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Fighting fraud: checks in EU countries

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Fighting fraud: checks in EU countries

European Union (EU) citizens need to have confidence that the EU budget is being put to proper use. In 1995, the EU introduced rules (Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995) covering checks in EU countries and the imposition of penalties in the event of irregularities*.

ACT

Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities’ financial interests

SUMMARY

European Union (EU) citizens need to have confidence that the EU budget is being put to proper use. In 1995, the EU introduced rules (Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995) covering checks in EU countries and the imposition of penalties in the event of irregularities*.

WHAT DOES THIS REGULATION DO?

It seeks to combat fraud against the EU’s financial interests (the EU budget - taxpayers’ contributions).

It establishes a common set of legal rules for all areas covered by EU policies.

In particular, it provides for checks and administrative measures and penalties when EU funding rules are not respected.

KEY POINTS

More than half of EU expenditure is paid to recipients via EU countries’ governments and their agencies. Both this system of decentralised administration and the monitoring of the use of the expenditure are governed by detailed rules. These rules vary depending on the policy area concerned.

EU countries are responsible for taking the necessary measures to ensure that transactions involving the EU’s financial interests are correct and regular. Measures regarding checks must be proportionate to the objectives pursued so as not to entail excessive economic constraints or administrative costs. They must also take account of EU countries’ administrative practices and structures.

The European Commission is responsible for checking that:

administrative practices conform with EU rules;

the necessary substantiating documents exist and that they tally with the EU's revenue and expenditure;

financial transactions are carried out and checked in appropriate circumstances.

In addition, under Regulation (Euratom, EC) No 2185/96, the European Commission may carry out checks and inspections on the spot.

Withdrawal of the wrongly obtained advantage

In general, if an irregularity is found, the wrongly obtained advantage must be repaid and an accompanying amount of interest may be calculated on a flat-rate basis. The measure withdrawing the advantage may consist of:

an obligation to pay or repay the amounts due or wrongly received;

the total or partial loss of any financial guarantees or advances received by the party in question.

Intentional irregularities or irregularities caused by negligence may lead to administrative penalties, such as:

payment of an administrative fine;

payment of an additional sum; however, this should not exceed a level that is strictly necessary to constitute a deterrent;

total or partial removal of an advantage granted, even if the party only wrongly benefited from the advantage, or exclusion from or withdrawal of the advantage, for a limited period following the irregularity;

other penalties of a purely economic type provided for by EU law.

General principles

Administrative checks, measures and penalties must be:

effective;

proportionate; and

dissuasive.

They must take account of the nature and seriousness of the irregularity, the advantage granted or received and the degree of responsibility.

An administrative penalty may only be imposed if, prior to the irregularity, an EU act or law has specifically allowed for it.

The limitation period for proceedings is 4 years, starting from the date on which the irregularity was committed. For continuous or repeated irregularities, the limitation period runs from the date on which the irregularity ceases. In the case of programmes that run over several years (i.e. multiannual), the limitation period runs until the programme comes to an end.

KEY TERMS

* Irregularity: any act or omission by a recipient of EU funding, which results in prejudicing the EU’s general budget, either by reducing or losing revenue accruing from own resources collected directly on behalf of the EU, or by an unjustified item of expenditure.

REFERENCES

Act

Entry into force

Deadline for transposition in the Member States

Official Journal

Regulation (EC, Euratom) No 2988/95

26.12.1995

-

OJ L 312, 23.12.1995, pp. 1-4.

Corrigendum

-

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OJ L 36, 10.2.1998, pp. 16-16.

RELATED ACTS

Council Regulation (Euratom, EC) No 2185/96 of 11 November 1996 concerning on-the-spot checks and inspections carried out by the Commission in order to protect the European Communities' financial interests against fraud and other irregularities (OJ L 292, 15.11.1996, pp. 2-5)

last update 08.09.2015

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