Horizon 2020 FAQ

Financial questions resulting from the provisions of the Model Grant Agreement / Consortium Agreement in Horizon 2020

This FAQ is based on the information included in the AGA: Version 5.0, July 3, 2018.

Disclaimer: The answers are drafted by members of the COST Action BESTPRAC based on their understanding and experience as a help to colleagues, but they do not substitute official interpretations by the EC. For other questions please consult also the official FAQ of the European Commission: ec.europa.eu/research/participants/portal/desktop/en/support/faq.html

Personnel costs

fold faq Depreciation of equipment

The AGA states that the beneficiaries may normally only charge the annual depreciation costs that correspond to the part of the equipment’s use for the action. (Version 5.0 3 July 2018; Note: 1.1.4 Full price of an asset in one single year, page 81). If the beneficiary bought the equipment during the action of two years and used it from that point to the end of the action 100% for the action how to calculate the depreciation cost per each reporting period?

Answer:

The beneficiary should calculate the depreciation cost per reporting period taking into account only the period of equipment usage for the  action.

Practical example:

The beneficiary bought a server for EUR 3.000 excluding VAT (total amount including VAT is 3600 euro) in February 2017 for the project which started in January 2017. The server is used for the project  100% of the time from 1 March 2017 until the end of the project in December 2018. The server’s useful life (period of depreciation) is two years (according to the beneficiary’s usual practices), but it has been used for the project for 22 months. The beneficiary uses a linear depreciation (every year the same amount).

In the reporting period ending in June 2017, the beneficiary must declare depreciation costs taking into account the time used for the project and the server’s useful life

RP1

2017 - 4 months (1 March 2017 - 30 Jun 2017)

 

EUR 3.000 x (4/24 months) x 100% (used for the project) = EUR 500 = amount declared for the server in the first reporting period.

RP 2

2017 - 6 month (1 July 2017 - 31 December 2017)

2018 - 12 months (1 January 2018 - 31 December 2018)

In the reporting period ending in December 2018, the beneficiary must declare:

EUR 3.000 x (18/24 months) x 100% (used for the project) = EUR 2250 = amount declared for the server in the second reporting period.

The remaining value of EUR 250 (depreciation value of 2 months) cannot be charged to the project.

 

SUPPLIER INVOICE DATE INVOICE nº DESCRIPTION AMOUNT (INCLUDING VAT) AMOUNT (EXCLUDING VAT) DEPRECIATION DEPRECIATION IN THE PROJECT ALLOCATION TOTAL AMOUNT DEPRECIATED
XXXYYZZZZ 29.2.2017 Rn 10/2017 Dell server  3.600,00 € 3.000,00 € 24 22 100% 2.750,00 €
                   
                   
Category: Other direct costs
fold faq Equipment: Can the beneficiary’s own equipment be an eligible cost (depreciation and service costs)? How will this be claimed?

Answer:

It is allowed to charge the use of beneficiary’s own equipment on the project, provided that the depreciation period has not been completed yet and that only the recorded use for the project is claimed. However, it is not always easy to define the “rate of actual use for the project” of use of equipment for a project. Some organizations have a standardized system for monitoring the usage of equipment (“time sheet for equipment"). Alternatively, the costs are often covered by the beneficiary.

The actual use should be directly measured and the amount of use (percentage and time used) must be auditable.

The idea of full capacity was removed from the AMGA (only applicable for Large Research Infrastructure). So if the beneficiary does not use the equipment exclusively for the action, only the portion used on the action may be charged.

 

Practical example:

Annual depreciation of the equipment is 17.200 €

Under normal circumstances the equipment can be used 1.720 hours per year

However the equipment is actually used only 100 hours per year

Out of which, for the EU action, it was used (according to the records) for 50 hours.

The amount chargeable to the EU action in the year would be:

17.200 € / 1.720 usable hours = 10 € per hour * 50 hours of use for the action = 500 €

In other words, in the example this means that we can claim only 50% of the annual depreciation (50/100 hours) on EU action.

