Explanatory Memorandum to COM(2008)483 - Amendment of Council Regulation (EC) No 219/2007 on the establishment of a joint undertaking to develop the new generation European air traffic management system (SESAR) - Main contents
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| dossier | COM(2008)483 - Amendment of Council Regulation (EC) No 219/2007 on the establishment of a joint undertaking to develop the new generation ... |
|---|---|
| source | COM(2008)483  |
| date | 23-07-2008 |
Joint Undertakings (JUs) are instruments provided for in the Treaty establishing the European Community which enable the Community to establish structures, in particular public-private partnerships, necessary for the efficient execution of Community research, technological development and demonstration programmes.
The first Joint Undertaking established under Article 171 of the Treaty was the GALILEO Joint Undertaking (GJU) created in 2002 i which also inspired the proposal for establishing the SESAR Joint Undertaking (SJU) launched in 2005 i.
However, these entities are not further defined in Community or national legislations. The absence of a clear definition of the legal status of these entities, which are between a Community body and a private company, has given rise to many difficulties in setting up their legal and administrative structure, which must comply with the requirements of the Community and of the hosting State.
Under the terms of the 7th Research and Development Framework Programme (FP7) f Joint Technology Initiatives (JTI) are to be implemented through JUs established under Article 171 of the Treaty. In view of the number of JTIs that were proposed and the legal and budgetary implications related to setting them up, the EU Institutions have specifically addressed the issue of better defining the status of these entities in order to adopt a common approach for their establishment.
In order to ensure consistency with the Community's approach to the setting up of these bodies, the SESAR Joint Undertaking should enjoy the same treatment as that afforded to similar structures. Moreover, these bodies have all been established as instruments for implementing FP7 and should therefore all be governed by a coherent set of rules. The purpose of the present proposal is to align the Regulation and Statutes of the SESAR Joint Undertaking, which is in the early stage of being setup, with the new approach that the EU Institutions have adopted for the establishment of JUs.
The proposal for the establishment of the SJU was presented at a time when the GJU was in the process of winding up its activities. Therefore, the SESAR proposal was also discussed in the light of the 'lessons learnt' from the GJU. From the discussions which took place during the legislative procedure, it appeared that a Joint Undertaking could not be regarded as a Community body (such as a Community agency) or an international organisation because of the participation of private entities. This meant that it had to comply with the legal obligations of the hosting State, although some obligations would also derive from its “Community character”.
The SJU was finally established by Council Regulation (EC) No 219/2007 of 27 February 2007 and its seat was fixed in Brussels. It has two founding members: the Community, represented by the European Commission, and Eurocontrol, represented by its Agency. As the SJU is conceived as a public-private-partnership, membership is also open to any other public or private entity including those from third Countries.
The legal status of the Joint Undertaking is not further defined in the Treaty or in any other EC or national legislative act other that the Regulations establishing the JU's. Therefore, it was considered that there was no legal basis which could justify granting this entity exemption from VAT and excise duties or benefits resulting from the Protocol on privileges and immunities granted to EU institutions or bodies, nor could its personnel be exempted from national taxes, social security contributions and similar charges. However, Member States agreed considering the scope of the SJU, to include a provision referring to a possible fiscal exemption (Article 2 i of Regulation (EC) No 219/2007): ' Member States shall take all possible measures to afford the Joint Undertaking the most extensive exemption from taxation as possible as regards to VAT and other taxes and duties '. This provision does not however constitute a binding commitment for Member States to grant the SJU any form of tax exemption.
On the other hand, it is also acknowledged that the SJU is ' a non profit entity which shall devote all its resources to the management of a public research programme of European interest '. Its founding members are two international organisations which provide two thirds of its total budget from public funds dedicated to R&D activities.
The setting up of the SJU was initiated immediately after the entry into force of Regulation (EC) No 219/2007. In 2007 the governance (consisting of the Administrative Board and the Executive Director) and an initial administrative structure were put in place and the membership process was launched. Under the terms of the current work programme the SJU structure and internal rules and the finalisation of the membership process are to be consolidated by the end of 2008. The SJU's objective is to launch the development activities in 2009.
After the presentation of the proposal for the SJU, discussions began on four other proposals for JU's (CLEAN SKY i, ENIAC i, IMI i and ARTEMIS i) based on Article 171 of the Treaty for the implementation of Joint Technology Initiatives within the 7th Framework Programme for research and Technological development. These new entities are comparable with the SJU to the extent that they also carry out and manage large R&D projects involving public and private entities. At that time and considering the growing number of such initiatives, the amount of Community funding involved and also the implications of Article 185 of the Financial Regulations relating to 'bodies set up by the Communities', the EU Institutions acknowledged that it was necessary to better define the legal status of the JUs. A new approach was therefore adopted based on the fact that JUs can be set up as Community bodies. Consequently, the Protocol on the Privileges and Immunities of the European Communities (PPI), the Staff Regulations of Officials of the European Communities and the provisions of Article 185 of the Financial Regulation could apply to these bodies.
