(1)

This Regulation lays down a financial envelope for the Digital Europe Programme for the period 2021-2027 which is to constitute the prime reference amount, within the meaning of {reference to be updated as appropriate according to the new inter-institutional agreement: point 17 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management (4)}, for the European Parliament and the Council during the annual budgetary procedure.

(2)

Regulation (EU, Euratom) 2018/ 1046 of the European Parliament and of the Council (5) ▌(the ‘Financial Regulation’) applies to this Programme. It lays down rules on the implementation of the Union budget, including the rules on grants, prizes, procurement, indirect implementation, financial assistance, financial instruments and budgetary guarantees.

(3)

In accordance with the Financial Regulation, Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council (6), Council Regulation (Euratom, EC) No 2988/95 (7), Council Regulation (Euratom, EC) No 2185/96 (8) and Regulation (EU) 2017/1939 (9), the financial interests of the Union are to be protected through proportionate measures, including the prevention, detection, correction and investigation of irregularities including fraud, the recovery of funds lost, wrongly paid or incorrectly used and, where appropriate, the imposition of administrative sanctions. In particular, in accordance with the provisions and procedures laid down in Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council and Regulation (Euratom, EC) No 2185/96, the European Anti-Fraud Office (OLAF) may carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union. In accordance with Regulation (EU) 2017/1939, the European Public Prosecutor's Office (EPPO) may investigate and prosecute fraud and other criminal offences affecting the financial interests of the Union, as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council (10). In accordance with the Financial Regulation, any person or entity receiving Union funds is to fully cooperate in the protection of the Union’s financial interests, to grant the necessary rights and access to the Commission, OLAF, the EPPO and the European Court of Auditors (ECA) and to ensure that any third parties involved in the implementation of the Union funds grant equivalent rights.

(4)

Pursuant to {reference to be updated as appropriate according to a new decision on OCTs: Article 88 of Council Decision / /EU (11)}, persons and entities established in overseas countries and territories (OCTs) should be eligible for funding subject to the rules and objectives of the Programme and possible arrangements applicable to the Member State to which the relevant overseas country or territory is linked. Their effective participation in the Programme should be monitored and regularly evaluated by the European Commission.

(5)

Pursuant to paragraph 22 and 23 of the Inter-institutional agreement for Better Law- Making of 13 April 2016 (12), there is a need to evaluate this Programme on the basis of information collected through specific monitoring requirements, correlated to existing needs and complying with the Regulation (EU) 2016/679 of the European Parliament and of the Council  (13), while avoiding overregulation and administrative burdens, in particular on Member States and taking into account existing measuring and bench-marking frameworks in the digital field . These requirements, where appropriate, can include measurable quantitative and qualitative indicators, as a basis for evaluating the effects of the Programme on the ground.

(5a)

The Programme should ensure utmost transparency and accountability of innovative financial instruments and mechanisms that involve the Union budget, especially as regards their contribution, both as regards initial expectations and end results made towards achieving Union objectives.

(6)

The Tallinn Digital Summit (14) of September 2017 and the Conclusions of the European Council (15) of 19 October 2017 indicated the need for Europe to invest in ▌our economies and addressing the skills gap to maintain and enhance European competitiveness and innovation , our quality of life and social fabric. The European Council concluded that the digital transformation offers immense opportunities for innovation, growth and jobs, will contribute to our global competitiveness, and enhance creative and cultural diversity. Seizing these opportunities requires collectively tackling ▌ the challenges posed by the digital transformation and reviewing policies affected by the digital transformation.

(6a)

Building a strong European digital economy and society will benefit from the good implementation of the Connecting Europe Facility, Wifi4EU and European Electronic Communications Code.

(7)

The European Council concluded in particular that the Union should urgently address emerging trends: this includes issues such as artificial intelligence ▌, while at the same time ensuring a high level of data protection in full compliance with Regulation (EU) 2016/679 , digital rights, fundamental rights and ethical standards. The European Council invited the Commission to put forward a European approach to artificial intelligence by early 2018 and called on the Commission to put forward the necessary initiatives for strengthening the framework conditions with a view to enable the EU to explore new markets through risk-based radical innovations and to reaffirm the leading role of its industry.

(7c)

Europe has to make decisive investments in its future, building strategic digital capacities in order to benefit from the digital revolution. A substantial budget (of at least 9,2 billion euro) must be ensured at EU level for this purpose, which must be complemented by sizable investment efforts at national and regional level, namely with a consistent and complementary relationship with structural and cohesion funds.

