Finance Helpdesk Newsletter #32

Upcoming Financial Workshops

"Simplifying The Implementation Of The Research Framework Programmes" Paper Published

What happens if a beneficiary does not submit a Form C?

What happens if a beneficiary does not submit a required Certificate on Financial Statement?

NEF VS FORCE  

Implications of the New VAT EU Rules

Updated FP7 Book by Mr Myer Morron (FREE) V2.6

Upcoming Open Workshops:

31/05/2010             3 Day in-depth FP7 Financial Workshop in Brussels, Belgium.

This is the last opportunity to attend one of our 3 Day Financial Workshops until after the Summer.

30/06/2010             2 Day Marie Curie Financial Workshop in Brussels, Belgium.

01/07/2010             1 Day FP7 European Research Council (ERC) Workshop in Brussels, Belgium

"Simplifying The Implementation Of The Research Framework Programmes" Paper Published

The Commission have published a document which discusses the plans for "Simplifying The Implementation Of The Research Framework Programmes"

The main plans include:

3.1. Strand 1: Streamlining proposal and grant management under the existing

Rules:

·        The Research Participant Portal will be developed into the unique platform for all interactions with beneficiaries;

·        The use of electronic signatures will replace paper signatures wherever possible, starting in 2010 with the financial statements;

·        A web-based document repository and a tracking system for transactions in proposal and grant management will be installed;

·        The Commission will provide a coherent audit programming respecting the single audit approach.

·        The Commission will increase the time between call publication and deadline beyond the standard three months, if possible;

·        More projects with smaller consortia;

·        More prizes will be given.

3.2. Strand 2: Adapting the rules under the current cost-based system

·        There will be a move towards having eligible actual costs for EU purposes in strict accordance to the accounting method used by the beneficiary without adjustments;

·        The current acceptability criteria for the use of average personnel costs will be widened;

·        Possibility to have a single reimbursement rate for all activity types and categories of organizations or a uniform reimbursement rate over all activity types;

·        Reduction in the number of methods for determining indirect costs (overheads). Possibly by  introducing a single flat rate for charging indirect costs for all types of organisations and funding schemes;

·        Paying back of Interest on Pre-financing may be partially of fully removed;

·        Introduce more Lump-sum payments and thus possibly reduce the need for timesheets.

3.3 Strand 3: Moving towards result-based instead of cost-based funding

·        To move away from cost-based system focused on input towards a system of funding based on prior definition and acceptance of output/results;

3 Options:

-        Project-specific lump sums as a contribution to project costs estimated during grant evaluation/negotiation, and paid against agreed output/results;

-        The publication of calls with pre-defined lump sums per project in a given subject area and selection of the proposals promising the highest scientific output for the specified lump sum;

-        A high-trust "award" approach consisting in distributing pre-defined lump sums per project without further control by the Commission.

To view the full Paper, please click here.

What happens if a beneficiary does not submit a Form C?

During Interim Reporting, the coordinator may decide to submit a partial report. The payment calculation will only be based on what has been submitted. A partner who has not submitted a Form C (Cost Statement) will therefore not receive any interim payment they may have been entitled to at this stage. Rather they will have to wait and submit their Costs Statement at one of the following periods.

If this happens for the final report, the coordinator should contact the project officer.

What happens if a beneficiary does not submit a required Certificate on Financial Statement?

If a beneficiary fails to submit a required Certificate on Financial Statement (CFS) by the period deadline, the costs of this beneficiary will not be considered eligible and will be rejected in the payment calculation by the Commission at that time. The beneficiary will have the opportunity to submit the CFS during the next period - at which time the previous costs will be eligible and will be taken into account in the payment calculation.

NEF VS FORCE

Both of these tools are accessed through the Participant Portal.

NEF stands for "Negotiation Facility" however; in fact, it covers Negotiation, Amendments and Periodic Reports.

Currently, there are major usage problems with NEF that the NEF support team is trying to sort out with the Commission.

FORCE stands for "Form C editor"

It depends on which unit your project is with as to which tool is used to produce your Financial Reports. From the user's point of view, this choice is academic, as the correct tool will appear automatically from the project link in your participant's portal.

