CELEX: 51994PC0071
Language: en
Date: 1994-03-07
Title: AMENDED PROPOSAL FOR A COUNCIL DECISION REPLACING DECISION 88/376/EEC, EURATOM ON THE SYSTEM OF THE COMMUNITIES' OWN RESOURCES

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                            AMENDED PROPOSAL FOR A COUNCIL DECISION
                             REPLACING DECISION 88/376/EEC, EURATOM
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                             ON THE SYSTEM OF THE COMMUNITIES* OWN
                                                    RESOURCES
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                              (presented by the Commission pursuant to Article 189 A (2)
                                                   of the EC-Treaty)
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 ---pagebreak---                           EXPLANATORY MEMORANDUM
On 14 September 1993 the Commission presented a proposal for a Council Decision on
the system of the Communities' own resources.1
The Council consulted the institutions concerned.          The Economic and Social
Committee delivered its opinion on 30 November 1993 and Parliament delivered its
opinion on 9 February 1994.
In accordance with Article 189a(2) of the EC Treaty, the Commission has amended its
proposal to take into account the opinions delivered by the institutions which have been
consulted.
The amendments accepted by the Commission may be summarized as follows:
        changes have been made to the drafting of the second, third, fifth, ninth,
        fifteenth and nineteenth recitals; in particular the reference to the European
        Council of 11 and 12 December 1992 has been omitted, as a similar reference is
        already included in the fourth recital;
        the tenth recital has been retained, but now states that the formula for
        calculating the correction of budgetary imbalances is confirmed (by the new
        Decision itself), rather than indicating that the European Council has already
        confirmed it;
        the sixteenth recital has been amended to omit the reference to the Copenhagen
        European Council and add the phrase "with a view to improving the own
        resources system". Parliament had proposed the phrase, " partly with a view to
        the establishment of a genuine own resources system";
        the seventeenth recital has been amended to omit the reference to the European
        Council and to stipulate that the Commission has been asked to submit
        proposals for reforming the financing of the Communities. However, the
        Commission cannot undertake to submit these proposals before the
        intergovernmental conferences open in 1996, as requested by Parliament.
        COM(93) 438 final.
 ---pagebreak---                                                7-' v.
         a new recital has been added which states that the total amount of available own
         resources will be calculated as a percentage of GNP until the appropriate
         institutions adopt a different system;
         Article 3(2) has been amended to stipulate that the total commitment
         appropriations entered in the general budget of the Communities over the period
         1995 to 1999 may not exceed 1.335% of the total GNP of the Community in
         1999, subject to a possible adjustment agreed by the institutions constituting the
         budgetary authority.
         the first sentence of Article 4 has been amended to read as follows: "The United
         Kingdom shall continue to be granted a correction in respect of budgetary
         imbalances.";
         Article 9 has been amended to state that the Commission will present a study on
         the options for reforming the financing of the Communities, possibly before the
         report scheduled for 1999. However, the Commission cannot undertake to
         present this study before the intergovernmental conferences open in 1996, as
         requested by Parliament.
Finally, the Commission has not accepted Parliament's proposal to add the following
recital:
"Whereas the institutions of the European Union agree to elaborate, in connection with
the 1996 intergovernmental conferences, a new own resources system which should be
based on the conclusions of the 1994 conference on own resources between Parliament,
the Council and the Commission, and should be guided by the criteria of direct
revenue-raising, equal, direct and equitable European taxation, transparency and
identifiability;"
Parliament's proposal is not the subject of an agreement between the institutions.
