Th i s p r og r am m e i s co - f i nanced b y the Eur op ean R eg i ona l D ev e l op m ent Fund .

Eligibility rules, financial flows

and financial control

Applicants seminar | Munich | 21-22 June 2016 Magdalena

Friedwagner-Maislinger

MA

Financial flows

2

European Commission

Managing Authority/Certifying Authority

Lead Partner

Service provider

= ERDF co-funding

= national funding

JS

services, invoices

payment

1st level control

progress report and certifications

Project Partner

Partner State 1 2

5

4 7

6

partner reports incl.

certifications of expenditure

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3

Managing Authority

JS

Certifying Authority Audit Authority/GoA

Auditor

ACP

= On the spot audits of the EC to verify the functioning of the system => THIRD LEVEL

= Check of all expenses and certification of eligible ones => FIRST LEVEL

= Audits on operations, sample check => SECOND LEVEL

=> TO ENSURE THAT ONLY ELIGIBLE EXPENSES ARE CO-FUNDED

(=PROPER USE OF FUNDS)

European Commission

first level controller Project Participant

Financial control

The eligibility rules

• Based on the new legal framework

especially • Regulation (EU) No 1299/2013

• Regulation (EU) No 1303/2013

• Commission Delegated Regulation (EU) No

481/2014

• Working with simplified cost options (such

as lump sums, overheads and flat rates)

• Harmonised with other ETC programmes

• Considering experiences made in the past

• Agreed among all Member States

• Relevant for all project participants of the

programme’s Member States Austria,

France, Germany, Italy and Slovenia

• Basis for first level control

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Structure of the eligiblity rules

General principles of eligibility

Detailed rules concerning the budget lines

• Staff costs

• Office and administration expenditure

• Travel and accommodation costs

• External expertise and services costs

• Equipment expenditure

Ineligible expenses

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General principles of eligibility

• Expenditure

• shall be essential and additional,

• must comply with the principles of efficiency, economy and effectiveness,

• shall be based on real costs (except for specific cases such as flat rate, lump sum or

depreciation),

• shall be supported by invoices and proofs of payment.

• Expenditure related to contracts between project partners cannot be co-funded.

• Double financing shall be excluded.

• Expenditure of organisations contracted via in-house procurement can be

considered eligible as long as based on verified actual, eligible costs without any

additional fees charged.

• Revenues generated must be deducted from the total eligible costs.

• When applicable, the relevant public procurement procedures need to be observed.

• Any conflicts of interests shall be avoided.

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General principles of eligibility

• Only expenses incurred on the level of the respective project participant within

the eligible period are eligible.

Pre project phase (project preparation): A lump sum of EUR 20.000 for total eligible

costs (corresponding to maximum EUR 17.000 ERDF) is granted if the project is

approved.

Project implementation: Costs related to the project implementation and incurred

between the project start date and the project closure date are eligible if following the

eligibility rules.

Post project phase: comprises all activities related to the final winding-up of the project

(e.g. FLC, submission of the final report). Only costs related to the first level control of the

last reporting period are eligible. 7

Staff costs

• Staff costs cover gross employment costs of staff members employed by the project

partners and working full or part time on the project in line with their respective

employment contracts.

• Staff costs of the project partner can be co-financed by the programme on the basis of:

• Real costs

• 20 % flat rate of the direct costs reported under the budget lines “travel and

accommodation costs”, “external experts and services costs” and “equipment

expenditure”.

• Each project partner shall decide on whether to apply the real costs or the flat rate

principle in the project application phase. Its choice is valid for all staff members of the

project partner and it cannot be modified during the entire project duration.

• Be aware that the concept of in-house consultant (as defined by H2020) is not applicable

to Interreg Alpine Space

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Staff costs - real costs method

Eligible are the salary including overtime (provided it is paid out) and any other costs linked to

the salary such as employment taxes and social security contributions which have to be borne

by the employer if they are stated by law and not recoverable by the employer.

A written assignment to the project needs to be issued for

each staff member. In this document a percentage of assign-

ment has to be fixed (corresponding to tasks, responsibilities

and outputs defined). This percentage remains applicable for

the entire duration of the assignment (amendments to the as-

signment only in exceptional and well justified cases).

