Purchases — Equipment (Article 6.2.C.2)

conditions — Calculation 1.1 What? If eligible under the Grant Agreement with the depreciation option (default option for most programmes), the beneficiaries/affiliated entities may charge ‘Equipment costs’ as depreciation costs.

In your Grant Agreement, this option is labelled ‘depreciation only’ (NOT ‘depreciation and full cost for listed equipment’ or ‘full cost and depreciation for listed equipment’; see Data Sheet, Point 3). For those other options, see specific cases below.

In this case, this budget category covers the depreciation costs of equipment, infrastructure or other assets used for the action. In addition, in some cases (e.g. infrastructure), it may also include the costs necessary to ensure that the asset is ready for its intended use (e.g. site preparation, delivery and handling, installation, etc).

What not? If the beneficiary’s usual practice is to consider durable equipment costs (or some of them) as indirect costs, these can NOT be declared as direct costs, but are covered by the flat rate for indirect costs (see Article 6.2.E). Any depreciation declared as a direct cost under the action must be a direct cost under the beneficiary’s cost accounting practices (see Article 6.2).

1.2 The costs must be declared as actual costs.

1.3 The costs must comply with the eligibility conditions set out in Article 6.2.C.2, in particular:

− fulfil the general conditions for actual costs to be eligible (i.e. incurred during the action duration, necessary, linked to the action, recorded in the beneficiary’s accounts, etc; see Article 6.1(a))

− have been purchased in accordance with Article 6.2.C and

− be written off in accordance with the beneficiary’s usual accounting practices and with international accounting standards.

‘International accounting standards’ are an internationally recognised set of rules for maintaining books and reporting company accounts, designed to be compared and understood across countries.

Example

The IAS 16 (International Accounting Standards) or the International Financial Reporting Standards (IFRS), originally created by the EU and now in common international use.

1.4 They must be calculated according to the following principles:

− the depreciable amount (purchase price) of the equipment must be allocated on a systematic basis over its useful life (i.e. the period during which the equipment is expected to be usable). If the equipment’s useful life is more than a year, the beneficiary can NOT charge the total cost of the item in a single year

‘Useful life’ means the time during which the equipment is useful for the beneficiary. If the beneficiary does not normally calculate depreciation, it may refer to its national tax regulations to define the useful life of the equipment.

Declaring the full price in one single year would be considered either as not compliant with the international accounting standards or as an excessive cost — and therefore in both cases ineligible; see specific case ‘cash-based accounting’ below), except in case of low-value assets (see below).

− depreciated equipment costs can NOT exceed the equipment’s purchase price

− if the beneficiary does not use the equipment exclusively for the action, only the portion used on the action may be charged (the amount of use must be auditable)

Example

A large 3D printer was bought before the action started and was not fully depreciated. For 6 months in reporting period 1 it was used for the action for 50 % of the time and for other activities for the other 50 % of the time. Linear depreciation is applied according to the beneficiary’s usual practices (depreciation over the expected period of use of the 3D printer): EUR 100 000 per year (EUR 50 000 for 6 months). Costs declared for the project: EUR 50 000 (6 months of use) multiplied by 50 % of use for the action during those 6 months = EUR 25 000.

− the beneficiary can charge depreciation in line with applicable audit standards and its usual accounting practices, i.e. normally at the earliest for periods as of the reception of the equipment and its availability for use (i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management).

Example

A robot-supported equipment was bought on 15 November and received and set up for use as of 01 December. The reporting period ends on 31 December and the financial year also ends on 31 December. The maximum depreciation that the beneficiary may charge is 1 month (from 1 to 31 December); i.e. 1/12 of the annual depreciation. This applies even if the beneficiary recorded in its accounts at 31 December a full year of depreciation for the item.

The depreciation costs must be calculated for each reporting period.

C.2 Equipment

C.2 Equipment

[OPTION 1 for programmes without equipment costs (ineligible):

Not applicable ]

[OPTION 2 for programmes with depreciation only:

Purchases of equipment, infrastructure or other assets used for the action must be declared as depreciation costs, calculated on the basis of the costs actually incurred and written off in accordance with international accounting standards and the beneficiary’s usual accounting practices.

Only the portion of the costs that corresponds to the rate of actual use for the action during the action duration can be taken into account.

Costs for renting or leasing equipment, infrastructure or other assets are also eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees. ]

[OPTION 3 for programmes with full cost only:

Purchases of equipment, infrastructure or other assets specifically for the action (or developed as part of the action tasks) may be declared as full capitalised costs if they fulfil the cost eligibility conditions applicable to their respective cost categories.

