[1] Shrublands constitute significant and important parts of European landscapes providing a large number of important ecosystem services. Biogeochemical cycles in these ecosystems have gained little attention relative to forests and grassland systems, but data on such cycles are required for developing and testing ecosystem models. As climate change progresses, the potential feedback from terrestrial ecosystems to the atmosphere through changes in carbon stocks, carbon sequestration, and general knowledge on biogeochemical cycles becomes increasingly important. Here we present carbon and nitrogen balances of six shrublands along a climatic gradient across the European continent. The aim of the study was to provide a basis for assessing the range and variability in carbon storage in European shrublands. Across the sites the net carbon storage in the systems ranged from 1,163 g C m−2 to 18,546 g C m−2, and the systems ranged from being net sinks (126 g C m−2 a−1) to being net sources (−536 g C m−2 a−1) of carbon with the largest storage and sink of carbon at wet and cold climatic conditions. The soil carbon store dominates the carbon budget at all sites and in particular at the site with a cold and wet climate where soil C constitutes 95% of the total carbon in the ecosystem. Respiration of carbon from the soil organic matter pool dominated the carbon loss at all sites while carbon loss from aboveground litter decomposition appeared less important. Total belowground carbon allocation was more than 5 times aboveground litterfall carbon which is significantly greater than the factor of 2 reported in a global analysis of forest data. Nitrogen storage was also dominated by the soil pools generally showing small losses except when atmospheric N input was high. The study shows that in the future a climate-driven land cover change between grasslands and shrublands in Europe will likely lead to increased ecosystem C where shrublands are promoted and less where grasses are promoted. However, it also emphasizes that if feedbacks on the global carbon cycle are to be predicted it is critically important to quantify and understand belowground carbon allocation and processes as well as soil carbon pools, particularly on wet organic soils, rather than plant functional change as the soil stores dominate the overall budget and fluxes of carbon.