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Revenue

The EU’s budget is financed by own resources, other revenue and the surplus carried over from the previous year. When the European Parliament and the Council approve the annual budget, total revenue must equal total expenditure. The total amount needed to finance the budget follows automatically from the level of total expenditure. However, since outturns of revenue and expenditure usually differ from the budgeted estimates, there is a balance of the exercise resulting from the implementation. Normally, there has been a surplus, which reduces Member States’ own resources payments in the subsequent year. In 2014, the EU had own resources of EUR 132 961.2 million and other revenue of EUR 9 973.4 million. The surplus carried over from 2013 was EUR 1 005.4 million.

 

Own Resources

The main rules on the system of own resources are set by a Council decision adopted by unanimity in the Council and ratified by all Member States. The Council Decision currently in application, Council Decision 2007/436/EU, Euratom 1 (ORD 2007), entered into force on 1 March 2009 with retroactive effect from 1 January 2007 (own resources payments for 2009 were thus adjusted to take account of this Decision being retroactively applied to 2007 and 2008 2). A new Council Decision, Council Decision 2014/335/EU, Euratom 3 (ORD 2014) is currently subject to ratification by Member States. Once ratified by all Member States, it will enter into force with retroactive effect from 1 January 2014. Own resources can be defined as revenue accruing automatically to the EU in order to finance its budget, without any subsequent decisions needing to be taken by national authorities. The overall amount of own resources needed to finance the budget is determined by total expenditure less other revenue. The total amount of own resources cannot exceed 1.23 % of EU GNI. Own resources can be divided into the following categories:

  • traditional own resources (TOR), i.e. custom duties and sugar levies;
  • the VAT own resource; and
  • the GNI own resource (the ‘additional fourth resource’), which serves as the balancing resource.

The own resources system also includes a specific mechanism for correcting budgetary imbalances in favour of the United Kingdom (the UK correction). In addition, some Member States may choose not to participate in certain justice and home affairs policies. Their own resources payments are adjusted accordingly. (This has been done since 2003 for Denmark and since 2006 for Ireland and the United Kingdom.)

Traditional own resources (customs duties and sugar levies)

Traditional own resources (TOR) are levied on economic operators and collected by Member States on behalf of the EU. TOR payments accrue directly to the EU budget, after deduction of the 25 % retained by Member States to cover collection costs. Following changes made to EU law to reflect the outcome of the Uruguay Round agreements on multilateral trade, there is no longer any material difference between agricultural duties and customs duties under the current rules of own resources, ORD 2007. Customs duties are levied on imports of agricultural and non-agricultural products from non-EU countries, at rates based on the Common Customs Tariff.

In 2014, the EU’s revenue from customs duties was EUR 16 499 million (11.46 % of its total revenue). A production charge paid by sugar producers brought revenue of EUR 131 million. At the same time, however, pursuant to Council Regulation 1360/2013 of 2 December 2013 4, the EU was owing Member States reimbursements of sugar levies of EUR 200 million, thus more than cancelling out the revenue. This Regulation corrects the sugar levies paid for the years 2001-2006. The correction was, for the most part, entered in the own resources accounts for 2014 (in accordance with Article 2 of the Regulation). As a result, total revenue from traditional own resources (customs duties and sugar levies, less the reimbursements) was EUR 16 430 million (11.41 % of the EU’s total revenue).

VAT own resource

The VAT own resource is levied on each Member State’s VAT base. The VAT bases are first harmonised in accordance with EU rules before calculating the VAT own resource to be paid. The same percentage is then levied on the harmonised base of each Member State. The harmonised VAT base is, however, capped at 50 % of a Member State’s GNI.

In 2014, five Member States benefited from the 50 % cap (Cyprus, Luxembourg, Malta, Slovenia and Croatia). Under ORD 2007, the uniform rate of call of the VAT own resource is fixed at 0.30 % from 1 January 2007, with the exception of certain countries which benefited from a reduced rate for the period 2007-2013: Austria (where the rate was fixed at 0.225 %), Germany (0.15 %), the Netherlands and Sweden (both at 0.10 %). The EU’s total revenue from the VAT own resource (including balances from previous years of EUR 79 million) was EUR 17 667 million (12.27 % of total revenue) in 2014.

Gross national income own resource

The GNI own resource was introduced in 1988 to balance budget revenue and expenditure, i.e. to finance the part of the budget not covered by other revenue. The same percentage is levied on each Member States’ GNI, established in accordance with EU rules. The rate is fixed as part of the budgetary procedure. The amount of the GNI own resource needed depends on the difference between total expenditure and the sum of all other revenue.

In 2014, under ORD 2007, the rate of call of GNI was 0.7012 % 5 and the total amount of the GNI resource levied (including balances from previous years of EUR 4 213 million) was EUR 99 074 million (representing 68.83 % of total revenue).

