Eligibility of costs in the Horizon 2020 funded EUROfusion project Garching, 3 December 2015 Subcontractors and other third party support Presented by: Michael Erdmann, EUROfusion Coordinator Unit, Max-Planck-Institute for Plasma Physics
H2020 - Eligibility of costs Direct Costs Indirect Costs Specific Costs Actual Costs Flat-rate Costs Unit Costs Unit Costs General Eligibility Conditions Personnel Subcontracting Overheads Mobility Other Direct Costs Specific Eligibility Conditions Travel Equipment Goods & Services
Eligibility of direct costs Direct Costs Actual Costs General Eligibility Conditions Personnel Subcontracting Other Direct Costs Specific Eligibility Conditions Travel Equipment Goods & Services
Eligibility of direct costs of subcontracting Direct Costs Actual Costs Costs that are directly linked to the action implementation and can therefore be attributed to it directly. caused in full by the action or caused in full by several actions and the attribution to a single action can, and has been, directly measured General Eligibility Conditions Subcontracting Specific Eligibility Conditions
Subcontracting - general eligibility conditions Actual General conditions for actual costs to be eligible Art. 6.1 Eligible actual costs must meet the following criteria: actually incurred by the beneficiary OK incurred during the action duration (exception for final report) indicated in estimated budget set out in Annex 2 incurred in connection with the action as described in Annex 1 and necessary for its implementation identifiable and verifiable, properly recorded in the beneficiary s accounts in compliance with applicable national law on taxes, labour & social security reasonable, justified, complying with principle of sound financial management
Subcontracting - specific eligibility conditions Beneficiaries are expected to have all resources to implement their share of the action themselves. As an exception, however, they may involve third parties. Subcontracting Specific eligibility conditions Art. 6.2 b Specific eligibility conditions for direct costs of subcontracting: costs incurred for subcontracting of action tasks described in Annex 1 OK purchased in accordance with relevant public procurement rules (unless beneficiary is a private company or private association) total estimated costs of subcontracting per beneficiary set out in Annex 2 the following obligations were extended to the subcontractor: avoiding conflict of interest (Article 35) maintaining confidentiality (Article 36) promoting the action and giving visibility to the EU funding (Article 38) liability for damages (Article 46)
Subcontracting - ineligible costs Subcontracting Indicative list of ineligible costs Costs based on activities implemented before the starting date of EUROfusion Costs based on activities implemented after the date of project closure Deductible VAT Indirect costs Costs that are invoiced to a third party and therefore not definitely and genuinely born by the beneficiary Costs resulting from subcontracting between beneficiaries (not allowed in the same Grant Agreement)
Excursus - other third party support Four additional types of third party support Art. 10, 11, 12, 14 Beneficiaries are expected to have all resources to implement their share of the action themselves. As an exception they may involve third parties. All legal entities involved in the action by providing external support without having signed the Grant Agreement are called third parties. In addition to call upon subcontractors, EUROfusion beneficiaries may: a) b) purchase goods, works or services (Article 10), call upon linked third parties (Article 14) c) use in-kind contributions provided by third parties against payment (Article 11) d) or free of charge (Article 12) to carry out work under the action and declare these costs for the action.
Third Party Involvement - Overview Types of third parties Implement action tasks Provides resources or services CHARACTERISTICS What is eligible? Must be indicated in Annex 1 Indirect costs Selecting the third party Articles Subcontractors YES NO PRICE YES NO Best value for money, avoid conflict of interest 13 Contractors NO YES PRICE NO YES Best value for money, avoid conflict of interest 10 Linked Third Parties YES NO COSTS YES YES Must be affiliated or have a legal link 14 In-kind Contributors NO YES COSTS YES YES Not used to circumvent the rules 11 & 12
Excursus - other third party support Subcontracting versus a) purchase of works and services Art. 10 Subcontracting (Article 13 GA) Works and services (Article 10 GA) implementation of action tasks no implementation of action tasks but necessary for their accomplishment action tasks must be described in tasks not described in Annex 1 Annex 1 but simplified approval procedure costs are to be declared as Direct Costs are to be declared as costs of subcontracting Other direct costs no indirect costs 25% indirect costs best value for money, if appropriate, lowest price beneficiaries remain fully responsible for the work carried out by third parties.
Excursus - other third party support b) Linked Third Parties (LTP) Art. 14 Affiliated entities or entities with a legal link to a beneficiary can be linked third parties. Entities with a legal link refers to an established relationship (between the third party and the beneficiary), which is: not based on a contract for the purchase goods, works or services and a legal relationship. This may be either a legal structure (e. g. JRU) or implemented through an agreement or contract (not limited to the action). The beneficiary remains responsible towards the Commission for the work carried out by the LTP. Moreover, the beneficiary is financially responsible for any undue amount paid by the Commission as reimbursement of costs of their LTP.
Excursus - other third party support b) Linked Third Parties (LTP) Art. 14 Additional characteristics of linked third parties: LTPs must be named in Article 14 of the GA. Their tasks and estimated costs must be identified in Annexes 1 and 2 (already at the moment of the GA signature or added later, through an amendment). Work is usually carried out independently and on the LTPs own premises. Beneficiaries must ensure that their GA obligations under Articles 18, 20, 35, 36 and 38 also apply to their LTPs. LTPs claim their own costs (all cost categories, including indirect costs at the 25% flat rate). No profit margin allowed!
Excursus - other third party support When no affiliation or established legal link exists, third parties can still provide external support (e. g. seconded staff, laboratory space, machines etc.) in the following forms: c) in-kind contributions provided by third parties against payment Art. 11 Use of in-kind contribution against payment Third parties contributing in-kind make available some of their resources to a beneficiary without this being their economic activity. Third parties and their contributions are set out in Annex 1. Eligible costs are the amounts that the beneficiary pays to the in-kind contributors within the limit of the third party s costs (no profit margin allowed!) Indirect costs (25 % flat-rate) of the third party are: either not taken into account if used in the premises of the beneficiary, or taken into account if used in the third parties premises
Excursus - other third party support When no affiliation or established legal link exists, third parties can still provide external support (e. g. seconded staff, laboratory space, machines etc.) in the following forms: and d) in-kind contributions provided by third parties free of charge Art. 12 Use of in-kind contribution free of charge Third parties contributing in-kind make available some of their resources to a beneficiary without this being their economic activity. Third parties and their contributions are set out in Annex 1. The beneficiary may declare costs of in-kind contributors provided free of charge within the limit of the third party s costs. Costs must be included in the in-kind contributor s accounts. They must be declared as receipts of the project. Indirect costs (25 % flat-rate) of the third party are: either not taken into account if used in the premises of the beneficiary, or taken into account if used in the third parties premises