Financing the EU budget

How is the EU budget financed?

The EU’s expenditure is financed by revenue from different sources:

• own resources, accounting for more than 90% of revenue
• surplus EU revenue ⁠– what remains after payments from the previous year have been made
• other sources – mainly fines on companies infringing EU competition law, refunds and taxes on salaries

The so-called ‘own resources decision’ lays down how the EU budget is financed.

The EU’s system of own resources

There are currently four own resources for the EU budget:

• traditional own resources: mainly customs duties
• value-added tax (VAT) based contributions from member states
• gross national income (GNI) based contributions from member states, which are adjusted to balance revenue and expenditure
• national contributions based on the amount of non-recycled plastic packaging waste generated by a member state

The share of the different sources of revenue varies slightly from year to year, with the gross national income own resource remaining the main source for financing the EU budget.

Own resources in 2025

Traditional own resources

Following the abolition of sugar levies in 2017, customs duties on imports from outside the EU are the only traditional own resources of the EU budget.

Member states are responsible for the collection of customs duties at their external borders. During the period 2021-2027, national authorities retain 25% of collected customs duties.

• The EU customs union

VAT-based own resource

A uniform rate of 0.3% is applied to the value-added tax base of each member state, with the taxable VAT base being capped at 50% of GNI for each country.

• VAT

GNI-based own resource

The GNI-based own resource is designed to cover the amount needed to balance the revenue and the expenditure in the EU budget. Since the EU budget cannot go in deficit, all expenditure in a given year needs to be covered by revenue.

Once the other own resources are deducted, member states contribute to the difference according to their gross national income. The contribution rate is adjusted every year to take into account the changes occurred in the relative proportion of national GNIs.

Over time, GNI-based contributions have become the predominant component in the own resources system, accounting for more than 70% of EU revenue.

Some countries receive reimbursements ⁠– or rebates ⁠– that serve to reduce the difference between what they pay into the EU budget and what they receive from it. For the budget for 2021-2027, the EU applies lump-sum corrections to reduce the annual GNI-based contributions made by Austria, Denmark, Germany, the Netherlands and Sweden.

Plastic-based own resource

The own resource based on non-recycled plastic packaging waste has been in place since 1 January 2021.

The new levy is calculated on the basis of the weight of non-recycled plastic packaging waste in each member state, with a call rate of €0.80 per kilogram. It includes a mechanism to avoid an excessively regressive impact on national contributions.

New own resources for the EU budget

On 16 July 2025, as part of the overall multiannual financial framework (MFF) package for 2028–2034, the Commission proposed to modernise and diversify the EU’s budget revenue system. 

The package aims to reduce the burden on member states and ensure the sustainable funding of the Union’s strategic priorities. It proposes five new own resources, based on:

• EU emissions trading system (ETS), which would generate revenues from greenhouse gas emissions
• the carbon border adjustment mechanism (CBAM), which would generate revenues from the embedded emissions of certain imported goods in the EU
• non-collected e-waste, by applying a uniform rate to the weight of e-waste (such as computers, smartphones, tablets, televisions, printers) that is not collected
• a tobacco excise duty, based on the minimum excise duty rate applied by each member state to tobacco products
• a corporate resource for Europe (CORE), an annual lump-sum contribution from all companies, except SMEs, operating and selling in the EU with a net annual turnover of at least €100 million

According to the Commission’s estimates, the new resources, together with adjustments to existing ones, could generate around €58.2 billion per year (in 2025 prices) once introduced on 1 January 2028.

Member states have already begun examining the proposal in the Council’s Working Party on Own Resources.

• New own resources to match our common ambition (European Commission)

See also