2000R1685 — EN — 05.07.2003 — 001.002 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B COMMISSIONREGULATION(EC)No1685/2000
of28July2000
laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as
regardseligibility ofexpenditureofoperationsco-financedbytheStructuralFunds
(OJ L 193, 29.7.2000, p. 39)
Amended by:
Official Journal
No page date
►M1CommissionRegulation(EC) No 1145/2003 of 27 Jun e 2003 L 160 48 28.6.2003
►M2CommissionRegulation(EC) No 448/2004 of 10 March 2004 L 72 66 11.3.2004
▼B
COMMISSIONREGULATION(EC)No1685/2000
of28July2000
layingdowndetailedrulesfortheimplementationofCouncilRegu-
lation (EC) No 1260/1999 as regards eligibility of expenditure of
operationsco-financedbytheStructuralFunds
THE COMMISSION OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 1260/1999 of 21 June
1999 laying down general provisions on the Structural Funds(1), and
inparticular Articles 30(3) an d 53(2) thereof,
After consulting the Committee pursuant to Article 147 of the Treaty,
the Committee on Agricultural Structures and Rural Development andthe Committee onStructures for Fisheries an d Aquaculture,
Whereas:
(1)Article 1(3) of Council Regulation (EC) No 1257/1999 of 17
May 1999 onsupport for rural developmen t from the EuropeanAgricultural Guidance and Guarantee Fund (EAGGF) andamending and repealing certain Regulations (
2) specifies that
rural development measures which are integrated into the
measures promoting the development and structural adjustmentof regions whose development is lagging behind (Objective 1)or which accompany the measures supporting the economic andsocial conversion of areas facing structural difficulties (Objective
2) in the regions concerned, shall take into account the specific
targets of Community support under the Structural Fundsaccording to the conditions laid down in Regulation (EC) No1260/1999. Article 2 of Regulation(EC) No 1257/1999 specifiesthe operations that may be concerned by support for rural devel-opment.
(2)Article 2 of Regulation(EC) No 1783/1999 of the EuropeanParliament and of the Council of 12 July 1999 on the EuropeanRegional Development Fund(
3) specifies the type of operations
the ERDF may help finance.
(3)Article 3 of Regulation(EC) No 1784/1999 of the European
Parliament and of the Council of 12 July 1999 on the European
Social Fund(4), specifies the type of operations the ESF may
help finance.
(4)Article 2 of Council Regulation (EC) No 1263/1999 of 21 June1999 on the Financial Instrument for Fisheries Guidance (
5)
specifies the type of measures the FIFG may help finance.
Council Regulation (EC) No 2792/1999 (6) lays downthe
detailed rules and arrangements regarding Community structuralassistance in the fisheries sector.
(5)Article 30(3) of Regulation(EC) No 1260/1999 provides thatrules on eligible expenditure should be the relevant national
rules unless the Commission deems it necessary to adopt rules
at Community level; for certain types of operation the Commis-sion considers it necessary in order to guarantee the uniform andequitable implementation of the Structural Funds across theCommunity to adopt a common set of rules on eligible expendi-ture. The adoptionof a rule relatin g to a particular type of
operation does not prejudge under which of the abovementioned
Funds such operation may be co-financed. The adoption of theserules should not prevent Member States, in certain cases which2000R1685 — EN — 05.07.2003 — 001.002 — 2
(1) OJ L 161, 26.6.1999, p. 1.
(2) OJ L 160, 26.6.1999, p. 80.
(3) OJ L 213, 13.8.1999, p. 1.
(4) OJ L 213, 13.8.1999, p. 5.
(5) OJ L 161, 26.6.1999, p. 54.
(6) OJ L 337, 30.12.1999, p. 10.
▼B
should be indicated, from applying stricter national provisions.
The rules should apply to all expenditure incurred between thedates set out inArticle 30(2) of Regulation(EC) No 1260/1999.
(6)Article 36(1) of Regulation(EC) No 1257/1999 provides thatRegulation (EC) No 1260/1999 and the provisions adopted inimplementation thereof apply, save as otherwise provided for
under Regulation (EC) No 1257/1999, to rural development
measures in areas covered by Objective 2 financed by theEAGGF (Guarantee section). Therefore, the rules set out in thepresent Regulation apply to such measures which form part ofthe programmes for Objective 2 regions except in so far asRegulation(EC) No 1257/1999 an d CommissionRegulation
(EC) No 1750/1999 (
1) laying down detailed rules for the appli-
cationof Regulation(EC) No 1257/1999 provide otherwise.
