Proposal for a COUNCIL DECISION amending Decision (EU, Euratom) 2020/2053 on the system of own resources of the European Union
Date: 2021-12-22
Institutions: Directorate-General for Budget, European Commission
Subjects: EU Emissions Trading Scheme, EU budget, carbon neutrality, coronavirus disease, economic recovery, epidemic, own resources

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   EUROPEAN COMMISSION  Brussels, 22.12.2021  COM(2021) 570 final 2021/0430 (CNS)  Proposal for a COUNCIL DECISION amending Decision (EU, Euratom) 2020/2053 on the system of own resources of the European Union  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The COVID-19 pandemic has caused the deepest economic recession for many decades in the 
EU1, which triggered a swift and resolute policy response at both national and EU level. All 
Member  States  have  adopted  exceptional  discretionary  measures,  in  addition  to  their 
“automatic stabilisers” in order to support economic activity and mitigate social impacts.  

The EU also took unprecedented steps to address the crisis. With a total of EUR 1.8 trillion in 
2018  prices,  the  EU’s  multitiannual  financial  framework,  coupled  with  the  European  Union 
Recovery  Instrument  (NextGenerationEU),  is  the  largest  stimulus  package  ever  financed 
through  the  EU  budget.  NextGenerationEU  was  formally  approved  by  the  Council  on  14 
December  20202  with  the  support  of  the  European  Parliament  and  will  deploy  EUR  750 
billion  (2018  prices),  raised  on  capital  markets,  to  fund  specific  recovery  and  resilience 
actions in a limited period of time, in order to boost economic growth and invest in resilience 
and a greener and digital future. 

Sufficient revenue is needed to cover the repayment of financing costs of NextGenerationEU 
borrowing, spread over three decades. Repayment of the principal may start before the end of 
the multiannual financial framework 2021-2027, if amounts not used for interest payments are 
lower than planned and in case new own resources are introduced3, and must be concluded by 
the end of 20584.  

In  the  framework  of  the  Interinstitutional  Agreement  of  16  December  20205,  the  European 
Parliament, the Council and the Commission  stated that expenditure from  the Union budget 
related  to  the  repayment  of  the  European  Union  Recovery  Instrument  should  not  lead  to  an 
undue reduction in programme expenditure or investment instruments under the  multiannual 
financial  framework.  According  to  this  Interinstitutional  Agreement,  it  is  also  desirable  to 
mitigate  the  increases  in  the  GNI-based  own  resource  for  the  Member  States.  The  three 
institutions  thus  agreed  to  “work  towards  introducing  sufficient  new  own  resources  with  a 
view  to  covering  an  amount  corresponding  to  the  expected  expenditure  related  to  the 

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The EU’s Gross Domestic Product contracted by about 5.9% in 2020 according to Eurostat data. 
Council  Regulation  (EU)  2020/2094  of  14  December  2020  establishing  a  European  Union  Recovery 
Instrument to support the recovery in the aftermath of the COVID-19 crisis, OJ L 433I , 22.12.2020, p. 
23. 
The conclusions of the European Council of July 2020 also stated under Point 150 that ‘the proceeds of 
the new own resources introduced after 2021 will be used for early repayment of Next Generation EU 
borrowing’. 
According to Article 5(2) of Council Decision (EU, Euratom) 2020/2053 of 14 December 2020 on the 
system  of  own  resources  of  the  European  Union  (‘Own  Resources  Decision’),  repayment  of  non-
repayable grants cannot exceed EUR 29,25 billion per year (in 2018 prices). 
Interinstitutional  Agreement  between  the  European  Parliament,  the  Council  and  the  European 
Commission  on  budgetary  discipline,  on  cooperation  in  budgetary  matters  and  on  sound  financial 
management, as well as on new own resources, including a roadmap for the introduction of new own 
resources, OJ L 433I , 22.12.2020, p. 28–46. 

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repayment.”6 The Commission committed to propose new own resources in 2021 with a view 
to their introduction at the latest by 1 January 20237.  

2. 

CONTENT OF THE AMENDING PROPOSAL 

The Commission proposes to introduce new own resources, vesting the EU with the necessary 
resources,  in  particular  in  view  of  new  budgetary  expenditure  for  the  repayment  of  the 
financing costs of NextGenerationEU borrowing and for the Social Climate Fund8.  

