Weekly question:
When do we know that a service falls under Subcontracting cost and not Other goods and services costs/Other goods, works and services costs?
Based on our experience, beneficiaries commonly make a mistake by confusing ‘Other goods and services’ – H2020, also known as ‘Other goods, works, and services’ – Horizon 2020, contracts, with costs that should be reported under ‘Subcontracting cost’ (subcontracts).
What do we have to know in order to avoid this mistake?
Subcontract falls under B. Direct costs of subcontracting, while contracts under D. Other direct costs, D.3 Other goods and services on the Financial statements – as per H2020 and for Horizon Europe, B. Subcontracting costs, respectively, C. Purchase costs – C.3 Other goods, works and services.
Subcontracting costs (Article 13, H2020 and description of the cost under Article 9.3, Horizon Europe) concern the implementation of action tasks which are part of the action and are clearly specified in Annex 1 in terms of nature and (estimated) amount, while Other goods and services costs (Article 10, H2020 and description of the cost under Article 6.2, Horizon Europe) do not cover the implementation of action tasks, although they are necessary for the implementation of the action tasks by Beneficiaries as described in Annex 1 of the Grant Agreement.
It is crucial to note that Subcontracting costs will not be taken into account for the indirect flat rate. Additionally, subcontracts among Beneficiaries within the same consortium are not permitted, nor are they allowed with affiliates.
What if, during the action period, the Beneficiary decides that they need to subcontract a service?
If it is not indicated in Annex 1, the Commission may still approve it and there are two options. The cost may be approved via an amendment to the Grant Agreement after its signature with (again) nature of the costs and amount known by the Commission or approved, on an exceptional basis, by the Commission by accepting the justifications provided by the Beneficiary in the technical periodic reports.
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