PURPOSE: to ensure that FISIM is allocated for the establishment of the Gross National Income (GNI) for the purposes of the European Communities' budget and its own resources

LEGISLATIVE ACT: Council Decision 2010/196/EU, Euratom on the allocation of financial intermediation services indirectly measured (FISIM) for the establishment of the gross national income (GNI) used for the purposes of the European Union’s budget and its own resources.

CONTENT: Decision 2007/436/EC, Euratom provides that where modifications to the European system of national and regional accounts (ESA 95) result in significant changes in the GNI as provided by the Commission, the Council shall decide whether those modifications shall apply for the purposes of that Decision.

It is appropriate to use the most recent statistical concepts for the purposes of the Union’s budget and its own resources, in particular as far as the establishment of the GNI as provided by the Commission in application of ESA 95 is concerned. FISIM should therefore be allocated for the establishment of the GNI for the purposes of the Union’s budget and its own resources.

By October 2008, all EU-27 Member States had transmitted their data including on FISIM allocation according to the new methodology. The assessment of those data indicated that the allocation of FISIM results in a significant change in the sense of the Decision 2007/436/EC, Euratom since it increases GNI by more than 1% on average and implies, when applying the method described in that Decision, a change in the ceilings set by the Decision.

As a result, the decision adopted by the Council should ensure that the allocation of FISIM applies for the purposes of Decision 2007/436/EC, Euratom. This allocation will apply from 1 January 2010.

ENTRY INTO FORCE: 0 7/04/2010.

APPLICATION : from 01/01/2010.

The European Parliament adopted by 534 votes to 4, with 20 abstentions, a legislative resolution amending the proposal for a Council decision on the allocation of financial intermediation services indirectly measured (FISIM) for the establishment of the gross national income (GNI) used for the purposes of the European Union's budget and its own resources.

To recall, the Commission had proposed that two different periods, covered by two different decisions on own resources, would be covered:

from 1 January 2005 to 31 December 2006, FISIM allocation would be applied for the purposes of Decision 2000/597/EC, Euratom; from 1 January 2007 onwards, it would apply for the purposes of Decision 2007/436/EC, Euratom.

Parliament proposes that this allocation should only apply from 1 January 2010 .

The Committee on Budgets adopted the report by Jean-Luc DEHAENE (EPP, BE) amending the proposal for a Council decision on the allocation of financial intermediation services indirectly measured (FISIM) for the establishment of the gross national income (GNI) used for the purposes of the European Union's budget and its own resources.

To recall, the Commission had proposed that two different periods, covered by two different decisions on own resources, would be covered:

from 1 January 2005 to 31 December 2006, FISIM allocation would be applied for the purposes of Decision 2000/597/EC, Euratom; from 1 January 2007 onwards, it would apply for the purposes of Decision 2007/436/EC, Euratom.

The committee made two amendments:

it deleted the clause stating that the allocation of FISIM shall apply for the purposes of decision 200/597/EC, Euratom from 1 January 2005 to 31 December 2006; and it inserted a clause to the effect that the allocation of FISIM shall apply for the purposes of Decision 2007/436/EC, Euratom from 1 January 2010 (rather than from 1 January 2007).

Members note that the proposed retroactive application from 1 January 2005 has given birth to divergences amongst Member States, which do not agree on the exact extent of the retroactivity of the decision, and could be open to legal challenges. It appears that the only possibility for reaching an agreement between all Member States is that no retroactive application of the allocation of FISIM be considered. The allocation would then take place only from the year of the entrance into force of the decision on, which means from 1 January 2010 on.

PURPOSE: to ensure that FISIM is allocated for the establishment of the Gross National Income (GNI) for the purposes of the European Communities' budget and its own resources.

PROPOSED ACT: Council Decision.

BACKGROUND: 'Financial intermediation services indirectly measured' (FISIM) represent a part of the production of financial institutions (banks, typically) which is not delivered under the form of direct sales of services with a fixed price, but by means of charging a higher rate of interest for loans than the one used for deposits (interest differential). The allocation of FISIM within the European system of national and regional accounts (ESA 95) was defined in Council Regulation (EC) No 448/98.

However, for the purposes of the Community's budget and its own resources, the allocation of FISIM is not automatically applied. Firstly, by way of specific derogation, the adoption of a unanimous Council decision on the basis of a Commission proposal is required under Council Regulation (EC) No 448/98. Secondly, if it is established that the allocation of FISIM constitutes a significant change in the GNI, under Council Decision 2000/597/EC, Euratom and Council Decision 2007/436/EC, Euratom the Council, acting unanimously on a proposal of the Commission and after consulting the European Parliament, shall decide whether these modifications apply for the purposes of both these Decisions.

The allocation of FISIM for establishment of the GNI used for the purposes of the Community's budget and its own resources would have a significant impact on Member States' estimated own resources contributions and would also modify the ceilings for payments and commitments as established under both Decisions. For these reasons the Commission considers that the allocation of FISIM results in significant changes in the GNI.

CONTENT : the main points of the proposal are as follows:

based on Council Regulation No 448/98, the draft Decision provides that FISIM would now be allocated for the establishment of the Gross National Income (GNI) for the purposes of the European Communities' budget and its own resources; based on Council Decision 2000/597/EC, Euratom, it provides that FISIM applies for the purposes of this Decision from 1 January 2005 to 31 December 2006; based on Council Decision 2007/436/EC, Euratom, it provides that FISIM applies for the purposes of this Decision from 1 January 2007.

Entry into effect is set as from 1 January 2005, in line with the entry into effect of Commission Regulation (EC) No 1889/2002.

PURPOSE: to ensure that FISIM is allocated for the establishment of the Gross National Income (GNI) for the purposes of the European Communities' budget and its own resources.

PROPOSED ACT: Council Decision.

BACKGROUND: 'Financial intermediation services indirectly measured' (FISIM) represent a part of the production of financial institutions (banks, typically) which is not delivered under the form of direct sales of services with a fixed price, but by means of charging a higher rate of interest for loans than the one used for deposits (interest differential). The allocation of FISIM within the European system of national and regional accounts (ESA 95) was defined in Council Regulation (EC) No 448/98.

However, for the purposes of the Community's budget and its own resources, the allocation of FISIM is not automatically applied. Firstly, by way of specific derogation, the adoption of a unanimous Council decision on the basis of a Commission proposal is required under Council Regulation (EC) No 448/98. Secondly, if it is established that the allocation of FISIM constitutes a significant change in the GNI, under Council Decision 2000/597/EC, Euratom and Council Decision 2007/436/EC, Euratom the Council, acting unanimously on a proposal of the Commission and after consulting the European Parliament, shall decide whether these modifications apply for the purposes of both these Decisions.

The allocation of FISIM for establishment of the GNI used for the purposes of the Community's budget and its own resources would have a significant impact on Member States' estimated own resources contributions and would also modify the ceilings for payments and commitments as established under both Decisions. For these reasons the Commission considers that the allocation of FISIM results in significant changes in the GNI.

CONTENT : the main points of the proposal are as follows:

based on Council Regulation No 448/98, the draft Decision provides that FISIM would now be allocated for the establishment of the Gross National Income (GNI) for the purposes of the European Communities' budget and its own resources; based on Council Decision 2000/597/EC, Euratom, it provides that FISIM applies for the purposes of this Decision from 1 January 2005 to 31 December 2006; based on Council Decision 2007/436/EC, Euratom, it provides that FISIM applies for the purposes of this Decision from 1 January 2007.

Entry into effect is set as from 1 January 2005, in line with the entry into effect of Commission Regulation (EC) No 1889/2002.