Italy warned that it would veto even the tentative draft conclusions on the EU’s next seven-year budget on Tuesday, unless the contentious rebates, totalling over €9 billion annually, are removed from the negotiations.

“There is no valid reason to include in the conclusions of the next European Council the objective of concluding the agreement on the future European financial plan by 2026,” according to a press release from the Italian government.

“This is especially true after the inclusion of rebates to satisfy the demands of the frugal countries,” the statement goes on to add.

Last week, the rebates were included in a Council budget negotiating draft, sparking strong objections at a meeting of EU ambassadors on Wednesday, according to four diplomats who spoke to Euractiv.

These rebates compensate the wealthiest EU countries for their large contributions to the bloc’s budget based on gross national income, and benefit Germany, Denmark, the Netherlands, Sweden, and Austria.

They face opposition from the European Commission, EU budget auditors, MEPs, analysts, and all member states that do not receive them.

The dispute is now carrying over into this week’s EU leaders’ summit, with Italy threatening to block the sole substantive point in the draft European Council conclusions, which simply “welcome” progress to date and call for an agreement by the end of 2026.

Diplomats warn that a far-right election win in France in April 2027 could complicate or derail the negotiations if the budget is not finalised beforehand.

Italy’s European Affairs Minister, Tommaso Foti, presented his country’s demands to fellow EU ministers on Tuesday, ahead of discussions later in the day on the full seven-year EU budget proposal.