Category: Other direct costs
fold faq Eligibility of equipment maintenance costs: Is maintenance of scientific equipment which is not used exclusively for the action eligible (for e.g.: old equipment already bought before the project that needs small parts to be changed + calibration

Answer: 

Equipment maintenance costs are usually eligible, if acknowledged in accounting books and reflect existing state. Following criteria need to be fulfilled:

  • Such costs are recorded as direct costs in the year of occurrence also in accounting books (not recorded as an asset)
  • Such costs incurred for the duration of the action (some supporting evidence might be welcome e.g. log books)

Difference between existing and new equipment is not evident. Costs that are not directly linked to the project (e.g. maintenance would be necessary irrespectively of who is using the equipment for what purpose) are not eligible.

Additionally, if the equipment is not used exclusively for the action this costs can easily divert from direct to indirect cost if no special rules are valid.

“Full cost” option (reimbursement) is given in AGA, although limited only for “JET” projects (through equipment costs). Parallel full cost option is foreseen for large research infrastructure (through capitalized and operating costs of large research infrastructure), but again with certain limitations.

Category: Other direct costs
fold faq Eligibility of equipment maintenance costs: If maintenance of scientific equipment is eligible shall it be charged as other goods and services or equipment costs?

Answer:

Equipment maintenance costs are eligible if they are not covered by overhead costs according to the usual accounting practices and if they are purchased together with the durable equipment. In this case they can be charged as equipment costs according to AGA Art. 6.2.D.2 1.1.1 

1.1 Equipment costs (D.2): Depreciation costs of equipment, infrastructure or other assets 

1.1.1 What? This budget category covers the depreciation costs of equipment, infrastructure or other assets used for the action. 

In some cases (e.g. infrastructure), equipment costs may also include the costs necessary to ensure that the asset is in good condition for its intended use (e.g. site preparation, delivery and handling, installation, etc.). 

What not? If the beneficiary’s usual practice is to consider durable equipment costs (or some of them) as indirect costs, these can NOT be declared as direct costs, but are covered by the 25 % flat rate for indirect costs (see Article 6.2.E). Any depreciation declared as a direct cost under a H2020 action must be a direct cost under the beneficiary’s cost accounting practices (see Article 6.2.) 

If service contracts are not purchased together with the durable equipment, they should be charged under „other goods and services“ if they follow the general conditions to be eligible set in Art. 6.1.

Category: Other direct costs
fold faq Eligibility of computer costs: Are computers bought for hired staff considered as indirect costs (as in FP7 most of the time but subject to Project Officer interpretation) or are they eligible as direct costs?

Answer:

Discussions about IT Equipment (e.g. desktop computer, Laptops, etc.) should take place at the proposal stage, when the budgets are being finalized. IT equipment is treated the same as in FP7. These are normally costs which should be covered by beneficiary, except for specific circumstances whereby this equipment can be fully justified to the PO to be vital for the completion of the project.

Examples:

  • Individual computers cannot be charged to a project for their total cost, but per their usage and depreciation rates (Version 5.0 - 3 July 2018, page 88 and 689).
  • Use of supercomputers owned by an institution can be internally charged to the project (costs for goods and services which the beneficiary itself produced or provided for the action), if charging the use of a specific research device is something that the institution does for other users. For such a charge to be eligible, a project needs to provide the supercomputer usage rate, costs calculation and confirmation that the same charge is applied to other users (Version 5.0 - 3 July 2018, page 98).
  • The costs of renting or leasing specific computers (including related duties, taxes and charges such as non-deductible value added tax (VAT) paid by the beneficiary) are also eligible, if they do not exceed the depreciation costs of similar equipment and do not include any financing fees (Version 5.0 - 3 July 2018, page 83 and 615).
  • The costs of specific computers contributed in-kind against payment are eligible, if they do not exceed the depreciation costs of similar equipment, do not include any financing fees and if the conditions in Article 11.1 are met (Version 5.0 - 3 July 2018, page 646).
Category: Other direct costs
fold faq Eligibility of travel costs in case of combination with personal travel and travels for other purposes: How to justify such travel costs and in what amount?

