In this article, we will talk about Horizon Europe personnel costs, going into thorough calculation details and tips, as well as common errors that the companies can avoid. This article is mainly about the personnel costs of projects that have already received the EU grant and they are in the implementation phase. However, if you are still in the application stage and you need some guidance and tips on Horizon Europe project cost management, you can also find some useful information here.
Which are the personnel costs and their importance in Horizon Europe
First of all, we need to understand when kind of expenses can be included in the personnel costs budget. For the Horizon Europe programme, the following four budget categories are eligible to be defined as personnel costs:
- Employees costs (including salaries/wages, bonuses, social security contributions – both for employer and employee, taxes, benefits and any other costs that may arise from national laws or the employment contract). This category refers to any cash compensation given to staff members, thus professionals hired by the company and there is a respective payslip or similar proof.
- Seconded persons/staff – this arrangements involves an employee being temporarily assigned to another part of company, a different employer within the same group or, in some cases, a different employer altogether (such as a client or business partner). For example, companies might second staff to their customers or clients on a secondment basis for a period of time (typically between three and twelve months) to work within the client’s organization.
- Natural person under direct contract – this category covers the costs for in-house consultants and similar persons that worked on the project. It is important to point out here that this budget category is not for companies (such costs can be declared as subcontracting ones) but self-employed (freelancers) natural person working part- or full-time for the respective project under a contract, not governed by the labour law.
- SME owners and natural-person beneficiaries without a salary (A.4) — owners of beneficiary SMEs, and natural-person beneficiaries, who work on the action but do not draw a salary from the beneficiary. Note: dividends and profit distributions are not eligible; remuneration via service contracts or similar non-employment arrangements is eligible, provided the person is not on the beneficiary's payroll. The cost is calculated using a fixed unit-cost daily rate (see SME owner unit cost below), not the actual-cost formula used for employees.
As we have mentioned in other articles, personnel costs is the category with the highest budget share in the majority of EU funded projects (they can constitute even more than 50-60% of the overall budget, especially in these IT projects where the major development is about software elements – platforms, artificial intelligence, machine learning, data analytics, mobile applications – and thus, numerous expert professionals are required).
Main changes in Horizon Europe personnel costs calculation to Horizon 2020
In an effort to simplify and harmonise the overall approach of how companies calculate Horizon Europe personnel costs, the European Commission has conducted two major changes compared to H2020:
- Calculation scope: For actual personnel costs, the daily rate is calculated per reporting period rather than per calendar or financial year. (For the optional HE Personnel Unit Cost scheme the "last closed financial year" rule still applies — the approved unit cost is derived from the beneficiary's most recent closed financial year and is fixed for at least two years.)
- Day-equivalents instead of hours: The default basis for declaring time is now the day-equivalent, replacing the H2020 hourly rate. Hourly rates persist only in specific contractual cases — for example a natural person under direct contract whose contract fixes an hourly rate; in that case the conversion is
daily rate = hourly rate × 8.
Personnel costs (PCs) calculation
As mentioned above, in the new Horizon Europe, personnel costs are calculated on the daily rate scenario. As such, the basic formula to calculate PCs in your project is the following:
Personnel costs = Daily Rate x Days worked in the project
The daily rate itself is calculated per reporting period, not per calendar year, as:
Daily Rate = actual personnel costs during the reporting period ÷ maximum declarable day-equivalents in that reporting period
The maximum declarable day-equivalents in a reporting period are derived from the 215-day annual ceiling, prorated by the number of months in the period and the person's working-time factor:
Max declarable day-equivalents = (215 ÷ 12) × months in the reporting period × working-time factor
The 215 figure is the horizontal annual ceiling on day-equivalents per person across EU grants (to prevent double funding), not a flat divisor.