(7)Article 87 and 88 of the Treaty apply to operations co-financedby the Structural Funds. The decision of the Commission
approving an assistance cannot prejudge any assessment in rela-
tion to State aid rules and does not relieve the Member State ofits obligations under those Articles.
(8)The measures provided for inthis Regulationare inaccordan cewith the opinion of the Committee on the Development andConversion of Regions,
HAS ADOPTED THIS REGULATION:
Article 1
The rules contained in the Annex to this Regulation shall apply in
determining the eligibility of expenditure under forms of assistance asdefined in Article 9(e) of Regulation (EC) No 1260/1999.
Article 2
This Regulation shall enter into force on the seventh day following its
publicationinthe Official Journal of the European Communities .
This Regulation shall be binding in its entirety and directly applicable
inall Member States.2000R1685 — EN — 05.07.2003 — 001.002 — 3
(1) OJ L 214, 13.8.1999, p. 31.
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ANNEX
ELIGIBILITYRULES
RuleNo1: Expenditureactuallypaidout
1. PAYMENTS BY FINAL BENEFICIARIES
1.1. Payments effected by final beneficiaries within the meaning of the third
subparagraph of Article 32(1) of Regulation(EC) No 1260/1999 (herein -
after the general Regulation) shall be in the form of cash subject to the
exceptions indicated in point 1.5.
1.2. In the case of aid schemes under Article 87 of the Treaty and aid granted
by bodies designated by the Member States, ‘payments effected by final
beneficiaries’ means aid paid to individual recipients by the bodies which
grant the aid. Payments of aid by final beneficiaries must be justified by
reference to the conditions and objectives of the aid.
1.3. Payments into venture capital, loan and guarantee funds (including
venture capital holding funds) are treated as ‘expenditure actually paid
out’ within the meaning of the third subparagraph of Article 32(1) of the
general Regulation provided that the funds meet the requirements of Rules
8 and 9 respectively.
1.4. In cases other than those referred to in point 1.2, ‘payments effected by
final beneficiaries’ means payments effected by the bodies or public or
private firms of the type defined in the programme complement in accor-
dance with Article 18(3)(b) of the general Regulation having direct
responsibility for commissioning the specific operation.
1.5. Under the conditions set out in points 1. 6, 1.7 and 1.8, depreciation,
contributions in kind and overheads can also form part of the payments
referred to in point 1.1. However, the Structural Funds' co-financing of
an operation shall not exceed the total eligible expenditure, excluding
contributions in kind, at the end of the operation.
1.6. The cost of depreciationof real estate or equipmen t for which there is a
direct link with the objectives of the operation is eligible expenditure,
provided that:
(a) national or Community grants have not contributed towards the
purchase of such real estate or equipment;
(b) the depreciation cost is calculated in accordance with the relevant
accountancy rules; and
(c) the cost relates exclusively to the period of co-financing of the opera-
tioninquestion .
1.7. In kind, contributions are eligible expenditure provided that:
(a) they consist in the provision of land or real estate, equipment or mate-
rials, research or professional activity, or unpaid voluntary work;
(b) they are not made in respect of financial engineering measures
referred to inRules 8, 9 an d 10;
(c) their value can be independently assessed and audited;
(d) inthe case of the provisionof lan d or real estate, the value is certified
by an independent qualified valuer or duly authorised official body;
(e) in the case of unpaid voluntary work, the value of that work is deter-
mined taking into account the amount of time spent and the normal
hourly and daily rate for the work carried out; and
(f) the provisions of Rules 4, 5 and 6 are complied with where applic-
able.
1.8. Overheads are eligible expenditure provided that they are based on real
costs which relate to the implementation of the operation co-financed by
the Structural Funds and are allocated pro rata to the operation, according
to a duly justified fair and equitable method.
1.9. The provisions of points 1.5 to 1.8 are applicable to individual recipients
referred to inpoin t 1.2 inthe case of aid schemes un der Article 87 of the
Treaty and aid granted by bodies designated by Member States.
1.10. Member States may apply stricter national rules for determining eligible
expenditure under points 1.6, 1.7 and 1.8.2000R1685 — EN — 05.07.2003 — 001.002 — 4
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2. PROOF OF EXPENDITURE
2.1. As a general rule, payments by final beneficiaries, declared as interim
payments and payments of the final balance, shall be supported by
receipted invoices. Where this cannot be done, payments shall be
supported by accounting documents of equivalent probative value.
