What changed between the plenary report and the adopted text

Added:“The European Commission acknowledges the importance of minimising the administrative burden upon Member States’ authorities in the context of the targeted extension of the Early Detection and Exclusion System (EDES) to shared management and direct management with Member States.

Removed:Recital 40: (40) In order to ensure synchronisation with the timeline for the adoption of the statement of estimates, the working document on the building policies of all Union institutions, bodies and agencies should be attached to the draft budget.

Added:The Commission is committed to developing comprehensive guidance and offering training sessions to Member States on the implementation of EDES and the use of its database.

Removed:As stated in paragraph 3 of the initiative report adopted ahead of the publication of this proposal, this revision must seek to reinforce transparency, accountability and democratic scrutiny of the EU budget. On this ground there is no reason to limit this publication to European Commission.

Added:The Commission will continue improving the EDES database, for example by enabling the searches of multiple entities and improving the layouts of the database.

Removed:Recital 43: (43) In view of the increased volume of borrowing and lending operations carried out by the Commission on behalf of the Union to finance the recovery from the COVID-19 pandemic, transparency regarding those operations should be further enhanced. To address the increased complexity of those operations and in order to ensure better visibility of their content, a comprehensive overview of borrowing and lending operations carried out by the Commission, including as a minimum detailed information on maturities, schedule of payments, interest due, the investor base, where applicable the dimension and costs of the common liquidity pool underpinning the diversified funding strategy, and on the role of own resources in the repayment of the debt, as well as the borrowing plan including revenue sources, should be added to the document annexed to the section of the budget relating to the Commission. That document should lay out the underlying data and the methodology used by the Commission to estimate the interest due.

Added:The Commission will strive to ensure IT interoperability between EDES and relevant national systems to streamline the process and allow for swifter checks on the exclusion situations of relevant persons or entities.

Removed:Recital 103: (103) In order to enhance the protection of the Union financial interests the early-detection and exclusion system should be reinforced. It is important to avoid that a person or entity in an exclusion situation is able to apply to, or to be selected for implementing funds, or to receive such funds under a programme also in shared management. Where there is a final judgment or a final administrative decision, the authorising officer responsible should be able to exclude a person or entity, provided that the latter is in an exclusion situation and deemed as not reliable by having engaged in certain misconducts referred to in Article 139(1). In the absence of a final judgment or a final administrative decision, the authorising officer responsible should be able to exclude, on the basis of a preliminary classification in law made by the panel referred to in Article 146, having regard to facts and findings established in the context of audits or investigations carried out by European Anti-fraud Office (OLAF), European Public Prosecutor Office (EPPO), the European Court of Auditors (ECA) or any other check, audit or control performed under the responsibility of the authorising officer. Such exclusion should be registered in the early-detection and exclusion system database established under Article 138(1). Member States’ authorities should take it into account by rejecting such persons or entities from being selected to implement Union funds or from receiving such funds. Payment a…

Added:The Commission confirms that any request for additional information for the purposes of EDES will not go beyond what is strictly necessary and proportionate, and will be treated in conformity with applicable data protection rules. It is recalled that the opinion of the European Data Protection Supervisor on the Commission proposal for a recast of the Financial Regulation did not raise any concerns in respect of EDES.

Removed:Recital 104: (104) It is important to underline that the EDES system should only apply in respect of Union funds disbursed to the Member States under direct management, such as those under Regulation (EU) 2021/241 of the European Parliament and of the Council41 , where Member States have the responsibility to take all the appropriate measures to protect the financial interests of the Union, to the extent that the Commission has relevant responsibilities under the respective legal framework and with due regard to the sui generis nature of the funds. Therefore, the responsibilities of the Commission should be limited to the obligation to refer a case to the panel for the purpose of excluding a person or entity if the authorising officer becomes aware of misconducts through final judgments and administrative decisions or facts and findings established in the context of audits or investigations carried out concerning those funds by the European Anti-fraud Office (OLAF), the European Public Prosecutor Office (EPPO), the European Court of Auditors (ECA) or any other check, audit, or control performed under the responsibility of the authorising officer. Without prejudice to these responsibilities of the Commission, the Member States remain responsible to verify the information on decisions of exclusion registered in the EDES database, to enforce such decisions and to ensure that no payment application is submitted related to a person or entity that is in such an exclusion situation.