(8)

The Commission's Communication on ‘A new, modern Multiannual Financial Framework for a European Union that delivers efficiently on its priorities post-2020’ (16) outlines among the options for the future financial framework a programme for Europe's digital transformations to deliver 'strong progress towards smart growth in areas such as high quality data infrastructure, connectivity and cybersecurity. It would seek to secure European leadership in supercomputing, next generation internet, artificial intelligence, robotics and big data. It would reinforce the competitive position of industry and businesses in Europe across the digitised economy and would have a significant impact on bridging and filling the skills gap across the Union so that European citizens have the necessary skills, and knowledge to face the digital transformation

(9)

The Communication ‘Towards a common European data space’ (17), addresses the new measure to be taken as a key step towards a common data space in the EU — a seamless digital area with a scale that will enable the development and innovation of new products and services based on data.

(10)

The general objective of the Programme should be to support the digital transformation of industry and to foster better exploitation of the industrial potential of policies of innovation, research and technological development, for the benefit of businesses and citizens all over the Union, including the outermost as well as economically disadvantaged regions . The programme should be structured into five Specific Objectives reflecting key policy areas, namely: high-performance computing ▌, artificial intelligence, cybersecurity, advanced digital skills, and deployment, best use of digital capacities and interoperability. For all these areas, the Programme should also aim at better aligning Union, Member States and regional policies, and pooling of private and industrial resources in order to increase investment and develop stronger synergies. Furthermore, the Programme should strengthen the Union's competiveness and the resilience of its economy .

(10a)

The five Specific Objectives are distinct but interdependent. For example, artificial intelligence needs cybersecurity to be trustable, high performance computing capabilities will be key in supporting learning in the context of artificial intelligence, and all three capacities require advanced digital skills. Although individual actions under this programme may pertain to a single specific objective, the objectives should not be viewed in isolation, but as forming the core of a coherent package.

(10b)

There is a need to support SMEs intending to harness the digital transformation in their production processes. This will allow SMEs to contribute to the growth of the European economy through an efficient use of resources.

(11)

A central role in the implementation of the Programme should be attributed to European Digital Innovation Hubs, which should stimulate the broad adoption of advanced digital technologies by industry, in particular SMEs and entities employing up to 3 000 employees that are not SMEs (midcaps) , by public organisations and academia. In order to clarify the distinction between Digital Innovation Hubs complying with the eligibility criteria under this Programme and Digital Innovation Hubs established following the Communication of Digitising European Industry (COM(2016)0180) and financed by other sources, Digital Innovation Hubs financed under this Programme should be called European Digital Innovation Hubs. The European Digital Innovation Hubs should work together as a decentralised network. They serve as access points to latest digital capacities including high performance computing (HPC), artificial intelligence, cybersecurity, as well as other existing innovative technologies such as Key Enabling Technologies, available also in fablabs or citylabs. They shall act as single-entry points in accessing tested and validated technologies and promote open innovation. They will also provide support in the area of advanced digital skills (e.g. by coordinating with education providers for the provision of short-term training for workers and internships for students). The network of European Digital Innovation Hubs should ensure a broad geographical coverage across Europe  (18) and should also contribute to the participation of the outermost regions in the Digital Single Market.

(11a)

During the first year of the programme, an initial network of European Digital Innovation Hubs should be established through an open and competitive process from entities designated by Member States . To this effect, Member States should be free to propose the candidates in accordance with their national procedures, administrative and institutional structures and the Commission should take utmost account of the opinion of each Member State before the selection of a European Digital Innovation Hub in its territory. Entities which are already carrying out functions as Digital Innovation Hubs in the context of the Digitising European Industry Initiative may, as a result of the competitive, and open process, be designated by Member States as candidates. The Commission may involve independent external experts in the selection process. The Commission and Member States should avoid unnecessary duplication of competences and functions at national and EU level. Hence there should be adequate flexibility when designating the hubs and determining their activities and composition. In order to ensure both a broad geographical coverage across Europe as well as a balance of technologies’ or sectors coverage the network might be further enlarged through an open and competitive process.

(11b)

The European Digital Innovation Hubs should develop appropriate synergies with Digital Innovation Hubs funded by Horizon Europe or other R&I programmes, the European Institute of Innovation and Technology, in particular the EIT Digital and also with established networks such as the European Entreprise Network or the EU Invest hubs.

