CELEX: 51993PC0683(01)
Language: en
Date: 1993-12-21
Title: Proposal for a COUNCIL REGULATION (EC, Euratom) amending Regulation (EEC, Euratom) No 1552 implementing Decision 88/376/EEC, Euratom on the system of the Communities own resources

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                    COM(93) 683 final
                                                    Brussels, 21 December 1993
                                Proposal for a
I                COUNCIL REGULATION (EC. Euratom)
I            amending Regulation (EEC, Euratom) No 1552/89
                implementing Decision 88/376/EEC, Euratom
             on the system of the Communities' own resources
                                Proposal for a
             COUNCIL REGULATION ŒCSC. EC. Euratom)
         amending the Financial Regulation of 21 December 1977
       applicable to the general budget of the European Communities
                       (presented by the Commission)
 ---pagebreak---                                EXPLANATORY MEMORANDUM
This proposal is a formal alternative to the Commission proposal of 14 September 1993
(COM(93) 437 final).
The objective is the same: to ensure that when Community expenditure complies, year after year,
with the own resources ceiling set for the Community, all the financial resources mobilized may
be deployed to finance Community policies.
This proposal differs from the initial one in that the legislative and budgetary procedure proposed
here would not require the entry in the statement of expenditure of negative balances of resources
resulting from errors in forecasting the structure of own resources since it would eliminate these
balances. The question of whether they should count against the own resources ceiling would
then become academic. To satisfy the undertaking it gave to Parliament when the
Interinstitutional Agreement was concluded, the Council should adopt the proposal before the
1995 budgetary procedure starts.
I.      In its communication of 9 June 1993 (SEC(93) 851 final) the Commission drew the
        Council's and Parliament's attention to the problem that shortfalls in tax revenue as a
        result of the 1992-93 economic recession was eating into the own resources ceiling.
        The reasons for these shortfalls are a yield of traditional own resources which is lower
        than forecast in the budget and a reduction in the VAT and GNP bases; initially, they
        affect the cash flow and, in the case of VAT and GNP-based resources, result in
        repayments to the Member States. In order to cover the expenditure approved and
        implemented in the financial year concerned, while complying with the principle that the
        budget must be in balance, they are then entered as expenditure in the budget for the next
        year or the next year but one, depending on the case.
        For 1992 the shortfalls amount to almost ECU 2 billion; they could be double that in
        1993. The financial regulations require these amounts to be entered in the budget in
         1993, 1994 and 1995.
        For the first time since 1988, all the own resources available beneath the ceiling will have
        to be entered in the initial budget for 1994, and very probably in the one for 1995 too.
        As there are no explicit rules about how the own resources ceiling should be applied in
        this case, it might be considered that past years' revenue shortfalls must be entered by a
        supplementary and amending budget as expenditure counting against this ceiling, thus
        implying an equivalent reduction in the expenditure adopted for the year in question,
        while Community expenditure will remain well below the own resources ceiling in 1992
        and 1993.
        The Commission's initial proposal was designed to specify the rules for dealing with past
        years' balances in relation to the own resources ceiling for the year in which these
        balances are entered in the budget in specific circumstances which are not explicitly
        provided for in the current rules.
 ---pagebreak---     The treatment recommended in line with the spirit of the own resources Decision was to
    neutralize them symmetrically and conditionally:
            symmetrically, since provision would be made to allow negative balances from
            earlier years to be financed in the year in which they are entered in the budget in
            excess of the own resources ceiling for that year. Conversely, there should be no
            possibility of using positive balances from earlier years in the year in which they
            are entered in the budget in excess of the own resources ceiling;
            conditionally, since this would be subject to an ex post check that budget
            expenditure in the reference year was kept below the actual own resources ceiling.
II. Since then, the problem has changed:
            The budgetary authority has accepted the Commission's proposals that the
            shortfalls which can already be identified for 1992 and 1993 should be partly
            financed in 1993. This precautionary move does not, however, resolve the entire
            problem. It concerns only part of the expected shortfall and cannot be repeated
            in 1994 even though there is almost ECU 2 billion to be covered. The reduction
            in the GNP growth rate on which the 1993 budget was based and the monetary
            realignments of 1992 have led to a large reduction in the bases. However, the
            total payment appropriations contained in the financial perspective agreed at
            Edinburgh will hit the own resources ceiling in 1994. The same will probably be
            true in 1995. This means that there will be insufficient appropriations available
            those years to absorb the considerable shortfalls from 1993.
