COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS CONSOLIDATED ANNUAL ACCOUNTS OF THE EUROPEAN UNION 2017
Date: 2018-06-27
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, 27.6.2018 COM(2018) 521 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS CONSOLIDATED ANNUAL ACCOUNTS OF THE EUROPEAN UNION 2017  
 
 
EN 

  EN 

 
 
 
 
 
 
 
 
CONTENTS 

FOREWORD ..................................................................................................... 4 

EUROPEAN UNION POLITICAL FRAMEWORK, GOVERNANCE AND ACCOUNTABILITY .... 6 

NOTE ACCOMPANYING THE CONSOLIDATED ACCOUNTS ...................................... 12 

HIGHLIGHTS OF THE FINANCIAL YEAR 2017 ...................................................... 14 

CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES ................... 18 

BALANCE SHEET .......................................................................................... 21 

STATEMENT OF FINANCIAL PERFORMANCE ..................................................... 22 

CASHFLOW STATEMENT ............................................................................... 23 

STATEMENT OF CHANGES IN NET ASSETS ...................................................... 24 

NOTES TO THE FINANCIAL STATEMENTS ........................................................ 25 

FINANCIAL STATEMENT DISCUSSION AND ANALYSIS .......................................... 97 

BUDGETARY IMPLEMENTATION REPORTS AND EXPLANATORY NOTES .................. 115 

GLOSSARY .................................................................................................. 160 

LIST OF ABBREVIATIONS .............................................................................. 164 

 
 
 
 
 
 Annual accounts of the European Union 2017 

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 Annual accounts of the European Union 2017 

FOREWORD 

It  is  my  pleasure  to  present  the  2017  annual  accounts  of  the  European 
Union.  They  provide  a  complete  overview  of  the  EU  finances  and  the 
implementation  of  the  EU  budget  for  the  last  year,  including  information 
on  contingent  liabilities,  financial  commitments  and  other  obligations  of 
the Union. Reflecting the multiannual nature of the Union's activities, they 
offer  explanations  of  the  key  financial  figures  and  their  evolution.  The 
consolidated annual accounts of the European Union are part of the 
Commission’s  Integrated  Financial  Reporting  Package  and  form  an 
essential part of our highly developed system of financial accountability. 

While  2016  was  a  year  of  doubt  for  the  European  project,  not  least  with 
the decision of the United Kingdom to leave the Union, 2017 was a year of 
renewed hope and perspective. 

The 60th anniversary of the Treaty of Rome provided the backdrop to a period of deep reflection on the 
future of Europe. We took the opportunity to reaffirm our commitment to the values of the Union and to 
define the priorities for the Union of 27. 

In 2017, the European Union focused on making the economic recovery sustainable. Growth rates for the 
EU and the euro area  beat expectations to reach a  10-year high of 2.4 %. Nevertheless,  the EU had to 
tackle a series of challenges related to competitiveness, migration or security, and address some major 
natural disasters. 

The  EU  budget  is  a  unique  asset  for  the  Union  that  translates  ambitions  into  tangible  results  on  the 
ground.  It  complements  national  budgets  by  delivering  European  added  value  in  areas  where  a 
coordinated response is the most efficient and effective way to deliver on our priorities. 

2017 was the fourth year of the implementation of the current Multiannual Financial Framework; all the 
financial programmes are now fully operational. At the same time, with many unexpected challenges, the 
importance of a flexible approach to budget implementation was once more confirmed. The MFF mid-term 
revision has provided additional means to respond to unforeseen circumstances.  

The  2017  adopted  budget  focused  on  two  main  policy  priorities  for  Europe:  supporting  the  ongoing 
recovery  of  the  European  economy  and  tackling  the  migration  and  refugee  crisis.  It  ensured  the 
implementation  of  the  ongoing  programmes  on  the  one  hand,  and  provided  for  financial  support  to 
address the new challenges on the other.  

Nearly  half  of  the  funds  –  EUR 83.2 billion  in  commitments  –  stimulated  growth,  employment  and 
competitiveness.  This  included  funding  for  research  and  innovation  under  Horizon  2020,  for  education 
under  Erasmus+,  for  small  and  medium  sized  enterprises  under  the  COSME  programme,  and  for 
infrastructure  under  the  Connecting  Europe  Facility  (CEF).  Moreover,  the  European  Fund  for  Strategic 
Investments  (EFSI)  provided  for  the  implementation  of  the  Investment  Plan  for  Europe,  and  the 
convergence  among  Member  States  and  among  regions  was  fostered  through  the  European  Structural 
and Investment Funds (ESIF).  

The  European  Fund  for  Strategic  Investments  has  already  triggered  more  than  EUR 287 billion  in 
new  investment  and  has  helped  creating  more  than  300 000  jobs.  In  December  2017,  the  European 
Parliament  and  Council  decided  to  increase  and  extend  the  fund  to  catalyse  investments  of  up  to 
EUR 500 billion  by  2020.  The  EFSI  guarantee  fund,  which  the  Commission  established  to  provide  a 
liquidity  cushion  to  cover  guarantee  calls  by  the  EIB  group  for  its  investments,  has  reached 
EUR 3.5 billion at end 2017. 

EUR  54  billion  was  allocated  to  programmes  aiming  to  strengthen  economic,  social  and  territorial 
cohesion,  including  the  European  Regional  Development  Fund,  the  Cohesion  Fund,  and  the  European 
Social  Fund.  The  Youth  Employment  Initiative,  which  implementation  accelerated  in  2017, 
focuses on decreasing youth unemployment throughout the Union. By the end of 2017 the total eligible 

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 Annual accounts of the European Union 2017 

cost  of  operations  selected  for  support  reached  nearly  EUR  7  billion.  Member  States  declare  that  1.7 
million young people have already benefitted from the assistance provided by the Initiative. 

Moreover, the EU budget served as an instrument of solidarity with e.g. EUR 1.2 billion mobilised under 
the EU Solidarity Fund, the highest sum ever provided in a single instalment, following the earthquakes of 
2016 and 2017 in the Italian regions of Abruzzo, Lazio, Marche and Umbria.  

EUR  58.6  billion  were  devoted  to  the  promotion  of  sustainable  growth  and  the  preservation  of 
Europe's natural resources. Programmes included the pillars of the Common Agricultural Policy (CAP) of 
market  support  measures  and  rural  development,  fisheries,  and  activities  in  the  fields  of  climate  and 
environment under the Programme for the Environment and Climate Action (LIFE). 

The  EU  budget  also  continued  to  underpin  the  comprehensive  European  response  to  the  migration 
crisis  and  the  management  of  Europe’s  external  borders.  The  Asylum,  Migration  and  Integration  Fund 
(AMIF)  promoted the efficient management of migration flows and the development of a common Union 
approach  to  asylum  and  migration.  The  total  of  payments  executed  in  2017  amounted  to 
EUR 576.2 million, almost a double of the 2016 figure. Financed by the EU budget, the European Border 
and  Coast  Guard  Agency  with  its  extended  mandate  has  significantly  strengthened  its  presence  at  the 
EU’s  external  borders  with  the  aim  of  supporting  the  Member  States  in  their  border  management 
activities and jointly implementing an integrated border management at EU level.  

The EU budget also allowed the Union to play a strong role beyond Europe during a period of turbulence 
in Europe’s neighbourhood. Last but not least, it contributed to the response to global challenges such 
as  climate  change  by  integrating  mitigation  and  adaptation  actions  into  all  major  EU  spending 
programmes, with the total budget contribution to climate mainstreaming estimated at 20.3 % for 2017. 

An optimal performance of the Union’s budget has been a priority for the Juncker Commission from 
day  one.  We  strongly  support  the  increasing  emphasis  of  the  European  Parliament,  the  Member  States 
and the European Court of Auditors not only on how programmes are managed, but also on whether they 
are delivering results in the areas that really matter for Europe’s citizens. 

The  Commission  will  continue  playing  its  role,  along  with  the  budgetary  authority,  to  harness  the 
potential of the EU budget to invest in growth, create jobs and tackle our common challenges. 

Commissioner for Budget and Human Resources, European Commission 

Günther H. Oettinger 

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 Annual accounts of the European Union 2017 

EUROPEAN UNION POLITICAL 
FRAMEWORK, GOVERNANCE AND 
ACCOUNTABILITY 

The  European  Union  (EU)  is  a  Union  within  which  281  European  countries  (the  Member  States)  confer 
competences to attain objectives they have in common. The Union is founded on the values of respect for 
human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the 
rights of persons belonging to minorities. These values are common to the Member States in a society in 
which  pluralism,  non-discrimination,  tolerance,  justice,  solidarity  and  equality  between  women  and  men 
prevail. 

1. 

POLITICAL FRAMEWORK 

EU Treaties 

The  overarching  objectives  and  principles  that  guide  the  Union  and  the 
European  Institutions  are  defined  in  the  Treaties.  The  Union  and  the  EU 
institutions  may  only  act  within  the  limits  of  the  competences  conferred  by 
the  Treaties  so  as  to  attain  the  objectives  set  out  therein  and  must  do  this    
in accordance with the principles2 of subsidiarity and proportionality. To attain  

its objectives and carry out its policies, the Union provides itself with the necessary financial means. The 
Commission is responsible for implementing the objectives in cooperation with the Member States and in 
accordance with the principle of sound financial management. 

The EU  pursues the objectives established  in  the Treaty  with a number of  tools,  one of which is the EU 
budget. Others are, for example, proposing legislation or pursuing policy strategies.  

Europe 2020  
strategy 

The  Europe  2020  strategy  agreed  in  2010  by  the  Heads  of  State  or 
Government of EU Member States defines a 10 year jobs and growth strategy 
at  EU  level  for  the  EU3.  The  strategy  put  forward  three  mutually  reinforcing 
priorities  of  smart,  sustainable  and  inclusive  growth  with  five  EU  headline 
targets. Its success depends on all the actors of the Union, acting collectively.  

The EU budget is only one of the EU levers contributing to the delivery of the Europe 2020 objectives. A 
wide  range  of  actions  at  national,  EU  and  international  levels  are  being  mobilised  to  deliver  concrete 
results in relation to the Europe 2020 strategy. 

1   On 29 March 2017, the United Kingdom (UK) gave formal notification of its intention to leave the EU thus triggering 
the  withdrawal  process  under  Article  50  of  the  Treaty  on  the  European  Union.  The  UK  is  due  to  leave  the  EU  on 
29 March 2019. 

2 

  Under the principle of subsidiarity, the Union shall act only if and in so far as the objectives of the proposed action 

cannot be sufficiently achieved by the Member States but can rather, by reason of the scale or effects, be better 
achieved  at  Union  level.  Under  the  principle  of  proportionality,  the  content  and  form  of  Union  action  shall  not 
exceed what is necessary to achieve the objectives of the Treaties. See Article 5 of the TFEU. 

3   See  Communication  from  the  Commission,  Europe  2020,  A  strategy  for  smart,  sustainable  and  inclusive  growth, 

COM(2010)2020, 3 March 2010. 

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 Annual accounts of the European Union 2017 

Commission political 
priorities 

The Commission's political priorities are defined in the political guidelines set 
by  the  President  of  the  Commission,  providing  a  roadmap  for  the 
Commission's action that is fully consistent and compatible with Europe 2020 
as the EU's long-term growth strategy.  

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10 PRIORITIES 

 Annual accounts of the European Union 2017 

A  new  boost  for  jobs,  growth  and 
investment. 

A  reasonable  and  balanced  free 
trade  agreement  with  the  United 
States. 

A connected digital single market. 

An area of Justice and Fundamental 
Rights based on mutual trust. 

A  resilient  Energy  Union  with  a 
forward-looking 
change 
policy. 

climate 

Towards a new policy on migration. 

A  deeper  and  fairer  internal  market 
with a strengthened industrial base. 

Europe as a stronger global actor. 

A  deeper  and  fairer  Economic  and 
Monetary Union (EMU). 

A Union of democratic change. 

2030 Agenda for 
Sustainable 
Development4 

Sustainable development has long been at the heart of the European project. 
The  EU  Treaties  give  recognition  to  its  economic,  social  and  environmental 
dimensions  which  should  be  addressed  together.  The  EU  is  committed  to 
development that meets  the needs of the  present  without compromising the 
ability of future generations to meet their own needs. The EU budget plays an 

essential role in many sustainability challenges from youth unemployment to ageing populations, climate 
change,  pollution,  sustainable  energy  and  migration.  Under  the  current  Commission  sustainable 
development is mainstreamed in key cross-cutting projects as well as in sectoral policies and initiatives. 

The  policies  supported  by  the  EU  budget  are  implemented  in  accordance  with  the  Multiannual  Financial 
Framework (MFF) and corresponding sectorial legislation defining spending programmes. 

Multiannual Financial 
Framework and  

spending programmes 

The  Multiannual  Financial  Framework  translates  the  EU’s  political  priorities 
into financial terms over a period long enough to be effective and to provide a 
coherent  long-term  vision  for  beneficiaries  of  EU  funds  and  co-financing 
national  authorities.  It  sets  maximum  annual  amounts  (ceilings)  for  EU 
expenditure  as  a  whole  and  for  the  main  categories  of  expenditure 
(headings). The sum of the ceilings of all headings gives the total ceiling of 

commitment appropriations. The Multiannual Financial Framework is adopted by unanimity indicating the 
agreement  of  all  Member  States  to  the  objectives  and  the  level  of  spending  (maximum  level  of  budget 

4   Commission communication "Next steps for a sustainable European future European action for sustainability", 

SWD(2016) 390 final, 22 November 2016. 

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 Annual accounts of the European Union 2017 

commitments  and  payments),  with  the  consent  of  the  European  Parliament.  The  Commission  is 
responsible for managing and implementing the EU budget and programmes adopted  by the Parliament 
and  the  Council.  Most  of  the  actual  implementation  and  spending  (about  75%)  is  done  by  national  and 
local authorities but the Commission is responsible for supervising it. The Commission handles the budget 
under the watchful eye of the European Court of Auditors. Both institutions aim to ensure sound financial 
management. 

Interinstitutional 
agreement 

Financial 

The  Multiannual 
the 
Framework 
interinstitutional  agreement5  which  is  a  political  agreement  between  the 
European  Parliament,  the  Council  and  the  Commission.  The  purpose  of  this 
agreement, adopted in 2013 in accordance with Article 295 of the TFEU, is to  

complemented  by 

is 

implement  budgetary  discipline,  improve  the  functioning  of  the  annual  budgetary  procedure  and 
cooperation  between  the  institutions  on  budgetary  matters  as  well  as  to  ensure  sound  financial 
management. 

Annual budget 

The annual budget is prepared by the Commission and usually agreed by mid-
December  by  the  European  Parliament  and  the  Council,  based  on  the 
procedure of Art. 314 TFEU. According to the principle of budget equilibrium, 
total  revenue  must  equal  total  expenditure  (payment  appropriations)  for  a 
given financial year.  

The  main  sources  of  funding  of  the  EU  are  own  resources  revenues  which  are  complemented  by  other 
revenues. There are three types of own resources: traditional own resources (such as custom duties and 
sugar  levies),  the  own  resource  based  on  value  added  tax  (VAT)  and  the  own  resource  based  on  gross 
national  income  (GNI).  Other  revenues  arising  from  the  activities  of  the  EU  (e.g.  competition  fines) 
normally  represent  less  than  10 %  of  total  revenue.  The  overall  amount  of  own  resources  needed  to 
finance  the  budget  is  determined  by  total  expenditure  less  other  revenue.  The  total  amount  of  own 
resources cannot exceed 1.20 % of the sum of gross national income (GNI) of the Member States. 

The EU's operational expenditure covers the various headings of the Multiannual Financial Framework and 
takes  different  forms,  depending  on  how  the  money  is  paid  out  and  managed.  The  EU  budget  is 
implemented in three management modes: 

Shared  management:  under  this  method  of  budget  implementation,  tasks  are  delegated  to 
Member States. About 75 % of the expenditure falls under this management mode covering such 
areas as agricultural spending and structural actions. 

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 third parties, such as the EU regulatory agencies or international organisations. 

Financial Regulation 

The Financial Regulation (FR) applicable to the general budget is a central act 
in the regulatory architecture of the EU´s finances defining EU financial rules 
applicable to the EU budget. 

5

   Interinstitutional  Agreement  of  2  December  2013  between  the  European  Parliament,  the  Council  and  the 
Commission  on  budgetary  discipline,  on  cooperation  in  budgetary  matters  and  on  sound  financial  management 
(2013/C 373/01). 

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 Annual accounts of the European Union 2017 

2.  GOVERNANCE AND ACCOUNTABILITY IN THE EU 

2.1.  INSTITUTIONAL STRUCTURE 

The organisational governance of the EU consists of institutions, agencies and other EU bodies which are 
listed  in  note  9  of  the  notes  to  the  consolidated  financial  statements.  The  European  Investment  Bank 
(EIB) and the European Investment Fund (EIF) are not included in the scope of the Financial Regulation. 
The main institutions, in the sense of being responsible for drafting policies and taking decisions, are the 
European Parliament, the European Council, the Council and the Commission. 

The Commission is the executive of the EU and promotes its general interest. It does this by proposing 
legislation;  implementing  EU  policies;  overseeing  the  correct  implementation  of  the  Treaties  and 
European law; managing the EU budget; and by representing the Union outside Europe. 

The  Commission's  internal  functioning  is  based  on  a  number  of  key  principles  underpinning  good 
governance:  clear  roles  and  responsibilities,  a  strong  commitment  to  performance  management  and 
compliance  with  the  legal  framework,  clear  accountability  mechanisms,  a  high  quality  and  inclusive 
regulatory framework, openness and transparency, and high standards of ethical behaviour. 

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 Annual accounts of the European Union 2017 

2.2.  THE COMMISSION'S GOVERNANCE STRUCTURE 

The European Commission has a unique governance system, with a clear distinction between political and 
administrative  oversight  structures  and  well-defined  lines  of  responsibility  and  financial  accountability6. 
The system is based on the Treaties and the structure has evolved to adapt to a changing environment 
and to remain in line with best practice as set out in relevant international standards7.  

 

 

The  College  of  Commissioners  assumes  collegial  political  responsibility  for  the  work  of  the 
Commission.  Operational  implementation  of  the  budget  is  delegated  to  Directors-General  and 
Heads of Service who lead the administrative structure of the Commission8.  

The  College  delegates  financial  management  tasks  to  the  Directors-General  or  Heads  of  Service 
who  thereby  become  Authorising  Officers  by  Delegation  (AOD).  These  tasks  can  further  be 
delegated  to  Directors,  Heads  of  Unit  and  others,  who  thereby  become  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 from both an operational and budgetary standpoint. 

In  the  Commission,  the  roles  and  responsibilities  in  financial  management  are  thus  clearly  defined  and 
applied.  This  is  a  decentralised  approach  with  clear  responsibilities  with  the  aim  of  creating  an 
administrative  culture  that  encourages  civil  servants  to  take  responsibility  for  activities  over  which  they 
have control and to give them control over the activities for which they are responsible. 

Within  the  context  of  the  Commission's  Strategic  Planning  and  Programming  cycle,  each  authorising 
officer is required to prepare an "annual activity report" (AAR) on the activities and policy achievements 
and results of the year where he/she declares that resources have been used based on the principles of 
sound  financial  management  and  that  he/she  has  set  in  place  control  procedures  which  provide  the 
necessary guarantee concerning the legality and regularity of the underlying transactions. At Commission 
level  these  results  are  adopted  and  published  in  an  aggregated  form  in  the  Annual  Management  and 
Performance Report for the EU budget and sent to the European Parliament and the Council. This is the 
main instrument through which the College of Commissioners takes political responsibility for the 
management of the budget. 

The Accounting Officer of the Commission is centrally responsible for the treasury management, recovery 
procedures, laying down accounting rules based on International Public Sector Accounting Standards and 
methods,  validating  accounting  systems  and  the  preparation  of  the  Commission's  and  consolidated 
annual  accounts  of  the  EU.  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  cash  flows.  The  annual  accounts  are  adopted  by  the  College  of  Commissioners.  The 
Accounting  Officer  is  an  independent  function  and  bears  a  major  responsibility  as  regards  financial 
reporting  in  the  Commission.  The  Internal  Auditor  of  the  Commission  is  likewise  a  centralised  and 
independent function and provides independent advice, opinions and recommendations on the quality and 
functioning  of  internal  control  systems  inside  the  Commission,  EU  agencies  and  other  autonomous 
bodies.  

The  Audit  Progress  Committee  follows-up  implementation  of  audits,  in  particular  of  the  Internal  Audit 
Service but also on the basis of European Court of Auditors audits, and assesses internal audit quality, so 
as to gain a more general view of the control systems of the Commission. 

The  Corporate  Management  Board  plays  a  role  in  the  corporate  governance  of  the  Commission  by 
providing  oversight  and  strategic  orientations  on  major  corporate  management  issues,  including  in 
relation  to  the  management  of  financial  and  human  resources.  Chaired  by  the  Secretary-General,  it 
brings  together  on  a  regular  basis  Directors-General  and  Cabinets  responsible  for  budget,  human 

6   For  more  details  see  Communication  to  the  Commission  from  President  Juncker  and  First  Vice-President 
Timmermans:  Governance  in  the  European  Commission,  C(2017)  6915  final  of  11 October 2017,  URL: 
https://ec.europa.eu/info/sites/info/files/c_2017_6915_final_en.pdf. 

7   E.g. internal control standards are based on the COSO 2013 Internal Control principles. 

8   As a result, the term 'European Commission' is used to denote both the institution  – the College - formed by the 
Members  of  the  Commission,  and  its  administration  managed  by  the  Directors-General  of  its  departments  (and 
heads of other administrative structures such as services, offices and executive agencies). 

10 

 
                                                            
 Annual accounts of the European Union 2017 

resources and IT to ensure that the necessary organisational and technical structures are in place in the 
Commission to deliver on the political priorities of the President in an efficient and effective manner. 

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 Annual accounts of the European Union 2017 

2.3.  PERFORMANCE FRAMEWORK 

Implementing  robust  performance  frameworks  is  essential  for  ensuring  a  strong  focus  on  results,  EU 
added value and sound management of EU programmes. The performance framework of the EU budget is 
highly  specified,  scoring  higher  than  any  Organisation  for  Economic  Co-operation  and  Development 
(OECD) country in the standard index of performance budgeting frameworks. The EU budget performance 
framework  reports  on  several  types  and  levels  of  strategic  goals,  objectives  and  targets,  including  the 
Europe 2020 strategy and other political priorities. It must also take account of the complementarity and 
mainstreaming  of  policies  and  programmes  and  the  key  role of  the  Member  States  in implementing  the 
EU Budget.  

  Objectives, indicators and targets are strongly featured in the programmes' legal basis and every 
year the Commission reports on them through the Programme Statements that accompany the 
draft  budget.  They  provide  all  of  the  key  information  that  is  necessary  for  careful  programme 
scrutiny and performance measurement: this includes 7-year financial commitments; programme 
performance baselines (starting points for policy action); end-goals (to be achieved at the end of 
the multi-annual programming period); and intermediate milestones. 

 

 

 

To ensure resources are allocated to priorities and that every action brings high performance and 
added  value,  the  Commission  implements  its  EU  Budget  Focused  on  Results  initiative. 
Building  on  the  2014–2020  performance  framework,  it  promotes  a  better  balance  between 
compliance and performance.  

The  Annual  Management  and  Performance  Report  for  the  EU  budget  provides  a 
comprehensive  overview  on  the  performance,  management  and  protection  of  the  EU  budget.  It 
explains  how  the  EU  budget  supports  the  European  Union’s  political  priorities,  the  results 
achieved with the EU budget, and the role the Commission plays in ensuring and promoting the 
highest standards of budgetary and financial management. 

The  European  Court  of  Auditors  takes  a  systematic  and  thorough  approach  to  assessing  the 
qualitative  aspects  of  budgeting,  including  the  performance  dimension,  as  a  normal  part  of  its 
annual reporting and through special reports.  

All of these elements place the budget authority in a strong position to take performance into account as 
a significant factor in deciding on the next annual budget. 

2.4.  FINANCIAL REPORTING 

The main element of EU financial reporting is the Integrated Financial Reporting Package of the EU 
which comprises the consolidated annual accounts of the EU, the Annual Management  and Performance 
Report  for  the  budget  and  the  Report  on  the  follow-up  to  the  discharge.  The  Integrated  Financial 
Reporting  Package  provides  the  public  with  a  comprehensive  view  of  the  financial  and  operational 
situation of the EU each year. 

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

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

a) 

b) 

the consolidated financial statements; and 

the  reports  on  implementation  of  the  budget,  which  provide  an  aggregated  record  of 
budget implementation. 

In  addition,  the  consolidated  annual  accounts  of  the  EU  are  accompanied  by  a  Financial  Statement 
Discussion  and  Analysis  (FSDA)  which  summarises  significant  changes  and  trends  in  the  financial 
statements  and  explains  significant  risks  and  uncertainties  the  EU  has  faced  and  needs  to  address  in 
future. 

12 

 
 
 
Reporting and Accountability in the Commission: 

 Annual accounts of the European Union 2017 

Integrated Financial 
Reporting Package 

  Consolidated Annual Accounts of the EU 

  Annual Management and Performance Report for the budget 

  Report on the follow up to the discharge 

Other reports 

  General Report on the activities of the EU 

  Annual Activity Reports of the Directorates-General 

  Report on Budgetary and Financial Management 

2.5.  EXTERNAL AUDIT AND DISCHARGE PROCEDURE 

External audit 

The  European  Court  of  Auditors  (the  Court)  is  the  external  auditor  of  the  EU  institutions  (and  bodies). 
The  Court's  mission  is  to  contribute  to  improving  EU  financial management,  promote  accountability and 
transparency, and act as the independent guardian of the financial interests of the citizens of the EU. The 
Court’s  role  as  the  EU’s  independent  external  auditor  is  to  check  that  EU  funds  are  correctly  accounted 
for, are raised and spent in accordance with the relevant rules and regulations and have achieved value 
for money. 

The EU’s annual accounts and its sound financial management are audited by the Court, which, as part of 
its activities, draws up for the European Parliament and the Council: 

(1) 

(2) 

an annual report on the activities financed from the general budget, detailing its observations on 
the annual accounts and underlying transactions; 

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 and payments to final beneficiaries; and 

(3) 

special reports covering specific areas. 

Discharge 

The final step of a budget lifecycle is the discharge procedure for a given financial year. It represents the 
political  dimension  of  the  external  control  of  budget  implementation  and  is  the  decision  by  which  the 
"Discharge Authority" (i.e. the European Parliament, acting on a Council recommendation) "releases" the 
Commission  (and  other  EU  bodies)  from  its  responsibility  for  the  management  of  a  given  budget.  This 
decision  is  based  on  an  examination  of  the  EU  consolidated  annual  accounts  and  a  set  of  Commission 
reports  (the  Annual  Management  and  Performance  Report,  the  report  on  the  follow-up  to  the  previous 
year's discharge and the annual report to the discharge authority on internal audits carried out) as well 
as on the European Court of Auditors' Annual Report, audit opinion (the "Statement of Assurance") and 
Special  Reports.  It  also  takes  account  of  the  Commission  written  replies  to  questions  and  further 
information requests as well as hearings of the Budget Commissioner and Commissioners responsible for 
the main spending areas before the European Parliament's Budgetary Control Committee (CONT). 

The  outcome  of  the  discharge  procedure  may  be  threefold:  granting,  postponement  or  refusal  of  the 
discharge. The final discharge reports also include specific requests addressed to the Commission by both 
the European Parliament and the Council. These requests are subject to a follow up report in which the 
Commission outlines the concrete actions it has already taken or intends to take.  

13 

 
 
 
 
 
 Annual accounts of the European Union 2017 

NOTE ACCOMPANYING THE 
CONSOLIDATED ACCOUNTS 

The  consolidated  annual  accounts  of  the  European  Union  for  the  year  2017  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] 

Rosa ALDEA BUSQUETS 

Accounting Officer of the Commission 

22 June 2018 

14 

 
 
 
 
 
 Annual accounts of the European Union 2017 

15 

 
 
 
 Annual accounts of the European Union 2017 

HIGHLIGHTS OF THE FINANCIAL YEAR 
2017 

Implementation of the 2017 Union budget 

The  2017  adopted  budget  focused  on  two  main  policy  priorities  for  Europe:  supporting  the  ongoing 
recovery  of  the  European  economy  and  addressing  the  security  and  humanitarian  challenges  in  our 
neighbourhood.  Increased  funding  went  to  investments  in  growth,  jobs  and  competitiveness  in  the 
European Union as well as to securing the necessary resources to protect the external borders of the EU, 
to reinforce security inside and outside the Union, to provide support for the reception and integration of 
refugees, and to address the root causes of migration in the countries of origin and transit. 

The  implementation  of  the  EU  budget  in  2017  totalled  EUR 171.1 billion  in  commitment  appropriations, 
and EUR 137.4 billion in payment appropriations.  

Nearly  half  of  the  funds  –  EUR 83.3 billion  in  commitments  –  stimulated  growth,  employment  and 
competitiveness.  This  included  funding  for  research  and  innovation  under  Horizon  2020,  education 
under  Erasmus+,  small  and  medium  sized  enterprises  under  the  COSME  programme,  the  Connecting 
Europe Facility (CEF), the guarantee fund for the European Fund for Strategic Investments (EFSI) which 
is the vehicle behind the  Investment Plan for Europe, and to foster convergence among  Member States 
and  among  regions  through  the  European  Structural  and  Investment  Funds  (ESIF).  Moreover,  the  EU 
budget support to European farmers amounted to EUR 44.7 billion in payments. 

The  budget  was  also  used  to  reinforce  the  external  borders  of  the  Union  and  address  the  refugee 
crisis  and  irregular  migration  by  funding  stronger  tools  to  prevent  migrant  smuggling  and  address  the 
long-term  drivers  of  migration  in  cooperation  with  countries  of  origin  and  transit,  stronger  policies  for 
legal  migration,  including  resettlement  for  persons  in  need  of  protection,  and  instruments  to  support 
Member States with respect to the integration of refugees inside the EU. 

The United Kingdom's withdrawal from the European Union 

Background 

On  23  June  2016  a  majority  of  the  citizens  of  the  United  Kingdom  who  voted  in  the  referendum  on 
membership  of  the  European  Union  voted  to  leave  the  EU.  On  29  March  2017  the  United  Kingdom 
formally  notified  the  European  Council  of  its  intention  to  leave  the  EU  and  the  European  Atomic  Energy 
Community (Euratom). In doing so it triggered Article 50 of the Treaty on European Union, which sets out 
the procedure for a Member State to withdraw from the Union.  

The negotiation process  

At a special meeting of the European Council on 29 April 2017 the leaders of the other 27 Member States 
adopted political guidelines on the orderly withdrawal of the United Kingdom from the EU. These defined 
the framework for the negotiations and set out the EU’s overall positions and principles. Four days later 
the  Commission  sent  a  Recommendation  to  the  Council  to  open  Article  50  negotiations  with  the  United 
Kingdom, including draft negotiating directives.  

On  22  May  the  Council  adopted  a  Decision  authorising  the  opening  of  negotiations  with  the  United 
Kingdom and formally nominating the Commission as the EU’s negotiator. It also adopted the first set of 
negotiating directives. These provided for a clear structure and a united EU approach to the negotiations.  

The  EU  is  represented  by  Michel  Barnier,  who  was  appointed  as  Chief  Negotiator  by  the  European 
Commission.  Within  the  European  Commission,  a  Task  Force  under  the  authority  of  Michel  Barnier 
coordinates  the  work  on  all  of  the  strategic,  operational,  legal  and  financial  issues  related  to  the 
negotiations.  The  Commission  reports  back  to  the  Council  throughout  the  negotiations,  and  also  keeps 
the European Parliament closely and regularly informed.  

16 

 
 
 
The first phase of negotiations  

 Annual accounts of the European Union 2017 

The  first  phase  of  the  talks  began  on  19  June  2017.  It  set  out  to  provide  as  much  clarity  and  legal 
certainty as possible and to settle the disentanglement of the United Kingdom from the EU.  

Six  negotiating  rounds  were  held  during  2017.  Negotiations  focused  on  three  priority  issues:  protecting 
citizens’ rights; the framework for addressing the unique circumstances in Ireland and Northern Ireland; 
and  the  financial  settlement  to  ensure  that  both  the  EU  and  the  United  Kingdom  respect  their  financial 
obligations  undertaken  before  the  withdrawal.  In  addition,  the  negotiations  covered  other  separation 
issues.  

On 8 December 2017 the European Commission recommended to the European Council to conclude that 
sufficient  progress  had  been  made  in  the  first  phase  of  the  Article  50  negotiations  with  the  United 
Kingdom.  The  Commission’s  assessment  was  based  on  a  Joint  Report  agreed  by  the  negotiators  of  the 
Commission and the UK government. In this Joint Report, the UK agreed to pay all its obligations under 
the current Multiannual Financial Framework (MFF) and previous financial perspectives as if it were still a 
Member State, including its share of the Union's liabilities and contingent liabilities.  

On  15  December  the  European  Council  confirmed  that  sufficient  progress  had  been  achieved,  and  the 
leaders  adopted  guidelines  to  move  to  the  second  phase  of  negotiations,  on  possible  transitional 
arrangements and the future relationship between the EU and the United Kingdom.  

The next phase of negotiations  

On  20  December  2017  the  European  Commission  sent  a  Recommendation  to  the  Council  to  begin 
discussions  on  the  next  phase  of  negotiations,  including  draft  negotiating  directives.  These  supplement 
the  negotiating  directives  from  May  2017  and  set  out  additional  details  on  possible  transitional 
arrangements.  

The Recommendation also recalls the need to translate into legal terms the results of the first phase of 
the  negotiations,  as  outlined  in  the  Commission’s  Communication  and  the  Joint  Report.  In  line  with  the 
European  Council’s  guidelines  of  15  December,  the  additional  negotiating  directives  on  transitional 
arrangements were adopted on 29 January 2018.  

On  19  March  2018  the  Commission  published  a  draft  of  the  Withdrawal  Agreement  that  outlined  the 
progress made in the negotiation round with the UK of 16-19 March 2018. In the financial settlement part 
of  the  Withdrawal Agreement,  the  EU and  the  UK  translated  the  progress  achieved  in  the  first  phase  of 
negotiations (presented in the Joint Report) into a legal text. 

Following  the  publication  of  the  draft  Withdrawal  Agreement,  on  23  March  2018  the  European  Council 
issued further guidelines with a view to the opening of negotiations on the overall understanding of the 
framework for the future EU-UK relationship. Negotiations should be completed by autumn 2018 in order 
to  allow  enough  time  before  29  March  2019  for  the  Withdrawal  Agreement  to  be  concluded  by  the 
Council,  after  obtaining  the  consent  of  the  European  Parliament,  and  to  be  approved  by  the  United 
Kingdom in accordance with its own procedures.  

Financial settlement and the 2017 EU annual accounts 

With regard to the financial settlement, it was stated in the Joint Report, confirmed by the publication of 
the draft Withdrawal Agreement on 19 March, that the UK would pay all its obligations under the current 
MFF  and  previous  financial  perspectives  as  if  it  were  still  a  Member  State.  More  specifically,  the  draft 
withdrawal  agreement  states  that  the  United  Kingdom  shall  in  particular  be  liable  to  the  Union  for  its 
share of: 

 

 

 

The budgetary commitments of the Union budget and of the budgets of the Union decentralised 
agencies outstanding on 31 December 2020 – see Article 133 of the Withdrawal Agreement; 

The financing of the Union's liabilities incurred until 31 December 2020, with certain exceptions – 
see Article 135; 

The contingent financial liabilities of the Union arising from financial operations decided/approved 
before the withdrawal date – see Article 136; and 

17 

 
 
 
 Annual accounts of the European Union 2017 

 

The  payments  required  to  discharge  the  contingent  liabilities  of  the  Union  that  become  due 
related to legal cases concerning financial interests of the Union (provided that the facts forming 
the subject matter of those cases occurred no later than 31 December 2020) – see Article 140. 

This is the most recent information available at the time of preparation of these accounts. Based on this 
current  situation,  there  is  no  impact  on  the  consolidated  EU  annual  accounts  at  31  December  2017 
resulting from the withdrawal process. 

It is also noted that the Commission has proposed on 2 May 2018 its proposal for the next MFF starting in 
2021 which is prepared on the basis that the UK will no longer be a Member State. 

18 

 
 
 
 Annual accounts of the European Union 2017 

19 

 
 
 
 Annual accounts of the European Union 2017 

EUROPEAN UNION 
FINANCIAL YEAR 2017 

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.

20 

 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

21 

 
 
 
 Annual accounts of the European Union 2017 

CONTENTS 

BALANCE SHEET ............................................................................................. 21 

STATEMENT OF FINANCIAL PERFORMANCE ........................................................ 22 

CASHFLOW STATEMENT .................................................................................. 23 

STATEMENT OF CHANGES IN NET ASSETS ......................................................... 24 

NOTES TO THE FINANCIAL STATEMENTS ........................................................... 25 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

SIGNIFICANT ACCOUNTING POLICIES ................................................. 26 

NOTES TO THE BALANCE SHEET ......................................................... 39 

NOTES TO THE STATEMENT OF FINANCIAL PERFORMANCE ..................... 64 

CONTINGENT LIABILITIES AND ASSETS ............................................... 71 

BUDGETARY AND LEGAL COMMITMENTS .............................................. 76 

FINANCIAL RISK MANAGEMENT .......................................................... 80 

RELATED PARTY DISCLOSURES .......................................................... 91 

EVENTS AFTER THE BALANCE SHEET DATE .......................................... 93 

SCOPE OF CONSOLIDATION ............................................................... 94 

22 

 
 
 
 Annual accounts of the European Union 2017 

BALANCE SHEET 

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 

Note 

31.12.2017 

31.12.2016 

 EUR millions 

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 

 405 
10 745 
 581 
59 980 
25 022 
 611 

97 344 

8 655 
24 005 
11 755 
 295 
24 111 

68 821 
166 165 

(73 122) 
(2 880) 
(50 063) 

 381 
10 068 
 528 
62 247 
21 901 
 717 

95 842 

3 673 
23 569 
10 905 
 165 
28 585 

66 897 
162 739 

(67 231) 
(1 936) 
(55 067) 

(126 065) 

(124 234) 

 (659) 
(6 850) 
(39 048) 
(63 902) 

(110 459) 
(236 524) 

 (675) 
(2 284) 
(40 005) 
(67 580) 

(110 544) 
(234 778) 

(70 359) 

(72 040) 

4 876 
(75 234) 
(70 359) 

4 841 
(76 881) 
(72 040) 

*  The  European  Parliament  adopted  a  budget  on  18  November  2017  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 2018. 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. 

23 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

STATEMENT OF FINANCIAL PERFORMANCE 

Note 

2017 

2016      

EUR millions 

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

Revenue from exchange transactions 
Financial revenue 
Other 

Total Revenue 

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, executive agencies 
and trust funds 
Implemented by other EU agencies and bodies 
Implemented by third countries and international 
organisations 
Implemented by other entities 
Staff and pension costs 
Changes in employee benefits actuarial assumptions 
Finance costs 
Other expenses 

Total Expenses 
ECONOMIC RESULT OF THE YEAR 

3.1 
3.2 
3.3 
3.4 
3.5 
3.6 

3.7 
3.8 

3.9 

3.10 

3.11 
3.11 

3.11 
3.12 
3.13 
3.14 
3.15 

78 620 
20 520 
16 947 
4 664 
1 879 
10 376 

95 578 
20 439 
15 859 
3 858 
1 947 
5 740 

133 006 

143 422 

1 845 
1 332 

3 177 

1 769 
 998 

2 767 

136 183 

146 189 

(44 289) 
(11 359) 

(44 152) 
(12 604) 

(17 650) 

(35 045) 

(7 353) 
(1 253) 
(15 738) 

(2 667) 
(4 115) 

(1 478) 
(10 002) 
(3 544) 
(1 896) 
(6 756) 

(9 366) 
(1 606) 
(15 610) 

(2 547) 
(3 258) 

(2 035) 
(9 776) 
(1 068) 
(1 904) 
(5 486) 

(128 101) 
8 082 

(144 456) 
1 733 

24 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

CASHFLOW STATEMENT 

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 other  
employee benefits 
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 
(Increase)/decrease in financial assets at fair value 
through surplus or deficit 
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 

2017 
8 082 

 99 
 888 
 497 
(3 557) 
 (745) 

 (130) 
5 891 

 928 
 (438) 
 (957) 
(3 678) 

(6 405) 
 3 

(1 687) 

 (53) 

(3 190) 
 (22) 

(4 474) 

(4 474) 
28 585 
24 111 

EUR millions 
2016 
1 733 

 88 
 575 
1 774 
 (314) 
(1 297) 

 (26) 
3 417 

 581 
(2 351) 
7 813 
 (821) 

(1 349) 
 18 

(2 073) 

 (31) 

 (822) 
(0) 

6 914 

6 914 
21 671 
28 585 

25 

 
  
 
 
 
 
 
 
 
 
 
 
STATEMENT OF CHANGES IN NET ASSETS 

Annual accounts of the European Union 2017 

BALANCE AS AT 31.12.2015 
Movement in Guarantee Fund reserve 
Fair value movements 
Other 
2015 budget result credited to Member States 
Economic result of the year 
BALANCE AS AT 31.12.2016 
Movement in Guarantee Fund reserve 
Fair value movements 
Other 
2016 budget result credited to Member States 
Economic result of the year 
BALANCE AS AT 31.12.2017 

Amounts to be called from Member States  
Accumulated Surplus/(Deficit) 

Other reserves 

Fair value 
reserve 

(77 124) 
 (82) 
– 
 (59) 
(1 349) 
1 733 
(76 881) 
 (20) 
– 
 (11) 
(6 405) 
8 082 
(75 234) 

4 390 
 82 
– 
 44 
– 
– 
4 516 
 20 
– 
 62 
– 
– 
4 598 

 292 
– 
 33 
– 
– 
– 
 325 
– 
 (2) 
 (46) 
– 
– 
 278 

EUR millions 

Net Assets  

(72 442) 
– 
 33 
 (15) 
(1 349) 
1 733 
(72 040) 
– 
 (2) 
 5 
(6 405) 
8 082 
(70 359) 

26 

 
 
 
 
 
 
 
 
  
  
 Annual accounts of the European Union 2017 

NOTES TO THE FINANCIAL STATEMENTS 

27 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

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 October 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 December 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. 

Application of new and amended European Union accounting rules (EAR) 

Amendments to EAR which are effective for annual periods beginning on or after 1 January 2017 

The following amendments have been adopted by the Accounting Officer of the Commission: 

  Amendments to EAR 1 "Financial Statements"; and  

  Amendments to EAR 14 "Accounting Policies, Changes in Accounting Estimates and Errors". 

These amendments stem from the recent changes to IPSAS 1 "Presentation of Financial Statements" 
and  IPSAS  3  "Accounting  Policies,  Changes  in  Accounting  Estimates  and  Errors",  proposing 
improvements  to  ensure  consistency  among  IPSAS  standards.  Consequently,  the  related  EARs  have 
been updated and the main changes relate to the description of qualitative characteristics of financial 
reporting  and  updates  to  the  hierarchy  of  sources  to  be  used  in  the  selection  and  application  of 
accounting policies.  

The adoption of these amendments has had no impact on the EU annual accounts 2017. 

New and revised EARs adopted but not yet effective at 31 December 2017 

The EU has not applied the following new and revised EARs, which have been adopted by the Accounting 
Officer of the Commission, but which are not yet effective: 

  Revision  to  EAR  12  "Employee  Benefits"  (effective  for  annual  periods  beginning  on  or  after 
1 January  2018):  The  EAR  12  has  been  revised  in  line  with  the  new  IPSAS  39  "Employee 
Benefits".  The  main  change  is  that  any  gain  or  loss  resulting  from  changes  in  the  actuarial 
assumptions is to be recognised directly in net assets, in contrast with the current requirement to 
recognise them in surplus or deficit. 

The  EU  is  currently  analysing  the  impact  and  practical  consequences  of  applying  this  revised  EAR. 
However,  no  significant  impact  is  expected  on  the  consolidated  financial  statements,  except  for  the 
recognition  of  the  actuarial  assumptions  in  the  net  assets  instead  of  the  statement  of  financial 
performance. 

  New  EAR  20  "Public  Sector  Combinations"  (effective  for  annual  periods  beginning  on  or  after 
1 January  2019):  The  EAR  20,  which  is  based  on  the  IPSAS  40  "Public  Sector  Combinations", 
establishes the classification of a public sector combination into two different types depending on 
whether the transaction takes place under common control or not: (i) amalgamation, in which the 
transaction  is  based  on  the  carrying  amounts  of  the  entity  combined  with  the  EU;  and  (ii) 
acquisition,  in  which  the  transaction  is  based  on  the  acquisition  date  fair  values  of  the  entity 

28 

 
 
 Annual accounts of the European Union 2017 

acquired by the EU. Both have distinct requirements and levels of disclosure, in order to provide a 
better understanding of its effects to users of the financial statements of the EU.  

The impact on the EU financial statements in the year of initial application will depend on whether in 
that period the EU would enter into a public sector combination transaction. 

1.2.  ACCOUNTING PRINCIPLES 

The objective of 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  1  "Financial  Statements"  and  are  the  same  as  those 
described  in  IPSAS  1:  fair  presentation,  accrual  basis,  going  concern,  consistency  of  presentation, 
materiality,  aggregation,  offsetting  and  comparative  information.  The  qualitative  characteristics  of 
financial  reporting  are  relevance,  faithful  representation  (reliability),  understandability,  timeliness, 
comparability and verifiability. 

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.  The 
complete  list  of  consolidated  entities  can  be  found  in  note  9  of  the  EU  financial  statements.  It  now 
comprises  52  controlled  entities  and  1  associate.  Entities  that  fall  under  the  consolidation  scope,  but 
which are immaterial to the EU consolidated financial statements as a whole, need not be consolidated or 
accounted for using equity method where to do so would result in excessive time or cost to the EU. Those 
entities  are  referred  to  as  'Minor  entities'  and  are  separately  listed  in  note  9.  In  2017,  7  entities  have 
been classified as minor entities. 

Controlled entities 

The decision to include an entity in the scope of consolidation is based on the control concept. Controlled 
entities are all entities for which the EU is exposed, or has right, to variable benefits from its involvement 
and  has  the  ability  to  affect  the  nature  and  amount  of  those  benefits  through  its  power  over  the  other 
entity. This power must be presently exercisable and must relate to the relevant activities of the entity. 
Controlled  entities  are  fully  consolidated.  The  consolidation  begins  at  the  first  date  on  which  control 
exists, and ends when such control no longer exists. 

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 EU budget, the existence of voting rights in the 
governing bodies, audit by the European Court of Auditors and discharge by the European Parliament. An 
individual assessment for each entity is made in order to decide whether one or all of the criteria listed 
above are sufficient to result in control. 

