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Commission Decision of 5 March 2008 laying down rules for the implementation of Decision No 574/2007/EC of the European Parliament and of the Council establishing the External Borders Fund for the period 2007 to 2013 as part of the General programme Solidarity and Management of Migration Flows as regards Member States' management and control systems, the rules for administrative and financial management and the eligibility of expenditure on projects co-financed by the Fund (notified under document number C(2008) 789) (Only the Bulgarian, Czech, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish texts are authentic) (2008/456/EC)

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ANNEX XIRULES ON THE ELIGIBILITY OF EXPENDITURE — EXTERNAL BORDERS FUND

I.General principles

I.1.Basic principles

1.In accordance with the basic act, for it to be eligible, expenditure must be:
(a)

within the scope of the Fund and within its objectives, as described in Articles 1 and 3 of the basic act;

(b)

within the eligible actions listed in Articles 4 and 6 of the basic act;

(c)

needed to carry out the activities covered by the project, forming part of the multiannual and annual programmes, as approved by the Commission;

(d)

reasonable and comply with the principles of sound financial management, in particular, value for money and cost-effectiveness;

(e)

incurred by the final beneficiary and/or the partners in the project, who shall be established and registered in a Member State, except in the case of international governmental organisations that pursue the same objectives laid down in the basic act. With regard to Article 39 of this Decision, the rules applicable to the final beneficiary shall apply mutatis mutandis to the partners in the project;

(f)

incurred in accordance with the specific provisions in the grant agreement.

2.In the case of multiannual actions within the meaning of Article 16(6) of the basic act, only the part of the action co-financed by an annual programme is considered to be a project for the application of these eligibility rules.
3.Projects supported by the Fund shall not be financed by other sources covered by the Community budget. Projects supported by the Fund shall be co-financed by public or private sources.

I.2.Budget of a project

The budget of a project shall be presented as follows:

a

Including assigned income as described in point IV.

ExpenditureIncome
+Direct costs (DC)
+Indirect costs (fixed percentage of DC, defined in the grant agreement)
+Costs covered by assigned income (if applicable)
+contribution from the EC (defined as the lowest of the three amounts indicated in Article 12 of this Decision)
+contribution from the final beneficiary and the partners in the projecta
+contribution from third parties
+receipts generated by the project
= Total eligible cost (TEC) = Total income

The budget shall be balanced: total eligible cost shall be equal to total income.

I.3.Income and non-profit principle

1.Projects supported by the Fund must be of a non-profit-making nature. If, at the end of the project, the sources of income, including receipts, exceed expenditure, the contribution to the project from the Fund shall be reduced accordingly. All sources of income for the project must be recorded in the final beneficiary's accounts or tax documents, and must be identifiable and controllable.
2.Project income shall come from all financial contributions granted to the project by the Fund, from public or private sources, including the final beneficiary's own contribution, and from any receipts generated by the project. ‘Receipts’ for the purpose of this rule covers revenue received by a project during the eligibility period as described in point I.4, from sales, rentals, services, enrolment/fees or other equivalent income.
3.The Community contribution resulting from the application of the principle of non-profit, as referred to under Article 12(c) of this Decision, will be the ‘total eligible cost’ minus the ‘contribution from third parties’ and ‘receipts generated by the project’.

I.4.Eligibility period

1.Costs relating to a project must be incurred and the respective payments (except for depreciation) made after 1 January of the year referred to in the financing decision approving the annual programmes of the Member States. The eligibility period is until 31 December of the year N(1) +1, meaning that the costs relating to a project must be incurred before this date.
2.An exception to the abovementioned eligibility period is made for:
(a)

projects supported under the 2007 annual programme, in accordance with Article 37(3) of the basic act;

(b)

technical assistance for Member States (refer to point V(3)).

I.5.Record of expenditure

1.Expenditure shall correspond to payments made by the final beneficiary. These must be in the form of financial (cash) transactions, with the exception of depreciation.
2.As a rule, expenditure shall be justified by official invoices. Where this cannot be done, expenditure shall be supported by accounting documents or supporting documents of equivalent evidential value.
3.Expenditure must be identifiable and verifiable. In particular,
(a)

it must be recorded in the accounting records of the final beneficiary;

(b)

it must be determined in accordance with the applicable accounting standards of the country where the final beneficiary is established and with the usual cost accounting practices of the final beneficiary; and

(c)

it must be declared in accordance with the requirements of applicable tax and social legislation.

