REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Eighth report from the Commission on the operation of the inspection arrangements for traditional own resources (2013–2015) (Article 18(5) of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000
Date: 2016-10-05
Institutions: Directorate-General for Budget, European Commission
Subjects: auditing, financial control, management audit, own resources

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 5.10.2016  COM(2016) 639 final   REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Eighth report from the Commission on the operation of the inspection arrangements for traditional own resources (2013–2015) (Article 18(5) of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000  
 
 
1. 

INTRODUCTION 

The  Commission  regularly  compiles  a  report  for  the  European 
Parliament  and  the  Council  on  the  operation  of  the  inspection 
arrangements for traditional own resources (TOR)1.  

The 
inspections  of  TOR  are  based  on  Council  Decision 
2007/436/EC,  Euratom  of  7  June  20072,  Council  Regulation 
No 1150/2000  of  22  May  20003  and  Council  Regulation 
No 1026/1999 of 10 May 19994. 

resources 
Traditional  own 
(TOR):  customs  duties  on 
products  imported  from  third 
countries,  plus  sugar  levies. 
the  period  2013-2015 
Over 
more than EUR 50 billion was 
made  available 
(net).  The 
yearly  average  was  EUR  16.8 
billion. 

This  report,  the  eighth  of  this  type,  describes  and  analyses  the  operation  of  the  inspection 
system for TOR for the period 2013 to 20155. It reports on the inspections carried out by the 
European Commission of traditional own resources over this period and includes: 

 

 

 

 

 

 

 

the  inspections  carried  by  the  Commission  on  the  spot  in  Member  States  and  their 
follow-up; 

the follow-up of the European Court of Auditors' preliminary findings letters; 

the examination of irrecoverable entitlements that have been written off; 

the treatment of Member States' errors leading to a loss of traditional own resources; 

the management of the database relating to fraud and irregularities (OWNRES); 

the pilot work on audit of A and B accounts by Member States; 

the assistance to the candidate countries. 

2. 

TOR INSPECTIONS' FRAMEWORK AND METHODOLOGY 

2.1.  TOR regulatory and operational framework  

The responsibility for collecting TOR is delegated to the Member 
States.  They  must  make  the  duties  collected  available  to  the  EU 
budget and are allowed to retain, by way of collection costs, 25% 
of  all  amounts  of  TOR  made  available  to  the  Commission6.  The 

Type of checks:  

Checks  on  regulations:  Checks 
on  Member  States'  provisions 
for 
the 
concerning 

system 

1 Article 18(5) of Regulation No 1150/2000 
2 OJ L 163, 23.6.2007, p. 17 
3 OJ L 130, 31.5.2000, pp. 1-9, as amended by Council Regulation No 1377/2014 of 18 December 2014 (OJ L 367, 

23.12.2014, p. 14) 

4 OJ L 126, 20.5.1999, p. 1 
5 The report focuses on the checks made by the EU institutions (the Commission and the Court of Auditors). It does not cover 
the  checks  made  by  the  Member  States,  the  detailed  results  of  which  are  set  out  in  the  annual  report  drawn  up  under 
Article 325 of the Treaty on the Functioning of the European Union. 

6 At the European Council of 8 February 2013, it was agreed that from 1 January 2014 Member States would retain, by way 
of collection costs, 20% of the amounts collected. This will be applied retroactively after the entry into force of the new 
Own Resources Decision. 

2 

 
 
 
                                                            
Member States are required to carry out checks themselves and to 
report to the Commission. 

However, the Commission retains important inspection powers in 
this  field.  To  supervise  the  system  for  the  collection  of  TOR 
several  types  of  checks  by  the  Commission  are  possible:  checks 
on regulations, checks on documents and on-the-spot inspections. 
The  Commission  is  also  required  to  respond  to  the  observations 
made  by  the  Court  of  Auditors  in  its  Annual  Report,  special 
reports or preliminary findings letters and also to the observations 
and  recommendations  made  by  the  European  Parliament  during 
the  discharge  procedure  in  respect  of  the  implementation  of  the 
budget.  The  Commission  ensures  that  the  Member  States  apply 
the EU rules correctly and reports to the budgetary authority. 

