PRELIMINARY DRAFT AMENDING BUDGET No 2 TO THE BUDGET FOR 2002 - GENERAL STATEMENT OF REVENUE

(presented by the Commission)

Having regard to:

- Article 78 of the Treaty establishing the European Coal and Steel Community,

- Article 272 of the Treaty establishing the European Community,

- Article 177 of the Treaty establishing the European Atomic Energy Community,

- Article 15 of the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities, [1] as last amended by Regulation No 762/2001 [2] of 9 April 2001,

[1] OJ L 356, 31.12.1977, p.1.

[2] OJ L 111 20.04.2001, p. 1.

The European Commission hereby presents to the budgetary authority the draft amending budget No 2 to the 2002 budget for the reasons set out in the explanatory memorandum.

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TABLE OF CONTENTS

EXPLANATORY MEMORANDUM

I. The entry into force of the Council decision of 29 september 2000 on the system of the European Communities' own resources (2000/597/EC, Euratom)

II. Recalculation of the 2002 budget and adjustment for 2001 following the entry into force of Council Decision 2000/597/EC, Euratom

III. budgeting of a preliminary amount of the positive balance carried over from 2001.

IV. Effect on Member States' own resources payments

GENERAL STATEMENT OF REVENUE

A. GENERAL STATEMENT OF REVENUE

B. FINANCING OF THE GENERAL BUDGET

EXPLANATORY MEMORANDUM

This Preliminary Draft Amending Budget (PDAB) No 2/2002 consists of the following elements that exclusively concern the revenue side of the budget:

- A complete recalculation of the financing of the 2002 budget to take account of the entry into force of the new Own Resources Decision (2000/597/EC, Euratom). A budgetary line is also foreseen for the effects of the new Decision on the payments of traditional own resources relating to the financial year 2001.

- The budgeting of a preliminary amount of the positive balance carried over from 2001.

Budgeted expenditure is therefore unchanged.

I. The entry into force of the Council decision of 29 september 2000 on the system of the European Communities' own resources (2000/597/EC, Euratom) [3]

[3] OJ L 253, 7.10.2000, p.42.

The new Council Decision on the system of the European Communities' own resources (2000/597/EC, Euratom) was adopted by the Council on 29 September 2000. According to Article 10(1) of the Council Decision it will enter into force on the first day of the month following receipt, by the Secretary-General of the Council, of the last of the notifications from the Member States of completion of their national procedures for adoption of the Decision.

The Secretary-General of the Council received the last of the notifications on 5 February 2002 and the new Council Decision will therefore enter into force on 1 March 2002. According to the last sentence of Article 10(1) the Decision is to take effect on 1 January 2002 except for Article 2(3) (the percentage of collection costs retained by Member States) and Article 4 (the calculation of the UK correction), which is to take effect on 1 January 2001.

II. Recalculation of the 2002 budget and adjustment for 2001 following the entry into force of Council Decision 2000/597/EC, Euratom

The 2002 budget was adopted by the European Parliament on 13 December 2001. Since the new Council Decision was not yet in force it was based on Council Decision 94/728/EC, Euratom [4].

[4] Council Decision of 31 October 1994 on the system of the European Communities' own resources, OJ L 293, 12.11.1994, p. 9.

The entry into force of the new Council Decision consequently requires a complete recalculation of the financing of the 2002 budget, which is one of the purposes of this PDAB.

The new Council Decision 2000/597 entails the following changes [5] as compared to the previous Council Decision 94/728:

[5] The changes apply as from 1.1.2002 unless stated otherwise.

- The use of ESA 95 (the European system of accounts 1995) is extended to the budgetary and own resources area, which has an impact on the calculation of the GNP [6] bases and consequently on Member States' payments of the GNP resource. The ceiling of own resources, measured in per cent of GNP, has also been recalculated [7] in order to maintain unchanged the maximum amount of own resources put at the disposal of the Communities.

[6] In ESA 95 the concept of GNP has been replaced by the conceptually identical concept of GNI (Gross national income). In the new Council Decision GNP is therefore defined as being equal to GNI for the purposes of own resources.

[7] See Communication from the Commission to the Council and the European Parliament, document COM(2001) 801 final.

