REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the follow-up to the discharge for the 2018 financial year (Summary)
Date: 2020-07-07
Institutions: Directorate-General for Budget, European Commission
Subjects: EU control, EU expenditure, audit, budgetary control, budgetary discharge, epidemic, financial year, general budget (EU), infectious disease, multiannual financial framework

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 7.7.2020  COM(2020) 311 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the follow-up to the discharge for the 2018 financial year (Summary)  
 
 
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL ON 
THE FOLLOW-UP TO THE DISCHARGE FOR THE FINANCIAL YEAR 2018 

 1.

INTRODUCTION 

The  2018  discharge  procedure  was  notable  in  several  respects.  It  was  the  first 
discharge  procedure  in  the  2020-2024  legislature  with  a  new  composition  of  the 
European Parliament  and its Budgetary Control Committee, and discharge hearings 
involved Members of the Commission from both the Juncker and the von der Leyen 
Commissions. Moreover, negotiations on the next Multiannual Financial Framework 
offered  a  unique  opportunity  to  feed  lessons  learned  about  the  past  from  the 
discharge proceedings into the process of improving the future.  

Proceedings  in  the  European  Parliament’s  Budgetary  Control  Committee  and  the 
Council were completed before the COVID-19 crisis and led to significant changes 
in the working environments of the EU institutions. The crisis did however delay the 
plenary  vote  from  early  April  to  mid-May.  Nevertheless,  the  vote  confirmed  the 
position  of  the  Budgetary  Control  Committee  with  the  plenary  showing  clear 
support for granting discharge to the Commission, thereby acknowledging that 
taxpayers’  money  in  the  EU  budget  was  overall  spent  well  and  in  a  proper 
manner. 

The  Commission  shares  the  main  objectives  expressed  by  the  European 
Parliament and the Council in the 2018 discharge procedure: 

 o EU  funds  should  be  spent  with  the  aim  of  achieving  the  objectives  of 
spending programmes. Objectives are already set for the 2014-2020 period 
but may have to be adjusted for some programmes in view of the COVID-19 
crisis.  For  the  2021-2027  spending  programmes,  objectives  should  be 
reviewed  to  reflect  the  new  political  priorities  and  ambitions,  reflecting  the 
impact of the COVID-19 crisis.  

 o EU  funds  should be  spent  in  compliance  with  the  rules, i.e. payments to 
beneficiaries  should  be  made  in  a  legal  and  regular  manner.  In  cooperation 
with the bodies implementing the EU budget on the ground, the Commission 
will  continue  doing  its  utmost  to  strike  an  appropriate  balance  between 
checks  before  and  after  payments  are  made  to  beneficiaries  –  taking  into 
account  the  new  risk  environment  resulting  from  the  COVID-19  crisis.  The 
aim is to achieve reasonable assurance that funds are spent properly without 
creating  unnecessary  administrative  burdens  for  beneficiaries,  or  for  the 
bodies implementing the EU budget, and to avoid high costs. 

these 

its  Integrated  Financial  and 
The  Commission  reports  on 
Accountability  Reporting.  Despite  the  challenges  stemming  from  the  COVID-19 
crisis, the  Commission  will  finalise  its  reporting  for  the  financial  year  2019  in 
respect  of  the  deadlines  set  in  the  Financial  Regulation,  which  will  allow  the 
political scrutiny of the Commission’s reporting to start without delay.  

issues 

in 

The  majority  (75%)  of  EU  funds  are  spent  in  Member  States  through  so-called 
shared management. In the 2018 discharge procedure, the European Parliament 
and to a certain extent also the Council focused on several questions relating to 
shared management such as: 

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 o How  can  the  Commission  help  Member  States  who  experience  problems  spending 

EU funds in a timely manner? 

 o Is  the  Member  States’  reporting  on  control  results  and  on  performance  indicators 

timely and of sufficient quality? 

 o How should Member States implement the new rules on conflicts of interest, which 

entered into force with the new Financial Regulation in 2018? 

 o How  can  more  information  be  made  available  on  the  ultimate  beneficiaries  of  EU 

funds? 