Please note Firefox 3.x is not supported for these tools.

NEF Usage Summary:

Table – Reproduced from NEF Documentation.

Implications of the New VAT EU Rules:

In February and December 2008 the EU country Finance Ministers adopted new VAT rules for dealing with cross border services and goods that became effective in January 2010. Under the new rules where goods are supplied to "businesses" in one State by another State (or a country outside the EU), the recipient of the goods or services must account for the imported goods or services as "nominal" income on which VAT is payable by the "business" and can recover against this the VAT so calculated. The effect of this for businesses that are registered for VAT and charge VAT on all their sales is zero (i.e. output VAT and input VAT reported both increased by the nominal VAT).

However, where the recipient of the services or goods has not up to now been registered for VAT (because the "sales" level is below the threshold that they need to register for VAT in their country) the value of the services must be added to the value of "real" sales to determine whether the 'business" exceeds the registration threshold.  So if a "business" (and this would, for this purpose, include non-profit organizations and higher education establishments) have income together with goods or services from abroad in excess of the threshold they need to register for VAT and make periodic reports to the VAT authorities.

Where a non-profit organizations or a higher education establishment receives services from abroad and the value of these services exceed the country's VAT threshold for registration, they will be unable to recover all the "nominal" VAT in the input VAT reporting but must pay 100% of the nominal output VAT. In most, if not all, there is a mechanism to deal with this and the following demonstrates the common basis of the calculation which might apply to a non-profit organizations or higher education establishment.

Example:

-         Country's threshold for Exempt VAT income Euro 75,000

-         Income exempt from VAT Euro 2,000,000

-         Regular Income liable to VAT (e.g. sale of books) but in the past below the threshold Euro 25,000

-         Services from abroad (now liable to VAT reporting) Euro 150,000

-         Therefore, total "income" on which VAT due Euro 175,000 and income from all sources Euro 2,175,000

-         Assumed VAT rate 20%

-         Total VAT on "income" (including services from abroad) liable to VAT = Euro 35,000 (175,000 x 20%)

-         Nominal VAT on services from abroad = Euro 30,000 (150,000 x 20%)

-         Input VAT recoverable is restricted proportionate to the amount of VAT liable income and the total income (i.e. 30,000 x 175,000/2,175,000) Euro 2,414 only

Extra cost to organisation after change of VAT rules =  Euro 27,586 (30,000 – 2,414).

If the, total "income" on which VAT is due including small amounts of sales and the new nominal income on basis of value of goods/service from abroad does not reach the Country's VAT exempt  threshold, there is no need to open a VAT file, and therefore, no additional reporting and no extra cost.

Updated FP7 Book by Mr Myer Morron (FREE) V2.6

Version 2.6 of Mr. Myer W. Morron’s  FP7 Book, which follows on from the highly acclaimed FP5 and FP6 versions has been published by EFPConsulting Ltd. It replaces drafts that were previously released.

Specific Changes from V2.5 are:

-         Added text on CIP programs and other Executive Agencies – A1.2.4 – 7 Update 2.2 Add 6.25 on

-         CIP financial differences

-         A1.2.3 still needs updating and completion.

-         Updated Commission organisation

The downloadable book continues to be free as it was in the previous framework programs. The book is constantly updated and registered users are notified of important changes and updates by Email.

The book covers subjects such as:

·          Background to changes in FP7

·          Overview of rules of participation

·          Benefits of participation in a Collaborative R&D project

·          Reasons not to participate

·          Brief Overview of Framework Program Seven and CIP

·          FP7 Funding Schemes (Types of Projects)

·          Framework Program Seven changes

·          Partner Search

·          Proposal preparation and submittal

·          What to do if your Proposal Fails

·          Project Roles

·          Financial Aspects

·          Use of External Consultants

·          What to do when your proposal is to be funded

·          Consortium Agreement

·          Problems during the project

·          Project Management

·          Project Ethics and Good Practice

·          European Technology Platforms

·          Ethical Considerations in FP7

·          SME Status

·          Intellectual Property Aspects

·          How to write a proposal

To download, please click here.

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