Article 311 TFEU stipulates that the EU budget should be financed wholly with own EU resources. These resources can be defined as revenue streams directly assigned to the EU without the need for any additional decision from the Member States. In practice however, the major part of EU revenues consists of contributions by the Member States.
Presently the EU revenue consists of the following categories (the percentages and the image are taken from the Financial report 2012, p. 35) :
- the traditional own resources (TOR) – 11,8% of the EU resources;
- a resource based on Value Added Tax (VAT) also called the VAT own resource (but which, according to some is not a real “own resource” in the proper sense) – 10,7%;
- a resource derived from the Gross National Income of each Member State (GNI) – 70,3%;
- other revenue and surplus from previous year – 7,3%.

The basic rules on the system of own resources are laid down in a Council decision adopted by unanimity in the Council and ratified by all Member States. For the time being Council decision 2007/436/EC is still in force, but a proposal for a new Council Decision lays on the table which would, if adopted, have retroactive effect from 1 January 2014.
The own resources system is known to be unfair (the reason for which correction mechanisms were introduced), non-transparent and very complex. In their recent Draft report on negotiations on the MFF 2014-2020: lessons to be learned and the way forward the Co-rapporteurs Jean-Luc Dehaene and Ivailo Kalfin advocate “an in-depth reform of the financing of the EU budget that should return to a system of genuine, clear, simple and fair own resources”. They insist that this should entail the introduction of new own resources that would reduce the share of GNI-based contributions. It was at the insistence of the European parliament that, in the context of the negotiations on the multiannual financial framework, a high-level group was set up with the mission to thoroughly examine the reform of the system of own resources.
This navigator offers a selection of information sources which can be useful studying the issue of the own resources more in depth.
See also the following EPRS products:
- Own resources of the European Union – EPRS Briefing – 10/4/2014.
- A financial transaction tax in 11 Member States, Plenary At a glance – 28/06/2013
- Financing of the EU Budget – The own resources system – Library briefing – 21/2/2013.
- A financial transaction tax for 11 EU countries, Library briefing – 4/12/2012.
EU Legislation
Legislation in force
Article 311 of the Treaty on the Functioning of the European Union lays the foundation of the financing system of the EU budget:

“The Union shall provide itself with the means necessary to attain its objectives and carry through its policies.
Without prejudice to other revenue, the budget shall be financed wholly from own resources.
The Council, acting in accordance with a special legislative procedure, shall unanimously and after consulting the European Parliament adopt a decision laying down the provisions relating to the system of own resources of the Union. In this context it may establish new categories of own resources or abolish an existing category. That decision shall not enter into force until it is approved by the Member States in accordance with their respective constitutional requirements.
The Council, acting by means of regulations in accordance with a special legislative procedure, shall lay down implementing measures for the Union’s own resources system in so far as this is provided for in the decision adopted on the basis of the third paragraph. The Council shall act after obtaining the consent of the European Parliament.”
A good overview of the further legislation which is applicable to the own resources can be found on the website of the European Commission “Financial programming and budget”, section on the Financing System – Own resources.
Further legislation that may be of interest:
Legislation in preparation
The following legislative procedures are of importance:
- 2011/0183 (CNS) – System of own resources of the EU
- Link in OEIL (database of the European Parliament on the activities of the institutions)
- Link in EUR-Lex (database of the European Commission on the decision-making process between institutions)
- 2011/0184(APP) – System of own resources of the EU: implementing measures –
- 2011/0185(CNS) – Methods and procedure for making available the traditional and GNI-bases own resources and measures to meet cash requirements. Recast.
- 2011/0333(CNS) – Methods and procedure for making available the own resource based on the value added tax
- 2011/0334(CNS) – Methods and procedure for making available the own resource based on the financial transaction tax
EU Institutions
European Parliament
Selection of documents- Draft report on negotiations on the MFF 2014-2020: lessons to be learned and the way forward – 16/01/2014 – 2014/2005(INI). This report was adopted by the European Parliament in its plenary session from 14 to 17 April 2014 (see P7_TA-PROV(2014)0378 starting at page 395).