The  Commission's  inspection  activities  have  three  specific 
objectives: 

collecting TOR. 

Checks  on  documents:  Analysis 
of  accounting  statements  and  all 
kind of accounting documents and 
States, 
from  Member 
files 
including  Member  States'  reports 
on irrecoverable entitlements. 

On-the-spot 
inspections:  check 
the  conformity  with  EU 
on 
legislation  of  national  systems 
and  underlying  documents  from 
both  the  accounting  and  customs 
perspective. These inspections are 
carried  out 
the 
Member  States  concerned  or 
autonomously. 

jointly  with 

  To  maintain  a  level  playing  field  between  Member  States  and  economic  operators, 
regardless  of  where  the  goods  are  cleared  through  customs  in  the  EU.  The 
Commission  must  ensure  that  EU  rules  are  applied  uniformly  so  as  to  prevent 
distortions of competition; 

  To  improve  the  situation  as  regards  recovery.  The  Commission  must  reassure  itself 
that the Member States comply with their responsibilities when it comes to collecting 
and making available TOR. Any administrative and financial impacts should also be 
shared proportionally among the Member States; 

  To  inform  the  budgetary  authority.  From  the  inspection  findings  the  Commission  is 
able to judge the effectiveness and diligence of the Member States with regard to the  
collection  and  making  available  of  TOR,  to  take  the  measures  necessary  to  remedy 
any shortcomings and ultimately to report to the budgetary authority. 

2.2.  Objectives and methodology of TOR on-the-spot inspections 

The general aim of the inspections on traditional own resources is to gain assurance that the 
procedures in place in Member States  comply  with  the relevant EU legislation  and that the 
EU's  financial  interests  are  appropriately  protected.  Each  year  various  customs  and 
accounting topics are examined. 

The Commission's on-the-spot inspections are based on a precise methodology to check that 
procedures  are  consistent  with  EU  standards.  They  are  planned  as  part  of  an  annual 
inspection programme containing a number of topics to be inspected in one or more Member 
States.  The  inspection  programme  is  planned  and  its  topics  selected  on  the  basis  of  risk 
analysis. All the inspections are carried out using standardized procedures and involve the use 

3 

 
 
of  tailor-made  audit  tools,  i.e.  questionnaires  sent  to  the  Member  States  in  advance  and 
check-lists,  including  test  programs,  to  be  used  on  the  spot.  This  is  to  ensure  that  the 
inspections are carried out, and that the reports are drafted, in a consistent manner. 

3. 

INSPECTIONS CARRIED OUT BY THE COMMISSION OVER THE PERIOD 2013-2015 

During  the  period  2013-2015  the  Commission  carried  out  86 
inspections  under  Article  18  of  Regulation  No  1150/2000.  Six  of 
these inspections were carried out under the Joint Audit approach7. 

Of  the  288  findings  noted,  122  had  a  direct  financial  impact 
(42.36%) and 63 a regulatory impact (21.88%). The Commission has 
taken  appropriate  measures  to  ensure  that  Member  States  make 
available to the EU budget the amounts involved, where appropriate.  

86 inspections giving rise 
to 288 findings. 

types  of 

Joint  Audit  approach: 
Special 
joint 
inspection  under  which 
Member  States'  internal 
departments 
audit 
conduct  an  audit 
in 
accordance with a method 
approved 
the 
Commission. 

by 

3.1. 

Inspections relating to customs matters 

In 2013 and 2015, the inspections focused on the entry of goods in the customs territory of 
the  EU.  They  covered  the  presentation  of  goods  to  customs,  the  definition,  coverage  and 
accuracy  of  summary  declarations  for  temporary  storage,  the  authorisations  for  temporary 
storage  facilities,  the  monitoring  of  goods  in  temporary  storage  and  the  timely  and  correct 
duty establishment.  

