Proposal for a COUNCIL REGULATION amending Regulation (EEC, Euratom) No 1553/89 on the definitive uniform arrangements for the collection of own resources accruing from value added tax
Date: 2018-05-02
Institutions: European Commission, Secretariat-General
Subjects: EU Member State, VAT, VAT resource, financial control

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   EUROPEAN COMMISSION  Brussels, 2.5.2018 COM(2018) 328 final 2018/0133 (NLE)  Proposal for a COUNCIL REGULATION amending Regulation (EEC, Euratom) No 1553/89 on the definitive uniform arrangements for the collection of own resources accruing from value added tax  
 
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The purpose of this proposal is to simplify the Own Resources aspects of Value Added Tax 
considerably  by  amending  Council  Regulation  (EEC,  Euratom)  No  1553/891:  the  focus  is 
switched to standard-rated supplies (so the weighted average rate will not be needed), while 
the  number  of  corrections  are  reduced  to  an  absolute  minimum  and  the  financial 
compensations have been removed. In addition, a common percentage is proposed, based on 
Member State’s most recent fiscal data.  

This proposal constitutes an integral part of the reform of the Own Resources system as set 
out in the proposal for a Council Decision on the system of Own Resources of the European 
Union2. That reform follows the recommendations proposed of the High-Level Group on Own 
Resources, which published its final report in December 20163.  

The proposal draws on past experiences in administering Own Resources and aims to simplify 
the  calculation  of  the  Own  Resource  based  on  Value  Added  Tax.  It  also  streamlines  the 
practical arrangements. It is explained in more detail in section 5 below. 

Given the nature of the Own Resources, their management relies on the correct application of 
other Union policies, in particular on the internal market and taxation.  

2. 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY  

The proposed Regulation has its legal basis in Article 322(2) of the Treaty on the Functioning 
of the European Union. Article 8(2) of Council Decision 2014/335/EU, Euratom4 and Article 
6(3)  of  the  proposed  Own  Resources  Decision  mention  that  Member  States  shall  make  the 
resources available to the Commission ‘in accordance with regulations’ adopted under Article 
322(2)  of  the  Treaty  on  the  Functioning  of  the  European  Union.  In  addition,  since  this 
Regulation amends an existing regulation, it is appropriate to use the same type of instrument.  

By the nature of the Union budget and the Own Resources that constitute its revenue side, the 
system of Own Resources and their being made available have to be managed from a Union 
perspective and this cannot be done by the Member States. 

This proposed Regulation complements the already existing ‘making available’ provisions, in 
particular Regulation (EU, Euratom) No 609/20145.  

It  is  in  the  interests  of  the  Union  and  its  Member  States  to  ensure  that  the  system  of  Own 
Resources  works  well  and  the  proposed  Regulation  is  designed  to  facilitate  cooperation 
between them. 

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Council  Regulation  (EEC,  Euratom)  No  1553/89  of  29  May  1989  on  the  definitive  uniform 
arrangements for the collection of own resources accruing from value added tax (OJ L 155, 7.6.1989, p. 
9). 
COM(2018) 325 final of 2.5.2018. 
Future  financing  of  the  EU.  Final  report  and  recommendations  of  the  High  Level  Group  on  Own 
Resources. December 2016. 
Council  Decision  of  26  May  2014  on  the  system  of  Own  Resources  of  the  European  Union 
(2014/335/EU, Euratom) (OJ L 168, 7.6.2014, p. 105). 
Council  Regulation  (EU,  Euratom)  No  609/2014  of  26  May  2014  on  the  methods  and  procedure  for 
making available the traditional, VAT and GNI-based Own Resources and on the measures to meet cash 
requirements (OJ L 168, 7.6.2014, p. 39). 

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3. 

RESULTS  OF  EX-POST  EVALUATIONS,  STAKEHOLDER  CONSULTATIONS  AND 
CONSULTATIONS AND IMPACT ASSESSMENTS 

This proposal is part of the Own Resources legislative package for the 2021-2027 period. In 
order to simplify the Own Resource based on Value Added Tax, the current Value Added Tax 
Own Resources Regulation should be amended. 

The explanatory memorandum for the proposal for a new Own Resources Decision provides 
more  information  on  recent  reports  and  documents  analysing  the  need  to  reform  the  Own 
Resources system. 

