BETA


2018/0135(CNS) System of own resources of the European Union

Progress: Awaiting committee decision

RoleCommitteeRapporteurShadows
Lead BUDG
Former Responsible Committee BUDG LEWANDOWSKI Janusz (icon: PPE PPE), DEPREZ Gérard (icon: ALDE ALDE)
Committee Opinion INTA
Committee Opinion CONT
Committee Opinion ECON
Committee Opinion ENVI
Committee Opinion AGRI
Committee Opinion AFCO
Former Committee Opinion INTA
Former Committee Opinion CONT GERBRANDY Gerben-Jan (icon: ALDE ALDE)
Former Committee Opinion ECON JÁUREGUI ATONDO Ramón (icon: S&D S&D)
Former Committee Opinion ENVI BELET Ivo (icon: PPE PPE)
Former Committee Opinion AGRI
Former Committee Opinion AFCO SELIMOVIC Jasenko (icon: ALDE ALDE)
Lead committee dossier:
Legal Basis:
Euratom Treaty A 106a-pa, TFEU 311 -a3

Events

2018/10/24
   CZ_SENATE - Contribution
Documents
2018/10/09
   CofR - Committee of the Regions: opinion
Documents
2018/10/09
   CofA - Court of Auditors: opinion, report
Details

Opinion No 5/2018 of the Court of Auditors.

The financing system for the EU budget has not been significantly reformed since 1988. The Commission has proposed changing this financing system for the future budget under the 2021-2027 Multi-annual Financial Framework (MFF) by:

- reforming existing own resources, which will make up 87 % of EU revenue: keeping TOR but with lower rate of collection costs, maintaining the GNI-based own resource and simplifying the own resource based on VAT;

- introducing a ‘basket’ of three new own resources, which together will make up 12 % of EU revenue: one based on the Common Consolidated Corporate Tax Base (CCCTB), one based on the European Union (EU) Emissions Trading System (ETS) and one based on plastic packaging waste that is not recycled;

- phasing out the corrections that exist in the current system;

- increasing the ceilings for own resources to overcome the impact of Brexit and the integration of European Development Fund (EDF) into the EU budget, as well as to cover financial liabilities linked to loans or financial facilities guaranteed from the EU budget.

Assessment

The proposed new EU financing system took on board a number of the key principles of the reform, but not all and the financing system remains complex. It is of the opinion that a single regulation with a comprehensive set of own resources provisions would simplify the system and make it more transparent.

After having assessed the Commission's proposals, the Court of Auditors considers that:

- the proposed reduction of the collection costs rate for TOR is not justified by means of a study providing reliable estimates of the costs incurred by customs authorities in collecting duties;

- the proposed simplified VAT-based own resource includes assumptions on standard-rated transactions that do not adhere to some of the calculation steps described by the Commission;

- the application of the own resource based on the CCCTB is subject to the Directive on this tax being adopted by the Council and transposed in the Member States. It will be at the earliest phased in several years after the start of the new MFF;

- the EU ETS is an important tool for implementing the EU’s policies on climate and the environment. However, the proposed own resource based on the EU ETS does not create an additional incentive for Member States to reduce greenhouse gas emissions. In addition, it is not a stable resource since the auction prices of the emission allowances are highly volatile;

- the plastic packaging waste-based own resource provides an incentive for Member States to increase plastics recycling. There is a need to improve the quality of data used to calculate this own resource;

- the phasing-out of corrections is a step forward in implementing a more transparent and less complex system. According to the Commission’s proposal, corrections will end in 2026;

- there may be restrictions on audit powers in respect of those based on the CCCTB and plastic packaging waste. There is a risk this may affect auditability and thus accountability.

Recommendations

The Court of Auditors recommended that the legislative bodies should ask the Commission to take the following measures as soon as possible:

(1) Review the legislative proposals as regards the new own resources. The Commission should: (i) carefully assess the likelihood of applying the CCCTB-based own resource during the next MFF, (ii) clarify in its proposal that the EU ETS-based own resource does not create an additional incentive for Member States to reduce greenhouse gas emissions, and analyse the impact of this resource’s volatility, (iii) carefully consider how the amounts expected to be collected through the plastic packaging waste-based own resource may decrease due to changes in the behaviour of households and economic operators.

