According to the equilibrium principle the total budgeted EU revenue must equal the total budgeted EU expenditure. When determining Member States' own resources contributions the starting point is the total amount of authorised expenditure.
A small part of this amount is covered by 'other revenue' (taxes levied on the salaries of EU staff, interests on late payments and fines, contributions from non-EU countries to certain programmes, etc).
Whereas the EU budget must always be in balance, at the end of the year there can sometimes be a positive difference (surplus) in comparison to the budget estimates.
The remainder is mostly financed by Member States' own resources contributions, which account for around 97 % of all revenue.
In 2015, the EU had own resources of EUR 137 334.7 million and other revenue of EUR 7 258.2 million. The surplus carried over from 2014 was EUR 1 434.6 million.
The bulk of the EU funding comes from ‘own resources’, which are funds that belong to the EU but are collected on its behalf by Member States. The own resources can be divided into the following categories:
The total amount of own resources cannot exceed 1.23 % of EU GNI.
The key for determining the own resources is the ‘Own Resources Decision’. The current one (1) was agreed on 26 May 2014 and, once ratified by all Member States, will enter into force with retroactive effect from 1 January 2014.
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 (see the section on Justice and home affairs adjustment for Denmark, Ireland and the United Kingdom).
Traditional own resources (TOR) are levied on economic operators and collected by Member States on behalf of the EU. These payments accrue directly to the EU budget, after a 25% deduction that Member States retain as collection costs. 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 2015, the EU’s revenue from customs duties was EUR 18 607 million (12.7 % of its total revenue). A production charge paid by sugar producers brought revenue of EUR 124 million. Total revenue from traditional own resources (customs duties and sugar levies) was EUR 18 730 million (12.8 % of the EU’s total revenue).
The VAT bases of all Member States are first harmonised in accordance with EU rules. They are then capped at 50% of the GNI base (in order to remedy the regressive aspects of the VAT-based resource). Finally, a uniform rate of 0.3 is levied on each Member State’s harmonised VAT base.
In 2015, five Member States saw their VAT contribution reduced thanks to this 50 % cap (Croatia, Cyprus, Luxembourg, Malta and Slovenia).
The EU’s total revenue from the VAT own resource (including balances from previous years of EUR -181.9 million) was EUR 18 087 million (12.4 % of total revenue) in 2015.
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 amount of the GNI own resource needed therefore depends on the difference between total expenditure and the sum of all 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.
In 2015, the rate of call of GNI was 0.6618480 (2) and the total amount of the GNI resource levied (including balances from previous years of EUR 6 958 million, part of which were deferred payments for the 2014 VAT and GNI balances exercise by some Member States) was EUR 100 967 million (representing 69.14 % of total revenue).
The current UK correction mechanism was introduced in 1985 to reduce the net contribution of the UK to the funding of the EU budget. 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 amount 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 difference.
The cost of the UK 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. However, Germany, the Netherlands, Austria and Sweden only pay one quarter of the amounts calculated on the basis of their respective GNI. The rest is redistributed across the remaining Member States.
The UK correction in 2015 was EUR 6 083.6 million.
Denmark, the United Kingdom and Ireland are fully exempt from financing specific parts of freedom, security and justice policies, with the exception of the related administrative costs.
The Commission calculates this adjustment during the year following the financial year concerned, at the same time as it determines the GNI balances.
Revenue other than own resources includes: tax and other deductions from EU staff remunerations, contributions from non-EU countries to certain programmes (e.g. in research), interests on late payments and fines, and other diverse items.
As the balance from the previous year’s budget is usually positive in comparison to the budget estimates, there is sometimes a surplus at the end of the year. This positive difference is returned to the Member States in the form of reduced contributions the following year.
In 2015, other revenue totalled EUR 7 258.2 million, and the surplus carried over from the year 2014 was EUR 1 434.6 million.
According to the Financial Regulation, the Commission may accept or renounce any donation made to the EU, including foundations, subsidies, gifts and bequests.
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 donation made is subject to the authorisation of the Parliament and the Council.
Donations occur very rarely. In 2015, the Commission was not required to take any decisions on donations.
Fines imposed on companies for infringing EU competition rules are also a source of revenue.
In 2015, the European Commission imposed 38 individual fines on companies breaching competition law. These related to 5 separate cases and had a combined value of EUR 364 million. Of the 38 fines, 12, worth EUR 127 million, 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 2015 and earlier, at 31 December 2015, approximately EUR 1.8 billion was covered by guarantees (representing a coverage of 96.07% of total amount of fines) and provisional cash payments had been made in respect of approximately EUR 4.6 billion. Fines for EUR 790 million were reimbursed to companies at the beginning of 2016 because the General Court annulled a Commission's decision in the air freight case in December 2015.