4.Where applicable, the final beneficiaries are obliged to keep certified copies of the accounting documents justifying income and expenditure incurred by the partners in relation to the project concerned.
5.The storage and processing of such records must comply with the national data protection legislation.

I.6.Territorial scope

1.Expenditure for actions described in Articles 4 and 6 of the basic act must be incurred in the territory of the Member States, by the final beneficiaries defined in point I.1(e), with the exception of:
  • expenditure implementing actions relating to the general objective defined in Article 3(1)(d) of the basic act. Expenditures for these actions may be incurred in the territory of the Member States and in third countries,

  • actions relating to the surveillance of external borders. These actions can take place both within and beyond the territory of Member States.

2.Partners in the project registered and established in third countries may participate in projects on a no-cost basis, except in the case of international governmental organisations. Therefore, costs incurred by these partners are ineligible.

II.Categories of eligible costs (at project level)

II.1.Direct eligible costs

The direct eligible costs of the project are costs that, with due regard to the general conditions of eligibility set out in part I above, are identifiable as specific costs directly linked to the implementation of the project. Direct costs shall be included in the estimated overall budget of the project.

The following direct costs are eligible:

II.1.1. Staff costs
II.1.1.1.General rules
1.Direct costs for staff are eligible only for persons that have a key and direct role in the project, such as project managers and other staff operationally involved in the project, for example planning project activities, implementing (or monitoring) operational activities, delivering services to the final recipients of the project, etc.

Costs for other members of staff in the final beneficiary organisation who only provide a supporting role (such as the general manager, accountant, procurement support, human resources support, information technology support, administrative assistant, receptionist, etc.) are not eligible as direct costs and are considered to be indirect costs (see point II.2).

2.Staff costs shall be detailed in the forward budget, indicating functions, number of staff and names.

If the names of the persons are not yet known or cannot be disclosed, indication shall be provided of the professional and technical capacities of the persons set to implement the relevant functions/tasks within the project.

3.The cost of staff assigned to the project, i.e. salaries and social security contributions and other statutory costs, shall be eligible, provided that this does not exceed the average rates as regards the final beneficiary's usual policy on remuneration. Where applicable, this figure may include all the usual contributions paid by the employer, but it must exclude any bonuses, incentive payments or profit-sharing schemes. Levies, taxes or charges (in particular, direct taxes and social security contributions on wages) arising from projects co-financed by the Fund amount to eligible costs only where they are actually borne by the final beneficiary of the grant.
II.1.1.2.Specific conditions for staff costs of public bodies

Staff costs for public bodies in charge of implementing the project are considered as eligible direct costs only in the following situations:

1.

In accordance with the tasks carried out in relation to the project as well as the duration of the project, costs for staff of consular and other services of Member States in third countries competent in the management of flows of third-country nationals into the territory of the Member States, such as consular officers, air liaison officers and immigration liaison officers, are considered as direct eligible costs, provided that the purpose of the project is to improve the co-operation between Member States and involves the sharing of tasks and responsibilities for the benefit of more than two participating Member States.

2.

Costs for staff of other authorities and services of Member States concerned by the basic act, such as border guards provided that:

(a)

the project does not predominantly concern the procurement of equipment or real estate as referred to in points II.1.3 and II.1.4 below; and

(b)

the project consists mainly of tasks which require the active and continuous input by staff such as the organisation of meetings and management processes for exchange of information or best practices, consultation and coordination mechanisms, training or education of staff and programmes for the secondment and exchange of staff.

In such cases, the staff costs are considered as direct eligible costs for:

  • a person contracted by the final beneficiary solely for the purpose of implementing the project,

  • a person employed on a permanent basis by the final beneficiary who:

    (i)

    fulfils tasks specifically linked to the implementation of the project on the basis of overtime remuneration; or

    (ii)

    is seconded by a duly documented decision of the organisation to tasks that are specifically linked to the implementation of the project and which do not form part of his/her normal routine and he/she is replaced for his/her usual tasks by another person recruited by the organisation.

II.1.2. Travel and subsistence costs
1.Travel and subsistence costs are only eligible as direct costs for:
(a)

staff of the final beneficiary whose costs are eligible as defined in point II.1.1;

(b)

in duly exceptional and justified cases, staff of the final beneficiary providing a supporting role as defined in point II.1.1;

(c)

other persons outside the final beneficiary who participate in the activities of the project. In this case, attendance lists should be kept as supporting evidence.