This was the approach adopted for the creation of the four new JUs mentioned above, which are clearly defined as Community bodies in their basic acts. This status entails a number of privileges and obligations which have been defined in the respective Regulations and Statutes of these bodies taking into account their specific nature and operational needs.
Since the establishment of the SJU, four new JUs have been established under Article 171 of the Treaty. These are: ARTEMIS, CLEAN SKY, IMI and ENIAC.
The scope of the present proposal is to ensure that the setting up of the SJU is consistent with the approach endorsed by the Institutions for the establishment of JUs under Article 171 of the Treaty. The proposed adaptations of the SJU Regulation and its Statutes reflect the principles of the Community approach for setting up JUs and are in line with the respective provisions of the Regulations establishing the JUs mentioned in 1.2.1.
Not applicable
Information relating to the impact of the present proposal have been provided by the administrative services of the SJU. The Commission Staff Working Document on the financial and staff implications of the Proposal for a Council Decision on Europol i has also been used as a reference.
The main purpose of the present proposal is to ensure a consistent approach for the establishment of JUs under Article 171 of the Treaty. Nevertheless, the alignment of the SJU Regulation and Statutes with those of the above mentioned JTIs would have a substantial positive financial impact on both the SJU and the SESAR development phase. The savings which will result from this new statute will make it possible to concentrate and optimise the use of Community funds for research, development and validation activities for the benefit of the entire Community which is in fact the one of SESAR’s objectives.
The total estimated cost of the SESAR development phase over the period 2007-2016 is EUR 2.1 billion. The costs will be supported in equal parts by the Community (EUR 700 million: EUR 350 million from the 7th R&D framework programme + EUR 350 million from the Trans-European Networks Programme), by Eurocontrol (EUR 700 million) and by 'industry' (EUR 700 million).
While the Community's contribution to the SJU will be entirely in cash, some 90 % of the contributions from Eurocontrol and from industry shall be mainly in-kind.
As the SJU was not considered to be a Community body and as Joint Undertakings are not defined in Belgian law, the SJU had requested the Belgian authorities to determine its fiscal status. The SJU requested that it be considered as a taxable person for VAT purposes, with the right to full deduction of VAT. The position taken by the Belgian Minister of Finances was that the SJU could not be granted such a status. Under these circumstances, the financial impact of the SJU's present fiscal status is substantial. The SJU will have to pay non recoverable VAT on the purchase of goods and services for its own operations, on the in-kind contributions from its members and in general on all study and development activities that it coordinates. It is estimated that the total amount of VAT to be paid amounts to EUR 290 million, representing 41% of the Community's overall estimated contribution to the SESAR Development phase. A changeover to the status of a Community body would therefore generate savings in the order of EUR 290 million in the budget of the SJU which shall be allocated in favour of financing research and development activities.
A changeover of the SJU staff from Belgian employment conditions to the EU Staff Regulations will also have a positive impact on the personnel and administrative costs of the SJU.
The SJU will be a lean structure with a small number of highly qualified staff in charge of the overall management of the Development phase. According to the staff establishment plan approved by the SJU Administrative Board, there will be a total complement of twenty-eight staff. At present the SJU employs fifteen staff and plans to recruit eight additional staff by the end of 2008 and five more in 2009.
Considering the high level of involvement of the major air traffic management (ATM) players in the SJU, independence of staff is essential. This is why the SJU needs to recruit its own personnel, which shall be placed under the direct authority of the Executive Director. However, the ATM sector is a relatively small environment. The major stakeholders of the sector already employ all the highly qualified experts. The SJU must therefore be able to offer attractive conditions in order to recruit qualified staff. For this reason, although SJU staff are currently subject to Belgian employment laws, the SJU Statutes state that the employment conditions shall be 'based on those of the servants of the European Communities'. The rules for recruitment adopted by the Administrative Board establish that: 'The conditions of employment of servants of the European Communities as referred to in Article 8 of the Statutes serve as a basis and as far as possible, for the establishment of the salaries of the staff, for the salary increases due to seniority, for the number of days of leave, for the reimbursement of the medical expenditure, for the complementary pension rights.'
The SJU staff have been recruited on the basis of the grades of Community temporary agents corresponding to their functions. All SJU staff have been recruited at the first step of their respective grade. Consequently, the changeover will not require a reclassification of the staff as there is a direct correspondence between the grades of the two sets of Staff Regulations. Furthermore the SJU has taken complementary insurances for sickness and pensions in order to upgrade the mandatory conditions offered under Belgian rules to the level of those offered under the Community Staff Regulations.