            The Council rejected the Commission's initial proposal since it would allow
            adoption of a budget which appeared to exceed the own resources ceiling.
            Although legally compatible with the own resources Decision, this possibility was
            politically unacceptable to a number of Member States.
            The Commission has considered an alternative which is set out below and which
            has attracted the interest of the Council and Parliament.
            Parliament has made its acceptance of the Interinstitutional Agreement subject to
            the "express condition of a prior agreement with the Council on how to deal with
            the negative balances arising from fiscal shortfalls which must be budgetized in
            such a way that they do not undermine the availability of expenditure ceilings for
            the financing of ordinary expenditure".
            During the negotiations on the finalization of the Interinstitutional Agreement, the
            Council acknowledged that "every effort must be made to ensure that available
            funds provided for in the financial perspective can be used to meet financing
            requirements of the Community's budget expenditure, while complying in full with
            the annual ceiling on own resources". It undertook to "work out an appropriate
            solution to the problem of the treatment of balances and notes that an alternative
            suggestion to the original Commission proposal is currently being examined in
            detail".
 ---pagebreak---              In its resolution on the adoption of an Interinstitutional Agreement on budgetary
             discipline and improvement of the budgetary procedure for 1993-99, Parliament
             interpreted the assurances given by the Council Presidency as meaning that, if the
             own resources ceiling were respected, the Council guaranteed that the expenditure
             ceilings contained in the financial perspective would remain fully available for
             ordinary expenditure.
             Finally, Parliament has stated that it will ensure that this undertaking is respected
             during the budgetary procedures.
III. In these circumstances, the Commission has decided to withdraw its initial proposal and
     formally propose the alternative explored during finalization of the negotiation of the
     Interinstitutional Agreement. The initial proposal aimed to neutralize the balances; the
     alternative would eliminate them, both symmetrically and conditionally.
     When implementation of a budget is completed and the VAT and GNP bases are
     established, the financing of this budget would be recalculated and the amounts required
     redistributed among the Member States in the light of all actual revenue and expenditure
     for year n as resulting from the revenue and expenditure account and the real VAT and
     GNP bases.
     On this basis refunds would be made to Member States or they would have to make
     additional payments to adjust the payments made during the year. The balances which
     occur under the current arrangements would thus disappear. This would apply to both
     surpluses and shortfalls.
     In the specific case of expenditure actually exceeding the revised own resources ceiling,
     the refinancing of the budget would be calculated within the limit of the ceiling. The
     amount in excess of the ceiling would be refunded to the Member States in line with the
     current rules.
     The proposal is being submitted because of the special circumstances currently prevailing.
     New legislation is needed if the Edinburgh financial perspective, the Interinstitutional
     Agreement and the own resources Decision are all to be respected in 1995.
     The value of the system proposed is, however, long term. It avoids the artificial transfers
      of resources back and forth between the Member States and the Community. One
      paradoxical feature of the current system is that, in the event of favourable economic
      developments, Member States have to pay balances of resources from earlier years; this
      is equivalent to financing, in advance and for no good reason, part of the budget for the
      following year.
 ---pagebreak--- IV. New provisions to be incorporated in own resources legislation
    The treatment proposed does not require any change in the system of own resources or
    the manner in which they are established.
    (a)    Council Regulation (EEC, Euratom) No 1552/89 of 29 May 1989 implementing
           Decision 88/376/EEC, Euratom on the system of the Communities' own resources
           must, however, be amended to provide the following rules for implementing the
           solution proposed:
     1.    Provisions concerning the calculation of the refinancing of the budget
                   The provision concerning the calculation of the previous year's VAT and
                   GNP balances would be replaced by a provision stating that the financing
                   of that year's budget would be recalculated the following November on the
                   basis of the actual VAT and GNP bases and in line with actual
                   implementation as shown in the revenue and expenditure account,
                   including miscellaneous resources.
                   The financing would be recalculated within the limit of the own resources
                   ceiling since any amount in excess of this ceiling would be refunded to the
                   Member States.
                   The amounts resulting from the recalculation of the financing would be
                   redistributed among the Member States.
                   The average exchange rates for the year concerned would be used to
                   recalculate the financing.
                   It would, of course, be for the budgetary authority, acting on a proposal
                   from the Commission, to adopt a budgetary structure to accommodate the
                   new system, replacing the structure of the existing system.
