
– 
– 
– 
 1 
 2 
 5 
– 
 1 
– 
– 
– 
– 

 0 
– 
– 
– 
– 
– 
– 
– 
– 
– 
 1 
 179 

5 

 118 
 228 
 6 
 581 
2 117 
 71 
 22 
1 031 
 148 

 580 
 30 
 15 
 354 
 7 
 453 
 11 
 26 
 39 
 55 
 3 
 263 
 13 
 75 
 1 
 11 

 162 
 8 
 1 
 14 
 2 
 87 
 128 
 11 
 1 
– 
 399 
7 070 

6=3+4+5 
 351 
2 754 
 100 
14 678 
60 141 
2 931 
 430 
7 193 
1 759 

 982 
1 021 
 133 
33 508 
 164 
3 330 
 259 
 643 
1 243 
 739 
 122 
5 469 
1 488 
1 240 
 77 
 205 

1 124 
 92 
 12 
 146 
1 495 
 478 
1 086 
 216 
 122 
 277 
3 931 
149 939 

121 

Initial adopted 
budget 

7 

 297 
2 105 
 94 
11 622 
55 635 
1 003 
 346 
4 107 
 961 

 420 
 780 
 117 
40 223 
 122 
2 242 
 245 
 567 
 763 
 463 
 115 
3 658 
 904 
 851 
 75 
 195 

 991 
 96 
 12 
 152 
1 450 
 388 
 588 
 193 
 43 
 150 
3 532 
135 505 

Budget appropriations 

Additional 
appropriations 

Final adopted 
budget 

Carried over 

Assigned 
revenue 

Amending 
budgets & 
Transfers 
8 

9=7+8 

10 

11 

12=9+10+11 

EUR millions 

Total 
appropriation
s 
available 

 2 
 60 
 (1) 
 (341) 
 (518) 
 1 
 1 
 (11) 
 107 

 (23) 
 8 
 (3) 
3 244 
 10 
 178 
 6 
 (13) 
 5 
 74 
 1 
 286 
 (12) 
 564 
 0 
 (0) 

 (30) 
 (11) 
 (0) 
 (21) 
 44 
 3 
 68 
 (6) 
 9 
 (150) 
 (0) 
3 530 

 300 
2 165 
 93 
11 280 
55 117 
1 004 
 347 
4 096 
1 068 

 397 
 788 
 114 
43 467 
 133 
2 420 
 251 
 553 
 768 
 537 
 116 
3 944 
 892 
1 415 
 75 
 195 

 961 
 84 
 12 
 131 
1 494 
 391 
 656 
 187 
 52 
– 
3 531 
139 034 

 8 
 14 
 8 
 51 
 22 
 6 
 18 
 35 
 16 

 55 
 5 
 6 
 391 
 7 
 12 
 14 
 12 
 4 
 3 
 3 
 26 
 5 
 8 
 9 
 15 

 160 
 7 
 1 
 6 
– 
 20 
 5 
 4 
 3 
– 
 452 
1 410 

 121 
 308 
 6 
 191 
1 981 
 80 
 19 
1 490 
 259 

 497 
 30 
 15 
 136 
 6 
 537 
 11 
 25 
 31 
 52 
 3 
 222 
 12 
 75 
 1 
 11 

 164 
 8 
 1 
 22 
 2 
 87 
 144 
 12 
 1 
– 
 492 
7 050 

 429 
2 486 
 107 
11 522 
57 120 
1 089 
 384 
5 621 
1 343 

 949 
 823 
 134 
43 995 
 146 
2 969 
 276 
 590 
 803 
 593 
 123 
4 192 
 908 
1 498 
 84 
 221 

1 285 
 99 
 13 
 160 
1 495 
 498 
 805 
 202 
 55 
– 
4 475 
147 495 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

5.6.1. 

POLICY AREA: COMPARISON OF BUDGET AND ACTUAL COMMITMENTS 

  Policy Area 

Initial 
adopted 
budget 

Amending 
budgets  & 
transfers 

Final 
adopted 
budget 

Additional 
appropri- 
ations* 

Total 
appropria-
tions 
available 

EUR millions 

Commitments 
made 

01 Economic and financial 

 213 

 20 

 233 

 118 

 351 

 236 

affairs 

02 Enterprise and Industry 
03 Competition 
04 Employment, social affairs 

2 536 
 94 
13 839 

 (10) 
 (1) 
 90 

2 526 
 93 
13 929 

 228 
 6 
 750 

2 754 
 100 
14 678 

2 608 
 97 
10 312 

and inclusion 

05 Agriculture and rural 

58 047 

 (22) 

58 025 

2 117 

60 141 

47 789 

development 

06 Mobility and transport 
07 Environment 
08 Research and Innovation 
09 Communications networks, 
content and technology 

10 Direct research 
11 Maritime affairs and 

Fisheries 

2 867 
 407 
6 215 
1 637 

 425 
1 066 

 (7) 
 1 
 (53) 
 (26) 

 (23) 
 (76) 

2 860 
 408 
6 162 
1 612 

 401 
 991 

 71 
 22 
1 031 
 148 

 580 
 30 

2 931 
 430 
7 193 
1 759 

 982 
1 021 

12 Internal market and 

 117 

 1 

 118 

 16 

 133 

services 

13 Regional and urban policy 
14 Taxation and customs union 
15 Education and culture 
16 Communication 
17 Health and consumer 

33 073 
 157 
2 820 
 246 
 618 

protection 
18 Home affairs 
19 Foreign policy instruments 
20 Trade 
21 Development and 

Cooperation 
22 Enlargement 
23 Humanitarian aid and Civil 

protection 

24 Fight against fraud 
25 Commission's policy 

coordination & legal advice 

1 201 
 733 
 121 
5 084 

1 520 
1 006 

 78 
 194 

 81 
– 
 57 
 2 
 (2) 

– 
 (55) 
 (2) 
 121 

 (45) 
 158 

 (2) 
– 

33 154 
 158 
2 877 
 248 
 616 

1 202 
 678 
 119 
5 204 

1 475 
1 164 

 77 
 194 

 354 
 7 
 453 
 11 
 27 

 41 
 61 
 3 
 264 

 13 
 75 

 1 
 11 

33 508 
 164 
3 330 
 259 
 643 

1 243 
 739 
 122 
5 469 

1 488 
1 240 

 77 
 205 

2 879 
 423 
7 002 
1 708 

 535 
 218 

 123 

17 078 
 160 
3 223 
 252 
 624 

 523 
 687 
 120 
5 353 

1 440 
1 187 

 77 
 198 

26 Commission’s 
administration 

27 Budget 
28 Audit 
29 Statistics 
30 Pensions and related 

expenditure 

31 Language Services 
32 Energy 
33 Justice 
34 Climate action 
40 Reserves 
90 Other Institutions 
Total 

1 001 

 (40) 

 961 

 162 

1 124 

1 070 

 96 
 12 
 132 
1 450 

 388 
 933 
 203 
 121 
 456 
3 532 
142 640 

 (11) 
– 
– 
 44 

 84 
 12 
 132 
1 494 

 3 
 24 
 2 
– 
 (179) 
– 

 391 
 958 
 205 
 122 
 277 
3 531 
 50  142 690 

 8 
 1 
 14 
 2 

 87 
 128 
 11 
 1 
– 
 400 
7 249 

 92 
 12 
 146 
1 495 

 478 
1 086 
 216 
 122 
 277 
3 931 
149 939 

 89 
 12 
 140 
1 493 

 444 
 990 
 209 
 122 
– 
3 789 
113 208 

* Additonal appropriations include appropriations carried over from previous year,  assigned revenue and appropriations made available 
again following decommitments. 

