CELEX: 51988PC0137
Language: en
Date: 1988-03-16
Title: Proposal for a COUNCIL DECISION on the system of the Communities' own resources (....../EEC/Euratom/ECSC) (submitted by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (88) 137
Vol. 1988/0041
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Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 concernant
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                   COM ( 88 ) 137 final
                                                   Brussels / 16 March 1988
                         Proposai for a
                         COUNCIL DECISION
         on the system of the Communities' own resources
                    ( . / EEC / Euratom/ ECSC )
                  ( submitted by the Commission )
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 ---pagebreak---                                      COUNCIL DECISION
                    on the system of the Communities' own resources
                               ( . / EEC, Euratom, ECSC)
       ( This proposal amends and replaces C0M(87)420 final of 31 July 1987,
                          sent to the Council on 4 August 1987)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic Community, and
in particular Article 201 thereof ,
Having regard to the Treaty establishing the European Atomic Energy Community ,
and in particular Article 173 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 Economic and Social Committee^,
Whereas Article 199 of the Treaty establishing the European Economic Community
requires that all estimated items of revenue and expenditure be included in
the budget ; whereas the budget shall be in balance;
Whereas
resources'1t^g. Counci l Decision
                , hereinafter      of 7 May
                                referred    1985"the
                                         to as    on the Communities'
                                                     Decision of 7 Maysystem
                                                                       1985", ofraised
                                                                                  own
to 1.4 Z the limit on the rate applied to the uniform value added tax base
previously set at . 1 Z by the Council Decision of 21 April 1970 on the
replacement of.financial contributions from Member States by the Communities'
own resources'' 3 hereinafter referred to as "the Decision of 21 April 1970",
                                                                          «
Whereas the resources available within the limit of 1.4 Z are no longer
sufficient to cover the estimates of Community expenditure ;
Whereas the Community must be provided with stable and guaranteed financial
means to be able to operate the common policies , improve the present situation
and ensure a sufficiently lengthy period of budgetary security;
Whereas the Single European Act opens up new possibilities to the Community ;
whereas Article 8a of the treaty establishing the European Economic Community
provides for the completion of the internal market by 31 December 1992;
Whereas the European Council meeting in Brussels on 11 , 12 and 13 February
1988 reached certain conclusions ;
(1 )
( 2)
( 3)
( 4 ) 0J     L 128 of 14.5.1985 , p. 15
( 5 ) 0J     L 94 of 28.4.1970, p. 19
 ---pagebreak---                                                - 2 -
       Whereas, in accordance with these conclusions , the Community will , for each
       year between now and 1992 , be assigned a maximum amount of own resources
       corresponding to 1.2 X of the total of the Member States' gross national
       product for the year at market prices , hereinafter referred to as "GNP";
       Whereas observance of this ceiling is based on maintenance of a strict
       relationship between commitment appropriations and payment appropriations ,
       implying an overall volume of commitment appropriations corresponding in 1992
       to 1.3 X of Member States' 6NP ;
       Whereas these ceilings should remain applicable until this Decision is
       amended;
       Whereas , with a view to matching the resources paid by each Member State more
   • ? closely with its ability to contribute , the composition of Community own
• , ^  resources must be amended and enlarged; whereas it is necessary for this
       pur pose :
       - to fix at 1.4 % the maximum rate to be applied to each Member State 's
         . uniform base for value added tax , hereinafter referred to as VAT, limited
           where appropriate to 55 X of its GNP ;
       - to introduce an additionaU type of resource to balance budget revenue and
           expenditure , based on the sum of Member States' GNP; for this purpose , the
           Commission will introduce a directive on the application of the rules *' ■
   ,       governing the establishment of GNP;                        1
       - to provide for the possibility of <new resources connected with economic and
           tax harmonization in the Community;     :             *
       Whereas the customs duties on products coming under the Treaty establishing
       the European Coal and Steel Community should be included in Community own
       resources ;
       Whereas an agreement has been reached- by the Parliament , the Council and the
       Commission ( budgetary discipline );
