Proposal for a COUNCIL IMPLEMENTING DECISION imposing a fine on Austria for manipulation of debt data in Land Salzburg
Date: 2017-02-22
Institutions: European Commission, Eurostat
Subjects: Austria, EU control, EU statistics, Salzburg, budget deficit, budgetary control, euro area, national statistics, public debt, sanction (EU)

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   EUROPEAN COMMISSION  Brussels, 22.2.2017  COM(2017) 93 final 2017/0044 (NLE)   Proposal for a COUNCIL IMPLEMENTING DECISION imposing a fine on Austria for manipulation of debt data in Land Salzburg  
 
 
1. 

Background to the Recommendation 

EXPLANATORY MEMORANDUM 

According to Article 126(1) of the Treaty on the Functioning of the European Union (TFEU), 
Member States shall avoid excessive government deficits. Government deficit and debt data 
relevant for the application of Articles 121 TFEU and 126 TFEU, or for the application of the 
Protocol  on  the  excessive  deficit  procedure  annexed  to  the  Treaties,  is  an  essential  input  to 
economic policy coordination in the Union. 

Regulation  (EU)  No  1173/2011  of  the  European  Parliament  and  of  the  Council  of  16 
November 2011 on the effective enforcement of budgetary surveillance in the euro area1 sets 
out a system of sanctions for enhancing the enforcement of budgetary surveillance in the euro 
area. In this context, in order to deter against the misrepresentation, whether intentional or due 
to  serious  negligence,  of  government  deficit  and  debt  data,  Article  8(1)  of  the  Regulation 
provides that the Council, acting upon a recommendation by the Commission, may decide to 
impose a fine on the Member State responsible. 

Article 8(3) of Regulation (EU) No 1173/2011 empowers the Commission, when it finds that 
there  are  serious  indications  of  facts  liable  to  constitute  a  misrepresentation  of  government 
deficit  and  debt  data,  to  conduct  all  investigations  necessary.  On  3  May  2016,  the 
Commission launched an investigation related to the manipulation of statistics in Austria. 

The  preliminary  findings  of  the  investigation  related  to  manipulation  of  statistics  in  Austria 
were  sent  to  Austria  for  its  observations  on  20  December  2016,  as  required  by  Article  6  of 
Commission  Delegated  Decision  2012/678.  The  Commission  invited  Austria  to  submit 
written  observations  on  the  preliminary  findings  by  19  January  2017.  Austria  provided  its 
written observations on 25 January 2017. 

On 22 February 2017, the Commission adopted its Report on the investigation related to the 
manipulation  of  statistics  in  Austria  as  referred  to  in  Regulation  (EU)  No  1173/20112  (the 
Report), taking into account the observations of Austria.  

The  Report  concludes  that  the  Landesrechnungshof  (LRH),  the  State  Office  and  the  State 
Government  of  Land  Salzburg,  i.e.  entities  within  the  general  government  sector  of  the 
Republic of Austria, were seriously negligent in not ensuring appropriate compilation controls 
and reporting procedures. Thereby those entities facilitated the fact that the Budget Unit of the 
State Office of Land Salzburg could misrepresent and conceal financial transactions, leading 
to the misrepresentation in 2012 and 2013 of Austria’s debt data regarding years 2008-20123  
to Eurostat, i.e. after the entry into force of Regulation (EU) 1173/2011. 

Moreover, the Report concluded that Statistics Austria (hereinafter “STAT”) was aware of the 
possibility of misrepresentation of the accounts of Land Salzburg since, at least, 6 December 
2012, but that it only informed the Commission (Eurostat) accordingly on 10 October 2013. 

The  conditions  set  out  in  Article  8(1)  of  Regulation  (EU) No  1173/2011  for  recommending 
that  the  Council  impose  a  fine  on  the  Member  State  are  present,  as  regards  the 
misrepresentation of debt data which took place when Austria reported the incorrect data to 
Eurostat  in  March  and  September  2012  and  March  and  September  2013,  and  thus  after  the 
entry into force of the Regulation on 13 December 2011.  

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OJ L 306, 23.11.2011, p. 1. 
COM(2017) 94 final. 
Namely the aggregated number of reported years for the reporting in 2012 (for years 2008-2011) and in 
2013 (for years 2009-2012), following the formula that data provided in year n concern years n-1, n-2, 
n-3 and n-4. 

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2. 

