Guide for Applicants

Transcription

1 EUROPEAN COMMISSION EUROSTAT Guide for Applicants Eurostat Grants Version January /55

2 IMPORTANT NOTICE The Guide for Applicants is a user guide that aims to explain to applicants and beneficiaries the rules that apply to the evaluation of their proposals and management of their grants. It is designed to be your main practical reference for preparing and submitting your proposal and if successful for managing your grant. Details on processes and procedures are described in the Online Manual. The Online Manual also contains FAQs and detailed instructions on the IT tasks you will be required to perform in the Electronic Exchange System. The templates of Eurostat grant agreements (mono and multi-beneficiary) can be found on the Reference documents page under Other EU programmes. For IT questions please contact the IT helpdesk). 2/55

3 TABLE OF CONTENTS 1. Legal framework Actions that will be funded Eligibility conditions Admissibility requirements Exclusion grounds Operational and financial capacity requirements Award criteria Participants: Roles & responsibilities Grant profile: Action grants How to submit your proposal Preparing your submission How to fill out your application Help Submission Acknowledgement of receipt Complaints Information on the evaluation results Preparing your grant agreement & final legal checks Managing your grant APPENDIX 1 ELIGIBLE COSTS APPENDIX 2 SUPPORTING DOCUMENTS APPENDIX 3 UNIT COSTS GUIDELINES ANNEX - Model time sheet /55

4 1. Legal framework If you are in any doubt about any issues mentioned in this guide, the legally binding rules and conditions for the calls are in the following documents: Regulation No 966/2012 (EU Financial Regulation) Regulation No 1268/2012 (Financial Regulation Rules of Application) Regulation No 223/2009 (Regulation on European Statistics) the model grant agreements (MGAs) 1 (Reference documents page under Other EU programmes). 2. Actions that will be funded Eligibility conditions Admissibility requirements Exclusion grounds Operational and financial capacity requirements Award criteria The types of projects and activities that will be funded are set out in the work programme/financing decision and call document. Eligibility conditions, admissibility requirements, exclusion grounds, [applicable only for Open calls for proposals: operational and financial capacity requirements] and award criteria are explained in the call document. Eligible applicants: (this doesn't apply to open calls for proposal, please always check Call document) In line with Article 190(1)(d) of Delegated Regulation (EU, Euratom) No 1268/2012 and in accordance with Article 5 of Regulation (EC) No 223/2009, grants may be awarded without a call for proposals to bodies that are identified in the list referred to in said Article 5 as national statistical institutes or other national authorities responsible for the development, production and dissemination of European statistics. 2 If entities falling under the above mentioned article wish to cooperate in an action, they can do so either a) as co-beneficiaries in a Multi-beneficiary grant agreement (MBGA) or b) as a sole beneficiary with linked third party/ies (affiliated entity), if there is a link between them, as indicated in Article 122 of the Financial regulation. 3 Any linked third party has to fulfil the eligibility and exclusion criteria. The grant agreement will contain corresponding provisions on linked third parties, and costs incurred by such an entity will be eligible, provided that they satisfy the same conditions concerning the eligibility of costs and their verifiability as apply to the beneficiary. How to update the Article 5 list: Article 5 of the above mentioned Regulation states that "Member States" are responsible for designating the statistical authorities. At national level the National Statistical Institutes (NSIs) have the role of coordinators of European statistics and shall act as a contact point for the Commission (Eurostat) on All references to rules in this guide relate to the multi-beneficiary MGA. The mono-beneficiary MGA contains similar rules. Further information and a list of all bodies eligible to receive Eurostat grants ("Article 5 list") can be found on the following page of Eurostat's web site: Regulation (EU, EURATOM) No 966/ /55

5 statistical matters. As such they are the competent national authority to assess, in compliance with Article 5, whether or not another national administration should be included in the list. In order to inform the Commission (Eurostat) of the names of authorities that have been designated, or of any changes among those authorities, alternatively one of following procedures should be applied: The Head of the respective NSI sends a letter containing the required information to the Director General of Eurostat, clearly indicating that the respective Permanent Representation has been informed of the planned changes. Or The Permanent Representation of the respective Member State sends a letter to the Director General of Eurostat in which the necessary names or changes thereof are listed, indicating that the respective NSI has been consulted and agrees with the proposed changes. Note: Any national entity proposed as (co-)beneficiary or affiliated entity in a grant application, has to be acknowledged as an Article 5 entity and included in the list of potential beneficiaries in order to render their application eligible. The corresponding procedure should be launched no later than the application and has to be concluded before the signature of the grant agreement. For further questions concerning the procedure: see or contact: ESTAT-ESSC_DGINS_PG@ec.europa.eu 3. Participants: Roles & responsibilities Applicants are (jointly) responsible for their proposal. Each organisation is responsible for submitting correct information in the proposal. The coordinator 4 submits the proposal on behalf (and in the name of) all applicants. After grant signature, the beneficiaries are jointly responsible for implementing the project (in accordance with part B of the proposal which will become an annex to the grant agreement if the project is selected for funding). If a co-beneficiary fails to implement its part of the project, the consortium becomes responsible for implementing this part, unless we expressly relieve it from this obligation. The detailed obligations of the participants during grant implementation are set out in Article 25 of the grant agreement. The coordinator is responsible for managing the project, submitting reports and deliverables and acting as intermediary for all contacts with us. Third parties involved in the action The tasks set out in Part B of the proposal (action tasks) can be performed by one of the following: the beneficiaries linked third parties 5 subcontractors 4 5 Please read "applicant/beneficiary" instead of "coordinator" in case of mono-beneficiary grant agreements. Affiliated entities 5/55

6 If you use linked third parties or subcontractors, you must specify (and justify) this in Part B of your application. Important: The key coordinator tasks listed in Article 25 of the grant agreement may be performed by a linked third party (affiliated entity) of the coordinator, but NOT by another beneficiary or subcontractor. Throughout the whole Guide for Applicants, please read "applicant/beneficiary" instead of "coordinator" in case of mono-beneficiary grant agreements. 4. Grant profile: Action grants Type of grant: The grant is a grant for a specific project (action grant) that reimburses eligible costs. This means that it reimburses ONLY the costs you will actually incur for your project (NOT the budgeted costs). The project costs will be reimbursed at the reimbursement rate fixed in your grant agreement and up to the maximum grant amount fixed in Article 5 of the grant agreement. The grant will be paid out in one or more parts: pre-financing payment(s) (if foreseen in the grant agreement) designed to provide beneficiaries with a float; normally paid within 30 days after all beneficiaries have acceded to the grant agreement. As a general rule, the pre-financing is intended to provide you with a float and can be given only if the nature of the project requires it. The call specifies if prefinancing is offered for the action. payment of the balance reimburses the outstanding part of the costs incurred for the project implementation; calculated as the difference of total amount due and payments already made (i.e. pre-financing); normally paid within 90 days after submission of the final reports; subject to formal approval of the reports by us. If the total amount of earlier payments is greater than the final grant amount, we will recover the difference (i.e. you will have to pay back money). 5. How to submit your proposal All proposals must be submitted directly online via the Electronic Submission System using the web-link received in the invitation . Paper applications are no longer accepted. In case of open calls, the Electronic Submission System can be reached using a link published on the call page in the Participant Portal. The submission process is explained in the Participant Portal Online Manual (together with 6/55

7 detailed instructions for the IT tool). Submission is a 2-step process: a) register your organisation b) submit the proposal in 3 parts, as follows: Part A includes administrative information about the applicant organisations (future coordinator and beneficiaries) and the summarised budget for the proposal Fill in directly online. ACRONYM for the proposal: please use the following naming convention: "Year- Country-Acronym topic" (ex BE-REI) Part B (description of the action) covers the technical content of the proposal. Fill in the word template and upload as PDF file. annexes (see below). Upload as PDF files. The proposal must be submitted before the call deadline (specified in the call document). If you miss the deadline, your proposal will be disregarded by the system and will not be considered to have been submitted. Documents must be uploaded to the right category (otherwise your proposal might be incomplete and so inadmissible). You shall submit your proposal in English. Important: We strongly advise you to complete your proposal sufficiently in advance of the deadline, to avoid any last minute problems. Any technical problems due to last minute submissions (e.g. congestion, etc.) will be at your risk. Even though you can save successive versions of your application as you go, we strongly encourage you to have fully prepared your proposal before starting the online submission process. To complete part A, all applicants must be registered in the Beneficiary Register and have communicated their PIC to the coordinator. Linked third parties must also register, but later on during grant preparation. Subcontractors do NOT need to register. 5.1 Preparing your submission You must do 3 things before submitting your application: read the work programme/financing decision and call document create an EULogin/ECAS user account (if you don't already have one) register your organisation in the Beneficiary Register (if you are not yet registered) Read the call document Check whether: your project falls within the scope of the call your organisation/proposal meets the eligibility criteria 7/55

8 and inform yourself about the: award criteria only for Open calls for proposals: financial and operational capacity requirements exclusion criteria admissibility conditions (e.g. call deadline.) For British applicants: Please be aware that eligibility criteria must be complied with for the entire duration of the grant. If the United Kingdom withdraws from the EU during the grant period without concluding an agreement ensuring eligibility for British beneficiaries, you will cease to receive EU funding or be required to leave the project on the basis of Article 34 of the grant agreement. Create a user account (only once) To use the Participant Portal Electronic Submission System (the only way to apply), all participants need to create an EULogin/ECAS user account. Register your organisation in the Beneficiary Register (only once) Once you have an EULogin/ECAS account, you can register your organisation in the Beneficiary Register. When your registration is finalised, you will receive a 9-digit participant identification code (PIC). You will need the PIC numbers of your organisation (as the applicant) and, in case of multi-beneficiary actions, the other applicants (i.e. not linked third parties or subcontractors) to complete Part A of the application. The person who registered the organisation can submit updates and corrections (including supporting documents) at any point before the call deadline (afterwards this can be done only by the legal entity appointed representative (LEAR)). You don't need to complete the registration process in a single session. You can enter some information, save it and continue later. 5.2 How to fill out your application Part A Administrative forms Part A of the proposal must be filled out directly online. List of Participants This section should list the organisations that wish to participate as beneficiaries. Other participants (linked third parties or subcontractors) should only be mentioned in Part B. All applicants (co-beneficiaries and linked third parties) must also register in the Beneficiary Register before proposal submission. Linked third parties can register later on (during grant preparation). Contact details 8/55

9 Please make sure the address you give is correct and working we may have to contact you for more information, when evaluating your proposal. Budget overview table The budget overview table should show the total estimated expenditure and receipts for each applicant, per budget category. Column A B.1, B.2 C E D F G H I J K Budget category Direct personnel costs Direct costs of travel & subsistence Direct costs of subcontracting Indicate costs for subcontracted action tasks. Other direct costs Include costs for equipment, consumables, workshops, postal charges and telephone costs and other goods and services, provided they are not for subcontracted action tasks. Costs of financial support to third parties Not applicable Indirect costs Automatically calculated (at the indirect cost flat-rate set out in the call document). Total costs Automatically calculated. Receipts Indicate project-generated income and financial contributions from third parties that are specifically to be used to cover eligible costs. Reimbursement rate Pre-filled (at the reimbursement rate set out in the call document). Maximum EU contribution Automatically calculated. Requested EU contribution Indicate the amount of EU funding you would like to have for the project. Only the white cells of the budget table in the Submission System need to be filled in (the grey cells are either not applicable or automatically filled by the system). The budgeted costs should be based on a detailed and accurate estimation of your estimated project costs (based on the cost eligibility rules set out in Article 6 of the grant agreement and Appendix 1 to this guide). 9/55

