D.3 Eligibility rules

D.3.1 General principles of eligibility

Each project partner must understand and observe the following preconditions:

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all expenditure is essential for the project’s implementation and would not have been incurred if the project had not been carried out (value added);

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all expenditure must comply with the principles of efficiency, economy and effectiveness (sound financial management)

REGULATION (EU, Euratom) 2018/1046, Article 33

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the principle of economy requires that the resources used in the pursuit of a project partner’s activities will be made available in due time, in appropriate quantity and quality, and at the best price;

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the principle of efficiency means project partners have to ensure the best relationship between the resources employed, the activities undertaken and the achievement of objectives;

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the principle of effectiveness means how the objectives that the project partners pursued are achieved through the activities undertaken.

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all expenditure is generated and paid by the respective project partner during the eligible project phase, i.e. preparation, contracting, implementing and closure. Project phases are set in BAMOS+ and are based on a MC decision e.g. in a call announcement;

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project partners are not allowed to report a cost if it is a result of contracting from:

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their own employees,

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themselves (e.g. internal invoice),

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other project partners.

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no other EU funds have contributed towards the financing of the same expenditure (prohibition of double funding)

REGULATION (EU, Euratom) 2018/1046, Article 191(3)

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relevant public procurement rules are observed.

D.3.2 Ineligible costs

The following costs are not eligible for reimbursement¹

¹REGULATION (EU) 2021/1060, Article 58 and REGULATION (EU) 2021/1059, Article 38
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interest on debt;

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the purchase of land for an amount exceeding 10% of the total eligible expenditure of the investment in infrastructure and works concerned. For derelict sites and for those formerly in industrial use which comprise buildings, that limit is increased to 15%;

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value added tax (VAT), except:

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for projects the total cost of which is below EUR 5,000,000 (including VAT);

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for projects the total cost of which is at least EUR 5,000,000 (including VAT) where it is non-recoverable under national VAT legislation;

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fines, financial penalties and expenditure on legal disputes and litigation;

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costs of gifts and awards;

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costs relating to the fluctuation of foreign exchange rates.

Cost sharing

Cost sharing is not allowed in Interreg Baltic Sea Region. Cost sharing is defined as a pro rata allocation of certain project expenditure incurred by one project partner and allocated to various other project partners.

To avoid cost sharing, each partner needs to plan its own budget and report only its own expenditure to the LP. Therefore, a well-planned division of tasks and project budget among the partnership is essential when setting up the project.

D.3.3 Forms of support

Simplified cost options

Pre-defined unit costs, lump sums or flat rates provide the basis for the calculation of
a partner’s expenditure.

Real costs

Project partners incur and pay the expenditure. They support the expenditure by invoices or other equivalent accounting documents. They ensure that the expenditure is accounted for and proven by delivery of works, services or supplies.

D.3.4 Use of euro and exchange rate

All expenditure reported in the progress report must be denominated in euros.

Any expenditure paid in another currency must be converted into euros using the monthly accounting exchange rate of the Commission in the month during which that expenditure was submitted for verification.

D.3.5 Cost category 0 – Preparation costs

Projects can receive reimbursement of the preparation costs of the project based on the following preconditions:

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the possibility of applying for preparation costs is stated in the announcement of the respective call for applications; and

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the project applied for reimbursement of the preparation costs in the application; and

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the project did not receive any other EU funds specifically designed for the development of this project application.

The preparation costs are based on a lump sum – up to EUR 24,000 of total eligible expenditure, which corresponds to EUR 19,200 of the Programme co-financing.

The MA/JS will transfer the lump-sum to the bank account that the lead partner indicated in BAMOS+ after the signing of the subsidy contract. It is then the lead partner’s responsibility to pay the agreed division to the project partners.

D.3.6 Cost category 1 – Staff costs

Project partners declare personnel costs on the basis of the simplified cost option method called the standard scale of unit cost. For each country the MA/JS has defined a single hourly rate in national currency/EUR. The hourly rate is a standard amount for each employee regardless of their position.

Table 8 The hourly rate per country

Denmark

Hourly rate
374

Currency
DKK

Estonia

Hourly rate
29

Currency
EUR

Finland

Hourly rate
36

Currency
EUR

Germany

Hourly rate
48

Currency
EUR

Latvia

Hourly rate
24

Currency
EUR

Lithuania

Hourly rate
22

Currency
EUR

Norway

Hourly rate
546

Currency
NOK

Poland

Hourly rate
92

Currency
PLN

Sweden

Hourly rate
501

Currency
SEK

Conditions for reimbursement of the staff cost:

Project partners have to report the staff cost based on the number of working hours that their employees need for project implementation under the following conditions:

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A project partner can report the hours of an employee working under an employment contract or equivalent.

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A project partner cannot declare more than 1,720 hours per full time employee per calendar year. This maximum number of hours is reduced to a pro- rata of 1,720 hours for employees working part-time. This maximum number of hours is also reduced to a pro-rata of 1,720 hours for reporting periods shorter than 12 months.