The annual net salary of a staff member is intended to be equivalent to the annual net salary of an EC temporary agent of the same grade and step. The calculation of the net salary takes into account: Basic salary, household allowance, dependant child allowance, education allowance, deduction of the pension contribution, deduction of sickness insurance contribution, deduction of accident insurance, deduction of tax, deduction of unemployment contribution, deduction of allowances received elsewhere and deduction of the special levy. The annual cost is then calculated by adding on the mandatory social security contributions of both employee and employer and finally the supplementary contributions for upgrading the sickness and pension schemes.
Taking into account the fact that the SJU currently employs 15 staff consisting of: one AD14, one AD13, three AD 12, two AD10, two AD8, three AD7, one AST3 and two AST1, the indicative average annual cost of a SJU employee under the present staff rules is EUR 253.306.
The indicative average annual cost i of a SJU employee under the EC Staff Regulations would be EUR 105.563. This amount is determined under the same assumptions in terms of number of employees, grading and benefits and assuming also that the SJU staff costs will be covered entirely by the Community's contribution to the SJU.
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It should be noted that the positions currently filled are those of the management staff. Future recruitments will be made at lower grades; therefore the average salary cost will decrease.
Currently employed SJU staff will be offered the choice to changeover to the EC Staff Regulations, but will not be obliged to do so.
The proposed revision of Council Regulation (EC) No 219/2007 consists in incorporating the following provisions that align the status of the SJU to that of the newly created JUs:
1. Recognition of the SJU as a Community body (Article 2 of the Regulation).
2. Application of the Staff Regulations of the European Communities, the conditions of employment of other servants of the European Communities and the rules adopted jointly by the Institutions of the European Communities for the purpose of applying them, to SJU staff (Article 2a of the Regulation).
3. Application of the Protocol on Privileges and Immunities of the European Communities to the SJU, to its staff and to the Executive Director (Article 2b of the Regulation).
4. Adaptation of the provisions on liability (Article 2c of the Regulation);
5. Adaptation of the provisions on jurisdiction of the Court of Justice and applicable law (Article 2d of the Regulation);
6. Quantification of the Community contribution and practical arrangements for its transfer to the SJU (Article 4 i of the Regulation).
7. Amendment of the provision related to the modification of the SJU Statutes (Articles 3 i & 5 i of the Regulation and 24 i of the Statutes). This amendment is not linked to the alignment of the SJU status. It is a correction to the procedure for adopting amendments to the SJU Statutes. The intention of the original provision was to enable the adoption of amendments to the Statutes by means of a regulatory comitology procedure involving the Single Sky Committee. However, the wording of the original provision does not clearly express this intention and therefore needs to be adapted.
8. Application of Article 185 of the Financial Regulations i:
9. Adoption of financial rules in accordance with the framework financial regulations for bodies referred to in Article 185 of the Financial Regulation (Article 4a of the Regulation).
10. Discharge (Article 4b of the Regulation) and presentation of the budget (Article 15 i & i of the Statutes).
11. Adaptation of the procedure for the appointment of the Executive Director (Article 7 i of the Statutes).
12. Adaptation of the provisions on protection of the financial interests of the Community (Article 17 i of the Statutes).
13. Transitional provisions for the changeover of SJU staff to EU Staff Regulations (Article 2 of the proposal).
The present proposal does not envisage a change of the legal basis of the original Regulation.
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Council Regulation amending Regulation (EC) No 219/2007.
Contents
- budgetary implications
- 1.1. Grounds for and objectives of the proposal
- 1.2. General context
- 1.2.1. Existing provisions in the area of the proposal
- 1.2.2. Consistency with the other policies and objectives of the Union
- 2. CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT
- 2.1. Consultation of interested parties
- 2.1.1. Consultation methods, main sectors targeted and general profile of respondents
- 2.1.2. Summary of responses and how they have been taken into account
- 2.2. Collection and use of expertise
- 2.3. Impact assessment
- Fiscal impact
- Changeover of SJU staff to EU Staff Regulations
- 3. LEGAL ASPECTS OF THE PROPOSAL
- 3.1. Summary of the proposed action
- 3.2. Legal basis
- 3.3. Subsidiarity principle
- 3.4. Proportionality principle
- 3.5. Choice of instruments
- 5. ADDITIONAL INFORMATION
- 5.1. Simulation, pilot phase and transitory period
- 5.2. Review/revision/sunset clause
The total estimated Community contribution to the development phase of SESAR has been fixed at a maximum of 700 million EUR coming in equal parts from the 7th R&D Framework Programme and the Trans-European Network programme over the period 2007-2013. The above-mentioned programmes shall finance the administrative and operational costs of the SJU in accordance with their respective rules. The proposed revision of Regulation 219/2007 will not affect the estimated amount mentioned. However, a revised financial statement is attached to the present proposal in order to update the budgetary forecast of the SJU in the light of developments in the project.
The proposed revision of Regulation 219/2007 will require the adaptation of the SJU's financial rules, its rules for recruitment and its employment contracts. The SJU will also have to conclude a general agreement with the Commission and an administrative agreement with Belgium on the application of the PPI.
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