Section 2: Rules for financing the participation in Union programmes and activities
Article UNPRO.2.1: Financial conditions
1. Participation of the United Kingdom or United Kingdom entities in Union programmes, activities or parts thereof shall be subject to the United Kingdom contributing financially to the corresponding funding under the Union budget.
2. The financial contribution shall take the form of the sum of:
(a) a participation fee; and
(b) an operational contribution.
3. The financial contribution shall take the form of an annual payment made in one or more instalments.
4. Without prejudice to Article UNPRO.8 [Participation fee in the years 2021 to 2026], the participation fee shall be 4% of the annual operational contribution and shall not be subject to retrospective adjustments except in relation to suspension under point (b) of Article UNPRO.3.1(7) [Suspension of the participation of the United Kingdom in a Union programme by the Union] and termination under point (c) of Article UNPRO.3.3.(6) [Termination of the participation in a programme or activity in the case of substantial modification to Union programmes]. As of 2028 the level of the participation fee may be adjusted by the Specialised Committee on Participation in Union Programmes.
5. The operational contribution shall cover operational and support expenditure and be additional both in commitment and payment appropriations to the amounts entered in the Union budget definitively adopted for programmes or activities or exceptionally parts thereof increased, where appropriate, by external assigned revenue that does not result from financial contributions to Union programmes and activities from other donors, as defined in Protocol I.
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6. The operational contribution shall be based on a contribution key defined as the ratio of the Gross Domestic Product (GDP) of the United Kingdom at market prices to the GDP of the Union at market prices. The GDPs at market prices to be applied shall be the latest available as of 1 January of the year in which the annual payment is made in as provided by Statistical Office of the European Union (EUROSTAT), as soon as the arrangement referred to in Article UNPRO.5.2 [Statistical cooperation] applies and according to the rules of this arrangement. Before this arrangement applies, the GDP of the United Kingdom shall be the one established on the basis of data provided by the Organisation for Economic Co-operation and Development (OECD).
7. The operational contribution shall be based on the application of the contribution key to the initial commitment appropriations increased as described in paragraph 5 entered in the Union budget definitively adopted for the applicable year for financing the Union programmes or activities or exceptionally parts thereof in which the United Kingdom participates.
8. The operational contribution of a programme, activity or part thereof for a year N may be adjusted upwards or downwards retrospectively in one or more subsequent years on the basis of the budgetary commitments made on the commitment appropriations of that year, their implementation through legal commitments and their decommitment.
The first adjustment shall be made in year N+1 when the initial contribution shall be adjusted upwards or downwards by the difference between the initial contribution and an adjusted contribution calculated by applying the contribution key of year N to the sum of:
(a) the amount of budgetary commitments made on commitment appropriations authorised in year N under the European Union voted budget and on commitment appropriations corresponding to decommitments made available again; and
(b) any external assigned revenue appropriations that do not result from financial contributions to Union programmes and activities from other donors as defined in Protocol I and that were available at the end of year N.
Each subsequent year, until all the budgetary commitments financed under commitment appropriations originating from year N have been paid or decommitted and at the latest 3 years after the end of the programme or after the end of the multiannual financial framework corresponding to year N, whichever is earlier, the Union shall calculate an adjustment of the contribution of year N by reducing the United Kingdom contribution by the amount obtained by applying the contribution key of year N to the decommitments made each year on commitments of year N financed under the Union budget or from decommitments made available again.
If external assigned revenue appropriations that do not result from financial contributions to Union programmes and activities from other donors as defined in Protocol I are cancelled, the contribution of the United Kingdom shall be reduced by the amount obtained by applying the contribution key of year N to the amount cancelled.
In year N+2 or in subsequent years, after having made the adjustments referred to in the second, third and fourth subparagraphs, the contribution of the United Kingdom for year N shall also be reduced by an amount obtained by multiplying the contribution of the United Kingdom for year N and the ratio of:
(a) the legal commitments of year N, funded under any commitment appropriations available in year N, and resulting from competitive award procedures,
(i) from which the United Kingdom and the United Kingdom entities have been excluded, or
(ii) for which the Specialised Committee on Participation in Union Programmes has decided, in accordance with the procedure established in Article UNPRO.2.1a [Quasi- exclusion from competitive grant award procedure] that there has been a quasi- exclusion of United Kingdom or United Kingdom entities, or
(iii) for which the deadline for submission of applications has expired during the suspension referred to in Article UNPRO.3.1 [Suspension of the participation of the United Kingdom in a Union programme by the European Union] or after termination referred to in Article UNPRO.3.3 [Termination of the participation in a programme in the case of substantial modification of Union programme] has taken effect, or
(iv) for which the participation of the United Kingdom and United Kingdom entities has been limited in accordance with Article UNPRO.3.5(3) [Financial increases review]; and
(b) the total amount of legal commitments funded under any commitment appropriations of year N.
This amount of legal commitments shall be calculated by taking all budgetary commitments made in year N and deducting the decommitments that have been made on these commitments in year N+1.
