Proposal for a Council Decision amending Decision (EU, Euratom) 2020/2053 on the system of own resources of the European Union

In “An Economy that Works for People”

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On 22 December 2021, the European Commission announced its proposal for the introduction of new own resources (OR). It is motivated (amongst other factors) by the longstanding consideration to boost the EU budget without requiring an increase of the GNI-based own resources. Also, the proposed amendment aims to secure necessary resources to cover new budgetary expenditures such as the reimbursement of the financial costs of the Next Generation EU (NGEU) and the newly created Social Climate Fund (SCF), without limiting the funding of the existing programmes and long-term MFF commitments. 

The adopted 2021-2027 MFF was linked to the December 2020 Own Resources Decision. This first step of the OR reform was necessary to allow the NGEU to come into force, increase the OR ceiling and introduce the first new OR - a new contribution based on non-recycled plastic packaging waste has been introduced as of 1 January 2021. 

A related Interinstitutional agreement (IIA) between the the European Parliament, the Council and the Commission was reached in December 2020 and included a roadmap for the introduction of new OR, which sets out steps to further reforms, which include the introduction of other new OR. The Commission submitted the first basket of new OR on 22 December 2021 - 6 months delay according to the IIA roadmap. 

The proposed new OR basket comprises the extended Emissions Trade Scheme (EU ETS), a Carbon Border Adjustment Mechanism (CBAM) and reallocated profits of very large multinational companies (based on Pillar 1 of the OECD/G20 agreement). 

(1) A share of the revenue obtained in accordance with the EU Emissions Trading Scheme (EU ETS) Directive: The proposal specifies that 25% of most revenues generated from allowances to be auctioned from the emissions trading will accrue to the EU budget. This includes revenues from the ETS for stationary installations and aviation for which additional allowances would be auctioned as well as its extension to maritime transport and the introduction of a separate emission trading for road transport and buildings. 

(2) A share of revenues from the border carbon adjustment mechanism: This proposal establishes that a share of the revenues from the sale of carbon border adjustment mechanism certificates will be transferred to the EU budget as own resources in the form of a national contribution.

(3) Applying a uniform call rate to the share of residual profits of multinational companies reallocated to Member States: The proposal provides that Member States will make a national contribution to the EU budget based on the share of the residual profits of the largest and most profitable multinational enterprises re-allocated to Member States in case they are end market jurisdictions where goods or services are used or consumed under the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting agreement.

The Council needs to adopt its decision on the new OR proposal after consulting the European Parliament, although it is not obliged to follow Parliament's opinion. 

On 14 February 2022, the proposal was referred to the EP Committee for Budgetary affairs and the co-rapporteurs have been appointed - Valerie Hayer and Jose Manuel Fernandes who prepared a draft report on the proposal (26 August 2022).  On 23 November 2022, the European Parliament adopted, in the framework of a special legislative procedure (Parliament’s consultation), a legislative resolution approving the proposal for a Council decision on the system of own resources of the European Union from December 2021. According to the resolution, the revenue from the application of a uniform rate of call equal to 100% (instead of 75%) of the revenue from the sale of certificates of the carbon adjustment mechanism at borders should constitute own resources entered in the EU budget. Furthermore, if by the end of 2023 the process of ratification of the OECD/G20 (IF) Pillar 1 Agreement has not started in a critical mass of countries as defined by the Multilateral Convention, the Commission should propose a new own resource in connection with the single market, such as a digital levy or a similar measure, in order to generate revenues by 2026. The resolution demonstrates the consistency of the European Parliament’s long-standing position in support of the principles of unity and universality of the EU budget, and fight the perception and prevalence of the ‘net balance’ logic.

On 20 June 2023, the Commission put forward an adjusted package for the next generation of own resources, amending its previous proposal and completing its proposal for a next generation of OR.

The most important amendments concern the ETS-based one. It proposes to increase the call rate for the ETS-based own resource to 30% from all revenues generated by EU emissions trading, up from 25% originally proposed and add new sectors (maritime transport, buildings and road transport). 

The proposal also includes a new temporary statistical own resource based on company profits. It is designed as a national contribution paid by Member States based on statistics under the European system of accounts. A call rate of 0.5% to be applied on gross operating surplus. This OR will be replaced by a possible contribution from Business in Europe: Framework for Income Taxation (BEFIT), once it is adopted.

The timeline of entry into force of the new ORs has also been updated and the previously foreseen date of 1 January 2023 is amended to 1 January 2024. In order to fulfil that timeline, the proposal will feed into the negotiations with the Member States in the Council and the Commission calls on the Council to accelerate these negotiations. After entering into formal reconsultation, on 9 November European Parliament debated and voted a legislative resolution approving the amended Commission proposal. It calls on the Commission to alter its proposal according to Parliament's amendments.


Linked legislative trains: 

Author: Alina Dobreva, Members' Research Service,

As of 20/03/2024.