Extracts:
“8. Is convinced, moreover, that tangible progress can only be achieved following an in-depth reform of the financing of the EU budget that should return to a system of genuine, clear, simple and fair own resources; stresses that this should lead to the introduction of one or several new own resources that will considerably reduce the share of GNI-based contributions to the EU budget and, accordingly, the burden on national treasuries; reiterates its strong commitment to any process leading to the reform of the current unfair, non-transparent and complex system of own resources;”
“24. Strongly believes that the High Level Group on Own Resources represents a unique opportunity to overcome the deadlock that has arisen over the reform of the current ownresources system; expects that it will contribute significantly to understanding the shortcomings of the current system and the benefits that can derive from an in-depth, comprehensive reform and the introduction of new and genuine own resources which can significantly reduce the share of GNI contributions to the EU budget;” - Resolution on the multiannual financial framework and own resources – 13/06/2012 – 2012/2678(RSP)
Extract:
“3. Insists that the EU budget should show an appropriate balance between revenue from genuine own resources and expenditure as required by the Treaty; states that it is not prepared to give its consent to the next MFF regulation without political agreement on reform of the own-resources system, putting an end to existing rebates and other correction mechanisms and leading to more transparency, fairness and sustainability; welcomes the legislative proposals made by the Commission on 29 June 2011 on the reform of the own-resources system, including the proposals on a financial transaction tax (FTT) and a new EU VAT as own resources, which are aimed at reducing the share of Member States’ GNI-based contributions to the EU budget to 40 % by 2020” - Resolution on the future of the European Union’s own resources – 29/03/2007 – 2006/2205(INI)
- Questions mentioning the terms own resources in the title
- Questions mentioning the terms own resources in the text
- Reform of the European Union’s financing system / SURE Committee, Activities and Documents, Vol. 2, Key Topics, p. 119-136.
- Reform of the Own Resources system and Net Positions in the EU Budget 1998
- Press releases mentioning “own resources”
- Time for radical reform on EU revenues – Interview with EP Budget Committee Chair – Lamassoure – 21/10/2011
- A new own resources system by 2014 – 22/3/2007
European Council
European Council 7/8 February 2013 – Conclusions on the Multiannual Financial Framework.
See more in particular part II: Revenue.
Council of the EU
The statements forming part of the political agreement reached on the MFF (15997/13 ADD 1) as adopted by the Council at its meeting of 2/12/2013.
Extract: “To this end, a high-level Group will be convened, composed of members appointed by the three institutions. It will take into account all existing or forthcoming input which may be brought by the three European institutions and by National Parliaments.”
- Documents with “own resources” in the title
- Remark: See also the procedure files mentioned above under Legislation in preparation which contain links to the Council meetings and legal acts.
- Council agrees on own resources package (press release 22/01/2014,Presse 26)
- Multiannual Financial Framework – state of play on the basis of technical clarifications undertaken in the Friends of the Presidency Group and in the Working Party on Own Resources in Jan. and Feb. 2012 – 13/2/2012.
- Lawfulness of the new legal architecture proposed by the Commission for the own resources system for the EU, 8/02/2012, 6198/12
- Multiannual Financial Framework (2014-2020) – Questionnaire on the system of own resources of the European Union – 18/11/2011, 16104/11.
- Proceedings of the Working Party on Own Resources on the proposals for the system of own resources of the European Union – 8/11/2011, 16510/11
European Commission
For the legislative proposals see above “Legislation in preparation”.
Q&A: the EU’s high-level group on own resources / MEMO/14/130 of 25/02/2014
Staff working paper- Commission report on the operation of the own resources system, 27/10/2011, SEC(2011)876 final and annex.
- Information page on the EU’s own resources
- Where does the money come from?
This page contains useful links to the publication “Public finances” for each aspect of the own resources topic. - Financing system. Own Resources. This page contains comprehensive information about the own resources mechanism which is presently in place.
- Interactive page on EU expenditure and revenue : contains statistics on revenue by category and by Member State.
- Financing of the European Union Budget – Study for the European Commission, Directorate General for Budget / Iain Begg, Henrik Enderlein, Jacques Le Cacheux, Mojmir Mrak, 2008.
- Tax-based EU own resources: an assessment / European Commission. Direction Taxation of the Directorate-General for Taxation and Customs Union ; Philippe Cattoir, Taxation paper No 1, 2004.
- Q&A: the EU’s high-level group on own resources 25/02/2014, MEMO/14/130
- EU revenue: the future of own resources 20/10/2011, speech/11/696, Algirdas Semeta.
Court of Auditors
- Getting the Gross National Income (GNI) data right: a more structured and better-focused approach would improve the effectiveness of the Commission’s verification, special report No 11/2013. Report on the verifications carried out by the Commission on GNI data used for own resources.
- Own Resources: Opinion No 2/2012 of the Court of Auditors, OJ C 112 of 18/4/2012.
