COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT pursuant to Article 294(6) of the Treaty on the Functioning of the European Union concerning the position of the Council on the adoption of Proposal for a Regulation of the European Parliament and of the Council laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the Instrument for Financial Support for Border Management and Visa Policy
Date: 2021-06-03
Institutions: Directorate-General for Regional and Urban Policy, European Commission
Subjects: Cohesion Fund, EU migration policy, European Maritime and Fisheries Fund, European Regional Development Fund, European Social Fund, European security, distribution of EU funding, external border of the EU, financial management, right of asylum

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   EUROPEAN COMMISSION  Brussels, 3.6.2021  COM(2021) 291 final 2018/0196 (COD)  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT  pursuant to Article 294(6) of the Treaty on the Functioning of the European Union  concerning the position of the Council on the adoption of Proposal for a Regulation of the European Parliament and of the Council laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the Instrument for Financial Support for Border Management and Visa Policy  
 
 
2018/0196 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

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

concerning the 

position of the Council on the adoption of Proposal for a Regulation of the European 
Parliament and of the Council laying down common provisions on the European 
Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the 
Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and 
financial rules for those and for the Asylum, Migration and Integration Fund, the 
Internal Security Fund and the Instrument for Financial Support for Border 
Management and Visa Policy 

1. 

BACKGROUND 

Date of transmission of the proposal to the European Parliament and 
to the Council 
(document COM(2018) 375 final – 2018/0196 (COD)): 

29 May 2018 

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

17 October 2018 

Date of the opinion of the European Court of Auditors: 

Date of the opinion of the Committee of the Regions: 

31 October 2018 

6 December 2018 

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

27 March 2019 

Date of transmission of the amended proposals 
(document COM(2020) 23 final – 2018/0196 (COD)) 
(document COM(2020) 450 final – 2018/0196 (COD)): 

14  January  2020 
28 May 2020 

Date of the opinion of the European Court of Auditors: 

14 June 2020 

The European Economic and Social Committee was  consulted and 
decided not to issue an opinion 

The  Committee  of  the  Regions  was  consulted  and  decided  not  to 
issue an opinion 

/ 

/ 

Date of adoption of the position of the Council: 

27 May 2021 

2. 

OBJECTIVE OF THE PROPOSAL FROM THE COMMISSION 

The  proposal  for  a  Common  Provisions  Regulation  (CPR)  aims  at  setting  out  common 
provisions for eight shared management funds. The proposal reduces fragmentation of rules, 
delivering a common set of basic rules for the following funds: 

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ERDF:  

European Regional Development Fund 

CF: 

Cohesion Fund 

ESF+:   

European Social Fund Plus 

JTF: 

Just Transition Fund 

EMFAF: 

European Maritime, Fisheries and Aquaculture Fund 

AMIF:  

BMVI: 

Asylum, Migration and Integration Fund 

 Instrument  for  Financial  Support  for  Border  Management  and  
 Visa Policy 

ISF: 

Internal Security Fund 

The main objectives of the architecture and provisions of the proposed CPR are to: 

1. 

2. 

3. 

Substantially  reduce  unnecessary  administrative  burden  for  beneficiaries  and 
managing  bodies  while  maintaining  a  high  level  of  assurance  of  legality  and 
regularity.  This  is  the  key  guiding  principle  of  the  approach  for  2021-2027,  and 
includes  a  large  number  of  simplifications  and  alignments  across  the  regulations  – 
but especially in terms of: 

i. 

There is no requirement to designation process for the  auhtorities’ part of the 
management  and  control  systems  (and  other  measures  which  facilitate 
programme launch). Greater use of “proportionate arrangements”, where lower 
risk programmes can rely more on national systems; 

ii. 

The further promotion of simplified cost options and the use of payments based 
on fulfilment of conditions or achievement of results; 

iii.  Financial instruments. 

Increase  flexibility  to  adjust  programme  objectives  and  resources  in  the  light  of 
changing  circumstances  and  also  in  terms  of  voluntary  contributions  to  EU-level 
instruments managed directly or indirectly. 

Align  the  programmes  more  closely  with  EU  priorities  and  increase  their 
effectiveness. This includes: 

i. 

Aligning  the  intervention  logic  and  reporting  with  the  MFF  headings  and 
increasing concentration requirements for cohesion policy funds on five policy 
objectives: 1) a more competitive and smarter Europe, 2) a greener, low-carbon 
transitioning  towards  a  net  zero-carbon  economy  and  resilient  Europe;  3)  a 
more  connected  Europe;  4)  a  more  social  and  inclusive  Europe;  5)  a  Europe 
closer to citizens; 

ii. 

