Guidance Concerning a Harmonised Structure of Fees

/ EUROPEAN COMMISSION
DIRECTORATE-GENERAL
ENVIRONMENT
Directorate D - Water, Marine Environment & Chemicals
ENV.D.3 - Chemicals, Biocides and Nanomaterials

CA-Dec12-Doc.5.1.b -Final

Guidance concerning a Harmonised Structure of Fees

Document background and purpose

In accordance with second subparagraph of Article 80(2) of Regulation (EU) No 528/2012 of the European Parliament and of the Council of 22 May 2012 concerning the making available on the market and use of biocidal products[1] (hereinafter referred to as 'BPR'), the Commission shall issue guidance concerning a harmonised structure of fees.

This document has been drafted by the Commission services responsible for biocidal products with the purpose of advising Member States on possible fee structures and relative amounts, taking into account the solutions identified for fees payable to the European Chemicals Agency ('ECHA'), as well as existing, national practices.

Principles following from the legislation

The following principles already follow from BPR itself:

Article 80(2) of BPR

"Member States shall directly levy from applicants fees for services that they provide with respect to the procedures under this Regulation, including the services undertaken by Member States' competent authorities when acting as evaluating competent authority.

…

Member States may levy annual fees with respect to biocidal products made available on their markets.

Member States may collect charges for other services they provide.

Member States shall set and publish the amount of fees payable to their competent authorities."

Article 80(3) of BPR

"(a)fees shall be set at such a level as to ensure that the revenue derived from the fees is, in principle, sufficient to cover the cost of the services delivered and shall not exceed what is necessary to cover those costs;

(b)partial reimbursement of the fee when the applicant fails to submit the information requested within the specified time limit;

(c)the specific needs of SMEs shall be taken into account, as appropriate, including the possibility of splitting of payments into several instalments and phases;

(d)the structure and amount of fees shall take into account whether information has been submitted jointly or separately;

(e)in duly justified circumstances, and where it is accepted by the Agency or the competent authority, the whole fee or a part of it may be waived; and

(f)the deadlines for the payment of fees shall be fixed taking due account of the deadlines of the procedures provided for in the Regulation."

General considerations
Purpose of fees

The principle that fees should be set to such a level to ensure a full recovery of the costs of the services provided should be understood as fixing the fees at such a level to cover the costs of the work carried out by the Competent Authorities.

This being clarified, it should be discussed whether the purpose of the fees to be collected by the Competent Authorities should be to cover:

- the costs of the different activities carried out by the Competent Authorities in the context of BPR, including thus not only the costs of assessing the application but also overhead expenses such as the development of guidance documents, the running of a helpdesk, enforcement and control activities, which would mean that a proportion of the fees should help finance these activities for which no specific fee might otherwise be collected; or

- the costs of the evaluation of the type of application under consideration, which would mean that the fee would reflect only the average costs of assessing such type of applications; or

- the costs of the evaluation of the specific application under consideration, which would mean that the fee would directly reflect the time spent on the application.

When establishing the fees to be paid to ECHA, the Commission opted for the first of these three approaches, thus reducing the need for supporting certain activities through the general budget of the European Union, and responding to the objective that fees should be set to such a level to ensure a full recovery of the costs of the services provided - in a broad sense.

To ensure a smooth functioning of the internal market and a level-playing field between Member States, it is important that Member States have a coherent approach in the way the costs of the 'services' provided are accounted. Like for ECHA, the Commission would therefore recommend that the notion of 'services' be interpreted in a broad sense, and that fees are not limited to cover the mere costs of a given application, but also include the different overhead expenses, which are necessary for the operation of BPR, and for which no specific fee is otherwise provided.

Overhead expenses can include for instance:

HR, IT, finances, legal and administrative support staff,
Development of guidance documents for applicants,
Development and maintenance of an IT system,
Running of a helpdesk,
Providing the public with information on biocidal products,
Enforcement and control activities,
Participation in ECHA activities.
Annual fees

In line with the objective of full-cost recovery through the collection of fees, and with a view to reduce the amount of the fees collected for specific activities, the Commission recommends that the Members States should consider the option of levying annual fees to finance the overhead expenses necessary for the operation of BPR.

The interest of an annual fee is that it offers a source of revenue to finance the overhead expenses, thus reducing the relative part of these in the fees collected for applications. In a long-established system, annual fees could thus cover the overhead expenses, whereas the application fees could cover the costs of the evaluation of the type of application under consideration.

As proposed for products to be authorised at the Union level, the annual fee could be set at the same level for all products.

Alternatively, the annual fee for each calendar year could be a percentage of the value of the sale of each biocidal product in the year before that to which the annual fee pertains. The higher the value of sale, the higher the fee would be.

The second option would be more favourable to SMEs as one would expect their annual value of sale to be less than that of larger companies. This option would require a system for reporting the value of the sale of each biocidal product, which Member States and the Commission could set up on the basis of Article 68 of the BPR.