(2) Reconsider the proposal for the simplified VAT-based own resource and, should it decide to keep it, modify the proposal.

2018/10/04
   DE_BUNDESRAT - Contribution
Documents
2018/09/13
   SE_PARLIAMENT - Reasoned opinion
Documents
2018/07/03
   PT_PARLIAMENT - Contribution
Documents
2018/07/03
   EP - Former Committee Opinion
2018/06/26
   CZ_CHAMBER - Contribution
Documents
2018/06/20
   EP - Former Committee Opinion
2018/06/11
   EP - Former Committee Opinion
2018/05/31
   EP - Committee referral announced in Parliament, 1st reading/single reading
2018/05/29
   EP - Former Committee Opinion
2018/05/16
   EP - Former Responsible Committee
2018/05/03
   EC - Document attached to the procedure
2018/05/02
   EC - Legislative proposal published
Details

PURPOSE: to lay down rules on the allocation of Own Resources to the Union in order to ensure the financing of the Union's annual budget.

PROPOSED ACT: Council Decision.

ROLE OF THE EUROPEAN PARLIAMENT: the Council adopts the act after consulting the European Parliament but without being obliged to follow its opinion.

BACKGROUND: the Own Resources System of the Union must ensure adequate resources for the orderly development of the policies of the Union, subject to the need for strict budgetary discipline.

The current Own Resources system rests on three main categories of revenue : (i) so-called Traditional Own Resources (mainly customs duties); (ii) a Value Added Tax-based Own Resource; and (iii) the Gross National Income-based Own Resource.

The Own Resource based on national income has over time become the main component of the system, accounting for over 70% of EU revenue.

Today, the range of new policy priorities with budgetary implications and the UK's withdrawal from the EU require particular attention to the architecture of the own resources system. A proposal for reform of the financing system is needed to meet the EU's economic and environmental challenges.

The Commission adopted a 'Reflection Paper on the Future of EU Finances ' in June 2017. The paper proposes a range of options where Own Resources would be linked more visibly to EU policies , in particular the Single Market and sustainable growth. The paper stated that when introducing new Own Resources, attention should be paid to (i) their transparency, simplicity and stability; (ii) their consistency with EU policy objectives; (iii) their impact on competitiveness and sustainable growth; and (iv) their equitable breakdown among Member States.

In March 2018, the European Parliament adopted a Resolution on the reform of the EU's system of Own Resources. The Resolution highlights the shortcomings in the present way of financing the EU budget and makes a plea for far-reaching reforms , calling in particular for the introduction of different new categories of Own Resources and the discontinuation of all corrections.

This proposal is presented at the same time as the proposal for the next multiannual financial framework regulation for the period 2021-2027.

CONTENT: the proposed own resources decision determines: (i) the categories of Own Resources to be entered in the budget of the Union; (ii) the maximum call rates to be applied ; (iii) the Own Resources ceilings; (iv) correction mechanisms (if deemed necessary) and how to finance them; and (v) certain budgetary principles.

The main elements of the new proposal are as follows:

(1) Modernisation the current own resources : the Commission proposes:

to keep customs duties unchanged as traditional own resources for the EU, but by reducing the percentage retained by Member States as 'collection costs' to 10%; to maintain the own resource based on gross national income and maintaining its balancing function; simplify the own resource based on value added tax on the basis of the following principles: (i) focusing on the standard rate supplies; (ii) streamlining the procedure to calculate the VAT base; and (iii) application of a uniform call rate on the standard rated base.

(2) A basket of new own resources : the Commission proposes to introduce three new categories of Own Resources including:

a share of the common consolidated corporate tax base : a 3 % call rate would be applied to the new common consolidated corporate tax base (to be phased in once the necessary legislation has been adopted), which could yield on average some EUR 12 billion per year; a 20% share of the revenue generated by the emissions trading scheme . Depending on the forecast, average revenues could vary from EUR 1.2 to 3.0 billion per year depending on the market price for EU ETS allowances; a national contribution calculated on the amount of non-recycled plastic packaging waste in each Member State (i.e. EUR 0.80 per kilo), which could yield some EUR 7 billion per year.

(3) Revenues from EU policies : the Commission proposes that, it should be a matter of principle that revenue which is directly generated by implementing of EU policy and the enforcing common Union level rules should accrue by default to the EU budget.