‘Capitalised costs’ means:

- costs incurred in the purchase or for the development of the equipment, infrastructure or other assets and

- which are recorded under a fixed asset account of the beneficiary in compliance with international accounting standards and the beneficiary’s usual cost accounting practices.

If such equipment, infrastructure or other assets are rented or leased, full costs for renting or leasing are eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees.]

[OPTION 4 for programmes with depreciation and full cost for listed equipment (grant-level):

Purchases of equipment, infrastructure or other assets used for the action must be declared as depreciation costs, calculated on the basis of the costs actually incurred and written off in accordance with international accounting standards and the beneficiary’s usual accounting practices.

Only the portion of the costs that corresponds to the rate of actual use for the action during the action duration can be taken into account.

Costs for renting or leasing equipment, infrastructure or other assets are also eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees. [additional OPTION if selected for the grant : Moreover, for the following equipment, infrastructure or other assets purchased specifically for the action (or developed as part of the action tasks):

- [insert name/type of equipment]

- [insert name/type of equipment]

[same for more equipment]

If the RAO decides to set specific rules, they must be set out in the call and take into account the value of the contracts and the relative size of the EU contribution in relation to the total cost of the action and the risk (proportionality). Specific rules may only be set for the award of contracts of a value higher than EUR 60 000. Full purchase cost option and conditions must be specified in the call. 94

costs may exceptionally be declared as full capitalised costs, if they fulfil the cost eligibility conditions applicable to their respective cost categories. ‘Capitalised costs’ means: - costs incurred in the purchase or for the development of the equipment, infrastructure or other assets and - which are recorded under a fixed asset account of the beneficiary in compliance with international accounting standards and the beneficiary’s usual cost accounting practices. If such equipment, infrastructure or other assets are rented or leased, full costs for renting or leasing are eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees.] ] [OPTION 5 for programmes with full cost and depreciation for listed equipment (grant-level): Purchases of equipment, infrastructure or other assets specifically for the action (or developed as part of the action tasks) may be declared as full capitalised costs if they fulfil the eligibility conditions applicable to their respective cost categories. ‘Capitalised costs’ means: - costs incurred in the purchase or for the development of the equipment, infrastructure or other assets and, - which are recorded under a fixed asset account of the beneficiary in compliance with international accounting standards and the beneficiary’s usual cost accounting practices. If such equipment, infrastructure or other assets are rented or leased, full costs for renting or leasing are eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees. [additional OPTION if selected for the grant: However, for the following equipment, infrastructure or other assets used for the action: - [insert name/type of equipment] - [insert name/type of equipment] [same for more equipment] the costs must be declared as depreciation costs, on the basis of the costs actually incurred and written off in accordance with international accounting standards and the beneficiary’s usual accounting practices. Only the portion of the costs that corresponds to the rate of actual use for the action during the action duration can be taken into account. Costs for renting or leasing such equipment, infrastructure or other assets are also eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees. ]] [OPTION 6 for programmes with choice at call level: [OPTION 1 by default (depreciation only): Purchases of equipment, infrastructure or other assets used for the action must be declared as depreciation costs, calculated on the basis of the costs actually incurred and written off in accordance with international accounting standards and the beneficiary’s usual accounting practices. Only the portion of the costs that corresponds to the rate of actual use for the action during the action duration can be taken into account. Costs for renting or leasing equipment, infrastructure or other assets are also eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees.]

— Calculation

2.1 What? If eligible under the Grant Agreement with the full cost option (sometimes in HE, RFCS, DEP, EDF, SMP, EU4H, EUAF, UCPM, RELEX; always in CEF, CCEI, HUMA), the beneficiaries/affiliated entities may charge ‘Equipment costs’ as full costs.

In your Grant Agreement, this option is labelled ‘full cost only’ (NOT ‘depreciation and full cost for listed equipment’ or ‘full cost and depreciation for listed equipment’; see Data Sheet, Point 3). For those other options, see specific cases below. Equipment that does not comply with the specific conditions for full cost (e.g. equipment purchased prior to the action but used for the action) must be declared using the normal depreciation cost.

In this case, the equipment costs cover the full capitalised costs for the equipment, infrastructure or other assets to the grant.

‘Capitalised’ costs means recorded as assets in the beneficiary’s balance sheet. They may relate to:

− the full purchase costs and/or

− the full development costs

and must be recorded under a fixed asset account in the beneficiary’s accounting records in compliance with international accounting standards and the beneficiary’s usual cost accounting practices.

