Annual revision of national contributions to the EU budget

20-11-2014

The annual adjustment of the financing of the EU budget is now in the spotlight. In 2013, around three quarters of the total revenue (€149.5 billion) came from a resource linked to the gross national income (GNI) of EU countries. A resource based on value added tax (VAT) provides another 10% of total revenue. These two resources, together with a series of correction mechanisms, represent the national contributions to the EU budget. Since both resources are linked to statistical aggregates, their calculation takes into account estimates and final data, and needs to be regularly updated. A system of checks and controls is in place, which includes aspects of peer review among Member States through specific committees. The European Court of Auditors says that the management of revenue is not affected by material errors (estimated error rate is 0%), but has made recommendations relating to the GNI resource. Each October, GNI and VAT contributions are updated on the basis of revised statistical bases. Coupled with an amending budget, this revision does not result in extra funds for the EU budget, but in a redistribution of burden sharing among Member States. Relevant adjustments must be credited and debited at the beginning of December. This year's revision, which reflects efforts to resolve longstanding reservations on some GNI data, resulted in larger adjustments than usual. On the Council's request, the Commission has put forward a proposal to allow Member States to postpone relevant payments until 1 September of the following year if specific conditions are met. The EP, which has little say in the own resources system, has long pushed for its reform, criticising among other things its complexity and the predominant role the GNI resource has gained over time. A high-level group is carrying out a general review of the system, which could pave the way to reform proposals.

The annual adjustment of the financing of the EU budget is now in the spotlight. In 2013, around three quarters of the total revenue (€149.5 billion) came from a resource linked to the gross national income (GNI) of EU countries. A resource based on value added tax (VAT) provides another 10% of total revenue. These two resources, together with a series of correction mechanisms, represent the national contributions to the EU budget. Since both resources are linked to statistical aggregates, their calculation takes into account estimates and final data, and needs to be regularly updated. A system of checks and controls is in place, which includes aspects of peer review among Member States through specific committees. The European Court of Auditors says that the management of revenue is not affected by material errors (estimated error rate is 0%), but has made recommendations relating to the GNI resource. Each October, GNI and VAT contributions are updated on the basis of revised statistical bases. Coupled with an amending budget, this revision does not result in extra funds for the EU budget, but in a redistribution of burden sharing among Member States. Relevant adjustments must be credited and debited at the beginning of December. This year's revision, which reflects efforts to resolve longstanding reservations on some GNI data, resulted in larger adjustments than usual. On the Council's request, the Commission has put forward a proposal to allow Member States to postpone relevant payments until 1 September of the following year if specific conditions are met. The EP, which has little say in the own resources system, has long pushed for its reform, criticising among other things its complexity and the predominant role the GNI resource has gained over time. A high-level group is carrying out a general review of the system, which could pave the way to reform proposals.