Calculation of the fine 

According to Article 14 of Commission Delegated Decision 2012/678/EU of 29 June 2012 on 
investigations  and  fines  related  to  the  manipulation  of  statistics  as  referred  to  in  Regulation 
(EU)  No  1173/20114,  the  Commission  shall  ensure  that  the  fine  to  be  recommended  is 
effective, proportionate and dissuasive. The fine is established using a two-step methodology. 
First,  the  Commission  determines  the  reference  amount.  Second,  it  may  modulate  that 
reference amount upwards or downwards taking into account the specific circumstances of the 
case. 

According to Article 14(2) of Delegated Decision 2012/678/EU, the reference amount is equal 
to 5 % of the larger impact of misrepresentation of the general government debt of Austria for 
the relevant years covered by the notification in the context of the excessive deficit procedure 
(EDP). The revision to the debt for the year 2012 reported by the Republic of Austria in the 
April  2014  EDP  Notification  amounted  to  EUR  1 192  million.  The  reference  amount  thus 
equals EUR 59.6 million. 

Taking  into  account  the  criteria  set  out  in  Article  14(3)(d)  of  Delegated  Decision 
2012/678/EU,  the  point  of  departure  is  that  the  reference  amount  shall  be  the  highest 
magnitude  detected,  multiplied  by  the  number  of  years,  across  the  four  years  of  the  last 
notification,  in  which  the  relevant  misrepresentation  occurred.  The  highest  magnitude 
detected,  as  mentioned  above,  was  of  EUR  1 192  million  in  2012.  Moreover,  the  last 
notification  in  which  the  relevant  misrepresentation  occurred  was  the  October  2013  EDP 
notification, covering years 2009 to 2012. However, in view of the fact that Regulation (EU) 
No  1173/2011  only  entered  into  force  on  13  December  2011  and  that  no  sanctions  were 
foreseen for misrepresentation of government deficit and debt data prior to that date, only the 
misrepresentation  for  years  2011  and  2012,  as  misreported  in  the  2012  and    the  2013  EDP 
notifications  respectively,  are  of  relevance.  In  this  sense,  the  reference  amount  shall  be 
multiplied by two, amounting to EUR 119.2 million.  

Taking  into  account  the  criteria  set  out  in  Article  14(3)(a)  of  Delegated  Decision 
2012/678/EU, the Commission  in  its report  concludes that the misrepresentation of data did 
not have a significant impact on the functioning of the strengthened economic governance of 
the Union, due to the limited impact on the debt of the Republic of Austria as a whole. In this 
sense, the Commission considers that in view of the concrete circumstances, the Republic of 
Austria could be granted a reduction of the fine on this account. 

Taking  into  account  the  criteria  set  out  in  Article  14(3)(b)  of  Delegated  Decision 
2012/678/EU,  the  Report  indicates  that  the  misrepresentation  was  the  result  of  serious 
negligence.  The  Report  does  not  conclude  that  the  misrepresentation  was  intentional  in  an 
EDP context (see in particular section 4 of the Report). Therefore, no modulation is applied 
on this account under the concrete circumstances. 

Taking  into  account  the  criteria  set  out  in  Article  14(3)(c)  of  Delegated  Decision 
2012/678/EU, the Report concludes that the misrepresentation of data was facilitated by the 
fact,  that  three  entities  of  the  general  government  sector  of  the  Republic  of  Austria  were 
seriously negligent in not ensuring appropriate compilation controls and reporting procedures 
(see  in  particular  sections  3  and  4  of  the  Report).  Nevertheless,  the  Commission  does  not 
consider  this  to  be  a  concerted  action  by  those  entities  and  hence  the  Republic  of  Austria 
could be granted a reduction of the fine on this account under the concrete circumstances. 

Taking  into  account  the  criteria  set  out  in  Article  14(3)(e)  of  Delegated  Decision 
2012/678/EU, the Report concludes that STAT and all entities concerned have shown a high 

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OJ L 306, 6.11.2012, p. 21. 

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degree of cooperation in the course of the investigation. In this respect, the Commission has 
had  some  regard  to  its  practice  in  the  area  of  competition,  where  fines  may  be  reduced 
significantly on account of cooperation with the Commission in the course of an investigation.  

Nevertheless, it has been ascertained that STAT, even if it was fully and directly informed by 
the  State  Office,  at  least  since  22  January  2013,  that  misrepresentation  had  occurred  in  the 
accounts of Land Salzburg, failed to immediately inform the Commission (Eurostat) of these 
facts.  This  element  would  normally  justify  an  increase  in  the  amount  of  the  fine.  As  a 
combined  result  of  the  two  above  elements,  the  Commission  considers  that  the  Republic  of 
Austria could still be granted a certain reduction of the fine on this account. 

