By Julien Sudre, Horizon Europe grant writing and project management specialist, founder of Grant 360 and Innotrope.
Horizon Europe funding rates depend on the action type, the beneficiary's legal status and the specific call conditions. Research and Innovation Actions (RIAs) and Coordination and Support Actions (CSAs) generally fund up to 100% of eligible costs. Innovation Actions (IAs) generally fund up to 70%, with up to 100% available to eligible non-profit legal entities. For actual-cost grants, the budget separates personnel, subcontracting, purchases and other applicable direct costs, and normally calculates indirect costs at 25% of a defined direct-cost base. Always check the topic conditions and signed Grant Agreement (GA) before preparing or declaring a budget.
This guide explains how to apply the rates and categories, with worked examples and practical checks for proposal writers, coordinators and beneficiaries.
What funding rate applies to each Horizon Europe action type?
The rate depends primarily on the action type, subject to the applicable work programme and topic conditions. The standard rates for common collaborative actions are:
- Research and Innovation Action (RIA): standard maximum EU funding rate: 100%. Important qualification: applies to eligible costs of participating beneficiaries.
- Innovation Action (IA): standard maximum EU funding rate: 70%. Important qualification: up to 100% for qualifying non-profit legal entities.
- Coordination and Support Action (CSA): standard maximum EU funding rate: 100%. Important qualification: check the particular call conditions.
- Programme co-fund action: standard maximum EU funding rate: 30-70%. Important qualification: the specific rate is established in the work programme and call.
These are maximum rates, not a promise that every expenditure will be reimbursed. The applicable rate is set by the call and grant documentation. Source: Horizon Europe 2026-2027 General Annexes; Horizon Europe Regulation, Article 34.
For example, in a standard IA, a company with EUR 200,000 of eligible costs and a 70% rate would receive up to EUR 140,000, leaving EUR 60,000 to finance from other resources. A qualifying non-profit beneficiary in the same action could receive up to EUR 200,000 for the same eligible-cost amount, if the applicable rate is 100%. Non-profit status must be established under the programme's definition; being a university or research organisation does not replace checking the entity's legal status.
Does a 100% funding rate mean that every project expense is covered?
No. The funding rate applies to eligible costs, not to every payment made by a beneficiary. Costs outside the grant's eligibility rules, outside the action's scope or inadequately substantiated may not be accepted.
For actual-cost grants, the general conditions include that expenditure is necessary for the action, incurred within the eligible period (subject to specific exceptions), identifiable and verifiable, reasonable, and compliant with applicable law and the beneficiary's usual accounting practices. The precise conditions and exceptions depend on the cost category and GA.
For example, if a beneficiary incurs EUR 100,000 of expenditure but only EUR 90,000 is eligible, a 100% rate applies to EUR 90,000, not EUR 100,000. Consult Article 6 of the applicable GA and the Horizon Europe Annotated Grant Agreement before classifying unusual expenses.
What are the main cost categories in an actual-cost Horizon Europe grant?
The main direct-cost categories cover personnel, subcontracting, purchases, and, in grants that permit them, other specific categories such as financial support to third parties. Indirect costs are calculated separately. The categories and permitted forms of costs are specified in the GA, including its Data Sheet and Article 6.
Main categories include:
- Personnel: typical examples include employees working on project tasks and eligible natural-person contracts. Key budgeting question: who performs the work, under what contractual arrangement, and how is their project effort established?
- Subcontracting: typical example: an external provider carrying out an action task. Key budgeting question: is an action task being outsourced, and is the procurement justified and compliant?
- Purchase costs: typical examples include travel, equipment, consumables and other goods and services. Key budgeting question: is the item needed for the action, and which purchase subcategory applies?
- Financial support to third parties: typical examples include grants or prizes awarded through a permitted cascade-funding scheme. Key budgeting question: does the call and GA explicitly authorise this support and define its conditions?
- Indirect costs: typical examples include general overheads not attributed directly to the action. Key budgeting question: which eligible direct costs enter the 25% calculation base?
The same invoice should not be charged twice or reclassified merely to maximise reimbursement. Source: Horizon Europe 2026-2027 General Annexes, budget categories.
How are personnel costs calculated and documented?
Personnel costs are calculated using the method applicable to the beneficiary and personnel arrangement, which may include actual-cost calculations or an authorised unit-cost approach. They are not universally based on an hourly rate or a single organisation-wide daily rate.
For actual-cost personnel, the beneficiary must establish the eligible remuneration and the days worked on the action using the applicable GA methodology and reliable supporting records. Alternative evidence may be permitted where the GA conditions are met. Special rules can apply to SME owners and natural persons who do not receive a salary, and to other eligible personnel arrangements.
For example, a researcher splitting their time between two projects needs a credible allocation of working days and must not charge the same days to both grants. A self-employed individual contracted under conditions comparable to an employee may, depending on the contractual facts and GA rules, be treated differently from a supplier invoicing a defined external service.
Practical check: before assigning an external consultant to personnel or subcontracting, examine who directs the work, the contract's nature, where the work is performed, and whether the arrangement meets the relevant personnel eligibility conditions. An invoice alone does not determine the category.
When should a cost be classified as subcontracting rather than a purchase?
Subcontracting concerns an external provider performing an action task described in the project, whereas purchases concern goods or services supporting beneficiaries in performing their own tasks. The distinction depends on the substance of the work, not simply on the supplier's profession or invoice size.