Thematic  reports  are  often  drafted  in  order  to  consolidate  the  findings  made  during  the 
inspections  on  a  specific  topic  and  the  follow-up  to  these  findings.  A  thematic  report  on 
entry was drawn up by the Directorate-General for Budget and was presented to the Member 
States in the Advisory Committee on Own Resources (ACOR) on 4 December 2014 and to 
the Customs Policy Group (CPG)8 of 16-17 December 2014. The eight inspections performed 
in 2013 and the three inspections in 2015 have shown that in the Member States visited the 
majority  of  the  defined  objectives  were  properly  adhered  to.  However,  32  findings  were 
communicated  to  Member  States,  including  compliance  issues  and  requests  for  improving 
their procedures.  

In  2013  and  2014,  the  inspections  focused  on  the  end-use  customs  procedure  which  was 
examined  in  18  Member  States.  They  particularly  covered  the  authorising  procedures,  the 
customs supervision, the control of the assignment of the goods to the prescribed end-use and 
the  timely  and  correct  entry  in  the  accounts  of  import  duties.  The  findings  communicated 
related mainly to weaknesses in the authorisations of end-use and in the customs supervision, 
to insufficient checks and to inconsistencies in the customs declarations.  

7 Inspections in Denmark and Austria 
8 The Customs Policy Group includes Directors General of national customs administrations 

4 

 
 
                                                            
In 2014, the inspections focused on the follow-up by Member States of cases of fraud and 
irregularities. The fields examined included the management, the assessment and the follow-
up  of  risk  information  relating  to  potential  cases  of  frauds  and  irregularities,  the 
implementation of the Common Priority Control Area Discount and the timely establishment 
and recovery of the debts.  

A  thematic  report  on  this  topic  was  also  drawn  up  by  the  Directorate-General  for  Budget 
and  was  presented  to  the  Member  States  in  the  Advisory  Committee  on  Own  Resources 
(ACOR) meeting of 7 July 2015 and to the Customs Policy Group on 4 December 2015. The 
20 inspections led to the communication of 37 findings to the Member States visited most of 
which  requiring  improvements  in  the  monitoring  and  control  procedures  to  manage  Risk 
Information  Forms  and  Mutual  Assistance  Communications  through  the  timely  set-up  of 
comprehensive risk profiles to cover the identified risk. The findings and their follow-up also 
concerned  Member  States'  diligence,  the  monitoring  of  ex-post  checks  and  other  follow-up 
measures. 

In  2015,  five  inspections  concerning  the  management  of  tariff  suspensions  and  quotas 
were carried out to examine in particular whether the benefit of tariff suspensions and quotas 
was  only  granted  to  eligible  persons  and  for  the  quantities  available,  whether  adequate 
customs controls were carried out and whether corresponding duties were calculated correctly 
and made available timely. The majority of the Member States were found to be compliant 
with  EU  legislation  ensuring  an  adequate  protection  of  the  EU's  financial  interest. 
Shortcomings  were  nevertheless  identified  concerning  the  management  of  tariff  quotas,  the 
checks performed and the making available of TOR amounts in case of partial allocation or 
denial  of  a  quota.  The  Commission  asked  the  Member  States  concerned  to  quickly  remedy 
the situation.  

In  addition,  the  management  of  preferential  tariff  measures  was  examined  in  four 
countries.  Here  attention  was  focussed  on  the  procedures  and  conditions  for  granting  the 
preferential  treatment,  the  monitoring  of  incomplete  declarations  and  missing  proofs  of 
origin, the checks and the risk analysis and the subsequent requests of verification of origin. 
Although  as  a  whole  an  adequate  protection  of  the  EU's  financial  interests  is  ensured, 
shortcomings  were  found  in  relation  to  the  subsequent  verifications  of  proofs  of  origin  and 
the content and the processing of the customs declarations with preferential origin. It should 
be  noted  that  the  European  Court  of  Auditors  published  a  special  report  in  2014  on  this 
topic9. 