Overall,  the  Commission  recommends  to  the  Council  that  the  fine  to  be  imposed  on  the 
Republic of Austria is set to EUR 29.8 million, corresponding to 25 % of the double reference 
amount.  

Article  8(2)  of  Regulation  (EU)  No  1173/2011  provides  that  the  total  amount  of  the  fine 
should  not  exceed  0.2  %  of  the  latest  gross  domestic  product  (GDP)  of  the  Republic  of 
Austria. The recommended fine does not exceed 0.2 % of the GDP of Austria in 2015. 

3. 

Conclusion and recommendation 

In conclusion, the Commission Report finds that three entities within the general government 
sector  of  the  Republic  of  Austria  were  seriously  negligent  in  not  ensuring  appropriate 
compilation controls and reporting procedures, and that one sub-entity of one of those entities 
misrepresented  and  concealed  financial  transactions,  leading  to  an  incorrect  reporting  of 
deficit  and debt data to Eurostat in 2012 and 2013, regarding years 2008-2012, i.e. after the 
entry  into  force  of  Regulation  (EU)  1173/2011.  Based  on  these  findings,  the  Commission 
recommends to the Council that a fine in the amount of EUR 29.8 million be imposed on the 
Republic of Austria. 

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2017/0044 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

imposing a fine on Austria for manipulation of debt data in Land Salzburg 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having  regard  to  Regulation  (EU)  No  1173/2011  of  the  European  Parliament  and  of  the 
Council of 16 November 2011 on the effective enforcement of budgetary surveillance in the 
euro area5, and in particular Article 8(1) thereof, 

Having  regard  to  Commission  Delegated  Decision  2012/678/EU  of  29  June  2012  on 
investigations  and  fines  related  to  the  manipulation  of  statistics  as  referred  to  in  Regulation 
(EU) No 1173/20116, 

Having regard to the Commission's report on the investigation related to the manipulation of 
statistics in Austria as referred to in Regulation (EU) No 1173/2011 adopted on 22 February 
20177, 

Having regard to the recommendation from the Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

According to Article 126(1) of the Treaty on the Functioning of the European Union 
(TFEU),  Member  States  shall  avoid  excessive  government  deficits.  Government 
deficit and debt data relevant for the application of Articles 121 TFEU and 126 TFEU, 
or for the application of the Protocol on the excessive deficit procedure annexed to the 
Treaties, is an essential input to economic policy coordination in the Union. 

In order to for enhance the enforcement of budgetary surveillance in the euro area, and 
to  deter  against  the  misrepresentation,  whether  intentional  or  due  to  serious 
negligence,  of  government  deficit  and  debt  data,  the  Council,  acting  upon  a 
recommendation  by  the  Commission,  may  decide  to  impose  a  fine  on  the  Member 
State responsible. 

On 3 May 2016, the Commission launched an investigation related to the manipulation 
of  statistics  in  Austria  as  referred  to  in  Regulation  (EU)  No  1173/2011.  The 
preliminary  findings  of  the  investigation  were  sent  to  Austria  for  its  observations  on 
20 December 2016, as required by Delegated Decision 2012/678. Austria provided its 
written observations on the preliminary findings on 25 January 2017. 

On 22 February 2017, the Commission adopted a report on the investigation related to 
the  manipulation  of  statistics  in  Austria  as  referred  to  in  Regulation  (EU)  No 
1173/2011, taking into account the observations provided by Austria.  

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OJ L 306, 23.11.2011, p. 1. 
OJ L 306, 6.11.2012, p. 21. 
COM(2017) 94 final. 

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(5) 

(6) 

(7) 

(8) 

(9) 

In its report, the Commission concludes that the Landesrechnungshof (LRH) and State 
Office  and  State  Government  of  Land  Salzburg,  i.e.  entities  within  the  general 
government sector of the Republic of Austria, were seriously negligent in not ensuring 
appropriate  compilation  controls  and  reporting  procedures.  Thereby  those  entities 
facilitated  the  fact  that  the  Budget  Unit  of  the  State  Office  of  Land  Salzburg  could 
misrepresent  and  conceal  financial  transactions,  leading  to  the  misrepresentation  in 
2012 and 2013 of Austria’s debt data regarding years 2008-2012  to Eurostat, i.e. after 
the  entry  into  force  of  Regulation  (EU)  1173/2011.  Moreover,  it  concluded  that 
the  possibility  of 
(hereinafter  “STAT”)  was  aware  of 
Statistics  Austria 
misrepresentation of the accounts of Land Salzburg since, at least, 6 December 2012 
but that it only informed the Commission (Eurostat) accordingly on 10 October 2013. 