These  issues  are  reflected  in  the  requests  that  the  European  Parliament  and  the 
Council  made  in  the  2018  discharge  procedure,  and  which  the  Commission  is  now 
following  up.  The  Commission  can  address  some  concerns  by  taking  action  within 
the existing rules and resources, e.g. by issuing guidance to Member States. In other 
cases,  the  Commission  is  analysing  if  changes  in  legislation  are  required  to  fully 
meet the requests made by the discharge authority, e.g. to obtain detailed information 
on beneficial owners of recipients of EU funds.  

In its 2018 discharge resolution, the European Parliament also stresses that respect 
for  fundamental  values,  including  the  rule  of  law,  is  an  essential  precondition 
for  sound  financial  management  and  effective  EU  funding.  The  Commission 
agrees that the EU budget should be spent in accordance with applicable rules, and 
mechanisms should be in place to protect the EU budget, also in case of generalised 
deficiencies as regards the rule of law in Member States. 

This  report  provides  a  summary  of  actions  taken  by  the  Commission  in 
response  to  the  main  requests  made  by  the  European  Parliament  and  the 
Council  in  the  2018  discharge  procedure.  Where  relevant,  it  also  explains  the 
challenges the Commission will face in addressing some of these concerns. When the 
2019 discharge procedure begins later in the year, the Commission will provide more 
detailed and updated information on its follow-up actions. 

The  scope  for  action  will  naturally  also  depend  on  the  outcome  of  the  ongoing 
negotiations  on  the  next  Multiannual  Financial  Framework  and  the  COVID-19 
recovery  package.  Pragmatic  and  open  cooperation  between  all  stakeholders 
involved  in  decision-making, implementation  and control of the EU  budget  will be 
essential to achieve an EU budget which supports those that need it the most, pushes 
for  investment  and  reform,  and  strengthens  the  economy  by  focusing  on  common 
priorities such as the European Green Deal and digitalisation.  

 2.

RULE OF LAW AND FUNDAMENTAL RIGHTS 

Strengthening the rule of law in the Union is, and must remain, a key objective 
for  all.  The  Commission  set  out  several  concrete  actions  for  the  short  and 
medium  term  in  July  20191 such  as  the  preparation  of  an  annual  Rule  of  Law 
Report, developing further the EU Justice Scoreboard and strengthening the dialogue 
with other EU institutions, Member States and stakeholders. The annual Rule of Law 
Report  is  one  of  the  major  initiatives  in  the  Commission’s  Work  Programme  for 
2020 and will be published for the first time in the autumn of 2020.  

1 COM(2019)343 final Strengthening the rule of law within the Union - a blueprint for action.  

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Actions will have to be developed further as a key work strand for the Commission, 
the European Parliament and the Council.  

Already  in  2018,  as  part  of  the  legislative  package  underlying  the  Multiannual 
Financial  Framework  2021-2027,  the  Commission  put  forward  a  proposal  on  the 
protection  of  the  Union’s  budget  in  the  case  of  generalised  deficiencies  as 
regards  the  rule  of  law  in  Member  States 2.  In  its  proposal,  the  Commission 
underlines  that  the  Union  is  a  community  of  law  and  its  values  constitute  the  very 
basis of its existence. They permeate its entire legal and institutional structure and all 
its  policies  and  programmes.  Respect  for  these  values  must  be  ensured  therefore 
throughout  all  Union  policies.  This  includes  the  EU  budget,  where  respect  for 
fundamental values is an essential precondition for sound financial management and 
effective  EU  funding.  The  Commission  welcomes  the  European  Parliament’s 
support for its proposal. 

The  Commission  also  welcomes  the  European  Parliament’s  support  for  the 
European  Public  Prosecutor’s  Office  (EPPO),  which  marks  a  fundamental 
development in the protection of the Union’s financial interests. The EPPO will have 
the power to investigate and prosecute criminal cases affecting the EU budget, such 
as corruption or fraud with EU funds, or cross-border VAT fraud. While being aware 
of concerns for the financing of the EPPO, the Commission recalls that the existing 
budget reflects extensive discussions with the budgetary authority.  