The amended proposal specifies that 25% of most revenues generated from allowances to be 
auctioned  from  the  emissions  trading  will  accrue  to  the  EU  budget.  This  includes  revenues 
from the current Emissions Trading System for stationary installations and aviation for which 
additional allowances would be auctioned  as well as its extension to maritime transport and 
the introduction of a separate  emission trading for road transport and buildings, in line with 
the proposal for an amendment of Directive 2003/87/EC9.  

Allowances  auctioned  by  the  European  Investment  Bank  for  the  Innovation  Fund  and  the 
initial  endowment  of  the  Modernisation  Fund  are  excluded.  In  order  to  remain  neutral,  the 
own resource scope also includes allowances in principle dedicated for auctioning by Member 
States, which based on discretion exercised by Member States are transferred free of charge to 
the power sector, used for compliance by effort sharing sectors, or auctioned by the European 
Investment Bank for the Modernisation Fund.  

To address possible social impacts in relation to the introduction of emissions trading for road 
transport and buildings, the Commission has proposed to establish a Social Climate Fund. The 
Fund  will  benefit  vulnerable  households,  micro-enterprises  and  transport  users.  For  its 
duration the Fund will be financed by the own resources of the Union budget, including as of 
2026  the  revenues  from  the  emission  trading  for  road  transport  and  buildings.  The  total 
financial  envelope  of  the  Fund  for  the  2025-32  period  will  be  EUR  72.2  billion  in  current 
prices,  corresponding  in  principle  to  an  amount  equivalent  to  around  25%  of  the  expected 
revenue from the new emissions trading system for buildings and road transport for the period 
2026-2032.   

A  temporary  solidarity  adjustment  mechanism  is  proposed  to  mitigate  the  regressive 
distributional  impacts  of the emissions trading-based own resource, introducing a maximum 
contribution  for  lower-income  and  carbon-intensive  Member  States  and  a  minimum 
contribution for typically higher-income and low-carbon Member States. This will avoid that 
some Member States contribute disproportionally to the EU budget in comparison to the size 

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Annex II, point F. 
Commission Work Programme 2021, COM (2020) 690 final. 
Proposal  for  a  Regulation  of  the  European  Parliament  and  the  Council  establishing  a  Social  Climate 
Fund, COM(2021) 568 final. 
Proposal for a Directive of the European Parliament and of the Council amending Directive 2003/87/EC 
establishing a system for greenhouse gas emission allowance trading within the Union, Decision (EU) 
2015/1814  concerning  the  establishment  and  operation  of  a  market  stability  reserve  for  the  Union 
greenhouse gas emission trading scheme and Regulation (EU) 2015/757, COM/2021/551 final. 

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of their economy, during the period of transition to more sustainable economies and societies, 
and ensures a just contribution from all. 

This  proposal  establishes  that  a  share  of  the  revenues  from  the  sale  of  carbon  border 
adjustment mechanism certificates will be transferred to the  EU budget as own resources in 
the form of a national contribution.  

Finally, this proposal provides that Member States will make a national contribution to the EU 
budget  based  on  the  share  of  the  residual  profits  of  the  largest  and  most  profitable 
multinational  enterprises  re-allocated  to  Member  States  in  case  they  are  end  market 
jurisdictions where goods  or services  are used or consumed under the OECD/G20  Inclusive 
Framework on Base Erosion and Profit Shifting agreement10 on a reform of the international 
tax framework. While work on a Multilateral Convention is still ongoing at the international 
level, the Commission has announced that it would table a proposal for a Council directive in 
2022  ensuring  a  consistent  implementation  of  the  Multilateral  Convention  on  a  partial  re-
allocation of taxing rights.  

3. 

LEGAL FRAMEWORK 

3.1. 

Own Resources Decision  

Pursuant  to  Article  311(3)  of  the  Treaty  on  the  Functioning  of  the  European  Union,  the 
Council,  after  consulting  the  European  Parliament  "may  establish  new  categories  of  own 
resources or abolish an existing category". This provision explicitly allows for amending the 
Own  Resources  Decision  to  add  new  own  resources  as  agreed  in  the  Interinstitutional 
Agreement. 

In  accordance  with  the  special  legislative  procedure  set  out  in  Article  311(3)  Treaty  on  the 
Functioning  of  the  European  Union,  the  Council  adopts  the  revised  decision  by  unanimity 
after  consulting  the  European  Parliament.  The  decision  will  enter  into  force  once  it  is 
approved by the Member States in accordance with their constitutional requirements.  

3.2. 