122 

 
 
 
 
 
 
 
 
 
 
 
5.7.  POLICY AREA: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS 

Annual accounts of the European Union 2014 

Policy Area 

Commitments made 

Total 
appropriation
s available 

From final 
adopted budget 

From 
carry-
overs 

From 
assigned 
revenue 

Total 

% 

Appropriations carried over to 2015 
% 

Total 

Assigned 
revenue 

Carry-overs 
by decision 

Appropriations lapsing 

From final 
adopted 
budget 

From 
carry-
overs 

Assigned 
revenue 
(EFTA) 

Total 

% 

EUR millions 

4 

5=2+3+4 

6=5/1 

7 

8 

9=7+8 

10=9/1 

11 

12 

13 

01  Economic and financial affairs 
02  Enterprise and Industry 
03  Competition 
04  Employment, social affairs and 

inclusion 

1 

 351 
2 754 
 100 
14 678 

2 

 233 
2 526 
 93 
10 139 

3 

– 
– 
– 
 168 

05  Agriculture and rural 

60 141 

46 400 

2 931 
 430 
7 193 
1 759 

 982 
1 021 
 133 
33 508 
 164 
3 330 
 259 
 643 
1 243 
 739 
 122 
5 469 
1 488 
1 240 

 77 
 205 

1 124 
 92 
 12 
 146 
1 495 

2 854 
 407 
6 162 
1 612 

 401 
 216 
 118 
17 066 
 157 
2 877 
 246 
 604 
 508 
 661 
 118 
5 195 
1 434 
1 163 

 77 
 192 

 960 
 84 
 12 
 131 
1 493 

development 

06  Mobility and transport 
07  Environment 
08  Research and Innovation 
09  Communications networks, 
content and technology 

10  Direct research 
11  Maritime affairs and Fisheries 
12  Internal market and services 
13  Regional and urban policy 
14  Taxation and customs union 
15  Education and culture 
16  Communication 
17  Health and consumer protection 
18  Home affairs 
19  Foreign policy instruments 
20  Trade 
21  Development and Cooperation 
22  Enlargement 
23  Humanitarian aid and Civil 

protection 

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 
32  Energy 
33  Justice 
34  Climate action 
40  Reserves 
90  Other Institutions 

  Total 

 3 
 82 
 3 
 5 

 236 
2 608 
 97 
10 312 

67.1% 
94.7% 
97.2% 
70.3% 

 115 
 146 
 3 
 576 

– 
– 
– 
2 161 

 115 
 146 
 3 
2 737 

32.9% 
5.3% 
2.8% 
18.6% 

 0 
 0 
 0 
1 629 

1 389 

47 789 

79.5% 

 728 

2 912 

3 640 

6.1% 

8 712 

 25 
 16 
 840 
 97 

 134 
 2 
 5 
 11 
 2 
 347 
 6 
 19 
 13 
 21 
 2 
 157 
 6 
 24 

– 
 6 

 110 
 4 
 0 
 8 
– 

2 879 
 423 
7 002 
1 708 

 535 
 218 
 123 
17 078 
 160 
3 223 
 252 
 624 
 523 
 687 
 120 
5 353 
1 440 
1 187 

 77 
 198 

1 070 
 89 
 12 
 140 
1 493 

98.2% 
98.3% 
97.3% 
97.1% 

54.5% 
21.4% 
92.3% 
51.0% 
97.2% 
96.8% 
97.3% 
97.0% 
42.1% 
93.1% 
97.9% 
97.9% 
96.8% 
95.8% 

98.9% 
96.6% 

95.3% 
96.6% 
96.6% 
95.7% 
99.8% 

 46 
 6 
 191 
 51 

 447 
 28 
 10 
 343 
 5 
 106 
 5 
 7 
 26 
 34 
 2 
 107 
 6 
 52 

 1 
 5 

 52 
 3 
 0 
 5 
 2 

– 
– 
– 
– 

– 
 28 
– 
6 481 
– 
– 
– 
 7 
 247 
 15 
 0 
 7 
 40 
– 

– 
– 

– 
– 
– 
– 
– 

 46 
 6 
 191 
 51 

 447 
 56 
 10 
6 824 
 5 
 106 
 5 
 13 
 273 
 49 
 2 
 114 
 46 
 52 

 1 
 5 

 52 
 3 
 0 
 5 
 2 

1.6% 
1.4% 
2.7% 
2.9% 

45.5% 
5.5% 
7.5% 
20.4% 
2.8% 
3.2% 
1.8% 
2.1% 
22.0% 
6.6% 
1.4% 
2.1% 
3.1% 
4.2% 

1.0% 
2.5% 

4.6% 
3.4% 
3.2% 
3.7% 
0.1% 

 6 
 1 
– 
 0 

– 
 746 
 0 
9 607 
 0 
 0 
 3 
 6 
 447 
 2 
 1 
 2 
 1 
 1 

 0 
 2 

 1 
– 
 0 
 1 
 1 

– 

– 
– 
– 
– 

– 
– 
 0 
– 
– 
– 
– 
 1 
 2 
 5 
– 
 1 
– 
– 

– 
– 

 0 
– 
– 
– 
– 

 478 
1 086 
 216 
 122 
 277 
3 931 
149 939 

 391 
 955 
 205 
 121 
– 
3 445 
109 256 

– 
– 
– 
– 
– 
 1 
 179 

 53 
 34 
 4 
 0 
– 
 343 

 444 
 990 
 209 
 122 
– 
3 789 
3 772  113 208 

92.9% 
91.1% 
96.5% 
99.4% 
0.0% 
96.4% 
75.5% 

 34 
 94 
 7 
 0 
– 
 56 
3 297 

– 
– 
– 
– 
 199 
 4 

 34 
 94 
 7 
 0 
 199 
 60 
12 101  15 399 

7.1% 
8.6% 
3.2% 
0.4% 
71.8% 
1.5% 
10.3% 

 0 
 3 
 1 
 0 
 78 
 82 
21 333 

123 

14=11+1
2+13 
 0 
 0 
 0 
1 629 

– 
– 
– 
 0 

15=14/1 

0.1% 
0.0% 
0.1% 
11.1% 

– 

8 712 

14.5% 

 0 
– 
– 
– 

– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
 0 
– 

– 
– 

– 
– 
– 
– 
– 

 7 
 1 
– 
 0 

– 
 746 
 0 
9 607 
 0 
 0 
 3 
 6 
 447 
 2 
 1 
 2 
 1 
 1 

 0 
 2 

 1 
– 
 0 
 1 
 1 

0.2% 
0.3% 
0.0% 
0.0% 

0.0% 
73.1% 
0.1% 
28.7% 
0.0% 
0.0% 
1.0% 
0.9% 
36.0% 
0.3% 
0.7% 
0.0% 
0.1% 
0.1% 

0.1% 
0.8% 

0.1% 
0.1% 
0.2% 
0.6% 
0.0% 

– 
 0 
 0 
 3 
– 
 1 
– 
 0 
– 
 78 
 82 
– 
 0  21 333 

0.0% 
0.3% 
0.4% 
0.2% 
28.2% 
2.1% 
14.2% 

– 
– 
– 
– 

– 

– 
– 
– 
– 

– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
– 

– 
– 

– 
– 
– 
– 
– 

– 
– 
– 
– 
– 
– 
– 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

5.7.1. 