Member  States  are  generally  committed  to  improve  their  systems.  Most  of  the  above-
mentioned findings have already been addressed or are being so. 

9 ECA Special Report No 2 'Are preferential trade arrangements appropriately managed?'  

5 

 
 
                                                            
3.2. 

Inspections relating to accounting matters 

regards 

the  management  of  TOR 

The management of the separate account10 combined with the 
corrections of  the  normal account  is  a recurrent topic which is 
inspected  in  all  Member  States  visited,  in  addition  to  the  main 
customs  topic.  This  account  represents  a  valuable  source  of 
information on how administrations carry out their responsibilities 
as 
(establishment  of 
entitlements, management  of guarantees,  monitoring of recovery, 
cancellations,  writing-off  of  irrecoverable  debts).  Comprehensive 
inspections  were  conducted  in  three  Member  States  entirely  on 
this topic. The inspections carried out over the period 2013-2015 
on  this  topic  confirmed  that  most  errors  were  one-off  and  that 
systematic  errors  were  exceptional.  The  Member  States  assumed 
the financial consequences resulting from the findings noted. The 
Commission's inspections confirmed that the overall situation was 
improving  thanks  to  the  pressure  exerted  by  the  Commission's 
inspections and also to the introduction in most Member States of 
electronic customs and/or accounting systems reducing the risk of 
one-off errors. However, Member States must sustain their efforts 
to ensure the diligent management of the separate account and the 
corrections of the normal account. The Commission will continue 
to  monitor  closely  Member  States'  diligence  in  their  recovery 
efforts. 

recovered 

the  normal  account 

The  Member  States  enter  TOR 
two  accounts:  
in  one  of 
for 
- 
amounts 
or 
guaranteed  (these  amounts  are 
the  EU  budget)  
paid 
for 
the  separate  account 
- 
amounts  which  have  not  been 
recovered 
guaranteed 
or 
amounts  which  have  been 
contested. 

into 

TOR  collection  system:  All  the 
procedures 
systems 
and 
introduced  by 
the  Member 
States  to  ensure  that  TOR  are 
established,  entered 
the 
accounts, recovered and paid. 

in 

Irrecoverable  TOR  are  to  be 
withdrawn  from  the  separate 
account  after  a  defined  period 
of  time.  The  amounts  must  be 
made  available  (paid)  to  the 
Commission  unless  they  cannot 
be  recovered  for  reasons  of 
force  majeure  or  other  reasons 
which  cannot  be  attributed  to 
the Member State. 

A  series  of  inspections  was  also  carried  out  in  six  Member  States  on  the  reliability  of  the 
normal and separate account statements. The general conclusion was that the procedures in 
place  to  establish  these  statements  complied  with  the  EU  provisions  and  ensured  the 
protection  of  the  EU's  financial  interests.  The  findings  communicated  following  these 
inspections concern one-off errors or systematic shortcomings with a limited financial impact. 

Finally, as a follow-up to earlier problems detected in the Belgian TOR collection system, the 
external  audit  performed  on  the  customs  clearance  and  on  the  TOR  accounting  systems 
(required  by  the  Commission)  was  reviewed  and  found  generally  acceptable.  The  external 
auditor concluded that the Belgian TOR bookkeeping and the resulting amounts transferred to 
the Commission are free from material error and that the overall reliability of the accounts is 
not compromised by the errors (some of them with financial impact) found. The follow-up of 
the  remedial  action  requested  by  the  Commission  is  ongoing.  However,  the  review  of  the 
external  audit  allowed  lifting  the  Director  General's  reservation  on  the  reliability  of  the 
Belgian accounts expressed in his declarations of assurance in the Annual Activity Reports of 
DG Budget for 2011 and 2012.  

10 Also called B account 

6 

 
 
 
                                                            
4. 