Implementing legislation 

In  parallel,  the  Council  needs  to  amend  the  implementing  measures  related  to  the  own 
resources  system  to  ensure  that  they  remain  fit  for  purpose.  Additionally,  new  making 
available provisions are  required  for all new own resources. The Commission will table the 
necessary proposals in the first half of 2022.   

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Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy, 
OECD/G20 Base Erosion and Profit Shifting Project, 8 October 2021. 

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2021/0430 (CNS) 

Proposal for a 

COUNCIL DECISION 

amending Decision (EU, Euratom) 2020/2053 on the system of own resources of the 
European Union 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 311, third paragraph thereof, 

Having  regard  to  the  Treaty  establishing  the  European  Atomic  Energy  Community,  and  in 
particular Article 106a thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments,  

Having regard to the opinion of the European Parliament,  

Acting in accordance with a special legislative procedure,  

Whereas: 

(1) 

(2) 

NextGenerationEU, established by Council Regulation (EU) 2020/209411, will deploy 
EUR 750 billion in 2018 prices, raised on financial markets as a temporary recovery 
instrument  to  ensure  a  sustainable  and  resilient  recovery  throughout  the  Union  and 
facilitate the implementation of economic support in the exceptional situation caused 
the COVID-19 pandemic, and promote the green and digital transition.  

The  repayment  of  the  principal  of  such  funds  to  be  used  for  expenditure  under  the 
European  Union  Recovery  Instrument  and  the  related  interest  due  will  have  to  be 
financed  by  the  general  budget  of  the  Union,  including  by  sufficient  proceeds  from 
new  own  resources  introduced  after  2021.  In  the  framework  of  the  Interinstitutional 
Agreement  of  16  December  202012,  the  European  Parliament,  the  Council  and  the 
Commission  recognised  the  importance  of  the  context  of  the  European  Union 
Recovery  Instrument  and  acknolwedged  that  ‘expenditure  from  the  Union  budget 
related to the repayment of the European Union Recovery Instrument should not lead 
to an undue reduction in programme expenditure or investment instruments under the 
MFF’. The Interinstitutional Agreement also stated that ‘it is also desirable to mitigate 
the increases in the GNI-based own resource for the Member States’.  

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Council  Regulation  (EU)  2020/2094  of  14  December  2020  establishing  a  European  Union  Recovery 
Instrument to support the recovery in the aftermath of the COVID-19 crisis (OJ L 433I, 22.12.2020, p. 
23). 
Interinstitutional  Agreement  between  the  European  Parliament,  the  Council  and  the  European 
Commission of 16 December 2020 on budgetary discipline, on cooperation in budgetary matters and on 
sound  financial  management,  as  well  as  on  new  own  resources,  including  a  roadmap  for  the 
introduction of new own resources (OJ L 433I , 22.12.2020, p. 28). 

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(3) 

(4) 

(5) 

(6) 

(7) 

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The  EU  Emissions  Trading  System,  established  by  Directive  2003/87/EC  of  the 
European Parliament and of the Council13, is a central part of the climate policy of the 
Union. Considering the close link of emissions trading to the climate policy objectives 
of  the  Union,  it  is  appropriate  to  allocate  a  share  of  the  revenues  concerned  to  the 
Union budget. 

The emissions trading own resources includes a share of revenues generated from the 
auctioning  of  allowances  in  all  sectors  falling  under  the  scope  of  Directive 
2003/87/EC.  Under  Directive  2003/87/EC  and  Regulation  (EU)  2018/842  of  the 
European Parliament and of the Council14, Member States may decide not to auction 
some  of  the  total  quantity  of  allowances  specified  under  Directive  2003/87/EC  or  to 
have  it  transferred  and  auctioned  for  the  Modernisation  Fund  established  by  that 
Directive.  Those  allowances  should  also  be  used  to  calculate  the  amount  of  own 
resources  based  on  emission  trading.  It  is  appropriate  to  exclude  allowances  for  the 
initial endowment of the Modernisation Fund as well as allowances for the Innovation 
Fund.  