Added:The Commission is committed to facilitate a smooth transition towards the application of EDES in full cooperation with the Member States.”

Removed:Recital 134: (134) In order to improve governance and quality of interoperable digital public services, the Member States, the Union institutions, the executive agencies and the Union bodies, such as those referred to in Articles 70 and 71 should follow and apply to the greatest possible extent the European Interoperability Framework.

Removed:Recital 140: (140) In order to ensure efficient implementation of the Union budget, it is appropriate to further clarify the application of the principle of proportionality to indirect management. While the principle of proportionality cannot affect the nature of the obligations imposed by the relevant applicable legal framework, it should be systematically used in the cooperation with Union implementing partners, in order to strike the right balance between protection of the Union’s financial interests and preserving the Union’s ability to implement its policies. Certain adjustments and restructuring of the relevant provisions, including a harmonisation of the control procedures between those used by the European Court of Auditors on the one hand and those used at the national and regional levels on the other hand should be made. This should not be interpreted as limiting in practice the necessary rights and access required for the authorising officer responsible, for EPPO in respect of those Member States participating in enhanced cooperation pursuant to Regulation (EU) 2017/1939, for OLAF, for the Court of Auditors, and, where appropriate, for the relevant national authorities, to comprehensively exert their respective competences.

Removed:Recital 141 a (new): (141a) Consistent with the Union's efforts to simplify legislation and to avoid overregulation and reduce administrative burdens, as set out in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making, additional administrative obligations (norms, guidelines and procedures set at national, regional or programme level) that go beyond the requirements set at Union level (so-called “gold plating”), should be avoided; auditors at national and Union level including the Commission and the European Court of Auditors should include in their work both the detection of such redundant administrative obligations and the reasons behind them, as well as recommendations on ways to alleviate and prevent such practices; in particular auditors of the Commission should share information about good practices across Member States that can be pointed out as potential solution to such findings.

Removed:'Gold plating' by Member States, whereby additional administrative obligations are imposed over and above EU rules, should be avoided. This amendment is linked to the surrounding Recitals, which are part of the recast.

Removed:Recital 150: (150) In light of the Covid-19 pandemic and the impact of Russia’s war of aggression against Ukraine, it is appropriate to modify the definition of crisis, which applies in particular to the common provisions and to procurement in the field of external actions and covers public and animal health, food security and safety emergencies and global health threats. In order to allow the flexibility needed to ensure a rapid response to unforeseen circumstances of extreme urgency resulting from a crisis, the contracting authority should be allowed to apply simplified procurement rules, such as use of negotiated procedure without prior publication of a contract notice applicable to crisis situations and acceptance of evidence on exclusion and selection criteria from the presumed successful tenderer after the award decision but in any case before the signature of the contract. The contracting authority should also have flexibility to exceptionally modify a contract or a framework contract, beyond the thresholds referred to in Article 176(3), without a procurement procedure in order to respond to a crisis. A declaration of crisis should be required in line with the relevant internal rules prior to having recourse to such simplified rules, except for procurement in the field of external action where such declaration is not required. In addition, the authorising officers responsible should justify case-by-case the extreme urgency resulting from the declared crisis.

