In a speech to the German parliament before the summit's opening in Brussels, Schroeder conceded that he had little hope of his country's EU partners reaching a compromise on the bloc's 2007-2013 spending.
"There is absolutely no real justification for this rebate, in view of the fact that Great Britain is number six in terms of its population's per-capita income, but is far behind in terms of payments per head," Schroeder said.
"Asking me, in the interests of unanimity, to make this rebate disappear in negotiations over agriculture or somewhere else, is a bit naive," he added.
Hold on rebate
Ahead of the summit on Thursday and Friday, Britain is clinging to the $6 billion annual rebate former prime minister Margaret Thatcher won two decades ago.
And France - backed by Germany - refuses cuts in generous handouts to its farmers.
Italy says it will veto a deal that axes aid to its poor south, and Germany wants to reduce its contribution to the EU's coffers.
Thatcher secured Britain's $6
billion annual rebate 20 years ago
Schroeder said Germany was prepared to be flexible, but said current EU proposals were not sufficient "because we have to ensure that net payments do not rise endlessly".
He was pessimistic over prospects of a deal this weekend.
"I have little hope that what we want - that everyone moves - leads everyone to the same conclusion as us, namely that they have to move," he said.
Schroeder argues that a deal on the EU budget is important amid the crisis that followed French and Dutch voters' rejection of the proposed EU constitution.
He told parliament that he stands "without ifs and buts" behind the charter and argued that other countries should press ahead with plans to ratify it.
The EU summit "can give advice, but it cannot break off the ratification processes or rule in what form, in what time frames they should take place", Schroeder said.
He argued that it would be "the right decision" to review progress during the first half of next year, when Austria holds the rotating EU presidency.