Abstract This article analyses the institutional constraints for European Union finances reform and proposes a decision-making process that incorporates these constraints and provides incentives to reorient the budget towards more EU public goods. The authors propose separating the budget into a redistributive and a public good category. In order to reveal common interests, the decision of what is to be considered an EU public good is left to the negotiation process. In addition, while public goods should be financed proportionally to GNI shares, this is not necessarily the case for redistributive policies. Net balances resulting from the proposal are calculated.