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8 common mistakes in Horizon Europe projects and how to avoid them

The old rule says that it is best to learn from the mistakes of others. Find out what pitfalls you can encounter during project implementation and what to do to avoid errors and not lose money from your Horizon Europe grant.

  1. Random purchases without following any rules

The compliance with the “best value for money” rule is one of the main requirements for cost eligibility. You should be able to confirm best price-quality ratio for the purchases made within the project.
This does not mean that you must collect several offers for every purchase. Nor does it mean that you are obliged to select the lowest price. What you must do is to follow your internal rules regarding procurement of goods or services and these rules must ensure that the price is market value.
This is particularly important for expenses incurred on subcontracting. In most cases these are high-budget costs, so if they are challenged it can cause a major risk for the project.

What can be done to avoid such risks?

Establish clear rules regarding competitive selection procedures (for example in a form of a company purchase policy) and follow them during the project lifetime.
Also, in case of subcontracting, don’t forget to double-check the provisions of your Grant Agreement (GA) and its Annex 1. The subcontractor selection procedure, or at least the general rules that you plan to follow, should be already described in Annex 1 to the GA.

  1. Full cost of equipment instead of depreciation

When you plan the project budget and you need to buy any equipment, infrastructure or other assets, keep in mind that in principle only depreciation costs can be charged as eligible, not the full purchase cost.
Check with your accountant how your equipment is amortised and include only the depreciation expenses for the period and in the proportion used for the HE project.
If you want to read more on special cases when the full purchase cost can be charged, check here.

  1. Trips without evidence

During the project implementation you meet your partners, contractors and potential clients and the related costs can be also refunded by the HE grant.
But how to prove that the travel was necessary and strictly related to the project, especially when the question is asked by an auditor at the end of the project and the travel took place 2 years ago?

As always, it’s better to be prepared in advance. Ask every person traveling within the project to keep the proof. Depending on the type of travel, this can include: agenda of the participated conference, presentation if you were a speaker, brochures, flyers. It’s also worth taking some pictures, for example of your company’s stand at trade fairs where you were promoting the project results.
If you are just meeting your collaborator or contractor, you can prepare a short note describing the purpose of the meeting.
Yes, it requires some additional work, but can also save a lot of time during the mandatory audit of the project.

  1. Deductible value added tax (VAT) charged to the project

In most cases, when you buy goods or services, you can recover the VAT under your national VAT system.  Consequently, the value added tax is an ineligible cost and cannot be claimed against the grant. Otherwise, it would mean double funding (you would recover it under the grant and from the tax authority).
Therefore, in principle, only net amounts can be charged to the HE projects.
Conversely and in rare situations, if the VAT is not deductible under the national VAT system (i.e. you have no right to recover it) then it can be an eligible cost. Always double check with your accountant to avoid any mistakes.

  1. Personnel costs without any time recording system

You must keep evidence for all direct costs incurred within the project. In case of documents from your contractors, such as invoices, it seems to be obvious, but what about registering the time that your team spends on the HE project?
Well, you also need proof.
For each person whose costs are charged within the personnel costs you should have a separate document including information on the time spent on the project (hours or days) each month. This document must be signed monthly by the person working on the project and the supervisor (this can be done manually or electronically).

  1. Same work included in different public funded projects

You managed to win different competitions and now you have a few ongoing projects funded by public grants.
This is something to be proud of but remember, if a person working on the HE project is also involved in other activities funded by public money, you must register the time s/he dedicates to all the projects.
By doing so, you can properly apply the EC rules and avoid double-funding of your personnel by different grants and in consequence, rejection of ineligible costs.

  1. Only net salary included in the costs

You are free to choose who will be in the project team – employees or freelancers.
In case of persons working under employment contract, the eligible personnel costs are limited to salary, social security contributions, taxes and other costs linked to the remuneration, if they arise from national law or the employment contract.
Unfortunately, sometimes the social security costs paid by the employer are overlooked and not charged against the grant. This way your company can lose money by showing lower costs than it actually incurred.
Double check if you included all the mandatory personnel costs paid by employee and employer.

  1. Bonuses with subjective criteria

The eligibility of bonuses is strictly limited by the EC rules. Bonuses paid based on subjective criteria, commercial or fund-raising targets cannot be charged under the grant.
However, in some cases it is possible to include them as eligible costs, for example in the case of 13th salary, holiday payments or bonuses based on seniority.
Nevertheless, these should be treated as exceptions and always carefully checked against the EC rules.

When carrying out your project, do not forget the above points, so that the technological success is not overshadowed by problems related to HE compliance.
If any of the above problems sounds familiar and you are looking for the best solution, please feel free to contact us at hello@getpolite.eu.
Don’t be shy – we are Polite!

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