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The European Union has a budget to pay for policies carried out at European level (such as agriculture, assistance to poorer regions, trans-European networks, research, some overseas development aid) and for its administration , including a parliament , executive branch , and judiciary that are distinct from those of the member states. These arms administer the application of treaties, laws and agreements between the member states and their expenditure on common policies throughout the Union. According to the European Commission, 6% of expenditure is on administration, compared with 94% on policies.
To pay for this, the EU had an agreed budget of €143 billion for the year 2014, representing around 1% of the EU-28's gross national income (GNI). Prior to 2014, the EU had a budget of €864.3 billion for the period 2007–2013, representing 1.05% of the EU-27's GNI for the period.
* 1 Adoption and management
* 2 Revenue
* 2.1 Sources of income
* 2.1.1 Traditional own resources * 2.1.2 VAT-based own resources * 2.1.3 GNI-based own resources * 2.1.4 Other revenue
* 2.2 Correction mechanisms
* 3 Expenditure
* 3.1 Proportional outgoings * 3.2 Pre-2014 * 3.3 2014–20
* 4 Funding by member states
* 4.1 EU-27 contributions (2007–13) * 4.2 EU-28 contributions (2014)
* 5 See also * 6 References * 7 External links
ADOPTION AND MANAGEMENT
BUDGET SETTING PROCEDURE
The EU budget is proposed annually by the
The annual budget must remain within ceilings determined in advance by the Multiannual Financial Framework , laid down for a seven-year period by the Council (requiring the unanimous approval of every Member State) with the assent of the Parliament.
The budget for a year is determined in advance, but final calculations of payments required from each member state are not completed until after the budget year is over and information about revenue and expenditure is available, and correction mechanisms have been applied.
REVIEW AND SCRUTINY
Despite its name, the court has no judicial functions. It is, rather,
a professional external investigatory audit agency. The primary role
of the court is to externally check if the budget of the European
Union has been implemented correctly, in that EU funds have been spent
legally and with sound management. In doing so, the court checks the
paperwork of all persons handling any income or expenditure of the
union and carries out spot checks. The court is bound to report any
problems in the court's reports for the attention of other states and
institutions, these reports include its general annual report as well
as specific and special reports on certain bodies and issues. The
court's decision is the basis for the
In this role the court has to remain independent yet remain in touch
with the other institutions, for example a key role is the
presentation of the court's annual report to the
European Parliament .
It is based on this report that the parliament makes its decision on
whether or not to sign off the
European Court of Auditors has signed off the European Union
accounts every year since 2007, but has highlighted that they are
materially affected by error and, while making it clear that the
Following a report by the European Court of Auditors that found that 4.8% of the EU budget in 2012 was affected by error, senior German MEP Inge Gräßle (CDU), a member of the European Parliament’s budgetary control committee, claimed that "numerous questions arise concerning the willingness of the court, to significantly correct downward, the level of error rate after discussions with the audited authority, the EU Commission… half of the errors in the structural funds sector were excluded from the estimate of the damage of the court, otherwise the numbers would be even worse".
On 29 June 2011 the
Due to the tough economic times, seven member states (Austria, Czech Republic, Finland, Germany, the Netherlands, Sweden, and the United Kingdom) argued during the 26 March 2012 General Affairs Council meeting that the EC's proposed overall amount for the seven-year EU budget plan should be reduced by €100 billion, or in the case of Sweden, by more than €100 billion.
On 8 February 2013, European Union leaders agreed to cut the budget by 3.3%; the agreement on the proposed budget by the European Council has yet to be approved by the European Parliament , adopted unanimously by the Council of the European Union and ratified by the national parliaments of all member states; if adopted, it will be the first cut in its 56-year history.
