Financial and legal aspect in the context of proposal preparation

1. Financial and legal aspect in the context of proposal preparation Marija Šola, MSc. Project manager University of Belgrade School of Electrical Engineering

2. Useful documents regarding to financial aspect of the project proposals • Call Fich • Guide for applicants • Guide for legal and financial viability checking • Guide to Financial Issues relating to ICT PSPGrant Agreements

3. Call Fiche • Call identifier: CIP-ICT PSP-2013-7 • Date of publication: 22 December 20121 • Closure date: 14 May 2013, at 17h00, Brussels local time2 • Indicative budget : 125.73 M€ • Funding instruments

4. Guide for applicants • Guide for Applicants (Pilot A) • Guide for Applicants (Pilot B) • Guide for Applicants (Thematic Network - TN) • Guide for Applicants (Best Practice Network - BPN) • Guide for Applicants (Public Procurement of Innovative solutions Pilot - PPI)

5. Guide for legal and financial viability checking • This guide is made available for assisting participants who are invited for projectnegotiation following the evaluation of their proposal( only for coordinators). • Content • VERIFICATION OF THE EXISTENCE AND THE LEGAL STATUS OFPARTICIPANTS • VERIFICATION OF THE OPERATIONAL CAPACITY • VERIFICATION OF THE FINANCIAL CAPACITY:IMPLEMENTATION RULES

6. Guide to Financial Issues relating to Grant Agreements • This source outline information useful for preparation project proposals and the whole project duration. • Following the positive evaluation of a proposal, the coordinator is invited by email to commence negotiations with the Commission for a Grant Agreement. • Model Grant Agreement

7. Guide to Financial Issues relating to Grant Agreements • This guide is aimed at assisting beneficiaries and coordinators during preparation and implementation projects. • Guide to Financial Issues relating to ICT PSPGrant Agreements • Content • CORE GRANT AGREEMENT • ANNEX II – GENERAL CONDITIONS • ANNEX 1 - FINANCIAL STATEMENT - PILOT TYPE A AND PILOTTYPE B • ANNEX 2 -SUMMARY FINANCIAL REPORT- PILOT TYPE A ANDPILOT TYPE B • ANNEX 3 - SUMMARY FINANCIAL REPORT – THEMATICNETWORK • ANNEX 4 - REPORT ON THE DISTRIBUTION OF THE EU FINANCIAL CONTRIBUTION

8. Guide to Financial Issues relating to Grant Agreements Article 5 – Maximum EU financial contribution • 5.1 - Types of reimbursement- The ICT PSP grant agreement foresees three types of reimbursement. • Pilots Type A and B • The EUfinancial contribution for these projects is limited to 50% of the eligible costs. • For pilot projects selected following Call 2009 and beyond, indirect costs must be chargedon the basis of a flat-rate of 30% of the personnel costs • Best Practice Networks • The EU contribution forthese projects is limited to up to 80% of the eligible direct costs. • For best practice networksindirect costs are not eligible for funding. • Thematic Networks • Thematic networks are financedon the basis of eligible costs actually incurred("thematic networks –actual costs") • Thematic networks are financedon the basis of lump sums and flat-rates ("thematic network – lump sum")

9. Guide to Financial Issues relating to Grant Agreements Article 5 – Maximum EU financial contribution • 5.2 - Indicative breakdown of the budget and the EU financial contribution • Breakdown of the budget has to be included in Annex I (Description of Work) • Transfer of budget between beneficiaries is allowed without an amendment of the grantagreement. • An amendment to the grant agreement will be necessary in all cases when the budget transferarises from a significant change in Annex I.

10. Guide to Financial Issues relating to Grant Agreements Part C: Financial provisions Article II.20 – Eligible costs – general principles • Article II.20(1) – Eligible costs • be indicated in the indicative breakdown in Annex I; • be necessary for the implementation of the project; • be actually incurred by the beneficiary; • be identifiable and verifiable • comply with the requirements of the applicable tax and social legislation • be reasonable and justified • be incurred during the duration of the project. • Article II.20(2) – Ineligible costs • costs of capital employed, • provisions for possible future losses or charges, • interest owed, • exchange losses, • provisions for doubtful debts, • resources made available to a beneficiary free of charge, • value of contributions in kind, • unnecessary or ill-considered expenses

11. Guide to Financial Issues relating to Grant Agreements Part C: Financial provisions Article II.20 – Eligible costs – general principles • Article II.20(3) – Costs can be charged only in one categories of costs • The reimbursement of beneficiaries is based on their eligible direct and indirect costs • Costs may only be charged in one category of costs • Nocost can be taken into account twice, both as a direct and an indirect cost, or in two different costcategories for direct costs

12. Guide to Financial Issues relating to Grant Agreements Part C: Financial provisions Article II.21 – Direct costs The grant agreement foresees three categories of direct costs: • personnel, • subcontracting and • other specific direct costs

13. Guide to Financial Issues relating to Grant Agreements Part C: Financial provisions Article II.21 – Direct costs Article II.21(2) – Personnel costs • Any beneficiary may include in its personnel costs "permanent employees", who have permanentworking contracts with the beneficiary or "temporaryemployees", who have temporary workingcontracts with the beneficiary. • Personnel costs should reflect the total remuneration: salaries plus social security charges (holidaypay, pension contribution, health insurance, etc.) and other statutory costs included in theremuneration. • Only the costs of the actual hours worked by the persons directly carrying out work under theproject may be charged. Working time to be charged must be recorded throughout the duration ofthe project by any reasonable means (e.g. timesheets). • Where it is the usual practice of the beneficiary to consider certain types of personnel costs (suchas administrative or support personnel) as indirect costs, the costs of this personnel cannot becharged as direct eligible costs.

14. Guide to Financial Issues relating to Grant Agreements Part C: Financial provisions Article II.21 – Direct costs Article II.21 (2) – Subcontracting • The costs of subcontracting are a direct eligible cost. • Definition of subcontracting is given inArticle II.6 of the grant agreement. • This costs have to be specified in DOW

15. Guide to Financial Issues relating to Grant Agreements Part C: Financial provisions Article II.21 – Direct costs Article II.21 (3) – Other direct costs • Travel and related subsistence costs • The purchase cost of durable equipment - Within this framework, each beneficiary must apply its usual depreciationsystem for durable equipment. Depreciation is charged in each relevant periodic report. • Consumables and supplies

16. Guide to Financial Issues relating to Grant Agreements Part C: Financial provisions Article II.22 – Indirect costs • Indirect costs do not apply to Thematic Networks – Lump sum, as they arefinanced by lump sums and flat-rates based on scale-of-unit costs. • For Thematic Networks – actual costs, indirect costs are calculated on a flat-rate basis of 7% ofall direct eligible costs, excluding the direct eligible costs for subcontracting. • Indirect costs in Best PracticeNetworks are not eligible for EU funding. • The way indirect costs may be charged to grant agreeements for Pilot Type A and Type B projectsdepend on the Call following which the projects have been selected.

17. Frequently Asked Question How to calculate personnel costs? Personnel costs = Hourly rate * Actual hours worked on project Hourly rate = Total remuneration (salaries plus social security charges) / Productiv hours Productiv hours*=Approximately 210 workable days in ayear * 7.5 = 1570 * Guide to Financial Issues relating to Grant Agreements- Page 26

18. Thank you very much for your attention!