Under  this  approach,  the  EU's  institutions  (except  the  European  Central  Bank)  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-entity 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 Arrangements 

A joint arrangement is an agreement over which the EU and one or more parties have joint control. Joint 
control is contractually agreed sharing of control over an arrangement, which exists only when decisions 

29 

 
 Annual accounts of the European Union 2017 

about the relevant activities require the unanimous consent of parties sharing control. Joint agreements 
can  be  either  joint  operations  or  joint  ventures.  In  case  a  joint  arrangement  is  structured  through  a 
separate vehicle and parties to the joint arrangement have rights to the net assets of the arrangement, 
this  joint  arrangement  classifies  as  a  joint  venture.  Participations  in  joint  ventures  are  accounted  for 
using the equity method (see note 1.5.4). In case the parties have rights to the assets, and obligations 
for the liabilities, related to the arrangement, this joint arrangement is classified as a joint operation. In 
relation  to  its  interest  in  joint  operations,  the  EU  recognises  in  its  financial  statements:  its  assets  and 
liabilities,  revenue  and  expense,  as  well  as  its  share  of  assets,  liabilities,  revenue  and  expense  held  or 
incurred jointly. 

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 note 1.5.4). 

Non-consolidated entities the funds of which are managed by the Commission 

The  funds  of  the  Joint  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 

Financial  statements  are  presented  annually.  The  accounting  year  begins  on  1  January  and  ends  on 
31 December. 

1.4.1.  Currency and basis for conversion 

Functional and reporting currency 

The financial statements are presented in millions of euros, unless stated otherwise, 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  re-translation  at  year-end  exchange  rates  of  monetary  assets  and  liabilities 
denominated in foreign currencies are recognised in the statement of financial performance. Translation 
differences  on  non-monetary  financial  instruments  classified  as  available  for  sale  financial  assets  are 
included in the fair value reserve. 

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 European Central Bank (ECB) exchange rates applying on 31 December: 

Euro exchange rates 

Currency 
BGN 
CZK 
DKK 
GBP 
HRK 
HUF 

31.12.2017 
1.9558 
25.5350 
7.4449 
0.8872 
7.4400 
310.3300 

31.12.2016 
1.9558 
27.0210 
7.4344 
0.8562 
7.5597 
309.8300 

Currency 
PLN 
RON 
SEK 
CHF 
JPY 
USD 

31.12.2017 
4.177 
4.6585 
9.8438 
1.1702 
135.01 
1.1993 

31.12.2016 
4.4103 
4.5390 
9.5525 
1.0739 
123.4000 
1.0541 

30 

 
  
 
1.4.2.  Use of estimates 

 Annual accounts of the European Union 2017 

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  revenue  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 
(3-11 years). 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  the  expenses  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. 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: 

Type of asset 
Buildings 
Space assets 
Plant and equipment 
Furniture and vehicles 
Computer hardware 
Other 

Straight line depreciation rate 

4 % to 10 % 
8 % to 25 % 
10 % to 25 % 
10 % to 25 % 
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’s commencement 
at the lower of the fair value of the leased asset and the present value of the minimum lease payments. 
The interest element of the finance lease payment is charged to expenditure over the period of the lease 
at  a  constant  periodic  rate  in  relation  to  the  balance  outstanding.  The  rental  obligations,  net  of  finance 
charges, are included in financial liabilities (non-current and current). The interest element of the finance 

31 

 
 
 Annual accounts of the European Union 2017 

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 asset's 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. Operating lease payments are recognised as an expense in the statement 
of financial performance on a straight-line basis over the lease term. 

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 

Investments  accounted for using the equity method are initially recognised at cost. The EU's interest in 
these  investments  is  recognised  in  the  statement  of  financial  performance,  and  its  share  in  the 
movements in reserves is recognised in the fair value reserve in net assets. 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  investment  in  the  financial  statements  at  the  balance  sheet 
date. Distributions received from the investment reduce the carrying amount of the asset. 

If the EU's share of deficits of an investment accounted for using the equity method equals or exceeds its 
interest  in  the  investment,  the  EU  discontinues  recognising  its  share  of  further  losses  ("unrecognised 
losses").  After  the  EU's  interest  is  reduced  to  zero,  additional  losses  are  provided  for  and  a  liability  is 
recognised, only to the extent that the EU has incurred legal or constructive obligation or made payments 
on behalf of the entity. 

If  there  are  indications  of  impairment,  a  write-down  to  the lower  recoverable  amount  is necessary.  The 
recoverable amount is determined as described under note 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. 

Associates and joint ventures classified as minor entities are not accounted for under the equity method. 
EU contributions to those entities are accounted for as an expense of the period.  

1.5.5. 

Financial assets 

Classification 

The  EU  classifies  their  financial  assets  in  the  following  categories:  financial  assets  at  fair  value  through 
surplus  or  deficit;  loans  and  receivables;  held-to-maturity  investments;  and  available  for  sale  financial 
assets. The classification of financial instruments is determined at initial recognition and re-evaluated at 
each balance sheet date. 

32 

 
 Annual accounts of the European Union 2017 

(i)  Financial assets at fair value through surplus or deficit 

A financial asset is classified in this category if acquired principally for the purpose of selling in the short 
term.  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. 

(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,  or  in  case  the  EU  is  subrogated  to  the  rights  of  the 
original lender following a payment made by the EU under a guarantee contract. Payments due within 12 
months  of  the  balance  sheet  date  are  classified  as  current  assets.  Payments  due  after  12  months  from 
the balance sheet date are classified as non-current assets. Loans and receivables include term deposits 
with the original maturity above three months. 

(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  period  of  time  the  EU  expects  to  hold  them.  Investments  in  entities  that  are  neither 
consolidated  nor  accounted  for  using  the  equity  method  and  other  equity-type  investments  (e.g.  Risk 
Capital Operations) are also classified as available for sale financial assets. 

Initial recognition and measurement 

Purchases  and  sales  of  financial  assets  at  fair  value  through  surplus  or  deficit,  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. Cash equivalents and 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 
surplus  or  deficit  transactions  costs  are  added  to  the  fair  value  at  initial  recognition.  Financial  assets 
carried at fair value through surplus or deficit are initially recognised at fair value and transaction costs 
are expensed in the statement of financial performance. 

The fair value of a financial asset on initial recognition is normally the transaction price (i.e. the fair value 
of the consideration received), unless the fair value of that instrument is evidenced by comparison with 
other observable current market transactions in the same instrument or based on a valuation technique 
whose  variables  include  only  data  from  observable  markets  (e.g.  in  case  of  some  derivative  contracts). 
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. 

33 

 
 Annual accounts of the European Union 2017 

 

 

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 EFSM, 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 the EU has transferred substantially all risks and rewards of ownership to another party. 

Subsequent measurement 

a)  Financial  assets  at  fair  value  through  surplus  or  deficit  are  subsequently  carried  at  fair  value. 
Gains and losses arising from changes in the fair value of the ‘financial instruments at fair value 
through surplus or deficit’ category are included in the statement of financial performance in the 
period in which they arise. 

b)  Loans  and  receivables  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. 

c)  Held to maturity assets are carried at amortised cost using the effective interest method. The EU 

currently holds no held to maturity investments. 

d)  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,  except  for  translation  differences  on  monetary  assets  which  are  recognised  in  the 
statement  of  financial  performance.  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  and  over-the–counter  derivatives),  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.  

Investments in Venture Capital Funds, classified as available for sale financial assets, which do not have a 
quoted  market  price  in  an  active  market  are  valued  at  the  attributable  net  asset  value,  which  is 
considered as an equivalent of their fair value. 

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. 

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 

34 

 
 Annual accounts of the European Union 2017 

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. 

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. 

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 contract, decision, agreement or 
basic legal act. The float or advance is either used for the purpose for which it was provided during the 
period defined in the agreement or it is repaid. If the beneficiary does not incur eligible expenditure, they 
have 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).  

Pre-financing is, on subsequent balance sheet dates, measured at the amount initially recognised on the 
balance sheet less eligible expenses (including estimated amounts where necessary) incurred during the 
period.  

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 on the balance sheet. 

Other  advances  to  Member  States  which  originate  from  reimbursement  by  the  EU  of  amounts  paid  as 
advances  by  the  Member  States  to  their  beneficiaries  (including  "financial  instruments  under  shared 
management") are recognised as assets and presented under the pre-financing heading. Other advances 
to  Member  States  are  subsequently  measured  at  the  amount  initially  recognised  on  the  balance  sheet 
less  a  best  estimate  of  the  eligible  expenses  incurred  by  final  beneficiaries,  calculated  on  the  basis  of 
reasonable and supportable assumptions. 

The  EU  contributions  to  the  trust  funds  of  the  European  Development  Fund  or  other  unconsolidated 
entities are also classified as pre-financing since their purpose is to give a float to the trust fund to allow 
it to finance specific actions defined under the trust fund's objectives. The EU contributions to trust funds 

35 

 
 Annual accounts of the European Union 2017 

are  measured  at  the  initial  amount  of  the  EU  contribution  less  eligible  expenses,  including  estimated 
amounts where necessary, incurred by the trust fund during the reporting period and allocated to the EU 
contribution in accordance with the underlying agreement. 

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,  i.e.  when  the 
EU receives value from another entity without directly giving approximately equal value in exchange (for 
example recoverables from Member States related to own resources). 

Receivables  from  exchange  transactions  meet  the  definition  of  financial  instruments  and  are  thus 
classified as loans and receivables and measured accordingly (see note 1.5.5). The financial instruments 
notes  disclosures  concerning  receivables  from  exchange  transactions  include  accrued  revenue  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  concerning  the  treatment  of  accrued  revenue  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  that  would  give  rise  to  a  financial  liability  or  equity 
instrument.  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 include cash at hand, deposits held at call or at 
short  notice  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 less the fair value of any plan assets. The defined benefit obligation is calculated by 
actuaries  using  the  projected  unit  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 relatives 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, 

36 

 
 Annual accounts of the European Union 2017 

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  surplus  or  deficit,  financial 
liabilities carried at amortised cost or as financial guarantee liabilities. 

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. 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 surplus or deficit include derivatives which fair value 
is negative. They follow the same accounting treatment as financial assets at fair value through surplus 
or deficit, see note 1.5.5.  

Financial  guarantee  liabilities  are  initially  recognised  at  fair  value,  being  the  premium  received. 
Subsequently,  financial  guarantee  liabilities  are  measured  at  the  higher  of  the  best  estimate  of  the 
expenses  expected  to  be  required  to  settle  the  financial  guarantee  liability  and  the  amount  initially 
recognised  less,  when  appropriate,  cumulative  amortisation.  The  EU  recognises  a  financial  guarantee 
liability when it receives consideration for granting of the guarantee, that is at market terms, or when the 
fair value of the guarantee can be measured reliably. In case no active market for a directly equivalent 
guarantee contract exists, the EU discloses the guarantee given as a contingent liability (see note 1.7.2) 
or - when it is more likely than not that an outflow of resources will be required to settle the obligation – 
the EU recognises a provision (see note 1.5.11). 

Financial liabilities are classified as non-current liabilities, except for maturities less than 12 months after 
the balance sheet date.  

EU trust funds that are considered as part of the Commission's operational activities are accounted for in 
the  Commission  accounts  and  further  consolidated  in  the  EU  annual  accounts.  Therefore,  contributions 
from  other  donors  to  the  EU  trust  funds  fulfil  the  criteria  of  revenues  from  non-exchange  transactions 
under  conditions  and  they  are  presented  as  financial  liabilities  until  the  conditions  attached  to  the 
contributions  transferred  are  met,  i.e.  eligible  costs  are  incurred  by  the  trust  fund.  The  trust  fund  is 
required to finance specific projects and return remaining funds at the time of winding-up. At the balance 
sheet  date  the  outstanding  contribution  liabilities  are  measured  at  contributions  received  less  the 
expenses  incurred  by  the  trust  fund,  including  estimated  amounts  when  necessary.  For  reporting 
purposes  the  net  expenses  are  allocated  to  the  contributions  of  other  donors  in  proportion  to  net 
contributions  paid  as  at  31  December.  This  allocation  of  contributions  is  only  indicative. When  the  trust 
fund is wound up the actual split of remaining resources will be decided by the trust fund board. 

1.5.13.  Payables 

A  significant  amount  of  the  payables  of  the  EU  are  unpaid  cost  claims  from  beneficiaries  of  grants  or 
other EU funding (non-exchange transactions). They are recorded as payables for the requested amount 

37 

 
 Annual accounts of the European Union 2017 

when the cost claim is received. Upon verification and acceptance of the eligible costs, the payables are 
valued at the accepted and eligible amount. 

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 revenue 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 revenue 
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.  By  analogy,  if 
payment has been made in advance for services or goods that have not yet been received, the expense 
will be deferred and recognised in the subsequent accounting period. 

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 revenue. 
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: 

a)  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; 

38 

 
 Annual accounts of the European Union 2017 

b)  or not to accept the decision, in which case they lodge an appeal under EU law.  

However, even if appealed, 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  circumstances 
and  subject  to  the  agreement  of  the  Commission's  Accounting  Officer,  the  debtor  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. 

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 revenue and expense 

Interest  revenue  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 revenue 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 revenue is recognised using the rate of interest to discount the future cashflows 
for the purpose of measuring the impairment loss. 

Revenue from dividends 

Revenue  from  dividends  and  similar  distributions  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  amount. 
Furthermore,  at  the  balance  sheet  date  expenses  related  to  the  service  delivered  during  the  period  for 

39 

 
 Annual accounts of the European Union 2017 

which an invoice has not yet been received or accepted are estimated and recognised in the statement of 
financial performance. 

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. 

1.8.  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). 

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.  

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. 

40 

 
 
 Annual accounts of the European Union 2017 

2.  NOTES TO THE BALANCE SHEET 

ASSETS 

2.1.  INTANGIBLE ASSETS 

Gross carrying amount at 31.12.2016 
Additions 
Disposals 
Transfer between asset categories 
Other changes 
Gross carrying amount at 31.12.2017 
Accumulated amortisation at 31.12.2016 
Amortisation charge for the year 
Amortisation written back 
Disposals 
Transfer between asset categories 
Other changes 
Accumulated amortisation at 31.12.2017 

Net carrying amount at 31.12.2017 
Net carrying amount at 31.12.2016 

EUR millions  

 820 
 105 
 (1) 
 4 
 12 
 940 
 (439) 
 (96) 
 (3) 
 4 
 (2) 
0 
 (535) 

 405 
 381 

The above amounts relate primarily to computer software.  

2.2.  PROPERTY, PLANT AND EQUIPMENT 

The Space assets category covers operational fixed assets related to the two EU space programmes: the 
Global Navigation Satellite Systems (GNSS), i.e. Galileo and EGNOS, and the Copernicus European Earth 
observation  programme,  while  assets  of  the  space  systems  which  are  not  yet  operational  are  included 
under the Assets under construction heading. 

For Galileo, four new satellites have been added in 2017 to the operational constellation bringing it up to 
18 satellites. The Galileo operational fixed assets amounted to EUR 2 276 million at 31 December 2017, 
net  of  depreciation  (2016:  EUR 2 146 million).  The  remaining  assets  under  construction  totalling 
EUR 1 026 million  (2016:  EUR  756  million)  include  the  four  satellites  launched  in  December  2017  for 
which the in-orbit testing had not yet been completed at the balance sheet date. The development of the 
Galileo  system  will  continue  until  the system  reaches  its  full  operational  capacity.  When  completed,  the 
Galileo constellation will comprise 24 operational satellites and 6 spares. 

Regarding Copernicus, a new satellite (Sentinel 2B) became operational in 2017, in addition to other four 
Copernicus  operational  satellites,  increasing  the  total  value  of  Copernicus  operational  fixed  assets  to 
EUR 1 140 million (2016: EUR 1 073 million), net of accumulated depreciation. Another EUR 1 443 million 
related to Copernicus satellites is recognised as assets under construction (2016: EUR 1 133 million). 

Fixed  assets  related  to  the  European  Geostationary  Navigation  Overlay  System  (EGNOS)  ground 
infrastructure of EUR 67 million (2016: EUR 83 million) are also included under the Space assets heading. 
In addition, EGNOS assets under construction amount to EUR 52 million (2016: EUR 21 million). 

The  assets  related  to  the  EU  space  programmes  are  being  built  with  the  assistance  of  the  European 
Space Agency (ESA).  

41 

 
 
 
 
 
 
 
 
 
Property, plant and equipment 

Gross carrying amount at 31.12.2016 
Additions 
Disposals 
Transfer between asset categories 
Other changes 
Gross carrying amount at 31.12.2017 
Accumulated depreciation at 31.12.2016 
Depreciation charge for the year 
Depreciation written back 
Disposals 
Transfer between asset categories 
Other changes 
Accumulated depreciation at 31.12.2017 

Land and 
Buildings 

 5 297 
  84 
  (24) 
  98 
  1 
 5 456 
 (2 865) 
  (182) 
– 
  13 
  0 
  (1) 
 (3 035) 

Space 
assets 

 3 603 
  0 
  (1) 
  641 
  21 
 4 264 
  (301) 
  (480) 
– 
  1 
  0 
  (1) 
  (780) 

NET CARRYING AMOUNT AT 31.12.2017 
NET CARRYING AMOUNT AT 31.12.2016 

 2 422 
 2 432 

 3 484 
 3 302 

Annual accounts of the European Union 2017 

Plant and 
Equipment 

Furniture and 
Vehicles 

Computer 
Hardware 

  269 
  14 
  (19) 
  1 
  1 
  266 
  (186) 
  (20) 
  2 
  16 
  (0) 
  (1) 
  (188) 

  658 
  62 
  (49) 
  1 
  3 
  675 
  (535) 
  (64) 
  18 
  32 
  (1) 
  (2) 
  (553) 

Other 

  298 
  17 
  (8) 
  1 
  2 
  309 
  (203) 
  (30) 
  1 
  7 
  (0) 
  (0) 
  (226) 

Finance 
leases 

 2 783 
  9 
– 
  (5) 
– 
 2 787 
 (1 150) 
  (97) 
– 
– 
  3 
– 
 (1 244) 

EUR millions 

 Assets under 
construction 

Total 

 2 292 
 1 417 
  (0) 
  (743) 
  (44) 
 2 920 

 15 783 
 1 630 
  (119) 
  (5) 
  (14) 
 17 273 
 (5 715) 
  (917) 
  29 
  78 
  2 
  (6) 
 (6 528) 

  78 
  83 

  122 
  122 

  83 
  95 

 1 543 
 1 633 

 2 920 
 2 292 

 10 745 
 10 068 

  583 
  27 
  (17) 
  2 
  1 
  597 
  (474) 
  (44) 
  9 
  8 
  (0) 
  (1) 
  (502) 

  95 
  109 

42 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

2.3.  INVESTMENTS ACCOUNTED FOR USING THE EQUITY 

METHOD 

The  participation  of  the  EU,  represented  by  the  Commission,  in  the  European  Investment  Fund  (EIF)  is 
treated  as  an  associate  using  the  equity  method  of  accounting.  The  EIF  is  the  EU's  financial  institution 
specialising in providing risk capital and guarantees to Small and Medium-sized Entities (SMEs). The EIF 
is located in Luxembourg and operates as a private-public partnership, whose members are the European 
Investment  Bank  (EIB),  the  EU  and  a  group  of  financial  institutions.  At  31  December  2017  the  EU  held 
29.7 %  of  ownership  interests  in  the  EIF  (2016:  28.1 %)  and  29.7 %  of  the  voting  rights  (2016: 
28.1 %).  In  accordance  with  its  statutes,  the  EIF  is  required  to  allocate  to  a statutory  reserve  at  least 
20 %  of  its  annual  net  result  until  the  aggregate  reserve  amounts  to  10 %  of  subscribed  capital.  This 
reserve is not available for distribution. 

Participation at 31.12.2016 
Contributions 
Dividends received 
Share of net result 
Share in the net assets 
Participation at 31.12.2017 

EUR millions 
European 
Investment Fund 
 528 
 44 
 (7) 
 21 
 (6) 
 581 

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

Assets 
Liabilities 
Revenue 
Expenses 
Surplus/(deficit) 

31.12.2017 
Total EIF 
2 488 
 (532) 
263 
 (153) 
110 

EUR millions 
31.12.2016 
Total EIF 
2 301 
 (423) 
240 
 (118) 
122 

Reconciliation of the above summarised financial information to the carrying amount of the interest held 
in the EIF is as follows: 

Net assets of the associate 
EC ownership interests in EIF 
Carrying amount 

31.12.2017 
1 956 
29.7% 
 581 

EUR millions 
31.12.2016 
1 878 
28.1% 
 528 

The EU, represented by the Commission, has paid in 20 % of its subscribed shares in the EIF capital at 
31 December 2017, the amount uncalled being as follows: 

Total share capital 
Paid-in 
Uncalled 

Total EIF capital 
4 500 
 (900) 
3 600 

EUR millions 
EU subscription 
1 337 
 (267) 
1 070 

43 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

2.4.  FINANCIAL ASSETS 

Note 

31.12.2017 

31.12.2016 

EUR millions 

Non-current financial assets 
Available for sale financial assets 
Financial assets at fair value through surplus or deficit 
Loans 

Current financial assets 
Available for sale financial assets 
Financial assets at fair value through surplus or deficit 
Loans 

2.4.1 
2.4.2 
2.4.3 

2.4.1 
2.4.2 
2.4.3 

Total 

2.4.1.  Available for sale financial assets 

BUFI investments 
ECSC in Liquidation 
European Bank for Reconstruction and Development 

Guarantee Funds for budgetary guarantees: 
EFSI Guarantee Fund 
Guarantee Fund for external actions 

Financial Instruments financed by the EU budget: 
Horizon 2020 
Risk Sharing Finance Facility 
ETF Start up 
Connecting Europe Facility 
European Fund for South East Europe 
Risk Capital Operations 
Other 

Total 
Non-current 
Current 

11 758 
 16 
48 205 
59 980 

1 873 
 6 
6 776 
8 655 
68 635 

9 131 
– 
53 116 
62 247 

1 311 
 0 
2 361 
3 673 
65 920 

31.12.2017 
2 158 
1 658 
 188 
4 004 

EUR millions 
31.12.2016 
2 013 
1 685 
 188 
3 886 

3 414 
2 199 
5 613 

1 730 
 665 
 483 
 482 
 119 
 113 
 422 
4 014 
13 632 
11 758 
1 873 

 948 
2 069 
3 017 

1 213 
 719 
 476 
 483 
 118 
 132 
 398 
3 539 
10 442 
9 131 
1 311 

Out of the total of EUR 13 632 million, the EU holds available for sale financial assets in the form of debt 
securities (e.g. bonds) of EUR 12 048 million, equity instruments of EUR 1 333 million and investments in 
the  EIB  Unitary  Fund  (money  market  fund)  of  EUR 251 million.  The  debt  securities  and  units in  the EIB 
Unitary Fund are mainly used to temporarily invest the amounts allocated to the EU guarantee and risk-
sharing instruments until they are used to satisfy the guarantee calls. 

BUFI investments 

Provisionally  cashed  fines  related  to  competition  cases  are  allocated  to  a  dedicated  fund  (BUFI  Fund  - 
'Budget  Fines'  Fund)  and  invested  by  the  Commission  in  debt  instruments  categorised  as  available  for 
sale financial assets. 

ECSC in Liquidation 

Regarding  the  European  Coal  and  Steel  Community  (ECSC)  in  liquidation,  all  available  for  sale  financial 
assets are debt securities denominated in EUR and quoted in an active market. 

44 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
European Bank for Reconstruction and Development 

 Annual accounts of the European Union 2017 

The  EU  holds  a  financial  investment  in  the  capital  of  the  European  Bank  for  Reconstruction  and 
Development  (EBRD),  in  which  at  31  December  2017  the  number  of  shares  held  were  90 044 
(2016: 90 044  shares),  representing  3 %  of  the  total  subscribed  share  capital.  The  EU  subscribed  for  a 
total  amount  of  EUR  900  million  of  share  capital,  out  of  which  EUR  713  million  is  currently  uncalled. 
According to the Agreement establishing EBRD, the shareholders have some contractual restrictions such 
as the fact that the shares  are not transferable and their redemption is capped at the  maximum  of the 
original purchase cost. 

The EU measures the investment in EBRD at fair value. The original purchase cost is considered to be the 
best  estimate  of  the  fair  value,  in  particular  due  to  contractual  restrictions  referred  to  above.  Although 
EBRD's  shares  are  not  quoted  in  any  stock  exchange  market,  there  are  recent  transactions  in  the 
investee's equity (issuance of capital at par value), indicating that the cost is the best estimate of the fair 
value in this situation. 

GUARANTEE FUNDS FOR BUDGETARY GUARANTEES 

EFSI Guarantee Fund 

Pursuant  to  the  EFSI  Regulation,  the  EFSI  Guarantee  Fund  has  been  established  to  provide  a liquidity 
cushion against potential losses incurred by the EIB in relation to its financing and investment operations 
eligible for the EFSI EU guarantee under the EFSI Agreement - see note 4.1.1. The EFSI Guarantee Fund 
is  financed  by  contributions  from  the  EU  budget.  It  is  also  endowed  by  returns  on  guarantee  fund 
resources  invested,  revenues  received  by  the  EU  as  remuneration  for  the  guarantee  under  the  EFSI 
Agreement, and amounts recovered by the EIB from defaulting debtors in respect of previous guarantee 
calls.  The  fund  is  managed  by  the  Commission,  which  is  authorised  to  invest  the  assets  of  the  EFSI 
Guarantee Fund on the financial markets in accordance with the principle of sound financial management 
following  appropriate  prudential  rules. The  EFSI  Guarantee  Fund  started  its  operations  in April  2016.  In 
accordance with the EFSI Regulation, as amended in December 2017 (Regulation (EU 2017/2396), it will 
be  progressively  provisioned  and  shall  gradually  reach  EUR 9.1 billion,  i.e.  35 %  of  the  total  EU  EFSI 
guarantee obligations. 

Guarantee Fund for external actions 

The  Guarantee  Fund  for  external  actions  covers  loans  guaranteed  by  the  EU  budget,  in  particular  EIB 
lending operations outside the EU financed from the EIB's own resources and loans under macro-financial 
assistance (MFA) and Euratom loans outside the EU – see note 4.1.1. It is a long-term instrument (non-
current  part:  EUR 2 078 million)  managed  by  the  EIB  and  intended  to  cover  any  defaulting  loans 
guaranteed by the EU. The Fund is endowed by payments from the EU budget, 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. The Fund should be maintained at a target amount corresponding 
to 9 % of the guaranteed loans outstanding at year-end. The difference between the target amount and 
the value of the Fund's assets at year-end shall be covered from the EU budget in year n+2, while any 
surplus is paid back to the EU budget. 

FINANCIAL INSTRUMENTS FINANCED BY THE EU BUDGET 

For  an  overview  of  all  financial  instruments  financed  by  the  budget  see  the  Financial  Statement 
Discussion and Analysis. 

Horizon 2020 

Under  the  EU  Regulation  establishing  Horizon  2020  –  the  Framework  Programme  for  Research  and 
Innovation (2014-2020), new financial instruments have been established in order to enhance access to 
finance to entities engaged in research and innovation (R&I). These instruments are: the InnovFin Loan 
and Guarantee Service for R&I under which the Commission shares the financial risk related to a portfolio 
of  new  financing  operations  entered  into  by  the  EIB;  the  InnovFin  SME  Guarantee  including  the  SME 
Initiative  Uncapped  Guarantee  Instrument  (SIUGI)  –  guarantee  facilities  managed  by  the  EIF  providing 
guarantees and counter-guarantees to the financial intermediaries for the new portfolios of loans (under 
SIUGI the Commission shares the financial risk related to the guarantee given with Member States, EIF 
and EIB); and the InnovFin Equity Facility for R&I providing for investments in venture capital funds and 
managed by the EIF.  

45 

 
  
 
 Annual accounts of the European Union 2017 

Risk-Sharing Finance Facility 

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,  an  EU  budget  of  up  to  EUR 1 billion  was  allocated  to  the  RSFF  under  the  2007-2013 
MFF.  Under  the  2014-2020  MFF,  there  are  no  new  budget  contributions  foreseen  for  the  RSFF.  The  EU 
overall risk is limited to the amount it contributes to the Facility. 

ETF Start up 

These  are  equity  instruments  that  were  financed  by  the  Growth  &  Employment  programme,  the  MAP 
programme, the CIP programme and the Technology Transfer Pilot Project, under the trusteeship of the 
EIF,  supporting  the  creation  and  financing  of  Start-Up  SMEs  by  investing in suitable  specialised  venture 
capital funds. 

Connecting Europe Facility 

Pursuant  to  Regulation  (EU)  No  1316/2013,  the  Connecting  Europe  Facility  (CEF)  debt  instrument  has 
been established with the objective to facilitate infrastructure projects’ access to financing in the sectors 
of transport, telecommunications and energy. It is managed by the EIB under an agreement with the EU. 
The CEF debt financial instrument is the continuity of the Loan Guarantee Instrument for TEN-T projects 
(LGTT)  and  of  the  pilot  phase  of  the  Project  Bond  Initiative  (PBI).  The  LGTT  and  the  PBI  Portfolio  were 
merged into the CEF financial instrument with effect from 1 January 2016. It offers risk-sharing for debt 
financing in the form of senior and subordinated debt or guarantee as well as support for project bonds. 

2.4.2. 

Financial assets at fair value through surplus or deficit 

Type of derivative 

Foreign currency forward contract 
EFSI guarantee on equity portfolio 
Total 
Non-current 
Current 

31.12.2017 

Notional 
amount  
 634 
 258 
 892 
 258 
 634 

Fair value 

 6 
 16 
 23 
 16 
 6 

EUR millions 

31.12.2016 

Notional 
amount  
 50 
– 
 50 
– 
 50 

Fair value 

 0 
– 
 0 
– 
 0 

The EU enters into foreign currency forward contracts in order to hedge the foreign currency risk related 
to USD denominated debt securities held in the EFSI Guarantee Fund. Under the foreign currency forward 
contracts, the EU shall deliver the contractually agreed notional amount in foreign currency ('pay leg'), as 
presented in the table above, and will receive the notional amount in EUR ('receive leg') at the maturity 
date.  Such  derivative  contracts  are  measured  at  fair  value  at  the  balance  sheet  date  and  classified  as 
either financial assets or financial liabilities at fair value through surplus or deficit depending on whether 
their  fair  value  is  positive  or  negative.  At  31  December  2017,  there  was  only  one  foreign  currency 
forward  contract  active,  resulting  in  positive  fair  value  of  EUR 6 million  (FV  hierarchy  level  2),  thus 
recognised under financial assets at fair value through surplus or deficit.  

The  EFSI  EU  guarantee  given  to  the  EIB  Group  in  relation  to  the  portfolios  of  equity  investments  is 
classified as a derivative financial instrument and accounted for as a financial asset or financial liability at 
fair  value  through  surplus  or  deficit  (FV  hierarchy  level  3),  see  note  4.1.1.  At 31 December  2017  the 
amount of the underlying equity investments disbursed by the EIB and EIF amounted to EUR 258 million 
and the fair value of the EFSI EU guarantee on the EFSI equity portfolios totalled EUR 16 million.  

Fair value hierarchy of financial assets measured at fair value 

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 

31.12.2017 
11 983 
 510 
1 161 

EUR millions 
31.12.2016 
8 910 
 231 
1 302 

13 654 

10 442 

During the period there were no transfers between level 1 and level 2. 

46 

 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

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

Opening balance at 31.12.2016 
Purchases and sales 
Gains or losses for the period in financial income or finance costs 
Gains or losses in net assets 
Transfers into level 3  
Transfers out of level 3  
Other 
Closing balance at 31.12.2017 

2.4.3. 

 Loans 

Loans for financial assistance 
Other loans 

Total 

Non-current 
Current 

2.4.3.1.  Loans for financial assistance 

Note 
2.4.3.1 
2.4.3.2 

31.12.2017 
54 844 
 137 

54 981 

48 205 
6 776 

EUR millions 

1 302 
 39 
 (21) 
 30 
– 
 (188) 
– 
1 161 

EUR millions 

31.12.2016 
55 134 
 343 

55 477 

53 116 
2 361 

EFSM 

BOP 

MFA 

Euratom 

ECSC in 

Total at 31.12.2016 
New loans 
Repayments 
Exchange differences 
Changes in carrying amount 
Impairment 
Total at 31.12.2017 
Non-current 
Current 

47 456 
– 
– 
– 
 0 
– 
47 456 
42 300 
5 156 

4 272 
– 
(1 150) 
– 
 (8) 
– 
3 114 
1 700 
1 414 

2 964 
1 013 
 (58) 
– 
 5 
– 
3 924 
3 846 
 78 

Liqui-     
dation 
 191 
– 
 (76) 
 (7) 
 (8) 
– 
 100 
 96 
 5 

 252 
 50 
 (51) 
 (1) 
 0 
– 
 250 
 203 
 47 

EUR millions 
Total 

55 134 
1 063 
(1 335) 
 (8) 
 (11) 
– 
54 844 
48 144 
6 700 

Nominal value of loans for financial assistance at 31 December 2017, including ECSC in Liquidation loans, 
total EUR 54 093 million (2016: EUR 54 373 million). The change in carrying amount corresponds to the 
change in accrued interests. 

EFSM 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  ECOFIN  Council  conclusions  of  9 May 2010  restrict  the  facility  to 
EUR 60 billion  but  the  legal  limit  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. It is not foreseen that the EFSM will engage in new financing programmes 
or enter into new loan facility agreements.  

The  BOP  facility,  a  policy-based  financial  instrument,  provides  medium-term  financial  assistance  to 
Member  States  of  the  EU  that  have  not  adopted  the  Euro.  It  enables  the  granting  of  loans  to  Member 
States who are experiencing, or are seriously threatened with, difficulties in their balance of payments or 
capital movements. The maximum outstanding amount of loans granted under the instrument is limited 
to EUR 50 billion. Borrowings related to these BOP loans are guaranteed by the EU budget. 

MFA is a policy-based financial instrument of untied and undesignated balance of payment and/or budget 
support  to  partner  countries  currently  following  an  IMF  programme.  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.  In  2017,  new  loan  disbursements  under  MFA 
totalled  EUR 1 013 million,  of  which  EUR 600 million  has  been  provided  to  Ukraine,  EUR 300 million  to 
Tunisia,  EUR 100 million  to  Jordan  and  EUR 13 million  to  Georgia.  At  31 December 2017,  another 

47 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

EUR 460 million  relating  to  a 
facility  agreement  under  MFA  were  granted  to  Tunisia 
(EUR 300 million), to Jordan (EUR 100 million) and to Moldavia (EUR 60 million) but not yet disbursed – 
see  note  4.1.2.  The  remaining  EUR 600 million  available  under  the  MFA  loan  facility  agreement  to 
Ukraine has not been requested by Ukraine within the availability period which ended in January 2018. 

loan 

The  European  Atomic  Energy  Community  (Euratom,  represented  by  the  Commission)  lends  money  to 
both  Member  States  and  non-Member  States,  and  to  entities  of  both,  to  finance  projects  relating  to 
energy installations. At 31 December 2017, loans of EUR 250 million were granted for projects in Ukraine 
but  not  yet  disbursed  –  see  note  4.1.2.  Guarantees  from  third-parties  of  EUR 250 million  (2016: 
EUR 252 million) have been received covering Euratom loans. 

ECSC in Liquidation loans are not loans for financial assistance but promissory notes in order to keep the 
cash  flows  in  parallel  with  the  borrowings.  However,  similar  to  the  loans  for  financial  assistance,  they 
were  granted  on  borrowed  funds  in  accordance  with  articles  54  and  56  of  the  ECSC  Treaty  for  project 
financing. 

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 

2.4.3.2.  Other loans 

Loans with special conditions 
ECSC in liquidation housing loans 
Term deposits between 3 and 12 months  
Total 
Non-current 
Current 

31.12.2017 
0 % - 4.54 % 
0.08 % - 5.76 % 
2.88 % - 3.38 % 
0.62 % - 3.75 % 
5.23 % - 5.81 % 

31.12.2016 
0 % - 4.54 % 
0 % - 5.76 % 
2.37 % - 3.37 % 
0.62 % - 3.75 % 
5.23 % - 5.81 % 

31.12.2017 
 78 
 4 
 55 
 137 
 61 
 76 

EUR millions 
31.12.2016 
 93 
 5 
 245 
 343 
 77 
 266 

Nominal value of other loans at 31 December 2017 total EUR 561 million (2016: EUR 673 million). 

Loans with special conditions are granted at preferential rates as part of co-operation with non-Member 
States. 

Impairment on other loans 

31.12.2016 

Additions 

Reversals 

Write-off  

Other 

Loans with special 
conditions 
Subrogated loans 

Total 

 7 

 332 

 339 

 0 

 100 

101 

– 

 (0) 

 (0) 

– 

– 

– 

– 

– 

– 

EUR millions 
31.12.2017 

 8 

 432 

 440 

Subrogated loans are defaulted loans which were granted by the EIB and guaranteed by EU budget, for 
which  all  rights  have  been  subrogated  to  the  EU  following  the  payment  from  the  Guarantee  Fund  for 
external  actions.  These  loans  are  fully  impaired  for  an  amount  of  EUR  432  million  (2016: 
EUR 332 million). Guarantee calls, which occurred in 2017, were partially covered by financial provisions 
made  in  previous  years.  Under  an  agreement  between  the  EU  and  the  EIB,  recovery  proceedings  are 
undertaken by the EIB on behalf of the EU with an aim to recover any sums due. 

48 

 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 Annual accounts of the European Union 2017 

2.5.  PRE-FINANCING 

Non-current pre-financing 
Pre-financing 
Other advances to Member States 
Contribution to Trust Funds 

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

Total 

Note 

31.12.2017 

31.12.2016 

EUR millions 

2.5.1 
2.5.2 

2.5.1 
2.5.2 

21 939 
3 018 
 64 
25 022 

22 361 
1 645 
24 005 
49 027 

20 219 
1 651 
 31 
21 901 

21 386 
2 183 
23 569 
45 470 

The level of pre-financing amounts in the various programmes must be sufficient to ensure the necessary 
funding  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 
Trust funds 

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 
31.12.2017 

Gross 
amount 

Cleared via 
cut-off 

EUR millions 
Net amount at 
31.12.2016 

3 735 

– 

3 735 

3 955 

– 

3 955 

20 561 

6 792 

5 037 

(5 678) 

(1 182) 

(2 267) 

14 883 

5 610 

2 770 

19 858 

6 477 

4 219 

(4 727) 

 (617) 

(2 393) 

36 125 

(9 127) 

26 998 

34 509 

(7 737) 

12 165 

13 843 

(8 331) 

(8 749) 

 440 

 (212) 

26 447 

(17 292) 

3 834 

5 094 

 228 

9 155 

12 424 

13 136 

(8 843) 

(8 348) 

 142 

 (82) 

25 701 

(17 273) 

15 131 

5 860 

1 826 

26 772 

3 581 

4 788 

 60 

8 429 

 723 

 (148) 

 575 

 616 

 (157) 

 459 

1 586 

9 000 

7 753 

19 062 

81 635 

21 939 

59 696 

 (956) 

(5 879) 

(3 933) 

(10 916) 

(37 335) 

– 

(37 335) 

 630 

3 121 

3 820 

8 146 

44 300 

21 939 

22 361 

1 861 

7 230 

6 498 

16 206 

76 416 

20 219 

56 197 

(1 135) 

(4 432) 

(4 077) 

(9 801) 

(34 811) 

– 

(34 811) 

 726 

2 797 

2 422 

6 404 

41 605 

20 219 

21 386 

Pre-financing  represents  money  paid  out,  and  thus  implementation  of  payment  appropriations.  As 
explained in note 1.5.7, these are advances and so not yet expensed. Thus while pre-financing reduces 

49 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

outstanding RAL (see note 5.1) it represents expenses still to be recognised in the statement of financial 
performance. 

The closure of the programming period 2007-2013 and the gradual set-up of programs under the period 
2014-2020  strongly  influence  the  amounts  on  the  balance  sheet:  pre-financing  related  to  the  old 
programs  is  decreasing  due  to  the  acceptance  of  costs  as  programmes  are  closed,  while  further  pre-
financing has been paid out concerning the new programming period.  

For  shared  management  this  transition  between  programming  periods  also  explains  the  movement 
between  current  and  non-current  balances.  Concerning  the  programming  period  2014-2020,  the  initial 
pre-financing paid is booked as non-current, while the annual pre-financing is booked as current. 

The  increase  of  EUR 0.9 billion  in  other  shared  management  concerns  EUSF  (European  Union  Solidarity 
Fund),  mainly  to  support  reconstruction  works  after  the  earthquakes  in  the  Italian  regions  of  Abruzzo, 
Lazio, Marche and Umbria. 

For  direct  management,  the  pre-financing  amounts  relate  mainly  to  Horizon  2020  and  the  Connecting 
Europe Facility.  

The pre-financing under indirect management covers mainly internal policies programmes like Erasmus, 
Galileo and EGNOS, but also instruments related to external relations like ENI (European Neighbourhood 
Instrument), DCI (Development Cooperation Instrument) and humanitarian aid. 

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 2017 the nominal value 
of guarantees received in respect of pre-financing amounted to EUR 620 million while the on-going value 
of those guarantees was EUR 462 million (2016: EUR 683 million and EUR 496 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 
amount received to the PGF's capital. 

At  31 December 2017  pre-financing  amounts  covered  by  the  PGF  totalled  EUR 1.9 billion  (2016: 
EUR 1.8 billion). 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 1 997 million (2016: EUR 1 951 million). The assets of the 
PGF also include financial assets that are managed by the Directorate-General for Economic and Financial 
Affairs of the Commission. 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 
Aid Schemes 
Total 
Non-current 
Current 

31.12.2017 
2 768 

EUR millions 
31.12.2016 
2 534 

1 895 
4 663 
3 018 
1 645 

1 300 
3 834 
1 651 
2 183 

50 

 
 
 
 
 
 
 
 
Advances to Member States for financial instruments under shared management 

 Annual accounts of the European Union 2017 

Under the framework of the European Structural and Investment Funds (ESIF) programmes, it is possible 
to make advance payments from the EU budget to Member States so as to allow them to contribute to 
financial instruments (i.e. loans, equity investments or guarantees). These financial instruments are set 
up  and  managed  under  the  responsibility  of  the  Member  States,  not  the  Commission.  Nevertheless, 
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. 

2014-2020 Period: 

Under cohesion policy the Member States have contributed an amount of EUR 3 714 million, of which it is 
estimated  that  EUR 2  760 million  was  still  to  be  implemented  at  31  December  2017.  This  includes  the 
contribution  of  the  Member  States  to  the  SME  Initiative,  an  instrument  aimed  at  stimulating  additional 
lending by the banking sector to SMEs (EUR 966 million paid, out of which EUR 315 million is estimated 
as not yet implemented). 

For rural development, EUR 8 million remained unused at year-end. 

2007-2013 Period:  

All  amounts  related  to  the  cohesion  policy  are  considered  to  have  been  either  implemented  or  re-
allocated to other measures, therefore no assets remain on the balance sheet at 31 December 2017. It 
should be noted that the actual implementation by the various instruments will be reviewed as part of the 
closure process of the programmes. 

Aid Schemes 

Similar  to  the  above,  advances  paid  by  the  Member  States  for  various  aid  schemes  (state  aid,  market 
measures  of  EAGF  or  investment  measures  of  EAFRD)  that  were  not  used  at  year-end  are  recorded  as 
assets on the EU'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-heading above. 

2014-2020 Period: 

The  unused  amounts  at  year  end  were  estimated  at  EUR 680 million  for  cohesion  policy  and 
EUR 904 million for agricultural policy. 

2007-2013 Period: 

It is estimated that EUR 311 million (2016: EUR 461 million) representing advances paid in the context of 
the agricultural policy remained unused at the end of 2017. 

2.6.  EXCHANGE RECEIVABLES AND NON-EXCHANGE 

RECOVERABLES 

Note 

31.12.2017 

31.12.2016 

EUR millions 

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

Current 
Recoverables from non-exchange transactions 
Receivables from exchange transactions 

2.6.1 
2.6.2 

2.6.1 
2.6.2 

Total 

 594 
 17 
 611 

11 065 
 689 
11 755 
12 366 

 700 
 16 
 717 

10 347 
 558 
10 905 
11 621 

51 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.6.1.  Recoverables from non-exchange transactions 

 Annual accounts of the European Union 2017 

Note 

31.12.2017 

31.12.2016 

EUR millions 

Non-current 
Member States 

Current 
Member States 
Competition fines 
Accrued income and deferred charges 
Other recoverables 

Total 

2.6.1.1 

2.6.1.1 
2.6.1.2 
2.6.1.3 

 594 

 594 

6 190 
4 225 
 570 
 81 

11 065 

11 659 

2.6.1.1.  Recoverables from Member States 

TOR established in the A account 
TOR 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 

31.12.2017 
3 113 
1 617 
 46 
 (997) 
 56 
3 836 
2 280 
 955 
 16 
 136 

 (804) 
2 583 
 182 
 64 
 120 
6 784 
 594 
6 190 

 700 

 700 

8 162 
1 808 
 329 
 47 

10 347 

11 047 

EUR millions 
31.12.2016 
3 261 
1 437 
1 764 
 (753) 
 36 
5 745 
2 606 
 924 
 30 
 167 

 (999) 
2 729 
 293 
 41 
 55 
8 863 
 700 
8 162 

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.  The  amounts  under 
other  recoverables  also  include  amounts  from  fines  imposed  on  Member  States  for  infringements  of  EU 
law (EUR 24 million). 

Own resources recoverables 

Traditional own resources (TOR), composed of customs duties and sugar levies, are collected by Member 
States on behalf of the Commission. Member States establish TOR and communicate the amounts of the 
entitlements  established  to  the  Commission  by  means  of  monthly  'A  account'  statements.  Established 
entitlements that have not been included in the 'A accounts', because they have not been recovered by 
Member  States  and  no  security  has  been  provided  (or  if  security  has  been  provided  but  are  anyway 
contested),  are  shown  in  the  'separate  account'.  These  entitlements  are  subject  to  impairment  on  the 
basis of information provided every year by the Member States.  

On  31 December 2016  there  were  ratified  own  resources  adjustments  related  to  the  new  provisions 
introduced by the Own Resources Decision (ORD) 2014 concerning 2014, 2015 and 2016 and they were 
receivable on 1 January 2017. The remaining amounts relate to the amending budget no 6/2017 adopted 
on 30 November 2017. The amounts were to be received on the first working day of January 2018. 

On 8 March 2018, the European Commission sent a letter of formal notice (Infringement No 2018/2008) 
to the United Kingdom because it refuses to make customs duties available to the EU budget, as required 
by  EU  law.  A  2017  OLAF  report  found  that  importers  in  the  United  Kingdom  evaded  a  large  amount  of 

52 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

customs  duties  by  using  fictitious  and  false  invoices  and  incorrect  customs  value  declarations  at 
importation.  The  Commission  calculates  that  the  infringement  of  EU  legislation  by  the  United  Kingdom 
resulted, during the period November 2011 until December 2017, in losses to the EU budget amounting 
to  EUR 2.2 billion  (net, i.e.  after  deducting  the  collection  costs  to  be  retained  by  the  UK from  the  gross 
amount  of  EUR 2.7 billion).  Late  interest  will  also  be  due  on  this  amount.  The  amounts  in  question  are 
not included in these 2017 accounts as they will only be recognised once the revenue recognition criteria 
are met, in accordance with the EU accounting rules. 

EAGF and Rural Development recoverables 

This item primarily covers the amounts owed by Member States at 31 December 2017, as declared and 
certified  by  the  Member  States  at  15  October  2017.  An  estimation  is  made  for  the  recoverables  arising 
after this declaration and up to 31 December 2017. The Commission 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. 

