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Budget management modes


Once the budget is adopted, it is implemented either:

  • directly by the Commission (at headquarters or in EU delegations to non-EU countries) and other EU bodies such as executive agencies (‘direct management’)
  • indirectly by other international organisations or non-EU countries (‘indirect management’)
  • by both the Commission and Member States (‘shared management’).

Up to 80% of the EU budget expenditure is managed by Member States under ‘shared management’ in areas such as agriculture, cohesion policy, growth and employment. However, ultimate responsibility for implementing the budget lies with the European Commission.

The EU budget lifecycle

Once a new year has started, the Commission may propose to modify the budget to respond to changing conditions. Usually this is done either through transfers (money from the reserves added to the budget or transfers between the lines of a chapter or between budget headings) or through amending budgets (amendments to the adopted budget of a given year, for example in order to mobilise assistance from the European Solidarity Fund).

Procedures similar to that used for adopting the budget apply to the adoption of subsequent amendments to the budget. A budget of a given year can thus only be considered as final once the year in question has ended and all changes to it have been adopted by the European Parliament and the Council. These changes therefore reflect the effect, at the end of the financial year, of active budget management.

The following factors can cause items in the annual budget to vary over the course of the financial year:

  • Carryovers are amounts from the previous year’s budget that have not been used and that are following specific rules carried forward to the current financial year. The Commission’s decision on carryovers was taken on 11 February 2015.
  • Amending budgets take into account political, economic or administrative needs which could not have been foreseen at the point at which the budget was prepared and adopted. They ensure more precise and more economical financing of the EU budget by the Member States. Eight amending budgets were adopted in 2015 (see table), none of which entailed additional contributions from Member States.

Summary table of amending budgets in 2015 (million EUR)

Date of adoption Main subject Official Journal Impact on commitment appropriations Impact on payment appropriations
28-Apr Reprogramming of unused commitments in 2014 OJ L 190 17/07/2015 16 479  
07-Jul European Fund for Strategic Investment OJ L 261 07/10/2015    
07-Jul Surplus 2014  OJ L 261 07/10/2015    
07-Jul EU Solidarity Fund related to two floods in Romania, one in Bulgaria and one in Italy OJ L 261 07/10/2015 66 66
07-Jul Migration and refugee flows, redeployment of payments from the Galileo programme OJ L 261 07/10/2015 76  
14-Oct Revision of TOR, VAT and GNI contributions OJ L 320 04/12/2015    
14-Oct Budgetary measures under the European Agenda on Migration OJ L 320 04/12/2015 344 19
25-Nov Own resources,  a reduction in the budget of the European Data Protection Supervisor. OJ L 18 27/01/2016    
TOTAL without reserves 16 966 85
Reserves - 14 - 19


Transfers between budget items are by definition neutral in their effect on the overall budget. They may increase the amount of appropriations available in operational budget lines when reserves are mobilised.

Decisions relating to transfers are generally made by the European Parliament and the Council, but institutions are allowed to carry out internal transfers under specified conditions.

Changes in payment appropriations by heading in 2015 (million EUR)

Pop out table

Heading  Initial budget Carry-over from 2014 Amending budgets Transfers Total
1a Competitiveness for growth and jobs 1a 15 798 112 -70 -119 15 721
1b Economic, social and territorial Cohesion 1b 51 125 16 0 -158 50 983
2 Sustainable growth: Natural resources 2 55 911 902 -1 303 57 115
3 Security and citizenship 3 1 860 8 67 36 1 971
4 Global Europe 4 7 422 42 56 174 7 694
5 Administration 5 8 659 845 0 0 9 504
  Total   140 775 1 924 52 236 142 987
  Special instruments 9 352 36 33 -167 254
  Grand Total   141 127 1 960 85 69 143 241

From an accounting point of view, the budget ‘outturn' is, in general terms, the difference between total revenue and total expenditure, a positive difference thus indicating a surplus. Payments cannot exceed receipts. Out of EUR 143 241 million available, EUR 141 586 million — almost 99 % — has been used.

Active budget management 2000-15 (million EUR)

Financial regulation

The Financial regulation  (1) lays down the rules for the establishment and implementation of the EU budget. It was last amended in 2015 (2) to be aligned with the so-called ‘procurement Directives’ and to introduce the Early Detection and Exclusion System (EDES) – a system designed to protect the Union's financial interests against unreliable economic operators.

The new public procurement rules encourage the wider use of green procurement (environmentally friendly goods, services and works) and thus support the shift towards a more resource efficient and low-carbon economy. Moreover, the simplified rules alleviate the administrative burden both on EU institutions and on business, and accelerate the access to EU funds. For example, applicants no longer need to fill in the same details each time they apply for EU funds and applications can now be made online.

Over the years, stricter requirements have also been introduced as regards the accountability of those involved in managing EU finances.

Accounting framework

Since its introduction in January 2005, ‘accruals-based’ accounting has become a part of the Commission’s continued effort to modernise the management of EU finances. Accruals-based accounts recognise revenue when it is earned, rather than when it is collected. Expenses are recognised when they are incurred rather than when they are paid. This contrasts with ‘cash-based’ accounting that recognises transactions and other events only when cash is received or paid out.

The accounting rules in place are based on the internationally accepted standards for the public sector, the International Public Sector Accounting Standards (IPSAS).

Annual accounts

The EU’s annual accounts are drawn up in accordance with the Financial regulation and with the EU accounting rules. The accounting system of the European institutions comprises two sets of accounts: the general accounts (financial statements) and the budgetary accounts. The two sets of accounts together constitute the annual accounts.

The annual financial statements aim to provide a fair representation of the financial position and performance of the EU in a given year. Explanatory notes giving further information on the figures are also included. The same accounting rules are used by all consolidated European bodies.

The budgetary accounts provide information on the implementation of the EU budget in a given year and include the budget result for the year.

The accounts are kept in euro and the accounting year is the calendar year.

The Commission’s Accounting Officer produces  the consolidated EU annual accounts which are available online, as well as the monthly and quarterly reporting on the implementation of the budget (3). The annual accounts are audited by the European Court of Auditors before being adopted by the Commission. They are then sent to the European Parliament and to the Council.

Treasury management

The own resources, the main source of EU revenue, are credited twice a month to the accounts held with Member States’ treasuries or central banks. From there, the Commission transfers the necessary funds to its accounts with commercial banks, from which payments are made to EU beneficiaries. However, the Commission only transfers the funds needed to carry out its daily payments (the ‘just in time’ principle).

Member States make their contributions to the budget in their national currencies, while most of the Commission’s payments are denominated in euro. The Commission therefore needs to make foreign exchange transactions, in order to convert contributions from Member States that have not yet adopted the euro and to be able to make payments in non-EU currencies.

In 2015, 0.4 % of more than 2 million payments made were executed through treasuries and central banks, representing 66 % of the total amount paid (EUR 139.5 billion). The remaining 99.6 % of payments were made through commercial banks (representing 34 % of the total amount paid). The Commission’s funds are mainly kept in accounts held with Member States treasuries and with central banks.

1 Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ L 298, 26.10.2012, p. 1).
2 Regulation (EU, Euratom) 2015/1929 of the European Parliament and of the Council of 28 October 2015 amending Regulation (EU, Euratom) No 966/2012 on the financial rules applicable to the general budget of the Union (OJ L 286, 30.10.2015, p. 1)