Removed:Recital 160: (160) It is appropriate that different cases usually referred to as situations of conflict of interests be identified and treated distinctly. The notion of a ‘conflict of interests’ should be solely used for cases where a person or entity with responsibilities for budget implementation, audit or control, or an official or an agent of a Union institution or national authorities at any level, is in such a situation. The provisions on conflicts of interests should be applied in a way that ensures legal certainty, be based on a clear and proportionate assessment of the risks and allow for practical application by the competent authorities. The assessment of a conflict of interest should allow in particular the control of serious conflicts of interests that are linked to Union funding involving high-level officials. The Commission guidelines should provide clarity to applicants and decision-making bodies, avoid unnecessary administrative burden and respect the principle of proportionality. The special characteristics of Union programmes reliant on voluntary participation should be taken into account when assessing whether a situation may objectively be perceived as a conflict of interest. The authority assessing conflicts of interests should be able to conduct such evaluations with rules that are enforceable and comprehensible to tenderers. Attempts to unduly influence an award procedure or obtain confidential information should be treated as grave professional misconduct which ca…

Removed:Recital 165: (165) It is necessary to simplify the rules governing dynamic purchasing systems, reducing time-consuming procedures, including the resolution of appeals, to enable contracting authorities to take full advantage of the possibilities afforded by that purchasing method. In particular, the systems should be operated in the form of a restricted procedure, thus allowing for any economic operator that submits a request to participate and meets the exclusion and selection criteria to take part in procurement procedures carried out through the dynamic purchasing system over its period of validity, which should not be limited to four years. Tenders may also be presented in the form of an electronic catalogue particularly for off-the-shelf products or services generally available on the market. Moreover, in order to reduce the administrative burden given the dynamic nature of the systems, the requirement to appoint an opening and evaluation committee should be waived for specific procurements under a dynamic purchasing system. Considering the progress in digitalisation of procurement procedures, it should be clarified that public openings for open procedures may be organised remotely via video conferences.

Removed:Recital 194 a (new): (194a) By introducing a new category of a very low value grant of an amount of up to EUR 10 000, the lessons learned from providing small-scale support during the pandemic to small and medium-sized enterprises and individual applicants should be implemented. The new category would create efficiencies for the implementing partners and the Commission, while reducing bureaucracy for applicants.

Removed:The lessons learned from providing small-scale support during the pandemic to small and medium-sized enterprises and individual applicants should be implemented by introducing a new category of a very low value grant of an amount of up to EUR 10000 in order to improve efficiency and reduce bureaucracy. This is linked to the simplification and crisis management aims of the recast.

Removed:Recital 219 a (new): (219a) When the Commission is empowered, in a relevant basic act, to borrow on behalf of the Union or Euratom for the purpose of on-lending the corresponding amounts to beneficiary Member States or third countries under the conditions applicable to the borrowings, if the cash flows between the borrowed funds and the loans are matched one-to-one, the Union must carry out market operations based on disbursement needs for each specific case of lending, which limits the possibility to coherently plan various borrowing operations and to structure maturities to achieve the best costs.

Removed:Recital 219 b (new): (219b) Financing individual programmes of financial assistance through separate funding methods creates cost and complexity as different programmes of financial assistance compete for a limited number of funding opportunities. It fragments the supply of Union debt securities and reduces liquidity and investor interest in the separate programmes, even though all Union debt securities have the same high credit quality. Financial assistance should thus be organised under a single funding method that enhances the liquidity of Union bonds and the attractiveness and cost-effectiveness of Union issuance.

Removed:Recital 219 c (new): (219c) Recent experience with the funding needs for Ukraine has highlighted the disadvantages of a fragmented approach to the organisation of the Union’s debt. In order to strengthen the Union’s position as an issuer of euro-denominated debt, it is of paramount importance that all new issuance be organised through a single funding method.

Removed:Recital 219 d (new): (219d) The model for a single funding method, and most elements of the infrastructure needed for its implementation, have already been established in the form of a diversified funding strategy under Council Decision (EU, Euratom) 2020/2053. That strategy has allowed the successful mobilisation of funds for grants and loans under Regulation (EU) 2021/241 of the European Parliament and of the Council and for a range of other Union programmes referred to in Council Regulation (EU) 2020/2094. To anticipate possible future borrowing and lending operations, it is appropriate to establish a diversified funding strategy as the single funding method for implementation of borrowing operations.