Fostering  a  closer  link  with  the  European  Semester  process  and  for  HOME 
funds  with  other  EU 
(e.g.  Schengen  evaluation 
recommendations); 

recommendations 

iii.  Setting meaningful enabling conditions that need to be fulfilled throughout the 

implementation period. 

It  also  confirms the overall financial  allocation and balance between  cohesion  policy  funds, 
categories of regions and goals.  

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3. 

COMMENTS ON THE POSITION OF THE COUNCIL 

The  Council’s  position  fully  reflects  the  agreement  reached  in  the  trilogues.  The  most 
important changes introduced compared to the Commission’s proposal include: 

Programming, transfers, mid-term review and enabling conditions 

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A  new  article  including  the  climate  contribution  targets  for  the  ERDF  and  the 
Cohesion  Fund  (30%  and  37%)  was  added,  together  with  the  climate  adjustment 
mechanism  in  case  monitoring  shows  insufficient  progress  towards  reaching  the 
target.  Climate  coefficients  are  established  for  each  of  the  intervention  fields  in 
Annex I.  

Provisions on partnership are strengthened by including the possibility to allocate an 
appropriate  percentage  of  resources  coming  from  the  Funds  for  the  administrative 
capacity building of social partners and civil society organisations, and underpinning 
the  role  of  the  Code  of  conduct  on  partnership  (Delegated  Regulation  (EU)  No 
240/2014)  in  all  stages  of  programming  and  implementation.  The  Council  has 
accepted adding the article on Horizontal principles, as requested by the Parliament 
and fully aligned with Treaty wording. The objectives of the Funds should take into 
account among others the “do no significant harm” principle. 

The  Partnership  Agreement  remains  the  main  document  setting  out  the  strategic 
orientation  for  programming  and  the  arrangements  for  the  implementation  of  the 
Funds.  The AMIF,  ISF  and BMVI were excluded from  the Partnership Agreement. 
However, the Partnership Agreement  will still cover coordination between the eight 
CPR  Funds, 
including  between  AMIF,  ISF  and  BMVI,  as  well  as  on 
complementarities  with  other  Union  instruments.  The  Partnership  Agreement  can 
only be amended once, following the mid-term review.  

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More flexibility in transferring resources is enabled, as for instance:  

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The  ceilings  for  contributions  to  InvestEU  from  the  ERDF,  the  ESF+,  the 
Cohesion Fund and the EMFAF have been differentiated in two stages (up to 
2% of each Fund at the beginning of the programming period and further up to 
3% after 1 January 2023); 

Introduction of a provision on transfers back, in case of unused resources, for 
transfers among the CPR Funds  -  up to  5% (exception made for the transfers 
among  the  three  cohesion  policy  funds  –  see  below)  and  for  transfers  from 
CPR Funds to any instrument under direct or indirect management – up to 5%; 

The ceilings for transfers among cohesion policy funds have been increased  – 
up to 20% (25% for Czechia); 

Transfers from the ERDF and the ESF+ to the JTF have become voluntary; 

Possibility  to  transfer  resources  between  categories  of  regions  has  been 
modulated according to the level of development of Member States (5%, up to 
15% for countries whose GNI per capita (in PPS for 2015- 2017), is less than 
90% of the EU average). 

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On  enabling  conditions,  Member  States  will  be  allowed  to  submit  payment 
applications  corresponding  to  specific  objectives  for  which  the  conditions  are  not 
fulfilled. The Commission will not make payments before their fulfilment.  

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Performance  framework  and  mid-term  review  of  cohesion  policy  programmes  –  a 
flexibility amount has been introduced, corresponding to 50% of the allocations for 
the last two years of the programming period, which will be definitively allocated in 
the programmes only after the mid-term review in 2025.  

The  period  during  which  temporary  measures  as  a  response  to  exceptional  and 
unusual  circumstances  can  be  proposed  by  the  Commission  has  been  limited  to  18 
months.  The  new  provisions  on  structured  dialogue  raised  concerns  and  the 
Commission has issued a declaration accordingly.  

Some  limitations  have  been  introduced  on  the  application  in  time  and  scope 
regarding  measures  linked  to  sound  economic  governance  and  some  changes  have 
been introduced in the corresponding procedure (macroeconomic conditionality). All 
ESF+ programmes have been excluded from the application of these provisions.  