       Whereas the conclusions of the European Council of 25 and 26 June 1984 on the
       correction of budgetary imbalances will have to be adjusted to take account of
       the capping of the VAT base and the introduction of an additional resource ;
       whereas this adjustment should ensure that the VAT share of the United Kingdom
       will be replaced by its share of payments under the third and fourth resources
       and that the effect on the United Kingdom in respect of a given year of the
       introduction of the fourth resource which is not compensated by this change
       will be offset by an adjustment to the compensation in respect of that year ;
       whereas the contributions of Spain and Portugal to the financing of the
       correction should be reduced in accordance with the rebates provided for in
       articles 187 and 374 of the Act concerning the conditions of accession of the
       Kingdom
       treaties'0^f. ,Spain and the Portuguese Republic and the adjustments to the
       Whereas when the Community budget contains a monetary reserve , hereinafter
       referred to as the "EAGGF monetary reserve ", to offset the impact of
       significant and unforeseen fluctuations in the ECU/dollar parity on the
       expenditure under the Guarantee Section of the European Agricultural Guidance
       and Guarantee Fund, this Decision must provide for it to be covered by special
       provisions ;
       ( 6) OJ n* L 302 of 15.11.1985 , p. 23
                                                                                        3
 ---pagebreak---                                          - 3 -
Whereas provisions must be laid down to cover the changeover from the system
introduced by the Decision of 7 May 1985 to that arising from this Decision;
Whereas the European Council of 11 , 12 and 13 February 1988 provided that this
Decision should take effect on 1 January 1988,
HAS LAID DOWN THESE PROVISIONS, WHICH IT RECOMMENDS TO THE MEMBER STATES FOR
ADOPTION :
                                       Article 1
The Communities shall be allocated resources of their own in accordance with
the following Articles in order to ensure that their budget is in balance .
The budget of the Communities shall , irrespective of other revenue , be
financed entirely from the Communities' own resources .
                                       Article 2
1.    Revenue from the following shall constitute own resources entered in the
      budget of the Communities :
   a)   levies , premiums , additional or compensatory amounts , additional amounts
        or factors and other duties established or to be established by the
        institutions of the Communities in respect of trade with non-member
        countries within the framework of the common agricultural policy, and
        also contributions and other duties provided for within the framework
        of the common organization of the markets in sugar;
   b)   Common Customs Tariff duties and other duties established or to be
        established by the institutions of the Communities in respect of trade
        with non-member countries and customs duties on products coming under
        the Treaty establishing the European Coal and Steel Community;
   c)   the application of a uniform rate valid for all Member States to the
        assessment base for value added tax which is determined in a uniform
        manner for Member States according to Community rules ; however the
        assessment base for any Member State to be taken into account for the
        purposes of this Decision shall not exceed 55 X of its GNP;
   d)   the application of a rate - to be determined under the budgetary
        procedure in the light of the total of all other revenue - to the sum of
        all the Member States' GNP;
      Revenue deriving from any new charges introduced within the framework of a
      common policy , in accordance with the treaty establishing the European
      Economic Community or the Treaty establishing the European Atomic Energy
      Community , provided the procedure laid down in Article 201 of the Treaty
      establishing the European Economic Community or in Article 173 of the
      Treaty establishing the European Atomic Energy Community has been
      followed , shall constitute own resources entered in the budget of the
      Communities .
2.    The sum of the VAT payments under paragraph 1 c ) and Article 5 ( 2 ) must
      reach for at least one Member State but shall not exceed for any Member
      State an amount corresponding to 1.4 X of its base .
                                                                                   4
 ---pagebreak---                                                - 4 -
  3.    The Member States shall retain , by way of collection costs , 10 % of the
        amounts paid under paragraphs 1 a ) and 1 b ).
. 4.    The rate fixed under paragraph 1 d ) shall apply to the GNP of each Member
        State .
  5.    If , at the beginning of the financial year , the budget has not been
        adopted, the previous uniform VAT rate and rate applicable to Member
        States' GNP , without prejudice to whatever provisions may be adopted in
        accordance with Article 8(2 ) by reason of the entry of an EA6GF monetary
        reserve in the budget , shall remain applicable until the entry into force
        of the new rates .