FOLLOW-UP TO THE COMMISSION'S INSPECTIONS 

4.1.  Regulatory aspects 

Where flaws or loopholes are detected in national regulations or administrative provisions in 
the  course  of  the  inspections,  the  Member  States  are asked to  take  the necessary  measures, 
including legislative and regulatory measures, to bring them into line with EU requirements. 
Such  adjustments  are  an  important  result  of  the  Commission's  inspections.  The  findings 
identified  are  also  an  essential  source  of  information  on  the  problems  encountered  by  the 
Member States in applying customs regulations and their impact on TOR. 

4.2.  Outcome of disputes 

Some points in the rules remain a source of disagreement between the Member States and the 
Commission, whose only option then is to start an infringement procedure (Article 258 of the 
Treaty  on  the  Functioning  of  the  European  Union).  During  the  period  2013-2015,  the 
following infringements were either launched or closed:  

  Case No 2007/2230, (ECJ11's judgment of 17 July 2014, Commission versus Portugal, 
C-335/12):  the  Court  upheld  the  Commission's  position  and  concluded  that  the 
national authorities did not comply with their obligations when they refused to make 
available amounts corresponding to duties concerning non-exported excess quantities 
of sugar following their accession to the Union. As the late payment interest requested 
was paid in full, the case was closed. 

  Case  No  2013/2103  concerning  the  United  Kingdom:  The  Member  State  refused  to 
compensate for the loss of own resources caused by the undue establishment of export 
The letter of formal notice 
certificates by Anguilla, territory under its sovereignty. 
was sent on 27/9/2013 and the reasoned opinion on 16/10/2014.  

  Case  No  2013/2165  concerning  the  Netherlands:  The  Member  State  refused  to 
compensate  for  the  loss  of  own  resources  caused  by  the  undue  establishment  of 
EUR.1 certificates by Curacao and Aruba, territories under its sovereignty.  The  letter 
of formal notice was sent on 21/11/2013 and the reasoned opinion on 16/10/2014.  

  Case  No  2013/2251  concerning  Italy:  The  Member  State  refused  to  compensate  for 
the loss of own resources caused by the absence of adequate measures for recovery of 
an  amount  of  customs  duties  established  and  entered  in  the  accounts.  This  case  is 
linked  to  the  write-off  cases  IT(07)08-917  regarding  smuggling  of  cigarettes.  The 
letter of formal notice was sent on 21/11/2013 and the reasoned opinion on 28/4/2016. 

  Case  No  2014/2221  concerning  Belgium:  The  Member  State  refused  to  make 
available  the  interest  on  late  payments  related  to  four  cases  where  the  requested 
guarantees  have  proved  insufficient  to  cover  the  customs  debt.  The  letter  of  formal 

11 European Court of Justice 

7 

 
 
                                                            
notice was sent on 25/9/2014 and a complementary letter of formal notice was sent on 
22/10/2015. 

In its judgment of 3 April 2014 Commission versus United Kingdom, the Court also upheld 
the  Commission's  position  confirming  that  the  national  authorities  had  not  complied  with 
their  obligations  by  refusing  to  make  available  amounts  corresponding  to  duties  owed  on 
imports of fresh garlic covered by erroneous binding tariff information. 

The  Court  has  also  reached  several  decisions  relating  to  requests  by  Member  States  for 
annulment  of  calls  for  funds  letters issued  by  the  Commission  services.  The  General  Court 
ruled  that  a  Commission  letter  inviting  the  Member  States  to  pay  own  resources  was  not  a 
measure  against  which  an  action  for  annulment  may  be  brought12.  Appeals  against  these 
decisions are pending before the Court of Justice13. 

4.3. 

Financial aspects 

Over  the  reference  period  (2013-2015)  additional  entitlements  totalling  more  than 
EUR 124 million  were  paid  to  the  Commission  following  observations  made  in  the 
inspection  reports  and  on  the  occasion  of  other  inspection  activities  and  as  a  result  of  the 
follow-up  of  Court  of  Auditors'  findings  and  Court  of  Justice's  decisions  on  TOR 
infringement procedures. 

The 
interest  for 
EUR 104 million. 

late  payment  paid  by 

the  Member  States 

totalled  more 

than 

5. 

