Abstract: How do the European Union’s (EU) fiscal allocations impact the electoral outcomes of corrupt incumbent parties? Works examining the link between EU funds and corruption prompt questions about how EU funds interact with political corruption to shape party dynamics and electoral outcomes. In this project, I account for the degree of executive corruption in recipient states to analyze the impact of EU fiscal allocations on governing parties’ electoral outcomes. I propose a theory of corruption compensation whereby EU allocations deliver political latitude that corrupt incumbents utilize to advance their governing authority. Examining data on EU fiscal allocations from 2000 to 2015, I find that higher shares of EU allocations are correlated with higher electoral margins for corrupt incumbents in recipient countries. These findings lend robust empirical support to the argument that misallocation of EU transfers by corrupt parties advances their electoral payoffs and buffers their political latitude over the opposition.