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A project partner can report only actual (productive) hours that were worked and that were dedicated to project related tasks. Non-productive hours relating to holidays, sick leave, maternity leave, etc. are not eligible.

Project partners that are SMEs can declare the working hours of their owners not receiving a salary as staff costs. The partners should apply the conditions defined above.

Documentation

Project partners have to complete and deliver the following documents to the MA/JS for each person for whom they report staff costs.

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Employment confirmation

a document from the project partner (in the English language). This document confirms that the person is working for the project, in line with conditions of reimbursement of the staff costs described above.

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Report of hours

a document that confirms the number of hours worked for the project.

For both points above project partners are obliged to use templates prepared by the MA/JS and which are published on the Programme portal. The MA/JS will only accept staff costs which are documented through these Programme templates. Project partners have to complete and sign these documents. They have to deliver the signed versions as attachments to the partner report.

In addition, project partners have to keep, on their premises, original employment contracts or equivalent employment documents of the persons whose working hours are the subject of the programme co-financing. Project partners do not have to attach those documents to the partner report but they have to keep it available and deliver it upon request of the MA/JS or any other authorised body (Audit Authority, European Commission, etc.).

Calculation

Project partners have to insert the number of hours for each project staff member in the partner report. The number of hours has to be in line with the report of hours. The partner report automatically calculates the staff cost.

D.3.7 Cost category 2 – Office and administration costs

Project partners receive the reimbursement of office and administration costs as a flat rate – 15% of the eligible staff costs.¹ The flat rate covers the following elements²:

¹REGULATION (EU) 2021/1059, Article 40(2)
²REGULATION (EU) 2021/1059, Article 40(1)
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office rent;

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insurance and taxes relating to the buildings where the staff are located and to the equipment of the office (e.g. fire, theft insurances);

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utilities (e.g. electricity, heating, water);

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office supplies;

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accounting;

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archives;

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maintenance, cleaning and repairs;

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security;

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IT systems;

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communication (e.g. telephone, fax, internet, postal services, business cards, mobile phones and other devices purchased as a part of a subscription contract for communication services);

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bank charges for opening and administering the account or accounts where the implementation of an operation requires a separate account to be opened;

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charges for transnational financial transactions.

Project partners cannot report any cost item listed above in any other cost category.

Calculation and documentation

The progress report will automatically calculate the flat rate based on the approved staff costs. For this cost category, project partners do not have to provide any supporting documentation (i.e. no invoices, payment proof, etc.).

The MA/JS does not check or monitor any differences compared to the real costs. Over or under-compensation of a project partner’s expenditure are a natural consequence resulting from the application of a flat rate.

D.3.8 Cost category 3 – Travel and accommodation costs

Project partners will receive the reimbursement of travel and accommodation costs as a flat rate – 15% of the eligible staff costs¹. The flat rate covers the following elements²:

¹REGULATION (EU) 2021/1059, Article 41(5)
²REGULATION (EU) 2021/1059, Article 41(1)
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travel costs (e.g. tickets, travel and car insurance, fuel, car mileage, tolls, and parking fees);

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the costs of meals;

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accommodation costs;

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visa costs;

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daily allowances.

Project partners cannot report any cost item listed above in any other cost category.

The flat rate only covers travel and accommodation costs of a project partner’s own employees. Travel and accommodation costs of external experts and service providers are covered by cost category 4 – external expertise and services³.

³REGULATION (EU) 2021/1059, Article 41(3)

Calculation and documentation

The progress report will automatically calculate the flat rate based on the approved staff costs. For this cost category, project partners do not have to provide any supporting documentation (i.e. no invoices, payment proof, etc.).

The MA/JS does not check or monitor any differences compared to the real costs. Over or under-compensation of a project partner’s expenditure are a natural consequence resulting from the application of a flat rate.

D.3.9 Cost category 4 – External expertise and services costs

Project partners can report costs of the following expertise and services provided by
a public or private law body or a natural person¹:

¹REGULATION (EU) 2021/1059, Article 42
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studies or surveys (e.g. evaluations, strategies, concept notes, design plans, handbooks);

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training;

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translations;

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development, modifications and updates to IT systems and website;

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promotion, communication, publicity, promotional items and activities or information linked to a project or to a programme as such;

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financial management;

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services relating to the organisation and implementation of events or meetings (including rent, catering or interpretation);

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participation in events (e.g. registration fees);

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legal consultancy and notarial services, technical and financial expertise, other consultancy and accountancy services;

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intellectual property rights;

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verifications (e.g. cost of the controller);

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the provision of guarantees by a bank or other financial institution where required by Union or national law or in a programming document adopted by the Monitoring Committee;

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travel and accommodation for external experts, speakers, chairpersons of meetings and service providers and in case their participation is justified and contributing to the project content and activities;

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other specific expertise and services needed for project.

Documentation

Project partners have to collect and deliver to the controller the following documents, to prove costs reported in this category:

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procurement documentation;

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invoices (or equivalent accounting documents);

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proof of delivery of services;

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payment proof.