COMMISSION'S  MEASURES  TO  IMPROVE  THE  RECOVERY  OF  TRADITIONAL  OWN 
RESOURCES 

Apart  from  its  on-the-spot  inspections  in  the  Member  States,  the  Commission  has  several 
other means of monitoring the recovery of TOR. Appropriate use of these means effectively 
improves recovery. 

5.1.  Examination of irrecoverable entitlements which have been written off 

Member  States  must  take  the  measures  necessary  to  make  TOR 
available,  except  where  recovery  proves  impossible  for  reasons  of 
force  majeure  or  for  reasons  which  cannot  be  attributed  to  them 
(Article 17(2) of Regulation No 1150/2000). 

Under  the  EU  rules,  Member  States  must  report  to  the  Commission 
irrecoverable  amounts  exceeding  EUR  50,000  (write-off  reports)  for 
which they consider that  this  outcome  is  not  attributable to them and 

17 

article 

Write-off report: Procedure 
under 
of 
Regulation  No  1150/2000 
for  monitoring  Member 
financial 
States'  potential 
responsibility 
for 
irrecoverable  amounts  of 
TOR  over  EUR  50  000. 
Under  the  procedure,  the 
its 
Commission 

issues 

12 Slovenia v Commission, Case T-585/14; Slovakia v Commission, Cases T-678/14 and T-779/14; Romania v Commission, 

Case T-784/14; Spain v Commission, Case T-841/14 

13 Romania v Commission, Case C-599/15P; Slovakia v Commission, Cases C-593/15P and C-594/15P   

8 

 
 
 
                                                            
the  Commission  issues  its  comments  on  each  report.  For  amounts 
below  this  threshold,  there  is  no  separate  reporting  requirement  but 
samples  of  these  cases  are  routinely  assessed  during  the  on-the-spot 
inspections by the Commission. 

To  help  the  Member  States  in  assessing  their  potential  financial 
responsibility for irrecoverable TOR amounts, the Commission issued 
a working document – the Compendium – with the criteria underlying 
its  comments  on  the  write-off  reports  during  the  period  1992-2012. 
The  working  document  was  communicated  to  Member  States  during 
the  ACOR  meeting  of  6  December  2012.  It  was  revised  on  25  June 
2013  to  take  into  account  changes  in  the  EU  legislation  and  the 
relevant case law on traditional own resources. 

of 

irrecoverable 

opinion on whether the TOR 
became 
for 
reasons  not  attributable  to 
the  Member  States.  The 
the 
purpose 
Commission's  examination 
of  the  cases  reported  is  to 
of 
assess 
degree 
the 
the 
diligence  shown  by 
Member  States  in  carrying 
out 
recovery 
operations. 

their 

When  Member  States  consider  that  they  meet  the  conditions  to  be  released  from  the 
obligation  to  place  at  the  disposal  of  the  Commission  the  amounts  exceeding  EUR  50,000 
corresponding  to  established  entitlements  which  prove  irrecoverable,  they  must  report  the 
relevant  cases  to  the  Commission  using  a  multilingual  database  called  WOMIS  (Write-Off 
Management  and  Information  System),  which  became  operational  on  1  January  2010.  This 
tool, regularly updated, allows for an efficient and secure management of the Member States' 
reports. 

Over the period 2013-2015, 904 reports14 were communicated to the Commission involving a 
total amount of EUR 245,523,019. In response to the 791 reports examined during this period 
(on-going  cases  and  new  reports)  involving  a  total  amount  of  EUR 290,520,371,  the 
Commission  accepted  106  reports  involving  EUR 40,831,238.  In  264  cases,  involving 
EUR 87,273,185, the Commission was of the opinion that the amounts became irrecoverable 
for reasons attributable to the Member States concerned. In 12 cases, reporting the case to the 
Commission was considered incorrect or premature (EUR 5,013,866). The Commission had 
to ask for additional information for more than half of the cases examined (409 reports15, for 
which  the  Commission's  final  comments  were  still  outstanding  at  the  end  of  2015 
(EUR 157,402,082)).  

