SCOs and FNLC in practice in the IPA countries : final report.
Date: 2025-01-06
Institutions: Directorate-General for Regional and Urban Policy
Subjects: EU programme, administrative cooperation, administrative formalities, report, simplification of formalities

SCOs and FNLC in practice in the 
IPA countries 

Final Report 

Contract: 2022CE160AT279 

Sabine Zillmer (Spatial Foresight) 
Dea Hrelja (t33) 
October – 2024 

 
EUROPEAN COMMISSION 

Directorate-General for Regional and Urban Policy 
Directorate D – European Territorial Cooperation, Macro-regions, Interreg and Programmes Implementation I 
Unit D1 – Competence Centre Macro-regions, Transnational/Interregional/External Cooperation, Enlargement 

Contact: Gilles Kittel 

E-mail:  REGIO-TRANSNATIONAL-AND-INTERREGIONAL-COOPERATION@ec.europa.eu  

gilles.kittel@ec.europa.eu 

European Commission 
B-1049 Brussels 

 
 
 
EUROPEAN COMMISSION 

SCOs and FNLC in practice in the 
IPA countries 

Final Report 

Contract: 2022CE160AT279 

2024 

EN 

Directorate-General for Regional and Urban Policy 

 
The information and views set out in this report are those of the authors and do not necessarily reflect the official 
opinion of the Commission. The Commission does not guarantee the accuracy of the data included in this report. 
Neither the Commission nor any person acting on the Commission’s behalf may be held responsible for the use 
which may be made of the information contained therein. 

Acknowledgements: We thank the colleagues of Spatial Foresight and t33 involved in the study for their inputs 
to other deliverables and all programme authorities providing valuable insights during interviews and workshops. 

Manuscript completed in October 2024 

1st edition 

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PDF 

ISBN 978-92-68-23604-8 

doi:10.2776/7354093 

KN-01-24-029-EN-N

SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

Table of Contents 

Abstract ............................................................................................................. 9 

Executive Summary ....................................................................................... 10 

1. 

Introduction ............................................................................................ 16 

2.  Scope and methodology ....................................................................... 18 

3.  Use of SCOs in 2021-2027 Interreg IPA programmes ......................... 22 

3.1.  Use of SCOs across Interreg IPA programmes ................................... 23 

3.2.  Types of SCOs in Interreg IPA programmes ....................................... 24 

3.3.  Programmes' approaches to SCOs ..................................................... 28 

3.4.  SCOs by cost categories and combinations of SCO in one operation . 29 

3.5.  The non-use of FNLC .......................................................................... 33 

3.6.  Limitations of transfer to IPA programmes ........................................... 34 

4. 

Insights into selected SCO practices ................................................... 36 

4.1.  SCOs for staff costs ............................................................................. 36 

4.1.1.  Off-the-shelf .............................................................................................. 37 
4.1.2.  Programme specific SCOs ....................................................................... 40 
4.1.3.  Choosing the most appropriate SCO for staff costs ................................. 43 

4.2.  SCOs for travel costs ........................................................................... 45 

4.2.1.  Off-the-shelf .............................................................................................. 45 
4.2.2.  Programme specific SCOs ....................................................................... 48 
4.2.3.  Choosing the most appropriate SCO for travel costs ............................... 51 

4.3.  Preparation and closure costs ............................................................. 53 

4.3.1.  Project preparation costs .......................................................................... 53 
4.3.2.  Project closure costs ................................................................................ 57 
4.3.3.  Choosing the most appropriate SCO for project preparation and closure 

costs ......................................................................................................... 60 

4.4.  Events and trainings ............................................................................ 62 

4.4.1.  Use of unit costs ....................................................................................... 62 
4.4.2.  Use of lump sums ..................................................................................... 65 

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SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

4.4.3.  Choosing the most appropriate SCO for events and trainings ................. 67 

4.5.  Office and administration costs (indirect costs) ................................... 69 

4.5.1.  Flat rates for indirect costs ....................................................................... 70 
4.5.2.  Flat rate for costs including indirect costs ................................................ 73 
4.5.3.  Choosing the most appropriate SCO for office and administration costs . 75 

4.6.  SCOs for small-scale projects ............................................................. 77 

4.6.1.  Unit costs for small-scale projects ............................................................ 78 
4.6.2.  Lump sum for small-scale projects ........................................................... 81 
4.6.3.  Choosing the most appropriate SCOs for small-scale projects ................ 84 

5.  Conclusions and recommendations .................................................... 86 

Bibliography ................................................................................................... 93 

List of Tables 

Table 1 – Indicators of the structured SCO database ................................................... 20 

Table 2 – Off-the-shelf options for SCOs in Interreg IPA programmes ........................ 22 

Table 3 – Types of SCOs per Interreg IPA programme ................................................ 26 

Table 4 – Number of programme specific SCOs in 2021-2027 Interreg IPA 

programmes by type of SCO ........................................................................ 29 

Table 5 – Benefits and challenges of the use of Art. 39(3)(c) Interreg Regulation to 

cover staff costs ............................................................................................ 38 

Table 6 – Benefits and challenges of the use of Art. 55(2)(a) Interreg Regulation to 

cover staff costs ............................................................................................ 40 

Table 7 – Benefits and challenges of the development of unit costs to cover staff costs

 ..................................................................................................................... 43 

Table 8 – Benefits and challenges of the use of Art. 41(5) of the Interreg Regulation to 

cover travel costs .......................................................................................... 46 

Table 9 – Benefits and challenges of the use of a programme specific flat-rate to cover 
travel costs ................................................................................................... 49 

Table 10 – Benefits and challenges of the use of SCOs developed in Delegated Acts or 
in other Union policies to cover travel costs ............................................... 51 

Table 11 – Benefits and challenges of the development of lump sums to cover project 

preparation costs ........................................................................................ 57 

Table 12 – Relationship between preparation and closure costs in four Interreg IPA 

programmes ............................................................................................... 58 

Table 13 – Benefits and challenges of the development of lump sums to cover project 

closure costs .............................................................................................. 59 

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SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

Table 14 – Benefits and challenges of the use of unit costs to cover costs of events and 
trainings ...................................................................................................... 64 

Table 15 – Benefits and challenges of the use of lump sums to cover costs of events 

and trainings ............................................................................................... 67 

Table 16 – Benefits and challenges of the use of Art. 54(a) CPR to cover indirect costs

 ................................................................................................................... 71 

Table 17 – Benefits and challenges of the use of Art. 54(b) CPR to cover indirect costs

 ................................................................................................................... 72 

Table 18 – Benefits and challenges of the use of Art. 54(c) CPR to cover indirect costs

 ................................................................................................................... 73 

Table 19 – Benefits and challenges of the use of Art. 56(1) CPR to eligible costs other 

than direct staff costs ................................................................................. 74 

Table 20 – Benefits and challenges of the development of unit costs to cover all costs 

for small-scale cooperation costs ............................................................... 80 

Table 21 – Benefits and challenges of the development of lump sums to cover project 

closure costs .............................................................................................. 84 

List of Figures 

Figure 1: Interreg VI A IPA CBC programmes 2021-2027 ............................................ 18 

Figure 2: Methodological overview of the study’s activities .......................................... 19 

Figure 3: Number of SCOs in Interreg VI A IPA CBC programmes 2021-2027* .......... 23 

Figure 4: Use of different off-the-shelf flat rates by 2021-2027 Interreg IPA programmes
 ..................................................................................................................... 25 

Figure 5: Programme specific SCOs of 2021-2027 Interreg IPA programmes by type of 
SCO .............................................................................................................. 27 

Figure 6: Methodologies used by Interreg IPA programmes to specify their programme 

specific SCOs ............................................................................................... 28 

Figure 7: Number of SCOs in Interreg IPA countries according to type of cost category

 ..................................................................................................................... 30 

Figure 8: Frequent combination of off-the-shelf flat rates in Interreg IPA programmes 31 

Figure 9: Illustration of alternative SCO combinations for the same type of operation at 

the example of the Danube Programme ....................................................... 33 

Figure 10: Flowchart guiding the reasoning behind the choice of the most appropriate 

SCO to cover staff costs ............................................................................... 44 

Figure 11: Combination of different SCOs and implications for the interpretation of 

direct and indirect costs ................................................................................ 47 

Figure 12: Flowchart guiding the reasoning behind the choice of the most appropriate 

SCO to cover travel costs ............................................................................. 52 

Figure 13: Flowchart guiding the reasoning behind the choice of the most appropriate 

SCO to cover preparation or closure costs ................................................... 61 

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SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

Figure 14: Flowchart guiding the reasoning behind the choice of the most appropriate 

SCO to cover costs of events and trainings ................................................. 68 

Figure 15: Overview of flat rates for calculating indirect costs ...................................... 69 

Figure 16: Flowchart guiding the reasoning behind the choice of the most appropriate 

SCO to cover office and administration costs ............................................... 76 

Figure 17: Flowchart guiding the reasoning behind the choice of the most appropriate 

SCO to reimburse small-scale projects ........................................................ 85 

Figure 18: Illustration of SCO combinations in small-scale projects for the three 

alternatives ................................................................................................... 91 

Abbreviations 

AA 

CBC 

CPI 

CPR 

EC 

Audit Authority 

Cross-border cooperation 

Consumer Price Index 

Common Provision Regulation 

European Commission 

ERDF 

European Regional Development Fund 

ESF 

ESIF 

EU 

FLC 

European Social Fund 

European Structural and Investment Funds 

European Union 

First Level Control 

FNLC 

Financing Not Linked to Costs 

IPA 

JS 

MA 

MSCA 

NUP 

PforR 

PO 

RRF 

SCO 

SO 

Instrument for Pre-accession Assistance 

Joint Secretariat 

Managing Authority 

Marie Sklodowska Curie Action 

National URBACT Points 

Program-for-Results Financing 

Policy Objective 

Recovery and Resilience Facility 

Simplified Cost Option 

Specific Objective 

8 

 
 
 
 
 
 
 
 
 
SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

Abstract 

This report presents the final results of the study on the use of Simplified Cost Options 
(SCOs) in 14 Interreg IPA programmes 2021-2027. The analysis is divided in two parts. 
The first part describes the use of different SCOs by these programmes. This analysis 
distinguishes between types of SCOs, individual programmes, approaches to developing 
SCOs and their use for different cost categories. This part concludes with a reflection on 
the limitations of transferability to other IPA programmes. The second part examines the 
use of SCOs by different cost categories, for which SCOs are frequently used in Interreg 
IPA  programmes.  These  are  SCOs  for  staff,  travel,  events  and  training,  project 
preparation  and  closure,  and  office  and  administrative  costs.  Specific  approaches  for 
small-scale projects are also described. For each cost category, the analysis closes with 
a reflection on how to choose the most appropriate approach. The report concludes with 
recommendations for the future use of SCOs in cooperation programmes and identifies 
some risks in the development of SCOs. 

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SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

Executive Summary 

The study analyses the use of Simplified Cost Options (SCOs) as a means to reduce 
administrative burdens and costs in the implementation of cohesion policy, in particular 
within the Interreg IPA programmes of the European Structural and Investment Funds 
(ESIF). In the light of past experience with SCOs, the study promotes better and smarter 
practices in Interreg IPA programmes in the 2021-2027 programming period. To this end, 
the report describes and analyses SCO practices in different cost categories applied by 
these  programmes.  It  provides  insights  and  recommendations  for  the  effective  use  of 
SCOs in cooperation programmes. With this focus, the report contributes to the debate 
on cohesion policy after 2027 and the claims for further simplification as highlighted in 
the guidelines for the next European Commission 2024, the so-called Letta report and 
the High-level expert group on the future of cohesion policy.  

The analysis examines data from 12 out of 14 Interreg IPA programmes for the 2021-
2027 programming period. This includes eight of the ten cross-border programmes and 
four transnational and interregional programmes, such as the Interreg IPA Adriatic-Ionian 
and  URBACT  programmes.  The  two  excluded  programmes  had  SCOs  under 
consideration at the time of data collection, but these could not yet be confirmed for the 
analysis. Three key activities guide this analysis: (1) identification and analysis of SCO 
practices within these programmes, (2) a detailed review of 30 selected practices, and 
(3)  workshops  and  discussions  involving  Commission  services  and  public  authorities 
involved  in  these  programmes.  The  findings  highlight  similarities  in  SCO  approaches 
across programmes and provide insights and recommendations for replicating effective 
SCO practices in other programmes. To provide further inspiration for SCO applications, 
complementary  information  was  collected  on  four  SCOs  from  three  other  2021-2027 
territorial cooperation programmes, namely the Baltic Sea Region, Central Baltic and the 
Hungary-Slovenia programmes. 

Across the 12 Interreg IPA programmes, 70 SCOs have been identified, although many 
of these have similarities in that they are managed by the same Member State. While 
some  SCOs  are  mandatory  or  specific  to  certain  project  types,  none  are  limited  to  a 
single policy objective and all identified SCOs are currently only applied at the lower level 
of reimbursement to beneficiaries. The 12 Interreg IPA programmes mainly use off-the-
shelf  SCOs  provided  by  EU  regulations.  These  are  mostly  flat  rates.  Flat  rates  for 
reimbursement of staff, travel and indirect costs are widely used, while other off-the-shelf 
options are less commonly used. Most programmes use at least one programme specific 
SCO. Most of these are lump sums. These are often used for preparation and closure 
costs and for events. The variety of SCOs implemented by the South Adriatic Programme 
illustrates  the  flexibility  of  unit  cost  approaches  for  different  cost  categories  and 
beneficiary specific needs. Overall, while there are no significant structural differences 
between  cross-border  and  other  territorial  cooperation  programmes,  the  specific 
application of unit costs and lump sums varies according to programme needs. 

While  off-the-shelf  SCOs  do  not  require  additional  documentation  or  calculations, 
programme  specific  SCOs  must  be  supported  by  calculations  demonstrating  their 
fairness, equity, and verifiability under Article 53(3) CPR. Approximately 80% of these 
programme specific SCOs are based on historical data and/or other calculation methods 
suggested by the CPR.  

The  programmes  apply  SCOs  to  several  cost  categories,  in  particular  travel  and 
accommodation, staff and administration costs. In many programmes, SCOs for these 
three cost categories can be combined, which contributes to a significant simplification. 
Other cost categories for which the programmes frequently use SCOs include event and 

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SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

project preparation and closure costs. The South Adriatic Programme stands out with a 
comprehensive set of SCOs covering all major cost categories. Other programmes, such 
as Euro-MED and IPA Adriatic-Ionian, offer differentiated SCOs depending on the type 
of project or the origin of the beneficiary. However, in some cases the flexibility of multiple 
SCO  options  complicates  budget  planning  and  implementation  for  beneficiaries  and 
programme authorities, potentially reducing the simplification benefits of SCOs. 

Two limitations of the study should be noted: 

•  An alternative to SCOs is the "financing not linked to costs" (FNLC) approach, 
which shifts from cost-based to results-based reimbursement and which is still 
rarely  used  in  cohesion  policy  programmes.  Despite  its  potential  to  simplify 
processes,  FNLC  faces  challenges  in  defining  results  within  Interreg  IPA 
programmes. The challenge lies in the cooperation focus of these programmes. 
As  a  result,  no  FNLC  schemes  have  been  identified  in  Interreg  IPA  or  other 
Interreg programmes for 2021-2027. Thus, the analysis only considers SCOs. 

•  The application of SCOs differs significantly between mainstream cohesion policy 
programmes  and  Interreg  or  Interreg  IPA  programmes.  This  affects  the 
transferability  of  these  practices.  The  differences  stem  from  differences  in 
programme size, type of operations, implementation logic and structure of SCOs. 
These differences mean that while SCO practices from Interreg IPA programmes 
can  be  shared  between  similar  territorial  cooperation  programmes,  their 
application is not directly transferable to mainstream IPA programmes. For the 
latter,  SCOs  often  need  to  be  tailored  to  specific  policy  areas  or  objectives. 
Learning from SCO applications is thus more about understanding the strategic 
approach to identifying and combining SCOs across different cost categories. 

The analysis of the different SCO applications distinguishes six cost categories of high 
relevance  in  Interreg  IPA  programmes.  In  addition  to  examples  from  Interreg  IPA 
programmes, examples from other Interreg programmes that are applicable to the IPA 
context are also included. These illustrate unit cost approaches for staff costs and tailor-
made SCOs for small-scale projects. Each cost category includes examples from one or 
other programme in boxes for illustration and summarises the degree of replicability. To 
support decision-making on different SCO alternatives, each cost category includes (1) 
a  flowchart  summarising  the  alternatives  and  requirements  for  each  category  and  (2) 
tables with the benefits and challenges of each alternative.  

Staff costs can be reimbursed through off-the-shelf or programme specific SCOs:  

•  Off-the-shelf SCOs for staff costs, notably the flat rate of up to 20% of direct costs 
other  than  direct  staff  costs  as  defined  in  Article  39(3)(c)  of  the  Interreg 
Regulation,  are  widely  used  in  Interreg  IPA  programmes  because  of  their 
simplicity and reduction of administrative burden. This method avoids the need 
for  detailed  methodology  development  by  programme  authorities  but  does  not 
always perfectly approximate real costs. This can be problematic in programmes 
where  there  are  significant  salary  differences  between  EU  and  non-EU 
beneficiaries.  Despite  its  simplicity,  there  is  a  risk  if  programmes  allow 
beneficiaries  to  choose  their  flat  rate  within  a  given  limit,  which  could  lead  to 
uneven application and challenges in maintaining fairness principles. The other 
two  off-the-shelf  options  for  calculating  hourly  rates  offer  more  flexibility  and  a 
better approximation of real costs than the flat rate.  

•  Programme  specific  SCOs,  such  as  unit  costs  for  staff  costs,  offer  a  tailored 
approach that can be more closely aligned with actual costs, thereby  reducing 

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SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

the  risk  of  over-  or  under-compensation  inherent  in  off-the-shelf  options.  For 
example,  the  Interreg  IPA  South  Adriatic  programme  has  effectively  used 
historical data to set differentiated hourly rates by country, type of organisation, 
and  seniority,  thereby  improving  the  accuracy  and  fairness  of  cost  allocation. 
Such  SCOs  are  potentially  more  resource  intensive  to  develop.  However, 
depending on the degree of differentiation of unit costs, they provide a balanced 
solution  that  reduces  administrative  burden  and  error  rates.  And  they  are 
particularly  beneficial  in  managing  the  diverse  cost  structures  typical  of 
cooperation programmes. 

Due to the collaborative nature of  Interreg programmes, travel costs  are an important 
cost  category  for  which  simplification  is  crucial.  These  costs  may  also  be  reimbursed 
using  off-the  shelf  or  programme  specific  SCOs,  although  the  range  of  off-the  shelf 
options is smaller: 

•  The off-the-shelf SCO provided by the Interreg Regulation 2021/1059 allows a 
flat  rate  of  up  to  15%  of  direct  staff  costs  to  cover  travel  costs.  This  option  is 
widely  used  in  Interreg  IPA  programmes.  However,  some  programmes  apply 
different rates up to this ceiling, creating inconsistencies and potentially shifting 
the responsibility for setting rates from Managing Authorities to beneficiaries. This 
can undermine fairness. Such inconsistencies, together with the socio-economic 
disparities between EU and non-EU countries, can lead to significant differences 
in  the  effectiveness  of  covering  these  costs.  This  suggests  that  programme 
specific SCOs may be needed to better address these disparities. Moreover, the 
method of combining SCOs introduces further complications in the categorisation 
of costs, affecting the basis for calculating staff and travel costs and potentially 
leading to under-compensation in regions with lower salaries. 

• 

In the context of the Interreg IPA programmes, a few programme specific SCOs 
have  been  developed  to  more  accurately  estimate  real  travel  costs.  These 
address the differences in travel costs between EU and non-EU countries, either 
by using a higher flat rate than the off-the-shelf option for some beneficiaries, or 
by  applying  a  unit  cost  approach.  Interreg  Euro-MED  has  introduced  a 
recalibrated flat rate of 22% of direct staff costs for IPA beneficiaries, reflecting 
the  higher  real  travel  costs  in  these  countries  compared  to  the  EU.  Similarly, 
Interreg  IPA  South  Adriatic  has  developed  unit  costs  based  on  a  Commission 
Decision  for  travel  and  accommodation  in  small-scale  projects,  adjusted  for 
specific  distances  between  countries  and  available  transport  modes.  These 
initiatives  demonstrate  tailor-made  approaches  to  meet  the  specific  needs  of 
different programme participants, aiming at fair reimbursement while maintaining 
administrative simplification. 