 ---pagebreak---                                                             A i-
                                              Amended proposal for a COUNCIL DECISION
                                               replacing decision 88/376 EEC, Euratom
                                          on the system of the communities' own resources
                                    (presented by the Commission pursuant to Article 189 A (2)
                                                         of the EC-Treaty)
Having regard to the opinion of the European Parliament and of the Economic and Social Committee the commission submits its
proposal amended as follows :
 ---pagebreak---                                                              2 -
THE COUNCIL OF THE EUROPEAN UNION
Having regard to the Treaty establishing the European
Community, and in particular Articles 199 and 201 ,
Having regard to the Treaty establishing the European Atomic
Energy community, and in particular Articles 171(1) and 173
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 Economic and Social
Committee, 3
1  OJ No C
2  Opinion delivered on
3  OJ No C
 ---pagebreak---                                                               - 3 -
Whereas Council Decision 88/376/EEC, Euratom of 24 June 1988
on the system of the Communities' own resources ^ expanded
and amended the composition of own resources by capping the
VAT resources base at 55% of gross national product for the
year at market prices (hereinafter "GNP") with the maximum
call-in rate being maintained at 1.4%, and by introducing an
additional resource, based on the total GNP of Member states,
designed to guarantee budgetary balance between revenue and
expenditure ;
Whereas this system has produced a sounder basis for financing    Whereas this system has produced a basis for financing the
the Community; whereas, however, the structure of the system      Community; ...
should make more allowance for each Member State's ability to
contribute by correcting the regressive aspects of the system
for the least prosperous Member states;
Whereas the Community must have adequate resources to finance     Whereas the Community must have adequate own resources to
its policies; whereas its revenue must match the expenditure      finance its policies; whereas its own resources are based on
judged necessary for these policies, for which the priorities     the expenditure judged necessary for these policies, for which
were set in the financial perspective contained in the            the priorities were set in the financial perspective contained
Interinstitutional Agreement between the European Parliament,     in the Interinstitutional Agreement between the European
the Council and the Commission, which will take effect on         Parliament, the Council and the Commission, which took effectf
1 January 1995;                                                   on 29 October 1993 ;
4   OJ No L 185, 15.7.1988, p. 24
 ---pagebreak---                                                                - 4
Whereas the European Council meeting in Edinburgh on 11 and
12 December 1992 reached certain conclusions;
Whereas, in accordance with these conclusions, the Community       Whereas, in accordance with these conclusions, the Community
will, by 1999 , be assigned a maximum amount of own resources      should,by 1999 , be assigned a maximum amount of own resources
corresponding to 1.27% of the total of the Member States'GNP;      corresponding to 1.27% of the total of the Member States' GNP;
Whereas observance of this ceiling requires that the total
amount of own resources at the Community's disposal for the
period 1995 to 1999 does not in any one year exceed a
specified percentage of the sum of the Community's GNP for the
year in question; whereas that percentage has been set by
reference to the expenditure ceilings agreed by the Community
institutions;
Whereas an overall ceiling of 1.335% of the Member States' GNP
is set for commitment appropriations; whereas an orderly
progression of commitment appropriations and payment
appropriations must be ensured;
Whereas these ceilings should remain applicable until this
Decision is amended;
 ---pagebreak---                                                                - 5 -
Whereas, with a view to matching the resources paid by each        Whereas, with a view to matching the resources paid by each
Member State more closely with its ability to contribute, the      Member State more closely with its ability to contribute, the
European Council of 11 and 12 December 1992 decided to amend       composition of Community own resources should be amended ;
the composition of Community own resources:
-  by lowering the ceiling for the uniform rate to be applied
   to the uniform value added tax base of each Member State
   from 1.4% to 1.0% in equal steps between 1995 and 1999;
-  by, if necessary, capping at 50% of GNP from 1995 onwards          by, capping at 50% of GNP from 1995 onwards the value added
   the value added tax base of the Member States whose per            tax base of the Member States whose per capita GNP is less
   capita GNP is less than 9 0% of the Community average and by       than 9 0% of the Community average and by reducing the
   reducing the capping of the base from 55% to 50% in equal          capping of the base from 55% to 50% in equal steps over the
   steps over the period 1995-99 for the other Member States;         period 1995-99 for the other Member States;
Whereas the European Council of 11 and 12 December confirmed       Whereas the formula for calculation of the correction of
