Budgeting

When budgeting your Horizon 2020 application, pay attention to the different expense categories. Here you can read about the different types of expenses, rules for third parties and regulations for the use of already existing equipment in the project, as well as how to transfer within the budget.


Budgeting in Horizon 2020-applications

The budget in a Horizon 2020 application is an estimate of i.a.:

  • Direct costs (staff charges, costs for outsourced assignments, as well as other direct costs)
  • Indirect costs.

The total budget corresponds to the amount covered in Part A of the application.

Direct Costs

Direct costs are the costs which can be ascribed directly to the project and are spent in relation to the completion of the project. The direct costs cover:

  • Staff charges
  • Outsourced assignments
  • Other direct costs (e.g. travel, auditor’s report, translations, services, purchase of materials etc.)

Staff Charges and Recording of Hours

When budgeting, it is important to make sure that the actual hourly wage rate is calculated -  not consultant charges. Staff charges in the budget need to include an estimate of the payroll costs for scientific and administrative employees involved in the project.

Be aware that you can only report the hours you are able to document. Therefore each employee needs to register the hours spent on a specific work package (WP) during the project. It is important to be meticulous with the recording of hours as missing recordings can result in a claim a partial or total repayment of the EU-funding.

Outsourced Assignments for Third Parties/Subcontracting

As a rule, work in the project should be carried out by the project partners, but in some cases third parties can contribute to the project. These parties will be paid directly by the project partners, and the partners will report to the EU afterwards. The expenses for this needs to be part of the budget.

It is important to invite competing offers, as it needs to be documented that third parties have been selected based on a ‘best value for money’ practice. Otherwise, the EU might claim a partial or total repayment of the EU funding- .

Existing Equipment

Costs for equipment, inventory, facilities, machines and other matters used in the project can be eligible for funding. It is only the write-off periods within the project period which can be settled with the EU, and only the time in which the equipment in question is used in the project. This means that if e.g. a machine is used to other assignments 40 % of the time, it is only 60 % which can be budgeted and afterwards accounted for in the project. Remember to document with log books.

The duration of the equipment’s write-off period is determined in accordance with the institution’s/company’s normal accounting-practice and Danish law.

Indirect Costs (Overhead)

The indirect costs (also called overhead) are costs, which cannot be directly ascribed to work done in the project. These costs often cover e.g. rent, internet, heat, telephone and electricity. A flatrate on 25 % of the reported direct costs are automatically calculated as EU-grant to the grantees' indirect costs (subtracting excluded)

Transfer of Budget During Project Completion

The budget is an estimate. It is allowed to transfer budget between budget-categories and between partners. Often this can be done without needing to change in Annex 1 and Annex 2, but only accounting for the changes in the reporting. Annex 1 and Annex 2 will need to be changed however if the transfer is a substantial change, such as a partner undertaken a work package (WP) from another partner or if a new subcontractor is introduced.

Cost Eligible for Funding

Regardless if the costs are direct or indirect, the costs need to be eligible for funding in the eyes of the EU. If not, the costs will not be covered. When presenting accounts and composing reports on the project, only costs which meets the following requirements can be included:

  • Costs need to be real. This means no estimates, budget-numbers or additions.
  • Costs need to be defrayed by the grantee. This means that it is the grantee who has defrayed the costs.
  • Costs need to be defrayed in the project period. This means that the cause of the costs needs to be within the project period.
  • Costs need to be part of the budget.
  • Costs need to have arisen in connection with the work described in the application and need to be necessary for the completion of the work.
  • Costs need to be identifiable and verifiable. Especially, costs need to be registered in the grantee’s accounts, corresponding with national accounting regulations and with the usually accounting- and administrative principles for the grantee.
  • Cost need to fulfill valid, national regulations (taxes, working conditions and social security)
  • Costs need to be fair, just and in correspondence with healthy, economic sense, especially regarding thrift and efficiency.
FAQ about budgeting

Read more about budgeting in the European Commission's FAQ

last modified Apr 24, 2019