In Interreg IPA programmes, the project preparation and completion of projects require 
considerable  coordination  efforts.  The  Interreg  Regulation  recognises  this  effort  by 
allowing these costs to be included in eligible expenditure. However,  there are no off-
the-shelf  SCOs  for  these  costs.  Programmes  must  therefore  develop  specific  SCOs, 
mainly in the form of lump sums. These lump sums are determined on the basis of the 
outcome  of  a  successfully  submitted  project  application.  This  greatly  simplifies  the 
application  process  by  eliminating  the  need  to  account  for  actual  costs  incurred.  The 
amount  of  these  lump  sums  varies  considerably  between  programmes,  reflecting 
differences  in  the  scope  and  complexity  of  the  estimated  project  preparations.  This 
variation  also  extends  to  the  coverage  of  specific  cost  categories  during  project 
preparation, which may include staff, administrative, travel, and external services costs. 

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For  project  closure  costs  the  approach  is  similar,  using  lump  sums  to  streamline  the 
administrative process of successfully completing and reporting on a project. Although 
less common than those for preparation, SCOs for closure costs also aim to reduce the 
administrative  burden.  These  SCOs  cover  staff  costs  associated  with  final  reporting, 
administrative costs, and sometimes travel costs associated with final project activities. 
Both preparation and closure lump sums are typically calculated using a mix of historical 
data, market research data and sometimes pre-determined rates from Commission acts, 
aiming  to  strike  a  balance  between  fairness,  verifiability  and  administrative  efficiency. 
The methods and challenges in developing these SCOs highlight the potential for wider 
application in other Interreg IPA programmes, given their benefits in reducing the time 
and financial resources required for detailed cost tracking. 

Events and training are another important activity of Interreg IPA programmes and part 
of their collaborative nature. Neither the CPR nor the Interreg Regulation provide off-the-
shelf SCOs for this purpose. Suitable types of SCOs are unit costs and lump sums, as 
exemplified especially by the South Adriatic Programme:  

•  Unit costs are a suitable alternative for the reimbursement of expenses related to 
events and training as they allow for a clear definition of expected outputs and 
their associated costs. The Interreg IPA Bulgaria-Türkiye Programme uses unit 
costs  to  distinguish  between  one-day  and  multi-day  events,  applying  specific 
daily  rates  that  cover  various  event-related  expenses  such  as  venue  rental, 
equipment,  catering  and  materials 
for  participants.  The  South  Adriatic 
Programme  adjusts  unit  costs  for  targeted  trainings  of  small-scale  projects  by 
considering  factors  such  as  country,  duration  of  training  and  type  of  module, 
using  rates  from  existing  Union  guidelines  to  streamline  calculations.  These 
examples simplify administrative processes, reduce error margins and ensure a 
good approximation of actual costs, making it an attractive option for managing 
recurring activities such as events and training within the programme. 

•  The use of lump sums to cover the full cost of events and training also simplifies 
administration  by  defining  a  fixed  amount  to  be  paid  after  the  event  if  certain 
predefined conditions are met. This approach is exemplified by the South Adriatic 
Programme, which uses lump sums for  specific types of  events of small-scale 
projects such as workshops, seminars, and B2B meetings. These lump sums are 
adjusted according to the number of participants and the duration of the event, 
with  additional  considerations  for  ensuring  quality  and  documenting  results. 
While  this method  offers  significant  administrative  simplification  and  budgetary 
certainty,  it  also  carries  some  risks.  An  example  is  the  non-reimbursement  of 
partially  delivered  events  and  the  need  to  develop  an  equitable  and  verifiable 
calculation, which may be more challenging than the unit cost approach. 

For the reimbursement of indirect costs, the CPR offers several alternatives, all of which 
are  flat  rates.  Three  of  them  do  not  require  any  calculation  or  documentation  by  the 
programme. The four alternatives differ in terms of the rates applied, the basis for their 
calculation and the cost coverage:  

• 

Interreg  IPA  programmes  rarely  use  the  flat  rate  of  up  to  7%  of  eligible  direct 
costs to cover indirect costs. The requirement for detailed information on all direct 
costs,  may  not  allow  for  an  optimal  approximation  of  actual  costs  due  to  the 
different cost structures across different programme areas and beneficiary types. 
The potential mismatch between the flat rate applied and the actual indirect costs 
incurred may result in over- or under-compensation. Programmes may need to 
adjust  flat  rates  more  specifically  by  country  or  type  of  beneficiary,  based  on 
sound data, to ensure fairness and equity. 

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SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

•  The flat rate of up to 15% of eligible direct staff costs is the most commonly used 
rate in Interreg IPA programmes. It simplifies calculations by referring only to one 
other important cost category – staff costs – without the uncertainty of all other 
cost  categories.  However,  it  may  lead  to  inequalities  in  the  reimbursement  of 
indirect  costs,  particularly  in  projects  with  high  external  and  investment  costs, 
which may claim a disproportionately high amount of indirect costs.  

•  The flat rate of up to 25% of all eligible direct costs is not used by Interreg IPA 
programmes.  This  may  be  for  the  same  reasons  as  for  the  7%  flat  rate, 
compounded by the additional effort required to establish a fair, equitable, and 
verifiable  calculation  basis.  While 
rate  offers  a  higher  potential 
reimbursement for indirect costs, it requires detailed initial calculations, similar to 
those required for programme specific SCOs. Despite these requirements, once 
established,  it  offers  considerable  administrative  relief,  particularly  where  a 
calculation has already been made in a previous programming period, allowing it 
to continue without recalculation. 

this 

•  Finally, programmes may  apply a flat rate of up to 40% of direct staff costs to 
cover all other costs other than direct staff costs, including indirect costs. This 
inhibits a potentially significant simplification of the budgeting for projects where 
staff  costs  dominate.  This  approach  is  suitable  for  projects  with  differing  cost 
structures between partners. However, it also introduces complexities in ensuring 
a fair cost approximation across different projects, especially if applied uniformly 
without adjustments for specific project or partner circumstances.  

Article 53(2) of the CPR requires that small-scale projects not exceeding EUR 200,000, 
must primarily use SCOs. While this may be achieved through a combination of SCOs, 
as illustrated by the approach of the South Adriatic Programme, evidence of the Interreg 
Slovenia-Hungary Programme illustrates how small-scale projects can be implemented 
using a single SCO per project. The programme has developed tailor-made SCOs for 
different types of small-scale projects. These include unit costs for cooperation projects 
involving a limited number of participants, such as training courses, and lump sums for 
mutual trust-building and staff exchange projects:  

•  Unit  costs  for  small-scale  cooperation  projects  streamline  the  management  of 
event-related expenses. In this approach, the unit cost calculation  is based on 
historical  data  and  current  estimates  to  cover  all  event-related  costs  per 
participant. This method simplifies the administrative processes by reducing the 
burden  of  financial  reporting  and  verification.  The  calculated  unit  costs  cover 
various event costs, including staff, venue and catering. This aims to standardise 
costs across different event types and sizes, thereby facilitating predictable and 
equitable funding for different event sizes. 

•  The lump sum SCO for small-scale mutual trust-building activities provides a pre-
defined amount to cover all costs associated with public events such as concerts 
or  fairs.  Due  to  the  nature  of  these  events  with  unpredictable  numbers  of 
participants, a unit cost per participant would not be appropriate. This lump sum 
is calculated on the basis of the typical costs of organising such events, including 
venue,  staff,  and  administrative  expenses.  The  calculation  ensures  that  all 
necessary types of costs are fully covered. This approach eliminates the need for 
detailed financial tracking and reporting per cost type, which significantly reduces 
the administrative burden on project participants.  

14 

 
 
 
SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

To  conclude,  the  analysis  highlights  the  adoption  of  SCOs  in  most  Interreg  IPA 
programmes, recognising their significant benefits in reducing administrative burden and 
improving  efficiency  during  project  implementation.  SCOs,  particularly  programme 
specific SCOs, require an initial effort but  significantly reduce the workload over time, 
freeing up resources for crucial on-the-spot checks and minimising the risk of error and 
fraud.  The  simplification  achieved  through  SCOs  also  assists  beneficiaries  in  budget 
planning  and  speeds  up  financial  processes,  improving  the  overall  management  and 
effectiveness  of  funding  programmes.  However,  the  inherent  challenge  of  achieving 
optimal  cost  approximation  remains,  with  the  potential  for  both  over-  and  under-
compensation. This requires a careful balance in the selection and development of SCOs 
across cost categories and possibly different project purposes. 

The  recommendations  highlight  the  need  for  careful  consideration  and  possible 
recalibration  of  SCOs,  particularly  when  moving  from  one  funding  period  to  the  next. 
Given  the  variability  of  lump  sums  and  the  potential  mismatch  that  indexation  could 
exacerbate, programmes are encouraged to justify and tailor SCOs to ensure that they 
are fair, equitable, and verifiable. Collaborative approaches, market analysis and the use 
of EU-level guidance are suggested to refine the methodology for establishing SCOs, 
particularly  where  historical  data  is  lacking.  Furthermore,  while  off-the-shelf  SCOs 
provide a baseline, programme specific adjustments may be necessary to  adequately 
reflect the different cost structures of different projects and beneficiaries. This helps to 
ensure that SCOs remain relevant and effective in simplifying administrative procedures 
without sacrificing accuracy or fairness in cost approximation. 

15 

 
 
 
 
SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

1.  Introduction 

Simplification  is  becoming  increasingly  important  to  tackle  administrative  costs  and 
burden  in  the  implementation  of  cohesion  policy.  Simplified  Cost  Options  (SCOs)  are 
one  of  these  simplification  measures  introduced  in  the  European  Structural  and 
Investment Funds (ESIF). Since the beginning of the 2007-2013 programming period, 
Member  States  could  first  declare  indirect  costs  on  a  flat  rate  basis,  and  since  2009, 
additional SCO options have been introduced (standard scales of unit costs and lump 
sums)  and  the  possibility  to  use  all  these  forms  of  SCOs  has  been  extended  to  the 
European Regional Development Fund (ERDF). 

The regulatory framework agreed in December 2013 improved the system used for the 
European Social Fund (ESF) and the ERDF and the Omnibus Regulation amending the 
relevant provisions of the Common Provision Regulation (CPR) 2014-2020 has further 
extended the use of performance-based funding models. In 2019, "financing not linked 
to  costs"  (FNLC)  was  introduced,  linking  funding  directly  to  the  achievement  of  pre-
defined  outputs,  results  or  conditions.  At  the  same  time,  Member  States  were 
encouraged to apply SCOs. Not least in view of the funding of grants under the Recovery 
and Resilience Facility (RRF), the European Court of Auditors (2021, point 102) expects 
that "performance-based funding will become the dominant form of EU funding in terms 
of spending covered". For the 2021-2027 programming period, SCOs and FNLC have 
been proposed as key to reducing the administrative burden and costs for beneficiaries 
and managing authorities, while maintaining a high level of assurance  on legality and 
regularity. Estimates suggest a reduction of 20-25% in total administrative costs if these 
options are applied consistently (COM(2018) 375 final, 2018, p. 5).  

The purpose of this study is further supported by recent documents and guidelines which 
also reflect also the debate on cohesion policy after 2027. In her political guidelines for 
the  next  European  Commission  2024-2029,  President  von  der  Leyen  underlined  the 
need to learn from past experiences and to use financial capacities in the most efficient 
way. In this way "…a lot can be done with the European budget to deliver where it matters 
the  most.  ...  we  have  also  learnt  a  lot  from  this  experience  –  notably  the  need  for 
simplicity and flexibility, speed and strategic focus in our spending" (von der Leyen, 2024, 
p.  29).  The report  by  Enrico  Letta  (2024)  and  the  Issue  paper  8  support  the  need for 
further simplification. The Issue paper 8 (Group of high-level specialists on the future of 
Cohesion  Policy,  2023)  highlights  that  "Despite  several  efforts  at  simplification  in 
successive programming periods, the delivery mode of Cohesion Policy is still perceived 
as too complex. [Thus,] Cohesion Policy rules post-2027 should be streamlined starting 
from the initial phase of programming and throughout the implementation cycle." (Group 
of high-level specialists on the future of Cohesion Policy, 2023, p. 3) At the same time 
Letta  acknowledges  the  European  Commission  has  made  "significant  progress  in  the 
area of simplification and reduction of administrative burdens" (Letta, 2024, p. 120) in 
recent years.  

In light of these experiences and perspectives, this study promotes better and smarter 
administrative  practices  in  the  2021-2027  programming  period  in  Interreg  IPA  partner 
countries  and  beneficiaries.  It  illustrates  prevailing  approaches  to  the  use  of  SCO  in 
Interreg  IPA  programmes  and  selected  other  Interreg  programmes  to  facilitate  the 
development and use of  these simplification  tools in these countries. To this  end, the 
report provides insights for a  better understanding  of the state of SCOs  and explores 
ways  to transfer good examples  to make the  most of  these simplifications. The study 
also aimed to identify and illustrate suitable practices of FNLC. However, the research 
confirmed  the  limited  use  of  FNLC  in  few  cohesion  policy  programmes  to  date. 

16 

 
 
 
SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

Consequently,  the  focus  of  the  study  on  simplification  approaches  is  on  SCOs  rather 
than on FNLC.  

The following chapter summarises the overall scope and methodological approach of the 
study, thus providing a framework for the study findings. Chapter 3 gives an overview of 
SCO  practices  in  the  2021-2027Interreg  IPA  programmes.  By  differentiating  the 
identified SCO practices not only by type of SCO, but also by types of cost categories, 
combinations of SCOs used by programmes and approaches to developing SCOs, the 
chapter  provides  different  access  points  for  interested  authorities,  whether  they  are 
looking for specific types of SCOs or  want to gain insight  into the SCO practices of a 
specific  Interreg  IPA  programme.  The  chapter  concludes  with  two  short  sections  on 
specific tentative conclusions: 

•  why FNLC may not be used in Interreg IPA programmes; 

• 

the extent to which the practices of Interreg IPA programmes can be transferred 
to other contexts and programmes. 

Chapter 4 presents the core of the report by systematically examining a variety of SCO 
approaches according to cost categories. The report distinguishes six cost categories for 
which SCOs could be identified in Interreg IPA programmes, and which may often be 
relevant  and  feasible  for  SCOs  in  cooperation  programmes.  Some  of  these  cost 
categories  and  corresponding  SCO  approaches  even  illustrate  the  particularities  of 
territorial  cooperation  programmes  compared  to  other  cohesion  policy  or  IPA 
programmes.  Flowcharts  are  provided  to  support  the  decision-making  process  when 
looking for a suitable SCO. The results of the analysis presented in Chapter 4 and the 
observations from  the  workshops conducted  during  the study, as well as further case 
studies with detailed descriptions of a selection of SCO practices form the basis for the 
concluding remarks and recommendations presented in the last chapter of this report. 

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SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

2.  Scope and methodology 

The study focuses on territorial cooperation programmes of the 2021-2027 programming 
period in which candidate country authorities participate. These are mainly the ten cross-
border Interreg IPA programmes in Figure 1. In addition to these programmes, four other 
territorial cooperation programmes that benefit from IPA III funds are also included in the 
analysis, namely three transnational cooperation programmes: 

• 

• 

• 

Interreg IPA Adriatic-Ionian, 

Interreg Danube, 

Interreg Euro-MED, 

and  the  URBACT  interregional  programme.  For  simplicity,  all  references  to  these  14 
programmes will be grouped as "Interreg IPA programmes". 

Figure 1: Interreg VI A IPA CBC programmes 2021-2027 

Source: European Commission: https://ec.europa.eu/regional_policy/policy/cooperation/european-
territorial/ipa_en 

For  these  14  territorial  cooperation  programmes,  the  study  carried  out  three  main 
activities (Figure 2), which form the basis of this report and the findings on SCO practices 
presented: 

•  The  first  activity  focused  on  the  identification  of  SCO  practices  in  the  14 
programmes  of  the  2021-2027  programming  period.  In  addition  to  the 
identification of the SCO approach used, the corresponding document analysis 
included a structured data collection on a wide range of indicators (Table 1) to 

18 

 
 
 
 
SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

allow  an  assessment  of  the  approaches  and  the  selection  of  a  sample  of  30 
practices to be analysed in more detail.  

Figure 2: Methodological overview of the study’s activities  

Source: Service provider, 2024 

•  The second activity involved a more detailed review and analysis of a selection 
of  SCO  practices.  For  these  practices,  the  aim  was  to  obtain  differentiated 
information on the selection of the SCO approach, its development, the objectives 
of its  use and  its  actual implementation in the programme and  its effects. The 
examples should cover different approaches of the SCOs in the 14 Interreg IPA 
programmes according to the options provided by the two relevant regulations 

o  EU Reg. 2021/1060 – Common Provision Regulation (CPR), Articles 53 

to 56 and Articles 94 and 95;  

o  EU Reg. 2021/1059 – Interreg Regulation, Articles 39 to 41.  

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SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

In  particular,  the  aim  was  to  describe  as  many  programme  specific  SCOs  as 
possible  to  illustrate  a  wide  variety  of  options  that  have  not  yet  been  fully 
exploited. However, the initial review of SCOs in these 14 programmes revealed 
a  considerable  similarity  in  the  SCO  approaches  used  and  a  relatively  small 
number  of  such  programme  specific  SCOs.  To  overcome  this  limitation  in  the 
variety  of  potentially  interesting  cases,  a  few  additional  territorial  programmes 
were screened for potentially interesting SCO approaches that could be useful 
and replicable also in Interreg IPA programmes. Complementary information was 
collected from three other 2021-2027 territorial cooperation programmes, namely 
the Baltic Sea Region, the Central Baltic and the Hungary-Slovenia programmes. 

The  in-depth  review  of  the  selected  SCO  practices  was  based  on  further 
document analysis, usually including additional SCO development material, as 
well as interviews with desk officers involved in the respective SCO development. 
This activity resulted in 30 reports, which are divided into two sections: 

o 

the practice and its feasibility for transfer; 

o  a roadmap for authorities wishing to implement such an SCO in their own 

programme. 

Table 1 – Indicators of the structured SCO database 

Indicators 

General information: 

Specific information on the SCO: 

  Programme  

  Managing Authority (MA) / Joint Secretariat (JS) 

developing the SCO 

Type of calculation method (for programme 
specific SCOs)  

Data used for the SCO calculation (incl. 
sources, type of data, amount of data, 
description of the calculation method) 

  Specific objectives for which the SCO is used 

Adjustment methodology or criteria  

General information on the SCO: 

Categories of cost covered by the SCO 

Type of SCO (i.e. flat rate, unit cost, lump sum) 

Mandatory vs. optional use of the SCO 

  Sub-type of SCO (e.g. flat rate according to Art. 

54(a) CPR) 

Total amount of expenditure expected to be 
covered 

  Relevant types of operation covered by SCO 

Number / share of operations expected to be 
covered 

Types of beneficiaries using the SCO 

Ex-ante assessment existing or not 

Indicator triggering reimbursement  

Link of lower- to upper-level SCO (i.e. with Art. 
94 CPR) 

  Unit of measurement / flat rate for 

reimbursement 

Source: Service provider, 2024 

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SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

•  The  third  activity  complements  the  desk  research  and  interviews  with  further 
exchanges with Commission services, public authorities of Interreg and Interreg 
IPA programme authorities and other authorities from candidate countries. These 
exchanges  were  organised  in  different  workshop  formats  to  (a)  inform  the 
respective authorities about the study and  the preliminary  findings, (b) discuss 
these findings for further elaboration of the study results, and (c) refine the results 
and develop conclusions. Sharing experiences and discussing the benefits and 
challenges faced by different stakeholders in the development and use of SCOs 
provided important additional insights.  

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3.  Use of SCOs in 2021-2027 Interreg IPA 

programmes  

With  the  focus  of  the  study  on  2021-2027  Interreg  IPA  programmes,  a  wide  range  of 
SCOs  should  be  considered,  i.e.  all  options  of  the  CPR  and  the  Interreg  Regulation. 
Apart  from  the  principal  differentiation  between  flat  rates,  unit  costs  and  lump  sums 
according to Art. 54 (a) to (c) CPR, this includes a considerable variety of off-the-shelf 
options (see Table 2). 