2.2. As regards rural development, the provision specified in point 2.1 applies
without prejudice to specific rules established inCommissionRegulation
(EC) No 445/2002 laying down detailed rules for the application of
Council Regulation (EC) No 1257/1999 on support for rural development
from the European Agricultural Guidance and Guarantee Fund (EAGGF)
for the case of the determination of standard unit costs for certain invest-
ments in the forestry sector.
2.3. In addition, where operations are executed in the framework of public
procurement procedures payments by final beneficiaries, declared as
interim payments and payments of the final balance, shall be supported
by receipted invoices issued in accordance with the provisions of the
signed contracts. In all other cases, including the award of public grants,
payments by final beneficiaries, declared as interim payments and
payments of the final balance, shall be justified by expenditure actually
paid (including expenditure referred to in point 1.5) by the bodies or
public or private firms concerned in implementing the operation.
3. SUBCONTRACTING
3.1. Without prejudice to the application of stricter national rules, expenditure
relating to the following subcontracts is ineligible for co-financing by the
Structural Funds:
(a) subcontracting which adds to the cost of execution of the operation,
without adding proportionate value to it;
(b) subcontracts with intermediaries or consultants in which the payment
is defined as a percentage of the total cost of the operation unless
such payment is justified by the final beneficiary by reference to the
actual value of the work or services provided.
3.2. For all subcontracts, subcontractors shall undertake to provide the audit
and control bodies with all necessary information relating to the subcon-
tracted activities.
RuleNo2: Accountingtreatmentofreceipts
1. ‘Receipts’ for the purposes of this rule covers revenue received by an
operation during the period of its co-financing or during such longer
period up to the closure of the assistance as may be fixed by the Member
State, from sales, rentals, services, enrolment/fees or other equivalent
receipts with the exceptionof:
(a) receipts generated throughout the economic lifetime of the co-
financed investments and subject to the specific provisions of Article
29(4) of the general Regulation;
(b) receipts generated within the framework of financial engineering
measures referred to inRules 8, 9 an d 10;
(c) contributions from the private sector to the co-financing of operations,
which appear alongside public contributions in the financing tables of
the relevant assistance.
2. Receipts under point 1 represent income which reduces the amount of co-
financing under the Structural Funds that is required for the operation in
question. Before the Structural Funds' participation is calculated and no
later thanat the time of the closure of the assistan ce, they are deducted
from the operation's eligible expenditure in their entirety or pro rata,
depending on whether they were generated entirely or only in part by the
co-financed operation.
RuleNo3: Financialandotherchargesandlegalexpenses
1. FINANCIAL CHARGES
Debit interest (other than expenditure on interest subsidies to reduce the
cost of borrowing for businesses under an approved State aid scheme),
charges for financial transactions, foreign exchange commissions and
losses, and other purely financial expenses are not eligible for co-finan-
cing by the Structural Funds. However, charges for transnational
financial transactions within assistance under Peace II and the Community
Initiatives (Interreg III, Leader+, Equal and Urban II) are eligible for cofi-2000R1685 — EN — 05.07.2003 — 001.002 — 5
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nancing by the Structural Funds after deduction of interest received on
payment on account. Furthermore, in the case of global grants, debit
interest charges paid by the designated intermediary prior to payment of
the final balance of the assistance are eligible, after deduction of interest
received onpaymen t onaccoun t.
2. BANK CHARGES ON ACCOUNTS
Where co-financing by the Structural Funds requires the opening of a
separate account or accounts for implementing an operation, the bank
charges for opening and administering the accounts, are eligible.
3. LEGAL FEES FOR ADVICE, NOTARY FEES, THE COSTS OF TECH-
NICAL OR FINANCIAL EXPERTISE, AND ACCOUNTANCY OR
AUDIT COSTS
These costs are eligible if they are directly linked to the operation and are
necessary for its preparation or implementation or, in the case of
accounting or audit costs, if they relate to requirements by the managing
authority.
4. COSTS OF GUARANTEES PROVIDED BY A BANK OR OTHER
FINANCIAL INSTITUTION
These costs are eligible to the extent that the guarantees are required by
national or Community legislation or in the Commission Decision
approving the assistance.
5. FINES, FINANCIAL PENALTIES AND EXPENSES OF LITIGATION
These expenses are not eligible.