Answer:

First, travel costs should meet the following criteria: “it is the usual practice of the beneficiary to pay for such travels (e.g. travels for combining professional and personal reasons)” and “it has been an actual cost for the beneficiary” (page 78, Version 5.0 – 3 July 2018). For the accurate eligible amount, a beneficiary must keep evidence of basic travel costs (“Record keeping – The beneficiary must keep evidence, not only of the actual cost of the return flight, but also of the cost of the flight that the person would have taken if he/she would have returned directly after the end of the work for the action”, page 78, Version 5.0 – 3 July 2018).

Category: Other direct costs

Other direct costs

fold faq Depreciation of equipment

The AGA states that the beneficiaries may normally only charge the annual depreciation costs that correspond to the part of the equipment’s use for the action. (Version 5.0 3 July 2018; Note: 1.1.4 Full price of an asset in one single year, page 81). If the beneficiary bought the equipment during the action of two years and used it from that point to the end of the action 100% for the action how to calculate the depreciation cost per each reporting period?

Answer:

The beneficiary should calculate the depreciation cost per reporting period taking into account only the period of equipment usage for the  action.

Practical example:

The beneficiary bought a server for EUR 3.000 excluding VAT (total amount including VAT is 3600 euro) in February 2017 for the project which started in January 2017. The server is used for the project  100% of the time from 1 March 2017 until the end of the project in December 2018. The server’s useful life (period of depreciation) is two years (according to the beneficiary’s usual practices), but it has been used for the project for 22 months. The beneficiary uses a linear depreciation (every year the same amount).

In the reporting period ending in June 2017, the beneficiary must declare depreciation costs taking into account the time used for the project and the server’s useful life

RP1

2017 - 4 months (1 March 2017 - 30 Jun 2017)

 

EUR 3.000 x (4/24 months) x 100% (used for the project) = EUR 500 = amount declared for the server in the first reporting period.

RP 2

2017 - 6 month (1 July 2017 - 31 December 2017)

2018 - 12 months (1 January 2018 - 31 December 2018)

In the reporting period ending in December 2018, the beneficiary must declare:

EUR 3.000 x (18/24 months) x 100% (used for the project) = EUR 2250 = amount declared for the server in the second reporting period.

The remaining value of EUR 250 (depreciation value of 2 months) cannot be charged to the project.

 

SUPPLIER INVOICE DATE INVOICE nº DESCRIPTION AMOUNT (INCLUDING VAT) AMOUNT (EXCLUDING VAT) DEPRECIATION DEPRECIATION IN THE PROJECT ALLOCATION TOTAL AMOUNT DEPRECIATED
XXXYYZZZZ 29.2.2017 Rn 10/2017 Dell server  3.600,00 € 3.000,00 € 24 22 100% 2.750,00 €
                   
                   
Category: Other direct costs
fold faq Equipment: Can the beneficiary’s own equipment be an eligible cost (depreciation and service costs)? How will this be claimed?

Answer:

It is allowed to charge the use of beneficiary’s own equipment on the project, provided that the depreciation period has not been completed yet and that only the recorded use for the project is claimed. However, it is not always easy to define the “rate of actual use for the project” of use of equipment for a project. Some organizations have a standardized system for monitoring the usage of equipment (“time sheet for equipment"). Alternatively, the costs are often covered by the beneficiary.

The actual use should be directly measured and the amount of use (percentage and time used) must be auditable.

The idea of full capacity was removed from the AMGA (only applicable for Large Research Infrastructure). So if the beneficiary does not use the equipment exclusively for the action, only the portion used on the action may be charged.

 

Practical example:

Annual depreciation of the equipment is 17.200 €

Under normal circumstances the equipment can be used 1.720 hours per year

However the equipment is actually used only 100 hours per year

Out of which, for the EU action, it was used (according to the records) for 50 hours.

The amount chargeable to the EU action in the year would be:

17.200 € / 1.720 usable hours = 10 € per hour * 50 hours of use for the action = 500 €

In other words, in the example this means that we can claim only 50% of the annual depreciation (50/100 hours) on EU action.

