The new Own Resources Legislation for the period of the MFF 2014-2020 European Commission Chapter 33: Financial and Budgetary Provisions Explanatory meeting with Serbia Brussels, 27 January 2015 1
Background Overview of the presentation Where does the money come from? Overview of categories of own resources Composition of EU budget revenue and historical evolution Own Resources Decision 2014 Short summary of the Commission proposals 2011 and the negotiation process The provisions in the new ORD: continuity, a few changes Implementing Regulation on Art.311(4) a novelty Continuing the debate about reform: the High Level Group on Own Resources (HLGOR) 2
Where does the money come from? A brief recapitulation: Own resources: Traditional own resources (custom duties and sugar levies) VAT-based Own Resource GNI-based ( residual or additional own resource) other revenue (fines, contributions from staff, surplus) Commission proposals for new sources - e.g. Financial Transaction Tax - have been rejected for the time being 3
Where does the money come from? Example: 2012 budget OTHER REVENUE 1% VAT-BASED RESOURCES 11% GNI-BASED RESOURCE 73% CUSTOMS DUTIES 15% 4
30.000,0 National contributions, example Budget 2013 Nationaler Betrag nach Mitgliedstaaten und zugunsten der EU erhobene traditionelle Eigenmittel 2013 (Mio. EUR) GNI own resource 25.000,0 VAT own resource Traditional own resources (TOR), net (75%) 20.000,0 VK-Ausgleich (4 329,5 Mio. EUR) 15.000,0 VK-Zahlungen (nach Ausgleich): 17 110,3 Mio. EUR 10.000,0 5.000,0 0,0 BE BG CZ DK DE EE IE EL ES FR HR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK 5
Evolution revenue composition 2000-2013 150.000 140.000 130.000 120.000 110.000 100.000 90.000 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 Surplus from previous year Other GNI own resource VAT own resource TOR EU Revenue 2000-2013, (million EUR) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 6
Composition of own resources Evolution 1958-2011 EU budget revenue 1958-2011 (in % of EU GNI) 1,20% 1,00% 0,80% Other revenue & surplus GNI-based own resource VAT-based own resource Traditional own resources (custom duties & sugar levies) Financial contributions Other revenue & surplus GNI-based own resource 0,60% VAT-based own resource 0,40% 0,20% Financial contributions Traditional own resources (custom duties & sugar levies) 0,00% 1958 1963 1968 1973 1978 1983 1988 1993 2003 2008 2011 7
State of the Discussion in 2011 Discontentment with Status Quo (corrections, complexity ) Renewed EP Initiative on OR (2007 Lamassoure Report) Frustration with "juste retour"-dogma and EU budget negotiations being reduced to a 'zero-sum-game' (reflows ) Lissabon (Art. 311) provides new explicit possibility for Council to introduce new categories of OR or to eliminate existing ones. 2010 Commission: Budget Review 2011 Commission: Own Resources Report 8
COM proposals in 2011: Reforming the Financing of the EU budget Commisison submits proposal for a new Own Resources according to Art. 311 TFEU, (+ new implementing regulation, + recast): Abolish existing statistical VAT-based OR from 2014 onward. Introduction of two new genuine own resources - Financial Transaction tax - New VAT-OR Radical simplification of corrections based on lump-sum rebates Compared to previous system: - easier - more transparent - Fairer 9
Correction on the revenue side according to Commisison proposal 2011
Financing the budget: The Own resources system The current financing system will be largely 'rolled over' TOR collection costs down from 25 to 20 % Rationalisation (albeit very limited) of system of financial corrections ("rebates") Member States are invited to examine if it could become a new own resource Council invited to continue working on the Commission proposal for a new own resources based on VAT. 11
The negotiations on the financial package 2014-2020 (I) I. In Council, between MS: Thourough examination of COM proposals; No unanimity on FTT-OR; (Authorization of enhanced cooperation among EU11 on a directive); European Council in February 2013: No new OR, but Council invited to continue examination Only a few minor changes on corrections 12
The negotiations on the financial package 2014-2020 (II) II. Negotiations between EP and Council: EP links progress on reform of OR-system with consent on MFF regulation 2014-2020; Political agreement in June 2013: EP achieves some concession from Council, including more flexibility provisions and the creation of an interinstitutional High Level Group. Council finalizes OR legislation in the course of 2013 and early 2014: 13
The New Own Resources Decision (I) Legislative package, incl. Own Resources Decision and new Implementing Regulation was adopted on 26 May 2014; Will come into force after ratification by all MS with retroactive application as of 1 January 2014 Will largely roll over existing financing system (no new sources) Some new corrections, UK rebate will remain 14
The New Own Resources Decision (II) Content Art. 2: Categories of OR are defined TOR, VAT-on notionally harmonised basis, GNIbased TOR-collection costs at 20% VAT-based OR call rate and exceptions Rebates on GNI bases contributions Art.3 Own Resources Ceiling (1,23% of GNI) Art. 4, Art. 5 UK correction mechanism and its financing spelled out 15
The New Own Resources Decision (III) Art. 6: Universality principle Art. 7 Surplus carry-over Art. 9 Implementing Measures, defines which elements may be decided under Art.311(4), i.e. with EP consent: Calculation of balances Controlling and supervising arrangements Art. 10: transitional provisions Art. 11: entry into force + retroactive application 16
The New Implementing Regulation Council Regulation No. 608/2014 of 26 May 2014 laying down implementing measures for the system of own resources of the EU Chapter I: Determining Own Resources Calculation of balances (Art.1) Chapter II: Provisions concerning control and Supervision, Reporting (Art. 2 to 6) Controlling and supervision measure Powers and obligations of authorized agents Preparations and management of inspections Reporting fraud and irregularities (TOR) Reporting on TOR Chapter III: Committee and Final Provisions (Art. 7 to 9) Committee procedure, 'Comitology' (ACOR) Final Provisions, Entry into Force 17
High Level Group on Own Resources Members nominated by Commission, Council an European Parliament, chaired by Mario Monti Created upon insistence of European Parliament Will examine all aspects of financing system Involves national parliaments First assessment in 2014, final results in 2016 (which might inform new Commission initiatives) 18
Outlook Own Resources stay on political agenda of the EU. Commission proposals 2011 remain a point of reference in the debate. Negotiation about the FTT progress, but slowly. Implementation from 2016 onwards? First Assessment of the High Level Group was presented in December 2014. Issue of Own Resources might re-surface in other contexts (Eurozone budget ). 19
Further information Website on the Multiannual financial framework (MFF) 2014-2020: http://ec.europa.eu/budget/reform/index_en.htm http://ec.europa.eu/budget/mff/programmes/index_en.cfm#horizon2020 20