5.2.  Treatment  of  errors  of  establishment  leading  to  a  loss  of  traditional  own 

resources 

In its judgment of 15 November 200516 Commission versus Denmark, the European Court of 
Justice upheld the Commission's view that the obligation of the Member State to establish the 
EU's entitlement to TOR (and to make them available) arises as soon as the conditions laid 
down  in  the  customs  regulations  are  met  under  normal  circumstances.  Therefore,  it  is  not 
necessary  to  wait  for  the  establishment  to  actually  take  place.  As  the  Member  States  are 

14 Including cases where Member States requested reassessment 
15 Including cases where Member States requested reassessment 
16 Case C-392/02 

9 

 
 
                                                            
released from their obligation to make TOR available only in cases of force majeure or if it is 
impossible to recover the amount for reasons which cannot be attributed to them, they must 
therefore  assume  the  financial  consequences  of  errors  they  have  made  irrespective  of  the 
timing of actual establishment or even in the absence of establishment. 

On  the  basis  of  this  case-law,  the  Commission  followed  up  the  administrative  errors 
committed by the Member States to the detriment of the EU's  financial  interests  during the 
period 2013-2015 (on-the-spot inspections, national repayment or remission decisions due to 
administrative errors, etc.). As a result of this follow-up, the Commission asked the Member 
States to make available EUR 32,704,818 over the period 2013-2015. 

The  European  Court  of  Justice  also  clarified  in  its  judgement  C-334/08  of  8  July  2010 
Commission versus Italy that Member States are financially responsible for TOR that should 
have been made available, from the date when the amount should have been made available if 
no  administrative  error  had  been  committed.  Interest  on  late  payment  is  being  calculated 
accordingly. 

5.3.  OWNRES database 

Under Regulation No 1150/2000 Member States must send the Commission information on 
cases  of  fraud  and  irregularities  involving  entitlements  of  more  than  EUR  10,000.  This 
information is reported via the OWNRES database, which is managed and maintained by the 
Commission. 

This  database  provides  the  Commission  with  essential  information  necessary  to  monitor 
recovery  and  prepare  its  on-the-spot  inspections.  It  is  also  used  by  the  Anti-Fraud  Office 
(OLAF) for various analyses and the data reported is assessed in detail in the annual report 
from  the  Commission  to  the  European  Parliament  and  the  Council  on  the  protection  of  the 
European Union’s financial interests — Fight against fraud. 

5.4. 

Pilot project on audits of A and B accounts by Member States 

Apart  from  the  Joint  Audit  Arrangements  with  Denmark  and  Austria, the  Commission  also 
engaged in a pilot project on audits of A and B accounts management to be carried out by the 
Member States themselves and subsequently assessed by the Commission services. A project 
group for a joint audit approach was established in 2012 in accordance with the concept  of 
the Customs 2013 Action Programme and in which 13 Member States were represented. The 
group developed recommendations for common objectives and audit tools for the use of the 
internal audit services (or TOR inspection services) of the national administrations. An audit 
pilot  on  TOR  accounting  was  launched  in  2014  in  which  five  Member  States  (Bulgaria, 
Estonia,  Croatia,  Italy  and  Slovenia)  participated.  They  submitted  their  audit  reports  in  the 
last  quarter  of  2014.  The  Commission  then  conducted  on-the-spot  inspections  in  the 
concerned Member States to validate their own audit pilot findings. The overall conclusions 
from the exercise were included in a single Commission report per Member State. 

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The results were generally positive, though several issues were identified that require further 
work and reflection. More experience is needed with this type of joint work. A second pilot 
project on TOR accounting has been launched in 2016 to that effect. 

5.5.  Monitoring measures for the acceding countries 

The Commission provides technical assistance to the candidate countries so that they develop 
the administrative  capacity and put  in place  the systems necessary  to implement the  acquis 
with  respect  to  TOR  upon  accession.  It  also  assesses  the  preparedness  of  the  candidate 
countries to that effect. 