Removed:Recital 219 e (new): (219e) The use of a diversified funding strategy should allow the flexible implementation of the funding programme, while fully respecting the principles of budgetary neutrality and budgetary balance as set out in Article 310(1) of the Treaty on the Functioning of the European Union (TFEU). The costs of the funding programme should be fully borne by the beneficiaries based on a single cost allocation methodology that ensures the transparent and proportional allocation of costs. Repayment obligations should remain with the beneficiaries of the financial assistance, in compliance with Article 224(5), point (e).

Removed:Recital 219 f (new): (219f) The implementation of a diversified funding strategy requires a single set of rules to be followed in respect of all borrowing and lending programmes relying on it.

Removed:Recital 219 g (new): (219g) A diversified funding strategy should provide the Commission with more flexibility concerning the timing and the maturity of single funding transactions and allow regular and steady disbursements to different beneficiary countries. Such a strategy should be based on the pooling of funding instruments. This would give the Commission flexibility to organise payments to the beneficiaries independently of market conditions at the time of disbursement, while also reducing the risk that the Commission would have to raise fixed amounts in volatile or adverse conditions.

Removed:Recital 219 h (new): (219h) Giving the Commission that flexibility would require putting into place a common liquidity pool. Such a centralised liquidity function would render the Union’s funding capacity more resilient, and be able to withstand temporary mismatches between all inflows and outflows, based on a robust liquidity forecasting capacity.

Removed:Recital 219 i (new): (219i) The Commission should implement all necessary transactions aiming at a regular capital market presence, at achieving the best possible funding costs and at facilitating transactions in debt securities of the Union and Euratom.

Removed:Recital 219 j (new): (219j) In extending the diversified funding strategy to a wider range of programmes, it is therefore appropriate for the Commission to establish the necessary arrangements for its implementation. Those arrangements should comprise a governance framework, risk management procedures, and a cost allocation methodology, which should respect Article 224(5), point (e). To ensure transparency, the Commission should regularly and comprehensively inform the European Parliament and the Council about all aspects of its borrowing and debt management strategy.

Removed:Recital 219 k (new): (219k) In view of the potential risks arising when the Union budget is used as a guarantee for borrowing operations, and in order to increase scrutiny and democratic accountability, it is important that the European Parliament and the Council, as budgetary authority, approve the maximum amount that the Commission is authorised to borrow under the diversified funding strategy during each financial year, within the limits set by the basic act empowering the Commission to borrow the funds on behalf of the Union.

Removed:Recital 246: (246) The Union should be able to participate in global initiatives, when such participation contributes to the achievement of Union policy objectives. In order to provide a suitable legal framework for Union participation in global initiatives, Union contribution to such initiatives should be included as a new budget implementation instrument. In the interests of transparency and effective decision making, any such Union contribution should be subject to a decision of the European Parliament and the Council on a proposal by the Commission. Furthermore, the use of this new financial vehicle would be subject to conditions and limited to cases where other instruments provided in the Financial Regulation do not enable the achievement of the respective EU policy objectives with the same scale and impact. That Commission proposal should set out in detail why this financial vehicle would be a more appropriate tool to achieve the relevant EU policy objectives than other instruments. The Commission should join any governance board or equivalent steering committee of a global initiative in order to ensure the best representation of the Union’s interest and facilitate access to performance and control data.

