The Gross National Income (GNI)-based own resource, also called national contributions, was established as a "residual" keystone of the own resources system to ensure that all agreed expenditures in an annual budget were sufficiently covered by the total EU budget revenues. With this, the EU budget is always initially balanced, i.e. at the stage of its adoption.
It is considered as a balancing source of the EU budget. This is because its amount varies year by year, according to the overall revenues needed to cover expenditures, after taking into account the amounts coming from customs duties, VAT-based contributions and other sources (fines imposed when businesses fail to comply with EU rules, taxes from EU staff salaries, bank interest, and contributions from third countries).
Over time, GNI-based contributions have become the predominant component in the own resources system, accounting for more than 70% of EU revenue.
How does it work in detail?
The percentage to be applied to each Member State’ GNI (the call rate) varies year by year and it is determined according to the total of all other EU budget revenues. Each Member States’ GNI at market prices is defined in accordance with the European system of national and regional accounts (ESA 2010), which is an internationally-compatible accounting framework used to describe a “total economy” (i.e. a region, country or group of countries). The Commission verifies the sources and methods used by Member States to calculate the GNI.
Depending on the total annual revenues needed to finance expenditures, a uniform call rate is then applied to the GNI of each Member State. The total amount of own resources that can be collected from Member States is limited with reference to the EU GNI – the sum of all Member States’ GNI. For the period 2021-2027, the total amount of own resources allocated to the EU to cover annual appropriations for payments cannot exceed 1.40% of the EU GNI. For more information, see Revenue ceilings.
Complementing GNI-based contributions
Although GNI-based contributions provide stability and sufficiency to the EU budget, the predominance of this own resource increases the perception that national contributions are a mere cost factor. However, Member States contributing more to the EU budget than they receive directly actually pay less on average than other Member States in percentage of their wealth (gross national income – GNI), while they are among the biggest beneficiaries of the single market and the EU integration.
Everybody is a winner from being part of the single market, addressing the challenge of migration and fighting terrorism and climate change together. The EU – powered by the EU budget – creates an added value for all which goes beyond any mathematical calculations.
In addition, recent economic developments pose a challenge for tax and statistical national authorities when it comes to measuring GNI precisely, which is the first basis for assessing wealth. In particular, the dematerialisation of many services, the rapid spread of e-commerce, the growing weight of intangible assets and the large and rapid fluctuations in foreign capital investments pose significant challenges on this front.
For this reasons, in order to ensure a fair burden sharing across Member States and to return to the balancing function of the GNI-based own resource while easing the burden on Member States, the Commission will work towards the introduction of new own resources for the EU budget. These will complement the GNI-based contributions, while tackling the above-mentioned issues.