Reform of EU financial rules | Legislative Train Schedule (2024)

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For a brief overview of the key points of the adopted text and its significance for the citizen, please see the corresponding summary note.

The Financial Regulation lays down the principles and procedures governing the establishment, implementation and control of the EU budget. It is accompanied by Rules of Application containing more detailed and technical rules. On 14 September 2016, the European Commission tabled a proposal for a new Financial Regulation which would merge the existing Regulation with the Rules of Application, creating a single set of rules. The Commission considers that simpler and more flexible EU financial rules are key in enhancing European Union (EU) budget’s ability to adapt to changing circ*mstances and to respond to unexpected developments.

Within the Parliament, the proposal is dealt with jointly by the Committee on Budgets (co-rapporteur Ingeborg GRÄSSLE, EPP, Germany) and by the Committee on Budgetary Control (co-rapporteur Richard ASHWORTH, ECR, UK).

InDecember 2016 the European Economic and Social Committee (EESC) adopted its opinionsupporting the Commission's objective of introducing simpler, more flexible general and sectoral financial rules.

InJanuary 2017 the European Court of Auditors (ECA) adopted an opinion on the proposal. It noted that the Commission should have performed an impact assessment before publishing the proposal, as required on the basis of the Interinstitutional Agreement on Better Law-Making. It also pointed out to a number ofissues not addressed in the proposal, such as the need for improving the Commission's auditing practices or enabling ECA to have direct access to Commission data on the Commission's premises. Furthermore, the ECA addressed a number of specific aspects of the proposal, suggesting concrete amendments.

InMarch 2017 the Parliament’s co-rapporteurs presented a draft report and on in May 2017 the EP Committees decided to open interinstitutional negotiations with report adopted in committee.

That was followed by a joint report of the two committees, adopted on 8 June 2017. Numerous amendments were proposed, including safeguarding the EP's budgetary prerogatives, expanding the consultation of citizens on the draft budget, strengthening the position of regions with regard to financial decision-making, protecting the no-profit principle with regard to EU grants and enhancing the powers of the ECA.

On 14 June 2017, thedecision to enter into interinstitutional negotiations was confirmed by the Parliament's plenary (Rule 69c).

As regards the Council, inMarch 2017, a compromise text on agricultural provisions was put forward by the Presidency which is the basis for further work in the Council in this area. Key outstanding issues relating to rules on the CAP include direct payments to farmers, active farmer status and young farmer status.

In his State of the Union Letter of Intent of 13 September 2017, the President of the Commission indicated, as a priority to be completed by the end of 2018, a swift adoption of the proposal, especially important with regard to the simplification of the use of EU structural and investment funds and the facilitation of their combination with the European Fund for Strategic Investments. In November 2017 the BUDG committee approved the text agreed at first reading interinstitutional negotiations.

In order to facilitate the adoption of the part of the Commission proposal pertaining to agriculture, in November 2017 the legislative dossier was split into two and the part concerning agriculture became a separate file: "Financial rules applicable to the general budget of the Union: agricultural provisions" [2016/0282B(COD)], with therelevant Regulation adopted in December 2017.

After 2,5 years of negotiations, the trilogues have been succesfully completed in December 2017 at political level and in April 2018 on technical level, when a final text was approved by Coreper.

The European Parliament negotiators have succeeded in modifying the original proposal on four key issues:

• no trust funds in internal policies,
• no abolition of the non-profit principle in grants,
• no possibility of transfer from structural funds to EFSI,
• full respect of the Parliament's budgetary competences – there will be no modification of the rules on transfers, provisional twelfths, mobilisation of European Globalization Fund and EU Solidarity Fund; BUDG competences for transfers will be maintained.

Further changes include:

• insertion of the principle of payment on conditions fulfilled, focusing on payment for results obtained or conditions fulfilled, instead of focusing cost verification,
• appropriate consideration of volunteer work,
• compromise solution on the internal assigned revenue,
• maintenance of the status quo on external assigned revenue, draft amending budgets, reflows of financial instruments, pilot projects and preparatory actions,
• concerning trust funds in the area of external policies of the Union, the position of the Parliament has been strengthened with regard to prior consultation before a fund is created,
• rules on the combination of structural funds and the European Fund for Strategic Investment have been simplified,
• new rules on budgetary guarantees will increase transparency on the exposure of the Union budget,
• a Common Provisioning Fund (CPF) will be established, allowing to make asset management more efficient; by 30 June 2019, the Commission will submit to the European Parliament and to the Council an independent external evaluation of the advantages and disadvantages of entrusting the financial management of the assets of the CPF to the Commission, to the European Investment Bank, or to a combination of the two, and make an appropriate legislative proposal,
• there will be a single set of rules for combination of financial instruments with ancillary forms of support.

Following the approval of the trilogue compromise in the Committees on 23 April 2018, the provisional text was approved by Parliament's plenary on 5 July 2018 and by the Council on the following day. The final text in all official languages must be now prepared by the lawyer linguists before being published in the Official Journal.

The date of entry into force has been set at the third day following that of the publication of the new Financial Regulation the Official Journal of the European Union. However, some rules amending Regulation 1301/2013on the European Regional Development Fund and Regulation 1303/2013on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund Regulation will apply retroactively (from 1 January 2014 or from 1 January 2018), while certain other rules – only from 1 January 2019, but only as regards the implementation of the administrative appropriations of the European Union institutions (otherwise those rules will apply from from the third day from the publication in the OJ).

References:

• EP Legislative Observatory, Procedure file on Financial rules applicable to the general budget of the Union: simplification, 2016/0282A(COD).
• European Parliament, Council, Regulation of the European Parliament and of the Council on on the financial rules applicable to the general budget of the Union, PE-CONS 13/18 (provisional text)
• European Parliament, Legislative resolution of 5 July 2017, P8_TA-PROV(2018)0309
• Legislative Trains, Omnibus Regulation: Agricultural Provisions
• Regulation (EU, Euratom) No966/2012 of the European Parliament and of the Council of 25October 2012 on the financial rules applicable to the general budget of the Union.
• Commission Delegated Regulation (EU) No1268/2012 of 29October 2012 on the rules of application of Regulation (EU, Euratom) No966/2012 of the European Parliament and of the Council on the financial rules applicable to the general budget of the Union.
• European Court of Auditors, Opinion No 1/2017 concerning the proposal for a Regulation of the European Parliament and of the Council on the financial rules applicable to the general budget of the Union
• European Economic and Social Committee, Opinion on the Mid-term review of the Multiannual Financial Framework 2014-2020
• BUDG and CONT committees, Report of 8 June 2017, PE 601.115.
• President of the European Commission, State of the Union 2017: letter of intent to President Antonio Tajani and to Prime Minister Jüri Ratas, 13.9.2017

Author: Rafał Mańko, Members' Research Service, legislative-train@europarl.europa.eu