- The percentage of traditional own resources (TOR) that Member States are allowed to retain to cover their collection costs increases from 10 % to 25 %. The new percentage applies to traditional own resources established after 31 December 2000. Apart from the recalculation for 2002, the present PDAB consequently includes an adjustment for 2001 as well. The adjustment is budgeted as negative revenue in a separate budget title 2. It is based on provisional data and will be corrected as soon as the outturn for the 2001 traditional own resources is known [8].

[8] Account will also have to be taken of Article 10(2)(c) of the new Council Decision, which states that Member States shall continue to retain 10 % for amounts of TOR which should have been made available by the Member States before 28 February 2001 (even though they might have been paid at a later date).

- The maximum rate of call of VAT is reduced from 1.00 % to 0.75 % in 2002 (and to 0.50 % from 2004 onwards). Moreover, the new financing rules for the UK correction further reduces the uniform rate of call of VAT as compared to the previous Council Decision (see also below).

- The method of calculating the UK correction is modified in order to neutralise the net gains (the "windfall gains") of the United Kingdom that result from the increase in the percentage of TOR retained by Member States. Adjustments are also foreseen as a consequence of future enlargements of the Union. The new calculation method applies as from the year 2001. However, since the UK rebate of a given year is financed in the following year the result of the new calculation method is budgeted and financed as from 2002.

- The share of Austria, Germany, the Netherlands and Sweden in the financing of the UK correction is reduced to one fourth of their normal share. The reduction is financed by the other Member States, excluding the United Kingdom. The new financing rules also have an impact on the so-called frozen rate, which increases as compared to the calculation under the previous Council Decision. As a consequence the uniform rate of call of VAT is further reduced.

III. budgeting of a preliminary amount of the positive balance carried over from 2001.

The final amount of the surplus carried over from the financial year 2001 is not yet known. However, preliminary figures show a considerable under-execution of expenditure, especially in the area of structural actions. In order not to unnecessarily delay the budgeting of an amount that could have a significant impact on the national budgets of the Member States it is proposed to budget a preliminary estimate of the surplus carried over from 2001 in the present PDAB.

In addition to the EUR1 200 million that was already budgeted in the 2002 budget, it is therefore proposed to budget a further EUR10 000 million in the present PDAB in anticipation of the definitive amount of the surplus carried over from 2001.

The definitive balance from the financial year 2001 will be budgeted in the Preliminary draft supplementary and/or amending budget to be presented in May 2002.

IV. Effect on Member States' own resources payments

As a result of the combined effect of the budgeted additional amount of the surplus carried over from 2001 as well as of the adjustment for the increase in the percentage of the 2001 traditional own resources retained by Member States, total own resources payments under title 1 of the present PDAB decrease by EUR7 961.3 million as compared to the 2002 budget. The remaining part of the budgeted additional surplus of EUR10 000 million corresponds to the adjustment for the 2001 traditional own resources, which is budgeted as negative revenue under title 2.

The difference in own resources payments on the level of individual Member States as compared to the 2002 budget is the result of the total amount of own resources to be paid as well as of the application of the rules of the new Own Resources Decision, as described above.

The following table compares the 2002 own resources payments resulting from the present PDAB with the payments under the 2002 budget. The adjustment for the 2001 traditional own resources in title 2 is shown in a separate column.

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GENERAL STATEMENT OF REVENUE

A. General statement of revenue

B. Financing of the general budget

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TITLE 1-OWN RESOURCES (SUMMARY TABLE)

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TITLE 1 - OWN RESOURCES (DETAIL)

CHAPTER 13 - OWN RESOURCES ACCRUING FROM VALUE ADDED TAX PURSUANT TO ARTICLE 2(1)(C) OF DECISION 2000/597/EC, EURATOM

Article 1 3 0 - Own resources accruing from value added tax pursuant to Article 2(1)(c) of Decision 2000/597/EC, Euratom

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Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the Communities' own resources (OJ L 253, 7.10.2000, p. 42), and in particular Article 2(1)(c) thereof.

If account is taken of the capped VAT bases and of the compensation arrangements for the United Kingdom, own resources accruing from value added tax are as follows at the uniform rate (0,5208 %).

