Durability of operations - Article 57 of the Council Regulation (EC) No 1083/2006

Transcription

1 POLAND Durability of operations - Article 57 of the Council Regulation (EC) No 1083/ th MEETING OF THE COORDINATION COMMITTEE OF THE FUNDS Brussels, September 2008

2 Definition (article 57 point 1) Durability of operations The Member State or managing authority shall ensure that an operation retains the contribution from the Funds only if that operation does not, within five years from the completion of the operation or three years from the completion of the operation in Member States which have exercised the option of reducing that time limit for the maintenance of an investment or jobs created by SMEs, undergo a substantial modification: a) affecting its nature or its implementation conditions or giving to a firm or a public body an undue advantage; and b) resulting either from a change in the nature of ownership of an item of infrastructure or the cessation of a productive activity. * * A similar definition can be found in Art. 30 of the Regulation 1260/99. 1 Therefore, in our opinion, conclusions accepted by COCOF should refer to both projects co-financed during programming period as well as to projects co-financed during programming period.

3 Substantial modification Substantial modification Key element of the definition Durability of operations How to interpret this element?

4 Durability of operations Polish approach Conjunction ( ) a) affecting its nature or its implementation conditions or giving to a firm or a public body an undue advantage; and b) resulting either from a change in the nature of ownership of an item of infrastructure or the cessation of a productive activity. We can talk of a substantial modification if one of the conditions mentioned in point a) and simultaneously one of the conditions mentioned in point b) are fulfilled, and furthermore, between these two conditions a cause and effect relationship occurs (i. e. point b) is a cause and point a) is a result).

5 Polish approach in case studies Example 1: Substantial modification A public administration body, within five years of the completion of the project (operation), converts the project of establishing an industrial park into a different type of activity, because of a low interest of the entrepreneurs. The Beneficiary decides to close the park. In this case, there is a change of the nature of the project as well as of its implementing conditions. Moreover, the change results from the cessation of the activity, so it is treated as a substantial modification.

6 Polish approach in case studies Example 2: Substantial modification Within five years of the completion of the project, a territorial selfgovernment unit sells an item of infrastructure co-financed by ERDF to a private entity. The change in the nature of ownership results in this case neither in the change of the project s nature (since the private entity is formally obliged to continue the project in the same form) nor in giving to a firm an undue advantage (since the infrastructure was sold in a public contract and to the market price, and the entrepreneur obligated himself not to establish higher fees for using the infrastructure). This kind of change is not treated as a substantial modification of the project.

7 Substantial modification Is this a proper approach?

8 Durability of operations Other important issues related to article 57 point 1 of the Council Regulation (EC)( No 1083/2006 : How to interpret a phrase: a change in the nature of ownership in an item of infrastructure? Should we consider this issue only in the public ownership - private ownership context? How to define an item of infrastructure in operations co-financed by the Funds? Typical problematic infrastructure items which can be spot in projects implemented in Poland are: software, hardware, furniture for office. Do these items fall within the scope of art. 57 of the Council Regulation (EC) No 1083/2006?

9 Durability of operations Other important issues related to article 57 point 1 of the Council Regulation (EC)( No 1083/2006 : What to do in a case, when infrastructure items co-financed by the funds (tangible fixed assets) will be depreciated in a shorter period of time (e.g.3 years) than the article 57 point 1 (Durability of operations) provides? There are many tangible fixed assets (e.g. hardware, software) in projects implemented in Poland which can be depreciated (according to polish tax regulations) in a shorter period of time than the Durability of operations provides. Does the art. 57 point 1 apply to any operations co-financed by the Funds? Even those which are co- financed by the ESF?

10 Sums unduly paid (article 57 point 3): Sums unduly paid ( ) 3. Sums unduly paid shall be recovered in accordance with Articles 98 to 102. What if the substantial modification takes place e.g. after 4 years of the completion of the project? Will it be possible to recover only a proportional part of the contribution? Art. 57 (3) refers to Art. 98 of the Regulation 1083/06. This interpretation seems to be in line with Art. 98 (2), 2nd and 3rd sentence of the Regulation 1083/06 (A similar wording can be found in Art. 39 (1) Regulation 1260/99): "The corrections made by a Member State shall consist of cancelling all or part of the public contribution to the operational programme. The Member State shall take into account the nature and gravity of the irregularities and the financial loss to the Funds".

11 Sums unduly paid (article 57 point 4): Sums unduly paid ( ) 4. The Member States and the Commission shall ensure that undertakings which are or have been subject to a procedure of recovery in accordance with paragraph 3 following the transfer of a productive activity within a Member State or to another Member State do not benefit from a contribution from the Funds. How to interpret this part of regulation? Does it concern only the projects that are actually implemented or any project in the future? If so- for how long?

12 Thank You for your attention!