POLICY AREA: COMPARISON OF BUDGET AND ACTUAL PAYMENTS 

  Policy Area 

Initial 
adopted 
budget 

Amending 
budgets  & 
transfers 

Final 
adopted 
budget 

Additional 
appropri- 
ations* 

Total 
appropria-
tions 
available 

EUR millions 

Payments 
made 

01 Economic and financial 

 297 

 2 

 300 

 129 

 429 

 306 

affairs 

02 Enterprise and Industry 
03 Competition 
04 Employment, social affairs 

2 105 
 94 
11 622 

 60 
 (1) 
 (341) 

2 165 
 93 
11 280 

 322 
 14 
 242 

2 486 
 107 
11 522 

2 237 
 96 
11 403 

and inclusion 

05 Agriculture and rural 

55 635 

 (518) 

55 117 

2 003 

57 120 

55 766 

 1 
 1 
 (11) 
 107 

 (23) 
 8 

1 004 
 347 
4 096 
1 068 

 397 
 788 

 85 
 37 
1 525 
 275 

 552 
 35 

 (3) 

 114 

 21 

3 244 
 10 
 178 
 6 
 (13) 

 5 
 74 
 1 
 286 

 (12) 
 564 

 0 
 (0) 

43 467 
 133 
2 420 
 251 
 553 

 768 
 537 
 116 
3 944 

 892 
1 415 

 75 
 195 

 528 
 13 
 549 
 25 
 37 

 35 
 55 
 7 
 248 

 17 
 83 

 9 
 26 

1 089 
 384 
5 621 
1 343 

 949 
 823 

 134 

43 995 
 146 
2 969 
 276 
 590 

 803 
 593 
 123 
4 192 

 908 
1 498 

 84 
 221 

1 037 
 362 
4 918 
1 184 

 508 
 805 

 119 

43 979 
 138 
2 673 
 257 
 571 

 789 
 552 
 118 
4 133 

 898 
1 430 

 75 
 199 

development 

06 Mobility and transport 
07 Environment 
08 Research and Innovation 
09 Communications networks, 
content and technology 

10 Direct research 
11 Maritime affairs and 

Fisheries 

12 Internal market and 

services 

1 003 
 346 
4 107 
 961 

 420 
 780 

 117 

13 Regional and urban policy 
14 Taxation and customs union 
15 Education and culture 
16 Communication 
17 Health and consumer 

40 223 
 122 
2 242 
 245 
 567 

 763 
 463 
 115 
3 658 

 904 
 851 

 75 
 195 

protection 
18 Home affairs 
19 Foreign policy instruments 
20 Trade 
21 Development and 

Cooperation 
22 Enlargement 
23 Humanitarian aid and Civil 

protection 

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 

 991 

 (30) 

 961 

 324 

1 285 

1 060 

 96 
 12 
 152 
1 450 

 (11) 
 (0) 
 (21) 
 44 

 84 
 12 
 131 
1 494 

 14 
 1 
 28 
 2 

 99 
 13 
 160 
1 495 

 88 
 12 
 139 
1 493 

31 Language Services 
 445 
32 Energy 
 733 
33 Justice 
 193 
34 Climate action 
 50 
40 Reserves 
– 
90 Other Institutions 
3 729 
142 497 
Total 
* Additonal appropriations include appropriations carried over from previous year,  assigned revenue and appropriations made available 
again following decommitments. 

 391 
 656 
 187 
 52 
– 
3 531 
3 530  139 034 

 388 
 588 
 193 
 43 
 150 
3 532 
135 505 

 498 
 805 
 202 
 55 
– 
4 475 
147 495 

 107 
 149 
 16 
 4 
– 
 944 
8 460 

 3 
 68 
 (6) 
 9 
 (150) 
 (0) 

124 

 
 
 
 
 
 
 
 
 
  
 
5.8.  POLICY AREA: IMPLEMENTATION OF PAYMENT APPROPRIATIONS 

EUR millions 

Annual accounts of the European Union 2014 

Policy Area 

Payments made 

From final 
adopted 
budget 

From 
carry-
overs 

From 
assigned 
revenue 

Total 

% 

Appropriations carried over 
Total 

Automatic 
carry-overs 

Carry-overs 
by decision 

Assigned 
revenue 

% 

From final 
adopted 
budget 

Appropriations lapsing 
From 
carry-
overs 

Assigned 
revenue 
(EFTA) 

Total 

Total 
appropriati
ons 
available 
1 

2 

3 

4 

5=2+3+4 

6=5/1 

 7 

 8 

 9 

10=7+8+
9 

11=10/1 

12 

13 

14 

01  Economic and financial affairs 
02  Enterprise and Industry 
03  Competition 
04  Employment, social affairs and 

 429 
2 486 
 107 
11 522 

 293 
2 144 
 87 
11 226 

inclusion 

05  Agriculture and rural 

57 120 

54 224 

development 

06  Mobility and transport 
07  Environment 
08  Research and Innovation 
09  Communications networks, 
content and technology 

10  Direct research 
11  Maritime affairs and Fisheries 
12  Internal market and services 
13  Regional and urban policy 
14  Taxation and customs union 
15  Education and culture 
16  Communication 
17  Health and consumer protection 
18  Home affairs 
19  Foreign policy instruments 
20  Trade 
21  Development and Cooperation 
22  Enlargement 
23  Humanitarian aid and Civil 

protection 

1 089 
 384 
5 621 
1 343 

 949 
 823 
 134 
43 995 
 146 
2 969 
 276 
 590 
 803 
 593 
 123 
4 192 
 908 
1 498 

 997 
 330 
4 080 
1 052 

 353 
 782 
 109 
43 456 
 128 
2 405 
 241 
 543 
 762 
 527 
 113 
3 917 
 885 
1 405 

24  Fight against fraud 
25  Commission's policy coordination 

 84 
 221 

 68 
 180 

& legal advice 

26  Commission’s administration 
27  Budget 
28  Audit 
29  Statistics 
30  Pensions and related expenditure 
31  Language Services 
32  Energy 
33  Justice 
34  Climate action 
40  Reserves 
90  Other Institutions 

  Total 

1 285 
 99 
 13 
 160 
1 495 
 498 
 805 
 202 
 55 
– 
4 475 

 833 
 79 
 11 
 126 
1 493 
 377 
 650 
 183 
 48 
– 
3 027 
147 495  137 136 

 7 
 12 
 7 
 48 

 20 

 5 
 18 
 28 
 15 

 47 
 4 
 5 
 390 
 6 
 11 
 13 
 11 
 4 
 2 
 3 
 23 
 4 
 8 

 6 
 13 

 5 
 81 
 3 
 129 

 306 
2 237 
 96 
11 403 

71.2% 
90.0% 
90.0% 
99.0% 

1 522 

55 766 

97.6% 

 35 
 15 
 810 
 117 

 108 
 19 
 5 
 133 
 3 
 257 
 4 
 17 
 22 
 24 
 2 
 193 
 9 
 17 

 0 
 5 

1 037 
 362 
4 918 
1 184 

 508 
 805 
 119 
43 979 
 138 
2 673 
 257 
 571 
 789 
 552 
 118 
4 133 
 898 
1 430 