Removed:Recital 248: (248) In order to provide a clear legal framework for the Union institutions to donate services, supplies or works, non-financial donations should be included as a new budget implementation instrument. This instrument should not be confused with the general framework of support provided by the Union to third countries which is of a broader nature but can include non-financial donations. In light of the COVID-19 pandemic and the impact of Russia’s war of aggression in Ukraine, such an instrument should provide a stable legal basis in particular for future crisis and emergency situations and ensure that the Union institutions have the appropriate budget support tools to help Member States, other persons and entities when support is most needed. That instrument should be implemented under direct management. Related provisions, such as definitions, suspension, termination and reduction, and evaluation committee should be adjusted accordingly. In the interests of sound financial management, supplies financed from administrative appropriations should not be donated before their depreciated value represents 80 % of the purchase price. However, that rule should not apply to perishable supplies such as foodstuffs, medicines and certain medical goods, including masks, which would not be suitable for donation once their value has depreciated.

Removed:Recital 254: (254) In its Communication on the European Green Deal, the Commission encourages the renovation of buildings in order to reduce their emissions and make them more energy efficient. Taking into account the rapid evolution of the market for energy efficient buildings, there is an acute need for the Union institutions to incorporate the Green Deal commitments in their own building policy and to renovate their buildings, prioritising the most energy-efficient investments. In addition, the recent development of working methods accelerated by the Covid-19 pandemic requires adapting the institutions’ office stock in order to develop a dynamic office policy. As a consequence, financing of structural renovations by loans should be allowed. The interpretation of the concept of new building projects should be broadened and, in particular, include any project concerning structural renovation.

Removed:Recital 256: (256) Some modifications regarding the transmission to the Commission of data on recipients for the purposes of publication, and regarding the electronic recording and storage of data on recipients and the use of the system referred to in Article 36(2) to access and analyse those data should apply as of 1 January 2026 in order to ensure a smooth transition by allowing sufficient time for the necessary adaption of electronic data systems and of relevant agreements, as well as the provision of guidance and training for national, regional and local authorities.

Removed:Waiting for the adoption of the programmes under the post-2027 MFF in order to start using the new single integrated and interoperable information and monitoring system is disproportionately long. A date of application of 1 January 2026 should provide sufficient time for the development of the system and the adaptation of the various involved systems.

Removed:Article 2 – paragraph 1 – point 22 – point b: (b) a situation caused by natural disasters, man-made crisis such as wars and other conflicts or extraordinary circumstances having comparable effects related, inter alia, to climate change, public and animal health, food security and food safety emergencies and global health threats such as pandemics, environmental degradation, privation of access to energy and natural resources or extreme poverty;

Removed:Article 2 – paragraph 1 – point 31 a (new): (31a) ‘foreign subsidy’ means a financial contribution provided by a third country, directly or indirectly, which confers a benefit on an economic operator engaging in an economic activity in the internal market and which is limited, in law or in fact, to one or more economic operators or industries; for the purposes of this definition, a financial contribution shall be understood within the meaning of Article 3(2) of Regulation (EU) 2022/2560 of the European Parliament and of the Council;

Removed:Article 2 – paragraph 1 – point 48: (48) ‘non-governmental organisation’ means a voluntary, independent from government, non-profit organisation, which has some degree of formal existence, is transparent and accountable to its members or founders and is not a political party or a trade union;

Removed:Article 2 – paragraph 1 – point 65 a (new): (65a) 'sub-beneficiary' means a natural person or an entity with or without legal personality who receives Union funds from a beneficiary with a view to performing the tasks financed by a Union grant;

Removed:Article 2 – paragraph 1 – point 73 a (new): (73a) 'very low value grant’ means a grant lower than or equal to EUR 10 000;

Removed:Article 6 – title: Respect for budgetary principles and general regime of conditionality for the protection of the Union budget and respect for the values on which the Union is founded and fundamental rights

Removed:Article 6 – paragraph 2 a (new): 2a. The Commission and Member States shall, in the implementation of the Union budget, ensure respect for the values on which the Union is founded and fundamental rights, including non-discrimination, and compliance with the Charter of Fundamental Rights of the European Union.

Removed:Article 7 – paragraph 2 – subparagraph 2 – point c: (c) appropriations made available again in accordance with Article 14;

Removed:Technical adaptation linked to the amendments to Articles 14 and 15 of the proposal.