The possibility to implement policy objective 5 has been made conditional on the use 
of one of the three types of territorial instruments: integrated territorial investments, 
community-led local development (CLLD) and other territorial tools. The role of the 
Lead-fund  option  has  been  clarified  in  the  case  of  CLLD,  with  a  possible 
involvement of support from the European Agricultural Fund for Rural Development 
(EAFRD). 

The possibility to program technical assistance, as an alternative to flat-rate approach 
has  been  introduced,  with  the  exception  of  HOME  Funds  and  Interreg,  using  the 
different percentages established for each of the Funds. 

Monitoring, evaluation, communication and visibility 

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The  voting  rights  for  each  member  of  the  Monitoring  Committees  have  been 
confirmed. 

The  role  of  the  monitoring  committee  under  the  EMFAF  has  been  reduced  to 
consultation regarding the approval of programme amendments. 

The Annual performance report will no longer be required for the EMFAF. 

The frequency of electronic transmission of financial data has been reduced from six 
to five times and to twice per year for indicator data, which is still an increase from 
the current 2-3 times a year for the cohesion policy Funds and once a year for AMIF, 
ISF and BMVI (data to be transmitted is established in Annex VII). 

The  frequency  of  publishing  updated  lists  of  selected  operations  has  been  reduced 
from  the  proposed  every  three  months  to  every  four  months  –  but  more  frequently 
than the current situation. 

The  obligations  to  publicise  EU  support  by  natural  persons  and  final  recipients 
sustained, have been further detailed. In addition, the level of financial correction has 
been  decreased  from  5%  to  3%  in  cases  of  beneficiaries  not  complying  with  the 
obligation to publicise the received EU support. 

A  new  provision  has  been  introduced  that  requires  Member  States  to  publish 
information,  except  where Union law or national  law excludes such publication for 
reasons  of  security,  public  order,  criminal  investigations  or  protection  of  personal 
data. 

Financial  support  from  the  Funds,  including  the  provisions  for  financial  instruments 
and eligibility rules  

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Provisions  on  grants  under  conditions  have  been  introduced,  with  additional 
safeguards regarding the re-use of the amounts paid back compared to 2014-2020. 

Direct award of financial instrument management to the EIB, international financial 
institutions and publicly owned banks has been introduced. 

Additional  provisions  have  been  introduced  on  financial  instruments  implemented 
across consecutive programming periods – with a view to ensuring legal clarity. 

The possibility for VAT to be eligible for operations the total cost of which is at least 
EUR 5 000 000 (including VAT) has been introduced, in case it is  non-recoverable 
under national VAT legislation. Specific rules are also included regarding operations 
combining financial instruments with a form of grant. 

Management costs and fees under financial instruments under direct award have been 
increased  and  differentiated,  with  respectively  5%  and  7%  for  the  holding  fund,  and 
7% and 15% for specific funds. 

Management and control system  

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The  actions  needed  for  Member  States  to  prevent,  detect,  correct  and  report  on 
irregularities,  including  fraud,  have  been  extended  to  include  the  collection  of 
information on beneficial owners of the recipients of funding in accordance with new 
Annex XVII. Using a single data-mining tool remains voluntary in spite of the inter-
institutional agreement. The Commission has issued a declaration accordingly. 

Whereas  Member  States  shall  ensure  that  all  exchanges  of  information  between 
beneficiaries  and  the  programme  authorities  are  carried  out  by  means  of  electronic 
data  exchange  systems  (required  for  the  HOME  Funds  and  the  EMFAF  from 
1 January 2023), an exception has been introduced, enabling, upon explicit request of 
a  beneficiary,  the  managing  authority  to  exceptionally  accept  exchanges  of 
information in paper format. 

The  format  of  report  by  Member  States  on  irregularities  in  accordance  with  the 
criteria for determining the cases of irregularity to be reported, has been set out in a 
new Annex XII, instead of the initially proposed implementing act. 

Some rules on selection of operations have been clarified, regarding in particular the 
link with smart specialisation strategies for some specific objectives under PO1 and 
the role of the Commission regarding the rules for selection of operations has been 
amended  (no  consultation,  only  for  information,  15  days  before  the  monitoring 
committee).  

An 80-day deadline has been introduced for payment by the managing authority from 
the date of submission of the payment claim by the beneficiary (against 90 days as 
proposed by the Commission). 

On  management  verifications,  the  required  risk  management  strategy  has  been 
substituted by a simpler written description of the risks. Furthermore, the possibility 
for AMIF, ISF and BMVI to establish specific rules on management verifications, in 
case an international organisation is a beneficiary, has been introduced.  