        2. Provisions relating to subsequent adjustments of resources
           The corrections to the VAT and GNP bases of year n after the initial revision in
           year n + 1 are not normally very large and lead to relatively small adjustments to
           VAT and GNP resources. The financing of a given financial year would be
           recalculated only once, during the following financial year. Subsequently:
                   adjustments would be calculated as in the present system, but the uniform
                   VAT rate and the GNP call-in rate resulting from the recalculation of the
                   refinancing would be applied;
                   as in the present system, the adjustments would take the form of operations
                   for the financial year in which they take place and would thus, in due
                   course, be included in the recalculation of the financing of that financial
                   year.
 ---pagebreak--- 3.    Provisions relating to the specific eventuality of the own resources ceiling being
      exceeded
      Should it be found that the own resources ceiling was in fact exceeded, the
      amount in excess would be refunded to the Member States on the first working
      day of December following the financial year concerned and would be entered in
      the budget, as is the case now, as negative expenditure under the own resources
      ceiling of the next financial year but one.
      Appropriate estimates of any amounts in excess in the final outturn could be
      entered in the budget for the next financial year but one during the budgetary
      procedure, where necessary by means of a letter of amendment.
(b) At the same time, the Financial Regulation applicable to the general budget of the
      Communities would have to be amended to set out the procedural rules for:
              adjusting the financing of the budget for year n;
              the treatment of any amount in excess of the own resources ceiling.
Conclusions
This proposal is consistent with the own resources Decision, which sets the own
resources ceiling every year, and with the Interinstitutional Agreement, which assumes
that the resources should be used in full for financing Community policies.
It eliminates the appearance of parasitic balances by recalculating thefinancingof the
budet for the year n, without exceeding the own resources ceiling, by reference to the
figures in the revenue and expenditure account and the real VAT and GNP bases. It
eliminates the anomalies of the present system under which Member States are
refunded sums which they then have to pay back again shortly afterwards to restore
the balance of the budget for a specific financial year or, conversely, are asked to pay
additional resources which are no longer necessary. However, it does not impinge
upon the current rules, which state that a negative balance resulting from the own
resources ceiling being exceeded should count against the own resources ceiling of a
subsequent financial year.
 ---pagebreak---                                          Proposal for a
                           COUNCIL REGULATION (EC. Euratom)
                       amending Regulation (EEC, Euratom) No 1552/89
                         implementing Decision 88/376/EEC, Euratom
                       on the system of the Communities' own resources
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and in particular
Article 209 thereof,
Having regard to the Treaty establishing the European Atomic Energy Community, and in
particular Article 183 thereof,
Having regard to Council Decision 88/376/EEC, Euratom of 24 June 1988 on the system of the
Communities' own resources(1), and in particular Article 8(2) thereof,
Having regard to the proposal from the Commission(2),
Having regard to the opinion of the European Parliament^,
Having regard to the opinion of the Court of Auditors(4),
Whereas provision must be made for the financing capacity available for a given year up to the
own resources ceiling to be used in full to cover expenditure during that year, with due respect
for the principle of budgetary balance;
Whereas balances from earlier years should not therefore be taken into account, subject to the
arrangements for dealing with an expenditure outturn exceeding the own resources ceiling in the
previous year;
Whereas, for this purpose, the financing of the budget for each year should be recalculated after
implementation and the overall cost redistributed between the Member States;
Whereas, should the expenditure outturn exceed the own resources ceiling in a given year, the
excess amount should be refunded to the Member States;
(i)
     OJ No L 185, 15.7.1988, p. 24.
(2)
     OJNo
(3)
      OJNo
(4)
     OJ No
 ---pagebreak--- Whereas Council Regulation (EEC, Euratom) No 1552/89(5), as amended                          by
Regulation (Euratom, EC) No 3464/93(6), should therefore be amended accordingly,
HAS ADOPTED THIS REGULATION:
                                            Article 1
Council Regulation (EEC, Euratom) No 1552/89 is amended as follows:
1.  Article 10 is amended as follows:
    (a) The seventh subparagraph of paragraph 3 is replaced by the following:
          "Without prejudice to paragraph 4, any change in the uniform rate of VAT resources,
          in the correction granted to the United Kingdom referred to in Article 5 of Decision
          88/376/EEC, Euratom and in its financing, in the uniform rate of the additional
          resource and, where appropriate, in the GNP financial contributions, shall require the
          final adoption of a supplementary or amending budget and shall give rise to
          readjustments of the twelfths which have been entered since the beginning of the
          financial year."