10 They should include the estimated costs of your linked third parties and costs for subcontracted tasks. You may include only eligible costs (i.e. costs that fulfil the eligibility conditions). Keep your estimates on file (you may be required to produce them later on). The budget overview table must be in line with the amounts entered into the detailed budget table. Part B Description of the action (DoA) This part concerns the technical content of the proposal. All relevant parts of the document should be filled in. Annexes & supporting documents Important: Only for Open calls for proposals - Use the forms provided inside the Submission System (not the documents available on the Call Topic Page of the Participant Portal they are only for information). Detailed budget table The detailed budget table should show the detailed budget breakdown of the estimated costs indicated in budget overview table of Part A. It will be taken into account for the evaluation (cost efficiency). The itemised expenditure should match the activities described in the description of the action and be linked to the work packages, if applicable, for which they will be used. Important: The detailed budget table must be in line with the amounts entered into the budget overview table. You should budget ONLY eligible costs (see Article 6 of the grant agreement and the Appendix 1 to this guide). Keep your estimates on file (you may be required to produce them later on). Unit cost declaration: for more details see Appendix 3. If requested in the Call document: CVs Provide CVs for the core project team (these are the key staff you have listed in the relevant section of part B). You can submit CVs in any format though we strongly recommend you use the Europass format. As far as possible, upload them in batches, rather than individually. If nobody has yet been recruited for a key job at proposal stage, please provide a description of the profile or job. 10/55

11 Audit report (not applicable to public bodies) Applicants requesting more than EUR must provide an audit report by an approved external auditor, certifying the accounts for the last closed financial year. The following organisations do NOT have to provide a report: applicants that are a public body (i.e. a body governed by public law, e.g. public authorities at local, regional or national level) or university. 5.3 Help In addition to this document, the following other documentation is available: Online Manual In case of an open call for proposals, please consult the Call Topic Page regularly, since we will publish new information (e.g. call updates, FAQs). Please try to find the answers you need yourself in the available documentation. If you do not find an answer, you can contact us as follows: IT helpdesk for technical questions about the Participant Portal Submission System (forgotten passwords, access rights and roles, technical aspects of proposal submission, etc.). estat-unit-costs@ec.europa.eu for general questions on UNIT COSTS only Please indicate clearly the reference of the call and topic you are interested in or applying to. 5.4 Submission Acknowledgement of receipt Complaints Once the proposal is submitted you will receive a confirmation (with date and time of your application). If you do not receive this , it means your proposal has NOT been submitted. If you believe this is due to a fault in the Electronic Submission System, you should immediately file a complaint via the Participant Portal, explaining the circumstances and attaching a copy of the proposal. 6. Information on the evaluation results After submission you will normally not hear from us until after evaluation unless we need to clarify matters such as eligibility or request additional information. We will check eligibility and admissibility and evaluate your proposal against the award criteria set out in the call document. Proposals that do not pass the technical evaluation will receive a letter at the end of evaluation. To ensure equal treatment for all applicants, we can NOT answer any questions on the outcome of the call before the evaluation is completed. 11/55

12 7. Preparing your grant agreement & final legal checks Applicants that have submitted sucessful proposals will be invited to prepare the grant agreement directly online in the Participant Portal. At the same time, if necessary, the participants will be requested (by REA validation) to submit their financial data and appoint their LEAR (this will happen only once, and not repeated if you have already done that for a previous grant). In addition, we will finalise the mandatory legal checks (operational and financial capacity (if applicable), exclusion and double funding). If all requirements are fulfilled, you will receive an invitation to sign your grant agreement (signature first by the coordinator on behalf of the consortium and then by the EU). The other consortium members (if any) must then accede to the grant agreement by signing an Accession Form (also directly in the Participant Portal). Our model grant agreement clauses are mandatory. We cannot make any exceptions for specific beneficiaries since we have to treat all beneficiaries equally. 8. Managing your grant Your grant will be managed exclusively via the the Participant Portal Grant Management System. Paper or communications are in principle no longer used. The system will prompt action on your side via PNS notifications. From your side, we mainly require the following: and implement the project as described in the description of the action (DoA) report regularly (see Articles 14 and 15 of the grant agreement): o periodic financial and technical report (PP Periodic Reporting Module available only at the end of each reporting period) o submission of deliverables (PP Continuous Reporting Module always open) From our side, we will make the payments promised in the grant agreement (see Article 16). In case of multi-beneficiary grant agreements, the payments will be made to the coordinator (who must distribute them without delay). Important: You will be prompted to submit a financial statement to request payment of costs incurred during the reporting period. You should declare ONLY the eligible costs actually incurred for the project implementation (NOT the budgeted costs or other ineligible costs; see Article 6 of the grant agreement and the Appendix 1 to this guide). Keep your calculations on file (you may be required to produce them later on and during an audit you will have to show how each cost item you declared can be reconciled with your accounts). 12/55

13 APPENDIX 1 ELIGIBLE COSTS ELIGIBLE COSTS GENERAL CONDITIONS ARTICLE 6 ELIGIBLE AND INELIGIBLE COSTS 6.1 General conditions for costs to be eligible Eligible costs are costs that meet the following criteria: (a) for actual costs: (i) they must be actually incurred by the beneficiary; (ii) they must be incurred in the period set out in Article 3, with the exception of costs relating to the submission of the final report (see Article 15); (iii) they must be indicated in the estimated budget set out in Annex 2; (iv) they must be incurred in connection with the action as described in Annex 1 and necessary for its implementation; (v) they must be identifiable and verifiable, in particular recorded in the beneficiary s accounts in accordance with the accounting standards applicable in the country where the beneficiary is established and with the beneficiary s usual cost accounting practices; (vi) they must comply with the applicable national law on taxes, labour and social security, and (vii) they must be reasonable, justified and must comply with the principle of sound financial management, in particular regarding economy and efficiency; (b) for unit costs: they must be calculated as follows: {amounts per unit set out in Annex 2a multiplied by the number of actual units}; (i) the number of actual units must comply with the following conditions: (c) for flat-rate costs: - the units must be actually used or produced in the period set out in Article 3; - the units must be necessary for implementing the action or produced by it, and - the number of units must be identifiable and verifiable, in particular supported by records and documentation (see Article 13); (i) they must be calculated by applying the flat-rate set out in Annex 2, and (ii) the costs (actual costs or unit costs) to which the flat-rate is applied must comply with the conditions for eligibility set out in this Article ; 13/55

14 1. Eligible costs The grant can only reimburse eligible costs (i.e. costs that comply with the general and specific conditions set out in this Article) ( reimbursement of eligible costs grant ). ONLY eligible costs may be entered into the estimated budget for the action (see Article 4) and declared in the financial statements (see Article 15). Record-keeping & burden of proof The burden on proof for eligibility is on the beneficiaries/linked third parties. They must keep sufficient supporting documents (see Article 13) to show that the costs they declare are eligible. Compliance with eligibility rules may be subject to a check or audit by us. Any ineligible costs found will be rejected (see Article 28). If a beneficiary declares ineligible costs, the ineligible costs will be rejected and, if needed, other measures specified in Chapter 6 (e.g. suspension, termination, grant reduction, etc.) may be taken. Article 6.1 refers to general eligibility conditions, applicable per cost form (see Article 5). Article 6.2 refers to specific eligibility conditions, applicable per budget category (see Article 4). 2. General eligibility conditions for actual costs In order to be eligible, actual costs must be: actually incurred by the beneficiary (i.e.: o o real and not estimated, budgeted or imputed and definitively and genuinely borne by the beneficiary (not by any other entity)). incurred during the action duration (i.e. the generating event that triggers the costs must take place during the action duration) The action duration is the period running from the action starting date to the end date of the action (see Article 3). If costs are invoiced or paid later than the end date, they are eligible only if the debt existed already during the action duration (supported by documentary evidence) and the final cost was known at the moment of the financial report. Costs of services or equipment supplied to a beneficiary (or to its linked third party) may be invoiced and paid after the end date of the action if the services or equipment were used by the beneficiary (or to its linked third party) during the action duration. By contrast, costs of services or equipment supplied after the end of the action (or after GA termination) are not eligible. Example: A conference for which costs are claimed must take place during the action duration; a publication for which costs are claimed must have been completed during the action. entered as eligible costs in the estimated budget of the action, under the relevant budget category (see Annex 2) When the final amount of the grant is calculated, the eligible costs cannot include costs under budget categories that did not appear in the action estimated budget, unless the 14/55

15 initial estimated budget was amended or if these additional costs were approved in accordance with Article 10. Costs included in the estimated budget may be transferred between beneficiaries and budget categories without amending the GA under the conditions set out in Article 4.2. For transfers involving implementation contracts (sub-contracting): to have recourse to any additional award of contracts while the action is under way, see below the section on subcontracting. connected to the action as described in Annex 1 (i.e. necessary to achieve the action s objectives) The EU grant cannot be used to finance activities other than those approved by us. identifiable and verifiable (i.e. come directly from the beneficiary s accounts (be directly reconcilable with them) and supported by documentation) The beneficiaries must be able to show (with records and supporting documents; see Article 18) the actual costs of the work, i.e. what was actually paid for the work (and for depreciation costs: what is actually recorded in the beneficiary s profit and loss accounts). Costs must be calculated according to the applicable accounting rules of the country in which the beneficiary is established and according to the beneficiary s usual cost accounting practices. Example: if a beneficiary always charges a particular cost as an indirect cost, it must do so also for the EU action, and should not charge it as a direct cost. This may NOT be used as an excuse for non-compliance with other GA provisions. A beneficiary must make any changes needed to bring its usual cost accounting practices in line with all GA provisions. Example: conditions for the eligibility of depreciation costs (in line with the international accounting standards, which may deviate from the accounting rules of the country) Where national taxation and accounting rules do not require an invoice, an accounting document of equivalent value must be supplied (i.e. a document that (i) is produced to prove that the accounting entry is accurate and (ii) complies with the applicable accounting law). in compliance with applicable national laws on taxes, labour and social security AND reasonable, justified and must comply with the principles of sound financial management, in particular regarding economy and efficiency (i.e. be in line with good housekeeping practice when spending public money and not be excessive) Economy means minimising the costs of resources used for an activity (input), while maximising quality; efficiency is the relationship between outputs and the resources used to produce them. Examples: 1. The beneficiary may NOT increase the remuneration of its personnel, upgrade its travel policy or its purchasing rules because of the EU grant. 2. Entertainment or hospitality expenses (including gifts, special meals and dinners) are generally not eligible. 3. Tips which are not obligatory are not eligible. By contrast, in some countries the invoice of the restaurant includes a certain mandatory amount as payment for the service. In this case, the amount may be considered eligible if the other eligibility conditions are fulfilled. 15/55

16 3. General eligibility conditions for unit costs In order to be eligible, unit costs must be: calculated by multiplying the number of actual units used to carry out the work or produced (e.g. days spent on the project) by the amount per unit Example: The unit cost is fixed at EUR 120 per day. This amount per unit is also set out in Annex 2a. the number of units must be necessary for the action the units must be used during the action duration AND the beneficiaries must be able to show the link between the number of units declared and the work on the action. The beneficiaries must be able to show (with records and supporting evidence; see Article 13) that the number of units declared was actually used for the action. (The actual costs of the work are not relevant.) Example: A beneficiary declares 10 days of work for an action in If there is an audit, the beneficiary must be able to show a record of the days worked for the action (i.e. timesheets). DIRECT & INDIRECT COSTS ARTICLE 6 ELIGIBLE AND INELIGIBLE COSTS [ ] 6.2 Specific conditions for costs to be eligible Costs are eligible if they comply with the general conditions (see above) and the specific conditions set out below for each of the following budget categories: A. direct personnel costs; B. direct travel and subsistence costs; C. direct costs of subcontracting; D. not applicable; E. other direct costs; F. indirect costs. Direct costs are costs that are directly linked to the action implementation and can therefore be attributed to it directly. They must not include any indirect costs (see Point F below). Indirect costs are costs that are not directly linked to the action implementation and therefore cannot be attributed directly to it. [ ] 16/55