In  the  domain  of  the  Common  Agricultural  Policy,  the  European  Parliament 
requested the Commission to develop – together with the Member States – effective 
legal  instruments to respect the rule of law in relation to alleged cases of  so-called 
‘land-grabbing’. It is first and foremost for the relevant Member States’ authorities 
to act on issues concerning land ownership. However, whenever there are allegations 
of  particular  malpractices  in  individual  Member  States,  the  Commission  looks  into 
these cases very carefully, as it has already done or is doing following allegations in 
several  Member  States,  notably  Slovakia,  the  Czech  Republic  and  Hungary.  The 
situation  can  be  improved  if  the  Commission’s  proposal  on  the  rule  of  law  for  the 
next  Multiannual  Financial  Framework  is  adopted  by  the  European  Parliament  and 
Council. 

In the domain of external aid, the European Parliament insisted that the Commission 
ensure that the delivery  of external aid is subject to the  rule of law and respect 
for human  rights in recipient countries. The EU is indeed firmly committed to the 
fundamental values of human rights, democracy and rule of law, which are essential 
elements  of  all  the  EU’s  partnerships  and  cooperation  agreements  with  third 
countries.  Following  the  Consensus  for  Development,  the  EU  and  the  EU  Member 
States are committed to the application of a rights-based approach, encompassing all 
human  rights,  to  all  development  cooperation.  The  EU  can  work  with  and  through 
governments,  in  which  case  a  financing  agreement  is  signed.  Such  agreements 
include  a  clause  that  enables  the  Commission  to  suspend  or  to  terminate  the 
agreement  in  case  of  breach  of  an  obligation  relating  to  respect  for  human  rights, 
democratic  principles  and  the  rule  of  law.  During  implementation,  the  EU  aims  at 
close coordination in the assessment and monitoring of fundamental values, referring 
to the analysis and priorities of the Human Rights country strategy and feeding this 
follow-up into its political dialogue with the partner country. Similar clauses are also 
included in agreements signed with international organisations, when the EU works 

2 COM(2018) 324 final. 

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with  and  through  them  to  implement  external  assistance.  Finally,  contractual  and 
financial procedures also seek to ensure value for money and prevent rent capture or 
embezzlement by specific interest groups.    

The  European  Parliament  expressed  concern  about  media  reports  from  projects  in 
Eritrea.  The  Commission  firmly  rejects  allegations,  is  committed  to  close 
monitoring of ongoing projects and will report back to the budgetary authority on its 
engagement  in  the  country.  On  the  specific  project Reconnecting  Eritrea  and 
Ethiopia  through  rehabilitation  of  the  main  arterial  roads  in  Eritrea  –  so-
called ‘Roads  Project’,  the  EU  Delegation  ensures  regular  follow-up,  including 
through several field missions with UNOPS, one together with EU Heads of Mission 
in  February  2020. The  implementation  is  in  line  with  EU  standards  on  project  and 
financial management.  

In response to the European Parliament’s concerns for vulnerable  migrants  in  the 
Hotspots, the Commission points out that it receives, on a regular basis, reports on 
the  activities  of  the  implementing  partners  on  the  ground  that  benefit  from  EU 
funding. The Commission itself also monitors the implementation of the EU-funded 
actions on the ground and participates in technical meetings to monitor the progress 
of  the  implementation  of  the  agreed  strategies  with  the  authorities.  Projects  funded 
by the EU in Greece include the outreach activities, the identification and provision 
of  protection  services  to  vulnerable  groups,  accommodation  and  legal  aid,  in 
particular  to vulnerable  persons, e.g. sexual  and  gender-based violence victims and 
unaccompanied minors. 

 3.

MEASURING PERFORMANCE OF EU SPENDING PROGRAMMES 

The EU budget is primarily an investment budget. Amounting to roughly 1% of EU 
gross  national  income,  and  representing  around  2%  of  all  EU  public  spending,  it 
aims to complement national budgets and to implement commonly agreed priorities. 
Unlike  national  budgets,  the  EU  budget  is  mainly  focused  on  supporting  strategic 
investments  over  the  medium  to  longer  term,  and  on  using  its  leverage  to  catalyse 
investment from other public and private sources. 

The  European  Parliament  notes  that  measuring  the  achievement  of  Union 
priorities,  policies  and  programmes  is  challenging  but  effective  performance 
monitoring  is  essential  to  grasp  the  situation,  identify  emerging  issues,  and  take 
corrective actions when the objectives are not met or in cases where the outcomes of 
one Union policy could have an adverse impact on achieving the set goals of another 
policy.  The  Commission  concurs  and  appreciates  the  European  Parliament  and  the 
Council’s support for further improving performance frameworks and reporting.   

