The purpose of this paper is to estimate the redistributive effects of the European Union budget between 1995 and 1997 on the countries and regions of the EU. This analysis focuses on the main items of revenue, expenditure and net fiscal balance. The method adopted consists of two stages. First, we estimate the income elasticity of European Union revenues, expenditures and fiscal balance in order to examine the progressive degree of each instrument considered. Secondly, we analyse the impact of each of these instruments on regional and national income in order to evaluate their capacity to reduce differences in per capita income levels.