COMMISSION STAFF WORKING DOCUMENT Accompanying the document Amended Proposal for a Council Decision amending Decision (EU, Euratom) 2020/2053 on the system of own resources of the European Union
Date: 2023-06-20
Institutions: Directorate-General for Budget, European Commission
Subjects: EU Emissions Trading Scheme, EU budget, carbon neutrality, coronavirus disease, economic recovery, epidemic, own resources

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 20.6.2023  SWD(2023) 331 final  COMMISSION STAFF WORKING DOCUMENT   Accompanying the document Amended Proposal for a Council Decision amending Decision (EU, Euratom) 2020/2053 on the system of own resources of the European Union {COM(2023) 331 final}  
 
 
TABLE OF CONTENTS 

Executive Summary ............................................................................................................................................................................................... 3 

Part 1. Overview of the own resources system and recent developments on the revenue side of the 

EU budget ....................................................................................................................................................................................................... 4 

1.1 Recent developments of the EU own resources system. ......................................................................................... 4 

1.1.1. The own resources system: main elements of reform ........................................................................ 4 

1.1.2. Simplification of the own resources system: Value Added Tax own resource ..................... 5 

1.1.3. Diversification of revenues: the plastics-based own resource ....................................................... 7 

1.2 The increase in “other revenues” ............................................................................................................................................. 9 

Part 2. Potential New Own Resources – Types and Evaluation ............................................................................................ 13 

2.1. Assessment framework for new own resources candidates ............................................................................. 13 

2.1.1. Political context ......................................................................................................................................................... 13 

2.1.2. Selection of criteria ................................................................................................................................................. 13 

Revenue potential .................................................................................................................................................................. 14 

Simplicity  .................................................................................................................................................................................... 14 

Fast mobilisation of new revenue sources ............................................................................................................ 14 

2.2 Stakeholder and other institutions’ views ...................................................................................................................... 16 

2.3. Evaluation of potential new own resources – individual factsheets ............................................................ 17 

2.3.1. Corporate taxation (BEFIT), including financial sector ...................................................................... 18 

2.3.2. Statistical own resource based on company profits .......................................................................... 19 

2.3.3. Financial Sector - Financial Transaction Tax (FTT) .............................................................................. 20 

2.3.4. EU ‘fair border Mechanism’  .............................................................................................................................. 21 

2.3.5. Tax on crypto assets ............................................................................................................................................... 22 

2.3.6. Statistical own resource based on gender pay gap ............................................................................ 23 

2.3.7. Statistical own resource based on food waste  .................................................................................... 24 

2.3.8. Statistical own resource based on e-waste ............................................................................................. 26 

Part 3. The new own resources package ............................................................................................................................................. 29 

3.1. 

Emissions trading scheme (ETS) own resource ................................................................................................... 29 

3.1.1. The 2021 proposal on ETS – an overview ................................................................................................ 29 

3.1.2.  Ensuring  fairness  –  the  Valuation  Mechanism  and  Solidarity  Adjustment 

Mechanisms ........................................................................................................................................................ 31 

3.1.3. The evolution of the carbon market ............................................................................................................. 33 

3.2. 

The statistical own resource based on company profits ............................................................................... 34 

3.2.1. Characteristics of the statistical based own resource on company profits ........................ 35 

3.2.2. How would it work? ................................................................................................................................................. 37 

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Executive Summary    

In 2020, the revenue side of the EU budget was significantly reformed. The Recovery plan for Europe 
put  in  place  to  address  the  economic  and  social  damage  brought  about  by  the  COVID-19  crisis  and  the 
empowerment to borrow up to around EUR 750 billion (2018 prices) on the markets to finance it was a step 
change  for  the  EU.  At  the  same  time,  adding  a  new  own  resource  based  on  non-recycled  plastic  packaging 
waste, the first one since the introduction of the GNI-based own resource in 1988, was an important step in 
the  direction  of  supporting  EU  policy  priorities,  such  as  the  circular  economy,  and  diversifying  the  revenue 
sources  of  the  EU  budget.  Finally,  the  revenue  side  of  the  EU  budget  became  less  complex  with  the 
simplification of the VAT own resource and the budgetary rebates.   

The commitment to repay the  NextGenerationEU borrowing as from 2028 emphasises the urgent 
need  for  new  own  resources  to  protect  EU  budget  expenditures  for  existing  policies  and  new 
challenges.  The  Commission  has  proposed  a  first  package  in  December  2021  with  three  new  sources  of 
revenues for the EU budget, i.e. contributions from the emissions trading system, from the EU Carbon Border 
Adjustment Mechanism and from a share of residual profits from multinationals that will be re-allocated to 
EU Member States under the recent OECD/G20 agreement (“Pillar One”). The inter-institutional agreement of 
16  December  2020  among  the  European  Parliament,  the  Council,  and  the  Commission  foresees  another 
package to be presented by the Commission.  

Against this background, this document takes stock of the current situation and  analyses a set of  potential 
candidates for the Commission adjusted proposal on new own resources. 

Three  criteria  are  used  to  evaluate  potential  new own  resources  –  revenue  potential,  simplicity, 
and  fast  mobilisation  of  revenues.  As  found  in  the  literature,  they  summarise  different  considerations 
relevant to designing new own resources optimally, such as  the ability to generate sufficient revenues, ease 
of administration in terms of revenue collection and compliance. They also reflect the political context and the 
need to act urgently. The ability to implement any new sources of revenues quickly is an important dimension 
which takes account of the needs of the EU budget.  

The analysis covers eight potential new own resources, scoring each option on a qualitative  and 
quantitative  basis.  The  eight  candidates  are:  corporate  taxation  (BEFIT),  including  the  financial  sector;  a 
statistical  own  resource  based  on  company  profits;  a  tax  on  the  financial  sector  with  an  assessment  of  a 
financial  transaction  tax  (FTT);  an  EU  ‘fair  border  mechanism’;  a  tax  on  cryptocurrencies;  a  statistical  own 
resource  based  on  gender  pay  gap;  a  statistical  own  resource  based  on  food  waste;  and  a  statistical  own 
resource based on e-waste. Having due consideration of the current economic environment, with high inflation 
creating pressures on the EU budget, the analysis shows that only few candidates would be suitable under the 
current circumstances; others could not be mobilised in the short run or are too complex to implement.  

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Part 1. Overview of the own resources system and recent 
developments on the revenue side of the EU budget 

Until 2020, the EU own resources system has remained fairly stable, providing reliable revenue to 
the  EU  budget.  Between  1988  and  2021,  the  main  categories  of  own  resources  remained  the  same: 
traditional own resources (customs duties), contributions from the Member States based on value added tax 
(VAT)  and  on  gross  national  income  (GNI).  This  stable  system  has  however  increasingly  relied  on  the  own 
resource  based  on  GNI,  which  had  been  introduced  in  1988  as  a  residual  item.  Throughout  the  decades, 
various  attempts  have  been  undertaken  to  reform  this  system  and  to  introduce  new  own  resources(1).  The 
reform  of  2020  introduced  significant  changes  which  pave  the  way  for  the  modernisation  of  the  own 
resources system. 

In parallel, other streams of revenues (‘other revenues’) have increased their share in the revenue 
side  of  the  EU  budget.  ‘Other  revenues’  coming  from  various  sources  described  in  part  1.2  have  also 
provided a stable revenue source. Since 2021, ‘other revenues’ also include the amounts  for non-repayable 
support assigned to the European Recovery Instrument and borrowed for NextGenerationEU (NGEU), for which 
an exceptional and temporary authorisation was established in the Own Resources Decision(2). Complemented 
with  an  increasing  role  of  financial  instruments,  NGEU  issuances  explains  recent  increases  in  the  share  of 
‘other revenues’.  

1.1 Recent developments of the EU own resources system.  

1.1.1. The own resources system: main elements of reform  

In  2020,  in  response  to  the  severe  COVID-19  crisis,  Member  States  agreed  on  far-reaching 
reforms,  including  on  the  system  of  own  resources.  The  Recovery  plan  for  Europe  put  in  place  to 
address  the  economic  and  social  damage  brought  about  by  the  COVID-19  crisis  has  introduced  significant 
changes on the revenue side of the EU budget. To give the Union the means to achieve its objective, the Own 
Resource Decision(3) adopted in December 2020 empowers the Commission to borrow up to EUR 750  billion 
(2018 prices) on an exceptional and temporary basis. In order to do so, it also substantially increases the own 
resource  ceiling, enabling  such  EU  borrowing  on  an  exceptional  and temporary  basis.  In  particular,  the  Own 
Resource  Decision  has  added  a  separate  and  additional  compartment  in  the  own  resource  payment  ceiling 
equal to 0.6% of EU GNI, to enable NextGenerationEU borrowing.  

Although  the  2020  reform  introduced  a  new  own  resource  (based  on  recycled  plastic  packaging 
waste), the balancing GNI-based own resource remains the dominant source of revenue for the EU 
budget. Broadly stable revenues from both Traditional Own Resources and the VAT-based, combined with a 
slowly rising total budget, have translated into a growing weight of the GNI-based own resource (Graph 1). 
The introduction of the new plastics-based own resource makes a small dent in the GNI dominance, without 
significantly altering the overall picture.    

(1)   Proposal  for  a  Council  Decision  on  the  system  of  own  resources  of  the  European  Union  (COM(2011)  510  final) 
suggests the introduction of a Financial Transaction Tax and a new Value Added Tax based Own Resource. As a result, 
a High-Level Group chaired by Mario Monti was mandated to identify possible new own resources. 

(2) 

In December 2020, the Council established the European Union Recovery Instrument (NextGenerationEU) to help the 
EU tackle the crisis caused by the COVID-19 pandemic. It is put in place for a temporary period to be used exclusively 
for crisis response and recovery measures. 

(3)   Council Decision (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources of the European 

Union and repealing Decision 2014/335/EU, Euratom. 

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Graph 1. The evolution of own resources, 2000-2022 

Source:  Commission  services,  Expenditure  and  Revenue  Tables  2000-2021  (Spending  and  revenue 
(europa.eu)); source Budget 2022: financing tables 2022, including Draft Amending Budget 5 

A  system  of  rebates  is  maintained  for  the  period  2021-2027,  but  it  is  now  simpler  and  more 
transparent.  The  system  of  rebates  on  national  contributions,  initially  introduced  in  1984,  was  meant  to 
reduce  the  excessive  net  budgetary  burden  on  some  Member  States,  while  at  the  same  time  adding 
complexity to the revenue system. With the withdrawal of the United Kingdom, the UK rebate ceased to apply. 
As from 2021, gross lump sums are deducted from the GNI-contributions of Austria, Denmark, Germany, the 
Netherlands,  and  Sweden,  and  they  are  financed  by  all  Member  States,  i.e.  including  the  five  beneficiaries, 
which reduces the net amount of their rebates. As these lump sums are indexed to inflation, they imply large 
windfall gains in the  current  inflationary environment.  The retention rate for traditional own resources, also 
known as ‘collection costs’, increases from 20% to 25%.  

1.1.2. Simplification of the own resources system: Value Added Tax own resource 

The Value Added Tax-based own resource was simplified for the first time in 2020. The previous system used 
to  rely  on  a  notional  harmonised  value  added  tax  base  requiring  complex  calculations  to  adjust  for  the 
derogations  and  exemptions  in  the  VAT  Directive.  Following  the  reform,  the  value  added  tax  base  is  now 
calculated in a simpler way, by dividing the national receipts by a weighted average rate based on a reference 
year (4). The adjustment for derogations and exemptions have been removed, thus simplifying the calculations 
A uniform call rate of 0.3% applies to the value added tax bases of all Member States.   

(4)   The reference year is 2016. It is applied throughout the Multiannual Financial Framework  2021-2027. The weighted 
average  rate  is  determined  by  allocating  all  taxable  transactions  to  the  appropriate  rate  of  value  added  tax  using 
data from national accounts and other sources. Before the reform, the weighted average rate had to be calculated 
annually. 