SOURCES OF INCOME
PIE CHART SHOWING EU REVENUE SOURCES (2014) VAT-based resources (12.26%) GNI-based resources (68.73%) Traditional own resources (11.4%) Other (6.92%) Surplus from 2013 (0.7%)
The EU obtains its revenue from four main sources:
* TRADITIONAL OWN RESOURCES, comprising customs duties on imports from outside the EU and sugar levies; * VAT-BASED RESOURCES, comprising a percentage (around 0.3%) of each member state's standardised value added tax (VAT) rate; * GNI-BASED RESOURCES, comprising a percentage (around 0.7%) of each member state's gross national income (GNI); and * OTHER RESOURCES, including deductions from EU staff salaries, bank interest, fines and contributions from non-EU countries.
Traditional Own Resources
Traditional own resources are taxes raised on behalf of the EU as a
whole, principally import duties on goods brought into the EU. These
are collected by the state where import occurs and passed on to the
EU. States are allowed to keep a proportion of the revenue to cover
administration (20% ). The
VAT-based Own Resources
VAT-based own resources are taxes on EU citizens based on the proportion of VAT levied in each member country. VAT rates and exemptions vary in different countries, so a formula is used to create the 'harmonised tax base', upon which the EU charge is levied. The starting point for calculations is the total VAT raised in a country. This is then adjusted using a weighted average of VAT rates applying in that country, producing the intermediate tax base. Further adjustments are made where there is a derogation from the VAT directive allowing certain goods to be zero-rated. The tax base is capped, such that it may not be greater than 50% of a country's gross national income (GNI).
Member countries generally pay 0.3% of their harmonised tax base into
the budget, but this is varied for some countries. The rate for
Countries are required to make an account of VAT revenues to the EU
before July after the end of the budget year. The EU examines the
submission for accuracy, including control visits by officials from
the Directorate-General for
The country may then respond to any issues raised in the report, and
negotiations continue until both sides are satisfied, or the matter
may be referred to the
European Court of Justice
GNI-based Own Resources
GNI-based own resources currently forms the largest contribution to EU funding. A simple multiplier is applied to the calculated GNI for the country concerned. This is the last recourse for raising funding for a budget year, so the actual figure is adjusted within predetermined limits to obtain the budget total required. Revenue is currently capped at 1.23% of gross national income in the European Union as a whole.
The GNI for own resource purposes is calculated by national accountants according to European law governing the sources and methods to compile GNI and the transmission of GNI data and related methodological information to the Commission (Eurostat). Basic information must be provided by the countries concerned to Eurostat before 22 September in the year following the budget year concerned.
Eurostat carries out information visits to the National Statistical
Institutes forming part of the European Statistical System. Based on
assessment reports by Eurostat, the Directorate-General for
Other revenue accounted for 6.9% of EU revenue in 2014. This includes tax and deductions from EU staff remuneration, interest on deposits or late payments, payments from non-EU countries for certain programmes, underspent funding from community programs and any other surplus from the previous budget.
The EU budget has a number of correction mechanisms designed to re-balance excessive contribution by certain member states:
* THE UK REBATE , which reimburses the UK by 66% of the difference
between the revenue provided by the UK and the expenditure received by
the UK; This rebate is not paid to the UK. It is deducted from the
amount the UK is due to pay.
* LUMP-SUM PAYMENTS, which give the
Approximately 94% of the EU budget funds programmes and projects both within member states and outside the EU. Approximately 6% of the budget is used for administrative costs, and less than 3% is spent on EU civil servants' salaries.
2006 EU expenditure in millions of euros (Total 106,576 million) Regional support (30.4%) Common Agricultural Policy (46.7%) Internal policies (8.5%) External actions (4.9%) Administration (6.3%) Compensations (1%) Reserves (0.1%) Pre-accession strategy (2.1%)
In the 2006 budget, the largest single expenditure item was due to the Common Agricultural Policy (CAP), with its direct aid, export refunds, storage and rural development and support and subsidies, which accounted for around 46.7% of the total budget. In 2014, CAP spending had decreased to 39%.
Next in 2006 came the EU's structural funds , which are used to support specific regions in the EU, as part of EU\'s regional policy , which aims to reduce regional disparities in terms of income, wealth and opportunities. Europe's poorer regions receive most of the support, but all European regions are eligible for funding under the policy's various funds and programmes. In 2006 approximately 30.4% of the EU budget was used for such support. While the CAP spending is going down, the regional support is increasing, and is expected to reach almost 36% in 2013.
