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The EU's own resources

 

Own resources are the EU's revenue. Annual expenditure must be completely covered by annual revenue.

The different types of own resources and the method for calculating them are set out in a Council Decision on own resources. It also limits the maximum annual amounts of own resources that the EU may raise during a year to 1.20 % of the EU gross national income (GNI).

The own resources system

On 26 May 2014, the Council adopted a legislative package, including a new own resources decision, introducing some changes to the own resources system for the period 2014-20. The new own resources rules apply, following the entry into force of this decision on 1 October 2016, retroactively as of 1 January 2014.

Three types of own resources:

  • Traditional own resources: consist mainly of customs duties on imports from outside the EU and sugar levies. EU Member States keep 20 % of the amounts as collection costs.
  • Own resources based on value added tax (VAT): a uniform rate of 0.3 % is levied on the harmonised VAT base of each Member States.
  • Own resources based on GNI: each Member State transfers a standard percentage of its GNI to the EU. Although designed simply to cover the balance of total expenditure not covered by the other own resources, this system has become the largest source of revenue of the EU budget. 

Correction mechanisms

Correction mechanisms are designed to correct excessive contribution by certain Member States:

  • the UK is reimbursed by 66 % of the difference between its contribution and what it receives back from the budget. The cost of the UK rebate is divided among EU Member States in proportion to the share they contribute to the EU's GNI. However, Germany, the Netherlands, Austria and Sweden, who considered their relative contributions to the budget to be too high, pay only 25 % of their normal financing share of the UK correction.
  • For the period 2014-2020 only, Denmark, the Netherlands and Sweden benefit from gross reductions in their annual GNI contribution of EUR 130 million, EUR 695 million and EUR 185 million respectively. Austria benefits from a gross reduction in its annual GNI contribution of EUR 30 million in 2014, EUR 20 million in 2015 and EUR 10 million in 2016;
  • For the period 2014-2020 only, reduced VAT call rates for Germany, the Netherlands and Sweden are fixed at 0.15 %.

A high-level group on Own Resources was established in 2014 to examine how the system of financing the EU budget can be made more transparent, fair, simple and democratically accountable. Its final report and recommendations were published on 17 January 2017. The Chairman of the Group, former Commissioner and Prime Minister of Italy Mario Monti, handed over the report to the presidents of the European Parliament, the Council and the Commission. On the basis of the report and the recommendations, the Commission will assess if a reform of the own resources system is appropriate.