For example, commissioning an external laboratory to execute an entire project testing task may be subcontracting; purchasing standard laboratory supplies for testing performed by a beneficiary is a purchase. A specialist scientific task is not automatically prohibited from subcontracting, but it must meet the applicable conditions, including appropriate justification, procurement rules and the project's contractual description. The coordinator's core responsibilities have specific restrictions that should be checked separately.
Subcontracting normally does not generate the standard 25% indirect-cost addition. For a detailed review of classification and documentation risks, see Common Financial Management Mistakes and Ineligible Costs in Horizon Europe.
How are travel, equipment and other purchase costs treated?
Purchase costs must be necessary for the action and satisfy the relevant procurement, valuation and documentation rules. Travel and subsistence, equipment, and other goods, works and services have distinct rules; they should not be merged into an unexplained budget line.
For example, a EUR 60,000 instrument used for several years is not automatically chargeable in full to a three-year project. Under the standard equipment-depreciation approach, only the eligible depreciation corresponding to project use and the eligible period is declared, unless the call or GA permits another treatment, such as full capitalised costs for specified equipment.
Similarly, a conference trip should have a demonstrable project purpose, reasonable travel arrangements and evidence consistent with the beneficiary's normal practices. An open-access publication charge must be assessed against the applicable open-science and cost-eligibility conditions rather than assumed eligible solely because it concerns a project publication.
How do you calculate the 25% indirect-cost flat rate?
For standard Horizon Europe actual-cost grants, indirect costs are normally calculated as 25% of eligible direct costs after excluding subcontracting, financial support to third parties and unit costs or lump sums that already include indirect costs. Specific treatment also applies to internally invoiced goods and services. The precise base must follow the GA.
Consider this simplified illustrative budget:
- Personnel: EUR 200,000. Included in the 25% base: yes.
- Travel and consumables: EUR 40,000. Included in the 25% base: yes.
- Subcontracting: EUR 60,000. Included in the 25% base: no.
- Total direct costs: EUR 300,000.
- Indirect-cost base: EUR 240,000.
- Indirect costs: 25% x EUR 240,000 = EUR 60,000.
- Total eligible costs: EUR 360,000.
At a 100% rate, the maximum contribution for these eligible costs would be EUR 360,000; at 70%, it would be EUR 252,000. This illustration excludes other special categories and assumes all listed costs satisfy the applicable eligibility rules. The 25% is an overhead calculation, not a second EU funding rate. Source: Horizon Europe Regulation, Article 35.
How do funding rates and cost categories work in lump sum projects?
In a lump sum grant, the applicable funding rate is incorporated when the fixed grant amount is established. During implementation, payment is linked to the completion and acceptance of the relevant Work Packages (WPs), rather than reimbursement of each beneficiary's declared actual expenditure.
The proposal budget still needs credible estimates of the resources required to implement the work, using the applicable eligible-cost principles and the call's lump sum methodology. Beneficiaries should not assume that an arbitrary estimate is acceptable merely because individual invoices are not declared for reimbursement.
For example, if a WP is allocated a fixed EU contribution of EUR 120,000, spending EUR 130,000 does not automatically increase that contribution. Equally, spending less than estimated does not automatically reduce the agreed amount for a WP accepted as completed. Rules on partially completed WPs, grant reductions and final payment must be checked in the relevant GA and official lump sum guidance.
For the broader financial lifecycle, see Finance in Horizon Europe and How Project Payments Work.
Can affiliated entities and third parties charge costs to the project?
They can in specific circumstances, but their legal role and the grant's conditions determine how costs are reported. An affiliated entity, an associated partner, an in-kind contributor, a subcontractor and a recipient of financial support to third parties are not interchangeable categories.
For example, an affiliated research institute may implement action tasks and declare eligible costs under the arrangements applicable to affiliated entities if it is correctly included in the grant. An associated partner generally implements activities without receiving EU funding under the grant. Third parties providing in-kind contributions may be subject to separate conditions, depending on whether contributions are paid or free of charge and how they are used.
Identify these relationships while preparing the consortium and budget. Reclassifying an organisation after implementation begins may create avoidable contractual and reporting difficulties.
How can you check that a Horizon Europe budget is consistent before submission?
Start with the work plan, assign realistic resources to each task and beneficiary, classify costs according to the actual arrangements, calculate indirect costs on the correct base, and apply the appropriate funding rate. Then compare the resulting EU contribution with the topic's budget conditions and the partners' capacity to cover any co-financing.
A useful internal review asks whether the personnel effort matches the activities, whether outsourced tasks are described and justified, whether equipment use is correctly apportioned, whether travel is linked to specific activities, and whether all partners understand the difference between eligible costs, EU contribution and their own financing requirement.
For example, a company participating in an IA should check that it can finance the unfunded share of its eligible costs and any ineligible expenditure and temporary cash-flow needs. The 70% funding rate does not mean that 70% of every invoice will be paid immediately. See Financial Reporting and Payments in Horizon Europe.
Conclusion: What should you remember about funding rates and cost categories?
Funding rates determine the maximum proportion of eligible costs supported by the EU; cost categories determine how expenditure is classified and, for actual-cost grants, reported. The correct sequence is to establish the action's funding conditions, identify and classify eligible costs, calculate the applicable indirect costs, and then calculate the EU contribution. Lump sum grants use a different payment and reporting model, but still require a credible budget at proposal stage.
Always give priority to the specific call conditions and signed GA over generic rules of thumb. A well-structured budget is both a compliance tool and a realistic plan for delivering the project.
About the author
Julien Sudre specialises in Horizon Europe proposal development, project management and communication. Through Grant 360, he develops practical resources and tools to support research and innovation organisations throughout the EU project lifecycle.