Table 2 – Off-the-shelf options for SCOs in Interreg IPA programmes 

CPR 

Interreg Regulation 

Flat rate for indirect costs up to 7% of direct costs, 
Article 54(a) 

Flat rate for indirect costs up to 15% of direct staff 
costs, Article 54(b) 

Flat rate for direct staff costs up to 20% of direct 
costs other than direct staff costs, Article 39(3)(c) 

Flat rate for indirect costs up to 25% of direct 
costs, Article 54(c) 

Hourly rate determined by dividing annual gross 
employment costs by 1,720 hours or corresponding 
pro-rata, Article 55(2)(a) 

Hourly rate determined by dividing monthly gross 
employment costs by the average monthly working 
time of the person concerned, Article 55(2)(b) 

Flat rate of up to 40% of direct staff costs to cover 
the remaining eligible costs, Article 56(1) 

Flat rate up to 15% of the direct staff costs to 
calculate travel costs, Article 41(5) 

Source: Service provider, 2024, based on EU Reg. 2021/1060 and EU Reg. 2021/1059  

These off-the-shelf options and the options for programme specific SCOs under Art. 53 
CPR  structured  the  study’s  analysis  to  identify  SCO  evidence  in  the  14  Interreg  IPA 
programmes, as detailed in the following sections.1  

SCOs could be included in the study for 12 of the 14 Interreg IPA programmes. The two 
programmes  not  included  were  Interreg  IPA  Greece  –  Albania  and  Greece  –  North 
Macedonia. For both programmes, six SCOs were under consideration at the time of the 
data  collection  in  Autumn  2023.  However,  they  could  not  be  confirmed  and  were 
consequently not considered for any further analysis. All other study steps focused on 
the remaining 12 programmes.  

1   Additional evidence collected from other Interreg programmes (see methodology in Chapter 2) is not considered for 

the review of the application of SCOs in 2021-2027 Interreg IPA programmes. 

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3.1.  Use of SCOs across Interreg IPA programmes 

The number of SCOs identified per programme is quite similar for the majority of Interreg 
IPA  programmes  in  the  2021-2027  programming  period  (see  Figure  3).  Most  of  them 
have around five SCOs. of the only programmes with a higher number of SCOs are the 
transnational  IPA  Adriatic-Ionian  and  South  Adriatic  programmes,  with  seven  and  13 
SCOs  respectively.  For  the  12  programmes  with  SCOs,  a  total  of  70  SCOs  could  be 
identified. 

Tentative list of SCOs  

A  note  of  caution:  The  identification  of  these  70  SCOs  represents  the  state  of 
information  at  the  end  of  2023.  While  all  SCOs  included  in  this  analysis  have  been 
developed by that date, not all of them may have been deployed or may even still be 
subject to finalisation or approval processes. Nevertheless, they have been included in 
the analysis to illustrate the full range of SCOs provisionally available in the 2021-2027 
Interreg IPA programmes. 

Figure 3: Number of SCOs in Interreg VI A IPA CBC programmes 2021-2027* 

Adriatic-
Ionian 

7 

Danube  

5 

Euro-MED 

4 

5 

URBACT 

4 

5 

6 

5 

6 

13 

(6) 

5 

5 

(6) 

* Numbers in brackets indicate SCOs under development in December 2023 

Source: Service provider, 2024, based on European Commission: 
https://ec.europa.eu/regional_policy/policy/cooperation/european-territorial/ipa_en  

In addition to this similarity in the number of SCOs per programme, the analysis revealed 
that Interreg IPA programmes managed by the same Member State tend to apply the 

23 

 
 
 
SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

same types of SCOs.2 For example, the five SCOs of the Bulgarian-Serbian Interreg IPA 
programme  are  also  mirrored  in  the  Bulgaria-North  Macedonia  and  Bulgaria-Türkiye 
programmes.  This  structure  further  contributes  to  an  overall  limited  variation  of  SCO 
approaches across the 2021-2027 Interreg IPA programmes, which is much lower than 
the total number of identified SCOs would suggest at first sight. 

The number of SCOs per programme does not automatically mean that several or all 
SCOs  may  be  combined by  one  project. Some programmes also  provide for  different 
SCOs for different types of projects, in which case either a smaller number of SCOs or 
no SCO may be combined in a project. For example, the travel and accommodation unit 
cost of the South Adriatic Programme can be combined with up to seven other SCOs, 
depending on the types of costs incurred in a project, thereby covering all project costs 
with  SCOs.  The  Euro-MED  Programme  is  an  example  where  two  SCOs  have  been 
developed for travel and accommodation costs, differentiating according to the origin of 
the beneficiary.  

Many SCOs implemented by the 12 analysed Interreg IPA programmes are mandatory, 
either  for  all  projects  or  for  specific  types  of  projects.  A  typical  distinction  is  between 
regular projects and small-scale projects, which may also benefit from different SCOs. 
In some cases, such as the reimbursement of staff costs in the three Interreg IPA CBC 
programmes  involving  Bulgaria,  the  use  of  SCOs  is  optional,  as  project  partners  can 
choose between the reimbursement through the relevant SCO or real costs.  

While  sometimes  differentiating  between  specific  types  of  projects,  no  SCO  in  any 
Interreg  IPA  programme  is  limited  to  a  single  policy  objective  (PO)  or  even  a specific 
objective (SO), as it may be the case in mainstream programmes.3  

At  the  time  of  the  analysis,  all  SCOs  used  by  Interreg  IPA  programmes  were  used 
exclusively  at  the  lower  level,  i.e.  for  the  reimbursement  of  beneficiaries  by  the 
programme.  Upper-level  SCOs  for  the  reimbursement  of  programmes  by  the  EU 
Commission (Art. 94 CPR) did not yet exist in any of the 12 programmes with finalised 
lower-level SCOs. Thus, the following analyses in this chapter refer only to the lower-
level SCOs. 

3.2.  Types of SCOs in Interreg IPA programmes 

The majority of the SCOs in the 12 programmes can be grouped under one of the off-
the-shelf options introduced above, most of which are flat rates. In fact, the Interreg IPA 
programmes  apply  nearly  all  the  off-the-shelf  options  foreseen  in  the  two  regulations. 
Two off-the-shelf SCOs were used by only one programme: 

• 

• 

the hourly rate determined by dividing annual gross employment costs by 1,720 
hours or corresponding pro-rata, Article 55(2)(a) CPR; and 

the hourly rate determined by dividing monthly gross employment costs by the 
average monthly working time of the person concerned, Article 55(2)(b) CPR. 

2  

If not indicated in another way, the following analysis is mainly based on documents of the corresponding 2021-
2027 Interreg IPA programmes. 

3   This independence of PO and/or SO in Interreg is also supported by the cases collected by INTERACT 

(https://interact.eu/).  

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SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

However, evidence from outside the Interreg IPA programmes suggests that the benefit 
of  the  two  off-the  shelf  options  lies  mainly  in  their  potential  to  calculate  programme 
specific SCOs for staff costs.4 

Three of the five remaining off-the-shelf flat rates are used by almost all 12 Interreg IPA 
programmes, while the other two flat rates are used more selectively (see Figure 4). The 
three dominating flat rates are those of up to 

•  15% of staff costs to cover indirect costs; 

•  20% of direct costs other than direct staff costs to cover staff costs; 

•  15% of staff costs to cover travel costs. 

Last but not least, the wide application of the two flat rates introduced by the Interreg 
Regulation indicates the specific cost structure of Interreg and Interreg IPA projects.  

Figure 4: Use of different off-the-shelf flat rates by 2021-2027 Interreg IPA 
programmes 

Flat Rate ...

of up to 15% of the 
direct staff costs to 
calculate travel 
costs, Article 41(5) 
Interreg Reg.
29%

of up to 40% of 
direct staff costs 
for remaining 
eligible costs, 
Article 56(1) CPR
17%

Source: Service provider, 2024 

for indirect costs 
up to 7% of direct 
costs, Article 
54(a) CPR
2%

for indirect costs 
up to 15% of 
direct staff costs, 
Article 54(b) CPR
26%

for direct staff costs 
up to 20% of direct 
costs other than 
direct staff costs, 
Article 39(3)(c) 
Interreg Reg.
26%

Article 54(c) CPR offers the possibility to reimburse indirect costs at a flat rate of up to 
25% of direct costs, provided that a fair, equitable and verifiable methodology has been 
applied for the 2021-2027 programming period or the previous one. However, this option 
has not been used by any of the Interreg IPA programmes analysed.  

With the exception of the URBACT Programme, all other Interreg IPA programmes use 
at least one or two programme specific SCOs in addition to the majority of off-the-shelf 
SCOs. The other exception to this rule is the South Adriatic Programme, with a total of 
nine  programme  specific  SCOs  (see  Table  3).  At  this  level  of  analysis,  there  is  no 

4   Examples are the programme specific SCO for staff costs developed by the 2021-2027 South Adriatic and Baltic 

Sea Region programmes. 

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SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

structural difference between cross-border and other territorial cooperation programmes, 
with the possible exception of the URBACT Programme. Differences in SCO definitions 
are  typically  related  to  the  types  of  costs  and/or  beneficiaries  or  other  structural 
differences rather than to the main SCO alternatives (see section 3.4 below). The SCOs 
of the URBACT Programme have a particular structure in terms of their application, as 
only one SCO targets the projects (i.e. URBACT networks), while the other SCOs are 
only relevant for the National URBACT Points (NUP).  

Table 3 – Types of SCOs per Interreg IPA programme 

Programme 

Total no. of 
SCOs 

Off-the-shelf 
(mostly flat 
rates) 

Programme 
specific 

Interreg IPA CBC programmes: 

Bulgaria – North Macedonia 

Bulgaria - Serbia 

Bulgaria – Türkiye 

Croatia – Bosnia and Herzegovina – Montenegro 

Croatia - Serbia 

South Adriatic 

Hungary – Serbia 

Romania Serbia 

Transnational & interregional Interreg IPA programmes: 

IPA Adriatic-Ionian 

Danube 

Euro-MED 

Urbact 

Source: Service provider, 2024 

5 

5 

5 

6 

6 

13 

5 

5 

7 

5 

4 

4 

3 

3 

3 

4 

4 

4 

4 

3 

6 

4 

2 

4 

2 

2 

2 

2 

2 

9 

1 

2 

1 

1 

2 

./. 

About two thirds of the 26 identified programme specific SCOs implemented by the 2021-
2027 Interreg IPA programmes have been developed as lump sums (see Figure 5). The 
other programme specific SCOs are mainly unit costs and two flat rates, which are not 
part  of  the  off-the-shelf  options.  The  two  programme  specific  flat  rates  have  been 
developed to meet programme specific needs: 

• 

• 

in the South Adriatic programme, a flat rate to cover the costs of the Italian First 
Level Control (FLC); and  

in  the  Euro-MED  programme,  a  flat  rate  for  the  reimbursement  of  travel  and 
accommodation costs, which are higher than the rate offered by the off-the-shelf 

26 

 
 
 
SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

option  of  Article  41(5)  Interreg  Regulation,  to  consider  specific  needs  of 
beneficiaries from candidate countries. 

Lump  sums  are  typically  used  for  cost  items  that  can  be  easily  translated  into 
deliverables/outputs  defined  as  a  single  unit.  The  lump  sum  is  thus  an  ex-ante 
appropriation of the actual costs based on expected deliverables/outputs. In Interreg IPA 
programmes they are most commonly used for preparation and closure costs, and in a 
few  cases  for  different  types  of  events.  Lump  sums  imply  a  "binary"  approach;  i.e. 
payment  is  conditional  on  the  delivery  of  the  agreed  deliverables/outputs  without  the 
possibility of obtaining payment for partial delivery.  

This may explain why, for example, the three Interreg IPA programmes coordinated by 
the Bulgarian authorities use unit costs more frequently to simplify the reimbursement of 
event costs. Other examples of the use of unit costs are provided by the South Adriatic 
Programme, which has developed unit costs for  

•  Accompanying actions, differentiated by country and by type of participant; 

•  Targeted training, differentiated by country, duration of the training and type of 

training module; 

•  Travel  and  accommodation,  differentiated  by 

transport  mode  and 

accommodation and subsistence by country; 

•  Staff costs, differentiating unit costs per hour by country, type of beneficiary and 

level of seniority. 

The  unit  cost  examples  thus  illustrate  the  possible  use  of  unit  costs  in  different  cost 
categories and  how they can be adjusted to different types of units depending on  the 
cost structure. They are considered useful whenever it is possible to (1) easily identify 
and define the expected quantities of a deliverable, activity or output and (2) calculate 
the unit cost for these quantities.  

Figure 5: Programme specific SCOs of 2021-2027 Interreg IPA programmes by 
type of SCO  

Programme-specific SCOs

2; 8%

7; 27%

Flat rate

Lump sum

Unit cost

Source: Service provider, 2024 

17; 65%

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Structural differences between the Interreg IPA CBC programmes and other territorial 
cooperation programmes could not be observed, although the latter mostly used lump 
sums and no unit costs. However, the example of the South Adriatic Programme with 
several unit costs, some of which differ according to the origin of the beneficiary, shows 
that unit costs can be a very useful simplification measure also for territorial cooperation 
programmes involving more than two countries. This is also supported by the non-IPA 
example of a unit cost to calculate staff costs in the Baltic Sea Region Programme. 

3.3.  Programmes' approaches to SCOs 

While off-the-shelf SCOs can be implemented without further supporting documentation 
demonstrating that the approach is fair, equitable and verifiable, programme authorities 
need to provide additional calculations or other documentation to ensure that programme 
specific  SCOs  meet  the  requirements  of  Art.  53(3)  CPR.5  About  80%  of  the  26 
programme  specific  SCOs  in  the  2021-2027  Interreg  IPA  programmes  have  been 
developed  using  one  or  more  of  the  proposed  calculation  methods  to  support  a  fair, 
equitable and verifiable approach. Only a few SCOs of the South Adriatic Programme 
were  developed  by  using  an  SCO  developed  by  a  Union  policy  for  a  similar  type  of 
operation or by combining such a scheme with other data (see Figure 6).  

Figure 6: Methodologies used by Interreg IPA programmes to specify their 
programme specific SCOs 

Basis for establishing programme specific SCOs

not specified; 4; 
15%

Historical data; 
12; 46%

Union policy 
scheme; 3; 12%

Historical data 
combined with 
Union policy 
scheme; 2; 8%

Statistical data 
and/or other 
objective 
information; 5; 
19%

Source: Service provider, 2024 

Almost half of the identified programme specific SCOs identified are based on historical 
data at the level of beneficiaries of one or more previous programmes. In two cases, the 
use of statistical data refers to the use of inflation rates to update an SCO already used 

5   For upper-level SCOs Art. 94 CPR requires in addition the European Commission’s approval of the methodology. 

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in the previous programming period. For a few SCOs, no specification could be identified 
beyond the information that a fair, equitable and verifiable calculation method was used.  

Table 4 – Number of programme specific SCOs in 2021-2027 Interreg IPA 
programmes by type of SCO 

Historical 
data 

Type of SCO 

Statistical 
data and/or 
other 
objective 
information 

Historical 
data 
combined 
with Union 
policy 
scheme 

Union policy 
scheme 

not specified 

Flat rate 

Lump sum 

Unit cost 

2 

6 

4 

Source: Service provider, 2024 

0 

5 

0 

0 

2 

0 

0 

0 

3 

0 

4 

0 

A comparison of the approaches to defining programme specific SCOs with the type of 
SCO further supports the broad viability of using historical data (see Table 4). This can 
be used for any type of SCO, provided that the relevant cost categories were covered by 
the  programme  in  the  previous  programming  period  or 
in  other  predecessor 
programmes. In contrast, for example, the variety of union schemes potentially useful for 
Interreg IPA programme activities may be more limited. Similarly, it may not be easy or 
even possible to develop a programme specific flat rate based on statistical data.  

3.4.  SCOs by cost categories and combinations of SCO in 

one operation 

2021-2027  Interreg  IPA  programmes  use  SCOs  for  several  cost  categories.  Figure  7 
below summarises their use by category. SCOs for travel and accommodation costs 
are the most frequently used, i.e. in all 12 programmes included, although sometimes 
not for all  beneficiaries. Two programmes  have  even  implemented  two  corresponding 
SCOs:  

•  The  Euro-MED  Programme  differentiates  the  reimbursement  of  travel  and 
accommodation  costs  according  to  the  origin  of  the  beneficiary.  One  of  these 
SCOs is an off-the-shelf option (Article 41(5) Interreg Regulation) and applies to 
beneficiaries from EU Member States. The other SCO applies a higher flat rate 
than offered by the Interreg Regulation to compensate for different cost structures 
for beneficiaries from candidate countries.  

•  The South Adriatic Programme distinguishes between two SCOs for travel and 
accommodation  costs,  depending  on  the  type  of  project.  Beneficiaries  of 
standard and strategic projects use the off-the-shelf option of a 15% flat rate of 
direct staff costs (Article 41(5) Interreg Regulation) and small-scale projects apply 
a programme specific unit cost SCO.  

29 

 
 
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Figure 7: Number of SCOs in Interreg IPA countries according to type of cost 
category 

Cost categories covered by SCOs

0

2

4

6

8

10

12

14

16

Travel and accomodation costs

Staff costs

Office and administration costs

Project preparation costs

All costs other than direct staff costs

Workshops, seminars and other events

Project closure costs

Communication costs

Other

Source: Service provider, 2024 

Other cost categories with SCOs in almost all programmes, used at least optionally or 
for some types of projects and/or beneficiaries, are staff and office and administration 
costs.  The  URBACT  Programme  has  two  SCOs  for  the  reimbursement  of  office  and 
administration costs, one for URBACT networks and one for NUPs. For staff costs again 
two programmes have two SCO options each:  

•  The IPA Adriatic-Ionian Programme uses the two off-the shelf unit cost options, 
i.e.  the  hourly  rate  obtained  by  dividing  the  annual  gross  employment  cost  by 
1,720 hours or corresponding pro-rata, and the hourly rate obtained by dividing 
the monthly gross employment cost by the average monthly working time of the 
person concerned (Article 55(2) CPR). The programme offers these options as 
alternatives  for  calculating  the  costs  of  part-time  project  staff  with  a  flexible 
number of hours worked per month during the project. Alternatively, staff costs 
may also be calculated as a flat rate of 20% of other direct costs (Article 39(3)(c) 
Interreg Regulation). Beneficiaries must choose between the two alternatives at 
the application stage. 

•  The South Adriatic Programme has developed a programme specific unit SCO 
(for standard and strategic projects) for staff costs, i.e. unit costs for hourly rates, 
differentiated by country, type of beneficiary and level of seniority. Alternatively, 
the  programme  also  offers  the  use  of  the  off-the-shelf  option  to  calculate  staff 
costs as 20% of other direct costs (Article 39(3)(c) Interreg Regulation). 

The most common combination of the use of SCOs for these three cost categories (i.e. 
travel and accommodation, office and administration as well as staff costs) is shown in 
the figure below.  

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Figure 8: Frequent combination of off-the-shelf flat rates in Interreg IPA 
programmes 

Source: Service provider, 2024 

Several Interreg IPA programmes combine three off-the-shelf flat rates, namely the flat 
rate  

• 

• 

for indirect costs up to 15% of direct staff costs, Article 54(b) CPR, 

for direct staff costs up to 20% of direct costs other than direct staff costs, Article 
39(3)(c) Interreg Regulation, and 

•  of up to 15% of the direct staff costs to calculate travel costs, Article 41(5) Interreg 

Regulation. 

When this combination is used, programmes usually specify the direct cost categories 
included in their real cost calculation to avoid the risk of double-funding. For example, to 
apply the flat rate to the calculation of travel and accommodation costs, these cannot be 
part  of  the  other  direct  costs  that  form  the  basis  of  the  staff  cost  calculation.  Further 
implications  of  this  combination  for  travel  and  accommodation  costs  are  described  in 
sub-section 4.2.1. 

Other  cost  categories  for  which  several  2021-2027  Interreg  IPA  programmes  apply 
SCOs  include  project  preparation  (and  sometimes  also  closure)  costs,  which  are 
always implemented using lump sums. SCOs for project closure costs have only been 
developed  in  programmes  that  also  use  a  lump  sum  to  reimburse  project  preparation 
costs. For workshops, seminars and other events involving exchanges or meetings, 
there are also several SCOs in place in Interreg IPA programmes. However, these refer 
to only four programmes: 

•  These  are  the  three  programmes  with  a  Bulgarian  MA.  A  unit  cost  has  been 
developed for each programme, with two different rates for event participants in 
one-day and multi-day events. 

