1. Eligibility of expenditure Relevant rules and regulations Workshop on Financial Management and auditing Rostock, 3 February 2005 Rostislav Zatloukal

2. What kind of project costs are eligible? INTERREG III is an initiative in the framework of the ERDF and therefore all general rules concerning eligibility of expenditure regarding the structural funds are applicable. In the period 2000-2006, expenditure usually eligible under the EAGGF, the ESF or the Fisheries fund will also be eligible. This would concern, for instance, rural development or training. EU funds may be required for small infrastructure investment or for equipment, relevant to the project’s objectives. In any case, motorways, infrastructure or other large-scale investments will not be eligible.

3. Which basic rules do projects/operations have to comply with? Any project for which EU funding is granted must comply with specific EU regulations and rules and in particular those applying to the ERDF. Other Community rules must be taken into account, e.g.: rules with regard to environment. Applicants must comply with specific regulations (e.g. Natura 2000); rules with regard to public procurement; rules with regard to publicity on EU funding; rules on competition; rules on equal opportunities.

4. Overview of relevant regulations and rules  Council Regulation (EC) No 1260/1999 – on Structural Funds  Commission Regulations (EC): >No 1685/2000+No 448/2004 – Eligibility of expenditure >No 438/2001+No 2355/2002, No 448/2001– Management and control systems, Financial corrections >No 1159/2000 – on information and publicity measure  INTERREG III guidelines  Programme Document, Programme Complement Programme Manual, Subsidy Contract  National rules and regulations (national, regional, local level)

5. Which costs are eligible for ERDF funding? -actually paid out by eligible partners & within the project period; -related to the products/services that have actually been delivered; -directly linked to the approved budget -directly related to the project implementation; -Revenues must be deducted from the reported costs => EC Reg. 448/2004, Annex, Rule No 2

6. -not claimed before under this or any other EU financed programme; -supported by relevant documents (invoices, account. documents…) – EC Reg. 448/2004, Annex Rule 1. (2.1.) -properly accounted, certified, audited and reported within the specified period by the responsible bodies to the Joint Secretariat; -the general principles of efficiency, good value for money, economy, expediency and legality of all actions to be applied; -included under a category of expenditure listed in the budget Which costs are eligible for ERDF funding?

7. COMMISSION REGULATION (EC) No 448/2004 of 10 March 2004 Eligibility of expenditure Annex Rule No 1: Expenditure actually paid out Rule No 2: Accounting treatment of receipts Rule No 3: Financial and other charges and legal expenses Rule No 4: Purchase of second-hand equipment Rule No 5: Purchase of land Rule No 6: Purchase of real estate Rule No 7: VAT and other taxes and charges Rule No 8: Venture capital and loan funds Rule No 9: Guarantee funds Rule No 10: Leasing Rule No 11: Costs incurred in managing and implementing the SF Rule No 12: Eligibility of operations depending on the location

8. Rule No 1: Expenditure actually paid out 1. Payments by Final Beneficiaries 2. Proof of Expenditure 3. Subcontracting Rule No 2: Accounting treatment of receipts Revenues/incomes must be deducted from the operation´s eligible expenditure in their entirety Rule No 3: Financial and other charges and legal expenses 1.Financial charges 2.Bank charges on accounts 3.Legal fees for advice, notary fees, the costs of technical or financial expertise, and accountancy or audit costs 4.Costs of guarantees provided by a bank or other financial inst. 5.Fines, financial penalties…

9. Rule No 4: Purchase of second-hand equipment 1.Declaration stating the origin and confirmation that it has not been purchased during the previous 7 years with the aid of nat. or EU grants. 2.The price shall not exceed its market value and shall be less than the costs of similar new equipment. 3.The equipment shall have the technical characteristics necessary for the operation and comply with applicable norms and standards. Rule No 7: VAT and other taxes and charges 1. VAT does not constitute eligible expenditure except where it is genuinely and definitely borne by the final beneficiary or individual recipient (…). VAT which is recoverable, by whatever means, cannot be considered as eligible (…). 2. VAT which is not recoverable by the final beneficiary or individual recipient by virtue of the application of specific national rules shall constitute eligible expenditure (in compliance with the 6 th Council Directive 77/388/EEC on VAT).

10. Thank you for your attention!