(11c)

European Digital Innovation Hubs should act as facilitator to bring together industry, businesses and administrations which are in need of new technological solutions on one side, with companies, notably start-ups and SMEs, that have market-ready solutions on the other side.

(11d)

A consortium of legal entities may be selected as European Digital Innovation Hubs following the provision in Article 197.2(c) of the Financial Regulation that allows entities which do not have legal personality under the applicable national law to participate in calls for proposals, provided that their representatives have the capacity to undertake legal obligations on behalf of the entities and that the entities offer guarantees for the protection of the financial interests of the Union equivalent to those offered by legal persons.

(11e)

European Digital Innovation Hubs should be allowed to receive contributions from Member States, participating third countries or public authorities within them, contributions from international bodies or institutions, contributions from the private sector, in particular from members, shareholders or partners of the European Digital Innovation Hubs, revenues generated by the European Digital Innovation Hubs’ own assets and activities, bequests, donations and contributions from individuals or funding including in the form of grants from the Programme and other Union programmes.

(12)

The Programme should be implemented through projects reinforcing essential digital capacities and their wide use. This should involve co-financing with Member States and, when needed, the private sector. The co-financing rate should be established in the work programme. Only in exceptional cases might the Union funding cover up to 100 % of eligible costs. This should notably require reaching a critical mass in procurement to obtain better value for money and guarantee that suppliers in Europe stay at the forefront of technology advancements.

(13)

The policy objectives of this Programme will be also addressed through financial instruments and budgetary guarantee under the ▌InvestEU Fund.

(14)

The Programme's actions should be used to improve further the Union’s digital capacities as well as to address market failures or sub-optimal investment situations, in a proportionate manner, without duplicating or crowding out private financing and have a clear European added value.

(15)

To achieve maximum flexibility throughout the lifetime of the programme and develop synergies between its components, each of the specific objectives may be implemented through all instruments available under the Financial Regulation. The delivery mechanisms to be used are direct management and indirect management when Union financing should be combined with other sources of financing or when execution requires the setup of commonly governed structures. Moreover, in order to respond in particular to new developments and needs, e.g. new technologies, the Commission may, within the annual budgetary procedure and in accordance with the Financial Regulation, propose to deviate from the indicative amounts set out in this Regulation.

(15a)

In order to ensure efficient allocation of funds from the general budget of the Union, it is necessary to ensure the European added value of all actions and activities carried out with the Programme, their complementarity to Member States' activities, while consistency, complementarity and synergies should be sought with funding programmes supporting policy areas with close links to each other. While for directly and indirectly managed actions the relevant work programmes provide a tool for ensuring consistency, collaboration between the Commission and the relevant Member States authorities should be established to ensure consistency and complementarities also between directly or indirectly managed funds and funds subject to shared management.

(16)

The high performance computing and the related data processing capacities in the Union should allow to ensure wider use of high performance computing by industry and, more generally, in areas of public interest in order to seize unique opportunities that supercomputers bring to society as regards health, environment and security as well as competitiveness of industry, notably small and medium-sized enterprises. Acquiring a world-class supercomputers, will secure the Union's supply system and help deploy services for simulation, visualisation and prototyping while ensuring a HPC system in accordance with Union values and principles.

(17)

The support to the Union's intervention in this area was expressed by the Council (19) and, by the European Parliament (20). Moreover, in 2017-2018 nineteen Member States signed the EuroHPC Declaration (21), a multi-government agreement where they commit to collaborate with the Commission to build and deploy state-of-the-art HPC and data infrastructures in Europe that would be available across the Union for scientific communities, public and private partners.

(18)

For the high performance computing specific objective a joint undertaking is deemed the most suited implementation mechanism, in particular to coordinate national and Union strategies and investments in high performance computing infrastructure and research and development, pool resources from public and private funds, and safeguard the economic and strategic interests of the Union (22). Moreover, high performance computing competence centres as defined in Article 2(4) of the Council Regulation (EU) 2018/1488 in Member States will provide high performance computing services to industry, including SMEs and start-ups, academia and public administrations

(19)

Developing capacity related to artificial intelligence is a crucial driver for the digital transformation of industry , services and also of the public sector. Ever more autonomous robots are used in factories, deep sea application, homes, cities and hospitals. Commercial artificial intelligence platforms have moved from testing to real applications in health and environment; all major car manufacturers are developing self-driving cars, and machine learning techniques are at the heart of all main web platforms and big data applications. It is essential for Europe to join forces at all levels to be competitive internationally. The Member States have acknowledged this through concrete commitments for collaboration in a coordinated action plan.