2.6.1.2.  Recoverables from competition fines 

Recoverable from fines gross amount 
Less amounts cashed 
Less amounts written down 
Total 
Non-current 
Current 

31.12.2017 
7 679 
(3 282) 
 (172) 
4 225 
– 
4 225 

EUR millions 
31.12.2016 
6 510 
(4 524) 
 (178) 
1 808 
– 
1 808 

The  recoverables  of  EUR  4  225  million  refer  to  competition  fines  which  were  not  cashed  at  year  end 
(EUR 4 397 million)  less  amounts  written-down  (EUR 172 million).  The  amounts  cashed  mainly  relate  to 
cash receipts from companies that have nevertheless initiated an appeal or still have the option to appeal 
against  the  fine  decisions  at  EU  courts.  A  contingent  liability  is  disclosed  for  the  possibility  to  pay  back 
these amounts to the companies (see note 4.1.4).  

Fined companies who have launched or are planning to launch an appeal have an option to either make 
provisional payments or to provide bank guarantees to the Commission. 

It should be noted that EUR 942 million of the fines not cashed at year end were due for payment after 
31 December 2017.  For  some  of  the  fines  not  cashed  at  year  end,  the  Commission  has  accepted 
guarantees  totalling  EUR 3 124 million  (2016:  EUR 1 012 million).  After  31  December  2017,  the 
Commission has accepted additional guarantees of EUR 880 million.  

The  amounts  written  down  reflect  the  Commission's  case  by  case  assessment  on  fines  amounts  not 
cashed or not covered with a guarantee, which the Commission expects to not recover.   

increase 

The 
fine 
(EUR 2 424 million)  where  the  companies  concerned  covered  the  fine  with  Commission  accepted  bank 
guarantees i.e. the fine would not be cashed until the final court settlement.  

recoverables  mainly  concerns  one  significant 

the  competition 

fines 

in 

2.6.1.3.  Accrued income and deferred charges 

Financial corrections 
Other accrued income 
Deferred charges relating to non-exchange transactions 
Total 
Non-current 
Current 

31.12.2017 
 1 
 327 
 241 
 570 
– 
 570 

EUR millions 
31.12.2016 
 9 
 64 
 256 
 329 
– 
 329 

The  other  accrued  income  includes  EUR  271  million  that  the  Commission  expects  to  recover  from  the 
Member  States  in  the  area  of  cohesion.  The  recovery  will  be  made  as  a  result  of  the  examination  and 
acceptance of the annual accounts submitted by the Member States on 15 February 2018. This procedure 

53 

 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

for  the  acceptance  of  Member  States'  annual  accounts  has  been  introduced  for  the  first  time  in  the 
cohesion area for the programming period 2014-2020. 

2.6.2.  Receivables from exchange transactions 

Non-current 
Other receivables 

Current 
Customers 
Impairment on receivables from customers 
Deferred charges relating to exchange transactions 
Other 

Total 

31.12.2017 

EUR millions 
31.12.2016 

 17 
 17 

 241 
 (141) 
 259 
 331 
 689 
 707 

 16 
 16 

 246 
 (128) 
 250 
 191 
 558 
 574 

The  impairment  on  receivables  from  customers  disclosed  above  includes  EUR 68 million  of  impairment 
determined on an individual basis. 

2.7.  INVENTORIES  

Scientific materials 
Other 
Total 

31.12.2017 
 45 
 250 
 295 

EUR millions 
31.12.2016 
 54 
 111 
 165 

2.8.  CASH AND CASH EQUIVALENTS 

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

Bank accounts for budget implementation 

Cash belonging to financial instruments 

Cash relating to fines 

Cash relating to other institutions, agencies and 
bodies 
Cash relating to trust funds 
Total 

Note 

2.8.1 

2.8.2 

2.8.3 

31.12.2017 
20 078 
 152 
 5 
 0 

20 236 

1 608 

1 234 

 999 

 34 
24 111 

EUR millions 

31.12.2016 
24 566 
 127 
 5 
– 

24 698 

1 390 

1 325 

1 006 

 167 
28 585 

2.8.1.  Bank accounts for budget implementation and other term deposits 

This  heading  covers  the  funds  which  the  Commission  keeps  in  its  bank  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 treasury balance at the end of 2017 is due to the following main elements: 

  As  regards  own  resources,  the  end  of  year  treasury  balance  includes  a  total  net  amount  of 
EUR 8.9 billion to be returned to Member States in early 2018 as a result of an amending budget 
adopted late in 2017. 

54 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

 

The  additional  amount  of  fines  imposed  by  the  Commission  for  breach  of  competition  rules  of 
EUR 0.5 billion definitively cashed late in 2017 is also part of the year-end treasury balance. 

 

The treasury balance also includes assigned revenue payment appropriations of EUR 8.4 billion. 

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 (see note 2.4.1). 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  when  it  is  unknown  if  an  appeal  will  be  made  by  the  other  party,  the 
underlying amount is shown as contingent liability in note 4.1.4. 

Since  2010,  all  new  provisionally  cashed  fines  are  managed  by  the  Commission  in  the  BUFI  fund  and 
invested in financial instruments categorised as available for sale (see note 2.4.1). 

55 

 
 
 Annual accounts of the European Union 2017 

LIABILITIES 

2.9.  PENSION AND OTHER EMPLOYEE BENEFITS 

Net employee benefit scheme liability 

Pension 
Scheme 
of 
European 
Officials 
63 951 
N/A 
63 951 

Other 
retirement 
benefit 
schemes 

Joint 
Sickness 
Insurance 
Scheme 

31.12.2017  
Total 

EUR millions 
31.12.2016  
Total 

1 854 
 (137) 
1 717 

7 756 
 (301) 
7 455 

73 560 
 (438) 
73 122 

67 664 
 (432) 
67 231 

Defined Benefit Obligation 
Plan assets 
Net liability 

The increase in the total  employee benefits liability is primarily due to an increase in the net liability of 
the Pension Scheme of European Officials. This increase is mainly due to: the fact that additional benefit 
rights  gained  by  scheme  members  exceeded  benefit  payments  out  of  the  scheme,  updated  actuarial 
assumptions, and a data quality review, partially offset by the increase in the discount rate. 

2.9.1. 

Pension Scheme of European Officials 

This defined benefit obligation represents the present value of expected future payments that the EU is 
required  to  make  so  as  to  settle  the  pension  obligations  resulting  from  employee  service  in  the  current 
and  prior  periods.  The  scheme  is  ongoing,  and  as  such,  all  payments  required  to  be  made  from  the 
scheme on an annual basis are included in the EU budget each year. 

In  accordance  with  Article  83  of  the  Staff  Regulations,  the  payment  of  the  benefits  provided  for  in  the 
staff pension scheme constitutes a charge to the EU's budget. The scheme is unfunded, but the Member 
States  guarantee  the  payment  of  these  benefits  collectively.  A  compulsory  pension  contribution  is 
deducted from the basic salaries of active members, currently 9.8 %. These contributions are treated as 
budget revenue of the year and contribute to the funding of EU expenditure in general, see also note 3.6. 

The liabilities of the pension scheme were assessed on the basis of the number of staff and retired staff 
at 31 December 2017 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). 
As was already noted in the 2016 annual accounts, the relevant Commission services continued to work 
during 2017  to strengthen data collection methods and thus the underlying data quality. Improvements 
have  been  achieved  and  are  reflected  in  the  total  employee  benefits  liability  amount.  This  work  is 
ongoing. 

In  2018  the  updated  EU  accounting  rule  12  based  on  IPSAS  39  will  be  applicable.  The  impact  of  any 
changes will be thus reflected in the 2018 accounts.  

2.9.2.  Other retirement benefit schemes 

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. 

2.9.3. 

Joint Sickness Insurance Scheme 

In addition to the above retirement benefit schemes, a valuation is made for the estimated liability that 
the EU has regarding the Joint Sickness Insurance Scheme in relation to healthcare costs which must be 
paid  during  employees'  post-activity  periods  (net  of  their  contributions).  The  calculation  of  this  liability, 
based  on  EU  accounting  rule  (EAR)  12,  takes  account  of  the  full  active  service  period.  The  update  of 
EAR 12 effective from 2018 onwards will reflect IPSAS 39 and may revise this method. 

56 

 
 
 
 
 
 
 
Movement in present value of employee benefits defined benefit obligation 

 Annual accounts of the European Union 2017 

The present value of the defined benefit obligation is the discounted, without deducting any plan assets, 
expected future payments required to settle the obligation resulting from employee service in the current 
and prior periods.  

An analysis of the current year movement in the defined benefit obligation is shown below: 

EUR millions 

Pension 
Scheme of 
European 
Officials  

58 746 

Other 
retirement 
benefit 
schemes 
1 882 

Joint Sickness 
Insurance 
Scheme 

Total 

7 036 

67 664 

2 637 
1 148 
3 616 
– 
(1 417) 
 (778) 

 87 
 29 
 (86) 
– 
 (61) 
 1 

 266 
 134 
 394 
 21 
 (94) 
– 

2 990 
1 311 
3 924 
 21 
(1 572) 
 (777) 

63 951 

1 854 

7 756 

73 560 

Present value as at 
31.12.2016 
Current Service Cost 
Interest cost 
Net Actuarial (gains) and losses 
Contributions from members 
Benefits paid 
Liability increase/(decrease) due 
to taxes on pensions 
Present value as at 
31.12.2017 

Current service costs are the increase in the present value of the defined benefit obligation arising from 
current members' service in the current period.  

Interest  costs  are  the  increase  during  the  period  in  the  present  value  of  the  defined  benefit  obligation 
because the benefits are one period closer to settlement.  

Net Actuarial gains and losses comprise: 

 

 

Experience  adjustments  (the  effects  of  differences  between  the  previous  actuarial  assumptions 
for 2017 and what has actually occurred in 2017); and 

Effects of changes in actuarial assumptions, either financial (such as projected salary increases) 
or  demographic  (such  as  mortality  rates).  These  assumptions  are  updated  regularly  to  reflect 
changes in the underlying conditions. 

Benefits (for example, pensions or medical cost re-imbursements) are paid during the year according to 
the rules of the scheme. These benefits paid lead to a decrease in the defined benefit obligation as they 
are no longer to be paid in the future. 

57 

 
 
 
 
 
 
 
 
Actuarial assumptions - employee benefits 

 Annual accounts of the European Union 2017 

The  principle  actuarial  assumptions  used  in  the  valuation  of  the  two  main  employee  benefit  schemes  of 
the EU are shown below: 

2017 
Nominal discount rate  
Expected inflation rate  
Real discount rate 
Expected rate of salary increases 
Medical cost trend rates 
Retirement age 
2016 
Nominal discount rate  
Expected inflation rate  
Real discount rate 
Expected rate of salary increases 
Medical cost trend rates 
Retirement age 

Pension Scheme 
of European 
Officials 

Joint Sickness 
Insurance 
Scheme 

1.9 % 
1.5 % 
0.4 % 
1.8 % 
N/A 
63/64/66 

1.7 % 
1.4 % 
0.3 % 
1.2 % 
N/A 
63/64/66 

2.0 % 
1.6 % 
0.4 % 
1.7 % 
3.0 % 
63/64/66 

1.9 % 
1.5 % 
0.4 % 
1.1 % 
3.0 % 
63/64/66 

Mortality  rates  are  based  on  the  EU  Civil  Servants  Life  Table  -  EULT  2018  (2016:  International  Civil 
Servants Life Table – ICSLT 2013). 

The nominal discount rate is determined as the value of the Euro zero-coupon yield (with a maturity of 
20 years as of December 2017 for the Pension Scheme of European Officials (PSEO), and 25 years for the 
Joint  Sickness  Insurance  Scheme).  The  inflation  rate  used  is  the  expected  inflation  rate  over  the 
equivalent period. It must be determined empirically, based on prospective values as expressed by index-
linked  bonds  on  the  European  financial  markets.  The  real  discount  rate  is  calculated  from  the  nominal 
discount rate and the expected long-term inflation rate. 

Movement in present value of plan assets 

EUR millions 

Other retirement 
benefit schemes 

Joint Sickness 
Insurance Scheme 

Total 

139 

 (2) 
 137 

293 

 8 
 301 

 432 

 6 
 438 

Present value as at 
31.12.2016 
Net movement in plan assets 
Present value as at 
31.12.2017 

5 year trend 

Employee benefits liability 

2013 
46 818 

2014 
58 616 

2015 
63 814 

2016 
67 231 

EUR millions 
2017 
73 122 

The significant increase in the employee benefits liability over the five years can largely be explained by a 
reduction in the real discount rate used to discount the future cash flows. This reduction is linked to the 
underlying  economic  conditions,  particularly  the  fall  in  interest  rates.  For  the  main  PSEO  scheme,  for 
example, the real discount rate fell from 1.8 % at the end of 2013 to 0.4 % at the end of 2017.  

58 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts recognised in the Statement of Financial Performance 

 Annual accounts of the European Union 2017 

2017 
Current service cost 
Interest cost 
Past service cost 
Change in plan assets 
Staff and pension costs 
Actuarial gains and losses 
Total recognised 

Pension 
Scheme of 
European 
Officials 

Other 
retirement 
benefit 
schemes 

Joint 
Sickness 
Insurance 
Scheme 

EUR millions 
Total 

2 360 
1 027 
– 
– 
3 387 
3 236 
6 623 

 89 
 29 
– 
 (15) 
 103 
 (86) 
 17 

 266 
 134 
– 
 (81) 
 318 
 394 
 712 

2 715 
1 190 
– 
 (96) 
3 808 
3 544 
7 353 

Joint Sickness Insurance Scheme sensitivity 

A one percentage point change in assumed medical cost trend rates would have the following effects: 

EUR millions 

One percentage 
point increase 
 166 

One percentage 
point decrease 
 (141) 

2 538 

(1 867) 

The aggregate of the current service cost and interest cost 
components of net periodic post-employment medical costs 
The accumulated post-employment benefit obligation for 
medical costs 

2.10.  PROVISIONS 

Amount at 
31.12.2016 

Additional 
provisions 

Unused 
amounts 
reversed 

Amounts 
used 

Transfer 
between 
categories 

 149 
 217 
 102 
1 113 

 880 
 23 
 127 
2 611 
1 936 

 49 
 2 
 21 
– 

 378 
 7 
 191 
 648 
 440 

 (26) 
– 
 (3) 
– 

 (46) 
 (4) 
 (39) 
 (118) 
 (30) 

 (122) 
 (198) 
 (2) 
 (32) 

 (94) 
– 
 (8) 
 (456) 
 (128) 

– 
– 
– 
– 

– 
– 
– 
– 
 (194) 

Legal cases: 
  Agriculture 
  Cohesion 
  Other 
Nuclear site 
dismantlement 
Financial 
Fines 
Other 
Total 
Non-current 

Current 

 675 

 208 

 (88) 

 (328) 

 194 

EUR millions 

Change in 
estimation 

Amount at 
31.12.2017 

– 
– 
 3 
 853 

 (3) 
– 
 1 
 853 
 856 

 (3) 

 49 
 20 
 120 
1 934 

1 115 
 27 
 272 
3 538 
2 880 

 659 

Provisions are amounts, arising from past events, that will probably have to be paid by the EU budget in 
the future. 

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. 

Nuclear site dismantlement 

In 2017 the basis for the provision was updated as per the "JRC Decommissioning & Waste Management 
Programme  Strategy  (D&WMP)  –  Updated  in  2017".  The  review  of  the  strategy,  along  with  budget  and 
staff needs, has been conducted together with the independent D&WMP Expert Group. It is a follow up of 
the comments raised by the Review of the JRC D&WM Programme made by external experts in 2012 and 

59 

 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

the recommendations raised by the 2015 JRC Internal Audit on Decommissioning. It represents the best 
available  estimate  of  the  budget  and  staff  needed  to  complete  the  decommissioning  of  the  JRC  sites  of 
Ispra, Geel, Karlsruhe and Petten.  

In accordance with the EU accounting rules, this provision is indexed for inflation and then discounted to 
its net present value (using the Euro swap curve). At 31 December 2017, this resulted in a provision of 
EUR 1 934 million, split between amounts expected to be used in 2018 (EUR 30 million) and afterwards 
(EUR  1  904  million).  The  increase  of  EUR  821  million  compared  to  31  December  2016  is  mainly  due  to 
the extended timeframe (currently around 40 years, previously around 20 years). 

It  must  be  noted  that  major  uncertainties,  inherent  to  the  long  term  planning  of  nuclear 
decommissioning,  could  affect  this  estimate  which  could  significantly  increase  in  the  future.  The  main 
sources of uncertainty are related to the end state of the decommissioned site, nuclear materials, waste 
management  and  disposal  aspects,  incomplete  or  lacking  definition  of  national  regulatory  frames, 
complicated  and  time  consuming  licensing  process  and  future  developments  of  the  decommissioning 
industrial market. 

Financial provisions 

These concern mainly provisions which represent the estimated losses that will be incurred in relation to 
the  guarantees  given  under  different  financial  instruments,  where  entrusted  entities  are  empowered  to 
issue guarantees in their own name but on behalf of and at the risk of the EU. The financial risk of the EU 
linked to the guarantees is capped and financial assets are gradually provisioned to cover for the future 
guarantee  calls.  This  heading  also  includes  provisions  for  outstanding  loans  to  Syria  issued  by  the  EIB 
under its external lending mandate and thus guaranteed by the EU via the Guarantee Fund for external 
actions. Non-current financial provisions are discounted to their net present value. 

The  increase  of  the  financial  provision  relates  to  the  increase  of  the  volume  of  guaranteed  operations 
under H2020 and COSME financial instruments. 

2.11.   FINANCIAL LIABILITIES 

Non-current financial liabilities 
Financial liabilities at amortised cost 
Financial liabilities at fair value through surplus or 
deficit 

Note 

31.12.2017 

31.12.2016 

EUR millions 

2.11.1 
2.11.2 

50 061 
 2 

55 067 
– 

Current financial liabilities 
Financial liabilities at amortised cost 
Financial liabilities at fair value through surplus or 
deficit 

2.11.1 
2.11.2 

Total 

2.11.1.  Financial liabilities at amortised cost  

50 063 

55 067 

6 850 
– 

6 850 
56 913 

2 283 
 1 

2 284 
57 351 

Borrowings for financial assistance 
Other financial liabilities 

Total 

Non-Current 
Current 

Note 
2.11.1.1 
2.11.1.2 

31.12.2017 
54 841 
2 070 

56 911 

50 061 
6 850 

EUR millions 

31.12.2016 
55 128 
2 222 

57 350 

55 067 
2 283 

60 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.11.1.1.  Borrowings for financial assistance 

 Annual accounts of the European Union 2017 

EFSM 

BOP 

MFA 

Euratom 

ECSC in 

Total at 31.12.2016 
New borrowings 
Repayments 
Exchange differences 
Changes in carrying 
amounts 
Total at 31.12.2017 
Non-current 
Current 

47 456 
– 
– 
– 
 0 

47 456 
42 300 
5 156 

4 272 
– 
(1 150) 
– 
 (8) 

3 114 
1 700 
1 414 

2 964 
1 013 
 (58) 
– 
 5 

3 924 
3 846 
 78 

Liquid-     
dation 
 184 
– 
 (76) 
 (7) 
 (4) 

 97 
 93 
 5 

 252 
 50 
 (52) 
 (1) 
– 

 250 
 203 
 47 

EUR millions 
Total 

55 128 
1 063 
(1 336) 
 (8) 
 (7) 

54 841 
48 141 
6 700 

Borrowings  mainly  include  debts  evidenced  by  certificates  amounting  to  EUR 54 674 million  (2016: 
EUR 54 951 million). The changes in carrying amount correspond to the change in accrued interests. 

Aside from ECSC in liquidation, the repayment of the above borrowings are ultimately guaranteed by the 
EU budget – see note 4.1.2, and by extension each Member State. 

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 

2.11.1.2.  Other financial liabilities 

31.12.2017 
0 % - 4.54 % 
0 % - 5.68 % 
2.88 % - 3.38 % 
0.62 % - 3.75 % 
6.91 % - 8.97 % 

31.12.2016 
0 % - 4.54 % 
0 % - 5.68 % 
2.37 % - 3.37 % 
0.62 % - 3.75 % 
6.92 % - 9.78 % 

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

Current 
Finance lease liabilities 
Buildings paid for in instalments 
Fines to be reimbursed 
Other 

Total 

31.12.2017 

EUR millions 
31.12.2016 

1 456 
 305 
 159 
1 920 

 89 
 24 
 13 
 24 
 150 
2 070 

1 545 
 329 
 160 
2 034 

 84 
 22 
 25 
 58 
 189 
2 222 

61 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Finance lease liabilities 

 Annual accounts of the European Union 2017 

Description 

< 1 year 

Future amounts to be paid 
> 5 years 

1-5 years 

Land and buildings 
Other tangible assets 
Total at 31.12.2017 
Interest element 
Total future minimum lease 
payments at 31.12.2017 
Total future minimum lease payments at 
31.12.2016 

 85 
 4 
 89 
 69 
 158 

 156 

 424 
 9 
 433 
 249 
 682 

 678 

EUR millions 

Total 
Liability 
1 532 
 13 
1 545 
 565 
2 111 

1 023 
– 
1 023 
 247 
1 271 

1 439 

2 274 

The lease and building related amounts above will have to be funded by future budgets.  

2.11.2.  Financial liabilities at fair value through surplus or deficit  

Type of derivative 

Foreign currency forward contract 
FX option (put spread) 
Total 
Non-Current 
Current 

31.12.2017 

EUR millions 

31.12.2016 

Notional 
amount  
– 
 9 
 9 
9 
– 

Fair value 

– 
 2 
 2 
2 
– 

Notional 
amount  
 101 
– 
 101 
– 
101 

Fair value 

 1 
– 
 1 
– 
1 

As at 31 December  2017  the EU holds a derivative financial instrument (Foreign exchange option –  put 
spread type of option) in which it covers the devaluation of the foreign exchange currency (UHA) related 
to loans given by financial institutions to the SMEs in Ukraine so as to enhance the access to financing, as 
well  as  the  attractiveness  of  the  loan  conditions  in  Ukraine.  Under  the  terms  of  the  contract,  the  EU 
provides its partners with an option to call, for each eligible loan, up to a maximum of 30 %, for an EU 
contribution in the case of devaluation the ratio UHA/EUR. 

At  31  December  2017  all  financial  liabilities  at  fair  value  through  surplus  or  deficit  are  categorised  into 
level 2 of the fair value hierarchy (valuation based on observable inputs other than quoted prices). 

2.11.3.  Financial guarantee liabilities 

The  EFSI  guarantee  on  the  debt  portfolio  disbursed  by  the  EIB  under  the  EFSI  Innovation  and 
Infrastructure window (IIW) is classified as a financial guarantee liability. At 31 December 2017 the EFSI 
financial guarantee liability totals EUR zero, as the revenues to be received under the guarantee exceed 
expected losses (see note 4.1.1). 

62 

 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

2.12.  PAYABLES 

Cost claims & 
invoices received 
from: 
Member States: 

EAFRD & other 
rural development 
instruments 
ERDF & CF 

ESF 

Other 

Private and public 
entities 
Total cost claims 
& invoices 
received 
EAGF 

Own Resources 
Payables 
Sundry Payables 

Other 

Total 

Gross 
Amount 

Adjust- 
ments 

Net Amount at 
31.12.2017 

Gross 
Amount 

Adjust- 
ments 

EUR millions 
Net Amount at 
31.12.2016 

 481 

– 

 481 

 500 

 (34) 

 467 

12 602 

4 183 

 746 

1 563 

 (883) 

 (264) 

 (280) 

 (144) 

11 719 

10 663 

3 919 

 466 

1 419 

4 145 

 793 

1 677 

 (793) 

 (95) 

 (47) 

 (169) 

9 871 

4 050 

 747 

1 507 

19 574 

(1 571) 

18 004 

17 779 

(1 138) 

16 641 

11 534 

8 836 

 341 

 333 

N/A 

N/A 

N/A 

N/A 

11 534 

8 836 

12 193 

10 441 

 341 

 333 

 364 

 364 

N/A 

N/A 

N/A 

N/A 

12 193 

10 441 

 364 

 364 

40 618 

(1 571) 

39 048 

41 142 

(1 138) 

40 005 

Payables  include  invoices  and  cost  claims  received  but  not  yet  paid  at  year  end.  They  are  initially 
recognised  at  the  time  of  the  reception  of  the  invoices  /  cost  claims  for  the  requested  amounts.  The 
payables are subsequently adjusted to reflect only the amounts accepted following review of costs,  and 
the amounts estimated to be eligible, following the cut-off procedure. The amounts estimated to be non-
eligible are included in the column "Adjustments"; the largest amounts concern the structural actions. 

In  the  2014-2020  programming  period,  the  Common  Provisions  Regulation  (CPR)  applicable  to  the 
Structural  Funds  (ERDF  and  ESF),  Cohesion  Fund  and  to  the  European  Maritime  and  Fisheries  Fund 
(EMFF)  foresees  that  the  EU  budget  is  protected  by  means  of  a  systematic  retention  of  10 %  of  the 
interim payments made. By February following the end of the CPR accounting year (1 July - 30 June), the 
control cycle is complete both through management verifications by the managing authorities and audits 
by the audit authorities. The Commission examines the assurance documents and the accounts provided 
by  the  relevant  authorities  in  the  Member  States.  The  payment  /  recovery  of  the  final  balance  is  made 
only after this assessment is finalised and the accounts are accepted. The amount retained according to 
this provision at end 2017 totalled EUR 3.1 billion. A part of this amount (EUR 0.6 billion) is estimated as 
being non-eligible on the basis of the information provided by the Member States in their accounts and is 
also included in the column "Adjustments". 

The final component of the adjustments to the payables is represented by the amounts corresponding to 
other advances to Member States (see note 2.5.2) still to pay at year end (EUR 0.3 billion).  

Concerning cohesion policy (ERDF, CF, ESF) the claims related to the period 2007-2013 remain significant 
at EUR 10 billion, as the Commission is checking the final cost claims submitted by the Member States. At 
the  same  time,  claims  related  to  period  2014-2020  increased  to  EUR  5  billion  following  progress  in  the 
implementation of the programmes. 

Requests for pre-financing 

In  addition  to  the  above  amounts,  EUR 0.5 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.  

Own Resources Payables 

Own resources payables refer to Member States contributions to the EU budget to be reimbursed at year-
end  following  the  amending  budget  no  6/2017.  Amending  budgets  are  implemented  according  to 
Article 10(3)  of  Regulation  no  609/2014.  The  significant  amount  on  31  December  2017  is  due  to  the 

63 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

adoption  of  amending  budget  no  6/2017  on  30  November  2017.  According  to  this  legal  provision,  the 
resulting amounts were returned to the Member States on the first working day of January 2018. 

2.13.  ACCRUED CHARGES AND DEFERRED INCOME 

Accrued charges 
Deferred income 
Other 
Total 

The split of accrued charges is as follows: 

EAGF 
EAFRD and other rural development instruments 
ERDF and CF 
ESF 
Other 
Total 

31.12.2017 
63 588 
 111 
 203 
63 902 

31.12.2017 
33 303 
17 464 
4 249 
2 870 
5 702 
63 588 

EUR millions 
31.12.2016 
66 800 
 638 
 143 
67 580 

EUR millions 
31.12.2016 
33 033 
17 024 
7 157 
3 473 
6 112 
66 800 

The  biggest  movement  concerns  cohesion  policy,  a  decrease  of  EUR 2.9 billion  for  ERDF & CF  and 
EUR 0.6 billion for ESF. This is due to the decreasing accruals for the former programming period 2007-
2013 as the programmes have entered the closure phase. 

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 

31.12.2017 
 278 
2 663 
1 935 
4 876 

EUR millions 

31.12.2016 
 325 
2 643 
1 873 
4 841 

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 during the period 

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

2017 
 (8) 
 6 
 (2) 

EUR millions 
2016 
 34 
– 
 34 

64 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.14.2.  Guarantee Fund reserve 

 Annual accounts of the European Union 2017 

This  reserve  reflects  the  9 %  target  amount  of  the  outstanding  amounts  guaranteed  by  the  EU  budget 
under the EIB external lending mandate, that is required to be kept as assets in the Guarantee Fund for 
external actions (see note 2.4.1). 

2.14.3.  Other reserves 

The amount relates primarily to the reserves of the ECSC in liquidation (EUR 1 515 million) for the assets 
of  the  Research  Fund  for  Coal  and  Steel,  which  were  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 31.12.2016 
Return of 2016 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 31.12.2017 

EUR millions  

76 881 
6 405 
 20 
 11 
(8 082) 
75 234 

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 concern the EAGF activities and employee 
benefit liabilities. 

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. 

65 

 
 
 
 
 
 
 Annual accounts of the European Union 2017 

3.  NOTES TO THE STATEMENT OF FINANCIAL 

PERFORMANCE 

REVENUE 

REVENUE FROM NON-EXCHANGE TRANSACTIONS:  
OWN RESOURCES 

3.1.  GNI RESOURCES 

Own  resources  revenue  is  the  primary  element  of  the  EU's  operating  revenue.  GNI  (gross  national 
income)  revenue  amounts  to  EUR 78 620 million  for  2017  (2016:  EUR 95 578 million)  and  is  the  most 
significant  of  the  three  categories  of  own  resources.  A  uniform  percentage  is  levied  on  the  GNI  of  each 
Member State. The GNI revenue balances revenue and expenditure i.e. funds the part of the budget that 
is  not  covered  by  other  sources  of  income.  The  decrease  of  GNI  revenue  is  explained  mainly  by  the 
substantial reduction of payment appropriations and the relatively high budget surplus from the previous 
financial year (EUR 6 405 million). Both elements reduced the requested Member States' GNI contribution 
in 2017, as this contribution is a balancing figure. 

3.2.  TRADITIONAL OWN RESOURCES 

Customs duties 
Sugar levies 
Total 

2017 
20 475 
 45 
20 520 

EUR millions 
2016 
20 301 
 138 
20 439 

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. 

3.3.  VAT RESOURCES 

The VAT resource is levied on Member States’ VAT bases, which are notionally harmonised in accordance 
with EU rules for this purpose. The VAT contribution is calculated applying a uniform rate of call of 0.3 % 
to  the  base  of  each  Member  State.  For  the  period  2014-2020,  the  Council  Decision  2014/335/EU, 
Euratom, foresees a reduced rate of call of 0.15 % for Germany, the Netherlands and Sweden. 

REVENUE FROM NON-EXCHANGE TRANSACTIONS: 
TRANSFERS 

3.4.  FINES 

These  revenues  of  EUR 4 664 million  (2016:  EUR 3  858 million)  relate  to  fines  the  Commission  has 
imposed on companies for breaches of EU competition rules and to fines the Commission has imposed on 
Member  States  for  infringements  of  EU  law.  The  Commission  recognises  revenues  from  fines  when  it 
adopts the decision to impose a fine and it officially notifies the addressee. The fine amounts in 2017 are 
mainly  competition  fines  (EUR 4 568 million).  The  biggest  cases  concern  breaches  of  EU  antitrust  rules, 
i.e.  a  fine imposed  on  Alphabet  Inc.  and  Google  Inc.  for  abusing  market  dominance  as a  search  engine 

66 

 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

(EUR 2 424 million),  a  fine  on  Scania  for  participating  in  a  cartel  in  the  trucks  sector  (EUR 881 million) 
and fines on 11 air cargo carriers for a price fixing cartel (EUR 776 million). 

3.5.  RECOVERY OF EXPENSES 

Shared management 
Direct management 
Indirect management 
Total 

2017 
1 775 
 81 
 23 
1 879 

EUR millions 

2016 
1 876 
 56 
 15 
1 947 

This heading mainly represents 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. Recoveries are based on 
controls,  audits  or  eligibility  analysis  and  therefore,  these  actions  are  an  important  consideration  in 
implementing  the  EU  budget.  These  operations  protect  the  EU  budget  from  expenditure  incurred  in 
breach  of  law  and  are  particularly  important  since  the  audit  results  of  the  European  Court  of  Auditors 
have  found  a  material  level  of  error  in  payments  made  from  the  EU  budget  –  see  the  Court's  annual 
report including the statement of assurance on the legality and regularity of the underlying transactions. 

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.  

The  amounts  included  in  the  above  table  represent  revenue  incurred  through  the  issuance  of  recovery 
orders.  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. 
Not  included  are  amounts  recovered  through  offsetting  with  expenses,  amounts  recovered  by  way  of 
withdrawals and recoveries of pre-financing amounts. 

Shared management recoveries make 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 and deductions from expenditure less the decrease in 
accrued income at year-end. 

67 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

3.6.  OTHER REVENUE FROM NON-EXCHANGE 

TRANSACTIONS 

Budgetary adjustments 
Contributions from third countries 
Staff taxes and contributions 
Contributions from Member States for external aid 
Transfer of assets 
Adjustment of provisions 
Agricultural levies 
Other 
Total 

2017 
5 806 
1 269 
1 218 
 988 
 208 
 29 
 4 
 854 
10 376 

EUR millions 

2016 
1 956 
 953 
1 189 
 732 
 147 
 14 
 5 
 744 
5 740 

The  budgetary  adjustments  include  the  budget  surplus  from  2016  (EUR 6 405 million).  The  budget 
surplus of the previous year is brought forward to the next year and constitutes a revenue for 2017. 

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

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 Member States for external aid are mainly the amounts received to set up the Facility 
for Refugees in Turkey. 

Transfer  of  assets  revenue  relates  mainly  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. 

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  2017  amount  of  other  revenue  from  non-exchange  transactions  includes  an  amount  of 
EUR 300 million called from the EDF, representing its contribution to the EFSD guarantee fund which will 
be established in 2018 under the Regulation (EU) 2017/1601. 

68 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

REVENUE FROM EXCHANGE TRANSACTIONS 

3.7.  FINANCIAL REVENUE 

Interest on: 
  Loans 
  Late payments 
  Other  
Premium on financial guarantee liability (EFSI) 
Financial revenue from financial assets or liabilities at fair 
value through surplus or deficit 
Realised gains on available for sale financial assets 
Dividends 
Other 
Total 

2017 

1 379 
 217 
 41 
 61 
 57 

 38 
 23 
 28 
1 845 

EUR millions 
2016 

1 446 
 108 
 38 
 16 
 0 

 35 
 13 
 112 
1 769 

Interest revenue on loans relate mainly to loans granted for financial assistance (see note 2.4.3). 

Interest revenue on late payments stem mainly from fines and own resources contributions due and not 
paid on time. 

3.8.  OTHER REVENUE FROM EXCHANGE TRANSACTIONS 

Fee revenue for rendering of services (agencies) 
Foreign exchange gains 
Fee and premium revenue related to financial instruments 
Property, plant and equipment related revenue 
Sales of goods 
Share of net result of EIF 
Other 
Total 

2017 
 557 
 281 
 51 
 43 
 42 
 21 
 338 
1 332 

EUR millions 
2016 
 267 
 331 
 48 
 17 
 46 
 2 
 288 
 998 

Fee  revenue  for  rendering  of  services  mainly  include  marketing  authorisation  fees  charged  by  the 
European  Medicines  Agency  and  trade  mark  fees  collected  by  the  European  Union  Intellectual  Property 
Office.

EXPENSES 

3.9.  SHARED MANAGEMENT 

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 
Total 

2017 
44 289 
11 359 

17 650 
7 353 
1 253 
81 905 

EUR millions 
2016 
44 152 
12 604 

35 045 
9 366 
1 606 
102 772 

69 

 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 Annual accounts of the European Union 2017 

The transition from the former programming period 2007-2013 to the current programming period 2014-
2020 explains the reduction of expenses of EUR 17.4 billion for the cohesion area: the costs declared for 
the period 2007-2013 decreased substantially (EUR 28.6 billion) as the implementation has finished and 
the  programmes  have  entered  the  closure  phase.  At  the  same  time  the  costs  declared  for  the  period 
2014-2020 increased but only by EUR 11.2 billion as the programmes are now advancing. 

Other  expenses  mainly includes:  Asylum  and  Migration  (EUR 485 million),  Fund  for  European  Aid  to  the 
Most Deprived (EUR 378 million) and Internal Security (EUR 226 million). 

3.10.  DIRECT MANAGEMENT 

Implemented by the Commission 
Implemented by EU Executive Agencies 
Implemented by Trust funds 
Total 

2017 
8 831 
6 699 
 208 
15 738 

EUR millions 
2016 
9 254 
6 259 
 97 
15 610 

These  amounts  mainly  concern  the  implementation  of  Research  Policy  (EUR 7.2 billion),  Networks 
Programmes  (EUR 1.3 billion),  Development  Co-operation  Instruments  (EUR 1.3 billion),  European 
Neighbourhood Policy (EUR 1.2 billion) and Humanitarian Aid (EUR 0.7 billion). 

3.11.  INDIRECT MANAGEMENT 

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

2017 
2 667 
1 101 
3 014 
1 478 
8 260 

EUR millions 

2016 
2 547 
 876 
2 382 
2 035 
7 840 

Of  the  indirect  management  expenses,  EUR 4.2 billion  relates  to  external  actions  (mainly  the  areas  of 
pre-accession, humanitarian aid, international co-operation and neighbourhood). A further EUR 3.6 billion 
is related to increasing Europe's competitiveness (in areas such as research, satellite navigation systems 
and education). 

3.12.  STAFF AND PENSION COSTS 

Staff costs 
Pension costs 
Total 

2017 
6 193 
3 808 
10 002 

EUR millions 
2016 
6 074 
3 702 
9 776 

Pension costs represent elements of the movements that have arisen following the actuarial valuation of 
the employee benefits liabilities other than actuarial assumptions. They do not therefore represent actual 
pension payments of the year, which are significantly lower. 

70 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

3.13.  CHANGES IN EMPLOYEE BENEFITS ACTUARIAL 

ASSUMPTIONS 

The  actuarial  loss  of  net  EUR 3 544 million  shown  under  this  heading  relates  to  the  employee  benefits 
liabilities recognised on the balance sheet (see note 2.9). 

3.14.  FINANCE COSTS 

Interest expenses: 
  Borrowings 
  Other 
Impairment losses on loans and receivables 
Finance leases 
Impairment losses on available for sale financial assets 
Loss on financial assets or liabilities at fair value through 
surplus or deficit 
Realised loss on available for sale financial assets 
Other  
Total 

2017 

1 373 
 22 
 324 
 81 
 39 
 12 

 2 
 42 
1 896 

EUR millions 
2016 

1 440 
 57 
 184 
 67 
 40 
 1 

 0 
 116 
1 904 

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

The  impairment  losses  on  loans  and  receivables  includes  an  amount  of  EUR 243 million  related  to  the 
traditional own resources (see note 2.6.1.1).  

3.15.  OTHER EXPENSES 

Administrative and IT expenses 
Property, plant and equipment related expenses 
Adjustment of provisions 
Foreign exchange losses 
Operating lease expenses 
Reduction of fines by the Court of Justice 
Other 
Total 

2017 
2 521 
1 423 
1 377 
 446 
 414 
 67 
 509 
6 756 

EUR millions 
2016 
2 455 
1 021 
 685 
 505 
 383 
 18 
419 
5 486 

The increase in expenses related to provisions is due mainly to the change in estimation for the nuclear 
site dismantlement provision (see note 2.10).  

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

Research costs 
Non-capitalised development costs 
Total 

2017 
 376 
 81 
 456 

EUR millions  
2016 
 344 
 88 
 431 

71 

 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2017 

3.16.  SEGMENT REPORTING BY MULTIANNUAL FINANCIAL FRAMEWORK HEADING (MFF) 

Smart and 
inclusive 
growth 

Sustainable 
growth 

Security 
and 
citizenship 

Global 
Europe 

Administration 

GNI resources 
Traditional own resources 
VAT 
Fines 
Recovery of expenses 
Other 
Revenue from non-exchange transactions 
Financial revenue 
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, executive agencies 
and trust funds 
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 
Other expenses 

Total expenses 
Economic result of the year 

– 
– 
– 
– 
 357 
1 172 
1 529 
 147 
 196 
 343 

1 873 

– 
– 
(17 650) 
(7 353) 
 (439) 
(9 809) 

(2 530) 
 (434) 
 (819) 
(1 638) 
– 

 (88) 
(2 453) 

(43 213) 
(41 341) 

– 
– 
– 
– 
1 488 
 244 
1 732 
 (4) 
 (12) 
 (15) 

1 716 

(44 289) 
(11 359) 
– 
– 
 74 
 (525) 

 (121) 
 0 
 15 
 (360) 
– 

 (16) 
 (88) 

– 
– 
– 
– 
 5 
 43 
 48 
 0 
 (6) 
 (6) 

 42 

– 
– 
– 
– 
 (897) 
(1 080) 

 (754) 
 (177) 
 1 
 (426) 
– 

 (0) 
 (196) 

(56 669) 
(54 953) 

(3 528) 
(3 486) 

– 
– 
– 
– 
 28 
 414 
 443 
 17 
 10 
 27 

 470 

– 
– 
– 
– 
 9 
(4 337) 

 (24) 
(3 504) 
 (675) 
 (615) 
– 

 (18) 
 (113) 

(9 277) 
(8 807) 

– 
– 
– 
– 
 0 
4 827 
4 827 
 1 
 338 
 338 

5 166 

– 
– 
– 
– 
– 
 (12) 

– 
– 
 (0) 
(5 977) 
(3 544) 

 (106) 
(3 386) 

(13 025) 
(7 859) 

Not 
assigned 
to MFF 
heading* 
78 620 
20 520 
16 947 
4 664 
 0 
3 676 
124 428 
1 684 
 805 
2 489 

126 917 

– 
– 
– 
– 
 0 
 25 

 762 
– 
– 
 (986) 
– 

EUR millions 

Total 

78 620 
20 520 
16 947 
4 664 
1 879 
10 376 
133 006 
1 845 
1 332 
3 177 

136 183 

(44 289) 
(11 359) 
(17 650) 
(7 353) 
(1 253) 
(15 738) 

(2 667) 
(4 115) 
(1 478) 
(10 002) 
(3 544) 

(1 668) 
 (521) 

(2 389) 
124 528 

(1 896) 
(6 756) 

(128 101) 
8 082 

* 

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

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

72 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

4. 

CONTINGENT LIABILITIES AND ASSETS 

CONTINGENT LIABILITIES 

Contingent liabilities are possible future payment obligations for the EU that may arise due to past events 
or  legally  binding  commitments  taken  but  which  will  depend  on  future  events  not  wholly  under  the 
control  of  the  EU.  They  relate  mainly  to  financial  guarantees  given  (on  loans  and  financial  assistance 
programmes)  and  to  legal  risks.  All  contingent  liabilities,  except  those  relating  to  fines  and  guarantees 
covered by funds (see note 2.4.1), would be financed, should they fall due, by the EU budget (and thus 
the EU Member States) in the years to come. 

4.1.1.  Budgetary guarantees 

Ceiling 

37 479 

31.12.2017 

Signed 

28 950 

Disbursed 

19 972 

Ceiling 

40 645 

31.12.2016 

Signed 

30 161 

EUR millions 

Disbursed 

21 145 

16 000 

53 479 

13 473 

42 423 

10 128 

30 100 

16 000 

56 645 

11 245 

41 406 

4 392 

25 537 

EIB external 
lending mandate 
guarantees 
EFSI guarantee 

Total 

The above table shows the extent of the exposure of the EU budget to possible future payments linked to 
guarantees  given  to  the  EIB  group.  Disbursed  amounts  represent  the  amounts  already  given  to  final 
beneficiaries, while signed amounts include these disbursed monies plus agreements already signed with 
beneficiaries  but  not  yet  disbursed.  The  ceiling  represents  the  total  guarantee  that  the  EU  budget,  and 
thus its Member States, have committed to cover. 

EIB external lending mandate guarantees 

The  EU  budget  guarantees  loans  signed  and  granted  by  the  EIB  from  the  EIB's  own  resources  to  third 
countries.  At  31 December 2017  the  amount  of  loans  outstanding  and  covered  by  the  EU  guarantee 
totalled EUR 19 972 million (2016: 21 145 million). The EU budget guarantees: 

 

 

EUR 18 583 million (2016: EUR 19 481 million) via the Guarantee Fund for external actions (see 
note 2.4.1), and 

EUR 1  389 million  (2016:  EUR 1 664 million)  directly  for  loans  granted  to  Member  States  before 
accession. 

In  addition  to  the  EUR 19  972  million  disclosed  above  as  disbursed,  the  EU  guarantees  a  further 
EUR 258 million of outstanding loans to Syria for which provisions have been made. 

The EU external lending mandate guarantee relating to loans granted by the EIB is limited to 65 % of the 
outstanding  balances  for  agreements  signed  after  2007  (mandates  2007-2013  and  2014-2020).  For 
agreements  before  2007  the  EU  guarantee  is  limited  to  a  percentage  of  the  ceiling  of  the  credit  lines 
authorised, in most cases 65 % but also 70 %, 75 % or 100 %. Where the ceiling is not reached, the EU 
guarantee covers the full amount. 

To  disclose  the  maximum  exposure  faced  by  the  EU  at  31 December 2017,  however,  one  must  also 
include  loans  authorised  to  be  signed  but  not  yet  signed  (EUR 8  529 million)  and  loans  signed  but  not 
disbursed (EUR 8 978 million). 

In March 2018 Decision (EU) 2018/412 was adopted by the European Parliament and the Council allowing 
for  an  increase  of  the  ceiling  of  the  EIB  financing  operations  under  the  EU  guarantee.  This  will  be 
reflected  in  an  updated  guarantee  agreement  with  the  EIB  and  when  amended,  the  EU  maximum 
exposure would increase by EUR 3.4 billion. 

73 

 
 
 
 
 
 
 
 
 
European Fund for Strategic Investments (EFSI) guarantee 

 Annual accounts of the European Union 2017 

EFSI is an initiative that aims to increase the risk bearing capacity of the EIB Group by enabling the EIB 
to extend its investments in the EU. The objective of EFSI is to support additional investments in the EU 
and access to finance for small companies. EFSI is not a  separate legal entity or an investment fund in 
the strict sense. The EFSI risk reserve offers protection to the EIB against potential losses for underlying 
operations.  It  is  composed  of  an  allocation  of  EUR 5 billion  of  EIB's  own  capital  and  an  EU  budget 
guarantee  of  up  to  EUR 16 billion  ('EFSI  EU  guarantee').  The  EFSI  EU  guarantee  is  provided  to  the  EIB 
under an agreement between the EU and the EIB, hereafter referred to as 'EFSI Agreement'. 

The amounts related to the EFSI contingent liabilities, including the guarantee ceiling, as disclosed in this 
note are based on the EFSI Agreement in force at 31 December 2017. However, it should be noted that 
the  amended  EFSI  Regulation  (Regulation  EU  2017/2396),  as  adopted  in  December  2017,  enabled  an 
increase  of  the  EFSI  EU  Guarantee  up  to  EUR 26  billion.  The  EFSI  Agreement  has  been  amended 
accordingly in March 2018. 

The EFSI operations are conducted within two windows: the Infrastructure and Innovation Window (IIW) 
implemented  by  the  EIB  (EFSI  EU  guarantee  of  EUR 13 billion)  and  the  SME  Window  (SMEW) 
implemented  by  the  EIF  (EFSI  EU  guarantee  of  EUR  3  billion),  both  of  which  have  a  debt  portfolio  and 
an equity portfolio. The EIF acts under an agreement with the EIB on the basis of an EIB guarantee which 
itself is counter-guaranteed by the EFSI EU Guarantee under the EFSI Agreement. 

