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Own resources

The EU’s own resources are the main sources of revenue for the EU budget. Its annual expenditure may not exceed its revenue (i.e. it operates a balanced budget).

There are 4 types of own resource.

  • Traditional. This mainly comprises customs duties on imports to the EU. As of 1 January 2021, countries retain 25% of the duties collected to cover their collection costs.
  • Based on value-added tax (VAT). A rate of 0.3% applies to each EU country’s harmonised VAT base, which is capped at 50% of its gross national income (GNI), and the proceeds are transferred to the EU.
  • Based on GNI. Each EU country transfers to the EU a uniform percentage of its GNI. The percentage is adjusted so that overall revenue matches the agreed level of payments. This is the EU’s largest source of revenue.
  • A new one. From 1 January 2021, a contribution from EU countries based on the quantity of non-recycled plastic packaging waste is a new EU own resource.

Over time, mechanisms have been introduced to correct what have been perceived as excessive contributions by certain countries. As from 2021, Denmark, Germany, the Netherlands, Austria and Sweden benefit from such corrections.

As part of the adoption of the multiannual financial framework for 2021-2027 and the recovery package, the Council adopted a new own-resources decision (Decision (EU, Euratom) 2020/2053) in December 2020. This will raise the maximum amount of resources that can be called from EU countries in any given year to finance EU expenditure — the own-resources ceiling — from 1.20% to 1.40% of the sum of the EU-27 GNI. This reflects the integration of the European Development Fund into the EU budget and addresses the withdrawal of the United Kingdom from the EU, a former net contributor to the budget.

Decision (EU, Euratom) 2020/2053 also authorises the Commission, on an exceptional basis, to borrow temporarily up to €750 billion in 2018 prices on the capital markets to address the consequences of the COVID-19 crisis. In parallel, the own-resources ceiling will be exceptionally and temporarily increased by a further 0.6 percentage points to cover all liabilities of the EU resulting from this borrowing until all the borrowed funds have been repaid.

To enter into force, the decision needs to be approved by all 27 EU countries in accordance with their constitutional requirements.