17 1. Direct costs Direct costs are specific costs directly linked to the performance of the action and which can therefore be directly booked to it. They are: either costs that have been caused in full by the activities of the action or costs that have been caused in full by the activities of several actions (projects), the attribution of which to a single action can, and has been, directly measured (i.e. not attributed indirectly via an allocation key, a cost driver or a proxy). In case of "combined surveys" (i.e. surveys including an EU part and a national part), only the costs generated by the EU part of the survey are eligible. For details on this point, see paragraph 1.8 of the Part B of the Submission Template. The beneficiaries must be able to show (with records and supporting evidence) the link to the action. 2. Indirect costs Indirect costs are costs that cannot be identified as specific costs directly linked to the performance of the action. In practice, they are costs whose link to the action can NOT be (or has not been) measured directly, but only by means of cost drivers or a proxy (i.e. parameters that apportion the total indirect costs (overheads) among the different activities of the beneficiary). Indirect costs are declared on the basis of a flat-rate equal to 30% of the total eligible direct personnel costs for grants awarded to entities registered in the list pursuant to Article 5 of regulation 223/2009. Applicable only for Open calls for proposals: Indirect costs are automatically declared as a 7% fixed flat-rate of the total eligible direct costs for other entities (i.e. entities not registered in the Article 5 list) 17/55

18 PERSONNEL COSTS ARTICLE 6 ELIGIBLE AND INELIGIBLE COSTS [ ] A. Direct personnel costs Types of eligible personnel costs A.1 Personnel costs are eligible if they are related to personnel working for the beneficiary under an employment contract (or equivalent appointing act) and assigned to the action ( costs for employees (or equivalent) ). If paid on the basis of time spent, their amount is eligible if it corresponds to the amount per unit set out in Annex 2a multiplied by the number of actual days worked on the action. If paid on the basis of deliverables, their amount is eligible if it is limited to the amount per deliverable (including social security contributions, taxes or other costs included in the remuneration, if they arise from national law or the contract). A.2 The costs for natural persons working under a direct contract with the beneficiary other than an employment contract or seconded by a third party against payment are eligible personnel costs, if: (a) the person works under the beneficiary s instructions and, unless otherwise agreed with the beneficiary, on the beneficiary s premises; (b) the result of the work carried out belongs to the beneficiary, and (c) the costs are not significantly different from those for personnel performing similar tasks under an employment contract with the beneficiary. If paid on the basis of time spent, their amount is eligible if it corresponds to the amount per unit set out in Annex 2a multiplied by the number of actual days worked on the action. If paid on the basis of deliverables, their amount is eligible if it is limited to the amount per deliverable (including social security contributions, taxes or other costs included in the remuneration, if they arise from national law or the contract). Calculation Personnel costs declared as unit costs (budget categories A.1 and A.2, paid on basis of time spent): {daily rate multiplied by number of actual days worked on the action (rounded up or down to the nearest half-day)}, The number of actual days declared for a person must be identifiable and verifiable (see Article 13). The daily rate is the rate of the pay grade set out in Annex 2a (or for personnel without an applicable pay grade the rate of the grade with the closest basic salary); (b) for personnel costs declared as actual costs (budget category A.1 and A.2, paid on basis of deliverables): {amount per deliverable multiplied by number of deliverables produced for the action}. [ ] 18/55

19 1. Personnel costs (category A) What costs? This budget category covers personnel costs (employees or equivalent, natural persons under direct contract and seconded persons). The personnel costs should correspond to the adequate human resources needed to ensure the successful implementation of the project. The costs you declare must correspond to the actual time worked on the project by the staff concerned. Any staff assigned to the action, regardless whether employed by the beneficiary, cobeneficiaries or linked third parties, is to be filled in into the different categories according to their status. Permanent staff is usually working as officials or under a contract for an unlimited period. Temporary staff must be hired by the beneficiary under a labour contract in accordance with its national legislation. This staff must work under the sole technical supervision and responsibility of the beneficiary (i.e. the work is decided, designed and supervised by the beneficiary). Other staff: This staff category should be used for staff working under "civil contracts" (nonpermanent staff) as defined in part Specific cases below. Administrative staff costs are eligible only if directly linked to the technical performance of the action. In compliance with the grant agreement the costs connected with horizontal services (such as financial management, human resources, training, legal advice, IT, etc.) are considered as indirect costs and should not be included under staff costs, since they are covered by the corresponding flat rate. This is equally true for the general involvement of high management staff. For example the normal involvement of accountants, clerks, legal advisers should not be included under administrative staff. On the contrary, the direct assignment of a secretary or administrative assistant to a project is considered eligible. Costs incurred for physical persons like experts, consultants, interviewers (including civil servants of other organisations working independently), persons contracted via an Interim Agency who do not belong to the beneficiary's organisation but work on the action and are fully paid by the beneficiary on the basis of an invoice, shall be considered as subcontracting costs and not as personnel costs. These costs should be taken into account under item "Direct costs of subcontracting". 19/55

20 How to calculate them? Declaration of direct personnel costs on the basis of UNIT COSTS: Unit costs for direct personnel costs shall be applied for the estimation and subsequent declaration of staff costs. Unit costs for direct personnel costs are average daily rates per pay grade of the beneficiary's salary grid. They have to be established by all beneficiaries of Eurostat grants in accordance with the method adopted by Commission Decision C (2014)6332 of 11/09/2014. Please refer to Appendix 3 for guidance on how to establish and implement unit costs. The Unit costs declaration template is available in Annex of Application form - Part B. In order to allow an appropriate evaluation of the proposal with regard to the description of the action (technical specifications), information on the profiles of the staff involved (e.g. statistician, project manager, IT expert, researcher, etc.), the applicable unit cost grade and their envisaged working time (expressed in days) is to be provided in the estimated detailed budget. Budgeting personnel costs For the estimated budget, you should indicate for each partner the total amount of staff costs they estimate to be necessary for the project. Only eligible costs should be budgeted. The cost details should contain: profile and unit costs grade number of persons per staff category/profile number of days (the estimated time the staff of each pay grade will spend on the action) unit cost Eligible personnel costs that are not paid on the basis of time spent, but on the basis of deliverables such as questionnaires/records (e.g. in the case of interviewers) are reimbursed on the basis of costs actually incurred. Record-keeping Keep these detailed estimates on file (they may be needed during grant preparation or later on in case of an audit). Control of final financial statement: In case of control of final financial statement the use of the correct pay grade for individual staff members and their time registration will be checked. The use of the correct pay grade could for instance be demonstrated by providing a pay slip or other official document (provided for example by the HR department) indicating the pay grade (and the period in the pay grade if it has changed during the action). The number of days declared for the action is to be demonstrated via appropriate time recording (electronic or paper-based). Special case: Staff paid on the basis of deliverables: Actually incurred costs are used for staff members paid on the basis of deliverables, ex. interviewers paid on the basis of questionnaires or interviews. Given the usually rather high number of "interviewers" involved in surveys with the same or a similar remuneration structure, an individual breakdown may not be necessary. 20/55

21 Where the same basis for remuneration is used for all interviewers, it is sufficient to indicate the number of interviewers involved and the basis on which they are paid (questionnaire). Specific cases (personnel costs (A): Non-permanent staff ("civil contracts") Salaries (fees) of non-permanent staff (staff specifically recruited for the project) may be an eligible cost (budget category A.2, Other staff costs), if the following conditions are met: the individual concerned works for the beneficiary under a direct contract explicitly linking them to the project (employment contract or equivalent, but not a service contract) the individual concerned works under conditions similar to those of an employee (regarding the way the work is organised, the tasks that are performed and the premises where they are performed) the result of the work belongs to the beneficiary (unless agreed otherwise) the costs are reasonable and not significantly different from the costs of staff performing similar tasks under an employment contract with the beneficiary travel and subsistence costs for participating in project meetings or project travel is directly paid by the beneficiary the individual uses the beneficiary s infrastructure (i.e. generates indirect costs for the beneficiary). If the same person is contracted/recruited to work on different projects, with different contracts but performing similar roles, the rates should not vary from one project to the other. The cost of staff members working under civil contracts shall be calculated using unit costs applying the analogy principle. See Appendix 3 for more details. Seconded staff Costs for persons that are seconded by a third party against payment may be an eligible cost under the same conditions as non-permanent staff. Permanent staff of a public organisation For public organisations (i.e. public bodies, with the exception of universities), the salary costs of permanent staff may be claimed only if they relate to the costs of project activities which the organisation would not have carried out if the project had not been undertaken. TRAVEL ARTICLE 6 ELIGIBLE AND INELIGIBLE COSTS [ ] B. Direct travel and subsistence costs Travel and subsistence costs (including related duties, taxes and charges, such as non-deductible value added tax (VAT) paid by beneficiaries that are not public bodies acting as public authority) are eligible if they are in line with the beneficiary s usual practices on travel.] [ 21/55

22 1. Travel costs (category B) What costs? This budget category covers the travel costs and related subsistence allowances spent for the action. Only travel costs relating to specific and clearly identifiable activities are eligible for EU funding and must have been incurred by people directly involved in or contracted for such activities. Travel and subsistence costs must be reasonable and in line with your usual practices on travel costs. Travel and subsistence costs of participants in conferences and seminars should also be included under this category. How to calculate them? Budgeting travel & subsistence costs For the estimated budget, you should enter an estimate of the total amount of travel costs and subsistence costs (actual or per diems) needed for the project, for each partner. These amounts should be a detailed and accurate estimate, based on the corporate policy, destination, number of people involved, etc. Only eligible costs should be budgeted. Ideally the details should show the: reason for travelling (e.g. second project meeting, study visit, etc.) places of origin and destination number of people travelling/receiving subsistence allowances type of unit (e.g. flights, train journeys). Record-keeping Keep the detailed estimates on file. You must provide these to us if requested and you will need them at the reporting stage. Reporting travel & subsistence costs (financial statement) The costs you declare must correspond to the costs you incurred for travels (including all related duties, taxes and charges; for VAT, see Article 6.4). Travel costs For the financial statement, you should include all costs from the point of origin to the destination, including transfers to/from airports/train stations. All people travelling in connection with the project are required to make every effort to use the cheapest fare and method wherever possible, public transport. Subsistence costs This means cost of accommodation, meals, local travel at the place of assignment and other expenses. The subsistence costs reimbursed are, of course, those incurred by the beneficiary, not by the person actually travelling. 22/55

