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Potential applicants will be able to find below answers to some of the questions frequently addressed to the JTS concerning the first calls for proposals for ordinary project. While JTS do their utmost to avoid any errors or omissions, the answers given below are for general guidance, and are not to be considered as legally binding. For this reason the reader is encouraged to consult the source documents when these are referred to.

4. EXPENDITURES

Question 4.1. Where can I found the Programme Management and Control Manual

The Programme Management and Control Manual is one of the Programme's documents specifically devoted to the project implementation, mainly to the eligibility of expenditure, their reporting and payment, and, then, is aimed at providing further and/or complementary information on provisions laid down in the IPA Adriatic CBC Operational Programme, in the Implementation Manual and in the Applicants' Manual and the relevant Call for proposals. Specifically, Chapter 5 of this Manual provides all the explanations concerning project expenditure and applicable rules.
This document can be downloaded from the Programme website in the "Implementation Documents" section.

Question 4.2. Are preparation costs eligible?

Yes, they are, but only for those projects finally approved for funding and for an amount not exceeding 2% of the approved total budget.
They must be clearly indentified in the project proposals (costs foreseen in WP0) and show the direct connection to the approved project activities.
The preparation costs must be incurred only for the following activities:

  • finalization of the application documents (staff costs and external expertise);
  • joint meetings for the preparation of the project (travels, accommodation, meeting and events costs);
  • preparatory studies, analysis and researches for activities to be carried on within the project (staff costs, external expertise).

Question 4.3. Are all the expenditures typologies eligible when incurred for the preparation activities?

No, they are not. Overheads, promotion costs, investments, equipments and financial charges costs are not eligible in the preparation phase and in case Beneficiaries fall into the de minimis regime, the preparation costs are not eligible at all.

Question 4.4. Since when costs for preparation activities are meant as eligible?

Preparation costs are eligible if related to activities carried out:

  • for Beneficiaries from Member States, from the 1st January 2007 to the day of submission of the project proposal (hard copy submission included),
  • for Beneficiaries from (potential) Candidate Countries, from the date of the signature of the financing Agreement between each of these Countries and the European Commission to the day of submission of the project proposal (hard copy submission included).

Question 4.5. Since when costs for implementation activities are meant as eligible?

As general rule implementation costs are eligible from the starting date of the project to its closing date, as defined in the Application form approved by the JMC. However Final Beneficiaries may decide at their own risk to start the project before it will be finally approved for granting, taking into consideration that, at the earliest, implementation costs are eligible from the first day after the closure of the relative Call for proposals, provided that this day is the official start of the project.
The closing date of the project indicates when all the project activities will end, the related expenditures have been all actually paid and the last Progress Report has been submitted to the competent First Level Control Office. This means that the end date stated in the AF will be also the last month within all payments must be done otherwise the related expenditures will not be eligible for reimbursement. It is suggested not to envisage activities in the last month or pretty nearer but to reserve a feasible time to make all the payments and close the project (send the last Progress Reports) within the indicated project end.

Question 4.6. When expenditures are considered "incurred" in the Programme eligible area?

As a general rule, expenditures are considered to be incurred in the place where the Final Beneficiary's registered office or the branch office involved into the project is located. For meeting/event and expenditure in tangible assets (as equipment or investments) the place of location of the meeting/event and of the tangible asset will be instead taken into consideration.
Consequently, according to this rule, the following expenditures will be considered incurred in the Programme eligible area if the Final Beneficiary IS LOCATED (with the registered office or with a branch office from at least one year) in the Programme eligible area: staff, overheads, external expertise, promotion, financial guarantees and bank charges.
Equipments, investments, meetings and events and travel and accommodation costs will be instead considered incurred in the Programme eligible area if the place where they are located IS in the Programme eligible area.
Refer to the paragraph "Location of activities" of the Applicants' Manual ( 4.4.5.3.) for additional information.

Question 4.7. Are expenditures of Final Beneficiaries located in territorial derogation areas of the Programme eligible and what happens when the limit of the 20% of the amount of the Community contribution to the Programme is reached?

The Programme admits derogations to the territorial eligibility rule for adjacent areas to eligible territories up to the limit of 20% of the amount of the Community contribution to the Programme.
This means that in case this limit is reached, the JMC will not finance, totally or partly, expenditures incurred in territorial derogation areas.
According to the Programme general rule, expenditures are considered to be incurred in the place where the Final Beneficiary's registered office or the branch office involved into the project is located. By derogation to the abovementioned rule, for meeting/event and expenditure in tangible assets (as equipment or investments) the place of location of the meeting/event and of the tangible asset will be taken into consideration.
Consequently, expenditures incurred by Final Beneficiaries located in derogation areas are considered incurred in the Programme derogation areas, whilst expenditures for meeting/event and for equipment/investments will be instead considered incurred in the place where they are located (thus in derogation areas if located in the place where these Final Beneficiaries are located).
A list of territorial derogations areas - adjacent to the eligible ones - is defined in the Operational Programme (see table 1.1. of the Implementation Manual).

Question 4.8. Is VAT to be considered eligible expenditure? How does it have to be declared?