In  this  domain,  the  Commission  conducted  its  last  preparatory  mission  in  2013  in  the 
framework  of  the  accession  negotiations  concerning  Croatia.  This  fact-finding  mission 
enabled the Commission to obtain reasonable  assurance of Croatia's administrative capacity 
to  apply  the  acquis.  Technical  assistance  in  the  form  of  own  resources  workshops  was 
provided  to  Iceland  and  Montenegro.  Iceland  withdrew  its  application  for  EU  membership 
and the technical assistance is ongoing for Montenegro. 

6. 

OVERALL ASSESSMENT OF THE INSPECTIONS' ARRANGEMENTS 

As  in  previous  periods  the  findings  made  during  the  period  2013-2015  confirm  the 
advantages and reassurance that the EU derives from the TOR inspections arrangements. In 
its  annual  reports,  the  European  Court  of  Auditors  also  found  these  arrangements  to  be 
effective in protecting the EU financial interest. 

The main purpose of the TOR arrangements concerning inspection by the Commission is to 
ensure that the Member States respect the EU TOR regulatory framework and make the TOR 
available to the EU budget timely and in full. The financial impact of the inspections reported 
above is significant and obviously improves recovery and the making available of TOR to the 
EU  budget.  But  clearly  the  inspections  also  improve  compliance  with  the  EU  rules.  As  a 
result  of  the  Commission's  inspection  findings,  Member  States  regularly  revise  their  own 
rules and procedures or put in place new ones. The European Court of Justice's rulings also 
confirm regularly the Commission's views on the protection of the EU financial interest when 
it  comes  to  the  implementation  of  the  own  resources  legislative  framework.  Finally,  the 
findings  of  the  Commission  inspections  influence  the  legislative  process,  for  example  by 
identifying loopholes and their consequences.  

All  in  all,  the  TOR  inspections  by  the  Commission  contribute  significantly  to  a  better 
protection  of  the  financial  interest  of  the  EU  by  monitoring  efficiently  the  timeliness  and 
completeness of the making available of TOR by the Member States. 

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7. 

CONCLUSION 

The results recorded from 2013 to 2015 show that the Commission's inspections of TOR and 
the  systematic  follow-up  of  the  shortcomings  observed  continue  to  be  indispensable  and 
efficient  means  to  improve  recovery  of  TOR  and  provide  reassurance  that  the  financial 
interests of the EU are properly safeguarded in this domain. 

The  inspections  keep  on  being  a  key  tool  leveraging  compliance  with  the  EU  rules.  Its 
financial impact is significant, as illustrated by the additional net amount made available to 
the EU budget (including payments for irrecoverable amounts for reasons attributable to the 
Member  States  and  payments  related  to  Member  States'  financial  responsibility  for  errors 
made by the national administrations) of around EUR 348 million during 2013-2015. This 
results in significant incentives for timely and complete making available of TOR to the EU 
budget. On top of this, the inspections contribute to ensure equality of treatment among the 
Member States, as regards both the application of the customs and accounting rules and the 
protection  of  the  EU's  financial  interests,  providing  a  powerful  mechanism  to  fight  and 
prevent damaging distortions of competition.  

From  1  May  2016,  a  new  customs  legislation17  is  applicable  and,  after  ratification  by  the 
Member States, a new own resources legislative framework for the period 2014-2020 will be 
retroactively applied from 1 January 2014. Both require the Commission to continue its TOR 
inspection activities resolutely and effectively. 

17 Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union 
Customs  Code;  Commission  Delegated  Regulation  (EU)  2015/2446  of  28  July  2015  supplementing  Regulation  (EU) 
No 952/2013 of the European Parliament and of the Council as regards detailed rules concerning certain provisions of the 
Union Customs Code; Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015 laying down detailed 
rules for implementing certain provisions of Regulation (EU) No 952/2013 of the European Parliament and of the Council 
laying down the Union Customs Code. 

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