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•  The  South  Adriatic  Programme  differentiates  four  such  SCOs  for  small-scale 
projects  to  take  into  account  the  variety  of  exchange  and  meeting  activities 
implemented by different projects. These SCOs are specified as  

o  Lump sums for workshops, seminars and conferences; 

o  Lump sums for incoming missions and B2B missions; 

o  Unit costs for accompanying actions;  

o  Unit costs for targeted training.  

Other common costs in Interreg IPA programmes, such as those for external expertise 
and  services,  equipment  and  infrastructure  and  works,  are  not  explicitly  covered  by 
SCOs in any of these programmes. They are, however, included whenever the flat rate 
of 40% of direct staff costs is applied to cover all other eligible costs – an option offered 
by seven programmes. This may indicate the difficulty of developing individual SCOs for 
these cost categories that are sufficiently replicable across a programme’s operations. 
Nevertheless, explicit SCOs may be suitable for these other categories, at least in some 
cases, as illustrated by the example of a unit cost for project equipment developed by 
the Interreg Central Baltic Programme (2024).  

The  analysis  does  not  reveal  any  structural  differences  in  the  use  of  SCOs  by  cost 
category between Interreg IPA CBC and the other programmes.  

Complementing the above illustration of a frequent combination of SCOs for three cost 
categories, Figure 9 illustrates another approach to combinations where the programme 
offers  alternative  reimbursement  approaches  to  project  partners.  In  the  Danube 
Programme, for example, project partners can choose whether to report staff or travel 
and  accommodation  costs  on  a  real  cost  basis.  This  determines  the  possible  use  of 
SCOs  for  other  cost categories. Only  the use of the lump sum for project preparation 
costs is not affected by this choice. 

The South Adriatic Programme provides a unique example of the combination of SCOs 
for small-scale projects. In compliance with Article 53(2) of the CPR, the costs of small-
scale projects financed by the programme can only be reimbursed through SCOs. To 
this end, the programme has developed a wide range of SCOs representing the main 
cost categories (activities) of its small-scale projects. Their combination allows to cover 
all costs of the operation. Specifically, SCOs  can be selected from the following list is 
made possible: 

•  Lump sum for workshop, seminars and conferences; 

•  Lump sum for incoming missions & B2B meetings; 

•  Lump sum for joint action plan/model/methods; 

•  Lump sum for closure cost; 

•  Standard Scale of Unit Costs for accompanying actions; 

•  Standard Scale of Unit Costs for targeted training; 

•  Standard Scale of Unit Costs for travel & accommodation; 

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•  2% Flat Rate for Italian FLC’s cost. 

These examples show that there are different ways to combine different SCOs within an 
operation  and  that  different  projects  and/or  partners  can  benefit  from  different 
combinations of SCOs in the same programme. The latter offers the potential to adapt 
to  different  cost  structures  of  partners  and  projects.  However,  giving  beneficiaries  too 
many options when setting up the budget of a project is not conducive to simplification: 

•  Applicants need to be aware of the implications of one or another choice; 

•  Using different calculation methods for partners in the same project may be more 

burdensome and prone to error than a single approach; 

•  Both,  the  development  of  several  options  and  the  control  of  their  correct 
application,  reduce  the  simplification  potential  of  SCOs  for  programme 
authorities. 

Figure 9: Illustration of alternative SCO combinations for the same type of 
operation at the example of the Danube Programme 

Source: Service provider, 2024 

3.5.  The non-use of FNLC 

In  addition  to  the  simplified  reimbursement  procedures  through  SCOs,  Article  53(1)(f) 
CPR also offers the possibility to pay beneficiaries on the basis of "financing not linked 
to costs" (FNLC). So far, only a few cohesion policy programmes use this option. These 
include very few ESF and ERDF programmes.6 This limited use of FNLC confirms that 
the  concept  is  still  relatively  new  to  ESIF  funds,  which  is  associated  with  a  limited 

6   See e.g. 14th meeting of the DG Regio SCO Transnational Network (2023): 

https://ec.europa.eu/regional_policy/policy/how/improving-investment/simplified-cost-options_en  

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understanding of the concept. In general terms, it offers the opportunity to move from a 
cost-based to a result-based calculation, within which programmes and beneficiaries can 
decide  for  themselves  how  to  achieve  the  agreed  outcomes.  Such  results-based 
approaches  originate  from  the  experience  of  the  World  Bank  and  in  particular  its 
"Program-for-Results Financing" (PforR) (Wes, 2023).  

The  analysis  did  not  identify  any  FNLC  for  Interreg  IPA  programmes  or  for  Interreg 
programmes in general. The challenge is typically to define outcomes that are (1) under 
the  control  of  the  beneficiary  and/or  the  programme  and  (2)  sufficiently  general  to  be 
applied, for example, to all projects under a specific objective or project type to formulate 
the  corresponding  result  indicator.  While  such  sector  and  policy  specific  result 
formulations have been addressed by some mainstream programmes, Interreg IPA and 
more  generally  Interreg  programmes  tend  to  face  additional  challenges  in  developing 
FNLC schemes. The main difficulties can be summarised as follows:  

•  FNLC  approaches  are  designed  to  overcome  capacity  issues  of  authorities 
implementing programmes and projects. Practical experience of SCOs in Interreg 
IPA programmes shows that even SCOs require time and skills if programmes 
wish to design programme specific SCOs rather than using off-the-shelf SCOs. 
Similarly,  FNLC  investment  in  programmes  such  as  Interreg  IPA  also  requires 
significant input at the design phase.  

•  This difficulty is closely linked to the structure of Interreg IPA programmes, which 
tend to be less targeted in terms of themes and measures and often have a wider 
scope  and  range  of  activities.  This challenges  the  need  to  achieve  a  common 
understanding  of  FNLC  concepts  at  all  levels  involved  in  the  design  and 
implementation of a programme.  

• 

In  contrast  to  mainstream  programmes,  Interreg  IPA  programmes  have  a 
different focus on improving cooperation. It is challenging to find measures that 
represent cooperation results in a harmonious way and cover a sufficient part of 
the overall programme budget.  

Under these circumstances, it is not surprising that no FNLC schemes were identified in 
the  programmes  analysed,  nor  in  other  Interreg  programmes  of  the  2021-2027 
programming period. In contrast, the evidence suggests that even the use of programme 
specific SCOs can be challenging for the time being and could be further developed to 
maximise simplification and benefits for beneficiaries of Interreg IPA programmes.  

3.6.  Limitations of transfer to IPA programmes 

The analysis shows further differences in the application of SCOs between mainstream 
cohesion policy programmes and Interreg or Interreg IPA programmes. These limit the 
transferability of SCOs from Interreg IPA programmes to other IPA programmes: 

•  The  programmes  differ  significantly  in  size,  which  has  implications  for  the 
application of the SCO, e.g. in terms of their scope and size. For example, the 
total programme budget of the 2021-2027 Interreg IPA South Adriatic Programme 
for  the  cooperation  between  Italy,  Albania  and  Montenegro  is  around  EUR  81 
million for the whole programming period.7 The Union’s to Albania’s 2023 annual 

7   See e.g. https://www.italy-albania-montenegro.eu/index.php/programme/the-programme-in-a-nutshell  

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action  plan  under  IPA  III  was  almost  as  high  at  EU  80  million  (European 
Commission, 2022).  

•  The type of operations and the size of the measures are very different between 
the  two  types  of  programme.  Both  are  closely  linked  to  the  objectives  of  the 
mainstream  IPA  and  Interreg  IPA  programmes,  respectively.  The  objective  of 
Interreg  IPA  programmes  is  to  intensify  cooperation  between  regions  and 
countries  within  their  territory  in  policy  areas  defined  in  the  cooperation 
programme. The policy areas are subject to the policies and objectives defined 
for ESIF programmes.  

•  The  implementation  logic  is  different.  Mainstream  IPA  III  is  subject  to  annual 
action  plan  contributions  decided  by  the  European  Commission  on  an  annual 
basis. Interreg IPA programmes, in contrast, are subject to the same seven-year 
programming periods as other ESIF programmes.  

•  The structure of SCOs also varies between Interreg or Interreg IPA programmes 
and ESIF mainstream programmes, respectively. The former do not differentiate 
SCOs by specific objectives or policy areas, but they apply their SCOs either to 
all  cooperation  projects  or  differentiate  between  types  of  projects,  such  as 
regular,  strategic  and  small-scale  projects.  For  mainstream  programmes, 
however,  it  is  much  more  useful  to  differentiate  between  policy  areas  and/or 
specific  objectives,  depending  on  the  similarity  of  measures  across  specific 
objectives. 

In consequence, the experience of the development and implementation of SCOs 
in  Interreg  IPA  programmes  is  transferable  to  other  territorial  cooperation 
programmes  but  cannot  be  replicated  by  IPA  programmes.  Transferability is  thus 
limited  to  learning  from  SCO  applications  at  a  meta-level,  i.e.  how  programmes  can 
approach  the  identification  of  appropriate  SCOs  and  how  different  SCOs  can  be 
combined to cover as many cost categories as possible.  

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4.  Insights into selected SCO practices 

The following sections illustrate the use of SCO practices in Interreg IPA programmes 
by type of cost category.8 This structure may assist programme authorities in identifying 
an  appropriate  SCO  for  a  specific  cost  category.  In  addition,  this  structure  allows  a 
comparison  of  alternative  SCOs  for  each  of  the  cost  categories.  The  chapter 
distinguishes between six cost categories that typically occur in Interreg IPA programmes 
and can be reimbursed using SCOs. Five of the six cost categories are similar to those 
identified in section 3.4 (Figure 7), for which several 2021-2027 Interreg IPA programmes 
use SCOs. These cost categories may occur in any type of Interreg IPA project, be it a 
small-scale or a regular or strategic project. To broaden the view of potentially interesting 
and inspiring SCOs, the 6th category complements SCOs that explicitly and exclusively 
reimburse small-scale projects as a whole, including all types of costs incurred in such 
projects.  

To  broaden  the  illustration  of  SCO  approaches  within  these  cost  categories,  the 
examples  below  also  include  some  examples  from  a  selection  of  other  Interreg 
programmes,  which  are  also  considered  appropriate  for  the  context  of  Interreg  IPA 
programmes. These examples are from the 

• 

• 

• 

Interreg  Baltic  Sea  Region  Programme  2021-2027  to  illustrate  a  unit  cost 
approach for staff costs; 

Interreg  Slovenia-Hungary  Programme  2021-2027  to  illustrate  two  alternative 
approaches to SCOs for small-scale projects, depending on the purpose of the 
project; and 

Interreg  Central  Baltic  Programme  2021-2027  to  illustrate  a  specific  approach 
within the standardisation of office and administration costs focusing on project 
management equipment. 

Each section concludes with a flowchart to support the decision-making process for one 
or the other SCO option available per cost category.  

4.1.  SCOs for staff costs 

Due  to  the  nature  of  Interreg  projects  and  their  budget  structure,  staff  costs  usually 
represent  a  key  cost  category  and  a  significant  proportion  of  project  budgets.  In  this 
context, the use of SCOs to cover staff costs has a high potential for simplification for 
Interreg IPA programme authorities and project beneficiaries.  

While "off-the-shelf" SCOs are the most widely used, the experience of one Interreg IPA 
programme in developing programme specific SCOs to cover staff costs sheds light on 
the potential of such an approach in the context of Interreg IPA. 

8  

If not indicated otherwise, all following information is based on SCO documentation and programme information by 
the covered Interreg and Interreg IPA programmes.  

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4.1.1. 

Off-the-shelf  

Interreg Regulation 2021/1059, Article 39(3)(c): Flat rate for direct staff costs up to 
20% of direct costs other than direct staff costs  

As outlined above, Interreg IPA programmes have almost exclusively opted for an off-
the-shelf  SCO  to  cover  staff  costs,  i.e.  the  "up  to  20%"  flat  rate  according  to  Article 
39(3)(c) of the Interreg Regulation. 

The use of such an SCO results in a significant simplification of the administrative burden 
and reduction of errors compared to the real costs, while not requiring the development 
of SCO methodologies and calculations by programme authorities.  

At  the  same  time,  off-the-shelf  flat  rates  for  staff  costs  (as  well  as  for  other  cost 
categories)  cannot,  by  their  very  nature,  always  offer  the  best  solution  in  terms  of 
approximating real costs.  

In the specific case of Interreg IPA programmes, salaries may vary significantly between 
countries  (especially  in  transnational  programmes)  and  between  EU  and  non-EU 
beneficiaries, with some beneficiaries benefiting more than others from the use of this 
off-the-shelf SCO, i.e. when the flat rate applied covers more than the actual staff costs 
or, conversely, 20% of direct costs is not sufficient to cover staff costs. While this is an 
inherent "risk" of using of off-the-shelf solutions, programmes can overcome such issues 
by: 

•  Developing  programme  specific  SCOs  for  staff  costs  (see  paragraph  4.1.2 

below);  

•  Determining  hourly  rates  using  the  "1,720  hours  method"  in  accordance  with 
Article  55(2)(a)  of  the  CPR  (by  dividing  the  latest  documented  annual  gross 
employment  costs  by  1,720  hours  for  persons  working  full-time,  or  by  a 
corresponding  pro-rata  of  1  720  hours,  for  persons  working  part-time)  –  see 
below. 

•  Within  the  same  off-the-shelf  SCO,  offering  two  different  (pre-determined)  flat 
rates to e.g. EU and IPA beneficiaries to better approximate the real costs of staff. 
In  this  case,  although  still  within  the  framework  of  an  off-the-shelf  solution,  an 
estimate of the real costs should be made, based on historical or verifiable data, 
to  prove  that  the  flat  rate  to  be  applied  in  each case  is  justified  and  has  been 
calculated respecting the principle of fairness. 

It should be noted that some Interreg IPA programmes, when adopting this off-the-shelf 
SCO to cover staff costs, but also in the context of other off-the-shelf options such as 
those covering indirect costs, have decided to leave it to the beneficiaries to decide which 
flat rate percentage to use (in this case within the range up to 20%) according to their 
specific budget structure. This carries the risk of shifting the responsibility for setting flat 
rates to the beneficiaries and leads to the application of different flat rates depending on 
the project beneficiary. 

While there is no formal impediment to this practice in the regulations, it poses numerous 
risks for programme authorities and beneficiaries. 

37 

 
 
SCO AND FNLC IN PRACTICE IN THE IPA COUNTRIES – FINAL REPORT 

A word of caution: The risks of using different flat rates to cover the same category of 
costs 

This  approach  should  be  considered  risky.  Three  key  aspects  are  worth 
mentioning: 

1)  From a legal perspective, "it is the sole responsibility of the Managing Authority 
to define the SCO methodology and its parameters" (European Commission, 2021 
Chapter 5.2). Allowing each beneficiary to determine its own flat rate percentage 
de  facto  transfers  the  responsibility  for  defining  the  SCO  from  the  Managing 
Authority to the beneficiaries, in sharp contrast with the EC guidelines. 

2)  According  to  Article  53(3)(a)  of  the  CPR,  SCOs  "shall  be  established  on  a  fair, 
equitable and verifiable method". By providing the flexibility to choose different 
flat rates, this approach determines the existence of different percentages to cover 
the same category of costs (e.g. in some cases staff costs are reimbursed as 18% 
of direct costs, in others as 15%, etc.). As a consequence, the programme could 
be  asked  to  justify  how  the  application  of  different  percentages  ensures 
compliance  with  the  principle  of  fairness.  In  other  words,  the  Audit  Authority 
(AA)  and/or  the  European  Commission  itself  may  ask  the  programme  for 
documents  justifying  the  application  of  different  percentages.  If  the  programme 
does not have a solid data base and documentation to justify this, it risks financial 
corrections. 

3)  Finally,  this  approach  does  not  bring  significant  benefits  in  terms  of 
simplification.  If  beneficiaries  apply  different  percentages,  the  programme 
authorities  will  still  have  to  verify  each  reimbursement  request  and  check  the 
plausibility  of  the  chosen  percentage  depending  on  the  specific  project  cost 
structure and budget distribution.  There is therefore a risk that the simplification 
effort will be negated, if the same approach is used for SCOs covering other cost 
categories (staff, travel and accommodation) and which can be combined to this 
SCO. 

Table 5 – Benefits and challenges of the use of Art. 39(3)(c) Interreg Regulation 
to cover staff costs 

Benefits 

•  Significant reduction in administrative costs for programmes and burden on 

beneficiaries compared to declaring/verifying real costs 

•  Reduction of errors 
•  As an off-the-shelf option, no need to develop methodologies or justify the 

Challenges 

flat rate chosen 

•  Greater differences in staff costs (e.g. EU vs. IPA salaries,  transnational 
programmes) leading to weaker approximation of real staff costs and risk 
of overcompensation 

•  Tangible risks of using different flat rates within the same off-the-shelf SCO 
depending on the beneficiary or project budget structure (i.e. possible lack 
of compliance with the principle of fairness) 

Source: Service provider, 2024 

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CPR  2021/1060,  Article  55(2)(a):  Hourly  rate  calculated  by  dividing  the  latest 
documented annual gross employment costs by 1,720 hours for persons working 
full-time, or a corresponding pro-rata of 1,720 hours for persons working part-time. 

The possible weaknesses of considering Article 39(3)(c) of Interreg Regulation as SCO 
to cover staff costs (e.g. a flat rate that does not adequately approximate real costs for 
all  beneficiaries)  can  be  overcome  by  considering  the  development  of  hourly  rates 
through the methodology offered by Article 55(2)(a) of the CPR, i.e. "For the purposes of 
determining direct staff costs, an hourly rate may be calculated […] (a) by dividing the 
latest documented annual gross employment costs by 1,720 hours for persons working 
full-time, or a corresponding pro-rata of 1,720 hours for persons working part-time". 

Unlike the standard off-the-shelf SCOs in the CPR and the Interreg Regulation, which 
provide flat rates for certain categories of costs, Article 55(2) provides an off-the-shelf 
methodology, in the specific case of paragraph (a) a denominator represented by 1,720 
hours, from which an SCO can be developed.  

The  definition  of  hourly  rates  can  be  an  appropriate  solution  for  those  programmes 
seeking a better approximation of real costs, for example due to  

•  significant salary differences between/among participating countries (or types of 

organisations),  

•  differences in beneficiaries' involvement in the project throughout the year (full-

time, part-time, varying number of hours). 

The advantage of such a methodology is the flexibility it can offer to beneficiaries once 
the  hourly  rates  have  been  calculated.  At  the  same  time,  it  allows  for  a  better 
approximation as the rates will vary and depend on each individual's gross annual salary, 
i.e. the numerator. 

Hourly rate = 

𝐴𝑛𝑛𝑢𝑎𝑙 𝑔𝑟𝑜𝑠𝑠 𝑠𝑎𝑙𝑎𝑟𝑦

1,720 ℎ𝑜𝑢𝑟𝑠

At  the  same  time,  certain  challenges  and  drawbacks  may  arise  from  the  use  of  this 
methodology, such as 

•  a  limited  reduction  in  administrative  costs  and  burden  compared  to  Article 
39(3)(c) of the Interreg Regulation or to programme specific SCOs, in terms of 
necessary calculations and documentation for the audit trail, e.g. proof of contract 
with gross annual salary, timesheets, etc. at the level of each person involved; 

•  a  higher  risk  of  error  compared  to  Art.  39(3)(c)  because  each  beneficiary 

calculates his own hourly rate; 

•  still a risk of a poor approximation of real staff costs, e.g. if the denominator of 
1,720 hours is not an accurate estimate of the actual number of hours worked in 
a given country/organisation in a year, i.e. if the actual number of hours worked 
is  higher  than  1,720,  the  hourly  rate  provided  by  the  1,720-hours  rule  will  be 
higher than the real cost per hour. 

In  view  of  these  potential  challenges,  Article  55(2)(a)  has  only  been  chosen  by  one 
Interreg IPA programme. 

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Table 6 – Benefits and challenges of the use of Art. 55(2)(a) Interreg Regulation 
to cover staff costs 

Benefits 

Risks and 
challenges 

•  Approved  methodology  to  calculate  hourly  rates  (i.e.  1,720  hours 

denominator) 

•  Greater  flexibility  for  beneficiaries  with  different  levels  of  involvement 

(hours worked/year) in the project 

•  Better approximation of real costs compared to Art.39(3)(c) 
•  Less reduction of administrative costs and burden compared to Art.39(3)(c) 
•  Higher risk of error 
•  Risk  of  poor  approximation  of  real  costs/overcompensation  if  the  actual 

number of hours worked per year is higher than 1,720 

Source: Service provider, 2024 

CPR  2021/1060,  Article  55(2)(b):  Hourly  rate  calculated  by  dividing  the  latest 
documented  monthly gross  employment  costs  by  the average  monthly  working 
time of the person concerned in accordance with applicable national rules referred 
to in the employment or work contract or an appointment decision (both referred 
to as the employment document). 