RuleNo4: Purchaseofsecond-handequipment
The purchase costs of second-hand equipment are eligible for co-financing by
the Structural Funds under the following three conditions without prejudice to
the application of stricter national rules:
(a) the seller of the equipment shall provide a declaration stating its origin, and
confirm that at no point during the previous seven years has it been
purchased with the aid of national or Community grants;
(b) the price of the equipment shall not exceed its market value and shall be
less than the cost of similar new equipment; and
(c) the equipment shall have the technical characteristics necessary for the
operation and comply with applicable norms and standards.
RuleNo5: Purchaseofland
1. GENERAL RULE
1.1. The cost of purchase of land not built on shall be eligible for co-financing
by the Structural Funds under the following three conditions without
prejudice to the application of stricter national rules:
(a) there shall be a direct link between the land purchase and the objec-
tives of the operation co-financed;
(b) except in the cases described in point 2, the land purchase may not
represent more than 10 % of the total eligible expenditure of the
operation, unless a higher percentage is fixed in the assistance
approved by the Commission;
(c) a certificate shall be obtained from an independent qualified valuer or
duly authorised official body confirming that the purchase price does
not exceed the market value.
1.2. Inthe case of aid schemes un der Article 87 of the Treaty, the eligibility of
lan d purchase shall be assessed interms of the aid scheme inits en tirety.
2. ENVIRONMENTAL CONSERVATION OPERATIONS
For environmental conservation operations, all the conditions indicated
below shall be met for the expenditure to be eligible:
— the purchase is the subject of a positive decision by the managing
authority,
— the land is devoted to the intended use for a period determined in that
decision,2000R1685 — EN — 05.07.2003 — 001.002 — 6
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— the land is not for agricultural purposes save in duly justified cases
accepted by the managing authority,
— the purchase is made by or onbehalf of a public in stitutionor a body
governed by public law.
RuleNo6: Purchaseofreal estate
1. GENERAL RULE
The cost of purchase of real estate, i.e. buildings already constructed and
the land on which they are built, is eligible for co-financing by the Struc-
tural Funds if there is a direct link between the purchase and the
objectives of the operation concerned under the conditions set out in point
2 without prejudice to the application of stricter national rules.
2. TERMS OF ELIGIBILITY
2.1. A certificate shall be obtained from an independent qualified valuer or
duly authorised official body establishing that the price does not exceed
the market value, and either attesting that the building is in conformity
with national regulations or specifying the points which are not in confor-
mity where their rectification by the final beneficiary is foreseen under the
operation.
2.2. The building shall not have received, within the previous 10 years, a
national or Community grant which would give rise to a duplication of
aid in the event of co-financing of the purchase by the Structural Funds.
2.3. The real estate shall be used for the purpose and for the period decided by
the managing authority.
2.4. The building may only be used in conformity with the objectives of the
operation. In particular, the building may be used to accommodate public
administration services only where such use is in conformity with eligible
activities of the Structural Fund concerned.
RuleNo7: VATandothertaxesandcharges
1. VAT does not constitute eligible expenditure except where it is genuinely
and definitively borne by the final beneficiary, or individual recipient
within the aid schemes pursuant to Article 87 of the Treaty and in the
case of aid granted by the bodies designated by the Member States. VAT
which is recoverable, by whatever means, cannot be considered eligible,
even if it is not actually recovered by the final beneficiary or individual
recipient. The public or private status of the final beneficiary or the indi-
vidual recipient is not taken into account for the determination whether
VAT constitutes eligible expenditure in application of the provisions of
this rule.
2. VAT which is not recoverable by the final beneficiary or individual reci-
pient by virtue of the application of specific national rules shall only
constitute eligible expenditure where such rules are in full compliance
with the Sixth Council Directive 77/388/EEC on VAT(1).
3. Where the final beneficiary or individual recipient is subject to a flat-rate
scheme under Title XIV of the Sixth Council Directive 77/388/EEC on
VAT, VAT paid is considered recoverable for the purposes of point 1.
4. Community co-financing may not exceed total eligible expenditure
excluding VAT, without prejudice to the provisions of Article 29(6) of
the general Regulation.
5. Other taxes and charges (in particular direct taxes and social security
contributions on wages and salaries) which arise from co-financing by
the Structural Funds do not constitute eligible expenditure except where
they are genuinely and definitively borne by the final beneficiary or indi-
vidual recipient.