- The legitimacy of own taxes as a basis for funding the EU / Ladislav Balko in Journal Cour des comptes europénne, No 6 2011, p. 2-10
- Financing the European Union’s Budget / Sabine Hiernaux-Fritsch and Gaston Moonen in Journal of the European Court of Auditors, October 2010, No 9, p. 4-13.
Further reading: Think tanks, articles, working papers…
Academic articles, working documents etc.:- Who pays for the budget of the European Union? / Herman Matthijs in Scottish Journal of Arts, vol. 18, iss II, March 2014, p. 9-21.
- Funding the EU Budget – Need and options for reform. Paper submitted for the 10th Euroframe conference on Economic Policy Issues in the European Union “Toward a better governance in the EU?”, 24/5/2013 / Margit Schratzenstaller ; Autrian Institute of Economic Research (WIFO)
- The EU own resources system – reform needs and options / Margit Schratzenstaller ; Leibniz Information Centre for Economics, in Intereconomics, 2013, iss. 5, p. 303-313
Abstract:”The most prominent and debated issues in the negotiations on the next Multiannual Financial Framework for the EU for the period 2014–2020 were the overall budget volume, the structure of expenditures and the continuation of the rebates for (some) net contributor countries. However, the system of the EU’s own resources was hardly addressed in the negotiations, although it is one of the most important obstacles to reform. This article reviews the most important deficits of the current system of own resources and assesses the most substantial reform proposal which has been advocated for years by the European Commission, namely to fi nance part of the EU budget through EU taxes.” - Reforming the system of financing the EU Budget / Clémentine d’Oultremont and Arnout Mijs ; Egmont, Royal institute for international relations, 2013
- Eckpunkte eines zukuntsfähigen EU-Budgets / Margit Schratzenstaller, Februar 2013
- Vers un nouveau financement de l’Union / Nicolas-Jean Brehon ; Fondation Robert Schuman, 2012
- De financiering van de Europese begroting onder druk / Herman Matthijs, Ivan Van de Cloot ; Itinera Institute, 2012
- Europe for growth: for a radical change in financing the EU / Daniel Gros ; Paul De Grauwe ; Jutta Haug ; Alain Lamassoure ; Guy Verhofstadt ; Gaëtane Ricard-Nihoul ; Eulalia Rubio ; Centre for European Policy Studies CEPS, 2011, 86 p
- La rénovation des ressources de l’Union : entre sources de financements innovants et ressources propres / Matthieu Houser in Revue du Marché commun et de l’Union européenne, 2011, n. 549, p. 355-360 (revue disponible en format papier dans la collection de la bibliothèque).
- Reforming the EU Budget: reconciling needs with political-economic constraints / Zentrum für Europäische Wirtschaftsforschung ; Friedrich Heinemann, Philipp Mohl, Steffen Osterloh, in European Integraton, vol. 32, No. 1, 59-76, January 2010
- Rethinking how to pay for Europe / Iain Begg, Swedish Institute for European Policy Studies (SIEPS), 2010, 12 p.
- Options for an EU financing reform / Philippe Cattoir, Notre Europe, 2009, 69 p.
- The reform of the EU Budget: finding new Own Resources / Rui Henrique Alves and Oscar Afonso in Intereconomics, May/June 2009, p. 177-184.
- Einnahmen- und Steuerpolitik in Europa: Herausforderungen und Chancen / Konrad, Kai, 2009, 171 p.
- Reform options for the EU Own Resources System / Abstract and executive summary of a research projects commissioned by the German Federal Ministry of Finance ; Zentrum für Europäische Wirtschaftsforschung ; Friedrich Heinemann, Philipp Mohl, Steffen Osterloh, 2008.
- Can reforming own resources foster policy quality? / Núñez Ferrer, Jorge ; Swedish Institute for European Policy Studies (SIEPS), 2008, 48 p.
- EU budget reform options and the common pool problem / Steffen Osterloh, Friedrich Heinemann, Philipp Mohl ; Centre for European Economic Research (ZEW), 2008, 27 p.
- The case for a European tax benefits, practical aspects and options for endowing the EU with a veritable own resource / Eulalia Rubio, Groupement d’études et de recherches “Notre Europe”, 2008, 5 p
- The current own resource system of the EU Budget: still a working model for the European Union? / Florian Becker, Bachelor thesis, Universiteit Twente, Universität Münster, 2007
- Les ressources de l’UE: changement ou statu quo? / Centre d’analyse stratégique, 2007.
- How to pay for Europe? / Iain Begg ; the Federal Trust, European Essay No. 5, 2000, 32 p.
- Paying for Europe/ Iain Begg, Nigel Grimwade, 1998, 200 p.
Be the first to write a comment.