Worked example (AGA Article 1): A full-time senior researcher works on the action throughout a reporting period of 1 January 2022 – 31 October 2022 (10 months). Their annual loaded personnel cost (gross salary + employer social charges + benefits) is €90,000, so their actual personnel costs during the reporting period are €75,000. Max declarable day-equivalents = (215 ÷ 12) × 10 × 1.0 = 179. Daily rate = 75,000 ÷ 179 ≈ €419 / day-equivalent. For staff whose conditions change within the reporting period (e.g. full-time for part of it, part-time for the rest), day-equivalents are computed sub-period by sub-period and summed.
Note 1 (horizontal 215-day cap): Across all EU grants combined, a person cannot declare more than 215 day-equivalents per calendar year (pro-rated by working-time factor for part-time staff). This is independent of the daily-rate calculation above. The 1,720-hours figure (= 215 × 8) is a legacy Horizon 2020 reference; it is retained in EMDESK templates as a default but is not the binding HE basis.
Note 2: When declaring actual personnel costs, a company must record the actual day-equivalents worked on the action — not a) budgeted time, b) estimated time (a guess of the personnel costs needed) or c) time-share percentages (e.g. X% of the person's time).
To calculate the days a person worked you could either (i) use reliable time records (e.g. time-sheets) on paper or in a computer-based time recording system; or (ii) sign a monthly declaration of day-equivalents worked on the action using the Commission's template — actively recommended by the Commission for reduced record-keeping burden.
In case you need to report a full year (or month), the calculation is similar:
SME owner unit cost (A.4)
SME owners and natural-person beneficiaries without a salary do not calculate a daily rate from their own personnel costs. Instead, the Commission fixes a flat unit-cost daily rate, adjusted by a country-specific correction coefficient:
- Calls with opening date before 30 July 2024: €5,080 ÷ 18 = €282.22 / day × country coefficient
- Calls with opening date from 30 July 2024: €8,745.40 ÷ 18 = €485.86 / day × country coefficient
Beneficiaries declare only the number of day-equivalents worked on the action; the Funding & Tenders Portal computes the cost automatically based on the country coefficient set by the call's Work Programme.
Be careful: the total amount of personnel costs declared (for reimbursement as actual costs) in EU grants for a person for a year CANNOT be higher than the total personnel costs recorded in the beneficiary’s accounts (for that person for that year).
Project-based remuneration (supplementary payments)
If your organisation pays staff supplementary amounts for working on funded projects, the supplementary part is eligible only under the project-based remuneration rules. The supplement must:
- correspond to actual remuneration costs paid for time worked on the action over the reporting period;
- not exceed the remuneration paid by the beneficiary for work in similar projects funded by national schemes ("national projects reference");
- be defined on objective criteria set out in the beneficiary's written remuneration rules; and
- reflect the beneficiary's usual practice for similar staff and similar projects.
Salary uplifts applied only for EU-funded projects, without a comparable national-projects baseline, are not eligible. See the Horizon Europe General Model Grant Agreement (Article 6) for the full conditions.
Avoiding errors in declaring Horizon Europe personnel costs
Companies are quite often committing errors when they declare Horizon Europe personnel costs (and not only), mainly due to misunderstanding or lack of attention to the rules and the details of the grant agreement provisions or sometimes unintentionally. Consequences can be quite important resulting from non-optimal use of funding resources to financial recoveries and severe corrective measures by the European Commission.
These exact errors we aim to avoid with the current article, analysing in detail the norms and approaches the new Horizon Europe programme uses when it comes to the personnel costs calculation. Nevertheless, we will share with you some additional insight that may be useful to avoid such errors:
A general control objective is to keep the residual error rate (the share of incorrectly declared costs that audits do not detect) below the Commission's general audit materiality threshold of 2% (EU Financial Regulation, Article 33). Independent auditing services for the assessment of legality and regularity of Horizon Europe project payments help meet that objective.
As the main detected errors are due to incorrect time working on the project, incorrect remuneration costs and unreliable/missing timesheets, you need to make sure that your time recording is:
- Consistent with HR records;
- Properly dated and signed;
- Not in excess of your full time employment;
- Sufficient in terms of information.