RuleNo8: Venturecapitalandloanfunds
1. GENERAL RULE
The Structural Funds may co-finance the capital of venture capital and/or
loan funds or of venture capital holding funds (hereinafter funds) under
the conditions set out in point 2. For the purposes of this Rules, ‘Venture2000R1685 — EN — 05.07.2003 — 001.002 — 7
(1) OJ L 145, 13.6.1977, p. 1.
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capital funds and loan funds’ means investment vehicles established speci-
fically to provide equity or other forms of risk capital, including loans, to
small and medium-sized enterprises as defined in Commission Recom-
mendation 96/280/EC (1) as last amended by Recommendation of 6 May
2003. ‘Venture capital holding funds’ means funds set up to invest in
several venture capital and loan funds. The Structural Funds' participation
in funds may be accompanied by co-investments or guarantees from other
Community financing instruments.
2. CONDITIONS
2.1. A prudent business plan shall be submitted by the co-financiers or spon-
sors of the fund specifying, inter alia , the targeted market, the criteria,
terms and conditions of financing, the operational budget of the fund, the
ownership and co-financing partners, the professionalism, competence and
independence of the management, the fund's by-laws, the justification and
intended utilisation of the Structural Funds' contribution, the investment
exit policy, and the winding-up provisions of the fund, including the reuti-
lisation of returns attributable to the contribution from the Structural
Funds. The business plan shall be carefully appraised and its implementa-
tion monitored by or under the responsibility of the managing authority.
2.2. The fund shall be set up as an independent legal entity governed by agree-
ments between the shareholders or as a separate block of finance within
an existing financial institution. In the latter case the fund shall be subject
to a separate implementation agreement, stipulating in particular the
keeping of separate accounts distinguishing the new resources invested in
the fund (including those contributed by the Structural Funds) from those
initially available in the institution. All participants in the fund shall make
their contributions in cash.
2.3. The Commission cannot become a partner or shareholder in the fund.2.4. The contribution from the Structural Funds shall be subject to the limits
laid down in Article 29(3) and (4) of the general Regulation.
2.5. Funds may invest only in SMEs at their establishment, early stages
(including seed capital) or expansion and only in activities which the
fund managers judge potentially economically viable. The assessment of
the viability should take into account all sources of income of the enter-
prises in question. Funds shall not invest in firms in difficulty within the
meaning of the Community Guidelines on State aid for rescuing and
restructuring firms in difficulty (
2).
2.6. Precautions should be taken to minimise distortion of competition in the
venture capital or lending market. In particular returns from equity invest-
ments and loans (less pro rata share of the management costs) may be
preferentially allocated to the private sector shareholders up to the level
of remuneration laid down in the shareholder agreement, and after that,
they shall be allocated proportionally between all shareholders and the
Structural Funds. Returns to the fund attributable to the Structural Funds'
contributions shall be reused for SME development activities in the same
eligible area.
2.7. Management costs may not exceed 5 % of the paid-up capital on a yearly
average for the duration of the assistance unless, after a competitive
tender, a higher percentage proves necessary.
2.8. At the time of the closure of the operation, the eligible expenditure of the
fund (the final beneficiary) shall be the capital of the fund that has been
invested in or loaned out to SMEs, including the management costs
incurred.
2.9. Contributions to funds from the Structural Funds and other public sources,
as well as the investments made by funds in individual SMEs, are subject
to the rules onState aid.
3. RECOMMENDATIONS
3.1. The Commission recommends the standards of good practice set out in
points 3.2 to 3.6 for funds to which the Structural Funds contribute. The
Commission will regard compliance with these recommendations as a
positive element when it examines the fund's compatibility with State aid
rules. The recommendations are not binding for the purposes of the elig-
ibility of expenditure.2000R1685 — EN — 05.07.2003 — 001.002 — 8
(1) OJ L 107, 30.4.1996, p. 4.
(2) OJ C 288, 9.10.1999, p. 2.
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3.2. The financial contribution of the private sector should be substantial, and
above 30 %.
3.3. Funds should be large enough and cover a wide enough target population
to ensure that their operations are potentially economically viable, with a
time scale for investments compatible with the period of the Structural
Funds' participation, and focusing on areas of market failure.
3.4. The timing of payments of capital into the fund should be the same for the
Structural Funds and the shareholders, and pro rata to the stakes
subscribed.
3.5. Funds should be managed by independent professional teams with suffi-
cient business experience to demonstrate the necessary capability and
credibility to manage a venture capital fund. Management teams should
be chosen on the basis of a competitive selection process, taking into
account the level of fees envisaged.
