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How is the EU funded?

The EU's sources of income include contributions from member countries,  import duties on products from outside the EU and fines imposed when businesses fail to comply with EU rules. The EU countries agree on the size of the budget and how it is to be financed several years in advance. 

The EU budget supports growth and job creation. Under the cohesion policy, it funds investment to help bridge economic gaps between EU countries and regions. It also helps develop rural areas in Europe.

The 3 main sources of revenue are:

  • a small percentage of gross national income (usually around 0.7%) contributed by all EU countries -  the largest source of budget revenue. The underlying principles are solidarity and ability to pay – though the amount may be adjusted to avoid over-burdening particular countries.
  • a small percentage of each EU country’s standardised value-added tax revenue, usually around 0.3%.
  • a large share of import duties on non-EU products (the country that collects the duty retains a small percentage).

The EU also receives income tax from EU staff, contributions by non-EU countries to certain EU programmes and fines on companies that breach EU rules and regulations.

European budget in 2011

What EU countries contribute to the EU budget is just a small share of their overall spending.

EU budget compared to those of individual EU countries

Small though the EU budget is by comparison with the EU’s economic output (gross domestic product), it is invaluable for investment.


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