23 Record-keeping All supporting documents for the real expenses (e.g. hotel ticket, taxi receipts, restaurant bills) should be kept on file (they will be needed later on in case of an audit). You are also strongly recommended to create a written description of your organisation s reimbursement practices (actual costs incurred or daily per diem system). PURCHASES EQUIPMENT OTHER GOODS AND SERVICES SUBCONTRACTING ARTICLE 6 ELIGIBLE AND INELIGIBLE COSTS [ ] C. Direct costs of subcontracting (including related duties, taxes and charges such as nondeductible value added tax (VAT) paid by paid by beneficiaries that are not public bodies acting as public authority) are eligible if the conditions in Article are met. [ ] E. Other direct costs E.1 The depreciation costs of equipment, infrastructure or other assets (new or second-hand) as recorded in the beneficiary s accounts are eligible, if they were purchased in accordance with Article and written off in accordance with international accounting standards and the beneficiary s usual accounting practices. The costs of renting or leasing equipment, infrastructure or other assets (including related duties, taxes and charges, such as non-deductible value added tax (VAT) paid by beneficiaries that are not public bodies acting as public authority) are also eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees. The only portion of the costs that will be taken into account is that which corresponds to the duration of the action and rate of actual use for the purposes of the action. E.2 Costs of other goods and services (including related duties, taxes and charges, such as nondeductible value added tax (VAT) paid by beneficiaries that are not public bodies acting as public authority) are eligible, if they are purchased specifically for the action and in accordance with Article Such goods and services include, for instance, consumables and supplies, dissemination, protection of results, certificates on the financial statements (if they are required by the Agreement), translations and publications. E.2 Costs of other goods and services (including related duties, taxes and charges, such as nondeductible value added tax (VAT) paid by beneficiaries that are not public bodies acting as public authority) are eligible, if they are purchased specifically for the action and in accordance with Article Such goods and services include, for instance, consumables and supplies, dissemination, protection of results, certificates on the financial statements (if they are required by the Agreement), translations and publications. [ ] ARTICLE 9 PURCHASE OF GOODS, WORKS OR SERVICES 9.1 Rules for purchasing goods, works or services If necessary to implement the action, the beneficiaries may purchase goods, works or services. The beneficiaries must make such purchases ensuring the best value for money or, if appropriate, the lowest price. In doing so, they must avoid any conflict of interests (see Article 20). 23/55 The beneficiaries must ensure that the Commission, the European Court of Auditors (ECA) and the European Anti-Fraud Office (OLAF) can exercise their rights under Articles 17 and 18 also towards their contractors.

24 9.1.2 Beneficiaries that are contracting authorities within the meaning of Directive 2004/18/EC (or 2014/24/EU ) or contracting entities within the meaning of Directive 2004/17/EC (or 2014/25/EU ) must comply with the applicable national law on public procurement. 9.2 Consequences of non-compliance If a beneficiary breaches any of its obligations under Article 9.1.1, the costs related to the contract concerned will be ineligible (see Article 6) and will be rejected (see Article 26). If a beneficiary breaches any of its obligations under Article 9.1.2, the grant may be reduced (see Article 27). Such breaches may also lead to any of the other measures described in Chapter 6. ARTICLE 10 IMPLEMENTATION OF ACTION TASKS BY SUBCONTRACTORS 10.1 Rules for subcontracting action tasks If necessary to implement the action, the beneficiaries may award subcontracts covering the implementation of certain action tasks described in Annex 1. [Optional: Subcontracting may cover only a limited part of the action.] The beneficiaries must award the subcontracts ensuring the best value for money or, if appropriate, the lowest price. In doing so, they must avoid any conflict of interests (see Article 20). The tasks to be implemented and the estimated cost for each subcontract must be set out in Annex 1 and the total estimated costs of subcontracting per beneficiary must be set out in Annex 2. The Commission may however approve subcontracts not set out in Annex 1 and 2 without amendment (see Article 39), if: - they are specifically justified in the [periodic][final] technical report and - they do not entail changes to the Agreement which would call into question the decision awarding the grant or breach the principle of equal treatment of applicants. The beneficiaries must ensure that the Commission, the European Court of Auditors (ECA) and the European Anti-Fraud Office (OLAF) can exercise their rights under Articles 17 and 18 also towards their subcontractors The beneficiaries must ensure that their obligations under Articles 20, 21, 22 and 30 also apply to the subcontractors. Beneficiaries that are contracting authorities within the meaning of Directive 2004/18/EC (or 2014/24/EU) or contracting entities within the meaning of Directive 2004/17/EC (or 2014/25/EU) must comply with the applicable national law on public procurement Consequences of non-compliance If a beneficiary breaches any of its obligations under Article , the costs related to the subcontract concerned will be ineligible (see Article 6) and will be rejected (see Article 26). If a beneficiary breaches any of its obligations under Article , the grant may be reduced (see Article 27). Such breaches may also lead to any of the other measures described in Chapter 6. 24/55

25 1. Purchases Equipment Other goods and services Subcontracting (categories C and E) How to distinguish them? Generally speaking, subcontracting is for the contracting out of parts of the action (i.e. action tasks mentioned in Annex 1 GA), while purchases are for buying of equipment, consumables and other services. Purchases cover the procurement of ordinary services, goods or equipment needed to carry out the project. Unlike subcontracting, they do not involve any externalisation of the project activities described in the proposal. Examples of purchases: Dissemination of information, evaluation, audits, translations, reproduction, purchase of tickets, renting of rooms and accommodation, purchase of consumables and supplies, website development. The "Equipment" category of the budget is for assets, while the "Other goods and services" category is for consumables. Budget categories C "subcontracting" and E.1 "equipment" and E.2 "other goods and services" must be chosen accordingly. 2. Subcontracting (category C) What costs? This budget category covers the costs for subcontracting of a part of the action tasks (i.e. externalising a part of the action to a third party). You may subcontract action tasks if you follow these rules: DO NOT act as a subcontractor in the project (not possible for beneficiaries). Subcontract only a limited part of the project; subcontracting all or most of the activities would distort the concepts of partnership and ownership of the project. Subcontract only tasks that are absolutely necessary due to the nature of the project and its implementation needs. DO NOT subcontract the management and general administration of the project. Specify in Part B of the Proposal Form the tasks that will be subcontracted (and explain what value subcontracting will add and why the relevant expertise is not available in your organization/consortium) and show the estimated costs in your estimated budget. After the grant is awarded, if you want to subcontract any tasks that were not described in your application as to be subcontracted, you shall request an amendment to the grant agreement. According to Article 10 of the grant agreement, the Commission may, in certain cases, approve new subcontarting without an amendment. Please note, however, that the approval is at the full discretion of the Commission and there is no automatic entitlement to it. Beneficiaries that rely on the simplified approval procedure bear the full risk of non-approval and rejection of costs by the Commission. Retain sole responsibility for carrying out the project and for compliance with the provisions 25/55

26 of the grant agreement. Ensure that there is no liability exposure on our side towards the subcontractor (since we are not party to the subcontracts, we should not have any liability towards the subcontractors and are bound solely by the terms of our grant agreement. Ensure that: o o o the goods/service provider waives all rights in our respect under these contracts the European Commission, European Court of Auditors (ECA) and European Anti- Fraud Office (OLAF) can exercise their rights under Articles 17 and 18 of the grant agreement also towards your subcontractors your obligations under Articles 20, 21, 22 and 30 of the grant agreement also apply to your subcontractors. Typically, your subcontracts should include the following terms: goods/services to be provided and their links to the project start and end dates price to be paid (breakdown and description of the costs) detailed description of the tasks/work schedule/completion phases detailed description of the costs on which the price is based payment arrangements (one or more advance payments, staggered payments, etc.) clauses addressing non-performance or late completion. Ensure that the subcontracts are based on the best value for money (considering the quality of the service proposed, i.e. the best price-quality ratio) or on the lowest price. This does NOT in all cases require a competitive selection procedure. You can organise the tender according to your internal practices if you can demonstrate that you will: select the tender offering best value for money, or the lowest price avoid any conflicts of interest. If you are acting as a contracting authority or entity (as defined, respectively, in Directives 2014/24/EU and 2014/25/EU 6 ), you must abide by the applicable national public procurement rules. In principle, NSIs or other competent national authorities falling under Article 5 of Regulation 223/2009 of the European Parliament and of the Council cannot be proposed as pre-identified subcontractors in the application. They should normally be involved as co-beneficiaries. They may also cooperate as linked third parties, if a legal or capital link exists between them and the grant beneficiary (see part I.2). In the following situations these entities may, however, act as subcontractors: 6 New directives in force since 2016: Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement (OJ L 94, , p. 65) and repealing Directive 2004/18/EC (OJ L 94, , p.65). Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on public procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC (OJ L 94, , p. 243). Old directives: Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public work contracts, public supply contracts and public service contracts (OJ L 134, , p. 114). Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors (OJ L 134, , p. 1). 26/55

27 If a public procurement procedure, in accordance with the national legislation, is launched and these entities are selected, If public procurement procedures allow for a direct award of contracts (e.g. for low values), If their participation is covered by an already existing framework contract. How to calculate them? Budgeting subcontracting costs For the estimated budget, you should enter an estimate of the total amount of subcontracts needed for the project, for each partner. Reporting subcontracting costs (financial statement) For the financial statement, you should include all costs incurred for the subcontracts. The costs you declare must correspond to the price you paid to the subcontractors (including all related taxes; for VAT, see Article 6.4). 3. Equipment costs (category E.1) What costs? If you need to buy/rent specific equipment for the project (e.g.computer,server, specific software), it can be charged as equipment costs if you follow these rules: Clearly demonstrate why the equipment needs to be purchased, rented or leased for the project Respect the contracting rules, e.g. compare the prices of different suppliers to see who offers the best value for money (taking account of price and quality) Charge to the project only the cost of equipment purchased or rented during the period covered by the grant agreement, at a rate that reflects the degree and duration of use for the project in that period.this rate must be controllable and coherent with the time worked by the staff assigned to the action. Itemise the equipment with an inventory number in the organisation where it is installed. Calculate the depreciation in accordance with international accounting standards and your usual accounting practices, taking into account the rate of actual use for the project. For the equipment bought before the starting date of the action which has not yet been fully depreciated according to the usual accounting rules of the applicant, the remaining depreciation (according to the amount of use, in percentage and time) can be eligible under the action. Software will be considered under this category if it is used specifically for the action. Common software (like Office suites) cannot be included under this category, since it is covered by the 30% flat rate of indirect costs. Record-keeping Keep evidence of the procedure followed for selecting the supplier on file. You must provide these to us if requested. If (exceptionally) explicitly authorised in your grant agreement, you may declare the full purchase costs of the equipment (i.e. more than the depreciation for the months of the action). How to calculate them? Budgeting equipment costs 27/55

28 For the estimated budget, you should enter an estimate of the total amount of equipment costs needed for the project, for each partner. This amount should be a detailed and accurate estimate, based on the depreciation. Only eligible costs should be budgeted. Record-keeping Keep the detailed estimates on file. You must provide these to us if requested and you will need them at the reporting stage. Reporting equipment costs (financial statement) For the financial statement, you should enter the depreciation (or rental/leasing costs) incurred for the equipment. Example (depreciation): Total value of equipment purchased: EUR 1,000 Service life: 3 years (36 months) Monthly depreciation = EUR 1,000/36 = EUR Duration of eligibility for cost in Grant Agreement: 01/10/2014 to 30/09/2016 (24 months). Date of purchase (= date of invoice): 30/04/2015. Period of use = maximum 17 months. Usage rate (if equipment used on a half-time basis for the project) = 50%. Total amount payable for depreciation = EUR x 17 months x 0.5 = EUR Other goods and services (category E.2) What costs? This budget category covers consumables, workshops, conferences and seminars, publications and dissemination, translation and other costs not covered in the previous categories. The costs of consumables and supplies are eligible if they are exclusively used for the project and identifiable as such in your accounts and if the purchasing rules were complied with (best value for money). Publications must be produced specifically for the project and comply with the Guidelines on visibility of EU funding. Other costs not falling under any other category can be charged under category E, if they are necessary and specific to the project activities and contribute to its final results. Typically these includes: consumables and supplies (e.g. in the framework of field surveys: postal charges, envelopes, telephone costs or purchase of small technical items). translation costs costs of services (e.g. experts not considered staff members, specific evaluation of the project, auditor fees). An audit report is necessary if the maximum grant amount indicated in the estimated budget for reimbursement of actual costs (therefore excluding the reimbursement on the basis of unit costs, lump sums, flat-rate financing) is EUR or more, and a payment of more than EUR for actual costs is requested. conference fees; meeting registration costs charges for financial transactions; fees for a bank guarantee and audit reports requested by us 28/55

