Members' Research Service By / November 13, 2018

Own resources of the European Union: Reforming the EU’s financing system [EU Legislation in Progress]

The EU budget is financed by the system of own resources and cannot run a deficit. The current system provides sufficient revenue to cover EU expenditure, but has often been criticised as opaque and unfair.

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Written by Alessandro D’Alfonso (4th edition, updated on 9.6.2021).

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© nmann77 / Fotolia

On 1 June 2021, the decision that reforms the financing system of the EU budget entered into force, following its ratification by all Member States. It introduces three significant innovations in the own resources system, applying retroactively from 1 January 2021. The maximum level of resources that can be called from Member States permanently rises from 1.20 % to 1.40 % of EU gross national income (GNI). A temporary increase in the own resources ceiling, worth a further 0.60 % of EU GNI, is devoted exclusively to the financing of Next Generation (NGEU), enabling the Commission to borrow resources on an unprecedented scale on the capital markets, with a view to financing the recovery. A national contribution linked to non-recycled plastic packaging waste is introduced, the first new EU own resource to be created since 1988. In addition, Parliament pushed for a broader reform of the financing system underlining that the introduction of a basket of new own resources should cover at least the repayment costs of NGEU (for both principal and interest). Parliament managed to include a detailed roadmap for the introduction of various additional new own resources by 2026 in the interinstitutional agreement on budgetary matters with the Council and the European Commission. Envisaged resources are linked to EU policies on climate and the single market.


Proposal for a Council decision on the system of own resources of the European Union
Proposals for Council regulations (1) laying down implementing measures for the system of own resources of the European Union; (2) on the methods and procedure for making available the own resources…; and (3) amending Regulation (EEC, Euratom) No 1553/89 on the definitive uniform arrangements for the collection of own resources accruing from value added tax
Committee responsible: Budgets (BUDG) COM(2018) 325, 326, 327, 328 and COM(2020)445 final
Rapporteur: José Manuel Fernandes (EPP, Portugal) and Valérie Hayer (Renew, France) 2.5.2018 and 28.5.2020
Shadow rapporteurs: Elisabetta Gualmini (S&D, Italy)
Hélène Laporte (ID, France)
David Cormand (Greens/EFA, France)
Roberts Zīle (ECR, Latvia)
Younous Omarjee (GUE/NGL, France)
Dimitrios Papadimoulis (GUE/NGL, Greece)
Consultation procedure (CNS)
Next steps expected: Decision (EU, Euratom) 2020/2053
OJ L 424, 15.12.2020, pp. 1–10

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