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On  average,  the  removal  of  complex  calculations  had  a  limited  impact  on  Member  States.  The 
objective of corrections and compensations was to offset the potential exemptions and derogations foreseen 
in the value added tax Directive that were applied by some Member States (5). First, the VAT national receipts 
were  corrected  from  non-VAT  elements, leading  to  the  so-called  ‘net  receipts’.  Over  the  period  2016-2019, 
corrections  represented  on  average  0.5%  of  total  value  added  tax  receipts  in  the  EU27  as  a  whole.  The 
difference  between  receipts  and net receipts  (representing the amounts of corrections)  was limited in  most 
Member  States  (Graph  2).  Second,  more  complex,  the  compensations  included  a  statistical  treatment  of 
derogations  and  exemptions  for  levying  VAT,  allowing  the  calculation  of  the  final  base.  Compensations 
represented around 0.2% of the EU’s value added tax base on average. The difference between intermediate 
and final  base  (corresponding  to  the  statistical  compensation)  was  limited  for  most  Member  States  (Error! 
Reference source not found.). Finally, as the annual weighted average rate did not fluctuate considerably 
over time, the reform proposed to remove the complex calculations of the annual weighted average rate, and 
to take the weighted average rate of 2016 (Graph 4) (6).    

Graph 2. Corrections to VAT receipts, EUR billion, average 2016-2020 

Note:  Net  receipts  exclude  corrections  from  receipts.  Corrections  aimed  to  take  out  non-VAT  elements  from 
VAT receipts and to add  potential VAT receipts accounted for elsewhere or not at all.  The  small differences 
between receipts and net receipts show the small impact of removing the corrections. 

Source: Commission services calculations based on national VAT statements. 

(5)   Commission Staff Working Document: Financing the EU budget: report on the operation of the own resources system, 
SWD(2018) 172 final, accompanying the document “Proposal for a Council Decision on the system of Own Resources 
of the European Union”, COM(2018) 325 final. 2 May 2018. 

(6)   In the short run, this has a limited impact, although changes in the scope of application of reduced VAT rates could 

have a larger impact in the longer run. 

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Graph 3. Compensations to the VAT base, EUR billion, average 2016-2020 

Compensations were made until 2020 to harmonise the notional VAT base, as calculated from the VAT 
receipts reported by Member States. They correspond to the full application of the VAT Directive (no 
derogations, no exemption). VAT bases are displayed before capping at 50% of GNI. 

Note: 

Source: Commission services calculations based on national VAT statements. 

Graph 4. Weighted Average VAT Rates, %, 2016-2020 

Source: Commission services calculations based on national VAT statements. 

Finally,  to  ensure  fairness  among  Member  States,  the  capping  mechanism  was  maintained.  The 
mechanism  prevents  Member  States  with  high  consumption  shares  and  large  value  added  tax  bases  from 
paying a disproportionate contribution, by capping the value added tax base for the VAT own resource at 50% 
of their GNI.  

1.1.3. Diversification of revenues: the plastics-based own resource 

The  most  notable  novelty  concerning  own  resources  is  the  own  resource  based  on  non-recycled 
plastic packaging waste, entered into force in 2021. The introduction of this new own resource is not 
only historic, as it is the first new own resource since the introduction of the GNI-based own resource in 1988, 
but  also  an  important  step  in  the  direction  of  supporting  EU  policy  priorities, such  as  the  circular  economy, 

7 

 
 
with the revenue side of the budget. The new own resource contributes some 3% of total EU revenues, which 
represents a small but important change in the mix of revenues. 

As  a  statistical-based  own  resource,  the  plastics-own  resource  changes  the  contribution  key  of 
Member  States,  thereby  encouraging  them  to  implement  or  reinforce  recycling  policies.  The  own 
resource contribution is proportional to the quantity of plastic packaging waste that is not recycled. Member 
States contribute EUR 0.80 per kilogramme of plastics packaging waste that is generated in their territory and 
not  recycled  (i.e.  is  put  in  a  landfill  or  incinerated  with  or  without  energy  recovery).  As  such,  it  provides 
Member  States  with  a  direct  financial  incentive  to  reduce  waste  generation  and  recycle  more.  It  however 
leaves them free to choose the appropriate way of achieving this, which may include a tax or other measures, 
such as deposit systems and communication campaigns to encourage recycling(7). 

In  the  years  before  the  Covid-19  crisis,  both  plastic  packaging  waste  generation  and  recycling 
have risen in the EU. The quantity of plastic packaging waste that each Member State generates annually 
depends  on  its  demographic  and  economic  size.  In  the  past,  it  has  broadly  evolved  in  sync  with  real  GNI 
growth (Graph 5).  

Graph 5.  Plastic packaging waste (PPW) generated and recycled vs GNI, EU27 

Source: Eurostat database (Tables: env_waspac & nama_10_gdp). 

Note: Recycling rates series feature a break due to a change in measurement. This break explains the fall in 
the series in recent years, as measurement is stricter.  

The proportion of plastic packaging waste that is recycled varies widely across the EU. Whereas in 
two Member States in 2020 it had already reached the 50% EU target(8) for 2025, in others it remained quite 
far below  that  level.  Overall,  recycling  rates  have  also  increased  from  an  EU  average  of  31.4%  in  2008  to 
37.6% in 2020, although with wider fluctuations in several countries (Graph 6).  

(7)   The July 2020 European Council agreed to introduce a correction mechanism mitigating the financial impact on the 
lower-income Member States. To sharpen incentives to reduce non-recycled waste, the correction takes the form of a 
lump sum, proportional to the quantity of non-recycled plastic packaging waste per capita in each country in 2017. 

(8)   European  Parliament  and  Council  Directive  94/62/EC  of  20  December  1994  on  packaging  and  packaging  waste 

(Official Journal L 365, 31/12/1994, P. 0010 - 0023). 

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Graph 6. Recycling rate: plastic packaging waste recycled in % of total generated, 2020 

Source: Eurostat database (Tables: env_waspac).  

The  plastics-own  resource  encourages  decoupling  non-recycled  plastic  waste  from  economic 
growth.  The  new  own  resource  is  expected  to  support  Member  States’  efforts  to  reduce  the  generation  of 
plastic packaging waste and to increase its recycling. Both effects would contribute to decouple the dynamics 
of  non-recycled  waste  from  economic  developments.  However,  the  incentives  become  smaller  over  time  as 
the “price” for the non-recycled plastic packing waste in the Own Resources Decision is fixed in current prices 
while the overall price levels increased substantially due to high inflation rates.     

1.2 The increase in “other revenues” 

In addition to own resources, “other revenues” present another income stream for the EU budget. 
These revenues come  from various sources such as surpluses  from the  previous  year or contributions from 
third countries. They can also be directly generated by the implementation of EU policy and the enforcement 
of common Union rules, such as fines in the context of competition policy or taxes paid by EU civil servants 
(see  Box  1).  By  default,  other revenues,  provided  they  are  not  assigned,  are  budgeted  as  general  revenues. 
Until 2020, other revenues have so far represented less than 10% of total own resource revenues, on average 
(Graph 7).  

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Graph  7.  Evolution  of  the  share  of  other  revenues  and  own  resources  in  total  budget  revenue, 
2000-2022, % 

Note: Light colour / green bars include revenue from own resources, i.e. traditional own resources (TOR), VAT, 
plastic packaging waste (PPW) and GNI. Dark colour / blue bars include other revenues as per Box 1, including 
the revenues from borrowing activities linked to non-repayable part of NGEU. 

Source:  Commission  services,  Expenditure  and  Revenue  Tables  2000-2021  (Spending  and  revenue 
(europa.eu)), source Budget 2022: financing tables 2022, including Draft Amending Budget 5. 

Components of other revenue (excluding NGEU) such as surplus, administrative revenues or fines 
have remained quite stable over time. They account for a small share of total revenues (i.e. 4.5% in 2016 
and 3.1% in 2021) and depend to a large extent on the implementation of the EU budget and the revenues 
actually  collected  during  the  financial  year.  Income  stemming  from  interests  and  fines  or  penalties  due  to 
infringement law are more difficult to predict and can vary from one year to another.  

Compared to the last decade, the share of revenues from “budgetary guarantees, borrowing and 
lending operations” have increased to reach 23% of total revenues in 2021 (graph 8). This is solely 
related to the  borrowing for  the new NGEU instrument,  where  proceeds for the non-repayable expenditures 
are channelled to the budget via external assigned revenues. On the contrary, the increasing role  of financial 
instruments over the past years, contributing to incentivising both private and public investment in the EU, or 
the  increased  support  to  some  countries  through  facilities  such  as  the  balance  of  payment  assistance  or 
external lending related to the past economic and financial crisis  do not feature prominently on the revenue 
side. 

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Graph 8. Budget revenue, 2016 (lhs) vs 2021 (rhs) 

Source: Consolidated annual accounts of the European Union 2016 and 2021. 

Box 1. Other revenues and assigned revenues 

The  annual  budget  includes  the  yearly  general  statement  of  revenues,  including  ‘other  revenue’ 
described in Titles 2 to 6 below, which are subdivided further into Chapters, Articles, and Items. 

‒  Title 2 (Surpluses, balances, and adjustments) includes the surplus from the previous financial 
years  as  well  as  own  resources  balances,  and  other  adjustments  such  as  for  the  non-
participation of certain Member States in specific policies.  

‒  Title 3 (Administrative revenue) comprises in particular revenues from taxes  and levies on the 

remuneration of staff. 

‒  Title  4  (Financial  revenue,  default  interests  and  fines)  refers  mainly  to  fines  in  the  field  of 

competition. 

‒  Title  5  (Budgetary  guarantees,  borrowing  and  lending  operations)  covers  NextGenerationEU 
(NGEU)  funds  for  the  non-repayable  support  as  well  as  guarantees  and  interest  and 
repayments of loans granted.  

‒  Title  6  (Revenue,  contributions  and  refunds  related  to  Union  policies)  covers  mainly  revenue 
from  financial  corrections  related  to  structural  and  agricultural  funds  and  includes  the 
participation  of  third  countries  in  research  programmes,  the  clearance  of  accounts  in 
agricultural funds and other contributions and refunds to EU programmes/activities.  

Expenditure can be financed by general revenue or revenue that is assigned to specific expenditures. 
Assigned  revenues  therefore  represent  an  exception  to  the  principle  of  universality.  The  complete 
list  of  items  constituting  assigned  revenue  is  given  in  Article  21  of  the  Financial  Regulation.  The 
sums  borrowed  for  NextGenerationEU  are  assigned  to  specific  programme  spending  (in  particular 

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the Recovery and Resilience Facility).  

The number of “Other revenue” sources are expected to increase in the near future. Recent policies 
generating  other  revenues  for  the  EU  Budget  include  EU  policies  such  as  the  European  Travel 
Information  and  Authorisation  System  -  ETIAS (9),  the  CO2  emission  standards  for  cars  and  vans 
Regulation (10), the CO2 emission standards for heavy duty vehicles (11).  

(9)  ETIAS  is  a  pre-travel  authorisation  system  for  visa  exempt  third  country  nationals  and  will  enter  into  operation  in 
November 2023. Its key function is to verify if such third country nationals meet entry requirements before travelling 
to the Schengen area. Revenues from fees applied under ETIAS are revenues to the EU budget (Title 6). 

(10)  The  Regulation  proposes  stronger  requirements  for  passenger  cars  and  light  duty  vehicles  and  includes  an  excess 
emissions premium for manufacturers whose fleets of newly registered vehicles exceed a specific emission target. 
For the year 2019 and 2020, automotive manufacturers were required to pay excess emission premiums of around 
EUR 13.6 m and EUR 510 m respectively (included in Title 4). 

(11)  In  2019,  the  legislation  setting  CO2  emission  standards  for  HDV  was  adopted.  It  includes  an  excess  emissions 
premium for fleets of newly registered vehicle exceeding a specific emission target as of 2025. The revenues will be 
assigned to the EU budget as other revenues. A revision of the legislation is currently in preparation. 

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Part  2.  Potential  New  Own  Resources  –  Types  and 
Evaluation 

The own resource package is framed by a specific political context – the inter-institutional agreement signed 
in  December 2020  where  the  three  institutions  agreed  on  a  roadmap towards the  introduction  of  new  own 
resources.  

This part explores criteria to assess new own resources, taking account of the current economic and political 
context,  and  applies  these  criteria  to  potential  candidates,  scoring  them,  to  propose  or  discard  new  own 
resources in the short term.  

