This document is an excerpt from the EUR-Lex website
The EU budget is an investment budget that pools resources and directs them towards projects in line with EU political priorities. It comprises all the EU’s revenue and expenditure. The EU decides on its long-term budget framework, called the multiannual financial framework (MFF), every 7 years. As laid down in the Lisbon Treaty (Article 312 of the Treaty on the Functioning of the European Union), the MFF sets the maximum annual amounts (ceilings) for the EU spending as a whole and for the main spending areas (headings). The current MFF runs from 2021 to 2027.
The EU budget is funded from several sources of revenue, known as the EU’s ‘own resources’ (customs duties, a proportion of each EU country’s gross national income, a share of EU countries’ value added tax receipts and, as of 1 January 2021, a new own resource based on the amount of non-recycled plastic packaging waste).
Every 7 years, the European Parliament and the Council negotiate the MFF and how the money will be allocated across spending areas on the basis of a proposal from the Commission. Every year, the European Parliament and the Council agree on the size of the annual budget and on the spending priorities for the next 12 months.
To finance the post-coronavirus recovery, the EU agreed on a recovery plan, NextGenerationEU, worth €750 billion, to come on top of the 2021-2027 long-term budget. To finance it, the EU will borrow funding on the markets.