Introduction

In Horizon Europe calculation for personnel cost for employees has been changed drastically compared to Horizon 2020.

Three main changes:

1. The calculation of actual personnel cost is now based on a Daily rate instead of Hourly rate.
2. Time sheets that were indispensable in Horizon 2020 can now be replaced by monthly declarations
3. The declaration when exclusively working in the action cannot be used in Horizon Europe

Personel cost

Both Daily rate and Day equivalents worked in the action are explained in detail below. 

Day equivalents worked in the action

This is the amount of days worked in the reporting period.

BE AWARE: in the Model Grant Agreement it is stated that the calculation can also be done per calendar year. The COM allows this though will not support this - the COM incentivates to use the reporting period as explained in the Annotated Model Grant Agreement.

Monthly declarion or Time sheets

In Horizon Europe Monthly declarations are recommended (template is available – art 20 AMGA). Remark: For Horizon Europe you do not need to upload the declarations during project execution although it is stated so on the template of the declaration. Possibly you might be asked in other EU funded programmes than Horizon Europe to upload these declarations.

If you will keep using time sheets on hourly basis, then you have to convert first your hours worked into days, and use day-equivalents.

You can choose between time sheets or monthly declarations but the same should be chosen for the same category of employees. Or you can choose also differently per different cost center (eg. different approach per faculty of a university).

If you choose to work with conversions from hours to days…..

There are 3 conversion rules to convert hours worked into day-equivalents. The choice has to be made based upon your practices:

• Fixed conversion: 8 hours=1 day-equivalent
• Average number of hours that the person must work according to his/her contract
  • In the contract it says 37,5 hours per week over 5 working days, then 1 day-equivalent= 7,5 hours
  • If by contract he/she works half time and has to work 19 hours per week
    • First convert to the amount it would be if a full time so 19/0,5= 38hrs
    • Then divide by 5 working days in a week: 7,6hours per day-equivalent
• Based on usual cost accounting practice determining the standard number of annual productive hours, then calculate the day equivalent accordingly:
  • Standard annual productive hours for fulltime (eg. 1600 hrs)
  • 90% of Standard annual workable hours of full-time (eg. 90% of 1720 hrs= 1548 hrs)
    • since 1600 is higher than 1548, then 1 day equivalent is: 1600/215= 7,44 hours (rounding according to own practices -  the COM works in their system with 2 decimals)

Once the conversion has been chosen, then solely at reporting time, the hours worked should be converted to the total number of days worked, by dividing the total of number of hours worked on the action by number of hours of a day equivalent.

Rounded up or down to the nearest half day

Example:

• If 7.5 hours day-equivalent, and the person worked 200 hours on the project, then 200/7,5= 26,66 -> 26,5 day equivalents worked on the action
• If half time worker and day equivalent is 7,6 hours per day and the person worked 200 hours on the project, then 200/7,6= 26,3 -> 26,5 day equivalents worked on the action 

Capping rules

IMPORTANT capping rules (double capping rules) notwithstanding which type of declarations you will choose….

• Horizontal ceiling: number of day-equivalents declared as worked on the actions in all EU and EURATOM grants is maximum 215 per calendar year!
• Reporting period ceiling: the number of day-equivalents to be declared is capped at the max. declarable day-equivalents per reporting period

Daily rate

Keep in mind that you can only have one daily rate per person per reporting period!

Actual personnel cost

This implies all costs, including taxes, social security, 13 month salaries, … (as in Horizon 2020), recorded in the statutory accounts during that period.

Maximum declarable day-equivalents

Pro-rata of 215

• 215/12 , then multiply by the number of months the person is employed in the reporting period, and multiply with the working factor (full time employed is 1 – half-time employed is 0.5)
  • When full time working in 6 months reporting period: 215/12 *6*1
  • When half time working in 6 months reporting period: 215/12*6*0.5
• Remarks:
  • if change of working regime occurs during the reporting period: then multiply 215/12 by number of months worked full-time, and add to this 215/12 multiplied by the working factor (for example 0.5) to come to the total of maximum declarable day-equivalents.
  • Parental leave:
    • You can deduct these day-equivalents from the maximum declarable days. Example of a (full time worker) in parental leave during 4 months in a  14 month reporting period:
      • 215/12*4*1= 72 day-equivalents parental leave
      • declarable day-equivalents: 215/12*14*1 – 72= 179 max. declarable day-equivalents
    • The annual personnel cost during periods of parental leave which are not fully covered by other sources as national schemes, are eligible (if following general eligibility rules)

Extra information

How to combine the double ceiling rules of personnel costs in H2020 projects and personnel cost in Horizon Europe when the same employee is active in both H2020 and HEU projects?

• To report under H2020, the beneficiary must check for each year, e.g. 2021 that the result of the formulas in Article 6.2.A of the H2020 MGA is not higher than the personnel costs recorded in the beneficiary’s accounts for 2021, otherwise the costs declared should be capped at the level of the personnel costs recorded in the accounts. 
• At the moment when the beneficiary will declare personnel costs for the same person under H2020 and also HE, for the part of the personnel costs declared for work done in 2021 (among the personnel costs calculated for the whole reporting period under HE), the beneficiary will have to take into consideration what was already declared under H2020 for 2021. For instance if the total personnel costs recorded in the 2021 accounts of the beneficiary for this employee is EUR 18 000, and the beneficiary already declared EUR 10 000 under H2020, the maximum that it can declare under HE for 2021 is 8 000 (18 000 EUR total personnel costs for the employee) – EUR 10 000 (already declared under H2020). The beneficiary can therefore declare not more than EUR 8 000 under HE for 2021 (among the personnel costs calculated for the whole reporting period under HE), this because of the 2^nd double ceiling rule of Horizon 2020.

1-person companies

This personnel cost calculation can in Horizon Europe also be used for natural persons with a contract other than a standard employee. In Horizon Europe a self-employed or 1-person company are part of this category, as well are seconded persons. But they have to work under the same conditions as employees regarding supervision, with a similar similar time schedule as employees, and a remuneration based on working time rather than on delivering outputs.

• If the contract specifies the daily rate, then this must be used
• If the contract specifies the hourly rate then this should be converted into daily rate
• If the contract describes a fixed amount for the work but does not specify the number of days, then the daily rate is obtained by dividing this global amount by the pro rata of 215 according to the duration of the contract
• Details in Annotated Model Grant Agreement, page 44

Common errors / audit findings

according to EC feedback to L&F NCP's in june 2025, the most common errors regarding Personnel Cost calculations are:

• Incorrect remuneration costs: budgeted, standard, estimated or fixed rates
• Incorrect productive hours calculation
• Unreliable/missing timesheets, alternative evidence not sufficient

Sources

• Powerpoint 21.04.2022 – Personnel Costs by Common Legal Service – European commission
• Annotated Model Grant Agreement  Horizon Europe (still a draft!)
• Model Grant Agreement (general)
• NCP Flanders webpage Horizon Europe – legal and finance assistance 

Questions?

NCP Flanders Legal & financial NCPs:

• Ann Van Hauwaert: ann.vanhauwaert@fwo.be 
• Ria De Breucker: ria.debreucker@vlaio.be