FINANCIAL MANAGEMENT
& RECORD KEEPING
Grants are on a cost-reimbursement basis — the final amount depends on actual eligible costs, verified against strict criteria and full supporting documentation.
Eligible vs. non-eligible costs
A cost is eligible only if it meets every criterion on the left. Costs on the right are never eligible, even if budgeted.
Eligible costs
Cost-reimbursement basis — final amount is based on actual eligible costs, not the budget estimate.
- Actually incurred during the implementation period (services performed, supplies delivered/installed).
- Indicated in the budget (Annex III), or covered by an approved Addendum.
- Necessary for the project, reasonable, and in line with sound financial management.
- Identifiable, verifiable and backed by original documentary evidence in the accounts.
- Compliant with national tax & social legislation.
- Not double-funded from any other source.
- Procurement rules of Annex IV have been respected.
- Paid before the Final Report — or listed in the Pending Payments list.
Non-eligible costs
Art. 14.11 General Conditions & Art. 7.2.3 Special Conditions.
- Debts and debt service charges (interest).
- Provisions for losses or future liabilities.
- Costs already financed by another EU-funded action.
- Land / existing buildings (unless justified & transferred per Art. 7.5).
- Currency exchange losses; credit to third parties.
- In-kind contributions (except volunteers' work).
- Public administration salaries, unless specified in Special Conditions.
- Bonuses; negative bank interest; fines and litigation costs.
- VAT, customs and import duties (unless non-recoverable).
Pre-financing schedule
Which option applies depends on the project's duration and grant size.
≤ 12 months or Grant ≤ €100,000
- Initial pre-financing: 80% of the maximum grant amount, within 30 days of contract signature — signed contract serves as payment request.
- Balance of the final amount within 90 days of the payment request.
> 12 months and Grant > €100,000
- Initial pre-financing: 100% of the first reporting period's estimated budget, within 30 days.
- Further pre-financing: 100% of the next period if ≥70% of the previous payment was spent — otherwise reduced pro-rata.
- Total pre-financing capped at 90% of the maximum grant amount.
- Balance of the final amount within 90 days of the payment request.
Good to know
Segregated bank account
A dedicated account or sub-account for the project — with justification if that's not feasible.
Keep records 5 years
3 years for grants below €60,000, after the balance is paid — longer if audit/litigation is ongoing.
Simplified Cost Options
Where the CA/IBFM applies SCO (Annex K), no financial documentation is required — but keep it on file.
INFOREURO exchange rate
Use the rate of the month implementation began, applied consistently in the Detailed Breakdown of Expenditures.
Expenditure verification
Obligatory for any final report on grants >€100,000, and for interim/final requests on grants >€5,000,000.
VAT is not eligible
Exemption procedures exist in both Serbia and North Macedonia (Annex 4.2 / 4.3) — Annex 1.4 & the Partnership Agreement are preconditions.
Reporting & supporting documents
Detailed breakdown of expenditures, salary calculations, time sheets, financial report template and more.
Tax regime IPA III
Legal framework and procedures for tax exemption or recovery applicable to this Call for Proposals.
VAT exemption — SRB / MKD
Country-specific procedures and templates for VAT exemption in Serbia and North Macedonia.