EU Commission releases 'own resources' package

• On 16 July 2025, the European Commission (Commission) published its long-term budget proposal, Multiannual Financial Framework (MFF) 2028 to 2034.
• Alongside the MFF, the Commission also published its Own Resources Decision (ORD), which outlines potential revenue sources to support the European Union (EU) budget.
• The ORD identifies five new own resources, including an annual lump-sum contribution from companies resident for tax purposes in the EU with an annual net turnover exceeding €100m. This own resource is designed as a bracket system with four tiers, starting with a €100k annual contribution on the first tier.
• Adoption of the ORD requires unanimous approval by the Member Stated and consultation of the European Parliament. Following Council adoption, the ORD must be ratified by all Member States in accordance with their constitutional requirements.

Executive summary

On 16 July 2025, the Commission published a proposal package for the 2028 to 2034 EU budget. The package consists of a Communication, a proposal for a Council Regulation laying down the multiannual financial framework for the years 2028 to 2034, a proposal for an Interinstitutional Agreement and a proposal for a Council Decision on the system of own resources.

The Commission's Own Resources Decision (ORD) introduces five new own resources for the European Union (EU). In addition to own resources linked to revenues from the Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM), new own resources based on the amount of electrical and electronic equipment not collected (e-waste) and a Tobacco Excise Duty Own Resource are suggested.

The fifth new own resource, the Corporate Resource for Europe (CORE), targets companies that are tax resident in the EU with an annual net turnover exceeding €100m. The aim is to ensure that corporations operating in the EU single market contribute to the EU budget. Under CORE, companies are divided in four brackets based on their annual net turnover, and their contributions are structured as lump-sum payments ranging from €100k to €750k annually.

The ORD will now move to negotiations between Member States. Adoption of the ORD requires unanimous approval by the Council (EU Member States) and consultation of the European Parliament. Following Council adoption, the decision must be ratified by all Member States in accordance with their constitutional requirements.

Detailed discussion

Background

The EU operates within an annual budgetary cycle, complemented by a long-term budget, known as the Multiannual Financial Framework (MFF). The MFF determines the maximum amounts that the EU budget can allocate to its major sectors of activities. These maximum amounts are set per category of expenditure, corresponding to the EU's major policies. The current MFF runs from 1 January 2021 through 31 December 2027.

The framework is established based on a Commission proposal that outlines budget ceilings, revenue rules (own resources), and sector-specific programs. The adoption of the MFF requires unanimous agreement from all 27 EU Member States in the Council, following the consent of the European Parliament.

The EU's own resources are designated revenue streams that finance the EU budget. Established under Article 311 of the Treaty on the Functioning of the EU (TFEU), the own resources system is designed to ensure the EU has the financial means to carry out its policies and objectives. The structure and composition of these resources are determined through a unanimous decision by the Council, following consultation with the European Parliament and subsequent ratification by all Member States domestically.

The current EU own resources for the MFF 2021 to 2027, as laid out in Council Decision 2020/2053 are customs duties, contributions based on the Value Added Tax (VAT) collected by Member States, direct contributions by EU countries, also known as Gross National Income (GNI), and a contribution based on the non-recycled plastic packaging waste.

The EU needs to establish new own resources because there is an obligation to repay the NextGenerationEU (NGEU) starting in 2028, while extra revenue also is necessary to address policy demands stemming from the current geopolitical landscape. To manage these additional budgetary needs without resorting to expenditure cuts or increasing GNI-based contributions, the Commission proposed new own resources in 2021 and 2023; however, these proposals have thus far met with limited success.

In 2021, the Commission proposed three new own resources in based on: (i) the Carbon Border Adjustment Mechanism (CBAM); (ii) the revised EU Emissions Trading System (ETS), and (iii) a share of the residual profits under Pillar One. In 2023, the proposal was adjusted to include a new temporary statistical-based own resource on company profits. (For background, see EY Global Tax Alert, European Commission proposes adjusted package for the next generation of 'own resources', dated 23 June 2023.)