95.2% 
94.5% 
87.5% 
88.2% 

53.6% 
97.8% 
88.6% 
100.0% 
94.7% 
90.1% 
93.3% 
96.7% 
98.2% 
93.2% 
95.9% 
98.6% 
98.8% 
95.4% 

 75 
 199 

88.6% 
90.1% 

 150 
 6 
 0 
 5 
– 
 19 
 4 
 3 
 2 
– 
 402 
1 304 

 77 
 3 
 0 
 8 
– 
 49 
 79 
 7 
 0 
– 
 300 

1 060 
 88 
 12 
 139 
1 493 
 445 
 733 
 193 
 50 
– 
3 729 
4 057  142 497 

82.5% 
89.2% 
92.6% 
86.9% 
99.8% 
89.5% 
91.0% 
95.1% 
91.1% 
0.0% 
83.3% 
96.6% 

125 

 7 
 18 
 7 
 15 

 23 

 5 
 16 
 16 
 16 

 43 
 3 
 4 
 11 
 4 
 13 
 10 
 10 
 3 
 4 
 3 
 25 
 6 
 7 

 7 
 13 

 128 
 6 
 0 
 5 
 0 
 14 
 5 
 3 
 3 
– 
 418 
 870 

– 
– 
– 
 36 

 116 
 227 
 3 
 62 

 122 
 245 
 10 
 112 

28.5% 
9.9% 
9.5% 
1.0% 

 868 

 459 

1 350 

2.4% 

– 
– 
– 
– 

– 
– 
– 
– 
– 
– 
 0 
– 
– 
 6 
– 
– 
– 
 3 

 0 
– 

 44 
 4 
 680 
 142 

 389 
 11 
 10 
 3 
 3 
 280 
 7 
 8 
 8 
 29 
 2 
 29 
 3 
 58 

 1 
 6 

– 
– 
– 
– 
– 
– 
– 
– 
– 
– 
 4 
 917 

 87 
 4 
 0 
 15 
 2 
 38 
 63 
 5 
 1 
– 
 192 
2 991 

 49 
 20 
 696 
 158 

 433 
 14 
 14 
 14 
 7 
 293 
 17 
 18 
 12 
 39 
 5 
 54 
 9 
 68 

4.5% 
5.2% 
12.4% 
11.7% 

45.6% 
1.7% 
10.1% 
0.0% 
5.1% 
9.9% 
6.2% 
3.0% 
1.5% 
6.6% 
3.9% 
1.3% 
1.0% 
4.5% 

 7 
 19 

8.8% 
8.5% 

 215 
 10 
 1 
 20 
 2 
 52 
 69 
 8 
 4 
– 
 614 
4 778 

16.7% 
10.3% 
6.7% 
12.2% 
0.1% 
10.4% 
8.5% 
4.1% 
6.4% 
0.0% 
13.7% 
3.2% 

 0 
 3 
 0 
 4 

 2 

 2 
 1 
– 
 0 

– 
 3 
 1 
 0 
 0 
 1 
 0 
 0 
 2 
 0 
 0 
 1 
 1 
 1 

 0 
 2 

 1 
 2 
 0 
 2 

 2 

 1 
 0 
 8 
 1 

 8 
 1 
 0 
 1 
– 
 1 
 1 
 2 
 0 
 1 
– 
 3 
 1 
 0 

 2 
 1 

 1 
 0 
 0 
– 
 1 
 0 
 1 
 1 
 1 
– 
 82 
 112 

 10 
 0 
 0 
 1 
– 
 1 
 1 
 1 
 1 
– 
 50 
 106 

– 
– 
– 
– 

– 

 0 
– 
– 
 0 

– 
– 
– 
– 
– 
– 
– 
 0 
– 
– 
– 
– 
 0 
 0 

– 
– 

– 
– 
– 
– 
– 
– 
 2 
– 
– 
– 
– 
 2 

% 

16=15/1 

0.3% 
0.2% 
0.5% 
0.1% 

0.0% 

0.2% 
0.3% 
0.1% 
0.1% 

0.8% 
0.5% 
1.3% 
0.0% 
0.2% 
0.1% 
0.5% 
0.3% 
0.4% 
0.2% 
0.3% 
0.1% 
0.2% 
0.1% 

2.7% 
1.4% 

0.8% 
0.5% 
0.8% 
0.8% 
0.0% 
0.2% 
0.4% 
0.8% 
2.4% 
0.0% 
2.9% 
0.1% 

15= 
12+13 
+14 
 1 
 4 
 1 
 6 

 4 

 2 
 1 
 8 
 1 

 8 
 4 
 2 
 2 
 0 
 2 
 1 
 2 
 3 
 1 
 0 
 5 
 2 
 1 

 2 
 3 

 11 
 1 
 0 
 1 
 1 
 1 
 4 
 2 
 1 
– 
 132 
 220 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
 
Annual accounts of the European Union 2014 

5.9.  POLICY AREA: MOVEMENTS IN COMMITMENTS OUTSTANDING 

Policy Area 

Commitments outstanding at end of the previous year 

Commitments of the year 

Commitments 
carried forward 
from previous 
year 

Decommitments 
/Revaluations/Canc
ellations 

Payments  

Commitments 
outstanding at 
year-end 

Commitments 
made during the 
year 

Payments 

Cancellation  
commitments 
which cannot be 
carried over 

Commitments 
outstanding at 
year-end 

EUR millions 

Total 
commitments 
outstanding at 
year-end 

01  Economic and financial affairs 
02  Enterprise and Industry 
03  Competition 
04  Employment, social affairs and 

inclusion 

05  Agriculture and rural development 
06  Mobility and transport 
07  Environment 
08  Research and Innovation 
09  Communications networks, content 

and technology 
10  Direct research 
11  Maritime affairs and Fisheries 
12 
Internal market and services 
13  Regional and urban policy 
14  Taxation and customs union 
15  Education and culture 
16  Communication 
17  Health and consumer protection 
18  Home affairs 
19 
20  Trade 
21  Development and Cooperation 
22  Enlargement 
23  Humanitarian aid and Civil protection 
24 
25  Commission's policy coordination & 

Foreign policy instruments 

Fight against fraud 

legal advice 

26  Commission’s administration 
27  Budget 
28  Audit 
29  Statistics 
30  Pensions and related expenditure 
31 
32  Energy 
33 
Justice 
34  Climate action 
40  Reserves 
90  Other Institutions 

Language Services 

Total 

 739 
1 855 
 8 
27 559 

25 354 
3 994 
1 055 
12 907 
2 823 

 202 
2 360 
 21 
112 172 
 106 
2 387 
 125 
 616 
1 992 
 770 
 21 
15 617 
3 206 
 918 
 38 
 15 