Similarly to Article 55(2)(a), Article 55(2)(b) offers an off-the-shelf methodology. 

Hourly rate = 

𝐿𝑎𝑡𝑒𝑠𝑡 𝑑𝑜𝑐𝑢𝑚𝑒𝑛𝑡𝑒𝑑 𝑚𝑜𝑛𝑡ℎ𝑙𝑦 𝑔𝑟𝑜𝑠𝑠 𝑠𝑎𝑙𝑎𝑟𝑦

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑚𝑜𝑛𝑡ℎ𝑙𝑦 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑡𝑖𝑚𝑒 

The challenges outlined for Article 55(2)(a)  also apply to this methodology. Moreover, 
the lack of a predefined denominator means that calculations and checks must also be 
carried out to determine the average monthly working time of each person concerned.  

Such a methodology has not been applied in the context of Interreg IPA and is rarely 
used in the wider context of Interreg and in "mainstream" cohesion policy programmes.  

4.1.2. 

Programme specific SCOs 

Unit costs (CPR 2021/1060, Article 53(1)(b)) to cover staff costs 

In the context of the analysed Interreg IPA programmes, only one case of programme 
specific SCO to cover staff costs was identified, i.e. the elaboration of unit costs to cover 
staff costs by the Interreg IPA South Adriatic programme. 

Unit costs can be used for any type of project, activity or cost category where it is possible 
to easily identify and define: 

• 

• 

the  expected  quantities  of  a  deliverable,  output,  activity  (in  this  case  hours 
worked), 

the unit cost of these quantities (INTERACT, 2021). 

The development of hourly rates for staff costs is one of the main examples and uses of 
unit costs. In the context of Interreg IPA, such a tailor-made solution can be considered 
as  the  most  balanced  one  to  reduce  the  administrative  burden  and  risk  of  error  for 
programmes and beneficiaries, while overcoming the potential problems mentioned in 
the previous paragraph regarding the use of off-the-shelf SCOs, in particular 

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•  Significant differences in salaries between/among participating countries, leading 

to a higher risk of overcompensation; 

•  Differences between types of organisations and levels of seniority; 

• 

flexible working hours dedicated to the Interreg project. 

The box below outlines the specific case of unit costs developed by Interreg IPA South 
Adriatic. 

Programme: Interreg IPA South Adriatic 

Type of SCO: unit cost to cover staff costs (CPR Art. 53(1)(b)) 

Methodological approach and data used 

The unit costs have been established using a fair, equitable and verifiable calculation method 
in accordance with Article 53(3)(a) CPR. This method may be based on: 

(i) 
(ii) 
(iii) 

statistical data, other objective information or expert judgement; 
verified historical data of individual beneficiaries; 
the application of the usual cost accounting practices of individual beneficiaries. 

In the case analysed, verified historical data of individual beneficiaries were used (ii). 

The  unit  costs  were  established  on  the  basis  of  a  sample  of  historical  data  from  projects 
financed by the 2014-2020 Interreg IPA CBC Italy – Albania – Montenegro Programme over a 
three-year period (2018-2021). The sample related to 32 projects financed through the 1st call 
for standard projects of the 2014-2020 Programme, at the beneficiary level by specifying the 
total amount of the verified and certified costs.  

For each record of the historical data sample, the direct staff cost per hour was calculated by 
dividing the eligible gross employment costs over one year per 1,720 hours in accordance with 
Art. 55(2)(a) CPR which provided the denominator.  

The  direct  staff  costs  per  hour  of  the  sample  of  historical  data  were  then  analysed  using  a 
statistical approach, taking into account three variables:  

• Country (i.e., Albania, Italy or Montenegro); 
• Type of beneficiary (by distinguishing between (i) public bodies/bodies governed by public 
law,  (ii)  universities/research  centres/other  public  educational  institutions,  (iii)  private 
associations/NGOs/foundation/non-profit/social partners);  

• Function/role of the person employed in the project distinguishing between three different 

functions/roles for each type of beneficiary. 

The result was the identification of the average hourly costs by country, type of beneficiary and 
function/role, and the associated standard deviations. 

A  total  of  27  unit  costs  were  elaborated  (Three  countries  à  three  types  of  organisation  per 
country à three levels of seniority per type of organisation). 

Alternatives considered 

Alternative approaches to defining the gross annual employment costs included 

• a survey of a sample of beneficiaries (risk: unreliable data/responses) 
• reference  to  official  statistics  (risk:  inconsistency  due  to  lack  of  harmonisation  of  data 

between participating countries). 

An alternative approach considered calculating a different denominator to determine the total 
number of hours worked per year instead of 1,720 hours. However, this was ruled out to avoid 

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a higher risk of error in the unit cost calculation. In general, the off-the-shelf methodology of 
calculating the denominator provides more certainty from a regulatory perspective. This option 
is also usually preferred by the European Commission. 

Replicability of this programme specific SCO by other Interreg IPA programmes 

Given that staff costs typically  represent a significant share of the total cost of Interreg IPA 
operations,  the  approach  used  by  South  Adriatic  could  be  adopted  by  other  Interreg  IPA 
programmes. Furthermore, the differentiation of hourly rates by country (EU/non-EU), type of 
organisation and level of seniority would be beneficial to all programmes in terms of reducing 
administrative burden (for beneficiaries) and costs (for the programme), reducing errors and 
consequently increasing the time available for controllers to carry out on-the-spot checks. 

On the other hand, it should be noted that such an approach could prove more burdensome 
for transnational programmes, i.e. when country-specific hourly rates have to be calculated for 
a large number of countries. 

With regard to the data requirements for determining the annual gross employment costs (i.e. 
the "numerator"), the programme must have historical data on verified expenditure (real costs), 
including  information  on  other  variables  that  may  affect  costs,  such  as  country,  type  of 
organisation and level of seniority. 

Historical data on staff costs should refer, as in the case of this SCO, to data at beneficiary 
level from a sample of projects for a number over a period of at least three years. In terms of 
resources required, the work to develop this SCO should, as an indication, involve two Joint 
Secretariat officers (and/or external experts), one first level controller per participating country 
(or more in the case of decentralised FLC systems). A period of at least six months is required 
to develop the methodology, with most of the time spent collecting historical data from FLCs. 
This  estimate  does  not  include  the  workload  for  further  exchanges  with  the  European 
Commission. 

A  similar  and  comparable  approach,  to  be  considered  mainly  by  transnational 
programmes, was adopted by the Interreg Baltic Sea programme, which developed nine 
unit costs for staff costs, one for each participating country9. Similarly to South Adriatic, 
(a sample of) historical data from the previous programming period with 1720 hours as 
the denominator was used to determine hourly rates in each country, and a comparison 
with Eurostat data on labour costs was made to verify the historical data. The unit costs 
were defined in national currencies (four out of nine countries do not have the euro as 
their national currency, i.e. Denmark, Poland, Sweden and Norway). It should be noted 
that  in  this  case  no  distinction  was  made  between  types  of  organisation  and  level  of 
seniority to minimise the variety of different unit costs. Instead, the programme calculated 
an average unit cost for typical types of occupations in their projects by ensuring a similar 
representative  coverage  of  different  occupations  in  the  sample  of  each  country.  To 
eliminate  the  influence  of  extreme  values  in  the  sample,  median  rather  than  average 
hourly unit costs were used. This illustrates another approach to balancing simplification 
with the approximation of real costs. 

9   Denmark, Estonia, Finland, parts of north-eastern Germany, Latvia, Lithuania, southern Norway, Poland, Sweden. 
The unit costs developed for the Russian regions previously participating in the programme were dropped as a 
result of Russia’s exclusion following the Russian invasion of Ukraine. 

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Table 7 – Benefits and challenges of the development of unit costs to cover staff 
costs 

Benefits 

Challenges 

•  Differentiation of hourly rates e.g. by country, type of organisation and level 
of seniority allowing a better approximation of real costs (compared to real 
costs  but  also  flat  rates),  while  reducing  the  administrative  burden  on 
beneficiaries and costs for programme and ensuring manageability.  

•  Reducing the risk of error,  
•  Faster preparation for reimbursement and verification (lighter audit trail) 
•  Transparent budgeting. 
•  Collecting  verifiable  data  on  employment  costs,  including  variables 
affecting  costs  (country,  type  of  organisation,  level  of  seniority)  where 
historical data is not available or sufficient. 

•  More  burdensome  SCO  design  phase,  especially  when  developed  by 

transnational programmes (many countries involved) 

Source: Service provider, 2024 

4.1.3. 

Choosing the most appropriate SCO for staff costs 

The figure below is intended to help to decide which SCO to implement to cover staff 
costs, depending on programme needs, resources and data availability. 

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Figure 10: Flowchart guiding the reasoning behind the choice of the most appropriate SCO to cover staff costs 

Source: Service provider, 2024

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4.2.  SCOs for travel costs  

By  their  very  nature,  Interreg  programmes  bring  together  partners  from  different 
countries to implement projects and strengthen cooperation. It is therefore obvious that 
travel costs are a recurring cost category in Interreg and that simplifying their financial 
reporting can benefit both programmes and beneficiaries. To this end, the existence of 
an  off-the-shelf  SCO  within  the  Interreg  Regulation  2021/1059  to  cover  travel  costs 
already  significantly  supports  this  effort.  At  the  same  time,  certain  conditions  in  the 
specific  context  of  Interreg  IPA  may  require  the  development  of  programme  specific 
SCOs. 

4.2.1. 

Off-the-shelf 

Interreg Regulation 2021/1059, Article 41(5): Flat rate for travel costs up to 15% of 
direct staff costs  

As outlined in section 3.4, in 14 cases Interreg IPA programmes have opted for the flat 
rate of up to 15% of direct staff costs to cover travel costs, as provided for in Article 41(5) 
of Interreg Regulation 2021/1059. All programmes except three (managed by the same 
Member State) apply the maximum rate allowed. In the three exceptions, a flat rate of 
"up to 5%" is applied, reflecting the same type of practice adopted by other programmes 
for staff and indirect costs where different flat rates are applied to the same cost category 
depending on the beneficiary. As explained in section 4.1.1, such a practice is not in line 
with the principle of fairness and shifts the responsibility for setting the flat rate from the 
MA to the beneficiaries.  

Notwithstanding  this  practice,  the  application  of  the  off-the-shelf  SCO  to  cover  travel 
costs has not shown any specific problems. However, the combination of different off-
the-shelf SCOs within an operation may raise some questions. As outlined in section 3.4, 
several Interreg IPA programmes combine three off-the-shelf flat rates, namely  

• 

for direct staff costs, up to 20% of direct costs other than direct staff costs, Article 
39(3)(c) Interreg Regulation,  

•  up  to  15%  of  direct  staff  costs  to  calculate  travel  costs,  Article  41(5)  Interreg 

Regulation, and 

• 

for indirect costs, up to 15% of direct staff costs, Article 54(b) CPR. 

The possibility of this type of SCO combination has implications, namely 

•  The direct costs on which the calculation of staff costs is based cannot include 
travel costs. Thus, the direct staff costs reimbursed will be more limited because 
the basis for their calculation is more limited. 

•  Travel costs are not treated as direct costs, whereas we could assume that they 

are direct costs in the context of Interreg10. 

10   "Direct costs are those costs that are directly related to the implementation of the operation or project where the direct 
link with this individual operation or project can be demonstrated." (European Commission, 2021, Section 3.1.2) 

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•  The claiming of indirect costs, usually for office and administration, means that 
travel  costs  do  not  fall  into  this  category  either,  i.e.  they  are  neither  direct  nor 
indirect, but a third separate category. 

Figure 11 below illustrates such implications. 

While the off-the-shelf SCO covering travel costs provides a good approximation to real 
costs for most programmes and significantly reduces administrative costs and the risk of 
error,  the  participation  of  non-EU  countries  can  pose  certain  risks  of  under-  or  over-
compensation  if  the  same  flat  rate  is  applied  in  countries  with  heterogeneous  socio-
economic contexts. This may be the case, for example, where wage levels are different, 
but travel costs are similar for partners on either side of a border. In the case of the travel 
cost  flat  rate,  which  is  based  on  direct  staff  costs,  significant  differences  in  salaries 
between EU and non-EU countries lead to significant differences in the reimbursement 
of travel costs, to the expense of countries where salaries are lower (but travel costs are 
usually not). 

In such a scenario, the development of a programme specific SCO for specific countries 
or a group of countries may be a possible solution. 

Table 8 – Benefits and challenges of the use of Art. 41(5) of the Interreg 
Regulation to cover travel costs 

Benefits 

•  Significant reduction in administrative costs for programmes and burden on 

beneficiaries compared to declaring/verifying real costs. 

•  Reduction of errors. 
•  As an off-the-shelf option, no need to develop methodologies or justify the 

Challenges 

flat rate chosen. 

•  Greater differences in staff costs (e.g. EU vs. IPA salaries, transnational 
programmes) used as a basis for calculating the flat rate, leading to under-
compensation of travel costs in countries with lower salaries. 

•  Tangible risks of using different flat rates within the same off-the-shelf SCO 
depending  on  the  beneficiary  or  the  budget  structure  of  the  project  (i.e. 
possible lack of compliance with the principle of fairness). 
Inconsistent  interpretation  of  travel  costs  as  direct/indirect  costs  when 
combined  with  other  SCOs  covering  different  cost  categories  (i.e.  staff, 
office and administration). 

• 

Source: Service provider, 2024 

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Figure 11: Combination of different SCOs and implications for the interpretation of direct and indirect costs 

Source: Service provider, 2024 

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4.2.2. 

Programme specific SCOs 

In the context of the Interreg IPA programmes analysed, only two cases of programme 
specific SCOs to cover travel costs were identified, i.e. the elaboration of a specific flat 
rate to cover travel costs of IPA beneficiaries (Interreg Euro-MED) and the use of unit 
costs  developed  in  other  Commission  decisions  to  cover  travel  costs  in  small-scale 
projects (Interreg IPA South Adriatic). 

CPR 2021/1060, Article 53(1)(d): flat-rate financing 

In Interreg, flat rates are normally used to cover specific categories of costs (not specific 
activities). Reimbursement based on flat rates depends on three different types of costs: 

• 

• 

the costs calculated as a flat rate;  

the base costs on which a flat rate is calculated; 

•  other costs not covered by the previous two categories.  

Flat rates should therefore only be used where it is possible to distinguish which types 
of costs are covered by a flat rate and which are not, to avoid double funding. Flat rates 
are best suited to high volume, low value transactions where verification is costly. This 
is the case for travel costs. 

In the identified programme specific SCO developed by Interreg Euro-MED, the same 
flat rate structure used  in the off-the-shelf option described above (Interreg regulation 
Article 41(5)) was adopted (i.e. a flat rate based on direct staff costs). However, the flat 
rate percentage has been recalculated and increased (22%) to better reflect the context 
of  the  IPA  countries.  The  rationale  behind  the  choice  of  this  particular  programme 
specific SCO lies in the need to overcome the discrepancies between staff costs in EU 
Member State and IPA countries, on which the off-the-shelf SCOs for travel costs are 
developed. In other words, the lower staff costs in IPA countries lead to lower travel cost 
amounts compared to EU Member State beneficiaries when using the off-the-shelf SCO. 
Furthermore, the differentiation between EU and IPA countries provides a better balance 
between approximation of real costs and simplification. 

Programme: Interreg Euro-MED 

Type of SCO: flat rate (CPR Art. 53(1)(d)) to calculate travel costs 

Methodological approach and data used 

The flat rate has been established using a fair, equitable and verifiable calculation method in 
accordance with CPR Article 53(3)(a). This method may be based on: 

(i) 
(ii) 
(iii) 

statistical data, other objective information or expert judgement; 
verified historical data of individual beneficiaries; 
the application of the usual cost accounting practices of individual beneficiaries. 

In the case analysed, verified historical data of individual beneficiaries were used (ii). 

The  JS  carried  out  an  in-depth  analysis  of  travel  and  accommodation  data,  focusing  on 
information at beneficiary level and using only verified real costs related to "standard" Interreg 

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project  practices  in  terms  of  travel  (i.e.  costs  certified  until  30  June  2020  for  activities  not 
affected by COVID-19). 

Firstly, the average share of declared staff costs used for travel and accommodation costs was 
calculated  per  fund  (ERDF  and  IPA),  taking  into  account  Interreg  MED  2014-2020  data  at 
beneficiary  level.  Based  on  the  dataset,  the  information  obtained  on  travel  costs  as  a 
percentage of declared staff costs was compared to the median. The data were considered 
homogeneous and therefore reliable, as the results obtained by the two methods converged in 
the same direction (10% ERDF and 22/23% for IPA). 

In order to obtain more reliable results, an analysis per country was carried out, also taking 
into account data from two different transnational Interreg programmes (Balkan MED 2014-
2020  and  Adrion  2014-2020)  and  one  interregional  programme  (Interreg  Europe)  for  each 
participating country. 

The information provided by the other Interreg programmes sharing the Euro-MED area and 
the beneficiaries allowed to consolidate the results obtained for Interreg MED 2014-2020: a 
flat rate of 15% for ERDF partners and around 22% for IPA partners. These analyses led the 
programme to opt for an off-the-shelf flat rate for ERDF beneficiaries and an ad hoc flat rate of 
22% for beneficiaries from IPA countries. 

Replicability of this programme specific SCO by other Interreg IPA programmes 

The programme specific SCO of 22% of staff costs to cover travel and accommodation costs 
of IPA beneficiaries should be highlighted in terms of the effort made by the programme to 
differentiate between beneficiaries from EU Member States,  for whom an off-the-shelf SCO 
applies, and IPA beneficiaries, for whom this specific flat-rate SCO has been developed. This 
helps to overcome the discrepancies between EU and non-EU countries in terms of staff costs, 
on  which  the  travel  cost  SCOs  are  based.  This  is  a  highly  replicable  SCO  in  Interreg  IPA 
programmes as they always include both EU and IPA beneficiaries. 

While  the  approach  outlined  above  is  a  good  solution  to  overcome  the  differences  in 
reimbursement of travel costs between programme participating countries, it can still be 
considered  burdensome  for  programmes  in  terms  of  resources  and  data  collection  or 
availability. 

Table 9 – Benefits and challenges of the use of a programme specific flat-rate to 
cover travel costs 

Benefits 

•  Better  approximation  of  real  travel  costs  for  all  participating  countries 

compared to the off-the-shelf option 

•  Reduction of errors 
•  Significant  reduction  of  administrative  costs  for  programmes  and  burden 

for beneficiaries compared to declaring/verifying real costs. 

Challenges 

•  Partial/insufficient availability of historical data. 
•  More  burdensome  SCO  design  phase,  especially  when  developed  by 

transnational programmes (many countries involved). 

Source: Service provider, 2024 

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CPR  2021/1060,  Article  53(3)(c):  the  amounts  for  the  forms  of  grants  […]  are 
established  in  accordance  with  the  rules  for  application  of  corresponding  unit 
costs, lump sums and flat rates applicable in Union policies for a similar type of 
operation. 

CPR  2021/1060  Article  53(3)(e):  the  amounts  for  the  forms  of  grants  […]  as  flat 
rates and specific methods established by or on the basis of this Regulation or 
the Fund-specific Regulations. 

When the off-the-self SCO solution does not provide a sufficient balance between the 
approximation  of  real  costs  and  administrative  simplification,  the  development  of  a 
programme specific SCO can still be considered too difficult for programmes for a variety 
of reasons, such as lack of time, resources, expertise or unavailability of necessary data. 
In these cases, programmes can use other justifications to determine an SCO and avoid 
or at least reduce the need for complex calculations: 

•  applicable  in  other  Union  policies  for  a  similar  type  of  operation  (e.g.  ESF+ 
Regulation and its delegated acts, Horizon Europe, Erasmus+, etc.) according to 
CPR 2021/1060, Article 53(3)(c), or 

•  established by the CPR or the fund-specific regulations (here: Interreg), including 
the  case  of  Delegated  Acts  amending  or  complementing  the  aforementioned 
regulations, according CPR 2021/1060, Article 53)(e). 

The use of SCOs (usually unit costs) already applied in the same or other Union policies 
allows programmes to avoid developing their own methodologies and calculations, while 
ensuring compliance. 