In the meantime, several other proposals for new own resources have been discussed within the EU institutions, among them a Digital Levy, a Handling Fee in eCommerce items, behavioral taxes, a minimum tax on high-net-worth individuals and a common external withholding tax. The ORD proposal replaces these prior proposals.

New system of own resources

In the Proposal for a Council Decision on the system of own resources published 16 July 2025, the Commission proposes five new own resources:

1. 30% of the revenues generated by EU ETS (I)
2. 75% of the revenues generated by CBAM
3. €2 per kilogram of non-collected e-waste (based on weight of non-collected electric and electronical equipment)
4. 15% of the revenues based on the Member State-specific minimum tax rate for manufactured tobacco and tobacco-related products
5. An annual lump-sum contribution of in-scope companies operating and selling in the EU with an annual net turnover exceeding €100m (Corporate Resource for Europe/CORE)

According to the Commission, the new system of own resources shall generate revenues of €58.2b per year in total.

Corporate Resource for Europe

According to the Commission, the Corporate Resource for Europe (CORE) aims to ensure that large businesses contribute to the EU budget. It is estimated that CORE could generate approximately €6.8b annually for the EU budget from 2028 to 2034.

Member States would be responsible for collecting CORE from companies on behalf of the EU. The contribution shall be payable by any company, meaning any legal person or legal arrangement (entity) that is resident for tax purposes in a Member State and any permanent establishment located in a Member State of entities resident, for tax purposes, in a third country. Governmental entities, international organizations and nonprofit organizations are excluded.

The CORE annual lump-sum contribution would be differentiated based on a company's annual net turnover as follows:

Net turnover shall be defined as it is in Article 2 (5) of Directive 2013/34/EU — i.e., "the amounts derived from the sale of products and the provision of services after deducting sales rebates and value added tax and other taxes directly linked to turnover." Thus, no special accounting should be needed to calculate this contribution.

The introduction of CORE would be based on Article 311 TFEU, and according to the Commission it does not necessitate additional sectoral legislation.

Implications

Although the proposal designates CORE as a "financial contribution," it essentially directly targets economic actors similar to a tax. This appears to potentially raise important questions regarding the proposal's legal basis, as direct taxation falls under the competence of Member States and can only be implemented through EU Directives in accordance with the stipulations outlined in Article 115 TFEU. Further, the EU's direct taxation framework is governed by the principles of subsidiarity and proportionality, which provide that, in areas where the EU does not have exclusive competence, the EU may act only when Member States cannot sufficiently achieve the objectives themselves. Also, any EU action should not exceed what is necessary to fulfill the Treaties' objectives.

However, it is still too early to know whether Member States will adopt this new own resource, particularly given that it could be seen as a "quick fix" to address the need for alternatives to Pillar One and Digital Services Taxes amid ongoing trade negotiations with the United States. Also, as a lump-sum contribution per legal entity independent of the profitability of the company, the proposed resource raises issues of fairness and robustness. Given the many legislative hurdles yet to clear and the reluctance of EU Member States to approve own resources, stakeholders should monitor the responses by Member States to assess whether the proposal receives sufficient support to move forward.

Next steps

For adoption, the new own resource proposal requires a unanimous agreement by all EU Member States in the Council after a consultation of the European Parliament. Following adoption, each EU Member State must approve the agreement at the national level, in accordance with respective constitutional requirements. The Commission's proposals have faced some heavy criticism in the European Parliament and some Member States have also clearly expressed their dissent.

For additional information concerning this Alert, please contact:

Ernst & Young Belastingadviseurs BV, Rotterdam

• Marlies de Ruiter 
• Maikel Evers 
• Mahi Anastasiou 

EY Tax GmbH Steuerberatungsgesellschaft, Berlin

• Roland Nonnenmacher 
• Florian Zawodsky 
• Annika Seubert 

EY Société d'Avocats, Paris

• Jean-Pierre Lieb 

Ernst & Young LLP (United States), Global Tax Desk Network, New York

• Jose A. (Jano) Bustos

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

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