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Own resources

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Own resources
Originally, the Community budget, like that of other international organisations, depended on the Member States' financial contributions. However, under a decision adopted on 21 April 1970, the Member States' contributions were replaced by own resources. These are transfers paid by the Member States to the Community budget to cover the financing of expenditure by the European Union. The combined total of all own resources may not exceed 1.27% of the aggregate gross national product (GNP) of the Member States.

With the introduction of this system, financial autonomy was established, and since 1 January 1978, the Community budget has been entirely financed by own resources. These are currently made up of four elements:

•agricultural duties and the sugar and isoglucose levies: these consist mainly of the agricultural duties and, under the common organisation of the sugar markets, production and storage levies;
•customs duties: these come from the application of the common customs tariff to imports from third countries;
•the VAT resource: this comes from the application of a flat rate to the VAT base of each Member State. The rate was set at 1% for 1999, but, under the new own resources decision (September 2000), it will fall to 0.75% in 2002 and 2003 and to 0.50% from 2004. It is collected on a base which may not exceed 50% of a Member State's GNP;
•the 'fourth resource': introduced in 1988, this is a so-called additional resource, because it is set according to the other three sources of budget revenue. It is based on GNP and the application of a rate, set under the budget procedure, to the total GNP of all the Member States.

In the 2002 budget, the revenue of the European Union amounted to EUR 95.6 billion, of which 43% came from the GNP resource, 38.3% from the VAT resource, 14.8% from customs duties and 1.8% from agricultural duties.


Customs Union
Financial perspective 2000-2006

© European Communities, 1995-2004

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