 201 
 7 
 1 
 113 
– 
 20 
4 434 
 183 
 36 
– 
 557 
222 410 

 (3) 
 (23) 
 (0) 
 (344) 

 (70) 
 (188) 
 (22) 
 (161) 
 (42) 

 (21) 
 (202) 
 (3) 
(1 033) 
 (5) 
 (58) 
 (9) 
 (134) 
 (141) 
 (42) 
 (1) 
 (457) 
 (79) 
 (5) 
 (9) 
 (1) 

 (11) 
 (0) 
 (0) 
 (9) 
– 
 (1) 
 (274) 
 (18) 
 (1) 
– 
 (156) 
(3 522) 

 (122) 
 (724) 
 (7) 
(10 165) 

(11 148) 
 (867) 
 (245) 
(3 551) 
(1 000) 

 (122) 
 (683) 
 (14) 
(43 087) 
 (65) 
 (989) 
 (92) 
 (271) 
 (431) 
 (367) 
 (13) 
(3 266) 
 (804) 
 (654) 
 (21) 
 (14) 

 (177) 
 (6) 
 (0) 
 (58) 
– 
 (19) 
 (648) 
 (81) 
 (20) 
– 
 (402) 
(80 136) 

 615 
1 109 
– 
17 049 

14 136 
2 939 
 788 
9 194 
1 781 

 59 
1 475 
 3 
68 052 
 36 
1 341 
 24 
 211 
1 421 
 360 
 7 
11 894 
2 323 
 259 
 8 
– 

 13 
– 
– 
 46 
– 
– 
3 512 
 84 
 14 
– 
– 
138 753 

 236 
2 608 
 97 
10 312 

47 789 
2 879 
 423 
7 002 
1 708 

 535 
 218 
 123 
17 078 
 160 
3 223 
 252 
 624 
 523 
 687 
 120 
5 353 
1 440 
1 187 
 77 
 198 

1 070 
 89 
 12 
 140 
1 493 
 444 
 990 
 209 
 122 
– 
3 789 
113 208 

 (184) 
(1 513) 
 (89) 
(1 238) 

(44 618) 
 (170) 
 (117) 
(1 367) 
 (184) 

 (386) 
 (122) 
 (105) 
 (892) 
 (73) 
(1 684) 
 (165) 
 (300) 
 (358) 
 (185) 
 (105) 
 (867) 
 (94) 
 (775) 
 (54) 
 (185) 

 (883) 
 (82) 
 (12) 
 (81) 
(1 493) 
 (426) 
 (85) 
 (112) 
 (30) 
– 
(3 328) 
(62 361) 

– 
 (0) 
– 
 (0) 

 (0) 
 (0) 
– 
 (3) 
 (0) 

 (0) 
 (0) 
– 
 (0) 
– 
 (0) 
 (0) 
– 
– 
 (1) 
– 
 (0) 
 (1) 
 (0) 
– 
– 

 (0) 
– 
– 
– 
 (0) 
 (0) 
 (0) 
– 
– 
– 
 (8) 
 (14) 

 52 
1 095 
 7 
9 074 

3 171 
2 708 
 306 
5 631 
1 524 

 149 
 96 
 19 
16 185 
 86 
1 539 
 86 
 324 
 165 
 501 
 15 
4 486 
1 346 
 412 
 23 
 14 

 187 
 7 
 0 
 59 
– 
 18 
 904 
 97 
 91 
– 
 453 
50 832 

 667 
2 204 
 7 
26 124 

17 308 
5 647 
1 093 
14 826 
3 305 

 208 
1 571 
 22 
84 237 
 122 
2 879 
 110 
 535 
1 586 
 862 
 22 
16 379 
3 669 
 671 
 31 
 14 

 201 
 7 
 0 
 105 
– 
 18 
4 416 
 181 
 105 
– 
 453 
189 585 

126 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

5.10.  POLICY AREA: BREAKDOWN OF COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN 

Policy Area 

<2008 

2008 

2009 

2010 

2011 

2012 

2013 

2014 

EUR millions 
Total 

01  Economic and financial affairs 
02  Enterprise and Industry 
03  Competition 
04  Employment, social affairs and 

inclusion 

05  Agriculture and rural development 
06  Mobility and transport 
07  Environment 
08  Research and Innovation 
09  Communications networks, content 

and technology 
10  Direct research 
11  Maritime affairs and Fisheries 
12 
Internal market and services 
13  Regional and urban policy 
14  Taxation and customs union 
15  Education and culture 
16  Communication 
17  Health and consumer protection 
18  Home affairs 
19 
20  Trade 
21  Development and Cooperation 
22  Enlargement 
23  Humanitarian aid and Civil protection 
24 
25  Commission's policy coordination & 

Foreign policy instruments 

Fight against fraud 

legal advice 

26  Commission’s administration 
27  Budget 
28  Audit 
29  Statistics 
30  Pensions and related expenditure 
31 
32  Energy 
33 
Justice 
34  Climate action 
40  Reserves 
90  Other Institutions 

Language Services 

Total 

 30 
 14 
– 
 538 

 150 
 84 
 28 
 62 
 16 

 5 
 160 
– 
2 439 
– 
 27 
– 
 1 
 12 
 4 
– 
 500 
 111 
 2 
 0 
– 

– 
– 
– 
 1 
– 
– 
 25 
– 
– 
– 
– 
4 211 

– 
 13 
– 
 6 

– 
 23 
 49 
 86 
 13 

 5 
 1 
 0 
 197 
– 
 34 
 0 
 6 
 23 
 6 
– 
 450 
 76 
 8 
 1 
– 

– 
– 
– 
 0 
– 
– 
 36 
 0 
– 
– 
– 
1 034 

 0 
 34 
– 
 70 

 0 
 128 
 84 
 226 
 54 

 2 
 7 
 0 
 249 
– 
 44 
 0 
 18 
 53 
 13 
– 
 708 
 109 
 13 
 1 
– 

– 
– 
– 
 0 
– 
– 
 770 
 1 
– 
– 
– 
2 586 

 0 
 54 
– 
 189 

 0 
 238 
 105 
 477 
 82 

 4 
 10 
 1 
1 871 
 0 
 66 
 1 
 30 
 120 
 23 
 0 
1 061 
 227 
 25 
 0 
– 

 0 
– 
– 
 1 
– 
– 
1 349 
 2 
 0 
– 
– 
5 937 

 160 
 192 
– 
1 603 

 183 
 588 
 146 
1 288 
 183 

 4 
 43 
 0 
6 732 
 2 
 164 
 1 
 23 
 217 
 44 
 0 
1 825 
 410 
 26 
 0 
– 

 0 
– 
– 
 4 
– 
– 
 411 
 11 
 1 
– 
– 
14 261 

 178 
 349 
– 
4 687 

3 061 
 746 
 174 
2 840 
 516 

 11 
 514 
 0 
18 311 
 9 
 391 
 2 
 30 
 425 
 108 
 2 
3 245 
 606 
 33 
 2 
– 

 1 
– 
– 
 12 
– 
– 
 386 
 18 
 3 
– 
– 
36 658 

 246 
 452 
 0 
9 956 

10 742 
1 132 
 201 
4 216 
 917 

 29 
 739 
 2 
38 253 
 25 
 615 
 20 
 103 
 571 
 162 
 4 
4 106 
 784 
 151 
 4 
 (0) 