The staff costs must be calculated individually for each staff member. Depending on the extent

of assignment to the project the following calculation method applies:

• Full time assignment on the project: 100% of the gross employment costs are eligible (as long as

they are in line with the general principles outlined above).

• Part-time assignment on the project – fixed percentage of time: The gross employment costs

multiplied by the fixed percentage of time worked on the project is eligible (percentage shall be fixed

in project assignment).

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Staff costs – flat rate option

• The staff costs are calculated as a flat rate of 20% of the project partner’s direct costs

other than staff costs.

• The eligible amount for staff costs is thus equal to 20% of the total eligible amount

declared under the following budget lines:

• Travel and accommodation costs,

• External expertise and service costs,

• Equipment expenditure.

• If the beneficiary opts for the flat rate financing of direct costs, no direct staff costs can be

claimed.

• When the 20% flat rate option is applied, it has to be proved that the project partner has

at least one employee (e.g. by providing a registration at the social insurance agency).

Project partners do not need to document that the expenditure has been incurred and

paid.

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Office and administration expenditure

• Office and administration expenditure covers operating and administrative

expenses of project partners (such as office rent, utilities, office supplies, IT

systems, communication, bank charges).

• For office and administration expenditure a flat rate of 15% of the reported

staff costs can be granted. No direct costs can be considered eligible.

• The list on cost items covered by office and administration expenditure stated in

the delegated act is exhaustive. All listed items are to be considered as covered

by the flat rate and cannot be reimbursed under any other budget line.

• Project partners do not need to document that the expenditure has been

incurred and paid.

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Travel and accommodation costs

• This budget line covers travel and accommodation costs (i.e. travel costs, costs of meal,

accommodation costs, visa costs and daily allowances) of project partners that relate to

project activities.

• This budget line follows the real costs principle.

• Only travel and accommodation costs of the following staff members shall be eligible:

• responsible person and contact person indicated in the AF and their officially

designated substitutes (in case of applying the flat rate for staff);

• responsible person and contact person indicated in the AF and their officially

designated substitutes as well as the staff members officially assigned to the project

for the period in question (in case of applying the real costs principle for staff costs

calculation).

• Please consider the principles to be obeyed as laid down in the eligibility rules (including

indicative daily rates for hotel and maximum daily subsistence allowances).

• Travel and accommodation costs of observers or external experts are ineligible under this

budget line (to be reported under external expertise and service costs).

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External expertise and service costs

• This budget line covers expenses related to professional services and expertise provided by

external service providers (other than the PP) contracted to carry out certain activities linked

to the delivery of the project.

• This budget line follows the real costs principle.

• Please consider the principles to be obeyed as laid down in the eligibility rules.

• As regards the procurement of services the following is regulated:

• Beneficiaries which fulfil the definition of a contracting authority according to the relevant national

procurement legislation have to respect these public procurement rules and properly document the

procurement procedure.

• All other beneficiaries must ensure adequate market research for contracts with a value higher than

EUR 5,000 excluding VAT. For purchases with an estimated contract value of EUR 50,000 net and

more, a call for offers must be published on the programme´s dedicated website allowing interested

companies appropriate time to file an offer (at least two weeks). The purchase process must be

documented using a form provided by the programme.

• Expenses based on contracts concluded and payments effected between PP or PP and

observers are ineligible.

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Equipment expenditure

• In this budget line equipment purchased, rented or leased by a PP, other than those covered

by the office and administration budget line, shall be reported. Equipment is limited to the

items listed in the eligibility rules (such as office equipment, IT hard- and software, furniture,

laboratory equipment, tools or devices).

• This budget line follows the real costs principle.

• Please consider the principles to be obeyed as laid down in the eligibility rules.

• Equipment can only be co-financed if it is necessary for the project implementation or if is

considered as a project output (to be detailed in the AF) • An equipment necessary for the project implementation is a tool or device used to carry out project activities. It

must be necessary for the delivery of the project and used for that purpose. The full purchase price is eligible if used

solely for the purpose of the project and depreciable within the eligible period. Otherwise a pro-rata needs to be

calculated on the basis of a justified and equitable method.