For  the  purpose  of  the  use  of  the  EFSI  EU  guarantee  the  implementation  of  EFSI  is  supervised  by 
a steering  board  acting  by  consensus  and  composed  of  four  members,  of  which  three  are  appointed  by 
the Commission and one by the EIB. Under the amended EFSI Regulation, the EFSI steering board will be 
composed  of  five  members,  including  one  non-voting  member  appointed  by  the  European  Parliament, 
while  the  decisions  shall  be  taken  by  consensus,  and  -  if  the  consensus  cannot  be  achieved  -  by  the 
unanimous vote among its voting members. The EFSI steering board does not take investment decisions. 

The EU and the EIB have distinct roles within EFSI. EFSI is established within the EIB who finances the 
operations  (debt  and  equity  investments)  and,  to  do  this,  borrows  the  necessary  funds  on  the  capital 
markets.  Regarding  the  IIW,  the  EIB  takes  the  investment  decisions  independently  and  manages  the 
operations  in  accordance  with  its  rules  and  procedures.  The  same  applies  to  the  SMEW  operations 
managed by the EIF. 

In  order  to  ensure  that  investments  made  under  EFSI  remain  focused  on  the  specific  objective  of 
addressing  the  market  failures  which  hinder  investment  in  the  EU  and  that  they  are  eligible  for  the 
protection of the EU guarantee, a dedicated governance structure has been put in place. The Investment 
Committee of independent experts examines each project proposed by the EIB under the IIW regarding 
its  eligibility  for  the  EU  guarantee  coverage.  Once  an  operation  is  confirmed  to  be  eligible  as  EFSI 
guaranteed  operation,  the  decision  to  continue  with  the  project  and  its  management  is  then  subject  to 
the  normal  EIB  project  cycle  and  governance  process.  Regarding  SMEW,  the  role  of  the  Investment 
Committee  is  limited  to  the  consultation  on  the  description  of  the  SMEW  Products,  which  are  being 
approved by the EFSI Steering Board and EFSI Managing Director. 

The role of the EU relates to the provision of the EU budget guarantee for part of the potential losses that 
the EIB may suffer from its investments in debt and equity instruments. Consequently, the EU does not 
intervene  in  the  selection  and  management  of  EFSI  operations,  does  not  invest  money  in  the  EFSI 
operations and is not a direct contractual party to the underlying instruments. As the control criteria and 
accounting  requirements  for  consolidation  under  the  EU  accounting  rules  (and  IPSAS)  are  not  met,  the 
related guaranteed assets are not accounted for in the consolidated annual accounts of the EU. 

The EU guarantee granted to the EIB  Group under EFSI is, in accordance with the EU accounting rules, 
accounted for as a financial guarantee liability in respect of the IIW debt portfolio, as a financial provision 
for the SMEW debt portfolio and as a derivative (financial asset or liability at fair value through surplus or 
deficit) for both equity portfolios. In addition, a contingent liability related to the EFSI guarantee given is 
disclosed in this note. 

Under the EFSI IIW debt portfolio, the EU guarantee covers the first loss piece of a portfolio of financing 
operations entered into by the EIB, which are mainly standard loans and guarantees. The EU guarantee is 
called when the debtor fails to make a payment when due or in the case of a debt restructuring. The EU 
guarantee  is  remunerated  in  proportion  to  the  risk  taken  by  the  EU  and  this  happens  in  the  form  of  a 
distribution,  between  the  EIB  and  the  EU,  of  the  risk-related  revenues  received  by  EIB  from  the 
guaranteed  operations.  The  EU  revenues  should  first  cover  the  losses  incurred  on  the  guaranteed 
operations. The EU guarantee is therefore accounted for as financial guarantee liability and measured, at 

74 

 
 Annual accounts of the European Union 2017 

initial  recognition,  at  fair  value,  being  the  net  present  value  of  the  premiums  receivable  (the  EU 
revenues). At subsequent balance sheet dates, the financial guarantee liability is measured at the higher 
of  the  expected  losses  and  the  amount  initially  recognised  less,  when  appropriate,  the  accumulated 
amortisation of the revenue. The financial guarantee liability is presented net of the EU revenues still to 
be received – zero at 31 December 2017 – see note 2.11.3. 

Under  the  EFSI  IIW  equity  portfolio,  which  consists  of  direct  equity  or  quasi  equity  participations  or 
subordinated  loans,  the  EIB  invests  pari-passu  at  its  own  risk  and  also  at  the  risk  of  the  EU. 
Consequently, the EU guarantee covers - for the part of the equity investments guaranteed by the EU - 
the negative value adjustments (unrealised losses) at each balance sheet date, the realised losses at dis-
investment and the EIB funding costs. In cases where the value of an investment, which was previously 
subject to a  negative value adjustment, increases at subsequent reporting  dates, the amount up to the 
original cost of the investment is reimbursed by the EIB to the EU. At the time of the dis-investment, the 
EU  is  also  entitled  to  gains  on  the  investment  exceeding  the  original  cost.  The  EU  guarantee  is 
remunerated  by  revenues  received  by  the  EIB  from  the  guaranteed  operations,  including  interests, 
dividends and realised gains. The settlement between the EU and the EIB happens annually net of losses 
and revenues. 

Under EFSI SMEW equity portfolio, the EU guarantees equity investments in venture capital and private 
equity funds, funded by the EIB and originated and managed by the EIF. The EU guarantee is provided 
on a portfolio basis for two portfolios: sub-window 1 and sub-window 2. The EFSI guarantee is called to 
cover  impairment  and  realised  losses  from  the  guaranteed  investments  and  the  EIB  funding  costs.  The 
EU  is  entitled  to  the  remuneration  for  the  risk  taken  in  form  of  dividends  and  realised  gains  from  the 
guaranteed  equity  operations.  Under  the  sub-window  2,  the  EU  Horizon  2020  programme  also  partially 
invests in the same equity portfolio (the H2020 investment funded by the EU is accounted for as an AFS 
financial asset in the EU accounts) and bears first losses from the investments, while further losses are 
covered by the EU Guarantee and the EIF. 

The  EFSI  guarantee  on  the  EFSI  equity  portfolio  is  classified  as  a  derivative  financial  instrument  and 
accounted  for  as  a  financial  asset  or  financial  liability  at  fair  value  through  surplus  or  deficit.  At 
31 December  2017  the  fair  value  of  the  EFSI  EU  guarantee  on  the  EFSI  equity  portfolio  amounted  to 
EUR 16 million – see note 2.4.2. 

The contingent liability above includes operations of the COSME, H2020, CCS and EaSI programmes for 
the part covered by the EFSI EU guarantee under SMEW debt portfolio. 

EU  guarantee  payments  would  be  made  by  the  EFSI  Guarantee  Fund  –  see  note  2.4.1.  At  the  end  of 
2017  the  assets  of  the  guarantee  fund  totalled  EUR  3.5  billion  (2016:  EUR 1  billion),  while  another 
EUR 2.6 billion  (2016:  EUR  2.4  billion)  have  been  committed  but  not  yet  paid  and  is  included  in  the 
amount disclosed as RAL in note 5.1. 

4.1.2.  Guarantees relating to financial assistance (borrowing and lending activities) 

EFSM 

BOP 

MFA 

Euratom 

Total 

Drawn 

47 456 

3 114 

3 924 

 250 

54 744 

31.12.2017 

Undrawn 

Total 

– 

– 

 460 

 250 

 710 

47 456 

3 114 

4 384 

 500 

Drawn 

47 456 

4 272 

2 964 

 252 

55 454 

54 944 

EUR millions 

31.12.2016 

Undrawn 

Total 

– 

– 

1 313 

 300 

1 613 

47 456 

4 272 

4 277 

 552 

56 557 

The  EU  budget  guarantees  the  borrowings  of  the  Commission  taken  to  finance  lending  to  Member  and 
non-Member  States  in  the  back-to-back  transactions.  These  borrowings  are  already  recognised  as 
liabilities on the EU balance sheet - see note 2.11.1. However, should there be a default on the back-to-
back-loans  given  out  with  these  borrowings,  the  EU  budget,  based  on  Article  14  of  Council  Regulation 
609/2014, would have to bear the full cost of the amount defaulted:  

  Borrowings related to loans disbursed under the EFSM are guaranteed solely by the EU budget; 

  Borrowings related to BOP loans are guaranteed solely by the EU budget; 

75 

 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

  MFA loans are firstly guaranteed by the Guarantee Fund for external actions (see note 2.4.1) and 

then by the EU budget; and  

  Guarantees  from  third-parties  are  the  first  cover  for  the  entire  amounts  of  the  outstanding 
Euratom  loans.  The  Guarantee  Fund  would  cover  the  external  lending  amounts  should  the  third 
party guarantees not provide for them. 

ECSC  in  Liquidation  loans  granted  on  borrowed  funds  are  not  covered  by  an  EU  budgetary  guarantee. 
Instead, they are covered by financial assets of the ECSC in Liquidation – see note 2.4.1.  

4.1.3.  Guarantees given for EU financial instruments 

Horizon 2020 
Risk Sharing Finance Facility 
Connecting Europe Facility 
Other 
Total 

31.12.2017 
1 297 
 654 
 490 
 32 
2 473 

EUR millions 
31.12.2016 
 921 
 711 
 465 
 3 
2 101 

As  mentioned  in  Article  140(3)  FR,  the  budgetary  expenditure  linked  to  a  financial  instrument  and  the 
financial  liability  of  the  EU  shall  in  no  case  exceed  the  amount  of  the  relevant  budgetary  commitment 
made for it, thus excluding contingent liabilities for the budget. In practise it means that these liabilities 
have a counter-part on the asset side of the balance sheet or are covered by the outstanding budgetary 
commitments  not  yet  expensed.  The  contingent  liabilities  above  are  shown  net  of  financial  provisions 
made for these instruments – see note 2.10. 

4.1.4. 

Legal cases 

Fines 
Agriculture 
Cohesion 
Other 
Total 

Fines 

31.12.2017 
3 242 
1 737 
 3 
 481 
5 463 

EUR millions 

31.12.2016 
1 834 
1 711 
 3 
 600 
4 148 

These  amounts  mainly  concern  fines  imposed  by  the  Commission  for  infringement  of  competition  rules 
that  have  been  provisionally  paid  by  fined  companies  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 or until the expiry of the period for appeal. 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. 

Should  the  EU  lose  any  of  these  cases  relating  to  fines  imposed,  there  would  be  no  charge  to  the  EU 
budget since the fines have been provisionally paid and this cash is held either in specific bank accounts 
(see note 2.8) or in the BUFI fund set up for this purpose (see note 2.4.1). The amount of fines are only 
recognised as budgetary revenue when they are definitive (Article 83 FR). 

Agriculture 

These  are  contingent  liabilities  towards  the  Member  States  connected  with  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. 

76 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cohesion 

 Annual accounts of the European Union 2017 

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

Other legal cases 

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. 

4.2.  CONTINGENT ASSETS 

Guarantees received: 
   Performance guarantees 
   Other guarantees 
Other contingent assets 
Total 

31.12.2017 

EUR millions 
31.12.2016 

 352 
 22 
 34 
 409 

 369 
 28 
 34 
 431 

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

77 

 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

5.  BUDGETARY AND LEGAL COMMITMENTS 

This note provides information on the budgetary  process and  future funding needs and  not on liabilities 
existing as at 31 December 2017. 

The  multiannual  financial  framework  (MFF)  agreed  by  the  Member  States  defines  the  programmes  and 
sets  out  the  heading  ceilings  for  commitment  appropriations  and  the  total  for  payment  appropriations 
within which the EU may enter into budgetary and legal commitments, and ultimately make payments for 
a period of 7 years – see table 1.1 in the notes to the budgetary implementation reports. 

The  MFF  ceilings  were  adopted  by  the  Council  (Member  States),  with  the  consent  of  the  European 
Parliament,  and  Article  16  of  Regulation  1306/2013  on  the  financing  of  the  CAP  makes  a  direct  link 
between  the  annual  ceiling  of  EAGF  expenditure  and  the  MFF  Regulation.  The  European  Parliament  and 
the Council also adopted the respective basic acts for the EAGF expenditure that set out the expenditure 
per Member State for the entire period 2014-2020. 

Legal  commitments  correspond  to  programmes,  projects,  agreements  or  contracts  signed,  thus  legally 
binding  the  EU.  A  legal  commitment  is  the  act  whereby  the  authorising  officer  enters  or  establishes  an 
obligation (for the EU) which results in a charge (Article 85 FR).  

A  budgetary  commitment  is  in  principle  made  before  the  legal  commitment,  but  for  some  multiannual 
programmes/projects  it  is  the  reverse,  the  relevant  budgetary  commitments  being  made  in  annual 
instalments, over several years, when the basic act so provides for. For example, for cohesion, Article 76 
of the Common Provisions Regulation (CPR) (Regulation (EU) No 1303/2013) provides that the decision 
of the Commission adopting a programme shall constitute a legal commitment within the meaning of the 
Financial Regulation but that the budget commitments of the Union in respect of each programme shall 
be  made  in  annual  instalments  for  each  Fund  during  the  period  between  1  January  2014  and 
31 December  2020.  Other  legal  bases  may  contain  similar  provisions.  For  this  reason,  there  may  be 
amounts  that  the  EU  has  legally  committed  to  pay,  but  where  the  budgetary  commitment  has  not  yet 
been made – see notes 5.2 and 5.3 below. 

If  the  budgetary  commitment  has  been  made  but  the  subsequent  payments  are  not  yet  made,  the 
amount of outstanding commitments is called "Reste à Liquider" (RAL). This can represent programmes 
or projects, often multiannual, signed but which are not yet (fully) implemented. They represent payment 
obligations  for  future  years.  As  the  financial  statements  are  prepared  on  an  accrual  basis,  whereas  the 
budgetary  implementation  reports  are  prepared  on  a  cash  basis,  part  of  the  overall  amounts  unpaid 
(RAL)  has  already  been  expensed  and  is  recognised  as  a  liability  on  the  balance  sheet  (see  notes  2.12 
and 2.13). The calculation of these expenses is made based either on cost claims/invoices received or on 
the estimated implementation of a programme or project where no claims have been notified yet to the 
EU – see note 5.1 below. Once the payments relating to the RAL are made after 31 December 2017, the 
liability on the balance sheet is derecognised. The part of the RAL not expensed yet is not included under 
liabilities but is instead disclosed below. 

The  disclosures  below  thus  represent  amounts  at  31 December 2017  that  the  EU  has  committed  to  pay 
based on the fulfilment of the contractual agreements and which are therefore intended to be funded by 
future EU budgets. 

Outstanding budgetary commitments not yet 
expensed 
Shared management legal commitments under the 
current MFF pending implementation 
Significant legal commitments in other areas 
Total 

Note 
5.1 

5.2 

5.3 

31.12.2017 
221 391 

EUR millions 

31.12.2016 
189 881 

211 688 

276 351 

20 030 
453 109 

22 275 
488 507 

78 

 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

5.1.  OUTSTANDING BUDGETARY COMMITMENTS NOT YET 

EXPENSED 

Outstanding budgetary commitments not yet expensed 

31.12.2017 
221 391 

EUR millions 
31.12.2016 
189 881 

The  amount  disclosed  above  is  the  budgetary  RAL  ("Reste  à  Liquider")  of  EUR 267 258 million  (see 
table 4.4  in  the  notes  to  the  budgetary  implementation  reports),  less  related  amounts  that  have  been 
included  as  liabilities  on  the  balance  sheet  and  as  expenses  in  the  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.  As  explained  above,  this  is  the  normal  consequence  of  the 
existence of multiannual programmes.  

It should be noted that outstanding pre-financing advances at 31 December 2017 totalled EUR 49 billion 
(see  note  2.5).  This  represents  budgetary  commitments  that  have  been  paid,  decreasing  the  RAL,  but 
where  the  amounts  paid  are  still  considered  as  belonging  to  the  EU  and  not  to  the  beneficiary  until  the 
contractual commitments are fulfilled. They are thus like the RAL disclosed above, not yet expensed.   

5.2.  SHARED MANAGEMENT LEGAL COMMITMENTS UNDER 
THE CURRENT MFF PENDING IMPLEMENTATION  

Financial 
framework 
2014-2020 
(A) 

Legal 
commitments 
concluded (B) 

Budget 

commitments    

(C ) 

Decommit-   
ments (D) 

Funds 

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 

262 058 

262 058 

140 302 

91 991 

3 814 

91 991 

3 814 

51 813 

2 114 

357 862 

357 862 

194 229 

99 343 

99 343 

56 401 

5 749 

5 749 

3 210 

105 093 

105 093 

59 611 

5 391 

2 812 

8 202 

4 233 

2 635 

6 868 

2 794 

1 500 

4 294 

Budget 
available 
under MFF 
(=A-C) 

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

121 756 

121 756 

40 178 

1 699 

40 178 

1 699 

163 633 

163 633 

42 942 

42 942 

2 539 

2 539 

45 482 

45 482 

2 597 

1 311 

3 908 

1 439 

1 134 

2 573 

213 023 

211 688 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

Total 

471 157 

469 822 

258 134 

These  are  legal  obligations  that  the  EU  has  committed  to  paying  when  adopting  the  operational 
programmes  related  to  shared  management.  The  decision  of  the  Commission  adopting  an  operational 
programme shall constitute a financing decision within the meaning of Article 84 FR and once notified to 
the Member State concerned, a legal commitment within the meaning of that Regulation. 

Article 76 of the CPR for European Structural and Investment Funds (ESIF) states:  

"The  budget  commitments  of  the  Union  in  respect  of  each  programme  shall  be  made  in  annual 
instalments for each Fund during the period between 1 January 2014 and 31 December 2020. The budget 
commitments relating to the performance reserve in each programme shall be made separately from the 
remaining allocation to the programme." 

The table above starts with the total MFF (column A) and shows the legal commitments for which budget 
commitments  have  not  yet  been  made  and,  for  information,  the  maximum  commitments  in  relation  to 
the  ceilings  foreseen  in  the  MFF  2014-2020,  headings  1B,  2  and  3.  These  legal  commitments  thus 
represent the outstanding amounts that the EU will commit budgetarily and then pay after 31 December 

79 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

2017. Column B shows the legal commitments concluded by the Commission at year-end and column C 
shows  the  budget  commitments  made  relating  to  these  legal  commitments  at  year-end.  At 
31 December 2017 no decommitments (column D) have been made. 

5.3.  SIGNIFICANT LEGAL COMMITMENTS IN OTHER AREAS 

Connecting Europe Facility 
Copernicus 
ITER 
Galileo  
Fisheries agreements 
Operating lease commitments 
Other contractual commitments 
Total 

31.12.2017 
12 676 
1 841 
1 496 
 253 
 133 
2 577 
1 054 
20 030 

EUR millions 
31.12.2016 
13 799 
2 393 
1 891 
 523 
 247 
2 419 
1 003 
22 275 

These  amounts  reflect  the  long-term  legal  commitments  that  were  not  yet  covered  by  commitment 
appropriations  in  the  budget  at  year-end.  These  binding  obligations  will  be  budgeted  in  annual 
instalments in future years and paid.  

Certain  important  programmes  (see  below)  may  be  implemented  by  annual  instalments  according  to 
Article  85(4)  FR.  This  allows  the  EU  to  make  legal  commitments  (sign  grant  agreements,  delegation 
agreements and procurement contracts) in excess of the available commitment appropriations of a given 
year.  Therefore  a  substantial  amount  of  the  overall  allocation  for  the  current  MFF  may  be  already 
committed. This applies in particular for the programmes described below: 

Connecting Europe Facility (CEF) 

The CEF provides financial assistance to trans-European networks in order to support projects of common 
interest  in  the  sectors  of  transport,  telecommunications  and  energy  infrastructures.  The  legal 
commitments for the CEF programme cover a period running from 2014 until 2020 for the CEF Transport 
and up to 2021 for CEF Energy. The legal basis of these commitments is Regulation (EU) No 1316/2013 
of the EP and of the Council of 11 December 2013 establishing the Connecting Europe Facility, amending 
Regulation  (EU)  No 913/2010  and  repealing  Regulations  (EC)  No 680/2007  and  (EC)  No 67/2010  Text 
with EEA relevance (OJ L 348, 20 December 2013) which foresees the use of the annual instalment in its 
article 19. 

Copernicus 

Copernicus is the European Earth observation programme – see also note 2.2. These commitments are 
made for the period until 2020. Based on Regulation (EU) 377/2014 of the EP and Council of 3 April 2014 
(OJ L 122/44  of  24  April 2014)  the  Commission  signed  delegation  agreements  with  the European  Space 
Agency  (ESA),  EUMETSAT  and  the  European  Centre  for  Medium  Range  weather  forecasts.  Article  8  of 
Regulation 377/2014 authorises the use of annual instalments. 

ITER – International Thermonuclear Experimental Reactor 

These commitments are intended to cover future funding needs of the ITER facilities up to 2021. 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. These commitments are made on the 
basis  of  Council  decision  (Euratom)  791/2013  of  13 December 2013  amending  decision  (Euratom) 
198/2007  establishing  the  European  Joint  Undertaking  for  ITER  and  the  Development  of  Fusion  Energy 
which  authorises  the  use  of  annual  instalments.  ITER  was  created  to  manage  and  to  encourage  the 
exploitation of the ITER facilities, to promote public understanding and acceptance of fusion energy, and 
to undertake any other activities that are necessary to achieve its purpose. ITER involves the EU, China, 
India, Russia, South Korea, Japan and the USA.  

Galileo 

These  are  amounts  committed  to  the  Galileo  programme  developing  a  European  Global  Navigation 
Satellite System – see also note 2.2. These commitments are made for the period until 2020. Based on 
Regulation  (EU)  1285/2013  of  the  EP  and  Council  of  11 December 2013  (OJ  L  347/1  of 

80 

 
 
 
 
 Annual accounts of the European Union 2017 

20 December 2013)  the  Commission  signed  a  delegation  agreement  with  ESA.  Article  9  of  Regulation 
(EU) 1285/2013 authorises the use of annual instalments. 

Fisheries agreements 

These  are  commitments  entered  into  up  to  2020  with  third  countries  for  operations  under  international 
fisheries  agreements.  These  commitments  are  made  based  on  Council  decisions  for  each  third  country 
(e.g. Council decision (EU) 1894/2015 of 5 October 2015 on the conclusion of the Protocol between the 
European  Union  and  the  Republic  of  Cape  Verde  setting  out  the  fishing  opportunities  and  the  financial 
contribution provided for in the Fisheries Partnership Agreement between the European Community and 
the  Republic  of  Cape  Verde;  OJ L 277,  22 October 2015).  These  are  specific  international treaties  which 
imply multiannual rights and obligations. 

Operating lease commitments 

Minimum amounts committed to be paid according to the underlying contracts during the remaining term 
of these lease contracts are as follows: 

Minimum lease payments 

EUR millions 

< 1 year 
 374 
 7 
 380 

1- 5 years 
1 106 
 13 
1 120 

> 5 years 
1 078 
 0 
1 078 

Total 
2 558 
 21 
2 577 

Buildings 
IT materials and other equipment 
Total 

Other contractual commitments 

The amounts included under this disclosure correspond to amounts committed to be paid during the term 
of the contracts. The most significant amount included here relates to building contracts of the European 
Parliament (EUR 175 million). 

81 

 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

6. 

FINANCIAL RISK MANAGEMENT 

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

  Borrowing and lending activities for financial assistance carried out by the Commission through: 
EFSM,  BOP,  MFA,  and  Euratom  actions  and  for  loans  from  borrowed  funds  of  the  ECSC  in 
Liquidation;  

 

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

  Assets held in funds for budgetary guarantees: The Guarantee Fund for external actions and the 

EFSI Guarantee Fund; and 

 

Financial instruments financed by the EU budget. 

6.1.  TYPES OF RISK 

Market  risk  is  the  risk  that  the  fair  value  or  future  cash  flows  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). 

  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.  

 

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 in  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. 

6.2.  RISK MANAGEMENT POLICIES  

The  implementation  of  the  EU  budget  relies  increasingly  on  the  use  of  operational  programme  financial 
instruments.  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 use of the EU budget maximises the impact of the funds available. For more information on 
the amounts concerned, see note 2.4.1. 

Common to most financial instruments is the fact that the implementation is delegated to either the EIB 
group  (including  EIF)  or  to  other  financial institutions  based  on  an  agreement  between  the  Commission 
and  the  financial  institution.  Agreements  signed  with  these  financial  institutions  include  strict  conditions 
and obligations on the intermediaries so as to 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 institution (i.e. a fiduciary account). The 
financial institution may, depending on the instrument in question, use the funds on this fiduciary account 
to  provide  loans,  issue  debt  instruments,  invest  in  equity  instruments  or  cover  the  guarantee  calls. 
Proceeds from financial instruments have, as a general rule, to be reimbursed to the EU budget. 

The  risk  as  regards  these  financial  instruments  is  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 

82 

 
 Annual accounts of the European Union 2017 

difficulties in obtaining funding from commercial lenders), it is therefore likely that some losses to the EU 
budget will occur. 

Measurement of financial instruments 

The  following  classes  of  financial  assets  and  liabilities  are  not  measured  at  fair  value:  cash  and  cash 
equivalents, loans, exchange receivables and non-exchange recoverables, borrowings and other financial 
liabilities  measured  at  amortised  cost.  The  carrying  amount  of  those  financial  assets  and  liabilities  is 
considered as a reasonable approximation of their fair value. 

Borrowing and lending activities for financial assistance 

The borrowing and lending transactions, as well as related treasury management, are carried out by the 
EU  according  to  the  respective  Council  and  EP  Regulation,  Council  Decisions,  and,  if  applicable,  internal 
guidelines.  Written  procedure  manuals  covering  specific  areas  such  as  borrowings,  loans  and  treasury 
management  have  been  developed  and  are  used  by  the  relevant  operational  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  609/2014  (as  amended  by  Council  Regulation  804/2016)  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 national central bank. 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  decisions  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  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 
practices.  

83 

 
 
 
 Annual accounts of the European Union 2017 

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 
portfolio,  BUFI.  The  main  objectives  of  the  portfolio  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  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 operational 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: 

 

 

ensure that the funds are easily available when needed, while 

aiming  at  delivering,  under  normal  circumstances,  a  return  which  on  average  is  in  line  with  the 
return of the BUFI Benchmark minus costs incurred, while preserving the nominal amount of the 
fines. 

Investments  are  restricted  essentially  to  the  following  categories:  term  deposits  with  Member  States' 
Central  Banks,  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. 

Financial 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 for external actions 

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.  This  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. 

EFSI Guarantee Fund 

The EFSI Guarantee Fund was established by Regulation (EU) 2015/1017 of the EP and of the Council of 
25 June 2015 (amended by Regulation (EU) 2017/2396 of 13 December 2017). The rules and principles 
for the asset management of the Fund are laid out in the Commission Decision C(2016)165 of 21 January 
2016.  The  managed  assets  shall  provide  sufficient  liquidity  in  relation  to  the  potential  guarantee  calls, 
while still aiming at optimising the return and risk level that is compatible with maintaining a high degree 
of security and stability. 

84 

 
 
 Annual accounts of the European Union 2017 

6.3.  CURRENCY RISK 

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

Financial assets 
Available for sale financial assets 
Financial assets at fair value 
through surplus or deficit 
Loans* 
Receivables and recoverables 
Cash and cash equivalents 

Financial liabilities 
Financial liabilities at fair value 
through surplus or deficit 
Payables 

Total 

Financial assets 
Available for sale financial assets 
Financial assets at fair value 
through surplus or deficit 
Loans* 
Receivables and recoverables 
Cash and cash equivalents 

Financial liabilities 
Financial liabilities at fair value 
through surplus or deficit 
Payables 

Total 

USD 

GBP 

DKK 

31.12.2017 
SEK 

EUR 

Other 

Total 

EUR millions 

 680 
 (632) 

 6 
 15 
 49 
 118 

 57 
– 

 0 
 549 
3 180 
3 787 

 17 
– 

– 
 63 
 27 
 107 

 56 
– 

– 
 86 
 693 
 835 

12 806 
 655 

 123 
11 591 
18 468 
43 642 

 16 
– 

 7 
 62 
1 694 
1 779 

13 632 
 23 

 137 
12 366 
24 111 
50 268 

– 

– 

– 

– 

– 

 (2) 

 (2) 

 (4) 
 (4) 
 114 

 (2) 
 (2) 
3 785 

 (0) 
 (0) 
 107 

 (1) 
 (1) 
 834 

(39 029) 
(39 029) 
4 613 

 (12) 
 (14) 
1 765 

(39 048) 
(39 050) 
11 218 

USD 

GBP 

DKK 

31.12.2016 
SEK 

EUR 

Other 

Total 

EUR millions 

 228 
 (49) 

 4 
 1 
 39 
 222 

 58 
– 

 0 
 593 
2 394 
3 045 

 14 
– 

– 
 51 
 428 
 493 

 42 
– 

– 
 81 
1 220 
1 342 

10 080 
 50 

 329 
10 888 
22 387 
43 734 

 21 
– 

 10 
 8 
2 117 
2 156 

10 442 
 0 

 343 
11 622 
28 585 
50 993 

 (100) 

– 

– 

– 

 100 

– 

 (1) 

 (1) 
 (101) 
 121 

 (5) 
 (5) 
3 040 

 (0) 
 (0) 
 493 

 (0) 
 (0) 
1 342 

(39 983) 
(39 883) 
3 851 

 (16) 
 (16) 
2 140 

(40 005) 
(40 005) 
10 987 

* Excluding back-to-back loans for financial assistance. 

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

2017 
2016 

31.12.2017 
31.12.2016 

Economic result 

USD 
 (5) 
 (4) 

USD 
 (5) 
 (7) 

GBP 
 (339) 
 (272) 

Net assets 

GBP 
 (5) 
 (5) 

EUR millions 

SEK 
 (71) 
 (118) 

EUR millions 

SEK 
 (5) 
 (4) 

DKK 
 (8) 
 (43) 

DKK 
 (2) 
 (1) 

85 

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

 Annual accounts of the European Union 2017 

2017 
2016 

31.12.2017 
31.12.2016 

Economic result 

USD 
 6 
 5 

USD 
 7 
 9 

GBP 
 414 
 332 

Net assets 

GBP 
 6 
 6 

EUR millions 

SEK 
 87 
 145 

EUR millions 

SEK 
 6 
 5 

DKK 
 10 
 53 

DKK 
 2 
 2 

Borrowing and lending activities for financial assistance 

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 Council Regulation 609/2014 (as amended by Council regulation 804/2016). 
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 laid down by the above referred 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. 

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 for external actions 

The financial assets of this fund are in EUR so there is no currency risk. The loans subrogated to the EU 
as  result  of  calls  on  the  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. 

EFSI Guarantee Fund 

The  EFSI  Guarantee  Fund  currently  operates  in  both  EUR  and  USD.  In  December  2016  the  first 
investments in USD denominated fixed-rate debt securities (US Treasuries) were undertaken with a view 
to  improve  returns  and  diversify  market  risk  through  exposure  to  the  US  market.  Currency  risk  is 
managed  through  entering  into  derivative  contracts  (foreign  exchange  forward  contracts)  hedging  the 

86 

 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

market  value  of  the  USD  investments  portfolio.  The  limit  for  maximum  unhedged  foreign  exchange 
exposure is set at 1 % of the total portfolio value within the benchmark and annual strategy allocations. 
Thus,  upward  or  downward  movements  in  the  USD  investments'  market  value  above  or  below  the  1 % 
limit  would  trigger  a  rebalancing  trade  (a  new  forward  contract  with  the  same  or  opposite  direction), 
adjusting or reversing the hedged position accordingly. Readjustment of the hedge may also be prompted 
by movements of the EUR/USD exchange rate. 

6.4.  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 +/- 100 basis points (1 %). 

31.12.2017: Available for sale financial assets 

31.12.2016: Available for sale financial assets 

Borrowing and lending activities for financial assistance 

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

EUR millions 

Effect on net 
assets 

 (359) 
 382 
 (291) 
 313 

Due  to  the  nature  of  its  borrowing  and  lending  activities,  the  EU  has  significant  interest-bearing  assets 
and liabilities. However, the interest rate risks that arise from borrowings are offset by equivalent loans 
in terms and conditions (back-to-back).  

Treasury 

The  Commission's  treasury  does  not  borrow  money;  so  as  a  consequence,  it  is  not  exposed  to  interest 
rate  risk.  Interest  is  however  calculated  on  balances  held  on  the  different  bank  accounts.  The 
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.  As  some  of  the  remunerations  applied  to  these  accounts  may  currently  be 
negative, cash management procedures are in place to minimise balances kept on these accounts. 

In  addition,  own  resources  accounts  are  protected  from  any  impact  of  negative  interest  in  accordance 
with Council Regulation 609/2014 and as amended by Council Regulation 804/2016. 

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. The rates applied by 
commercial  banks  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 

The  provisionally  cashed  fines  are  invested  in  a    portfolio  of  money  market  instruments  and  long  term 
bonds  with an average duration of 2.6 years.  

Guarantee Fund for external actions 

The budget provisioned in the Guarantee Fund is invested in a portfolio of money market instruments and 
long term bonds with a total average portfolio duration of 2.93 years.  

87 

 
 
 
 
 
 
 
 
 
EFSI Guarantee Fund 

 Annual accounts of the European Union 2017 

The  budget  provisioned  in  the  EFSI  Guarantee  Fund  is  invested  in  a  portfolio  of  money  market 
instruments and long term bonds with a total average portfolio duration of 3.5 years. 

6.5.  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. 

Analysis of the age of financial assets that are not impaired 

Total 

54 981 
12 366 
 23 

67 369 
55 477 
11 622 
 0 

Neither 
past due 
nor 
impaired 

54 980 
8 905 
 23 

63 908 
55 476 
10 310 
 0 

EUR millions 

Past due but not impaired 

< 1 year 
 0 
2 894 
– 

1-5 years 
– 
 359 
– 

> 5 years 
– 
 208 
– 

2 894 
 1 
 130 
– 

 359 
– 
 909 
– 

 208 
– 
 273 
– 

67 099 

65 786 

 131 

 909 

 273 

Loans 
Receivables and recoverables 
Financial assets at fair value 
through surplus or deficit 
Total at 31.12.2017 
Loans 
Receivables and recoverables 
Financial assets at fair value 
through surplus or deficit 
Total at 31.12.2016 

Receivables and recoverables between 1 and 5 years include recoverables related to competition fines of 
EUR 278 million (2016: EUR 870 million) that are to a large extent covered by bank guarantees and the 
Commission has thus low exposure to a credit risk. These guarantees are provided by fined companies as 
an alternative to making provisional payments. 

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

AFS* 

Financial 
assets at 
FVSD** 

31.12.2017 
Loans & 
Receivables*** 

EUR millions 

Cash 

Total 

Counterparties with 
external credit rating 
Prime and high grade 
Upper medium grade 
Lower medium grade 
Non-investment grade 

Counterparties without 
external credit rating 
Group 1 
Group 2 

Total 

8 068 
1 794 
2 186 
– 
12 048 

– 
– 
– 
12 048 

3 132 
23 879 
28 041 
4 087 
59 139 

19 261 
3 977 
 463 
 389 
24 090 

30 477 
29 650 
30 691 
4 476 
95 293 

4 745 
 1 
4 746 
63 885 

 21 
– 
 21 
24 111 

4 772 
 1 
4 773 
100 067 

 16 
– 
– 
– 
 16 

 6 
– 
 6 
 23 

88 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

AFS* 

Financial 
assets at 
FVSD** 

31.12.2016 
Loans & 
Receivables*** 

EUR millions 

Cash 

Total 

6 451 
1 412 
1 056 
– 
8 920 

– 
– 
– 
8 920 

– 
– 
– 
– 
– 

 0 
– 
 0 
 0 

3 386 
23 826 
4 532 
27 724 
59 469 

21 990 
5 325 
 492 
 744 
28 552 

31 828 
30 563 
6 081 
28 468 
96 941 

6 238 
 79 
6 317 
65 786 

 33 
– 
 33 
28 585 

6 272 
 79 
6 351 
103 292 

Counterparties with 
external credit rating 
Prime and high grade 
Upper medium grade 
Lower medium grade 
Non-investment grade 

Counterparties without 
external credit rating 
Group 1 
Group 2 

Total 

*   Available for sale financial assets (excluding equity instruments and Unitary Fund). 
**  Financial assets at fair value through surplus or deficit. 
*** Loans and Receivables include recoverables. 

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- and equivalent 

  Upper medium grade: Moody P-2, A1 – A3; S&P A-2, A+ - A-; Fitch F2, A+ - A- and equivalent 

 

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

  Non-investment grade: Moody not prime, Ba1 – C; S&P B, C, BB+ - D; Fitch B, C, BB+ - D and 

equivalent 

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 above referred 
regulation. The Commission may draw on these accounts solely to cover cash requirements arising from 
execution of the budget. 

Borrowing and lending activities for financial assistance 

Exposure to credit risk is managed firstly by obtaining country guarantees in the case of Euratom, then 
through the Guarantee Fund for external actions (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 1.20 % of Member States' 
GNI  and  during  2017  0.76 %  was  actually  used  to  cover  payment  appropriations.  This  means  that  at 
31 December 2017 there existed an available margin of 0.44 % to cover these guarantees. 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. 

89 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Treasury 

 Annual accounts of the European Union 2017 

Most  of  the  Commission's  treasury  resources  are  kept,  in  accordance  with  Council  Regulation  609/2014 
(as  amended  by  Council  Regulation  804/2016)  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  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, which take into account the average amount of 
daily  payments  executed  from  it,  are  kept  on  each  account.  As  a  consequence  the  total  amount  kept 
overnight  on  these  accounts  remains  constantly  at  low  levels  (overall  less  than  EUR 80 million  on 
average,  spread  over  21  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  2017 
between  EUR 4 billion  and  EUR 40 billion,  and  with  an  overall  amount  of  payments  made  from 
Commission accounts in 2017 that exceeds EUR 134 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 monitored on 
a daily basis.  

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  sovereign  debt  investments  from  provisionally cashed  fines  imposed  as  from  2010,  the  Commission 
takes  on  the  exposure  to  credit  risk.  The  highest  concentration  of  exposure  is  towards  France,  which 
represents  26  %  of  the  portfolio.  The  five  countries  with  the  highest  exposure  (France,  Italy,  Spain, 
Germany  and  Belgium)  represent  altogether  72  %  of  the  investment  portfolio.  The  weighted  average 
credit rating of the portfolio is A- (S&P or equivalent). 

Financial guarantees 

The risk management policy applied for the acceptance of such guarantees ensures a high credit quality 
for  the  Commission.  The  compliance  of  the  outstanding  guarantees  with  the  applicable  policy 
requirements is reviewed regularly. 

90 

 
 
 
Guarantee Fund for external actions 

 Annual accounts of the European Union 2017 

The  treasury  portfolio’s  agreed  asset  management  guidelines  and/or  investment  strategy  define  certain 
limits  and  restrictions  in  order  to  limit  the  exposure  to  credit  risk  of  the  portfolio.  Such  limits  and 
restrictions  include  eligibility  criteria,  absolute  credit  limits  in  nominal  terms  depending  on  issuer 
category,  relative  concentration  limits  depending  on  issuer  category  and  concentration  limits  per  issue. 
All investments are rated at least as investment grade. 

EFSI Guarantee Fund 

The asset management guidelines, risk and investment strategies define certain limits and restrictions in 
order to limit the exposure to credit risk of the portfolio which is generally limited to investment grade. 
The weighted average credit rating of the portfolio is A- (S&P or equivalent). 

As  the  sole  counterparty  for  all  outstanding  currency  forwards  as  of  31 December 2017  is  the  Bank  for 
International  Settlements  (BIS),  no  credit  enhancements,  such  as  collateral,  netting  agreements,  or 
guarantees  are  put  in  place  as  of  this  date.  The  maximum  exposure  to  credit  risk  for  foreign  exchange 
derivatives having a positive fair value at the end of the reporting period is equal to the carrying amount 
on the balance sheet. 

6.6.  LIQUIDITY RISK 

Maturity analysis of financial liabilities by remaining contractual maturity 

Borrowings 
Payables 
Other 
Total at 31.12.2017 
Borrowings 
Payables 
Other 
Total at 31.12.2016 

< 1 year 

(6 700) 
(39 048) 
 (150) 
(45 898) 
(2 094) 
(40 005) 
 (189) 
(42 288) 

1-5 years 
(14 862) 
– 
 (665) 
(15 527) 
(18 084) 
– 
 (637) 
(18 721) 

> 5 years 
(33 279) 
– 
(1 255) 
(34 534) 
(34 950) 
– 
(1 397) 
(36 346) 

Financial liabilities at fair value through surplus or deficit  

Derivative pay leg 
Derivative receive leg 
Net cash flows at 31.12.2017 
Derivative pay leg 
Derivative receive leg 
Net cash flow at 31.12.2016 

< 1 year 

 (634) 
 638 
 5 
 (150) 
 149 
 (1) 

1-5 years 
 (2) 
– 
 (2) 
– 
– 
– 

> 5 years 
– 
– 
– 
– 
– 
– 

EUR millions 
Total 
(54 841) 
(39 048) 
(2 070) 
(95 959) 
(55 128) 
(40 005) 
(2 222) 
(97 355) 

EUR millions 
Total 

 (635) 
 638 
 3 
 (150) 
 149 
 (1) 

Borrowing and lending activities for financial assistance 

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  for  external  actions 
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  609/2014  (on  the  methods  and  procedure  for  making  available 
own  resources  amended  by  Council  Regulation  804/2016),  Member  States  contributions  relating  to 

91 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

(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.  

Fines 

Provisionally cashed fines: BUFI portfolio 

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  portfolio  is  composed  of  mostly  highly 
liquid  securities  that  can  be  sold  to  meet  unexpected  cash  outflows.  In  addition  the  share  of  deposits, 
securities maturing within 1 year and floating rate notes is 38 %. 

Guarantee Fund for external actions 

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  short-term  portfolio  with  a  maturity  of  less  than  twelve  months  which  is  to  be 
invested  in  monetary  instruments.  As  at  31 December 2017,  these  investments,  including  cash, 
amounted  to  EUR 244 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 2017, this ratio stood at 23 %. 

EFSI Guarantee Fund 

The Guarantee 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 portfolio is composed of highly 
liquid  assets  that  can  be  sold  to  meet  unexpected  cash  outflows,  including  the  most  liquid  USD-
denominated  securities  –  US  Treasuries  standing  at  16 %  of  the  total  investment  portfolio  as  of  the 
reporting date.  

The settlement of derivative contracts is gross and is based on their contractual maturity. Obligations are 
honoured via sales of USD-denominated assets and/or a swap transaction, whereby it is possible that a 
cash outflow arises due to foreign exchange differences. 

No  liquidity  management  is  necessary  with  regard  to  collateral/margin  requirements  as  the  current 
hedging  counterparty  accepts  to  operate  with  the  Commission  without  any  requirements  for 
collateral/margin calls. 

Other financial instruments – foreign exchange option 

During  the  year  ended  31  December  2017,  the  EU  entered  into  a  derivative  contract  (foreign  exchange 
option)  covering  the  devaluation  of  foreign  exchange  currency  related  to  loans  given  by  financial 
institutions  (see  note  2.11.2).  As  for  the  other  financial  instruments  financed  by  the  EU  Budget,  the 
amount  for  which  the  EU  is  liable  under  this  option  cannot  exceed  the  amount  committed,  being  the 
liquidity risk mitigated by that fact. 

92 

 
 
 Annual accounts of the European Union 2017 

7.  RELATED PARTY DISCLOSURES 

7.1.  RELATED PARTIES 

The  related  parties  of  the  EU  are  the  EU  consolidated  entities,  associates  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. 

7.2.  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. 

93 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2% + 
184.55 
403.25 
98.51 
273.6 
547.2 
N/A 

N/A 

N/A 

2% + 
184.55 
403.25 
98.51 
273.6 
547.2 
N/A 

N/A 

N/A 

 Annual accounts of the European Union 2017 

KEY MANAGEMENT FINANCIAL ENTITLEMENTS  

Entitlement (per employee) 
Basic salary (per month) 

Category 1 
27 436.90 

Category 2 

Category 3 

Category 4 

Category 5 

24 852.26 - 
25 846.36 

19 881.81 - 
22 367.04 

21 472.36 - 
22 864.09 

12 641.93 - 
19 881.81 

EUR 

15% 

15% 

15% 

15% 

0-4%-16% 

Residential/Expatriation 
allowance  

Family allowances: 
Household (% salary) 

Dependent child 
Pre-school 
Education, or 
Education outside place of work 
Presiding judges allowance 

2% + 
184.55 
403.25 
98.51 
273.6 
547.2 
N/A 

2% + 
184.55 
403.25 
98.51 
273.6 
547.2 
N/A 

2% + 
184.55 
403.25 
98.51 
273.6 
547.2 
627.76 

Representation allowance 

1 486.84 

955.58 

627.76 

Annual travel costs 

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 
Number of persons at year-
end 

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 

54 873.80 

Reimbursed 
Reimbursed 

27 436.90 

Reimbursed 
Reimbursed 
40% - 65% 
Covered 
Max 70% 

48 969.98 
- 50 928.78 
Reimbursed 
Reimbursed 

24 852.26 - 
25 846.36 
Reimbursed 
Reimbursed 
40% - 65% 
Covered 
Max 70% 

39 763.62 
- 44 734.07 
Reimbursed 
Reimbursed 

19 881.81 - 
22 367.04 
Reimbursed 
Reimbursed 
40% - 65% 
Covered 
Max 70% 

42 944.71 
- 45 728.19 
Reimbursed 
Reimbursed 

21 472.36 - 
22 864.09 
Reimbursed 
Reimbursed 
40% - 65% 
Covered 
Max 70% 

Reimbursed 

Reimbursed 
Reimbursed 

Reimbursed 

Reimbursed 
Reimbursed 
N/A 
Covered 
Max 70% 

8% - 45% 
1.7% 

8% - 45% 
1.7% 

8% - 45% 
1.7% 

8% - 45% 
1.7% 

8% - 45% 
1.7% 

7% 
N/A 
3 

7% 
N/A 
6 

7% 
N/A 
93 

7% 
N/A 
28 

6-7% 
9.8% 
112 

* With correction coefficient ("CC") applied. 

** Paid for the first 3 years following departure. 

94 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

8. 

EVENTS AFTER THE BALANCE SHEET DATE 

At the date of signing of these accounts no material issues had come to the attention of or were reported 
to the Accounting Officer of the Commission that would require separate disclosure under this section. As 
explained  in  note  4.1.1,  the  EFSI  Agreement  has  been  amended  in  March  2018  following  the  amended 
Regulation EU 2017/2396. 

The accounts and related notes were prepared using the most recently available information and this is 
reflected in the information presented. 

95 

 
 
 Annual accounts of the European Union 2017 

9. 

