Budget of the European Union

The EU budget is adopted through the budgetary procedure by the European Parliament and the Council of the European Union. The EU budget must remain within the limits set out in the Multiannual Financial Framework (MFF) and the Own Resource Celling. The MFF is the EU's long-term budget. It is established at least for five years Implementation The European Commission, in cooperation with Member States, is responsible for the implementation of the EU budget in accordance with the Financial Regulation. The EU budget is implemented in accordance with the principles of unity and of budgetary accuracy, annuality, equilibrium, unit of account, universality, specification, sound financial management and performance and transparency. The EU programmes are managed in three ways: • direct management (the programmes are executed by the Commission directly or by its executive agencies), • indirect management (third parties, such as international organisation, oversee the execution), or • shared management (the Member States authorities oversee the execution). Audit and discharge The Commission reports on how it has implemented the budget in various ways, most importantly by publishing the Integrated Financial Reporting Package, which consists of the annual accounts, the Annual Management and Performance Report, and other accountability reports. The annual discharge procedure allows the European Parliament and the council to hold the Commission politically accountable for the implementation of the EU budget. The European Parliament decides, after a recommendation by the council, on whether or not to provide its final approval, known as 'granting discharge', to the way the Commission implemented the EU budget in a given year. When granted, it leads to the formal closure of the accounts of the institution for a given year. When deciding whether to grant, postpone or refuse the discharge, the Parliament takes into consideration the Integrated Financial Reporting Package prepared by the Commission along with the European Court of Auditors' Annual Report on how the budget has been spent and any relevant Special Reports from the Court. More particularly, every year the European Court of Auditors, which is the EU's independent external auditor, examines the reliability of accounts, whether all revenue has been received and all expenditure incurred in a lawful and regular manner, and whether the financial management has been sound. The European Court of Auditors has signed off the EU accounts every year since 2007. In October 2018, the European Court of Auditors gave the EU annual accounts a clean bill of health for the 11th year in a row, finding them true and fair. The Court has given, for a second year in a row, a qualified opinion on the 2017 payments. The report thus shows further improvements in terms of compliance and performance, and confirms that the commission is on the right path. While a clean opinion means that the figures are true and fair, a qualified opinion means that there are minor issues still to be fixed. If Member States or final beneficiaries are found to spend EU money incorrectly, the Commission takes corrective measures. In 2017, the Commission recovered €2.8 billion, equal to 2.1% of the payments to the EU budget. Therefore, the actual amount at risk is below the 2% threshold, once corrections and recoveries have been taken into account.2% of any public budget is very high however hence the qualification. == Revenue ==

The EU obtains its revenue from four main sources: • Traditional own resources: Customs duties on imports from outside the EU and levies collected on behalf of the EU. • VAT-based own resources: comprising a percentage of Member State's standardised value added tax (VAT) base. • GNI-based own resources: comprising a percentage of each member state's gross national income (GNI). • Other revenue: including taxes from EU staff salaries, bank interest, fines and contributions from third countries. Traditional own resources Traditional own resources VAT-based own resources The VAT-based own resource is a source of EU revenue based on the proportion of VAT levied in each member country. VAT rates and exemptions vary in different countries, so a formula is used to create the so-called "harmonised VAT base", upon which the EU charge is levied. The starting point for calculations is the total VAT raised in a country. This is then adjusted using a weighted average rate of VAT rates applying in that country, producing the intermediate tax base. Further adjustments are made where there is a derogation from the VAT directive allowing certain goods to be exempt. The tax base is capped, such that it may not be greater than 50% of a Member State's gross national income (GNI). In 2017, eight Member States saw their VAT contribution reduced thanks to this 50% cap (Estonia, Croatia, Cyprus, Luxembourg, Malta, Poland, Portugal and Slovenia). Member countries generally pay 0.3% of their harmonised VAT base into the budget, but there are some exceptions. The rate for Germany, the Netherlands and Sweden is 0.15% for the 2014-2020 period, while Austria also had a reduced rate in the 2007-2013 period. The EU's total revenue from the VAT own resource was 16,947 million euros (12.2% of total revenue) in 2017. Member States are required to send a statement of VAT revenues to the EU before July after the end of the budget year. The EU examines the submission for accuracy, including inspection visits by officials from the Directorate-General for Budget and Eurostat, who report back to the country concerned. The country has a legal obligation to respond to any issues raised in the report, and discussions continue until both sides are satisfied, or the matter may be referred to the European Court of Justice for a final ruling. The Advisory Committee on Own Resources (ACOR), which has representatives from each Member State, gives its opinion where Member States have asked for authorisations to leave certain calculations out of account or to use approximate estimates. The ACOR also receives and discusses the inspection results. In 2018, 15 inspections were reported by inspectors to the ACOR. It is anticipated that 12 countries will be visited in 2019. GNI-based own resources The Gross National Income (GNI)-based resource is calculated by National Statistical Institutes according to European law governing the sources and methods to compile GNI and the transmission of GNI data and related methodological information to the commission (Eurostat). Basic information must be provided by the countries concerned to Eurostat before 22 September in the year following the budget year concerned. Eurostat carries out information visits to the National Statistical Institutes forming part of the European Statistical System. Based on assessment reports by Eurostat, the Directorate-General for Budget of the Commission may notify to the Permanent Representative of the Member State concerned required corrections and improvements in the form of reservations on the Member State's GNI data. Payments are made monthly by Member States to the commission. Own resources payments are made monthly. Custom duties are made available by Member States after their collection. Payments of VAT- and GNI-based resources are based upon the budget estimates made for that year, subject to later correction. Other revenue Other revenue accounted for 12.4% of EU revenue in 2017. This includes tax and other deductions from EU staff remunerations, contributions from non-EU countries to certain programmes (e.g. relating to research), interest on late payments and fines, and other diverse items. As the balance from the previous year's budget is usually positive in comparison to the budget estimates, there is usually a surplus at the end of the year. This positive difference is returned to the Member States in the form of reduced contributions the following year. ==Expenditure==