2.Travel costs shall be eligible on the basis of the actual costs incurred. Reimbursement rates shall be based on the cheapest form of public transport and flights shall, as a rule, be permitted only for journeys over 800 km (return trip), or where the geographical destination justifies travelling by air. Boarding passes must be kept. Where a private car is used, reimbursement is normally made either on the basis of the cost of public transport, or on the basis of mileage rates in accordance with published official rules in the Member State concerned or used by the final beneficiary.
3.Subsistence costs shall be eligible on the basis of real costs or a daily allowance. Where an organisation has its own daily rates (subsistence allowances), they shall be applied within ceilings established by the Member State in accordance with national legislation and practice. Subsistence allowances are normally understood to cover local transport (including taxis), accommodation, meals, local telephone calls and sundries.
II.1.3. Equipment
II.1.3.1.General rules
1.Costs pertaining to the acquisition of equipment (based on any of the following: rental, leasing, purchase based on the full or partial cost, or depreciation of purchased assets) are only eligible if they are essential to the implementation of the project. Equipment shall have the technical properties needed for the project and comply with applicable norms and standards.
2.Costs for day-to-day administrative equipment (such as printer, laptop, fax, copier, phone, cabling, etc.) are not eligible as direct costs and are to be considered as indirect costs (see point II.2).
II.1.3.2.Renting and leasing

Expenditure in relation to renting and leasing operations is eligible for co-financing subject to the rules established in the Member State, national legislation and practice and the duration of the rental or lease for the purpose of the project.

II.1.3.3.Purchasing
1.Costs pertaining to the acquisition of equipment (systems, operating equipment, means of transport, inter alia, as referred to in Article 5(1)(c) to (f) of the basic act) are eligible in accordance with national rules. Such costs are eligible for co-financing on the basis of the full or partial cost of the purchase if:
(a)

they are directly linked to the realisation of the project;

(b)

incurred in accordance with national procurement rules established in the Member State;

(c)

the equipment has the technical characteristics necessary for the project and complies with applicable norms and standards;

(d)

the equipment will continue to be used for the same objectives pursued by the project, even after the project has ended for the minimum duration of:

  • three years or more for information and communication technology (ICT) equipment,

  • five years or more for other types of equipment such as operating equipment and means of transport, except for the ones indicated below,

  • 10 years for helicopters, vessels and aircrafts.

2.Costs for the abovementioned equipment may be eligible on the basis of depreciation in accordance with national rules. In that case the above conditions (a), (b) and (c) shall apply. Furthermore, the following conditions must also be satisfied:
(a)

where equipment is purchased before or during the lifetime of the project, the portion of equipment depreciation is eligible on the basis of the duration of use for the project and the rate of actual use for the project;

(b)

equipment that was purchased before the lifetime of the project, but which is used for the purpose of the project, is eligible on the basis of depreciation. However these costs are ineligible if the equipment was originally purchased through a Community grant;

(c)

purchase costs of equipment shall correspond to normal market costs and the value of the items concerned is written off in accordance with the tax and accounting rules applicable to the final beneficiary.

II.1.4. Real estate
II.1.4.1.General rules

In the case of either purchase of real estate, construction or renovation of real estate, or rental of real estate, it shall have the technical properties needed for the project and comply with the applicable norms and standards.

II.1.4.2.Purchase, construction or renovation
1.If the acquisition of real estate is essential for implementation of the project and is clearly linked with its objectives, the purchase of real estate, i.e. buildings already constructed, or construction of real estate, is eligible for co-financing on the basis of the full or partial cost, or on the basis of depreciation, under the conditions set out below, without prejudice to the application of stricter national rules:
(a)

a certificate shall be obtained from an independent qualified valuer or duly authorised official body establishing that the price does not exceed the market value, either attesting that the real estate is in conformity with national regulations or specifying the points which are not in conformity that the final beneficiary plans to rectify as part of the project;

(b)

the real estate has not been purchased through a Community grant at any time prior to the implementation of the project;

(c)

the real estate is to be used solely for the purpose stated in the project for a period of at least 10 years after the end date of the project unless the Commission specifically authorises otherwise in the case of co-financing of the full or partial costs. In the case of co-financing on the basis of depreciation this period is reduced to five years;

(d)

the purchase of the real estate respects the principles of value for money and cost-effectiveness and is being considered as proportionate to the aim to be achieved through the implementation of the project;

(e)

in the case of co-financing on the basis of depreciation, only the portion of the depreciation of these assets corresponding to the duration of use for the project and the rate of actual use for the project is eligible. Depreciation shall be calculated according to national accounting rules.