The annual fee could also be proportional to the degree of risk of the biocidal product, as for instance reflected in the number of R-phrases on its labelling. The higher the degree of risk, the higher the fee would be.

In these last two options, a maximum and minimum annual fee could also be set.

Member States should avoid levying an annual fee for products authorised by the Union. As ECHA will already levy such an annual fee for these products, it would be a disproportionate burden for the companies placing these products on the market, which would then contribute twice to the overhead expenses necessary for the operation of BPR.

Type and structure of fees

Members States have different administrative and budgetary practices. In addition, Competent Authorities for biocidal products are not all organised in the same way; nor do they always directly collect the fees for the work they are responsible for.

These differences have however no bearing on the type and the structure of the fees to be collected; as these are rather a direct consequence of BPR and of its implementing rules (Regulation on changes, Regulation on authorisation of the same product). The basic type and structure of the fees should therefore be the same in all Member States.

Amount of fees

Amount of fees will vary from one Member State to another as the costs of assessing an application and the overhead expenses differ across the EU because of differences in earnings and cost of living of the different Member States, as well as differences in currencies for Member State Competent Authorities located outside the Euro-zone.

Relative amount of fees – that is the ratio between different fees - could however be harmonised among Member States, as all Member States would be expected to spend on average the same relative amount of time on different type of applications.

It is important that the amounts of the fees are established in full transparency and that the activities to be carried out by Competent Authorities are run in the most efficient manner.

In particular, when synergies are created or likely to be created – for instance through the assessment of several products with very similar conditions of use (e.g. anti-coagulants rodenticides) – the expected gain in efficiency should be reflected in the amount of the fees to be collected.

Finally, the amount of the fees should be such as to encourage applicants to submit joint applications, critically for the purpose of active substance approval renewal and, to a lesser extent, for the purpose of active substance approval. The structure and amount of fees should therefore provide an incentive for applicants to join forces, but should at the same time recognise the fact that the evaluation of an application submitted jointly by several companies would be more resource intensive than the evaluation of an application submitted by an individual company.

Monitoring

Bearing in mind the objective of a transparent and efficient system, Competent Authorities should establish an accurate system for recording the time spent on every application.

Such a system is a prerequisite to operate options A and B, as described in section f. below. As for option C, although it would not require the same degree of recording, it is nevertheless important that such a system is established to help reviewing and adjusting fees in the future.

Payment modalities of fees

The options presented in this section are meant to be best-practice solutions, which can be used as a source of inspiration by Member States.

Time of payment

Option A

Member State could decide to collect a fee at the start of the procedure to which additional fee(s) could be added before the end of the procedure to reflect the amount of time spent on the application and, if necessary, including a proportion of the overhead expenses.

In addition, Member State could decide to establish a maximum fee, above which the costs of assessing the application would no longer be collected to the applicant but would be passed on overhead expenses.

Option B

Alternatively, Member State could collect the full fee at the start of the procedure and refund at the end of it the amount paid in excess when the costs are less than anticipated.

Option C

Member State could decide to collect, for a given type of application, the same fee for all applicants, this fee representing the average costs of assessing this type of application, including, if necessary, a proportion of the overhead expenses.

The advantage of this option is that applicants are fully aware of the fee to be paid at the time of application and can make an informed decision.

Option D

Member State could decide to have a more tailored approach to collect a fee that would correspond as closely as possible to the work to be carried on the application, while, if necessary, still including a proportion of the overhead expenses.

In such an approach, Member State could call for the collection of different fees, for different purposes and at different times during the procedure.

First, Member States could ask for payment of an application fee to support the administrative costs of validating the application, evaluating the amount of work to be carried out and issuing an invoice for the payment of the evaluation fee.

Second, Member States could ask for payment of an evaluation fee, which would reflect the complexity of the application and the amount of work required, on the basis of elements such as:

Physical and chemical properties of the product;
Number of active substance present in the product;
Categories of users;
Use scenarios;
Need for a comparative assessment;
Need for MRLs.

For each of these elements, the fee would reflect the work to be done and could range from zero if it is not relevant, to a full fee when an assessment is necessary, with the possibility to reduce the fee when justified.

Third, Member States could ask for payment of an evaluation fee, in the case additional data have to be provided in the course of the evaluation of the application.

The advantage of this option is that applicants are fully aware of the fee to be paid at the time of application and can make an informed decision.

Top-up fees

The fee collected could also be increased if a higher cost for handling the application would be anticipated, e. g. when the product contains more than one active substance or when the use of the product may lead to residues in food or feed.

Reimbursement

The principle of the partial reimbursement of the fee in case the application is withdrawn is inherently addressed through options A and B and would thus require no extra provision in those cases.

Option C would require specific provisions to address the principle of the partial reimbursement of the fee in case the application is withdrawn.