This  proposal  is  not  linked  to  the  Regulatory  Fitness  Programme.  It  targets  Member  States 
and  not  microenterprises,  small  and  medium-sized  enterprises  or  other  stakeholders.  It  is  in 
principle neutral on sectoral Union competitiveness and international trade. The proposal has 
no consequences for the protection of fundamental rights. 

4. 

BUDGETARY IMPLICATIONS 

The  budgetary  implications  of  this proposal  and  the  Own  Resources  legislative  package  are 
detailed  in  a  Legislative  Financial  Statement  attached  to  the  proposal  for  the  Making 
Available  Regulation  for  new  Own  Resources6.  The  reformed  Own  Resources  system, 
including the reformed system of the Value Added Tax, can be implemented with the same 
level of administrative appropriations and staff resources as the present system.  

5. 

OTHER ELEMENTS 

The  application  of  this  Regulation  will  be  discussed  on  a  regular  basis  in  the  Advisory 
Committee on Own Resources, as it is currently the case. 

The Commission’s proposal may be summarised as follows: 

Aricle  1(1)  of  the  proposal  deletes  the  previous  subdivision  in  6  titles  of  Regulation  (EEC, 
Euratom) No 1553/89. 

Article 1(2) of the proposal amends Article 1 of  Regulation (EEC, Euratom) No 1553/89 as 
follows: 

– 

Article 1 is updated to reflect the fact that the Value Added Tax Own Resource is to 
focus  on  standard-rated  supplies  to  final  consumption.  It  also  refers  to  the  uniform 
call rate referred to in the proposed new Own Resources Decision. The standard rate 
of Value Added Tax should be understood as the rate of Value Added Tax referred to 
in  Article  96  of  Council  Directive  2006/112/EC,  on  the  common  system  of  Value 
Added Tax7. 

Article 1(3) of the proposal deletes Article 2 of Regulation (EEC, Euratom) No 1553/89.  

– 

The  enacting  terms  have  been  moved  to  Article  3,  while  the  non-normative 
provisions, setting the framework, are now contained in the recitals. 

Article  1(4)  of  the  proposal  replaces  Articles  3  and  4  of  Regulation  (EEC,  Euratom)  No 
1553/89 as follows: 

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COM(2018) 326 final of 2.5.2018. 
Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 
347, 11.12.2006, p. 1). 

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– 

– 

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– 

– 

– 

Article 3(1): to provide an unquestionable and reliable data source, the standard-rated 
Value  Added  Tax  Own  Resource  base  is  to  be  derived  from  the  total  net  Value 
Added Tax receipts collected in a calendar year in each Member State, corrected for 
the specific territorial issues listed in the Value Added Tax Directive; 

Article 3(2):  to  arrive  at  the  standard-rated  supplies  to  final  consumption,  the 
corrected net receipt is multiplied by the common Union share; 

Article 3(3): as Member States apply different standard rates, the receipts cannot be 
used  to  apply  the  uniform  call  rate.  Therefore,  the  standard-rated  supplies  to  final 
consumption  should  be  divided  by  the  Member  State’s  standard  rate  to  obtain  the 
standard rated Value Added Tax base instead; 

Article 3(4): the uniform call rate is applied to the standard-rated Value Added Tax 
base to obtain the standard-rated Value Added Tax Own Resource that accrues to the 
EU budget; 

Article 3(5):  where  a  Member  State  infringes  the  Value  Added  Tax  Directive,  the 
collected  net  Value  Added  Tax  receipts  should  be  corrected  to  ensure  an  equal 
treatment between Member States; 

Article 4: when a Member State, following the proper procedures, chooses to change 
its standard rate of Value Added Tax, Article 4 provides the standardised method for 
taking that change into account. The method takes into account the rates before and 
after the change.  

Article  1(5)  of  the  proposal  deletes  Articles  5  and  6  of  Regulation  (EEC,  Euratom)  No 
1553/89: 

– 

Articles 5 and 6 are deleted, as the proposal provides for a minimal use of corrections 
and no compensations.  

Article 1(6) of the proposal amends Article 7 of  Regulation (EEC, Euratom) No 1553/89 as 
follows: 

– 

Article 7 remains virtually unchanged. It replaces ‘before’ with ‘by’ at the beginning 
of paragraph 1. In  paragraph 2, it includes  the conseuqential changes related to  the 
deletion  of  Articles  5  and  6,  and  to  the  move  of  Article  11  to  Article 4(7)  Council 
Regulation (EU, Euratom) No 20xx/xxxx.  

