Budget

The hierarchy of rules on eligibility of expenditure applicable to Interreg projects is as follows, and apply to all partners of the project, independently of partner country:

  1. EU rules on eligibility as set out in the CPR, ERDF Regulation and Interreg Regulation;
  2. Programme eligibility rules as set out in this document;
  3. National (including institutional) eligibility rules. Such rules only apply for matters not covered by eligibility rules set in the abovementioned EU and programme rules.

This hierarchy of rules only applies to eligibility rules of expenditure.

All applicable EU and national rules, apart from eligibility of expenditure, are on a higher hierarchical level than rules set by the Interreg Aurora Programme and must therefore be followed (e.g. procurement law). In such cases, the partner has to follow the stricter applicable rule. National procurement rules must be observed for all purchases and full documentation of the procurement is mandatory for expenditure to be regarded as eligible.

The programme will use both real costs and simplified cost options (SCOs). Regarding real costs, all beneficiaries must maintain separate accounting records or use separate accounting codes for all transactions relating to the project. The SCOs are reported based on pre-defined calculation methods and are not expected to match with accounting records. Costs covered by a SCO cannot be reported under any other cost category as real costs as this would be double financing.

All costs must follow the principles of sound financial management and must be free from partiality and conflict of interest. A conflict of interest can arise when a decision is compromised for reasons involving family, emotional life, political or national affinity, or where any economic interest or any other interest is shared with another person.

All costs must be:

  • project related, clearly connected to project activities traceable in the approved application form.
  • directly supporting the achievement of results and outputs of the project
  • incurred, entered into the project accounts and paid by the project partner during the project period.

Value added tax (VAT) is according to the EU-regulations eligible in projects with a budget up to EUR 5 000 000 (including VAT).  

Cost-sharing within the project partnership
Invoicing between partners shall be avoided, as it can cause time-lags and other problems for project partners at the reporting stage. The main principle is that a specific cost shall be paid by one partner in total, and they shall not send an invoice regarding partial payments of that cost to the other partners. The partner carrying shared costs, shall include it as an expenditure in the individual project partner budget. The project partner in question can then receive a larger proportion of the funding in the project.

Ineligible expenditure
Examples of costs that are not eligible:

  • Any expenditure which is already 100% co-financed by another EU-funding source or a national or regional subsidy is not eligible in the context of an Interreg Aurora project (double-financing).
  • Fines, financial penalties and expenditure on legal disputes and litigation
  • Gifts
  • Costs related to fluctuation of foreign exchange rate
  • In-kind costs
  • Expenditure incurred and/or paid before the start date of the project
  • Expenditure incurred after the end date of the project
  • Expenditure paid to late (no later than 2 months after the end date of the project but before submitting the final payment application)
  • Holiday pay dept (accrued holiday pay) meaning holiday pay that are not actually paid out to the employee during the project time, nor within 2 months after the end of the project
  • Expenditure above approved flat rates

Use of the euro
The ERDF-funding is handled in EUR meaning that all partners budgets and reports must be in EUR. And even though the Norwegian IR-funding will be handled and paid in NOK also the Norwegian figures needs to be converted into EUR, for comparison regarding the joint application submitted in Min Ansökan.

  • Swedish SEK shall be converted into EUR with the official exchange rate from the EU-commission applicable at the time of submission of the application.

Here you can find the EU-commission official exchange rate

  • Norwegian NOK shall be converted into EUR with fixed exchange rate of 10 NOK = 1 EUR.

Cost categories and simplified cost options
The programme aims to simplify the reporting of costs as much as possible. This is done by using some Simplified Cost Options (SCOs) such as flat rates and lump sums.  When using flat rates, all partners must use the same method.

The benefits of SCOs are many. As SCOs are typically very easy to calculate, the beneficiary rarely makes mistakes in applying them. Reporting becomes much easier as there is no need to attach invoices. Thus, SCOs helps the programme to focus the efforts on what actually matters – results – and less on technicalities and practicalities that come with regular reporting. There can also be some downsides worth mentioning. As SCOs are calculated on the principle of being approximately suitable, some partners or projects will, by definition, be undercompensated where others will be overcompensated. Another aspect to consider is that SCOs are always defined in advance and cannot be modified later.

In Min Ansökan one chooses the method for the budget and the following cost categories are possible in Aurora projects depending on the choice of method:

A) The 40%-method

  1. Staff costs (real costs)
  2. Other costs – flat rate 40%

B) All cost categories

  1. Staff costs (real costs)

  2. Office and administrative expenditure (flat rate 15% based on staff costs, calculated by the system)

  3. Travel and accommodation costs (flat rate 15% based on staff costs, calculated by the system)
  4. External expertise and services costs (real costs)
  5. Equipment expenditure (real costs)
  6. Costs for infrastructure and works (real costs)

Budget specification
The budget shall be specified on partner level as well as under each cost category depending on the reporting method.