3.6. Funds should not normally acquire majority stakes in firms and should
pursue the objective of realising all investments within the life of the
fund.
RuleNo9: Guaranteefunds
1. GENERAL RULE
The Structural Funds may co-finance the capital of guarantee funds under
the conditions set out in point 2. For the purposes of this Rule, ‘Guarantee
funds’ mean financing instruments that guarantee venture capital and loan
funds within the meaning of Rule No 8 and other SME risk financing
schemes (including loans) against losses arising from their investments in
small and medium-sized enterprises as defined in recommendation 96/280/
EC as last amended by Commission Recommendation of 6 May 2003.
The funds may be publicly-supported mutual funds subscribed by SMEs,
commercially-run funds with private-sector partners, or wholly publicly-
financed funds. The Structural Funds' participation in funds may be
accompanied by part-guarantees provided by other Community financing
instruments.
2. CONDITIONS
2.1. A prudent business plan shall be submitted by the co-financiers or spon-
sors of the fund in the same way as for venture capital funds (Rule No 8),
mutatis mutandis , and specifying the target guarantee portfolio. The busi-
ness plan shall be carefully appraised and its implementation monitored
by or under the responsibility of the managing authority.
2.2. The fund shall be set up as an independent legal entity governed by agree-
ments between the shareholders or as a separate block of finance within
an existing financial institution. In the latter case the ‘fund’ shall be
subject to a separate implementation agreement, stipulating in particular
the keeping of separate accounts distinguishing the new resources invested
in the fund (including those contributed by the Structural Funds) from
those initially available in the institution.
2.3. The Commission cannot become a partner or shareholder in the fund.2.4. Funds may only guarantee investments in activities that are judged poten-
tially economically viable. Funds shall not provide guarantees for firms in
difficulty within the meaning of the Community guidelines on State aid
for rescuing and restructuring firms in difficulty.
2.5. Any part of the Structural Funds' contribution left over after the guaran-
tees have been honoured shall be reused for SME development activities
inthe same eligible area.
2.6. Management costs may not exceed 2 % of the paid-up capital on a yearly
average for the duration of the assistance unless, after a competitive
tender, a higher percentage proves necessary.
2.7. At the time of the closure of the operation, the eligible expenditure of the
fund (the final beneficiary) shall be the amount of the paid-up capital of
the fund necessary, on the basis of an independent audit, to cover the
guarantees provided including the management costs incurred.
2.8. Contributions to guarantee funds from the Structural Funds and other
public sources, as well as the guarantees provided by such funds to indi-
vidual SMEs are subject to the rules onState aid.2000R1685 — EN — 05.07.2003 — 001.002 — 9
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RuleNo10: Leasing
1. GENERAL RULE
Expenditure incurred in relation to leasing operations is eligible for co-
financing under the Structural Funds subject to the rules set out in points
2t o4 .
2. AID VIA LESSOR
2.1. The lessor is the direct recipient of the Community co-financing, which is
used for the reduction of the lease rental payments made by the lessee in
respect of assets covered by the leasing contract.
2.2. Leasing contracts for which Community aid is paid shall include an option
to purchase or provide for a minimum leasing period equal to that of the
useful life of the asset to which the contract relates.
2.3. Where a leasing contract is terminated before expiry of the minimum
leasing period without the prior approval of the competent authorities,
the lessor shall undertake to repay to the national authorities concerned
(for credit to the appropriate fund) that part of the Community aid corre-
sponding to the remainder of the leasing period.
2.4. The purchase of the asset by the lessor, supported by a receipted invoice
or an accounting document of equal probative value, constitutes the
expenditure eligible for co-financing. The maximum amount eligible for
Community co-financing shall not exceed the market value of the asset
leased.
2.5. Costs connected with the leasing contract (notably tax, lessor's margin,
interest refinancing costs, overheads, insurance charges), other than the
expenditure referred to in point 2.4, are not eligible expenditure.
2.6. Community aid paid to the lessor shall be used in its entirety for the
benefit of the lessee by means of a uniform reduction in all the leasing
rentals for the duration of the leasing period.
2.7. The lessor shall demonstrate that the benefit of the Community aid will be
transferred fully to the lessee by establishing a breakdown of the rental
payments or by an alternative method giving equivalent assurance.
2.8. The costs referred to in point 2.5, the use of any fiscal benefits arising
from the leasing operation, and other conditions of the contract shall be
equivalent to those applicable in the absence of any Community financial
intervention.