 12 
 (0) 
 (0) 
 28 
 0 
 (0) 
 534 
 52 
 11 
– 
– 
74 066 

 52 
1 095 
 7 
9 074 

3 171 
2 708 
 306 
5 631 
1 524 

 149 
 96 
 19 
16 185 
 86 
1 539 
 86 
 324 
 165 
 501 
 15 
4 486 
1 346 
 412 
 23 
 14 

 187 
 7 
 0 
 59 
 (0) 
 18 
 904 
 97 
 91 
– 
 453 
50 832 

 667 
2 204 
 7 
26 124 

17 308 
5 647 
1 093 
14 826 
3 305 

 208 
1 571 
 22 
84 237 
 122 
2 879 
 110 
 535 
1 586 
 862 
 22 
16 379 
3 669 
 671 
 31 
 14 

 201 
 7 
 0 
 105 
– 
 18 
4 416 
 181 
 105 
– 
 453 
189 585 

127 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

5.11.  IMPLEMENTATION OF 2014 EXPENDITURE 

The year 2014 was the first year of the new programming period 2014-2020. 

Commitments: 

The  initial  adopted  budget  for  all  institutions,  excluding  Special  Instruments,  set  commitment 
appropriations  at  EUR 142 184 million.  This  represented  a  decrease  of  6 %  compared  to  the  final  2013 
budget and left a margin of EUR 445 million below the ceiling of the MFF. 

The final adopted budget for commitments was implemented at a 76 % level in the first year of the new 
programming period mostly because of the delay in the adoption of the operational programmes for the 
funds  under  shared  management.  Modifications  via  amending  budgets  were  negligible  apart  from  the 
mobilisation  of  the  European  Union  Solidarity  Fund  for  EUR 127 million.  The  total  implementation  of 
EUR 109 256 million 
the 
reprogramming  of  commitments  in  various  Funds  under  shared  management  and  by  the  carry  over  to 
2015. 

left  EUR 33 434 million  unused.  This  will  be 

fully  compensated  by 

The  reprogramming  of  unused  2014  commitment  appropriations  to  2015  and  2016  (according  to  MFF 
Art. 19) was agreed in April 2015 with a revision of the MFF ceilings and a related amending budget for 
2015.  The  main  impacts  in  2015  were  under  Heading  1(b)  (EUR 11.2 billion)  and  Heading  2 
(EUR 5 billion), while for 2016 the main change is to Heading 2 (EUR 4.4 billion). 

In 2014, the low  implementation  of  commitments at the start  of  new programmes led  to  a decrease of 
RAL  of  EUR 32.8 billion  or  15 %,  which  is  only  temporary  due  to  the  magnitude  of  amounts  re-
programmed or carried forward.  

Payments: 

Payment  appropriations  were,  after  a  cut  of  EUR 556 million  to  the  Draft  Budget  2014  (including 
Amending  Letters  1  and  2),  initially  set  at  EUR 135 505 million  (including  Special  Instruments), 
corresponding to 1 % of the EU's GNI. This meant a decrease of 6 % (EUR 9 billion) compared to the final 
adopted budget for 2013. This initial level of appropriations left a margin of only EUR 711 million below 
the  MFF  ceiling.  The  ceiling  of  payments  for  this  first  year  of  the  new  programming  period  was  set 
exceptionally  low,  i.e.  more  than  EUR  8  billion  below  2013  and  EUR 6 billion  below  2015  level.  It  was 
clear  from  the  outset  that  in  view  of  the  amount  of  outstanding  commitments,  the  heavy  pressure  on 
payments would continue throughout 2014 with  a need to revise the amount of appropriations  required 
and very active management of the budget. 

The  net  reinforcement  of  payment  appropriations  of  operational  budget  lines  via  amending  budgets 
amounted to EUR 3 599 million. This brought at year-end the level of payment appropriations above the 
ceiling  of  the  MFF  through  recourse  to  the  Contingency  Margin,  and  the  new  and  last-resort  Special 
Instrument to react to unforeseen circumstances. The Council and the Parliament rejected Commission’s 
Global  transfer  proposal  and  used  the  proposed  reinforcements  for  redeployments  in  the  amending 
budgets. 

The  total  implementation  of  payment  appropriations  was  EUR 137 136 million  (EUR 142 883 million  in 
2013) with a rate of 99 %. Once account is taken of the carryover of payment appropriations to 2015, a 
total  of  EUR 112 million  lapses.  From  payment  appropriations  carried  forward  from  2013  an  amount  of 
EUR 106 million was cancelled. 

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  2014,  Part  A 
"Overview at budget level" and Part B dealing with each heading of the multi-annual financial framework.

128 

 
 
 
6. 

IMPLEMENTATION OF THE INSTITUTIONS AND AGENCIES BUDGET 

Annual accounts of the European Union 2014 

6.1.  INSTITUTIONS: SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE 

Institution 

Income appropriations 

Entitlements established 

Revenue 

Receipts as   Outstanding 

EUR millions 

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 
European External Action Service 

Initial adopted 
budget 

Final 
adopted 
budget 

Current 
year 

Carried over 

Total 

 156 
 56 
135 167 
 47 
 20 
 11 
 8 
 1 
 1 

 156 
 56 

 173 
 74 
138 697  146 066 
 50 
 20 
 15 
 10 
 1 
 1 

 47 
 20 
 11 
 8 
 1 
 1 

 24 
 7 
10 957 
– 
– 
– 
– 
– 
– 

 197 
 80 
157 023 
 50 
 20 
 15 
 10 
 1 
 1 

On 
entitlements of 
current year 
 170 
 70 
139 403 
 50 
 19 
 15 
 10 
 1 
 1 

On 
entitlements 
Carried over 
 4 
 6 
3 878 
– 
– 
– 
– 
– 
– 

Total 

% of budget 

 174  111.97% 
 76  136.61% 
143 280  103.30% 
 50  105.10% 
 19 
98.42% 
 15  137.08% 
 10  121.66% 
 1  104.28% 
78.02% 
 1 

 37 
135 505 

 37 

 313 
139 034  146 721 

– 
10 988 

 313 
157 709 

 313 
140 052 

– 
3 888 

 313  835.12% 
103.53% 

143 940 

 22 
 4 
13 743 
 0 
– 
– 
– 
– 
– 

– 
13 769 

The  consolidated  reports  on  the  implementation  of  the  general  budget  of  the  EU  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.  

Concerning  the  EEAS,  it  should  be  noted  that,  in  addition  to  its  own  budget,  it  also  receives  contributions  from  the  Commission  of  EUR 208 million  (2013: 
EUR 210 million) and the EDF of EUR 56 million (2013: EUR 59 million). These budget credits are put at the disposal of the EEAS (as assigned revenue) so as to 
cover primarily the costs of Commission staff working in the EU delegations, these delegations being administratively managed by the EEAS. 

