Bijlagen bij COM(2020)289 - Communication from the commission to the European parliament, the council and the court of auditors annual accounts of the European commission for the financial year 2019

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agreement of which the EU and one or more parties have joint control. Joint control is the agreed sharing of control of an arrangement by way of a binding arrangement, which exists

Annual accounts of the European Commission 2019

arrangement that is structured through a separate vehicle and whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Participations in joint ventures are accounted for using the equity method (see note 1.5.4). A joint operation is a joint arrangement whereby the parties that have joint control of the arrangements have rights to the assets, and obligations for the liabilities, related to the arrangement. Participations in joint operations are accounted for by recognising in the EU’s financial statements its assets and liabilities, revenue and expense, as well as its share of assets, liabilities, revenue and expense jointly held or incurred.

Associates

Associates are entities over which the EU has, directly or indirectly, significant influence but not exclusive or joint control. It is presumed that significant influence exists if the EU holds directly or indirectly 20 % or more of the voting rights. Participations in associates are accounted for using the equity method (see note 1.5.4).

Non-consolidated entities the funds of which are managed by the Commission

The funds of the Joint Sickness Insurance Scheme for staff of the EU, the European Development Fund and the Participants Guarantee Fund are managed by the Commission on their behalf. However, since these entities are not controlled by the EU, they are not consolidated in its financial statements.

1.4. BASIS OF PREPARATION

Financial statements are presented annually. The accounting year begins on 1 January and ends on 31 December.

1.4.1.      Currency and basis for conversion

Functional and reporting currency

The financial statements are presented in millions of euros, unless stated otherwise, the euro being the EU’s functional currency.

Transactions and balances

Foreign currency transactions are translated into euros using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the re-translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of financial performance. Translation differences on non-monetary financial instruments classified as available for sale financial assets are included in the fair value reserve.

Different conversion methods apply to property, plant and equipment and intangible assets, which retain their value in euros at the rate that applied at the date when they were purchased.

Year-end balances of monetary assets and liabilities denominated in foreign currencies are converted into euros on the basis of the European Central Bank (ECB) exchange rates applying on 31 December:

Annual accounts of the European Commission 2019

Euro exchange rates

Currency31.12.2019
BGN1.9558
CZK25.4080
DKK7.4715
GBP0.8508
HRK7.4395
HUF330.5300

31.12.2018 Currency

1.9558 PLN

31.12.2019         31.12.2018

25.7240 RON

7.4673 SEK

0.8945 CHF

7.4125 JPY

320.9800 USD

4.2568

4.783

10.4468

1.0854

121.9400

1.1234

4.3014

4.6635

10.2548

1.1269

125.8500

1.145

1.4.2.      Use of estimates

In accordance with IPSAS and generally accepted accounting principles, the financial statements necessarily include amounts based on estimates and assumptions by management based on the most reliable information available. Significant estimates include, but are not limited to: amounts for employee benefit liabilities, financial risk of accounts receivable and the amounts disclosed in the notes concerning financial instruments, accrued revenue and charges, provisions, degree of impairment of intangible assets and property, plant and equipment, net realisable value of inventories, contingent assets and liabilities. Actual results could differ from those estimates. Changes in estimates are reflected in the period in which they become known, if the change affects the period only, or that period and future periods, if the change affects both.

1.5. BALANCE SHEET

1.5.1.      Intangible assets

An intangible asset is an identifiable non-monetary asset without physical substance. An asset is identifiable if it is either separable (i.e. it is capable of being separated or divided from the entity, e.g. by being sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the entity intends to do so), or arises from binding arrangements (including rights from contracts or other legal rights), regardless of whether those rights are transferable or separable from the entity or from other rights and obligations).

Acquired intangible assets are stated at historical cost less accumulated amortisation and impairment losses. Internally developed intangible assets are capitalised when the relevant criteria of the EU Accounting Rules are met and the expenses relate solely to the development phase of the asset. The capitalisable costs include all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management. Costs associated with research activities, non-capitalisable development costs and maintenance costs are recognised as expenses as incurred.

Intangible assets are amortised on a straight-line basis over their estimated useful lives (3 to 11 years). The estimated useful lives of intangible assets depend on their specific economic lifetime or legal lifetime determined by an agreement.

1.5.2.      Property, plant and equipment

All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition, construction or transfer of the asset.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits or service potential associated with the item will flow to the EU and its cost can be measured reliably. Repairs and maintenance costs are charged to the statement of financial performance during the financial period in which they are incurred.

Land is not depreciated as it is deemed to have an indefinite useful life. Assets under construction are not


Annual accounts of the European Commission 2019

Type of asset                                                                             Straight line depreciation rate

Buildings

Space assets

Plant and equipment

Furniture and vehicles

Computer hardware

Other

4 % to 10 %
8 % to 25 %
10 % to 25 %
10 % to 25 %
25 % to 33 %
10 % to 33 %

Gains or losses on disposals are determined by comparing proceeds less selling expenses with the carrying amount of the disposed asset and are included in the statement of financial performance.

Leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. Leases are classified as either finance leases or operating leases.

Finance leases are leases where substantially all the risks and rewards incidental to ownership are transferred to the lessee. When entering a finance lease as a lessee, the assets acquired under the finance lease are recognised as assets and the associated lease obligations as liabilities as from the commencement of the lease term. The assets and liabilities are recognised at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. Over the period of the lease term, the assets held under finance leases are depreciated over the shorter of the asset’s useful life and the lease term. The minimum lease payments are apportioned between the finance charge (the interest element) and the reduction of the outstanding liability (the capital element). The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability, which is presented as current/non-current, as applicable. Contingent rents are charged as expenses in the period in which they are incurred.

An operating lease is a lease other than a finance lease, i.e. a lease where the lessor retains substantially all the risks and rewards incidental to ownership of an asset. When entering an operating lease as a lessee, the operating lease payments are recognised as an expense in the statement of financial performance on a straight-line basis over the lease term with neither a leased asset nor a leasing liability presented in the statement of financial position.

1.5.3.      Impairment of non-financial assets

An impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset's future economic benefits or service potential through amortisation or depreciation (as applicable). Assets that have an indefinite useful life are not subject to amortisation/depreciation and are tested annually for impairment. Assets that are subject to amortisation/depreciation are tested for impairment whenever there is an indication at the reporting date that an asset may be impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable (service) amount. The recoverable (service) amount is the higher of an asset’s fair value less costs to sell and its value in use.

Intangible assets and property, plant and equipment residual values and useful lives are reviewed, and adjusted if appropriate, at least once per year. If the reasons for impairments recognised in previous years no longer apply, the impairment losses are reversed accordingly.

1.5.4.      Investments accounted for using the equity method

Participations in associates and joint ventures

Investments accounted for using the equity method are initially recognised at cost, with the initial carrying amount subsequently being increased or decreased to recognise further contributions, the EU’s share of the surplus or deficit of the investee, any impairments and dividends. The initial cost together with all movements give the carrying amount of the investment in the financial statements at the balance

Annual accounts of the European Commission 2019

performance, and its share of investee’s movements in equity is recognised in the reserves within net assets. Distributions received from the investment reduce the carrying amount of the asset.

If the EU's share of deficits of an investment accounted for using the equity method equals or exceeds its interest in the investment, the EU discontinues recognising its share of further losses (‘unrecognised losses’). After the EU’s interest is reduced to zero, additional losses are provided for and a liability is recognised only to the extent that the EU has incurred legal or constructive obligation or made payments on behalf of the entity.

If there are indications of impairment, a write-down to the lower recoverable amount is necessary. The recoverable amount is determined as described under note 1.5.3. If the reason for impairment ceases to apply at a later date, the impairment loss is reversed to the carrying amount that would have been determined had no impairment loss been recognised.

In cases where the EU holds 20 % or more of an investment capital fund, it does not seek to exert significant influence. Such funds are therefore treated as financial instruments and categorised as available for sale financial assets.

Associates and joint ventures classified as minor entities (see note 1.3) are not accounted for under the equity method. EU contributions to those entities are accounted for as an expense of the period.

1.5.5.      Financial assets

Classification

The EU classifies their financial assets in the categories ‘financial assets at fair value through surplus or deficit’, ‘loans and receivables’, ‘held-to-maturity investments’ and ‘available for sale financial assets’. The classification of financial instruments is determined at initial recognition and re-evaluated at each balance sheet date.

(i) Financial assets at fair value through surplus or deficit

A financial asset is classified in the category ‘fair value through surplus or deficit’ if acquired principally for the purpose of being sold in the short term, or if so designated by the entity. Derivatives are also presented in this category. Assets in this category are classified as current assets if they are expected to be realised within 12 months of the balance sheet date.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the EU provides money, goods or services directly to a debtor with no intention of trading the receivable, or in case the EU is subrogated to the rights of the original lender following a payment made by the EU under a guarantee contract. Payments due within 12 months of the balance sheet date are classified as current assets. Payments due after 12 months from the balance sheet date are classified as non-current assets. Loans and receivables include term deposits with the original maturity above three months.

(iii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the EU has the positive intention and ability to hold to maturity. During this financial year, the EU did not hold any investments in this category.

(iv) Available for sale financial assets

Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are classified as either current or non-current assets, depending on the period of time the EU expects to hold them. Investments in entities that are neither consolidated nor accounted for using the equity method and other equity-type investments (e.g. Risk Capital Operations) are also classified as available for sale financial assets.

Annual accounts of the European Commission 2019

Initial recognition and measurement

Purchases and sales of financial assets classified as ‘at fair value through surplus or deficit, ‘held-to-maturity’ or ‘available for sale’ are recognised on their trade-date - the date on which the EU commits to purchase or sell the asset. Cash equivalents and loans are recognised when cash is deposited in a financial institution or advanced to borrowers. Financial instruments are initially recognised at fair value. For all financial assets not carried at fair value through surplus or deficit, transactions costs are added to the fair value at initial recognition. Financial assets carried at fair value through surplus or deficit are initially recognised at fair value and transaction costs are expensed in the statement of financial performance.

The fair value of a financial asset on initial recognition is normally the transaction price (i.e. the fair value of the consideration received), unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable markets (e.g. in case of some derivative contracts). However, when a long-term loan that carries no interest or an interest below market conditions is granted, its fair value can be estimated as the present value of all future cash receipts discounted using the prevailing market rate of interest for a similar instrument with a similar credit rating.

Loans granted are measured at their nominal amount, which is considered to be the fair value of the loan. The reasoning for this is as follows:

The ‘market environment’ for EU lending is very specific and different from the capital market used to issue commercial or government bonds. As lenders in these markets have the opportunity to choose alternative investments, the opportunity possibility is factored into market prices. However, this opportunity for alternative investments does not exist for the EU, which is not allowed to invest money on the capital markets; it only borrows funds for the purpose of lending at the same rate. This means that there is no alternative lending or investment option available to the EU for the sums borrowed. Thus, there is no opportunity cost and therefore no basis of comparison with market rates. In fact, the EU lending operation itself represents the market. Essentially, since the opportunity cost ‘option’ is not applicable, the market price does not fairly reflect the substance of the EU lending transactions. Therefore, it is not appropriate to determine the fair value of EU lending with reference to commercial or government bonds.

Furthermore, as there is no active market or similar transactions to compare with, the interest rate to be used by the EU for fair valuing its lending operations under the EFSM, BOP and other such loans, should be the interest rate charged.

In addition, for these loans, there are compensating effects between loans and borrowings due to their back-to-back character. Thus, the effective interest for the loan equals the effective interest rate for the related borrowings. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the statement of financial performance.

Financial instruments are derecognised when the rights to receive cashflows from the investments have expired or the EU has transferred substantially all risks and rewards of ownership to another party.

Subsequent measurement

a) Financial assets at fair value through surplus or deficit are subsequently carried at fair value. Gains and losses arising from changes in the fair value of the ‘financial instruments at fair value through surplus or deficit’ category are included in the statement of financial performance in the period in which they arise.

b) Loans and receivables are carried at amortised cost using the effective interest method. In the case of loans granted on borrowed funds, the same effective interest rate is applied to both the loans and borrowings since these loans have the characteristics of ‘back-to-back operations’ and the differences between the loan and the borrowing conditions and amounts are not material. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the statement of financial performance.

c) Held to maturity assets are carried at amortised cost using the effective interest method. The EU currently holds no held to maturity investments.

Annual accounts of the European Commission 2019

reserve, except for translation differences on monetary assets, which are recognised in the statement of financial performance. When assets classified as available for sale financial assets are derecognised or impaired, the cumulative fair value adjustments previously recognised in the fair value reserve are recognised in the statement of financial performance. Interest on available for sale financial assets calculated using the effective interest method is recognised in the statement of financial performance. Dividends on available for sale equity instruments are recognised when the EU’s right to receive payment is established.

The fair values of quoted investments in active markets are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities and over-the–counter derivatives), the EU establishes a fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cashflow analysis, option pricing models and other valuation techniques commonly used by market participants.

Investments in Venture Capital Funds, classified as available for sale financial assets, which do not have a quoted market price in an active market are valued at the attributable net asset value, which is considered as an equivalent of their fair value.

In cases where the fair value of investments in equity instruments that do not have a quoted market price in an active market cannot be reliably measured, these investments are valued at cost less impairment losses.

Impairment of financial assets

A financial asset is impaired and a loss is recognised if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and that loss event (or events) has an impact on the estimated future cashflows of the financial asset that can be reliably estimated. The EU assesses at each reporting date whether there is objective evidence that a financial asset is impaired.

(a)             Assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables or held-to-maturity investments carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cashflows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the statement of financial performance. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. The calculation of the present value of the estimated future cashflows of a collateralised financial asset reflects the cashflows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the statement of financial performance.