The  EU  budget  already  has  an  advanced  framework  for  measuring  and 
reporting  on  performance  and  evaluation,  with  clear  objectives  and  indicators. 
This has been confirmed by the OECD.  

The  Commission  uses  a  single  set  of  objectives  and  indicators  to  measure  the 
performance of the EU budget. These objectives, both general and specific, and the 
related  indicators  are  defined  in  the  legal  bases  of  the  programmes.  The 
comprehensive reporting has been progressively improved to provide a more focused 
and  structured  snapshot  on  the  progress  towards  achieving  the  programme’s 
objectives.  This  information,  combined  with  other  sources  both  of  qualitative  and 
quantitative nature, allows performance to be monitored over time. In turn, at a later 
stage an assessment can be made of the extent to which the programme achieved its 
agreed objectives, using both the more annual monitoring and information provided 

4 

 
 
by  programme  evaluations.  This  combination  of  qualitative  and  quantitative 
information  also  makes  it  possible  to  take  account  of  new  developments  as  they 
occur, such as the response to the COVID-19 outbreak. 

The Commission remains committed to continuously improving its annual reporting. 
In  order  to  sharpen  the  focus  on  the  progress  and  achievement  of  objectives,  the 
Commission  has  identified  a  set  of  core  indicators  for  annual  reporting  that  have 
been  included  in  the  proposals  for  the  next  Multiannual  Financial  Framework.  All 
indicators  established  for  financial  programmes  were  critically  reviewed  as  part  of 
the  Spending  Review  leading  up  to  the  Commission’s  proposals  for  the  future 
Multiannual  Financial  Framework.  In  line  with  the  request  from  the  European 
Parliament,  this  resulted  in  proposals  for  a  smaller  number  of  higher  quality 
indicators  of  programme  performance.  The  monitoring  and  evaluation  framework 
will also be strengthened for the future financial programmes 

A  well  performing  budget  has  to  be  able  to  react  to  unforeseen  events.  The 
ongoing response to the COVID-19 pandemic has shown that the EU budget can 
indeed  be  mobilised  quickly  and  flexibly  as  part  of  a  coordinated  European 
response  to  crises,  for  example  through  the  Coronavirus  Response  Investment 
Initiatives,  the  reactivation  of  the  Emergency  Support  Instrument  (ESI)  and  the 
extension  of  the  scope  of  the  EU  Solidarity  Fund  (EUSF).  In  the  field  of  external 
actions, as part of the Team Europe response to COVID-19, the EU budget has been 
quickly redirected to provide support where it is most needed in partner countries in 
support of humanitarian actions and health and socio-economic needs. As part of the 
European  recovery  plan,  the  Commission  proposed  on  27  May  a  reinforced 
Multiannual  Financial  Framework  for  2021-2027  together  with  a  new  Recovery 
Instrument  -  Next  Generation  EU  -  to  boost  and  frontload  funding,  as  part  of  an 
ambitious and comprehensive plan for European recovery that is rooted in solidarity 
and  inspired  by  our  common  principles  and  values.  These  proposals  support  crisis 
repair  and  provide  a  framework  for  long-term  investment  in  the  Union’s  resilience 
and the green and digital transitions. Reinforcing the flexibility of the EU budget and 
investing  in  crisis  preparedness  and  resilience  will  be  a  priority  for  the  future 
financial framework.  

 4.

RESPECTING RULES 

The  Commission  implements  the  EU  budget  in  a  complex  environment, with a 
wide  variety  of  partners.  In  this  context,  the  Commission  aims  to  ensure  that 
financial  management  systems  and  financial  transactions  comply  with  legal  and 
contractual  rules.  To  this  end,  it  carries  out  controls  and  audits  for  the  funds  it 
manages  directly.  Implementing  partners  are  obliged  to  set  up  management  and 
control systems – and the Commission will assess if these systems are in place and 
functioning.  