2.1. Assessment framework for new own resources candidates 

2.1.1. Political context 

In December 2021, the Commission proposed three new sources of revenues for the EU budget with 
contributions from the Emissions Trading System (ETS), from the EU Carbon Border  Adjustment  Mechanism 
(CBAM)  and  from  a  share  of  the  residual  profits  of  the  largest  multinational  enterprises  that  would  be 
reallocated to the EU under the OECD/G20 Pillar 1 agreement. This basket of own resources was consistent 
with the proposed sectorial legislation on both the revised ETS Directive and on the Carbon Border Adjustment 
Mechanism  (CBAM)  proposed  earlier  in  the  same  year.    Since  then,  the  discussions  on  own  resources  have 
made  limited  progress  and  the  recent  agreement  on  the  underlying  sectoral  legislation  –  ETS  Directive  and 
CBAM Regulation – paves the way for relaunching the discussions (see part 3).  

The  inter-institutional  agreement  of  16  December  2020  among  the  European  Parliament,  the 
Council, and the Commission foresees another batch of own resources, mostly linked to the corporate 
and financial sectors. The European Parliament as well as other institutions have identified a large number of 
potential candidates, including in the field of corporate and financial taxation (see section 2.2).  

The  delays  in  the  implementation  of  the  December  2021  proposals  increase  the  urgency  of 
additional resources. Issues of both timing and sufficiency related to ETS, CBAM, and the OECD/G20 Pillar 1 
make  it  now  necessary  to  supplement  this  selection  with  additional  new  own  resources.  This  document 
intends  to  provide  Member  States,  the  Parliament,  and  stakeholders  at  large  with  a  full  overview  of  the 
analysis  underpinning  the  Commission’s  proposal,  so  that  all  elements  are  available  to  resume  and  swiftly 
progress in the discussions on the proposed new own resources.  

2.1.2. Selection of criteria 

Against  this  political  background,  the  assessment  framework  must  account  for  the  need  to  act 
quickly and provide the necessary means to the EU budget, but also of ways to design new own 
resources optimally. For this purpose, selection criteria are established according to the literature, but only 
own resource candidates able to generate significant resources quickly and without heavy implementation are 
considered, to respond to the challenges the EU budget is facing. Therefore, the assessment framework relies 
on  three  criteria  related  to  (1)  revenue  potential,  (2)  simplicity  in  terms  of  compliance  and  administrative 
burden, and (3) fast mobilisation. These are in line with the economic literature, while taking account of the 
specificities of the EU budget at this juncture (Table 1 and Box 2).  

13 

 
Table 1. Assessment framework  

Assessment framework 

1.  Revenue potential 

2.  Simplicity  

3.  Fast mobilisation of new 

revenue sources  

Revenue potential 

The  revenue  potential  evaluates  the  amounts  of  money  the  own  resource  can  generate.  Linked  to  revenue 
potential are also the stability of these revenues over time and their predictability.  

Simplicity 

Simplicity  refers  to  budget  revenue  collection  and  the  ease  of  implementing  new  own  resources,  from  an 
administrative  angle,  including  the  availability  of  statistics.  It  also  contributes  to  improving  transparency, 
which is particularly important to preserve accountability to citizens and stakeholders. In the past, the EU own 
resources  system  had  grown  increasingly  complex  and  opaque  due  to  factors  such  as  the  cumbersome 
calculations of the UK rebate, the “rebates on the rebate”, and heavy steps to calculate a notional harmonised 
value added tax base(12). The reforms of 2020 - simplifying the VAT base(13) and introducing a plainer system 
of lump-sum rebates led to a simpler revenue collection for both Member States and the Commission.  

Fast mobilisation of new revenue sources   

Fast mobilisation of new revenue sources reflects the ability to implement new sources of revenues quickly. 
The EU does not levy taxes and therefore,  it relies on sources of revenues stemming from other legislation. 
This  criterion  entails  the  political  and  legal  practicalities  of  raising  new  own  resources  quickly.  It  includes 
considerations  such  as  a  need  for  minimal  extra  pieces  of  new  legislation.  In  this  sense,  the  criterion  may 
account  for  the  current  state  of  negotiations  of  different  measures  at  EU  or  international  level  or  for  the 
prospects of agreement of sectoral legislation serving as prerequisite for the implementation of a new own 
resource.  

(12)    European  Court  of  Auditors,  Opinion  No  5/2018  on  the  Proposal  for  a  Council  Decision  on  the  system  of  own 
resources  of  the  European  Union  (COM(2018)  325  final)  and  related  implementing  acts;  and  Commission  Staff 
Working  Document,  'Financing  the  EU  budget:  report  on  the  operation  of  the  own  resources  system',  Commission 
Staff Working Document No SWD(2018) 172 final of 2.05.2018, accompanying the Proposal for a Council Decision 
on the system of Own Resources of the European Union, No COM(2018) 325 final. 

(13)  See Part 1, section 1.2. 

14 

 
                                                        
 
Box 2. Criteria: What does the literature tell us? 

There  is  an  extensive  literature  on  tax  and  economists  have  been  assessing  taxation  from  various 
perspectives  concerning  for  example  policy,  administration,  and  compliance.  Comparatively,  the 
literature on EU revenues is more limited, given the specificities of the EU budget compared to national 
budgets.  The  EU  budget  does not  levy  taxes  and  is  financed  by  revenues  from  common  policies (i.e. 
customs  duties)  and  national  contributions  (see  Part  1).  These  revenues  are  currently  collected  by 
Member States and transferred to the EU budget. Therefore, the application of criteria used in the tax 
literature would need to be further adjusted to reflect these specificities.  

Equity,  efficiency,  and  a  practical/simple  administration  are  three  principles  traditionally  used  to 
evaluate the rationale for raising revenue as done through national budgets. These objectives originate 
in the early economic theory of Adam Smith and continue to gather wide acceptance among modern 
theorists  today.  They  reflect  various  aspects  of  governance,  tax  policy,  and  tax  administration, 
including the extent to which the two main roles traditionally defined for taxes under national budgets 
-  redistribution  and  revenue  raising  for  the  collective  provision  of  goods  and  services,  including 
insurance (Smith, 2015(14)) - are fulfilled.  

Some key conceptual considerations are listed below and refer to the criteria for a good tax, as found 
in the literature(15). 

- Effectiveness in raising revenues will determine revenue sufficiency. In the literature, effectiveness 
refers  to  a  tax  or  revenue  design  which  is  dependable (16)  and  predictable  from  year  to  year;  for 
instance, tax / revenue systems applying to a broad tax base at a low tax rate are known to be most 
effective in raising revenues.  

- Efficiency is important as public authorities aim to avoid distortions often associated with the loss of 
economic  activity  (‘deadweight  loss’)  that  may  arise  when  taxes  drive  a  wedge  between  economic 
agents.  Economic  distortions  are  behavioural  changes  which  can  occur  when  taxes  change  relative 
prices and consumers can turn to substitute products. Such distortions would prevent from concluding 
or supress a transaction which would have occurred in absence of the tax(17).  

- Equity is a major issue in taxation and it can encompass several dimensions, such as  the ability to 
pay,  progressivity  and  redistribution  from  the  better  off  to  the  worse  off  (vertical  equity);  equal 
treatment  of  agents  in  the  same  situation  (horizontal  equity),  ‘the  polluter  pays’  principle  and 
correction of other negative externalities (Smith, 2015). 

(14) Smith, S., 2015, Taxation: A Very Short Introduction, Oxford University Press. Law Journal Library - HeinOnline.org. 

(15) See for instance De Mooij, R. and M. Keen, 2014, “Taxing Principles”, IMF Back to Basics, Finance and Development, Vol. 
51, No.4.; Stiglitz, J. E., 2015,  Economics of the Public Sector, W.W. Norton &  Company, Fourth Edition, Chapter 17; 
Keen,  M.,  and  others,  2015,  “Current  Challenges  in  Revenue  Mobilization  -  Improving  Tax  Compliance”,  IMF  Policy 
Paper;  Grote, Martin, "Establishing a Tax Policy Unit", IMF How-to-Notes, October 2017 or The qualities of a good tax.  

(16)  This refers to stable and reliable resources over time, an aspect relevant in the context of medium-term budgeting 
and  fiscal  planning,  which  finance  ministries  are  encouraged  to  apply;  indeed,  Medium-Term  Fiscal  Frameworks 
(MTFFs) and Medium-Term Budget Framework (MTBF) have benefits for fiscal discipline, macro stability, control, and 
accountability (IMF Institute for Capacity Development).  

(17) Tax wedge can happen between producer and consumer, seller and buyer, or employer and employee). To derive the 
behavioural  responses  and  macroeconomic  implications  of  tax  policy  changes  on  the  labour  market,  investment, 
aggregate  inflation,  economic  growth,  partial  and/or  general  equilibrium  models  are  usually  employed.  The  role  of 
performing  revenue  and  economic  impact  analyses  usually  belongs  to  Tax  Policy  Units  (TPU).  See  Grote,  Martin, 
"Establishing a Tax Policy Unit", IMF How-to-Notes, October 2017. 

15 

 
                                                        
 
-  Simplicity  or  ease  of  administration  refers  to  revenue  collection,  implementation,  and  compliance.  
This  criterion,  which  also  features  among  those  qualifying  `good'  tax  systems (Smith, 2015,  Stiglitz, 
2000(18)),  De  Mooij  et  al.,  2014),  essentially  concerns  administering  a  tax  or  revenue  system  at  low 
collection costs (Begg and Grimwade, 1998; Heinemann et al., 2008; Schratzenstaller, 2014). Generally 
speaking,  the  proof  of  simplicity  is  whether  revenues  are  reliably  collected  every  year  without 
excessive administrative burden or legal and procedural controversy.  

- Transparency concerns the different stakeholders’ understanding and ease of access to information, 
including  through  clear  calculation  methods  of  different  budget  revenues.  Stakeholders  may  include 
taxpayers  /  citizens,  civil  society,  parliaments.  Transparency  is  even  more  vital  in  multi-level 
governance systems (Begg et al., 2008).  

2.2 Stakeholder and other institutions’ views  

The European Parliament supports the proposal of new own resources. In its report adopted on the 10 
May  2023(19),  the  European  Parliament  responded  to  the  Commission’s  proposal  of  22  December  2021  on 
three  additional  sources  of  revenues  for  the  EU  budget  based  on  carbon  border  adjustment  mechanism 
(CBAM),  emission  trading  scheme  (ETS)  and  reallocated  profits  of  multinationals.  This  report  called  on  the 
Member States in the Council to adopt the new own resources from the first package of 14 December 2021. 
Moreover, concerned on the sufficiency of new own resources “to cover all NGEU repayments and borrowing 
costs”,  to  avoid  cuts  to  existing  EU  programmes  and  policies,  it  “urged  all  actors  to  continue  the  efforts  to 
identify fresh and new, preferably genuine, own resources and other revenue sources for the EU budget”.  

This  report  discussed  several  possible  measures  as  a  basis  for  own  resources,  supporting,  among  others, 
corporate  taxation  (BEFIT),  a  tax  on  cryptocurrencies,  a  tax  related  to  the  digital  economy,  a  financial 
transaction tax (FTT), an EU ‘fair border tax’, and saw high potential in all statistics-based own resources. On 
the latter, the European Parliament report proposes a bio-waste statistical own resource fostering the reuse 
of bio-waste(20) and an own resource on gender pay gap statistics.  

Finally, the Parliament report also mentions revenue sources other than own resources, such as those in the 
form  of  levies,  fees  charged  for  visa  waivers  under  the  European  Travel  Information  and  Authorisation 
System  (ETIAS)  when  it  comes  into  operation,  excess  emission  premiums,  competition  fines,  infringement 
penalties or similar, which should be listed transparently in the annual budget documents, as well as proceeds 
generated in the context of criminal justice sentences and assets confiscated in the event of non-compliance 
with EU sanctions (e.g. Russian frozen assets). 

The  Council  technically  explored  the  Commission’s  proposals  since  2021,  but  little  progress  has 
been made concerning the adoption of new own resources. Further to the inter-institutional agreement 
of 16 December 2020, the Council monitored the Commission’s proposals of December 2021 on CBAM, ETS, 
and reallocated  profits of multinationals, including  their share in the  ‘Fit-for-55’ package  of July 2021, and 
the related implementing Regulations proposed in March 2022. In this context, in 2022, the Council reached a 

(18)  Stiglitz, J. E., 2000, ‘Economics of the Public Sector’, W. W. Norton & Company. 

(19)  EP(2023),  Committee  on  Budgets,  2022/2172(INI)  https://www.europarl.europa.eu/doceo/document/BUDG-PR-

739558_EN.pdf.   