129 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6.2.  INSTITUTIONS: IMPLEMENTATION OF COMMITMENT AND PAYMENT 

Annual accounts of the European Union 2014 

APPROPRIATIONS 

Commitment appropriations 

Institution 

Total 
appropriations 
available 
1 

From final 
adopted 
budget 
2 

From 
carry-
overs 
3 

From 
assigned 
revenue 

Total 

% 

4  5=2+3+4 

6=5/1 

From 
assigned 
revenue 
7 

Carry-
overs by 
decision 
8 

Total 

% 

9=7+8 

10=9/1 

From final 
adopted 
budget 
11 

From 
carry-
overs 
12 

Assigned 
revenue 
(EFTA) 
13 

Commitments made 

Appropriations carried over 

Appropriations lapsing 

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

1 804 
 587 

1 738 
 485 

146 008 
 358 
 134 
 133 

105 811 
 352 
 132 
 123 

 89 

 10 
 8 

 86 

 10 
 8 

 808 

 513 

 1 
– 

 178 
– 
– 
– 

– 

– 
– 

– 

 37 
 29 

1 775 
 513 

98.4% 
87.4% 

 12 
 24 

– 
– 

 12 
 24 

0.6% 
4.1% 

3 429 
 1 
– 
 4 

109 418 
 352 
 132 
 127 

74.9% 
98.6% 
98.7% 
95.4% 

3 242  12 097 
– 
– 
– 

 1 
– 
 1 

15 339 
 1 
– 
 1 

 2 

– 
– 

 88 

98.5% 

 10 
 8 

97.9% 
96.9% 

– 

– 
– 

– 

– 
– 

– 

– 
– 

10.5% 
0.4% 
0.1% 
0.4% 

0.1% 

0.0% 
0.0% 

 272 

 784 

97.1% 

 18 

 4 

 22 

2.7% 

 18 
 50 

21 251 
 4 
 2 
 6 

 1 

– 
– 

 2 

149 939 

109 256 

 179 

3 772  113 208  75.5% 

3 297  12 101 

15 399 

10.3% 

21 333 

– 
– 

– 
– 
– 
– 

– 

– 
– 

– 

– 

– 
– 

– 
– 
– 
– 

– 

– 
– 

– 

– 

EUR millions 

Total 

% 

14=11 
+12+13 

15=14/1 

 18 
 50 

0.0% 
0.0% 

21 251 
 4 
 2 
 6 

0.0% 
0.0% 
0.0% 
0.0% 

 1 

0.0% 

– 
– 

0.0% 
0.0% 

 2 

0.0% 

21 333 

0.0% 

130 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

Payment appropriations 

Payments made 

Appropriations carried over 

Appropriations lapsing 

EUR millions 

Institution 

Total 
appropriations 
available 
1 

From final 
adopted 
budget 
2 

From 
carry-
overs 
3 

From 
assigned 
revenue 
4 

Total 

% 

Automatic 
carry-overs 

5=2+3+4 

6=5/1 

7 

Carry-
overs by 
decision 
8 

From 
assigned 
revenue 

Total 

9 10=7+8+9 

%  From final 
adopted 
budget 
12 

11=10/1 

From 
carry-
overs 
13 

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

2 168 
 635 

1 460 
 435 

143 020 
 374 
 145 
 141 

134 108 
 335 
 124 
 115 

 96 

 10 
 9 

 79 

 9 
 7 

 256 
 39 

 902 
 14 
 9 
 6 

 6 

 1 
– 

 26 
 29 

3 758 
 1 
– 
 3 

 2 

– 
– 

1 742 
 503 

80.4% 
79.2% 

138 768 
 349 
 134 
 125 

97.0% 
93.5% 
92.4% 
88.2% 

 86 

89.4% 

 10 
 7 

93.7% 
82.2% 

 278 
 50 

 452 
 17 
 8 
 8 

 8 

 0 
 1 

– 
– 

 913 
– 
– 
– 

– 

– 
– 

 108 
 24 

2 799 
 1 
– 
 1 

– 

– 
– 

 386 
 74 

17.8% 
11.7% 

4 164 
 18 
 8 
 9 

 8 

 0 
 1 

2.9% 
4.9% 
5.4% 
6.3% 

8.2% 

3.7% 
10.1% 

 18 
 50 

 29 
 4 
 2 
 6 

 1 

– 
– 

 22 
 8 

 56 
 2 
 2 
 2 

 1 

– 
– 

 897 

 464 

 70 

 239 

 773 

86.2% 

 49 

 4 

 57 

 110 

12.3% 

 2 

 11 

Total 

% 

Assigned 
revenue 
(EFTA) 

16=15/1 

14  15=12 
+13+1
4 

– 
– 

 2 
– 
– 
– 

– 

– 
– 

– 

 40 
 58 

 88 
 6 
 3 
 8 

1.8% 
9.2% 

0.1% 
1.6% 
2.2% 
5.5% 

 2 

2.5% 

– 
 1 

2.6% 
7.7% 

 13 

1.5% 

147 495 

137 136 

1 304 

4 057 

142 497  96.6% 

 870 

 917 

2 991 

4 778 

3.2% 

 112 

 106 

 2 

 220 

0.1% 

131 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

6.3.  AGENCIES INCOME: BUDGET FORECASTS, 
ENTITLEMENTS AND AMOUNTS RECEIVED 

Agency 

Final adopted 
budget 

Entitlements 
established 

Amounts 
received 

Outstanding 

EUR millions 

Funding 
Commission 
Policy Area 

European Agency for the Cooperation of 
Energy Regulators 
European Asylum Support Office 
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 Banking Authority 
European Insurance and Occupational 
Pensions Authority 
European Environment Agency 
European Police office 
European Securities and Markets Authority 
Community Fisheries Control Agency 
European Food Safety Authority 
European Institute for gender equality 
Galileo Supervisory Authority 
Fusion for energy ITER 
The European Union's Judicial Cooperation 
Unit (Eurojust)  
eu.LISA 
European Maritime Safety Agency 
Office for Harmonisation in the Internal 
Market 
European Medicines Agency 
European Network and Information 
Security Agency 
Office for the body of European Regulators 
for Electronic Communications BEREC 
European Union Agency for Fundamental 
Rights  
European Railway Safety Agency 
European Agency for Safety and Health at 
Work 
European Institute of Innovation and 
Technology  
Translations Centre for the bodies of the 
EU 
European Training Foundation 
Community Plant Variety Office  
European foundation for improvement of 
living & working conditions 
Education, Audiovisual and Culture 
Executive Agency 
Executive Agency for Competitiveness and 
Innovation 
European Research Council Executive 
Agency 
Research Executive Agency 
Executive Agency for Health and 
Consumers 
European Transport Network Executive 
Agency 