(b)             Assets carried at fair value

In the case of equity investments classified as available for sale financial assets, a significant or permanent (prolonged) decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available for sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the statement of financial performance – is removed from reserves and recognised in the statement of financial performance. Impairment losses recognised in the statement of financial performance on equity instruments are not reversed through the statement of financial performance. If, in a subsequent period, the fair value of a debt instrument classified as available for sale financial asset increases and the increase can be objectively related to an event occurring after the impairment loss was recognised, the impairment loss is reversed through the statement of financial performance.

1.5.6.      Inventories

Annual accounts of the European Commission 2019

labour, other directly attributable costs and related production overheads (based on normal operating capacity). Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. When inventories are held for distribution at no charge or for a nominal charge, they are measured at the lower of cost and current replacement cost. Current replacement cost is the cost the EU would incur to acquire the asset on the reporting date.

1.5.7.      Pre-financing amounts

Pre-financing is a payment intended to provide the beneficiary with a cash advance, i.e. a float. It may be split into a number of payments over a period defined in the particular contract, decision, agreement or basic legal act. The float or advance is either used for the purpose for which it was provided during the period defined in the agreement or it is repaid. If the beneficiary does not incur eligible expenditure, they have the obligation to return the pre-financing advance to the EU. As the EU retains control over the prefinancing and is entitled to a refund for the ineligible part, the amount is presented as an asset.

Pre-financing is initially recognised on the balance sheet when cash is transferred to the recipient. It is measured at the amount of the consideration given. In subsequent periods pre-financing is measured at the amount initially recognised on the balance sheet less the eligible expenses (including estimated amounts where necessary) incurred during the period.

Interest on pre-financing is recognised as it is earned in accordance with the provisions of the relevant agreement. An estimate of the accrued interest revenue, based on the most reliable information, is made at the year-end and included in the balance sheet.

Other advances to Member States which originate from reimbursement by the EU of amounts paid as advances by the Member States to their beneficiaries (including ‘financial instruments under shared management’) are recognised as assets and presented under the heading ‘Pre-financing’. Other advances to Member States are subsequently measured at the amount initially recognised on the balance sheet less a best estimate of the eligible expenses incurred by final beneficiaries, calculated on the basis of reasonable and supportable assumptions.

The EU contributions to the trust funds of the European Development Fund or other unconsolidated entities are also classified as pre-financing since their purpose is to give a float to the trust fund to allow it to finance specific actions defined under the trust fund’s objectives. The EU contributions to trust funds are measured at the initial amount of the EU contribution less eligible expenses, including estimated amounts where necessary, incurred by the trust fund during the reporting period and allocated to the EU contribution in accordance with the underlying agreement.

1.5.8.      Exchange receivables and non-exchange recoverables

The EU Accounting Rules require a separate presentation of exchange and non-exchange transactions. To distinguish between the two categories, the term ‘receivables’ is reserved for exchange transactions, whereas for ‘non-exchange transactions’, i.e. when the EU receives value from another entity without directly giving approximately equal value in exchange, the term ‘recoverables’ is used (e.g. recoverables from Member States related to own resources).

Receivables from exchange transactions meet the definition of financial instruments and are thus classified as loans and receivables and measured accordingly (see note 1.5.5). The financial instruments notes disclosures concerning receivables from exchange transactions include accrued revenue and deferred charges from exchange transactions, as they are not material. A general write-down based on past experience is made for outstanding recovery orders not already subject to a specific write-down.

Recoverables from non-exchange transactions are carried at fair value as at the date of acquisition (adjusted for interest and penalties) less write-down for impairment. A write-down for impairment of recoverables from non-exchange transactions is established when there is objective evidence that the EU will not be able to collect all amounts due according to the original terms of recoverables from non-exchange transactions. The amount of the write-down is the difference between the asset’s carrying amount and the recoverable amount. The amount of the write-down is recognised in the statement of financial performance. A general write-down, based on past experience, is also made for outstanding recovery orders not already subject to a specific write-down. See note 1.5.14 concerning the treatment

Annual accounts of the European Commission 2019

from non-exchange transactions are disclosed together with receivables from exchange transactions where appropriate.

1.5.9.      Cash and cash equivalents

Cash and cash equivalents are financial instruments and include cash at hand, deposits held at call or at short notice with banks and other short-term highly liquid investments with original maturities of three months or less.

1.5.10.    Employee benefits

The EU provides a set of benefits (emoluments and social security) to employees. For accounting purposes these have to be classified into short-term and post-employment benefits.

Short-term employee benefits

Short-term employee benefits are those benefits due to be settled before twelve months after the end of the reporting period in which employees rendered the service, such as salaries, annual and paid sick leaves, and other short-term allowances. Short-term employee benefits are recognised as an expense when the related service is provided. A liability is recognised for the amount expected to be paid if the EU has a present legal or constructive obligation to pay as a result of past service provided by the employee and the obligation can be estimated reliably.

Post-employment benefits

The EU grants a set of post-employment benefits to employees, which include retirement, invalidity and survival pensions provided under the Pension Scheme of the European Officials (PSEO), as well as medical coverage provided under the Joint Sickness Insurance Scheme (JSIS) (see note 2.9). These benefits are provided under a single plan – although split in two schemes – and they must be treated similarly so as to give a fair presentation of the situation and reflect the economic reality:

i. Pension Scheme of European Officials (PSEO): The benefits granted under this notionally funded1

scheme relate to seniority, invalidity and survival, as well as, family allowances, death before retirement to those employees that work or worked in the EU Institutions, Agencies and other EU bodies or are survivors of deceased officials or pensioners. Staff contribute one third of the expected cost of these benefits from their salaries.

ii. Joint Sickness Insurance Scheme (JSIS): Under this scheme, the EU provides health coverage for

staff of the European Commission, Institutions, Agencies and other EU bodies through the reimbursement of medical expenses. The benefits granted to the ‘inactives’ of this scheme (i.e. pensioners, orphans, etc.) are classified as post-employment benefits.

The EU also provides post-employment benefits to members of the EU institutions via separate pension schemes. These are shown under the heading ‘Other retirement benefit schemes’. Under these schemes the EU provides pension benefits to members of the Commission, Court of Justice and General Court, Court of Auditors, Council, European Parliament, Ombudsman, Data Protection Supervisor, Civil Service Tribunal. The EU provides health coverage to the members of the EU Institutions via the JSIS.

The above post-employment benefits qualify as defined benefit obligations of the EU and are calculated at each reporting date by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. The calculation of defined benefit obligation is performed annually using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.

1 The PSEO is a notional (virtual) fund with defined benefits in which staff’s contributions serve to finance their future pensions. Although there is no actual investment fund, the amount that would have been collected by such a fund is considered to have been invested in the Member States’ long-term bonds and is reflected in the pension liability that

Annual accounts of the European Commission 2019

The post-employment benefits provided to EU staff are incorporated in a single plan comprising both a pension scheme (PSEO) and a sickness insurance scheme (JSIS), with the right to coverage under the JSIS scheme being dependent on having acquired the right to coverage under the PSEO scheme. Under the terms of this single plan, as set out in the Staff Regulation, certain entitlements, such as the right to a deferred and reduced pension under the PSEO scheme, are acquired after 10 years of service. However, the entitlements acquired under the single plan by the employee’s subsequent service are materially higher than those initial entitlements as reflected by subsequent annually accrued pension rights.

Therefore, in order to depict the economic substance of the underlying transaction required by the faithful representation qualitative characteristic of financial reporting as outlined in both EAR 1 and the IPSAS Conceptual Framework, the service cost incurred is accrued on a straight-line basis over staff’s estimated active service period, i.e. the period from the date when service by the employee first leads to benefits under the plan (whether or not the benefits are conditional on further service) until the date when further service by the employee will lead to no material amount of further benefits under the plan, other than from further salary increases. This approach is applied consistently to the benefits provided for under the single plan.

Remeasurements of the net defined benefit liability comprise actuarial gains and losses and the return on plan assets, and are recognised immediately in net assets.

The EU recognises the net interest expense (income) and other expenses related to the defined benefit plans in the statement of financial performance within the caption ‘staff and pension costs’.

When benefits provided are changed or curtailed, the resulting change in benefits that relates to past service or the gain or loss on curtailment is recognised immediately in the statement of financial performance. Gains and losses on settlement are recognised when the settlement occurs. Past service cost is recognised immediately in the statement of financial performance, unless the changes are conditional on the employees remaining in service for a specified period of time.

1.5.11.    Provisions

Provisions are recognised when the EU has a present legal or constructive obligation towards third parties as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognised for future operating losses. The amount of the provision is the best estimate of the expenses expected to be required to settle the present obligation at the reporting date. Where the provision involves a large number of items, the obligation is estimated by weighting all possible outcomes by their associated probabilities (‘expected value’ method).

Provisions for onerous contracts are measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.

1.5.12.    Financial liabilities

Financial liabilities are classified as financial liabilities at fair value through surplus or deficit, financial liabilities carried at amortised cost or as financial guarantee liabilities.

Borrowings are composed of borrowings from credit institutions and debts evidenced by certificates. They are recognised initially at fair value, being their issue proceeds (fair value of consideration received) net of transaction costs incurred, then subsequently carried at amortised cost using the effective interest method; any difference between proceeds, net of transaction costs, and the redemption value is recognised in the statement of financial performance over the period of the borrowings using the effective interest method. In the case of loans granted on borrowed funds, the effective interest method may not be applied to loans and borrowings, based on materiality considerations. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the statement of financial performance.

Financial liabilities categorised at fair value through surplus or deficit include derivatives where fair value is negative. They follow the same accounting treatment as financial assets at fair value through surplus

Annual accounts of the European Commission 2019

Financial guarantee liabilities are initially recognised at fair value, being the premium received. Subsequently, financial guarantee liabilities are measured at the higher of the best estimate of the expenses expected to be required to settle the financial guarantee liability and the amount initially recognised less, when appropriate, cumulative amortisation. The EU recognises a financial guarantee liability when it receives consideration for granting of the guarantee, that is at market terms, or when the fair value of the guarantee can be measured reliably. In case no active market for a directly equivalent guarantee contract exists, the EU discloses the guarantee given as a contingent liability (see note 1.7.2) or – when it is more likely than not that an outflow of resources will be required to settle the obligation – the EU recognises a provision (see note 1.5.11).

Financial liabilities are classified as non-current liabilities, except for maturities less than 12 months after the balance sheet date.

EU trust funds that are considered as part of the Commission’s operational activities are accounted for in the Commission accounts and further consolidated in the EU annual accounts. Therefore, contributions from other donors to the EU trust funds fulfil the criteria of revenues from non-exchange transactions under conditions and they are presented as financial liabilities until the conditions attached to the contributions transferred are met, i.e. eligible costs are incurred by the trust fund. The trust fund is required to finance specific projects and return remaining funds at the time of winding-up. At the balance sheet date the outstanding contribution liabilities are measured at contributions received less the expenses incurred by the trust fund, including estimated amounts when necessary. For reporting purposes the net expenses are allocated to the contributions of other donors in proportion to net contributions paid as at 31 December. This allocation of contributions is only indicative. When the trust fund is wound up the actual split of remaining resources will be decided by the trust fund board.

1.5.13.    Payables

A significant amount of the payables of the EU are unpaid cost claims from beneficiaries of grants or other EU funding (non-exchange transactions). They are recorded as payables for the requested amount when the cost claim is received. Upon verification and acceptance of the eligible costs, the payables are valued at the accepted and eligible amount.

Payables arising from the purchase of goods and services are recognised at invoice reception for the original amount and corresponding expenses are entered in the accounts when the supplies or services are delivered and accepted by the EU.

1.5.14.    Accrued and deferred revenue and charges

Transactions and events are recognised in the financial statements in the period to which they relate. At year-end, if an invoice is not yet issued but the service has been rendered, the supplies have been delivered by the EU or a contractual agreement exists (e.g. by reference to a treaty), an accrued revenue will be recognised in the financial statements. In addition, at year-end, if an invoice is issued but the services have not yet been rendered or the goods supplied have not yet been delivered, the revenue will be deferred and recognised in the subsequent accounting period.

Expenses are also accounted for in the period to which they relate. At the end of the accounting period, accrued expenses are recognised based on an estimated amount of the transfer obligation of the period. The calculation of accrued expenses is done in accordance with detailed operational and practical guidelines issued by the Commission which aim at ensuring that the financial statements provide a faithful representation of the economic and other phenomena they purport to represent. By analogy, if payment has been made in advance for services or goods that have not yet been received, the expense will be deferred and recognised in the subsequent accounting period.

Annual accounts of the European Commission 2019

1.6. STATEMENT OF FINANCIAL PERFORMANCE

1.6.1.     Revenue

REVENUE FROM NON-EXCHANGE TRANSACTIONS

The vast majority of the EU’s revenue relates to non-exchange transactions:

GNI based resources and VAT resources

Revenue is recognised for the period for which the Commission sends out a call for funds to the Member States claiming their contribution. They are measured at their ‘called amount’. As VAT and GNI resources are based on estimates of the data for the budgetary year concerned, they may be revised as changes occur until the final data are issued by the Member States. The effect of a change in estimate is included when determining the net surplus or deficit for the period in which the change occurred.

Traditional own resources

Recoverables from non-exchange transactions and related revenues are recognised when the relevant monthly ‘A’ statements (including duties collected and amounts due that are guaranteed and not contested) are received from the Member States. At the reporting date, revenue collected by the Member States for the period but not yet paid to the Commission is estimated and recognised as accrued revenue. The quarterly ‘B’ statements (including duties neither collected nor guaranteed, as well as guaranteed amounts that have been contested by the debtor) received from the Member States are recognised as revenue less the collection costs to which they are entitled. In addition, a value reduction is recognised for the amount of the estimated recovery gap.

Fines

Revenue from fines is recognised when the EU’s decision imposing a fine has been taken and it is officially notified to the addressee. After the decision to impose a fine, the undertakings have two months from the date of notification:

a) either to accept the decision, in which case they must pay the fine within the time limit laid down and the amount is definitively collected by the EU; or

b) not to accept the decision, in which case they lodge an appeal under EU law.