29 purchase of information materials specific and key to project implementation (books, studies, electronic data) project-specific press releases and event advertisements (one-off costs) purchase of copyrights and other intellectual property rights (IPR) Intellectual property costs connected with publishing project materials (e.g. CD-ROMs) other costs stemming from obligations under the grant agreement which are not budgeted for under another budget category. General office supplies (pens, paper, folders, ink cartridges, electricity supply, telephone and postal services (except in case of field surveys), internet connection, general software, etc.) are indirect costs, belonging in category F unless unusually high quantities of such supplies are required due to the specific circumstances. Costs of purchasing land or immovable property are not eligible. For the costs of premises rented to carry out the project, you will have to provide a specific rental contract/lease indicating a clear and exclusive link with the project. If this link is not demonstrated, the cost will be considered covered by the indirect costs. How to calculate them? Budgeting other goods & services costs For the estimated budget, you should enter an estimate of the total amount of all other goods and services needed for the project, for each partner. These amounts should be a detailed and accurate estimate, based on type of publication (languages and number of copies/pages, etc), conference/seminar/event or other cost. Only eligible costs should be budgeted. Publication & dissemination Publication and dissemination costs include costs for editing, translation and printing, as well as costs for website creation and/or maintenance (keep track of these costs separately separate lines for editing, printing, translation, etc.). The details should include the following: for publications: title reference number of the output in Annex 1 GA (e.g. work package 4, output 3 - Conference) type of publication (e.g. brochure, leaflet) language(s) in which it will be produced estimated number of pages number of copies type of unit (usually number of pages or number of copies). for translations: title of the publication reference number of the output in Annex I (e.g. work package 4, output 3) source and target languages (e.g. from English into Italian) number of pages type of unit (e.g. pages). Translations performed by your own staff shall be included under staff costs. Conferences, seminars and other events 29/55

30 Costs for workshops, conferences, seminars and other events include costs for renting of rooms, interpreting, catering, etc. (keep track of these costs separately separate lines for renting of rooms, interpreting, catering, etc.). The details should show: for renting of rooms: - expected number of participants - duration of the event (e.g. days, half-days or number of hours) - title of the event in Annex 1 GA for interpreting: - number of interpreters per day - number of days interpreting needed - source and target languages (e.g. English into French & vice versa) - type of unit to count (e.g. days of interpreting) for catering: - type of catering costs (e.g. lunch, coffee break) - number of items - number of participants - type of unit to count (e.g. participants). for travel and subsistence allowances provided for participants of workshops, seminars, etc.: reason for travelling (e.g. workshop, conference etc.) places of origin and destination number of the people travelling/receiving subsistence allowances type of unit (e.g. flights, train journeys). Record-keeping Keep the detailed estimates on file. You must provide these to us if requested and you will need them at the reporting stage. Reporting other goods & services costs (financial statement) For the financial statement, you should include costs for goods and services. Catering costs (i.e. lunch, dinner during workshops) must not include people receiving subsistence allowance for the same event, unless such costs are deducted from their allowance. Refreshments (coffee, tea, etc.) offered during workshops or meetings can be considered as eligible costs covered by this item. Specific cases (subcontracting, equipment & other goods and services (C,E): Subcontracting between beneficiaries Is NOT allowed in the same GA. All beneficiaries contribute to and are interested in the action; if one beneficiary needs the services of another in order to perform its part of the work, it is the second beneficiary who should declare the costs for that work. Subcontracting to affiliates Is NOT allowed, unless they have a framework contract or the affiliate is their usual provider, and the subcontract is priced at market conditions. Otherwise, these affiliates may work in the action, but they must be identified as linked third parties under Article 11 and declare their own costs. Coordination tasks of the coordinator (e.g. distribution of funds, review of reports and others tasks listed under Article 25.2(b)) Can NOT be subcontracted. Other activities of the coordinator may in principle be subcontracted. 30/55

31 Framework contracts or subcontracts Framework contracts can be used for selecting a provider if this is the usual practice of the beneficiary (e.g. for a type of service). In order to be eligible, the framework contract must (have) be(en) awarded on the basis of best-value-for-money and absence of conflict of interest. The framework contract does not necessarily have to be concluded before the start of the action. INDIRECT COSTS F. Indirect costs Indirect costs are eligible if they are declared on the basis of the flat-rate of [ ]% of the eligible direct costs (see Article 5.2 and Points A to E above). Beneficiaries receiving an operating grant 1 financed by the EU or Euratom budget cannot declare indirect costs for the period covered by the operating grant.] [ ] 21 For the definition, see Article 121(1)(b) of the Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 ( Financial Regulation No 966/2012 )(OJ L 218, , p.1): operating grant means direct financial contribution, by way of donation, from the budget in order to finance the functioning of a body which pursues an aim of general EU interest or has an objective forming part of and supporting an EU policy. 1. Indirect costs (category F) Commonly known as overheads. These are costs that cannot be identified as specific costs directly linked to the project and so booked to it directly. They cover general indirect costs you incur in implementing the project, typically: general rental costs or depreciation of buildings and equipment maintenance costs telecommunication and postal fees water, gas, electricity, heating, etc. office furniture supplies and petty office equipment insurance costs connected with support services, such as administrative and financial management, human resources, training, documentation, IT, etc. Eligible indirect costs are calculated (automatically by the system), with a flat-rate instead of actual costs. This rate fixed in the grant agreement is 30% of the eligible direct personnel costs for grants awarded to entities registered in the list pursuant to Article 5 of regulation 223/2009 or, in case of open call for proposals, 7% of the total direct eligible costs for other entities. 31/55

32 This means that your indirect costs will depend directly on your direct costs. And that you will not need to keep track of your actual indirect costs. 6.4 Ineligible costs Ineligible costs are: (a) costs that do not comply with the conditions set out above (Article 6.1 to 6.3), in particular: (i) (ii) costs related to return on capital; debt and debt service charges; (iii) provisions for future losses or debts; (iv) interest owed; (v) doubtful debts; (vi) currency exchange losses; (vii) bank costs charged by the beneficiary s bank for transfers from the Commission; (viii) excessive or reckless expenditure; (ix) deductible VAT; (x) costs incurred during suspension of the implementation of the action (see Article 33); (xi) in-kind contributions provided by third parties; (b) costs declared under another EU or Euratom grant (including grants awarded by a Member State and financed by the EU or Euratom budget and grants awarded by bodies other than the Commission for the purpose of implementing the EU or Euratom budget); in particular, indirect costs if the beneficiary is already receiving an operating grant financed by the EU or Euratom budget in the same period, unless it can demonstrate that the operating grant does not cover any costs of the action; (c) costs for staff of a national (or local) administration, for activities that are part of the administration s normal activities (i.e. not undertaken only because of the grant); (d) costs (especially travel and subsistence costs) for staff or representatives of EU institutions, bodies or agencies; 6.5 Consequences of declaration of ineligible costs Declared costs that are ineligible will be rejected (see Article 42). This may also lead to any of the other measures described in Chapter Ineligible costs Costs are ineligible, if one of the following applies: they do not meet the general and specific eligibility conditions set out in Articles 6.1 to /55

33 Examples: costs incurred in relation to activities not indicated in Annex 1 to the grant agreement (description of the action); subcontracting costs do not complying with Article 10; taxes for which you are liable in your capacity as a business (e.g. IRAP in Italy, Gewerbesteuer in Germany); gifts and presents given to interviewees during data collection exercises in order to improve the response rate; recreational/tourism/cultural activities; costs not entailing a cash flow for you; costs incurred by a third party to the grant agreement. they are listed in Article 6.4, in particular: costs related to return on capital or return generated by an investment Examples: dividends paid as remuneration for investing in the action; remuneration paid as a share in the company s equity. debt and debt service charges Debt service is the amount paid on a loan in principal and interest over a period of time. Example: If a beneficiary takes a loan used to acquire equipment or consumables for the project of EUR at 9 percent interest for 10 years, the debt service for the first year (principal and interest) is EUR provisions for future losses or debts Provision means an amount set aside in an organisation s accounts, to cover for a known liability of uncertain timing or amount. This includes allowances for doubtful or bad debts. interest owed (i.e. interest on a loan to borrow capital) excessive or reckless expenditure Excessive means paying significantly more for products, services or personnel than the prevailing market rates or the usual practices of the beneficiary (and thus resulting in an avoidable financial loss to the action). Reckless means failing to exercise care in the selection of products, services or personnel (and thus resulting in an avoidable financial loss to the action). currency exchange losses (i.e. for beneficiaries using currencies other than euros or being invoiced in a currency other than the currency they use: any loss due to exchange rate fluctuations (e.g. between the date of invoicing and the date of payment)) This includes insurance premiums against risk of exchange rate losses. bank costs charged by the beneficiary s bank for transfers from us. Conversely, bank charges for the distribution of the EU funding may constitute an eligible cost for the coordinator (if the eligibility conditions of Article 6.1 and Article 6.2.E.2 are met). deductible VAT Deductible VAT means VAT that is recoverable under the national VAT system (i.e. the system of collection and deduction under the national VAT legislation). Such VAT is not a genuine and definitive cost and, according to accounting standards, should not be recorded as such. Therefore, it is not actually incurred by the beneficiary. The cost and revenue accounts should exclude deductible VAT; such VAT should be recorded in separate payable or receivable accounts, without effect on revenue or cost line items. The VAT paid is a claim against the tax authority. It should be recorded in the assets part of the balance sheet. It should not be recorded as expenditure in the profit and loss accounts (only the purchase price of goods and services excluding VAT should be recorded). Similarly, for the value of purchased equipment or assets, only the net purchase cost should be recorded in the balance sheet s fixed asset line, and the depreciation cost should be calculated based on this value, excluding VAT. 33/55