Double-check your formulas. Do not include ineligible items or costs that belong to other budget categories (e.g. indirect costs) in the numerator, and confirm that the denominator is the maximum declarable day-equivalents for the reporting period — not the 215 annual ceiling.
Finally, make sure that (i) your time charged to the project is correct; (ii) time records meet the Grant Agreement’s (GA) conditions; (iii) personnel cost formula and transaction listing reconcile; (iv) employment Contracts are in place; and (v) you used the exchange rate stipulated by the Horizon Europe GA.
This article is written by Panos Antonopoulos, Innovation Consultant.
Reviewed and updated by the EMDESK Academy editorial team on 13 May 2026 against the Horizon Europe Annotated Grant Agreement v2.0 (01.04.2025).
Summary of corrections applied in this update:
- Corrected the daily-rate formula from "annual personnel costs ÷ 215" to "actual personnel costs during the reporting period ÷ maximum declarable day-equivalents" (AGA Art. 1.4). 215 is the per-calendar-year horizontal ceiling, not a flat divisor.
- Clarified the "last closed financial year" rule: no longer applies to actual personnel costs (reporting-period scope), but still applies to the optional HE Personnel Unit Cost scheme.
- Fixed a stale Horizon 2020 reference in the SME-owner bullet (now correctly Horizon Europe).
- Added an SME-owner unit-cost sub-section with the country-adjusted fixed daily rates (€282.22 for pre-30/07/2024 calls, €485.86 from 30/07/2024).
- Corrected the statement on SME-owner remuneration: service contracts are eligible (dividends and profit distributions are not).
- Updated the description of the monthly day-equivalents declaration: the Commission's template now exists and is actively recommended.
- Refined "hourly rates no longer operate": hourly-to-daily conversion remains allowed for natural persons under direct contract whose contracts fix an hourly rate.
- Reframed the 1,720-hours figure as a legacy Horizon 2020 reference retained in EMDESK templates, not as the binding HE basis.
- Attributed the 2% residual error rate to the EU Financial Regulation (Art. 33) rather than presenting it as a Horizon Europe-specific target.
- Updated the EMDESK product section to describe the reporting-period method and to flag when template defaults need to be overridden.
Effortlessly manage daily rates and personnel costs in Horizon Europe projects with EMDESK
EMDESK's powerful features allow for seamless management of daily rates and personnel costs in Horizon Europe projects. With intuitive tools, users can establish daily rates for every participant or employee and accurately report the person-days dedicated to each work package.
- Profile Creation: Easily integrate each employee into the system by listing them as sub-participants under your organisation in the 'Participant' section.
- Daily-rate configuration: in the "Financial Profile" tab, enter the daily rate calculated from your actual personnel costs and your maximum declarable day-equivalents for the reporting period (or, for SME owners, the country-adjusted unit-cost rate). EMDESK's HE templates ship with 8 hours/day and 17.916667 days/month (= 1,720 productive hours, ≈ 215 day-equivalents) as defaults; for partial reporting periods or non-standard working-time factors, override the day-equivalent ceiling so the implied denominator matches the AGA Article 1.4 reporting-period calculation.
*EMDESK’s Horizon Europe project templates have 8 ‘Hours a day’ and 17.916667 ‘Days a month’ pre-filled by default in order to have the annual productive hours equal to 1,720 for a more accurate financial report.*
- Effort Tracking and Reporting: Employees can record their work effort for different work packages. EMDESK automatically computes personnel costs based on the preset daily rates.
- Comprehensive Reporting Tools: EMDESK provides robust monitoring tools, including a specialised report showcasing each employee's work dedication to each package throughout the year. This assists in the effortless completion of the yearly timesheet declaration for the EC.
Experience the blend of precision and convenience with EMDESK's advanced features, designed to cater to Horizon Europe projects' intricate demands.
