A quick overview and guidance on costs
As a general rule in Horizon 2020, the company is expected to have all the necessary resources to carry out the majority of the work in the project. Nevertheless, the SME can involve external support if necessary for project implementation.
Entities providing external support are called “third parties”. Such support should be justified and mentioned in the Grant Agreement to be accepted by the EC.
What are the third parties in H2020 projects?
Third parties may undertake tasks or part of the tasks within the project. They can allocate their own resources to the project or supply goods/services for the project.
However, they do not sign the Grant Agreement with the European Commission. And neither they do not receive direct payments from the EU. This means that the beneficiary is fully responsible for the work carried out by the third party.
Nevertheless, as with the beneficiary, third parties are also subject to controls by EU agencies.
Possible third parties
There are four types of third parties in Horizon 2020 projects:
If you need additional help or equipment to implement the project, , you can be supported by contractors. Contractors can provide goods, work or services. For example you may need to buy software, prototype elements or hire machines.
In Horizon 2020 these costs are budgeted and reported as “other direct costs”. In the process of selecting a contractor you have to prove ‘the best price-quality ratio’.
If you are not able to accomplish all necessary project activities, these may be assigned to subcontractors. Subcontractors carry out project tasks (part of the task) defined in proposal independently. The tasks to be subcontracted and estimated costs must be mentioned in the Grant Agreement. The respective costs have to be indicated in the project budget as “subcontracting”.
The price of subcontracts includes a profit margin; thus H2020 beneficiaries have to choose such subcontractors in a tendering process following the best value for money rule.
Be aware that subcontracting affiliates is not allowed.
- LINKED THIRD PARTIES
Part of the project work can be delegated to affiliated entities. For example contractors with a legal link to your company (same legal structure, relationship between board members etc.).
Such linked third parties are allowed to carry out work for the project independently (like subcontractors). But unlike subcontractors, linked third parties claim only their own (actual) costs for the work they perform. They cannot include any profit margin.
Additionally, linked third parties and their tasks must be identified in the GA. Although they do not sign the GA, they must be eligible for funding by Horizon 2020. They are therefore treated for many issues like beneficiaries, for example they declare their own costs in their own financial statement.
- IN-KIND CONTRIBUTORS
Third parties which makes only in-kind contributions to the project but do not implement project tasks themselves are called in–kind contributors. In-kind contributions include for example personnel, equipment, research infrastructure, laboratory space etc.
Unlike the linked third party, in this case there is no legal relationship between the beneficiary and the third party.
In-kind contributions can take the following forms:
- in-kind contributions against payment –you can declare costs related to the project but only the cost actually incurred by the third party. Third parties are not allowed to make a profit.
- in-kind contributions free of charge – when a third party provides resources that are not invoiced and available for free to the beneficiary. In this case, there is no payment for third party and there is therefore NO cost incurred by the beneficiary.
If In-kind contributions provided free of charge is used for project (not for the company in general) are considered as “receipts”.
If you are still lost and do not know how to claim third parties costs in your H2020 project, contact us at email@example.com