Removed:Article 7 – paragraph 2 – subparagraph 2 – point e: (e) appropriations provided following the receipt of assigned revenue during the financial year or carried over from preceding financial years.

Removed:Clarification of the terminology used in view of the changes put forward in Articles 21 and 22 of the proposal.

Removed:Article 14 – paragraph 1: 1. Where budgetary commitments are decommitted in any financial year after the year in which they were made as a result of the total or partial non-implementation of the actions for which they were earmarked, the appropriations corresponding to such decommitments shall be made available again to the benefit of the budget line of origin, without prejudice to pre-agreed national envelopes, where applicable.

Removed:Article 14 – paragraph 1 – subparagraph 1 a (new): Notwithstanding the first subparagraph, where there is an increased risk of continued total and partial non-implementation of the actions for which the budgetary commitments were earmarked, those appropriations may be made available to the benefit of the Single Margin Instrument or the Flexibility Instrument.

Removed:Article 14 – paragraph 1 – subparagraph 1 b (new): Subparagraph 1a shall not apply to projects under the research programme or to actions under Regulation (EU) 2021/947, Regulation (EU) 2021/1529, Decision (EU) 2021/1764 and Council Regulation (Euratom) 2021/948.

Removed:Article 15: deleted / (deleted) / (deleted) / (deleted) / (deleted) / (deleted) / (deleted)

Removed:Article 22 – paragraph 1 – subparagraph 1 – point c: (c) in the statement of expenditure, an annex, forming an integral part of the budget, setting out all the budget lines for which internal or external assigned revenue is foreseen and providing information on the estimated amount of such revenue to be received; for each budget line, that information shall be broken down into the specific categories of assigned revenue referred to in Article 21(2), (3) and (5).

Removed:Article 22 – paragraph 2 – subparagraph 1 – point c a (new): (ca) in the case provided for in Article 21(5), commitment and payment appropriations shall be made available in the context of the budgetary procedure.

Removed:Article 25 – paragraph 3 – subparagraph 2 – point c a (new): (ca) it does not harm or risk harming the security or public order of the Union or the Member States;

Removed:Article 25 – paragraph 3 – subparagraph 2 a (new): Where it accepts a donation pursuant to the first subparagraph, the Commission shall inform the European Parliament and the Council.

Removed:Article 33 – paragraph 2 – point b: (b) progress in the achievement of objectives, including, where relevant, horizontal spending and mainstreaming targets, shall be monitored with performance indicators;

Removed:Article 33 – paragraph 2 – point c a (new): (ca) programmes and activities shall be implemented to achieve their set objectives respecting the values on which the Union is founded set out in Article 2 TEU;

Removed:Article 33 – paragraph 2 – point d: (d) programmes and activities shall, where feasible and appropriate in accordance with the relevant sector-specific rules, be implemented to achieve their set objectives without doing significant harm to the environmental objectives of climate change mitigation, climate change adaptation, the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control and the protection and restoration of biodiversity and ecosystems, as set out in Article 9 of Regulation (EU) 2020/852 of the European Parliament and of the Council51.

Removed:Article 33 – paragraph 2 – point d a (new): (da) programmes and activities shall be implemented to achieve their set objectives respecting applicable working and employment conditions under relevant collective agreements, national and Union law as well as ILO conventions, and all other relevant applicable legislation regarding, but not limited to, social rights, minimum wages, occupational safety and health, work-life balance and organisation of working time.

Removed:Article 33 – paragraph 3: 3. Specific, measurable, attainable, relevant and time-bound objectives as referred to in paragraphs 1 and 2 and indicators that are relevant, accepted, credible, easy, concise, robust and based on widely recognized scientific evidence and an effective, transparent and comprehensive methodology shall be defined where relevant. Those indicators shall include indicators to measure the impact of Union spending on gender equality and to track spending on climate change mitigation and adaptation and the protection of biodiversity.