Even if appealed, the fine must be paid within the time limit of three months laid down as the appeal does not have suspensory effect (Article 278 TFEU). The cash received is used to clear the recoverable. However, subject to the agreement of the Commission’s Accounting Officer, the undertaking may present a bank guarantee for the amount instead. In that case the fine remains as a recoverable. If neither cash nor a guarantee is received and there are doubts about the undertaking’s solvency, a value reduction on the entitlement is recognised.

In case the undertaking appeals against the decision, and has already provisionally paid the fine, the amount is disclosed as a contingent liability, or, if it appears probable that the General Court may not rule in favour of the EU, a provision is recognised to cover this risk. If a guarantee had been given instead, the outstanding recoverable is written down as required.

The accumulated interest received by the Commission on the bank accounts where received payments are deposited is recognised as revenue, and any contingent liability is increased accordingly.

Since 2010, all provisionally cashed fines are managed by the Commission in a specifically created fund (BUFI) and invested in financial instruments.

REVENUE FROM EXCHANGE TRANSACTIONS

Revenue from the sale of goods and services is recognised when the significant risk and rewards of ownership of the goods are transferred to the purchaser. Revenue associated with a transaction involving

Annual accounts of the European Commission 2019

Interest revenue and expense

Interest revenue and expense are recognised in the statement of financial performance using the effective interest method. This is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest revenue or interest expense over the relevant period. When calculating the effective interest rate, the EU estimates cashflows considering all contractual terms of the financial instrument (for example prepayment options) but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest revenue is recognised using the rate of interest to discount the future cashflows for the purpose of measuring the impairment loss.

Revenue from dividends

Revenue from dividends and similar distributions is recognised when the right to receive payment is established.

1.6.2.      Expenses

Expenses from non-exchange transactions account for the majority of the EU’s expenses. They relate to transfers to beneficiaries and can be of three types: entitlements, transfers under agreement and discretionary grants, contributions and donations.

Transfers are recognised as expenses in the period during which the events giving rise to the transfer occurred, as long as the nature of the transfer is allowed by regulation (Financial Regulation, Staff Regulations, or other regulation) or an agreement has been signed authorising the transfer, any eligibility criteria have been met by the beneficiary, and a reasonable estimate of the amount can be made.

When a request for payment or cost claim is received and meets the recognition criteria, it is recognised as an expense for the eligible amount. At year-end, incurred eligible expenses due to the beneficiaries but not yet reported are estimated and recorded as accrued expenses.

Expenses from exchange transactions arising from the purchase of goods and services are recognised when the supplies are delivered and accepted by the EU. They are valued at their original invoice amount. Furthermore, at the balance sheet date expenses related to the service delivered during the period for which an invoice has not yet been received or accepted are estimated and recognised in the statement of financial performance.

1.7. CONTINGENT ASSETS AND LIABILITIES

1.7.1.      Contingent assets

A contingent asset is a possible asset that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the EU. A contingent asset is disclosed when an inflow of economic benefits or service potential is probable.

1.7.2.      Contingent liabilities

A contingent liability is a possible obligation that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the EU, or a present obligation that arises from past events but is not recognised either because it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation, or in the rare circumstances where the amount of the obligation cannot be measured with sufficient reliability. A contingent liability is disclosed unless the possibility of an outflow of resources embodying economic benefits or service potential is remote.

Annual accounts of the European Commission 2019

1.8. CASHFLOW STATEMENT

Cashflow information is used to provide a basis for assessing the ability of the EU to generate cash and cash equivalents, and its needs to utilise those cashflows.

The cashflow statement is prepared using the indirect method. This means that the economic result for the financial year is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of revenue or expense associated with investing cashflows.

Cashflows arising from transactions in a foreign currency are recorded in the EU’s reporting currency (Euro), by applying to the foreign currency amount the exchange rate between the euro and the foreign currency at the date of the cashflow.

The cashflow statement reports cashflows during the period classified by operating and investing activities (the EU does not have financing activities).

Operating activities are the activities of the EU that are not investing activities. These are the majority of the activities performed. Loans granted to beneficiaries (and the related borrowings, when applicable) are not considered as investing (or financing) activities as they are part of the general objectives and thus daily operations of the EU.

Investing activities are the acquisition and disposal of intangible assets and property, plant and equipment and of other investments which are not included in cash equivalents. Investing activities do not include loans granted to beneficiaries. The objective is to show the real investments made by the EU.

Annual accounts of the European Commission 2019

2. NOTES TO THE BALANCE SHEET

ASSETS

2.1. INTANGIBLE ASSETS

EUR million

Gross carrying amount at 31.12.2018                                                                                                                      333

Additions                                                                                                                                                                           71

Disposals                                                                                                                                                                        (10)

Transfer between asset categories                                                                                                                                0

Other changes                                                                                                                                                                    –

Gross carrying amount at 31.12.2019                                                                                                             394

Accumulated amortisation at 31.12.2018                                                                                                            (165)

Amortisation charge for the year                                                                                                                              (30)

Amortisation written back                                                                                                                                                0

Disposals                                                                                                                                                                           10

Transfer between asset categories                                                                                                                             (0)

Other changes                                                                                                                                                                    –

Accumulated amortisation at 31.12.2019                                                                                                   (185)

NET CARRYING AMOUNT AT 31.12.2019                                                                                                         209

NET CARRYING AMOUNT AT 31.12.2018                                                                                                                 168

Annual accounts of the European Commission 2019

2.2. PROPERTY, PLANT AND EQUIPMENT

Gross carrying amount at 31.12.2018

Additions

Disposals

Transfer between asset categories

Other changes

Land and

1 450

10

(0)

4

Space assets

5 259

10

(0)

411

Plant and

266

10

(16)

0

Furniture

69

2

(4)

(0)

Computer

235 15

(24) (0)

161 3

(11) 1

Finance leases

1 548

4

(3)

Assets under

2 759 829

(416) (0)

EUR million

Total

11 747

883

(58)

(0)

(0)

Gross carrying amount at 31.12.20191 4645 680260672261541 5493 17212 572
Accumulated depreciation at 31.12.2018(875)(1 341)(246)(58)(200)(130)(798)-(3 649)
Depreciation charge for the year(42)(659)(10)(4)(20)(9)(56)-(800)
Depreciation written back------(0)-(0)
Disposals001642484-56
Transfer between asset categories---0

(58)
0

(196)
(0)

(131)
--0
Accumulated depreciation at 31.12.2019(917)(2 000)(240)(850)-(4 392)

NET CARRYING AMOUNT AT 31.12.2019

NET CARRYING AMOUNT AT 31.12.2018

547

575

3 680

3 918

20

20

9

11

30

35

23

30

699

750

3 172

2 759

8 180

8 098


Other

Annual accounts of the European Commission 2019

2.3. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

The participation of the EU represented by the Commission in the European Investment Fund (EIF) is treated as an associate using the equity method of accounting. At 31 December 2019, the EU holds 29.7 % of the ownership interest in EIF (2018: 29.7 %).

EUR million

Participation at 31.12.2018

Contributions Dividends received Share of net result Share in the net assets

Participation at 31.12.2019

European Investment Fund

591

(3)

53

(49)

591

EIF summarised financial information:

Assets

Liabilities

Revenue

Expenses

Surplus/(deficit)

31.12.2019 Total EIF

2 965 (975)

337 (161)

176

EUR

31.12.2018 Total EIF

2 662 (674)

291 (167)

124

Reconciliation of the above summarised financial information to the carrying amount of the interest held in the EIF is as follows:

Net assets of the associate

EC ownership interests in EIF

31.12.2019

1 990

29.70%

EUR

31.12.2018

1 988

29.70%

Carrying amount

591

591

The Commission has paid-in 20 % of its subscribed shares in the EIF capital at 31 amount uncalled being as follows:

December 2019, the

EUR

Total share capital Paid-in

Total EIF capital

4 500 (900)

EU subscription

1 337 (267)

Uncalled

3 600

1 070

Annual accounts of the European Commission 2019

2.4. FINANCIAL ASSETS

Non-current

Available for sale financial assets

Financial assets at fair value through surplus or deficit

Loans

Current

Available for sale financial assets

Financial assets at fair value through surplus or deficit

Loans

EUR million

31.12.2019              31.12.2018

Total

2.4.113 94112 345
2.4.213414
2.4.351 35251 559
65 42763 917
2.4.12 9321 592
2.4.232
2.4.31 2852 281
4 2203 875
69 64767 793

2.4.1.      Available for sale financial assets

BUFI investments

European Bank for Reconstruction and Development

Guarantee Funds for budgetary guarantees:

EFSI Guarantee Fund

Guarantee Fund for external actions

EFSD Guarantee Fund

Financial instruments supported by the EU budget:

Horizon 2020

Connecting Europe Facility

Risk Sharing Finance Facility

EU SME Equity Facilities

European Fund for South East Europe

Risk Capital Operations

Energy Efficiency Finance Facility

Other

Total

Non-current Current

31.12.2019

EUR million

31.12.2018

1 8631 888
188188
2 0512 076
6 6545 000
2 5452 465
5959
9 7947 474
2 4552 031
699540
597679
507464
166115
112113
105101
387343
5 0284 386
16 87313 937
13 94112 345
2 9321 592

2.4.2.      Financial assets at fair value through surplus or deficit

Foreign currency forward contract Guarantee on equity portfolio

Total

Non-current

393 1 439

3 134

1 832

137

1 439

134

EUR million

Type of derivative31.12.201931.12.2018
amount Fair valueNotional amount

476 674

1 150

674

2 14

16

14

Annual accounts of the European Commission 2019 Fair value hierarchy of financial assets measured at fair value

Level 1: Quoted prices in active markets

Level 2: Observable inputs other than quoted prices Level 3: Valuation techniques with inputs not based on observable market data

EUR million

31.12.2019            31.12.2018

13 949

1 543

1 518

Total

17 010

12 487 275

1 191

13 953

Reconciliation of financial assets measured using valuation techniques with inputs not based on observable market data (level 3)

EUR million

Opening balance at 1.1.2019

Purchases, sales, issues and settlements

Gains or losses for the period in financial income or finance costs

Gains or losses in net assets

Transfers into level 3

Transfers out of level 3

Other

1 191

173

90

71

(8)

Closing balance at 31.12.2019

1 518

2.4.3.      Loans

Loans for financial assistance Other loans

Total

Non-current Current

EUR million

31.12.2019           31.12.2018

2.4.3.152 56453 775
2.4.3.273

52 637

51 352
64
53 840
51 559
1 2852 281

2.4.3.1. Loans for financial assistance

EUR million

Total at 31.12.201847 400BOP 1 7344 388Euratom 254Total 53 775
New loans--420-420
Repayments-(1 500)(52)(40)(1 592)
Exchange differences-----
Changes in carrying amount(6)(33)(1)(0)(40)
Impairment-----
Total at 31.12.201947 3942014 75421452 564
Non-current46 8002004 11217851 290
Current5941643351 273

The change in carrying amount corresponds to the change in accrued interests.

Nominal value of loans for financial assistance at 31 December 2019 total EUR 51 941 million (2018: EUR 53 114 million).

Note

Annual accounts of the European Commission 2019 Loans effective interest rates (expressed as a range of interest rates)

Macro Financial Assistance (MFA)

Euratom

Balance of Payment (BOP)

European Financial Stability Mechanism (EFSM)

31.12.2019

0 % - 3.82 %

0.08 % - 5.76 %

2.88 %

0.50 % - 3.75 %

31.12.2018

0 % - 3.82 % 0.08 % - 5.76 % 2.88 % - 3.38 % 0.50 % - 3.75 %

2.4.3.2. Other loans

Loans with special conditions

Total

Non-current Current

31.12.2019

73

73

62 12

EUR million 18 64

31.12.2018

64

37 27

Nominal value of other loans at 31 December 2019 total EUR 680 million (2018: EUR 615 million). Impairment on other loans

Loans with special conditions Subrogated loans

EUR million

31.12.2018 Additions Reversals Write-off Other 31.12.2019

8 579

2 75

10 658

Total

587

77

4

668

4

Annual accounts of the European Commission 2019

2.5. PRE-FINANCING

Non-current

Pre-financing

Other advances to Member States

Contribution to Trust Funds

Current

Pre-financing

Other advances to Member States

Total

2.5.1 2.5.2

EUR million

31.12.2019 31.12.2018

2.5.121 90621 615
2.5.24 0454 122
6071
26 01125 807

22 978 2 892

25 870 51 881

22 106 2 396

24 502 50 309

2.5.1. Pre-financing

EUR million

Gross Cleared via       Net amount        Gross Cleared via       Net amount

amount         accruals at 31.12.2019    amount         accruals at 31.12.2018

Shared Management

EAFRD & other rural

development instruments

ERDF & CF

ESF

Other

Direct Management

Implemented by: Commission

EU executive agencies Trust funds

Indirect Management

Implemented by:

Other EU agencies &

bodies

Third countries

International

organisations

Other entities

Total

Non-current Current

3 193

17 985 6 830 3 549

13 162

16 522

858

4 038

1 491

8 289

10 574

(3 540) (1 530) (1 463)

(8 633)

(10 339)

(665)

(3 158)

(861)

(5 317)

(6 104)

86 493 (41 609)

21 906 64 587

(41 609)

3 1933 743
14 44418 088
5 3016 548
2 0864 684
4 52912 827
6 18415 012
194585
8803 830
6301 546
2 9727 684
4 4719 107
44 88483 655
21 90621 615
22 97862 040

(3 461) (1 147) (2 498)

(8 523)

(9 540)

(432)

(2 975)

(879)

(5 053)

(5 426)

(39 933)

(39 933)

3 743

14 627 5 401 2 186

4 304

5 472 152

856 667

2 631

3 681

43 721

21 615

22 106

2.5.2.      Other advances to Member States

Advances to Member States for financial instruments under shared management Aid Schemes

Total

Non-current

31.12.2019

3 304 3 634

6 937

___

4 045


EUR million

31.12.2018

3 675 2 843

6 518

4 122


Note

Annual accounts of the European Commission 2019

2.6. EXCHANGE RECEIVABLES AND NON-EXCHANGE RECOVERABLES

Non-current

Recoverables from non-exchange transactions Receivables from exchange transactions

Current

Recoverables from non-exchange transactions Receivables from exchange transactions

Total

2.6.1 2.6.2

2.6.1 2.6.2

EUR million
31.12.201931.12.2018
2 436409
1 1506
3 585415
19 17222 075
8161 828
19 98823 903
23 57324 318

2.6.1.