, €42bn was spent on transport, building and the environment, €16bn on education and research, €13bn on welfare, €20bn on foreign and defence policy, €2bn in finance, €2bn in energy, €1.5bn in communications, and €13bn in administration. Proportional outgoings Approximately 94% of the EU budget funds programmes and projects both within member states and outside the EU. Less than 7% of the budget is used for administrative costs, and less than 3% is spent on EU civil servants' salaries. 2014–2020 period For the period 2014–2020, the EU budget had expenditures amounting to a total of €1,050,851 million: €900,638.1 million for the EU-28 member states, €62,021.8 million for non-EU expenditures, €56,022.9 million earmarked, and €32,168 million for other expenditures. • Smart and inclusive growth – aimed at enhancing competitiveness for growth and jobs and economic, social and territorial cohesion. • Sustainable growth: natural resources - included the common agricultural policy (CAP), common fisheries policy, rural development and environmental measures. • Security and citizenship – included justice and home affairs, border protection, immigration and asylum policy, public health, consumer protection, culture, youth, information and dialogue with citizens. • Global Europe - covered all external action ("foreign policy") by the EU, such as development assistance or humanitarian aid, with the exception of the European Development Fund (EDF). • Administration – covered the administrative expenditure of all the European institutions and European Schools, as well as pensions. • Compensations – temporary payments designed to ensure that Croatia, which joined the EU in July 2013, did not contribute more to the EU budget than it benefited from it in the first year following its accession. Besides those six categories, there were also expenditures allocated to "special instruments" (Emergency Aid Reserve, European Union Solidarity Fund, etc.). 2021–2027 period The EU budget for the 2021–2027 period has expenditures of €1,074.3 billion. An important part (95.5 billion euros) of the budget goes to the framework programme for research and development Horizon Europe. Around 25 billion euros are dedicated to Excellent Science (Pillar I), 53,5 billion euros to Global Challenges and European Industrial Competitiveness (Pillar II), and 13,5 billion euros to Innovative Europe (Pillar III). The transversal part about Widening the Participation and Strengthening the European Research Area receives around 3,3 billion euros. Beyond 2027 The proposed MFF for 2028-2034 has drawn criticism from the European Court of Auditors for possible negative effects caused by significant and manifold changes. Proposed borrowing would result in a significant increase of EU debt. Concerning the renewed discussions around eurobonds, the NZZ opines, uncontestedly joint bonds would prevent a repetition of the Greek debt crisis of 2010–2015. ==Funding by member states==

Net receipts or contributions vary over time, and there are various ways of calculating net contributions to the EU budget, depending, for instance, on whether countries' administrative expenditure is included. Also, one can use either absolute figures, the proportion of gross national income (GNI), or per capita amounts. Different countries may tend to favour different methods, to present their country in a more favourable light. EU-27 contributions (2007–13) Note: in this budget period, "EU 27" meant the 27 member states prior to the accession of Croatia. EU-28 contributions (2014–2020) In the 2014–2020 period, the EU budget had revenues amounting to total of €1,069,945.7 million: €825,759.1 million from national contributions (VAT-based own resources and GNI-based own resources), €139,351.6 million from traditional own resources (TOR) and €104,835 million from other revenues. European Commissioner for Budget and Human Resources Günther Oettinger stated that "I want to propose a budget framework that does not only do without the mother of all rebates [the U.K.'s] but without all of its children as well". However, while the UK rebated and reduced VAT rates were eliminated in the Multiannual Financial Framework for the 2021-2027 period, €53.2 billion in total of lump sum national rebates to Germany and the frugal Four were agreed to, funded by the Member States according to their GNI. ==See also==