Financial management 

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Retention rate from interim payment applications has been lowered from 10% to 5%, 
raising concerns and the Commission has issued a declaration accordingly. 

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The  number  of  payment  applications  sent  per  year  has  been  increased  from  the 
proposed four to six. 

The possibility to include in payment applications advances paid to beneficiaries of 
State aid has been introduced. 

The  amount  allowed  to  be  included  in  first  payment  for  financial  instruments  has 
been increased from 25% to 30%. 

Decommitment  rules:  the  N+3  rule  has  been  introduced  for  2021-2026,  while 
maintaining the final date of eligibility at end-2029. 

Pre-financing rules: annual clearance of pre-financing has been introduced for 2021 
and 2022 (the first accounting year ends on 30 June 2022), maintaining clearance in 
the final accounting year for the other years. For the AMIF, ISF and BMVI funds, a 
derogation  has  been  included  for  pre-financing  rates  to  be  set  in  the  Fund-specific 
regulations  and  clearance  no  later  than  with  the  final  accounting  year.  The  limited 
use  of  annual  clearance  is  raising  concerns  and  the  Commission  has  issued  a 
declaration accordingly. 

Financial  framework,  including  provisions  on  resources,  co-financing  rates  (cohesion 
policy only) 

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The volume and distribution of resources have been slightly adjusted, in accordance 
with the MFF. 

The reference to the common classification of territorial units for statistics (‘NUTS 
level 2 regions’) has been updated, with a reference to Commission Regulation (EU) 
2016/2066.  The  calculation  basis  for  the  allocations  has  been  updated,  with  the 
reference to the basis of Union figures for the period 2015-2017. 

The co-financing rates have been increased and further differentiated: less developed 
regions – 85%, transition regions – 60%, more developed regions – 40%, transition 
regions that were classified as less developed regions in the 2014-2020 programming 
period – 70%; more developed regions that were transition regions or had a GDP per 
capita below 100% for the period 2014-2020 – 50%; Cohesion Fund – 85%; Interreg 
– 80%; outermost regions – 85%. For the JTF, the rates will be higher for transition 
and  more  developed  regions:  (a)  85%  for  less  developed  regions;  (b)  70%  for 
transition regions; (c) 50% for more developed regions. 

The transfer from the Cohesion Fund to CEF of EUR 10 billion has been confirmed, 
as  well  as  the  split  70% / 30%  for  the  national  allocation  until  1  January  2024  and 
competitive  calls  but  specific  rules  have  been  established  for  the  Member  States 
whose  gross  national  income  (GNI)  per  capita  measured  in  purchasing  power 
standards  and  calculated  on  the  basis  of  Union  figures  for  the  period  2015-2017  is 
less  than  60%  of  the  average  GNI  per  capita  of  the  EU-27  -  70%  of  70%  of  the 
amount they have transferred to the CEF will be guaranteed until 1 January 2025. 

Subject  matter/definitions:  delegation  of  power,  implementing,  transitional  and  final 
provisions 

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Processing and protection of personal data – a new article has been introduced with a 
legal  ground  for  the  processing  of  personal  data  in  form  of  an  obligation  when  it 
comes to the use of personal data by the programme authorities. 

Revised  or  new  definitions  of  economic  operator,  beneficiary,  enabling  condition, 
EMFAF priority, residual error rates have been established. 

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A new provision has been introduced to  confirm that the CPR will be reviewed by 
the  Parliament  and  the  Council  by  31  December  2027,  in  accordance  with 
Article 177 TFEU.  

4. 

CONCLUSION 

The  Commission  supports  the  results  of  the  inter-institutional  negotiations  and  therefore 
accepts the position taken by the Council. 

On  the  other  hand,  with  regard  to  some  amendments  considered  more  problematic,  the 
Commission has issued four declarations on the following issues:  

1) “Clearance of pre-financing”,  

2)  “Structured  dialogue  under  Temporary  measures  for  the  use  of  the  Funds  in  response  to 
exceptional and unusual circumstances”,  

3)  “Further  measures  to  protect  the  EU  budget  and  Next  Generation  EU  resources  (NGEU) 
against  fraud  and  irregularities  by  requiring  an  obligatory  use  of  a  single  data-mining  tool 
provided by the Commission”, and  

4)  “Protection  of  the  EU  budget  through  the  use  of  a  percentage  retention  of  payments  to 
shared management programmes”.  

The  statements  will  be  published  in  the  C  series  of  the  Official  Journal  of  the  European 
Union.  