Category: Other direct costs
fold faq Eligibility of equipment maintenance costs: Is maintenance of scientific equipment which is not used exclusively for the action eligible (for e.g.: old equipment already bought before the project that needs small parts to be changed + calibration

Answer: 

Equipment maintenance costs are usually eligible, if acknowledged in accounting books and reflect existing state. Following criteria need to be fulfilled:

  • Such costs are recorded as direct costs in the year of occurrence also in accounting books (not recorded as an asset)
  • Such costs incurred for the duration of the action (some supporting evidence might be welcome e.g. log books)

Difference between existing and new equipment is not evident. Costs that are not directly linked to the project (e.g. maintenance would be necessary irrespectively of who is using the equipment for what purpose) are not eligible.

Additionally, if the equipment is not used exclusively for the action this costs can easily divert from direct to indirect cost if no special rules are valid.

“Full cost” option (reimbursement) is given in AGA, although limited only for “JET” projects (through equipment costs). Parallel full cost option is foreseen for large research infrastructure (through capitalized and operating costs of large research infrastructure), but again with certain limitations.

Category: Other direct costs
fold faq Eligibility of equipment maintenance costs: If maintenance of scientific equipment is eligible shall it be charged as other goods and services or equipment costs?

Answer:

Equipment maintenance costs are eligible if they are not covered by overhead costs according to the usual accounting practices and if they are purchased together with the durable equipment. In this case they can be charged as equipment costs according to AGA Art. 6.2.D.2 1.1.1 

1.1 Equipment costs (D.2): Depreciation costs of equipment, infrastructure or other assets 

1.1.1 What? This budget category covers the depreciation costs of equipment, infrastructure or other assets used for the action. 

In some cases (e.g. infrastructure), equipment costs may also include the costs necessary to ensure that the asset is in good condition for its intended use (e.g. site preparation, delivery and handling, installation, etc.). 

What not? If the beneficiary’s usual practice is to consider durable equipment costs (or some of them) as indirect costs, these can NOT be declared as direct costs, but are covered by the 25 % flat rate for indirect costs (see Article 6.2.E). Any depreciation declared as a direct cost under a H2020 action must be a direct cost under the beneficiary’s cost accounting practices (see Article 6.2.) 

If service contracts are not purchased together with the durable equipment, they should be charged under „other goods and services“ if they follow the general conditions to be eligible set in Art. 6.1.

Category: Other direct costs
fold faq Eligibility of computer costs: Are computers bought for hired staff considered as indirect costs (as in FP7 most of the time but subject to Project Officer interpretation) or are they eligible as direct costs?

Answer:

Discussions about IT Equipment (e.g. desktop computer, Laptops, etc.) should take place at the proposal stage, when the budgets are being finalized. IT equipment is treated the same as in FP7. These are normally costs which should be covered by beneficiary, except for specific circumstances whereby this equipment can be fully justified to the PO to be vital for the completion of the project.

Examples:

  • Individual computers cannot be charged to a project for their total cost, but per their usage and depreciation rates (Version 5.0 - 3 July 2018, page 88 and 689).
  • Use of supercomputers owned by an institution can be internally charged to the project (costs for goods and services which the beneficiary itself produced or provided for the action), if charging the use of a specific research device is something that the institution does for other users. For such a charge to be eligible, a project needs to provide the supercomputer usage rate, costs calculation and confirmation that the same charge is applied to other users (Version 5.0 - 3 July 2018, page 98).
  • The costs of renting or leasing specific computers (including related duties, taxes and charges such as non-deductible value added tax (VAT) paid by the beneficiary) are also eligible, if they do not exceed the depreciation costs of similar equipment and do not include any financing fees (Version 5.0 - 3 July 2018, page 83 and 615).
  • The costs of specific computers contributed in-kind against payment are eligible, if they do not exceed the depreciation costs of similar equipment, do not include any financing fees and if the conditions in Article 11.1 are met (Version 5.0 - 3 July 2018, page 646).
Category: Other direct costs
fold faq Eligibility of travel costs in case of combination with personal travel and travels for other purposes: How to justify such travel costs and in what amount?

Answer:

First, travel costs should meet the following criteria: “it is the usual practice of the beneficiary to pay for such travels (e.g. travels for combining professional and personal reasons)” and “it has been an actual cost for the beneficiary” (page 78, Version 5.0 – 3 July 2018). For the accurate eligible amount, a beneficiary must keep evidence of basic travel costs (“Record keeping – The beneficiary must keep evidence, not only of the actual cost of the return flight, but also of the cost of the flight that the person would have taken if he/she would have returned directly after the end of the work for the action”, page 78, Version 5.0 – 3 July 2018).