To  avoid  an  excessively  regressive  impact  on  contributions  from  the  emissions 
trading,  a  maximum  contribution  should  be  established  for  eligible  Member  States. 
For  the  period  from  2023  to  2027,  Member  States  are  eligible  if  the  gross  national 
income per capita, measured in purchasing power standard and calculated on the basis 
of Union figures for 2020 is below 90% of the EU average. For the period from 2028 
to 2030, the gross national income per capita in 2025 should be used. The maximum 
contribution  should  be  established  by  comparing  Member  States’  shares  in  the  total 
emission  trading  based  own  resource  with  the  shares  of  those  Member  States  in  the 
Union  gross  national  income.  A  minimum  contribution  should  be  established  for  all 
Member States if their share of the total amount of ETS-based own resources is lower 
than 75% of their share in the Union gross national income. 
Regulation (EU) [XXX] of the European Parliament and of the Council15 establishes a 
carbon  border  adjustment  mechanism  to  complement  the  EU  Emissions  Trading 
System and to ensure the effectiveness of the climate policy of the Union. Considering 
the  close  link  of  the  carbon  border  adjustment  mechanism  to  the  Union’s  climate 
policy, a share of the revenues from the sale of certificates should be transferred to the 
Union budget as an own resource.  

In October 2021, the Organisation for Economic Co-operation and Development and 
the  G20  Inclusive  Framework  on  Base  Erosion  and  Profit  Shifting  reached  an 
agreement  on  the  allocation  to  participating  market  jurisdictions  of  25%  of  residual 
profits  of  large  multinational  enterprises  above  the  profitability  threshold  of  10% 
(‘OECD/G20 IF Pillar 1 Agreement’). The own resource should consist in applying a 
uniform  call  rate  to  the  share  of  residual  profits  of  the  multinational  enterprises,  re-

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a 
system  for  greenhouse  gas  emission  allowance  trading  within  the  Union  and  amending  Council 
Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32). 
Regulation (EU) 2018/842 of the European Parliament and of the Council of 30 May 2018 on binding 
annual  greenhouse  gas  emission  reductions  by  Member  States  from  2021  to  2030  contributing  to 
climate  action  to  meet  commitments  under  the  Paris  Agreement  and  amending  Regulation  (EU)  No 
525/2013 (OJ L 156, 19.06.2018, p. 26) 
Regulation  (EU)  [XXX]  of  the  European  Parliament  and  of  the  Council  establishing  a  carbon  border 
adjustment mechanism (OJ L […], […], p. […]). 

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(8) 

allocated to Member States [pursuant to the Directive on implementation of the global 
agreement on re-allocation of taxing rights.]  

The  provisions  concerning  the  contribution  from  the  auctioning  of  allowances  under 
the  current  Emissions  Trading  System  should  apply  as  of  1  January  2023.  Once 
Directive  2003/87/EC  has  been  amended,  the  provisions  concerning  the  contribution 
from the auctioning of allowances under the revised Emissions Trading System should 
apply  from  the  first  day  following  the  last  day  of  the  period  for  transposing  that 
amendment.  The  provisions  concerning  the  contribution  from  the  carbon  border 
adjustment  mechanism  should  apply  from  the  date  of  application  of  the  Regulation. 
[The provisions on the  OECD/G20 IF Pillar 1 Agreement shall enter into force once 
the  Directive  on  implementation  of  the  global  agreement  on  re-allocation  of  taxing 
rights applies and the Multilateral Convention entered into effect.]  

HAS ADOPTED THIS DECISION:  

Article 1 

Amendments to Decision (EU, Euratom) 2020/2053 

Decision (EU, Euratom) 2020/2053 is amended as follows:  

(1) 

(a) 

Article 2 is amended as follows: 

in paragraph 1, the following point (e) is added: 

“(e) the application of a uniform rate of 25% to:  

(1) 

the  revenues  generated  from  the  auctioning  of  allowances  by  the  Member 
States  pursuant  to  Articles  3d,  10  and  30d  of  Directive  2003/87/EC  of  the 
European Parliament and of the Council1;  

(2) 

the  amount  calculated  by  multiplying  the  annual  amount  of  allowances  in 
respect of which the relevant Member State applies any of the following:  

(a) 

(b) 

(c) 

the  option  for  transitional  free  allocation  referred    to  in  Article  10c  of 
Directive 2003/87/EC; 

the  possibility  of  limited  cancellation  referred  to  in  Article  6(1)  of 
Regulation  (EU)  2018/842  of  the  European  Parliament  and  of  the 
Council2; 

the  use  of  allowances  referred    to  in  Article  10d(4)  of  Directive 
2003/87/EC  to  auctioning  for  the  Modernisation  Fund  referred  to  in 
Article 10d(3) of that Directive;  

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Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a 
scheme  for greenhouse  gas emission allowance trading  within the  Community and amending Council 
Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32). 
Regulation (EU) 2018/842 of the European Parliament and of the  Council of 30 May 2018 on binding 
annual  greenhouse  gas  emission  reductions  by  Member  States  from  2021  to  2030  contributing  to 
climate  action  to  meet  commitments  under  the  Paris  Agreement  and  amending  Regulation  (EU)  No 
525/2013 (OJ L 156, 19.6.2018, p. 26). 

