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A common legal framework for combating fraud in Community policies

In order to effectively combat fraud, the regulation establishes a common set of legal rules for all areas covered by Community policies. In particular, it provides for checks and administrative penalties to protect the Communities' financial interests.

ACT

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

SUMMARY

This regulation establishes provisions to combat fraud against the financial interests of the European Communities. It provides for homogenous checks in all Member States and administrative measures and penalties concerning irregularities with regard to Community law.

Irregularity: an economic operator prejudices the Community budget

“Irregularity” means any infringement of a provision of Community law resulting from an act or omission by an economic operator that has, or would have, the effect of prejudicing the general budget of the Communities or budgets managed by them, either by reducing or losing revenue accruing from own resources collected directly on behalf of the Communities, or by an unjustified item of expenditure.

Economic operators are considered to be natural or legal persons and other entities on which national law confers legal capacity and to whom penalties are applied when they commit an irregularity. Penalties can also apply to those who have been involved in an irregularity, as well as those who are under a duty to take responsibility for or to ensure the non-commission of an irregularity.

Establishing a set of legal rules for all areas covered by Community policies

More than half of Community expenditure is paid to beneficiaries via Member States. This decentralised administration and monitoring of the use of the expenditure are governed by detailed rules that are subject to specific provisions depending on the Community policy concerned. This regulation establishes a set of legal rules for all areas covered by Community policies to protect the financial interests of the European Communities, notably through checks and administrative measures and penalties.

Member States are responsible for taking the necessary measures to ensure the regularity and reality of the transactions involving the Communities' financial interests. Measures regarding checks must be in proportion to the objectives pursued so as not to entail excessive economic constraints or administrative costs and must take account of Member States’ administrative practices and structures.

The European Commission has responsibility for checking that:

  • administrative practices conform with Community rules;
  • the necessary substantiating documents exist and that they concord with the Communities' revenue and expenditure;
  • financial transactions are carried out and checked in appropriate circumstances.

In addition, the European Commission may carry out checks and inspections on the spot.

Withdrawal of the wrongly obtained advantage

In general, any irregularity will result in the withdrawal of the wrongly obtained advantage with, where appropriate, interest determined on a flat-rate basis. This may consist of:

  • an obligation to pay or repay the amounts due or wrongly received;
  • the total or partial loss of the security provided in support of the request for an advantage granted or at the time of the receipt of an advance.

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

  • payment of an administrative fine;
  • payment of an additional sum, which may not exceed the level strictly necessary to constitute a deterrent;
  • total or partial removal of an advantage granted, even if the operator wrongly benefited from only a part of that advantage, or exclusion from or withdrawal of the advantage for a period subsequent to that of the irregularity;
  • other penalties of a purely economic type provided for by Community law.

General principles

Administrative checks, measures and penalties must be effective, proportionate and dissuasive. They must take account of the nature and seriousness of the irregularity, the advantage granted or received and the degree of responsibility.

An administrative penalty may only be imposed if, prior to the irregularity, a Community act has made provision for it.

The limitation period for proceedings is four years, starting from the date on which the irregularity was committed. For continuous or repeated irregularities, the limitation period runs from the date on which the irregularity ceases. In the case of multiannual programmes, the limitation period runs until the programme is terminated.

REFERENCES

ActEntry into forceDeadline for transposition in the Member StatesOfficial Journal

Regulation (EC, EURATOM) No 2988/95

26.12.1995

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OJ L 312, 23.12.1995

Last updated: 02.05.2011

See also

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