(20)  Bio-waste is defined as “biodegradable garden and park waste, food and kitchen waste from households, restaurants, 
caterers  and  retail  premises,  and  comparable  waste  from  food  processing  plants.  It  does  not  include  forestry  or 
agricultural  residues,  manure,  sewage  sludge,  or  other  biodegradable  waste  such  as  natural  textiles,  paper  or 
processed wood”. 

16 

 
 
                                                        
 
general approach and started negotiations with the European Parliament on the sectoral Regulations of CBAM 
and ETS. These took place mostly during the 2nd half of 2022, under the Czech Presidency(21). Few delegations 
took a fully-fledged position on the own resources’ package, given that not all Commission proposals were on 
the table. Consequently, there was no substantial progress in their adoption so far. 

The  European  Court  of  Auditors’  position  is  also  broadly  favourable.  The  latest  European  Court  of 
Auditors opinion on the Commission’s proposal of December 2021 dates from July 2022(22). While the opinion 
recognised  the  progress  made  towards  the  introduction  of  new  own  resources,  it  saw  a  need  for  more 
consistency in the rules for managing own resources.  

The European Economic and Social Committee (EESC) also supported the Commission’s December 
2021  proposal  for  new  own  resources,  but  was  concerned  with  the  competitiveness  of  EU 
businesses  and  the  subsistence  of  households.  The  Committee  deemed  new  own  resources  were 
necessary  to  cover  the  debt  repayment  resulting  from  NextGenerationEU  borrowing  and  acknowledged  the 
higher  flexibility  of  an  extended  own  resources  model,  with  funds  reacting  more  effectively  to  economic 
shocks. It stressed the importance of equity and fairness, efficiency, transparency, simplicity, and stability in 
the new system, as well as of a focus on competitiveness and applying solidarity to support households and 
businesses,  where  necessary.  A  targeted  impact  assessment  by  country  and  sector  (industry)  was  also 
mentioned,  together  with  preserving  a  level  playing  field  of  EU  businesses  in  the  international  tax  system, 
avoiding competitive disadvantages(23).  

The  European Committee  of the Regions (CoR)  noted the Commission's proposal, with a nuanced 
position. In its opinion of 30 November – 1 December 2022(24), the Committee noted that the introduction of 
a first basket of new own resources would send a positive message to investors on the financial markets and 
rating agencies; similarly to other institutions, it also stressed the need to establish new resources not only to 
repay  the  NGEU  debt  without  jeopardizing  EU  programmes  in  the  next  MFF,  but  also  to  increase  the  EU 
budget's financial autonomy in a permanent, sustainable way for the Member States' budgets. The Committee 
also  underlined  that  additional  new  own  resources would  be  needed  given  that,  overall, the  three  new  own 
resources proposed in December 2021 would yield up to EUR 17 billion / year from 2026 to 2030 (European 
Commission estimates), an amount insufficient to cover both the  costs of repaying the NGEU debt  (EUR  15 
billion / year) and finance the Social Climate Fund (EUR 9.7 billion / year). Furthermore, the Committee called 
upon the Commission to consider credible, territorial impact assessments regarding potential costs European 
companies and consumers may incur. 

2.3.  Evaluation  of  potential  new  own  resources  – 
factsheets 

individual 

This  section  presents  eight  potential  options  for  new  own  resources  based  on  either  Commission’s 
existing  or  forthcoming  sectorial  proposals  –  such  as  BEFIT  –  or  the  European  Parliament’s  own  initiative 
report (see section 2.2). Each of the eight assessments elaborates on the three criteria – revenue potential, 
simplicity, and fast mobilisation of revenues – and scores each option on a qualitative basis and using expert 
judgement (for the methodology, see Box 3). A summary evaluation is presented in Table 2. 

(21)  Council of the European Union Report 15178/22; Presidency report on new own resources, 25 November 2022. 

(22)  ECA  Opinion  03/2022:  Methods  and  procedure  for  making  available  own  resources  based  on  the  Emissions  Trading 
System, the Carbon Border Adjustment Mechanism and reallocated profits, and measures to meet cash requirements 
| European Court of Auditors (europa.eu). 

(23)  for  instance,  the  Committee  had  doubts  as  to  whether  the  Innovation  Fund  (IF)  with  revenues  derived  from  the 

auctioning ETS allowances would maintain and strengthen the EU industry’s competitive position. 

(24)  COTER-VII/021, 152nd plenary session The next generation of own resources for the EU budget | PES Group in the 

European Committee of the Regions (europa.eu). 

17 

 
                                                        
 
A tax on the digital economy is not part of this assessment, given the ongoing international discussions in the 
context  of  the  OECD.  The  EU  has  always  considered  the  OECD’s  Two-pillar  Solution  to  Address  the  Tax 
Challenges Arising from the  Digitalisation of the Economy a  paradigm-changing reform of the international 
corporate tax system. Its implementation remains a key priority in the area of corporate taxation for the EU 
and its  Member States. Enormous  progress  has been made following the October 2021 agreement. Certain 
building blocks now remain to be completed to pave the way for the signature of the Multilateral Convention 
before the end of the year.. Against such backdrop, the EU will not consider further measures on the digital 
sector, as long as the OECD’s Pillar One is in preparation or in place. 

The European Parliament called for the establishment of a bio-waste-based own resource. Since there are no 
specific statistics on bio-waste, but rather several statistical systems, the assessment considers two separate 
own resources based on the waste from electrical and electronic equipment – ‘e-waste’ – and on food waste.  

The eight candidates are: corporate taxation (BEFIT), including the financial sector (section 2.3.1); a statistical 
own resource based on company profits (section 2.3.2); a tax on the financial sector with an assessment of a 
financial  transaction  tax  (FTT)  (section  2.3.3);  an  EU  ‘fair  border  mechanism’  (section  2.3.4);  a  tax  on 
cryptocurrencies  (section  2.3.5);  a  statistical  own  resource  based  on  gender  pay  gap  (section  2.3.6);  a 
statistical own resource based on food waste (section 2.3.7); and a statistical own resource based on e-waste 
(section 2.3.8). 

Box 3. Evaluation and scoring of new own resources 

Each  potential  new  own  resource  is  scored  along  the  three  criteria  –  1)  revenue  potential,  2) 
simplicity of collection and implementation, and 3) fast mobilisation of new revenue sources to the 
EU budget.  

Each criterion is marked from 0 to 4 points (quarters of a circle), with 0 standing for no compliance 
and  4  standing  for  full  compliance  of  the  new  measure  with  the  criterion  considered.  With  a 
maximum  of  4  points  per  criterion,  any  given  new  own  resource  proposal  can  score  a  maximum 
number of 12 points (3 criteria * number of points/criterion).  

Scoring 

None 

Modest 

Adequate 

Good 

Full 

As  in  Monti  et  al.,  2016  and  Schratzenstaller  et  al.,  2016,  this  scoring  assessment  is  largely 
qualitative and reflects the expert judgment with each potential new measure.  

2.3.1. Corporate taxation (BEFIT), including financial sector  

DESCRIPTION: RATIONALE AND DESIGN 

The  initiative  Business  in  Europe: Framework  for  Income  Taxation  (BEFIT)  would  improve  the  functioning  of 
the  Single  Market  by  simplifying  corporate  tax  rules  and  tax  compliance,  and  levelling  the  playing  field  for 
businesses, as well as stimulating growth and investment. BEFIT aims to address double taxation and reduce 
tax  compliance  costs  that  businesses,  chiefly  those  with  cross-border  activity,  currently  face  in  the  Single 
Market. This will help make the EU more attractive to investment and support growth. BEFIT will  cover both 
the financial and non-financial sectors and will be mandatory for large groups, i.e. those with global combined 
annual  revenues  of  EUR  750  million  or  more  and  therefore  in  scope  of  the  Directive  on  ensuring  a  global 

18 

 
 
 
 
 
 
 
 
minimum  level  of  taxation  for  multinational  groups  in  the  Union  (‘Pillar 2’)  which  will  enter into  force  on  1 
January  2024.  It  will  remain  an  option  for  all  other  groups  of  companies  that  file  consolidated  financial 
statements and have a taxable presence in the EU.  

The  BEFIT-based  own  resource  could  levy  e.g.  a  call  rate  on  the  share  of  the  aggregated  tax  base25,  of  all 
groups  within  the  mandatory  scope  of  BEFIT  allocated  to  the  Member  States,  using  a  formulary 
apportionment.  

ASSESSMENT 

1.  Revenue potential  

A BEFIT-based own resource would link the financing of the EU budget to the benefits enjoyed by companies 
operating in the Single Market and make for a strong and stable resource over time. Under a BEFIT-based own 
resource,  Member  States  would  transfer  part  of  their  corporate  income  tax  revenues  to  the  EU  budget. 
Applying even a potentially small call rate could raise substantial revenues. 

2.  Simplicity of collection and implementation  

Member States would contribute  based on a call rate that will be applied to the apportioned share of each 
member  of  a  group  within  the  mandatory  BEFIT  scope.  Since  the  calculation  of  the  apportioned  shares  is 
already  part  of  the  BEFIT  system,  only  the  aggregation  of  the  tax  base  at  Member  State  level  would  be 
required for the purpose of raising the own resource amount. 

3.  Fast mobilisation of new sources of revenue to the EU budget  

The  Commission  will  come  forward  with  a  proposal  on  BEFIT  during  the  second  half  of  2023.  The  own 
resource element could be implemented only after the Directive on BEFIT comes into effect. Negotiations on 
the sectorial BEFIT proposal in Council requires Member States’ unanimous vote. 

2.3.2. Statistical own resource based on company profits  

DESCRIPTION: RATIONALE AND DESIGN 

A statistical own resource based on company profits would not be a tax on companies, nor would it increase 
their  compliance  costs.  It  would  be  a  national  contribution  linked  to  the  corporate  sector.  A  national 
contribution  could  be  designed  based  on  a  “statistical  proxy”  of  corporate  income  or  corporate  profits.  The 
measure  could  apply  to  financial  and  non-financial  corporations  (see  part  3,  for  more  details).  One  such 
statistical  indicator  is  gross  operating  surplus,  as  defined  in  the  European  System  of  Accounts  2010  (ESA 
2010)(26).  

This  statistical  indicator  covers  both  profit  generation  due  to  the  physical  presence  of  companies  and  their 
related  economic  activities,  and  -  at  least  partially  -  the  shifting  of  profits  for  tax  reasons.  Member  States 
attracting company profits that are in principle potentially taxable  would in principle contribute more on this 
statistical own resource.  

25   BEFIT will foresee a two staged process to calculate the tax base. In the second step national  adjustments will be 

possible.  

(26)  Gross operating surplus corresponds to ESA balancing item B.2g of financial and non-financial corporations (sectors 
S12 and S11, respectively). It equals the sectors’ gross value added (ESA balancing item B.1g) plus Other subsidies 
on production (ESA item D.39) minus compensation of employees (ESA item D.1) and other taxes on production (ESA 
item D.29). See part III for details on this measure and Box 5 for a discussion of alternative statistics. 

19 

 
                                                        
 
ASSESSMENT 

1.  Revenue potential  

The  own  resource  base  could  comprise  both  financial  and  non-financial  companies  and  would  reflect  the 
gross operating surplus of both sectors. The own resource base would be substantial and reach around EUR 
3 000 billion in current prices on average for 2018-2020.  

The call rate could be low: a call rate between 0.1% and 0.5% applied on the sum of gross operating surplus 
for the sectors of financial and non-financial corporations could bring revenues between EUR 3 billion and 16 
billion per year on average over the period 2028-2030 (in 2018 prices). 

2.  Simplicity of collection and implementation  

In  terms  of  implementation,  the  statistics  on  which  this  own  resource  would  be  levied  already  exist.  As  a 
matter  of  efficiency  and  effectiveness,  the  implementing  measures  for  the  supervision  related  to  this  own 
resource could take into account the existing obligations on Member States under the GNI control framework.  

3.  Fast mobilisation of new sources of revenue to the EU budget  

This own resource could be implemented quickly. This statistical own resource could be temporary and  cease 
to apply once Member States agree on  both the forthcoming Directive related to the BEFIT initiative, and to 
draw a Union own resource from that tax base (e.g. as described in factsheet 2.3.1).   

2.3.3. Financial Sector - Financial Transaction Tax (FTT) 

DESCRIPTION: RATIONALE AND DESIGN 

The financial sector is perceived as being undertaxed. It faces different non-harmonised national taxes across 
the EU and is VAT exempt. To ensure a just and stable contribution of the financial sector to public finances, a 
contribution  from  the  financial  sector  as  a  basis  for  an  EU  own  resource  could  balance  contributions  from 
other sectors.  