This  detailed  ‘bottom-up’  assessment  allows  the  Commission  to  detect  and 
address  weaknesses  in  controls  and/or  data  in  a  timely  manner.  Where 
appropriate,  the  Commission  decides  on  financial  corrections  and  recoveries. 
Weaknesses  may  result  in  errors  that  would  otherwise  have  been    prevented.  Once 
identified, the Commission takes appropriate action to ensure that any such errors are 
corrected.  Fraud,  which  is  distinct  from  other  irregularities  due  to  its  intentional 
nature,  is  only  found  in  a  very  limited  number  of  cases.  Nevertheless,  the 
Commission  has  zero  tolerance  for  fraud  and  follows  up  such  cases  in  a  diligent 
manner. 

5 

 
 
The Commission’s aim is to effectively protect the EU budget on a multi-annual 
basis and ensure that, once a programme is closed and all controls carried out, 
the remaining risk at closure is below 2%. Controls should be solid but also cost-
effective,  fulfilling  their  intended  objectives  in  an  efficient  manner  and  at  a 
reasonable cost.  

Reflecting  its  role  as  external  auditor,  the  European  Court  of  Auditors  follows  a 
different – more ‘top-down’ – approach based on statistical sampling when annually 
assessing the regularity  of payments  to farmers,  companies, students  etc.  However, 
the approach has in recent years led to results close to those of the Commission.  

In that context, the European Court of Auditors announced its intention to rely more 
on work  done  by, for  example, the  Commission or national/regional  authorities. In 
the  2018  discharge  procedure,  both  the  European  Parliament  and  the  Council 
expressed support for this objective.  

The Commission is co-operating closely with the European Court of Auditors to 
find the best way forward, taking into account lessons learned in a pilot project for 
Cohesion  expenditure.  The  Commission  indeed  fully  supports  the  Single  Audit 
principle and will continue working closely with Member States in accordance with 
this principle. In addition, on the basis of the control strategies applied to the various 
spending areas, the Commission will continue to apply a consistent methodology for 
its own calculation of error rates and to streamline its accountability reporting. 

The  European  Parliament  put  particular  emphasis  on  the  rules  on  conflicts  of 
interest.  The Commission takes avoidance and management of conflicts of interest 
very seriously. Since the entry into force of the revised Financial Regulation in 2018, 
the provisions on conflicts of interest apply explicitly to all management modes and 
to  all  financial  actors,  including  national  authorities  at  any  level,  involved  in  EU 
budget implementation.  

The Commission diligently follows up on information or complaints with respect to 
alleged  conflicts  of  interest.  For  example,  when  the  Commission  received  a 
complaint  concerning  an  alleged  conflict  of  interest  in  the  Czech  Republic,  the 
Commission  immediately  took  appropriate  action  and  followed  up  in  a  diligent 
manner  any  related  requests  made  by  the  European  Parliament  in  the  discharge 
procedure. 

Moreover, the Commission is accompanying and guiding Member States on how to 
avoid and  address  conflicts of  interest,  including  situations  that may be  objectively 
perceived  as  such,  in  shared  management,  in  line  with  the  new  provisions  of  the 
Financial Regulation.  It is actively monitoring the application of these new rules in 
the Member States and has taken broad and coordinated action to identify and share 
best practices in managing conflicts of interest.  

The results of a survey carried out in this respect in the Member States will feed into 
further  work.  Furthermore, 
the 
implementation of conflict of interest rules in all management modes. With respect 
to its own staff and its  Members, the Commission has a comprehensive framework 
on avoidance and management of conflict of interests.  

is  finalising  guidance  on 

the  Commission 

 5.

SMOOTHER IMPLEMENTATION 

The  European  Parliament  and  the  Council  expressed  concern  over  the  level  of 
outstanding  commitments  (the  RAL). They  requested the Commission to closely 

6 

 
 
monitor  developments  and  continue  its  support  for  Member  States  in  further 
improving the speed of implementation. 

The Commission reports regularly on the RAL and also forecasts the evolution of the 
RAL  in  the  coming  years.  These  reports,  including  the  annual  accounts,  are 
discussed with the European Parliament and the Council. The annual and long-term 
budgets  take  into  account  the  level  of  payment  appropriations  needed  to  reimburse 
all the expenditures incurred.  