(19a)

Libraries of algorithms may cover a large set of algorithms, including simple solutions such as classification algorithms, neural network algorithms or planning or reasoning algorithms, or more elaborated solutions, such as speech recognition algorithms, navigation algorithms embedded in autonomous devices, such as drones or in autonomous cars, AI algorithms built-in robots enabling them to interact with and adapt to their environment. Libraries of algorithms should be made easily accessible to all based on fair, reasonable and non-discriminatory terms.

(19b)

In its resolution of 1 June 2017 on digitising European industry the European Parliament pointed out the impact of language barriers on industry and its digitisation. In this context the development of large-scale AI-based language technologies such as automatic translation, speech recognition, big data text analytics, dialog and question-answering systems are essential to preserve linguistic diversity, ensure inclusiveness and enable human-human and human-machine communication.

(19c)

Products and services based on artificial intelligence should be user-friendly, legally compliant by default and provide consumers with more choice and more information, in particular on the quality of products and services.

(20)

The availability of large-scale data sets and testing and experimentation facilities are of major importance for the development of artificial intelligence, including language technologies.

(21)

In its resolution of 1 June 2017 on digitising European industry (23) the European Parliament highlighted the importance of a common European cybersecurity approach, recognising the need to raise awareness and considered cyber-resilience as a crucial responsibility for business leaders and national and European industrial security policymakers , as well as the implementation of security and privacy by default and by design .

(22)

Cybersecurity is a challenge for the whole Union that cannot ▌be addressed only with ▌national initiatives. Europe's cybersecurity capacity should be reinforced to endow Europe with the necessary capacities to protect ▌citizens , public administrations and businesses from cyber threats. In addition consumers should be protected when using connected products that can be hacked and compromise their safety. This should be achieved together with Member States and private sector by developing, and ensuring coordination between, projects reinforcing Europe's capacities in cybersecurity and ensuring the wide deployment of latest cybersecurity solutions across the economy, as well as by aggregating the competences in this field to ensure critical mass and excellence.

(23)

In September 2017, the Commission put forward a package of initiatives (24) setting out a comprehensive Union approach to cybersecurity, with the aim of reinforcing Europe’s capacities to deal with cyber-attacks and threats and to strengthen technology and industrial capacity in this field. This includes Regulation on the EU Cybersecurity Agency (ENISA) and information and communication technology cybersecurity certification (Cybersecurity Act).

(24)

Trust is a prerequisite for the Digital Single Market to function. Cybersecurity technologies such as digital identities, cryptography or intrusion detection, and their application in areas such as finance, industry 4.0, energy, transportation, healthcare, or e-government are essential to safeguard the security and trust of online activity and transactions by both citizens, public administrations, and companies.

(25)

The European Council in its conclusions of 19 October 2017 stressed that to successfully build a Digital Europe, the Union needs in particular labour markets, training and education systems fit for the digital age and that there is a need to invest in digital skills, to empower and enable all Europeans;

(26)

The European Council in its conclusions of 14 December 2017 called on Member States, the Council and the Commission to take forward the agenda of the Gothenburg Social Summit of November 2017 including the European Pillar of Social Rights as well as education and training and the delivery of the new European Skills Agenda. The European Council also asked the Commission, the Council and the Member States to examine possible measures addressing the skills challenges linked to digitisation, cybersecurity, media literacy and artificial intelligence and the need for an inclusive, lifelong-learning-based and innovation-driven approach to education and training. In response, the Commission presented on 17 January 2018 a first package of measures, addressing key competences, digital skills (25) as well as common values and inclusive education. In May 2018, a second package of measure was launched advancing work to build a European Education Area by 2025, which also emphasises the centrality of digital skills.

(26a)

Media literacy means the essential competencies (knowledge, skills and attitudes) that allow citizens to engage with media and other information providers effectively, and to develop critical thinking and life-long learning skills for socializing and becoming active citizens;

(26b)

Considering the need for a holistic approach, the Programme should also take into account the areas of inclusion, qualification, training and specialization which, in addition to the advanced digital competences, are decisive for the creation of added value in the knowledge society.