In  the  wake  of  the  2008-09  financial  crisis  and  subsequent  sovereign  debt  crisis,  the  introduction  of  a 
harmonised  framework  of  national  financial  transaction  taxes  (FTTs)  at  EU  level  became  part  of  the 
Commission’s  political  priorities  in  the  field  of  taxation  policy.  The  FTT  was  targeted  at  curbing  excessive 
speculation and volatility, making the financial sector bear part of the costs of its rescue from the financial 
crisis  and  fostering  harmonisation,  as  some  Member  States  were  considering  introducing  (or  had  already 
introduced) FTTs. The Commission put forward two FTT proposals, one in  2011 (for all Member States) and 
one in 2013 under enhanced cooperation. The latter proposal, still under discussion, is similar to a stamp duty 
and would apply only to purchases of shares issued by domestic listed companies with a market capitalisation 
higher than EUR 1 billion.  

ASSESSMENT  

1.  Revenue potential  

It  was  estimated  that  the  initial  2011  Commission  proposal  would  have  generated  revenues  up  to  EUR  57 
billion  per  year.  Design  changes  in  the  compromise  FTT  proposal  that  was  put  forward  under  enhanced 
cooperation  would  mean  a  much  lower  revenue  potential.  The  significantly  changed  design  and  limited 
number of  participating  Member States would  mean that, under the current design, the revenues to the EU 
budget would be rather limited. 

2.  Simplicity of collection and implementation  

A uniform tax rate would be applied to transactions of financial assets in scope of an FTT in addition to the 
price and intermediary fees. The revenues would be collected by the financial intermediary and allocated to 
the relevant Member States. Part of that revenue would then accrue to the EU budget at a set call rate.  

20 

 
3.  Fast mobilisation of new sources of revenue to the EU budget  

After years of negotiation, no agreement has been found on the FTT proposal, progress has been very slow, 
the enhanced cooperation is reduced to ten Member States, and the prospects of reaching an agreement in 
the  future  are  limited  given  that  the  last  substantial  discussions  took  place  under  the  Portuguese  Council 
Presidency in 2021. There is little expectation that any proposal would be agreed in the short term. 

2.3.4. EU ‘fair border Mechanism’  

DESCRIPTION: RATIONALE AND DESIGN 

The  EP  report  on  own  resources  ‘A  new  start  for  EU  finances.  A  new  start  for  Europe’  (2022/2172(INI)) 
suggested establishing an EU Fair Border ‘Mechanism’. It should help fight the social dumping of commodities 
made by underpaid people in developing countries and imported into the EU market. The companies importing 
products  into  the  European  Union  would  be  required  to  pay  a  charge  for  any  worker  in  their  global  supply 
chain who is paid a wage below the relevant poverty line of third countries.  

The European Parliament refers to the example of textile production in Bangladesh. Bangladesh is a part of an 
EU  programme  that  allows  developing  countries  to  export  goods  to  the  EU  at  lower  or  no  tariffs,  under 
the Generalised  Scheme  of  Preferences  (GSP).  The  GSP  is  one  of  the  key  EU  trade  instruments  to  assist 
developing  countries  to  integrate  into  the  world  economy,  reduce  poverty,  and  support  sustainable 
development  through  the  promotion  of  core  human  and  labour  rights,  environmental  protection,  and  good 
governance. A specific salary level is not part of the EU’s GSP conditionality. Therefore, the contemplated idea 
of a fair border tax could not be implemented via the GSP, but only as an additional selective tariff.   

Such  mechanisms  are  uncommon  in  the  world,  and  in  particular  do  not  include  any  trade  measures.  In 
California, for instance, a Garment Worker Protection Act is in place since January 2022 (27). It foresees that 
employees  engaged  in  garment  manufacturing  in  California  must  be  paid  an  hourly  rate  not  less  than  the 
minimum  wage  and  forbids  pay  per  piece,  except  in  specific  cases.  These  conditions  seem  to  concern 
domestically produced garments, with no specific reference to trade. In the EU, the Commission proposed in 
2022  two  pieces  of  legislation  -  a  Regulation  aiming  to  prohibit  products  made  using  forced  labour  and  a 
Directive  on  corporate  sustainability  due  diligence  (CSDDD).  The  Regulation  covers  cases  of  systematic  and 
deliberate  withholding  of  wages,  as  well  as  working  involuntarily  because  of  very  low  or  no  wage;  it  will 
empower national authorities to withdraw from the  EU market products made with forced labour or to stop 
such  imports  at  EU  borders.  The  Directive  aims  to  foster  sustainable  and  responsible  corporate  behaviour 
throughout  global  value  chains,  requiring  companies  to  identify  and,  where  necessary,  prevent,  end  or 
mitigate adverse impacts of their activities on human rights, such as exploitation of workers.  

ASSESSMENT 

1.  Revenue potential  

The  EU  Fair  Border  Mechanism would  bring  fresh  money.  If  introduced,  the  duties paid  on  certain  imported 
garments/goods  will  likely  be  classified  as  customs  duties  and  thus  Traditional  Own  Resources.  Under  the 
current own resources’ rules, the Member States would be able to retain 25% of the duties as collection costs. 

The  issue  of  how  the  charge  would  be  determined  and  calculated  across  complex  value  chains  should  be 
considered – the  production  of garments  has a  fairly simple supply  chain;  however,  more complex products 
have  infinitely  more  complicated  supply  chains  (e.g.  a  typical  motor  vehicle  has  over  20.000  parts  and 

(27)  Garment Worker Protection Act Frequently Asked Questions (ca.gov). 

21 

 
                                                        
 
thousands of suppliers and suppliers to those suppliers). Therefore, the quantification of potential revenue is 
difficult to establish. 

2.  Simplicity of collection and implementation 

The desired design of the charge is not clear – such as on what base the wage difference would need to be 
applied for a given assignment. Another question would be to know whether the importer would need to pay 
the difference in the wages on each piece of garment or would the difference be divided by the average daily 
output.    Moreover,  the  effect  of  the  tax  or  charge  on  increasing  the  salaries in  third  countries seems  to  be 
uncertain – the importer is usually not the producer and has limited control over the production part of the 
supply chain. 

3.  Fast mobilisation of new sources of revenue to the EU budget  

The ‘Fair Border Mechanism’ would be a trade policy tool which would be introduced by the Commission as a 
legislative  proposal  under  Article  207(1)  and  (2)  TFEU.  It  would  need  to  be  compatible  with  the  WTO 
Agreement and EU bilateral trade agreements. The tariff  must be justified under an exception in the WTO’s 
General  Agreement  on  Tariffs  and  Trade  (GATT)  because  it  would  exceed  the  EU’s  scheduled  tariff 
commitments (Article II GATT, i.e. the maximum permitted tariff which normally is already applied) and there 
would inevitably be discrimination between countries (most-favoured-nation obligation).  

This justification could theoretically be Article XX of GATT which allows WTO Members to restrict trade when 
this  is  necessary  to  protect  public  morals  or  human  life  or  health,  provided  they  do  not  unjustifiably  or 
arbitrarily  discriminate  between  countries  or  use  this  as  disguised  restriction  on  trade.  Using  this  article  to 
justify  a  “Fair  Border  Mechanism”  would  be  a  major  political  and  legal  challenge.  Properly  designing  and 
operating such a scheme would also create a high administrative burden on public authorities and the private 
sector,  raising  the  question  of  whether  poverty  alleviation  can  be  achieved  more  effectively  and  more 
efficiently through other means.  

2.3.5. Tax on crypto assets  

DESCRIPTION: RATIONALE AND DESIGN 

The global market in crypto assets has grown rapidly over the past years. Crypto assets are increasingly used 
and  citizens  are  increasingly  investing  in  the  crypto  market,  while  businesses  intensify  their  investments  – 
whether in the necessary infrastructure or in tradable assets. There are many kinds of crypto assets, including 
cryptocurrencies with fluctuating  prices (e.g.  Bitcoin), “stablecoins”  pegged to a  currency (e.g.  Tether pegged 
1:1  to  the  USD),  and  “non-fungible  tokens”  (NFTs)  representing  a  unique  digital  item  (e.g.  a  cyber  artwork). 
While crypto assets also have a hybrid or dual nature as an investment product (similar to financial assets) 
and  payment  method  (similar  to  currency),  to  date,  at  the  level  of  the  EU  Member  States,  the  main  tax 
implication arising from them has been as speculative assets that can deliver capital gains (and losses).  

In view of the constantly evolving nature of the crypto market and the importance of its future potential, as 
well  as  the  risks  it  brings  to  bear,  this  market’s  evolution  will  need  to  be  continuously  assessed  and 
monitored. As a first step, the recent adoption of MiCA (Markets in Crypto-assets) Regulation in April 2023 has 
already improved the opaque nature of the market. Transparency will continue to improve with the entry into 
force  of  the  DAC8  (Directive  on  Administrative  Cooperation)  proposal  (28)  on  the  automatic  exchange  of 
information, which will help boost crypto-asset related information sharing and tax compliance. 

(28)  DAC  8  should  enter  into  force  on  1  January  2026.  "https://taxation-customs.ec.europa.eu/news/new-transparency-

rules-require-service-providers-report-crypto-asset-transactions-2022-12-08_en" (europa.eu).  

22 

 
                                                        
 
Most  Member  States  already  tax  capital  gains  and  other  income  related  to  crypto  assets  as  part  of  their 
national tax systems; however, they do so in a heterogeneous way. The European Parliament has suggested 
several ideas, including a harmonised direct tax on capital gains arising from increases in the value of crypto 
assets, applying across the EU, and accruing to the EU budget. Any work at the EU level on this front should 
ensure  that  the  taxation  of  crypto  assets  is  coherent  with  national  tax  systems.  It  should,  moreover,  be 
considered only over the medium-term, based on further analysis and close coordination with Member States. 

ASSESSMENT 

1.  Revenue potential  

According to a study of the European Parliament (29) and based on limited data availability, the value of the 
European  cryptocurrency market had already reached EUR 4.3  billion in 2019 and it is expected to  grow to 
EUR 12.9 billion by 2026. 

The yield would fundamentally depend on the evolution in the price of crypto assets. It would also depend on 
what tax and call rates are ultimately applied. Although there are concerns about under-reporting of income 
from crypto-assets (which DAC8 will contribute to alleviate), it should be noted that the crypto-asset market 
is characterised by  high levels of  price  volatility, which introduces uncertainty as to the stability of revenue 
generation over time. 

2.  Simplicity of collection and implementation  

There are currently significant variations across the EU in the classification of crypto assets, what counts as a 
taxable  event,  tax  rates  and  thresholds,  how  to  value  individual  assets  and  gains  on  disposal,  and  the 
treatment of losses. What Member States already have in place varies greatly (30); and is interlinked with the 
national  tax  treatment  of  capital  gains  on  other  asset  classes.  Such  issues  would,  therefore,  have  to  be 
explored in greater detail and best practices shared to inform appropriate decisions.  

Irrespective of the DAC8 proposal, a possible change in the taxation of crypto assets into a mechanism for the 
taxation of gains harmonised at the EU level would entail significant resources to set up, in operating systems 
and collection mechanisms, all issues that would require careful consideration.  

An EU own resource call rate could then be applied e.g. to the capital gains tax base, provided Member States 
apply a harmonised tax base across the EU. 

3.  Fast mobilisation of new sources of revenue to the EU budget  

Given  the  policy  design  and  administrative  challenges,  the  innovative  and  evolving  nature  of  the  crypto 
market and tradable assets, as well as the precedent that the application of any measure at EU level would 
set, further work is required to map and explore solutions to a plethora of challenging questions. 

2.3.6. Statistical own resource based on gender pay gap  

DESCRIPTION: RATIONALE AND DESIGN 

The strict prohibition of any discrimination on grounds of sex and the right to equal treatment between men 
and women in all areas, including employment, work and pay is directly enshrined in article 157 of the Treaty 

(29)  New EU own resources: possibilities and limitations of steering effects and sectoral policy co-benefits (europa.eu). 

(30) Crypto assets were addressed in recent guidelines of the VAT Committee (Guidelines resulting from meetings of the 
VAT Committee) and their VAT treatment might change as part of a review of rules on VAT for financial services. 