3. AID TO LESSEE
3.1. The lessee is the direct recipient of the Community co-financing.3.2. The leasing rentals paid to the lessor by the lessee, supported by a
receipted invoice or an accounting document of equivalent probative
value, constitute the expenditure eligible for co-financing.
3.3. In the case of leasing contracts which include an option to purchase or
which provide for a minimum leasing period equal to the useful life of
the asset to which the contract relates, the maximum amount eligible for
Community co-financing shall not exceed the market value of the asset
leased. Other costs connected with the leasing contract (tax, lessor's
margin, interest refinancing costs, overheads, insurance charges, etc.) are
not eligible expenditure.
3.4. The Community aid in respect of leasing contracts referred to under point
3.3 is paid to the lessee in one or more tranches in respect of leasing
rentals effectively paid. Where the term of the leasing contract exceeds
the final date for taking account of payments under the Community assis-
tance, only expenditure in relation to leasing rentals falling due and paid
by the lessee up to the final date for payment under the assistance can be
considered eligible.
3.5. In the case of leasing contracts which do not contain an option to
purchase and whose duration is less than the period of the useful life of
the asset to which the leasing contract relates, the leasing rentals are
eligible for co-financing by the Community in proportion to the period
of the eligible operation. However, the lessee must be able to demonstrate
that leasing was the most cost-effective method for obtaining the use of
the equipment. Where the costs would have been lower if an alternative
method (for example hiring of the equipment) had been used, the addi-
tional costs shall be deducted from the eligible expenditure.2000R1685 — EN — 05.07.2003 — 001.002 — 10
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3.6. Member States may apply stricter national rules for determining eligible
expenditure under points 3.1 to 3.5.
4. SALE AND LEASE-BACK
Leasing rentals paid by a lessee under a sale and lease-back scheme may
be eligible expenditure under the rules set out in point 3. The acquisition
costs of the asset are not eligible for Community co-financing.
Rule No 11: Costs incurred in managing and implementing the Structural
Funds
1. GENERAL RULE
Costs incurred by Member States in the management, implementation,
monitoring and control of the Structural Funds are ineligible for co-finan-
cing except as provided for in point 2 and falling within the categories set
out inpoin t 2.1.
2. CATEGORIES OF MANAGEMENT, IMPLEMENTATION, MONI-
TORING AND CONTROL EXPENDITURE ELIGIBLE FOR CO-
FINANCING
2.1. The following categories of expenditure are eligible for co-financing
under assistance under the conditions set out in points 2.2 to 2.7:
— expenditure relating to the preparation, selection, appraisal and moni-
toring of the assistance and of operations (but excluding expenditure
on the acquisition and installation of computerised systems for
management, monitoring and evaluation),
— expenditure on meetings of monitoring committees and sub-commit-
tees relating to the implementation of assistance. This expenditure
may also include the costs of experts and other participants in these
committees, including third-country participants, where the chair-
person of such committees considers their presence essential to the
effective implementation of the assistance,
— expenditure relating to audits and on-the-spot checks of operations.
2.2. Expenditure on salaries including social security contributions is eligible
only in the following cases:
(a) civil servants or other public officials seconded by duly documented
decisionof the competen t authority to carry out tasks referred to in
point 2.1;
(b) other staff employed to carry out tasks referred to inpoin t 2.1.
The period of secondment or employment may not exceed the final date
for the eligibility of expenditure laid down in the decision approving the
assistance.
2.3. The Structural Funds' contribution to the expenditure under point 2.1 shall
be limited to a maximum amount which will be fixed in the assistance
approved by the Commission and shall not exceed the limits set out in
points 2.4 and 2.5.
2.4. For all assistance, except Community Initiatives, the Peace II special
programme and innovative actions, the limit shall be the sum of the
following amounts:
— 2,5 % of that part of the total Structural Funds' contribution less than
or equal to EUR 100 million,
— 2 % of that part of the total Structural Funds' contribution which
exceeds EUR 100 millionbut is less thanor equal to EUR 500
million,
— 1 % of that part of the total Structural Funds' contribution which
exceeds EUR 500 millionbut is less thanor equal to EUR 1000
million,
— 0,5 % of that part of the total Structural Funds' contribution which
exceeds EUR 1 000 million.