The UK correction

The current UK correction mechanism was introduced in 1985 to correct the imbalance between the United Kingdom’s share in payments to the Community budget and its share in the Community expenditure. This mechanism has been modified on several occasions to take account of changes made to the system of EU budget financing, but the essential principles remain the same.

The imbalance is calculated as the difference between the UK share in EU expenditure allocated to Member States, and its share in the total VAT base. The difference in percentage points is multiplied by the total amount of EU expenditure allocated to Member States. The UK is reimbursed 66 % of this budgetary imbalance. The cost of the correction is borne by the other 27 Member States. The distribution of the financing is first calculated on the basis of each country’s share in total EU GNI. Germany, the Netherlands, Austria and Sweden only, however, pay one quarter of the amounts calculated on the basis of their respective GNI. The rest is redistributed across the remaining Member States. ORD 2007 introduced several changes to the calculation of the UK correction:

  • fixing the rate of call for the VAT own resource at 0.30 % and temporarily granting reduced rates to Germany, the Netherlands, Austria and Sweden (see above) increased the amount of the UK correction;
  • the adjustment related to pre-accession expenditure was excluded from the calculation of the UK correction for 2013 onwards (therefore affecting the budget for the first time in 2014);
  • an adjustment related to expenditure in the new Member States was introduced. From the UK correction for 2008 onwards (therefore affecting budgeting from 2009), the total allocated expenditure used in calculating the UK correction does not include expenditure allocated to Member States that joined the EU after 30 April 2004, with the exception of agricultural direct payments, market-related expenditure and the part of rural development expenditure originating from the guarantee section of the European Agricultural Guidance and Guarantee Fund. This reduction was phased in progressively according to the following schedule: 20 % for the 2008 UK correction; 70 % for the 2009 UK correction; and 100 % thereafter.

The UK correction paid in 2014, under ORD 2007, was EUR 6 066 million.

Deferred payments

In 2014 the annual adjustments of the VAT and GNI balances, which have an impact on the calculations of national contributions to EU budget, resulted in exceptionally high additional amounts to be paid by some Member States to EU budget. Following the request of the Council the Commission proposed a change to the legislation which would allow deferring payments in such an exceptional situation. The amended Council Regulation has been approved and applied retroactively. In line with the new legislation eight Member States opted for deferring payments in 2014. These were: Bulgaria, France, Italy, Cyprus, Malta, Netherlands, Slovenia and United Kingdom. More specifically, Netherlands has paid its full balance by 31 December, while Italy has transferred a share of its balance by the same deadline. The remaining amounts and the contributions of the other 6 Member States had been scheduled for 2015.

Justice and home affairs adjustment for Denmark, Ireland and the United Kingdom

Article 3 of the Protocol on the position of Denmark and Article 5 of the Protocol on the position of the United Kingdom and Ireland, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, grant full exemption to these countries from financing certain specific parts of freedom, security and justice policies, with the exception of the related administrative costs. Article 10a of Council Regulation No 1150/2000 6 sets out the method for adjusting the contribution to be made by Member States that that have been exempted from the financing of a specific EU action or policy in accordance with these Treaties and their protocols referred to above.

The adjustment is calculated by multiplying the total expenditure in question, excluding any amounts contributed by participating non-EU countries, by the percentage that the GNI of the Member State entitled to the adjustment represents of the GNI of all Member States. The adjustment is financed by the participating Member States in proportion to their relative GNI. If the GNI figures are subsequently modified, the adjustments calculated are not revised. The Commission calculates the adjustment during the year following the financial year concerned, at the same time as it determines the GNI balances in accordance with paragraphs 6 and 7 of the Article 10 of Council Regulation No 1150/2000.

Other revenue and surplus from previous year

Revenue other than own resources includes: tax and other deductions from EU staff remunerations; interest earned on bank accounts; contributions from non-member countries to certain EU programmes (e.g. in research); repayments of unused EU financial assistance; interest on late payments and the balance from the previous year’s budget. This balance is mainly derived from the difference between the outturn of own resources payments and the outturn of expenditure in the previous year.

In 2014, other revenue totalled EUR 9 973 million, and the surplus carried over from the year 2013 was EUR 1 005 million.

Donations

Pursuant to Article 22 of the Financial Regulation, the Commission may accept any donation made to the EU, including foundations, subsidies, gifts and bequests.

If no objection has been made within that period, the Commis¬sion takes a final decision as to whether or not to accept the donation.

The Commission is required to estimate and explain the financial charges, including follow-up costs, that the acceptance of donations made to the EU would entail (Article 11 of the Rules of Application of the Financial Regulation).

The Commission may decide to accept a donation or to renounce it.