(27)

In its resolution of 1 June 2017 on digitising European industry (26) the European Parliament stated that education, training and lifelong learning are the cornerstone of social cohesion in a digital society. It furthermore demanded that the gender perspective would be incorporated in all digital initiatives, emphasizing the need to address the gender gap within the ICT sector, since this is essential for Europe’s long-term growth and prosperity;

(28)

The advanced digital technologies supported by this Programme, such as high performance computing, cybersecurity and artificial intelligence are now sufficiently mature to move beyond the research arena and be deployed, implemented and scaled-up at Union level. Just as the deployment of these technologies require a Union response so does the skills dimension. Training opportunities in advanced digital skills, including data protection competencies, need to be scaled up, increased and made accessible throughout the EU. Failing this could impede the smooth deployment of advanced digital technologies and hamper the overall competitiveness of Union's economy. The actions supported by this programme are complementary to those supported by the ESF, ERDF ERASMUS + and Horizon Europe programmes. They will target the workforce, in the private as well as the public sector, in particular ICT professionals and other related professionals, as well as students. These categories include trainees and trainers. The workforce refers to the economically active population, and includes both employed (employees and self-employed) and unemployed people.

(29)

Modernising public administrations and services through digital means is crucial to reducing administrative burden on ▌citizens ▌by making their interactions with public authorities faster, more convenient and less costly, as well as by increasing the efficiency , transparency and the quality of the services provided to citizens and businesses while at the same time increasing the efficiency of public spending . Since a number of services of public interest already have a Union dimension, the support to their implementation and deployment at Union level should ensure that citizens and businesses may benefit from the access to high quality multilingual digital services across Europe. Moreover, Union support in this area is expected to encourage re-use of public sector information.

(29a)

Digitalisation can facilitate and improve barrier-free accessibility for everyone, including older people, persons with reduced mobility or a disability, and those in remote or rural areas.

30)

The digital transformation of the areas of public interest such as healthcare (27), mobility, justice, earth/environmental monitoring , security , reduction of carbon emissions, energy infrastructure, education and training and culture requires the continuation, and expansion of Digital Service Infrastructures, which make secure cross-border exchange of data possible and foster national development. Their coordination under this Regulation best achieves the potential for exploiting synergies.

(30a)

The deployment of necessary digital technologies, in particular those under specific objectives of high performance computing, artificial intelligence and cybersecurity and trust is key to reap the benefits of digital transformation and might be complemented by other leading edge and future technologies, such as distributed ledgers (e.g. blockchain).

(30b)

The digital transformation should allow EU citizens to access, use and manage their personal data securely across borders, irrespective of their location or the location of the data.

(31)

The Council of the EU in its Tallinn declaration of 6 October 2017 concluded that digital progress is transforming our societies and economies to the core, challenging the effectiveness of previously developed policies in a broad range of areas as well as the role and function of the public administration overall. It is our duty to anticipate and manage these challenges to meet the needs and expectations of citizens and businesses.

(32)

The modernisation of European public administrations is one of the key priorities for successful implementation of the Digital Single Market Strategy. The mid-term evaluation of the Strategy highlighted the need to strengthen the transformation of public administrations and to ensure citizens have easy, trusted, and seamless access to public services.

(33)

The Annual Growth Survey published by the Commission in 2017 (28) shows that the quality of European public administrations has a direct impact on the economic environment and is therefore crucial to stimulating productivity, competitiveness, economic cooperation, sustainable growth, employment and high-quality jobs . In particular, efficient and transparent public administration and effective justice systems are necessary to support economic growth and deliver high quality services for firms and citizens.

(34)

Interoperability of European public services concerns all levels of administration: Union, national, regional and local. Besides removing barriers to a functioning Single Market, interoperability facilitates cross-border co-operation, promoting European standards, successful implementation of policies and offers great potential to avoid cross-border electronic barriers, further securing the emergence of new, or the consolidation of developing, common public services at Union level. In order to eliminate fragmentation of European services, to support fundamental freedoms and operational mutual recognition in the EU, a holistic cross-sector and cross-border approach to interoperability should be promoted in the manner that is the most effective, and the most responsive to end-users. This implies that interoperability is to be understood in a broad sense, spanning from technical to legal layers and encompassing policy elements in the field.Accordingly, the span of activities would go beyond the usual lifecycle of solutions to include all the interventions elements that would support the necessary framework conditions for sustained interoperability at large. The Programme should also facilitate cross-fertilisation between the different national initiatives, leading to the development of the digital society.

(34a)

The programme should, therefore, encourage open source solutions in order to allow reuse, increase trust and secure transparency. This will have a positive impact on the sustainability of funded projects.

