Navigating through Horizon Europe financial guidelines

In this article, you'll find an overview of the financial regulation applicable to the general budget of the EU, highlighting Horizon Europe financial guidelines and participation rules, as well as the legal framework for individual projects.

Written by Europa Media Trainings

European Commission documentation is often referred to as a labyrinth or a forest, but we suggest you look at it as a triangle or a pyramid, taking you from the high-level documents to the most specific ones. On the top of this pyramid of Horizon Europe financial guidelines documents, we can see the Financial regulation applicable to the general budget of the Union - July 2018.

Legal and financial rules and regulations continuously refer to one another, but with the same principle to always have in mind: We are spending taxpayers' money.

The Commission expects us to follow the principles of good accounting, value for money, national and institutional rules being followed, and cost-effectiveness and efficiency always being taken into consideration when spending the allocated budget.

The Financial regulation applicable to the general budget of the Union

The Financial regulation applicable to the general budget of the Union lays down rules on the implementation of the Union budget. One part deals exclusively with the rules on grants, but the document also includes prizes, procurement, indirect management, financial instruments, budgetary guarantees, financial assistance, and the reimbursement of external experts. In short, it is our broadest guideline and a starting point if we want to get involved with the EU funds.

Title VIII of this document: Grants deals with the most important topics for the ones interested in Research and Innovation funds, or more precisely, in Horizon Europe. Within this Title, we will highlight four Articles:

  • Article 185 - Usual cost accounting practices of the beneficiary allowing the organisations to apply the usual cost accounting practices of the organisation.
  • Article 186 - Eligible costs, gives us directions to answering one of the main questions when we talk about the EU grants - what is eligible and what is not an eligible cost. Since 2018 e.g. we know that VAT is an eligible cost, where it is not recoverable under the applicable national VAT legislation and is paid by a beneficiary.
  • Article 191 - The principle of non-cumulative award and prohibition of double funding ensures that two different grants cannot fund the same cost.
  • Article 202might seem a bit scary - Amount of the grant and extension of audit findings. Based on this article, we know that even if the project is closed and your financial officer has approved all the costs, the EC keeps the right to do post-checks and investigations.

Horizon Europe Rules for Participation 28.02.2021

Financial regulation gives us the framework, while the Horizon Europe Rules for Participation 28.02.2021 regulation provides more details on Horizon Europe specifically and in many cases refers back to Financial Regulation, sometimes stating the derogation from it.

We would highlight four elements from the introduction that are important to consider when thinking about your Horizon Europe project:

  • (82) refers to a broader acceptance of the usual cost-accounting practices;
  • (83) outlines the remuneration approach. We are again witnessing a simplified procedure in Horizon Europe, where there are no special calculations for the researchers’ additional activities, like in Horizon 2020.
  • (87)deals with Systematic cross-reliance on assessments and audits, a novelty regarding audits. Please remember there is a new EC approach in place.
  • (89)brings types of funding and, once again, insisting on simplifying the approach.

When you get to the articles, pay close attention to:

Article 2 – contains definitions for terms you will be using in your Grant Agreement or Consortium Agreement.

Article 6 – Strategic planning and implementation and forms of Union funding, gives details regarding the prizes, collaborative projects, and involvement of different stakeholders.

Article 15 – Alternative, combined and cumulative funding and transfers of resources, is closely connected to previously mentioned encouragement of the synergies of funds.

For the basics refer to Article 34, Article 35, and Article 36 – Eligible costs.

There are a few elements that start with a phrase by the way of derogation – which ensures us there can be derogations from financial regulations specific for Horizon Europe.

"By way of derogation from Article 192 of the Financial Regulation, income generated by the exploitation of the results shall not be considered to be receipts of the action" (page 37).

This means that if we develop, e.g. a software during our project, we can sell it and it won’t be considered receipt potentially decreasing EU contribution, since we are exploiting our project results.

Recorded webinar: Horizon Europe financial guidelines – how to read, understand, and comply with

We welcome you to watch this one-hour webinar to get expert insights on the key financial guidelines and regulations you should understand and comply with in the Horizon Europe and other EU programmes.

The legal framework for individual projects

Then, higher on the pyramid we have the legal framework for individual projects we implement. These are found in the reference documents section – your Grant Agreement or, if that's not ready yet, a Model Grant Agreement and the Annotated Grant Agreement (AGA) which is still in a pre-draft version for Horizon Europe. The AGA has been the most important document in Horizon 2020, and not having this legally binding document for Horizon Europe puts us between a rock and a hard place since many projects within this programme have already kicked off.

This document in this format is not fully in line with the MGA articles. Article 6 on personnel cost calculation includes a different method for calculating staff costs than the detailed procedure in the AGA. If you are in the phase already of reporting in Horizon Europe, discuss this with the financial officer.

To conclude, while waiting for the final version of the Annotated Grant Agreement, get familiar with higher-level documents and Model Agreements. We encourage you to gather a team you can trust will read through the documents and will closely cooperate – since the Horizon Europe programme has just kicked off, there are still issues researchers need to work through together with the legal and financial team. Finally, we all learn by doing and can have disagreements regarding specific points in the documents. In this case, following the "better safe than sorry" mantra, don't hesitate to reach out to your Project Officers for clarifications.

This article is written by Gabriella Lovász, Managing Director of Europa Media Trainings.

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