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1. Clearance of pre-financing 

Statement by the Commission on clearance of pre-financing 

The  payment  ceilings  in  the  MFF  regulation  took  into  account  the  assumption  that  all  pre-
financing would be cleared annually. The Commission considers that the agreement reached 
by the co-legislators on the CPR might result in going beyond the applicable MFF ceilings for 
payment appropriations, taking into account the expected payment profiles. This might result 
in a payment backlog in the second half of the next period. 

2. Structured dialogue under Temporary measures for the use of the Funds in response to 
exceptional and unusual circumstances.  

Statement by the Commission on Structured dialogue under Temporary measures for 
the use of the Funds in response to exceptional and unusual circumstances 

The provisions adopted by the co-legislators require the Commission to immediately inform 
the Parliament and the Council about the assessment of the situation regarding the exceptional 
and  unusual  circumstances.  The  co-legislators  also  require  the  Commission  to  inform  them 
immediately  about  the  envisaged  follow-up  through  temporary  measures  for  the  use  of  the 
Funds and to take due consideration of the positions  taken and views expressed through the 
structured  dialogue  to  which  the  Commission  may  be  invited  by  the  Parliament  or  the 
Council. 

Those  requirements  are  not  in  accordance  with  Article  291(2)  and  (3)  TFEU  and  with 
Comitology  Regulation  No 182/2011,  which  do  not  provide  for  any  involvement  of  the 
Parliament  and  the  Council  in  the  control  of  the  exercise  of  the  implementing  powers 
conferred  on  the  Commission.  They  may  result  in  situations  where  the  Commission’s 
implementing powers would be constrained. Therefore, the Commission can only satisfy these 
requirements  in  so  far  as  these  do  not  impinge  on  its  implementing  powers  as  they  are 
regulated under Article 291 TFEU and Comitology Regulation No 182/2011. 

These provisions cannot in  any event  be  replicated in  a different  legal  framework where no 
exceptional and unusual circumstances are provided for. 

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3.  Further  measures  to  protect  the  EU  budget  and  the  Next  Generation  EU  resources 
(NGEU)  against  fraud  and  irregularities  by  requiring  an  obligatory  use  of  a  single  data-
mining tool provided by the Commission  

Statement by the Commission on further measures to protect the EU budget and the 
Next Generation EU against fraud and irregularities by requiring an obligatory use of a 
single data-mining tool provided by the Commission 

In  the  Inter-institutional  Agreement  between  the  European  Parliament,  the  Council  and  the 
Commission  on  budgetary  discipline,  on  cooperation  in  budgetary  matters  and  on  sound 
financial  management,  as  well  as  on  new  own  resources,  including  a  roadmap  for  the 
introduction of new own resources, Points 30 to 33 require the Commission to make available 
an  integrated  and  interoperable  information  and  monitoring  system  including  a  single  data-
mining  and  risk-scoring  tool  to  access  and  analyse  the  required  data  with  a  view  to  a 
generalised  application  by  Member  States.  In  addition,  the  three  institutions  agreed  to 
sincerely  cooperate,  in  the  course  of  the  legislative  procedure  relating  to  the  relevant  basic 
acts, to ensure the follow up to the European Council conclusions of July 2020 regarding this 
element. 

The  Commission  considers  that  the  agreement  reached  by  the  co-legislators  under  Article 
69(2) (responsibilities of Member States) on the  obligatory use of a single data-mining tool 
and the collection and analysis of data on the beneficial owners of the recipients of funding is 
not sufficient to enhance the protection of the Union budget and Next Generation EU against 
fraud and irregularities and to ensure efficient checks on conflicts of interests, irregularities, 
issues of double funding, and criminal misuse of the funds. Therefore, the approach agreed by 
the  co-legislators  in  the  Common  Provisions  Regulation  does  not  appropriately  reflect  the 
desired ambition and spirit of the Inter-institutional Agreement. 

4.  Protection  of  the  EU  budget  through  the  use  of  a  percentage  retention  of  payments  to 
shared management programmes 

Statement by the Commission on the protection of the EU budget through the use of a 
percentage retention of payments to shared management programmes 

The  Commission  considers  that  the  agreement  by  the  co-legislators  to  reduce  the  retention 
rate  on  shared  management  payments  from  10%  to  5%  creates  an  increased  risk  of  the  EU 
budget paying amounts that are affected by irregularities. 

To  minimise  this  risk,  the  Commission  will  make  an  appropriate  use  of  interruptions  and 
suspensions  of payments to  programmes whenever it considers that the 5% retention  rate is 
insufficient to cover the amount of any potential irregularities. 

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