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The EU budget is an important tool that puts EU policies into practice. It finances actions that Member States cannot fund on their own or which they can fund more economically by pooling their resources.
The EU budget is adopted through a democratic procedure: it is prepared by the European Commission (the EU’s executive body) and is then discussed and agreed by the Council of the EU (representing EU Member States, including the Netherlands) and by the European Parliament (where the democratically elected Dutch representatives sit).
Once adopted, the budget is then managed either jointly by the EU Member States and the Commission, or directly by the Commission.
In practice, 80 % of the EU budget is managed by national or regional governments. Through grants, loans and other forms of financing, the EU budget provides financial support to hundreds of thousands of beneficiaries such as students, scientists, NGOs, SMEs and towns and regions.
The EU budget is largely financed by ‘own resources’ which are based on three kinds of sources:
This system has been unanimously decided on by the EU Member States for a 7-year period, and has been ratified by all the national parliaments. Its aim is to provide a reliable and sufficient level of revenue for the EU budget, while at the same time taking into account the Member States’ ability to pay. Each Member State thus contributes in line with its wealth.
The other sources of revenue for the EU budget include taxes on EU staff salaries, fines on companies for breaching competition laws and bank interest, etc. There is no direct EU tax. EU countries remain in control of their taxes.
Some 94 % of EU money is spent on the various EU policies, and most of it goes back to Member States. In many cases the EU budget supports large and complex projects. One of them is the European Partnership Action against Cancer, where collective European effort helps to prevent the disease and find a cure for it.
Approximately 6 % of the EU budget is spent on the functioning of the EU institutions. This is used to pay for the salaries and pensions of EU employees, translation and interpretation, security, buildings and IT systems etc. This expenditure is necessary in order to allow the EU to work.
There are around 55 000 EU civil servants and other employees serving 508 million Europeans and countless people in need around the world. By comparison, the Dutch Foreign Office is staffed with 3 000 people, whereas its European counterpart, the European External Action Service, counts 1 800 employees.
Furthermore, in order to adapt to the harsh economic situation in Europe, the EU institutions are also cutting costs: the Commission’s wide-ranging staff reform is expected to save EUR 8 billion by 2020, reducing its staff by 5 %, while at the same time increasing its working hours.
The charts below provide an overview of how much the EU invested in each of its Member States in 2013, and show the contribution of European funding to each country’s wealth. In the Netherlands, EU funding represents 0.4 % of the country’s GNI (Gross National Income).
The Commission has put into place robust internal control measures in order to ensure that funds are spent efficiently and effectively.
As 80 % of the EU budget is managed by national or regional governments, Member States also play an important role in ensuring that rules are observed, and in detecting and addressing irregularities and fraud.
Additionally, the European Court of Auditors reviews the EU accounts every year. For several years the Court has confirmed that the EU accounts are properly kept, but also points out errors in procedures (e.g. accounting errors by national programme participants or claims for non-eligible costs). Errors do not mean that EU money is lost, wasted or affected by fraud. A large part of the money spent in error is recovered.
In addition, the European Parliament approves how the Commission has spent the budget following the end of every financial year.
If you want to see which entities have received EU funding, the financial transparency system will show you who has received payments from the EU budget.
Although the EU budget is adopted every year, it must be established within the limits of the multiannual financial framework (MFF). The MFF is an expenditure plan setting the maximum annual amounts which the EU can spend in different fields of activities over a 7-year period. It therefore shapes the EU’s political priorities for 7 years.
For the 2014-20 funding period, the EU wants to meet the targets of the Europe 2020 growth strategy, focusing on what Europe needs in order to overcome the economic and financial crisis and concentrating on areas where it can make a genuine difference. Some of the Commission’s proposals for radical reform were watered down by the Member States, but very important changes remain. Key elements of the 2014-20 MFF include:
In 2013, the Netherlands’ public expenditure amounted to around EUR 300 billion) – that is 50 % of the country’s GNI. On the other hand, the EU budget for the 28 Member States was around EUR 144 billion, roughly 1 % of the Union’s GNI.
The EU and national budgets serve different, yet complementary purposes. The EU budget targets areas where EU money can generate added value. For example, a project of such magnitude as the European satellite navigation system Galileo could not be financed by a single Member State alone.
