Regulation on the current financial framework
The MFF Regulation is adopted under a special legislative procedure set out in article 312 TFEU, with the Council acting unanimously after obtaining the consent of the European Parliament. The three main EU budgetary institutions must ensure that expenditure in the EU’s annual budgets comply with the ceilings in the MFF.
The Regulation sets annual maximum amounts ("ceilings") for EU expenditure as a whole and for the main categories of expenditure reflecting major policy areas. ("headings").
The current MFF Regulation was approved in December 2020. It sets a maximum level of spending of €1 074 trillion (in 2018 prices) over the period 2021-2027, covering seven major areas.
The MFF also sets out maximum amounts that may be spent in addition to the MFF ceilings for emergency response or unforeseen needs (special instruments).
Various adjustments can be made to the MFF during its lifetime:
- annual technical adjustments in current prices to the MFF ceilings
- programme-specific adjustments
- re-entering or re-programming of budgetary commitments
- revisions due to unforeseen circumstances or other events (e.g. revision of the EU’s treaties with budgetary consequences, accession of new EU members)
On 22 December 2021, the Commission proposed a targeted amendment of the MFF Regulation as part of the own resources package (see below). The amendment should enable the expenditure foreseen for the Social Climate Fund, and a dedicated annual automatic adjustment of the Multiannual Financial Framework ceilings, based on new own resources, which could be used for the repayment of NextGenerationEU borrowing.
On 15 December 2022, a technical amendment to the rules on the 2021-2027 long-term budget entered into force, enabling the use of the budgetary "headroom" to guarantee borrowing for a support package for Ukraine of up to €18 billion. The headroom is the difference between the own resources ceiling (i.e. the maximum resources that the Commission can call from Member States in a given year) and the lower amount of funds provided for the EU budget actual spending in the same year.
Summary of the MFF Regulation on EUR-Lex
Decision on the system of own resources
The EU budget is funded almost entirely by own resources.
The basic rules for the own resources system are laid down periodically in a Council Decision adopted unanimously by the EU Council and ratified by every Member State in accordance with their national procedures.
On 14 December 2020, the Council approved the Decision on the system of own resources which applies as of 1 January 2021:
The Decision on the system of own resources is complemented by several acts:
- Council Regulation (EU, Euratom) No 609/2014 on traditional, VAT and GNI-based own resources
- Council Regulation (EU, Euratom) No 2021/768 laying down implementing measures for the system of own resources
- Council Regulation (EEC, Euratom) No 1553/89 on arrangements for the collection of own resources accruing from value added tax - consolidated text ("VAT Regulation", last amended by Council Regulation (EU, Euratom) 2021/769 of 30 April 2021)
- Council Regulation (EU, Euratom) 2021/770 on the own resource based on plastic packaging waste ("MAR 2", into force on 1 January 2021)
The Commission presented a proposal to introduce three new own resources on 22 December 2021, following up on the roadmap included in the interinstitutional agreement. The package also includes a targeted amendment of the Multiannual Financial Framework Regulation (see above). The Commission will present a proposal for a second basket of new own resources by the end of 2023.
More information on the EU budget’s Own resources
Summary of the Own Resources Decision on EUR-Lex
NextGenerationEU
The bulk of the recovery measures proposed by the Commission for the Multi-Annual Financial Framework 2021-2027, will be powered by NextGenerationEU. The instrument, with a financial firepower of €806.9 billion (in current prices), will be exceptional and temporary. The financing will be made possible by the Own Resources Decision, which will allow the Commission to exceptionally borrow up to €806.9 billion (in current prices) on behalf of the Union, through the issuance of bonds, for measures over the period 2021-2024. The Commission will then direct the funds in pursuit of EU priorities to the specific and new financing needs that have been revealed by the crisis through grants and loans.
To facilitate the repayment of the market finance raised and further help reduce the pressure on national budgets, the Commission proposed to introduce new own resources on 22 December 2021.
European Union Recovery Instrument Regulation
More information on the EU Recovery Plan
Financial Regulation
The Financial Regulation lays down the operating principles and basic rules governing the EU budget. It deals thoroughly with budget implementation and control issues.
The Financial Regulation is reviewed whenever it proves necessary to do so and in any case at the latest two years before the end of each multiannual financial framework. The Commission has proposed a revision of the Financial Regulation in May 2022 (COM(2022) 223) which is currently going through the legislative process with the European Parliament and the Council.
On 16 May 2022 the Commission proposed targeted adjustments to the Financial Regulation to align existing rules with the current long-term budget 2021-2027 and further reinforce them in view of developing an even more transparent, better protected and more agile budget.
The proposal is now subject to negotiations by the European Parliament and EU Member States in the Council in view of a swift adoption.
The proposal and its annex can be consulted below. A press release and a questions and answers document are also available online.
On 6 December 2022, targeted amendments to the Financial Regulation were introduced, establishing the unified funding approach as the main approach to markets for all borrowing. A QA document is available online.