This document is an excerpt from the EUR-Lex website
All the EU's revenue and expenditure is entered in its budget on the basis of annual forecasts. These forecasts must be in line with the multiannual financial framework (MFF), the EU's medium-term spending plan, as laid down in the Lisbon Treaty (Art. 312 of the Treaty on the Functioning of the European Union). The latest MFF covers the 2014-2020 period.
The budget is funded from the EU's 'own resources' (i.e. a proportion of each EU country's gross national income, and a share of their receipts from VAT, customs duties and other levies).
Each year, the European Commission submits a preliminary draft budget to the Council and the European Parliament, which share budgetary authority. The Council has to adopt its position on the draft budget by 1 October of the year preceding that for which the budget is proposed. If the Parliament approves the Council's position, the budget is adopted.
If, however, the European Parliament adopts amendments to the Council's position, the Conciliation Committee is convened in order to find an agreement. The President of Parliament has the role of declaring final adoption of the budget.