The EU has several sources of income to finance its administration and activities and enable it to achieve its goals of reducing economic disparities between regions and developing rural areas. The member countries collect the money on behalf of the EU.
The three main sources of revenue are:
- 0.73% of the gross national income of each member country, which accounts for two-thirds of the EU budget. The basic principle behind the calculation of each EU country's contribution is one of solidarity and ability to pay. However, adjustments are made if this produces an excessive burden on particular countries.
- So-called traditional own resources, mainly import duties on products from outside the EU
- A percentage of each EU country’s harmonised value-added tax revenue (VAT)
The EU also receives taxes paid by EU staff on their salaries, contributions from non-EU countries to certain EU programmes and fines from companies that breach EU rules and regulations.
European Budget in 2011
Member states' contribution to the EU budget accounts for only a small part of their overall expenditure.
EU budget compared to that of member states
The EU’s budget might be small compared with the Union’s gross domestic product, but it is invaluable for investment.