The amount of the fine shall not exceed 0,2% of the gross domestic product of Austria 
in 2015. 

The  reference  amount  of  the  fine  to  be  imposed  shall  be  equal  to  5  %  of  the  larger 
impact of misrepresentation of the general government debt of Austria for the relevant 
years  covered  by  the  notification  in  the  context  of  the  excessive  deficit  procedure 
(EDP). The revision to the debt reported by the Republic of Austria for the April 2014 
EDP notification amounted to EUR 1 192 million. The reference amount shall thus be 
set at EUR 59.6 million. 

Taking  into  account  the  criteria  set  out  in  Article  14(3)(d)  of  Delegated  Decision 
2012/678/EU,  the  Commission's  report  concludes  that  the  relevant  actions  of  the 
Member State on which a fine may be based are those which took place in the period 
from  13  December  2011,  when  Regulation  (EU)  No  1173/2011  entered  into  force, 
until  the  launch  of  the  investigation.  It  also  concludes  that  the  last  notification  in 
which the relevant misrepresentation occurred was the October 2013 EDP notification 
covering  the  years  2009-2012.  The  misrepresentation  for  years  2011  and  2012,  as 
misreported in the 2012 and the 2013 EDP notifications respectively, are of relevance 
in the context of the Regulation. These elements justify the amount of the fine to be 
increased. 

Taking  into  account  the  criteria  set  out  in  Article  14(3)(a)  of  Delegated  Decision 
2012/678/EU,  the  Commission  in  its  report  has  concluded that  the  misrepresentation 
of  data  did  not  have  significant  impact  on  the  functioning  of  the  strengthened 
economic  governance  of  the  Union,  due  to  the  limited  impact  on  the  debt  of  the 
Republic  of Austria as a whole.  These elements justify a reduction of the amount  of 
the fine. 

(10)  Taking  into  account  the  criteria  set  out  in  Article  14(3)(b)  of  Delegated  Decision 
2012/678/EU,  the  Commission  in  its  report  indicates  that  the  misrepresentation  was 
the  result  of  serious  negligence.  The  Report  does  not  conclude 
the 
misrepresentation was intentional in an EDP context. No modulation should be applied 
to the amount of the fine in this respect. 

that 

(11)  Taking  into  account  the  criteria  set  out  in  Article  14(3)(c)  of  Delegated  Decision 
2012/678/EU,  the  Commission  in  its  report  concludes  that  the  misrepresentation  of 
data was facilitated by the fact that three entities of the general government sector of 
the  Republic  of  Austria  were  seriously  negligent  in  not  ensuring  appropriate 
compilation controls and reporting procedures. Nevertheless, the Commission does not 
consider  this  to  be  a  concerted  action  by  those  entities.  These  elements  justify  a 
reduction of the amount of the fine. 

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(12)  Taking  into  account  the  criteria  set  out  in  Article  14(3)(e)  of  Delegated  Decision 
2012/678/EU,  the  Commission  in  its  report  concludes  that  STAT  and  all  entities 
concerned have shown a high degree of cooperation in the course of the investigation. 
This  element  would  normally  justify  a  reduction  of  the  amount  of  the  fine. 
Nevertheless, it has been ascertained that, under the principle of due diligence, STAT 
could  and  should  have  had  a  more  prompt  and  pro-active  role  in  informing  the 
Commission  (Eurostat)  that  misreporting  had  occured  in  the  accounts  of  Land 
Salzburg. This element would normally justify an increase in the amount of the fine. 
Considering  the  combined  effect  of  the  elements  justifying  a  reduction  against  the 
elements  justifying  an  increase,  a  certain  reduction  should  still  be  applied  to  the 
amount of the fine. 

(13) 

In  view  of  these  circumstances,  the  fine  to  be  imposed  on  Austria  should  be  set  at 
EUR 29.8 million, 

HAS ADOPTED THIS DECISION:  

Article 1 

A  fine  of  EUR  29.8  million  is  imposed  on  Austria  for  the  misrepresentation,  by  serious 
negligence of three government entities, of government debt data, as set out in the report of 
the  European  Commission  on  the  investigation  related  to  the  manipulation  of  statistics  in 
Austria as referred to in Regulation (EU) No 1173/2011. 

This Decision is addressed to the Republic of Austria. 

Done at Brussels, 

Article 2 

For the Council 
The President 

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