European leaders on Friday reached agreement on proposals to fix the EU’s budget which also involves a large cut in the Netherlands’ €1bn rebate.

Talks resumed early on Friday morning on a compromise proposal that would see total EU spending reduced to €960bn. Early reports said the new deal also included a cut in the Dutch rebate.

However, diplomats and Dutch officials have told reporters there is ‘nothing going on’ and the Netherlands’ net position will not be affected.

According to the Financieele Dagblad, the proposals envisage the Dutch discount being reduced to €650m but would also include a €360 ceiling on the Dutch value-added tax contribution to the EU’s coffers. 

This means the Dutch rebate of €1.1bn would effectively remain intact, the paper said.

Budget

The Netherlands, Britain and Germany have been at the forefront of efforts to ensure total EU spending is reduced. The new figure of €960bn is €12bn below the total which was thrown out at November’s summit.

Dutch commentators say if the Dutch rebate is cut, prime minister Mark Rutte will be in a difficult position and will face tough questioning from MPs. Rutte went to the summit saying he was determined the EU budget would be cut and the Dutch rebate would remain intact.

The Netherlands is one of the biggest net payers into the EU’s coffers. The payment is based on national income, plus a share of value-added and import tax receipts.

Officials negotiated the country’s €1bn discount in 2005 and it is due to expire in 2014.

The deal still has to be approved by the European parliament.

More to follow