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with  the  average  weighted  price  of  allowances  auctioned  on  the  common 
auction  platform  in  the  year  in  which  these  allowances  would  have  been 
auctioned.” 

(b) 

in paragraph 1, the following point (f) is added: 

“(f)  the  application  of  a  uniform  call  rate  equal  to  75%  of  the  revenues  from  the  sale  of 
certificates  of  the  carbon  border  adjustment  mechanism  established  by  Regulation  (EU) 
[XXX] of the European Parliament and of the Council3.” 

(c) 

in paragraph 1, the following point (g) is added: 

“(g)  the  application  of  a  uniform  call  rate  of  15%  to  the  share  of  residual  profit  of 
multinational  enterprises  reallocated  to  Member  States  pursuant  to  [the  Directive  on 
implementation of the global agreement on re-allocation of taxing rights4.]” 

(d) 

the following paragraph 2a is inserted: 

“2a.  By way of derogation from paragraph 1, point (e), the following shall apply until the 
financial year 2030:  

(a)  where a Member State’s share in the total amount of revenue resulting from the 
application  of  paragraph  1,  point  (e),  is  lower  than  75%  of  its  share  in  the 
Union  gross  national  income,  that  Member  State  shall  make  available  an 
amount that is equal to 75% of that gross national income share, multiplied by 
the total amount of revenue resulting from the application of paragraph 1, point 
(e).  

(b) 

a  Member  State’s  share  in  the  total  amount  of  revenue  resulting  from  the 
application  of  paragraph  1,  point  (e),  shall  not  be  higher  than  150%  of  that 
Member  State’s  share  in  the  Union  gross  national  income  for  Member  States 
with  a  gross  national  income  per  capita  below  90%  of  the  Union’s  average, 
measured  in  purchasing  power  standard  and  calculated  on  the  basis  of  the 
figures  for  2020,  for  the  period  from  2023  to  2027,  and  on  the  basis  of  the 
figures for 2025, for the period from 2028 to 2030.  

Gross national income as referred to in points (a) and (b) shall mean the gross national income 
at market prices  as referred to in Article 1(1) of  Regulation (EU) 2019/516 of the European 
Parliament and of the Council5.” 

Article 2 

Entry into force and application 

The Secretary-General of the Council shall notify the Member States of this Decision. 

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Regulation  (EU)  [XXX]  of  the  European  Parliament  and  of  the  Council  on  the  carbon  border 
adjustment mechanism. 
[Directive (EU) XXX giving effect to the OECD/G20 IF Pillar 1 Agreement]. 
Regulation  (EU)  2019/516  of  the  European  Parliament  and  of  the  Council  of  19  March  2019  on  the 
harmonisation of gross national income at market prices and repealing Council Directive 89/130/EEC, 
Euratom and Council Regulation (EC, Euratom) No 1287/2003 (GNI Regulation) (OJ L 91, 29.3.2019, 
p. 19). 

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Member  States  shall  notify  the  Secretary-General  of  the  Council  without  delay  of  the 
completion  of  the  procedures  for  the  approval  of  this  Decision  in  accordance  with  their 
respective constitutional requirements. 

This Decision shall enter into force on the first day of the first month following receipt of the 
last of the notifications referred to in the second paragraph. 

Article 1(1), point (a), shall apply from 1 January 2023 for the revenues pursuant to Article 3d 
and  10  of  Directive  2003/87/EC,  and  from  the  day  following  the  last  day  of  the  period  for 
transposing Directive (EU) [XXX] of the European Parliament and of the Council6 amending 
Directive 2003/87/EC for the revenues pursuant to Article 30d of Directive 2003/87/EC.   

Article  1(1),  point  (b),  shall  apply  from  the  date  of  application  of  Regulation  (EU)  [XXX] 
establishing a carbon border adjustment mechanism.  

Article 1(1), point (c), shall apply from  

the  first  day  of  the  date  of  application  of  the  [Directive  on  implementation  of  the  global 
agreement on re-allocation of taxing rights] or  

the  day  of  the  entry  into  force  and  effect  of  the  Multilateral  Convention,  whichever  is  the 
later. 

Article 3 

Addressees 

This Decision is addressed to the Member States. 

Done at Brussels, 

For the Council 
The President 

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Directive (EU) XXX/XXXX of the European Parliament and of the Council of dd/mm/yy 

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