Unlike the Dutch budget – or any other national budget – the EU budget does not fund defence expenditure or social protection, but is mostly investment spending. For example, as reducing pollution in the North Sea is an issue for the whole region, the EU is financing a six-country project that promotes the use of environmentally friendly technologies and fuels in shipping.
In 2013, the three main spending areas of the Dutch central government were the national debt, health, education, culture and science, and social security and labour.
In addition, the country pays more into the EU budget than it receives from it. However, this net balance does not accurately reflect the many benefits of EU membership. Many of them, such as peace, political stability, security and freedom to live, work, study and travel anywhere in the Union cannot be measured.
In addition, European investments are intended to benefit the EU as a whole, and European funding in one country can benefit other EU members. For example, Dutch company Philips supplied Spanish hospitals with highly-specialised health care devices, for which it received EU funding of EUR 8.4 million. Thanks to the single market, which makes it easier for EU countries to do business with each other, 76 % of Dutch exports went to European countries in 2013. This represents some EUR 382 billion, – more than 100 times the Dutch net contribution to the EU budget.
Operating budgetary balance: the difference between what a country receives from and pays into the EU budget. There are many possible methods of calculating budgetary balances. In its financial report,the Commission uses a method based on the same principles as the calculation of the correction of budgetary imbalances granted to the United Kingdom (the UK correction). It is, however, important to point out that constructing estimates of budgetary balances is merely an accounting exercise of the purely financial costs and benefits that each Member State derives from the Union and it gives no indication of many of the other benefits gained from EU policies such as those relating to the internal market and economic integration, not to mention political stability and security.
Most of the money the Netherlands receives from the EU goes to agriculture, rural development and nature conservation (42 % in 2013). EU agricultural policy supports farmers and promotes safe and good food, but it also looks after the environment and stimulates rural economies. It also helps improve life in the countryside: the village of Tollebeek, for example, built a health and sports centre thanks to EU funds.
EU countries have made agriculture a European rather than a national policy. It is the only policy almost entirely funded by the EU. That is why it represents a large proportion of the EU budget. It is also less costly for EU countries as a whole, than implementing 28 different national policies.
The common agricultural policy has undergone a major reform, whereby its share of the EU budget has fallen from 70 % in 1985 to around 40 % today, and is set to continue falling to 33 % in 2020. A new reform which came into force in 2014 further strengthens European agricultural competitiveness, making it more environmentally friendly and reducing the gap for countries receiving less money than the EU average.
The second largest share (29 % in 2013) of the money the Netherlands receives goes to growth and jobs. This includes research, an area crucial for its competitiveness and economic development. Some 8 067 participants – be they universities, research institutes or SMEs – have already received funding through the EU’s 2007-13 research programme. Thanks to EU investment, and in collaboration with European researchers, Dutch scientists helped develop a new technique to implant heart valves in children born with a heart defect, without the need for open-heart surgery.
Aimed at reducing economic, social and territorial disparities between Europe’s regions, this policy invests in projects supporting job creation, competitiveness, economic growth, improved quality of life and sustainable development.
'18 Septemberplein', the city's main square, has undergone a dramatic transformation in recent years. Designed by Italian architect Massimiliano Fuksas, it includes a 3 500 m2 floor mosaic made of durable concrete and now has a futuristic look, especially at night. The square attracts visitors who enjoy the artwork, water features and colourful light shows. The project has stepped up the city centre's accessibility and attractiveness. (EU funding: EUR 3.2 million)
The EU will finance safety features in Maastricht’s urban motorway tunnel. The new route will remove major bottlenecks in the area. Safety measures include the construction of a firehouse near the south entrance of the tunnel, two escape tubes, and foot and bicycle paths and bridges. (EU funding: EUR 5 million)
The EU will invest EUR 33 billion in 2014-20 in its new Connecting Europe Facility to improve Europe's transport, energy and digital networks, thus creating jobs and boosting Europe's competitiveness. It will make Europe's economy greener by promoting cleaner forms of transport, high-speed broadband connections, and the use of renewable energy.
