Own resources of the European Union: Reforming the EU’s financing system

Summary:

On 14 December 2020, the Council adopted the decision that reforms the financing system of the EU budget, in the context of a package including the new multiannual financial framework (MFF) and the Next Generation EU (NGEU) recovery instrument. The agreed increase in the maximum level of resources that can be called from Member States is a pre-condition for NGEU borrowing operations. Ratification by all Member States is now required before the decision can enter into force, with retroactive application from 1 January 2021. Six Member States have ratified the decision as of 12 February 2021.

Parliament fast-tracked its legislative opinion, adopted in September 2020, to enable the Council to ensure the timely launch of NGEU. In the broader negotiations on EU finances, Parliament pushed for a proper reform of the financing system underlining that the introduction of a basket of new own resources should cover at least the repayment costs of NGEU (for both principal and interest). Deeming the new plastics contribution a first partial step in this direction, Parliament managed to include a detailed roadmap for the introduction of various additional new own resources by 2026 in the interinstitutional agreement on budgetary matters with the Council and the European Commission. Envisaged resources are linked to EU policies on climate and the single market.

Further information:

This EU Legislation in Process Briefing relates to the following initiatives:

• Council Regulation on the methods and procedure for making available the Own Resources (...) and on the measures to meet cash requirements
• Council Regulation laying down implementing measures for the system of Own Resources of the European Union
• Council Regulation on the definitive uniform arrangements for the collection of Own Resources accruing from value added tax
• Proposal for a Council Decision on the system of Own Resources of the European Union

• Alternative Source 1