Belarus Denmark Estonia Finland Germany Latvia Lithuania Norway Poland Russia Sweden Eligibility of expenditure - Relevant rules and regulations BSR INTERREG III B Joint Secretariat Václav Kaplan Seminar on Financial Management and Auditing Rostock, 12 November 2004

What kind of project costs are eligible? INTERREG III is an initiative in the framework of the ERDF and therefore all general rules concerning eligibility of expenditure regarding the structural funds are applicable. In the period , expenditure usually eligible under the EAGGF, the ESF or the Fisheries fund will also be eligible. This would concern, for instance, rural development or training. EU funds may be required for small infrastructure investment or for equipment, relevant to the projects objectives. In any case, motorways, infrastructure or other large-scale investments will not be eligible.

Which basic rules do projects/operations have to comply with? Any project for which EU funding is granted must comply with specific EU regulations and rules and in particular those applying to the ERDF. Other Community rules must be taken into account, e.g.: rules with regard to environment. Applicants must comply with specific regulations (e.g. Natura 2000); rules with regard to public procurement; rules with regard to publicity on EU funding; rules on competition; rules on equal opportunities.

Overview of relevant regulations and rules Council Regulation (EC) No 1260/1999 – on Structural Funds Commission Regulations (EC): >No 1685/2000+No 448/2004 – Eligibility of expenditure >No 438/2001+No 2355/2002, No 448/2001– Management and control systems, Financial corrections >No 1159/2000 – on information and publicity measure INTERREG III guidelines Programme Document, Programme Complement Programme Manual National rules and regulation (national, regional, local level)

Expenditures must be… -actually paid out by eligible partners & within the project period; -related to the products/services that have actually been delivered; -directly linked to the approved budget and must not lead to exceeded budgets; -directly related to the project implementation; -related to operations that have been subject to Community rules; -Revenues must be deducted from the reported costs => EC Reg. 448/2004, Annex, Rule No 2

Expenditures must be… -not claimed before under this or any other EU financed programme; -supported by relevant documents (invoices, account. documents…) – EC Reg. 448/2004, Annex Rule 1. (2.1.) -properly accounted, certified, audited and reported within the specified period by the responsible bodies to the Joint Secretariat; -the general principles of efficiency, good value for money, economy, expediency and legality of all actions to be applied; -included under a category of expenditure listed in the budget

Budget lines

Project co-ordination and audit -Personnel resp. external expertise costs for Project Co-ordinator and the Financial Manager -Meetings costs of persons involved in the overall management and control of the project (e.g. steering / advisory groups …) -Costs for travel and accommodation of the project management. -Costs for the financial auditing (internal or external auditors) 1 -IT equipment/administrative/other costs of the project management -Eligible financial and bank charges (EC Reg. 448/2004, Rule 3) -In normal case all partners contribute to the co-ordination costs 1 projects from the 5 th round on, projects 1-4 th round BL 2 resp. BL 5

Personnel (incl. OH) -The cost of staff (salaries including tax) directly engaged in the operation (internal hours) => must not arise from the statutory responsibilities of the public authority or the public authoritys day-to-day management, monitoring and control tasks => counted as in cash contribution -Employers contribution for national social security purposes -Overheads => e.g. indirect administrative costs such as costs for office accommodation - electricity, rent, insurance, fax, phone, photocopies, Internet fees, heating, water, etc. => directly linked to the project activities => see Rule No.1 (1.8) of the EC Reg. 448/2004 => direct administrative costs shall be budgeted under BL 6

Meetings and dissemination -Costs related to organising and participating in meetings and seminars -Costs related to all aspects of promotion and publications specific to the project => relevant EC Reg. No 1159/2000 Note: -Travelling costs => BL4 -The fees of trainers, speakers, facilitators => BL 5

Travel and accommodation -costs for: travel, accommodation, subsistence allowances -related to project activities -economy class travel on public transport -in case of doubts on eligibility of travel to a third country – contact JS -Travel, accommodation and subsistence expenses of partners or participants from Russia and Belarus also eligible (if related to their travel to EU territory and actually paid by a EU project partner)

External expertise -all payments towards external bodies that realise a temporary and specific work in the frame of the project e.g. subcontracting of external staff, speakers for workshops, trainers, web designer, studies, research, services, etc. -All EU and national rules to be observed and fulfilled => in particular competition and public procurement rules -Expenditure related to co-ordination or audit activities => BL 1 -Sub-contracting of partners is not possible

Other costs and equipment -All other eligible project costs relevant to the project, which => cannot be included under the previous categories => are directly linked to project activities => direct administration costs => in kind contribution -Costs for small-scale office and other technical equipment (e.g. acquisition of hardware and software, office furniture, etc.) => used as a tool to reach the project objectives => not at the end of the project

Other costs and equipment -Either costs of the purchase or depreciation costs -Only items listed in the Application -Equipment to be seen as project output => BL 7 -Main relevant Rules: => competition and public procurement rules => EC regulation 448/2004, Annex Rule No. 1 ( ) => EC regulation 448/2004, Annex Rule No. 4 => EC regulation 448/2004, Annex Rule No. 10

Small scale investments -Small scale physical infrastructure investments for pilot projects of transnational relevance that are in line with the Programmes objectives -Only items listed in the Application -Max. 40% of the total project eligible budget -Either costs of the purchase or depreciation costs -Main relevant Rules: => competition and public procurement rules => EC regulation 448/2004, Annex Rule No. 1 ( ) => EC regulation 448/2004, Annex Rule No. 4 => EC regulation 448/2004, Annex Rule No. 10

Horizontal rules Reporting of VAT -relevant rule: EC regulation 448/2004, Annex Rule No. 7 Exchange rate -ERDF funds will be transferred to LP in EURO only -Three options of exchange rate calculation: 1. daily calculation 2. average rate 3. fixed dates (30.06 / 31.12) -Foreign exchange commissions and losses are NOT eligible

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