Travel and accommodation costs are a good example to illustrate the potential benefits 
of  such  an  approach,  i.e.  by  using  existing  unit  costs  calculated  according  to  routes 
and/or distances, means of transport and unit costs for accommodation depending on 
the country of destination. Such amounts can be found, for example, in the Commission 
Decision  (2021)35  authorising  the  use  of  unit  costs  for  travel,  accommodation  and 
subsistence costs under an action or work programme under the 2021-2027 multi-annual 
financial framework11. 

This approach has been adopted by the Interreg IPA South Adriatic Programme for its 
small-scale projects. The box below describes the main points. 

Programme: Interreg IPA South Adriatic 

Type of SCO: Unit costs (CPR Art. 53(1)(b), established in accordance with the rules for the 
application of corresponding unit costs, lump sums and flat rates applicable in Union policies 
for a similar type of operation (CPR Art. 53(3)(c)) 

Methodological approach and data used 

The methodology was established by Commission Decision C(2021)35 authorising the use of 
unit costs for travel, accommodation and subsistence costs in the context of an action or work 
programme under the 2021-2027 multiannual financial framework. The choice of this SCO is 
justified  by  the  distance  and  accessibility  of  the  roads  between  the  three  countries,  as  the 
Commission decision takes into account some exceptional situations, in particular for journeys 
of less than 400 km not covered by land transport (e.g. Helsinki/Tallinn). To calculate the unit 

11 And its amendments included in Commission Decision C(2023) 4928 (European Commission, 2023). 

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costs  for  travel  and  accommodation  the  programme  has  taken  into  account  the  amounts 
included  in  the  tables  ""5.1  Amounts  for  return  air,  rail  and  combined  air/rail  journey",  "5.2 
Amounts for intra-Member State return journeys by land between 50 and 400 km" and "5.5 
Amounts  for  accommodation  and  subsistence  costs"  of  the  aforementioned  Commission 
Decision (2021)35. 

However, the Decision did not  include  information  on land  transport  costs between Albania 
and Montenegro, which the programme calculated. As there is no train between Albania and 
Montenegro  and  the  only  land  transport  is  by  bus,  the  programme  used  internet  sources 
(websites of bus companies) to calculate the unit costs for this specific case. In total, there are 
four unit costs for travel (Puglia-Molise (IT) and Albania-Montenegro by land, Italy-Albania and 
Italy-Montenegro by air) and three unit costs for accommodation (one per country). 

The interesting aspect of the Interreg IPA South Adriatic approach lies in the decision to 
use a Commission Decision as the basis for the calculation of unit costs. These amounts 
can  effectively  be  used  as  off-the-shelf  options  where  the  nature  of  the  costs  to  be 
covered by the SCO can reasonably be considered similar, thus reducing the time and 
resources required by the programme to calculate them from scratch. It should be noted, 
however, that such amounts may need to be supplemented or adjusted, mainly for IPA 
countries if they are not included in the chosen Commission Decision or Delegated Act, 
but also for indexation if the amounts have not been calculated recently. 

Table 10 – Benefits and challenges of the use of SCOs developed in Delegated 
Acts or in other Union policies to cover travel costs 

Benefits 

Challenges 

•  Ready-to-use  amounts  without  the  need  for  programmes  to  develop 

methodologies and calculations 

•  Better  approximation  of  real  travel  costs  for  all  participating  countries 

compared to the off-the-shelf option 

•  Significant  reduction  of  administrative  costs  for  programmes  and  burden 

for beneficiaries compared to declaring/verifying real costs 

•  Reduction of errors 
•  Ensuring that the costs to be covered are reasonably similar 
•  Need to adjust amounts for indexation if amounts have not been calculated 

recently 

•  Need for adjustment or inclusion of new amounts for IPA countries if not 

provided for in the Decision/Delegated Act. 

Source: Service provider, 2024 

4.2.3. 

 Choosing the most appropriate SCO for travel costs 

The figure below is intended to help to decide which SCO to implement to cover travel 
costs, depending on the programme needs, resources and data availability. 

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Figure 12: Flowchart guiding the reasoning behind the choice of the most appropriate SCO to cover travel costs 

Source: Service provider, 2024

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4.3.  Preparation and closure costs 

Due to the nature of Interreg projects, the preparation and closure of projects may involve 
considerable coordination efforts, which may not be known in mainstream programmes. 
In order to take account of this effort and to support cooperation activities, Article 38(2) 
Interreg  Regulation  states  that  eligible  expenditure  includes  the  costs  of  initiating  or 
initiating and implementing an operation or part thereof.  

Neither  the  CPR  nor  the  Interreg  Regulation  provide  for  off-the-shelf  SCOs  for 
preparation and closure costs. The following sub-sections therefore focus exclusively on 
the development and use of programme specific SCOs for these two types of costs. The 
replicability of approaches is only considered towards the end of this section for project 
closure costs, as almost all Interreg IPA programmes have introduced an SCO for the 
preparation of project proposals.  

4.3.1. 

Project preparation costs 

Lump sums (CPR 2021/1060, Article 53(1)(c)) to cover preparation costs  

All  SCOs  for  the  reimbursement  of  preparation  costs  have  been  formulated  as  lump 
sums. Lump sums can be used for any type of project or activity where it is easy to pre-
define  the  deliverable  or  output in  terms  of  a single  unit  (INTERACT,  2021).  With  the 
submission  of  a  project  application  and  project  approval,  the  deliverable  of  a  "project 
preparation" is apparently proven and defined as a single unit. Representing only a very 
limited part of the total costs of Interreg IPA operations (around 1%), the use of a lump 
sum brings a high benefit in terms of the ratio between the potentially reimbursed costs 
and the effort required to claim them as real costs.  

More detailed information was collected for four SCOs, illustrating the differences in the 
use of lump sums for preparation costs between programmes: 

•  The  explicit  coverage  of  cost  categories  incurred  during  project  preparation 

varies. 

•  Some programmes differentiate the lump sum according to the type of project, 

while others use a single lump sum. 

•  Different approaches were used to calculate the lump sums. 

•  The formulation of the lump sum to be reimbursed differs in some cases.  

In all cases, project preparation costs can only be claimed if the project application  is 
successful. The amount relates to each individual project and can only be granted once 
per project (i.e. it is not dependent on the number of partners). The indicator that usually 
triggers the reimbursement is the signature of the project contract.  

The eligible amount of project preparation costs varies between 2021-2027 Interreg IPA 
programmes  from  a  few  thousand  euro  to  EUR  37,000,  which  may  reflect  not  only 
differences in approach but also differences in the effort required. For example, project 
preparation for transnational cooperation projects tends to be more demanding than for 
one or the other type of cross-border cooperation project.  

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Coverage of cost categories 

Typical costs covered by preparation lump sums are 

•  staff costs for developing the project proposal and drafting the application; 

•  administrative costs incurred during this process; 

• 

travel and accommodation costs incurred in the preparation of the project, which 
may  be  related  to  partnership  meetings  and/or  participation  in  programme 
information events; and 

•  external service costs, such as translation or expert advice. 

In some cases, programmes also explicitly provide for the coverage of "any other costs 
related  to  the  preparation"  prior  to  the  signature  of  the  Subsidy  Contract  and/or 
Partnership Agreement and some refer to "contracting costs".  

Single vs. differentiated lump sums  

Of the four cases analysed in depth, two apply a single lump sum and the other two apply 
differentiated lump sums. The latter illustrate the different approaches that can be taken 
to introduce differentiation in the reimbursement of preparation costs:  

•  The  example  of  the  South  Adriatic  Programme  distinguishes  between  EUR 
11,200 for regular projects and EUR 5,600 for small-scale projects. In both cases, 
the amount includes the IPA contribution and national co-financing.  

•  The  Romanian-Serbian  Programme  differentiates  according  to  the  type  of 
investment: The higher lump sum of EUR 13,500 can be claimed for infrastructure 
investment  projects  and  the  lower  lump  sum  of  EUR  10,000  for  equipment 
investment projects.  

In both cases, the differentiation aims at a better balance between approximation of real 
costs and simplification of reimbursement. It can be argued that small-scale projects tend 
to  be  easier  and  simpler  to  develop  than  other  projects.  This  is  particularly  true  with 
regard to the different amount and detail of information expected in applications for these 
projects. Similarly, the effort to develop infrastructure investment projects may be higher 
than for other investments due to additional coordination efforts. At the same time, the 
development  of  such  differentiated  rates  requires  sufficiently  detailed  data  and  other 
information to allow for a fair, equitable and verifiable calculation.  

Calculation approaches  

The  calculation  methods  used  by  the  programmes  to  estimate  the  lump  sum  for 
preparation  costs vary considerably.  Some  programmes  used  historical  data  from  the 
previous programming period. Other programmes combined different data sources. At 
least  in  part,  the  different  approaches  are  also  due  to  the  use  of  a  lump  sum  for 
preparation costs also in the previous programming period and thus aim  to overcome 
difficulties  in  defining  the  SCO  for  the  2021-2027  programming  period.  The  following 
examples illustrate some of the alternatives, without claiming to be exhaustive. 

•  The  Interreg  IPA  Croatia-Bosnia  and  Herzegovina-Montenegro  Programme 
calculated  preparation  costs  by  analysing  costs  incurred  by  beneficiaries  and 

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combining this data with further market research information. Using this data, the 
programme calculated the lump sum  by distinguishing  four categories of costs 
typically incurred during the application phase of a project.  

•  The  Interreg  IPA  Romania-Serbia  Programme  used  historical  data  on  project 
preparation lump sums from different programmes. It combined such data from 
two  Romanian  cross-border  Interreg  programmes  2014-2020  with  lump  sums 
from the Interact SCO database. Two categories of lump sums were created, one 
for projects with infrastructure investments and one without. The averages of the 
two  categories  were  used  for  the  programme  lump  sums  of  the  2021-2027 
programming period.  

•  The Euro-Med Programme also based its lump sum on a previous lump sum and 
used  an  indexation  method  to  adjust  it  to  the  new  programming  period.  The 
previous  lump  sum  came  from  the  Interreg  MED  2014-2020  Programme.  This 
was indexed using a two-step approach. First, an indexation based on Article 109 
CPR was applied, which allows for an annual indexation of 2%. Second, on top 
of the value calculated for 2027 (i.e. adding 2% for each of the seven years), a 
7% "IPA coefficient" was calculated for the whole programming period, assuming 
that the participation of IPA country  beneficiaries would be the same as in  the 
2014-2020 programming period. 

•  The South Adriatic Programme also used information on lump sums for the 2014-
2020 programming period provided by Interact and combined this with real cost 
information  from  another  Interreg  programme  for  2007-2013.  Only  data  from 
other  similar  and  "close"  programmes  were  included.  Extreme  values  were 
excluded, both from other programmes' lump sums and the real cost dataset. The 
remaining data were used to calculate the respective averages, i.e. one for the 
lump sums and one based on real data. These averages were used to calculate 
the  overall  average.  To  avoid  the  risk  of  overcompensation,  this  average  was 
then reduced by 10%.  

The  box  below  illustrates  the  example  of  the  Croatia-Bosnia  and  Herzegovina-
Montenegro programme to provide more calculation details.  

Programme: Interreg IPA Croatia-Bosnia and Herzegovina-Montenegro 

Type of SCO: lump sum to cover project preparation costs (CPR Art. 53(1)(c)) 

Methodological approach and data used 

The  lump  sum  was  determined  using  a  fair,  equitable  and  verifiable  calculation  method  in 
accordance with Article 53(3)(a) CPR. In this case, the method was based on verified historical 
data from individual beneficiaries, combined with market research data, European Commission 
rates and expert knowledge. 

Different steps were taken to calculate the four project preparation cost components of: 

(1) To calculate staff costs, historical staff costs claimed in the 2014-2020 programming period 
were  used.  The  monthly  salaries  per  country  were  used  to  calculate  the  average  cost  per 
working day for each country.  

The calculation of staff cost was based on the expert judgement and previous experience that 
three organisations, one from each of the three countries, would be involved in the preparation 

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and that each person would spend approximately 12 working days on the preparation of the 
proposal.  

𝑺𝒕𝒂𝒇𝒇 𝒄𝒐𝒔𝒕𝒔 = 𝑫𝒂𝒊𝒍𝒚 𝒔𝒕𝒂𝒇𝒇 𝒄𝒐𝒔𝒕𝒔 𝒄𝒐𝒖𝒏𝒕𝒓𝒚 𝑨 ∗ 𝟏𝟐 + 𝑫𝒂𝒊𝒍𝒚 𝒔𝒕𝒂𝒇𝒇 𝒄𝒐𝒔𝒕𝒔 𝒄𝒐𝒖𝒏𝒕𝒓𝒚 𝑩 ∗ 𝟏𝟐

+ 𝑫𝒂𝒊𝒍𝒚 𝒔𝒕𝒂𝒇𝒇 𝒄𝒐𝒔𝒕𝒔 𝒄𝒐𝒖𝒏𝒕𝒓𝒚 𝑪 ∗ 𝟏𝟐 

(2)  Office  and  administration  costs  were  calculated  as  a  flat  rate  of  15%  of  staff  costs  (i.e. 
applying  the  off-the-shelf  flat  rate  under  Article  54(b)  CPR)  and  therefore  did  not  require 
additional data.  

(3) External expertise and service costs were assumed to include translation and consultancy 
services for which market research was carried out to calculate average costs: 

•  For each of the three countries, prices per translated standard page were identified 
through market research, from which an average cost per page could be calculated. 
This was multiplied by the average number of standard pages per project proposal, 
which was 33, to calculate total translation costs:  

𝑻𝒓𝒂𝒏𝒔𝒍𝒂𝒕𝒊𝒐𝒏 𝒄𝒐𝒔𝒕𝒔 = (𝑪𝒐𝒔𝒕 𝒑𝒆𝒓 𝒑𝒂𝒈𝒆 𝒄𝒐𝒖𝒏𝒕𝒓𝒚 𝑨 + 𝑪𝒐𝒔𝒕 𝒑𝒆𝒓 𝒑𝒂𝒈𝒆 𝒄𝒐𝒖𝒏𝒕𝒓𝒚 𝑩 +
𝑪𝒐𝒔𝒕 𝒑𝒆𝒓 𝒑𝒂𝒈𝒆 𝒄𝒐𝒖𝒏𝒕𝒓𝒚 𝑪) /3*33 

•  External support for project preparation, workshops, etc. could be provided by external 
experts. Market research determined the average daily cost of such services in each 
of  the  three  countries.  Further  calculations  were  made  on  the  assumption  that  five 
working days would be used by external experts: 

𝑪𝒐𝒏𝒔𝒖𝒍𝒕𝒊𝒏𝒈 𝒄𝒐𝒔𝒕𝒔 =

(𝑫𝒂𝒊𝒍𝒚 𝒆𝒙𝒑𝒆𝒓𝒕 𝒄𝒐𝒔𝒕𝒔 𝑨+𝑫𝒂𝒊𝒍𝒚 𝒆𝒙𝒑𝒆𝒓𝒕 𝒄𝒐𝒔𝒕𝒔 𝑩+𝑫𝒂𝒊𝒍𝒚 𝒆𝒙𝒑𝒆𝒓𝒕 𝒄𝒐𝒔𝒕𝒔 𝑪)

𝟑

∗ 𝟓  

(4)  Travel  and  accommodation  costs  were  calculated  based  on  the  assumption  that  three 
people would attend in an internal preparatory event and two people each attend a programme 
event such as an InfoDay and a contracting event with programme authorities. The total costs 
for travel and accommodation were calculated using mainly per diems and travel allowances 
provided by the European Commission (e.g. per diem provided by DG INTPA).  

The total preparation cost was then the sum of these four cost categories, rounded up to the 
nearest EUR 1,000 value.  

Formulation of the lump sum 

Typically, lump sums are expressed as an amount of euros to be paid upon fulfilment of 
the deliverable (here: successful project proposal). A few programmes provide additional 
information or use a slightly different formulation: 

•  The documentation of the Bulgaria-Türkiye programmes refers to a lump sum of 
up to EUR 12,000, which may create uncertainty among project applicants as to 
how much can be claimed as reimbursement of project preparation costs. 

•  The  Interreg  IPA  CBC  programmes  with  Croatia,  as  well  as  the  Euro-Med 
Programme,  indicate  potential  deviations  from  the  announced  lump  sum, 
depending  on  the  EU  co-financing  rate  applicable  to  the  lead  partner.  For 
example, for project proposals submitted to either of the two programmes with 
Croatia, the lump sum to be paid to the lead partner of approved projects is 85% 
of the lump sum defined in the programme documents, e.g. EUR 6,800 (85% of 
EUR 8,000) in the Croatia-Bosnia and Herzegovina-Montenegro Programme.  

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Table 11 – Benefits and challenges of the development of lump sums to cover 
project preparation costs 

Benefits 

Challenges 

•  The lump sum offers a considerable simplification for a small budget line. 
It frees the successful applicant from the administrative burden during the 
preparation  of  the  project  proposal  and  allows  them  to  focus  on  the 
development of the proposal. 

•  On  the  part  of  the  programme  authorities,  the  lump  sum  reduces 
administrative  costs  by  minimising  the  verification  effort  and  avoiding 
errors, thus freeing time of the programme authorities for other tasks. 

•  Different approaches to the calculation of the lump sum seem feasible. 
• 

In  the  case  of  differentiated  rates,  the  programme  must  ensure  the 
availability of sufficient and appropriate data. 

•  The lump sum should not be formulated as an "up to" amount as this may 
not be fair, equitable and verifiable. The challenge may be to define a fair 
amount that avoids over- and under-compensation. 

•  Lump sums from other programmes should not be "copied"", nor should 
amounts  from  a  previous  programming  period  simply  be  adjusted  for 
inflation. While SCOs are often used to further develop an SCO in the next 
programming period, care must be taken to ensure that real costs are not 
separated  from  the  reimbursed  lump  sum  (e.g.  due  to  uneven  price 
changes between cost categories). 

Source: Service provider, 2024 

4.3.2. 

Project closure costs 

Lump sums (CPR 2021/1060, Article 53(1)(c)) to cover closure costs 

All SCOs for the reimbursement of closure costs have been formulated as lump sums 
and the logic for the reimbursement of project closure costs is similar to that for project 
preparation  costs.  Usually,  the  approval  of  the  final  project  report  triggers  the 
reimbursement  of  closure  costs,  i.e.  the  deliverable  of  the  "project  closure"  result  is 
achieved with the submission and approval of the final report. The use of a lump sum for 
project closure costs is less widespread in the 2021-2027 Interreg IPA programmes than 
the use of project preparation costs. However, lump sums for project closure have only 
been  developed  by  programmes  that  also  use  a  lump  sum  to  reimburse  preparation 
costs.  

The proportion of project closure costs is usually even lower than for project preparation 
costs and is usually included in the budget line for the management work package budget 
line. The use of a lump sum therefore brings a high benefit in terms of the ratio between 
the costs potentially reimbursed and the effort required to claim them as real costs. The 
table below gives an overview of the relationship between preparation and closure costs 
in  the  four  programmes  using  both  lump  sums.  Excluding  infrastructure  investment 
projects, this comparison suggests that project closure costs are around one third to one 
half of project preparation costs. 

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Table 12 – Relationship between preparation and closure costs in four Interreg 
IPA programmes 

Programme 

Preparation cost 
(lump sum in 
Euro) 

Closure cost 
(lump sum in 
Euro) 

Closure cost lump 
sum as share of 
preparation cost 
lump sum (%) 

Croatia-Serbia 

Croatia-Bosnia and 
Herzegovina-Montenegro 

5,500 

8,000 

Romania-Serbia* 

13,500 / 10,000 

South Adriatic** 

11,200 

2,500 

4,000 

3,000 

5,600 

45.5 

50.0 

22.2 / 30.0 

50.0 

* The programme does not apply a differentiation between types of projects for closure costs. 
** Amounts refer to regular projects only. 

Source: Service provider, 2024, based on programme documents 

Given  the  similarity  of  purpose  of  the  lump  sums  for  project  preparation  and  closure 
costs, programmes  usually use  the same calculation  for both lump sums. Differences 
mainly  relate  to  the  details  of  the  calculation,  such  as  (1)  which  other  project  closure 
lump sums and/or real costs can be used to make the corresponding calculation, and (2) 
the assumptions underlying the calculation.  