  6 . By way of derogation from paragraph 1 c ) if , on 1 January of the financial
        year in question, the rules for determining the uniform basis for
        assessing VAT are not yet applied in all the Member States , the financial
        contribution to the budget of the Communities to be made by a Member State
        not yet applying this uniform basis shall be determined according to the
     . proportion of its gross national product at market prices to the sum total
        of the gross national product of the Member States at market prices in the
        first three years of the five-year period preceding the year in question .
        This derogation shall cease to have effect as soon as the rules for
        determining the uniform basis for assessing valued added tax are applied
        in all Member States .
                                             Article 3
  1.    The total amount of own resources assigned to the Communities may not
        exceed 1.20 % of the total GNP of the Community .
  2.    The commitment appropriations entered in the general budget of the
        Communities may not exceed 1.30 X of the total GNP of the Community .
                                             Article 4
  The United Kingdom shall be granted a correction in respect of budgetary
  imbalances . This correction shall consist of a basic amount and an adjustment .
  The adjustment shall correct the basic amount to a reference compensation
  amount .                                              \I
                                                         I
  1.    The basic amount shall be established by :
     a)     calculating the difference , in the preceding financial year, between
            - the percentage share of the United Kingdom in the sum total of the
              payments referred to in Article 2(1 ) ( c ) and (d ) made during the
              financial year , including adjustments at the uniform rate in respect
              of earlier financial years,
              and                                            I
            - the percentage share of the United Kingdom in total allocated
              expenditure ;
     b) applying the difference thus obtained to total allocated expenditure;
     e)    multiplying the result by 0.66 .
  2 . The reference compensation is the correction resulting from application of
        ( a ), ( b) and ( c ) below , corrected by the benefits accruing to the United
        Kingdom from the changeover to capped VAT and the payments referred to in
        Article 2 ( 1 ) ( d ).
 ---pagebreak---                                              - 5 -
       It shall be established by :
    a ) calculating the difference , in the preceding financial year , between
          – the percentage share of the United Kingdom in the sum total of VAT
              payments which would have been made during that financial year ,
              including adjustments in respect of earlier financial years , for the
              amounts financed by the resources referred to in Article 2 ( 1 ) ( c ) and
               (d ) if the uniform VAT rate had been applied to non-capped bases , and
          - the percentage share of the United Kingdom in total allocated
              expenditure;
   b) applying the difference thus obtained to total allocated expenditure ;
    c)    multiplying the result by 0.66;
    d)    taking the difference between the payments by the United Kingdom taken
           into account in the first indent of paragraph 2 ( a ) and the first indent
          of paragraph 1 ( a );
    e)     subtracting the amount calculated at ( d ) from the amount calculated at
           ( c ).
3.     The basic amount is adjusted in such a way as to correspond to the
       reference compensation amount .
                                             Article 5
1.     The cost of the correction shall be borne by the other Member states in
       accordance with the following arrangements :
       the distribution of the cost shall first be calculated by reference to
       each Member State 's share of the payments referred to in Article ( 2 ) ( 1 )
       ( d ), the United Kingdom being excluded ; it shall then be adjusted in such
       a way as to restrict the share of the Federal Republic of Germany to two
       thirds of the share resulting from this calculation .
2.     The correction shall be granted to the United Kingdom by a reduction in
       its VAT payments .
       The costs borne by the other Member States shall be added to their VAT
       payments .
3 . The Commission shall perform the calculations required for the application
       of Article 4 and the present Article .
4.     If , at the beginning of the financial year , the budget has not been
       adopted, the correction granted to the United Kingdom and the costs borne
       by the other Member States as entered in the last budget finally adopted
       shall remain applicable .
                                           Article 6
The revenue referred to in Article 2 shall be used without distinction to
finance all expenditure entered in the budget of the Communities without
prejudice to whatever provisions may be adopted in accordance with Article 8
( 2 ) by reason of the entry of an EAGGF monetary reserve in the budget .