SCOPE OF CONSOLIDATION 

A. CONTROLLED ENTITIES (52) 

1. Institutions and consultative bodies (11) 
European Parliament 
European Council 
European Commission 
European Court of Auditors 
Court of Justice of the European Union 
European External Action Service 

European Data Protection Supervisor 
European Economic and Social Committee 
European Ombudsman 
Committee of the Regions 
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 

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 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 Border and Coast Guard Agency 
(Frontex) 
EU-LISA (European Agency for the operational 
management of large-scale IT systems in the area 
of freedom, security and justice) 

3. Other controlled entities (2) 
European Coal and Steel Community (in 
liquidation) 

B. ASSOCIATES (1) 

European Investment Fund  

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 Union Intellectual Property Office 
European Police Office (EUROPOL) 
European Aviation Safety Agency 
European Network and Information Security 
Agency 
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 
European Union Agency for Law Enforcement 
Training (CEPOL) 

European Institute of Innovation and Technology 

96 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MINOR ENTITIES 

 Annual accounts of the European Union 2017 

The  entities  listed  below  have  not  been  consolidated  using  the  equity  method  into  the  2017  EU 
consolidated financial statements on the basis of immateriality: 

Bio Based Industries Joint Undertaking  

Bio  Based  Industries  is  a  Public-Private  Partnership  (PPP)  between  the  EU  and  the  Bio-based  Industries 
Consortium  (BIC).  The  BBI  is  dedicated  to  realising  the  European  bio  economy  potential,  turning 
biological  residues  and  wastes  into  greener  everyday  products  through  innovative  technologies  and  bio 
refineries, which are at the heart of the bio economy. 

Clean Sky Joint Undertaking 

Clean  Sky  is  the  largest  European  research  programme  developing  innovative,  cutting-edge  technology 
aimed at reducing CO2, gas emissions and noise levels produced by aircraft. Funded by the EU’s Horizon 
2020  programme,  Clean  Sky  contributes  to  strengthening  European  aero-industry  collaboration, global 
leadership and competitiveness. 

Innovative Medicines Initiative Joint Undertaking (IMI) 

IMI  is  Europe's  largest  public-private  initiative  aiming  to  speed  up  the  development  of  better  and  safer 
medicines  for  patients.  IMI  is  a  joint  undertaking  between  the  European  Union  and  a  pharmaceutical 
industry association. 

Electronic Components and Systems for European Leadership (ECSEL) Joint Undertaking (amalgamation 
of the former ARTEMIS & ENIAC JUs)  

ECSEL  is  a  PPP  in  electronic  components  and  systems,  bridging  the  gap  between  research  and 
exploitation, aligning strategies to increase European and national investments, and building an advanced 
ecosystem. 

Fuel Cells Hydrogen Joint Undertaking (FCH) 

FCH  is  a  PPP  supporting  research,  technological  development  and  demonstration  (RTD) activities in  fuel 
cell and hydrogen energy technologies in Europe. Its aim is to accelerate the market introduction of these 
technologies, realising their potential as an instrument in achieving a carbon-lean energy system. 

Single European Sky ATM Research Joint Undertaking (SESAR) 

SESAR is a PPP responsible for the modernisation of the European air traffic management (ATM) system 
by coordinating and concentrating all ATM relevant research and innovation efforts in the EU. 

Shift2Rail Joint Undertaking 

Shift2Rail  is  the  first  European  rail  joint  technology  initiative  to  seek  focused  research  and  innovation 
(R&I) and market-driven solutions by accelerating the integration of new and advanced technologies into 
innovative rail product solutions.  

The annual accounts of the above entities are publicly available on their respective websites. 

97 

 
 
 Annual accounts of the European Union 2017 

98 

 
 
 
 Annual accounts of the European Union 2017 

FINANCIAL STATEMENT DISCUSSION AND 
ANALYSIS 

FINANCIAL YEAR 2017 

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. 

99 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

100 

 
 
 
 Annual accounts of the European Union 2017 

CONTENTS 

1. 

CONSOLIDATED FINANCIAL STATEMENTS OF THE EU:  
FINANCIAL SITUATION 2017 ................................................................. 100 

1.1. 

1.2. 

1.3. 

1.4. 

REVENUE ....................................................................................... 100 

EXPENSES ..................................................................................... 101 

ASSETS ......................................................................................... 102 

LIABILITIES ................................................................................... 108 

2. 

3. 

PROTECTION OF THE EU BUDGET .......................................................... 109 

MANAGEMENT OF RISKS AND UNCERTAINTIES OF EU BUDGET 
IMPLEMENTATION ................................................................................ 111 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

MACRO-ECONOMIC ENVIRONMENT ................................................... 111 

BUDGETARY CONTINGENT LIABILITIES FOR FINANCIAL ASSISTANCE .... 111 

CONTINGENT LIABILITIES RELATING TO BUDGETARY GUARANTEES ...... 113 

BOOST FOR JOBS, GROWTH AND INVESTMENT ................................... 113 

NEW ENTRANTS' RESERVE (NER) 300 ................................................ 114 

101 

 
 
 
 
 
 
 Annual accounts of the European Union 2017 

The  objective  of  this  Financial  Statement  Discussion  and  Analysis  (FSDA)  is  to  assist  readers  to 
understand  the  financial  position,  financial  performance  and  cash  flows  presented  in  the  consolidated 
financial statements of the EU. The information presented in this FSDA has not been audited. 

1. CONSOLIDATED FINANCIAL STATEMENTS OF THE 

EU: FINANCIAL SITUATION 2017 

1.1.  REVENUE 

The  consolidated  revenue  of  the  EU  incorporates  amounts  related  to  exchange  transactions  and  non-
exchange transactions, the latter being the most significant. 

The table below provides an overview of the main categories of non-exchange transactions. 

Five year trend of revenue from main non-exchange transactions (in EUR millions) 

160 000

140 000

120 000

100 000

80 000

60 000

40 000

20 000

-

Recovery of expenses

Fines

VAT

TOR

GNI resources

2013

2014

2015

2016

2017

In  2017  the  consolidated  revenue  fell  7 %,  to  EUR 136.2 billion,  when  compared  to  the  previous  year, 
mainly due to the following: 

 

 

a decrease of EUR 17 billion in the GNI resources, or 18 % when compared to previous year. This 
effect  can  be  seen  in  the  above  table  and  primarily  reflects  the  impact  of  the  reduction  of 
payment appropriations for the 2017 budget. The GNI resource is used to finance the part of the 
budget not covered by any other source of revenue; and 

the decrease above was partially compensated by 'other revenue' for non-exchange transactions 
which  includes  the  impact  of  the  budget  surplus  from  2016,  presented  under  the  budgetary 
adjustment  line,  to  the  amount  of  EUR 6.4 billion.  This  budget  surplus  was  large  due  to  the 
under-implementation  of  programmes  in  2016,  as  explained  in  the  note  2.2  of  the  budgetary 
implementation report of 2016. This is a mechanism that indirectly refunds the Member States as 
it  deducts  the  amount  of  own  resources  of  the  following  year  (in  this  case  reduced  for  the 
financial year of 2017), for that reason the budget surplus is recognised as revenue.  

102 

 
 
 
 
 
 Annual accounts of the European Union 2017 

1.2.  EXPENSES 

The  main  component  of  expenses  recognised  in  the  consolidated  financial  statements  is  transfer 
payments  under  the  shared  management  mode,  which  includes  the  following  funds:  (i)  European 
Agricultural  Guarantee  Fund  (EAGF);  (ii)  EAFRD  and  other  rural  development  instruments;  (iii)  ERDF  & 
CF; and (iv) European Social Fund (ESF).  

These funds made up almost 63 % of total expenses in the year ended in 31 December 2017 - the split 
can be found in the chart below. 

Relative weight of the main expenses implemented by the Member States for the financial year of 2017 

9% 

22% 

14% 

EAGF

EAFRD

ERDF / CF

ESF

55% 

Expenses  incurred  under  direct  management  represent  the  budget  implementation  by  the  Commission, 
executive  agencies  and  by  trust  funds.  Under  indirect  management  the  budget  is  implemented  by  EU 
agencies, EU bodies, third countries, international organisations and other entities.  

Overall,  the  expenses  incurred  under  direct  and  indirect  management  made  up  about  19 %  of  total 
expenses (EUR 24 billion) and remained stable compared to the previous financial year. 

The  EU  recognises  future  payment  obligations  as  expenses  even  if  they  are  not  yet  shown  in  the  cash-
based  budgetary  accounts.  The  important  amounts  are  shown  under  payables  and  accrued  charges  for 
agriculture and rural development and under pension and employee benefits liabilities relating to pension 
rights acquired by Commissioners, MEPs and staff. 

The amount of the consolidated expenses decreased by 11 %, to EUR 128.1 billion, when compared with 
2016, mainly resulting from the following effects: 

 

 

expenses  under  the  ERDF  &  CF  decreased  by  circa  50 %,  or  by  the  amount  of  EUR 17.4 billion, 
due to fewer expenses incurred relating to the previous programming period (2007-2013); and 

for the same reason, expenses under European Agricultural Fund for Rural Development (EAFRD) 
and other rural development instruments also decreased by EUR 1.2 billion. 

103 

 
  
 
 
 
 
 Annual accounts of the European Union 2017 

1.3.  ASSETS 

The  most  significant  items  on  the  asset  side  of  the  balance  sheet  relate  to  financial  assets  (loans, 
available  for  sale  financial  assets,  cash)  and  pre-financing  amounts,  which  make  up  circa  85 %  of  the 
assets of the EU. 

Composition of the consolidated assets of the EU 

6% 

1% 

7% 

3% 

Loans

33% 

Available for sale financial assets

Cash and cash equivalents

Pre-financing

Other advances to Member States

Receivables and recoverables

Property, Plant & Equipment

27% 

Other

8% 

15% 

As at 31 December 2017 the total assets were EUR 166.2 billion, reflecting an increase of approximately 
2 %. The key changes were: 

 

 

an  increase  of  EUR 3.6 billion  in  pre-financing  stemming  from  small  increases  in  most  policy 
areas; 

an increase of EUR 2.5 billion in financial instruments relating to the endowment of the Guarantee 
Fund  for  EFSI  operations.  This  fund  has  been  established  to  provide  a  liquidity  cushion  against 
potential losses incurred by the EIB in relation to its financing and investment operations eligible 
for the EFSI EU guarantee under the EFSI Agreement. It will be progressively provisioned and will 
gradually  reach  EUR 9.1 billion,  which  intends  to  cover  35 %  of  the  total  future  EU  EFSI 
guarantee obligations; and 

 

an  increase  of  EUR 0.7 billion  in  Property,  plant  and  equipment  (PPE)  which  relates  to  further 
developments of the space assets (Galileo and Copernicus). 

In general, the EU institutions and bodies strive to keep the amounts held as cash and cash equivalents 
at a low level. The cash balance of EUR 24.1 billion at year-end is lower than in 2016 and is made up of 
the following main elements: 

  Own  resources;  the  end  of  year  balance  includes  a  total  net  amount  of  EUR 8.9 billion  to  be 
returned to Member States in early 2018 as result of amending budgets adopted late in 2017; 

 

 

Fines  imposed  by  the  Commission  for  breach  of  competition  rules  of  EUR 0.5 billion  definitively 
cashed late in 2017 are also part of the year-end treasury balance; and 

The  treasury  balance  also  includes  the  assigned  revenue  and  payment  appropriations  of 
EUR 8.4 billion. 

104 

 
 
 
 
Pre-financing 

 Annual accounts of the European Union 2017 

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 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 ensuring sufficient funding for the 
projects and the timely recognition of expenditure. 

The total pre-financing (excluding other advances to Member States and contributions to the trust funds 
Bekou and Africa) on the EU balance sheet amounts to EUR 44.3 billion (2016: EUR 41.6 billion), almost 
all  of  which  relates  to  Commission  activities.  Some  61 %  of  the  Commission's  pre-financing  concerns 
shared management, which means that the implementation of the budget is delegated to Member States 
(the Commission retains a supervisory role). 

Commission pre-financing by management mode 

Indirect 
management 
18% 

Direct 
management 
21% 

Shared 
management 
61% 

The most significant pre-financing amount under shared management mode relates to ERDF & Cohesion 
Fund (EUR 14.9 billion). 

FINANCIAL INSTRUMENTS 

The following items are shown in accounting terms as financial instruments in the consolidated financial 
statements of the EU: 

 

 

Financial Instruments financed by the EU budget: under this type of budget implementation funds 
are either already disbursed to the fiduciary accounts managed by the entrusted entities and stay 
available  (as  cash  and  cash  equivalents  and  debt  securities)  to  cover  future  guarantee  calls  or 
have been invested in equity; 

Financial  assets  held  in  guarantee  funds  for  budgetary  guarantees:  under  this  type  of  budget 
implementation  the  EU  provides  guarantees  to  entrusted  entities  for  which  the  funding  is  only 
partially provisioned via guarantee funds set-up by the Commission and thus creating contingent 
liabilities for the EU budget – see note 3.3; and 

 

Loans and related borrowings for financial assistance programmes. 

Financial instruments financed by the EU budget 

The significance and volume of financial instruments financed by the EU budget under direct and indirect 
management  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 use of the EU budget aims at maximising the impact of the funds 
available.  Financial  instruments  financed  by  the  EU  budget  exist  in  the  form  of  guarantee  instruments, 

105 

 
 
 Annual accounts of the European Union 2017 

equity  instruments  and  loan  instruments  -  see  the  overview  by  MFF  below.  Assets  held  in  these 
instruments  are  either  kept  in  cash  and  cash  equivalents  or  invested  in  equity  instruments  and  debt 
securities shown as available for sale financial assets in the consolidated financial statements of the EU. 

Available for sale financial assets of financial instruments financed by the EU budget (year-end value) 

EUR millions 
4 500

4 000

3 500

3 000

2 500

2 000

1 500

1 000

 500

-

2013

2014

2015

2016

2017

The following tables provide an overview of financial instruments financed by the EU budget per MFF and 
their values at 31 December 2017: 

EUR millions 

Related to more than one MFF 

Assets* 

Liabilities**  Guarantees*** 

Guarantee and risk-sharing instruments: 

Guarantee Facility under the Western Balkan (EDIF) 

Equity instruments: 

European Fund for Southeast Europe (EFSE)  

Green for Growth Fund to the Eastern Neighbourhood Region 

Enterprise Innovation Fund (ENIF) 

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

Enterprise Expansion Fund (ENEF) 

Microfinance Initiative for Asia Debt Fund (MIFA) 

Total  

28 

28 

119 

70 

18 

18 

10 

8 

245 

273 

(26) 

(26) 

- 

0 

- 

- 

- 

- 

0 

(26) 

- 

-  

- 

- 

- 

- 

- 

- 

-  

- 

 MFF 2014-2020 

Assets 

Liabilities 

Guarantees 

Guarantee and risk-sharing instruments: 

Horizon 2020 – InnovFin Loan & Guarantee Service for R&I 

Horizon 2020 – InnovFin SME Guarantee 

Connecting Europe Facility Debt Instrument (CEF DI) 

COSME Loan Guarantee Facility 

Employment and Social Innovation Guarantee Facility (EaSI) 

Private Finance for Energy Efficiency Instrument (PF4EE) 

Cultural and Creative Sector Guarantee Facility 

Student Loan Guarantee Facility 

SEMED MSME Financial Inclusion Programme 

Natural Capital Financing Facility 

106 

941 

694 

524 

224 

56 

31 

17 

14 

14 

12 

(30) 

(205) 

(3) 

(331) 

(25) 

(1) 

(4) 

(1) 

- 

- 

(813) 

(484) 

(490) 

(2) 

- 

(2) 

- 

- 

(6) 

(1) 

 
 
 
 
 
 
 
  
  
 
 
  
  
 
 
 
 
 
 
  
 Annual accounts of the European Union 2017 

 MFF 2014-2020 

Assets 

Liabilities 

Guarantees 

(continuing from previous page) 

Eastern Partnership SME Finance Facility 

Women in Business Programme in Eastern Partnership 

Support for Mongolian Economic Diversification 

Equity instruments: 

Horizon 2020 InnovFin Equity Facility for R&I 

COSME – Equity Facility for Growth 

Risk Capital Facility for the Southern Neighbourhood countries 

Climate Investor One 

Latin American Investment Facility 

Africa Agriculture Trade and Investment Fund 

Mixed instruments: 

EU Deep and Comprehensive Free Trade Area Facility 

ElectriFI 

Total  

5 

4 

2 

(5) 

- 

- 

- 

(4) 

- 

2 538 

(604) 

(1 802) 

312 

45 

20 

16 

13 

10 

(9) 

(2) 

- 

- 

- 

- 

416 

(12) 

70 

32 

102 

3 056 

- 

0 

0 

- 

- 

- 

- 

- 

- 

- 

(18) 

- 

(18) 

(615) 

(1 820) 

MFF Prior to 2014 

Assets 

Liabilities 

Guarantees 

Guarantee and risk-sharing instruments: 

Risk Sharing Finance Facility (RSFF) 

SME Guarantee Facility under CIP 

Multi Annual Program (MAP) for Enterprises 

SME Guarantee Facility 

European Progress Microfinance Mandate 

Equity instruments:  

High Growth and Innovative SME Facility under CIP 

Multi Annual Framework Programme Equity Facility 

European Energy Efficiency Fund  

Marguerite Fund 

Global Energy Efficiency and Renewable Energy Fund  

European Progress Microfinance Facility (PMF) for EaSI 

European Technology Start up Facility 1998 (ETF) 

Technology Transfer Pilot projects 

Mixed instruments: 

Instrument of economic and financial cooperation MEDA 

European Neighbourhood and Partnership Instrument (ENPI) 

SME Support Loan 

Total  

Overall Total 

763 

90 

32 

12 

6 

(70) 

(167) 

(32) 

(5) 

(5) 

(654) 

- 

- 

- 

- 

904 

(279) 

(654) 

428 

217 

100 

79 

72 

67 

10 

1 

974 

179 

125 

16 

320 

(4) 

- 

- 

- 

- 

- 

- 

- 

(4) 

(2) 

(3) 

- 

(5) 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

2 198 

5 526 

(288) 

(930) 

(654) 

(2 473) 

*    The assets presented in this table include several items of the financial statements (Available-for-sale of EUR 4 014 million (of which 
EUR 1 145 million are equity instruments); Cash and cash equivalents of EUR 1 325 million; Loans of EUR 93 million and other items in the 
amount of EUR 94 million). 

**   The liabilities presented in this table include several items of the financial statements (Provisions of EUR 857 million; Payables of 
EUR 66 million and other items in the amount of EUR 7 million). 

107 

 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
  
  
 
 
  
  
 
 
 
 
 
 
  
  
 
 
  
  
 
 
  
  
 
 
 
 
 Annual accounts of the European Union 2017 

*** For certain guarantees the risk taken by the EU is fully covered by the provisions made.  

108 

 
 
 
 
Financial assets held in guarantee funds for budgetary guarantees 

 Annual accounts of the European Union 2017 

The  Commission  has  set-up  guarantee  funds  to  cover  budgetary  guarantees  (see  note  4.1.1  of  the 
consolidated  financial  statements)  given  to  the  EIB  group.  These  guarantee  funds  are  provisioned  by 
payments  from  the  EU  budget  so  as  to  provide  a  liquidity  cushion  against  potential  losses  from 
guaranteed operations. Payments to the guarantee  funds are invested in financial instruments including 
debt securities, cash and term deposits. At 31 December 2017, the Commission holds financial assets in 
the: 

  Guarantee Fund for external actions of EUR 2.4 billion; and 

  EFSI Guarantee Fund of EUR 3.5 billion. 

Loans and related borrowings for financial assistance programmes 

Financial support for Member States and third countries in the form of bilateral loans financed from the 
capital  markets  with  the  guarantee  of  the  EU  budget  is  provided  by  the  Commission  under  decisions  of 
the European Parliament and of the Council. 

The Commission, acting on behalf of the EU, currently operates three main programmes:  

  European Financial Stabilisation Mechanism (EFSM);  
  Balance of Payments (BOP) assistance; and  
  Macro-financial assistance (MFA), under which it may grant loans.  

The capital required to fund the EU lending is raised on the capital markets or with financial institutions.  

At 31 December 2017, the nominal amount of the loans granted for financial assistance under the EFSM 
and BOP were: 

BOP 

EFSM* 

EUR billions 

TOTAL 

Latvia 

Romania 

Total 

Ireland 

Portugal 

Total 

Total granted 

Total disbursed at 31.12.2017 

3.1 

2.9 

5.0** 

5.0 

8.1 

7.9 

22.5 

26.0 

48.5 

56.6 

22.5 

24.3 

46.8 

54.7 

Total repaid at 31.12.2017 

(2.2) 

(2.7) 

(4.9) 

- 

- 

- 

(4.9) 

Outstanding amount at 
31.12.2017 

*   Without re-financing transactions.  
**   Excluding precautionary assistance. 

EFSM 

0.7 

2.3 

3.0 

22.5 

24.3 

46.8 

49.8 

EFSM  was  created  to  provide  financial  assistance  to  all  Member  States  experiencing  or  seriously 
threatened with a severe economic financial disturbance caused by exceptional occurrences beyond their 
control. The EFSM was used to provide financial assistance, conditional on the implementation of reforms, 
to Ireland and Portugal between 2011 and 2014. 

This  programme  expired  and  no  additional  loans  can  be  drawn,  though  it  remains  in  place  for  specific 
tasks such as the lengthening of maturities for loans to Ireland and Portugal and providing bridging loans. 

109 

 
 
 
 
 
 
 
 
 
 
 
 
 
The main points of the EFSM programme are as follows: 

 Annual accounts of the European Union 2017 

Ireland 

 

 

 

Ireland requested the full total of EUR 22.5 billion granted by the EFSM in December 2010. This 
amount was disbursed in eight instalments between January 2011 and March 2014; 

Ireland has the option to lengthen the maturity of the EFSM loans based on the extension of the 
maximum weighted average maturity; and 

The  first  repayment  of  EUR  3.4  billion  was  scheduled  for  April  2018.  However,  Ireland  has 
requested a maturity extension, which was approved and successfully borrowed in the markets in 
the first quarter of 2018 and this amount has been rescheduled for repayment in two instalments 
of  EUR 2.4 billion  and  EUR  1  billion  in  2025  and  2033  respectively.  The  second  repayment  of 
EUR 0.5 billion  is  scheduled  for  October  2018  but  again  with  the  possibility  of  extending  the 
maturity. 

Portugal 

Portugal has requested EUR 24.3 billion from a total of EUR 26 billion granted by the EFSM in May 
2011. This amount was disbursed in seven instalments between May 2011 and November 2014; 
and  

The  first  repayment  of  EUR  0.6  billion  is  scheduled  for  October  2018  but,  as  in  the  case  of 
Ireland, Portugal has the possibility of extending the maturity. 

 

 

BOP 

The BOP is an assistance programme designed for countries outside the euro area that are experiencing 
or  threatened  by  difficulties  regarding  their  balance  of  payments.  BOP  assistance  takes  the  form  of 
medium-term loans that are conditional on the implementation of policies designed to address underlying 
economic problems. Typically, balance of payments assistance from the EU is offered in cooperation with 
the International Monetary Fund (IMF) and other international institutions or countries. 

The EU medium-term financial assistance under the BOP facility was activated in November 2008 to help 
Hungary and subsequently Latvia and Romania, in January and May 2009, to restore market confidence 
for a total commitment of EUR 14.6 billion. The BOP assistance programme for Hungary expired in 2010 
and has been fully repaid in 2016. Both assistance programmes for Latvia and Romania expired in 2012, 
hence no additional instalments can be disbursed.  

Additionally,  the  two  precautionary  assistance  programmes  for  Romania  expired  in  2013  and  2015 
respectively without being drawn down. 

The main points are as follows: 

  During  2017,  the  beneficiary  Member  States  of  BOP  have  reimbursed  timely  and  fully  a  total 
amount  of  EUR 1.3 billion  out  of  which  EUR  1.2  billion  related  to  a  capital  reimbursement  from 
Romania, being the remaining related to interests; and 

 

In  April  2018,  Romania  made  a  capital  repayment  of  EUR  1.2  billion  and  is  expected  to  make 
further capital reimbursements EUR 0.1 billion in October 2018.  

MFA 

The MFA is a form of financial aid extended by the EU to partner countries outside the EU experiencing a 
balance of payments crisis. It takes the form of medium/long-term loans or grants, or a combination of 
these, and is only available to countries benefiting from a disbursing IMF programme. 

The outstanding loans at 31 December 2017 under the MFA programme were EUR 3.9 billion at nominal 
amounts.  

110 

 
 
 Annual accounts of the European Union 2017 

1.4.  LIABILITIES 

The most significant items on the liability side of the balance sheet consists primarily of four key items: 
(i) pension obligation and other employee benefits liabilities; (ii) borrowings; (iii) payables to third parties 
and (iv) accrued charges. 

Composition of the liabilities on the consolidated balance sheet of the EU 

2% 

27% 

17% 

23% 

31% 

Pension & other employee
benefits

Borrowings

Payables

Accrued charges & deferred
income

Other liabilities

As at 31 December 2017 the total liabilities were EUR 236.5 billion, reflecting an increase of approx. 1 % 
when compared to the previous year.  

The key changes were related to the following effects in: 

 

 

The  increase  in  the  total  employee  benefits  liability  of  EUR 5.9 billion  is  primarily  due  to  an 
increase in the net liability of the Pension Scheme of European Officials; 

Provisions  rose  by  EUR 1 billion  as  a  consequence  of  an  updated  study  on  JRC  dismantlement 
provision which led to a higher estimate of the obligation. The change relates to the main input of 
the  calculation  –  the  timeframe  –  that  was  previously  calculated  around  20  years  and  now 
updated to 40 years; and 

  Accrued  expenses  fell  by  EUR 3.7 billion,  which  partially  compensate  the  above  effects.  This 
decrease  in  the  accrued  expenses  was  due  to  the  fact  that  the  cohesion  programmes  of  the 
previous MFF are well advanced in the closure phase. 

Overall  all  other  items  of  the  liability  remained  stable.  It  is  important  to  note  that  financial  liabilities  
decreased  in  the  long-term,  due  to  the  decrease  of  borrowings,  coupled  with  an  increase  of  the  short 
term  part,  this  impact  is  due  to  BOP  and  EFSM  repayments  in  2018  from  Romania  (EUR 1.35 billion), 
Ireland (EUR 3.9 billion) and Portugal (EUR 0.6 billion) as expected at the reporting date. 

111 

 
 
 
 
 
Total cost claims and invoices received and recognised under the payables heading of the balance sheet 

 Annual accounts of the European Union 2017 

EUR millions 
30 000

25 000

20 000

15 000

10 000

5 000

-

2014

2015

2016

2017

Net assets 

The  excess  of  liabilities  over  assets  does  not  mean  that  the  EU  institutions  and  bodies  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  2017  although  they  may  be  actually  paid  in  2018  or 
later  and  funded  using  future  budgets  and  the  related  revenues  will  only  be  accounted  for  in  future 
periods.  The  most  significant  amounts  to  be  highlighted  are  the  EAGF  activities  (paid  in  2018)  and  the 
employee benefits liability (to be paid over the next 30 plus years). 

2. PROTECTION OF THE EU BUDGET 

Financial corrections and recoveries overview for 2017 

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

The Commission's protective actions mitigate the impact of these errors through two main mechanisms: 

(1)   preventive  mechanisms  (e.g.  ex-ante  controls,  interruptions  and  suspensions  of  payments); 

and 

(2)   corrective  mechanisms  (primarily  financial  corrections  imposed  on  or  agreed  with  Member 

States and recoveries from recipients of EU payments). 

Under  the  shared  management  mode  (agricultural  spending  and  structural  actions),  Member  States  are 
primarily  responsible  throughout  the  expenditure  life  cycle  for  ensuring  that  expenditure  paid  out  from 
the EU budget is legal and regular. 

The protective actions arise following the supervision and checks made by both the Commission and also, 
in  the  case  of  shared  management  expenditure,  Member  States  on  the  eligibility  of  expenditure  funded 
by  the  EU  budget.  When  deciding  on  the  amount  of  a  financial  correction  or  recovery,  the  Commission 
takes  into  account  the  nature  and  seriousness  of  the  breach  of  applicable  law  and  the  financial 
implications for the EU budget, including cases of deficiencies in management and control systems.  

112 

 
 
 
 
 
 Annual accounts of the European Union 2017 

Corrective mechanisms process: 

Ex-post controls 
and audits  

In progress  

Confirmed 

Implemented  

Financial  corrections  and  recoveries  are  presented  at  two  main  stages  of  the  process.  Both  stages  may 
take place in the same year or in different years: 

(1)  Financial  corrections  and  recoveries  at  confirmation  stage:  These  amounts  have  been  either 
agreed  by  the  Member  State  concerned  or  adopted  by  a  Commission  decision.  In  2017,  the  total 
(2016: 
financial  corrections  and 
EUR 3 777 million), of which EUR 1 826 million resulting from corrective actions. 

recoveries  confirmed  amounted 

to  EUR 2 662 million 

Financial corrections and recoveries confirmed in 2017* - breakdown per policy areas 

EUR millions 

 3 

 234 

 391 

 1 

 5 

 65 

 198 

1 180 

 338 

 246 

EAGF

Rural Development

ERDF

Cohesion Fund

ESF

FIFG/EFF

EAGGF Guidance

Internal policies

External policies

(2)  Financial  corrections  and  recoveries  at  implementation  stage:  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.  In  2017,  the  total  financial  corrections  and  recoveries  implemented  amounted  to 
EUR 2 845 million  (2016:  EUR 3 389 million),  of  which  EUR 1 949 million  resulting  from  corrective 
actions.  The  implementation  of  financial  corrections  and  recoveries  may  take  a  number  of  years 
mainly  due  to  instalment  or  deferral  decisions  granted  to  Member  States  under  the  agricultural 
policy. Under the Cohesion policy the legal framework foresees the implementation at or after the 
closure of the programming period.  

Financial corrections and recoveries implemented in 2017* - breakdown per policy areas 

EUR millions 

 3 

 244 

 1 

 96 

 23 

 380 

 250 

1 348 

 331 

 170 

EAGF

Rural Development

ERDF

Cohesion Fund

ESF

FIFG/EFF

EAGGF Guidance

Internal policies

External policies

* The above figures reflect the financial effect of both preventive and corrective mechanisms; for more details see the 
2017 Annual Management and Performance Report for the EU budget, section 2. 

113 

 
 
 
 
 Annual accounts of the European Union 2017 

3. MANAGEMENT OF RISKS AND UNCERTAINTIES OF 

EU BUDGET IMPLEMENTATION 

3.1.  MACRO-ECONOMIC ENVIRONMENT 

The macro-economic environment of the EU9 has an impact on the ability of EU Member states to meet 
their  funding  obligations  towards  the  EU  institutions  and  bodies  and  thus  on  the  ability  of  the  EU  to 
continue implementing EU policies.  

While  the  broad-based  acceleration  of  global  economic  activity  and  trade  over  the  course  of  last  year 
benefitted the euro area, domestic demand also strengthened, enhanced by above-average business and 
consumer  sentiment,  continued  policy  support,  and  improving  labour  markets.  The  European  economy 
therefore  looks  set  to  continue  expanding  at  a  solid  pace.  Robust  job  creation  is  expected  to  continue 
providing fuel for consumer spending growth. At the same time, investment conditions are set to remain 
favourable  with  both  domestic  and  foreign  demand  expected  to  strengthen  and  financing  conditions 
expected to remain loose. The remaining slack in the economy should allow for GDP to continue growing 
at  rates  that  are  higher  than  the  estimated  rate  of  potential  growth  (around  1.5 %)  throughout  the 
forecast horizon. The cyclical momentum in the euro area, however, is forecast to moderate slightly over 
the course of 2018 as the brisk pace of employment growth starts to ease.  

Euro area and EU GDP is estimated to have grown by 2.4 % in 2017 and is forecast to grow by 2.3 % in 
2018 before easing somewhat to 2.0 % in 2019. 

While  labour  market  conditions  have  improved  across  all  Member  States,  unemployment  rates  continue 
to vary significantly. Nevertheless, the forecast for GDP growth has been revised up for a large majority 
of euro area Member States in each of the years covered by the forecast and growth rates are expected 
to converge further. Due to remaining slack in the labour market, wage pressures and core inflation are 
expected to rise only gradually. Temporary factors related to energy prices will therefore continue to play 
a  major  role  in  inflation  developments  and  will  maintain  the  headline  harmonised  indices  of  consumer 
prices (HICP) inflation rate above core inflation over much of 2018. After 1.5 % in 2017, HICP inflation is 
forecast to average 1.5 % over 2018 before edging-up to 1.6 % in 2019. 

Risks to the outlook for GDP and inflation remain broadly balanced. While there appears to be room for 
growth  to  exceed  expectations  in  the  coming  quarters,  this  could  lead  to  growth-limiting  supply-side 
constraints  kicking  in  earlier  than  otherwise  expected.  At  the  same  time,  benign  market  expectations 
concerning asset price valuations appear vulnerable to a re-assessment of sentiment and fundamentals. 
Risks related to the UK's vote to leave the EU remain, as do downside risks associated with geopolitical 
tensions and a shift towards more inward looking and protectionist policies. 

Momentum in the global economy remains strong, as the broad-based cyclical upswing continues, buoyed 
by the rebound in investment and trade, still favourable financial conditions and a supportive policy mix. 
Higher commodity prices are also proving supportive for commodity exporters. The near-term outlook is 
slightly stronger than projected in autumn 2017, with global GDP growth outside the EU now expected at 
4.1 % in both 2018 and 2019, compared to 3.8 % in 2017. 

3.2.  BUDGETARY CONTINGENT LIABILITIES FOR 

FINANCIAL ASSISTANCE 

The EU borrowing and lending activities for financial assistance programmes are non-budget operations. 
In general, funds raised are 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 to ensure the repayment of borrowings even 
in case of a loan default. 

9   See for more information: European Commission "European Economic Forecast Winter 2018", URL: 

https://ec.europa.eu/info/publications/economic-and-financial-affairs-publications_en. 

114 

 
                                                            
 Annual accounts of the European Union 2017 

Borrowings of the EU constitute direct and unconditional obligations of the EU and are guaranteed by the 
EU  Member  States  (budgetary  contingent  liabilities).  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  14  of  Council  Regulation  609/2014),  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. 

For  each  country  programme,  the  EP,  the  Council  and  the  Commission  decisions  determine  the  overall 
granted amount, the number of instalments to be disbursed, and the maximum (average) maturity of the 
loan  package.  Subsequently,  the  Commission  and  the  beneficiary  country  agree  the  loan/funding 
parameters, in particular the maturity of instalments. In addition, except for the first one, all instalments 
of  the  loan  depend  on  compliance  with  policy  conditions,  in  the  context  of  a  joint  EU/International 
Monetary  Fund  (IMF)  financial  assistance,  which  is  another  factor  influencing  the  timing  of  funding 
operations.  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  from  3  to  30 
years. 

The  following  table  provides  an  overview  of  the  planned  reimbursement  schedule  in  nominal  value  for 
outstanding EFSM and BOP loan amounts at 31 December 2017: 

BOP 

EFSM 

Latvia 

Romania 

Total 

Ireland 

Portugal 

Total 

EUR billions 

TOTAL 

2018 

2019 

2021 

2022 

2023 

2024 

2025 

2026 

2027 

2028 

2029 

2031 

2032 

2035 

2036 

2038 

2042 

- 

0.5 

- 

- 

- 

- 

0.2 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

1.3* 

1.0 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

3.9** 

- 

3.0 

- 

2.0 

0.8 

- 

2.0 

1.0 

2.3 

1.0 

- 

3.0 

2.0 

- 

- 

1.5 

1.3 

1.5 

- 

- 

- 

- 

0.2 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

115 

0.6 

- 

6.8 

2.7 

1.5 

1.8 

- 

2.0 

2.0 

- 

0.4 

2.2 

- 

- 

1.0 

1.8 

1.5 

4.5 

- 

9.8 

2.7 

3.5 

2.6 

- 

4.0 

3.0 

2.3 

1.4 

2.2 

3.0 

2.0 

1.0 

1.8 

3.0 

5.8 

1.5 

9.8 

2.7 

3.5 

2.6 

0.2 

4.0 

3.0 

2.3 

1.4 

2.2 

3.0 

2.0 

1.0 

1.8 

3.0 

 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

Total 

0.7 

2.3 

3.0 

22.5 

24.3 

46.8 

49.8 

*  In  April 2018,  Romania  has  made  a  capital  repayment  of  EUR 1.2 billion  with  a  further  capital  repayment  of 

EUR 0.1 billion to be expected in October 2018. 

**  Ireland  has  requested  a  maturity  extension  for  a  repayment  tranche  of  EUR 3.4 billion,  which  was  approved  and 
successfully  borrowed  in  the  markets  in  the  first  quarter  of  2018  and  this  amount  has  been  rescheduled  for 
repayment in two instalments of EUR 2.4 billion and EUR 1 billion in 2025 and 2033 respectively. 

The  Inter-governmental  financial  stability  mechanisms  European  Financial  Stability  Facility  (EFSF)  and 
European  Stability  Mechanism  (ESM)  are  outside  the  EU  Treaty  framework and  thus  not  included  in the 
consolidated annual accounts of the EU. 

3.3.  CONTINGENT LIABILITIES RELATING TO BUDGETARY 

GUARANTEES 

The EU has given guarantees to the EIB Group on loans granted outside of the EU and on debt and equity 
operations  covered  by  the  EFSI  guarantee.  At  31  December  2017,  the  EU  shows  in  the  notes  to  its 
consolidated financial statements (see note 4.1.1) contingent liabilities for both guarantees. In order to 
mitigate  the  risk  guarantee  calls  by  the  EIB  Group  could  have  on  the  EU  budget,  the  EU  has  created 
dedicated guarantee funds, i.e. the Guarantee Fund for external actions and the EFSI Guarantee Fund. 

The  Guarantee  Fund  for  external  actions  is  provisioned  by  the  EU  budget  so  as  to  cover  9 %  of  the 
guaranteed loans for EIB external lending mandate activities to third countries outstanding at year-end. 
At 31 December 2017, the total asset value of EUR 2.2 billion covers an exposure of amounts disbursed 
of EUR 20 billion, amounts signed of EUR 28.9 billion, and a ceiling of EUR 37.5 billion.  

The  EFSI  Guarantee  Fund  started  its  activity  in  2016  and  was  initially  expected  to  be  financed  out  of  a 
total of 50 % a maximum exposure of EUR 16 billion of the EU, thus the fund should gradually (by 2022) 
reach EUR 8 billion. In December 2017, the EFSI Regulation has been amended, as result, the maximum 
EU  EFSI  guarantee  was  increased  up  to  EUR 26 billion,  and  the  boundary  for  the  guarantee  fund 
decreased to 35 %. Therefore, based on the impact of the amendment the EFSI Guarantee Fund is now 
expected to reach the total amount of EUR 9.1 billion. 

The total assets that make up the EFSI Guarantee Fund at 31 December 2017 is EUR 3.5 million and that 
covers  an  exposure  of  disbursed  amounts  of  EUR 10.1 billion  and  of  amounts  signed  of  EUR 13.5 billion 
(including amounts disbursed). The EFSI Guarantee Fund currently operates in both EUR and USD. 

3.4.  BOOST FOR JOBS, GROWTH AND INVESTMENT 

Investment Plan for Europe 

In 2015 the Commission, together with the EIB, launched the Investment Plan for Europe, which includes 
the  European  Fund  for Strategic  Investments  (EFSI),  created  with  an initial  EUR 21  billion  of  EU  money 
and with the key aim of attracting private investment. Forecasts point to an additional 700 000 jobs and 
a 0.7 % increase in the EU’s gross domestic product by 2020 thanks to the investments approved in 2015 
and  2016.  This  shows  that,  even  in  sectors  and  regions  hard  hit  by  the  crisis  a  decade  ago,  strategic 
investment is  boosting  jobs  and  growth  across  the  EU.  Following  the  agreement  in  principle  reached  by 
the European Parliament and Member States in September, the Parliament voted in December to adopt a 
Regulation  extending  and  enhancing  the  European  Fund  for  Strategic  Investments.  The  timeline  of  the 
new  and  improved  EFSI  2.0  has  been  extended  from  mid-2018  to  the  end  of  2020,  and  its  investment 
target has been increased from EUR 315 billion to at least EUR 500 billion. 

In 2017 the Fund remained firmly on track to mobilise at least EUR 315 billion in additional investments 
in  the  real  economy  by  mid-2018.  It  was  active  in  all  28  Member  States  and  was  expected  to  trigger 
around EUR 256 billion in total investments by the end of 2017.  

A total of 357 infrastructure and innovation projects, representing financing of EUR 39.2 billion, had been 
approved  under  the  Fund  by  the  end  of  the  year.  In  addition,  347  financing  agreements  for  small  and 
medium-sized enterprises, worth EUR 11.9 billion, had been approved. Around 539 000 such businesses 
were expected to benefit from this.  

116 

 
 Annual accounts of the European Union 2017 

In  addition,  advisory  support  for  project  development  and  preparation  was  stepped  up  through  the 
European Investment Advisory Hub, and projects looking for financing were given the necessary visibility 
on the European Investment Project Portal. 

The  European  Fund  for  Strategic  Investments  supports  investment  in  sectors  of  strategic  importance  to 
the EU economy, including energy, transport, digital technologies, research, development and innovation, 
environment and resource efficiency, social infrastructure and small companies. This includes investment 
in social entrepreneurship, social impact and social innovation. 

117 

 
 
 
Continuing Support for EU member States 

 Annual accounts of the European Union 2017 

The  Structural  Reform  Support  Programme  was  set  up  in  May  2017  with  a  budget  of  EUR 142.8 million 
for the 2017-2020 period. At the request of Member States the Programme finances tailor-made technical 
support  to  help  them  in  the  key  areas  of  their  reform  efforts.  Through  the  Programme  the  Commission 
provides  targeted  support  that  reinforces  the  capacity  of  Member  States  to  design  and  implement 
reforms they consider necessary to make their economies more competitive and investment friendly. This 
technical  support  covers  reforms  in  the  areas  of  governance  and  public  administration,  public  financial 
management,  the  business  environment,  labour  markets,  education,  health  and  social  services,  the 
financial  sector  and  access  to  finance.  It  is  available  to  all  EU  Member  States,  is  demand  driven  and 
requires no co-financing.  

The  Programme  is  implemented  by  the  Structural  Reform  Support  Service,  in  cooperation  with  other 
relevant Commission departments. So far the Service has engaged with 15 Member States to carry  out 
more than 150 support projects. Under the 2018 project cycle it has received more than 400 requests for 
support from over 20 Member States, leading to substantial excess demand for the Programme’s budget, 
which is set at EUR 30.5 million for the year.  

The EU continued to provide post-programme support to Ireland, Spain, Cyprus, Portugal and Romania. 
Good progress was again made in the course of the year in implementing the Greek programme, which 
was designed to create the conditions for the return of confidence and to lay the foundations for a lasting 
economic  recovery  in  Greece.  The  second  review  was  concluded  in  July,  allowing  the  third  tranche  of 
funding from the European Stability Mechanism, amounting to EUR 8.5 billion, to be authorised. The third 
review was ongoing in December, and a staff-level agreement was reached early in that month. Greece 
also continued to receive economic support through the Investment Plan for Europe.  

The  Structural  Reform  Support  Service  has  also  taken  up  special  assignments  to  help  coordinate  the 
response to the refugee crisis in Greece and to implement the EU Aid Programme for the Turkish Cypriot 
community. 

3.5.  NEW ENTRANTS' RESERVE (NER) 300 

The  NER  300  fund  originates  from  the  sale  of  the  Emission  Trading  Scheme  allowances  and  belongs  to 
the Member States who use the money to finance innovative low-carbon energy demonstration projects. 
The Commission manages the programme on behalf of the Member States, while the EIB is responsible 
for the asset management of the NER 300 Fund and acts as a  technical advisor, under the Cooperation 
Agreement  with  the  Commission.  Since  neither  the  revenues  from  the  allowances  nor  the  expenses  for 
the projects financed are part of the EU budget, these amounts are not accounted for in the EU accounts. 

118 

 
 
 Annual accounts of the European Union 2017 

EUROPEAN UNION 
FINANCIAL YEAR 2017 

BUDGETARY IMPLEMENTATION REPORTS 
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.

119 

 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

120 

 
 
 
 Annual accounts of the European Union 2017 

CONTENTS 

EU BUDGET RESULT...................................................................................... 119 

STATEMENTS OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS ................... 120 

NOTES TO THE BUDGETARY IMPLEMENTATION REPORTS ................................... 123 

1.

THE EU BUDGET FRAMEWORK ............................................................... 123 

1.1. 

1.2. 

1.3. 

1.4. 

1.5. 

1.6. 

MULTIANNUAL FINANCIAL FRAMEWORK 2014-2020 ............................ 123 

MFF DETAILED HEADINGS (PROGRAMS) ............................................ 124 

ANNUAL BUDGET ............................................................................ 125 

REVENUE ....................................................................................... 125 

CALCULATION OF THE BUDGET RESULT ............................................. 127 

RECONCILIATION OF ECONOMIC RESULT WITH BUDGET RESULT .......... 128 

2.

IMPLEMENTATION OF THE 2017 EU BUDGET – COMMENTARY .................... 129 

2.1. 

2.2. 

REVENUE ....................................................................................... 129 

EXPENDITURE ................................................................................ 129 

3.

4.

IMPLEMENTATION OF EU BUDGET REVENUE ............................................ 131 

3.1. 

SUMMARY OF THE IMPLEMENTATION OF EU BUDGET REVENUE ............. 131 

IMPLEMENTATION OF EU BUDGET EXPENDITURE ..................................... 132 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

4.6. 

4.7. 

4.8. 

4.9. 

MFF: BREAKDOWN & CHANGES IN COMMITMENT & PAYMENT 
APPROPRIATIONS ........................................................................... 132 

MFF: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS ................ 133 

MFF: IMPLEMENTATION OF PAYMENT APPROPRIATIONS ....................... 134 

MFF: MOVEMENTS IN COMMITMENTS OUTSTANDING (RAL) .................. 135 

MFF: COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN .................... 136 

DETAILED MFF: BREAKDOWN & CHANGES IN COMMITMENT & PAYMENT 
APPROPRIATIONS ........................................................................... 137 

DETAILED MFF: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS .. 140 

DETAILED MFF: IMPLEMENTATION OF PAYMENT APPROPRIATIONS ........ 143 

DETAILED MFF: MOVEMENTS IN COMMITMENTS OUTSTANDING (RAL) ... 147 

4.10.  DETAILED MFF: COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN ..... 150 

5.

IMPLEMENTATION OF THE BUDGET BY INSTITUTION ................................ 153 

5.1. 

5.2. 

5.3. 

IMPLEMENTATION OF BUDGET REVENUE ............................................ 153 

IMPLEMENTATION OF COMMITMENT APPROPRIATIONS ........................ 154 

IMPLEMENTATION OF PAYMENT APPROPRIATIONS .............................. 155 

6.

IMPLEMENTATION OF THE AGENCIES' BUDGET ........................................ 156 

6.1. 

6.2. 