• An equipment considered as a project output (small scale investment) is a tool or device that remains in use by the

target group after the completion of the project. Such equipment may be approved by the Programme Committee

provided that the transnational benefit is well justified in the application form. The full purchase price is eligible.

=> In most cases only the depreciation costs will be co-financed.

• Equipment is eligible only if listed in the approved AF and not covered by the office and

administration costs (e.g. the IT system of a PP is covered by the overhead for office and

administration while any IT system developed for the project specifically is not).

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Ineligible expenses

Non-exhaustive list of ineligible expenditure:

• VAT unless it is genuinely and definitely borne by the project partner;

• interests on debts;

• exchange rate losses;

• national banking charges;

• housing (residential building, domestic architecture);

• purchase of land;

• fines, financial penalties and expenditure on legal disputes and litigation;

• contributions in kind (provision of land, real estate, equipment, unpaid voluntary work…);

• gifts;

• any costs incurred before project approval and after project closure (except the costs related to the first level

control of the last reporting period);

• expenditure already funded in total with public funds;

• communication material that is not in line with the programme rules on communication;

• tips;

• fees between beneficiaries of the same project for services, supplies and work carried out within the project;

• costs related to the contracting of employees of the partner organisations as external experts (e.g. as freelancers).

As the list of ineligible expenditure is not exhaustive, expenditure not listed should not be necessarily considered as

eligible.

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Th i s p r og r am m e i s co - f i nanced b y the Eur op ean R eg i ona l D ev e l op m ent Fund .

Skrt, Primož

JS

Building the budget

Building the budget in the AF

• Via the eMS system

https://ems.alpine-space.eu

• Before starting building your budget:

• Consult carefully the programme eligibility rules

(Factsheet 1.4 “What can be co-financed”).

• Check the Guidance for EoI and AF

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Building the budget in the AF

• STEP 1 – DEFINE BUDGET BREAKDOWN

Define partner budget

• STEP 2 – ENABLE FLAT RATES

• STEP 3 – PROVIDE BUDGET DETAILS

• STEP 4 – ENTER THE PARTNER CONTRIBUTION

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Short EMS walk-through

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Step 1 - EoI

Step 2 - AF

STEP 1: Define the budget breakdown

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• Calculated automatically based on the project start date

• Remember “refreshing” budget breakdown if project start date is changed

Budget periods follow this logic (assuming duration of 36 months):

Period Start date End date Reporting period

0 01.01.2014 19.10.2016 -

1 20.10.2016 30.06.2017 15.09.2017

2 01.07.2017 31.12.2017 15.03.2018

3 01.01.2018 30.06.2018 15.09.2018

4 01.07.2018 31.12.2018 15.03.2019

5 01.01.2019 30.06.2019 15.09.2019

6 01.07.2019 19.10.2019 15.03.2020

Take this into account when building your budget per period!

STEP 2: Enable the flat rates

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• In the tab “Partner budget”, select the relevant project partner and click

on “Define budget”.

• Enable the flat rates

• for administration is pre-set (15% of other budget lines)

• optional for staff costs (20% of all other direct costs)

STEP 3: Provide budget details

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• The budget per partner is displayed in three tables:

• Budget lines / work packages

• Budget lines / period

• Work packages / period

STEP 3: Provide budget details

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Points of attention

• Enter financial figures without any digits after the comma.

• Fill in the budget starting from preparation costs. Lump sum belongs to

period 0. Recommended to allocate it only to external expertise and services.

• Estimate the budget needed to carry out project activities; allocate budget to

the period when they will be paid out.

e.g. workshop on 22 June 2017, costs will only be paid by my organisation

mid-July => costs budgeted in period 2 (not period 1)

• Budget for project management (WP1) to remain reasonable: approx. 15% of

total project budget, in our experience. Should not exceed 20% anyway.

• Equipment (if any) must be either necessary for project implementation or a

project output. To be reflected clearly in the description of the item(s).

• Budget line “infrastructure and works” not to be used (not co-financed by the

programme).

STEP 4: Enter the partner contribution

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• The contribution should be entered once the total budget is filled in

• Please include the source of the contribution, legal status of the

granting institution (private or public) and its amount

• Different sources of contribution are allowed

• Total contribution to be coherent with the “total target value”

STEP 4: Enter the partner contribution

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Final overview of budget tables

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Questions?