Article 1(7) of the proposal replaces Article 8 of Regulation (EEC, Euratom) No 1553/89: 

– 

Article 8  remains  unchanged  in  essence.  It  replaces  the  reference  to  the  ‘VAT 
resources base’ with ‘standard rated Value Added Tax resource base’. 

Article 1(8) of the proposal replaces Article 10 of Regulation (EEC, Euratom) No 1553/89: 

– 

Article 10 remains unchanged in essence but it is amended to reflect the scope of the 
present  proposal.  The  reference  to  Articles  5  and  6  has  been  removed,  as  it  is 
proposed  that  compensations  and  certain  corrections  will  be  discontinued.  To 
simplify  procedures,  Article  10(2)  has  been  changed  from  ‘The  Commission  shall 
examine […]’ to ‘The Commission may adopt […]’. 

Article 1(9) of the proposal amends Article 11 of Regulation (EEC, Euratom) No 1553/89: 

– 

Article 11:  Article  11(1)  is  moved  to  Article  4(7)  of  Council  Regulation  (EU, 
Euratom)  No  20xx/xxxx.  The  moved  text  remains  unchanged  in  principle,  but  has 

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been  adapted  to  the  fact  that  the  weighted  average  rate  is  not  part  of  the  present 
proposal.  Article  11(3)  has  been  reformulated  to  reflect  the  move  of  the  control 
provisions to Council Regulation (EU, Euratom) No 20xx/xxxx. 

Article 1(10) of the proposal amends Article 12 of Regulation (EEC, Euratom) No 1553/89: 

– 

Article 12 remains unchanged in essence, but it is amended to reflect the scope of the 
proposal.  Member  States  are  required  to  provide  information  on  Value  Added  Tax 
collection in more general terms and only on relevant changes in the administrative 
processes and procedures for Value Added Tax collection. Also, the reporting period 
for the Commission  has  been  brought into line with  periods laid  down in  other  tax 
regulations and directives. To assess the effectiveness of Value Added Tax collection 
procedures, it is more relevant to report on improvements made by Member States to 
Value Added Tax collection than on the procedures themeselves. The text has been 
amended accordingly. 

Article 1(11) of the proposal replaces Article 13 of Regulation (EEC, Euratom) No 1553/89: 

– 

Article 13:  This  Article  is  amended  to  reflect  the  scope  of  the  proposal.  This  is 
achieved by removing the references to ‘authorisations’. 

Article 2 of the proposal deals with its entry into force, application and retroactivity, and its 
impact on the Value Added Tax Own Resources regime. 

This Regulation should enter into force at the same time as the new Own Resources Decision. 
It is planned that the new Value Added Tax Own Resources regime will apply retroactively 
from the beginning of the period, i.e., 1 January 2021, so corrections of statements produced 
before that date will follow the rules in force at the time. 

Lastly, there is a general terminological change from ‘VAT resources’ to ‘Value Added Tax 
Own Resources’. 

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2018/0133 (NLE) 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EEC, Euratom) No 1553/89 on the definitive uniform 
arrangements for the collection of own resources accruing from value added tax 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 322(2), 

Having  regard  to  the  Treaty  establishing  the  European  Atomic  Energy  Community,  and  in 
particular Article 106a thereof, 

Having regard to the proposal from the European Commission, 
Having regard to the opinion of the European Parliament8, 
Having regard to the opinion of the European Court of Auditors9, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

The Own Resource of the Union based on a share of the Value Added Tax referred to 
in  Article  2(1)(b)  of  Council  Decision  20xx/xxxx/EU,  Euratom10  ('standard  rated 
Value Added Tax Own Resource'), should be made available to the Union in the best 
possible conditions. Accordingly, rules should be laid down for the Member States on 
making that resource available to the Union budget. 

For  the  sake  of  simplicity  and  transparency,  and  in  order  to  reduce  administrative 
burden,  the standard rated  Value  Added  Tax  Own  Resource  should  be  calculated  on 
the basis of a common Union share of standard rated transactions. That share should 
represent  the  average  of  the  lowest  shares  of  standard  rated  supplies  to  final 
consumption  in  Member  States  over  a  period  of  five  years  that  has  been  calculated 
using national accounts and fiscal data approved by the Advisory Committee on Own 
Resources. 