                                                                                         6
 ---pagebreak--- This provision shall be without prejudice to the treatment of contributions by
certain Member States to supplementary programmes provided for in Article
130 L of the EEC Treaty .
                                          Article 7
Any surplus of the Communities' own resources over the actual expenditure
during a financial year shall be carried over to the following financial year .
                                          Article 8
1 . The Community own resources referred to in Article 2 shall be established
  - and collected by the Member States in accordance with national provisions
      imposed by law, regulation of administration action, which shall , where
      necessary , be adapted to meet the requirements of Community rules . Member
      States shall make these resources available to the Commission .
2 . Without prejudice to the auditing of accounts provided for in Article 206a
      of the Treaty establishing the European Economic Community , or to the
      inspection arrangements made pursuant to Article 209 ( c ) of that Treaty ,
      the Council shall , acting unanimously on a proposal from the Commission
      and after consulting the European Parliament , adopt the provisions
      necessary to apply this Decision and to make possible the inspection of
      the collection, making available to the Commission and payment of the
      revenue referred to in Article 2 and in Article 5 .
                                          Article 9
The mechanism for the graduated refund of own resources accruing from value
added tax or GNP-based financial contributions introduced for the Kingdom of
Spain and the Portuguese Republic up to 1991 by Articles 187 and 374 of the =
Act concerning the conditions of accession of the Kingdom of Spain and the /
Portuguese Republic and the adjustments to the Treaties shalt apply to the own
resources accruing from VAT and the GNP-based resource referred to in Article
2 ( 1 ) ( c ) and ( d ) of this Decision . It shall also apply to payments by these
two Member States in accordance with Article 5 ( 2 ) of this Decision .
                                        Article 10
The Commission shall submit by the end of 1991 a report on the operation of
the system, including a re-examination of the correction of budgetary
imbalances granted to the United Kingdom, established by this Decision .
                                        Article 11
1 . Member States shall be notified of this Decision by the Secretary-General
      of the Council of the European Communities ; it shall be published in the
      Official Journal of the European Communities .
     Member States shall notify the Secretary-General of the Council of the
      European Communities without delay of the completion of the procedures for
      the adoption of this Decision in accordance with their respective
      constitutional requirements .
      This Decision shall enter into force on the first day of the month
      following receipt of the last of the notifications referred to in the
      second subparagraph . It shall take effect on 1 January 1988 .
 ---pagebreak---                                            - 7 -
2. a ) Subject to points ( b ) and ( c ) above , the Decision of 7 May 1985 shall
       be repealed on 1 January 1988 . To the extent necessary , any references
       to the Decision of 21 April 1970 or to the Decision of 7 May 1985 shall
       be construed as references to this Decision
   b) Article 3 of the Decision of 7 May 1985 shall continue to apply to the
       calculation and adjustment of revenue accruing from the application of
       rates to the uncapped uniform assessment basis for value added tax in
       1987 and earlier years .
       For 1988 the deduction in favour of the United Kingdom in respect of
       previous financial years shall be calculated in accordance with points
       ( b) ti >, < ii ) and ( iii ) of Article 3 (3 ) of the Decision of 7 May 1985 .
       The distribution of the cost of financing if shall be calculated in
       accordance with Article 5 ( 1 ) of this Decision . The amounts
       corresponding to the deduction and the distribution of the cost of
       financing it shall be assigned to the VAT payments in accordance with
       Article 5 ( 2 ) of this Decision . When Article 2 ( 6 ) has to be applied ,
       the value added tax payments shall be replaced by financial
       contributions in the calculations referred to above for any Member
       State concerned . This system shall also apply to the payments of
       adjustments of corrections for earlier years .
   c ) Article 4 ( 2) of the Decision of 7 may 1985 shall continue to apply to
       the financial contributions needed to finance the completion of the
       supplementary programme for the operation of the HFR reactor of 1984-
       1987 .
                                          Done at
                                                  For the Council
                                                   The President