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Simplified Cost Options, Article 7(4) of Regulation (EC) No 1080/2006, Amended on 6 May 2009
A simplification has been introduced in the 2007-2013 ERDF Regulation, allowing Member States to claim indirect costs (overheads) on a flat rate basis up to 20% of direct costs of an operation, standard unit costs and lump sums.
The Regulatory text:
Article 7(4) of Regulation (EC) No 1080/2006 as amended
4. In the case of grants the following costs shall be expenditure eligible for a contribution from the ERDF, provided that they are incurred in accordance with national rules, including accountancy rules, and under the specific conditions provided for below:
- indirect costs, declared on a flat-rate basis, of up to 20 % of the direct costs of an operation;
- flat-rate costs calculated by application of standard scales of unit cost as defined by the Member State;
- lump sums to cover all or part of the costs of an operation.
The options referred to in points (i), (ii) and (iii) may be combined only where each of them covers a different category of eligible costs or where they are used for different projects within the same operation. The costs referred to in points (i), (ii) and (iii) shall be established in advance on the basis of a fair, equitable and verifiable calculation. The lump sum referred to in point (iii) shall not exceed EUR 50 000."
Comment
This regulatory change introduces a deviation from the “real costs principle” applied so far. It should relieve the administrative burdens on beneficiaries and management / control bodies, as well as contribute to a more efficient and correct use of funds, in the intentions of the change.
IT IS ONLY A SIMPLIFICATION IF YOU MAKE IT SIMPLE!
The Lab Group on simplification set up by INTERACT came to the following conclusions in its meeting of 5.11.2009 in Brussels:
Simplification is about:
• Making lives of beneficiaries easier
• Improving sound financial management, reduce the error rate
• Contributing to a good reputation of the programmes, better project quality and outputs.
Simplified cost options must be given a chance:
• Programmes/Member States should at least assess the pros and cons of the options, even if the “zero option” might be a possible outcome
• If the assessment leads to a positive outcome, the right timing to test the simplified cost option is the current period: the selected option(s) should at least be tested on a small scale, in order to prepare for a more systematic use in the post 2014 period.
It is a chance for ETC programmes, and a few programmes are already grabbing it.
Experiences so far in ETC programmes – From Lab Group meeting 5.11.2009
• CBC programmes are more interested in implementing simplified cost options still in this funding period (given that some of them already have harmonised eligibility rules for the whole programme, the introduction of these would be easier): One CBC programme at least, Flanders-Netherlands, has already agreed in its Monitoring Committee to use flat-rates on overheads.
• Transnational and interregional programmes are less interested in introducing these options now (but maybe in the post 2013 period) since they largely rely on national eligibility rules and would therefore need more time to implement the simplified cost options in a coordinated way.
Options most likely to be used in ETC programmes:
• Flat-rate on indirect costs
• Lump sums (especially for small project funds / People to people types of actions)
• No programme in the Lab Group is planning to adopt, at least at programme level, Standard scales of unit costs: difficult to identify sufficiently similar ETC projects; different economic profiles and living standards between Member States
Next steps
• Publication of the INTERACT Working paper on simplified cost options in 2010: presentation of the different options, applicability to ETC, possible solutions and concerns
COCOF Document on simplified cost options (Article 7(4) of Regulation (EC) NO 1080/2006
This is the final version of the COCOF document on simplified cost options: - Indirect costs declared on a flat rate basis - Flat rate costs calculated by application of standard scales of unit costs - Lump sums