In addition, there is a slight difference in the typical costs covered by a closure lump sum, 
which covers the following typical costs 

•  staff  costs  for  drafting  the  final  report  and  other  work  to  prepare  for  project 

closure; 

•  administrative costs incurred during this process; 

• 

travel  and  accommodation  costs  associated  with  the  preparation  of  the  final 
project report.  

The  box  below  summarises  the  calculation  for  the  Interreg  IPA  Croatia-Serbia 
Programme, illustrating the slight differences in the underlying assumptions compared 
to  the  calculation  of  preparatory  costs  for  the  Interreg  IPA  Croatia-Bosnia  and 
Herzegovina-Montenegro Programme in the previous box. 

Programme: Interreg IPA Croatia-Serbia 

Type of SCO: lump sum to cover project closure costs (CPR Art. 53(1)(c)) 

Methodological approach and data used 

The  lump  sum  was  determined  using  a  fair,  equitable  and  verifiable  calculation  method  in 
accordance with Article 53(3)(a) CPR. In this case, the method was based on verified historical 
data from individual beneficiaries, combined with market research data, European Commission 
rates and expert knowledge. 

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Different steps were taken to calculate the four project preparation cost components: 

(1) To calculate staff costs, historical staff costs claimed in the 2014-2020 programming period 
were used. Monthly salaries per country were used to calculate the average cost per working 
day for each of the two countries.  

The calculation of staff costs was based on the expert judgement and previous experience that 
two organisations, one from each of the two countries, would be involved in the preparation of 
the project closure documents and that each person would spend approximately ten working 
days on this work.  

𝑺𝒕𝒂𝒇𝒇 𝒄𝒐𝒔𝒕𝒔 = 𝑫𝒂𝒊𝒍𝒚 𝒔𝒕𝒂𝒇𝒇 𝒄𝒐𝒔𝒕𝒔 𝒄𝒐𝒖𝒏𝒕𝒓𝒚 𝑨 ∗ 𝟏𝟎 + 𝑫𝒂𝒊𝒍𝒚 𝒔𝒕𝒂𝒇𝒇 𝒄𝒐𝒔𝒕𝒔 𝒄𝒐𝒖𝒏𝒕𝒓𝒚 𝑩 ∗ 𝟏𝟎 

(2)  Office  and  administration  costs  were  calculated  as  a  flat  rate  of  15%  of  staff  costs  (i.e. 
applying  the  off-the-shelf  flat  rate  under  Article  54(b)  CPR)  and  therefore  did  not  require 
additional data.  

(3) Travel and accommodation costs were calculated based on the assumption that two people 
attend an internal workshop to prepare the final project report. The total costs for travel and 
accommodation  were  calculated  using  mainly  per  diems  and  travel  costs  provided  by  the 
European Commission (e.g. per diems provided by DG INTPA).  

Total closure costs were then the sum of these three cost categories, rounded up.  

Table 13 – Benefits and challenges of the development of lump sums to cover 
project closure costs 

Benefits 

Challenges 

Source: Service provider, 2024 

Benefits and challenges are the same as for project 
preparation costs. 

Replicability of programme specific SCOs for project closure costs by other Interreg IPA 
programmes 

Given that closure costs typically represent a very small proportion of the total costs of 
Interreg IPA operations, the approach used by some programmes, which apply the same 
approach to calculating preparation and closure costs could be adopted by other Interreg 
IPA programmes.  

In  terms  of  data  requirements  for  the  determination  of  the  lump  sum,  the  programme 
should have at its disposal historical data on the salaries of the beneficiaries (e.g. through 
previously  claimed  staff  costs),  as  well  as  information  on  travel  and  accommodation 
costs based on historical data or existing amounts provided in Commission delegated 
acts, and data on service costs (e.g. translation services) where relevant. 

In  terms  of  the  resources  required,  the  work  to  develop  such  SCOs  should,  as  a 
guideline,  involve  a  Joint  Secretariat  officer  (and/or  external  experts),  one  first  level 
controller per participating country (or more in the case of decentralised FLC systems). 
A period of one to three months is required to develop the methodology, with most of the 
time spent collecting historical data from the FLCs.  

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4.3.3. 

Choosing the most appropriate SCO for project 
preparation and closure costs 

As lump sums are the only appropriate SCO solution for project preparation and closure 
costs, the figure below focuses on the most appropriate data and calculation methods 
rather than a choice between SCOs. This figure is intended to help to decide which option 
to use to develop a lump sum for project preparation and/or closure costs.  

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Figure 13: Flowchart guiding the reasoning behind the choice of the most appropriate SCO to cover preparation or closure costs 

Source: Service provider, 2024 

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4.4.  Events and trainings  

Neither the CPR nor the Interreg Regulation provide for an off-the-shelf SCO for events 
and  training.  However,  such  cost  categories  represent  fairly  recurrent  activities  in 
Interreg  projects,  so  the  use  of  SCOs  for  their  reimbursement  can  bring  significant 
benefits to programmes and projects in terms of administrative simplification.  

The  following  sub-sections  focus  on  the  development  and  use  of  programme  specific 
SCOs for events and training, namely unit costs and lump sums. 

4.4.1. 

Use of unit costs 

Unit  costs  (CPR  2021/1060,  Article  53(1)(b))  to  cover  the  cost  of  events  and 
trainings 

In the context of the analysed Interreg IPA programmes, two programme specific unit 
costs were identified to cover the costs of events and trainings, i.e. unit costs to cover 
the costs of events for standard projects (Interreg IPA Bulgaria-Türkiye) and unit costs 
for targeted training in the context of small-scale projects (Interreg IPA South Adriatic). 

Unit costs are a very appropriate SCO for these cost categories as they can be used for 
"any type of project, activity or cost category where it is possible to easily identify and 
define: 

• 

the  expected  quantities  of  a  deliverable,  output,  activity  (in  this  case, 
events/trainings), 

•  unit costs for these quantities."(INTERACT, 2021, p. 10) 

When  defining  unit  costs  for  such  cost  categories,  it  is  important  to  clearly  define  the 
types of expenditures covered by the SCO, with the aim of covering all expenditure that 
can reasonably be associated with the organisation of an event or training. For example, 
in the case of Interreg IPA Bulgaria-Türkiye event or training costs include the following 
categories: 

•  hire of venue; 

•  hire of equipment, including translation equipment, audio equipment, etc; 

• 

the cost of hiring vehicles to transport participants; 

•  catering  costs  for  coffee  breaks,  refreshments,  lunches  and  dinners  for 

participants in the events; 

•  accommodation costs; 

• 

the  purchase  of  materials  for  participants  in  the  events  –  paper,  files,  folders, 
cases, CDs, etc. and the printing of invitations, agendas, presentations. 

The box below provides a more detailed description of the unit costs developed by IPA 
Bulgaria-Türkiye. 

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Programme: Interreg IPA Bulgaria-Türkiye 

Type of SCO: unit costs (CPR Art. 53(1)(b)) to cover the cost of one-day and multi-day events  

The  Interreg  IPA  Bulgaria-Türkiye  Programme  has  developed  its  own  unit  costs  for  the 
organisation of events for all standard projects, differentiating the unit costs according to the 
duration of the event (one day or several days). This distinction according to the duration of 
the  event  results  in  two  different  per  diem  unit  costs.  The  chosen  per  diem  is  then  applied 
equally to all participants. 

The category "events" includes meetings, conferences, training courses. 

Methodological approach and data used 

The starting point for the calculation was a database provided by the JS containing historical 
data of 304 events for 57 projects. Four steps were taken to structure and check the suitability 
of the entries for the unit cost calculation,: 

•  The data were evaluated and structured to identify the number of recurring and single-
day participants and the number of days the events lasted (for multi-day and one-day 
events). 

•  The  data  were  filtered  for  completeness  to  ensure  full  coverage  of  all  event 

organisation costs in the database.  

•  Projects where the nature of the events did not match the events to be covered by the 
SCO (i.e. events for project partners and their teams rather than external events) were 
excluded. 

•  To  ensure  that  only  costs  with  verifiable  evidence  were  included  in  the  calculation, 
projects with approved progress reports but not yet certified costs were excluded from 
the calculation.  

As a result of these steps, 46 projects with certified expenditures between February 2018 and 
July 2020 remained for calculation. Each record in the filtered database provided information 
on the total amount of event costs certified, the number of participants and the average cost 
per participant.  

A calculation was then made to differentiate between the cost per participant of single-day and 
multi-day events. The calculation was carried out with the following steps: 

•  The data were split into two different groups, one for one-day and one for multi-day 

events. 

•  For multi-day events, the eligible gross event costs of each event were summed and 
then divided by the length of the event (in number of days, according to the grouping). 
This gave the value of the per diem costs for each project. 

•  The  per  diem costs were then divided by the number of participants  in each event, 

giving the value of the event cost per day per participant. 

Replicability of this programme specific SCO in other Interreg IPA programmes 

The  approach  used  by  the  2021-2027  Interreg  IPA  Bulgaria-Türkiye  Programme  could  be 
adopted by other Interreg IPA programmes to facilitate the reimbursement of event costs. It 
can  be  beneficial  for  all  programmes  in  terms  of  reducing  administrative  burden  (for 
beneficiaries) and administrative costs (for the programme), reducing errors and irregularities. 
The  distinction  between  the  duration  of  events  (one-day  and  several  days)  allows  a  better 
approximation  of  event  costs  than  a  single  unit  rate.  More  unit  cost  categories  could  be 
differentiated  if  deemed  appropriate  to  reflect  different  costs,  e.g.  for  events  in  different 
countries of the programme. 

Similarly, the Interreg IPA South Adriatic Programme developed unit costs for targeted 
training in the context of small-scale projects, differentiated by country, duration and type 
of training module. In contrast to the SCO practice described above, the South Adriatic 

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Programme decided to base the methodology on Article 53 (3)(c) CPR, i.e. by using and 
adapting SCOs developed in other Union policies.  

The box below outlines the main aspects of the development of unit costs for targeted 
training courses. 

Programme: Interreg IPA South Adriatic 

Type of SCO: unit costs (CPR Art. 53(1)(b) / Art. 53(3)(c)) to cover the cost of targeted training 
courses in small-scale projects  

Methodological approach and data used 

In accordance with Article 53(3)(c) CPR on the use of SCOs applicable to other Union policies, 
the unit cost amounts for training were taken from the Commission Delegated Regulation (EU) 
2021/702  amending  Delegated  Regulation  (EU)  2015/2195  supplementing  Regulation  (EU) 
1304/2013  on  the  ESF,  as  regards  the  definition  of  standard scales  of  unit  costs  and  lump 
sums for the reimbursement of expenditure by the Commission to Member States. 

The  amount  per  trainee  calculated  in  the  Delegated  Regulation  for  Italy  is  differentiated 
according to the length of the module (30, 60 or 100 hours) and type (standard, with additional 
specific support, with meal allowance, with additional specific support and meal allowance), for 
a total of four types. This resulted in 12 unit costs for Italy. 

The amounts proposed in the Commission Delegated Regulation were then adjusted for the 
IPA  countries  by  using  the  training  costs  included  in  the  Marie  Sklodowska  Curie  Action 
(MSCA)  Work  Programme  2021-2022  and  weighing  the  percentages  compared  to  Italy  to 
parameterise  the  amounts.  This  resulted  in  adjusted  amounts  for  Albania  and  Montenegro, 
also resulting in 12 unit costs for each country. 

As the calculation in 2021 was made on the basis of data from the 2014-2020 programming 
period, a two-year indexation was applied to take account of inflation rate and the value was 
rounded to the nearest tenth. 

The identification of training costs by country, duration and type of module thus resulted in a 
total of 36 unit costs. 

Replicability of this programme specific SCO in other Interreg IPA programmes 

As  outlined  for  travel  costs  in  section  4.2,  the  interesting  aspect  of  the  Interreg  IPA  South 
Adriatic approach lies in the decision to use a Commission Delegated Regulation as the basis 
for establishing the unit costs. These amounts can effectively be used as "off-the-shelf" options 
where the nature of the costs to be covered by the SCO can reasonably be considered similar. 
This  reduces  the  time  and  resources  required  by  the  programme  to  calculate  them  from 
scratch.  Such  amounts  may  need  to  be  adapted,  primarily  for  IPA  countries  if  they  are  not 
included  in  the  delegated  act  chosen,  but  also  in  terms  of  indexation  if  the  amounts  in  the 
delegated act have not been calculated recently. 

Table 14 – Benefits and challenges of the use of unit costs to cover costs of 
events and trainings 

Benefits 

•  For such a recurring type of activity, significant reduction in administrative 
to 

for  programmes  and  burden  on  beneficiaries  compared 

costs 
declaring/verifying real costs 

•  Reduction of errors 
•  When  Article  53(3)(c)  CPR  is  applied,  ready-to-use  amounts  mean  that 

programmes do not need to develop methodologies and calculations 

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•  Time and resources to be invested at the beginning of the programming 

Challenges 

period to develop SCO methodology 

•  Need to adjust amounts for indexation if amounts have not been calculated 

recently (for Article 53(3)(c) CPR) 

•  Need to adjust integrate new amounts for IPA countries if not considered 

in the EC decision/delegated act (for Article 53(3)(c) CPR) 

Source: Service provider, 2024 

4.4.2. 

Use of lump sums  

Lump  sums  (CPR  2021/1060,  Article  53(1)(c))  to  cover  the  cost  of  events  and 
trainings 

The cost of events or training courses can also be covered through the use of lump sums, 
if the programme decides to apply an SCO covering the entire cost of an event, instead 
of  developing  unit  costs  per  participant.  In  this  scenario,  the  completion  of  the  event 
under certain conditions (defined by the programme) triggers the reimbursement. 

Events or training are an ideal category of costs to be covered by a lump sum, as they 
should be used where the deliverables/outputs and their values can be easily pre-defined 
as a single unit. Lump sums imply a "binary" approach: if the agreed deliverable/output 
is  delivered  by  the  project,  the  lump  sum  is  paid,  but  if  it  is  not,  or  is  only  partially 
delivered, the lump sum is not paid (i.e. the amount of a lump sum cannot be reduced 
proportionally in case of partial delivery). This can create risks for beneficiaries.  

Within the Interreg IPA programmes, the South Adriatic Programme has developed lump 
sums for events in small-scale projects, namely 

•  Lump sums to cover the costs of workshops, conferences and seminars; 

•  Lump sums to cover the costs of missions and B2B meetings. 

In both cases, the triggering indicator is defined on the basis of the duration of the event, 
a minimum number of participants from a minimum number of programme countries (at 
least two) and the type of event (face-to-face only). These conditions can be met by more 
than  one  event  taking  place  at  different  times  and  locations,  i.e.  two  events  may  be 
combined to reach the minimum number of participants. 

The  differentiation  of  lump  sums  by  country  allows  an  optimal  balance  between 
administrative manageability and approximation to real costs. 

The  box  below  describes  the  specific  case  of  lump  sums  developed  for  workshops, 
conferences and seminars in small-scale projects. 

Programme: Interreg IPA South Adriatic 

Type of SCO: Lump sums (CPR Art. 53(1)(c)) to cover the cost of workshops, conferences 
and seminars in small-scale projects  

Projects are eligible for a lump sum reimbursement of the total amount indicated in the table 
below for the organisation of face-to-face workshops, conferences or seminars lasting one day 
and involving at least 40 participants per event, coming from at least two different countries in 
the programme area. 

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Workshop, 
and conferences 

seminars 

Italy 

Albania 

Montenegro 

EUR 18,600 

EUR 13,400 

EUR 12,600 

The output is achieved when the minimum number of 40 participants is reached. This may be 
achieved as a sum of different participants in more than one event. 

follow-up  of  workshops,  seminars  and 
During  the  preparation,  implementation  and 
conferences, partners must demonstrate that sufficient quality standards are ensured (e.g. use 
of qualified experts, provision of sufficient services for participants, proper documentation of 
the results of the meeting, distribution of a questionnaire on participants' satisfaction, etc.), to 
enable the output to be achieved. 

Methodological approach and data used 

The  lump  sum  has  been  calculated  on  the  basis  of  historical  data  from  measures  funding 
similar interventions (similar in terms of types of eligible costs, activities and beneficiaries) in 
Italy, i.e. mainly data from the 2014-2020 ERDF-ESF Regional Operational Programme of the 
Puglia Region (where the Managing Authority is located). 

Some  cost  items  typical  for  workshops,  seminars  and  conferences  have  been  taken  into 
account, such as 

• 
• 
• 
• 
• 
• 
• 
• 
• 
• 

executive planning of the event (staff costs and external expertise) 
logistical assistance  
speaker fees 
hire and set-up of venues 
hostess service 
interpreter service 
catering service 
operational secretary 
preparation and implementation of the promotional campaign for the event 
follow-up of the event (reporting, evaluation, press releases, etc.) 

Average costs were calculated by type of event and additional variables (location, number of 
participants/operators, duration) using a weighted average. 

Adjustments  were  made  by  applying  country  correction  coefficients  to  take  account  of  the 
different cost of living in the three countries. For the IPA countries, the amounts were adjusted 
by taking into account event cost amounts of the Marie Sklodowska Curie Action (MSCA) Work 
Programme 2021-2022 and by weighting the percentages compared to Italy. 

Finally, an ex-ante indexation based on official sources of inflation data, taking into account 
the Consumer Price Index – All items (CPI) calculated by the International Monetary Fund – 
for all three countries, was applied to adjust the amounts to the 2021-2027 period. 

Replicability of this programme specific SCO in other Interreg IPA programmes 

Given that workshops, seminars, and conferences are usually the core outputs of small-scale 
projects, the approach taken by Interreg IPA South Adriatic could be adopted by other Interreg 
IPA programmes that fund such types of projects (and outputs). However, this approach can 
also be extended to standard projects. 

A  very  similar  SCO  has  been  developed  for  "incoming  missions  and  B2B  meetings", 
which are recurring activities of small-scale projects in the programme, using a similar 
methodology  for  calculating  lump  sums  per  country  and  a  comparable  logic  for  the 
indicators triggering reimbursement. 

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Table 15 – Benefits and challenges of the use of lump sums to cover costs of 
events and trainings 

Benefits 

•  For such a recurring type of activity, significant reduction in administrative 
to 

for  programmes  and  burden  on  beneficiaries  compared 

costs 
declaring/verifying real costs 

•  Reduction of errors 

Challenges 

•  Time and resources to be invested at the beginning of the programming 

period to develop the SCO methodology 

•  Risk if events are partially delivered (no reimbursement) 
•  Need to define specific conditions to consider the output delivered (i.e. to 

Source: Service provider, 2024 

trigger reimbursement) 

4.4.3. 

Choosing the most appropriate SCO for events and 
trainings 

The  following  flowchart  shows  the  possible  alternatives  to  real  costs  for  the 
reimbursement  of  event  and  training  costs,  based  on  the  CPR  and  the  Interreg  IPA 
practices described above. 

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Figure 14: Flowchart guiding the reasoning behind the choice of the most appropriate SCO to cover costs of events and trainings 

Source: Service provider, 2024 

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4.5.  Office and administration costs (indirect costs) 

All  project  development  and  implementation  (not  only  ESIF-funded  projects)  involve 
office and administration costs. These are costs incurred by the beneficiary that cannot 
be clearly attributed to a project. Interreg Regulation 2021/1059, Article 40 defines the 
cost  categories  of  office  and  administrative  costs  eligible  for  Interreg  projects.  These 
include office rental, utilities, office supplies, maintenance, IT and communication costs.12 
In general, these costs are directly related to direct costs, i.e. they tend to be proportional 
to  direct  costs.  Because  of  this  relationship,  the  use  of  simplified  reimbursements  for 
these costs is widespread and they are often calculated as a flat rate for all or part of the 
direct costs.  

The regulation provides for four alternatives for the flat rate calculation of indirect costs. 
They  differ  in  terms  of  the  maximum  flat  rate  percentage  and  the  corresponding 
calculation base (see Figure 15). In the case of the flat rate under CPR 2021/1060, Article 
56(1), the flat rate includes indirect costs  within the  broader category of eligible costs 
other than staff costs.  

All Interreg IPA programmes analysed use at least one flat rate to calculate indirect costs, 
thus  applying  the  three  off-the-shelf  SCOs  within  these  four  alternatives.  All  four 
alternatives are described in detail in the following section. As no programme specific 
SCO  could  be  identified  for  this  cost  category  that  went  beyond  the  off-the-shelf 
provisions  of  the  CPR,  the  following  only  focuses  on  the  differences  between  and 
implications of these alternative SCOs. 