Recoverables from non-exchange transactions

EUR million

Non-currentNote31.12.201931.12.2018
Member States2.6.1.12 422397
Other recoverables14

2 436
12
409
Current
Member States2.6.1.16 11710 836
Competition fines2.6.1.211 3019 727
Accrued income and deferred charges2.6.1.31 5811 291
Other recoverables173

19 172 21 607
222
22 075
Total22 485

Note

Annual accounts of the European Commission 2019 2.6.1.1. Recoverables from Member States

EUR million

31.12.2019 31.12.2018

TOR A accounts

TOR separate accounts

Own resources to be received

Impairment

Other

Own resource recoverables

European Agricultural Guarantee Fund (EAGF)

European Agricultural Fund for Rural Development (EAFRD) and other rural

development instruments

Impairment

EAGF and rural development recoverables

Pre-financing recovery

VAT paid and recoverable

Other recoverables from Member States

Total

Non-current Current

5 478

1 591

7

(931)
5 609

1  612

2  758 (991)

86
6 1459 075
1 722

879

(822)
1 708

955

(788)
1 7791 875
443145
1112
161127
8 53911 232
2 422 6 117397 10 836

2.6.1.2.     Recoverables from competition fines

Recoverable from fines gross amount

Provisional payments

Impairment

Total

Non-current Current

31.12.2019

14 606

(3 125)

(180)

11 301

11 301

EUR million

31.12.2018

13 022

(3 131)

(164)

9 727

9 727

2.6.1.3. Accrued income and deferred charges

Other accrued income

Deferred charges relating to non-exchange transactions

Total

Non-current Current

EUR million

31.12.2019            31.12.2018

1 502 791 238 53
1 5811 291
1 5810 1 291

Annual accounts of the European Commission 2019 2.6.2.      Receivables from exchange transactions

Non-current

Late payment interest Other receivables

Current

Customers

Impairment on receivables from customers

Deferred charges relating to exchange transactions

Other

Total

31.12.2019

1 137 13

1 150

205

(148)

142

617

816

1 966

EUR million

31.12.2018

6

181 (141)

157 1 631

1 828

1 834

2.7. INVENTORIES

Scientific materials Other

Total

EUR million
31.12.201931.12.2018
47 15

62
52 16

67

2.8. CASH AND CASH EQUIVALENTS

Accounts with Treasuries and Central Banks Current accounts Imprest accounts Transfers (cash in transit)

EUR million

31.12.2019           31.12.2018

Bank accounts for budget implementation

Cash belonging to financial instruments

Cash relating to fines

Cash relating to trust funds

Total

15 51912 932
9179
75
00
15 61713 017
1 5672 377
1 2581 438
97114
18 53816 946

6

Annual accounts of the European Commission 2019

LIABILITIES

2.9. PENSION AND OTHER EMPLOYEE BENEFITS

Net employee benefit scheme liability

EUR million

PensionOtherJoint31.12.2019 31.12.2018
Scheme ofretirementSicknessTotal Total
EuropeanbenefitInsurance
OfficialsschemesScheme

Defined Benefit Obligation                                  83 842               1 446           12 071             97 359           80 160

Plan assets                                                                   N/A                   N/A              (309)                (309)              (296)

Net liability                                                        83 842              1 446          11 762            97 050          79 865

Actuarial assumptions - employee benefits

2019Pension Scheme of European OfficialsJoint Sickness Insurance Scheme
Nominal discount rate1.1%1.2%
Expected inflation rate1.3%1.3%
Real discount rate(0.2)%(0.1)%
Expected rate of salary increases1.8%1.8%
Medical cost trend ratesN/A3.0%
Retirement age63/64/6663/64/66
2018
Nominal discount rate1.9%2.0%
Expected inflation rate1.4%1.5%
Real discount rate0.5%0.5%
Expected rate of salary increases1.9%1.8%
Medical cost trend ratesN/A3.0%
Retirement age63/64/6663/64/66

Movement in present value of employee benefits defined benefit obligation

EUR million
PensionOtherJointTotal
Scheme ofretirementSickness
EuropeanbenefitInsurance
OfficialsSchemesScheme

Present value as at 31.12.2018

Recognised in statement of financial performance

Current service cost Interest expense

Recognised in net assets

Remeasurements in employee benefits liabilities Actuarial (gains)/losses from experience

Actuarial (gains)/losses from demographic assumptions Actuarial (gains)/losses from financial assumptions

Other

Benefits paid

70 017

Present value as at 31.12.2019

83 842

1 154

8 990 80 160

2 824822773 183
1 339201801 539
1 91070(339)1 641
9 3391433 06512 547
(1 587)(23)(101)(1 711)

1 446 12 071 97 359

Annual accounts of the European Commission 2019 Movement in present value of plan assets of the Joint Sickness Insurance Scheme

EUR million

Present value as at 31.12.2018

Net movement in plan assets

296

14

Present value as at 31.12.2019

309

Joint Sickness Insurance Scheme sensitivity

A ten basis points change in the assumed medical cost trend rates would have the following effects:

EUR million 2019                                                     2018

Increase 0.1% Decrease 0.1%     Increase 0.1% Decrease 0.1%

The aggregate of the current service cost and interest cost components of net periodic post-employment medical costs Defined benefit obligation

8 352

(8) (341)

12 253

(12) (246)

A ten basis points change in the assumed discount rate would have the following effects:

EUR million
2019 Increase 0.1% Decrease 0.1%2018 Increase 0.1% Decrease 0.1%

Defined benefit obligation

(311)

322

(219)

226

A ten basis points change in the expected salary increases rate would have the following effects:

EUR million

2019                                                         2018

Increase 0.1%     Decrease 0.1%       Increase 0.1%     Decrease 0.1%

Defined benefit obligation

(30)

29

(26)

25

A one year change in the assumed retirement age would have the following effects:

Defined benefit obligation

2019 One year increase

(363)

One year decrease

383

One year increase

(91)

EUR million

One year decrease

54

Pension Scheme of European Officials sensitivity

A ten basis points change in the assumed discount rate would have the following effects:

2019                                                            20

se 0.1%       Decrease 0.1%        Increase 0.1%

(1 797)                        1 854                     (1 434)

EUR million
2019 Increase 0.1% Decrease 0.1%2018 Increase 0.1% Decrease 0.1%

Defined benefit obligation

1 478

A ten basis points change in the expected salary increases rate would have the following effects:

EUR million
2019 Increase 0.1% Decrease 0.1%2018 Increase 0.1% Decrease 0.1%

Defined benefit obligation

1 774

(1 724)

1 427

(1 388)

A one year change in the assumed retirement age would have the following effects:

Defined benefit obligation

2019 One year increase

(620)

One year decrease

771

2018 One year increase

(573)

EUR million

One year decrease

645

Annual accounts of the European Commission 2019

2.10. PROVISIONS

EUR million

Amount atAdditionalUnusedAmountsTransferChange in Amount at
31.12.2018provisionsamounts reversedusedbetween categoriesestimation 31.12.2019
Legal cases:
Agriculture270439-(269)-440
Other111(7)(1)-5
Nuclear site dismantling1 933--(34)2332 132
Financial1 551587(1)(206)71 938
Other6828(9)(16)-71
Total3 8331 056(17)(526)-2404 586
Non-current3 013868(1)(273)(357)2393 490
Current820188(17)(252)35711 097

Annual accounts of the European Commission 2019

2.11. FINANCIAL LIABILITIES

Non-current

Financial liabilities at amortised cost

Financial liabilities at fair value through surplus or deficit

Current

Financial liabilities at amortised cost

Financial liabilities at fair value through surplus or deficit

Financial guarantee liabilities

Total

Note

2.11.1 2.11.2

2.11.1 2.11.2

EUR million

31.12.2019 31.12.2018

52 757 7

52 764

2 475 15

2 489 55 253

52 351
9
52 360
1 367
4
20
1 390
53 750

2.11.1. Financial liabilities at amortised cost

Borrowings for financial assistance Other financial liabilities

Total

Non-current Current

2.11.1.1 2.11.1.2

EUR million

31.12.2019 31.12.2018

52 564 1 154

53 718

52 351 1 367

53 775

1 456

55 231

52 757 2 475

2.11.1.1. Borrowings for financial assistance

EUR million

Total at 31.12.201847 400BOP 1 7344 388Euratom 254Total 53 775
New loans--420-420
Repayments-(1 500)(52)(40)(1 592)
Exchange differences-----
Changes in carrying amount(6)(33)(1)(0)(40)
Total at 31.12.201947 3942014 75421452 564
Non-current46 8002004 11217851 290
Current5941643351 273

Borrowings effective interest rates (expressed as a range of interest rates)

Macro Financial Assistance (MFA)

Euratom

Balance of Payment (BOP)

European Financial Stability Mechanism (EFSM)

31.12.2019

0% - 3.82%

0% - 5.68%

2.88%

0.50% - 3.75%

31.12.2018

0 % - 3.82 %

0 % - 5.68 %

2.88 % - 3.38 %

0.50 % - 3.75 %

Note

Annual accounts of the European Commission 2019 2.11.1.2. Other financial liabilities

EUR million

31.12.2019             31.12.2018

Non-current

Finance lease liabilities Buildings paid for in instalments Other

800

210

51

1 061

Current

Finance lease liabilities Buildings paid for in instalments Fines to be reimbursed Other

67 24

1

93

Total

1 154

860 235 141

1 235

64

23

125

9

221

1 456

Finance lease liabilities

EUR million

Future amounts to be paid < 1 year 1 - 5 years    > 5 years Total Liability

Land and buildings Other fixed assets

63 5

Total at 31.12.2019

67

Interest element

48

Total future minimum lease payments at 31.12.2019

Total future minimum lease payments at 31.12.2018

115

115

291 10

450

499

710

852 15

301499867
150103301
4516021 168

1 275

2.11.2. Financial liabilities at fair value through surplus or deficit

EUR million

Type of derivative

Guarantee on equity portfolio FX option (put spread)

Total

Non-current Current

31.12.2019

tional amount

752 13

765

148 617

Fair value

10 2

12

9 4

31.12.2018

Notional

Fair amount

536 11

Fair value

20 2

546

82 464

22

7 15

Fair value hierarchy of financial liabilities measured at fair value

Level 1: Quoted prices in active markets

Level 2: Observable inputs other than quoted prices Level 3: Valuation techniques with inputs not based on observable market data

Total

31.12.2019

2 10

12

EUR million

31.12.2018

2 20

22

Annual accounts of the European Commission 2019

2.12. PAYABLES

Gross Amount

Adjustments*

Net Amount at 31.12.2019

Gross Amount

Adjustments*

Estimated non-eligible amounts and pending other advances to Member States.

2.13. ACCRUED CHARGES AND DEFERRED INCOME

EUR million

Net Amount at 31.12.2018

Cost claims and invoices
received from:
Member States
EAFRD & other rural development instruments2120247247
ERDF & CF8 068(2 437)5 63110 761(1 724)9 037
ESF2 882(558)2 3255 195(496)4 699
Other854(45)809632(75)557
Private and public entities1 562

13 386
(180)1 3811 461(179)

(2 475)
1 282
Total costs claims & invoices received(3 220)10 16618 29615 822
E AG F16 255N/A16 25514 772N/A N/A14 772
Own Resources PayablesN/A-769769
Sundry Payables1 372N/A1 3721 176N/A1 176
Total31 014(3 220)27 79335 013(2 475)32 539

EUR million

31.12.2019 31.12.2018

Accrued charges Deferred income Other

Total

66 185

138

52

66 374

62 263

213

24

62 500

The split of accrued charges is as follows:

EAGF

EAFRD and other rural development instruments

ERDF and CF

ESF

Other

EUR million

31.12.2019 31.12.2018

Total

28 19329 387
18 58318 687
9 5255 863
3 0162 321
6 8676 005
66 18562 263

Annual accounts of the European Commission 2019

NET ASSETS

2.14. RESERVES

Fair value reserve Guarantee Fund reserve Other reserves

Total

2.14.1

EUR million
31.12.201931.12.2018
377229
2 8702 849
59108
3 3063 186

2.14.1. Fair value reserve

Movements during the period of fair value reserve related to the available for sale financial assets:

Included in fair value reserve

Included in statement of financial performance

31.12.2019

176 (28)

Total

148

EUR million

31.12.2018

(68) 22

(46)

2.15. AMOUNTS TO BE CALLED FROM MEMBER STATES

EUR million

Amounts to be called from Member States at 31.12.2018

Return of budget surplus to Member States Movement in Guarantee Fund reserve Remeasurements in employee benefits liability Other reserve movements Economic result of the year

Total amounts to be called from Member States at 31.12.2019

68 885

1 803

21

14 073

1

(4 605)