The Commission mentions the European Travel and Information Authorisation System (ETIAS) as an example of revenue that could accrue to the EU budget on the basis of legal acts other than the Own Resources Decision or tax harmonisation.

(4) Phasing out corrections : mostly for historical reasons, a number of Member States benefited from a complex system of corrections and rebates, the most important of these mechanisms was the United Kingdom correction. Over time, the amounts of corrections and rebates have increased exceeding.

The Commission proposes to simplify and reform the current complex rebate system. However, in order to avoid a significant and sudden increase in the contributions of Member States having benefitted from corrections, lump sum reductions to their Gross National Income-based contribution are proposed, which will be gradually phased out until 2025 .

(5) Increasing the own resources ceiling : at present, this ceiling is set at "1.20% of the sum of all the Member States' Gross National Income ". With Brexit , the value of the amount under this ceiling automatically will decrease by approximately 16% (i.e. the share of the United Kingdom's Gross National Income). The integration of the European Development Fund into the EU budget will need to be accompanied by an increase in the ceilings.

The Commission proposes to increase the own resources ceilings for payments and commitments to 1.29 % and 1.35 % of the EU-27 gross national income, respectively.

NB: the proposal is accompanied by a proposal for a Regulation laying down measures for implementing the system of the European Union's own resources and a proposal for a Regulation on the operational arrangements for making own resources available to the EU budget and on the Commission's accounts.

Documents

AmendmentsDossier
77 2018/0135(CNS)
2018/09/05 ECON 77 amendments...
source: 627.605

History

(these mark the time of scraping, not the official date of the change)

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      • PURPOSE: to lay down rules on the allocation of Own Resources to the Union in order to ensure the financing of the Union's annual budget.

        PROPOSED ACT: Council Decision.

        ROLE OF THE EUROPEAN PARLIAMENT: the Council adopts the act after consulting the European Parliament but without being obliged to follow its opinion.

        BACKGROUND: the Own Resources System of the Union must ensure adequate resources for the orderly development of the policies of the Union, subject to the need for strict budgetary discipline.

        The current Own Resources system rests on three main categories of revenue: (i) so-called Traditional Own Resources (mainly customs duties); (ii) a Value Added Tax-based Own Resource; and (iii) the Gross National Income-based Own Resource.

        The Own Resource based on national income has over time become the main component of the system, accounting for over 70% of EU revenue.

        Today, the range of new policy priorities with budgetary implications and the UK's withdrawal from the EU require particular attention to the architecture of the own resources system. A proposal for reform of the financing system is needed to meet the EU's economic and environmental challenges.

        The Commission adopted a 'Reflection Paper on the Future of EU Finances' in June 2017. The paper proposes a range of options where Own Resources would be linked more visibly to EU policies, in particular the Single Market and sustainable growth. The paper stated that when introducing new Own Resources, attention should be paid to (i) their transparency, simplicity and stability; (ii) their consistency with EU policy objectives; (iii) their impact on competitiveness and sustainable growth; and (iv) their equitable breakdown among Member States.

        In March 2018, the European Parliament adopted a Resolution on the reform of the EU's system of Own Resources. The Resolution highlights the shortcomings in the present way of financing the EU budget and makes a plea for far-reaching reforms, calling in particular for the introduction of different new categories of Own Resources and the discontinuation of all corrections.

        This proposal is presented at the same time as the proposal for the next multiannual financial framework regulation for the period 2021-2027.

        CONTENT: the proposed own resources decision determines: (i) the categories of Own Resources to be entered in the budget of the Union; (ii) the maximum call rates to be applied ; (iii) the Own Resources ceilings; (iv) correction mechanisms (if deemed necessary) and how to finance them; and (v) certain budgetary principles.

        The main elements of the new proposal are as follows:

        (1) Modernisation the current own resources: the Commission proposes:

        • to keep customs duties unchanged as traditional own resources for the EU, but by reducing the percentage retained by Member States as 'collection costs' to 10%;
        • to maintain the own resource based on gross national income and maintaining its balancing function;
        • simplify the own resource based on value added tax on the basis of the following principles: (i) focusing on the standard rate supplies; (ii) streamlining the procedure to calculate the VAT base; and (iii) application of a uniform call rate on the standard rated base.

