Defence Spending in the Multiannual Financial Framework 2028–2034: More Own Resources but No EU Tax Sovereignty

Abstract This article examines the European Commission’s proposal for the Multiannual Financial Framework (MFF) 2028–2034 and argues that the European Union (EU) should complement temporary debt- and flexibility-based defence financing with a permanent tax-based source of revenue. While recent initiatives, including the activation of the Stability and Growth Pact’s national escape clause and the Security Action for Europe (SAFE) instrument, have expanded member states’ fiscal space, they remain temporary and primarily finance national rather than European defence. The new MFF foresees new own resources which, however, do not provide the EU with significantly more money for defence. Drawing on a comparative analysis of fiscally decentralised multilevel governance systems, the article examines value-added tax (VAT) arrangements in the United States, Switzerland, and Germany to identify institutional lessons for the EU. Neither the Swiss model of exclusive federal VAT nor the German model of shared federal VAT can be directly transplanted to the EU. Instead, the article proposes a distinct European model in which a small, treaty-based share of national VAT would constitute a genuine EU tax while preserving member states’ tax sovereignty. Such a reform would provide the EU with a stable source of own revenues to finance common European public goods, particularly defence.