In the EU budget, ceilings exist both for:
- Revenue – the own resources ceiling establishes the maximum amount of own resources the Union can request from Member States to finance its expenditures for the period 2021-2027;
- Expenditure – the long-term budget ceilings establish the maximum amounts that the Union can either commit or spend during the same period.
The revenue ceilings are defined in the Own Resources Decision, the legal text that sets the conditions to fund the EU budget. The own resources ceilings are expressed as a percentage of the EU's estimated Gross National Income (GNI) – the sum of all the Member States' GNI – because the nominal amount varies annually according to the evolution of the EU GNI.
There are two types of revenue ceilings:
- Own resources ceiling to cover the annual appropriations for commitments – 1.46% of EU GNI for the period 2021-2027 (up from 1.29% in 2014-2020);
- Own resources ceiling to cover annual appropriations for payments – 1.40% of EU GNI for the period 2021-2027 (up from 1.23% in 2014-2020).
The difference ("margin") between the own resources ceiling for payments and the long-term budget ceiling for payments functions as a guarantee for the Union to cover all of its financial obligations and contingent liabilities under any circumstance, even in case of negative economic development. This margin is called the headroom of the EU budget.
Under the latest Own Resources Decision, the own resources ceilings are being increased by 0.6 percentage points on an exceptional and temporary basis. This will guarantee an enlarged headroom, and will allow the EU to borrow on the markets to finance NextGenerationEU, the recovery instrument for Europe.
The increase of the own resources ceiling for payment appropriation to 2.00% of GNI is limited in time and will only be used in the context of the recovery from the coronavirus pandemic. The enlargement of the headroom does not entail an imminent additional contribution to the EU budget by Member States, as it only functions as a joint guarantee for the issuance of bonds by the Commission on behalf of the EU. The own resources ceiling for payment will be decreased back to 1.40% of GNI when all funds have been repaid and all liabilities have ceased to exist.