34 The VAT collected is a debt towards the tax authority and should therefore be recorded in the liabilities part of the balance sheet. Conversely, if VAT is NOT deductible, it is an eligible cost. The full price of the goods or services bought by the beneficiary can be recorded as expenditure in its profit and loss accounts, without any distinction between the net price and the amount of VAT charged on it. The full price of equipment and assets bought can be recorded in the balance sheet s fixed asset line and is the basis for the depreciation allowances recorded in the profit and loss accounts. costs incurred during the suspension of the implementation of the action Example: Action is suspended and one of the beneficiaries continues working on it after the date of the suspension costs declared under another EU or Euratom grant (i.e. double funding) This includes: costs funded directly by other EU programmes managed by the European Commission or its executive agencies or funding bodies (e.g. H2020 grants) costs managed/funded/awarded by Member States but co-funded with EU/Euratom funds (e.g. European Structural and Investment Funds (ESIF)) costs for grants awarded/funded/managed by other EU, international or national bodies and co-funded with EU/Euratom funds (e.g. Joint Undertakings, Article 185 TFEU bodies) if a beneficiary is receiving an operating grant 7 from the EU/Euratom, then the indirect costs of that beneficiary are not eligible and the indirect cost flatrate should not be applied unless it can demonstrate that the operating grant does not cover any costs of the action (see Article 6.2.F). Examples (operating grants): Grants awarded to support the running costs of certain institutions pursuing an aim of European interest, such as: College of Europe, European standards bodies (CEN, CENELEC, ETSI) costs for staff of a national (or local) administration, for activities that are part of the administration s normal activities (i.e. not undertaken only because of the grant) For public organisations (i.e. public bodies, with the exception of universities), the salary costs of permanent staff can be claimed only if they relate to the costs of project activities which the organisation would not have carried out if the project had not been undertaken. travel, subsistence and any other costs for EU staff (or elected representatives of the EU Parliament) Project cost categories explicitly excluded in the call (if option applies). If a beneficiary declares ineligible costs, the ineligible costs will be rejected and, if needed, other measures specified in Chapter 6 (e.g. suspension, termination, grant reduction, etc.) may be taken. Specific cases (ineligible costs): Non-identifiable VAT (in foreign invoices) In exceptional cases where the beneficiary cannot identify the VAT charged by the supplier (e.g. small non-eu invoices), the full purchase price can be recorded in the accounts if it is not possible to deduct the VAT. That VAT would therefore be eligible. 7 For the definition, see Article 121(1)(b) of the Financial Regulation No 966/2012: operating grant means direct financial contribution, by way of donation, from the budget in order to finance the functioning of a body which pursues an aim of general EU interest or has an objective forming part of and supporting an EU policy. 34/55

35 Partially deductible VAT Some entities have a mixed VAT regime, meaning that they carry out VAT exempt or out-of-the-scope activities AND VAT taxed activities. When VAT paid on goods or services by these entities cannot be directly allocated to one or the other category of activities it will be partially deductible. Therefore it will also be partially eligible. The eligible part corresponds to the pro-rata of the VAT which is not deductible for that entity. In these cases, the beneficiary uses a provisional (estimated) deduction ratio during the year. The final ratio is only determined at the end of the fiscal year. The beneficiary must regularise VAT when closing its accounts. Therefore, the beneficiary must also regularize the VAT costs declared for the grant (by declaring, in the next reporting period, an adjustment for the difference between the provisional deduction ratio and the final ratio). VAT incurred by a public body acting as public authority VAT incurred by a public body acting as public authority is ALWAYS ineligible. These are activities which can only be exercised by public bodies under their special legal framework, under different legal conditions to those covering private bodies. They may or may not be linked to imperium. Duties The eligibility of duties depends on the eligibility of the cost item to which they are linked (i.e. in whose price they are included). If the item is eligible, the duty is also eligible. In-kind contributions free of charge This means non-cash inputs from third parties, such as: donations of raw materials (e.g. paper and ink for publication purposes) unpaid volunteer work or provision of services any other good or service provided to the project whose cost is borne by another organisation and not reimbursed by the beneficiary. They are not an eligible cost and can NOT be included when calculating total eligible costs and the final grant amount (nor should they be reported as receipt at final reporting stage). 35/55

36 KEEPING RECORDS SUPPORTING DOCUMENTATION ARTICLE 13 KEEPING RECORDS SUPPORTING DOCUMENTATION 13.1 Obligation to keep records and other supporting documentation The beneficiaries must for a period of [OPTION 1 by default: five][option 2 for low value grants 1 : three] years after the payment of the balance keep records and other supporting documentation in order to prove the proper implementation of the action and the costs they declare as eligible. They must make them available upon request (see Article 12) or in the context of checks, reviews, audits or investigations (see Article 17). If there are on-going checks, reviews, audits, investigations, litigation or other pursuits of claims under the Agreement (including the extension of findings; see Article 17), the beneficiaries must keep the records and other supporting documentation until the end of these procedures. The beneficiaries must keep the original documents. Digital and digitalised documents are considered originals if they are authorised by the applicable national law. The [Commission][Agency] may accept non-original documents if they considers that they offer a comparable level of assurance Records and other supporting documentation on the technical implementation The beneficiaries must keep records and other supporting documentation on the technical implementation of the action, in line with the accepted standards in the respective field Records and other documentation to support the costs declared The beneficiaries must keep the records and documentation supporting the costs declared, in particular the following: (a) (b) for actual costs: adequate records and other supporting documentation to prove the costs declared, such as contracts, subcontracts, invoices and accounting records. In addition, the beneficiaries usual cost accounting practices and internal control procedures must enable direct reconciliation between the amounts declared, the amounts recorded in their accounts and the amounts stated in the supporting documentation; for unit costs: adequate records and other supporting documentation to prove the number of units declared. Beneficiaries do not need to identify the actual eligible costs covered or to keep or provide supporting documentation (such as accounting statements) to prove the amount per unit; 36/55

37 (c) (d) for flat-rate costs: adequate records and other supporting documentation to prove the eligibility of the costs to which the flat-rate is applied. The beneficiaries do not need to identify the costs covered or provide supporting documentation (such as accounting statements) to prove the amount declared at a flat-rate; for lump sum costs: not applicable. In addition, for personnel costs (declared as unit costs), the beneficiaries must keep time records for the number of days declared. The time records must be in writing and approved by the persons working on the action and their supervisors, at least monthly. In the absence of reliable time records of the days worked on the action, the [Commission][Agency] may accept alternative evidence supporting the number of days declared, if it considers that it offers an adequate level of assurance. For personnel costs (declared as actual costs), the beneficiary must also keep records on the number of deliverables declared. [OPTION to be added if Article 11 applies: For costs declared by linked third parties (see Article 11), it is the beneficiary that must keep the originals of the financial statement(s) and the certificates on the financial statement(s) of its linked third parties.] 13.2 Consequences of non-compliance If a beneficiary breaches any of its obligations under this Article, costs insufficiently substantiated will be ineligible (see Article 6) and will be rejected (see Article 26), and the grant may be reduced (see Article 27). Such breaches may also lead to any of the other measures described in Chapter Records and other supporting documentation The beneficiaries (for linked third parties, see point 10) must keep appropriate and sufficient evidence to prove the eligibility of all the costs declared, proper implementation of the action and compliance with all the other obligations under the GA. Costs that are not supported by appropriate and sufficient evidence may be rejected (and other measures described in Chapter 6 may be applied as well). The evidence must be the same as that which would be accepted by the national (tax) authorities. The evidence must be verifiable, auditable and available. It must be persuasive enough for our auditors, who assess it according to generally accepted audit standards. 8 Appendix 2 lists the records and documents (per cost category) that may serve as evidence. It must be kept for at least 5 years after the balance is paid (3 years for grants up to EUR ). If you throw supporting documents away during this period, you risk that the grant is reduced, that costs are rejected and that recoveries are more difficult. We may require to see documents of any beneficiary in the consortium (both coordinator and co-beneficiaries). 8 International Standard on Auditing ISA 500 Audit Evidence. 37/55

38 If there are ongoing procedures such as audits, investigations or litigations, the evidence must be kept until these end, even if this is longer than five (or three) years. The rules in the grant agreement do not affect national laws on keeping documents (which may require additional measures). 2. Original documents The beneficiaries must keep original documents. They will be accepted by us as originals, if considered an original under national law. Examples: 1. The Commission will accept authenticated copies or digitally-signed documents, if national law accepts these as originals. 2. The Commission will accept digitalised copies of documents (instead of hard copies), if this is acceptable under national law. This means that documents should be kept in the format in which they were received or created: documents received or created in paper form should be kept in paper form documents received or created electronically should be kept in their electronic format. Hard copies of original electronic documents are not needed. Costs that are not supported by appropriate and sufficient evidence may be rejected (and other measures described in Chapter 6 may be applied as well). If you are asked to provide supporting documents, it is enough to send copies. 3. Records for actual costs For actual costs, the beneficiaries must: keep detailed records and other supporting documents to prove the eligibility of the costs declared use cost accounting practices and internal control procedures that make it possible to verify that the amounts declared, amounts recorded in the accounts and amounts recorded in supporting documentation match up. Best practice: The information included in the financial statements for each budget category (i.e. personnel costs, other direct costs, indirect costs) must be broken down into details and must match the amounts recorded in the accounts and in supporting documentation. Example: For costs declared in category D.1, D.2, D.3 and D.4 (other direct costs): the beneficiary must keep a breakdown of costs declared by type (i.e. travel costs and related subsistence allowances, depreciation, costs of other goods and services etc.). It should be able to provide details of individual transactions for each type of cost. For depreciation, it must be able to provide details per individual equipment used for the action. Declared costs must match accounting records (i.e. general ledger transactions, annual financial statements) and supporting documentation (i.e. purchase orders, delivery notes, invoices, contracts, bank statements, asset usage logbook, depreciation policy, etc.). 4. Records for unit costs set by the Commission For unit costs, the beneficiaries must keep: 38/55

39 detailed records and other supporting documents to prove the number of units declared. It is NOT necessary to keep records on the actual costs incurred. The Commission may access the accounting records, but will reject costs only if the number of units declared is incorrect. (The actual costs of the work are not relevant). If the Commission detects an irregularity or fraud in the action s implementation, it may reduce the grant. Example: 1. For costs declared in category A.1 (employees or equivalent): the costs must be detailed for each person carrying out work for the action. They must match with supporting documentation (i.e. labour contracts, collective labour agreements, pay slips demonstrating the correct pay grade, time records). 5. Records for flat-rate costs For flat-rate costs, the beneficiaries must: keep detailed records and other supporting documents to prove that the costs on the basis of which the flat rate is calculated are eligible. Example: For the flat rate of 30 % of indirect costs, the auditors will verify (and the beneficiaries must be able to show) that the actual direct costs are eligible, using the detailed records and supporting documents explained above. It is NOT necessary to keep records on the actual costs incurred. 6. Records for personnel costs The beneficiaries must: show the actual hours worked, with reliable time records (i.e. time-sheets) either on paper or in a computer-based time recording system. Time records must be dated and signed at least monthly by the person working for the action and his/her supervisor. If the time recording system is computer-based, the signatures may be electronic (i.e. linking the electronic identity data (e.g. a password and user name) to the electronic validation data, with a documented and secure process for managing user rights and an auditable log of all electronic transactions). Time records should include, as a minimum: the title and number of the action, as specified in the GA the beneficiary s full name, as specified in the GA the full name, date and signature of the person working for the action the number of days worked for the action in the period covered by the time record the supervisor s full name and signature Information included in time-sheets must match records of annual leave, sick leave, other leaves and work-related travel. A template for time-sheets with these minimum requirements is available in Annex. (This template is not mandatory; beneficiaries may use their own model, provided that it fulfils the minimum conditions and it contains at least the information detailed above.) 39/55

