COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT pursuant to Article 294(6) of the Treaty on the Functioning of the European Union concerning the position of the Council at first reading with a view to the adoption of a Directive of the European Parliament and of the Council on the fight against fraud to the Union's financial interests by means of criminal law
Date: 2017-05-16
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: criminal law, fraud against the EU, general budget (EU), judicial cooperation in criminal matters in the EU, limitation of legal proceedings, offence, penalty

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   EUROPEAN COMMISSION  Brussels, 16.5.2017  COM(2017) 246 final 2012/0193 (COD)   COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT  pursuant to Article 294(6) of the Treaty on the Functioning of the European Union  concerning the position of the Council at first reading with a view to the adoption of a Directive of the European Parliament and of the Council on the fight against fraud to the Union's financial interests by means of criminal law  
 
 
2012/0193 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to Article 294(6) of the Treaty on the Functioning of the European Union 

concerning the 

position of the Council at first reading with a view to the adoption of a Directive of the 
European Parliament and of the Council on the fight against fraud to the Union's 
financial interests by means of criminal law 

1. 

BACKGROUND 

Date of transmission of the proposal to the European Parliament and 
to the Council (document COM(2012) 363 final – 2012/193 COD): 

11 July 2012 

Date  of  the  opinion  of  the  European  Economic  and  Social 
Committee: 

N/A 

Date of the opinion of the European Committee of the Regions: 

18 December 2012 

Date of the position of the European Parliament, first reading: 

16 April 2014 

Date of adoption of the position of the Council, first reading: 

25 April 2017 

2. 

OBJECTIVE OF THE PROPOSAL FROM THE COMMISSION 

The objective of the draft Directive is to establish minimum rules concerning the definition of 
criminal offences, sanctions and limitation periods in the field of the fight against fraud and 
other  illegal  activities  affecting  the  Union’s  financial  interests,  with  a  view  to  contributing 
effectively  to  a  stronger  protection  against  crime  affecting  those  financial  interests,  in  line 
with the acquis of the Union in this field. The Directive will improve the level of protection 
currently  existing  on  the  basis  of  the  1995  Convention  on  the  protection  of  the  European 
Communities'  financial  interests  ("Convention")1,  which  the  Directive  will  replace  for  the 
Member States bound by it.  

3. 

COMMENTS ON THE POSITION OF THE COUNCIL 

As  regards  the  substantive  provisions  of  the  Directive,  the  Council  Position  at  first  reading 
reflects  the  compromise  reached  in  negotiations  between  the  Council  and  the  European 
Parliament, facilitated by the Commission.  

The  Council  Position  at  first  reading  fully  maintains  the  objectives  of  the  Commission 
proposal. Compared to the Convention, the Directive will provide clearer and more stringent 
rules  on  a  number  of  important  issues.  As  regards  the  definition  of  criminal  offences,  the 
Directive  provides  updated  definitions  of  active  and  passive  corruption,  a  new  offence  of 

1 

OJ C 316, 27.11.1995, p. 48. 

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misappropriation, which covers conduct by public officials going beyond the mere fraudulent 
behaviour and an updated definition of public officials.  

Moreover,  against  the  initial  Council  view  to  exclude  VAT  fraud  from  the  scope  of  the 
Directive, the Council Position at first reading now includes the offence of serious VAT fraud 
in  the  Directive,  whereby  Member  States  will  need  to  criminalise  at  least  fraud  offences 
against the common VAT system when they are connected with the territory of two or more 
Member States and involve a total damage of at least EUR 10 million. The Commission was 
from the beginning of the view that VAT fraud should fall within the scope of the Directive, 
as  is  currently  the  case  for  the  Convention2.  The  inclusion  of  at  least  serious  cross-border 
VAT  fraud  cases  in  the  Directive  is  essential  for  the  Commission  in  order  not  to  step  back 
from the level of protection of the Convention and to continue ensuring minimum standards 
for  VAT  fraud  cases  across  the  Union  and  thus  ensure  uniform  and  better  protection  of  the 
financial  interests  of  the  Union.  The  Commission  accepts  that  not  all  VAT  fraud  cases,  but 
only  serious  VAT  fraud  cases,  are  covered  in  the  Directive  and  notes  that  the  10  million 
threshold is subject to a revision clause.  

With  regard  to  sanctions,  the  Directive  harmonises  maximum  criminal  sanctions  for  natural 
persons,  including  a  maximum  penalty  of  at  least  four  years  of  imprisonment,  when  the 
offences referred to in the Directive involve considerable damage or advantage, or when other 
serious circumstances defined in national law justify such sanction. 

While  the  Convention  was  silent  on  the  question  of  limitation  periods,  the  Directive 
introduces  a  new,  binding  set  of  rules  on  limitation  periods,  including  provisions  on 
interruptions and suspensions, in respect of criminal offences affecting the Union budget. This 
set  of  rules  will  enable  law  enforcement  and  judicial  authorities  to  effectively  investigate, 
prosecute  and  adjudicate  the  offences  in  question,  as  well  as  ensure  the  enforcement  of  the 
sanctions imposed.  

As  far  as  it concerns the  legal  basis,  the  Commission  proposal  was  based  on  Article 325(4) 
TFEU,  while  the  Council  and the  European  Parliament  agreed  that  Articles 83(1)  and  83(2) 
TFEU should be the appropriate legal basis for establishing minimum rules with regard to the 
definition  of  criminal  offences  and  sanctions,  including  offences  in  the  field  of  the  fight 
against fraud affecting the financial interests of the Union. Accordingly, the Council adopted 
in first reading the draft Directive on the basis of Article 83(2) TFEU. 

In view of the aforesaid, the Commission made the following statement at the Council on 7 
February  2017,  when  the  Council  reached  a  political  agreement  on  the  Directive  and  on  25 
April 2017 when the Council adopted its position at first reading:  

"Although  it  has  no  objection  regarding  the  substantive  provisions  of  the  Directive,  the 
Commission considers that it should have been based on Article 325 TFEU and reserves its 
right to initiate legal proceedings about the legal basis before the Court of Justice." 

4. 

CONCLUSION 

The  Commission  accordingly  supports the  position  of  the  Council  at  first  reading  regarding 
the  substantive  provisions  of  the  Directive.  The  Commission,  however,  considers  that  the 
Directive should have been based on Article 325 TFEU and reserves its right to initiate legal 
proceedings about the legal basis before the Court of Justice. 

2 

This was confirmed by the Court of Justice in its judgment of 8 September 2015, Taricco, C-105/14 

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