Every project has its own particular needs and costs, but there are a few guidelines to determine if a cost is eligible. In general, eligible costs correspond to tasks agreed on in the Grant Agreement. All costs must be actually incurred, identifiable, verifiable and recorded in the accounts.
The main cost categories in projects are:
Personnel represent the majority of the project’s budget. The calculation methods and eligibility rules are complex, calculated for every person working for the project on the basis of employment or service contract (natural person with direct contract).
In general, the cost per person is calculated by multiplying the hourly rate by the number of hours they work on the project, documented by a time-recording system. In principle timesheets are used for this purpose. Different calculation options, many various exceptions and case-by-case can cause a lot of headaches. Consequently, it is the most common category for potential mistakes and errors.
Cost of services to implement a specific task described in the proposal. Only a limited part of the action may be subcontracted and included in the project budget. Beneficiaries must choose subcontractors on “best value for money” competitive selection procedures, requesting several offers.
Other direct costs
Goods, work or services to support the beneficiary in implementation of the project tasks, divided into three categories:
– Travel – all travel related to the project (to events, conferences, to meet potential clients and partners, related to the technical work etc.)
– Equipment – the depreciation costs over the life of the project or cost of renting or leasing equipment
– Other goods and services – materials, consumables, dissemination and communication activities, costs of IPR, audit certificate on the financial statements etc.
A fixed amount for overhead, calculated as 25% of the personnel and other direct costs. Indirect costs do not need supporting evidence (accounting documentation) because they are declared using a flat rate.
It is possible that the budget does not include all these categories, but new categories not included in the proposal can be added. The budget can be also transferred between cost categories during project execution. This does not require an official amendment if the action is implemented according to the plan and Grant Agreement.
In Horizon 2020 the funding rate for Innovation Activities is 70% of total eligible costs. The maximum EC contribution cannot be exceeded. Reported costs can include VAT when it is non-refundable for the legal entity.
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