23 

 
                                                        
 
 
on the Functioning of the European Union, according to which “Member States shall ensure that the principle 
of equal pay for male and female workers for equal work or work of equal value” and in Directive 2006/54/EC.  

Although these provisions have direct effect and can be enforced by national courts, currently, the gender pay 
gap in the EU stands at 12.7 % in 2021 and has only changed minimally over the last decade. It means that 
women earn 12.7 % on average less per hour than men (31).  

In principle, an own resource based on the difference between the hourly earnings of women and men could 
incentivise Member States to take more action.  

ASSESSMENT 

1.  Revenue potential 

The relevant data are submitted to the Commission every year. The gender pay gap indicator is the relative 
difference between the average earnings of women and men: 

Mean (gross) hourly earnings of men − Mean (gross) hourly earnings of women 

Mean (gross) hourly earnings of men

This  indicator  takes  account  of  the  fact  that  the  two  groups  do  not  work  the  same  number  of  hours  on 
average. However, it does not take into account other characteristics of male and female employees, i.e. the 
difference in terms of qualifications, which is higher for women in most of the Member States, and occupation 
as well as the concentration of one sex in certain economic activity and sectors.  

Although  the  exact  design  of  a  related  own  resource  would  need  to  be  developed,  it  seems  that  an  own 
resource would generate a relatively limited amount of revenue. 

2.  Simplicity of collection and implementation  

Although the quality of statistics is considered as satisfactory, the gender pay gap  statistics published on a 
yearly basis by the Commission  do not measure  discrimination as such. Indeed,  differences in  pay  between 
males and females can be explained by other dimensions such as the differences in the overall structure of 
male versus female employment. Statistical work is ongoing to adjust the pay gap and compare the returns 
paid to women versus those paid to men with the same average characteristics(32).  

3.  Fast mobilisation of new sources of revenue to the EU budget  

Though  work  to  improve  the  related  statistics  is  ongoing,  it  is  not  sufficiently  developed,  nor  tested,  to 
propose a gender pay gap own resource within a reasonable timeframe.  

2.3.7. Statistical own resource based on food waste  

DESCRIPTION: RATIONALE AND DESIGN 

Food  waste  is  a  part  of  bio-waste,  but  there  are  two  separate  reporting  obligations.  According  to  Eurostat 
estimates, around 10% of food made available to EU consumers (at retail, food services and households) are 

(31)  Eurostat, annual gender pay gap 2021. 

(32)   Eurostat  https://ec.europa.eu/eurostat/en/web/products-statistical-working-papers/-/ks-tc-22-002. 

In  the  analysis 
employees  working  in  ‘public  administration,  defence  and  compulsory  social  security’  (NACE  rev.2  section  O)  or  in 
enterprises with less than 10 employees have been excluded as data are not available for all Member States.  

24 

 
 
                                                        
 
wasted.  Reducing  food  waste  would  consequently  provide  many  economic  and environmental  benefits  as it 
would  lower  the  carbon  and  overall  environmental  footprint  of  food  production  and  consumption.  It  would 
also increase food security.  

In  June  2023,  the  Commission  [will  propose/proposed]  an  amendment  to  the  Waste  Directive  and  [will 
introduce/introduced] binding reduction targets for food waste (a percentage as from the reference year). An 
own  resource  proportional  to  the  annual  quantity  of  food  waste  in  every  Member  State  would  complement 
this sectorial legislative proposal.   

ASSESSMENT 

1.  Revenue potential   

This new own resource would also apply to a statistical base, which is the quantity of food wasted in a year, 
valued in euro, as reported by Eurostat. In 2022, there were nearly 59 million tonnes of food waste (131 kg / 
inhabitant  /  year,  around  10%  of  the  food  produced  in  the  EU)(33).  This  had  an  associated  market  value 
estimated at EUR132 billion / year (2020).   

Under the new own resource, the national contribution would be directly proportional to the quantity of food 
waste generated in each Member State (statistical base). Concretely, a call rate between EUR 0.05 – 0.20 per 
kg could apply to this base and could generate between EUR 3 and 12 billion/year. (34) 

2.  Simplicity of collection and implementation  

The  waste  framework  Directive (35)  imposes  on  Member  States  an  obligation  to  submit  data  to  the 
Commission on the amount of food waste generated. The measurement of waste is harmonised throughout 
the EU by a Commission Delegated Act (36). 

A food waste own resource could make use of this existing statistical system. It should however be noted that 
the statistical system was just set up, and the results are still regarded as estimates rather than solid data, 
due  to  lack  of  data  series(37).  The  collection  of  the  own  resource  could  be  similar to  the  plastic  based  own 
resource, however the system for food waste will be much more complex, less precise and require longer time 
to establish quality data series.  

In particular, waste is generated throughout the whole food supply chain from production until consumption 
and the types of food waste and factors contributing to its generation. Moreover, important amounts of food 
waste are currently not measured due to lack of methods for measuring which would ensure sufficient levels 
of confidence and comparability – e.g. food waste which is usually discarded with wastewater or food waste 
recycled by home composting.  

(33)  Eurostat, (2022) Statistics explained: Food waste and food waste prevention – estimates.  
(34) This design differs somewhat from that of other own resources based on environmental statistics, such as plastic or 
e-waste.  Contrary  to  the  latter,  the  base  of  a  food  waste  own  resource  would  use  only  the  volume  of  waste 
generated and not the difference between the volume of waste generated and the volume of waste recycled. This is 
the case because, under food waste legislation, no comparable data is collected or can be derived for recycled food-
waste. 

(35)  Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing 

certain Directives. 

(36)  Commission  Delegated  Decision  (EU)  2019/1597  of  3  May  2019  supplementing  Directive  2008/98/EC  of  the 
European Parliament and of the Council as regards a common methodology and minimum quality requirements for 
the uniform measurement of levels of food waste (Text with EEA relevance). 

(37)  The  Commission  so  far  has  data  only  for  2020.  For  comparison,  data  on  recycling  of  plastics  have  been  collected 

since 1994 (i.e. there is almost 30 years of experience in data collection on plastics). 

25 

 
                                                        
 
 
3.  Fast mobilisation of new sources of revenue to the EU budget  

As announced in the Commission Work Programme for 2023(38), the Commission proposes a revision of food 
waste and textiles aspects of the EU waste framework Directive. As regards the statistics, the complexity of 
the issue may require significant further work.  

2.3.8. Statistical own resource based on e-waste   

DESCRIPTION: RATIONALE AND DESIGN 

A new own resource based on waste from electrical and electronic equipment could support the EU  priorities 
on the circular economy and the recent proposal of the Commission on Critical Raw Materials (CRM)( 39) which 
aims  to  ensure  EU  access  to  a  secure  and  sustainable  supply  of  critical  raw  materials.  This  initiative 
underlines the necessary contribution of waste from electrical and electronic equipment to the efficient use of 
resources and to the retrieval of secondary raw materials, including critical ones.  

The EU faces the challenge of further increasing e-waste collection, recycling, and reuse in Member States. An 
own resource based on the collection of e-waste could incentivise Member States to put in place measures to 
incentivise  consumers  to  discard  electrical  and  electronic  equipment  that  it  is  hoarded  in  households  in 
several  ways.  A  call  rate  could  be  applied  on  the  quantity  of  waste  electrical  and  electronic  equipment  not 
collected,  calculated  by  subtracting  waste  collected  from  waste  generated.  The  use  of  waste  generated 
compared to what is placed on the market has an important advantage, as it accounts for the lifespan of EEE 
products. This is particularly important in the current context of the energy crisis.  

ASSESSMENT 

1.  Revenue potential  

The  base  to  which  such  measure  could  apply,  the  quantity  of  e-waste  not  collected,  would  represent 
approximately 4 million tonnes per year (2016-2018). This statistical base would be calculated by subtracting 
e-waste  collected  from  e-waste  generated  and  would  be  based  on  the  existing  EU  Directive  on  Waste 
Electrical and Electronic Equipment (WEEE Directive (40)).  

A call rate in the range of EUR 1 to EUR 2 / kg could be applied on the difference between the generation and 
the  collection  of  waste  of  electric  and  electronic  equipment.  It  would  lead  to  a  range  of  revenues  between 
EUR 4-8 billion / year (average 2016-2018).  

While the quality of e-waste statistics, including e-waste trade, are still being improved, economic efficiency 
distortions  linked  to  the  firms’  incentives  to  report  e-waste,  including  exports/imports  as  such  cannot  be 
excluded. These could affect the base of this potential new own resource, warping the related revenues across 
EU countries. Therefore, particular attention should be paid to the reporting of companies when importing or 
exporting e-waste.  

(38)  The  Commission 

is  working 

on 

a 

food  waste 

target 

currently 

planned 

for 

June  2023: 

https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13223-Food-waste-reduction-targets_en. 

(39)  Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  a  framework  for  ensuring a 

secure and sustainable supply of critical raw materials (COM(2023) 160 final). 

(40)   Directive  2012/19/EU  of  the  European  Parliament  and  of  the  Council  of  4  July  2012  on  waste  electrical  and 

electronic equipment (WEEE) (recast) (OJ L 197, 24.7.2012, p. 38–71). 

26 

 
                                                        
 
2.  Simplicity of collection and implementation  

In  terms  of  implementation,  Member  States  already  have  the  obligation  to  provide  data  necessary  to 
calculate the own resource to Eurostat in the context of the electronic and electric equipment waste Directive 
(WEEE  Directive(41)).The  quality  of  statistics  would  need  to  be  further  improved  on  several  levels.  First,  it 
needs to be ensured that waste generation data is available for all Member States. Second, internet trade - in 
cases  where  producers  outside  the  EU  or  importers  of  used  goods  do  not  report  on  the  whole  amount  of 
electrical  and  electronic  equipment  placed  on  the  market  –  needs  to  be  taken  into  account.  Third,  specific 
issues  relate  to  second  hand  articles  sold  to  another  Member  State,  which  are  currently  not  reported  (no 
tracking  system  of  trade  of  electronic  appliances  between  physical  or  legal  persons  after  placing  on  the 
market or their storage before being wasted), and the treatment of electronic and electric equipment waste 
as metal scrap under sub-standard conditions. Fourth, the quality of statistics for e-waste generated and not 
collected also reflects country-specific coefficients for the lifespan of  products. Not least, addressing illegal 
and sub-standard activities such as illegal exports and scavenging of electronic and electric equipment waste 
constitute key challenges to implementing this measure / electronic and electric equipment waste Directive(42). 

3.  Fast mobilisation of new sources of revenue to the EU budget  

This  own  resource  could  generate  revenues  from  the  start.  As  announced  in  the  Critical  Raw  Materials 
communication(43), the Commission will review the electronic and electric equipment waste Directive to, inter 
alia,  address  critical  raw  materials-rich  equipment  in  provisions  relating  to  information  requirements  and 
recovery targets. The evaluation of the electronic and electric equipment waste Directive is already ongoing 
and should be available in 2024. Furthermore, significant work on the quality and comparability of statistics 
would need to be done. 

In conclusion, the analysis shows that, in principle, all candidates could become an own resource, 
but not all could be mobilised in the short run. Indeed, candidates display different features and some 
could be too complex to propose from a technical and/or political perspective. The table below presents the 
scoring of the own resource candidates according to the three criteria. 

It  shows  that  statistical  based  own  resources  are  in  general  easier  to  implement  and  to  mobilise  quickly. 
Depending on the call rates, they can generate substantial revenues. However, the quality of statistics differs 
among them, in particular when it comes to environmental own resources. As for the statistical own resource 
on company  profits, this relies on a harmonised system of European statistics and therefore does not raise 
any major comparability issues.  

Tax candidates can be attractive as they can generate significant amounts of revenues. However, they would 
require  unanimous  agreement  on  the  underlying  sectoral  legislation,  which  may  take  time.  Experience  on 
some existing proposals such as the Financial Transaction Tax  shows the difficulties to reach  swift  political 
consensus on that matter.  

(41)  Member  States  can  report  waste  generation  and/or  electrical  and  electronic  equipment  placed  on  the  market.  The 
latter  can  be  converted  to  waste  generation  according  to  Commission  Implementing  Regulation  (EU)  2017/699 
establishing  a  common  methodology  for  the  calculation  of  the  weight  of  electrical  and  electronic  equipment  (EEE) 
placed on the market of each Member State and a common methodology for the calculation of the quantity of waste 
electrical and electronic equipment (WEEE) generated by weight in each Member State and using the tools provided in 
https://environment.ec.europa.eu/topics/waste-and-recycling/waste-electrical-and-electronic-equipment-
weee/implementation-weee-directive_en.  