the formula for the calculation of the correction of budgetary     budgetary imbalances defined in Decision 88/376/EEC, Euratom,
imbalances defined in the Decision 88/376/EEC, Euratom;            is confirmed ;
 ---pagebreak---                                                                - 6 -
Whereas, by virtue of Article 127 of the 1979 Act of Accession
and Articles 187 and 374 of the 1985 Act of Accession, Greece
until 1985 and Spain and Portugal until 1991 were refunded a
proportion of their payments of VAT own resources, the
GNP-based resource and GNP-based financial contributions;
whereas these refunds constituted expenditure from the general
budget;
Whereas any adjustments of VAT and GNP bases for the years
from 19 81 to 19 91 will entail corrections of the amounts of
the refunds; whereas arrangements should be made to take
account of such adjustments in the general budget;
Whereas the budgetary imbalances should be corrected in such a
way as not to affect the own resources available for the
Community's policies;
Whereas the monetary reserve, hereinafter referred to as the
'EAGGF monetary reserve', is covered by specific provisions;
Whereas the conclusions of the European Council of 11 and          Whereas two reserves are to be created in the Community budget
12 December 1992 provided for the creation in the Community        one designed to respond rapidly to emergency aid requirements
budget of two reserves, one designed to respond rapidly to         in non-member countries, the other to finance a loan guarantee
emergency aid requirements in non-member countries, the other      fund; whereas these reserves should be covered by specific
to finance a loan guarantee fund; whereas these reserves           provisions;
should be covered by specific provisions;
 ---pagebreak---                                                                - 7 -
Whereas the European Council of Copenhagen of 22 and               Whereas the importance of continuing to combat fraud and
23 June 199 3 underlined the importance of continuing to combat    irregularities in connection with the Community budget also
fraud and irregularities in connection with the Community          makes it necessary for more detailed provisions to be laid down
budget; whereas more detailed provisions should be laid down       concerning the Commission's role in improving national VAT
concerning the Commission's role in improving national VAT         registration, calculation, recovery and control procedures with
registration, calculation, recovery and control procedures;        a view to improving the own resources system;
Whereas the European Council has asked the Commission to carry     Whereas the Commission has been asked to consider proposals for
out a study of possible candidates for a fifth resource;           reforming the Union's finances and a possible fifth resource.
Whereas provisions must be laid down to cover the changeover
from the system introduced by Decision 88/376/EEC, Euratom to
that arising from this Decision;
                                                                   New consideration
                                                                   The total amount of available own resources shall be equivalent
                                                                   to a percentage of the gross national product until the
                                                                   appropriate institutions adopt a different system.
Whereas the European Council of 11 and 12 December 1992            Whereas it is intended that this Decision should take effect on
provided that this Decision should take effect on                  1 January 1995;
1 January 1995;
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 the
financing of their budget.
 ---pagebreak---                                                                - 8 -
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;
 ---pagebreak---                                                                - 9 -
(c)    the application of a uniform rate valid for all Member
       States to the VAT assessment base which is determined
       in a uniform manner for Member states according to
       Community rules; however, the assessment base to be
       taken into account for the purposes of this Decision
       shall not exceed 50% of GNP in the case of Member
       States whose GNP is less than 90% of the Community
       average; for Member states not fulfilling this
       condition, the assessment base to be taken into account
       shall not exceed:
       54% of their GNP  in 1995
       53% of their GNP in  1996
       52% of their GNP  in 1997
       51% of their GNP  in 1998
       50% of their GNP  in 1999
(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 established in accordance with Community rules laid
       down in Council Directive 89/130/EEC, Euratom.^
5  OJ No L 49, 21.2.1989, p. 26
 ---pagebreak---                                                               - 10 -
2. Revenue deriving from any new charges introduced within the
framework of a common policy, in accordance with the Treaty
establishing the European Community or the Treaty establishing
the European Atomic Energy Community, provided the procedure
laid down in Article 201 of the Treaty establishing the
European Community or in Article 173 of the Treaty
establishing the European Atomic Energy Community has been
followed, shall also constitute own resources entered in the
budget of the Communities.
3. Member states shall retain, by way of collection costs, 10%
of the amounts paid under 1(a) and (b).