9. Upon request, the Union shall provide the United Kingdom with information in relation to its financial participation as included in the budgetary, accounting, performance and evaluation related information provided to the Union budgetary and discharge authorities concerning the Union programmes and activities in which the United Kingdom participates. That information shall be provided having due regard to the Union’s and United Kingdom’s confidentiality and data protection rules and is without prejudice to the information which the United Kingdom is entitled to receive under Chapter Two [Sound Financial Management] of this Part.
10. All contributions of the United Kingdom or payments from the Union, and the calculation of amounts due or to be received, shall be made in euros.
11. Subject to paragraph 5 and the second subparagraph of paragraph 8 of this Article, the detailed provisions for the implementation of this Article are set out in Annex UNPRO-1 [Implementation of financial conditions]. Annex UNPRO-1 may be amended by the Specialised Committee on Participation in Union Programmes.
Article UNPRO.2.1a: Quasi exclusion from competitive grant award procedure
1. When the United Kingdom considers that certain conditions laid down in a competitive grant award procedure amount to a quasi-exclusion of United Kingdom entities, the United Kingdom shall notify the Specialised Committee on Participation in Union Programmes before the deadline for submission of applications in the procedure concerned and shall provide justification.Within three months of the deadline for submission of applications in the award procedure concerned, the Specialised Committee on Participation in Union Programmes shall examine the notification referred to in the paragraph 1 provided that the participation rate of United Kingdom entities in the award procedure concerned is at least 25 % lower compared to:
(a) the average participation rate of United Kingdom entities in similar competitive award procedures not containing such a condition and launched within the 3 years preceding the notification; or,
(b) in the absence of similar competitive award procedures, the average participation rate of United Kingdom entities in all competitive award procedures launched under the programme, or the preceding programme, as relevant, within the 3 years preceding the notification.
3. The Specialised Committee on Participation in Union Programmes shall by the end of the period referred to in paragraph 2, decide whether there has been a quasi-exclusion of the United Kingdom entities from the award procedure concerned in light of the justification provided by the United Kingdom pursuant to paragraph 1 and the effective participation rate in the award procedure concerned.
4. For the purposes of paragraphs 2 and 3, the participation rate shall be the ratio of the number of applications submitted by United Kingdom entities to the total number of applications submitted within the same award procedure.
Article UNPRO.2.2: Programmes to which an automatic correction mechanism applies
1. An automatic correction mechanism shall apply in relation to those Union programmes, activities or parts thereof for which the application of an automatic correction mechanism is provided in Protocol I. The application of that automatic correction mechanism may be limited to parts of the programme or activity specified in Protocol I, which are implemented through grants for which competitive calls are organised. Detailed rules on the identification of the parts of the programme or activity to which the automatic correction mechanism does or does not apply may be established in Protocol I.
2. The amount of the automatic correction for a programme or activity or parts thereof shall be the difference between the initial amounts of the legal commitments actually entered into with the United Kingdom or United Kingdom entities financed from commitment appropriations of the year in question and the corresponding operational contribution paid by the United Kingdom as adjusted pursuant to Article UNPRO.2.1(8) [Financial conditions], excluding support expenditure, covering the same period if that amount is positive.
3. Any amount referred to in paragraph 2 of this Article, which for each of two consecutive years exceeds 8% of the corresponding contribution of the United Kingdom to the programme as adjusted pursuant to Article UNPRO.2.1(8) [Financial conditions] shall be due by the United Kingdom as an additional contribution under the automatic correction mechanism for each of those two years.
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4. Detailed rules on the establishment of the relevant amounts of the legal commitments referred to in paragraph 2 of this Article, including in the case of consortia, and on the calculation of the automatic correction may be laid down in Protocol I.
Article UNPRO.2.3: Financing in relation to programmes implemented through financial instruments or budgetary guarantees
1. Where the United Kingdom participates in a Union programme, activity, or parts thereof that is implemented through a financial instrument or budgetary guarantee, the contribution of the United Kingdom to programmes implemented through financial instruments or budgetary guarantees under the Union budget implemented under Title X of the Financial Regulation applicable to the general budget of the Union shall be made in the form of cash. The amount contributed in cash shall increase the Union budgetary guarantee or the financial envelope of the financial instrument.
2. Where the United Kingdom participates in a programme referred to in paragraph 1 that is implemented by the European Investment Bank Group, if the European Investment Bank Group needs to cover losses that are not covered by the guarantee provided by the Union budget, the United Kingdom shall pay to the European Investment Bank Group a percentage of those losses equal to the ratio of the Gross Domestic Product at market prices of the United Kingdom to the sum of the Gross Domestic Product at market prices of the Member States, the United Kingdom and any other third country participating in that programme. The Gross Domestic Product at market prices to be applied shall be the latest available as of 1 January of the year in which the payment is due as provided by EUROSTAT, as soon as the arrangement referred to in Article UNPRO.5.2 [Statistical cooperation] applies and according to the rules of this arrangement. Before this arrangement applies, the GDP of the United Kingdom shall be the one established on the basis of data provided by the OECD.
3. Where appropriate, modalities for the implementation of this Article, in particular ensuring that the United Kingdom receives its share of unused contributions to budgetary guarantees and financial instruments, shall be specified further in Protocol I.