(42)  Illegal imports / exports of e-waste and other toxic materials are multiplying in the EU recently, increasingly affecting 
countries  with  reduced  administrative  capacity  EUobserver  (2021),  ‘After  China  ban,  Romania  hit  by  illegal  waste 
imports’ (euobserver.com).  

(43)  Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European  Economic  and  Social 
Committee and the Committee of the Regions, A secure and sustainable supply of critical raw materials in support of 
the twin transition, COM(2023) 165 final.  

27 

 
                                                        
 
The EU fair border mechanism seems to raise substantial challenges at international level and would certainly 
need to be further explored and analysed.  

Table 2: Evaluation of the own resources examined 

Revenue 
potential 

Simplicity 

Fast 
mobilisation 

1.  Corporate taxation (BEFIT)  

2.  Statistical own resource based 

on Company profits  

3.  Financial sector - Financial 
Transaction Tax (FTT) 

4.  EU ‘fair border mechanism’ 

5.  Tax on cryptocurrencies  

6.  Statistical own resource based 

on Gender pay gap 

7.  Statistical own resource based 

on Food waste   

8.  Statistical own resource based 

on E – waste 

Good 

Good 

Modest 

Good 

Good 

Full 

Adequate 

Adequate 

Modest 

Modest 

Modest 

Modest 

Modest 

Adequate 

Modest 

Adequate 

Adequate 

Modest 

Adequate 

Adequate 

Adequate 

Adequate 

Good 

Good 

Scoring: 

None 

Modest 

Adequate 

Good 

Full 

Notes: (1) for more information about the scoring system, see Box 3.  

Source: European Commission. 

28 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Part 3. The new own resources package 

Following the agreement  on the Fit  for 55 package, the Commission proposes to adjust the first 
basket of new own resources proposed in December 2021. In line with the inter-institutional agreement, 
the  Commissions  proposes  to  adjust  its  proposal  and  puts  forward  a  corporate-related  own  resource.  The 
assessment made in part 2 shows that the statistical own resource based on company profits could generate 
revenues and be implemented quickly and has therefore been assessed to be a good candidate.  

This part describes in detail the package proposed by the Commission.  

3.1. 

Emissions trading scheme (ETS) own resource 

3.1.1. The 2021 proposal on ETS – an overview 

In December 2021, the Commission proposed to make part of the revenues from the ETS an own 
resource. This proposal built on the revised ETS architecture of the ‘Fit-for-55’ package tabled a few months 
earlier. In this package, major changes were proposed, including the creation of a separate emission trading 
system encompassing road transport and building emissions with full auctioning from the start, accompanied 
by a Social Climate Fund. 

In  principle,  allowances  designated  for  auctioning  with  revenues  accruing  to  Member  States  fall 
under the scope of the proposed own resource. A uniform share of 25 % per allowance auctioned would 
accrue  to  the  EU  budget,  as  per  the  proposal  of  December  2021.  This  leaves  outside  the  scope  those 
allowances auctioned to mobilise resources for both the Innovation Fund and the Modernisation Fund (2% of 
the ETS cap for power and industry, as well as an additional 2,5% as of 2024 from the ETS cap for power, 
industry, and maritime transport). 

Following interinstitutional negotiations, the revised ETS Directive has entered into force in June 
2023,  creating  the  legal  basis  for  an  ETS-based  own  resource.  In  parallel  and  in  response  to  the 
challenges faced by the energy sector resulting from the Russian invasion in Ukraine, the REPowerEU Plan has 
led to another change in the ETS  Directive,  directing EUR 20 billion of ETS auction revenue to the Recovery 
and Resilience Facility in the coming years, which are also outside the scope of the own resource. 

29 

 
 
 
Graph 9. Scope of the Emission Trading Own Resource, illustrative representation  

ETS for stationary, aviation and maritime sectors (ETS 1) 

ETS for road transport, buildings, and fuels in additional sectors (ETS 2) 

Notes: (1) In both graphic representations, the relative size of the boxes may not be to scale. (2) In the graphic 
representation of ETS for stationary, aviation and maritime sectors (ETS 1), the breakdown does not account 
for the operation of the Market Stability Reserve. (3) In the graphic representation of ETS for road transport, 
buildings, and fuels in additional sectors (ETS 2), the use of the option represented in dark blue is uncertain.  

Source: Commission services. 

Making a part of the ETS revenue an own resource builds on and does not necessitate a change to 
the  well-functioning  auction  infrastructure.  Auctions  take  place  on  a  daily  basis.  Collection  and 
administration  of  ETS  revenue  is  ensured  at  national  level  by  authorities  designated  by  Member  States. 
Collecting part of the revenue as an own resource would not entail any major additional tasks. All categories 
of allowances in the own resource scope are to be auctioned based on the infrastructure established by the 
ETS Auctioning Regulation with a common auction platform at its centre. The simplest and leanest approach is 
to arrange for the transfer of part of this revenue to the EU level from the auction platforms used by Member 
States. This minimises administrative efforts for both Member States and the Commission.  

30 

 
 
 
 
3.1.2.  Ensuring  fairness  –  the  Valuation  Mechanism  and  Solidarity  Adjustment 

Mechanisms 

The  scope  of  the  own  resource  includes  allowances  that  may  not  be  auctioned.  The  ETS  Directive 
foresees several mechanisms to support energy intensive sectors (such as the power sector), in particular in 
carbon-intensive economies, and helps them invest in climate-friendly technologies. For that purpose, the ETS 
legislation  allows  several  individual  Member  States  to  exercise  national  discretion  and  not  auction  some 
allowances designated to be auctioned (see table 3 for an overview which Member States have made use of 
discretionary choices in the existing ETS). In particular, some Member States have decided to make use of the 
derogation  to  provide  free  allocation  for  the  modernisation  of  the  energy  sector(44).  Some  Member  States 
have given up auctioning allowances to increase their resources in the Modernisation Fund(45). Some Member 
States have already decided to use some ETS allowances for compliance with their targets under the Effort 
Sharing Regulation(46). In the context of the own resource proposal, these allowances would be subject to an 
equivalent contribution as allowances auctioned – the so-called valuation mechanism (Graph 10). 

Table  3:  Discretionary  choices  in  ETS  legislation  -  Non-auctioned  allowances  in  own  resources 
scope 

Effort Sharing 
Regulation flexibility 

Transfer for free to the 
power sector (10c) 

Transfer to the 
Modernisation Fund 

BE 

BG 

CZ 

DK 

DE 

EE 

IE 

EL 

ES 

HR 

FR 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

(44) Pursuant to Article 10c of the ETS Directive For further details see https://climate.ec.europa.eu/eu-action/eu-emissions-
trading-system-eu-ets/free-allocation/allocation-modernise-energy-sector_en  and  https://climate.ec.europa.eu/eu-
action/funding-climate-action/modernisation-fund_en. 

(45)  Under Article 10(2)(b) and/or Article 10c of the ETS Directive. 

(46)  For  further  details  see  https://climate.ec.europa.eu/eu-action/effort-sharing-member-states-emission-targets/effort-

sharing-2021-2030-targets-and-flexibilities_en.  

31 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
 
AT 

PL 

PT 

RO 

SI 

SK 

FI 

SE 

Source: Commission services 

Several changes in revised legislation reaffirm the importance of the valuation mechanism. Firstly, 
in an amendment of the Effort Sharing Regulation (ESR) the discretionary flexibility for some Member States 
to  cancel  ETS  allowances  and  use  the  volumes  for  compliance  with  national  targets  has  been  extended. 
Eligible  Member  States  may  notify  changes  by  end  2024  and  again  end  2027  to  the  discretionary  choices 
made  and  notified  in  2019.  In  addition,  the  two  eligible  Member  States  who  initially  had  not  notified  the 
Commission  to  use  this  flexibility  may  decide  by  end  2023  to  make  use  of  it.  Secondly,  the  derogation 
pursuant to Article 10c of the ETS Directive will end in 2024. The three Member States who had notified the 
Commission  to  make  use  of  it  will  have  the  possibility  to  transfer  by  mid-May  2024  some  or  all  of  these 
allowances to the Modernisation Fund, or to auction them. Thirdly, pursuant to Article 30e(3), Member States 
with  a  national  carbon  tax  applied  to  some  or  all  the  emissions  covered  by  ETS  2  have  the  discretionary 
option not to apply up to 2030 the ETS  2 to these emissions and cancel allowances.  As the purpose of the 
valuation mechanism is to ensure that discretionary choices at the disposal of individual Member States are 
made on climate policy merits and not  on budgetary considerations, the extended choices confirm the need 
for this mechanism. 

The Commission additionally proposed a temporary solidarity adjustment mechanism to ensure a 
fair  emissions  trading-based  own  resource  contribution  from  all  Member  States.  Until  2030,  an 
upper and lower boundary for the own resource contribution applies, in relation to the gross national income 
key. This avoids that some Member States contribute disproportionally to the EU budget in comparison to the 
size  of  their  economy  during  the  period  of  transition  to  more  sustainable  economies  and  societies  and 
ensures a just contribution from all. The upper and lower boundary have been proposed to be fixed at 150% 
and 75%, respectively. While the lower boundary applies to all Member States, the application of the upper 
boundary is limited to lower income Member States. 

32 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Graph 10. The effect of the Solidarity Adjustment Mechanism on Member State contribution 

Source: Commission Services. 

3.1.3. The evolution of the carbon market 

Recent  evolutions  on  the  carbon  markets  have  increased  the  revenue  potential  of  the  Emission 
Trading System. In contrast to price assumptions used at the time the proposal was made and encapsulated 
in  the  accompanying  impact  assessment(47),  the  market  value  of  allowances  in  the  existing  ETS  has 
significantly increased in the months following the proposal and exceeded the price level of EUR 55 (in 2020 
prices)  up  to  2030  considered  in  the  impact  assessment.  In  2022,  allowance  auctions  cleared  on  average 
slightly  below  EUR  80.  Member  States’  annual  revenue  in  2022  reached  an  unprecedented  level  of  almost 
EUR  30  billion.  Independent  market  analysts(48)  expect  that  market  prices  will  remain  above  EUR  55  in  the 
coming years (Graph 11). 

(47) https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021SC0601.  

(48)  See  for  example  “The  EU-ETS  price  through  2030  and  beyond:  A  closer  look  at  drivers,  models  and  assumptions”, 
December 2022, published by Kopernikus-Projekt Ariadne. 

33 

 
 
 
                                                        
 
Graph 11. Carbon price, 2018-2023, eur 

Source: EEX auction clearing prices. 

3.2. 

The statistical own resource based on company profits   

Insufficient  tax  harmonisation  in  the  EU  allows  large  multinational  enterprises  to  exploit 
loopholes and mismatches in national tax systems. Large Multinational enterprises (MNE’s) are able to 
account part of their activities in different Member States and benefit from tax differentials. They can reduce 
their effective tax burden by allocating functions in several countries in the areas of financing and intellectual 
property rights. They can shift profits through the pricing of intra-group transactions. They can also limit their 
physical  presence  in  some  high-tax  jurisdictions.  Since  a  few  years, the  EU  has  been  adopting  measures  to 
reduce this phenomenon and ensure a fairer taxation to preserve the Single market. 

At  global  level,  the  process  launched  by  the  OECD  and  supported  by  the  European  Commission 
aimed  at  addressing  these  challenges  and  ensuring  a  fair  taxation  among  tax  jurisdictions.  In  a 
continued  effort  to  put  an  end  to  tax  practices  of  MNE’s,  which  allow  them  to  shift  profits  to  jurisdictions 
where they are subject to no or very low taxation, the OECD has further developed a set of international tax 
rules to  ensure  that  MNEs  pay  a  fair share  of  tax  wherever  they  operate.  This  major  reform  aims  to  put  a 
floor on competition over corporate income tax rates through the establishment of a global minimum level of 
taxation. By removing a substantial part of the advantages of shifting profits to jurisdictions with  no or very 
low taxation, the global minimum tax reform will level the playing field for businesses worldwide and allow 
jurisdictions to better protect their tax bases.  