2.Expenses for renovation of real estate are eligible for co-financing on the basis of the full or partial cost or on the basis of depreciation. In the case of renovation costs only conditions (c) and (e) above apply.
II.1.4.3.Rental

Rental of real estate is eligible for co-financing where there is a clear link between the rental and the objectives of the project concerned, under the conditions set out below and without prejudice to the application of stricter national rules:

(a)

the real estate shall not have been purchased through a Community grant.

(b)

the real estate should only be used for implementation of the project. If not, only the portion of the costs corresponding to the use for the project is eligible.

II.1.4.4.Office space for the final beneficiary

Costs for the purchase, construction, renovation or rental of office space for the routine activities of the final beneficiary are not eligible. Such costs are considered to be indirect costs (see point II.2).

II.1.5. Consumables, supplies and general services
1.The costs of consumables, supplies and general services are eligible provided that they are identifiable and directly necessary for the implementation of the project.
2.However, office supplies as well as all kinds of small administrative consumables, supplies, hospitality costs and general services (such as telephone, internet, postage, office cleaning, utilities, insurance, staff training, recruitment, etc.) are not direct eligible costs; they are included in indirect costs, as referred to in point II.2.
II.1.6. Subcontracting
1.As a general rule, final beneficiaries must have the capacity to carry out the activities relating to the project themselves. Therefore, subcontracting must be limited and shall not exceed 40 % of the direct eligible costs of a project unless duly justified and approved in advance by the responsible authority.
2.Expenditure relating to the following subcontracts is ineligible for co-financing by the Fund:
(a)

subcontracting of tasks relating to the overall management of the project;

(b)

subcontracting that adds to the cost of the project without adding proportionate value to it;

(c)

subcontracting with intermediaries or consultants where payment is defined as a percentage of the total cost of the project, unless such payment is justified by the final beneficiary by reference to the actual value of the work or services provided.

3.For all subcontracts, subcontractors shall undertake to provide all audit and control bodies with all the necessary information relating to subcontracted activities.
II.1.7. Costs deriving directly from the requirements linked to EU co-financing

Costs needed to meet the requirements linked to EU co-financing, such as publicity, transparency, evaluation of the project, external audit, bank guarantees, translation costs, etc., are eligible as direct costs.

II.1.8. Expert fees

Legal consultancy fees, notarial fees and costs of technical and financial experts are eligible.

II.2.Indirect eligible costs

1.Indirect costs relate to categories of expenditure that are not identifiable as specific costs directly linked to the project. A fixed percentage of the total amount of direct eligible costs may be eligible as indirect costs, provided that:
(a)

the indirect costs are kept to a minimum and the exact percentage of indirect costs is set by the Member State in relation to needs;

(b)

the indirect costs are anticipated in the forward budget of the project;

(c)

the indirect costs do not include costs assigned to another heading of the budget for the project;

(d)

the indirect costs are not financed from other sources. Organisations receiving an operating grant received from the EU budget and/or from the Member States cannot include indirect costs in their forward budget;

(e)

as a general rule, the fixed percentage of indirect costs in relation to the total amount of direct eligible costs does not exceed 5 %. However, the fixed percentage of indirect costs shall not exceed 2,5 % in any of the following situations:

  • where the responsible authority acts as an executing body as defined in Article 7(3), or

  • where the combined total of subcontracting (II.1.6) and procurement (points II.1.3 and II.1.4) exceeds 40 % of the eligible direct costs.

2.The percentage allocated to indirect costs shall cover the following costs in particular:
(a)

staff costs that are ineligible as direct costs as per point II.1.1.1 (1);

(b)

administration and management expenses, such as costs identified in II.1.5.2;

(c)

bank fees and charges (except bank guarantees as defined in section II.1.7);

(d)

costs for real estate and maintenance costs when linked to day-to-day administrative operations, such as costs identified in II.1.4.4;

(e)

all costs linked to the project but excluded from section II.1 — ‘Direct eligible costs’.