D.3.10 Cost category 5 – Equipment

Project partners can report cost of purchase, rent, lease or depreciation of the following equipment if not covered by cost category 2¹:

¹REGULATION (EU) 2021/1059, Article 43
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office equipment;

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IT hardware and software;

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furniture and fittings;

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laboratory equipment;

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machines and instruments,

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tools or devices;

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vehicles (except for project management purposes and staff transportation);

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other specific equipment needed for the project;

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the purchase of consumables necessary for the operating of laboratory equipment or other tools or devices (e.g. chemicals, reagents, fuel etc.) used for the implementation of content related activities and where directly attributable to the project.

Project partners have to decide whether to report the full costs or the depreciation/rental/lease costs of each equipment.

For example, if project partners are going to use equipment for the project purpose during the whole project or even beyond (e.g. it is a part of a pilot), the full costs will be justified.
If project partners use it only for a limited time, e.g. few months, reporting of rental or depreciation costs would be a more efficient solution.

If project partners plan to buy high value items with the intention of using it for a short period of time (e.g. only for carrying out one pilot etc.) they should inform the MA/JS in advance about any such plans. The MA/JS together with the partner would evaluate whether the principles of efficiency, economy and effectiveness are being met and will find alternative solutions if necessary.

If the project partner decides to report depreciation, the calculation should be done according to a justified method and be in line with the national or institutional regulations.

Project partners must allocate the costs of depreciation, rent or lease to the time period of using such equipment for the project purposes.

Costs for the purchase of second-hand equipment may be eligible under the following conditions²:

²REGULATION (EU) 2021/1059, Article 43(2)
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no assistance has been received for the original purchase of that equipment from the Interreg funds or the Funds listed in the CPR

REGULATION (EU) 2021/1060, Article 1(1)

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the price does not exceed the generally accepted price on the market in question;

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it has the technical characteristics necessary for the operation and complies with all applicable norms and standards.

Equipment which is productive investment

The MA/JS understands productive investments as investments in fixed capital or immaterial assets for enterprises, which are to be used for the production of goods and services. In this way, the investments contribute to gross capital formation and employment.

For any equipment that falls under the category of productive investment, the project partner has to observe the relevant durability rules defined in chapter O.1. Equipment which falls under the category of productive investment is only eligible if it is included in the latest valid version of the application form as approved by the MA/JS.

Documentation:

Project partners have to collect and deliver to the controller the following documents, to prove costs reported in this category:

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procurement documents;

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invoices (or equivalent accounting documents);

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where relevant, depreciation costs calculation(s);

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proof of delivery of equipment;

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payment proof.

D.3.11 Cost category 6 – Infrastructure and works

Project partners can report the cost of realisation, or both design and realisation of infrastructure and works. They can also report the cost of site preparation, delivery, handling, installation, renovation. This should be limited to the following elements¹:

¹REGULATION (EU) 2021/1059, Article 44
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purchase of land with exceptions defined in chapter D.3.2

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building permits;

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building material;

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labour;

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specialised interventions (e.g. soil remediation, mine-clearing).

A project partner can report full costs of infrastructure and works that are implemented within the project.

The Programme understands infrastructure as the fundamental facilities and systems serving a country, city, or other area, including the services and facilities that are necessary for its economy to function. Infrastructure is composed of public and private physical improvements such as water supply, sewers, electrical grids, and telecommunications (including internet connectivity and broadband speeds).

A work means the outcome of building or civil engineering works taken as a whole which is sufficient in itself to fulfil an economic or technical function.²

²DIRECTIVE 2014/24/EU, Article 2(7)

A project partner has to ensure all compulsory requirements set by the EU and national legislation relating to the respective investment in infrastructure and works (e.g. feasibility studies, environmental impact assessments, building permission). This includes: if the project partner invests in infrastructure which has an expected lifespan of at least 5 years, it has to ensure climate proofing.³ Climate proofing means a process to prevent infrastructure from being vulnerable to potential long-term climate impacts whilst ensuring that the ‘energy efficiency first’ principle is respected and that the level of greenhouse gas emissions arising from the project is consistent with the climate neutrality objective in 2050.

³REGULATION (EU) 2021/1060, Article 73(2)
REGULATION (EU) 2021/1060, Article 2(42)

Please note, the Programme is not responsible for the climate proofing. The European Commission provides guidance. In addition, specific rules may be set out by the country in which the infrastructure investment will be realised.

C(2021) 5430 of 29 July 2021, Commission Notice, Technical guidance on the climate proofing of
infrastructure in the period 2021-2027,

Cost of infrastructure and works is only eligible if it is included in the latest valid version of the application form as approved by the MA/JS.

Land or buildings must be in the ownership of a project partner or the project partner must have put long-term legally binding agreements in place.

For any infrastructure and works item the project partner has to observe the relevant durability rules defined in chapter O.1.

Documentation:

Project partners have to collect and deliver to the controller the following documents, to prove costs reported in this category

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procurement documents;

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documents specifying the ownership of land/buildings where the infrastructure/works will be carried out;

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invoices (or equivalent accounting documents);

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proof of delivery of works;

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payment proof.