The acceptance of donations with a value of EUR 50 000 or more that involve a financial charge, including follow-up costs, exceeding 10 % of the value of the dona¬tion made is subject to the authorisation of the Parliament and the Council. They are both required to act on the matter within two months of the date of receipt of the request from the Commission.

In the absence of a negative opinion from the Parliament and the Council, the Commission makes a final decision to accept the donation. If the Parliament or the Council express a negative opinion, the Commission must renounce the donation. The Directorate-General for the Budget is responsible for measures needing to be taken to execute the Commission decision. In the case of a donation of real estate and its subse¬quent sale, the publicity rules laid down in the Financial Regulation must be respected.

The procedure described above also applies when an EU institution other than the Commission receives a donation.

Donations occur very rarely. In 2014, the Commission was not required to take any decisions on donations.

Fines

Fines imposed on companies for infringing EU competition rules are also a source of revenue for the EU. Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) prohibit various anticompetitive practices. Article 103 gives the European Council powers to put in place an enforcement system, which may include the imposition of fines. Council Regulation 1/2003 7 based on Article 103 TFEU, gives the Commission powers to enforce these rules and to fine companies for infringements.

In 2014, the European Commission imposed 70 individual fines on companies breaching competition law. These related to 14 separate cases and had a combined value of EUR 2.2 billion. Of the 70 fines, 32, worth EUR 1.3 billion, have not been contested by the companies and are thus final. In the other cases, the companies have submitted appeals to the General Court. When a company served with a fine decides to appeal against the Commission’s decision before the Court, the fine must be covered either by a provisional payment or by a bank guarantee. Of all pending fines from 2014 and earlier, at 31 December 2014, approximately EUR 1.9 billion was covered by guarantees and provisional cash payments had been made in respect of approximately EUR 5.5 billion.

Article 83 of the Financial Regulation states that revenues received by way of fines must not be recorded as budgetary revenue as long as the decisions imposing them may be annulled by the Court of Justice. Provisional payments must therefore be kept off budget. Payments received before 2010 are held with commercial banks selected by calls for tender. Those received since 2010 are held in a special fund managed by the Commission composed of a portfolio of high quality sovereign bonds.

The legal proceedings at the General Court or, if its decision is appealed against, the Court of Justice may take up to eight years. Depending on the final judgment, any fines provisionally paid, including earned interest, are either transferred to the Commission's income account and booked in the budget as other revenue, or are reimbursed to the companies. Revenue earned from fines in 2014 resulted from a combination of fines imposed during 2014 that were not contested and fines imposed in earlier years that became definitive during 2014. In total, fines worth a total of EUR 4.5 billion became definitive in 2014. This represented around 3.2 % of the EU budget in 2014.

National contribution by Member State and traditional own resources collected on behalf of the EU in 2014 (million EUR)