The arrangements for calculating the standard rated Value Added Tax Own Resource 
base  should  be  determined  in  a  uniform  manner  starting  from  actually  collected 
receipts for every given calendar year as the sole definitive method for determining the 
standard rated Value Added Tax Own Resource base.  

It  is  therefore  appropriate  to  amend  Regulation  (EEC,  Euratom)  No  1553/89 
accordingly. 

For reasons of consistency, this Regulation should enter into force on the same day as 
Decision  20xx/xxxx/EU,  Euratom  and  should  apply  from  1  January  2021.  However, 
the  amendments  to  Regulation  (EEC,  Euratom)  No  1553/89  should  not  apply  to  the 

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OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ L […], […], p. […]. 

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correction  of  statements  of  the  Value  Added  Tax  Own  Resource  base  for  financial 
years before 2021, 

HAS ADOPTED THIS REGULATION: 

Regulation (EEC, Euratom) No 1553/89 is amended as follows: 

(1) 

the following subdivisions and their titles are deleted: 

Article 1 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

'Title I General provisions'; 

'Title II Scope'; 

'Title III Method of calculation'; 

'Title  IV  Provisions  relating  to  accounting  and  making  available  of  Own 
Resources'; 

'Title V Provisions relating to control'; 

'Title VI Final provisions'; 

(2) 

Article 1 is replaced by the following: 

“Article 1 

The standard rated Value Added Tax Own Resource shall be calculated by applying a uniform 
call rate, set in accordance with Council Decision 20xx/xxxx/EU*, to the standard rated Value 
Added Tax Own Resource base determined in accordance with this Regulation. 

The standard rate of Value Added Tax is the rate of Value Added Tax referred to in Article 96 
of Council Directive 2006/112/EC**. 

* Council Decision 20xx/xxxx/EU, Euratom of [DATE] on the system of Own Resources of 
the European Union (OJ L […], […], p. […]). 

** Council Directive 2006/112/EC on the common system of Value Added Tax (OJ L 347, 
11.12.2006, p. 1).”; 

(3) 

(4) 

1. 

Article 2 is deleted; 

Articles 3 and 4 are replaced by the following: 

“Article 3 

For a given calendar year the standard rated Value Added Tax Own Resource base 
shall  be  calculated  by  each  Member  State  from  the  total  net  Value  Added  Tax 
receipts collected from the taxable transactions referred to in Article 2 of Directive 
2006/112/EC,  by  that  Member  State  during  that  same  calendar  year.  That  amount 
shall be corrected to take account of the following amounts:  

(a) 

(b) 

any  amounts  which  should  be  treated  for  Own  Resource  purposes  as  being 
transactions originating in or destined for a Member State although originating 
or destined for a territory referred to in Article 6 of Directive 2006/112/EC; 

any  amounts  accruing  from  one  of  the  places  referred  to  in  Article  7  of 
Directive  2006/112/EC,  insofar  as  Member  States  can  show  that  the  revenue 
has been transferred to that place. 

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2. 

3. 

4. 

5. 

1. 

2. 

The amount obtained in accordance with paragraph 1 shall be multiplied by 45%. 

The amount obtained in accordance with paragraph 2 shall be divided by the standard 
rate  of  Value  Added  Tax  applicable  in  the  Member  State  concerned  pursuant  to 
Directive  2006/112/EC  in  the  year  in  which  the  Value  Added  Tax  receipts  were 
collected.  

The  amount  obtained  in  accordance  with  paragraph  3  shall  be  multiplied  by  the 
uniform  call  rate  referred  in  Article  1(1)  of  Council  Regulation  (EU,  Euratom)  No 
20xx/xxxx* to obtain the standard rated Value Added Tax Own Resource to be made 
available to the Union budget. 

Where an infringement of Directive 2006/112/EC takes place and, as a consequence, 
the Union’s standard rated Value Added Tax Own Resources are reduced, the Union 
is entitled to receive the whole amount of the Own Resources in question, plus the 
interest  for  the  delay,  in  accordance  with  Article  12  of  Council  Regulation  (EU, 
Euratom) No 609/2014**. 

Article 4 

The standard rated Value Added Tax Own Resource base shall be calculated based 
on calendar years.  

Where a Member State introduces a change in the standard rate of Value Added Tax, 
the revised rate shall  apply  from the first day of the  month following the  month  in 
which the new standard rate took effect. A pro rata temporis of the two rates shall be 
computed for the purpose of the calculation referred to in Article 3(3). 