    (b) Paragraphs 4, 5 and 6 are replaced by the following:
               "4. Before 15 November the Commission shall recalculate the financing of the
                    budget for the previous year on the basis of:
                         the annual statements of VAT resources bases provided by the
                         Member States in accordance with Article 7(1) of
                         Regulation (EEC, Euratom) No 1553/89,
                         figures for the GNP aggregate provided by the Member States in
                         accordance with Article 3(2) of Directive 89/130/EEC, Euratom,
                    and in the light of all revenue and expenditure operations as defined in
                    Article 15 and as contained in the revenue and expenditure account.
                    Member States' VAT resources bases shall be capped in accordance with
                    Article 2(1 )(c) of Council Decision 88/376/EEC, Euratom.
(5)
     OJNoL 155, 7.6.1989, p. 1.
(6)
     OJNoL317, 18.12.1993, p. 1
 ---pagebreak---    On the basis of the Commission's calculation of the financing, each
   Member State shall be debited with the amounts shown to be due from it in
   respect of the VAT and GNP resources and credited with the amounts of such
   resources it has paid during the year in question, after subtraction of any
   refunds due under paragraph 5.
   The Commission shall determine the corrections and shall inform the
   Member States in time for them to enter them in the account referred to in
   Article 9(1) of this Regulation on the first working day of December of the
   same year.
   The average exchange rates for the year in question are used both for the
   conversion into ecus of the VAT and GNP bases and for the conversion into
   national currencies of the amount of these resources due from each
   Member State on the basis of the recalculation of the financing for the year
   in question
5. Should expenditure exceed the own resources ceiling, budget financing shall
   be recalculated on the basis of the parameters stipulated in paragraph 4, with
   the exception of the amount of resources, which shall be replaced by the own
   resources ceiling.
   Any amount exceeding the own resources ceiling for the previous year
   determined on the basis of the figures for the GNP aggregate and its
   ^components provided by the Member States in accordance with Article 3(2)
   of Directive 89/130/EEC, Euratom shall be refunded to the Member States on
   the first working day of December.
   Tliis refund shall be distributed between the Member States by reference to
   their payments of the GNP resource in the year in question. The -amount by
   which expenditure exceeds the own resources ceiling for a given year shall
   be entered as negative revenue in the budget for the next year but one and
   shall count against the own resources ceiling for that year.
6. Any corrections to the VAT resources base under Article 9(1) of
   Regulation (EEC, Euratom) No 1553/89 and any changes made to GNP for
   earlier years pursuant to Article 3(2) of Directive 89/130/EEC, Euratom,
   subject to Article 6 of that Directive, shall give rise for each Member State
   concerned to the adjustment of the VAT and GNP resources.
   The VAT resources base of a Member State shall be capped,
   where appropriate, in accordance with Article 2(1 )(c) of
   Decision 88/376/EEC, Euratom.
 ---pagebreak---                 The Commission shall calculate the adjustment by applying to the revised
                bases the uniform VAT rate and the GNP call-in rate resulting from the
                recalculation of the financing for the year in question. It shall inform the
                Member States of the adjusted amounts in time for them to enter them in the
                account referred to in Article 9(1) of this Regulation on the first working day
                of December of the same year."
   (c)     Paragraph 7 is deleted.
   (d)     Paragraphs 8 and 9 are replaced by the following:
           "8. After 30 September of the fourth year folllowing a given financial year, any
                 changes to GNP shall no longer be taken into account, except on points
                notified within this time limit either by the Commission or by the
                Member State.
           9.    The operations referred to in paragraph 6 constitute modifications to revenue
                 in respect of the financial year in which they occur."
2. In Article 15, the first subparagraph is replaced by the following:
   "The balance of a given financial year shall consist of the difference between.
           all the revenue collected in respect of that financial year, and
           the amount of payments made against appropriations for that financial year
           increased by the amount of the appropriations for the same financial year carried
           over pursuant to Article 7(l)(b) and (c) and (2)(b) of the Financial Regulation."