        (2) A basket of new own resources: the Commission proposes to introduce three new categories of Own Resources including:

        • a share of the common consolidated corporate tax base: a 3 % call rate would be applied to the new common consolidated corporate tax base (to be phased in once the necessary legislation has been adopted), which could yield on average some EUR 12 billion per year;
        • a 20% share of the revenue generated by the emissions trading scheme. Depending on the forecast, average revenues could vary from EUR 1.2 to 3.0 billion per year depending on the market price for EU ETS allowances;
        • a national contribution calculated on the amount of non-recycled plastic packaging waste in each Member State (i.e. EUR 0.80 per kilo), which could yield some EUR 7 billion per year. 

        (3) Revenues from EU policies: the Commission proposes that, it should be a matter of principle that revenue which is directly generated by implementing of EU policy and the enforcing common Union level rules should accrue by default to the EU budget.

        The Commission mentions the European Travel and Information Authorisation System (ETIAS) as an example of revenue that could accrue to the EU budget on the basis of legal acts other than the Own Resources Decision or tax harmonisation.

        (4) Phasing out corrections: mostly for historical reasons, a number of Member States benefited from a complex system of corrections and rebates, the most important of these mechanisms was the United Kingdom correction. Over time, the amounts of corrections and rebates have increased exceeding.

        The Commission proposes to simplify and reform the current complex rebate system. However, in order to avoid a significant and sudden increase in the contributions of Member States having benefitted from corrections, lump sum reductions to their Gross National Income-based contribution are proposed, which will be gradually phased out until 2025.

        (5) Increasing the own resources ceiling: at present, this ceiling is set at "1.20% of the sum of all the Member States' Gross National Income ". With Brexit, the value of the amount under this ceiling automatically will decrease by approximately 16% (i.e. the share of the United Kingdom's Gross National Income). The integration of the European Development Fund into the EU budget will need to be accompanied by an increase in the ceilings.

        The Commission proposes to increase the own resources ceilings for payments and commitments to 1.29 % and 1.35 % of the EU-27 gross national income, respectively.

        NB: the proposal is accompanied by a proposal for a Regulation laying down measures for implementing the system of the European Union's own resources and a proposal for a Regulation on the operational arrangements for making own resources available to the EU budget and on the Commission's accounts.

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                    • PURPOSE: to lay down rules on the allocation of Own Resources to the Union in order to ensure the financing of the Union's annual budget.

                      PROPOSED ACT: Council Decision.

                      ROLE OF THE EUROPEAN PARLIAMENT: the Council adopts the act after consulting the European Parliament but without being obliged to follow its opinion.

                      BACKGROUND: the Own Resources System of the Union must ensure adequate resources for the orderly development of the policies of the Union, subject to the need for strict budgetary discipline.

                      The current Own Resources system rests on three main categories of revenue: (i) so-called Traditional Own Resources (mainly customs duties); (ii) a Value Added Tax-based Own Resource; and (iii) the Gross National Income-based Own Resource.

                      The Own Resource based on national income has over time become the main component of the system, accounting for over 70% of EU revenue.

                      Today, the range of new policy priorities with budgetary implications and the UK's withdrawal from the EU require particular attention to the architecture of the own resources system. A proposal for reform of the financing system is needed to meet the EU's economic and environmental challenges.

                      The Commission adopted a 'Reflection Paper on the Future of EU Finances' in June 2017. The paper proposes a range of options where Own Resources would be linked more visibly to EU policies, in particular the Single Market and sustainable growth. The paper stated that when introducing new Own Resources, attention should be paid to (i) their transparency, simplicity and stability; (ii) their consistency with EU policy objectives; (iii) their impact on competitiveness and sustainable growth; and (iv) their equitable breakdown among Member States.

                      In March 2018, the European Parliament adopted a Resolution on the reform of the EU's system of Own Resources. The Resolution highlights the shortcomings in the present way of financing the EU budget and makes a plea for far-reaching reforms, calling in particular for the introduction of different new categories of Own Resources and the discontinuation of all corrections.

                      This proposal is presented at the same time as the proposal for the next multiannual financial framework regulation for the period 2021-2027.

                      CONTENT: the proposed own resources decision determines: (i) the categories of Own Resources to be entered in the budget of the Union; (ii) the maximum call rates to be applied ; (iii) the Own Resources ceilings; (iv) correction mechanisms (if deemed necessary) and how to finance them; and (v) certain budgetary principles.