*  Council  Regulation  (EU,  Euratom)  No  20xx/xxxx  of  [DATE]  laying  down  implementing 
measures for the system of Own Resources of the European Union (OJ L […], […], p. […]). 

**  Council  Regulation  (EU,  Euratom)  No  609/2014  of  26  May  2014  on  the  methods  and 
procedure for making available the traditional, VAT and GNI-based Own Resources and on 
the measures to meet cash requirements (OJ L 168, 7.6.2014, p. 39).”; 

(5) 

(6) 

Articles 5 and 6 are deleted; 

in Article 7, paragraphs 1 and 2 are replaced by the following: 

By  31  July,  the  Member  States  shall  send  the  Commission  a  statement  of  the  total 
“1. 
amount of the standard rated Value Added Tax Own Resource base for the previous calendar 
year, calculated in accordance with Article 3, to which the rate referred to in Article 1 is to be 
applied. 

The statement shall contain all the data used to determine the base that are required for 

2. 
the inspections referred to in Article 4(7) of Regulation (EU, Euratom) No 20xx/xxxx.”; 

(7) 

Article 8 is replaced by the following: 

“Article 8 

Member  States  shall  send  to  the  Commission  by  15  April  of  each  year  an  estimate  of  the 
standard rated Value Added Tax Own Resource base for the following financial year.”; 

(8) 

Article 10 is replaced by the following: 

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“Article 10 

1. 

2. 

Member States shall inform the Commission by 30 April of each financial year of the 
solutions and related modifications that they propose to adopt in order to determine 
the  amount  referred  to  in  Article  3(1).  The  solution  proposed  shall  indicate,  where 
applicable, the nature of the data that they consider appropriate, and an estimate of 
the value of the base for each of these corrections.  

By 31 May, the Commission shall send to the other Member States the information 
referred to in the first subparagraph which it has received from each Member State. 

The  Commission  may  adopt  implementing  acts  on  the  solutions  proposed  by 
Member  States  in  accordance  with  paragraph  1.  Those  implementing  acts  shall  be 
adopted in accordance with the advisory procedure referred to in Article 13(2).”; 

(9) 

Article 11 is amended as follows: 

(a)  paragraph 1 is deleted; 

(b)  paragraph 3 is replaced by the following paragraph: 

“Following the controls referred to in  Article 4(7) of Regulation  (EU, Euratom)  20xx/xxxx, 
the annual statement for a given financial year shall be corrected as specified in Article 9.”; 

(10) 

Article 12 is replaced by the following:  

“Article 12 

1. 

2. 

3. 

Each  year  the  Member  States  shall  provide  the  Commission  with  information 
concerning  all  relevant  changes  in  their  administrative  processes  and  procedures 
which they apply for the collection of Value Added Tax. 

The Commission shall consider, together with the Member State concerned, whether 
improvements to these processes and procedures can be contemplated with a view to 
improving their effectiveness. 

The Commission shall produce a report every five years on the measures taken and 
progress made  by the Member States in  the collection of Value  Added Tax and on 
any improvements contemplated. 

The Commission shall submit that report to the European Parliament and the Council 
for the first time by 31 December 2023.”; 

(11) 

Article 13 is replaced by the following: 

“Article 13 

1. 

2. 

The  Commission  shall  be  assisted  by  the  Advisory  Committee  on  Own  Resources 
established by Article 9 of Regulation (EU, Euratom) No 20xx/xxxx. That committee 
shall  be  a  committee  within  the  meaning  of  Regulation  (EU)  no  182/2011  of  the 
European Parliament and of the Council*. 

Where  reference  is  made  to  this  paragraph,  Article  4  of  Regulation  (EU)  No 
182/2011 shall apply. 

*  Regulation  (EU)  No  182/2011  of  the  European  Parliament  and  of  the  Council  of  16 
February  2011  laying  down  the  rules  and  general  principles  concerning  mechanisms  for 
control  by  Member  States  of  the  Commission's  exercise  of  implementing  powers  (OJ  L 55, 
28.2.2011, p. 13).”. 

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Article 2 

This  Regulation  shall  enter  into  force  on  the  date  of  entry  into  force  of  Decision 
20xx/xxxx/EU, Euratom. 

It shall apply from 1 January 2021. 

However,  Article  1  shall  not  apply  to  the  correction  of  statements  of  the  Value  Added  Tax 
Own Resource base for financial years before 2021. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the Council 
The President 

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