Slow  implementation  of  some  programmes  can  increase  the  RAL  as  a  mechanical 
consequence and leads to slower delivery of results and EU benefits on the ground. 
The  Commission  proposal  for  the  next  long-term  budget  2021-2027  addresses  this 
issue  with  various  measures  to  improve  the  absorption  of  EU  funds:  e.g.  by 
simplifying procedures, allowing for roll-over of existing implementation systems or 
changing  the  existing  N+3  decommitment  rule  to  N+2  and  an  appropriate  ratio 
between commitment and payment appropriations. 

The  Commission  continuously  helps  Member  States  to  speed  up  the 
implementation  of  their  programmes.  Member  States  have  at  their  disposal 
important  amounts  of  technical  assistance,  proportionate  to  allocations,  to  ensure 
programme  authorities  have  the  necessary  support  to  manage,  monitor  and  audit 
programmes.  The  Commission  has  also  established  special  monitoring  linked  to 
performance of programmes, based on the example of the dedicated Task Force on 
Better  Implementation  created  for  the  previous  programmes  at  risk.  Particular 
attention is dedicated to Member States with lower levels of implementation.  

The  Commission  has  taken,  and  will  continue  taking,  measures  aiming  to  bring 
simplification  and  flexibility  when  designing  rules  for  EU  programmes,  while 
taking into consideration to ease their implementation as well as their effectiveness 
in achieving Union objectives and transparency. 

In  particular,  the  Commission  has  reached  this  aim  in  the  revised  Financial 
Regulation,  which  includes  numerous  measures  for  legal  and  administrative 
simplification, efficiency and effectiveness in the following areas: 

 o Increased use of simplified cost options, i.e. simpler cost calculation methods 
(lump  sums,  flat  rates  and  unit  costs)  based  on  other  criteria  which  are 
simpler and less prone to errors compared to reimbursement of actual costs;  

 o Asking for information only once; 

 o Cross-reliance on assessments and audits; 

 o Closer relationships with trusted partners; 

 o Simpler content of grant applications and reporting; 

 o Fostering  e-government, and in particular the use of electronic systems data 

in the exchange of information with the beneficiaries. 

The Commission is monitoring the implementation of these measures. 

The Commission maintained its focus on simplifying rules in the proposals for the 
spending  programmes  underlying  the  2021-2027  Multiannual  Financial 
Framework.  Some  of  these  simplification  efforts  are  designed  to  benefit  in 
particular  SMEs  as requested  by the  European Parliament in the  discharge process. 
The impact of the Commission’s push for simplification will naturally depend on the 
outcome  of  the  ongoing  negotiations  between  the  European  Parliament  and  the 
Council on the proposals. 

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 6.

OTHER ISSUES 

6.1 DISTRIBUTION OF FUNDS  

The European Parliament requested the Commission to propose a different allocation 
of  funds  for  the  Common  Agricultural  Policy  and  Cohesion  Policy,  and  also  pay 
greater attention to the geographic distribution of research funds.  

The Commission recalls that the allocation of EU funds for the future spending 
programmes  is  part  of  the  ongoing  negotiations  between  the  European 
Parliament and the Council.  

The Commission’s proposals for the Common Agricultural Policy aim at achieving 
a  fairer  distribution  of  funds  to  beneficiaries.  Measures  that  contribute  to  this  are 
degressivity  and  capping  of  direct  payments,  redistributive  income  support, 
continued internal and external convergence of direct payments as well as provisions 
regarding the “genuine” farmer. 

Spending  programmes  for  research  &  innovation  (Horizon  2020  and  its  successor 
Horizon  Europe)  are  competitive  programmes  where  evaluation  and  selection  of 
proposals  are  based  on  excellence  and  impact  without  any  pre-allocated  national 
envelopes.  In  Horizon  2020,  EUR  900  million  are  devoted  to  ‘widening  measures’ 
such  as  Teaming,  Twinning,  European  Research  Area  (ERA)  Chairs  and  COST 
(European  Cooperation  in  Science  and  Technology)  to  help  countries  with  lower 
participation  rates  increase  their  success  in  the  competitive  R&I  framework 
programmes and to close the participation gap and innovation divide. This is carried 
out by supporting, through a competitive process, legal entities from these countries 
to be coordinators in the projects funded under these measures. For Horizon Europe, 
the co-legislators have agreed in their common understanding to increase the share of 
expenditure for this area of intervention. 

