In the budget for a Horizon Europe application (and in a subsequent project), costs are distributed across several Budget Categories, each with specific rules and conditions for eligibility.
Overall, the budget is divided into two main categories:
- Direct costs (personnel costs, subcontracting, procurement, etc.)
- Indirect costs (rent, heating, electricity, etc.)
The total budget is specified in Part B of the application, where the applicant also states the requested EU funding.
Direct Costs
Direct costs can be directly attributed to the project and are expenses incurred in connection with project implementation.
Personnel Costs
Personnel costs often represent a significant portion of the project budget and cover gross costs such as salaries, pensions, and health insurance. This includes:
- Calculation of daily rate:
Costs are calculated based on a daily rate, determined by dividing the annual personnel costs by 215 days, which is the maximum number of billable days per person per year. - Time registration and approval:
Hours and days allocated to a specific Work Package (WP) in the project must be recorded in a time-registration system and approved monthly by a supervisor. - Fixed daily rate for SME owners:
Small and medium-sized enterprise (SME) owners who do not receive a salary can apply a fixed daily rate. - Personnel Unit Cost (PUC):
A fixed pre-calculated daily rate that must be used for all participants from the same unit. This rate is calculated based on all employees within the unit and cannot be updated during the project.
Subcontracting
If necessary, limited parts of the tasks in a Horizon Europe project can be outsourced to Subcontractors. These costs must be included in the budget.
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Purchase Costs
Purchase costs cover:
- Travel and accommodation expenses, which must be necessary for project implementation and comply with the organisation's travel policy.
- Equipment, machinery, infrastructure, etc. Only depreciation costs incurred during the project period can be reimbursed, and only for the time the equipment is used for the project.
- Leasing costs, provided they follow standard practice and do not exceed the purchase cost.
- Other goods and services, such as translations, Open Access publications, and licenses.
Indirect Costs
Indirect costs – also known as overheads – are costs that cannot be directly linked to project work but still contribute to its implementation.
These costs typically include:
- Rent
- Internet
- Heating
- Electricity
- Phone bills
They are automatically calculated as a fixed rate of 25% of the eligible direct costs, except for subcontracting and other categories that already include indirect costs.
Eligible Costs
Regardless of whether the costs are direct or indirect, they must be eligible according to EU regulations. Otherwise, they will not be reimbursed.
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Budget Adjustments
The budget is an estimate, and during the project, it may be necessary to adjust the budget. It is therefore possible to transfer budget funds between budget categories (already existing in the budget) and also between participants. Usually, this can be done without amending Annexes 1 and 2 of the Grant Agreement, but remember to explain the change in the reporting. If the transfer constitutes a significant change, Annexes 1 and 2 must be amended accordingly. This applies, for example, if one partner takes over a task - a Work Package (WP) - from another partner.
Please note that while budget adjustments may be possible, it is not possible to increase the total EU grant amount.