 11 

 16 
 162 
 98 
 18 

 9 
 33 
 60 

 15 

 34 
 22 

 43 
 84 
 33 
 9 
 80 
 7 
 25 
 551 
 34 

 65 
 58 
 194 

 282 
 10 

 4 

 21 

 26 
 15 

 11 

 13 
 145 
 87 
 17 

 9 
 37 
 59 

 16 

 34 
 22 

 53 
 85 
 32 
 9 
 80 
 7 
 358 
 551 
 34 

 57 
 58 
 196 

 311 
 10 

 4 

 21 

 26 
 15 

 11 

 13 
 137 
 87 
 17 

 9 
 37 
 59 

 16 

 34 
 22 

 52 
 85 
 32 
 9 
 80 
 7 
 358 
 551 
 34 

 57 
 58 
 196 

 272 
 10 

 4 

 21 

 26 
 15 

 175 

 167 

 167 

 56 

 20 
 15 
 21 

 47 

 24 

 36 

 52 
 7 

 13 

 48 

 21 
 13 
 21 

 47 

 25 

 36 

 52 
 7 

 14 

 47 

 21 
 13 
 21 

 47 

 25 

 36 

 52 
 7 

 14 

– 

 0 
 8 
 (0) 
 0 

 0 
 0 
 0 

– 

 0 
 0 

 1 
 0 
– 
– 
 0 
– 
– 
 0 
 0 

– 
 0 
 0 

 39 
– 

– 

– 

 0 
– 

– 

 1 

 0 
– 
 0 

– 

– 

 0 

 0 
– 

 0 

2 486 

2 809 

2 759 

 50 

132 

06 

18 
06 
18 
15 

18 
02 
17 

18 

12 
12 

07 
18 
12 
11 
17 
04 
06 
08 
33 

18 
06 
12 

02 
09 

09 

18 

06 
04 

15 

15 

15 
17 
04 

15 

06 

08 

08 
17 

06 

 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

Type of revenue 

Commission Subsidy 
Fee income 
Other income 

Final 
adopted 
budget 
1 593 
 557 
 335 
2 486 

Entitlements 
established 

Amounts 
received 

EUR millions 
Outstanding 

1 566 
 603 
 640 
2 809 

1 565 
 558 
 635 
2 759 

 0 
 45 
 5 
 50 

133 

 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2014 

6.4.  COMMITMENT & PAYMENT APPROPRIATIONS BY 

AGENCY 

Agency 

European Agency for the Cooperation of 
Energy Regulators 
European Asylum Support Office 
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 Banking Authority 
European Insurance and Occupational 
Pensions Authority 
European Environment Agency 
European Police office 
European Securities and Markets 
Authority 
Community Fisheries Control Agency 
European Food Safety Authority 
European Institute for gender equality 
Galileo Supervisory Authority 
Fusion for energy ITER 
The European Union's Judicial 
Cooperation Unit (Eurojust)  
eu.LISA 
European Maritime Safety Agency 
Office for Harmonisation in the Internal 
Market 
European Medicines Agency 
European Network and Information 
Security Agency 
Office for the body of European 
Regulators for Electronic Communications 
BEREC 
European Union Agency for Fundamental 
Rights  
European Railway Safety Agency 
European Agency for Safety and Health 
at Work 
European Institute of Innovation and 
Technology  
Translations Centre for the bodies of the 
EU 
European Training Foundation 
Community Plant Variety Office  
European foundation for improvement of 
living & working conditions 
Education, Audiovisual and Culture 
Executive Agency 
Executive Agency for Competitiveness 
and Innovation 
European Research Council Executive 
Agency 
Research Executive Agency 
Executive Agency for Health and 
Consumers 
European Transport Network Executive 
Agency 

Commitment appropriations 
Carried to 
Commit-
2015 
ments 
made 

Total 
appropriati
ons 
available 

 11 

 10 

 16 
 184 
 99 
 19 

 9 
 115 
 61 

 16 

 34 
 22 

 66 
 86 
 33 

 9 
 80 
 7 
2 095 
1 169 
 34 

 59 
 60 
 420 

 282 
 10 

 13 
 136 
 97 
 18 

 8 
 111 
 61 

 16 

 34 
 22 

 59 
 85 
 33 

 9 
 80 
 7 
 693 
1 169 
 34 

 49 
 56 
 246 

 266 
 10 

 4 

 4 

 22 

 26 
 17 

 22 

 25 
 16 

 236 

 223 

 56 

 23 
 17 
 22 

 47 

 24 

 36 

 52 
 7 

 13 

 45 

 22 
 16 
 21 

 46 

 22 

 36 

 51 
 7 

 13 

 0 

 0 
 45 
 2 
 0 

 0 
 0 
 0 

 0 

– 
 0 

 7 
 0 
– 

– 
 0 
 0 
1 402 
– 
 0 

 10 
 2 
– 

 0 
 0 

– 

 0 

 0 
 2 

 8 

– 

 0 
– 
 1 

– 

– 

– 

– 
– 

– 

EUR millions 

Payment appropriations 
Payments 
made 

Carried to 
2015 

Total 
appropriati
ons 
available 

 16 

 13 

 16 
 191 
 130 
 20 

 10 
 127 
 72 

 16 

 38 
 27 

 70 
 95 
 39 

 11 
 87 
 10 
 407 
 573 
 39 

 72 
 61 
 458 

 316 
 11 

 11 
 125 
 94 
 17 

 8 
 112 
 59 

 15 

 32 
 21 

 48 
 86 
 32 

 9 
 78 
 8 
 150 
 507 
 34 

 54 
 53 
 239 

 251 
 10 

 5 

 4 

 28 

 28 
 22 

 21 

 24 
 16 

 179 

 165 

 59 

 23 
 15 
 26 

 52 

 26 

 38 

 54 
 8 

 14 

 43 

 21 
 13 
 21 

 46 

 20 

 36 

 50 
 7 

 12 

 3 

 2 
 63 
 33 
 2 

 2 
 11 
 12 

 1 

 5 
 6 

 22 
 6 
 6 

 1 
 8 
 2 
 257 
 38 
 4 

 15 
 5 
 40 

 47 
 1 

 1 

 7 

 3 
 5 

 2 

 4 

 2 
 0 
 5 

 6 

 4 

 2 

 4 
 1 

 1 

5 600 

3 890 

1 481 

3 488 

2 563 

 638 

134 

 
 
 
 
 
 
 
 
 
 
Type of expenditure 

Staff 
Administrative expenses 
Operational expenses 

Total 
appropriat
ions 
available 
 941 
 387 
4 272 
5 600 

Annual accounts of the European Union 2014 

EUR millions 

Commitment appropriations 
Carried to 
Commit-
2015 
ments 
made 

Payment appropriations 
Payments 
made 

Carried to 
2015 

Total 
appropria
tions 
available 
 955 
 465 
2 067 
3 488 

 914 
 363 
2 613 
3 890 

 1 
 11 
1 469 
1 481 

 909 
 346 
1 309 
2 563 

 17 
 99 
 522 
 638 

6.5.  BUDGET RESULT INCLUDING AGENCIES 

Revenue for the financial year 
Payments against current year's budget 
appropriations 
Payments against assigned revenue 
appropriations 
Payment appropriations carried over to 
year N+1 
Cancellation of unused appropriations 
carried over from year N-1 
Evolution of assigned revenue 
Exchange differences for the year  

European 
Union 

143 940 
(137 136) 

AGENCIES  Elimination 
of subsidies 
to agencies 
(1 565) 
1 565 

2 759 
(2 049) 

(4 057) 

 (300) 

(1 787) 

 (402) 

 25 

 157 

 336 
 110 
1 432 

 (235) 
 (2) 
 (73) 

– 

– 

– 

– 
– 
– 

EUR millions 
TOTAL 

145 134 
(137 620) 

(4 357) 

(2 189) 

 182 

 101 
 108 
1 358 

In order to provide all relevant budgetary data for the Agencies, the consolidated annual accounts include 
separate reports on the implementation of the individual budgets of the traditional agencies consolidated. 

135