Payments by instalment

The idea of providing the possibility to pay by instalments is to decrease the financial burden on applicants by spreading over a sufficiently long period of time the amounts to be paid, thus also ensuring that the revenues, generated through the sale of the product, once authorised, can be used for the payment.

This option could be of particular interest for SMEs, as confirmed by the experience of certain Member States having introduced such a provision. However, other Member States have faced some difficulties in implementing it, because of the extra administrative work involved and problems of solvency from certain companies. It could in particular involve a risk that the whole fee will not be paid if parts of the fee should be paid after an authorisation is granted. If however, to limit such risks, instalments can only be spread over the period of assessment of the application, this would provide little, if any at all, benefit to applicants.

SMEs

Micro, small and medium-sized enterprises (SMEs), as defined in the Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises, are predominant actors of the biocidal products market[2].

SMEs are facing difficulties in understanding a complex regulatory framework, in generating or getting access to the data required, in getting access to the expertise necessary to prepare a dossier to support an application for product authorisation and, last but not least, in supporting the costs of compliance, among which fees.

Among the different options at hand to support SMEs, the option of granting fee reductions or waivers should be considered.

However, with 90 per cent - if not more – of companies operating on the biocidal products market of certain Member States being SMEs, it might be an option difficult to implement, for a limited benefit, given the number of hurdles that companies will first have to be overcome before reaching the stage where they could benefit from such reductions or waivers.

In a system based on the payment of fees and on the principle of full costs recovery, it implies that the loss of income due to the reduction or waiver granted to SMEs has to be composed by increasing the fees, so that the extra revenue generated can compensate that loss.

When establishing the fees to be paid to ECHA, the Commission opted for this approach, assuming however that the proportion of SMEs, which would apply at the Union level, would be 60 per cent and thus lower than at national level.

Fee structure and relative amounts

The aim of this section is to propose an indicative approach for a harmonised structure for the main tasks and services provided by the Member States under the BPR. Member States may however collect charges for other services that they provide or may decide not to levy fees for particular services (for example provisional authorisation, help desk). The list provided below should therefore not be considered as exhaustive.

For biocidal products, the fees correspond to flat fees, as described in scenario C under section 3.f.

Active substance / Relative amount to the fee to be paid for the approval of an active substance for a single product type
When the application pertains to the approval of a chemical substance. / When the application pertains to the approval of a microorganism.
Approval (for a single product type) / 100% / 50%
Approval (per additional product type) / 50%
Renewal of approval (for a single product type) / Full evaluation / 100%
Limited evaluation / 50%
Renewal of approval (per additional product type) / Full evaluation / 50%
Limited evaluation / 25%
Biocidal products – Flat fees / Relative amount
Product authorisation* / 100%[3] / Single product
20% / Single product, when product and use are identical to the reference product assessed for the active substance approval
200% / Biocidal product family
Product authorisation according to the simplified procedure° / 10% / Single product
3% / Single product, when product and use are identical to the reference product assessed for the Annex I inclusion
15% / Biocidal product family
Changes to product authorisation*° / 40% / Major change
6% / Minor change
1% / Administrative change
Renewal of product authorisation*° / 75% / Full evaluation
25% / Limited evaluation
Renewal of product authorisation according to the simplified procedure / 5% / Single product
1% / Single product, when product and use are identical to the reference product assessed for the Annex I inclusion
Authorisation of the same product° / 3%
Addition of a biocidal product to a biocidal product family / 3% / Notification in accordance with Article 17 (6).
Making available on the market of a biocidal product authorised according to the simplified procedure° / 2% / Notification in accordance with Article 27 (1).
Biocidal products – Top-up fees
Provisional authorisation° / 10% / Single product
2% / Single product, when product and use are identical to the reference product assessed for the Annex I inclusion
Additional active substance*° / 8% / Per additional active substance contained in a product.
Substance of concern*° / To be determined on the basis of the additional amount of work required.
Additional product type*° / 8% / Per additional product type for a given product.
More than one user category*° / 8% / Per additional category of user for a given product.
Comparative assessment*° / 50% / Per active substance for which a comparative assessment is required in accordance with Article 23.
MRLs* / 10% / When an application for Union or national authorisation would require a specific assessment with a view to make a recommendation regarding the establishment of MRLs (to EFSA for instance).
Miscellaneous fees
Inclusion of an active substance in Annex I
Parallel trade permit / 4% / Applications made in accordance with Article 53.
Research and development / 1% / Notifications made in accordance with Article 56(2).
Confidentiality claim / Per claim made for other information than the one covered under Article 67(2).
Exceptional circumstances authorisation / In accordance with Article 53(1).
Annual fees (optional) / To be determined

* This represents the fee to be collected when the Competent Authority acts as the evaluating Competent Authority in the context of a procedure at the Union level, as a Reference Member State in the context of a procedure for mutual recognition or on its own in the context of a national authorisation. When the Competent Authority acts as Concerned Member State in the context of a procedure for mutual recognition, the fee to be collected should represent 1/8th of that fee.