40 If time records are not reliable, the Commission may exceptionally accept alternative evidence if it proves the number of hours worked on the action with a similar (or at least satisfactory) level of assurance (assessed against generally-accepted audit standards). The Commission has full discretion to accept or refuse the alternative evidence and there is no entitlement to it. Beneficiaries that rely on alternative evidence bear the full risk of refusal and rejection of costs by the Commission/Agency. Examples of possible alternative evidence (non-exhaustive list): travel documents proving participation in a project meeting (boarding pass, obliterated travel ticket, hotel invoice, etc.); agenda and minutes of the meeting; attendance lists; working papers; laboratory log books; professional/personal diaries; documents related to presentations; scientific publications; correspondence such as letters, notes, memos, s; etc. The auditors will use the following three criteria to assess how credible the alternative evidence is: 1. Clear identification of the person concerned 2. Clear link to the project under scrutiny 3. Possibility to quantify time spent on project-related tasks. Alternative evidence will only be accepted if these three criteria are met. Example (acceptable alternative evidence): A researcher submits the following as alternative evidence: I hereby send you the results of the analysis of project XYZ that I have been working on for the last two weeks. Criterion 1 is met the sender of the is the person concerned Criterion 2 is met the project is identified as XYZ Criterion 3 is met the time is quantified: two weeks Example (not acceptable alternative evidence): A beneficiary submits the following as alternative evidence: I hereby send you the results of the analysis recently carried out by my team. Criterion 1 is not met it is unclear who the person concerned is; the team members and their contributions are unknown Criterion 2 is not met: the project name is not mentioned Criterion 3 is not met the time is not quantified 7. Records of (linked) third parties The beneficiaries must ensure that linked third parties comply with the same obligations in terms of keeping appropriate and sufficient evidence. Example: Linked third parties that carry out work themselves must document all their costs in the same way the beneficiaries do. However, it is the beneficiary who must keep the original financial statements and the certificates on financial statements of the linked third parties. The beneficiaries must also ensure that they keep appropriate and sufficient evidence related to partner organisations and subcontractors. Examples: The beneficiaries must keep evidence showing that subcontractors fulfilled their obligations in terms of the visibility of EU funding. Alternatively, they may ensure that the subcontractors keep this evidence. Specific case (records of linked third parties): Financial statements and certificates on the financial statements (CFS) It is the beneficiary that must keep the originals of the financial statements and the certificates on the financial statements of the linked third parties. 40/55

41 APPENDIX 2 SUPPORTING DOCUMENTS LIST OF RECORDS & SUPPORTING DOCUMENTS PER COST CATEGORY Personnel costs Staff costs on the basis of Unit Costs: Pay slip or other official document (provided for example by the HR department) indicating the pay grade (and the period in the pay grade if it has changed during the action) justifying the use of the correct pay grade for individual staff members ; Time records (signed time sheets, electronic time registration) clearly indicating the link with the action. Individuals working for a beneficiary on the project under a contract other than an employment contract: specific contract linked to the project with description of tasks, reference to the project, the duration of the contract and time to be allocated to the project, timesheets (or equivalent time-recording system). Staff paid on the basis of deliverables: Employment contract, staff regulation, evidence justifying the internal staff category; Timesheets are NOT required for staff paid on the basis of deliverables. Travel & subsistence costs Travel costs Copies of tickets (airplane, train, bus, etc.), including boarding passes when applicable Copies of invoices for flight or rail tickets (if bought online, a confirmation is acceptable, providing it states the price paid) Travel by car: reimbursement claim, explanation of the reimbursement calculation, copy of the internal reimbursement policy, if available (maximum of the equivalent first-class rail fare) Proof of payment Attendance list signed by the participants (for meetings and conferences). Subsistence costs Expenses claim form indicating place, date and time signed and dated by the employee and the organisation authorising the expenditure (employer) Proof of accommodation (hotel invoice) Copies of all receipts related to food and beverages, local transport and other expenses Attendance list signed by the employees Proof the employee was reimbursed for their claimed costs. Direct costs of subcontracting Invoice Documentation of the procedure used to award contracts: copies of bids received, records related to the award process (comparisons of individual bids, minutes of meetings, etc.) 41/55

42 Proof of payment Subcontracting agreement. The subcontracting agreement should include the following terms: goods/service to be provided and links with the project (it is advisable to include a reference to the project) start and end dates price to be paid (breakdown and description of the costs) detailed description of the tasks/work schedule/completion phases detailed description of the costs on which the price is based payment arrangements (one or more advance payments, staggered payments, etc.) clauses/penalties for non-performance or late completion. Equipment Copies of invoices stating when the equipment was purchased and delivered Proof of payment Calculation of the amount requested Internal rules on depreciation. Invoices related to the purchase of goods or equipment must bear the grant reference, date of purchase and delivery. Invoices for services must also specify the date(s) the services were provided. Other goods & services costs Invoice, stating the following: o editing type/name of the publication and number of pages/words o translations title of the publication/document, translated languages (from-to) and number of pages/words o printing type/title of the publication, number of pages and number of copies o conferences detailed calculations of the relevant costs, e.g.: o for room rental number of participants, number of days/hours of the stay o for interpreting services cost per interpreter per day, languages involved) Procedure used to award contracts: Copies of price offers requested, including the description of the good or service to be provided Copies of bids received Records related to the award procedure (comparisons of individual bids, minutes of meetings, etc.) Proof of payment. Invoices related to the purchase of goods or equipment must bear the grant reference, date of purchase and delivery. Invoices for services must also specify the date(s) the services were provided. Indirect costs No supporting documents are required. 42/55

43 APPENDIX 3 UNIT COSTS GUIDELINES HOW TO CALCULATE AND USE UNIT COSTS GUIDELINES Unit costs for direct personnel costs are average daily rates per pay grade of the beneficiary's salary grid. They have to be established by all beneficiaries of Eurostat grants in accordance with a method adopted by Commission Decision C(2014)6332 of 11/09/2014. Unit costs declaration templates are available in Annex of Application form Part B. Unit costs (first submission or update) shall be submitted to the functional mailbox estat-unitcosts@ec.europa.eu. In case of a first submission, the unit costs shall be sent at the latest with the first grant application of the entity declaring them. 1. Form of financing and category of costs covered Personnel costs in grants awarded by Eurostat must be declared using unit costs, calculated in accordance with the method described in Section 3 below. Unit costs only cover direct personnel costs of a grant action. Out of scope of Unit costs: The costs of personnel which is not paid on the basis of time spent, but on the basis of deliverables such as questionnaires/records (e.g. in the case of interviewers paid a fixed amount for each interview) are reimbursed on the basis of costs actually incurred, and not using unit costs. 2. Justification The data to be submitted to calculate unit costs must in principle be based on official national salary grids (or assimilated) for the public service, accessible and auditable at any time. An authorised person of your organization must sign the unit costs declaration to certify that the submitted unit costs have been calculated using the method described in section 3. Controls by Eurostat Controls on the application of unit costs in grants will focus on time registration and the allocation of staff to pay grades. Controls at the level of individual salary information (e.g. pay slips) will no longer be required. Controls on the correct application of the method (including cost components and accurate figures) are integrated into the control programmes based on an annual risk assessment. 3. Method to determine and update the amounts 3.1 Unit costs for average daily personnel costs Unit costs are average daily rates for direct personnel costs, established per pay grade of the beneficiary s salary grid 9. 9 A salary grid is the range of pay, which usually presents in form of scales of the remuneration paid for working at a certain level or grade of an organisation. The pay grades for which unit costs are calculated have to be consistent with the structure of the salary grid. 43/55

44 They are calculated on the basis of historical payroll data and thus refer to personnel costs actually incurred by the beneficiary during a reference year. Payroll data for the calculation: Unit costs per pay grade are based on the real payroll data of the reference year and have to be reconcilable with the individual records in the payroll and the accountancy. The reference year is to be understood as the year for which the beneficiary disposes of the latest annual accounts. Reference year: Unit costs are based on the payroll data of the last day of the reference year. If the accounting year does not coincide with the calendar year, the reference year shall be the accounting year. The same reference year shall apply to the accounting data and to the payroll data. To determine which costs pertain to the reference year, each beneficiary shall take into account its own accounting rules and practices, notably the use of cash or accrual accounting. So, for example, if its accounting system is cash-based, the beneficiary will include in the calculation all the amounts effectively paid in the year of reference, irrespective of the year to which they pertain (including, for instance, compensations for previous years activities, etc.). On the other side, a beneficiary using an accrual accounting system will have to include the payments pertaining to the reference year and exclude payments pertaining to another accounting year, irrespective of the actual date of the payments themselves. The pay grade is defined as the level of the salary grid that comprises all levels of seniority (if they exist) within this grade. Pay grade: Unit costs are calculated for each pay grade of the salary grid, comprising all staff of seniority sub-levels in this grade. No further breakdown is necessary to take account of the variety of functions, tasks, statutory rights, statutory benefits and allowances and/or social contributions (such as family allowance, extra pay for specific functions, risks or responsibilities etc.). Although for each pay grade the basic salaries present a common basis, individual gross salaries usually differ considerably. The unit costs established for each pay grade are, in fact, the average of the total annual direct personnel costs paid by the beneficiary for the staff of the given pay grade (see example 1). The example 1 below presents a structure of a salary grid for which unit costs are established for five pay grades (comprising all staff of seniority steps 1-5). Example 1: 44/55

45 The breakdown of the entire staff into pay grades should correspond to the structure of the salary grid usually applied by the beneficiary in accordance with national legal provisions for the public service (or, where applicable, to that for assimilated entities). Since different salary grids are often applied for the remuneration of civil servants working as permanent officials, and for those working under temporary or unlimited employment contracts, separate grids should be provided for: a) officials (permanent and temporary) b) contractual staff (working under a temporary or unlimited employment contract) If such a distinction doesn't exist in your organization, a single grid is sufficient. Staff included in the calculation: The entire staff of all the pay grades of the organization, independently of their function (statisticians, library staff, administrative assistants etc.), should be included in the calculation. 3.2 Calculation of average daily personnel costs per pay grade The average daily rates for each pay grade are calculated on the basis of the total annual direct personnel costs incurred by the beneficiary during the reference year for the entire staff of the pay grade. For the calculation, the beneficiary extracts individual salary data for each pay grade from the payroll data as of the last day of the reference year. Calculation: For the calculation of the average rates per pay grade all employees' salary records have to be extracted from the database. Specific case: change of pay grade during the reference period Employees who changed the pay grade during the reference year can be included in the calculation, at your choice: a) either on a pro rata basis for each of the occupied pay grades; b) or just for the grade the person had at the end of the year. Example: A staff member working full-time has been promoted from pay grade A2 to pay grade A3 on 1 July Total salary from January to June: Total salary from July to December: Option 1: Pro-rata calculation Grade A2: / 0,5 FTE / 215 days = 186,05 Grade A3: / 0,5 FTE / 215 days = 232,56 Option 2: Grade at year end: A3 ( ) / 1 FTE / 215 days = 209,30 Employees who left before the end of the year have to be included in the calculation on a pro rata basis. The total annual direct personnel costs are divided by the staff employed during the reference year expressed in full-time equivalents (FTE) belonging to the respective pay grade and by 215 annual working days. 45/55

46 Average daily rate per pay grade (unit cost) 10 = Total annual direct personnel costs per pay grade FTE per pay grade during reference period * 215 working days Full-time equivalents (FTE): The use of full-time equivalents allows to take into account staff that has worked under parttime arrangements or only for part of the reference year. The table below gives an example of how total FTE per pay grade is calculated. Column A represents the individual working arrangements as percentage of full-time. If a person has for example worked half-time (50%) during the whole year, the corresponding working time equals to 0.5 FTE (Mr CD). A B C D Working time (Full time =100%) Months worked in the year % of year worked (B/12) Full time equivalent (A*C) Ms AB 100% % 1.00 Mr CD 50% % 0.50 Mr EF 100% 10 83% 0.83 Ms GH 100% % 0.79 Mr XY 80% % 0.37 Total FTE of the pay grade 3.49 Example 2: Alternatively, where information on FTE is not available or the organization prefers not to use it, the calculation may be based on the total number of staff. FTE: general principle Part-time working (see above) and leaves paid by third parties (see below) are the only situations in which an FTE adjustment could be performed. No other situation (overtime, sick leave paid by the employer, holiday, etc.) can be taken into consideration to perform FTE adjustments. To give an example, a person working full time for 1 year, during which he or she takes 1 month of holiday, 1 month of sick leave paid by the employer, and works overtime for the equivalent of 2 weeks will still be considered for 1 FTE. Special case: leave paid by a third party Even though, as a general rule, absences from work are not considered when calculating FTE, a correction could be made, if you so so choose, for absences during which the person is paid, entirely or for the most part, by a third party (like in the case of maternity leave, certain cases of sick leave, etc.). For example, if a person is on sick leave for 6 months over the year of reference, and during this period he or she is not paid by the beneficiary (but, for instance, by a social insurance institution), the person could be calculated for 0,5 FTE instead of 1 FTE. If he or she still 10 Please round to two decimal places. 46/55