Category: Other direct costs

Other financial issues

fold faq Depreciation of equipment

The AGA states that the beneficiaries may normally only charge the annual depreciation costs that correspond to the part of the equipment’s use for the action. (Version 5.0 3 July 2018; Note: 1.1.4 Full price of an asset in one single year, page 81). If the beneficiary bought the equipment during the action of two years and used it from that point to the end of the action 100% for the action how to calculate the depreciation cost per each reporting period?

Answer:

The beneficiary should calculate the depreciation cost per reporting period taking into account only the period of equipment usage for the  action.

Practical example:

The beneficiary bought a server for EUR 3.000 excluding VAT (total amount including VAT is 3600 euro) in February 2017 for the project which started in January 2017. The server is used for the project  100% of the time from 1 March 2017 until the end of the project in December 2018. The server’s useful life (period of depreciation) is two years (according to the beneficiary’s usual practices), but it has been used for the project for 22 months. The beneficiary uses a linear depreciation (every year the same amount).

In the reporting period ending in June 2017, the beneficiary must declare depreciation costs taking into account the time used for the project and the server’s useful life

RP1

2017 - 4 months (1 March 2017 - 30 Jun 2017)

 

EUR 3.000 x (4/24 months) x 100% (used for the project) = EUR 500 = amount declared for the server in the first reporting period.

RP 2

2017 - 6 month (1 July 2017 - 31 December 2017)

2018 - 12 months (1 January 2018 - 31 December 2018)

In the reporting period ending in December 2018, the beneficiary must declare:

EUR 3.000 x (18/24 months) x 100% (used for the project) = EUR 2250 = amount declared for the server in the second reporting period.

The remaining value of EUR 250 (depreciation value of 2 months) cannot be charged to the project.

 

SUPPLIER INVOICE DATE INVOICE nº DESCRIPTION AMOUNT (INCLUDING VAT) AMOUNT (EXCLUDING VAT) DEPRECIATION DEPRECIATION IN THE PROJECT ALLOCATION TOTAL AMOUNT DEPRECIATED
XXXYYZZZZ 29.2.2017 Rn 10/2017 Dell server  3.600,00 € 3.000,00 € 24 22 100% 2.750,00 €
                   
                   
Category: Other direct costs
fold faq Equipment: Can the beneficiary’s own equipment be an eligible cost (depreciation and service costs)? How will this be claimed?

Answer:

It is allowed to charge the use of beneficiary’s own equipment on the project, provided that the depreciation period has not been completed yet and that only the recorded use for the project is claimed. However, it is not always easy to define the “rate of actual use for the project” of use of equipment for a project. Some organizations have a standardized system for monitoring the usage of equipment (“time sheet for equipment"). Alternatively, the costs are often covered by the beneficiary.

The actual use should be directly measured and the amount of use (percentage and time used) must be auditable.

The idea of full capacity was removed from the AMGA (only applicable for Large Research Infrastructure). So if the beneficiary does not use the equipment exclusively for the action, only the portion used on the action may be charged.

 

Practical example:

Annual depreciation of the equipment is 17.200 €

Under normal circumstances the equipment can be used 1.720 hours per year

However the equipment is actually used only 100 hours per year

Out of which, for the EU action, it was used (according to the records) for 50 hours.

The amount chargeable to the EU action in the year would be:

17.200 € / 1.720 usable hours = 10 € per hour * 50 hours of use for the action = 500 €

In other words, in the example this means that we can claim only 50% of the annual depreciation (50/100 hours) on EU action.

Category: Other direct costs
fold faq Eligibility of equipment maintenance costs: Is maintenance of scientific equipment which is not used exclusively for the action eligible (for e.g.: old equipment already bought before the project that needs small parts to be changed + calibration

Answer: 

Equipment maintenance costs are usually eligible, if acknowledged in accounting books and reflect existing state. Following criteria need to be fulfilled:

  • Such costs are recorded as direct costs in the year of occurrence also in accounting books (not recorded as an asset)
  • Such costs incurred for the duration of the action (some supporting evidence might be welcome e.g. log books)

Difference between existing and new equipment is not evident. Costs that are not directly linked to the project (e.g. maintenance would be necessary irrespectively of who is using the equipment for what purpose) are not eligible.

