European Union Budget

The European Union has a budget to pay for policies carried out at European level (such as agriculture, assistance to poorer regions, trans-European networks, research, some overseas development aid) and for its administration, including a parliament, executive branch, and judiciary that are distinct from those of the member states. These arms administer the application of treaties, laws and agreements between the member states and their expenditure on common policies throughout the Union. According to the European Commission, 6% of expenditure is on administration, compared with 94% on policies.

To pay for this, the EU had an agreed budget of €143 billion for the year 2014, representing around 1% of the EU-28's gross national income (GNI). Prior to 2014, the EU had a budget of €864.3 billion for the period 2007–2013, representing 1.05% of the EU-27's GNI for the period.

The EU budget is proposed annually by the European Commission. The proposed annual budget is then reviewed and negotiated by the Council of the European Union (which represents member states' governments) and the European Parliament (which represents EU citizens). In order for the budget to be finalised, consensus of all member states is required.

The annual budget must remain within ceilings determined in advance by the Multiannual Financial Framework, laid down for a seven-year period by the Council (requiring the unanimous approval of every Member State) with the assent of the Parliament.

The budget for a year is determined in advance, but final calculations of payments required from each member state are not completed until after the budget year is over and information about revenue and expenditure is available, and correction mechanisms have been applied.

...
Wikipedia