Thoughts about EU performance-based funding
By letter of 10 September 2025, the Netherlands Court of Audit informed the House of Representatives of its first impressions of a new EU method to fund projects. The Union will pay out funds only when predefined results have been achieved.
This method differs from the more customary principle that the EU provides funds to cover actual costs incurred on a project. This principle applies, for instance, to EU support for Dutch agriculture and fisheries, social projects and economic development. In performance-based funding, the EU provides funds only when a member state demonstrates that agreed results have been achieved.
The Court’s letter describes how ‘Brussels’ applies performance-based funding in the Recovery and Resilience Facility (RRF). Established following the COVID pandemic, the RRF has already paid out a total of €350 billion to the member states, with the Netherlands receiving €2.5 billion. The government must still demonstrate to the Commission’s satisfaction that agreed results (expressed in milestones and targets) have been achieved in order to receive the remaining €2.9 billion reserved for the country.
In the next 2 years, the 27 member states and the Commission will negotiate the size of the EU’s multiannual budget for 2028-2034 and reach agreement on how it will be spent. The Commission has indicated that it will use performance-based funding more often. The Court of Audit observes in its letter that performance-based funding has both limitations and benefits. One benefit is the greater weight given to the achievement of goals and milestones. Better alignment of Dutch project controls and accountability with the European Union’s controls might also reduce implementation costs.
Limitations include parliament’s lack of insight into the costs incurred and the effects of expenditure (cost-based funding, incidentally, also provides limited insight into effects). Besides the financial contribution, the added value to the Netherlands of EU funding through the RRF is limited because the Netherlands has decided to implement existing measures in its RRF programme. This undermines effectiveness because the measures would have been carried out even without EU funding.