Financial Management

European Commission funding is subject to stringent financial regulations. The following section provides a high level introduction to the key financial aspects.


Budget rate:

The exchange rate at which European Union funded projects are budgeted is agreed in advance and is intended to limit risks associated with potential exchange losses for the life of the project.

The budgeted exchange rate is agreed monthly and this rate is used to cost applications. If the application is successful the same exchange rate will be used at award stage. This protects the sterling budget for grant holders. An exception is for Marie Curie awards where the prevailing Marie Curie budgeted rate for salaries is used, whatever exchange rate was used in the application.

The sterling budget is guaranteed, no matter what happens to the exchange rate, but grant holders will still be able to use the full euro budget, even if this means over-spending the sterling budget. The European Team in the Research Grants Section will assist with monitoring the budget and advising on potential additional sterling budget.

Budget transfers:

Although budgets are awarded across specific categories and any deviation could lead to a non-reimbursement of the related costs, there is a degree of flexibility with EU-funded projects. If a budget virement (transfer) is required between two existing cost categories, please consult your Research Grants Administrator.

Eligibility of costs / VAT

Each scheme and type of project have different rules. Please refer directly to the guidelines or consult your Research Grants Administrator.

Costs must be incurred in accordance with UoE’s normal accounting principles e.g. procurement, expenses etc. Please see attached policy websites: (link to our guidance page with policies listed)

One of the major changes introduced by the H2020 programme, compared to the former FP7, is that non-recoverable VAT is now eligible on H2020 projects.

Subcontracting / Services

Subcontracting of services/activity to undertake core tasks should be foreseen in the Grant Agreement. If a subcontract is required after the project started, an amendment to the Grant Agreement is usually required and will be subject to the EC approval/rejection..

The costs related to unforeseen subcontracts will not usually be funded by the European Commission.

EC Timesheets

Timesheets are mandatory on all EC projects. The University uses the eTime online time recording system.

Please see EC Timesheet Guidance Section or contact for further information.


All FP7 and H2020 projects awarded require periodic reports to be submitted either to the EC directly or to the coordinator of the project you are involved with. These are usually required within 60 days after the end of the reporting period but in some occasions the deadline can be moved forward.

Research Grants will keep a log of all reporting needed for your project and will administer the financial reports.

Financial Reporting consists of the following documentation:

  • Form C – financial statement of expenses
  • Explanation of Resources – a breakdown of the costs reported
  • Audit (Certificate on the Financial Statement). This is only required at the end of the project if:
    • FP7: the requested contribution from the EC has reached €375,000.
    • H2020: the sum of direct actual costs requested (indirect costs and other flat rates excluded) has reached €325,000.

Research Grants will complete the Form C on the EC Participant Portal and also arrange the final audit and will liaise with you throughout the project to ensure that all interim and final financial data required will be produced.

Please note salary costs cannot be claimed in the absence of authorised timesheets.


Payments in FP7 and H2020 projects consist of a pre-financing payment (less an amount to the guarantee fund), interim payments, final payment and reimbursement of the guarantee fund.

Payments are received in Euros, in a UoE EUR bank account, the details of which should only be provided by Research Grants. If you are contacted by an external organisation to provide bank details please refer to Research Grants who will verify the source and provide the correct account details.

Keys differences FP7 / H2020

H2020 vs FP7 - What changed?

  • Single reimbursement rate (usually 100%)
  • More flexible rules for third parties and contract/subcontract costs
  • Provision of services (contract) rather than subcontract
  • Flat rate of 25% for indirect costs (except Marie Curie)
  • 3 options for determining annual productive hours
  • Cleaner and simpler obligations on time records
  • Declaration of exclusive working on a project rather than timesheets
  • Average exchange rate used for claims
  • Eligibility of non-deductible VAT
  • Audit threshold of €325,000 of actual costs (excluding indirect costs)