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CHAPTER 1 4 - OWN RESOURCES BASED ON GROSS NATIONAL PRODUCT PURSUANT TO ARTICLE 2(1)(D) AND THE FIRST SUBPARAGRAPH OF ARTICLE 6 OF DECISION 2000/597/EC, EURATOM

Article 1 4 0 - Own resources based on gross national product pursuant to Article 2(1)(d) and the first subparagraph of Article 6 of Decision 2000/597/EC, Euratom

Item 1 4 0 0 - Own resources based on gross national product pursuant to Article 2(1)(d) of Decision 2000/597/EC, Euratom, with the exception of those corresponding to the European Agricultural Guidance and Guarantee Fund Guarantee Section monetary reserve, the reserve for loan guarantees and the reserve for emergency aid

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Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the Communities' own resources (OJ L 253, 7.10.2000, p. 42), and in particular Article 2(1)(d) thereof.

The rate, excluding the EAGGF Guarantee Section monetary reserve, the loan guarantee reserve and the emergency aid reserve, to be applied to Member States' gross national product for this financial year is 0,5208 %.

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Item 1 4 0 1 - Own resources based on gross national product pursuant to Article 2(1)(d) and the first subparagraph of Article 6 of Decision 2000/597/EC, Euratom, corresponding to the European Agricultural Guidance and Guarantee Fund Guarantee Section monetary reserve

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Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the Communities' own resources (OJ L 253, 7.10.2000, p. 42), and in particular Article 2(1)(d) and the first subparagraph of Article 6 thereof.

Council Regulation (EC) No 2040/2000 of 26 September 2000 on budgetary discipline (OJ L 244, 29.9.2000, p. 27).

The provisional amount is produced by applying a rate of 0,0027 % to Member States' gross national product.

The breakdown of payments is as follows:

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However, the amount actually to be paid will be limited to the amount of the transfer from Chapter B1-6 0 of the statement of expenditure of Section III «Commission», intended for the monetary reserve.

Item 1 4 0 2 - Own resources based on gross national product pursuant to Article 2(1)(d) and the first subparagraph of Article 6 of Decision 2000/597/EC, Euratom corresponding to the reserve for loans and loan guarantees.

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Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the Communities' own resources (OJ L 253, 7.10.2000, p. 42), and in particular Article 2(1)(d) and the first subparagraph of Article 6 thereof.

Council Regulation (EC, Euratom) No 2728/94 of 31 October 1994 establishing a Guarantee Fund for external actions (OJ L 293, 12.11.1994, p. 1), as last amended by Regulation (EC, Euratom) No 1149/1999 (OJ L 139, 2.6.1999, p. 1).

Council Regulation (ECSC, EC, Euratom) No 2730/94 of 31 October 1994 amending the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities (OJ L 293, 12.11.1994, p. 7).

Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision 94/728/EC, Euratom on the system of the Communities' own resources (OJ L 130, 31.5.2000, p. 1).

Council Regulation (EC) No 2040/2000 of 26 September 2000 on budgetary discipline (OJ L 244, 29.9.2000, p. 27).

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Item 1 4 0 3 - Own resources based on gross national product pursuant to Article 2(1)(d) of Decision 2000/597/EC, Euratom, corresponding to the emergency aid reserve

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Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the Communities' own resources (OJ L 253, 7.10.2000, p. 42), and in particular Article 2(1)(d) and the first subparagraph of Article 6 thereof.

Conclusions of the Edinburgh European Council of 11 and 12 December 1992 concerning the creation of a reserve for emergency aid.

Council Regulation (ECSC, EC, Euratom) No 2730/94 of 31 October 1994 amending the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities (OJ L 293, 12.11.1994, p. 7).

Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision 94/728/EC, Euratom on the system of the Communities' own resources (OJ L 130, 31.5.2000, p. 1).

Council Regulation (EC) No 2040/2000 of 26 September 2000 on budgetary discipline (OJ L 244, 29.9.2000, p. 27).

When the Commission considers it necessary to draw on this reserve, it convenes a three-way meeting as soon as possible in order to obtain the agreement of the two arms of the budgetary authority on the need to use the reserve and on the amount required. The appropriations will be transferred to the budget headings concerned.

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CHAPTER 1 5 - CORRECTION OF BUDGETARY IMBALANCES

Article 1 5 0 - Correction of budgetary imbalances granted to the United Kingdom in accordance with Articles 4 and 5 of Decision 2000/597/EC, Euratom

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Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the Communities' own resources (OJ L 253, 7.10.2000, p. 42), and in particular Articles 4 and 5 thereof.