                      The main elements of the new proposal are as follows:

                      (1) Modernisation the current own resources: the Commission proposes:

                      • to keep customs duties unchanged as traditional own resources for the EU, but by reducing the percentage retained by Member States as 'collection costs' to 10%;
                      • to maintain the own resource based on gross national income and maintaining its balancing function;
                      • simplify the own resource based on value added tax on the basis of the following principles: (i) focusing on the standard rate supplies; (ii) streamlining the procedure to calculate the VAT base; and (iii) application of a uniform call rate on the standard rated base.

                      (2) A basket of new own resources: the Commission proposes to introduce three new categories of Own Resources including:

                      • a share of the common consolidated corporate tax base: a 3 % call rate would be applied to the new common consolidated corporate tax base (to be phased in once the necessary legislation has been adopted), which could yield on average some EUR 12 billion per year;
                      • a 20% share of the revenue generated by the emissions trading scheme. Depending on the forecast, average revenues could vary from EUR 1.2 to 3.0 billion per year depending on the market price for EU ETS allowances;
                      • a national contribution calculated on the amount of non-recycled plastic packaging waste in each Member State (i.e. EUR 0.80 per kilo), which could yield some EUR 7 billion per year. 

                      (3) Revenues from EU policies: the Commission proposes that, it should be a matter of principle that revenue which is directly generated by implementing of EU policy and the enforcing common Union level rules should accrue by default to the EU budget.

                      The Commission mentions the European Travel and Information Authorisation System (ETIAS) as an example of revenue that could accrue to the EU budget on the basis of legal acts other than the Own Resources Decision or tax harmonisation.

                      (4) Phasing out corrections: mostly for historical reasons, a number of Member States benefited from a complex system of corrections and rebates, the most important of these mechanisms was the United Kingdom correction. Over time, the amounts of corrections and rebates have increased exceeding.

                      The Commission proposes to simplify and reform the current complex rebate system. However, in order to avoid a significant and sudden increase in the contributions of Member States having benefitted from corrections, lump sum reductions to their Gross National Income-based contribution are proposed, which will be gradually phased out until 2025.

                      (5) Increasing the own resources ceiling: at present, this ceiling is set at "1.20% of the sum of all the Member States' Gross National Income ". With Brexit, the value of the amount under this ceiling automatically will decrease by approximately 16% (i.e. the share of the United Kingdom's Gross National Income). The integration of the European Development Fund into the EU budget will need to be accompanied by an increase in the ceilings.

                      The Commission proposes to increase the own resources ceilings for payments and commitments to 1.29 % and 1.35 % of the EU-27 gross national income, respectively.

                      NB: the proposal is accompanied by a proposal for a Regulation laying down measures for implementing the system of the European Union's own resources and a proposal for a Regulation on the operational arrangements for making own resources available to the EU budget and on the Commission's accounts.

                    committees/5/date
                    2018-05-29T00:00:00
                    committees/5/rapporteur
                    • group
                      EPP
                      name
                      BELET Ivo
                    activities/0/commission/0
                    DG
                    Commissioner
                    OETTINGER Günther
                    committees/2/date
                    • 2018-05-16T00:00:00
                    • 2018-05-16T00:00:00
                    committees/2/rapporteur
                    • group
                      EPP
                      name
                      LEWANDOWSKI Janusz
                    • group
                      ALDE
                      name
                      DEPREZ Gérard
                    other/0
                    body
                    EC
                    dg
                    commissioner
                    OETTINGER Günther
                    activities
                    • date
                      2018-05-02T00:00:00
                      docs
                      • url
                        http://www.europarl.europa.eu/RegData/docs_autres_institutions/commission_europeenne/com/2018/0325/COM_COM(2018)0325_EN.pdf
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                        CELEX:52018PC0325:EN
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                        Legislative proposal published
                        title
                        COM(2018)0325
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                      EC
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                        Legislative proposal published
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                      • body
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                      links
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                        procedure
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                        2018/0135(CNS)
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                        Decision
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                        Preparatory phase in Parliament
                        summary
                        • Repealing Decision 2014/335/EU, Euratom
                        subtype
                        Legislation
                        title
                        System of own resources of the European Union
                        type
                        CNS - Consultation procedure
                        subject
                        • 8.70.01 Financing of the budget, own resources