3. Article 16 is replaced by the following:
                                         "Article 16
   The Commission shall, before the end of October in each financial year, make an estimate
   of the own resources, referred to in Article 2(1 )(a) and (b) of Decision 88/376/EEC,
   Euratom, collected for the entire year, on the basis of the data at its disposal at that time.
   If appreciable differences from the original estimates appear, they shall give rise to a
   supplementary or amending budget."
4. Article 16a is inserted, as follows.
                                        "Article 16a
   Should the expenditure outturn exceed the own resources ceiling in a given year, as
   referred to in Article 10(5), an appropriate estimate of the excess amount shall be entered
   in the budget of the next year but one during the budgetary procedure, where necessary
   by means of a letter of amendment.
                                              10
 ---pagebreak---         If it is not possible to enter the definitive excess amount in the budget before it has been
        adopted, the difference in relation to the estimate shall be entered by means of a
        supplementary or amending budget."
                                                Article 2
This Regulation shall enter into force on the seventh day following that of its publication in the
Official Journal of the European Communities.
However, it shall not apply to any adjustments of VAT and GNP-based resources for years prior
to 1993.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels,                                                            For the Council
                                                                              The President
                                                    11
 ---pagebreak---                                           Proposal for a
                        COUNCIL REGULATION (ECSC. EC. Euratom)
                    amending the Financial Regulation of 21 December 1977
                 applicable to the general budget of the European Communities
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Coal and Steel Community, and in
particular Article 78h thereof,
Having regard to the Treaty establishing the European Community, and in particular
Article 209 thereof,
Having regard to the Treaty establishing the European Atomic Energy Community, and in
particular Article 183 thereof,
Having regard to the proposal from the Commission(,),
Having regard to the opinion of the European Parliament^,
Having regard to the opinion of the Court of Auditors(3),
Whereas Council Regulation (EEC, Euratom) No 1552/89 of 29 May 1989 implementing
Decision 88/376/EEC, Euratom on the system of the Communities' own resources(4), as last
                                                {5)
amended by Regulation (EC, Euratom) No             , lays down the rules for clearing the balance
from each year;
Whereas the aforesaid Regulation also contains provisions for dealing with the eventuality of the
expenditure outturn exceeding the own resources ceiling;
Whereas the Financial Regulation of 21 December 1977(6), as last amended by
Regulation (Euratom, ECSC, EEC) No 610/90(7), must be amended accordingly,
(i)
        OJNo
(2)
        OJ
O)
        OJ
(4)
        OJ NoL 155, 7.6.1989, p. 1.
(5)
        OJNoL
(6)
        OJ NoL 356, 31.12.1977, p. 1
(7)
        OJNoL70, 16.3.1990, p. I.
                                                12
 ---pagebreak--- HAS ADOPTED THIS REGULATION:
                                              Article 1
The Financial Regulation of 21 December 1977 is amended as follows:
1.   The following paragraph is added to Article 6:
     "The repayment of any amount in excess of the own resources ceiling shall be made in
     accordance with Article 10(5) of Regulation (EEC, Euratom) No 1552/89."
2.   Article 32 is replaced by the following:
                                             "Article 32
     The balance from each financial year shall be cleared in accordance with Article 10(4) of
     Regulation (EEC, Euratom) No 1552/89.
     Should the expenditure outturn exceed the own resources in a given year, the excess amount
     shall be entered as negative revenue in the budget of the next year but one in accordance
     with Article 10(5) of Regulation (EEC, Euratom) No 1552/89.
     An appropriate estimate of the excess amount, calculated in accordance with Article 10(5)
     of Regulation (EEC, Euratom) No 1552/89 shall be entered in the budget during the
     budgetary procedure, if necessary by means of a letter of amendment.
     If it is not possible to enter the definitive excess amount in the budget before it has been
     adopted, the diffference in relation to the estimate shall be entered by means of a
     supplementary or amending budget.
     The second paragraph of Article 14 and the first subparagraph of Article 15(3) shall not be
     applicable for the purposes of the presentation of the supplementary or amending budget
     provided for in Article 16(a) of Regulation (EEC, Euratom) No 1552/89."
                                              Article 2
This Regulation shall enter into force on the seventh day following that of its publication in the
Official Journal of the European Communities.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels,                                                          For the Council
                                                                            The President
                                                  13
 ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM (93) 683 final
                                                      DOCUMENTS
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                                 Catalogue number : CB-CO-93-740-EN-C
                                                             ISBN 92-77-63058-2
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