BUDGET REVENUE .......................................................................... 156 

COMMITMENT AND PAYMENT APPROPRIATIONS BY AGENCY ................. 158 

121 

 
 
 
 
 
 
 
 
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EU BUDGET RESULT 

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

2017 
139 691 
(135 764) 
(1 796) 
 40 

(1 450) 
 (166) 
 555 

EUR million 
2016 
144 717 
(135 180) 
(1 655) 
 63 

(1 367) 
 (173) 
6 405 

123 

 
 
 
 
 
 
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STATEMENTS OF COMPARISON OF BUDGET AND ACTUAL 
AMOUNTS 

BUDGET REVENUE 

1  Own resources 

11 - Sugar levies 
12 - Customs duties 
13 - VAT 
14 - GNI 
15 - Correction of budgetary 
imbalances 
16 - Reduction of GNI based 
contribution of the 
Netherlands and Sweden 
3  Surpluses, balances and 

adjustments 

Initial 
budget 
adopted 
131 718 
 133 
21 334 
16 599 
93 652 
– 

– 

– 

4  Revenue accruing from 

1 490 

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  Default interest and fines 
8  Borrowing and lending 

operations 

9  Miscellaneous revenue 

Total 

 70 

 60 

Final 
adopted 
budget 
115 484 
 133 
20 374 
16 620 
78 356 
– 

Entitlements 
established 

115 455 
 134 
20 364 
16 584 
78 279 
 94 

EUR million 

Revenue 

115 416 
 134 
20 325 
16 584 
78 279 
 94 

– 

 (0) 

 (0) 

6 405 

1 490 

 70 

 60 

6 416 

1 495 

6 416 

1 484 

 611 

 587 

12 504 

12 179 

1 120 
 7 

3 230 
 7 

 25 
134 490 

 25 
126 771 

11 387 
 43 

 15 
147 926 

3 573 
 28 

 8 
139 691 

124 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

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

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 and deficit 

carried over from the 
previous financial year  

9  Special Instruments 

Total 

Initial 
adopted 
budget 

74 899 
21 312 

Final 
adopted 
budget 

75 399 
21 312 

53 587 

54 087 

58 584 

58 569 

Total 
appropriations 
available 

EUR million 

Commitments 
made 

85 181 
24 508 

60 673 

62 806 

83 268 
22 654 

60 614 

60 859 

42 613 

42 611 

45 830 

44 759 

4 284 
10 162 
9 395 
3 921 

– 
– 

4 284 
10 713 
9 395 
3 921 

– 
– 

4 472 
12 382 
10 190 
4 344 

– 
– 

4 124 
11 814 
9 794 
4 142 

– 
– 

 534 
157 858 

1 472 
159 831 

1 544 
176 576 

1 291 
171 150 

125 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

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

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 and deficit 

carried over from the 
previous financial year  

9  Special Instruments 

Total 

Initial 
adopted 
budget 

56 522 
19 321 

Final 
adopted 
budget 

49 840 
20 065 

37 201 

29 775 

54 914 

54 467 

Total 
appropriations 
available 

61 168 
24 370 

36 797 

58 575 

EUR million 

Payments 
made 

57 030 
21 376 

35 654 

56 743 

42 563 

42 558 

45 975 

44 695 

3 787 
9 483 
9 395 
3 921 

– 
– 

2 793 
8 938 
9 392 
3 921 

– 
– 

2 994 
10 944 
10 977 
4 841 

– 
– 

2 867 
9 793 
9 656 
4 085 

– 
– 

 390 
134 490 

1 341 
126 771 

1 414 
146 071 

1 291 
137 379 

126 

 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

NOTES TO THE BUDGETARY IMPLEMENTATION REPORTS  

1.

  THE EU BUDGET FRAMEWORK 

The  budgetary  accounts  are  kept  in  accordance  with  the  Financial  Regulation  (FR)  and  its  rules  of 
application. The general budget is the instrument which provides for and authorises the Union's revenue 
and  expenditure  every  year,  within  the  ceilings  and  other  provisions  laid  down  in  the  Multiannual 
Financial Framework in line with the legislative acts concerning multiannual programmes  adopted under 
that framework. 

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 
6. Compensations 

8. Negative reserve 

9. Special Instruments 
Commitment 
appropriations 

Total payment 
appropriations 

2014 

2015 

2016 

2017 

2018 

2019 

2020 

Total 

  52 756 

  77 986 

  69 304 

  73 512 

  76 420 

  79 924 

  83 661 

  513 563 

EUR million 

  16 560 

  17 666 

  18 467 

  19 925 

  21 239 

  23 082 

  25 191 

  142 130 

  36 196 

  60 320 

  50 837 

  53 587 

  55 181 

  56 842 

  58 470 

  371 433 

  49 857 

  64 692 

  64 262 

  60 191 

  60 267 

  60 344 

  60 421 

  420 034 

  43 779 

  44 190 

  43 951 

  44 146 

  44 163 

  44 241 

  44 264 

  308 734 

  1 737 

  2 456 

  2 546 

  2 578 

  2 656 

  2 801 

  2 951 

  17 725 

  8 335 

  8 721 

  8 749 

  9 076 

  9 143 

  9 483 

  9 432 

  9 825 

  10 268 

  10 510 

  9 918 

  10 346 

  10 786 

  11 254 

  66 262 

  69 584 

  7 056 

  7 351 

  7 679 

  8 007 

  8 360 

  8 700 

  9 071 

  56 224 

   29 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

   29 

– 

– 

  121 435 

  162 959 

  154 738 

  155 631 

  159 514 

  164 123 

  168 797 

 1 087 197 

  135 762 

  140 719 

  130 694 

  142 906 

  154 565 

  159 235 

  162 406 

 1 026 287 

The  above  table  shows  the  Multiannual  Financial  Framework  (MFF)  ceilings  at  current  prices.  2017  was 
the  fourth  financial  year  covered  by  the  MFF  2014-2020.  The  overall  ceiling  for  commitment 
appropriations  for  2017  was  EUR 155 631 million,  equivalent  to  1.04 %  of  the  EU  GNI,  whilst  the 
corresponding ceiling for payment appropriations was EUR 142 906 million, or 0.95 % of the EU GNI valid 
throughout the budgetary year 2017. 

New  flexibility  provisions  have  been  agreed  for  the  2014-2020  MFF.  One  of  the  new  provisions  is  a 
possibility to transfer unspent margins under the payment ceilings to the following years – via the Global 
Margin  for  Payments  in  the  framework  of  the  technical  adjustment  of  the  MFF  for  the  following  year. 
Therefore,  the  unspent  amount 
in  current  prices)  and  2016 
(EUR 13 991 million in current prices) was transferred to the years 2018-2020 and the ceilings of 2015, 
2016 and 2018-2020 were adjusted accordingly – see the above mentioned technical adjustment of the 
MFF for 2017 and the technical adjustment for 2018 (COM(2017) 220 of 24 May 2017). 

from  2015  (EUR 1 288 million 

On  24  May  2017  the  Commission  adopted  a  Communication  on  technical  adjustment  of  the  financial 
framework  for  2018  in  line  with  movements  in  GNI  (ESA  2010)  (COM(2017)  220  of  24  May  2017). 
Following the entry into force Council Regulation 2017/1123 amending MFF Regulation 1311/2013 (OJ L 
163, 24.6.2017) as a result of the mid-term review/revision, the figures included in the Communication 
of 24 May 2017 in respect of the Emergency Aid Reserve and the Flexibility Instrument were updated and 
replaced in the Communication of 15 September 2017 (COM(2017) 473 final). The adjustments of figures 
in  this  Communication  result  directly  from  the  amendment  of  the  MFF  Regulation  by  Regulation  (EU, 
Euratom)  2017/1123  and  did  not  deviate  from  the  provisions  of  Article  6(4)  of  the  MFF  Regulation, 
according to which no further technical adjustments than those referred to in Article 6(1) are made either 

127 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

during  the  year  or  ex-post.  The  newly  introduced  technical  adjustment  for  the  Flexibility  instrument 
according to Art 6(1)f is provided for the first time. 

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: 

1a  Competitiveness  for  growth  and  jobs,  encompassing  expenditure  on  research  and  innovation, 
education  and  training,  Connecting  Europe  Facility,  social  policy,  the  internal  market  and 
accompanying policies. 

1b  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,  and  the  environmental  measures,  in 
particular the Life + program. 

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 neighbourhood 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. 

Heading 9 – Special instruments 

Flexibility mechanisms enable the EU to mobilise the necessary funds to react to unforeseen events such 
as crisis and emergency situations. Their scope, financial allocation and operating modalities are provided 
for  in  the  MFF  regulation  and  the  Interinstitutional  Agreement.  In  the  current  context  of  reduced 
expenditure, they also ensure that budgetary resources can respond to evolving priorities, so that every 
euro is used  where it is most needed. Most of the flexibility mechanisms are therefore kept outside the 
MFF and the funding can be mobilised above the expenditure ceilings. 

1.2.  MFF DETAILED HEADINGS (PROGRAMS) 

The  headings  of  the  MFF  are  further  broken  down  into  detailed  headings,  corresponding  to  the  main 
spending  programs  (e.g.  Horizon  2020,  Erasmus+  etc.).  Underlying 
for  budget 
implementation  are  adopted  at  this  program  level.  Programs  are  the  commonly  used  structure  for 
reporting on implementation and results. For this reason, tables by program have been introduced also in 
these budgetary implementation reports (see tables 4.6 - 4.10 below). 

legal  bases 

128 

 
 Annual accounts of the European Union 2017 

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 the EP 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. 

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  multiannual  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. 

In the accounts, the types of funding are grouped into two main items: 

 

 

Final adopted budget appropriations; and 

Additional appropriations containing: 

–  Carryovers from previous year (the financial regulation allows for a limited number of cases 

to carry unspent amounts from the previous year into the current year); and 

–  Assigned revenue arising from reimbursements, contributions from third parties/countries to 
EU programs and work performed for third parties are assigned directly to the corresponding 
expenditure budget lines and constitute the third pillar of funding. 

All funding types together form the available appropriations. 

1.4.  REVENUE 

1.4.1.  Own resources revenue 

The vast majority of revenue comes from own resources, which consist of the following categories:  

(1) 

Traditional own resources (TOR): usually account for +/- 15 % of own resource revenue. 

(2) 

(3) 

Value  added  tax  (VAT)  based  resource:  usually  accounts  for  around  13 %  of  own  resource 
revenue. 

Gross  national  income  (GNI)  based  resource:  usually  accounts  for  +/-  72 %  of  own  resource 
revenue. 

The  allocation  of  own  resources  is  made  in  accordance  with  the  rules  laid  down  in  the  Council  Decision 
No. 2014/335/EU, Euratom of 26 May 2014 on the system of the EU's own resources (ORD 2014). This 
decision  has  entered  into  force  on  1  October  2016  and  applies  retroactively  from  1  January  2014.  The 
effects for 2014 and 2015 have been taken into account in the 2016 budgetary year. 

The  total  amount  of  own  resources  allocated  to  the  Union  to  cover  annual  appropriations  for  payments 
shall not exceed 1.20 % of the sum of all the Member States' GNIs. 

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 Annual accounts of the European Union 2017 

Traditional  own  resources  (TOR)  consist  of  customs  duties  (levied  on  imports  from  third  countries)  and 
sugar  levies  (paid  by  sugar  producers  to  finance  expenditure  on  the  sugar  common  organisation  of  the 
market)  levied  on  economic  operators  and  collected  by  Member  States  on  behalf  of  the  EU.  However, 
Member  States  keep  20 %  as  a  compensation  for  their  collection  costs.  All  established  traditional  own 
resource amounts must be entered in one or other of the accounts kept by the competent authorities: 

- 

- 

In  the  ordinary  accounts  provided  for  in  Article  6(3)  of  Regulation  No  609/2014:  all  amounts 
recovered or guaranteed. 
In the separate accounts provided for also in the above Article: all amounts not yet recovered and/or 
not guaranteed; amounts guaranteed but challenged may also be entered in this account. 

Traditional  own  resources  must  be  entered  in  the  Commission's  account  with  the  treasury  or  national 
central  bank  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). 

1.4.3.  Value added tax (VAT) 

Value added tax (VAT) is levied on Member States' VAT bases, which are harmonised for this purpose in 
accordance  with  EU  rules.  However,  the  VAT  base  is  capped  at  50 %  of  each  Member  State’s  GNI.  The 
uniform VAT rate applied is fixed at 0.30 % except for the period 2014-2020 in which the rate of call for 
Germany, the Netherlands and Sweden was fixed at 0.15 %. 

1.4.4.  Gross national income (GNI) 

The resource based on gross national income (GNI) is used 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. 

VAT and GNI-based resources are determined on the basis of forecasts of relevant bases made when the 
draft budget is being prepared. These forecasts are subsequently revised and updated during the budget 
year in question by means of an amending budget. 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, 
either  positive  or  negative,  are  called  by  the  Commission  from  the  Member  States  for  the  first  working 
day of June of the second year following the budget year in question. Corrections may still be made to the 
actual  VAT  and  GNI  bases  during  the  subsequent  four  years,  unless  a  reservation  is  issued.  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  the  VAT  and  GNI 
balances exercise or by individual calls for funds. 

1.4.5.  UK correction 

A  budgetary  imbalance  correction  mechanism  in  favour  of  the  United  Kingdom  (reducing  their  own 
resource  payments  while  increasing  the  payments  of  other  Member  States)  was  instituted  by  the 
European Council in Fontainebleau (June 1984). Germany, Austria, Sweden and Netherlands benefit from 
a reduced financing of the UK correction (restricted to one fourth of their normal share). 

1.4.6.  Gross reduction 

The  European  Council  of  7-8  February  2013  concluded  that  Denmark,  the  Netherlands  and  Sweden 
should benefit from gross reductions in their annual contributions based on GNI for the period 2014-2020 
and that Austria is to benefit from gross reductions for the period 2014-2016 only. The annual reductions 
are as follows: Denmark EUR 130 million, the Netherlands EUR 695 million and Sweden EUR 185 million. 

130 

 
 
 
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1.5.  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,  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  European  Economic  Area  (EEA).  In  accordance  with  Article  1(1)  of 
Regulation No 608/2014 laying down implementing measures for the system of 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  year  N  budget 
implementation  reports  and  those  carried  over  to  the  following  year  in  the  year  N-1  budget 
implementation  reports.  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. 

131 

 
 
 
 
 
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1.6.  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 

2017 
8 082 

(4 408) 

10 739 

 (257) 

3 725 
(3 574) 
(12 059) 
(3 373) 
1 784 

6 752 
(6 676) 

 (179) 

 555 

EUR millions 
2016 
1 733 

(1 969) 

3 363 

 611 

10 678 
(7 656) 
 (468) 
(3 102) 
1 379 

3 962 
(2 142) 

 16 

6 405 

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  accrued  revenue  mainly  consists  of  accrued  revenue  for  agriculture,  own  resources,  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  

The  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.  Only  the  net-
effect,  i.e.  accrued  expenses  for  current  year  minus  reversal  accrued  expenses  from  previous  year,  is 
taken into consideration. Payments made in the current year relating to invoices registered in prior years 
are part of current year's budgetary expenditure and therefore must be added to the economic result for 
reconciliation purposes. 

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  through  eligible  costs  accepted  during  the  current  year.  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.  

As well as 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 1(1) of Regulation No 608/2014). The same applies for the budgetary 

132 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

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 amortisation/depreciation, asset acquisitions, capital lease payments and financial 
participations for which the budgetary and accrual accounting treatments differ. 

2.

 IMPLEMENTATION OF THE 2017 EU BUDGET – 
COMMENTARY 

2.1.  REVENUE 

In  the  initial  adopted  EU  budget,  signed  by  the  President  of  the  European  Parliament  on 
1 December 2016, the amount of payment appropriations was EUR 134 490 million and the amount to be 
financed  by  own  resources  totalled  EUR 131 718 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 2017, six amending budgets were adopted. Taking them into account, the final adopted revenue 
for 2017 amounted to EUR 126 771 million. The surplus from the previous financial year, the substantial 
reduction  of  payment  appropriations,  a  significant  collection  of  fines  and  other  contributions  reduced 
Member States' GNI balancing contribution in 2017 (EUR 115 484 million). 

As far as the own resources result is concerned, the collection of traditional own resources was very close 
to the forecasted amounts. This is primarily because the budget estimates were modified at the time the 
amending budget 6/2017 was established (according to the new forecasts of spring 2017). 

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. 

As far as the VAT and GNI balances are concerned there is a new procedure in place. The rules are set 
out  in  Article  10  b  of  the  Making  Available  Regulation  (Regulation  609/2014).  The  new  procedure  does 
not entail an amending budget and therefore the Commission directly requests the Member States to pay 
the net amounts. The impact for the EU budget was close to zero due to the new netting system.  

The  heading  "Contributions  and  refunds  in  connection  with  EU  agreements  and  programmes"  concerns 
mainly revenue from financial corrections (ESIF, EAGF and EAFRD), 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. In 2017, these contributions and refunds mainly originated from 
repayments  for  structural  funds  (EUR 6.7 billion),  the  clearance  of  accounts  in  agricultural  funds 
(EUR 1.9 billion),  the  contribution  of  member  states  or  third  parties  to  specific  agreements 
(EUR 1.6 billion) and contributions to EU programs (EUR 1 billion). 

The revenue from fines relates mainly to fines in the field of competition. 

2.2.  EXPENDITURE  

The  2017  budget  aimed  to  achieve  the  right  balance  between  the  implementation  of  ongoing 
programmes  and  addressing  newer  challenges.  It  therefore  built  on  commitments  made  in  previous 
years, and makes use of the existing room for flexibility to respond to challenges in line with the 2014-
2020 Multiannual Financial Framework (MFF).  

133 

 
 
 Annual accounts of the European Union 2017 

In line with the annual evolution foreseen in the MFF, appropriations proposed in the draft budget were 
set  at  EUR 157.7 billion  (1.7 %  higher  when  compared  to  the  2016  budget)  in  commitments,  and 
EUR 134.9 billion (– 6.2 %) in payments, corresponding to 1.05 % and 0.90 % of EU GNI, respectively. 
The  increase  in  commitment  appropriations  was  4.8 %  after  ‘neutralising’  the  impact  of  the  re-
programming of the 2014 annual tranche of the European Agricultural Fund for Rural Development, the 
Asylum, Migration and Integration Fund, and the Internal Security Fund. The significant reduction of total 
payments essentially reflects the finalisation of the implementation of programmes from the 2007-2013 
MFF and the slow implementation of the new generation of programmes in some policy areas. 

During  the  year,  commitment  appropriations  were  increased  by  EUR 500 million  through  amending 
budget  3/2017  for  the  Youth  Employment  Initiative  (YEI)  and  amending  budget  5/2017  to  endow  the 
EFSD Guarantee Fund with an initial allocation of EUR 275 million. 

Following the difficult situation of 2016, a year in which payment appropriations exceeded the needs and 
the  year  was  closed  with  a  large  surplus,  the  Commission  at  first  observed  equally  slow  progression  in 
the  applications  for  payments  in  2017  and  acted  to  adjust  the  budget  accordingly.  Therefore,  draft 
amending budget 6/2017 was presented on 9 October 2017 proposing to decrease the level of payment 
appropriations  by  EUR 7.7 billion,  out  of  which  EUR 5.9 billion  from  budget  lines  under  sub-heading  1b 
Economic,  social  and  territorial  cohesion  and  to  a  lesser  extent  from  headings  2  Sustainable  Growth: 
Natural Resources, 3 Security and Citizenship, and 4 Global Europe, as well as from the European Union 
Solidarity Fund (EUSF).  

2017 Implementation of available appropriations 

The  2017  implementation  for  all  types  of  appropriations  (budget,  carry-overs  from  2017  and  assigned 
revenue)  was  97 %  for  commitments  and  93.9 %  for  payments.  Appropriations  from  the  budget  were 
fully  implemented  in  2017  (98.35 %  in  payments),  a  good  achievement  given  the  uncertainties  which 
prevailed  in  2016  and  most  of  2017.  The  implementation  rate  rises  to  99.9 %  of  commitment 
appropriations  and  99.8 %  of  payment  appropriations  when  assuming  full  consumption  of  the  amounts 
carried over to 2018. 

For  the  sub-heading  1b  Economic,  social  and  territorial  cohesion,  the  financial  implementation  of  2014-
2020  programmes  progressed  significantly  compared  to  2016,  while  the  first  closure  payments  were 
made  for  the  2007-2013  programmes.  The  reduction  of  payment  appropriations  through  amending 
budget 6/2017 was fully offset by the use of assigned revenue from the clearance of accounts procedure 
and the final amount spent for payments nearly equalled the budget initially foreseen. 

In  heading  2  Sustainable  Growth:  Natural  Resources,  the  financial  implementation  of  the  new  EAFRD 
programmes also increased compared to 2016. 

Outstanding Commitments 

Outstanding commitments (RAL, committed amounts not yet paid for) stood at EUR 267 billion at the end 
of 2017. The increase of over EUR 28 billion in comparison with the end of 2016 is larger than expected, 
since  the  gap  between  commitments  and  payments  made  was  wider  than  initially  foreseen  due  to  the 
reduction  of  payments  in  amending  budget  6/2017.  However  an  increase  in  RAL  constitutes  a  normal 
evolution,  as  commitment  appropriations  increase  every  year  as  foreseen  in  the  Multiannual  Financial 
Framework. In 2018, a further increase of RAL is expected as a result of the difference between budgeted 
commitment  and  payment  appropriations.  However,  this  increase  should  be  significantly  lower  than  in 
2017  given  the  smaller  gap  between  commitment  and  payment  appropriations  in  the  adopted  2018 
budget. Moreover, payment claims in the area of heading 1b Economic, social and territorial cohesion are 
expected to increase due to the application of the automatic "n+3" de-commitment rule. 

A  more  detailed  analysis  of  budgetary  adjustments,  their  relevant  context,  justification  and  impact  is 
presented in the Commission's report on Budgetary and Financial Management 2017, Part A "Overview at 
budget level" and Part B dealing with each heading of the Multiannual Financial Framework. 

Budget result  

The  budget  result  of  2017  was  a  historically  low  EUR 0.56 billion  and  arises  primarily  from  the  revenue 
side, where revenues from contributions and refunds were material in 2017 (EUR 12.2 billion), originating 
from  repayments  for  structural  funds  (EUR 6.7 billion),  the  clearance  of  accounts  in  agricultural  funds 
(EUR 1.9 billion),  the  contribution  of  member  states  or  third  parties  to  specific  agreements 
(EUR 1.6 billion)  and  contributions  to  EU  programs  (EUR 1 billion).  Payment  appropriations  reached  full 
implementation  (98.35 %),  unspent  amounts  were  allowed  for  carry-over  to  2018  and  the  amount  not 
used is insignificant.   

134 

 
 
3.

 IMPLEMENTATION OF EU BUDGET REVENUE  

Annual accounts of the European Union 2017 

3.1.  SUMMARY OF THE IMPLEMENTATION OF EU BUDGET REVENUE  

Title 

1  Own resources 

4 

3  Surpluses, balances and adjustments 
Revenue accruing from persons 
working with the institutions and other 
union bodies 
Revenue accruing from the 
administrative operation  of the 
institutions 
Contributions and refunds in 
connection with Union agreements and 
programmes 

5 

6 

 70 

 60 

Income appropriations 

Entitlements established 

Current year 

Carried over 

Total 

Initial 
adopted 
budget 
131 718 

Final 
adopted 
budget 
115 484 

– 

6 405 

115 429 

6 416 

1 490 

1 490 

1 488 

On 
entitlements 
of current year 
115 414 

6 416 

1 478 

Revenue 

On 
entitlements 
carried over 
 2 

– 

 7 

115 455 

6 416 

1 495 

Total 

115 416 

6 416 

 100 % 

 100 % 

1 484 

 100 % 

Receipts as 
% of budget 

EUR million 
Out- 
standing 

 26 

– 

 7 

 21 

 70 

 590 

 611 

 572 

 15 

 587 

 836 % 

 60 

12 228 

 275 

12 504 

12 061 

 118 

12 179 

20 299 % 

7  Default interest and fines 

1 120 

3 230 

4 823 

6 564 

11 387 

8  Borrowing and lending operations 

9  Miscellaneous revenue 

 7 

 25 

 7 

 25 

 39 

 6 

 5 

 9 

 43 

 15 

 541 

 24 

 4 

3 032 

3 573 

 5 

 4 

 28 

 8 

 111 % 

 410 % 

 30 % 

Total 

134 490 

126 771 

141 020 

6 906 

147 926 

136 509 

3 182 

139 691 

 110 % 

135 

 39 

– 

 11 

 24 

 324 

7 814 

 15 

 7 

8 235 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.

  IMPLEMENTATION OF EU BUDGET EXPENDITURE  

Annual accounts of the European Union 2017 

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

MFF Heading 

Budget appropriations 

Additional appropriations 

Total 
approp. 
available 

Budget appropriations 

Additional appropriations 

Commitment appropriations 

Payment appropriations 

EUR million 

Total approp. 
available 

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 

Global Europe 

Administration 

of which: Administrative expenditure of 
the institutions 

Compensations 

Negative reserve and deficit carried over 
from the previous financial year  

3 

4 

5 

6 

8 

9 

Initial 
adopted 
budget 

1 

 74 899 

 21 312 

 53 587 

 58 584 

 42 613 

 4 284 

 10 162 

 9 395 

 3 921 

– 

– 

Amending 
budgets & 
transfers 

2 

  500 

– 

  500 

  (15) 

Final 
adopted 
budget 

3=1+2 

 75 399 

 21 312 

 54 087 

 58 569 

  (2) 

 42 611 

– 

  551 

  0 

– 

– 

– 

 4 284 

 10 713 

 9 395 

 3 921 

– 

– 

Final 
adopted 
budget 

9=7+8 

 49 840 

 20 065 

Carry-overs 

Assigned 
revenue 

Initial 
adopted 
budget 

Amending 
budgets & 
transfers 

4 

5 

6=3+4+5 

7 

8 

  0 

  0 

– 

  433 

  433 

– 

  109 

  2 

  0 

– 

– 

 9 782 

 3 195 

 85 181 

 24 508 

 56 522 

 (6 682) 

 19 321 

  744 

 6 586 

 60 673 

 37 201 

 (7 426) 

 29 775 

 3 804 

 62 806 

 54 914 

  (447) 

 54 467 

 2 786 

 45 830 

 42 563 

  (5) 

 42 558 

  188 

 1 560 

  794 

  423 

– 

– 

 4 472 

 12 382 

 10 190 

 4 344 

– 

– 

 3 787 

 9 483 

 9 395 

 3 921 

– 

– 

  (994) 

  (545) 

  (2) 

– 

– 

– 

 2 793 

 8 938 

 9 392 

 3 921 

– 

– 

Carry-overs 

Assigned 
revenue 

10 

11 

12=9+10+11 

  130 

  117 

  13 

  635 

  630 

  11 

  120 

  786 

  494 

– 

– 

 11 198 

 4 188 

 7 009 

 3 473 

 2 786 

  189 

 1 887 

  798 

  426 

– 

– 

 61 168 

 24 370 

 36 797 

 58 575 

 45 975 

 2 994 

 10 944 

 10 977 

 4 841 

– 

– 

Special Instruments 

  534 

  938 

 1 472 

  31 

  41 

 1 544 

  390 

  951 

 1 341 

  32 

  41 

 1 414 

Total 

 157 858 

 1 974 

 159 831 

  575 

 16 169 

 176 576 

 134 490 

 (7 720) 

 126 771 

 1 714 

 17 585 

 146 071 

136 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.2.  MFF: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS 

Annual accounts of the European Union 2017 

MFF Heading 

Total 
appropr. 
available 

from final 
adopted 
budget 

1 

2 

from 
carry-
overs 

3 

Commitments made 

from 
assigned 
revenue 

Total 

% 

Appropriat. carried over to  
2018 
carry-
overs by 
decision 

assigned 
revenue 

Total 

from final 
adopted 
budget 

4 

5=2+3+4 

6=5/1 

7 

8 

9=7+8 

10 

Appropriations lapsing 

from 
carry-
overs 

11 

from 
assigned 
revenue 

12 

EUR million 

Total 

13=10+11
+12 

1 

Smart and inclusive growth 

 85 181 

1a: Competitiveness for growth and jobs 

 24 508 

 75 356 

 21 301 

1b: Economic, social and territorial 
cohesion 

 60 673 

 54 056 

2 

Sustainable growth: natural resources 

 62 806 

 58 100 

 7 912 

 1 353 

 83 268 

 98 % 

 22 654 

 92 % 

 1 870 

 1 842 

 6 559 

 60 614 

 100 % 

  28 

 2 334 

 60 859 

 97 % 

 1 470 

 45 830 

 42 150 

 2 183 

 44 759 

 98 % 

  0 

  0 

– 

  426 

  426 

– 

of which: Market related expenditure 
and direct payments 

Security and citizenship 

Global Europe 

Administration 

of which: Administrative expenditure of 
the institutions 

Compensations 

Negative reserve and deficit carried over 
from the previous financial year  

3 

4 

5 

6 

8 

9 

 4 472 

 12 382 

 10 190 

 4 344 

– 

– 

 4 035 

 10 710 

  108 

 9 270 

 3 838 

– 

– 

  2 

  0 

– 

– 

  89 

  997 

  522 

  303 

– 

– 

– 

 4 124 

 92 % 

 11 814 

 95 % 

 9 794 

 96 % 

 4 142 

 95 % 

– 

– 

 0 % 

 0 % 

  603 

  99 

  563 

  272 

  120 

– 

– 

  27 

  4 

  23 

  451 

  451 

  247 

  2 

– 

0 

– 

– 

 1 897 

 1 846 

  51 

 1 920 

 1 054 

  345 

  565 

  272 

  120 

– 

– 

  16 

  8 

  8 

  19 

  10 

  2 

  1 

  125 

  83 

– 

– 

  151 

  314 

– 

– 

– 

  8 

  8 

– 

  1 

  0 

  0 

– 

– 

– 

  9 

  0 

  0 

– 

– 

– 

  0 

  0 

– 

0 

– 

– 

– 

  0 

  16 

  8 

  8 

  27 

  18 

  2 

  3 

  125 

  83 

– 

– 

  151 

  323 

Special Instruments 

 1 544 

 1 259 

  31 

 1 291 

 84 % 

  41 

  62 

  103 

Total 

 176 576 

 158 730 

  567 

 11 854 

 171 150 

 97 % 

 4 315 

  788 

 5 103 

137 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.3.  MFF: IMPLEMENTATION OF PAYMENT APPROPRIATIONS 

Annual accounts of the European Union 2017 

MFF Heading 

Total 
appropr. 
available 

from final 
adopted 
budget 

from carry-
overs 

from 
assigned 
revenue 

Total 

% 

automat. 
carry-overs 

carry-overs 
by decis. 

assigned 
revenue 

Total 

from final 
adopted 
budget 

from carry-
overs 

from 
assigned 
revenue 

Payments made 

Appropriations carried over to 2018 

Appropriations lapsing 

1 

2 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9 

10=7+8+9 

11 

12 

13 

1 

2 

3 

4 

5 

6 

8 

9 

Global Europe 

Administration 

of which: Administrative 
expenditure of the 
institutions 

Compensations 

Negative reserve and 
deficit carried over from 
the previous financial 
year  

Smart and inclusive 
growth 
1a: Competitiveness for 
growth and jobs 
1b: Economic, social 
and territorial cohesion 
Sustainable growth: 
natural resources 
of which: Market related 
expenditure and direct 
payments 

 61 168 

 49 698 

  111 

 7 220 

 57 030 

 93 % 

 24 370 

 19 945 

  101 

 1 330 

 21 376 

 88 % 

 36 797 

 29 754 

  11 

 5 890 

 35 654 

 97 % 

  121 

  108 

  13 

– 

– 

– 

 3 977 

 4 098 

 2 858 

 2 966 

 1 119 

 1 132 

 58 575 

 53 889 

  626 

 2 228 

 56 743 

 97 % 

  111 

  451 

 1 245 

 1 806 

 45 975 

 41 992 

  621 

 2 081 

 44 695 

 97 % 

  103 

  451 

  705 

 1 259 

Security and citizenship 

 2 994 

 10 944 

 10 977 

 2 767 

 8 610 

 8 486 

  10 

  116 

  720 

  90 

 1 067 

  451 

 2 867 

 9 793 

 9 656 

 96 % 

 89 % 

 88 % 

  11 

  314 

  781 

 4 841 

 3 363 

  448 

  274 

 4 085 

 84 % 

  475 

  152 

  627 

  83 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

  5 

  2 

  1 

0 

– 

– 

– 

  99 

  820 

  348 

  115 

 1 136 

 1 129 

– 

– 

– 

– 

  23 

  24 

– 

0 

  0 

Special Instruments 

 1 414 

 1 241 

  32 

  18 

 1 291 

Total 

 146 071 

 124 691 

 1 615 

 11 073 

 137 379 

 1 338 

  458 

 6 512 

 8 308 

EUR million 

Total 

14=11+12
+13 

  40 

  28 

  11 

  26 

  21 

  12 

  16 

  191 

  128 

– 

– 

  99 

  384 

  19 

  16 

  3 

  9 

  8 

  1 

  4 

  67 

  46 

– 

– 

  0 

  99 

  0 

  0 

– 

– 

– 

  0 

– 

– 

– 

– 

– 

– 

  0 

  21 

  12 

  9 

  17 

  12 

  11 

  12 

  125 

– 

– 

  99 

  284 

 0 % 

 0 % 

 91 % 

 94 % 

138 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.4.  MFF: MOVEMENTS IN COMMITMENTS OUTSTANDING (RAL) 

Annual accounts of the European Union 2017 

Commitments outstanding at the end of previous year 

Commitments of the current year 

EUR million 
Total commitm. 
outstanding at 
the end of the 
year 

MFF Heading 

Commitm. 
carried forward 
from previous 
year 

Decommitm./ 
Revaluations/ 
Cancellations 

Payments 

Commitm. 
outstanding at 
year-end 

Commitm. made 
during the year 

Payments 

Cancellation of 
commitm. which 
cannot be carried 
over 

Commitm. 
outstanding at 
year-end 

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 

4 

5 

6 

8 

9 

Security and citizenship 

Global Europe 

Administration 

of which: Administrative expenditure of the 
institutions 

Compensations 

Negative reserve and deficit carried over from the 
previous financial year  

Special Instruments 

174 938 

35 622 

139 316 

33 947 

 247 

4 167 

24 974 

 732 

 431 

– 

– 

 0 

(4 337) 

(1 321) 

(3 015) 

 (180) 

 (2) 

 (231) 

 (517) 

 (2) 

 20 

– 

– 

 (0) 

(49 231) 

(13 887) 

(35 345) 

(11 860) 

 (211) 

(1 650) 

(6 662) 

 (726) 

 (448) 

– 

– 

 (0) 

121 370 

20 414 

100 956 

21 907 

 33 

2 286 

17 795 

 4 

 3 

– 

– 

– 

83 268 

22 654 

60 614 

60 859 

44 759 

4 124 

11 814 

9 794 

4 142 

– 

– 

(7 799) 

(7 489) 

 (310) 

(44 882) 

(44 484) 

(1 217) 

(3 131) 

(8 931) 

(3 637) 

– 

– 

1 291 

(1 290) 

 (3) 

 (3) 

 (0) 

 (0) 

– 

– 

 (1) 

 (0) 

0 

– 

– 

– 

75 467 

15 162 

60 304 

15 977 

 275 

2 908 

8 682 

 863 

 505 

– 

– 

 0 

196 837 

35 576 

161 260 

37 883 

 309 

5 194 

26 478 

 867 

 507 

– 

– 

 0 

Total 

238 759 

(5 268) 

(70 129) 

163 362 

171 150 

(67 250) 

 (4) 

103 896 

267 258 

139 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.5.  MFF: COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN  

Annual accounts of the European Union 2017 

MFF Heading 

< 2011 

2011 

2012 

2013 

2014 

2015 

2016 

2017 

Total 

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 

4 

5 

Security and citizenship 

Global Europe 

Administration 

of which: Administrative expenditure of the 
institutions 

9 

Special Instruments 

Total 

1 575 

 741 

 834 

 227 

– 

 40 

1 036 

– 

0 

– 

 532 

 294 

 238 

 58 

– 

 34 

 543 

– 

0 

– 

1 464 

 829 

 635 

 76 

– 

 74 

1 054 

– 

0 

– 

13 556 

2 754 

10 802 

 992 

– 

 114 

2 232 

 0 

0 

– 

6 680 

3 620 

3 060 

 496 

 0 

 77 

2 675 

 0 

0 

– 

41 805 

4 893 

36 912 

5 470 

 12 

 278 

4 226 

 0 

0 

– 

55 759 

7 283 

48 475 

14 588 

 22 

1 669 

6 030 

 4 

 3 

– 

75 467 

15 162 

60 304 

15 977 

 275 

2 908 

8 682 

 863 

 505 

 0 

196 837 

35 576 

161 260 

37 883 

 309 

5 194 

26 478 

 867 

 507 

 0 

2 878 

1 166 

2 668 

16 893 

9 928 

51 779 

78 050 

103 896 

267 258 

EUR million 

140 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.6.  DETAILED MFF: BREAKDOWN & CHANGES IN COMMITMENT & PAYMENT 

APPROPRIATIONS 

Annual accounts of the European Union 2017 

Commitment appropriations 

Payment appropriations 

Programme 

Initial 
adopted 
budget 

1 

Amending 
budgets & 
transfers 

2 

Final 
adopted 
budget 

3=1+2 

Carry- 
overs 

4 

Assigned 
revenue 

5 

6=3+4+5 

7 

8 

Budget appropriations 

Initial 
adopted 
budget 

Amending 
budgets & 
transfers 

Budget appropriations 

Additional 
appropriations 

Total 
approp. 
available 

1.1 

European Fund  Strategic Investments 
(EFSI) 
European satellite navigation 
(EGNOS/Galileo) 
International Thermonuclear Reactor 
(ITER) 
European Earth Observation Progr 
(Copernicus) 

Nuclear Safety and Decommissioning 

Horizon 2020 

Euratom Research and Training 
Programme 
Competitiveness enterprises and SME's 
(COSME) 

2 661 

 897 

 323 

 607 

 138 

10 346 

 341 

 349 

Education, Training and Sport (Erasmus+) 

2 064 

Employment and Social Innovation (EaSI) 

Customs, Fiscalis and Anti-Fraud 

CEF - Energy 

CEF - Transport 

CEF - Information & Communications 
Technology (ICT) 
Energy projects for economic recovery 
(EERP) 

Decentralised agencies 

Other actions and programmes 

Pilot projects and preparatory actions 

Specific competences of the Commission 

Total MFF Heading 1.1 

1.2 

Regional convergence (Less developed 
regions) 

Transition regions 

Competitiveness (More developed regions) 

Outermost and sparsely populated regions 

Cohesion fund 

European territorial cooperation 

Technical assistance 

European Aid to the Most Deprived (FEAD) 

 136 

 137 

 700 

1 723 

 124 

– 

 344 

 220 

 56 

 144 

21 312 

26 122 

5 627 

8 251 

 222 

9 056 

1 940 

 216 

 546 

 0 

– 

 (0) 

– 

– 

 78 

 (0) 

 0 

 6 

– 

 7 

 (77) 

 (1) 

 1 

– 

 (7) 

 (2) 

 (0) 

 (5) 

 (0) 

 (30) 

 (15) 

 45 

– 

– 

– 

 (0) 

– 

2 661 

 897 

 322 

 607 

 138 

10 424 

 341 

 349 

2 070 

 136 

 144 

 622 

1 723 

 125 

– 

 338 

 218 

 56 

 139 

21 312 

26 092 

5 613 

8 296 

 222 

9 056 

1 940 

 216 

 546 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

141 

Additional 
appropriations 

EUR million 

Total 
approp. 
available 

Final 
adopted 
budget 

9=7+8 

Carry- 
overs 

10 

Assigned 
revenue 

11 

12=9+10+11 

2 467 

 850 

 724 

 637 

 354 

10 100 

 347 

 250 

1 927 

 90 

 117 

 83 

1 249 

 63 

 142 

 319 

 198 

 29 

 118 

– 

 3 

 0 

 2 

– 

 71 

 20 

 2 

 7 

 2 

 5 

 2 

 2 

 0 

– 

– 

 1 

– 

– 

 39 

 255 

 19 

 19 

– 

2 506 

1 108 

 743 

 658 

 354 

2 689 

12 860 

 152 

 71 

 441 

 10 

 5 

 0 

 103 

 3 

 16 

 18 

 344 

 0 

 4 

 518 

 324 

2 375 

 102 

 127 

 85 

1 354 

 67 

 157 

 337 

 543 

 30 

 123 

20 065 

 117 

4 188 

24 370 

 39 

 148 

 19 

 17 

– 

2 700 

1 045 

 341 

 625 

 138 

2 317 

 688 

 426 

 697 

 150 

1 828 

12 251 

10 196 

 452 

 381 

 348 

 369 

2 458 

1 887 

 112 

 32 

 388 

 10 

 5 

 1 

 146 

 149 

 623 

 120 

1 843 

 3 

 16 

 18 

 435 

 1 

 5 

 128 

 16 

 356 

 653 

 57 

 143 

 97 

 117 

 123 

 971 

 118 

 110 

 336 

 196 

 44 

 131 

3 195 

24 508 

19 321 

 150 

 162 

 298 

 (60) 

 204 

 (97) 

 (1) 

 (119) 

 40 

 (7) 

 (0) 

 (40) 

 279 

 (54) 

 32 

 (16) 

 2 

 (15) 

 (13) 

 744 

3 405 

 677 

1 095 

 29 

1 133 

 185 

 1 

 6 

29 496 

19 315 

(4 613) 

14 702 

6 289 

9 391 

 251 

10 189 

2 124 

 217 

 553 

3 314 

5 853 

 140 

5 981 

 969 

 190 

 441 

(1 247) 

(1 441) 

 (14) 

1 107 

 (392) 

 (23) 

 (150) 

2 067 

4 413 

 126 

7 088 

 577 

 167 

 291 

– 

– 

– 

– 

– 

– 

 13 

 0 

3 375 

 542 

1 259 

 35 

1 260 

 53 

 1 

 6 

18 078 

2 609 

5 672 

 161 

8 348 

 630 

 180 

 298 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2017 

Commitment appropriations 

Payment appropriations 

Budget appropriations 

Additional 
appropriations 

Total 
approp. 
available 

Budget appropriations 

Initial 
adopted 
budget 

Amending 
budgets & 
transfers 

Carry- 
overs 

4 

– 

– 

– 

– 

 0 

Assigned 
revenue 

 56 

– 

 0 

6 586 

9 782 

5 

6=3+4+5 

7 

 556 

1 593 

 13 

 600 

 383 

 14 

60 673 

37 201 

(7 426) 

29 775 

85 181 

56 522 

(6 682) 

49 840 

 433 

2 786 

45 830 

42 563 

 (5) 

42 558 

15 226 

11 208 

 (215) 

10 994 

1 045 

 577 

 (192) 

Programme 

Youth Employment initiative 

Connecting Europe Facility (CEF) 

Pilot projects and preparatory actions 

Total MFF Heading 1.2 

Total MFF Heading 1 

2 

European Agricultural Guarantee Fund 
(EAGF) 
Agricultural Fund Rural Development 
(EAFRD) 
European Maritime and Fisheries Fund 
(EMFF) 
Fisheries Partnership Agreements (SFPAs) 
and Fisheries Management Organisations 
(RFMOs) 

Environment and climate action (LIFE) 

Decentralised agencies 

Other actions and measures 

Pilot projects and preparatory actions 

Specific Actions 

Total MFF Heading 2 

3 

Asylum, Migration and Integration Fund 
(AMF) 

Consumer 

Creative Europe 

Emergency Support within the Union (IES) 

Internal Security Fund 

IT systems 

Justice 

Rights, Equality and Citizenship 

Union Civil protection Mechanism 

Europe for Citizens 

Food and feed 

Health 

Decentralised agencies 

Pilot projects and preparatory actions 

Specific Actions 

Total MFF Heading 3 

4 

Pre-accession assistance (IPA II) 

Macro-financial Assistance (MFA) 

Initial 
adopted 
budget 

1 

– 

1 593 

 13 

53 587 

74 899 

42 613 

14 366 

 912 

 138 

 494 

 55 

– 

 8 

– 

58 584 

1 620 

 27 

 208 

 200 

 739 

 20 

 54 

 63 

 31 

 26 

 256 

 65 

 863 

 12 

 101 

4 284 

2 115 

 46 

Amending 
budgets & 
transfers 

2 

 500 

– 

– 

 500 

 500 

 (2) 

 (2) 

– 

 (11) 

– 

 (1) 

– 

– 

– 

 (15) 

 (6) 

– 

 1 

 (1) 

 (4) 

 16 

 (0) 

 1 

 (2) 

– 

 3 

– 

 (6) 

 (2) 

– 

 (0) 

 4 

 (6) 

Final 
adopted 
budget 

3=1+2 

 500 

1 593 

 13 

54 087 

75 399 

42 611 

14 364 

 912 

 127 

 494 

 54 

– 

 8 

– 

58 569 

1 614 

 27 

 209 

 199 

 735 

 35 

 54 

 64 

 30 

 26 

 259 

 65 

 858 

 10 

 101 

4 284 

2 118 

 40 

– 

– 

– 

– 

– 

– 

– 

– 

 862 

 133 

 2 

 10 

 10 

– 

 0 

– 

 129 

 504 

 65 

– 

 8 

– 

 133 

 364 

 55 

– 

 13 

– 

 433 

3 804 

62 806 

54 914 

 46 

 1 

 13 

– 

 61 

 3 

 3 

 2 

 2 

 1 

 3 

 2 

 51 

 0 

 1 

 188 

 76 

– 

1 661 

1 182 

 28 

 222 

 199 

 796 

 38 

 56 

 65 

 31 

 27 

 262 

 67 

 909 

 10 

 102 

4 472 

2 195 

 40 

 21 

 177 

 219 

 748 

 17 

 41 

 47 

 31 

 26 

 234 

 58 

 864 

 19 

 102 

3 787 

1 716 

 46 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

142 

EUR million 

Total 
approp. 
available 

Additional 
appropriations 

Carry- 
overs 

10 

Assigned 
revenue 

11 

12=9+10+11 

– 

– 

– 

 13 

 130 

 630 

 1 

 0 

– 

 4 

– 

– 

– 

 0 

 476 

 2 

 0 

7 009 

11 198 

2 786 

 532 

 133 

 2 

 8 

 10 

– 

 0 

– 

 525 

 292 

 5 

36 797 

61 168 

45 975 

11 527 

 519 

 139 

 343 

 65 

– 

 8 

 0 

Final 
adopted 
budget 

9=7+8 

 49 

 290 

 5 

 385 

 136 

 331 

 54 

– 

 8 

– 

54 467 

 635 

3 473 

58 575 

 623 

 21 

 187 

 218 

 398 

 28 

 37 

 53 

 28 

 26 

 241 

 59 

 765 

 14 

 96 

2 793 

1 386 

 10 

 2 

 1 

 2 

 0 

 2 

– 

 1 

 1 

– 

 0 

 1 

 1 

– 

– 

 1 

 11 

 4 

– 

 45 

 1 

 15 

– 

 60 

 3 

 3 

 2 

 2 

 1 

 4 

 2 

 51 

 1 

 0 

 189 

 414 

– 

 671 

 22 

 204 

 218 

 460 

 31 

 41 

 55 

 30 

 27 

 246 

 62 

 816 

 14 

 97 

2 994 

1 805 

 10 

8 

 (551) 

 (93) 

 (9) 

 3 

 (33) 

 (1) 

– 

 (6) 

– 

 (447) 

 (559) 

 (0) 

 10 

 (1) 

 (350) 

 12 

 (4) 

 6 

 (3) 

– 

 6 

 1 

 (99) 

 (6) 

 (7) 

 (994) 

 (330) 

 (35) 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2017 

Commitment appropriations 

Payment appropriations 

Budget appropriations 

Additional 
appropriations 

Total 
approp. 
available 

Programme 

Initial 
adopted 
budget 

1 

Amending 
budgets & 
transfers 

2 

Final 
adopted 
budget 

3=1+2 

Carry- 
overs 

4 

Assigned 
revenue 

5 

6=3+4+5 

7 

8 

Budget appropriations 

Initial 
adopted 
budget 

Amending 
budgets & 
transfers 

Additional 
appropriations 

EUR million 

Total 
approp. 
available 

Final 
adopted 
budget 

9=7+8 

Carry- 
overs 

10 

Assigned 
revenue 

11 

12=9+10+11 

Guarantee Fund for External Actions 

Union Civil Protection Mechanism 

EU Aid Volunteers initiative (EUAV) 

