The European Commission has today proposed an amendment to the rules on the adjustment of EU budget contributions from Member States. This comes after the current automatic system had this year led to a demand for exceptionally large additional payments from some countries. The proposed changes to the rules would provide for an extended deadline for payment until 1 September of the next year, interest free, under exceptional circumstances. The extension would kick in, if additional payment requests are over a certain threshold: for an individual Member State, if they are requested to pay more than twice their regular monthly payment to the EU budget; for all countries, if the total requested adjustment is more than half of the total monthly contribution of all Member States.
Commission Vice-President Kristalina Georgieva said: “The Commission has acted very quickly to make a proposal that would avoid imposing this kind of burden on national treasuries this year and in the future. We have included flexibility in extraordinary circumstances. However, the rules must remain precise in order to safeguard the EU’s financial soundness, which is important for our citizens, businesses, universities, farmers and others right across the EU.”
Part of the proposed rule change is that when requesting delayed payments, the Member States must provide a binding schedule for those payments. They will then be required to pay interest if they do not respect the agreed schedule.
The annual, automatic adjustment this year was unprecedented in size as it factored in re-calculations of Gross National Income (GNI) dating as far back as 1995. Following a discussion among the finance ministers on 7 November, the Commission has moved quickly to draft a change in the rules. The proposal made today will be sent to EU Member States for approval, and also requires an opinion from the European Parliament and the Court of Auditors.
The Commission has also recognised the need to look at timing of delivery of information on these adjustments, how this information can be made more easily accessible, and how to encourage more transparency when it comes to data related to GNI.
The adjustment of Member States’ national contributions based on VAT and GNI (own resources) to the financing of the EU budget takes place every year on the first working day of December. These adjustments vary year-on-year, based on updated GNI data provided by EU Member States, and based on rules agreed by Member States. This adjustment is separate from the regular contributions made by Member States to the EU budget, which are transferred on a monthly basis. The adjustment is not an additional payment into the EU budget, but is about fair burden sharing. The money flows back to Member States based on the relative size of their adjusted GNI.
This year’s adjustment includes GNI re-calculation dating back to 2002 for most Member States and to 1995 for one, as there were a number of unresolved issues that had accumulated over the last years. The adjustment – 9.5 billion euro across all EU Member States – is unprecedented in size and around 2.5 times larger than the next largest adjustment (3.8 billion euro in 2007). Normally adjustments are smaller and more manageable.