80 179

Note

Annual accounts of the European Commission 2019

3. NOTES TO THE STATEMENT OF FINANCIAL

PERFORMANCE

REVENUE

REVENUE FROM NON-EXCHANGE TRANSACTIONS: OWN RESOURCES

3.1. TRADITIONAL OWN RESOURCES

Customs duties Sugar levies

Total

EUR million
20192018
21 23522 763
04
21 23522 767

REVENUE FROM NON-EXCHANGE TRANSACTIONS: TRANSFERS

3.2. RECOVERY OF EXPENSES

Shared management Direct management Indirect management

Total

EUR million
20192018
2 5472 116
6565
1631
2 6272 213

3.3. OTHER REVENUE FROM NON-EXCHANGE TRANSACTIONS

Contribution of third countries and accession countries

Staff taxes and contributions

Contribution from Member States for external aid

Transfer of assets

Adjustment of provisions

Agricultural levies

Budgetary adjustments

Funding of institutions

Other

Total

EUR million
20192018
1 4511 347
966954
331594
4785
1697
24
(1 719)(726)
(3 725)(3 493)
343465
(2 288)(674)

Annual accounts of the European Commission 2019

REVENUE FROM EXCHANGE TRANSACTIONS

3.4. FINANCIAL REVENUE

Interest on:

Late payments

Loans

Other Premium on financial guarantee liability Dividend

Financial revenue from financial assets or liabilities at fair value through surplus or deficit

Realised gains on sale of available for sale financial assets Other

Total

2019

EUR million

2018

1331 458
1 1781 259
6763
193121
29103
12529
6923
348
1 7983 103

3.5. OTHER REVENUE FROM EXCHANGE TRANSACTIONS

Foreign exchange gains

Share of net result of EIF

Fee and premium revenue related to financial instruments

Sales of goods

Fixed assets related revenue

Other

Total

2019

EUR million

2018

335318
5337
4354
1618
47
274281
725716

EXPENSES

3.6. SHARED MANAGEMENT

Implemented by Member States

European Agricultural Guarantee Fund

European Agricultural Fund for Rural Development and other rural

development instruments

European Regional Development Fund and Cohesion Fund

European Social Fund

Other

Total

2019

EUR million

2018

43 95143 527
13 54113 149
35 17830 230
11 21811 935
2 6082 826
106 495101 666

Annual accounts of the European Commission 2019

3.7. DIRECT MANAGEMENT

Implemented by the Commission Implemented by EU Executive Agencies Implemented by Trust funds

Total

EUR million
20192018
8 4588 146
10 0958 962
412468
18 96517 576

3.8. INDIRECT MANAGEMENT

Implemented by other EU agencies and bodies Implemented by third countries

Implemented by international organisations Implemented by other entities

Total

EUR million
20192018
3 8203 622
637679
3 4483 337
2 8783 569
10 78311 208

3.9. STAFF AND PENSION COSTS

Staff costs Pension costs

Total

EUR million
20192018
3 4423 328
4 7214 461
8 1637 789

3.10. FINANCE COSTS

Interest expenses:

Borrowings

Other Finance leases

Impairment losses on available for sale financial assets Impairment loss on loans and receivables

Realised loss on sale of available for sale financial assets Loss on financial assets or liabilities at fair value through surplus or deficit Other

Total

2019

EUR million

2018

1 1721 252
2125
5256
1925
105126
520
5795
2641
1 4581 640

Annual accounts of the European Commission 2019

3.11. OTHER EXPENSES

Adjustment of provisions

Fixed assets related expenses

Administrative and IT expenses

Funding and contributions to other EU bodies

Foreign exchange losses

Operating lease expenses

Reduction of fines by the Court of Justice

Other

Total

2019

EUR million

2018

1 294919
1 046953
883831
491470
328328
188195
911
544322
4 8664 019

Expenses relating to research and development are as follows:

Research costs

Non-capitalised development costs

Total

2019

381 69

449

EUR million

2018

373 58

430

Annual accounts of the European Commission 2019

3.12. SEGMENT REPORTING BY MULTI ANNUAL FINANCIAL FRAMEWORK HEADING (MFF)

GNI resources

Traditional own resources

VAT

Fines

Recovery of expenses

Other

Revenue from non-exchange transactions

Financial revenue Other

Revenue from exchange transactions

Smart and

Sustainable growth

Security and citizenship

Global Europe

Administration

1 520

1 202

2 722

423 155

578

1 076 29

1 104

1 (12)

(11)

10 43

54

0 (5)

(5)

22 214

235

11 13

24

0 830

830

0 243

243

Not assigned to MFF headings*

108 820

21 235

18 128

4 291

(4 607)

147 867

1 363 330

1 693

Total expenses

Economic result of the year

* ‘Not assigned to MFF headings’ includes off-budget operations

(69 070) (65 770)

(59 800) (58 707)

(4 194) (4 145)

(9 427) (9 167)

(6 702) (5 629)

(1 538) 148 023

EUR million Total

108 820

21 235

18 128

4 291

2 627

(2 288)

152 813

1 798 725

2 522

Total revenue3 3001 093492601 073149 561155 335
Expenses implemented by Member States:
EAGF-(43 951)----(43 951)
EAFRD & other rural develop. instruments-(13 541)----(13 541)
ERDF & CF(35 178)-----(35 178)
ESF(11 218)-----(11 218)
Other(512)(668)(1 382)(46)-(0)(2 608)
Implemented by the Commission, executive
agencies and trust funds(12 763)(676)(1 060)(4 446)(19)0(18 965)
Implemented by other EU agencies and bodies(2 799)(62)(927)(32)--(3 820)
Implemented by third countries and
international organisations(526)(2)(242)(3 314)(0)-(4 085)
Implemented by other entities(2 037)(1)(1)(839)(0)-(2 878)
Staff and pension costs(1 637)(350)(444)(604)(5 129)-(8 163)
Finance costs(113)(56)(0)(9)(79)(1 200)(1 458)
Other expenses(2 287)(493)(137)(136)(1 475)(337)(4 866)

(150 730) 4 605

and unallocated programmes with individually immaterial amounts.


Annual accounts of the European Commission 2019

4.

CONTINGENT LIABILITIES AND ASSETS

4.1. CONTINGENT LIABILITIES

4.1.1. Budgetary guarantees

EUR million
31.12.2019Ceiling31.12.2018 SignedDisbursed
CeilingSignedDisbursed
EIB external lending mandate guarantees EFSI guarantee EFSD guarantee37 929

25 797 50
31 521 21 88920 014 17 63440 417 25 89830 889 19 84220 510 15 764
Total63 77553 41037 64866 31550 73136 273

4.1.2. Guarantees relating to financial assistance (borrowing and lending activities)

EUR million

31.12.201931.12.2018
DrawnUndrawnTotalDrawnUndrawnTotal
EFSM47 394-47 39447 400-47 400
BOP201-2011 734-1 734
MFA4 7545605 3144 3889805 368
Euratom214200414254200454
Total52 56476053 32453 7751 18054 955

4.1.3. Guarantees given for EU financial instruments

31.12.2019

Horizon 2020

Risk Sharing Finance Facility

Connecting Europe Facility

Other

Total

EUR million

31.12.2018

1 5841 467
110642
684579
3829
2 4162 717

4.1.4. Legal cases

EUR million

31.12.2019         31.12.2018

Fines

Agriculture Cohesion Other

Total

3 1283 187
199653
34126
2 1231 823
5 7915 688

Annual accounts of the European Commission 2019

4.2. CONTINGENT ASSETS

EUR million

31.12.2019                     31.12.2018

Guarantees received:

Performance guarantees                                                                                         75                                            79

Other guarantees                                                                                                        6                                              7

Other contingent assets                                                                                                31                                            25

Total                                                                                                                              113                                         111

Annual accounts of the European Commission 2019

5.

BUDGETARY AND LEGAL COMMITMENTS

Outstanding budgetary commitments not yet expensed Shared management legal commitments under the current MFF pending implementation Significant legal commitments in other areas

Total

EUR million

31.12.2019 31.12.2018

5.1249 357234 621
5.272 832143 883
5.310 22714 592
332 416393 097

5.1. OUTSTANDING BUDGETARY COMMITMENTS NOT YET EXPENSED

Outstanding budgetary commitments not yet expensed

31.12.2019 31.12.2018

249 357

EUR million 2.2018 234 621

5.2. SHARED MANAGEMENT LEGAL COMMITMENTS UNDER THE CURRENT MFF PENDING IMPLEMENTATION

EUR million

FundsFinancial

framework

2014-2020 (A)
Legal

commitments

according to

latest

Commission

Decision (B)
Budget

commitments

including

decommitments

(C)
Legal

commitments

pending

implementation

(B-C)
European Regional Development Fund and Cohesion Fund262 585262 407220 44741 960
European Social Fund92 91292 75178 84113 910
European Neighbourhood Policy
Instrument
Fund for European Aid to the most Deprived3 8143 8133 235578

HEADING 1B: COHESION POLICY FUNDS

European Agricultural Fund for

Rural Development

European Maritime and Fisheries

Fund

HEADING 2: NATURAL RESOURCES

Asylum and Migration Fund Internal Security Fund

HEADING 3: SECURITY & CITIZENSHIP

Total

359 310358 971302 52456 448
100 079 5 749100 079 5 68785 404 4 82814 675 859
105 829105 76690 23215 534
4 575 3 159

7 733
4 482 3 095

7 577
4 032 2 695

6 727
450 401

851
472 872472 315399 48372 832

Note

Annual accounts of the European Commission 2019

5.3. SIGNIFICANT LEGAL COMMITMENTS IN OTHER AREAS

EUR million

31.12.2019 31.12.2018

Connecting Europe Facility

Copernicus

Galileo

Fisheries agreements

Operating lease commitments

Other contractual commitments

Total

5.3.1

7 68011 554
6011 267
438493
22346
844796
440435
10 22714 592

5.3.1.      Operating lease commitments

EUR million
Future amounts to be paid
< 1 year 1- 5 years > 5 yearsTotal

Buildings

IT materials and other equipment

Total

139 2

371 5

326

141

376

326

836 8

844

Note

Annual accounts of the European Commission 2019

6.

FINANCIAL INSTRUMENTS DISCLOSURES

6.1. CURRENCY RISKS

Exposure of the EC to currency risk at year-end – net position

31.12.2019 GBP        DKK        SEK

EUR       Other

Financial assets

Available for sale financial assets

Financial assets at fair value

through surplus or deficit

Loans*

Receivables and recoverables

Cash and cash equivalents

577

(393)

17

8

93

62

801 309

17

62 318

9

93 431

16 189

529

49 22 476 15 824

21

7

133

1 563

EUR million

Total

16 873

137

73 23 573 18 538

3021 17239653355 0681 72359 194
Financial liabilities
Financial liabilities at fair value through surplus or deficit(0)---(10)(2)(12)
Payables(3)(0)-(1)(27 786)(3)(27 793)
(3) 299
(0) 1 172
396(1) 531
(27 796) 27 272(5) 1 717
(27 806)
Total31 388

EUR million

31.12.2018 GBP        DKK        SEK

EUR       Other

Total

Financial assets

Available for sale financial assets

Financial assets at fair value

through surplus or deficit

Loans*

Receivables and recoverables

Cash and cash equivalents

Financial liabilities

Financial liabilities at fair value through surplus or deficit Payables

Total

* Excluding back-to-back loans for financial assistance.

If the EUR had strengthened against the currency concerned by 10 % then this would have had the following impact:

6195718713 2201713 937
(475)---491-16
6---53564
-4 1099810819 77722624 318
431 520

5 686
287

403
406

522
13 197

46 737

(20)
1 493

1 741

(2)
16 946
19355 282
_(22)
(0)---(32 538)

(32 558) 14 179
(1)

(2) 1 738
(32 539)
(0)---(32 561)
1935 68640352222 721

2019 2018

Economic result

GBP                DKK

EUR million

(10)(101)(35)(48)
(5)(512)(35)(47) EUR million
Net assets

2019

(17)

(6)

(2)

(1)

USD

USD

USD

SEK

USD

GBP

SEK

DKK

Annual accounts of the European Commission 2019

If the EUR had weakened against the currency concerned by 10 % then this would have had the following impact:

EUR million

2019 2018

2019 2018

Economic result

GBP                DKK

121234258
66254357 EUR million
Net assets
SDGBPDKKSEK
20721
16621

6.2. INTEREST RATE RISK

The following table illustrates the interest rate sensitivity of available for sale financial assets assuming a possible change in interest rates of +/- 100 basis points (1 %).

2019: Available for sale financial assets

2018: Available for sale financial assets

Increase (+) / decrease (-) in basis points

+100 -100 +100 -100

EUR million

Effect on net assets

(395) 426

(303) 325

6.3. CREDIT RISK

Analysis of the age of financial assets that are not impaired

Neither past

Total           due nor

impaired

Loans

Receivables and recoverables Financial assets at fair value through surplus or deficit

52 637 23 573

137

52 636 9 018

137

EUR million

Past due but not impaired < 1 year       1-5 years       >

1 2 718

11 542

5 years

295

Total at 31.12.201976 34761 7912 71911 542295
Loans53 84053 840---
Receivables and recoverables24 31814 3996 5773 208134
Financial assets at fair value through surplus or deficit1616---
Total at 31.12.201878 17468 2546 5773 208134

USD

SEK

Annual accounts of the European Commission 2019 Credit quality of financial assets that are neither past due nor impaired

EUR million

31.12.2019
AvailableFinancialLoansReceivablesCashTotal
for sale*assets atand
FVSD**recoverables
Counterparties with
external credit rating
Prime and high grade8 013137-3 58914 53426 273
Upper medium grade3 329-22 9981 4343 44331 204
Lower medium grade1 906-24 7111 86429928 779
Non-investment grade216-4 8554772575 806
13 46413752 5647 36418 53392 061
Counterparties without
external credit rating
Debtors without defaults in the past--721 65251 730
Debtors with defaults in the22
past
--72 52 6361 654 9 0185 18 5381 731
Total13 46413793 793
Counterparties with
external credit rating
Prime and high grade8 097
Upper medium grade2 903
Lower medium grade1 487
Non-investment grade-
12 487

Counterparties without external credit rating

Debtors without defaults in

the past

Debtors with defaults in the

past

Total

*

Available    Financial

for sale*    assets at

FVSD**

16

12 487

16

16

31.12.2018 Loans Receivables and recoverables

EUR million

Cash           Total

-8 54613 94130 600
23 5137462 62229 784
25 7741 45416328 877
4 4881992174 904

53 775

62 2

64

53 840

10 944

16 942

94 165

3 455

3 455

3

14 399

16 946

Available for sale financial assets (excluding instruments in money market funds and other equity instruments). Financial assets at fair value through surplus or deficit.

