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Document 32018R1046

New financial rules governing the EU budget (Financial Regulation)

New financial rules governing the EU budget (Financial Regulation)

 

SUMMARY OF:

Regulation (EU, Euratom) 2018/1046 — the financial rules applicable to the EU’s general budget

WHAT IS THE AIM OF THE REGULATION?

  • The regulation updates and simplifies the rules for drawing up and implementing the annual budget for the EU and the European Atomic Energy Community (Euratom).
  • It reduces the overall number of rules by half, making them more concise and easier to apply.
  • The changes make the whole budgetary procedure more user-friendly for both recipients and managers of EU funding.

KEY POINTS

The new EU financial regulation:

  • replaces previous complex rules and procedures with a single rule book and less bureaucracy;
  • helps applicants for EU funding by
    • requiring them to provide less information
    • allowing the information and evidence provided to be valid for 3 years and reused
    • providing ‘seal of excellence’ certificates to outstanding projects that can help to attract additional funding from other sources
    • using simplified grants, such as lump-sum, flat rate and unit costs
    • focusing funding more on results (for example, the number of people successfully completing a training course and finding a job) rather than on actual costs and invoices
    • blending financing from different sources of funding, especially for transport, energy, and information and communication technology projects;
  • introduces a single audit approach to avoid duplication and multiple controls by
    • reusing information already available to EU institutions, managing authorities and other bodies
    • taking account of existing audits and assessments by trusted partners, national authorities and international organisations, such as the United Nations and World Bank;
  • strengthens measures against fraud by
    • targeting controls and audits on potentially suspicious projects
    • safeguarding against tax evasion and money laundering by preventing the use of shell companies* and tax havens
    • extending conflict of interest rules to national and regional authorities which receive EU funding
    • making public the identity of all shareholders in a project.

Annual budgetary deadlines

  • 1 July: each EU institution sends its estimated income and expenditure for the coming year to the European Commission.
  • 1 September: the Commission submits the draft budget to the European Parliament and the Council.
  • 1 October: the Council submits its opinion on the draft budget to the European Parliament.
  • 31 December: the Council and the European Parliament agree on the coming year’s budget.

FROM WHEN DOES THE REGULATION APPLY?

Most of the new rules have applied since 2 August 2018. Any exceptions are listed in Article 282 of the regulation.

BACKGROUND

  • The EU’s annual budget forecasts and authorises all income and expenditure for the EU and Euratom for the coming financial year (1 January to 31 December). Income and expenditure must be in balance.
  • Wide-ranging internal and external controls are designed to prevent and correct any financial errors or fraud. Offenders face financial penalties. The identity of recipients of EU funds are publicly available.
  • For more information, see:

KEY TERMS

Shell companies: companies often without active business operations or significant assets. Although this type of company is not necessarily illegal, shell companies are sometimes used for the purposes of tax evasion, tax avoidance, and money laundering, or to achieve a specific goal such as anonymity.

MAIN DOCUMENT

Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, pp. 1-222)

RELATED DOCUMENTS

Statements: Regulation of the European Parliament and of the Council on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (first reading) — Adoption of the legislative act (OJ C 267I , 30.7.2018, pp. 1-3)

Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ L 298, 26.10.2012, pp. 1-96)

Successive amendments to Regulation (EU, Euratom) No 966/2012 have been incorporated in the original act. This consolidated version is of documentary value only.

last update 22.03.2019

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