When the remains of a Roman bridge were found in Tungelroy, a local volunteer organisation decided to make the rural populations aware of this discovery. The objective was to construct a replica bridge and restore local hiking paths. The bridge design was based on historical information, and created with support from an archaeological consultant. The project won an important national prize. (EU funding: EUR 7 800)
The village of Tollebeek lacked suitable facilities to meet the healthcare, sporting and social needs of its inhabitants. The construction of a new school gym presented an opportunity to kill all birds with one stone – by ensuring the final building was more multi-functional. The resulting centre is home to facilities for school physical education lessons and sport clubs, while doubling up as a social/meeting centre with cafeteria and several smaller units for medical and paramedical practitioners. (EU funding: EUR 500 000)
An area of wasteland in the city of Groningen is being transformed into a centre for creative business. It will become a cultural and creative hotspot, an area for innovative entrepreneurs and educational institutes to develop new products and services. The temporary (2010-15) 'micro city' is also a practical laboratory for trying out sustainable approaches to temporary architectural structures and urban development. Events and public facilities, as well as a theatre and congress centre, are estimated to receive over 250 000 visitors every year. (EU funding: EUR 192 640)
Dutch company Nautus has provided job vouchers for local companies to take on apprentices aged under 27 and unemployed. It had become increasingly difficult for young people to find a job and get the experience requested by employers. It was up to municipalities to offer firms the vouchers, which covered 50 % of the minimum wage of the new employee. This project has helped lower youth unemployment in the region. (EU funding: EUR 860 000)
Some 10 061 Dutch students studied or worked abroad in 2012-13 thanks to the Erasmus exchange programme. They received a grant from the European Commission towards the extra costs of living abroad. Just one of many examples is Lotte Dieleman from Amsterdam, who spent 5 months in Granada (Spain) studying European studies: 'The months I spent in Granada were a truly liberating experience that really helped me reflect on myself and the things I wanted in life.'
Erasmus+ is not only for students: the programme allows new entrepreneurs to spend some time in an enterprise in another EU country in order to acquire the skills needeed for managing a small or medium-sized enterprise. The stay is partly financed by the European Commission.
The LifeValve project is giving hope to the parents of children born with a congenital heart defect. The team is seeking to develop a heart valve made from the patient's own cells that can be implanted without open heart surgery. This valve will then grow with the children and thus minimise the need for future surgical intervention. The first 'living valve' could be implanted into a patient as soon as 2014. (EU funding: EUR 9.9 million)
Dutch scientists are part of the ‘Human Brain’ project, which is developing the most detailed model of the brain yet using supercomputing technologies. The results will ultimately help the development of new treatments for brain diseases, as well as revolutionary new computing technologies. (EU funding: EUR 54 million)
Dutch researchers have joined a European research team looking to demonstrate that 70 % of today’s polymers can be derived from biomass, reducing our dependence on petroleum-based plastic production. The project Biocore will conceive a methodology – and analyse its industrial feasibility – for converting by-products such as straw, forestry residue etc. into a wide range of products, including biofuels, chemical products, polymers and materials. (EU funding: EUR 13.9 million)
In 2007-13, the EU invested EUR 250 million in HIV/AIDS, malaria and tuberculosis research. Research focuses on developing new therapies and diagnostic as well as preventive tools, such as vaccines and HIV microbicides. The programme is sponsoring research across the full spectrum, from basic molecular research to preclinical tests and drug development.
The Clean North Sea Shipping (CNSS) project, which brings together 18 partners from 6 countries, is reducing exhaust gas emissions from ships in the North Sea region. The project is seeking to increase the use of environmentally friendly technologies and fuels in shipping, without diminishing competitiveness within the North Sea maritime transport sector. It creates awareness, shares knowledge and provides influential stakeholders with the information they need to take action. (EU funding: EUR 1.3 million)
The ‘Hydrogen Region Flanders-South Netherlands’ project was launched in 2009 to turn the region into a knowledge-intensive ‘hotspot’ for the sustainable production of hydrogen and related applications, to reduce greenhouse gas emissions and to increase energy efficiency. The project brings together partners from industry – both large firms and SMEs – research centres and universities. The construction of the biggest fuel cell test facility for waste hydrogen in the world at Solvay port in Antwerp is a significant achievement. (EU funding: EUR 3 million)