Where does the EU funding money come from?

Where does the EU funding money come from?

Funded (99%) from the EU's own resources, supplemented by other sources of revenue. These include the following three

1) Traditional own resources

• mainly customs duties on imports from outside the EU and sugar levies (customs duties on imports of certain agricultural produce from non-EU countries (produce covered by an EU support regime, as well as levies (paid by producers) on sugar, isoglucose and inulin syrup).
• EU governments keep 25% to cover the cost of collection.

2) Own resource from value added tax (VAT)

• A standard percentage is levied on the harmonised VAT base of each EU country. The VAT resource accounts for around €14bn. The VAT base to be taxed is capped at 50% of GNI for each country. This rule is intended to prevent less prosperous countries having to pay a disproportionate amount (in such countries consumption – and so VAT – tend to account for a higher percentage of national income).

3) Own resource based on gross national income (GNI)

• A standard percentage is levied on the GNI (gross national income) of each EU country. It is used to balance revenue and expenditure, i.e. to fund the part of the budget not covered by other sources of income. 

Other Revenue

The budget also has other sources of revenue, e.g.:

• taxes on EU staff salaries
• contributions from non-EU countries to certain programmes
• fines on companies for breaching competition laws, etc.

Resource: http://ec.europa.eu/budget/explained/budg_system/financing/fin_en.cfm 

EU Funding and Grants

Most EU funding is not paid directly by the European Commission but via the national and regional authorities of the Member States. This is the case for payments under the Common Agricultural Policy and most payments under the structural policy financial instruments (European Regional Development Fund, European Social Fund, European Agricultural Guidance and Guarantee Fund and Financial Instrument for Fisheries Guidance), which make up, in money terms, the great bulk of EU funding.

The Commission pays direct grants to beneficiaries (public or private legally constituted bodies - universities, businesses, interest groups, NGOs - and, in some exceptional cases, individuals) in pursuance of other common policies in such fields as research and development, education, training, the environment, consumer protection, and information. It also pays direct grants in pursuance of EU external policies.

All EU funding is channelled towards precise objectives and priorities under the various common policies, which, in turn, are based on provisions of the Treaties. Grants are awarded on the basis of specific EU legislation, except those for pilot schemes, preparatory actions and certain tasks carried out by the Commission as an institution.

Source: http://ec.europa.eu