In  recent  years,  the  Union  has  adopted  landmark  measures  to  reinforce  the  fight  against 
aggressive  tax  planning  within  the  internal  market.  The  anti-tax  avoidance  directives  have  laid  down 
rules  against  the  erosion  of  tax  bases  in  the  internal  market  and  the  shifting  of  profits  out  of  the  internal 
market. Those rules converted into Union law the recommendations made by the Organisation for Economic 
Cooperation and Development (OECD) in the context of the initiative against base erosion and profit shifting 
(BEPS)  to  ensure  that  profits  of  multinational  enterprises  (MNEs)  are  taxed  where  economic  activities 
generating the profits are performed and where value is created.  

The implementation of the OECD/G20 Pillar 1 agreement remains an essential priority in the area 
of  corporate  taxation  for  the  EU  and  its  Member  States.  In  2021,  the  Commission  proposed  an  own 
resource  based  on  a  share  of  residual  profits  from  multinationals  that  will  be  re-allocated  to  EU  Member 
States under the OECD/G20 agreement on so-called ‘Pillar One’. This agreement addresses the tax challenges 
arising  from  the  digitalisation  of  the  economy  and  will  reform  significantly  the  international  corporate  tax 

34 

 
 
system.  Substantive  progress  has  been  made  following  the  October  2021  agreement.  However,  the 
multilateral convention has not yet been signed and ratified, which means that, it cannot yet enter into force 
(see Box 4).  

As  announced  in  the  Commission  Work  Programme,  the  Commission  intends  to  propose  its 
Business  in  Europe:  Framework  for  Income  Taxation  (BEFIT)  in  the  third  quarter  of  2023.  This 
initiative  will  improve  the  functioning  of  the  Single  Market  by  simplifying  corporate  tax  rules  and  tax 
compliance,  and  levelling  the  playing  field  for  businesses.  BEFIT  aims  at  tackling  the  complexity,  double 
taxation and reducing tax compliance costs that businesses, chiefly those with cross-border activity, currently 
face in the Single Market. It will contribute to making the EU more attractive to cross-border investment and 
support growth. BEFIT will be mandatory for large groups with global combined annual revenues of EUR 750 
million or more. The discussions in Council are expected to start in the fourth quarter of 2023.  

Box 4. OECD Pillar 1 

There  have  been  delays  in  the  international  process  agreeing  on  Pillar  One.  In  December  2021  the 
Commission proposed an own resource equivalent to 15% of the share of the residual profits of the 
largest and most profitable multinational enterprises that are reallocated to EU Member States under 
the  agreement  on  a  reform  of  the  international  tax  framework  (OECD/G20  Inclusive  Framework  on 
Base Erosion and Profit Shifting). ‘Pillar One’ of the agreement provides for the re-allocation of a share 
of  the  residual  profits  of  the  largest  and  most  profitable  multinational  enterprises  to  end  market 
jurisdictions where goods or services are used or consumed. Negotiating the practical implementation 
aspects of the agreement is taking more time than initially expected, so that it seems unclear at what 
point in time the underlying and forthcoming EU Directive for the Pillar One based own resource will 
start to be negotiated.  

Until  the  possible  establishment  of  an  own  resource  based  on  an  underlying  tax  proposal,  the 
Commission  is  proposing  a  corporate  statistical  own  resource  based  on  national  accounts 
statistics, prepared under the European system of accounts (ESA). It aims to levy the own resource on 
an  approximation  of  where  profits  are  generated  in  the  different  Member  States.  A  contribution  from  the 
corporate sector would ensure that all Member States pay their fair share. It would also help to balance the 
basket of own resources and further diversify the revenue sources for the EU budget.  

3.2.1. Characteristics of the statistical based own resource on company profits 

The  statistical  own  resource  on  companies’  profits  would  be  temporary  and  would  constitute  a 
national contribution, not a tax. While it constitutes a proxy for company profits at Member States’ level, 
the base of this new own resource does not constitute a tax on companies, but rather a national contribution 
paid by Member States based on  harmonised statistics of corporate income or corporate profits.  As such, it 
would not increase companies’ compliance costs. A statistical own resource based on company profits would 
aim  to  levy  own  resource  revenue  on  an  approximation  of  where  profits  are  generated  in  the  different 
Member States.  

The  own  resource  on  company  profits  could  improve the stabilisation  function  of  the  EU  budget 
against  asymmetric  shocks.  The  statistical  indicator  on  company  profits  reacts  to  changes  in  business 
cycles more quickly and strongly than GNI (Graph 12). The more significant drop of company profits compared 
to GNI in the years of the financial crisis and the faster take-up in the following years, would provide relief to 
Member  States  experiencing  an  asymmetric  shock.  The  potential  loss  in  revenues  from  the  statistical  own 
resource  on  company  profits  will  be  compensated  by  the  total  GNI  contribution  from  all  Member  States, 
getting relatively more contributions from Member States that have better conditions in the economic cycle 
(Graph 13).  

Graph  12.  Evolution  of  gross  operating  surplus  for  financial  and  non-financial  corporations 
(sectors S12 and S11) compared to GNI, total economy (S1), for EU27 (sum of countries data) 

35 

 
 
Source:  DG  BUDG  calculations  based  on  Eurostat  annual  NFSA  data  tables  nasa_10_nf_tr  and 
naidsa_10_nf_tr, data accessed on 29/03/2023 and 16/05/2023, respectively. 

36 

 
 
 
 
Graph  13.  Development  of  gross  operating  surplus  for  financial  and  non-financial  corporations 
(sectors S12 and S11) and GNI, total economy (sector S1) growth, 2017-2021 annual average, by 
country 

Note: * Missing data for BG 2018-2021 and RO 2021 estimated with annual average growth rate for EU27. 

Source: DG BUDG calculations based on Eurostat annual NFSA data table nasa_10_nf_tr and ECFIN forecast 
file SF 2023, data accessed on 29/03/2023 and 02/05/2023, respectively. 

Similarly  to  other  existing  own  resources  built  on  statistics,  this  new  own  resource  would  be 
Treaty-based.  Existing  own  resources  such  as  the  GNI  or  the  plastic  own  resource  are  also  statistically 
based, meaning that the revenues they generate do not come from national levies or taxes such as customs 
duties  or  VAT,  rather,  they  constitute  contributions  based  on  statistics  reported  by  Eurostat.  All  statistics-
based own resources are grounded in Article 311 TFEU and do not require an underlying sectoral legislation to 
be  adopted.  Once  these  contributions  to  the  EU  budget  are  established,  Member  States  would  be  free  to 
recoup them via domestic fiscal measures. 

3.2.2. How would it work? 

This  new  statistics-based  own  resource  would  be  calculated  by  applying  a  call  rate  on  a  base 
defined  using  sectoral  national  accounts  data  from  Eurostat  (expression  (1)).  The  statistical  base 
would be defined using a harmonised indicator that roughly approximates company profits. This notional EU 
company income [or profit] base would be  calculated according to the  European System of  Accounts 2010, 
which has the advantage of harmonised national accounting across Member States based on Regulation (EU) 
549/2013.  

Statistical  own  resource  on  company  profits  =  a  call  rate  (e.g.  0.5%)  *  statistical  base  on  company 
profits                                                                                                                                             (1) 

The  statistical  base  for  the  own  resource  on  company  profits  would  be  defined  as  the  gross 
operating  surplus  of  financial  and  non-financial  corporations  (ESA  sectors  S12  and  S11).  Gross 
operating surplus (ESA balancing item B.2g) equals the sector’s ‘Gross value added’ (ESA balancing item B.1g) 
plus ‘Other subsidies on production’ (ESA item D.39) minus ‘Compensation of employees’ (ESA item D.1) and 
Other taxes on production’ (ESA item D.29). 

37 

 
 
 
The  operating  surplus  constitutes  a  commonly  used  and  relatively  simple  concept  (see  Box  5). 
Indeed, the operating surplus  is a well-known ESA item and  simple approach, which reflects the surplus (or 
deficit) on production activities before accounting for interest, rents or charges paid or received for the use of 
assets  (property  income).  However,  operating  surplus  is  only  a  very  rough  approximation  of  aggregated 
potentially taxable company profits, as major tax-deductible items such as the cost of financing remain in the 
base.  

A  measure  in  gross  terms  is  preferable.  The  decision  to  use  a  ‘gross’  versus  ‘net’  concept  owes  to  the 
depreciation of tangible and intangible assets. The difference between gross and net operating surplus is the 
consumption of fixed capital. Since the calculation methods of ‘consumption of fixed capital’ and the lifetime 
of  assets  may  vary  across  Member  States,  a  measure  in  gross  terms  avoids  introducing  methodological 
discrepancies in the approximation of the company profits base. 

A call rate of 0.5% would provide  revenues of EUR  about 16 billion (2018  prices) on average per 
year. Revenue estimates depend on both the call rate and the statistical base (Graphs 14). 

38 

 
 
Graphs  14.  Company  profit  estimates  based  on  the  gross  operating  surplus  (B.2g)  variables, 
financial and non-financial corporations (sectors S12 and S11), in current prices  

Source:  DG  BUDG  calculations  based  on  Eurostat annual  NFSA  data  table  nasa_10_nf_tr,  data  accessed  on 
29/03/2023. 

Box 5. Alternative statistical bases considered 

In the process of selecting data source to be used as the statistical base for the own resource on 

39 

 
 
 
 
company profits, a number of alternatives to gross operating surplus were considered.  

1.  Structural business statistics (SBS) 

SBS  are  compiled  under  the  legal  basis  provided  by  European  Parliament  and  Council  Regulation 
(EC) No 295/2008 (49). SBS provides a statistical base with statics on the activities of the business 
economy and could allow to target large enterprises (>249 employed). SBS covers the non-financial 
business economy, including industry, construction, distributive trades, and market services. For data 
collection, Member States are free to choose, within quality limitations, how to produce SBS data. In 
some  Member  States  either  administrative  records  or  surveys  are  used  while  others  rely  on  both 
methods (50). 

The  definition  of  profit  in  SBS  is  gross  operating  surplus  which  includes  value  added  minus 
personnel  costs.  As  financial  companies  are  not  included,  other  Eurostat  sources  such  as  gross 
operating surplus (B2g) of sectoral national accounts seem more appropriate.  

2.  OECD Country by Country Report (CbCR) statistics 

OECD CbCR statistics provide a range of aggregate data on the economic activities of large MNEs 
(revenue > EUR 750 m). This data includes the profit of MNEs.  

However,  several  issues  limit  comparability  of  data  across  countries.  Methodologies  and 
requirements  vary  in  different  jurisdictions.  In  general,  tax-exempt  entities  and  MNE  groups  are 
included,  but  some  jurisdictions  exclude  them.  There  is  no  consistent  approach  for  treatment  of 
dividends from constituent entities. The checks on figures submitted by MNE groups vary between 
jurisdictions.  Differences  in  accounting  rules between  jurisdictions  further affect  the  comparability 
of CbCR data across jurisdictions. Additionally, due to confidentiality, not all MS are able to provide 
anonymised and aggregated datasets. These challenges in comparability between jurisdiction would 
present a serious issue of fairness between Member States. Moreover, not all EU Member States are 
represented. 

3.  Entrepreneurial income (ESA balancing item B.4g) 

The balancing item entrepreneurial income (B.4g) from Eurostat sectorial national accounts was also 
considered as a possible statistical base.  

Gross  entrepreneurial  income  (ESA  balancing  item  B.4g)  of  non-financial  (S11)  and  financial 
corporations (S12) (both including quasi-corporations) 

equals   gross operating surplus (ESA balancing item B.2g) 

plus       property income received (ESA item D.4) 

minus  

selected property income paid / interest on debt / rents / income on insurance and pension 
investments, and non-financial assets (selected ESA D.4 items) 

Although this concept sounds in principle to be closer to a concept of company profits at individual 

(49)  Structural business statistics introduced - Statistics Explained (europa.eu).  

(50)  Section 5 Methodological manual on European Structural Business Statistics 2021 edition Methodological manual on 

European Structural Business Statistics (europa.eu).  

40 

 
                                                        
 
firm  level,  there  are  methodological  issues  when  using  statistical  aggregates  for  sectors  of 
companies.  As  the  sector  data  is  non-consolidated  under  ESA  2010,  the  amounts  of  profits 
distributed  through  dividends  to  the  sector  of  non-financial  or  financial  corporations  within  the 
same  Member  State  are  partially  counted  twice  in  the  calculation  of  entrepreneurial  income.  This 
might lead to an artificial overstatement of the own resource base. 

41