Fund for Sustainable Development (EFSD) 

European Neighbourhood Instrument (ENI) 

Development Cooperation Instrument 
(DCI) 

Partnership Instrument (PI) 

Democracy and Human Rights (EIDHR) 

Stability and Peace (IcSP) 

Humanitarian aid 

Common Foreign and Security Policy 
(CFSP) 

Nuclear Safety Cooperation (INSC) 

Decentralised agencies 

Other actions and programmes 

Pilot projects and preparatory actions 

Specific Actions 

Total MFF Heading 4 

5 

Pensions 

European schools 

Decentralised agencies 

Pilot projects and preparatory actions 

Commission administrative expenditure 

Administrative expenditure of Other 
Institutions 

Total MFF Heading 5 

6 

Compensations 

Total MFF Heading 6 

8 

Negative reserve 

Deficit carried over 

Total MFF Heading 8 

9 

Emergency Aid Reserve (EAR) 

European Globalisation Adjustment Fund 
(EGF) 

European Union Solidarity Fund (EUSF) 

Total MFF Heading 9 

Total 

 241 

 21 

 22 

– 

2 440 

3 168 

 134 

 189 

 273 

 945 

 327 

 62 

 20 

 84 

 9 

 66 

10 162 

1 790 

 185 

– 

 5 

3 494 

3 921 

9 395 

– 

– 

– 

– 

– 

 315 

 169 

 50 

 534 

– 

 (9) 

 (5) 

 275 

 40 

 (17) 

 5 

 (5) 

 (13) 

 335 

 (41) 

 (11) 

– 

 (1) 

 (1) 

 (0) 

 551 

 12 

 (1) 

– 

– 

 (11) 

– 

 0 

– 

– 

– 

– 

– 

 (253) 

– 

1 191 

 938 

 241 

 11 

 17 

 275 

2 481 

3 151 

 138 

 184 

 260 

1 280 

 287 

 51 

 20 

 83 

 8 

 66 

10 713 

1 802 

 184 

– 

 5 

3 483 

3 921 

9 395 

– 

– 

– 

– 

– 

 62 

 169 

1 241 

1 472 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 99 

 9 

– 

– 

– 

 1 

– 

 110 

 1 

– 

 300 

 54 

 47 

 2 

 4 

 11 

 769 

 55 

 3 

 0 

 126 

 0 

 0 

 351 

 13 

 17 

 575 

2 535 

3 198 

 140 

 188 

 272 

2 148 

 351 

 54 

 20 

 209 

 9 

 66 

 109 

1 560 

12 382 

– 

– 

– 

– 

 1 

 0 

 2 

– 

– 

– 

– 

– 

– 

– 

 31 

 31 

 0 

 14 

– 

– 

 357 

 423 

 794 

– 

– 

– 

– 

– 

– 

 41 

– 

 41 

1 802 

 198 

– 

 5 

3 841 

4 344 

10 190 

– 

– 

– 

– 

– 

 62 

 210 

1 273 

1 544 

 241 

 20 

 24 

– 

2 358 

2 769 

 136 

 168 

 294 

1 146 

 294 

 81 

 20 

 93 

 11 

 67 

9 483 

1 790 

 185 

– 

 5 

3 494 

3 921 

9 395 

– 

– 

– 

– 

– 

 315 

 25 

 50 

 390 

– 

 (10) 

 (7) 

 275 

 (374) 

 (140) 

 (39) 

 (9) 

 (36) 

 247 

 (35) 

 (11) 

– 

 (27) 

 (3) 

 (12) 

 (545) 

 12 

 (1) 

– 

 (3) 

 (10) 

– 

 (2) 

– 

– 

– 

– 

– 

 (216) 

 (25) 

1 191 

 951 

 241 

 10 

 17 

 275 

1 984 

2 629 

 97 

 159 

 258 

1 393 

 259 

 71 

 20 

 66 

 9 

 56 

8 938 

1 802 

 184 

– 

 2 

3 484 

3 921 

9 392 

– 

– 

– 

– 

– 

 99 

 0 

1 241 

1 341 

– 

– 

– 

– 

 5 

 13 

 1 

 3 

 3 

 91 

 0 

 0 

– 

 0 

– 

– 

 110 

 2 

– 

 300 

 59 

 74 

 2 

 3 

 10 

 728 

 55 

 3 

 0 

 127 

 0 

 0 

 120 

1 887 

– 

 1 

– 

– 

 292 

 494 

 786 

– 

– 

– 

– 

– 

– 

 0 

 31 

 32 

 0 

 14 

– 

– 

 358 

 426 

 798 

– 

– 

– 

– 

– 

– 

 41 

– 

 41 

 351 

 11 

 17 

 575 

2 048 

2 716 

 99 

 166 

 271 

2 211 

 313 

 74 

 20 

 193 

 9 

 56 

10 944 

1 802 

 199 

– 

 2 

4 134 

4 841 

10 977 

– 

– 

– 

– 

– 

 99 

 42 

1 273 

1 414 

157 858 

1 974 

159 831 

 575 

16 169 

176 576 

134 490 

(7 720) 

126 771 

1 714 

17 585 

146 071 

143 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.7.  DETAILED MFF: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS 

Annual accounts of the European Union 2017 

Programme 

Total 
appropr. 
available 

from 
final 
adopted 
budget 

Commitments made 

from 
carry- 
overs 

from 
assigned 
revenue 

Total 

% 

Appropriat. carried-over 
to 2018 
carry- 
overs 
by 
decision 

assigned 
revenue 

Total 

from 
final 
adopted 
budget 

Appropriations lapsing 

from 
carry- 
overs 

from 
assigned 
revenue 

1 

2 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9=7+8 

10 

11 

12 

EUR million 

Total 

13=10+11
+12 

1.1 

European Fund  Strategic Investments 
(EFSI) 
European satellite navigation 
(EGNOS/Galileo) 
International Thermonuclear Reactor 
(ITER) 
European Earth Observation Progr 
(Copernicus) 

Nuclear Safety and Decommissioning 

2 700 

1 045 

 341 

 625 

 138 

2 661 

 897 

 322 

 607 

 138 

Horizon 2020 

12 251 

10 422 

Euratom Research and Training 
Programme 
Competitiveness enterprises and SME's 
(COSME) 
Education, Training and Sport 
(Erasmus+) 
Employment and Social Innovation 
(EaSI) 

Customs, Fiscalis and Anti-Fraud 

CEF - Energy 

CEF - Transport 

CEF - Information & Communications 
Technology (ICT) 
Energy projects for economic recovery 
(EERP) 

Decentralised agencies 

Other actions and programmes 

Pilot projects and preparatory actions 

Specific competences of the Commission 

 452 

 381 

 341 

 349 

2 458 

2 070 

 146 

 149 

 623 

1 843 

 128 

 16 

 356 

 653 

 57 

 143 

 135 

 144 

 621 

1 722 

 120 

– 

 338 

 218 

 55 

 137 

Total MFF Heading 1.1 

24 508 

21 301 

1.2 

Regional convergence (Less developed 
regions) 

29 496 

26 092 

Transition regions 

Competitiveness (More developed 
regions) 
Outermost and sparsely populated 
regions 

Cohesion fund 

European territorial cooperation 

Technical assistance 

European Aid to the Most Deprived 
(FEAD) 

6 289 

9 391 

 251 

10 189 

2 124 

 217 

 553 

5 613 

8 296 

 222 

9 056 

1 917 

 209 

 546 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

 39 

 32 

 1 

 17 

– 

2 700 

100 % 

 929 

89 % 

 323 

95 % 

 624 

100 % 

 138 

100 % 

 0 

 116 

 18 

 0 

– 

 882 

11 304 

92 % 

 946 

 17 

 27 

 357 

79 % 

 376 

99 % 

 95 

 5 

 192 

2 263 

92 % 

 195 

 3 

 1 

 1 

 31 

 3 

– 

 13 

 92 

 1 

 3 

 138 

94 % 

 145 

 622 

97 % 

100 % 

1 753 

95 % 

 124 

97 % 

– 

0 % 

 351 

 309 

 56 

 140 

99 % 

47 % 

97 % 

98 % 

 7 

 4 

 0 

 89 

 0 

 16 

 5 

 343 

 1 

 1 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 4 

– 

– 

– 

– 

– 

 0 

 116 

 18 

 0 

– 

 946 

 95 

 5 

 195 

 7 

 4 

 0 

 89 

 4 

 16 

 5 

 343 

 1 

 1 

1 353 

22 654 

92 % 

1 842 

 4 

1 846 

3 378 

29 470 

100 % 

 27 

 677 

1 095 

 29 

1 133 

 185 

– 

 6 

6 289 

100 % 

9 391 

100 % 

 251 

100 % 

10 189 

100 % 

2 101 

 209 

99 % 

96 % 

 552 

100 % 

– 

– 

– 

– 

 0 

 1 

– 

– 

– 

– 

– 

– 

 23 

– 

– 

 27 

– 

– 

– 

– 

 23 

 1 

– 

144 

 0 

– 

 0 

– 

 0 

 1 

 0 

 0 

 0 

 1 

 0 

 1 

 0 

 0 

– 

 0 

 1 

 1 

 2 

 8 

– 

– 

– 

– 

– 

– 

 7 

 1 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

– 

– 

– 

 0 

– 

– 

– 

 0 

– 

– 

– 

– 

– 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

– 

 0 

– 

 0 

 2 

 0 

 0 

 0 

 1 

 0 

 1 

 0 

 0 

– 

 0 

 1 

 1 

 2 

 8 

– 

– 

– 

– 

– 

– 

 7 

 1 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2017 

from 
final 
adopted 
budget 

Commitments made 

from 
carry- 
overs 

from 
assigned 
revenue 

Total 

% 

Appropriat. carried-over 
to 2018 
carry- 
overs 
by 
decision 

assigned 
revenue 

Total 

from 
final 
adopted 
budget 

Appropriations lapsing 

from 
carry- 
overs 

from 
assigned 
revenue 

2 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9=7+8 

10 

11 

12 

Programme 

Youth Employment initiative 

Connecting Europe Facility (CEF) 

Pilot projects and preparatory actions 

Total 
appropr. 
available 

1 

 556 

1 593 

 13 

 500 

1 593 

 13 

– 

– 

– 

– 

 0 

 56 

– 

– 

6 559 

7 912 

 556 

100 % 

1 593 

100 % 

 13 

100 % 

– 

– 

 0 

60 614 

100 % 

 28 

83 268 

97 % 

1 870 

Total MFF Heading 1.2 

Total MFF Heading 1 

60 673 

54 056 

85 181 

75 356 

2 

European Agricultural Guarantee Fund 
(EAGF) 
Agricultural Fund Rural Development 
(EAFRD) 
European Maritime and Fisheries Fund 
(EMFF) 
Fisheries Partnership Agreements 
(SFPAs) and Fisheries Management 
Organisations (RFMOs) 

Environment and climate action (LIFE) 

Decentralised agencies 

Other actions and measures 

Pilot projects and preparatory actions 

Specific Actions 

Total MFF Heading 2 

45 830 

42 150 

 426 

2 183 

44 759 

98 % 

15 226 

14 360 

1 045 

 129 

 504 

 65 

– 

 8 

– 

 909 

 125 

 494 

 54 

– 

 7 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

14 360 

94 % 

 133 

1 042 

100 % 

 2 

 6 

 10 

– 

– 

– 

 128 

99 % 

 500 

 64 

– 

 7 

– 

99 % 

99 % 

0 % 

90 % 

0 % 

 603 

 861 

 0 

– 

 4 

 1 

– 

 0 

– 

62 806 

58 100 

 426 

2 334 

60 859 

97 % 

1 470 

3 

Asylum, Migration and Integration Fund 
(AMF) 

1 661 

1 408 

Consumer 

Creative Europe 

Emergency Support within the Union 
(IES) 

Internal Security Fund 

IT systems 

Justice 

Rights, Equality and Citizenship 

Union Civil protection Mechanism 

Europe for Citizens 

Food and feed 

Health 

Decentralised agencies 

Pilot projects and preparatory actions 

Specific Actions 

Total MFF Heading 3 

4 

Pre-accession assistance (IPA II) 

Macro-financial Assistance (MFA) 

Guarantee Fund for External Actions 

 28 

 222 

 199 

 796 

 38 

 56 

 65 

 31 

 27 

 262 

 67 

 909 

 10 

 102 

4 472 

2 195 

 40 

 351 

 27 

 209 

 199 

 695 

 35 

 53 

 64 

 29 

 26 

 259 

 65 

 858 

 9 

 101 

4 035 

2 117 

 40 

 241 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 1 

 9 

– 

 35 

 0 

 0 

 0 

 1 

 0 

 2 

 2 

 25 

– 

 0 

 89 

 34 

– 

– 

 730 

 36 

 54 

 64 

 30 

 27 

92 % 

94 % 

95 % 

97 % 

96 % 

98 % 

 261 

100 % 

 66 

 882 

 9 

99 % 

97 % 

97 % 

 101 

100 % 

4 124 

2 151 

92 % 

98 % 

 40 

100 % 

 2 

 3 

 2 

 1 

 0 

 1 

 1 

 27 

 0 

 0 

 99 

 43 

– 

 241 

69 % 

 110 

145 

 14 

1 422 

86 % 

 32 

 28 

100 % 

 218 

98 % 

 199 

100 % 

 0 

 5 

– 

 26 

 40 

 66 

EUR million 

Total 

13=10+11
+12 

– 

– 

 0 

 8 

 16 

 18 

 4 

 3 

 2 

 0 

– 

– 

 1 

– 

 27 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 1 

 0 

 0 

– 

– 

 0 

 0 

 2 

 0 

 0 

– 

– 

– 

 0 

 8 

 16 

 10 

 4 

 3 

 2 

 0 

– 

– 

 1 

– 

– 

– 

– 

– 

– 

 8 

– 

– 

– 

– 

– 

– 

– 

– 

 19 

 8 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 1 

 0 

 0 

– 

– 

 0 

 0 

 2 

 0 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

– 

– 

– 

– 

– 

– 

 0 

– 

– 

– 

– 

– 

– 

 23 

 27 

 451 

– 

– 

– 

– 

– 

– 

– 

– 

 451 

 207 

– 

– 

– 

– 

– 

 0 

 51 

1 897 

1 054 

 861 

 0 

– 

 4 

 1 

– 

 0 

– 

1 920 

 239 

 0 

 5 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 247 

 1 

– 

– 

 2 

 3 

 2 

 1 

 0 

 1 

 1 

 27 

 0 

 0 

 345 

 44 

– 

 110 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2017 

Programme 

Total 
appropr. 
available 

from 
final 
adopted 
budget 

Commitments made 

from 
carry- 
overs 

from 
assigned 
revenue 

Total 

% 

Appropriat. carried-over 
to 2018 
carry- 
overs 
by 
decision 

assigned 
revenue 

Total 

from 
final 
adopted 
budget 

Appropriations lapsing 

from 
carry- 
overs 

from 
assigned 
revenue 

1 

2 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9=7+8 

10 

11 

12 

Union Civil Protection Mechanism 

EU Aid Volunteers initiative (EUAV) 

Fund for Sustainable Development 
(EFSD) 
European Neighbourhood Instrument 
(ENI) 
Development Cooperation Instrument 
(DCI) 

Partnership Instrument (PI) 

Democracy and Human Rights (EIDHR) 

Stability and Peace (IcSP) 

Humanitarian aid 

Common Foreign and Security Policy 
(CFSP) 

Nuclear Safety Cooperation (INSC) 

Decentralised agencies 

Other actions and programmes 

Pilot projects and preparatory actions 

Specific Actions 

Total MFF Heading 4 

5 

Pensions 

European schools 

Decentralised agencies 

Pilot projects and preparatory actions 

Commission administrative expenditure 

Administrative expenditure of Other 
Institutions 

Total MFF Heading 5 

6 

Compensations 

Total MFF Heading 6 

8 

Negative reserve 

Deficit carried over 

Total MFF Heading 8 

9 

Emergency Aid Reserve (EAR) 

European Globalisation Adjustment Fund 
(EGF) 

European Union Solidarity Fund (EUSF) 

Total MFF Heading 9 

Total 

 13 

 17 

 575 

2 535 

3 198 

 140 

 188 

 272 

2 148 

 351 

 54 

 20 

 209 

 9 

 66 

 11 

 17 

 275 

2 481 

3 151 

 138 

 184 

 260 

1 280 

 287 

 51 

 20 

 83 

 8 

 66 

– 

– 

– 

– 

– 

– 

– 

– 

 99 

 8 

– 

– 

– 

 1 

– 

12 382 

10 710 

 108 

1 802 

 198 

– 

 5 

3 841 

4 344 

10 190 

– 

– 

– 

– 

– 

 62 

 210 

1 273 

1 544 

1 797 

 184 

– 

 5 

3 446 

3 838 

9 270 

– 

– 

– 

– 

– 

– 

 18 

1 241 

1 259 

– 

– 

– 

– 

 1 

 0 

 2 

– 

– 

– 

– 

– 

– 

– 

 31 

 31 

 1 

– 

– 

 34 

 24 

 2 

 3 

 8 

 722 

 45 

 3 

 0 

 121 

– 

 0 

 997 

 0 

 12 

– 

– 

 207 

 303 

 522 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 12 

 17 

92 % 

100 % 

 1 

– 

 275 

48 % 

 300 

2 515 

99 % 

3 175 

99 % 

 140 

 187 

 268 

2 101 

100 % 

99 % 

99 % 

98 % 

 340 

97 % 

 54 

 20 

 204 

 9 

 66 

11 814 

100 % 

100 % 

97 % 

94 % 

99 % 

95 % 

1 797 

100 % 

 196 

99 % 

– 

 5 

0 % 

100 % 

3 654 

95 % 

4 142 

95 % 

9 794 

96 % 

– 

– 

– 

– 

– 

– 

 18 

0 % 

0 % 

0 % 

0 % 

0 % 

0 % 

9 % 

1 273 

100 % 

1 291 

84 % 

 20 

 23 

 0 

 1 

 3 

 47 

 9 

 0 

 0 

 6 

 0 

 0 

 563 

 0 

 2 

– 

– 

 150 

 120 

 272 

– 

– 

– 

– 

– 

– 

 41 

– 

 41 

176 576 

158 730 

 567 

11 854 

171 150 

97 % 

4 315 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 1 

– 

 2 

– 

– 

– 

– 

– 

0 

– 

– 

– 

– 

– 

– 

 62 

– 

– 

 62 

 788 

 1 

– 

 300 

 20 

 23 

 0 

 1 

 3 

 47 

 9 

 0 

 0 

 6 

 1 

 0 

 565 

 0 

 2 

– 

– 

 150 

 120 

 272 

– 

– 

– 

– 

– 

 62 

 41 

– 

 103 

5 103 

 0 

 0 

– 

 0 

 0 

 0 

 0 

 0 

– 

 0 

 0 

– 

 0 

– 

 0 

 1 

 5 

 0 

– 

 0 

 37 

 83 

 125 

– 

– 

– 

– 

– 

– 

 151 

– 

 151 

 314 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 1 

– 

– 

– 

– 

– 

 1 

– 

– 

– 

– 

– 

 0 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

– 

– 

– 

– 

– 

0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 9 

 0 

146 

EUR million 

Total 

13=10+11
+12 

 0 

 0 

– 

 0 

 0 

 0 

 0 

 0 

– 

 1 

 0 

– 

 0 

– 

 0 

 3 

 5 

 0 

– 

 0 

 37 

 83 

 125 

– 

– 

– 

– 

– 

– 

 151 

– 

 151 

 323 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.8.  DETAILED MFF: IMPLEMENTATION OF PAYMENT APPROPRIATIONS 

Annual accounts of the European Union 2017 

Programme 

Total 
appropr. 
available 

from 
final 
adopted 
budget 

from 
carry- 
overs 

from 
assigned 
revenue 

Total 

% 

automa- 
tic 
carry- 
overs 

carry- 
overs 
by 
decision 

assigned 
revenue 

Total 

Payments made 

Appropriations carried over to 2018 

from 
final 
adopted 
budget 

Appropriations lapsing 

from 
carry- 
overs 

from 
assigned 
revenue 

1 

2 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9 

10=7+8+9 

11 

12 

13 

EUR million 

Total 

14=11+12
+13 

1.1 

European Fund  
Strategic Investments 
(EFSI) 
European satellite 
navigation 
(EGNOS/Galileo) 
International 
Thermonuclear Reactor 
(ITER) 
European Earth 
Observation Progr 
(Copernicus) 
Nuclear Safety and 
Decommissioning 

2 506 

2 467 

1 108 

 848 

 743 

 723 

 658 

 635 

 354 

 354 

Horizon 2020 

12 860 

10 025 

Euratom Research and 
Training Programme 
Competitiveness 
enterprises and SME's 
(COSME) 
Education, Training and 
Sport (Erasmus+) 
Employment and Social 
Innovation (EaSI) 
Customs, Fiscalis and 
Anti-Fraud 

CEF - Energy 

CEF - Transport 

CEF - Information & 
Communications 
Technology (ICT) 
Energy projects for 
economic recovery 
(EERP) 

Decentralised agencies 

Other actions and 
programmes 
Pilot projects and 
preparatory actions 
Specific competences of 
the Commission 

 518 

 327 

 324 

 248 

2 375 

1 920 

 102 

 127 

 85 

 87 

 116 

 81 

1 354 

1 248 

 67 

 63 

 157 

 337 

 543 

 30 

 123 

 142 

 319 

 197 

 29 

 117 

– 

 3 

 0 

 2 

– 

 63 

 18 

 2 

 6 

 1 

 2 

 1 

 1 

 0 

– 

– 

 1 

– 

– 

 39 

2 506 

100 % 

 45 

 895 

81 % 

 1 

 724 

97 % 

 19 

 655 

100 % 

– 

 775 

 27 

 354 

100 % 

10 863 

 371 

84 % 

72 % 

 18 

 268 

83 % 

 226 

2 153 

 3 

 1 

 0 

 92 

 119 

 83 

 62 

1 311 

91 % 

90 % 

94 % 

97 % 

97 % 

 3 

 7 

 13 

 87 

 0 

 3 

 66 

99 % 

 149 

94 % 

 333 

 285 

 29 

 120 

99 % 

52 % 

99 % 

98 % 

88 % 

Total MFF Heading 1.1 

24 370 

19 945 

 101 

1 330 

21 376 

1.2 

Regional convergence 
(Less developed 
regions) 

Transition regions 

Competitiveness (More 
developed regions) 

18 078 

14 702 

2 609 

5 672 

2 067 

4 413 

– 

– 

– 

2 622 

17 325 

96 % 

 453 

 991 

2 520 

5 403 

97 % 

95 % 

147 

0 

 2 

 1 

 2 

– 

 68 

 20 

 2 

 7 

 2 

 0 

 1 

 2 

 0 

0 

0 

 1 

0 

0 

 108 

0 

0 

0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

 0 

 210 

 212 

 18 

 19 

 1 

– 

1 914 

 125 

 3 

– 

1 982 

 145 

 53 

 55 

 215 

 222 

 6 

 4 

 0 

 41 

 0 

 9 

 5 

 8 

 4 

 1 

 43 

 1 

 9 

 5 

 257 

 258 

 0 

 1 

 0 

 1 

 0 

 0 

 0 

 (0) 

 0 

 7 

 0 

 0 

 0 

 1 

 1 

 1 

 0 

 (0) 

– 

 0 

 0 

 0 

 1 

– 

 0 

 0 

 0 

– 

 8 

 2 

 0 

 0 

 1 

 3 

 0 

 0 

 0 

– 

– 

 0 

– 

– 

2 858 

2 966 

 12 

 16 

 753 

 89 

 269 

 753 

 89 

 269 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

– 

 0 

 (0) 

 0 

– 

– 

 0 

– 

– 

– 

 0 

– 

– 

 0 

– 

– 

– 

 0 

 0 

 0 

 0 

 0 

 15 

 2 

 0 

 0 

 2 

 4 

 2 

 0 

 0 

 0 

 0 

 0 

 0 

 1 

 28 

 0 

 0 

 0 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2017 

Programme 

Total 
appropr. 
available 

from 
final 
adopted 
budget 

from 
carry- 
overs 

from 
assigned 
revenue 

Total 

% 

automa- 
tic 
carry- 
overs 

carry- 
overs 
by 
decision 

assigned 
revenue 

Total 

Payments made 

Appropriations carried over to 2018 

from 
final 
adopted 
budget 

Appropriations lapsing 

from 
carry- 
overs 

from 
assigned 
revenue 

1 

2 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9 

10=7+8+9 

11 

12 

13 

EUR million 

Total 

14=11+12
+13 

 35 

 161 

100 % 

1 260 

8 348 

100 % 

Outermost and sparsely 
populated regions 

Cohesion fund 

European territorial 
cooperation 

Technical assistance 

European Aid to the 
Most Deprived (FEAD) 
Youth Employment 
initiative 
Connecting Europe 
Facility (CEF) 
Pilot projects and 
preparatory actions 

 161 

8 348 

 630 

 180 

 298 

 525 

 292 

 5 

 126 

7 088 

 576 

 147 

 291 

 49 

 290 

 5 

Total MFF Heading 1.2 

36 797 

29 754 

Total MFF Heading 1 

61 168 

49 698 

2 

European Agricultural 
Guarantee Fund (EAGF) 
Agricultural Fund Rural 
Development (EAFRD) 
European Maritime and 
Fisheries Fund (EMFF) 
Fisheries Partnership 
Agreements (SFPAs) 
and Fisheries 
Management 
Organisations (RFMOs) 
Environment and 
climate action (LIFE) 

Decentralised agencies 

Other actions and 
measures 
Pilot projects and 
preparatory actions 

Specific Actions 

45 975 

41 992 

11 527 

10 990 

 519 

 384 

 139 

 135 

 343 

 65 

– 

 8 

 0 

 326 

 54 

– 

 7 

– 

– 

– 

– 

 11 

 0 

– 

– 

– 

 11 

 111 

 621 

 1 

 0 

– 

 4 

– 

– 

– 

– 

 53 

 0 

– 

 475 

 2 

– 

 629 

 158 

 291 

 524 

 291 

 5 

5 890 

35 654 

7 220 

2 081 

57 030 

44 695 

 122 

11 113 

 4 

 2 

 8 

 10 

– 

 0 

– 

 389 

 337 

 64 

– 

 7 

– 

Total MFF Heading 2 

58 575 

53 889 

 626 

2 228 

56 743 

3 

Asylum, Migration and 
Integration Fund (AMF) 

Consumer 

Creative Europe 

Emergency Support 
within the Union (IES) 

Internal Security Fund 

IT systems 

Justice 

Rights, Equality and 
Citizenship 
Union Civil protection 
Mechanism 

 671 

 22 

 204 

 218 

 460 

 31 

 41 

 55 

 30 

 616 

 20 

 185 

 217 

 395 

 28 

 36 

 52 

 23 

 2 

 0 

 2 

 0 

 2 

– 

 1 

 0 

– 

 13 

 1 

 7 

– 

 37 

 1 

 2 

 1 

 1 

 631 

 21 

 194 

 217 

 433 

 29 

 39 

 53 

 24 

 137 

99 % 

100 % 

88 % 

98 % 

100 % 

100 % 

96 % 

97 % 

94 % 

97 % 

96 % 

75 % 

98 % 

99 % 

0 % 

96 % 

0 % 

97 % 

94 % 

95 % 

95 % 

100 % 

94 % 

92 % 

95 % 

96 % 

79 % 

148 

0 

0 

0 

 12 

 0 

0 

– 

0 

 13 

 121 

 103 

 2 

 1 

0 

 4 

0 

0 

0 

0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 451 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 1 

 6 

 1 

– 

 0 

1 119 

3 977 

 705 

 410 

 129 

– 

 1 

 1 

– 

 0 

– 

– 

– 

– 

 13 

 7 

 1 

– 

 0 

1 132 

4 098 

1 259 

 412 

 130 

– 

 5 

 1 

– 

 0 

– 

– 

– 

 1 

 7 

 0 

– 

 0 

 0 

 9 

 21 

 12 

 2 

 0 

 1 

 1 

 0 

– 

 0 

– 

 111 

 451 

1 245 

1 806 

 17 

 2 

 1 

 2 

 0 

 2 

0 

 1 

 0 

0 

– 

– 

– 

– 

– 

– 

– 

– 

 5 

 32 

 0 

 8 

– 

 24 

 2 

 1 

 1 

 1 

 34 

 1 

 10 

 0 

 26 

 2 

 1 

 2 

 5 

 5 

 0 

 0 

 0 

 1 

 0 

 0 

 0 

 1 

– 

– 

– 

 2 

 0 

– 

– 

– 

 3 

 19 

 8 

 0 

 0 

– 

 0 

– 

– 

– 

 0 

 9 

 0 

 0 

 0 

 0 

 0 

– 

 0 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

– 

– 

– 

– 

 1 

 9 

 0 

– 

 0 

 0 

 11 

 40 

 21 

 2 

 0 

 1 

 1 

 0 

– 

 0 

 0 

 26 

 5 

 0 

 0 

 0 

 1 

 0 

 1 

 1 

 1 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2017 

Programme 

Total 
appropr. 
available 

from 
final 
adopted 
budget 

from 
carry- 
overs 

from 
assigned 
revenue 

Total 

% 

automa- 
tic 
carry- 
overs 

carry- 
overs 
by 
decision 

assigned 
revenue 

Total 

Payments made 

Appropriations carried over to 2018 

from 
final 
adopted 
budget 

Appropriations lapsing 

from 
carry- 
overs 

from 
assigned 
revenue 

1 

2 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9 

10=7+8+9 

11 

12 

13 

EUR million 

Total 

14=11+12
+13 

Europe for Citizens 

Food and feed 

Health 

Decentralised agencies 

Pilot projects and 
preparatory actions 

Specific Actions 

Total MFF Heading 3 

4 

Pre-accession 
assistance (IPA II) 
Macro-financial 
Assistance (MFA) 
Guarantee Fund for 
External Actions 
Union Civil Protection 
Mechanism 
EU Aid Volunteers 
initiative (EUAV) 
Fund for Sustainable 
Development (EFSD) 
European 
Neighbourhood 
Instrument (ENI) 
Development 
Cooperation Instrument 
(DCI) 
Partnership Instrument 
(PI) 
Democracy and Human 
Rights (EIDHR) 
Stability and Peace 
(IcSP) 

Humanitarian aid 

Common Foreign and 
Security Policy (CFSP) 
Nuclear Safety 
Cooperation (INSC) 

Decentralised agencies 

Other actions and 
programmes 
Pilot projects and 
preparatory actions 

Specific Actions 

Total MFF Heading 4 

5 

Pensions 

European schools 

Decentralised agencies 

Pilot projects and 
preparatory actions 

 27 

 246 

 62 

 816 

 14 

 97 

2 994 

1 805 

 10 

 351 

 11 

 17 

 575 

 26 

 239 

 58 

 764 

 14 

 95 

2 767 

1 376 

 10 

 241 

 7 

 17 

– 

 0 

 1 

 1 

– 

– 

 1 

 10 

 4 

– 

– 

– 

– 

– 

 0 

 2 

 1 

 25 

– 

 0 

 90 

 216 

– 

– 

 1 

– 

– 

 27 

 241 

 60 

 789 

 14 

 96 

2 867 

1 596 

 10 

 241 

 8 

 17 

– 

97 % 

98 % 

97 % 

97 % 

95 % 

99 % 

96 % 

88 % 

99 % 

69 % 

73 % 

97 % 

0 % 

 0 

 1 

 1 

0 

0 

 1 

 11 

 7 

0 

– 

0 

– 

 275 

2 048 

1 978 

 5 

 31 

2 014 

98 % 

 5 

2 716 

2 614 

 12 

 16 

2 642 

97 % 

 14 

 99 

 166 

 271 

2 211 

 313 

 74 

 20 

 193 

 9 

 56 

10 944 

1 802 

 199 

– 

 2 

 95 

 156 

 253 

1 388 

 258 

 70 

 20 

 64 

 8 

 55 

8 610 

1 797 

 184 

– 

 1 

 1 

 3 

 2 

 90 

 0 

 0 

– 

 0 

– 

– 

 1 

 2 

 4 

 644 

 32 

 2 

 0 

 117 

 0 

 0 

 116 

1 067 

– 

 1 

– 

– 

 0 

 12 

– 

– 

 1 

 3 

 3 

 5 

 0 

 1 

0 

 0 

0 

0 

 314 

– 

 0 

– 

0 

 96 

 161 

 259 

2 123 

 290 

 72 

 20 

 181 

 8 

 55 

9 793 

1 797 

 197 

– 

 1 

97 % 

97 % 

96 % 

96 % 

93 % 

98 % 

100 % 

94 % 

95 % 

98 % 

89 % 

100 % 

99 % 

0 % 

53 % 

149 

 0 

– 

– 

– 

– 

– 

 5 

– 

– 

– 

 2 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 2 

– 

– 

– 

 1 

 0 

 2 

 0 

 26 

 1 

 0 

 99 

 199 

– 

 1 

 3 

 1 

 26 

 1 

 1 

 115 

 205 

– 

 110 

 110 

 0 

– 

 2 

 0 

 300 

 575 

 28 

 58 

 1 

 1 

 7 

 83 

 23 

 1 

 0 

 10 

 0 

 0 

 33 

 72 

 1 

 4 

 10 

 88 

 23 

 1 

 0 

 10 

 0 

 0 

 0 

 1 

 0 

 1 

 0 

 0 

 11 

 3 

 0 

– 

 1 

 0 

– 

 0 

 1 

 1 

 0 

 2 

 0 

 0 

 0 

– 

 2 

 0 

 1 

 820 

1 136 

 12 

 0 

 2 

– 

– 

 0 

 2 

– 

 1 

 5 

 0 

– 

 0 

– 

 0 

 0 

– 

– 

 0 

 1 

 1 

– 

– 

– 

– 

– 

 0 

 2 

 0 

 1 

 0 

 0 

 0 

 0 

– 

– 

– 

– 

 4 

– 

 0 

– 

– 

– 

– 

 0 

– 

– 

– 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

 1 

 0 

 1 

 0 

 0 

 12 

 4 

 0 

– 

 1 

 0 

– 

 0 

 2 

 2 

 1 

 2 

 0 

 0 

 0 

 0 

 2 

 0 

 1 

 16 

 5 

 0 

– 

 0 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUR million 

Total 

14=11+12
+13 

 58 

 128 

 191 

– 

– 

– 

– 

– 

 99 

 0 

– 

 99 

 384 

 21 

 46 

 67 

– 

– 

– 

– 

– 

– 

 0 

– 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 99 

 0 

Annual accounts of the European Union 2017 

Programme 

Total 
appropr. 
available 

from 
final 
adopted 
budget 

from 
carry- 
overs 

from 
assigned 
revenue 

Total 

% 

automa- 
tic 
carry- 
overs 

carry- 
overs 
by 
decision 

assigned 
revenue 

Total 

Payments made 

Appropriations carried over to 2018 

from 
final 
adopted 
budget 

Appropriations lapsing 

from 
carry- 
overs 

from 
assigned 
revenue 

1 

2 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9 

10=7+8+9 

11 

12 

13 

Total MFF Heading 5 

10 977 

8 486 

Commission 
administrative 
expenditure 
Administrative 
expenditure of Other 
Institutions 

6 

Compensations 

Total MFF Heading 6 

8 

Negative reserve 

Deficit carried over 

Total MFF Heading 8 

9 

Emergency Aid Reserve 
(EAR) 
European Globalisation 
Adjustment Fund (EGF) 
European Union 
Solidarity Fund (EUSF) 

Total MFF Heading 9 

Total 

4 134 

3 141 

 271 

 165 

3 577 

87 % 

 305 

4 841 

3 363 

– 

– 

– 

– 

– 

 99 

 42 

1 273 

1 414 

– 

– 

– 

– 

– 

– 

 0 

1 241 

1 241 

 448 

 720 

– 

– 

– 

– 

– 

– 

 0 

 31 

 32 

 274 

4 085 

84 % 

 451 

9 656 

88 % 

– 

– 

– 

– 

– 

– 

 18 

– 

 18 

– 

– 

– 

– 

– 

– 

0 % 

0 % 

0 % 

0 % 

0 % 

0 % 

 18 

43 % 

1 273 

1 291 

 475 

 781 

– 

– 

0 

0 

0 

0 

 0 

0 

 0 

– 

0 

 1 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 193 

 499 

 152 

 627 

 37 

 83 

 348 

1 129 

 125 

– 

– 

– 

– 

– 

– 

 23 

– 

 23 

– 

– 

– 

– 

– 

– 

 24 

– 

 24 

– 

– 

– 

– 

– 

 99 

 0 

– 

 99 

 284 

146 071 

124 691 

1 615 

11 073 

137 379 

1 338 

 458 

6 512 

8 308 

100 % 

91 % 

94 % 

150 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.9.  DETAILED MFF: MOVEMENTS IN COMMITMENTS OUTSTANDING (RAL) 

Annual accounts of the European Union 2017 

Commitments outstanding at the end of previous year 

Commitments of the current year 

Programme 

Commitm. 
carried forward 
from prev. year 

Decommitm./ 
Revaluations/ 
Cancellations 

Payments 

Commitm. 
outstanding at 
year-end 

Commitm. made 
during the year 

Payments 

Cancellation of 
commitm. which 
cannot be carried 
over 

Commitm. 
outstanding at 
year-end 

1.1 

European Fund  Strategic Investments (EFSI) 

European satellite navigation (EGNOS/Galileo) 

International Thermonuclear Reactor (ITER) 

European Earth Observation Progr (Copernicus) 

Nuclear Safety and Decommissioning 

2 460 

1 267 

2 128 

 205 

 867 

 (0) 

 (1) 

 (0) 

 (0) 

 (0) 

(2 451) 

 (738) 

 (668) 

 (192) 

 (353) 

 9 

 528 

1 460 

 13 

 514 

2 700 

 929 

 323 

 624 

 138 

Horizon 2020 

19 940 

 (458) 

(7 173) 

12 309 

11 304 

Euratom Research and Training Programme 

Competitiveness enterprises and SME's (COSME) 

Education, Training and Sport (Erasmus+) 

Employment and Social Innovation (EaSI) 

Customs, Fiscalis and Anti-Fraud 

CEF - Energy 

CEF - Transport 

CEF - Information & Communications Technology 
(ICT) 

Energy projects for economic recovery (EERP) 

Decentralised agencies 

Other actions and programmes 

Pilot projects and preparatory actions 

Specific competences of the Commission 

Total MFF Heading 1.1 

1.2 

Regional convergence (Less developed regions) 

Transition regions 

Competitiveness (More developed regions) 

Outermost and sparsely populated regions 

Cohesion fund 

European territorial cooperation 

Technical assistance 

European Aid to the Most Deprived (FEAD) 

Youth Employment initiative 

Connecting Europe Facility (CEF) 

Pilot projects and preparatory actions 

 226 

 874 

 652 

 187 

 141 

1 140 

3 892 

 304 

 694 

 31 

 411 

 41 

 162 

35 622 

71 813 

12 382 

22 235 

 523 

23 497 

2 218 

 176 

 840 

2 215 

3 402 

 15 

 (14) 

 (74) 

 (59) 

 (10) 

 (8) 

 (1) 

 (106) 

 (209) 

 (258) 

 (61) 

 (82) 

 (77) 

 (661) 

(1 022) 

 (1) 

 (0) 

 (0) 

 (23) 

 (2) 

 (9) 

(1 321) 

(1 537) 

– 

 (352) 

– 

 (940) 

 (176) 

 (8) 

 (0) 

– 

 (0) 

 (1) 

 (65) 

 (149) 

 (25) 

 (166) 

 (15) 

 (78) 

(13 887) 

(17 260) 

(2 494) 

(5 340) 

 (152) 

(8 341) 

 (620) 

 (57) 

 (267) 

 (523) 

 (286) 

 (5) 

 106 

 591 

 336 

 115 

 52 

1 062 

2 210 

 237 

 545 

 6 

 221 

 25 

 75 

20 414 

53 015 

9 888 

16 542 

 371 

14 216 

1 421 

 111 

 573 

1 692 

3 117 

 9 

 357 

 376 

2 263 

 138 

 145 

 622 

1 753 

 124 

– 

 351 

 309 

 56 

 140 

22 654 

29 470 

6 289 

9 391 

 251 

10 189 

2 101 

 209 

 552 

 556 

1 593 

 13 

 (55) 

 (157) 

 (56) 

 (464) 

 (1) 

(3 689) 

 (265) 

 (59) 

(1 895) 

 (30) 

 (38) 

 (6) 

 (289) 

 (1) 

– 

 (308) 

 (119) 

 (15) 

 (42) 

– 

– 

 (0) 

– 

– 

 (3) 

 (0) 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

(7 489) 

 (3) 

 (64) 

 (26) 

 (64) 

 (9) 

 (7) 

 (9) 

 (101) 

 (24) 

 (0) 

 (5) 

 (0) 

– 

– 

– 

– 

– 

– 

 (0) 

– 

– 

– 

– 

2 645 

 772 

 267 

 161 

 137 

7 612 

 92 

 317 

 368 

 107 

 107 

 616 

1 464 

 123 

– 

 44 

 191 

 41 

 99 

15 162 

29 406 

6 263 

9 327 

 242 

10 182 

2 092 

 107 

 528 

 556 

1 588 

 13 

EUR million 
Total commitm.  
outstanding at 
the end of the 
year 

2 654 

1 300 

1 727 

 174 

 651 

19 921 

 198 

 908 

 704 

 222 

 159 

1 678 

3 673 

 360 

 545 

 49 

 412 

 66 

 174 

35 576 

82 421 

16 151 

25 870 

 613 

24 398 

3 514 

 218 

1 101 

2 248 

4 704 

 22 

Total MFF Heading 1.2 

139 316 

(3 015) 

(35 345) 

100 956 

60 614 

 (310) 

 (0) 

60 304 

161 260 

151 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2017 

Commitments outstanding at the end of previous year 

Commitments of the current year 

Programme 

Commitm. 
carried forward 
from prev. year 

Decommitm./ 
Revaluations/ 
Cancellations 

Payments 

Commitm. 
outstanding at 
year-end 

Commitm. made 
during the year 

Payments 

Cancellation of 
commitm. which 
cannot be carried 
over 

Commitm. 
outstanding at 
year-end 

Total MFF Heading 1 

174 938 

(4 337) 

2 

European Agricultural Guarantee Fund (EAGF) 

Agricultural Fund Rural Development (EAFRD) 

European Maritime and Fisheries Fund (EMFF) 

Fisheries Partnership Agreements (SFPAs) and 
Fisheries Management Organisations (RFMOs) 

Environment and climate action (LIFE) 

Decentralised agencies 

Other actions and measures 

Pilot projects and preparatory actions 

Specific Actions 

Total MFF Heading 2 

3 

Asylum, Migration and Integration Fund (AMF) 

Consumer 

Creative Europe 

Emergency Support within the Union (IES) 

Internal Security Fund 

IT systems 

Justice 

Rights, Equality and Citizenship 

Union Civil protection Mechanism 

Europe for Citizens 

Food and feed 

Health 

Decentralised agencies 

Pilot projects and preparatory actions 

Specific Actions 

Total MFF Heading 3 

4 

Pre-accession assistance (IPA II) 

Macro-financial Assistance (MFA) 

Guarantee Fund for External Actions 

Union Civil Protection Mechanism 

EU Aid Volunteers initiative (EUAV) 

Fund for Sustainable Development (EFSD) 

European Neighbourhood Instrument (ENI) 

Development Cooperation Instrument (DCI) 

 247 

29 641 

2 595 

 31 

1 404 

 3 

 6 

 21 

 0 

33 947 

1 734 

 35 

 177 

 109 

1 191 

 43 

 93 

 117 

 49 

 23 

 323 

 127 

 41 

 31 

 74 

4 167 

6 400 

 10 

– 

 15 

 17 

– 

7 344 

8 282 

 (2) 

 (145) 

 (30) 

 (0) 

 (2) 

– 

– 

 (1) 

– 

 (180) 

 (77) 

 (0) 

 (8) 

 (0) 

 (68) 

 (3) 

 (18) 

 (12) 

 (11) 

 (1) 

 (27) 

 (0) 

 (3) 

 (2) 

 (2) 

 (231) 

 (56) 

 (0) 

– 

 (0) 

– 

– 

 (182) 

 (173) 

121 370 

 33 

18 567 

2 191 

 9 

1 087 

– 

 6 

 13 

 0 

21 907 

1 075 

 19 

 87 

 31 

 703 

 15 

 44 

 53 

 22 

 9 

 108 

 78 

 15 

 16 

 11 

2 286 

4 936 

 0 

– 

 8 

 13 

– 

5 484 

5 732 

(49 231) 

 (211) 

(10 928) 

 (374) 

 (22) 

 (315) 

 (3) 

– 

 (7) 

– 

(11 860) 

 (582) 

 (16) 

 (82) 

 (78) 

 (421) 

 (25) 

 (31) 

 (52) 

 (16) 

 (14) 

 (189) 

 (48) 

 (24) 

 (12) 

 (61) 

(1 650) 

(1 408) 

 (10) 

– 

 (7) 

 (4) 

– 

(1 678) 

(2 377) 

152 

83 268 

44 759 

14 360 

1 042 

 128 

 500 

 64 

– 

 7 

– 

60 859 

1 422 

 28 

 218 

 199 

 730 

 36 

 54 

 64 

 30 

 27 

 261 

 66 

 882 

 9 

 101 

4 124 

2 151 

 40 

 241 

 12 

 17 

 275 

2 515 

3 175 

(7 799) 

(44 484) 

 (185) 

 (14) 

 (115) 

 (23) 

 (61) 

– 

– 

– 

 (3) 

– 

– 

 (0) 

– 

– 

– 

– 

– 

– 

(44 882) 

 (0) 

 (49) 

 (5) 

 (112) 

 (140) 

 (12) 

 (4) 

 (7) 

 (1) 

 (8) 

 (13) 

 (53) 

 (12) 

 (765) 

 (1) 

 (35) 

(1 217) 

 (187) 

 (0) 

 (241) 

 (2) 

 (12) 

– 

 (336) 

 (264) 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 (0) 

– 

– 

– 

– 

– 

 (0) 

– 

75 467 

 275 

14 175 

1 028 

 12 

 477 

 3 

– 

 7 

– 

15 977 

1 373 

 22 

 105 

 59 

 718 

 32 

 46 

 63 

 22 

 13 

 208 

 54 

 117 

 8 

 66 

2 908 

1 963 

 40 

– 

 10 

 5 

 275 

2 178 

2 911 

EUR million 
Total commitm.  
outstanding at 
the end of the 
year 

196 837 

 309 

32 742 

3 218 

 21 

1 564 

 3 

 6 

 20 

 0 

37 883 

2 447 

 41 

 193 

 90 

1 420 

 47 

 90 

 115 

 44 

 22 

 316 

 133 

 132 

 24 

 77 

5 194 

6 899 

 40 

– 

 18 

 18 

 275 

7 662 

8 643 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2017 

Commitments outstanding at the end of previous year 

Commitments of the current year 

Programme 

Commitm. 
carried forward 
from prev. year 

Decommitm./ 
Revaluations/ 
Cancellations 

Payments 

Commitm. 
outstanding at 
year-end 

Commitm. made 
during the year 

Payments 

Cancellation of 
commitm. which 
cannot be carried 
over 

Commitm. 
outstanding at 
year-end 

EUR million 
Total commitm.  
outstanding at 
the end of the 
year 

Partnership Instrument (PI) 

Democracy and Human Rights (EIDHR) 

Stability and Peace (IcSP) 

Humanitarian aid 

Common Foreign and Security Policy (CFSP) 

Nuclear Safety Cooperation (INSC) 

Decentralised agencies 

Other actions and programmes 

Pilot projects and preparatory actions 

Specific Actions 

Total MFF Heading 4 

5 

Pensions 

European schools 

Decentralised agencies 

Pilot projects and preparatory actions 

Commission administrative expenditure 

Administrative expenditure of Other Institutions 

Total MFF Heading 5 

6 

Compensations 

Total MFF Heading 6 

8 

Negative reserve 

Deficit carried over 

Total MFF Heading 8 

9 

Emergency Aid Reserve (EAR) 

European Globalisation Adjustment Fund (EGF) 

European Union Solidarity Fund (EUSF) 

Total MFF Heading 9 

Total 

 340 

 346 

 626 

 964 

 204 

 145 

– 

 148 

 23 

 111 

 (7) 

 (2) 

 (12) 

 (43) 

 (10) 

 (5) 

– 

 (16) 

 (2) 

 (9) 

 (83) 

 (113) 

 (224) 

 (575) 

 (65) 

 (46) 

– 

 (23) 

 (8) 

 (40) 

 250 

 230 

 390 

 346 

 129 

 93 

– 

 109 

 14 

 62 

24 974 

 (517) 

(6 662) 

17 795 

– 

 1 

– 

 2 

 299 

 431 

 732 

– 

– 

– 

– 

– 

– 

 0 

– 

 0 

– 

 (0) 

– 

 (0) 

 (22) 

 20 

 (2) 

– 

– 

– 

– 

– 

– 

 (0) 

– 

 (0) 

– 

 (1) 

– 

 (1) 

 (276) 

 (448) 

 (726) 

– 

– 

– 

– 

– 

– 

 (0) 

– 

 (0) 

– 

– 

– 

 1 

 1 

 3 

 4 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 140 

 187 

 268 

2 101 

 340 

 54 

 20 

 204 

 9 

 66 

11 814 

1 797 

 196 

– 

 5 

3 654 

4 142 

9 794 

– 

– 

– 

– 

– 

– 

 18 

1 273 

1 291 

 (14) 

 (47) 

 (35) 

(1 548) 

 (225) 

 (26) 

 (20) 

 (158) 

 (1) 

 (15) 

(3 131) 

(1 797) 

 (196) 

– 

 (0) 

(3 301) 

(3 637) 

(8 931) 

– 

– 

– 

– 

– 

– 

 (18) 

(1 273) 

(1 290) 

 (0) 

– 

 (0) 

 (0) 

– 

– 

– 

– 

– 

– 

 126 

 140 

 233 

 553 

 115 

 29 

– 

 45 

 8 

 51 

 376 

 370 

 623 

 899 

 243 

 122 

– 

 154 

 22 

 113 

 (1) 

8 682 

26 478 

– 

– 

– 

– 

 (0) 

0 

 (0) 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

– 

 4 

 353 

 505 

 863 

– 

– 

– 

– 

– 

– 

 0 

– 

 0 

– 

 0 

– 

 6 

 354 

 507 

 867 

– 

– 

– 

– 

– 

– 

 0 

– 

 0 

238 759 

(5 268) 

(70 129) 

163 362 

171 150 

(67 250) 

 (4) 

103 896 

267 258 

153 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.10. 