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. The legal proceedings may take up to 8 years. Depending on the final judgment, any fines provisionally paid, including earned interest, are either transferred to the EU’s income account and booked in the budget as other revenue, or are reimbursed to the companies.
Revenue earned from fines in 2015 resulted from a combination of fines imposed during 2015 that were not contested and fines imposed in earlier years where legal proceeding finished during 2015. In total it was worth a total of EUR 1.4 billion which represented around 1% of the EU budget in 2015.
|Country||GNI||VAT own resource||GNI own resource||UK correction||Reduction in
to the NL and SE
own resources (TOR),
|(1)||(2) (*)||(3) (**)||(4) (**)||(5)=(1)+(2)+(3)+(4)||%||% GNI||(6)||(7)=(5)+(6)||%||% GNI|
|BE||415 782.3||584.7||2 826.4||280.8||0.0||3 691.9||3.1%||0.89%||1 778.8||5 470.7||4.0%||1.32%|
|CZ||151 342.2||206.1||1 007.2||101.9||0.0||1 315.2||1.1%||0.87%||227.2||1 542.4||1.1%||1.02%|
|DK||273 002.2||294.5||1 715.4||180.6||0.0||2 190.6||1.8%||0.80%||330.6||2 521.2||1.8%||0.92%|
|DE||3 091 500.0||3 673.2||20 249.5||360.7||0.0||24 283.4||20.5%||0.79%||3 842.0||28 125.5||20.5%||0.91%|
|IE||182 267.0||222.1||1 216.6||119.8||0.0||1 558.4||1.3%||0.86%||280.9||1 839.3||1.3%||1.01%|
|EL||176 522.7||171.1||916.9||117.7||0.0||1 205.6||1.0%||0.68%||137.2||1 342.8||1.0%||0.76%|
|ES||1 080 330.0||1 255.0||6 768.1||749.3||0.0||8 772.5||7.4%||0.81%||1 317.0||10 089.4||7.3%||0.93%|
|FR||2 226 210.9||2 849.1||14 669.2||1 494.2||0.0||19 012.5||16.0%||0.85%||1 593.7||20 606.2||15.0%||0.93%|
|IT||1 634 366.3||1 486.9||11 619.4||1 125.2||0.0||14 231.6||12.0%||0.87%||1 688.7||15 920.3||11.6%||0.97%|
|HU||105 740.9||134.2||738.2||73.5||0.0||945.8||0.8%||0.89%||127.8||1 073.6||0.8%||1.02%|
|NL||678 284.0||770.7||4 902.1||86.4||0.0||5 759.2||4.9%||0.85%||2 187.9||7 947.1||5.8%||1.17%|
|AT||335 224.3||445.3||2 047.6||36.3||0.0||2 529.2||2.1%||0.75%||197.1||2 726.4||2.0%||0.81%|
|PL||411 402.5||542.5||2 898.5||277.0||0.0||3 718.0||3.1%||0.90%||518.4||4 236.4||3.1%||1.03%|
|PT||175 546.1||253.9||1 153.4||121.4||0.0||1 528.7||1.3%||0.87%||117.7||1 646.4||1.2%||0.94%|
|RO||157 510.3||153.0||1 058.1||108.3||0.0||1 319.4||1.1%||0.84%||127.0||1 446.4||1.1%||0.92%|
|FI||209 410.0||265.6||1 328.9||134.5||0.0||1 729.1||1.5%||0.83%||125.1||1 854.1||1.4%||0.89%|
|SE||454 557.8||565.4||2 898.1||49.8||0.0||3 513.3||3.0%||0.77%||506.0||4 019.3||2.9%||0.88%|
|UK||2 521 046.8||3 737.5||20 555.6||-6 083.6||0.0||18 209.4||15.4%||0.72%||3 199.9||21 409.3||15.6%||0.85%|
|EU-28||14 621 241.5||18 087.0||100 960.4||-443.0||0.0||118 604.3||100%||0.81%||18 730.4||137 334.7||100%||0.94%|
|Surplus from previous year||1 434.6|
|Surplus external aid guarantee fund||0.0|
|Other revenue||7 258.2|
|Total revenue||146 027.4|
1 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).
2 Amending budget 8/2015, http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2016:018:FULL&from=EN, Table 3, p.L18/7.