3 520

3 522

97 687

3

0

2

Annual accounts of the European Commission 2019

6.4. LIQUIDITY RISK

Maturity analysis of financial liabilities by remaining contractual maturity

< 1 year       1-5 years       > 5 years

Borrowings

Payables

Financial guarantee liabilities

Other financial liabilities

(1 273)

(27 793)

(20)

(93)

Total at 31.12.2019

Borrowings

Payables

Other financial liabilities

(2 254)

(32 539)

(221)

Total at 31.12.2018

(19 312)

(31 978)

(421)

(640)

(17 363)

(533)

(34 158) (702)

EUR million

Total

(52 564)

(27 793)

(20)

(1 154)

(29 180)         (19 733)         (32 618)         (81 531)

(53 775)

(32 539)

(1 456)

(35 013)         (17 897)         (34 860)         (87 770)

Financial instruments at fair value through surplus or deficit

< 1 year       1-5 years       > 5 years

Derivative pay leg Derivative receive leg

(397) 395

Net cash flows at 31.12.2019

(2)

Derivative pay leg Derivative receive leg

(490) 477

Net cash flows at 31.12.2018

(14)

(2)

(2)

(2)

(2)

(7)

(7)

(6)

(6)

EUR million

Total

(406) 395

(10)

(498) 477

(21)

6.5. CARRYING AMOUNT AND FAIR VALUE OF FINANCIAL INSTRUMENTS

The following classes of financial assets and liabilities are not measured at fair value: cash and cash equivalents, loans, exchange receivables and non-exchange recoverables, borrowings and other financial liabilities at amortised cost. The carrying amount of those financial assets and liabilities is considered as a reasonable approximation of their fair value.

Annual accounts of the European Commission 2019

7. RELATED PARTIES

The related parties of the entity are the EU consolidated entities and the key management personnel of these entities. Transactions between these entities take place as part of the normal operations of the EU and as this is the case, no specific disclosure requirements are necessary for these transactions in accordance with the EU accounting rules.

Details on key management entitlements are provided in note 7 of the EU consolidated annual accounts.

Annual accounts of the European Commission 2019

8. EVENTS AFTER THE BALANCE SHEET DATE

The annual accounts and related notes were prepared using the most recently available information and this is reflected in the information presented above. At the date of signature of these accounts two key material matters are disclosed below, the departure of the United Kingdom from the European Union and the EU reaction to the coronavirus outbreak. No further material issues had come to the attention of or were reported to the Accounting Officer of the Commission that would require separate disclosure under this section.

Coronavirus disease 2019 (COVID-19)

During the first half of 2020, the coronavirus outbreak has had huge global impacts. As a non-adjusting event, the outbreak of the coronavirus does not require any adjustments to the figures reported. For subsequent reporting periods, the implementation of the immediate response initiatives proposed by the Commission (including the reactivation of the Emergency Support Instrument (ESI) and further reinforcement of the Union Civil Protection Mechanism (UCPM/rescEU), the Coronavirus Response Investment Initiative (CRII and CRII+) and the support to mitigate Unemployment Risks in an Emergency (SURE) following the COVID-19 outbreak) will affect the recognition, measurement or reclassification of some assets and liabilities in the financial statements:

Activation of the Emergency Support Instrument (ESI) and further reinforcement of the Union Civil Protection Mechanism (UCPM/rescEU):

Given the depth of the crisis following the COVID-19 outbreak as well as the extent and nature of the needs requiring support from the EU budget, the EU reactivated the ESI instrument. This instrument, originally established in March 2016 to address the emergency situation which had arisen following the massive influx of refugees in Greece (see Council Regulation (EU) 2016/369 of 15 March 2016), has been reactivated for a period of 3 years (2020-22) to finance expenditure necessary to address the COVID-19 pandemic for the period 1 February 2020 to 31 January 2022 (see Council regulation (EU) 2020/521 of 14 April 2020). To further this objective, the 2020 budget was amended to include EUR 2.7 billion in commitment appropriations and EUR 1.4 billion in payment appropriations (see Definitive Adoption (EU, Euratom) 2020/537 of Amending budget No 2 of the European Union for the financial year 2020 of 17 April 2020). The reactivation will allow the Union to deploy measures preventing and mitigating severe consequences in one or more Member States and to address in a coordinated manner the needs related to the COVID-19 disaster, by complementing any assistance provided under other EU instruments. The instrument is centrally managed by the Commission and mainly focuses on direct procurement and grants, whilst in certain cases actions will be implemented through partners such as international organisations.

As a complementary measure to the ESI, the Union Civil Protection Mechanism/rescEU was reinforced to allow wider stock-piling and coordination of essential resource distribution across Europe (see Commission Implementing Decision (EU) 2019/570, as amended by Commission Implementing Decision 2020/414 of 19 March 2020 and Commission Implementing Decision (EU) 2020/452 of 26 March 2020). To this purpose the 2020 budget was amended to include a further EUR 0.3 billion in commitment appropriations and EUR 0.2 billion in payment appropriations. The reinforcement of the UCPM/rescEU will support Member States in purchasing some of the needed equipment (including therapeutics, medical equipment, Personal Protective Equipment, laboratory supplies), thus increasing the volume as well as complementing and widening the scope of priority items purchased through the joint procurement under the Joint Procurement Agreement, a coordinated approach giving Member States a strong position when negotiating with the industry on availability and price of medical products. The rescEU direct grants will provide 100 % financing from the EU budget, which includes full financing for development of these capacities and full financing of deployment of equipment. The equipment purchased will be hosted by one or more Member States, while decision making is organised at EU level, providing emergency supplies over and beyond national stocks. It will be available to all Member States and will be used in case of insufficient national availability.

Coronavirus Response Investment Initiative (CRII and CRIIplus):

CRII, implemented by Regulation 2020/460 of the European Parliament and the Council of 30 March 2020, introduced specific measures to mobilise investments in the healthcare systems of

Annual accounts of the European Commission 2019

introducing flexibility in applying EU spending rules and extending the scope of the EU Solidarity Fund. CRIIplus, implemented by Regulation 2020/558 of the European Parliament and the Council of 23 April 2020, introduced further measures to provide exceptional flexibility for the use of the European Structural and Investments Funds. The 2019 balance sheet includes EUR 6.8 billion as current pre-financing since these amounts were originally intended to be recovered during 2020. However, as a consequence of the CRII, the amounts will now remain with the Member States so as to be used to accelerate investments related to the COVID-19 outbreak. As the CRII foresees the clearance or recovery of pre-financing at closure, and eligibility periods may end in 2022, this EUR 6.8 billion of current pre-financing will likely all be reclassified, in conformity with the accounting rules, to non-current in the 2020 financial statements.

European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE) following the COVID-19 outbreak:

As part of its emergency support package to tackle the economic impact of the COVID-19 crisis, the EU adopted on 19 May 2020 Council Regulation (EU) 2020/672 establishing the SURE instrument to help workers keep their jobs during the crisis. SURE is a temporary scheme which can provide up to EUR 100 billion of financial assistance (loans under favourable terms) to Member States. The instrument enables Member States to request EU financial assistance to help finance the sudden and severe increases of national public expenditure, as from 1 February 2020, related to national short-time work schemes and similar measures, including for self-employed persons, or to some health-related measures, in particular at the work place in response to the crisis. To enable the EU to provide financial assistance under SURE, the Commission shall be empowered to borrow on the capital markets or with financial institutions on behalf of the EU to a maximum amount of EUR 100 billion. SURE loans will be backed by the EU budget and guarantees provided by Member States according to their share in the EU's GNI. The total amount of guarantees will be EUR 25 billion and the instrument will become active only when all guarantees have been provided. The instrument is limited until 31 December 2022.

Next Generation EU:

Furthermore, on 27 May 2020 President von der Leyen presented a new proposal for the EU long-term budget (multiannual financial framework) 2021-2027 and sectoral programmes boosted by ‘Next Generation EU’2, an emergency temporary recovery instrument, to help repair the immediate economic and social damage brought about by the coronavirus pandemic, kickstart the recovery and prepare for a better future for the next generation. This proposal is currently being discussed with Member States and the European Parliament. Should an agreement be reached based on this proposal, many EU budget programmes would be topped-up by funds raised through borrowings by the EU. Given the size of the proposed amounts, it would have a significant impact on the content of future EU balance sheets; the specific impact can only be assessed once the final proposal has been approved by the budget authority and its implementation starts.

Departure of United Kingdom from the European Union

On 1 February 2020 the United Kingdom ceased to be a Member State of the European Union. Following the conclusion of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (the ‘Withdrawal Agreement’) between the two parties, the United Kingdom committed to pay all its obligations under the current MFF and previous financial perspectives following from its membership of the Union.

At the date of signature of these accounts, and based on the Withdrawal Agreement concluded and already in operation, there is no financial impact to be reported in these accounts.

Annual accounts of the European Commission 2019

EUROPEAN COMMISSION FINANCIAL YEAR 2019

BUDGETARY IMPLEMENTATION REPORTS

It should be noted that due to the rounding of figures into millions of euros, some financial data in the


Annual accounts of the European Commission 2019

CONTENTS

EU BUDGET RESULT ......................................................................................... 61

STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS ........................ 62

1. IMPLEMENTATION OF EC BUDGET REVENUE ............................................... 65

2. IMPLEMENTATION OF EC BUDGET EXPENDITURE ........................................ 66

2.1.       MFF: BREAKDOWN & CHANGES IN COMMITMENT & PAYMENT APPROPRIATIONS .............................................................................. 66

2.2.       MFF: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS ................... 67

2.3.       MFF: IMPLEMENTATION OF PAYMENT APPROPRIATIONS ......................... 68

2.4.       MFF: MOVEMENTS IN OUTSTANDING COMMITMENTS (RAL) .................... 69

2.5.       MFF: OUTSTANDING COMMITMENTS BY YEAR OF ORIGIN ....................... 70

2.6.       POLICY AREA: BREAKDOWN AND CHANGES IN COMMITMENT AND PAYMENT APPROPRIATIONS ......................................................... 71

2.7.       POLICY AREA: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS ...... 73

2.8.       POLICY AREA: IMPLEMENTATION OF PAYMENT APPROPRIATIONS ............ 75

2.9.       POLICY AREA: MOVEMENTS IN OUTSTANDING COMMITMENTS (RAL) ....... 77

2.10.     POLICY AREA: OUTSTANDING COMMITMENTS BY YEAR OF ORIGIN .......... 79

RECONCILIATION OF ECONOMIC RESULT WITH BUDGET RESULT .......................... 81

Annual accounts of the European Commission 2019

EU BUDGET RESULT

Revenue for the financial year

Payments against current year appropriations

Payment appropriations carried over to year N+1

Cancellation of unused appropriations carried over from year N-1

Evolution of assigned revenue (B)-(A)

Unused appropriations at the end of current year (A) Unused appropriations at the end of previous year (B) Exchange rate differences for the year

Budget result

EUR million
163 918159 318
(157 428)(154 833)
(1 615)(1 675)
75106
(1 736)(1 114)
9 1447 408
7 4086 295
4(1)
3 2171 802

Annual accounts of the European Commission 2019

STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS

BUDGET REVENUE

EUR million

Title

1 Own resources

11 - Sugar levies

12 - Customs duties

13 - VAT

14 - GNI

15 - Correction of budgetary imbalances

16 - Reduction of GNI based contribution of the Netherlands and Sweden

Surpluses, balances and adjustments Miscellaneous community taxes, levies and duties

Revenue accruing from the administrative operation of the institution

Contributions and refunds in connection with union agreements and programmes

Default interest and fines Borrowing and lending operations Miscellaneous revenue

Total

Initial adopted budgetFinal adopted budgetEntitlements establishedRevenue
146 305144 795147 056144 766
--(1)(1)
21 47121 47123 65621 365
17 73917 73917 77517 775
107 095105 585105 700105 700
--(81)(81)
--77
-1 8031 8111 805
1 2311 2311 2121 203
2525285264
13013014 11212 568
11511518 5752 625
3333
1515137
147 824148 117183 069163 240

5

Annual accounts of the European Commission 2019

BUDGET EXPENDITURE: COMMITMENTS BY MULTIANNUAL FINANCIAL FRAMEWORK (MFF) HEADING

I

MFF Heading

Initial adopted budget

Smart and inclusive growth

1a: Competitiveness for growth and jobs 1b: Economic, social and territorial cohesion

Sustainable growth: natural resources

of which: Market related expenditure and direct payments

Security and citizenship Global Europe Administration

Compensations

Negative reserve and deficit carried over from the previous financial year

Special Instruments

Total

577

161 680

Final adopted budget

Total

appropriations

available

EUR million

Commitments made

80 52780 62792 79490 536
23 33523 43527 82625 782
57 19257 19264 96964 754
59 64259 64262 84660 600
43 19243 19244 80643 962
3 7873 7874 0653 874
11 31911 62513 45413 111
5 8285 8286 2266 000

565

162 074

618

180 004

295

174 416

1

2

Annual accounts of the European Commission 2019

BUDGET EXPENDITURE: PAYMENTS BY MULTIANNUAL FINANCIAL FRAMEWORK (MFF) HEADING

I

EUR million

MFF HeadingInitial adopted Final adopted budget budgetTotal

appropriations

available
Payments made

Smart and inclusive growth

1a: Competitiveness for growth and jobs 1b: Economic, social and territorial cohesion

