European Commission proposes adjusted package for the next generation of 'own resources'

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EY Global

23 Jun 2023
Subject Tax Alert
Categories Corporate Tax
Jurisdictions European Union
  • The European Commission published a proposed package for the next generation of “own resources” to finance the European Union (EU) budget.
  • The proposals may lead to tax increases in the EU and include a new temporary statistical-based own resource on company profits to raise €16 billion per annum.
  • The proposal will move to negotiations between Member States.

Executive summary

On 20 June 2023, the European Commission (the Commission) published an adjusted package for the next generation of own resources (the adjusted package or the new own resources proposal). This completes and updates the package that the Commission put forward in December 2021.1 The EU's own resources are the main sources of revenue for the EU budget.

With the adjusted package, the Commission proposes, among others things, a new statistical-based own resource linked to the corporate sector. This new own resource is temporary, to be replaced by a possible contribution from Business in Europe: Framework for Income Taxation (BEFIT), once proposed and unanimously agreed upon by all Member States. It will be calculated as 0.5% of the notional EU company profit base, an indicator calculated by Eurostat on the basis of the national accounts statistics.

The proposal for the adjusted package will now move to negotiations between Member States.


On 27 May 2020, the Commission presented its proposal for a recovery plan from the crisis that societies and economies face due to COVID-19.2 To ensure the recovery is sustainable and fair for all EU Member States, the Commission proposed to create a new recovery instrument worth €750 billion, called NextGenerationEU. As part of the funding proposal for the instrument, the Commission proposed the introduction of EU taxes to complement the existing own resources, including:

  • New corporate tax based on operations and levied on companies that draw significant benefits from the EU single market and survived the COVID-19 crisis
  • Digital tax for large companies
  • Tax on nonrecycled plastic packaging waste
  • Carbon border adjustment mechanism
  • Emissions Trading System-based resource including a possible extension to maritime and aviation sectors

On 21 July 2020, the European Council agreed on the recovery plan and the EU budget for 2021 through 2027.3 The agreement also stated that the EU would, over the coming years, “work towards reforming the own resources system and introduce new own resources.” The agreement on the new own resources followed the Commission proposal of May 2020 with two notable differences:

  1. The Commission had suggested introducing a new own resource that would be levied on large companies that draw vast benefits from the EU single market and survived the COVID-19 crisis; this resource was not included in the conclusions.
  2. The Council agreed on the introduction of a Financial Transaction Tax as a new own resource, which the Commission had not proposed in May 2020.

Subsequently, in December 2020, the European Parliament, the Council (i.e., the Member States) and the Commission reached an interinstitutional agreement (pdf) under which the repayment of the NextGenerationEU must be financed by the European Union’s general budget and by sufficient proceeds from new own resources introduced after 2021.

In light of this, the Commission presented a package of the new own resources in December 2021,4 proposing three sources of revenue that would be introduced by 1 January 2023:

  1. 25% of the revenue generated by EU emissions trading
  2. 75% of the revenue generated by Carbon Border Adjustment Mechanism (CBAM)
  3. 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 global agreement

The Commission had also announced that it will present a proposal for a second basket of new own resources by end of 2023 that will include a Financial Transaction Tax and an additional own resource linked to the corporate sector.

The adjusted package

Since December 2021, little progress has been achieved on the negotiations of a new own resource package. In an attempt to speed up the negotiations, the Commission adjusted and complemented its 2021 proposal by publishing an adjusted package on 20 June 2023.

With the adjusted package, the Commission proposed to introduce a new statistical-based own resource, which is expected to provide revenues of approximately €16 billion per year. The new statistical-based own resource will be temporary, to be replaced by a possible contribution from BEFIT (Business in Europe: Framework for Income Taxation),5 a proposal that the Commission announced for publication on 12 September. This new own resource is not a tax on companies, but a national contribution of Member States calculated on the basis of statistics from national accounts under the European system of accounts (ESA). It will be calculated as 0.5% of the notional EU company profit base which will be defined using a harmonized indicator that roughly approximates company profits: gross operating surplus.

The Commission also proposed in the adjusted package to increase the call rate for the ETS-based own resource to 30% (up from 25% originally proposed). The call rate for CBAM (75% from all revenues generated), as proposed in 2021, remains the same.

The implementation of the Pillar One agreement (15% of the revenues of which will also contribute to the budget once entered into force) remains an essential priority for the EU and the Commission highlights in the adjusted package that it will continue to promote efforts for an agreement.

New own resources are required because the EU's annual expenditure may not exceed its revenue. Increase of expenditure due to inflation and high interest rates make the introduction of new own resources more pressing, while some Member States and political groups may call for expenditure cuts to address budgetary gaps.

The statistical-based new own resource would mean a significant increase in the national contributions to the EU budget. It is up to each Member States to find financial cover. It is expected that the majority of Member States will consider domestic tax increases, also in light of ongoing EU discussions on the Stability and Growth Pact. These rules limit national government deficits to 3% of Gross Domestic Product (GDP) and sets the public debt ceiling to 60% of GDP.

Next steps

For adoption, the new own resource proposal requires a unanimous agreement by all EU Member States in the Council following a consultation of the European Parliament. In addition, EU countries have to approve the agreement at national level, in accordance with their respective constitutional requirements.


Given the complexity of the adoption processes at the EU and national level, it is difficult to predict when and in what form the various elements of the proposal will be implemented. However, given the ongoing crisis and the emerging budget gaps, there will be pressure to conclude on the own resource framework as soon as possible in 2023. If adopted, the new statistical own resources is expected to trigger tax increases in many Member States.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Belastingadviseurs LLP, Rotterdam
  • Marlies de Ruiter
  • Maikel Evers
Ernst & Young Belastingadviseurs LLP, Amsterdam
  • Konstantina Tsilimigka
  • Roberto Aviles Gutierrez
EY Société d’Avocats, Paris
  • Jean-Pierre Lieb
Ernst & Young LLP (United States), Global Tax Desk Network, New York
  • Jose A. (Jano) Bustos

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.