(35)

The budget allocated to specific activities dedicated to the implementation of the interoperability framework and the interoperability of developed solutions is EUR 194 million

(36)

European Parliament resolution of 1 June 2017 on digitising European industry (29) stresses the importance of unlocking sufficient public and private finance for the digitisation of Europe’s industry.

(37)

In April 2016 the Commission adopted the Digitising European Industry initiative to ensure that ‘any industry in Europe, big or small, wherever situated and in any sector can fully benefit from digital innovations’. This is of particular relevance to SMEs in the cultural and creative sectors.

(38)

The European Economic and Social Committee welcomed the communication on ‘Digitising European Industry’ and considered it, together with accompanying documents, as ‘the first step in a vast European work programme to be carried out in close mutual cooperation between all interested public and private parties’. (30)

(39)

Reaching the target objectives may require leveraging the potential of complementary technologies in the networking and computing domains, as stated in the Communication ‘Digitising European Industry’ (31) that recognises ‘availability of world class networking and cloud infrastructure’ as an essential component of industry digitisation.

(40)

▌Regulation (EU) 2016/679 by providing for a single set of rules directly applicable in the Member States legal orders, guarantees the free flow of personal data between EU Member States and reinforce trust and security of the individuals, two indispensable elements for a real Digital Single Market. All actions undertaken under this Programme, when they involve the processing of personal data, should therefore support the application of Regulation (EU) 2016/679 , for instance in the field of artificial intelligence and blockchain technology. They should support the development of digital technologies that comply with the ‘data protection by design and by default’ obligations.

(41)

The Programme should be implemented in full respect of the international and EU framework of intellectual property protection and enforcement. The effective protection of intellectual property plays a key role in innovation and thus is necessary for the effective implementation of the Programme.

(42)

Bodies implementing this Programme should comply with the provisions applicable to the Union institutions, and with national legislation regarding the handling of information, in particular sensitive non-classified information and EU classified information. For Specific Objective 3, security reasons may require the exclusion of entities controlled from third countries from calls for proposals and tenders under this programme. In exceptional cases such an exclusion may also be required for Specific Objectives 1 and 2. The security reasons for such an exclusion should be proportionate and duly justified with reference to the risks inclusion of such entities would represent.

(43)

Reflecting the importance of tackling climate change in line with the Union’s commitments to implement the Paris Agreement and the United Nations Sustainable Development Goals, this Programme will contribute to mainstream climate actions and lead to the achievement of an overall target of 25 % of the EU budget expenditures supporting climate objectives (32). Relevant actions should be identified during the Programme's preparation and implementation, and reassessed in the context of the relevant evaluations and review processes.

▌

(45)

Work programmes should be adopted so that the objectives of the Programme are achieved in accordance with the Union's and Member States' priorities, while ensuring consistency, transparency and continuity of joint action by the Union and the Member States. The work programmes should be adopted in principle every two years, or, if justified by the needs related to the implementation of the programme, on an annual basis . The types of financing and the methods of implementation under this Regulation should be chosen on the basis of their ability to achieve the specific objectives of the actions and to deliver results, taking into account, in particular, the costs of controls, the administrative burden, and the expected risk of non-compliance. This should include consideration of the use of lump sums, flat rates and unit costs, as well as financing not linked to costs as referred to in Article 125(1) of the Financial Regulation.

(46)

The power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission concerning amendments to Annexes I and II to review and/or complement the indicators. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement on Better Law-Making of 13 April 2016. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(47)

This Regulation respects fundamental rights and observes the principles recognised in the Charter of Fundamental Rights of the European Unions, notably those referred under Articles 8, 11, 16, 21, 35, 38 and 47 regarding the protection of personal data, the freedom of expression and information, the freedom to conduct business, the prohibition of discrimination, healthcare, consumer protection and the right to effective remedy and fair trial. The Member States must apply this Regulation in a manner consistent with these rights and principles’.

▌

(49)

Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 of the Treaty on the Functioning of the European Union apply to this Regulation. These rules are laid down in the Financial Regulation and determine in particular the procedure for establishing and implementing the budget through grants, procurement, prizes, indirect implementation, and provide for checks on the responsibility of financial actors. Rules adopted on the basis of Article 322 TFEU also concern the protection of the Union's budget in case of generalised deficiencies as regards the rule of law in the Member States, as the respect for the rule of law is an essential precondition for sound financial management and effective EU funding.