Internal policies (training, youth, culture, audiovisual, media, information, energy, Euratom nuclear safeguards and environment, consumer protection, internal market, industry and Trans-European networks, research and technological development, other internal policies) took up around 8.5% in the 2006 budget.
External actions, i.e. EU's international activities outside the EU (development aid, peace keeping and security work, election observers etc.) accounted for 4.9% in 2006.
Finally, the pre-accession strategy, compensations and reserves brought up the rear of the budget, with approximately 2.1%, 1% and 0.1% respectively in 2006.
2014 EU expenditure in millions of euros (Total 142,496 million)
Growth (inc. infrastructure projects) (49.55%) Natural resources
(inc. CAP) (42.77%) Security and citizenship (1.28%) EU as a
global partner (0.07%) Administration (5.97%) Compensations
(0.02%) Reserves (0%)
For the period 2014-2020, the EU budget is used for six main categories of expenditure:
* GROWTH (aimed at enhancing competitiveness for growth and jobs and economic, social and territorial cohesion); * NATURAL RESOURCES (covering the common agricultural and common fisheries policies, and rural and environmental measures); * SECURITY AND CITIZENSHIP (covering justice, border protection, immigration and asylum, public health, consumer protection and culture); * FOREIGN POLICY (including development assistance or humanitarian aid outside the EU); * ADMINISTRATION (covering all the European institutions, pensions and European schools); and * COMPENSATIONS (temporary payments to Croatia).
FUNDING BY MEMBER STATES
Net receipts or contributions vary over time, and there are various ways of calculating net contributions to the EU budget, depending, for instance, on whether countries' administrative expenditure is included. Also, one can use either absolute figures, the proportion of gross national income (GNI), or per capita amounts. Different countries may tend to favour different methods, to present their country in a more favourable light.
EU-27 CONTRIBUTIONS (2007–13)
Financing of the general budget by member state (2007-2013) MEMBER STATE Total national contributions (€ millions) Share of total EU contributions (%) Average net contributions (€ millions) Average net contributions (% of GNI)
Czech Republic 8,995 1.24 1,931 1.32
Ireland 9,205 1.27 474 0.32
EU-28 CONTRIBUTIONS (2014)
Financing of the general budget and EU expenditure by member state (2014) Member state Member state contribution (€ mil) Total member state contributions incl. TOR (€ mil) Total EU expenditure in member state (€ mil)
European Union 116,531.8 132,961.3 128,564.9
Czech Republic 1,308.8 1,506.7 4,377.2
Ireland 1,425.1 1,650.6 1,563.1
* ^ European Commission, '2014 EU budget at a glance' (2014)
* ^ Georgieva, Kristalina. "Financial Report 2014". Europa.
European Commission. Retrieved 21 October 2015.
* ^ "Q&A on Interinstitutional Agreement on Budgetary Discipline
and Sound Financial Management 2007–2013".
* ^ "FAQ 10. How is the EU budget decided?". Europa. Retrieved 21
* ^ "Treaty on the Functioning of the European Union". Official
Journal of the European Union. Article 312(1): Eur-lex. 26 October
2012. p. 136. Retrieved 14 May 2016.
* ^ "Power of audit of the European Court of Auditors". European
NAvigator . Retrieved 15 October 2007.
* ^ "EU may force region to repay cash". BBC News. 16 October 2007.
Retrieved 17 October 2007.
* ^ "Consultative powers of the European Court of Auditors".
European NAvigator . Retrieved 15 October 2007.
* ^ "2012 annual report". Europa (web portal). Retrieved 13
November 2015. >
* ^ "European auditors point to errors but sign off EU’s accounts
– some UK media decline to listen to what the auditors say". Europa
(web portal). Retrieved 13 November 2015. >
* ^ "A
* OpenSpending Project\'s