4. The uniform rate referred to in 1(c) shall correspond to
the rate resulting from:
(a)    the application to the VAT assessment base for the
       Member States of:
       1.32% in 1995
       1.24% in 1996
       1.16% in 1997
       1.08% in 1998
       1.00% in 1999, and
 ---pagebreak---                                                               - 11 -
(b)    the deduction of the gross amount of the reference
       compensation referred to in Article 4(2). The gross
       amount shall be the compensation amount adjusted for
       the fact that the United Kingdom is not participating
       in the financing of its own compensation and the
       Federal Republic of Germany's share is reduced by
       one-third. It shall be calculated as if the reference
       compensation amount were financed by Member States
       according to their VAT assessment bases established in
       accordance with Article 2(1)(c).
5. The rate fixed under paragraph 1(d) shall apply to the GNP
of each Member State.
6. 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 the
provisions adopted in accordance with Article 7(2) as regards
the EAGGF monetary reserve, the reserve to finance the Loan
Guarantee Fund and the reserve for emergency aid in non-member
countries, shall remain applicable until the entry into force
of the new rates.
7. For the purposes of applying this Decision, GNP shall mean
gross national product for the year at market prices.
 ---pagebreak---                                                               - 12 -
                           Article 3
1. The total amount of own resources assigned to the
Communities may not exceed 1.27% of the total GNP of the
Community for payment appropriations.
The total amount of own resources assigned to the Communities
may not, for any of the years during the period 1995 to 1999,
exceed the following percentages of the total GNP of the
Community for the year in question:
- 1995    1.21,
- 1996    1.22,
- 1997    1.24,
- 1998    1.26,
- 1999    1.27.
2. The commitment appropriations entered in the general budget    2. The commitment appropriations entered in the general budget
of the Communities over the period 1995 to 1999 must follow an    general budget of the Communities over the period 1995 to 1999
orderly progression resulting in a total amount which does not    must follow an orderly progression resulting in a total amount
exceed 1.335 % of the total GNP of the Community in 1999. An      which, subject to an adjustment agreed by the institutions
orderly ratio between commitment appropriations and payment       constituting the budgetary authority, must not exceed 1.335% of
appropriations shall be maintained to guarantee their             the total GNP of the Community in 1999.
compatibility and to enable the ceiling mentioned in
paragraph 1 to be observed in subsequent years.
3. The overall ceilings referred to in paragraphs 1 and 2
shall continue to apply until such time as this Decision is
amended.
 ---pagebreak---                                                                 - 13 -
                           Article  4
The United Kingdom shall be granted a correction in respect of      The United Kingdom shall continue to be granted a correction in
budgetary imbalances.  This correction shall consist of a           respect of budgetary imbalances.
basic amount and an adjustment.    The adjustment shall correct
the basic amount to a reference compensation amount.
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
       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.
 ---pagebreak---                                                               - 14 -
2. The reference compensation shall be the correction
resulting from application of (a), (b) and (c) below,
corrected by the effects arising for the United Kingdom from
the changeover to capped VAT and the payments referred to in
Article 2(1)(d).
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;
 ---pagebreak---                                                              - 15 -
(d)    subtracting the payments by the United Kingdom taken
       into account in the first indent of 1(a) from those
       taken into account in the first indent of 2(a);
(e)    subtracting the amount calculated at (d) from the
       amount calculated at (c).
3. The basic amount shall be 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.
 ---pagebreak---                                                               - 16 -
2. The correction shall be granted to the United Kingdom by a
reduction in its payments resulting from the application of
Article 2. The costs borne by the other Member States shall
be added to their payments resulting from the application for
each Member State of Article 2.
3. The Commission shall perform the calculations required for
the application of Article 4 and this 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. However, the revenue needed to cover in
full or in part the EAGGF monetary reserve, the reserve to
finance the Loan Guarantee Fund and the reserve for emergency
aid in non-member countries, entered in the budget of the
Communities, shall not be called up from the Member States
until the reserves are implemented. Provisions for the
operation of these reserves shall be adopted as necessary in
accordance with Article 7(2).