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CHAPTER 1 9 - COSTS INCURRED BY THE MEMBER STATES IN THE COLLECTION OF OWN RESOURCES

Article 1 9 0 - Costs incurred by the Member States in the collection of own resources

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Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the Communities' own resources (OJ L 253, 7.10.2000, p. 42), and in particular Article 2(3) thereof.

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TITLE 2 - ADJUSTMENT OF COLLECTION COSTS

(SUMMARY TABLE)

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New title

TITLE 2 - ADJUSTMENT OF COLLECTION COSTS

(DETAIL)

New chapter

CHAPTER 2 0 - ADJUSTMENT OF COLLECTION COSTS

New article

Article 2 0 0 - Adjustment of collection costs

New item

Item 2 0 0 0 - Adjustment of collection costs (2001 )

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Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the Communities' own resources (OJ L 253, 7.10.2000, p. 42), and in particular Articles 2(3), 10(1) and 10(2)(c) thereof.

The new decision on the own resources system provides that the Member States may retain, by way of collection costs, 25% of the amounts of traditional own resources established after 31 December 2000, except for the amounts which should have been made available before 28 February 2001, which remain subject to a rate of retention of 10% (Article 10(2)(c) of Decision 2000/597/EC, Euratom).

As the last Member State ratified the new decision on 5 February 2002 which then entered into force on 1 March 2002, when the 2001 budget year was closed, account must be taken of the retrospective impact on the collection costs incurred by the Member States during the period from March 2001 to December 2001 (own resources having been paid with a deduction of only 10%).

This item is therefore to cover the reimbursement to the Member States of the amount resulting from the difference in the retention rates applied for the recovery of traditional own resources between the old decision and the new decision. The amounts have been calculated on the basis of provisional outturn figures. These amounts will be definitively adjusted in a forthcoming amending budget once the definitive 2001 revenue and expenditure account has been drawn up.

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TITLE 3 - SURPLUSES AVAILABLE (SUMMARY TABLE)

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TITLE 3 - SURPLUSES AVAILABLE (DETAIL)

CHAPTER 3 0 - SURPLUS AVAILABLE FROM THE PRECEDING FINANCIAL YEAR

Article 3 0 0 - Surplus available from the preceding financial year

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Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities (OJ L 356, 31.12.1977, p. 1), as last amended by Regulation (EC, ECSC, Euratom) No 2673/1999 (OJ L 326, 18.12.1999, p. 1).

Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision 94/728/EC, Euratom on the system of the Communities' own resources (OJ L 130, 31.5.2000, p. 1).

Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the European Communities' own resources OJ L 253, 7.10.2000, p. 42), and in particular Article 7 thereof.

In accordance with Article 32 of the Financial Regulation the balance from each financial year is entered in the budget for the subsequent financial year as revenue in the case of a surplus and expenditure in the case of a deficit.

The relevant estimates of such revenue or expenditure are entered in the budget during the budget procedure and, where appropriate, in a letter of amendment submitted pursuant to Article 14 of the Financial Regulation. They are drawn up in accordance with the principles set out in Article 15 of Regulation (EC, Euratom) No 1150/2000.

After the closure of the accounts for each financial year, any discrepancy in relation to the estimates is entered in the budget for the following financial year through a supplementary and/or amending budget.

A deficit is entered in Chapter B0-3 0 of the statement of expenditure of Section III "Commission".

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TABLE 2

Determination of VAT own resources to be paid and the costs borne by the other Member States to finance the United Kingdom correction to be added to the additional resource in accordance with Article 5(2) of Decision 2000/597/EC, Euratom

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TABLE 3

Determination of uniform rate and breakdown of resources based on gross national product pursuant to Article 2(1)(d) of Decision 2000/597/EC, Euratom

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TABLE 4

Determination of the additional resource in accordance with Articles 2(1)(d) and 5(2) of Decision 2000/597/EC, Euratom

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Note: The calculations are made to 15 decimal places TABLE 6

Calculation of gross amount of United Kingdom correction

(pursuant to Article 2(4) of the Decision on the own resources system)

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Calculation of Member States' shares, determination of the frozen VAT rate and the gross amount of the United Kingdom correction

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TABLE 7

Summary of financing of expenditure

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