47 receives a certain (non-significant) amount of money from the beneficiary, this money can be included in the unit costs calculation, without further adjustment of FTE. Please remember that, while this FTE adjustment is an option for the beneficiaries, costs which are not actually incurred by the beneficiary can never be taken into consideration for the calculation of unit costs. In other words, in a case like the one described above the FTE adjustment is optional, but the amounts paid by an external source (insurance, etc.) can never be included in the calculation. Calculation of Unit costs: Example 3: Pay grade 79 persons are here assumed to correspond to 51, 75 FTE. Pay grade 9 A B C D E (eligible) statutory benefits 79 persons belonging to pay grade 9 (including all sublevels) Full time equivalent Yearly basic salary: 1 Social contributions paid by beneficiary Total annual personnel costs (Σ B +C + D) Ms. AAA (e.g. 1 Pers. Nr.) 34,200 Mr. FFF ,400 Mr. GGG ,806 Ms. DDD 1 31,560 TOTAL pay grade 9 nbr of staff The table below present a simplified model of an extraction of 16 payroll records for the calculation of unit costs by grade. 15 All eligible statutory entitlements and social contributions paid by 14 the employer should be included in the total annual personnel costs 13 of the individuals (see columns C and D below) Pay grade ,600,000 Average daily personnel cost (E/(A*215)) The unit cost for pay grade 9 is per day. 47/55

48 Eligible personnel costs: Total annual direct personnel costs Total annual direct personnel costs per person correspond to the sum of the basic salary and all other direct personnel costs incurred by the beneficiary (excluding overheads 11 and other non-eligible costs defined below). The amount is based on the following components: Basic salary Basic salary + other statutory costs + social contributions (social security, pensions contributions ) and taxes on wages = Total annual direct personnel costs Monthly salaries consist primarily of the basic salary which is supplemented by statutory benefits. The basic salary is the main element of remuneration and is determined in accordance with the pay grade held. It is therefore in principle not a matter of which function the civil servant actually performs, but solely of the pay grade. The pay grades are governed by the official remuneration schemes for the public service at national or regional level. Other statutory costs These costs cover additional pays 12 in form of statutory benefits linked to specific functions, responsibilities and/or conditions, as well as specific salary components that are not paid on a monthly basis (e.g. Christmas or holiday allowances, additional month's pay at the end of the year, etc.). Due to the diversity of national legislative conditions for remunerating personnel, it is not possible to give an exhaustive list of eligible cost components. In principle these costs can be included when they are in line with your organization's usual policy on remuneration and in compliance with national legislation. Attention: Non statutory, non-mandatory, discretionary premiums or bonuses and additional remuneration schemes for EU-funded projects are not eligible. (For explanation see below) Overtime: Overtime compensations can be included, provided that they are in line with your organization's usual policy on remuneration and in compliance with national legislation. Social security contributions and taxes on wages These cover the employer's social contributions such as insurance contributions, payments for healthcare, labour disability, unemployment and taxes on wages. Pension contributions 11 i.e. excluding indirect costs such as hiring or depreciation of buildings and plant, water/gas/electricity, maintenance, insurance, supplies and petty office equipment, communication and connection costs. 12 Means other statutory entitlements. 48/55

49 These cover the employer's pension contributions, including those for early retirement. Attention: Provisions (e.g. imputed or notional contributions to pension reserves) paid by the State for public administrations are not eligible. Social contributions paid by public authorities other than the beneficiary Since unit costs are based on historical payroll data, each component of annual personnel costs (e.g. gross salary, social security charges, pension contribution, other statutory costs included in the remuneration) has to be reconcilable with the beneficiary s annual accounts. In the context of public administrations the above mentioned employer s social charges, or part of them (e.g. contributions for some staff only), may be paid by another state authority, e.g. by the State Treasury, a Ministry or an official agency. Specific case: Social contributions paid by another public authority In order to include these costs in the unit costs calculation, you will have to provide a declaration by the respective paying authority, stating the type of contribution(s) and the amount(s) paid for the beneficiary s staff during the reference year. Please see Annex 2 (there is no mandatory template). The Declaration should be produced only if social contributions for the beneficiary's staff are paid fully or partially by another state authority. This Declaration shall be attached to the respective unit costs, and must be signed by an authorised person of the respective paying authority such as Director General, Resources Director or Chief accountant. Without this declaration, the social contributions paid by another public authority are not eligible. Since detailed information per employee and/or pay grade is not always available, social contributions paid by other public authorities are calculated as a percentage of the total personnel costs incurred by the beneficiary. Example 4: Integration of Statutory benefits and social contributions paid by other public authorities: Part of social contributions for the beneficiary s staff is covered by another public authority and thus not included in the beneficiary s accountancy (where applicable). The corresponding average rate will be added to the unit costs established by the beneficiary on the basis of its payroll data. (See columns G and H below) 49/55

50 Example 5: Calculation Unit costs (specific case for the social contributions paid by other public authorities) Pay grade 9 A B C D E F G (eligible) statutory benefits 79 persons belonging to pay grade 9 (including all sublevels) Full time equivalent Yearly basic salary: 1 Social contributi ons paid by beneficiar y Total annual personnel costs (Σ B +C + D) Social contributi ons paid by other public authority Total personnel costs (E+F) (17%) Ms. AAA (e.g. Pers. Nr.) 1 34,200 Mr. FFF ,400 Mr. GGG ,806 Ms. DDD 1 31,560 TOTAL grade 9 pay ,600, ,000 1,872,000 Average daily personnel cost (G/(A*215)) In this special case, the social contributions of the beneficiary are paid by another public authority. As stated above, the respective paying authority shall declare the nature of these contributions and the amount paid for the beneficiary's staff. The unit cost for pay grade 9 will be 168,25 per day. Non eligible personnel costs: The following costs are non eligible personnel costs and must therefore be excluded from the basis for the calculation unit costs: Indirect costs (overheads) 13 ; Provisions paid by the beneficiary or another public authority for the beneficiary s staff to pension funds, reserves, etc.; Non statutory, non-mandatory and discretionary premiums or bonuses; Additional remuneration schemes specifically benefitting officials participating in EUfunded projects 14 ; Costs not actually incurred by the beneficiary (example: staff seconded for free from other public organizations); 13 Indirect costs are covered by a flat rate indicated in the respective grant agreement. 14 Personnel costs declared as eligible may not exceed the remuneration costs defined by the beneficiary according to its usual remuneration policy. 50/55

51 Non eligible costs: Normal eligibility rules as stipulated in the respective grant agreement apply. Non eligible costs have to be excluded. 3.3 Exchange rates Unit costs must be submitted in euro. If the beneficiary keeps its general accounts in a currency other than the euro, the amounts of the unit costs calculated in national currency need to be converted in euro using the exchange rate for the reference year. 15 The conversion in euro is to be done at the average of the daily exchange rates published in the C series of Official Journal of the European Union, determined over the corresponding reference year. If no daily euro exchange rate is published in the Official Journal of the European Union for the currency in question, conversion shall be made at the average of the monthly accounting rates established by the Commission and published on its website ( determined over the corresponding reference year. Application of exchange rate: The unit costs expressed in euro are part of the grant agreement. No further exchange rate conversion is carried out for the final financial statements. 3.4 Submission of unit costs to Eurostat The scanned copy of the original Declaration established by the beneficiary in line with the method explained above is to be transmitted to Eurostat by for information. This declaration must be signed by an authorized person of your organization 16. Submission: Entities which have not yet calculated unit costs must provide the Declaration at the latest with the first grant application but we strongly recommend sending it for information as soon as possible. This will help to identify any potential issues and to solve them before the signature of the first grant agreement. The scanned version of the original signed declaration has to be sent to Eurostat by e- mail (estat-unit-costs@ec.europa.eu). The originals shall be kept by the beneficiary (i.e. your organization)! After submission of the unit costs (and of any subsequent updates) it is the applicant s responsibility to ensure that the latest unit costs are applied in all subsequent grant applications. Example 6: Grid of Unit Costs This is only an example, but the following fields are mandatory: Calculation of Unit costs is based on accounting and payroll data as of: xx/xx/xx Calculation is based on: Full-time equivalents (FTE) Total number of staff Exchange rate, where applicable: xx,xx 15 Daily rates for the reference year can be extracted from the Statistical Data Warehouse of the ECB (Exchange rates), see 16 I.e. Director General, Resources Director, Chief accountant, etc. 51/55

52 1 Please round to two decimal places. 3.5 Updates Your organization may update its unit costs annually, from the moment it disposes of more recent annual payroll data. Updated unit costs have to be submitted to Eurostat as described above under item 3.4. The updates will become applicable to subsequent grant applications. They will not be applicable retroactively to already signed grant agreements. The update is not mandatory: an existing declaration could be used indefinitely. Update of unit costs: The new Declaration, together with, where applicable, the Declaration on social contributions paid by another state authority, shall be submitted by The new Declaration must be prepared following the same methodology. 3.6 Unit costs in grant applications and grant agreements Grant applications: The copy of original signed Declaration and, where applicable, the Declaration on social contributions paid by another state authority) shall be attached to each grant application. Please do not sign a new Declaration with each grant application and do not send original documents to us. When preparing a grant application and the related estimated budget, the beneficiary will have to give an indication of the envisaged personnel costs needed to carry out the action. In order to allow an appropriate evaluation of the proposal, information on the profiles of the staff involved (e.g. statistician, project manager, IT expert, etc.) and their envisaged working time is to be provided. Since the staff falling under a given profile may belong to different pay grades, the costs should be broken down by pay grades and the respective unit costs (daily rates) must be used. Estimated budget: Attention: Information on the profiles, the grades and the estimated working time (expressed in days) is essential when you establish the estimated budget for the action. 52/55

53 Example 7: Estimated budget Grant agreements: The unit costs are part of each grant agreement. Once the grant agreement has been signed, the unit costs attached to the signed grant agreement are approved and will remain valid for the entire duration of the agreement. They will not be subject to updates for the whole duration of the agreement. Final financial statement (cost claim): At the moment of the final financial statement (cost claim), the calculation will be made on the basis of the staff that actually performed the work. When declaring staff costs in the final financial statement each staff member is reimbursed according to the Unit costs corresponding to the pay grade(s) to which he/she belonged during the action. Control of cost claims: In case of control of cost claims the use of the correct pay grade for individual staff members and their time registration will be checked for personnel covered by unit costs. The use of the correct pay grade could for instance be demonstrated by providing a pay slip or other official document (provided for example by the HR department) indicating the pay grade (and the period in the pay grade if it has changed during the action). Special cases: change of grade, change of the grid, staff outside of the grid a) change of grade due to progress in seniority or promotion If a person, while working on the action, has been promoted to a higher grade, the working days are reimbursed pro-rata at the corresponding unit costs. Example: In an action of 18 months Ms X moved after 6 months from pay grade 9 to pay grade 10. During the first 6 months she worked 30 days on the project, during the last 12 months she worked another 50 days on it. 53/55