 ---pagebreak---                                                               - 17 -
The preceding subparagraph shall be without prejudice to the
treatment of contributions by certain Member States to
supplementary programmes provided for in Article 13OL of the
Treaty establishing the European Community.
                           Article 7
1. The Community own resources referred to in Article 2(1)(a)
and (b) shall be collected by the Member States in accordance
with the national provisions imposed by law, regulation or
administrative action, which shall,where appropriate, be
adapted to meet the requirements of Community rules. The
Commission shall examine at regular intervals the national
provisions communicated to it by the Member States, transmit
to the Member States the adjustments it deems necessary in
order to ensure that they comply with Community rules and
report to the budget authority. Member States shall make the
resources under Article 2(1)(a) to (d) available to the
Commission.
 ---pagebreak---                                                               - 18 -
2. Without prejudice to the auditing of the accounts and to
checks that they are lawful and regular and as laid down in
Article 206a of the Treaty establishing the European
Community, such auditing and checks being mainly concerned
with the reliability and effectiveness of national systems and
procedures for determining the base for own resources accruing
from VAT and GNP and without prejudice 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, the making
available to the Commission and payment of the revenue
referred to in Articles 2 and 5.
On the basis of these provisions, the Commission shall examine
the VAT registration, calculation, recovery and control
procedures applied in the Member States and shall, if
necessary, make recommendations for enhancing the
effectiveness of these procedures.
 ---pagebreak---                                                                - 19 -
                           Article 8
The mechanism for the graduated refund of own resources
accruing from VAT or GNP-based financial contributions
introduced for Greece up to 19 85 by Article 127 of the 1979
Act of Accession and for Spain and Portugal up to 1991 by
Articles 187 and 374 of the 19 85 Act of Accession shall 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 the two
lastnamed Member States in accordance with Article 5(2) of
this Decision. In the latter case the rate of refund shall be
that applicable for the year in respect of which the
correction is granted. Corrections of refunds resulting from
any adjustments of VAT and GNP bases for the years from 19 81
to 1991 shall be entered as negative or positive revenue, as
appropriate, in the general budget.
                           Article 9
The Commission shall submit, by the end of 1999, a report on       The Commission shall submit, by the end of 1999, a report on
the operation of the system established by this Decision.          the operation of the system established by this Decision.
Together With this report or separately, it shall also present     Together with this report or separately, it shall also present
a report on the findings of a study of the possibilities for       a report on the possibilities for reforming the financing of
creating a fifth own resource.                                     the Union, including a possible fifth resource.
 ---pagebreak---                                                               - 20 -
                          Article 10
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 1995.
2. (a) Subject to (b), Decision 88/376/EEC, Euratom shall be
       repealed as of 1 January 1995. Any references to the
       Decision of 21 April 1970, to Decision 85/257/EEC,
       Euratom or to Decision 88/376/EEC, Euratom shall be
       construed as references to this Decision.
 ---pagebreak---                                                               - 21 -
   (b) Article 3 of Decision 85/257/EEC, Euratom shall
       continue to apply to the calculation and adjustment of
       revenue accruing from the application of rates to the
       uncapped uniform VAT base for 19 87 and earlier years.
       Articles 2, 4 and 5 of Decision 88/376/EEC, Euratom
       shall continue to apply to the calculation and
       ajustment of revenue accruing from the application of a
       uniform rate valid for all Member states to the VAT
       base determined in a uniform manner and limited to 55%
       of the GNP of each Member State and to the calculation
       of the correction of budgetary imbalances granted to
       the United Kingdom for the years 1988 to 1994. When
       Article 2 (7) has to be applied, the value added tax
       payments shall be replaced by financial contribution in
       the calculations referred to in this paragraph for any
       Member State concerned ;( this system shall also apply
       to the payment of adjustments of corrections for
       earlier years.
Done at Brussels,
                     For the Council
                     The President
 ---pagebreak---                                                                      ISSN 0254-1475
                                                               COM(94) 71 final
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