6.2 INFORMATION ON BENEFICIARIES  

The  European  Parliament  called  on  the  Commission  and  the  Member  States  to 
provide  information  on  beneficiaries  in  a  uniform  manner  and  ensure  the 
interoperability of information. It also requested a list of the largest  beneficiaries 
and requested that information on final beneficiaries should include specification on 
the beneficial owners of companies (natural and legal persons). 

The  Commission  publishes  information  in  its  Financial  Transparency  System  on 
the beneficiaries of funding from the EU budget for programmes that it implements 
directly.  In  shared  management  –  such  as  the  Common  Agricultural  Policy  and 
Cohesion Policy – the obligation to manage and publish the data on the beneficiaries 
of EU funds lies with the Member States. The main rules for publishing information 
on  beneficiaries  are  set  out  in  the  Financial  Regulation  as  well  as  in  the  relevant, 
sector-specific legislation. 

Member  States  shall  ensure  annual  ex-post  publication  of  the  beneficiaries  of  the 
Common Agricultural Policy funds on a single website per Member State3. All the 
websites  are  available  through  links  on  europa.eu:  https://ec.europa.eu/info/food-

3 Cf. articles 111-114 and 117 of Regulation (EU) No 1306/2013. 

8 

 
 
 
                                                 
farming-fisheries/key-policies/common-agricultural-policy/financing-cap/controls-
and-transparency/beneficiaries_en. 

is 

of 

links 

through 

available 

beneficiaries 

For  Cohesion  Policy  and  for  the  European  Maritime  and  Fisheries  Fund 
(EMFF),  the  lists  of  beneficiaries  have  to  be  published  and  made  available  on 
Member States programmes’ sites4. As far as regional policy is concerned, access to 
lists 
europa.eu: 
https://ec.europa.eu/regional_policy/en/atlas/beneficiaries/,  including  an  inventory 
of  beneficiaries  lists.  A  similar  webpage  with  links  for  the  EMFF  is  available 
at: https://ec.europa.eu/fisheries/contracts_and_funding/the_european_transparency
_initiative_en/..  The  Commission  is  exploring  possible  actions  to  improve 
information  on  beneficiaries  of  EU  funds  while  taking  into  account  the 
legislative  framework,  potential  administrative  burdens  and  including  data 
protection rules. It is also looking into the possibility of strengthening the electronic 
management  and  exchange  of 
in  shared 
management  to  ensure  better  interoperability  of  data  in  general. It  will  further  look 
into the possibilities offered by the Arachne data mining tool. 

information  with  Member  States 

on 

Finally,  the  Commission  is  following  up  the  request  of  the  European  Parliament 
regarding  the  largest  beneficiaries  of  EU  funds  under  the  Common  Agricultural 
Policy and Cohesion policy. Since the responsibility to collect the requested data lies 
with  the  Member  States,  the  Commission  was  obliged  to  contact  the  respective 
authorities in the Member States to obtain the information. However, the COVID-19 
crisis  made  the  exercise  more  complicated  than  under  normal  circumstances.  The 
Commission will provide a comprehensive reply to the European Parliament once it 
is in a position to do so. 

6.3 FINANCIAL INSTRUMENTS MANAGED BY THE EIB GROUP 

The  European  Parliament  and  the  Council  invited  the  Commission  to  provide 
relevant information on  the funds  transferred  from  the EU budget for financial 
instruments managed  by the EIB  Group. The Commission will continue  to provide 
each  year  the  budget  authority  with  an  annual  detailed  report  on  all  financial 
instruments  in  the  form  of  “Working  Document  X  on  Financial  Instruments” 
attached to the Draft Budget  N+1 as per Article 41(4) of the Financial Regulation. 
The report produced in 2020, to be attached to the Draft Budget 2021, also includes 
the  overall  amount  and  the  breakdown  of  the  funds  transferred  to  the  financial 
instruments  managed  by  the  EIB  Group.  This  comprehensive  reporting  ensures 
transparency and allows proper scrutiny. 

6.4  TRADITIONAL OWN RESOURCES 

The  European  Parliament  urged  the  Commission  to  review,  together  with  the 
Member  States,  how  customs duties can be more effectively collected and possible 
improvements  in  the  recovery  of  fraudulent  amounts.  The  Council  stressed  the 
importance of accurate data. 