Sustainable growth: natural resources

of which: Market related expenditure and direct payments

Security and citizenship Global Europe Administration

Compensations

Negative reserve and deficit carried over from the previous financial year

Special Instruments

Total

67 55767 82382 55375 535
20 52220 26126 04421 748
47 03547 56156 51053 787
57 40057 83761 25259 521
43 11643 11344 93343 885
3 5273 2913 5753 256
9 3588 95310 93310 108
5 8295 8276 5886 004

412

144 083

647

144 377

671

165 573

295

154 719

1

2

Annual accounts of the European Commission 2019

1. IMPLEMENTATION OF EC BUDGET REVENUE

Income appropriations

Initial              Final

budget           budget

adopted         adopted

Entitlements established

Current year

Carried

Revenue

On                       On

entitlements of entitlements

current year      carried over

1 Own resources

3

4

Surpluses, balances and adjustments

Miscellaneous community taxes, levies and duties

146 305144 795147 01344147 056144 754
-1 8031 811-1 8111 805
1 2311 2311 203101 2121 193

Revenue accruing from the

5   administrative operation of the institution

Contributions and refunds in

6   connection with union agreements and programmes

25

130

25

130

272

13 557

13

555

285

14 112

256

12 273

8

294

Receipts as % of budget

12          144 766          100 %

1 805          100 %

10               1 203            98 %

264 1056 %

12 568 9667 %

EUR million

Outstanding

2 291

7 9

21 1 545

7Default interest and fines1151155 45613 11918 5752 3552712 6252283 %15 949
8Borrowing and lending operations333-33-3110 %-
9Miscellaneous revenue

Total
1515671361743 %7
147 824148 117169 32213 747183 069162 644596163 240110 %19 829


Total

Total

over

Annual accounts of the European Commission 2019

2. IMPLEMENTATION OF EC BUDGET EXPENDITURE

2.1. MFF: BREAKDOWN & CHANGES IN COMMITMENT & PAYMENT APPROPRIATIONS

EUR million

Commitment appropriations

Payment appropriations

Budget appropriationsAdditional appropriations

Carry- Assigned overs revenue
Total appropr. availableBudget appropriationsAdditional appropriat.

Carry- Assigned overs revenue
Total appropr. available
MFF HeadingInitial adopted budgetAmending budgets & transfersFinal adopted budgetInitial adopted budgetAmending budgets & transfersFinal adopted budget
123 = 1+2456=3+4+5789=7+8101112=9+10 +11
1Smart and inclusive growth80 52710080 627012 16692 79467 55726667 82313114 60082 553
1a: Competitiveness for growth and jobs23 33510023 43504 39027 82620 522(260)20 2611185 66426 044
1b: Economic, social and territorial cohesion57 192-57 192-7 77764 96947 03552647 561138 93556 510
2Sustainable growth: natural resources

of which: Market related
59 642(0)59 6424602 74562 84657 40043757 8376722 74361 252
expenditure and direct43 192-43 1924601 15544 80643 116(3)43 1136651 15544 933
payments
3Security and citizenship3 787(0)3 787-2794 0653 527(237)3 29192763 575
4Global Europe11 31930611 625341 79513 4549 358(406)8 953641 91610 933
5Administration5 82805 82813976 2265 829(2)5 8273623996 588
6Compensations

Negative reserve and deficit
------------
8carried over from the previous financial year
9Special Instruments

Total
577(12)5653024618412236647024671
161 680394162 07452517 405180 004144 083294144 3771 23819 958165 573


Annual accounts of the European Commission 2019

2.2. MFF: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS

EUR million

MFF Heading

Total appropr. available

from final adopted b

Commitments made

rom          from

arry-     assigned         To

5=2+3+4 6=5/1

Appropriat. carried over to 2020

carry-assigned

overs by      Total

revenue

decision

7                  8           9=7+8

Appropriations lapsing

1Smart and inclusive growth92 79480 54009 99690 53698 %2 074362 110
1a: Competitiveness for growth and jobs27 82623 40602 37625 78293 %2 01332 016
1b: Economic, social and territorial cohesion64 96957 134-7 62064 754100 %603393
2Sustainable growth: natural resources

of which: Market related
62 84659 1614381 00160 60096 %1 3304671 797
expenditure and direct44 80642 71843880743 96298 %348467815
payments
3Security and citizenship4 0653 737-1373 87495 %142-142
4Global Europe13 45411 622341 45413 11197 %3401341
5Administration6 2265 76412356 00096 %161-161
6Compensations

Negative reserve and deficit
-----0 %---
8carried over from the previous financial year0 %
9Special Instruments618295--29548 %894102

from final adopted budget

52 27

25 14

8

50

2 63

from assigned

97 1

21

21

96 414

13=10+

149 28

121 449

29

050
02
064

Total

180 004 161 120

473

12 823 174 416 97 %

1753016221
35651527934


from carryovers

%

Total

evenue

revenue


10

1

4

11

0

Annual accounts of the European Commission 2019

2.3. MFF: IMPLEMENTATION OF PAYMENT APPROPRIATIONS

EUR million

MFF Heading

Total appropr.     from final

available      adopted

budget

Payments made

from         from

carry- assigned        T

overs     revenue

6=5/1

Appropriations carried over to 2020

Appropriations lapsing

carryovers by decis.

assigned

1Smart and inclusive growth82 55367 6371137 78575 53591 %151
1a: Competitiveness for growth and jobs26 04420 0901021 55521 74884 %138
1b: Economic, social and territorial cohesion56 51047 547106 23053 78795 %13
2Sustainable growth: natural resources

of which: Market
61 25257 1636371 72159 52197 %198
related expenditure and44 93342 44963180643 88598 %190
direct payments
3Security and citizenship3 5753 1537963 25691 %9
4Global Europe10 9338 908601 14010 10892 %39
5Administration6 5885 4783351916 00491 %285
6Compensations Negative reserve and-----0 %-
8deficit carried over from the previous financial year-----0 %0
9Special Instruments

Total
6712950-29544 %1
165 573142 6331 15210 934154 71993 %682

467

from

final

adopted

budget

10=7+

36 8136 9673218
34 1084 2493016
-2 7052 71822
71 0231 687935

349

1 006

from assigned revenue

1 1 0

34

1801881292
77281164
2064926427

8                9             352              0

470 9 001 10 154            592           86

16

22

14=11+

52

48

4

44

42

131 14 92

368

700


automatic carryovers

from carryovers

%

Total

Total

revenue

5 = 2+

1

2

3


7

8

9

11


12+13

7

0

Annual accounts of the European Commission 2019

2.4. MFF: MOVEMENTS IN OUTSTANDING COMMITMENTS (RAL)

Commitments outstanding at the end of previous year

Commitments of the current year

MFF Heading

Commit. carried

forward from

prev. year

Smart and inclusive growth

1a: Competitiveness for growth and jobs

1b: Economic, social and territorial cohesion

Sustainable growth: natural resources

of which: Market related expenditure and direct payments

Security and citizenship

Global Europe

Administration

Compensations

Negative reserve and deficit

carried over from the previous

financial year

Special Instruments

Total

0

280 599

Decommitments/ Revaluations/ Cancellations

Payments

206 991 37 006

169 985

40 047

359

5 834

27 352

374

Commitm. outstanding at year-end

Commit.

made

during the

year

Payments

4=1+2+3
(1 360)(66 413)139 21790 536(9 122)
(738)(13 367)22 90125 782(8 380)
(622)(53 046)116 31764 754(742)
(253)(15 133)24 66160 600(44 387)
(6)(235)11743 962(43 650)
(269)(1 934)3 6323 874(1 323)
(1 200)(6 918)19 23413 111(3 190)
(28)(344)36 000(5 660)

(0) (0)

(3 109) (90 742)

295             (295)

186 747 174 416 (63 977)

Cancellation of

commitm.

which cannot

be carried-over

Commitm. outstanding at year-end

8=5+6+7

EUR million

commitm.

outstanding at

end of the

year

9=4+8

(4)81 410
(4)17 397
(0)64 012
(0)16 213
-313
-2 551
(0)9 920
(1)339

(5)

1

110 434

220 627
40 298
180 329
40 874
430
6 183
29 154
342

1

297 181


Total

7

1

2

6

8

9

Annual accounts of the European Commission 2019

2.5. MFF: OUTSTANDING COMMITMENTS BY YEAR OF ORIGIN

EUR million

MFF Heading

1     Smart and inclusive growth

2     Sustainable growth: natural resources

3     Security and citizenship

4     Global Europe

5     Administration

6     Compensations

Negative reserve and deficit carried over from the 8

previous financial year

9     Special Instruments

Total

1 4283 6402 1394 68312 47645 92468 92481 414220 627
681302851 3162 6857 60312 57516 21340 874
331820534331 2231 8512 5526 183
9099581 0101 8513 2534 9736 2319 97029 154
__0_012339342

2 438

4 746

3 453

7 904

18 846

59 723

0                       1                        1

89 583 110 488         297 181

The set up of the new Commission involved an internal re-organisation of services. Re-allocating the related transactions resulted in a shift of outstanding amount between years. The overall amount of outstanding commitments remains unchanged.


2013

2014

2015

2016

2017

2018

2019

Total

Annual accounts of the European Commission 2019

2.6. POLICY AREA: BREAKDOWN AND CHANGES IN COMMITMENT AND PAYMENT APPROPRIATIONS

01 02 03 04

05

06 07 08

09

10 11

12

13 14 15 16 17 18

Policy area

Economic and financial affairs

Internal market, industry,

entrepreneurship and SMEs

Competition

Employment, social affairs

and inclusion

Agriculture and rural

development

Mobility and transport

Environment

Research and innovation

Communications networks,

content and technology

Direct research

Maritime affairs and fisheries

Financial stability, financial

services and capital markets

union

Regional and urban policy

Taxation and customs union

Education and culture

Communication

Health and food safety

Migration and home affairs

Commitment appropriations

Budget appropriations

Initial adopted budget

Amending budgets & transfers

119

Final adopted budget

Additional appropriations

Carried Assigned

3 = 1+2
336(26)310
2 79602 796
1111113
14 753(3)14 751
58 407(3)58 404
4 808(8)4 800
525(0)524
7 405897 494
2 43032 433
440-440
1 0281171 145

460

119

Payment appropriations

Total appropr. available

Budget appropriations

Initial adopted budget

Amending budgets & transfers

Final adopted budget

9=7+8

Additional appropriations

Carried     Assigned

124

120

(1)

119

EUR million

Total appropr. available

12=9+10

4627731 204(16)1 188327631 982
2693 0652 473(49)2 424154662 905
61201111113146132
1 88116 63111 91052712 437112 56215 010
2 63361 49656 64136357 0046732 64960 326
1734 9732 510922 60151192 725
1654037015385415404
1 6659 1606 737(112)6 625332 4299 086
4152 8482 134(155)1 979135502 541
5971 037428-428475401 015
2201 36566118984932201 072

128

41 29026841 559306 03047 61834 79919634 994136 50641 512
177(0)177-13191176(0)176613195
4 540214 56106995 2604 052754 127219445 092
216(1)215-12228213(3)2101512237
617(1)616-48664561(1)5611049620
2 2715492 821-2533 0732 576(188)2 38882712 667


-over

revenue

-over

revenue

6 = 3 + 4+5

5

7

8

10

11

1

1

5

4

5

Annual accounts of the European Commission 2019

Policy area

19   Foreign policy instruments

20   Trade International cooperation and development Neighbourhood and enlargement negotiations Humanitarian aid and civil protection Fight against fraud Commission's policy coordination and legal advice Commission's administration

21

22

23 24 25 26

27   Budget

28   Audit

29

30

31 32 33 34 40

Statistics

Pensions and related

expenditure

Language services

Energy

Justice and consumers

Climate action

Reserves

Commitment appropriations

Budget appropriations

Initial        Amending         Final

adopted      budgets &      adopted

budget        transfers        budget

Additional appropriations

Carried Assigned

Total

869(13)856
116(1)115
3 717143 730
5 072605 133
1 7643402 104
83-83
2601261
1 14311 145
74377
20(0)20
160(1)159
2 008-2 008
403(3)401
2 006(0)2 006
2650265
165(0)165
1 285(1 016)269
161 680394162 074

34

Payment appropriations

Total appropr. available

Budget appropriations

Initial adopted budget

Amending budgets & transfers

Final adopted budget

Additional appropriations

Carried     Assigned

EUR million

Total appropr. available

=9+10

525

4+589=7+810+11
5791372224746363812
3118115(1)11443121
2874 0173 301(221)3 081253323 438
6725 8053 770(267)3 502114904 004
4312 5681 7051361 84183762 226
18483-837191
1227326002602012292
2131 3571 14221 1441732141 531
98674377159101
12120(0)201122
16175144(4)140627173
02 0082 008-2 008-02 008
73474403(3)4012573499
2252 2311 628(112)1 51662301 752
72722471125857270
1166108(9)9941104
-269678(199)479--479
405180 004144 083294144 3771 23819 958165 573


-over

revenue

-over

revenue

5

Annual accounts of the European Commission 2019

2.7. POLICY AREA: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS

EUR million

01 02 03 04 05 06 07 08 09 10 11

12

13 14 15 16 17 18

Policy area

Economic and financial

affairs

Internal market, industry,

entrepreneurship and SMEs

Competition

Employment, social affairs and inclusion Agriculture and rural development

Mobility and transport Environment

Research and innovation

Communications networks, content and technology

Direct research

Maritime affairs and

fisheries

Financial stability, financial

services and capital

markets union

Regional and urban policy

Taxation and customs union

Education and culture Communication Health and food safety Migration and home affairs

