Protection of the European Union’s financial interests – combating fraud – annual report 2023

The European Parliament adopted by 473 votes to 59, with 114 abstentions, a resolution on the protection of the European Union's financial interests - fight against fraud - annual report 2023.

Members recalled that the sound management of public resources and the protection of the Union's financial interests in all its areas of action are essential to increase citizens' confidence and reassure them that their money is spent wisely and efficiently.

General observations on PIF reports and major threats

Parliament notedthat the total number of frauds and irregularities reported by the competent European and national authorities has increased significantly, from 12 455 cases in 2022 to 13 563 cases in 2023, an increase of 9%. Members regretted that this figure is the highest ever reached and that it follows a growing trend over the last five years. Moreover, the total amounts concerned in 2023 (EUR 1.90 billion) are significantly higher than in 2022 (EUR 1.77 billion), having increased by 7.3%.

While welcoming the 2023 report on the protection of the EU’s financial interests (PIF report), Members agreed that, in order to effectively protect the Union's financial interests, the digital transition, which facilitates knowledge sharing and data processing, should be accelerated. They stressed the need for results-oriented governance and strong cooperation between the authorities responsible for administrative and judicial investigations, both at Union and Member State level.

The resolution highlighted the urgent need to consolidate and modernise the EU's anti-fraud architecture (AFA). It is essential to adapt the AFA to more seamlessly integrate the role of the European Public Prosecutor's Office (EPPO), thereby improving cross-border investigations. Members reiterated their call for adequate resources for all EU actors involved in the fight against fraud. Adapting anti-fraud measures to new technologies is equally important as criminals increasingly exploit advanced IT tools and AI to misuse EU funds.

VAT fraud

Members expressed their concern about the detrimental impact on Member States' national budgets resulting from the considerable financial losses of Value Added Tax (VAT) fraud reported by the European Public Prosecutor's Office. They also drew attention to the worrying number of investigations opened into the Recovery and Resilience Programmes (233) and the associated estimated financial loss (EUR 1.86 billion). They therefore called for appropriate action at national and European level.

Fight against corruption

Parliament affirmed that communication and transparency are essential in combating fraud and corruption. It highlighted the central role played by the media and investigative journalism in combating fraud, corruption, conflicts of interest and other misuse of public funds. It encouraged the Commission and the Member States to ensure maximum transparency in the use of funds, including information on final recipients, and to support civil society actors through training programmes, funding and any other measures necessary to ensure their independence from external influence.

Members noted that organised crime has a considerable impact on the Union's resources and that the scale of fraud affecting the Union's financial interests, particularly with regard to budget revenue, is increasing. Criminal organisations are increasingly resorting to high-level corruption to infiltrate public administrations and obtain economic benefits. Parliament therefore reiterated its call for the revision of Council Framework Decision 2008/841/JHA on the fight against organised crime. Furthermore, it called for an evaluation and periodic revision of the anti-corruption strategies implemented in the Member States.

Conflicts of interest

Over the period 2019-2023, 419 cases of conflicts of interest were reported through the IMS (compared to 375 over the period 2018-2022), representing a total amount of approximately EUR 112 million. Members called on the Commission to adopt the necessary initiatives to ensure consistent reporting of conflicts of interest and called for the provisions on conflicts of interest to be applied in a manner that ensures legal certainty.

Revenue

Members noted that in 2023, the total number of irregularities, fraudulent or not, related to traditional own resources (TOR) (5 118, compared to 4 661 in 2022) was 10% higher than the five-year average 2019-2023, but that the amount concerned decreased by 12% to EUR 478 million, compared to EUR 783 million in 2022.

Members regretted that the recovery rate for fraudulent cases remained at 25%. They called on Member States to step up their efforts to improve the efficiency of their national administrations' recovery activities following the detection of VAT irregularities and fraud.

The Commission is called on to introduce a harmonised system for the measurement of the VAT gap that includes territorial and sectoral dimensions, thereby enabling the development of anti-fraud strategies that are more firmly grounded in evidence and more targeted.

Expenditure

Members expressed concern about the high level of fraud and irregularities detected in both 2023 and 2022 under the Common Agricultural Policy. According to OLAF, the highest financial amounts in fraud cases concerned environmental protection, research, technological development and innovation.

Civil society organisations play a key role in a vibrant democracy. The EU provides financial support to encourage their participation in democratic dialogue. However, Members stressed that transparency in stakeholder meetings is fundamental and should apply equally to all entities collaborating with the EU institutions. Transparency in lobbying is also highlighted. The Commission is called upon to proactively monitor beneficiaries' compliance with the EU's fundamental values and principles.

NextGenerationEU (NGEU) and Recovery and Resilience Facility (RRF)

Parliament welcomed the Commission's efforts, through the revision of the 27 Recovery and Resilience Plans (RRPs), to adjust to the energy market disruptions following Russia's large-scale invasion of Ukraine. However, it pointed out that there are delays in the implementation of the Recovery and Resilience Facility (RRF) and called on the Commission to remain vigilant to ensure that Member States adequately protect the Union's financial interests.

Members called for the establishment of clear and measurable criteria for green investments under the EU budget and the RRF. They expressed concern about the possible increase in cases of fraud, corruption, double financing, and conflicts of interest in the coming years and urged the Commission and Member States to act swiftly to ensure the proper management and fair distribution of RRF funds.

Lastly, Members called on the Commission to ensure strict and swift implementation of all elements of the rule of law conditionality mechanism when Member States breach rule of law principles and when this undermines or threatens to undermine the Union's financial interests. They also stressed the need for coherence across various instruments when assessing the rule of law situation in Member States.