When actually incurred by Final Beneficiaries (according to the applicable national law), value added taxes shall be eligible if all the following conditions are fulfilled:

  1. they are not recoverable by any means;
  2. it is established that they are borne by final beneficiary; AND
  3. they are clearly identified in the "Budget breakdown" form of the project proposal.

Question 4.9. Is there a limit for the Overheads?

The budget line "Overheads" includes direct general costs (i.e. costs deriving exclusively from the project) and indirect general costs (overheads related to the project's activities, based on real costs and calculated on a pro-rata basis according to a duly justified, fair and equitable method).
These costs are related to office costs (i.e. electricity, heating, water, cleaning, office supplies, office rent), administrative costs, (i.e. telephone, fax, internet, mailing..) or other administration expenditure absolutely necessary for the successful completion of the project.
Whilst for direct general costs there's no limit, indirect overheads cost charged on the project (independently of the chosen apportionment methodology/ies) must not exceed 25% of the total amount of the following project costs:

  • Staff costs (with the exclusion of administrative staff expenditure, such as: management costs, recruitment expenses, costs for the general accountant of the institution...);
  • Travel and accommodation;
  • External expertise;
  • Meetings and events;
  • Promotion costs;
  • Equipment;
  • Investments;
  • Financial charges and guarantee costs.

Question 4.10. Is there a budgetary limit for 'External expertise'?

The Programme has not established a ceiling for the external expertise budget category. As even explained in the Programme Management and Control Manual, these expenses are anyway eligible if within the partnership there are no necessary competences to carry out project activities, the external experts is essential to the project and its charges are reasonable and proportionate to level of experience.

Question 4.11. Under which budget line shall translation and interpretation expenses be budgeted?

Translation and interpretation expenses could be budgeted in three different budget lines depending on the aim:

  • "Meetings and events" for expenses related to interpretation at events and translation of documents linked to specific events;
  • "Promotion Costs" for translation and interpretation costs not linked to specific events, but necessary for the implementation of promotion activities (e.g. translations of promotional project documents);
  • "External expertise" when the translation or interpretation is not linked to the other two specific budget lines.

Question 4.12. Is there a limit for investments, e.g. up to a maximum percentage of the total budget of the project? For construction works that require a specific permission, the subject who issues this permission must be partner of the project or could be even an Associate?

As the projects should strive for high levels of tangible and strategically relevant outcomes, the Programme can allow the co-financing of investments. Investments can constitute integrated aspects of projects activities, provided these investments have a trans-national character and a potential territorial impact. In order to be eligible, they must be listed and specified in the Budget and show a clear cross-border added value. This cost category refers to two types of costs:

  • construction works,
  • purchase of land.

Keeping in mind rules of eligibility for investments clearly explained in paragraph 5.3.8. of the Programme Management and Control Manual, for construction works the Programme has not established a ceiling, whilst costs for purchase of land are eligible up to a limit of 10% of the total budget of the project.
In case a valid and legally effective construction permit and/ or other document are required by national law for investment (as for construction works), the owner of the permit must be partner in the project. The concerned Final Beneficiaries must produce the required documents before signing the IPA Subsidy Contract

Question 4.13. Are bank charges eligible?

Bank charges for opening and managing a bank account expressly opened for the project's purposes are eligible and must be included under the "Financial charges and guarantee costs" budget line.
Any other charge NOT related to a bank account specifically opened for the project, must instead be budgeted under the "Overheads" budget line.
The following bank charges costs are NEVER eligible:

  • stamp duty for the bank statement, as it is a current account holding fee (tax);
  • possible charges for current account maximum overdraft (commissions that are charged by the bank on the current account maximum overdraft).

Question 4.14. 14 Is the Italian tax IRAP ("Imposta Regionale sulle Attività Produttive"), eligible?

As a general rule, on the basis of art. 34.3(a) of Reg. (EC) 718/2007 "taxes" are not eligible. Anyway, according to the new approach on co-financing published by the European Commission on the EuropeAid website ("New co-financing approach in grants" - update 30.3.2011), "Taxes" include indirect taxes such as value added taxes, customs and import duties, other fiscal charges and duties in beneficiary countries. Taxes in this context do not include direct taxes, such as income tax of staff working on the action. Such tax form part of the gross salary, which is an eligible cost under Reg. (EC) 718/2007 and under the IPA Adriatic CBC Programme too.
This being said, as far as concerns IRAP ("Imposta Regionale sulle Attività Produttive"), this could be an eligible expenditure in the limit in which it IS NOT a tax for which the beneficiary is liable in its capacity as a business entity, since in this case these taxes are not incurred specifically for the implementation of the project. This principle has been clearly explained by the Italian Minister for Economic Development - Department for Development Policies in its communication Prot. N. 0015151-U of 14/10/2009.
Namely, IRAP is eligible only if all the following conditions are respected:

  1. IRAP is calculated through the so called "metodo retributivo" according to art. 10 D.Lgs 15/12/1997 n. 446 and following amendments;
  2. The co-financed project entails additional costs for staff, clearly identified, for which the related IRAP's increase is easily identifiable.

ACCESS TO THE M.I.S.

Dear users, we inform you that, due to an improvement to the network infrastructure, in order to have access to the M.I.S. we will have to replace the link  https://sso.adriaticipacbc.org/gestionale  with   https://sso.adriaticipacbc.eu/gestionale