The Commission is determined to avoid losses of customs duties. It acts as soon 
as  irregularities  are  detected  and  meticulously  follows  up  on  inspection  findings  in 

4 Cf. article 115(2) of the Common Provisions Regulation and article 119(2) of the EMFF Regulation 508/2014. 

9 

 
 
 
                                                 
order  to  ensure  that  Traditional  Own  Resources  losses  to  the  EU  budget  are 
recovered in full.  

However, the responsibility for collecting the customs duties is primarily that of the 
Member  States.  The  Commission  is  currently  considering  how  to  better  pool 
expertise  and  resources  to  reinforce  the  customs  union  in  “acting  as  one”  and 
will  present  to  this  effect  an  Action  Plan  to  reinforce  the  Customs  Union.  In 
addition,  the  Commission  issues  recommendations  to  Member  States  to  enhance 
their control strategies. Moreover, the Commission is developing a wider and more 
structured  usage  of  data  mining  techniques  to  improve  its  monitoring  of  imports 
flows  in  order  to  detect  changes  in  fraud  patterns.  The  Commission  will  propose 
legislation to create a Single Window Environment for customs that will facilitate the 
controls at EU borders. 

It will also examine how reinforced desk checks focusing on unusual changes in the 
Traditional  Own  Resources  statements  could  generate  effective  and  efficient  value 
added in detecting errors. 

As far as e-commerce is concerned, in the 2018 report on the protection of financial 
interest and fight against fraud, the Commission has recommended to Member States 
-  who  are  in  charge  of  controls  -  to  enforce  their  control  strategy.  In  addition,  the 
VAT  e-commerce  package  planned  to  enter  into  force  in  2021  will  modernise  the 
VAT  collection  and  payment  for  cross-border  e-commerce  and  better  protect  the 
internal  market.  The  Commission  also  works  together  with  Member  States  and 
relevant business stakeholders in the framework of the Customs 2020 Project Group 
on Import and Export Customs Formalities Related to Low Value Consignments to 
develop  a  consistent  approach  for  the  implementation  of  the  customs  related 
elements of the new VAT rules. Finally, the Commission will consider the issue of e-
commerce when establishing its future annual traditional own resources’ inspection 
programmes. 

6.5 COVID-19  

The  magnitude  of  the  COVID-19  crisis  was  not  known  when  the  2018  discharge 
was  discussed  in  the  European  Parliament  and  the  Council.  Since  then,  the 
Commission  has  taken  a  range  of  measures  to  respond  to  the  crisis  caused  by  the 
pandemic,  such  as  the  Coronavirus  Response  Investment  Initiatives  to  mitigate  its 
socio-economic impact in the European Union, followed by the proposals for a new 
recovery  instrument  Next  Generation  EU  and  the  reinforced  Multiannual  Financial 
Framework  2021-2027  to  kick-start  the  European  recovery.  The  pandemic  itself, 
through its massive impact on EU beneficiaries, national authorities and Commission 
services,  as  well  as  the  measures  taken,  will  have  consequences  for  the 
performance  of  the  EU  budget  and  the  compliance  aspects  of  financial 
management. 

To address those issues pro-actively, the Commission is undertaking a targeted risk 
assessment  exercise  related  to  the  COVID-19  crisis,  including  an  overview  of 
mitigating  actions  taken  or  to  be  taken  by  the  Commission.  This  risk  assessment 
covers  both  performance  and  compliance  aspects  and  focuses  on  the  control,  audit 
and assurance aspects in relation to the EU budget. The Commission will inform the 
European Parliament and the Council on the outcome of the risk assessment exercise.   

10 

 
 
 7.

LOOKING AHEAD 

The  negotiations  on  the  2021-2027  Multiannual  Financial  Framework  and  the 
underlying spending programmes are entering the final phase. The Commission will 
work  closely  and  constructively  with  the  European  Parliament  and  the  Council 
throughout  the  process  to  ensure  that  the  EU  budget  continues  to  be  managed 
responsibly,  also  in  the  future  will  achieve  results  on  the  ground  and  can  be  fully 
accounted for in the annual discharge procedure. 

* * * 

11