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The EU budget is financed mainly (99%) from own resources. Annual revenue must completely cover annual expenditure. Budget revenue is determined by the Council after consultation of the European Parliament. The decision on the system of own resources needs to be ratified by the Member States.

This study is essentially an updated version of two earlier texts in this series: Tax Competition in the European Union (ECON 105 of October 1998) and Tax Co-ordination in the European Union (ECON 125 of January 2001). It covers much of the same ground as these studies, but takes into account recent developments both within European Union itself, and at the international level.