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The European Union (EU) is an association of 27 independent member states. The Administration of the Union has a parliamentmarker, a civil servicemarker and a judiciary that is 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. To pay for this, the EU had an agreed budget of €120.7 billion for the year 2007 and €864.3 billion for the period 2007-2013, representing 1.10% and 1.05% of the EU-27's GNI forecast for the respective periods. By comparison, the UK expenditure for 2004 alone was estimated at about €759 billion and France was estimated at about €801 billion. In 1960, the budget of the six member state EEC was 0.03% of GDP.

Setting a budget

The Administration of the European Union has three elements to its government: the Council of Ministers, the European Commissionmarker and the European Parliamentmarker. In addition, the European Court of Justice is funded from the budget of the Administration. All three take a part in setting the annual budget. The budget for a year, or period of years, 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. The UK rebate is one of the last elements of the budget to be calculated (though it is estimated in advance) as it depends upon the balance of all EU revenue to and from the UK.

Revenue

[[Image:EU Budget 2006 - EU25 total revenue.png|thumb|Pie chart showing EU25 total revenue in millions of euros for 2006.


Total revenue = 108,423 million]]The Administration obtains most of its revenue indirectly by payments from treasuries of member states. Revenue is divided into four categories.

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 (25%). The European Commission operates a system of inspectors to investigate the collection of these taxes in member states and ensure compliance with the rules. The effect of a state failing to collect these taxes is that other states will have to contribute more to the budget, so there is a potential conflict of interest on the part of the collecting authorities. Countries are liable to make good any loss of revenue due to their own administrative failure.

VAT based own resources

VAT based own resources are taxes on EU citizens derived as a 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). The EU applies a call-up rate to the tax base, generally of 0.33%, but this is varied for some countries. For 2007-2013 the rate proposed for Austria is 0.225%, and Germany 0.15%, the Netherlands and Sweden 0.1%. Countries are required to make an account of VAT revenues to the EU before the 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 Budget and Directorate-General for Taxation, and reports back to the country concerned. 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 for a final ruling. The Advisory committee on own resources, which has representatives from each member state, also receives and discusses the reports. In 2006, 9 countries were inspected by controllers, including 5 new member states who were participating in the procedure for the first time. It is anticipated that 11 countries will be visited in 2007. The EU may be working on figures for three years at any one time.

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 1.24% of GNI for the EU as a whole. GNI is determined by national accounts specialists working for Eurostat, on behalf of the Budget Directorate-General, according to agreed regulations. Basic information must be provided by the countries concerned before 22 September following the budget year concerned. There may then follow control visits or other negotiations to resolve any reservations. None of the member countries is currently wholly in agreement with the commission over the calculations. Payments are made monthly by member states to the commission. Own resources payments are made monthly as they are collected, but monthly installments of VAT and GNI based returns are based upon the budget estimates made for that year, subject to later correction.

Other Revenue

Other Revenue makes up approximately 1% of the EU budget. This includes interest on deposits or late payments, payments from non-EU organisations, underspent funding from community programs and any other surplus from the previous budget.

State by state analysis

[[Image:EU net budget 2007-2013 per capita.png|thumb|Choropleth map showing Open Europe estimate of total budget expenditure in euros for the whole period 2007-2013 per capita (based on Eurostat 2007 population estimates).

Net contributors


Net recipients


]]
 2007 briefing note by the eurosceptic research and advocacy organization "Open Europe" gave its (contested) estimates for total contributions to the EU and total receipts from it for each member state over the budget period 2007-2013. Those figures are given in the table below, along with the Eurostat population figures for the beginning of 2007. The calculated net contributions/receipts for each member state are depicted on the diagrams to the right.


Open Europe estimates for EU-27 budget for 2007-2013 in euros (€)
Member state

Money
to EU
(billions)

Money
from EU
(billions)

Net
benefit
(billions)

Ratio of money (Out/In) Population
(2007)
Net benefit per capita
Austriamarker 19 10 -8.5 0.526 8,298,923 -1024
Belgiummarker 33 39 +6.4 1.182 10,584,534 605
Bulgariamarker 2.3 12 +9.7 5.218 7,679,290 1263
Cyprusmarker 1.1 1 -0.1 0.909 778,684 -128
Czech Republicmarker 9.2 31 +22 3.370 10,287,189 2139
Denmarkmarker 17 10 -7.2 0.588 5,444,242 -1322
Estoniamarker 0.8 4 +3.2 5.0 1,342,409 2384
Finlandmarker 13 9 -3.7 0.692 5,276,955 -701
Francemarker 140 89 -51 0.636 63,392,140 -805
Germanymarker 164 78 -86 0.476 82,314,906 -1045
Greecemarker 15 40 +25 2.667 11,171,740 2238
Hungarymarker 8.4 32 +24 3.810 10,066,158 2384
Republic of Irelandmarker 11 12 +0.6 1.091 4,312,526 139
Italymarker 116 70 -46 0.603 59,131,287 -778
Latviamarker 1.4 6 +4.6 4.286 2,281,305 2016
Lithuaniamarker 1.7 9 +7.3 5.294 3,384,879 2157
Luxembourgmarker 2.3 10 +7.7 4.348 476,187 16170
Maltamarker 0.5 1 +0.5 2.0 407,810 1226
Netherlandsmarker 37 13 -24 0.351 16,357,992 -1467
Polandmarker 22 87 +65 3.955 38,125,479 1705
Portugalmarker 12 29 +17 2.417 10,599,095 1604
Romaniamarker 7.2 32 +25 4.444 21,565,119 1159
Slovakiamarker 3.5 14 +11 4.00 5,393,637 2039
Sloveniamarker 3.1 6 +2.9 1.9354 2,010,377 1443
Spainmarker 76 78 +22 1.026 44,474,631 49
Swedenmarker 20 9 -11 0.450 9,113,257 -1207
United Kingdommarker 103 46 -57 0.447 60,816,701 -937
Sources Calculated Calculated

Belgium and Luxembourg

The figures for Luxembourg may be inflated by the large number of companies based there with parents or subsidiaries based outside it. The ultimate beneficiary of EU expenditure to such companies may actually be those parents or subsidiaries instead. A similar situation pertains in Belgium.

Expenditure

[[Image:EU Budget 2006 - Total expenditure.svg|thumb|Pie chart showing EU total expenditure in millions of euros for 2006.


Total expenditure = 106,575.5 million]]In the 2006 budget, the largest single expenditure item was agriculture (direct aid, export refunds, storage, rural development and other) with around 46.7% of the total budget. Next came structural actions (Objective 1, Objective 2, Objective 3, other structural measures, community initiatives, innovatory measures and technical assistance, other specific structural operations and the cohesion fund) with approximately 30.4% of the total. 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%. Administration accounted for around 6.3%. External actions, the pre-accession strategy, compensations and reserves brought up the rear with approximately 4.9%, 2.1%, 1% and 0.1% respectively.

See also



External links



References

  1. Figure taken from online copy of book chapter held on this page on the eurosceptic website " Euro Know"
  2. accessed via this page on the website of "Open Europe"
  3. accessed via this page on Eurostat
  4. or see the
  5. accessed via this page on the website of the European Commission or see the



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