Total appropr. availableCommitments madeAppropriations carried over to 2020

carry-assigned

overs by Total revenue

decision
from

final

adopted

budget
from carryoversfrom assigned revenueTotal%from

final

adopted

budget
70191 %69
773308-39369-3
3 0652 793-1692 96297 %99-993
1201111311596 %3-32
16 63114 696-1 77616 47299 %43327523
61 49657 92643887759 24296 %1 3424671 80911
4 9734 797-924 88998 %81-812
540523-1253699 %4-41
9 1607 494-9388 43292 %728-7280
2 8482 427-2362 66393 %179-1796
1 037437-11355053 %48434870
1 3651 142_1431 28594 %76_763

Appropriations lapsing

124

100

103

83 %

47 61841 502-5 90647 408100 %74
191176-918597 %4
5 2604 56004354 99595 %264
228214-722197 %5
664612-2864096 %20
3 0732 820_1242 94496 %129

50

20

1247
41
2641
51
204
1291
fromfrom
carry-assignedTotal
oversrevenue
13=10+ 11 +12
-03
-14
002
-6285
21413446
-02
-01
-00
-06
-00
_14

30

20

5086
01
01
01
04
01


3

2

2

0

Annual accounts of the European Commission 2019

EUR million

Policy area

Total appropr. available

from

final

adopted

budget

19Foreign policy instruments913856
20Trade118114
21International cooperation and development4 0173 726
22Neighbourhood and enlargement negotiations5 8055 131
23Humanitarian aid and civil protection2 5682 103
24Fight against fraud Commission's policy8483
25coordination and legal advice273254
26Commission's administration1 3571 141
27Budget8676
28Audit2119
29Statistics175157
30Pensions and related expenditure2 0081 996
31Language services474395
32Energy2 2312 004
33Justice and consumers272263
34Climate action166165
40Reserves269-
Total180 004161 120

Commitments made

om          from

rry-     assigned        Tota

vers      revenue

34

261

Appropriations carried over to 2020

assigned

carryovers by decision

5=2em6=5/1
3188797 %26
211597 %1
2043 93098 %83
6065 73799 %66
4162 55399 %15
08399 %1

96 %

1291 27094 %84
68296 %3
12096 %1
616393 %10
01 99699 %0
4544093 %28
1002 10494 %125
426798 %3
116599 %1
--0 %-
823174 41697 %4 055

46

598

from

final

adopted

budget

26 1 84 66 15 1

Appropriations lapsing

from          from

carry-     assigned

overs      revenue

844
31
10
102
012
286
1252
32
10
46223
4 653356
00
02
03
02
01
00

51

04
01
00
02
-12
06
02
02
00
-223
7934


%

Total

revenue


3

4

8


12


1

7

5

5

7

0

7

Annual accounts of the European Commission 2019

2.8. POLICY AREA: IMPLEMENTATION OF PAYMENT APPROPRIATIONS

EUR million

Policy area

Total appropr. available

01

02

03 04

05

06 07

08 09

10 11

12

13

14 15

Payments made

from final      from         from

adopted      carry- assigned       T

budget       overs     revenue

Appropriations carried over to 2020

carry-tomatic

overs     assigned

automatic carryovers

Wc=2+

1 783
Economic and financial1 9821 1813057290 %4
Internal market,
industry, entrepreneurship and2 9052 405131472 56488 %16
SMEs
Competition1329913211486 %12
Employment, social affairs and inclusion15 01012 42272 35514 78499 %11
Agriculture and rural development60 32656 3286381 53358 50097 %198
Mobility and transport2 7252 5924292 62596 %5
Environment40438041339698 %4
Research and innovation9 0866 588304897 10778 %37
Communications
networks, content and2 5411 965101112 08682 %10
technology
Direct research1 0153634210450950 %62
Maritime affairs and1 07284621981 04698 %2
Financial stability,
financial services and128964310380 %4
capital markets union
Regional and urban

policy

Taxation and customs

union
41 51234 980113 92138 91294 %11
1951706518193 %5
Education and culture5 0924 108173804 50488 %18
Communication23719714621791 %12

467

191

319

439

436 22

2

from

final

adopted

budget

Appropriations lapsing

from         from

carry-    assigned T d

overs     revenue

=7+

194

335

416200
1912024316
1 1161 78011350
9096410
27100
1 9391 976030

449

501 25

5

2 585 2 596

7             12

564           582

0 1

20

32
10
14

2 23

46

5 1

3

6 1

20

5

2

5

6

18


%

revenue


8

9

11

12

13

3

2

0

5

3

2

0

5

3

3

0

6

3

0

0

1

1

0

2

Annual accounts of the European Commission 2019

EUR million

Total appropr.Payments madeAppropriations carried over to 2020Appropriations lapsing
from finalfromfromautomaticcarry-assigned revenuefrom

final

adopted

budget
fromfrom
Policy areaavailableadopted budgetcarryoversassigned revenueTotal%carryoversovers

by decis.
Totalcarryoversassigned revenueTotal
17 Health and food safety62055192958895 %8-20291103
Migration and home 182 6672 3806802 46692 %7-1911981203
Foreign policy 19

instruments
81274133978396 %4-24281102
20 Trade1211104211595 %3-242002
International
21 cooperation and3 4383 056221723 25095 %21-15617743411
development
Neighbourhood and
22 enlargement4 0043 487101773 67492 %13-3133262103
negotiations
Humanitarian aid and 23

civil protection
2 2261 83383272 16897 %8-49571001
24 Fight against fraud9174608088 %7-182204
Commission's policy
25 coordination and legal29223419625989 %1906257108
advice
Commission's 26

administration
1 5311 0111641011 27583 %130011324449013
27 Budget101621448079 %14-5191102
28 Audit2219112092 %1-110000
29 Statistics1731335714584 %5-20252103
Pensions and related 30

expenditure
2 0081 996--1 99699 %0-0012--12
31 Language services499378234044189 %17-33506107
32 Energy1 7521 5046791 58891 %6-1511576107
33 Justice and consumers2702514425996 %4-383104
34 Climate action10495419995 %4-140001
40 Reserves479----0 %----479--479
165 573142 6331 15210 934154 71993 %6824709 00110 1545928622700


Annual accounts of the European Commission 2019

2.9. POLICY AREA: MOVEMENTS IN OUTSTANDING COMMITMENTS (RAL)

Commitments outstanding at the end of previous year

01

02

03 04

05

06 07 08

09

10 11

12

13

14

15 16 17

Policy area

Economic and financial

affairs

Internal market, industry,

entrepreneurship and

SMEs

Competition

Employment, social affairs

and inclusion

Agriculture and rural

development

Mobility and transport

Environment

Research and innovation

Communications

networks, content and

technology

Direct research

Maritime affairs and

fisheries

Financial stability,

financial services and

capital markets union

Regional and urban policy

Taxation and customs

union

Education and culture

Communication

Health and food safety

Commitm.

carried

forward from

prev. year

3 273

Decommitments/ Revaluations/ Cancellations

2 913

13 44 192

35 938

10 281

1 422 14 315

2 646

214

3 302

15

(0)

Payments

(15) (1 311)

(21) (1 530)

(0)(12)
(461)(14 474)
(45)(14 201)
(93)(2 394)
(131)(281)
(146)(5 101)
(136)(981)
(27)(123)
(76)(834)

(12)

Commitm. outstanding at year-end

4=1+2+3

Commitm.

made

during the

year

Commitments of the current year

Cancellation of

Payments

1 947701(472)
1 3622 962(1 034)
-115(102)
29 25816 472(311)
21 69259 242(44 299)
7 7944 889(231)
1 010536(115)
9 0688 432(2 005)
1 5292 663(1 105)
64550(386)
2 3921 285(212)

103

(91)

commitm.

which cannot

be carried-

Commitm. outstanding at year-end

8=5+6+7

-229
(1)1 927
-13
(0)16 161
(0)14 943
(1)4 658
-421
(1)6 425
(0)1 558
(0)164
(0)1 073

12

EUR million

Total

commitm.

outstanding

at end of the

year

9=4+

2 176

3 289

13 45 419

36 634

12 451

1 431

15 493

3 087

228 3 465

15

120 918(287)(37 895)82 73747 408(1 017)(0)46 391129 127
158(5)(93)60185(88)(0)97157
2 858(129)(1 191)1 5374 995(3 313)(0)1 6813 218
67(3)(58)6221(159)(0)6268
473(12)(237)225640(351)-289514


over

1

2

3

5

6

7

3

Annual accounts of the European Commission 2019

Commitments outstanding at the end of previous year

Policy area

18

19 20

21

22

23 24

25

26

27 28 29

30

31 32 33 34 40

Migration and home

affairs

Foreign policy instruments

Trade

International cooperation

and development

Neighbourhood and

enlargement negotiations

Humanitarian aid and civil

protection

Fight against fraud

Commission's policy

coordination and legal

advice

Commission's

administration

Budget

Audit

Statistics

Pensions and related

expenditure

Language services

Energy

Justice and consumers

Climate action

Reserves

Commitm.

carried

forward from

prev. year

Decommitments/ Revaluations/ Cancellations


Total

5 143

1 066 24

9 571

14 472

977 33

21

217

15

1

122

25

5 302

244

368

280 599

Commitm.

Payments      outstanding

at year-end

Commitm.

made

during the

year

EUR million

Commitments of the current year

Total

Cancellation of

commitm.

m.

commitm.          Commitm.

outstanding

Payments     which cannot      outstanding

at end of the

he

be carried-        at year-end

year

over

(252)(1 627)3 2632 944(839)
(63)(395)607887(387)
(1)(16)8115(100)
(211)(2 544)6 8163 930(706)
(789)(3 065)10 6185 737(609)
(42)(579)3552 553(1 588)
(2)(18)1383(61)
(1)(20)0261(239)
(10)(194)131 270(1 081)
(1)(14)-82(66)
(0)(1)-20(19)
(7)(57)57163(88)
---1 996(1 996)
(1)(23)-440(418)
(137)(1 292)3 8742 104(296)
(4)(97)143267(162)
(1)(72)295165(28)


(0)

(0) (0)

(0)

2 105

500 16

3 224

5 128

965 21

22

5 368

1 107 24

10 040

15 746

1 320 34

22

(3 109) (90 742)

186 747          174 416 (63 977)

(0)189202
-1616
-11
-75132
(0)--
-2222
(1)1 8075 681
(0)105248
-138433
---
(5)110 434297 181


2

Annual accounts of the European Commission 2019

2.10. POLICY AREA: OUTSTANDING COMMITMENTS BY YEAR OF ORIGIN

EUR million

Policy area

01 Economic and financial affairs

02

Internal market, industry, entrepreneurship and

SMEs

03    Competition

04    Employment, social affairs and inclusion

05    Agriculture and rural development

06    Mobility and transport

07    Environment

08    Research and innovation

09

Communications networks, content and

technology

10    Direct research

11    Maritime affairs and fisheries

12

Financial stability, financial services and capital

markets union

13    Regional and urban policy

14    Taxation and customs union

15    Education and culture

16    Communication

17    Health and food safety

18    Migration and home affairs

19    Foreign policy instruments

20    Trade

21    International cooperation and development

22    Neighbourhood and enlargement negotiations

23    Humanitarian aid and civil protection

-129-04341 7812292 176
161825821303727191 9273 289
-------1313
2308671797482 30410 13914 79216 16145 419
0581991 1602 2146 75211 30914 94336 634
232975011 7472 0663 1794 65812 451
5643581321171684364211 431
1863046749321 5812 1663 2256 42515 493
10579952543357481 5623 087
884321623164228
1287353429141 0291 0733 465
--0--121215
7981 9875971 9105 83229 11242 50246 391129 127
--00584697157
1113441031714907051 6813 218
0-000156268
637112959109289514
37168473951 1471 6132 1055 368
485260871492475001 107
---01341624
2663273726641 0411 8712 2493 25110 040
5674315641 0982 0592 6433 2335 15115 746
__171523852169651 320


2013

2014

2015

2016

2017

2018

2019

Total

Annual accounts of the European Commission 2019

EUR million

Policy area

24 Fight against fraud

25

Commission's policy coordination and legal

advice

26    Commission's administration

27    Budget

28    Audit

29    Statistics

30    Pensions and related expenditure

31    Language services

32    Energy

33    Justice and consumers

34    Climate action 40    Reserves

Total

---12462134
------02222
--000310189202
-------1616
------(0)11
-0023133975132
-------2222
2204322412954091 0691 2081 8075 681
97711223551106248
__2630747096138433

2 438

4 746

3 453

7 904

18 846

59 723

89 583

110 488

297 181

The set up of the new Commission involved an internal re-organisation of services. Re-allocating the related transactions resulted in a shift of outstanding amount between years. The overall amount of outstanding commitments remains unchanged.


2013

2014

2015

2016

2017

2018

2019

Total

Annual accounts of the European Commission 2019

RECONCILIATION OF ECONOMIC RESULT WITH BUDGET RESULT

ECONOMIC RESULT OF THE YEAR

2019

4 605

EUR million 2018

14 372

Revenue

Entitlements established in current year but not yet collected

Entitlements established in previous years and collected in current year Accrued revenue (net)

Expenses

Accrued expenses (net)

Amount from liaison account

Expenses prior year paid in current year

Net-effect pre-financing

Payment appropriations carried over to next year

Payments made from carry-overs & cancellation of unused payment

appropriations

Movement in provisions

Other

(6 184)(6 212)
8 6489 326
3 341(4 015)
8 3894 439
3 7253 568
(3 832)(6 086)
(10 922)(8 570)
(2 927)(2 255)
1 2381 471
3 8653 509
(3 107)(4 220)

BUDGET RESULT OF THE YEAR

6 839

5 327

BUDGET RESULT OTHER INSTITUTIONS

BUDGET RESULT OF THE YEAR (EU)

(3 622) 3 217

(3 525) 1 802