2.5. For Community Initiatives, innovative actions and the Peace II special
programme, the limit shall be 5 % of the Structural Funds' total contribu-
tion. Where such assistance involves the participation of more than one
Member State this limit may be increased to take account of higher costs
of management and implementation and will be fixed in the Commission's
decision.2000R1685 — EN — 05.07.2003 — 001.002 — 11
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2.6. For the purposes of calculating the amount of the limits in points 2.4 and
2.5, the Structural Funds' total contribution shall be the total fixed in each
assistance approved by the Commission.
2.7. The implementation of points 2.1 to 2.6 of this Rule shall be agreed
between the Commission and the Member States and laid down in the
assistance. The rate of the contribution will be fixed in accordance with
Article 29(7) of the General Regulation. For the purposes of monitoring,
the costs referred to in2.1 will be the subject of a separate measure or
submeasure within technical assistance.
3. OTHER EXPENDITURE UNDER TECHNICAL ASSISTANCE
Actions which can be co-financed under technical assistance, other than
those set out in point 2 (such as studies, seminars, information actions,
evaluation, and the acquisition and installation of computerised systems
for management, monitoring and evaluation), are not subject to the condi-
tions set out in points 2.4 to 2.6. Expenditure on the salaries of civil
servants or other public officials in carrying out such actions is not
eligible.
4. EXPENDITURE BY PUBLIC ADMINISTRATIONS RELATING TO
THE EXECUTION OF OPERATIONS
The following expenditure of public administrations is eligible for co-
financing outside technical assistance if it relates to the execution of an
operation provided that it does not arise from the statutory responsibilities
of the public authority or the authority's day-to-day management, moni-
toring and control tasks:
(a) costs of professional services rendered by a public service in the
implementation of an operation. The costs must be either invoiced to
a final beneficiary (public or private) or certified on the basis of docu-
ments of equivalent probative value which permit the identification of
real costs paid by the public service concerned in relation to that
operation;
(b) costs of the implementation of an operation, including the expenditure
related to the provisionof services, born e by a public authority that is
itself the final beneficiary and which is executing an operation on its
own account without recourse to outside engineers or other firms. The
expenditure concerned must relate to expenditure actually and directly
paid on the co-financed operation and must be certified on the basis
of documents which permit the identification of real costs paid by
the public service concerned in relation to that operation.
RuleNo12: Eligibility ofoperationsdependingonthelocation
1. GENERAL RULE
As a general rule, operations co-financed by the Structural Funds shall be
located inthe regionto which the assistan ce relates.
2. EXCEPTION
2.1. Where the region to which the assistance relates will benefit wholly or
partly from anoperationlocated outside that region , the operationmay
be accepted by the managing authority for co-financing provided that all
the conditions set out in points 2.2 to 2.4 are satisfied. In other cases on
operation may be accepted as eligible for co-financing under the proce-
dure in point 3. For operations financed under the Financial Instrument
for Fisheries Guidance (FIFG), the procedure under point 3 must always
be followed.
2.2. The operationmust be located ina NUTS III area of the Member State
immediately adjacent to the region to which the assistance relates.
2.3. The maximum eligible expenditure of the operation is determined pro rata
to the proportionof the ben efits from the operationwhich it is foreseen
will accrue to the regionan d shall be based onanevaluationby a body
independent of the managing authority. The benefits shall be assessed
taking account of the specific targets of the assistance and its expected
impact. The operation cannot be accepted for co-financing where the
proportionof ben efits is less than50 %.
2.4. For each measure of the assistance, the eligible expenditure of the opera-
tions accepted under point 2.1 should not exceed 10 % of the total eligible
expenditure of the measure. In addition, the eligible expenditure of all2000R1685 — EN — 05.07.2003 — 001.002 — 12
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operations in the assistance accepted under point 2.1 should not exceed
5 % of the total eligible expenditure of the assistance.
2.5. Operations accepted by the managing authority under point 2.1 shall be
indicated in the annual and final implementation reports of the assistance.
3. OTHER CASES
In the case of operations located outside the region to which the assistance
relates but which do not fulfil the conditions of point 2, and of operations
financed under the FIFG, the acceptance of the operation for co-financing
shall be subject to prior approval by the Commissionona case-by-case
basis following a request submitted by the Member State, taking into
account in particular the proximity of the operation to the region, the level
of benefit to the region which can be foreseen, and the amount of the
expenditure in proportion to the total expenditure under the measure and
under the assistance. In the case of assistance relating to the outermost
regions, the procedure in this point will be applicable.2000R1685 — EN — 05.07.2003 — 001.002 — 13