2.2 The costs must be declared as actual costs.

2.3 The costs must comply with the eligibility conditions set out in Article 6.2.C.2, in particular:

− for full purchase costs:

− fulfil the general conditions for actual costs to be eligible (i.e. incurred during the action duration, necessary, linked to the action, recorded in the beneficiary’s accounts, etc; see Article 6.1(a)) and

− have been purchased in accordance with Article 6.2.C

Example

A beneficiary needs to buy an off-the-shelf equipment to perform some of its action tasks. The related purchase costs are eligible if they comply with Article 6.2.C (i.e. ‘best value for money/or lowest price’ and ‘no conflict of interests’ principles).

− for full development costs:

− depending on the nature of the cost items included in the development cost, fulfil the general and specific cost eligibility conditions that would apply to the individual cost item (for example, have been purchased in accordance with Article 6.2.C or fulfil the specific conditions for personnel costs to be eligible Article 6.2.A).

Example

A beneficiary is developing a prototype as part of its action tasks. For this purpose, it needs to buy several components and rely on a service provider to assemble some specific parts of the prototype. In that case, the related purchase costs are eligible if they comply with Article 6.2.C (i.e. notably with the ‘best value for money/ or lowest price’ and ‘no conflict of interests’ principles). The beneficiary has also its own employees involved in the assembling of the other parts of the prototype. In that case, the related personnel costs are eligible if they comply with Article 6.2.A.1 (personnel costs for employees or equivalent appointing act).

2.4 They must be calculated according to the following principles:

− correspond to the actual costs incurred in the purchase or for the development and

− ensure that there is no double charging of costs (in particular, no charging of depreciation costs for the prototype or pilot plant to the grant or another EU grant).

They cover the full purchase/development costs (not only the depreciation costs for the reporting period).

Specific cases (equipment costs (C.2)):

Depreciation and full costs for listed items (option in HE, RFCS, DEP, EDF, SMP, AMIF/ISF/BMVI, PERI, UCPM, RELEX) — If this option is activated in the Grant Agreement, the beneficiaries can use depreciation for all items, except certain items listed in the Grant Agreement for which you can charge full cost. For details, see above.

Full costs and depreciation for listed items (option in HE, RFCS, EDF, LIFE, SMP, UCPM) — If this option is activated in the Grant Agreement, the beneficiaries may charge all items at full cost, except the ones listed in the Grant Agreement for which you need to use depreciation. For details, see above.

Full price of a low-value asset in one single year (depreciation) — If the option for depreciation is activated, full cost of a low-value asset may exceptionally be eligible in the year when it is purchased if:

− the full cost is recorded in the accounts of the entity in accordance with its usual accounting practices as expenditure of that year (i.e. NOT recorded as an asset subject to depreciation)

− the cost of the asset is below the low-value ceiling as defined under national law (e.g. national tax legislation) or other objective reference compatible with the materiality principle

and

− the item is used exclusively for the action in the year of purchase.

If the item is not used exclusively for the action in the year of purchase, only the portion used on the action may be charged.

Equipment bought before the action starting date (depreciation) — If the option for depreciation is activated, depreciation costs for equipment used for the action, but bought before the action starting date are eligible if they fulfil the general eligibility conditions of Article 6.1(a). The remaining depreciation costs (the equipment has not been fully depreciated before the action’s start) may be eligible for the portion corresponding to the action duration and to the rate of actual use for the purposes of the action.

Example

According to the beneficiary’s accounting practices, a piece of equipment bought in January 2020 has a depreciation period of 48 months. If the action starts in January 2022 (when 24 months of depreciation have already passed) and the equipment is used for this action, the beneficiary can declare the depreciation costs incurred for the remaining 24 months, in proportion to the equipment’s use for the action.

Cash-based accounting

There are NO exceptions for cash-based accounting. If the

Example

A beneficiary that uses cash-based accounting buys a machine for EUR 100 000 in March 2021. According to the logbook of the machine, it is used for the action 50 % of the time from 1 July 2021

until the end of the action. The action started in January 2021 and runs for three years with two reporting periods. The machine’s useful life is six years. In the reporting period ending in June 2022, the beneficiary must declare depreciation costs taking into account the percentage of use, the time used for the action and the machine’s useful life: EUR 100 000 x (12/72 months) x 50 % (used for the action) = amount declared for the machine in the first reporting period In the reporting period ending in December 2023, the beneficiary must declare: EUR 100 000 x (18/72 months) x 50 % (used for the action) = amount declared for the machine in the second reporting period

