Determining the EU budget

The budget is a special type of decision to establish the annual budget of the European Union. It is a legally binding act. Over the course of a year the budget is amended to adapt and adjust to changing realities and financial breaks and setbacks.

Area of application

Specific titles of and chapters in the budget are directly applicable to the member states. These stipulate the precise contribution of the member states to the budget and, in some areas, how much the member states will draw receive out of the budget. Implementing the budget is, to a large extent, the responsibility of the member states.

The budget has to meet very specific requirements. These are the most important:

• 1. 

  unity: the entire budget is drawn up in a single document. Only revenue and expenditure in the budget is authorised. Amendments may refer to specific budget lines
• 2. 

  universality: revenue cannot be reserved for use for specific posts. Thus ensures expenditure can be financed by general means, rather then to be depended on a specific contribution to the budget
• 3. 

  annuality: all revenue and expenditure is tied to a single budget and should, as a matter of principle, not affect other budgets
• 4. 

  equilibrium: revenue and expenditure have to be equal. The EU is not allowed to borrow money to cover expenditures. Any excess revenue will be divided between the member states
• 5. 

  specification: all revenue and expenditure are to be put in a budget line. With a few exceptions, changes within the budget require amending proposals

Acts that amend the budget have to meet the same set of requirements.

Adopting budgets

The EU has a special budgetary procedure with which to adopt the budget.

The budget is based on the Treaty on the functioning of the European Union (TfEU).

• - 

  description: part six TfEU title II chapter 3, 4 (art. 313 to 319)
• - 

  principles: financial regulation (based on interinstitutional agreements¹)

• 1. 

  This particular type of agreement is used to establish institutional arrangements between the Council of Ministers, the European Parliament and the European Commission. The purpose of the agreement is to increase efficiency and to clarify procedures in order to prevent or limit conflicts amongst the institutions. Interinstitutional agreement can be legally binding, but this is not required.
   
• 2. 

  The European Union has a number of legal instruments to its disposal. These are used to make or coordinate policies, to take measures and initiate programme's, to facilitate the implementation of policies and to issue advice to member states. Legal instruments are divided into two categories, binding and non-binding instruments. Legal instruments specifically in place for implementing EU acts are binding, but have been put in a final, third section.