When preparing your proposal for a Horizon Europe grant, one of the most important steps in the process is the project budget. To well establish the budget, one must be aware of the detailed workflow, timeline, activities, and the volume of work to be engaged. But you also should know which categories of costs you can allocate to your Horizon Europe project funded by the European Commission.
In this special series of posts carefully prepared by NETO Innovation team, we will detail the categories of eligible costs in Horizon Europe as well as the calculation methods whenever needed. In this second post, we will focus on travel and equipment costs.
What are the eligible costs in Horizon Europe?
Your estimated budget is based on the estimated eligible costs and must be annexed to the Grant Agreement. The estimated eligible costs are of high importance to define the maximum possible grant amount of the action. All allocated costs must be identifiable and verifiable. To be eligible, all costs must meet the eligibility conditions of Article 6.1 of the Annotated Grant Agreement[1]. Under Horizon Europe, 5 categories are considered as eligible costs:
Personnel cost,
Subcontracting cost,
Purchase cost,
Other costs,
Indirect costs.
After a first article focusing on personnel costs, we will focus, in this post, on 2 types of purchase costs – Travel and Equipment. The other goods under direct costs and the remaining 3 categories (subcontracting costs, other costs, and indirect costs) will be investigated in future posts.
Purchase costs:
This type of costs is detailed in Article 6.2.C of the annotated grant agreement (AGA). The purchase costs must be directly related to the activity (project) and purchases must be realized over the duration of the project.
This covers the following three sub-categories:
Travel, accommodation and subsistence.
Equipment.
Other goods, works or services, if necessary to implement the action.
In the following we will detail the first two categories: (1) Travel and (2) Equipment. Other goods, works, and services, will be the subject of a future post.
Travel, accommodation and subsistence
As specified in the title, this category covers the following purchases: travel, accommodation, and subsistence.
Travel costs:
These costs must follow the below criteria[2]:
Travel must be carried out by the most economical and direct way.
Economy class fairs are used for the analysis of air travel costs and air travels are only accepted for distances above 400 km.
For other modes of transport, costs are analysed versus the first-class rail fare.
All receipts, tickets, and boarding passes must be kept as supporting evidence to the purchase travel cost.
Daily Subsistence Allowances (DSA):
Daily Subsistence Allowances (DSA) are paid for accommodation. They include the following costs:
Breakfast and two main meals.
Local transport.
The cost of telecommunications.
The DSA rate depends on the country (table below):
The DSA total amount depends on the duration of the journey:
Less or equal to 6 hours: reimbursement of actual costs (on production of supporting documents);
More than 6 hours up to 12 hours inclusive: 0.5 DSA;
More than 12 hours up to 24 hours inclusive: 1 DSA;
More than 24 hours up to 36 hours inclusive: 1.5 DSA;
More than 36 hours up to 48 hours inclusive: 2 DSA;
More than 48 hours up to 60 hours inclusive: 2.5 DSA, etc.
Hotels costs:
Regarding the hotel purchase cost, the maximum price per night is dependent on the destination and is given in the table below.
In Horizon Europe, if provided in the Grant Agreement, beneficiaries can charge the actual costs incurred for travel.
Equipment:
In HE, equipment is subject to depreciation. Purchases of equipment, infrastructure or other assets for the action must, then, be declared as depreciation costs in Horizon Europe. The costs are declared as actual costs and must be considered as direct cost in the beneficiary usual practice.
These costs are calculated on the basis of the costs actually engaged and must comply to the international accounting standards and to the beneficiary’s usual accounting practices. Only the portion of the costs that corresponds to the rate (percentage) of actual use for and over the action duration can be considered.
Costs for renting or leasing equipment, infrastructure or other assets are also eligible, if they do not exceed the related depreciation costs and do not include any financing fees.
These costs must comply to the following eligibility conditions:
Costs incurred during the action duration.
Necessary to the action.
Related to the action.
Identifiable, verifiable, and recorded in the beneficiary account.
Compliant with the beneficiary’s usual accounting practices and with international accounting standards such as the International Financial Reporting Standards (IFRS), IAS 16 (International Accounting Standards)[3], etc.
Specific cases:
Low-value asset:
The full cost of a low-value asset (such as small equipment) may be eligible in the year of its purchase if:
The full cost is recorded in the accounts of the entity as expenditure of that year (i.e., not recorded as an asset subject to depreciation).
The cost of the asset is below the low-value ceiling as defined under national law (e.g., national tax legislation) or other objective reference compatible with the materiality principle. For example, in the French tax legislation, small equipment and tools with a unit value excluding taxes not exceeding 500 euros, are not be subject to depreciation[4].
The item is used exclusively for the action in the year of purchase. If the item is not used exclusively for the action in the year of purchase, only the portion used on the action may be charged.
Equipment bought before the action starting date:
Depreciation costs for equipment used for the action and bought before the action starting date are eligible if they are compliant to the eligibility rules cited above and detailed in Article 6.1(a) of the Annotated Grant Agreement[1]. The remaining depreciation costs (the equipment has not been fully depreciated before the action’s start) may be eligible for the portion corresponding to the action duration and to the percentage of actual use for the purposes of the action.
Charging full capitalized costs:
In Horizon Europe, if specified and provided in the grant agreement, equipment can be declared as:
1. Full capitalized cost (related to the full purchase cost or the full development cost) if they are recorded as assets in the beneficiary’s balance sheet.
2. A mix of depreciation and full costs for listed items. The items to be declared in full costs must be provided in the grant agreement.
Are you interested in project financial management topics? We are preparing a series of posts about eligible costs in Horizon Europe. Subscribe to NETO Innovation website to receive these posts directly in your inbox.
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References:
[1] Annotated Model Grant Agreement – EU Funding Programmes 2021 – 2027 / Pre-Draft November 30th, 2021
[2] Annexe II – Financial Guidelines