Costs of renting or leasing of equipment, infrastructure or other assets (depreciation and full cost) — If the equipment was not purchased but rented or leased, the beneficiaries can charge the renting or leasing costs (i.e. finance leasing, renting and operational leasing) — both if the option for depreciation or the full cost option are activated,

[OPTION 2 full cost only (if selected for the call25): Purchases of equipment, infrastructure or other assets specifically for the action (or developed as part of the action tasks) may be declared as full capitalised costs if they fulfil the cost eligibility conditions applicable to their respective cost categories. ‘Capitalised costs’ means: - costs incurred in the purchase or for the development of the equipment, infrastructure or other assets and - which are recorded under a fixed asset account of the beneficiary in compliance with international accounting standards and the beneficiary’s usual cost accounting practices. If such equipment, infrastructure or other assets are rented or leased, full costs for renting or leasing are eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees.] [OPTION 3 depreciation + full cost for listed equipment at grant level (if selected for the call26): Purchases of equipment, infrastructure or other assets used for the action must be declared as depreciation costs, calculated on the basis of the costs actually incurred and written off in accordance with international accounting standards and the beneficiary’s usual accounting practices. Only the portion of the costs that corresponds to the rate of actual use for the action during the action duration can be taken into account. Costs for renting or leasing equipment, infrastructure or other assets are also eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees. [additional OPTION if selected for the grant : Moreover, for the following equipment, infrastructure or other assets purchased specifically for the action (or developed as part of the action tasks): - [insert name/type of equipment] - [insert name/type of equipment] [same for more equipment] costs may exceptionally be declared as full capitalised costs, if they fulfil the cost eligibility conditions applicable to their respective cost categories. ‘Capitalised costs’ means: - costs incurred in the purchase or for the development of the equipment, infrastructure or other assets and - which are recorded under a fixed asset account of the beneficiary in compliance with international accounting standards and the beneficiary’s usual cost accounting practices. If such equipment, infrastructure or other assets are rented or leased, full costs for renting or leasing are eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees.]] [OPTION 4 full cost + depreciation for listed equipment at grant level (if selected for the call28): Purchases of equipment, infrastructure or other assets specifically for the action (or developed as part of the action tasks) may be declared as full capitalised costs if they fulfil the eligibility conditions applicable to their respective cost categories.

To be used as an exception, only if justified by the nature of the actions and the context of the use of the equipment or assets. To be used as an exception, only if justified by the nature of the actions and the context of the use of the equipment or assets. Full purchase cost option and conditions must be specified in the call. To be used as an exception, only if justified by the nature of the actions and the context of the use of the equipment or assets. Depreciation option and conditions must be specified in the call.

‘Capitalised costs’ means: - costs incurred in the purchase or for the development of the equipment, infrastructure or other assets and, - which are recorded under a fixed asset account of the beneficiary in compliance with international accounting standards and the beneficiary’s usual cost accounting practices. If such equipment, infrastructure or other assets are rented or leased, full costs for renting or leasing are eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees. [additional OPTION if selected for the grant : However, for the following equipment, infrastructure or other assets used for the action: - [insert name/type of equipment] - [insert name/type of equipment] [same for more equipment] the costs must be declared as depreciation costs, on the basis of the costs actually incurred and written off in accordance with international accounting standards and the beneficiary’s usual accounting practices. Only the portion of the costs that corresponds to the rate of actual use for the action during the action duration can be taken into account. Costs for renting or leasing such equipment, infrastructure or other assets are also eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees. ]] ]

The costs must comply with the general and specific eligibility conditions (see Article 6.1(a) and Article 6.2.C). The costs must be calculated according to the following principles :

− they must correspond to the actual eligible costs incurred for the renting or leasing

− they must not exceed the depreciation costs of similar equipment, infrastructure or assets

− they must not include any financing fees (e.g. finance charges included in the finance lease payments or interests on loans taken to finance the purchase)

− there must be no double charging of costs (e.g. no charging of depreciation costs for equipment previously funded at full cost by an EU grant)

− where the Grant Agreement provides for depreciation: if equipment is not used exclusively for the action, only the portion used on the action may be charged (the amount of use must be auditable)

− where the Grant Agreement provides for full cost: in principle the full rental or lease cost can be charged, irrespective of the portion used on the action. However, the cost still cannot exceed depreciation costs of similar equipment/infrastructure/assets that need to be determined based on the duration of the action (i.e. if you enter into a 5- year lease at the start of a 3-year action, you may only charge cost up to the amount of depreciation for three years).