European Union Budget

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INDEX

1. THE EUROPEAN UNION BUDGET AT A GLANCE ………………………………… 3

2. WHAT DOES THE EU BUDGET LOOK LIKE?.................................................... 5

3. WHERE DOES THE MONEY COME FROM? …………………………………………. 5

4. WHERE IS THE MONEY BEING SPENT?
FINANCIAL FRAMEWORK …………..................................................................... 8

5. THEBUDGET: PROCEDURES, RULES, PRINCIPLES AND APPROPRIATIONS …………………………………………………………………………. 10

6. THE BUDGET : IMPLEMENTATION, PRESENTATION OF ACCOUNTS
AND ANNUAL DISCHARGE ……………………………………………………………… 13

1. THE EUROPEAN UNION BUDGET AT A GLANCE

Our money to good, agreed purposes:

Taxpayers' money is used by the Union to fund activities that all Member States and parliaments haveagreed upon in the Treaties.

A small amount – around 1% of the Union's national wealth, which is equivalent to about 235 Euro per head of the population – comes into the EU's annual budget and is then spent mainly for its citizens and communities.

A wide range of activities are funded in the Member States:

• In agriculture, fisheries, infrastructure (construction of roads, bridgesand railways), education and training, culture, employment and social policy, environmental policy, health and consumer protection, research, …

• Initiatives are also underway to offer EU citizens an area of freedom, security and justice without internal borders.

• Part of the EU budget is also spent on funding economic development around the world and on humanitarian aid to helpnon-EU countries afflicted by natural disasters and other crisis situations.

EU Budget is decided democratically:

The annual spending plans are negotiated between the European Parliament and the Council of Ministers on a basis of a proposal by the Commission

The budget covers the spending of all the Union's institutions.

It fixes income and expenditure for the year, lists all the activitiesthat are to be funded and sets out the total amounts of money and staff available for each.

It also cites the authorising acts for each action. Before they can be implemented, almost all activities also require a Community law – an authorising act or legal base - proposed by the Commission, and agreed by the legislative authority – the European Parliament and the Council of Ministers together,in many cases.

EU budget revenue and expenditure are limited by agreement:

EU spending is limited by the Treaties.

The Union budget is not allowed to be in deficit, which means that revenue has to cover the whole cost of all the different activities.

This revenue, or income, comes from three main sources:

• Customs duties.

• A share of the harmonised value added tax(VAT) base of each Member State.

• A further contribution from the Member States based on the size of their gross national income (GNI).

The amount of money which can be made available to the Union is limited by agreement of the Member States and parliaments. This ceiling is currently set at 1.23% of the Union's gross national income for payments made from the EU budget. As a comparison,about 45% of the Union's gross national income goes to national, regional and local public expenditure in the Member States.

EU spending is further limited by a multi-annual agreement between Members of the European Parliament, the Council of Ministers, and the European Commission. This agreement contains a "multi-annual financial framework". The recent ones cover spending plans for the seven-yearperiods from 2000 to 2006 and 2007 to 2013.

Proper management and control:

The Commission implements the budget on its own responsibility, but shares most of the management with the Member States.

A European Union legal act – the Financial Regulation - agreed upon by the Member States sets out the rules for calling on, budgeting and using EU funding. All income and expenditure must be...