DETAILED MFF: COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN 

Annual accounts of the European Union 2017 

Programme 

< 2011 

2011 

2012 

2013 

2014 

2015 

2016 

2017 

Total 

EUR million 

1.1 

European Fund  Strategic Investments (EFSI) 

European satellite navigation (EGNOS/Galileo) 

International Thermonuclear Reactor (ITER) 

European Earth Observation Progr (Copernicus) 

Nuclear Safety and Decommissioning 

– 

– 

– 

– 

– 

– 

 0 

– 

– 

– 

Horizon 2020 

 165 

 222 

Euratom Research and Training Programme 

Competitiveness enterprises and SME's (COSME) 

Education, Training and Sport (Erasmus+) 

Employment and Social Innovation (EaSI) 

Customs, Fiscalis and Anti-Fraud 

CEF - Energy 

CEF - Transport 

CEF - Information & Communications Technology 
(ICT) 

Energy projects for economic recovery (EERP) 

Decentralised agencies 

Other actions and programmes 

Pilot projects and preparatory actions 

Specific competences of the Commission 

Total MFF Heading 1.1 

1.2 

Regional convergence (Less developed regions) 

Transition regions 

Competitiveness (More developed regions) 

Outermost and sparsely populated regions 

Cohesion fund 

European territorial cooperation 

Technical assistance 

European Aid to the Most Deprived (FEAD) 

Youth Employment initiative 

Connecting Europe Facility (CEF) 

Pilot projects and preparatory actions 

Total MFF Heading 1.2 

Total MFF Heading 1 

2 

European Agricultural Guarantee Fund (EAGF) 

Agricultural Fund Rural Development (EAFRD) 

European Maritime and Fisheries Fund (EMFF) 

 0 

 2 

 0 

 1 

– 

 6 

 29 

– 

 515 

– 

 22 

 0 

 0 

 741 

 519 

 38 

 58 

– 

 178 

 41 

 1 

– 

– 

– 

 0 

 834 

1 575 

– 

 34 

 84 

 8 

 2 

 0 

 1 

– 

 2 

 17 

– 

 30 

– 

 8 

 2 

 0 

 294 

 229 

– 

 9 

– 

– 

– 

– 

– 

– 

– 

– 

 238 

 532 

– 

– 

 0 

– 

 4 

 796 

– 

 193 

1 374 

 4 

 254 

 5 

 8 

– 

 3 

 82 

 0 

– 

– 

 23 

 2 

 6 

2 754 

7 711 

– 

1 663 

– 

1 257 

 170 

 1 

– 

– 

– 

 0 

10 802 

13 556 

– 

 623 

 268 

– 

 3 

– 

– 

 16 

 601 

 1 

 32 

 1 

 4 

 0 

 5 

 157 

 0 

– 

– 

 7 

 1 

 1 

 829 

 509 

– 

 58 

– 

 58 

 9 

 1 

– 

– 

– 

– 

 635 

1 464 

– 

 1 

 11 

154 

– 

 0 

 98 

 0 

 90 

 2 

 58 

 260 

 2 

 80 

 7 

 463 

 306 

 11 

 134 

2 479 

3 364 

4 103 

 12 

 10 

 46 

 13 

 3 

 330 

 467 

 30 

– 

– 

 30 

 1 

 11 

3 620 

1 079 

 305 

 611 

 23 

 436 

– 

 8 

 2 

 123 

 472 

 1 

3 060 

6 680 

 0 

 303 

 8 

 30 

 77 

 99 

 33 

 13 

 314 

 447 

 49 

– 

 0 

 39 

 6 

 17 

4 893 

19 224 

4 671 

6 621 

 142 

3 870 

 284 

 42 

 181 

1 148 

 728 

 1 

36 912 

41 805 

 12 

4 228 

 971 

 51 

 213 

 185 

 56 

 36 

 401 

1 009 

 158 

 (0) 

 5 

 92 

 12 

 41 

7 283 

23 744 

4 874 

7 523 

 206 

8 418 

 917 

 59 

 391 

 420 

1 917 

 7 

48 475 

55 759 

 22 

13 378 

 847 

2 645 

 772 

 267 

 161 

 137 

7 612 

 92 

 317 

 368 

 107 

 107 

 616 

1 464 

 123 

– 

 44 

 191 

 41 

 99 

15 162 

29 406 

6 263 

9 327 

 242 

10 182 

2 092 

 107 

 528 

 556 

1 588 

 13 

60 304 

75 467 

 275 

14 175 

1 028 

2 654 

1 300 

1 727 

 174 

 651 

19 921 

 198 

 908 

 704 

 222 

 159 

1 678 

3 673 

 360 

 545 

 49 

 412 

 66 

 174 

35 576 

82 421 

16 151 

25 870 

 613 

24 398 

3 514 

 218 

1 101 

2 248 

4 704 

 22 

161 260 

196 837 

 309 

32 742 

3 218 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Programme 

< 2011 

2011 

2012 

2013 

2014 

2015 

2016 

2017 

Total 

EUR million 

Annual accounts of the European Union 2017 

Fisheries Partnership Agreements (SFPAs) and 
Fisheries Management Organisations (RFMOs) 

Environment and climate action (LIFE) 

Decentralised agencies 

Other actions and measures 

Pilot projects and preparatory actions 

Specific Actions 

Total MFF Heading 2 

3 

Asylum, Migration and Integration Fund (AMF) 

Consumer 

Creative Europe 

Emergency Support within the Union (IES) 

Internal Security Fund 

IT systems 

Justice 

Rights, Equality and Citizenship 

Union Civil protection Mechanism 

Europe for Citizens 

Food and feed 

Health 

Decentralised agencies 

Pilot projects and preparatory actions 

Specific Actions 

Total MFF Heading 3 

4 

Pre-accession assistance (IPA II) 

Macro-financial Assistance (MFA) 

Guarantee Fund for External Actions 

Union Civil Protection Mechanism 

EU Aid Volunteers initiative (EUAV) 

Fund for Sustainable Development (EFSD) 

European Neighbourhood Instrument (ENI) 

Development Cooperation Instrument (DCI) 

Partnership Instrument (PI) 

Democracy and Human Rights (EIDHR) 

Stability and Peace (IcSP) 

Humanitarian aid 

Common Foreign and Security Policy (CFSP) 

Nuclear Safety Cooperation (INSC) 

Decentralised agencies 

Other actions and programmes 

Pilot projects and preparatory actions 

– 

 108 

– 

– 

– 

– 

 227 

 14 

– 

 0 

– 

 9 

 0 

 0 

 0 

– 

 0 

 15 

 1 

– 

 0 

– 

 40 

 356 

– 

– 

– 

– 

– 

 381 

 229 

 0 

 4 

 10 

 26 

 4 

 9 

– 

 11 

 4 

– 

 57 

– 

– 

 0 

– 

 58 

 10 

– 

 1 

– 

 14 

 1 

 1 

 3 

– 

 0 

 0 

 3 

– 

 0 

 0 

 34 

 119 

– 

– 

– 

– 

– 

 215 

 168 

 0 

 4 

 11 

 13 

 1 

 6 

– 

 4 

 0 

– 

 100 

– 

– 

 1 

– 

 992 

 64 

 0 

 4 

– 

 28 

 0 

 4 

 3 

 0 

 0 

 3 

 6 

– 

 1 

 0 

 114 

 622 

– 

– 

– 

– 

– 

 735 

 756 

 17 

 12 

 41 

 14 

 14 

 11 

– 

 9 

 0 

– 

 63 

– 

– 

 1 

– 

 76 

 19 

 0 

 1 

– 

 43 

 0 

 2 

 4 

 0 

– 

 0 

 3 

– 

 1 

 0 

 74 

 154 

– 

– 

– 

– 

– 

 441 

 359 

 20 

 6 

 24 

 13 

 17 

 10 

– 

 7 

 2 

155 

– 

 180 

– 

– 

 5 

 0 

– 

 258 

– 

– 

 1 

 0 

 496 

5 470 

 6 

 1 

 8 

– 

 14 

 6 

 7 

 7 

 3 

 0 

 11 

 11 

– 

 3 

 0 

 77 

 686 

– 

– 

 2 

 7 

– 

 794 

 943 

 59 

 34 

 64 

 8 

 34 

 16 

– 

 20 

 1 

 67 

 4 

 17 

– 

 109 

 2 

 9 

 9 

 6 

 1 

 23 

 23 

 1 

 5 

 0 

 278 

1 225 

– 

– 

 3 

 4 

– 

1 252 

1 397 

 66 

 61 

 103 

 19 

 32 

 17 

– 

 27 

 5 

 9 

 321 

– 

 6 

 6 

– 

14 588 

 896 

 13 

 56 

 31 

 485 

 6 

 21 

 26 

 13 

 6 

 55 

 32 

 14 

 5 

 10 

1 669 

1 773 

 0 

– 

 3 

 2 

– 

1 666 

1 879 

 87 

 108 

 138 

 253 

 27 

 24 

– 

 32 

 1 

 12 

 477 

 3 

– 

 7 

– 

15 977 

1 373 

 22 

 105 

 59 

 718 

 32 

 46 

 63 

 22 

 13 

 208 

 54 

 117 

 8 

 66 

2 908 

1 963 

 40 

– 

 10 

 5 

 275 

2 178 

2 911 

 126 

 140 

 233 

 553 

 115 

 29 

– 

 45 

 8 

 21 

1 564 

 3 

 6 

 20 

 0 

37 883 

2 447 

 41 

 193 

 90 

1 420 

 47 

 90 

 115 

 44 

 22 

 316 

 133 

 132 

 24 

 77 

5 194 

6 899 

 40 

– 

 18 

 18 

 275 

7 662 

8 643 

 376 

 370 

 623 

 899 

 243 

 122 

– 

 154 

 22 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Union 2017 

Programme 

< 2011 

2011 

2012 

2013 

2014 

2015 

2016 

2017 

Total 

EUR million 

Specific Actions 

Total MFF Heading 4 

5 

Pensions 

European schools 

Decentralised agencies 

Pilot projects and preparatory actions 

Commission administrative expenditure 

Administrative expenditure of Other Institutions 

Total MFF Heading 5 

6 

Compensations 

Total MFF Heading 6 

8 

Negative reserve 

Deficit carried over 

Total MFF Heading 8 

9 

Emergency Aid Reserve (EAR) 

European Globalisation Adjustment Fund (EGF) 

European Union Solidarity Fund (EUSF) 

Total MFF Heading 9 

Total 

 0 

1 036 

 0 

 543 

 2 

1 054 

 1 

2 232 

 5 

2 675 

 16 

4 226 

 37 

6 030 

– 

– 

– 

– 

– 

0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

0 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

0 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 0 

0 

 0 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 1 

 1 

 3 

 4 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 51 

8 682 

– 

 0 

– 

 4 

 353 

 505 

 863 

– 

– 

– 

– 

– 

– 

 0 

– 

 0 

 113 

26 478 

– 

 0 

– 

 6 

 354 

 507 

 867 

– 

– 

– 

– 

– 

– 

 0 

– 

 0 

2 878 

1 166 

2 668 

16 893 

9 928 

51 779 

78 050 

103 896 

267 258 

156 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.

 IMPLEMENTATION OF THE BUDGET BY INSTITUTION 

Annual accounts of the European Union 2017 

5.1.  IMPLEMENTATION OF BUDGET REVENUE  

Income appropriations 

Entitlements established 

Institution 

Initial 
adopted 
budget 

Final 
adopted 
budget 

Current 
year 

Carried 
over 

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 
Total 

 159 
 52 

 159 
 52 

 207 
 79 

134 139 
 54 
 20 
 11 

126 419 
 54 
 20 
 11 

140 350 
 52 
 21 
 16 

 9 
 1 
 1 

 44 

 9 
 1 
 1 

 12 
 1 
 1 

 44 

 282 

 21 
 1 

6 883 
 0 
 0 
 0 

 0 
 0 
 0 

 1 

Revenue 

On 
entitlem. 
carried 
over 

 3 
 1 

3 177 
 0 
 0 
 0 

 0 
 0 
 0 

 1 

EUR million 

Outstanding 

Receipts 
as % of 
budget 

Total 

 207 
 78 

 130 % 
 149 % 

139 023 
 52 
 21 
 16 

 12 
 1 
 1 

 110 % 
 96 % 
 103 % 
 140 % 

 137 % 
 82 % 
 74 % 

 281 

 643 % 

 20 
 2 

8 210 
 0 
 0 
– 

– 
– 
– 

 2 

Total 

 227 
 80 

147 234 
 52 
 21 
 16 

 12 
 1 
 1 

On 
entitlem. 
of current 
year 

 204 
 77 

135 846 
 52 
 21 
 16 

 12 
 1 
 1 

 282 

 280 

134 490 

126 771 

141 020 

6 906 

147 926 

136 509 

3 182 

139 691 

 110 % 

8 235 

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 144 million  (2016: 
EUR 140 million) and the EDF of EUR 72 million (2016: EUR 44 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.   

157 

 
 
 
 
 
 
 
 
 
 
 
 
 
5.2.  IMPLEMENTATION OF COMMITMENT APPROPRIATIONS 

Annual accounts of the European Union 2017 

Institution 

Total 
appropriat. 
available 

from final 
adopted 
budget 

from carry-
overs 

from 
assigned 
revenue 

Total 

% 

from 
assigned 
revenue 

carry-overs 
by decision 

Total 

from final 
adopted 
budget 

Commitments made 

Appropriations carried over to 2018 

Appropriations lapsing 
from 
assigned 
revenue 

from carry-
overs 

1 

1 999 

 609 

2 

1 890 

 518 

0 

 0 

 49 

 24 

1 938 

 97 % 

 542 

 89 % 

 41 

 23 

0 

0 

 41 

 23 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9=7+8 

10 

11 

12 

European Parliament 
European Council and 
Council 
Commission 

Court of Justice 

Court of Auditors 
Economic and Social 
Committee 
Committee of Regions 

Ombudsman 
European Data-protection 
Supervisor 
European External Action 
Service 
Total 

172 231 

154 892 

 566 

11 551 

167 009 

4 195 

 788 

4 983 

 401 

 141 

 138 

 97 

 11 

 11 

 394 

 138 

 129 

 91 

 10 

 10 

 937 

 658 

0 

0 

0 

0 

0 

0 

0 

 1 

 0 

 4 

 4 

0 

0 

 395 

 138 

 97 % 

 98 % 

 98 % 

 133 

 96 % 

 95 

 10 

 10 

 98 % 

 94 % 

 89 % 

 1 

 0 

 0 

 0 

0 

0 

 221 

 880 

 94 % 

 55 

0 

0 

0 

0 

0 

0 

0 

 1 

 0 

 0 

 0 

0 

0 

 55 

176 576 

158 730 

 567 

11 854 

171 150 

 97 % 

4 315 

 788 

5 103 

 314 

158 

EUR million 

Total 

13=10+ 
11+12 
 20 

 44 

 240 

 5 

 3 

 5 

 2 

 1 

 1 

 2 

 323 

0 

 0 

 9 

0 

0 

0 

0 

0 

0 

0 

 9 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 20 

 44 

 231 

 5 

 3 

 5 

 2 

 1 

 1 

 2 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
       
5.3.  IMPLEMENTATION OF PAYMENT APPROPRIATIONS  

Annual accounts of the European Union 2017 

Institution 

Total approp. 
available 

from 
final 
adopted 
budget 

from 
carry- 
overs 

from 
assigned 
revenue 

Total 

% 

automatic 
carry-overs 

carry- 
overs 
by 
decision 

from 
assigned 
revenue 

Total 

from 
final 
adopted 
budget 

from 
carry- 
overs 

from 
assigned 
revenue 

Total 

Payments made 

Appropriations carried over to 2018 

Appropriations lapsing 

EUR million 

1 

2 

3 

4 

5=2+3+4 

6=5/1 

7 

8 

9 

11 

12 

13 

14 

European Parliament 
European Council and 
Council 
Commission 

Court of Justice 

Court of Auditors 
Economic and Social 
Committee 
Committee of Regions 

Ombudsman 
European Data-
protection Supervisor 
European External 
Action Service 
Total 

2 285 

1 600 

 671 

 466 

 263 

 57 

 41 

 23 

1 904 

 83 % 

 547 

 81 % 

141 230 

121 328 

1 167 

10 800 

133 294 

 94 % 

 423 

 151 

 147 

 105 

 12 

 12 

 373 

 130 

 120 

 84 

 9 

 9 

 19 

 8 

 7 

 7 

 1 

 1 

 1 

 0 

 3 

 2 

0 

0 

 393 

 138 

 93 % 

 92 % 

 131 

 89 % 

 93 

 10 

 88 % 

 87 % 

 9 

 77 % 

 290 

 52 

 862 

 21 

 8 

 9 

 8 

 1 

 1 

1 035 

 572 

 85 

 203 

 859 

 83 % 

 86 

10=7+8+
9 
 338 

 75 

 48 

 24 

 20 

 44 

0 

0 

 458 

6 359 

7 680 

 201 

0 

0 

0 

0 

0 

0 

0 

 1 

 0 

 1 

 2 

0 

0 

 22 

 8 

 10 

 9 

 1 

 1 

 77 

 163 

 5 

 3 

 5 

 2 

 1 

 1 

 2 

 22 

 6 

 54 

 3 

 1 

 1 

 1 

 0 

 0 

 11 

 99 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

– 

 0 

 42 

 50 

 255 

 8 

 4 

 6 

 3 

 1 

 1 

 13 

 384 

146 071 

124 691 

1 615 

11 073 

137 379 

 94 % 

1 338 

 458 

6 512 

8 308 

 284 

159 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

6.

  IMPLEMENTATION OF THE AGENCIES' BUDGET 

6.1.  BUDGET REVENUE  

Agency 

Agency for the Cooperation of Energy Regulators 
- ACER 
Body of European Regulators for Electronic 
Communications - BEREC 
Community Plant Variety Office - CPVO 
Consumers, Health, Agriculture and Food 
Executive Agency - CHAFEA 
Education, Audiovisual and Culture Executive 
Agency - EACEA 
European Agency for Safety and Health at Work 
- EU-OSHA 
European Agency for the Operational 
Management of Large-Scale IT Systems in the 
Area of Freedom, Security and Justice - eu-LISA 
European Asylum Support Office - EASO 
European Aviation Safety Agency - EASA 
European Banking Authority - EBA 
European Border and Coast Guard Agency - 
Frontex 
European Centre for Disease Prevention and 
Control - ECDC 
European Centre for the Development of 
Vocational Training - CEDEFOP 
European Chemicals Agency - ECHA 
European Environment Agency - EEA 
European Fisheries Control Agency - EFCA 
European Food Safety Authority - EFSA  
European Foundation for the Improvement of 
Living and Working Conditions - Eurofound 
European Global Navigation Satellite Systems 
(GNSS) Agency 
European Institute for Gender Equality - EIGE 
European Institute of Innovation and Technology 
- EIT 
European Insurance and Occupational Pensions 
Authority - EIOPA 
European Maritime Safety Agency - EMSA 
European Medicines Agency - EMA 
European Monitoring Centre for Drugs and Drug 
Addiction - EMCDDA 
European Police Office 
European Research Council Executive Agency - 
ERCEA 
European Securities and Markets Authority - 
ESMA 
European Training Foundation - ETF 
European Union Agency for Fundamental Rights 
- FRA 
European Union Agency for Law Enforcement 
Training - CEPOL 
European Union Agency for Network and 
Information Security - ENISA 

Funding 
Commission 
Policy Area 
6 

9 

17 
17 

15 

4 

18 

18 
6 
12 
18 

17 

15 

2 
7 
11 
17 
4 

6 

4 
15 

12 

6 
2 
18 

18 
8 

12 

15 
18 

18 

9 

160 

Final adopted 
budget 

EUR million 

Amounts 
received 

 13 

 4 

 16 
 10 

 50 

 15 

 68 

 79 
 192 
 38 
 281 

 58 

 18 

 112 
 70 
 17 
 81 
 20 

 28 

 8 
 303 

 24 

 79 
 331 
 16 

 118 
 47 

 42 

 20 
 23 

 9 

 11 

 13 

 4 

 16 
 10 

 50 

 15 

 70 

 80 
 153 
 39 
 294 

 59 

 18 

 114 
 68 
 17 
 81 
 20 

 704 

 8 
 304 

 24 

 78 
 317 
 16 

 120 
 47 

 42 

 20 
 23 

 10 

 11 

 
 
 
 
 Annual accounts of the European Union 2017 

Agency 

European Union Agency for Railways 
European Union Intellectual Property Office - 
EUIPO 
European Union's Judicial Cooperation Unit - 
EUROJUST 
Executive Agency for Small and Medium-sized 
Enterprises - EASME 
Fusion for Energy - F4E 
Innovation and Networks Executive Agency - 
INEA 
Research Executive Agency - REA 
Translation Centre for the Bodies of the 
European Union 
Total 

Funding 
Commission 
Policy Area 
6 
12 

33 

6 

8 
6 

8 
15 

Type of revenue 

Commission subsidy 
Fee income 
Other income 
Total 

Final adopted 
budget 

EUR million 

Amounts 
received 

 31 
 401 

 48 

 43 

 848 
 24 

 67 
 49 

 32 
 245 

 49 

 43 

 860 
 24 

 67 
 44 

3 714 

4 212 

Final adopted 
budget 
2 429 
 677 
 608 
3 714 

EUR million 
Amounts 
received 
2 429 
 664 
1 118 
4 212 

161 

 
 
 
 
 
 
 
 
 
 
EUR million 

Payment appropriations 
Payments 
Total 
made 
appropr. 
available 
 19 

 16 

 Annual accounts of the European Union 2017 

6.2.  COMMITMENT AND PAYMENT APPROPRIATIONS BY 

AGENCY  

Agency 

Agency for the Cooperation of Energy 
Regulators - ACER 
Body of European Regulators for 
Electronic Communications - BEREC 
Community Plant Variety Office - CPVO 
Consumers, Health, Agriculture and 
Food Executive Agency - CHAFEA 
Education, Audiovisual and Culture 
Executive Agency - EACEA 
European Agency for Safety and Health 
at Work - EU-OSHA 
European Agency for the Operational 
Management of Large-Scale IT 
Systems in the Area of Freedom, 
Security and Justice - eu-LISA 
European Asylum Support Office - 
EASO 
European Aviation Safety Agency - 
EASA 
European Banking Authority - EBA 
European Border and Coast Guard 
Agency - Frontex 
European Centre for Disease 
Prevention and Control - ECDC 
European Centre for the Development 
of Vocational Training - CEDEFOP 
European Chemicals Agency - ECHA 
European Environment Agency - EEA 
European Fisheries Control Agency - 
EFCA 
European Food Safety Authority - EFSA  
European Foundation for the 
Improvement of Living and Working 
Conditions - Eurofound 
European Global Navigation Satellite 
Systems (GNSS) Agency 
European Institute for Gender Equality 
- EIGE 
European Institute of Innovation and 
Technology - EIT 
European Insurance and Occupational 
Pensions Authority - EIOPA 
European Maritime Safety Agency - 
EMSA 
European Medicines Agency - EMA 
European Monitoring Centre for Drugs 
and Drug Addiction - EMCDDA 
European Police Office 
European Research Council Executive 
Agency - ERCEA 
European Securities and Markets 
Authority - ESMA 
European Training Foundation - ETF 
European Union Agency for 
Fundamental Rights - FRA 
European Union Agency for Law 

Commitment appropriations 
Commitm. 
made 

Total 
appropr. 
available 

 13 

 4 

 19 
 10 

 50 

 16 

 13 

 4 

 17 
 9 

 49 

 15 

 158 

 155 

 91 

 227 

 38 
 310 

 59 

 18 

 112 
 90 
 18 

 80 
 21 

 86 

 160 

 37 
 297 

 58 

 18 

 109 
 74 
 17 

 80 
 20 

 5 

 17 
 11 

 55 

 20 

 78 

 87 

 236 

 41 
 384 

 70 

 19 

 126 
 95 
 19 

 90 
 24 

3 744 

1 895 

1 192 

 8 

 289 

 24 

 91 

 302 
 16 

 125 
 47 

 45 

 20 
 23 

 10 

 10 

 308 

 26 

 94 

 374 
 17 

 139 
 50 

 50 

 21 
 29 

 12 

 8 

 317 

 24 

 101 

 331 
 17 

 129 
 47 

 46 

 20 
 23 

 11 

162 

 4 

 15 
 8 

 48 

 15 

 67 

 75 

 147 

 36 
 264 

 58 

 17 

 110 
 56 
 14 

 83 
 20 

 668 

 8 

 306 

 23 

 72 

 292 
 16 

 119 
 47 

 44 

 20 
 22 

 10 

 
 
 
 
 
 
 Annual accounts of the European Union 2017 

Agency 

Enforcement Training - CEPOL 
European Union Agency for Network 
and Information Security - ENISA 
European Union Agency for Railways 
European Union Intellectual Property 
Office - EUIPO 
European Union's Judicial Cooperation 
Unit - EUROJUST 
Executive Agency for Small and 
Medium-sized Enterprises - EASME 
Fusion for Energy - F4E 
Innovation and Networks Executive 
Agency - INEA 
Research Executive Agency - REA 
Translation Centre for the Bodies of 
the European Union 
Total 

Commitment appropriations 
Commitm. 
made 

Total 
appropr. 
available 

Payment appropriations 
Payments 
Total 
made 
appropr. 
available 

EUR million 

 11 

 32 
 417 

 50 

 43 

 879 
 24 

 67 
 49 

 11 

 31 
 236 

 49 

 42 

 879 
 24 

 67 
 46 

 12 

 34 
 437 

 58 

 47 

 869 
 25 

 70 
 53 

 11 

 29 
 230 

 49 

 40 

 835 
 24 

 66 
 46 

7 726 

5 501 

5 323 

4 033 

Type 

Administrative expenses 
Operational expenses 
Operational expenses for specific 
projects 
Staff 
Total 

Commitment appropriations 

Total 
appropriat. 
available 

Commitments 
made 

 364 
6 227 
 3 

1 133 
7 726 

 350 
4 045 
 2 

1 104 
5 501 

EUR million 

Payment appropriations 
Payments 
Total 
made 
appropriat. 
available 
 436 
3 737 
 3 

 339 
2 593 
 2 

1 148 
5 323 

1 099 
4 033 

163 

 
 
 
 
 
 
 
 
 
 
 
 
 Annual accounts of the European Union 2017 

GLOSSARY  

Actuarial assumptions 

Assumptions used to calculate the costs of future events that affect the pension liability. 

Actuarial gains and losses 

For  a  defined  benefit  scheme,  the  changes  in  actuarial  deficits  or  surpluses.  They  arise  as  a  result  of 
differences between the previous actuarial assumptions and what has actually occurred and due to effects 
of changes in actuarial assumptions. 

Administrative appropriations 

Administrative  appropriations  cover  the  running  costs  of  the  Institutions  and  entities  (staff,  buildings, 
office equipment). 

Adopted budget 

Draft budget becomes the adopted budget as soon as it is approved by the Budgetary Authority. 

Amending budget 

Decision adopted during the budget year to amend (increase, decrease, transfer) aspects of the adopted 
budget of that year. 

Amounts to be called from Member States 

These  represent  expenses  incurred  during  the  reporting  period  that  will  need  to  be  funded  by  future 
budgets,  i.e.  by  the  EU  Member  States.  This  is  a  consequence  of  the  co-existence  of  accruals  based 
financial statements and a cash based budget. 

Annual Activity Report (AAR) 

Annual Activity Reports indicate the results of operations by reference to objectives set, associated risks 
and the form of internal control, inter alia. Since the 2001 budget exercise for the Commission and since 
2003 for all European Union (EU) institutions, the ‘authorising officer by delegation’ must submit an AAR 
to  his/her  institution  on  the  performance  of  his/her  duties,  together  with  financial  and  management 
information. 

Appropriations 

Budget  funding.  The  budget  forecasts  both  commitments  and  payments  (cash  or  bank  transfers  to  the 
beneficiaries). Appropriations for commitments and payments  often differ (differentiated appropriations) 
because multi annual programmes and projects are usually fully committed in the year they are decided 
and  are  paid  over  the  years  as  the  implementation  of  the  programme  and  project  progresses.  Non-
differentiated  appropriations  apply  to  administrative  expenditure,  for  agricultural  market  support  and 
direct payments and commitment appropriations equal payment appropriations. 

Assigned revenue 

Dedicated  revenue  received  to  finance  specific  items  of  expenditure.  The  main  source  of  external 
assigned  revenue  is  financial  contributions  from  third  countries  to  programmes  financed  by  the  Union. 
The main source of internal assigned revenue is revenue from third parties in respect of goods, services 
or  work  supplied  at  their  request;  revenue  arising  from  the  repayment  of  amounts  wrongly  paid  and 
revenue from the sale of publications and films, including those on an electronic medium. 

164 

 
  
 
Available for sale financial assets 

 Annual accounts of the European Union 2017 

All  financial  assets  (except  derivatives)  that  are  according  to  International  Public  Sector  Accounting 
Standards  measured  at  fair  value  and  for  which  the  changes  in  fair  value  are  to  be  recognised  in  a 
reserve in net assets until derecognition (or impairment). 

Budget line 

As  far  as  the  budget  structure  is  concerned,  revenue  and  expenditure  are  shown  in  the  budget  in 
accordance with a binding nomenclature which reflects the nature and purpose of each item, as imposed 
by  the  budgetary  authority.  The  individual  headings  (title,  chapter,  article  or  line)  provide  a  formal 
description of the nomenclature. 

Cancellation of appropriations 

Unused appropriations that may no longer be used. 

Carryover of appropriations 

Exception to the principle of annuality in so far as appropriations that could not be used in a given budget 
year may, under strict conditions, be exceptionally carried over for use during the following year. 

Commitment 

Legal  pledge  to  provide  finance  subject  to  certain  conditions.  The  EU  commits  itself  to  reimbursing  its 
share  of  the  costs  of  an  EU  funded  project.  Today’s  commitments  are  tomorrow’s  payments.  Today’s 
payments are yesterday’s commitments. 

Commitment appropriation 

Commitment  appropriations 
cover 
agreements/decisions) that could be signed in the current financial year. 

cost  of 

total 

the 

legal  obligations 

(contracts,  grant 

Current service cost 

The increase in scheme liabilities arising from service in the current financial year. 

Decommitment 

An act whereby a previous commitment (or part of it) is cancelled. 

Defined benefit scheme 

A pension or other retirement benefit scheme where the scheme rules define the benefits independently 
of the contributions payable, and the benefits are not directly related to the investments of the scheme. 
The scheme may be funded or unfunded. 

Derivatives 

Financial  instruments  whose  value  is  linked  to  changes  in  the  value  of  another  financial  instrument,  an 
indicator or a commodity. In contrast to the holder of a primary financial instrument (e.g. a government 
bond), who has an unqualified right to receive cash (or some other economic benefit) in the future, the 
holder  of  a  derivative  has  only  a  qualified  right  to  receive  such a  benefit. An  example  of a  derivative  is 
currency forward contract. 

Direct management 

Mode  of  budget  implementation.  Under  direct  management  the  budget  is  implemented  directly  by 
Commission services, Executive Agencies or Trust Funds. 

Discount rate 

The rate used to adjust for the time  value of money. Discounting is a technique used to compare  costs 
and benefits that occur in different time periods. 

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Effective interest rate 

 Annual accounts of the European Union 2017 

The rate that discounts estimated future cash receipts or payments over the expected life of the financial 
asset or financial liability to the net carrying amount of the asset or liability.  

Financial assets or liabilities at fair value through surplus or deficit 

All  financial  assets  or  liabilities  that  are  according  to  International  Public  Sector  Accounting  Standards 
measured at fair value and for which the changes in fair value are to be recognised in surplus or deficit of 
the period (i.e. derivatives). 

Financial correction 

The purpose of financial corrections is to protect the EU budget from the burden of erroneous or irregular 
expenditure.  For  expenditure  under  shared  management,  the  task  of  recovering  incorrectly  made 
payments is primarily the responsibility of the Member State. 

A 'confirmed' financial correction has been accepted by the Member State concerned. A 'decided' financial 
correction has been adopted by a Commission decision and is always a net correction, where the Member 
State is required to reimburse irregular funds to the EU budget, thus leading to a definitive reduction of 
the allocated envelope to the  Member State concerned. Confirmed and decided financial corrections  are 
reported in this publication as one category. 

An 'implemented' financial correction has corrected the observed irregularity. 

Indirect management 

Mode  of  budget  implementation.  Under  indirect  management  the  Commission  confers  tasks  of  budget 
implementation to bodies of EU law or national law. 

Interruptions and suspensions 

If the Commission finds, based on its own work or the information reported  by audit authorities, that a 
Member State has failed to remedy serious shortcomings in the management and control systems and/or 
to  correct  irregular  expenditure  which  had  been  declared  and  certified,  it  may  interrupt  or  suspend 
payments. 

Irregularity 

An irregularity is an act which does not comply with EU rules and which has a potentially negative impact 
on EU financial interests, but which may be the result of genuine errors committed either by beneficiaries 
claiming  funds  or  by  the  authorities  responsible  for  making  payments.  If  an  irregularity  is  committed 
deliberately, it constitutes fraud. 

Lapsing appropriations 

Unused appropriations to be cancelled at the end of the financial year. Lapsing means the cancellation of 
all  or  part  of  the  authorisation  to  make  expenditures  and/or  incur  liabilities  which  is  represented  by  an 
appropriation.  Only  for  Joint  Undertakings,  as  specified  in  theirs  Financial  Rules,  any  unused 
appropriations  may  be  entered  in  the  estimate  of  revenue  and  expenditure  of  up  to  the  following  three 
financial years (the so-called "N+3" rule). Hence, lapsing appropriations for JUs could be reactivated until 
financial year "N+3" 

Own resources 

Represent  the  main  funding  for  the  EU  institutions  and  bodies  and  are  defined  in  the  own  resources 
regulation 609/2014. Own resources comprise GNI-based resources, VAT-based resources and traditional 
own resources. 

Payment appropriations 

Payment  appropriations  cover  expenditure  due  in  the  current  year,  arising  from  legal  commitments 
entered in the current year and/or earlier years. 

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 Annual accounts of the European Union 2017 

A payment intended to provide the beneficiary with a float. It may be split into a number of payments in 
accordance with the provisions of the underlying contract, decision, agreement or the basic legal act. The 
float or advance is either used for the purpose for which it was provided during the period defined in the 
agreement or it is repaid. 

Preventive measure 

Preventive measures, which are at the Commission’s disposal to protect the EU budget when it is aware 
of  potential  deficiencies,  include  suspensions  and  interruptions  of  payments  from  the  EU  budget  to  the 
operational programme. 

Reste à Liquider (RAL) 

Represents the amount where a budgetary commitment has been made but the subsequent payment is 
not yet done. They represent payment obligations for the EU for future years and stem directly from the 
existence  of  multi  annual  programmes  and  the  dissociation  between  commitment  and  payment 
appropriations. 

Shared management 

Mode of budget implementation. Under shared management budget implementation tasks are delegated 
to Member States. About 80 % of the EU expenditure falls under this implementation mode. 

Traditional own resources 

These represent revenue  for the EU and are part  of the 'own resources' which fund the activities of the 
EU.  Traditional  own  resources  are  defined  in  the  own  resource  regulation  609/2014  and  comprise 
customs duties and sugar levies. 

Transfers (between budget lines) 

Transfers between budget lines imply the relocation of appropriations from one budget line to another, in 
the  course  of  the  financial  year,  and  thereby  they  constitute  an  exception  to  the  budgetary  principle  of 
specification. They are, however, expressly authorised by the Treaty on the Functioning of the European 
Union under the conditions laid down in the Financial Regulation (FR). The FR identifies different types of 
transfers depending on whether they are between or within budget titles, chapters, articles or headings 
and require different levels of authorisation. 

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 Annual accounts of the European Union 2017 

LIST OF ABBREVIATIONS  

AAR 

ABB 

ABM 

Annual Activity Report 

Activity Based Budgeting 

Activity Based Management 

ACER  

Agency for the Cooperation of Energy Regulators   

AMIF  

Asylum, Migration and Integration Fund 

AOD  

Authorising Officers by Delegation 

ARTEMIS  

Advanced Research & Technology for EMbedded Intelligent Systems 

ATM 

BBI 

Air Traffic Management 

Bio-Based Industries Joint Undertaking 

BEREC   

Body of European Regulators for Electronic Communications   

BIC 

BIS 

BOP 

Bio-based Industries Consortium 

Bank for International Settlements 

Balance of Payments 

BUFI Fund 

Budget Fines Fund 

CAP 

Common Agricultural Policy 

CCS LGF 

Cultural and Creative Sector Guarantee Facility 

CEDEFOP 

European Centre for the Development of Vocational Training   

CEF 

Connecting Europe Facility 

CEF DI 

Connecting Europe Facility Debt Instrument 

CEPOL   

European Union Agency for Law Enforcement Training 

CF 

Cohesion Fund 

CHAFEA 

Consumers, Health, Agriculture and Food Executive Agency   

CIP 

COM 

Competitiveness and Innovation Framework Programme 

Commission 

COSME 

Competitiveness of Enterprises and Small and Medium-sized Enterprises 

COSO   

Committee of Sponsoring Organizations of the Treadway Commission 

CPR 

Common Provisions Regulation 

CPVO    

Community Plant Variety Office 

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 Annual accounts of the European Union 2017 

D&WM 

Decommissioning and Waste Management 

EACEA 

Education, Audiovisual and Culture Executive Agency 

EAFRD 

European Agricultural Fund for Rural Development 

EAGF    

European Agricultural Guarantee Fund 

EAGGF 

European Agricultural Guidance and Guarantee Fund 

EASA 

EaSI 

European Aviation Safety Agency   

Employment and Social Innovation 

EASME   

Executive Agency for Small and Medium-sized Enterprises   

EASO 

European Asylum Support Office 

EBA 

European Banking Authority 

EBRD 

European Bank for Reconstruction and Development 

ECA 

ECB  

ECDC 

ECHA 

European Court of Auditors 

European Central Bank 

European Centre for Disease Prevention and Control   

European Chemicals Agency 

ECOFIN 

Economic and Financial Affairs Council 

ECSC    

European Coal and Steel Community 

ECSEL 

Electronic Components and Systems for European Leadership Joint Undertaking 

EDF 

EDIF 

EEA 

EEA 

EEAS 

EFCA 

EFF 

European Development Fund 

Guarantee Facility under the Western Balkan 

European Economic Area 

European Environment Agency   

European External Action Service 

European Fisheries Control Agency   

European Fisheries Fund 

EFSA  

European Food Safety Authority   

EFSD 

EFSE  

EFSF  

EFSI 

EFSM 

European Fund for Sustainable Development 

European Fund for Southeast Europe 

European Financial Stability Facility 

European Fund for Strategic Investments 

European Financial Stabilisation Mechanism 

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 Annual accounts of the European Union 2017 

EFTA  

European Free Trade Association 

EGNOS  

European Geostationary Navigation Overlay System 

EIB  

EIF  

European Investment Bank 

European Investment Fund 

EIGE  

European Institute for Gender Equality   

EIOPA  

European Insurance and Occupational Pensions Authority   

EIT  

European Institute of Innovation and Technology   

ElectriFI 

Electrification Financing Initiative  

EMA  

European Medicines Agency 

EMCDDA  

European Monitoring Centre for Drugs and Drug Addiction   

EMFF  

European Maritime and Fisheries Fund 

EMSA  

European Maritime Safety Agency   

EMU  

Economic and Monetary Union 

ENEF  

Enterprise Expansion Fund 

ENIAC  

European Nanoelectronics Initiative Advisory Council 

ENIF  

Enterprise Innovation Fund 

ENISA  

European Union Agency for Network and Information Security   

ENPI  

European Neighbourhood and Partnership Instrument 

EP  

European Parliament 

ERCEA  

European Research Council Executive Agency   

ERDF  

European Regional Development Fund 

ESA  

ESF  

ESIF  

ESM  

European Space Agency 

European Social Fund 

European Structural and Investment Funds 

European Stability Mechanism 

ESMA  

European Securities and Markets Authority 

ETF  

ETF  

EU  

European Technology Start up Facility 1998 

European Training Foundation 

European Union 

EUIPO  

European Union Intellectual Property Office   

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EU-LISA 

European  Agency  for  the  Operational  Management  of  Large-Scale  IT  Systems  in  the   
Area of Freedom, Security and Justice 

EUMETSAT  

European Organisation for the Exploitation of Meteorological Satellites 

EU-OSHA  

European Agency for Safety and Health at Work   

Euratom 

European Atomic Energy Community 

Eurofound  

European Foundation for the Improvement of Living and Working Conditions  

EUROJUST  

European Union's Judicial Cooperation Unit   

EUROPOL  

European Police Office  

F4E  

FCH  

FIFG 

FIFO 

FP7  

FR  

FRA 

Fusion for Energy 

Fuel Cells Hydrogen Joint Undertaking 

Financial Instrument for Fisheries Guidance 

First-in, First-out 

7th Research Framework Programme for Research and Technological Development 

Financial Regulation 

European Union Agency for Fundamental Rights 

Frontex  

European Border and Coast Guard Agency 

FSDA    

Financial Statement Discussion and Analysis 

GDP 

Gross Domestic Product 

GMES  

Global Monitoring for Environment and Security 

GNI  

Gross National Income 

GNSS  

Global Navigation Satellite Systems 

H2020  

Horizon 2020 

ICSLT  

International Civil Servants Life Table 

IFRP  

Integrated Financial Reporting Package 

IIW  

IMF  

IMI  

Infrastructure and Innovation Window 

International Monetary Fund 

Innovative Medicines Initiative Joint Undertaking 

INEA 

Innovation and Networks Executive Agency 

IPA II 

Instrument for Pre-accession Assistance 

IPSAS 

International Public Sector Accounting Standards 

ISF 

Internal Security Fund 

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IT  

Information Technology 

ITER  

International Thermonuclear Experimental Reactor 

JAP  

JRC  

JU  

Joint Action Plan 

Joint Research Centre 

Joint Undertaking 

LGTT  

Loan Guarantee Instrument for TEN-T projects 

MAP  

MEP  

MFA  

MFF  

Multi Annual Program - Medium Enterprise Financial Inclusion Programme 

Member of the European Parliament 

Macro Financial Assistance 

Multiannual Financial Framework 

MSME 

Micro, Small and Medium Enterprise 

NEETs  

Not in Education, Employment or Training 

ORD  

PBI  

Own Resources Decision 

Project Bond Initiative 

PF4EE  

Private Finance for Energy Efficiency Instrument 

PGF  

PMF   

PPP  

Participants Guarantee Fund 

European Progress Microfinance Facility 

Public-Private Partnership 

PSEO  

Pension Scheme of European Officials  

R&I  

RAL 

REA  

Research and Innovation 

"Reste à Liquider" (Outstanding Commitments) 

Research Executive Agency   

RSFF  

Risk Sharing Finance Facility 

RTD  

S&P  

Research, Technological Development and Demonstration 

Standard & Poor's Financial Services LLC 

SANAD  

MENA Fund for Micro-, Small and Medium Enterprises 

SAPARD  

Special Accession Programme for Agriculture and Rural Development  

SEMED  

Southern and Eastern Mediterranean Micro, Small and Middle sized Enterprises Financial 
Inclusion Programme 

SESAR  

Single European Sky ATM Research Joint Undertaking 

SIUGI  

SME Initiative Uncapped Guarantee Instrument 

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SME 

Small and Medium-sized Enterprise(s) 

SMEW  

SME Window (Small and Medium-sized Enterprises Window) 

TFEU  

Treaty on the Functioning of the European Union 

TOR  

Traditional Own Resources 

TRDI  

Temporary Rural Development Instrument 

VAT  

YEI  

Value Added Tax 

Youth Employment Initiative 

173