Pop out table

GNI
(million EUR)
VAT
own resource
GNI
own resource
UK
correction
Reduction in
GNI-OR granted to the NL and SE
TOTAL
national contribution
Traditional own
resources (TOR).
net (75%)
TOTAL
own resources
(1) (2) (*) (3) (**) (4) (**) (5)=(1)+(2)+(3)+(4) % % GNI (6) (7)=(5)+(6) % % GNI
402 665.3
BE 508.6 2 864.4 287.1 0.0 3 660.2 3.1% 0.91% 1 572.5 5 232.7 3.9% 1.30%
40 972.9
BG 58.7 315.3 29.9 0.0 403.9 0.3% 0.99% 56.7 460.5 0.3% 1.12%
144 472.9
CZ 183.8 1 023.5 101.4 0.0 1 308.8 1.1% 0.91% 197.9 1 506.7 1.1% 1.04%
264 872.5
DK 279.5 1 737.7 196.3 0.0 2 213.4 1.9% 0.84% 294.2 2 507.6 1.9% 0.95%
2 972 188.0
DE 3 698.7 21 737.7 379.6 0.0 25 815.9 22.2% 0.87% 3 327.0 29 143.0 21.9% 0.98%
19 048.7
EE 25.7 138.3 14.2 0.0 178.2 0.2% 0.94% 22.2 200.4 0.2% 1.05%
159 732.3
IE 203.2 1 108.0 113.9 0.0 1 425.1 1.2% 0.89% 225.6 1 650.6 1.2% 1.03%
178 380.6
EL 286.0 1 410.9 129.7 0.0 1 826.6 1.6% 1.02% 123.2 1 949.8 1.5% 1.09%
1 052 245.0
ES 1 382.0 7 850.3 745.8 0.0 9 978.1 8.6% 0.95% 1 132.9 11 111.0 8.4% 1.06%
2 179 155.1
FR 2 956.4 15 025.0 1 592.2 0.0 19 573.6 16.8% 0.90% 1 394.1 20 967.7 15.8% 0.96%
41 772.8
HR 63.0 294.6 29.5 0.0 387.1 0.3% 0.93% 42.5 429.6 0.3% 1.03%
1 613 794.7
IT 1 760.1 11 443.0 1 165.1 0.0 14 368.2 12.3% 0.89% 1 520.4 15 888.6 11.9% 0.98%
16 582.8
CY 23.0 107.7 12.1 0.0 142.8 0.1% 0.86% 17.8 160.6 0.1% 0.97%
23 867.9
LV 32.5 192.7 18.9 0.0 244.1 0.2% 1.02% 25.9 270.0 0.2% 1.13%
35 202.8
LT 40.3 253.8 26.3 0.0 320.4 0.3% 0.91% 64.3 384.7 0.3% 1.09%
29 477.4
LU 38.5 171.4 22.2 0.0 232.1 0.2% 0.79% 14.0 246.2 0.2% 0.84%
100 695.3
HU 118.1 700.8 71.3 0.0 890.3 0.8% 0.88% 105.5 995.8 0.7% 0.99%
7 628.7
MT 10.6 49.4 5.7 0.0 65.7 0.1% 0.86% 10.5 76.1 0.1% 1.00%
662 465.0
NL 818.6 5 493.3 79.1 0.0 6 391.0 5.5% 0.96% 1 981.7 8 372.7 6.3% 1.26%
328 896.7
AT 453.0 2 197.5 40.5 0.0 2 690.9 2.3% 0.82% 178.6 2 869.5 2.2% 0.87%
396 057.8
PL 445.1 2 787.0 294.4 0.0 3 526.5 3.0% 0.89% 428.2 3 954.6 3.0% 1.00%
171 107.8
PT 242.3 1 271.1 123.4 0.0 1 636.9 1.4% 0.96% 111.0 1 747.9 1.3% 1.02%
146 462.1
RO 161.3 1 090.4 101.4 0.0 1 353.1 1.2% 0.92% 105.8 1 458.9 1.1% 1.00%
36 676.2
SI 52.8 247.2 26.7 0.0 326.8 0.3% 0.89% 58.2 385.0 0.3% 1.05%
73 854.5
SK 69.0 502.6 53.5 0.0 625.1 0.5% 0.85% 95.1 720.2 0.5% 0.98%
203 977.0
FI 270.5 1 365.3 141.4 0.0 1 777.2 1.5% 0.87% 126.8 1 904.1 1.4% 0.93%
445 167.8
SE 553.1 3 219.6 55.5 0.0 3 828.2 3.3% 0.86% 466.1 4 294.3 3.2% 0.96%
2 174 279.7
UK 2 932.9 14 475.0 -6 066.3 0.0 11 341.6 9.7% 0.52% 2 730.7 14 072.3 10.6% 0.65%
13 921 700.4
EU-28 17 667.4 99 073.7 -209.3 0.0 116 531.7 100% 0.84% 16 429.5 132 961.2 100.0% 0.96%

(*) For simplicity of the presentation, the GNI-based own resource includes the JHA-adjustment.
(**) Totals for UK correction payments and GNI Reduction granted to NL & SE are not equal to zero on account of exchange rate differences.

Surplus from previous year
1 005.4  
Surplus external aid guarantee fund
0.0
Other revenue
9 973.4
Total revenue
143 940.0

EU Revenue 2014 (after the UK correction)


EU revenue 2000-2014 (million EUR)


National contribution per Member State and TOR collected on behalf of the EU in 2014 (million EUR)

Pop out chart



1 Council Decision 2007/436/EC, Euratom of 7 June 2007 on the system of the European Communities’ own resources (OJ L 163, 23.6.2007, p. 17).
2 Amending Budget No 3 for the financial year 2009 (2009/457/EC, Euratom) (OJ L 157, 19.6.2009, p. 21).
3 Council Decision 2014/335/EU, Euratom of 26 May 2014 on the system of own resources of the European Union (OJ L 168, 7.6.2014, p. 105).
4 Council Regulation (EU) No 1360/2013 of 2 December 2013 fixing the production levies in the sugar sector for the 2001/2002, 2002/2003, 2003/2004, 2004/2005 and 2005/2006 marketing years, the coefficient required for calculating the additional levy for the 2001/2002 and 2004/2005 marketing years and the amount to be paid by sugar manufacturers to beet sellers in respect of the difference between the maximum levy and the levy to be charged for the 2002/2003, 2003/2004 and 2005/2006 marketing years (OJ L 343, 19.12.2013, p. 2).
5 Amending budget 7/2014, table 3, p. 508.
6 Council Regulation (EC, Euratom) No 2028/2004 of 16 November 2004 amending Regulation (EC, Euratom) No 1150/2000 implementing Decision 94/728/EC, Euratom on the system of the Communities' own resources (OJ L 352 of 27/11/2004).
7 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ L 1, 4.1.2003, p. 1).