  • When using the 40%-method, only the cost category of staff costs shall be specified. The flat rate of 40% will be automatically added in the system.
  • When using the method of “all cost categories”, only the cost categories reported as real costs shall be specified (staff, external expertise, equipment and costs for infrastructure and works). The categories where flat rates are used (Office and administrative expenditures and Travel and accommodation costs) will be added automatically in the budget in Min Ansökan).
  • Staff costs – the planned costs registered in the budget in the application phase shall be based on estimated real costs never mind which of the reporting methods one chooses in Min Ansökan. Staff costs shall be specified for each role (e.g project leader, researcher, project administration, communicator) and partner with the monthly salary, the percentage of social fees (%) and the level of assignment in the project (full time or fixed part time as a percentage of full time) as well as how many months of the project time this role is engaged to work. Add one line per role per partner e.g “project leader, 4 000 euros per month, social fees 30%, working 50% for 36 months”. Total cost in column for the intended partner = 93 600 EUR (calculated as 4 000 *1,30 * 36 * 50%). When applying for the payment of an approved grant one reports the real costs based on full time or the fixed part time.
  • Other costs – flat rate 40% – this is a flat rate based on staff costs to cover “all other costs” and cannot be used in combination with the flat rates for “Office and administrative expenditure” and “Travel and accommodation” nor in combination with real costs for external expertise, equipment costs and infrastructure. The use of this flat rate is mandatory in regular projects with a budget up to EUR 200 000 and optional in projects with larger budgets. When applying with the 40%-method only Staff costs need to be specified and a flat rate of 40% will be added on top of that. The same applies when applying for the payment of the approved grant.
  • Office and administrative expenditure – budgeted as a 15% – flat rate based on staff costs. The system will add and calculate this budget line automatically once the staff costs have been registered when choosing the method “all cost categories” in Min Ansökan. This budget line is always a flat rate, and one cannot choose to register real costs. This budget line is not possible to use in combination with the 40%-flat rate. When applying for the payment of an approved grant with this budget line the flat rate will be added automatically on top of the staff costs.
  • Travel and accommodation – budgeted as a 15% – flat rate based on staff costs. The system will add and calculate this budget line automatically once the staff costs have been registered when choosing the method “all cost categories” in Min Ansökan. This budget line is not possible to use in combination with the 40%-flat rate. This budget line is always a flat rate, and one cannot choose to register real costs. This budget line is not possible to use in combination with the 40%-flat rate. When applying for the payment of an approved grant with this budget line the flat rate will be added automatically on top of the staff costs.
  • External expertise and services costs – the planned costs registered in the budget in the application phase shall be based on estimated real costs. The costs shall be specified for each partner with a description of the planned purchases. Add one line per purchase and partner e.g “expert speaker, 1 000 euros, event xxx”. Total cost in column for the intended partner = 1 000 EUR. This budget line is not possible to use in combination with the 40%-flat rate. When applying for the payment of an approved grant with this budget line one reports the real costs paid for external expertise and services costs.
  • Equipment expenditure – the planned costs registered in the budget in the application phase shall be based on estimated real costs. The costs shall be specified for each partner with a description of the planned purchases. Add one line per item and partner e.g “laboratory equipment, 1 000 euros”. Also indicate whether this is a purchase or a depreciation cost for already bought items. Total cost in column for the intended partner = 1 000 EUR. This budget line is not possible to use in combination with the 40%-flat rate. When applying for the payment of an approved grant with this budget line one reports the real costs paid (or depreciated) for equipment expenditure.
  • Costs for infrastructure and works – the planned costs registered in the budget in the application phase shall be based on estimated real costs. The costs shall be specified for each partner with a description of the planned purchases. Add one line per purchase and partner e.g “xxx, 1 000 euros”. Total cost in column for the intended partner = 1 000 EUR. This budget line is not possible to use in combination with the 40%-flat rate. When applying for the payment of an approved grant with this budget line one reports the real costs paid for costs for infrastructure and works.
  • Lump sums – this is not actually a cost category but a method used for granting the support in small-scale projects. The grant is based on a draft budget. In the application stage the budget shall therefore clearly define the planned costs either using the 40%-method or the method with all cost categories. But then, once the application is approved, there is no need to report on the actual expenditure. The payment of the lump sum will be based on the results. If the final report is approved the lump sum will be paid and if the final report is not approved there will be no payment at all.

Project revenue
Projects are expected to share outputs and results widely and free of charge. But a budget line for project revenue is available for projects planning to have some kind of revenue. Unexpected revenue not foreseen in the budget in the application stage shall be reported in payment applications to avoid double financing of the expenditure.

Co-financing
You will need to specify who will contribute with financing to the project, this can be the partner itself or other external financiers. Remember that you will need co-financing corresponding to an amount of 35% of the EU-costs and 50% of the Norwegian costs. It is not necessary to submit documentation of approved grants from external financiers nor regarding own financing. If you, during the joint secretariat’s assessment of a submitted application finds out that external co-financing will not be approved, and project partners are not willing to cover the lack of funding with own financing – please contact the joint secretariat regarding either a withdrawal of the application or a reduced budget so that all planned costs are covered. 

EU-funding and IR-funding
The EU-funding (65%) and IR-funding (50%) will be calculated automatically by the system once you have added the costs and co-financing. In case the EU-share is larger than 65% and/or the IR-share is larger than 50% you will need to add some more co-financing or lower the costs.