By Jenna Ross, for Visual Capitalist
With 28 countries and more than 15.8 trillion euros ($17.35 trillion) in 2018 GDP at purchasing power parity (PPP) to its name, there's no doubt the European Union is highly influential in economics and politics. The bloc tackles a wide range of issues from climate change and health to external relations, justice and migration.
Of course, the money required to address these concerns must come from somewhere — and that's where the EU's budget comes in. Each member state contributes revenue, but it's been argued that not everyone is pulling their weight.
Today's chart is based on budget data from the European Commission and ranks the member states that contributed the most, and least, to the 2018 EU budget. Specifically, we've charted the net contributions — measured as the country's total contribution minus expenditures — on an absolute and per capita basis. We also break down the EU's main revenue sources and areas of expenditure for the year.
An Unequal Share
Perhaps not surprisingly, Germany and the United Kingdom are the top two net contributors in absolute terms. Combined, these two powerhouses had a GDP (PPP) of over 5 trillion euros in 2018.
At the other end of the scale, Poland tops the list of net beneficiaries with a deficit of –11,632 million euros, more than double that of second-place Hungary. In the wake of the European sovereign debt crisis, Greece and Portugal slide into fourth and fifth places, respectively.
When population is taken into account, these rankings shift dramatically. Per capita, the Netherlands tops the list with 284 euros contributed per resident, whereas Luxembourg lands in last place with a deficit of –2,710 euros. The small country is home to many EU institutions, resulting in high administrative spending: In 2018, administration amounted to 80% of total expenditures.
It's easy to see what the net beneficiaries might gain from the EU — but what about the top net contributors? Beyond straight budgetary allocations, member states have access to a single open market, and benefit from the political clout of 28 united countries, among other perks.
Following the Money
So, how does the EU collect its revenue, and what does it spend its money on? Revenue is broken down into four main categories:
- Value Added Tax (VAT)-Based Own Resource (2018 total: 17,600 million euros). Member states pay based on how much they receive in VAT. The VAT "base" is capped at 50% of a country's gross national income (GNI), and a standard levy of 0.3% applies. Germany, the Netherlands and Sweden benefit from a reduced rate of 0.15% in an effort to rebalance their excessive contributions.
- Gross National Income (GNI)-Based Own Resource (2018 total: 105,800 million euros). Calculated as the difference between total expenditure and the sum of all other revenue, this revenue stream is the amount needed to balance the EU budget. The European Union applies a standard percentage across member states, with Denmark, the Netherlands and Sweden receiving a lump sum reduction in 2018.
- Traditional Own Resources (2018 total: 20,200 million euros). Member states collect customs duties and sugar levies, which goes directly toward the EU budget after the country deducts a 20% collection cost.
- Other Revenue (2018 total: 15,700 million euros). This consists of various items including taxes on EU workers' salaries, interest on late payments and fines, and contributions from non-EU countries to research programs.
Revenue might also include a budget surplus from the previous year or net adjustments made to previous years' financials. On the other side of the budget, the European Union has a wide variety of expenditures, broken down into six main categories:
- Smart and Inclusive Growth (2018 total: 75,900 million euros). This category focuses on boosting growth, creating jobs and fostering economic and social cohesion through training, education, research and social policy.
- Sustainable Growth: Natural Resources (2018 total: 58,000 million euros). The European Union allocates funding for the sustainable growth of agriculture, rural development and fisheries. It also finances programs dedicated to climate action.
- Security and Citizenship (2018 total: 3,100 million euros). Focused on the safety and rights of its citizens, this budget line item encompasses everything from migration and border protection to food safety and consumer protection.
- Global Europe (2018 total: 9,500 million euros). This covers all foreign policy, including international development and humanitarian aid.
- Administration (2018 total: 9,900 million euros). The expenditures of all EU institutions are captured under this heading, including staff salaries, building rent, information technology and training.
- Special Instruments (2018 total: 200 million euros). This area enables the EU to mobilize funds for unforeseen events, such as natural disasters and major world trade patterns that displace workers.
The 2018 budget resulted in a surplus of 2 billion euros, but will it be balanced in future years?
The 2020 Budget and Beyond
The European Union's current budgetary framework ends in 2020. A proposal for the 2021-2027 budget has already been set forth, and council meetings are ongoing.
With Brexit's twice-postponed deadline looming on Oct. 31, the United Kingdom's departure will leave a "sizable gap" in the EU budget. This could leave member states scrambling to find additional revenue sources and ways to reduce expenditures.