Additionally, if the equipment is not used exclusively for the action this costs can easily divert from direct to indirect cost if no special rules are valid.

“Full cost” option (reimbursement) is given in AGA, although limited only for “JET” projects (through equipment costs). Parallel full cost option is foreseen for large research infrastructure (through capitalized and operating costs of large research infrastructure), but again with certain limitations.

Category: Other direct costs
fold faq Eligibility of equipment maintenance costs: If maintenance of scientific equipment is eligible shall it be charged as other goods and services or equipment costs?

Answer:

Equipment maintenance costs are eligible if they are not covered by overhead costs according to the usual accounting practices and if they are purchased together with the durable equipment. In this case they can be charged as equipment costs according to AGA Art. 6.2.D.2 1.1.1 

1.1 Equipment costs (D.2): Depreciation costs of equipment, infrastructure or other assets 

1.1.1 What? This budget category covers the depreciation costs of equipment, infrastructure or other assets used for the action. 

In some cases (e.g. infrastructure), equipment costs may also include the costs necessary to ensure that the asset is in good condition for its intended use (e.g. site preparation, delivery and handling, installation, etc.). 

What not? If the beneficiary’s usual practice is to consider durable equipment costs (or some of them) as indirect costs, these can NOT be declared as direct costs, but are covered by the 25 % flat rate for indirect costs (see Article 6.2.E). Any depreciation declared as a direct cost under a H2020 action must be a direct cost under the beneficiary’s cost accounting practices (see Article 6.2.) 

If service contracts are not purchased together with the durable equipment, they should be charged under „other goods and services“ if they follow the general conditions to be eligible set in Art. 6.1.

Category: Other direct costs
fold faq Eligibility of computer costs: Are computers bought for hired staff considered as indirect costs (as in FP7 most of the time but subject to Project Officer interpretation) or are they eligible as direct costs?

Answer:

Discussions about IT Equipment (e.g. desktop computer, Laptops, etc.) should take place at the proposal stage, when the budgets are being finalized. IT equipment is treated the same as in FP7. These are normally costs which should be covered by beneficiary, except for specific circumstances whereby this equipment can be fully justified to the PO to be vital for the completion of the project.

Examples:

  • Individual computers cannot be charged to a project for their total cost, but per their usage and depreciation rates (Version 5.0 - 3 July 2018, page 88 and 689).
  • Use of supercomputers owned by an institution can be internally charged to the project (costs for goods and services which the beneficiary itself produced or provided for the action), if charging the use of a specific research device is something that the institution does for other users. For such a charge to be eligible, a project needs to provide the supercomputer usage rate, costs calculation and confirmation that the same charge is applied to other users (Version 5.0 - 3 July 2018, page 98).
  • The costs of renting or leasing specific computers (including related duties, taxes and charges such as non-deductible value added tax (VAT) paid by the beneficiary) are also eligible, if they do not exceed the depreciation costs of similar equipment and do not include any financing fees (Version 5.0 - 3 July 2018, page 83 and 615).
  • The costs of specific computers contributed in-kind against payment are eligible, if they do not exceed the depreciation costs of similar equipment, do not include any financing fees and if the conditions in Article 11.1 are met (Version 5.0 - 3 July 2018, page 646).
Category: Other direct costs
fold faq Eligibility of travel costs in case of combination with personal travel and travels for other purposes: How to justify such travel costs and in what amount?

Answer:

First, travel costs should meet the following criteria: “it is the usual practice of the beneficiary to pay for such travels (e.g. travels for combining professional and personal reasons)” and “it has been an actual cost for the beneficiary” (page 78, Version 5.0 – 3 July 2018). For the accurate eligible amount, a beneficiary must keep evidence of basic travel costs (“Record keeping – The beneficiary must keep evidence, not only of the actual cost of the return flight, but also of the cost of the flight that the person would have taken if he/she would have returned directly after the end of the work for the action”, page 78, Version 5.0 – 3 July 2018).

Category: Other direct costs