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
Personnel
General Eligibility Conditions
‘Overheads’
Mobility
Subcontracting
Other Direct Costs
Travel
Equipment
Goods & Services
Specific Eligibility Conditions
Eligibility of direct costs
Direct Costs
Actual Costs
General Eligibility Conditions
Personnel
Subcontracting
Other Direct Costs
Travel
Equipment
Goods & Services
Specific Eligibility Conditions
Eligibility of direct costs of subcontracting
Direct Costs
Actual Costs
Subcontracting
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
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
»» 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
OK
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
Specific eligibility conditions for direct costs of subcontracting:
»» costs incurred for subcontracting of action tasks described in Annex 1
»» 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)
b
OK
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
4
2, 1
1
,
1
1
,
rt. 10
A
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) purchase goods, works or services (Article 10),
b) 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
Subcontractors
CHARACTERISTICS
Implement
Provides
Must be
Indirect Selecting the third
What is
action
resources or
indicated in
Articles
eligible?
costs
party
tasks
services
Annex 1
YES
NO
PRICE
YES
NO
Best value for
money, avoid
conflict of interest
13
10
14
Contractors
NO
YES
PRICE
NO
YES
Best value for
money, avoid
conflict of interest
Linked Third
Parties
YES
NO
COSTS
YES
YES
Must be affiliated
or have a legal link
YES
Not used to
circumvent the
rules
In-kind
Contributors
NO
YES
COSTS
YES
11 & 12
Excursus - other third party support
Subcontracting versus a) purchase of works and services
Subcontracting (Article 13 GA)
»» implementation of action tasks
»» action tasks must be described in
Annex 1 but simplified approval
procedure
»» costs are to be declared as “Direct
costs of subcontracting”
»» no indirect costs
Art. 10
Works and services (Article 10 GA)
»» no implementation of action tasks but
necessary for their accomplishment
»» tasks not described in Annex 1
»» Costs are to be declared as
“Other direct 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