III.Ineligible expenditure

The following costs are not eligible:

(a)

VAT, except where the final beneficiary can show that he is unable to recover it;

(b)

return on capital, debt and debt service charges, debit interest, foreign exchange commissions and exchange losses, provisions for losses or potential future liabilities, interest owed, doubtful debts, fines, financial penalties, litigation costs, and excessive or reckless expenditure;

(c)

entertainment costs exclusively for project staff. Reasonable hospitality costs at social events justified by the project, such as an event at the end of the project or meetings of the project steering group, are permitted;

(d)

costs declared by the final beneficiary and covered by another project or work programme receiving a Community grant;

(e)

purchase of land;

(f)

staff costs for officials who contribute to project implementation by accomplishing tasks that are part of their normal routine;

(g)

contributions in kind.

IV.Costs covered by assigned income

1.In duly substantiated cases, co-financing of the project as regards the contribution from the final beneficiary and the partners in the project may be made up in part of contributions in terms of work carried out by permanent officials employed by these bodies and involved in the project. In this case these costs are not eligible as direct or indirect staff costs as defined under points II.1.1 and II.2 but as costs covered by assigned income.

2.Such contributions shall not exceed 50 % of the total contribution given by the final beneficiary. In this case, the following rules shall apply:

(a)

tasks of public officials are specifically linked to implementation of the project and do not arise from the statutory responsibilities of the public authority;

(b)

public officials entrusted with implementing a project are seconded by a duly documented decision of the competent authority;

(c)

the value of the contributions can be audited and may not exceed the costs actually borne and duly supported by accounting documents of the public authority.

V.Technical assistance at the initiative of member states

1.At the initiative of each Member State, the following technical assistance measures are eligible for each annual programme, within the limits specified in Article 18 of the basic act:

(a)

expenditure relating to the preparation, selection, appraisal, management and monitoring of actions (including computer equipment and consumables);

(b)

expenditure relating to audits and on-the-spot checks of actions or projects;

(c)

expenditure relating to evaluations of actions or projects;

(d)

expenditure relating to information, dissemination and transparency in relation to actions;

(e)

expenditure on the acquisition, installation and maintenance of computerised systems for the management, monitoring and evaluation of the Funds;

(f)

expenditure on meetings of monitoring committees and sub-committees relating to the implementation of actions. This expenditure may also include the costs of experts and other participants in these committees, including third-country participants, where their presence is essential to the effective implementation of actions;

(g)

expenditure on salaries, including social security contributions, although only in the following cases:

  • civil servants or other public officials seconded by duly documented decision of the competent authority to carry out tasks referred to in points (a) to (f),

  • other staff employed to carry out tasks referred to in points (a) to (f),

  • the period of secondment or employment may not exceed the final date for the eligibility of expenditure laid down in the decision approving the assistance.

2.Technical assistance may finance expenses incurred by any of the following bodies: responsible authority, delegated authority, audit authority, certifying authority.

3.Activities linked to technical assistance must be performed and the corresponding payments made after 1 January of the year referred to in the financing decision approving the annual programmes of Member States. The eligibility period lasts until the end of June of the year N(2) + 2 or any later date compatible with the deadline for the submission of the final report on implementation of the annual programme.

4.Any procurement must be carried out in accordance with national procurement rules established in the Member State.

5.Member States may implement technical assistance measures for this Fund together with technical assistance measures for some or all of the four Funds. However, in that case only the portion of the costs used to implement the common measure corresponding to this Fund shall be eligible for financing under this Fund, and Member States shall ensure that:

(a)

the portion of costs for common measures is charged to the corresponding Fund in a reasonable and verifiable manner; and

(b)

there is no double financing of costs.

VI.Special transit scheme

The following specific rules shall apply in the case of the Special Transit Scheme:

(a)

the eligibility period for expenditure shall be in accordance with Article 40 (3) of this Decision;

(b)

by virtue of Article 6(2)(c) of the basic act, costs for staff specifically implementing the special transit scheme are considered as eligible direct costs in accordance with the general rules described in point II.1.1.1, paragraphs 2 and 3;

(c)

by virtue of Article 6(2)(c) of the basic act, travel and subsistence costs for staff specifically implementing the special transit scheme are considered as eligible direct costs;

(d)

point II.1.3.1 paragraph 2 shall not apply;

(e)

point II.1.4.4 shall not apply;

(f)

point II.1.5 paragraph 2 shall not apply;

(g)

indirect costs (Section II.2) shall be ineligible;

(h)

Section III, point (f) shall not apply.

(1)

Where ‘N’ is the year referred to in the financing decision approving the annual programmes of Member States.

(2)

Where ‘N’ is the year referred to in the financing decision approving the annual programmes of Member States.

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