Figure 15: Overview of flat rates for calculating indirect costs 

Source: Service provider, 2024, based on CPR 2021/1060 

12   For the full list of eligible elements, see Regulation 2021/1059, Article 40(1) (European Parliament & European 

Council, 2021). 

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4.5.1. 

Flat rates for indirect costs 

CPR 2021/1060, Article 54(a): Flat rate to cover indirect costs up to 7% of eligible 
direct costs 

While flat rates are widely used to cover indirect costs, the rate of up to 7% is rarely used 
in  the  Interreg  IPA  programmes  analysed.  The  calculation  of  this  rate  requires 
information  on  all  other  eligible  direct  costs.  As  outlined  in  the  Interreg  Regulation 
2021/1059, Articles 40 to 44, this may typically include 

•  direct staff costs 

• 

travel and accommodation costs 

•  costs of external expertise and services  

•  equipment costs 

•  costs for infrastructure and works 

The  rate  of  up  to  7%  suggests  a  limited  impact  on  simplification  and  reduction  of 
administrative costs and burden. However, the actual benefit also depends on the variety 
of other cost categories relevant for typical projects in a programme and the use of other 
SCOs for these other categories. 

At  the  same  time,  flat  rates  for  office  and  administration  costs  (as  for  any  other  cost 
category) may not, by their very nature, always be the best approximation of real costs 
in all circumstances and for all beneficiaries of a programme.  

In the specific case of Interreg IPA programmes, cost structures may differ significantly 
between countries and between EU and non-EU beneficiaries, or even between types of 
beneficiaries. As a consequence, the flat rate applied may cover more than the actual 
share  of  indirect  costs  or  may  be  insufficient  to  cover  these  costs.  To  overcome  this 
inherent risk of any off-the-shelf and uniform flat rate, and depending on the differences 
observed in a programme area, the programmes may consider to the following options 

•  Setting different flat rates per country, e.g. differentiating between EU and IPA 
country  beneficiaries  (or  more  countries 
transnational 
programmes). While continuing to apply rates within the ceiling of the off-the-shelf 
SCO (i.e. up to 7% of eligible direct costs), programmes are advised to estimate 
actual  costs  based  on  historical  or  other  verifiable  data  to  ensure  that  the 
differentiation of flat rates is justified and respects the principles of fairness and 
equity.  

the  case  of 

in 

•  Specify  flat  rates  by  type  of  beneficiary,  e.g.  distinguish  between  public  and 
private  beneficiaries  or  sub-types  thereof.  In  this  case,  the  same  estimation 
considerations apply as in the previous point. 

•  Use a higher flat rate based on a fair, equitable and verifiable calculation, thereby 
developing a programme specific SCO, unless the higher flat rate is calculated 
within the framework of CPR 2021/1060, Article 54(c), i.e. to a maximum of 25% 
of the eligible direct staff costs. 

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When adopting this off-the-shelf SCO to cover indirect costs, the programme should not 
use the phrase "up to 7%" but should decide on one or more exact flat rates to be applied 
by beneficiaries. If more than one exact flat rate is used, it should be specified when or 
to  whom  which  rate  applies.  Formulating  the  flat  rate  as  "up  to  7%"  implies  that 
beneficiaries  have  to decide which flat rate percentage to use (in this  case  within the 
range  up  to  7%)  according  to  their  specific  budget  structure.  This  carries  the  risk  of 
shifting the responsibility for defining the flat rates to the beneficiaries and leads to the 
application of different flat rates depending on the project beneficiary.  

While there is no formal impediment to this practice in the regulations, it poses numerous 
risks for programme authorities and beneficiaries, namely  

•  The transfer of responsibility is contrary to EC guidelines. 

•  The principle of fairness is compromised, especially when more than one flat rate 

used by a programme is formulated as "up to" flat rate. 

•  The degree of simplification may be questioned as such an approach is prone to 

error. 

For a more detailed description of these risks, see the box "A word of caution" in section 
4.1.1. 

Table 16 – Benefits and challenges of the use of Art. 54(a) CPR to cover indirect 
costs 

Benefits 

Challenges 

•  Reduced administrative costs for programmes and burden on beneficiaries 
compared  to  identifying  and  specifying  indirect  costs  attributable  to  the 
operation. 

•  Reduction of errors. 
•  For the off-the-shelf option, there is no need to develop methodologies or 

justify the flat rate chosen. 

•  Greater  differences  in  cost  structures  (e.g.  EU  vs.  IPA  cost  structures, 
between different types  of beneficiaries or for different types of projects) 
leading to a weaker approximation of real indirect costs. 

•  There is a risk of over- and under-compensation depending on the diversity 
of  cost  structures  between  projects.  In  the  case  of  under-compensation, 
there is a risk of low demand (i.e. project proposals), which may affect the 
quality of outputs achieved.  

•  Tangible risks where, within the same off-the-shelf SCO, different flat rates 
are  used  depending  on  the  beneficiary  or  project  budget  structure  (i.e. 
possible lack of fairness), unless different flat rates have been defined and 
are based on verifiable data for different beneficiaries/circumstances. 

Source: Service provider, 2024 

CPR 2021/1060, Article 54(b): Flat rate to cover indirect costs up to 15% of eligible 
direct staff costs 

This off-the-shelf flat rate is most commonly used by Interreg IPA programmes to cover 
indirect costs. As it is based on direct staff costs, this flat rate is clearly linked to a single 
other cost category, without the need to calculate and document other cost categories 
calculating  office  and  administration  costs.  It  can  therefore  be  considered  a  simpler 
method than the one presented above (i.e. up to 7% of eligible direct costs).  

When applying this flat rate in Interreg IPA programmes, three main approaches can be 
distinguished: 

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•  Firstly, staff costs are subject to real costs (e.g. URBACT). In this case there is 
no  link  between  the  use  of  the  flat  rate  calculate  indirect  costs  and  any  other 
SCO.  

•  Secondly,  staff  costs  are  subject  to  another  off-the-shelf  flat  rate,  namely  the 
calculation according to Interreg Regulation 2021/1059, Article 39(3)(c). In this 
case, other direct costs provide the real cost basis for calculating up to 20% of 
staff  costs,  which  is  then  used  as  the  basis  for  calculating  the  15%  of  indirect 
costs. Examples of such approaches are common in Interreg IPA programmes 
and include, for example, the programmes managed by Croatia and Bulgaria and 
the Danube Programme. In the case of this combination of off-the-shelf SCOs, 
the occurrence of ineligible direct other costs (compared to the planned budget) 
has a double impact, first on staff costs and then, consequently, on indirect costs.  

•  Thirdly, staff costs are calculated using a unit cost, which may be either one of 
the  off-the-shelf  unit  costs  (e.g.  ADRION)  or  a  programme  specific  SCO  (e.g. 
South Adriatic).  

The calculation suggests simplifications as it refers to only one other cost category, which 
may be less prone to risk. At the same time, the share of indirect costs in total costs may 
be higher or lower than when applying the flat rate of up to 7%, depending on the cost 
structure  of  the  projects.  In  other  words,  projects  with  a  high  share  of  external  and 
investment costs can claim a comparatively higher amount of indirect costs under the 
Article  54(a)  CPR  flat  rate,  whereas  projects  mainly  implementing  exchange  and 
cooperation activities with a high share of direct staff costs (other than external service 
costs) can claim a higher amount of indirect costs under the Article 54(b) CPR flat rate. 

At  the  same  time,  like  the  off-the-shelf  flat  rate  for  office  and  administration  costs 
introduced earlier (as well as for any other cost category), this flat rate, by its very nature, 
may not always be the best approximation of real costs in all circumstances and for all 
beneficiaries of a programme. This is illustrated not least by the consideration of different 
budget structures described above  when they occur in the same programme. In such 
cases, programmes may consider alternatives similar to those described for the flat rate 
of up to 7% under Article 54(a) CPR, or even apply both off-the-shelf flat rates to different 
types of projects. For the sake of transparency, these types should then be specified in 
the programme documents. 

Beyond  these  differences,  all  the  other  risks  and  considerations  described  for  the  flat 
rate of up to 7% according to Article 54(a) CPR apply equally to the flat rate of up to 15% 
under Article 54(b) CPR. 

Table 17 – Benefits and challenges of the use of Art. 54(b) CPR to cover indirect 
costs 

Benefits 

Challenges 

The benefits and challenges are generally the same as for 
the previous flat rate (i.e. Art.54(a) CPR). Some differences 
are due to the possible combination with other SCOs in 
relation to the flat rate covering indirect costs. 

Source: Service provider, 2024 

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CPR 2021/1060, Article 54(c): Flat rate to cover indirect costs up to 25% of eligible 
direct costs 

This flat rate has not been used by any of the Interreg IPA programmes analysed. It has 
the same calculation base as the flat rate of up to 7%, namely eligible direct costs. Thus, 
the same benefits, risks and challenges apply depending on the exact formulation of the 
flat rate and the different ways of calculating the underlying costs. The difference lies in 
the requirements for applying the higher flat rate of up to 25% under Article 54(c) CPR. 

While neither of the two previous off-the-shelf flat rates requires any calculation by the 
programme authority, Article 54(c) CPR can only be applied if 

• 

the  flat  rate  (between  7%  and  25%  of  eligible  direct  costs)  is  based  on  a  fair, 
equitable and verifiable calculation method; or 

•  such a calculation has already been made in the 2014-2020 programming period. 
The use of this previously calculated flat rate can then be continued for similar 
operations.  

This  flat  rate  therefore  requires  some  calculation  effort  on  the  part  of  the  programme 
authority, similar to that required for programme specific SCOs. However, this effort may 
be  somewhat  less  as  the  programme  authority  can  focus  on  data  collection  and 
calculation rather than developing its own detailed methodology. 

Table 18 – Benefits and challenges of the use of Art. 54(c) CPR to cover indirect 
costs 

Benefits 

Challenges 

•  Reduced administrative costs for programmes and burden on beneficiaries 
compared  to  identifying  and  specifying  indirect  costs  attributable  to  the 
operation. 

•  Reduction of errors. 
• 

If the programme has already made a calculation for the 2014-2020 period, 
the same flat rate can be used again without further calculation effort. 
•  Compared  to  a  programme  specific  SCO,  the  effort  required  by  the  MA 

tends to be lower, while the benefit to beneficiaries increases. 

•  Greater  differences  in  cost  structures  (e.g.  EU  vs.  IPA  cost  structures, 
between different types  of beneficiaries or for different types of projects) 
may require more calculation effort to achieve a good approximation of the 
real  indirect  costs  for  different  beneficiaries/projects.  Otherwise,  a  single 
flat rate will lead to a weaker approximation. 
If different flat rates have been identified in the calculation, it is necessary 
to specify clearly and transparently the circumstances for their application 
(e.g. which project types).  

• 

Source: Service provider, 2024 

4.5.2. 

Flat rate for costs including indirect costs 

CPR 2021/1060, Article 56(1): Flat rate to cover eligible costs other than direct staff 
costs of up to 40% of eligible direct staff costs 

Unlike the SCOs described in the previous sub-section, this flat rate does not explicitly 
and solely cover office and administrative costs but includes these costs in the broader 
category of "eligible costs other than direct staff costs". Thus, depending on the activities 
of  a  project,  it  may  include,  in  addition  to  office  and  administration  costs,  travel  and 
accommodation, external expertise and services, equipment and infrastructure costs.  

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This last off-the-shelf SCO covering indirect costs is used by a minority of Interreg IPA 
programmes (e.g. ADRION, South Adriatic). They usually use this option in addition to 
the  flat  rate  of  up  to  15%  of  eligible  direct  staff  costs.  Programmes  that  apply  both 
alternatives offer project applicants the choice to use those combinations of SCOs that 
better suit their budget structure, for example: 

•  For projects or project partners with a significant proportion of costs other than 
staff costs, e.g. where there is extensive use of external services, including a lot 
of travel or where investments are planned, the flat rate of up to 40% would not 
be equitable and fair, but the flat rate of up to 15% would be more suitable to 
approximate real costs. 

•  On  the  other  hand,  there  are  also  many  Interreg  and  Interreg  IPA  projects  in 
which staff costs represent the majority of all costs (for all or some partners) and 
for  which  the  application  of  a  flat  rate  of  up  to  40%  of  direct  staff  costs  may 
represent  a  considerable  simplification  and  reasonable  approximation  of  other 
real costs. 

Most programmes that offer both options do not differentiate between types of projects 
but leave the choice to project applicants. By allowing project partners to choose different 
combinations of SCO, the use of these alternatives is also well suited to address large 
differences  in  cost  structures  between  partners  within  a  project,  resulting  from  the 
different roles, responsibilities and expertise of the partners.  

The case of the Hungary-Serbia Interreg IPA Programme deviates slightly from this rule 
by offering the flat rate option of up to 40% only to small-scale project partners, while the 
use of SCOs is fixed for all partners in all other projects.  

The use of  the  flat rate of  up  to  40% brings a significant simplification. It reduces the 
administrative burden and reduces errors compared to the real costs, without requiring 
the development of SCO methodologies and calculations by the programme authorities. 
Simplification  for  beneficiaries  can  be  maximised  if  the  programme  uses  a  unit  cost 
approach to calculate the underlying direct staff costs, which can be an off-the-shelf or 
programme specific unit cost. For programmes using a real cost approach to calculate 
the underlying eligible direct staff costs, the simplification effect is correspondingly lower 
(see the impact of real staff costs in section 4.1). 

At the same time, off-the-shelf flat rates, by their very nature,  cannot always offer the 
best solution in terms of approximating real costs. Therefore, the limitations, challenges 
and  risks  mentioned  above  also  apply  to  a  large  extent  to  this  off-the-shelf  flat  rate. 
However, the complementary use of this flat rate by several Interreg IPA programmes 
illustrates an additional way of adapting to different budget structures.  

Table 19 – Benefits and challenges of the use of Art. 56(1) CPR to eligible costs 
other than direct staff costs 

Benefits 

•  Significant reduction in administrative costs for programmes and burden on 
beneficiaries  compared  to  identifying  and  specifying  different  cost 
categories 
forms  of 
through  actual  costs  or  combining  multiple 
reimbursement. 
•  Reduction of errors. 
•  Compared  to  a  programme  specific  SCO,  the  effort  required  by  the  MA 

• 

tends to be lower, while the benefit to beneficiaries increases. 
It  may  be  best  used  as  an  alternative  budget  option  to  address  specific 
project or partner budgets with a high proportion of direct staff costs. 

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Challenges 

•  Using  only  this  SCO  to  calculate,  inter  alia,  indirect  costs  may  be  too 
simplistic as budget structures may vary too much between projects and 
project partners to ensure a sufficient approximation to real costs. 

•  Programmes  may  need  to  identify/define  additional  SCOs  to  adequately 

reflect different budget structures. 

•  Where different flat rates have been calculated, the circumstances for their 
application (e.g. which project types) need to be clearly and transparently 
defined.  

Source: Service provider, 2024 

4.5.3. 

Choosing the most appropriate SCO for office and 
administration costs 

Since  flat  rates  seem  to  be  the  only  adequate  SCO  solution  to  cover  office  and 
administration  costs,  the  following  figure  focuses  on  the  choice  between  the  four 
alternatives  discussed.  This  figure  is  intended  to  help  to  decide  which  option  is  best 
suited to the programme's typical project and partner budgets. Due to the complexity of 
the alternatives and the likelihood that an off-the-shelf alternative will suffice without a 
fair, equitable and verifiable calculation, the figure does not include an estimate of the 
resources required to perform such a calculation.

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Figure 16: Flowchart guiding the reasoning behind the choice of the most appropriate SCO to cover office and administration costs 

Source: Service provider, 2024 

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4.6.  SCOs for small-scale projects 

According to Article 53(2) CPR, small-scale projects (i.e. operations not exceeding EUR 
200,000) must be reimbursed through SCOs rather than real costs, except for operations 
where the support constitutes State aid. Another exception is the use of real costs as the 
basis for calculating flat rate financing. SCOs are therefore central for all Interreg IPA 
programmes implementing small-scale projects.  

All previous types of cost category specific SCOs can in principle be developed for any 
type  of  project,  whether  regular  or  small-scale  projects,  or  following  some  other 
differentiation of project types, or using the same SCO for all projects in an Interreg IPA 
programme. In addition to developing SCOs for a specific cost category for all or certain 
types  of  projects,  programmes  may  also  develop  SCOs  for  small-scale  projects  that 
cover all cost categories of these projects. The following sub-sections illustrate such an 
approach using the example of the 2021-2027 Interreg Slovenia-Hungary Programme, 
which complements the cost-specific SCO approaches of the previous sections.  

The 2021-2027 Interreg Slovenia-Hungary Programme has developed three SCOs for 
small-scale projects by distinguishing three types of such projects. Each type of small-
scale project is characterised by certain cooperation features and objectives:  

•  Cooperation projects (based on unit costs) implement trainings, workshops, 
conferences  or  similar  events  for  a  limited  number  of  people.  These  projects 
enable or improve cooperation between institutions and the target groups of the 
programme. 

•  Mutual trust-building projects (based on lump sums) organise one-day public 
events  such  as  concerts,  markets  or  fairs  attended  by  around  200  people,  to 
increase trust among the population in the cross-border region by offering open 
events. 

•  Employee exchange projects (based on lump sums) support cooperation in 
the  field  of  education  and  the  labour  market  through  the  secondment  of  an 
employee  to  the  neighbouring  country  or  through  the  joint  employment  of  two 
people in a project. 

In this way, the 2021-2027 Interreg Slovenia-Hungary Programme covers all small-scale 
projects  or  people-to-people  actions.  This  approach  is  thus  based  on  the  prior 
identification  of  the  types  of  people-to-people  actions  to  be  supported  during  the 
programming period and can also be used as a means of steering the types of small-
scale  projects  supported.  In  contrast  to  the  other  SCO  examples  described  in  the 
previous  sections,  the  2021-2027  Interreg  Slovenia-Hungary  Programme  uses  these 
SCOs not only for the reimbursement of the beneficiaries (i.e. at the lower level) but also 
at the upper level for the reimbursement between  the European Commission  and the 
Programme according to Article 94 CPR. Consequently, the development of these three 
SCOs for small-scale projects not only included the more or less formal involvement of 
the programme's AA but also required an assessment of the proposed methodology and 
calculation by the AA. 

The first two of these three SCOs are illustrated below to show the possibilities offered 
by programme specific unit costs and lump sums to simplify the reimbursement of small-
scale project in line with Article 53(2) CPR and without having to develop SCOs for the 
different types of costs incurred in small-scale projects. The two examples also illustrate 

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how  the  cost  categories  can  be  calculated  and  combined  depending  on  the  type  of 
people-to-people action. 

While  off-the-shelf  SCOs  are  an  option  for  basically  all  cost  categories  typically 
encountered in small-scale projects, the following examples are exclusively programme 
specific SCOs.  

4.6.1. 

Unit costs for small-scale projects 

Unit  costs  (CPR  2021/1060,  Article  53(1)(b))  to  cover  small-scale  cooperation 
activities 

As  mentioned  above,  unit  costs  can  be  used  for  any  type  of  project,  activity  or  cost 
category that can be easily identified and defined: 

• 

the expected quantities of a deliverable, output, activity (in this case  costs per 
participant); and 

•  unit cost for these quantities. 

This programme specific SCO aims at reducing the administrative costs (for programme) 
and the burden (for the beneficiaries) of financial reporting and verification for small-scale 
projects and at the same time fulfils the regulatory requirement to use SCO for projects 
below EUR 200,000 (Art. 53(2), EU Reg. 2021/1060 CPR).  The use of a unit cost for 
small-scale cooperation activities also facilitates the implementation of different types of 
events with different numbers of participants.  

Typical costs incurred in such cooperation projects are 

•  preparation of the project proposal including its coordination; 

•  staff; 

•  administration;  

• 

• 

travel and accommodation; 

translation and interpretation, 

•  venue, including rooms and equipment; 

•  catering services;  

•  moderation of the event. 

The  calculation  of  a  unit  cost  per  participant  is  based  on  several  assumptions  and 
calculations  of  the  different  types  of  underlying  costs.  The  methodology  uses  a 
combination  of  different  calculations  including  off-the-shelf  SCOs,  to  define  the 
programme  specific  unit  cost  per  participant.  The  box  below  illustrates  the  specific 
example of the Interreg Slovenia-Hungary Programme.  

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Programme: Interreg Slovenia-Hungary 

Type of SCO: unit cost to cover all costs of people-to-people actions in "cooperation projects" 
(CPR Art. 53(1)(b)) 

Methodological approach and data used 

The unit cost has been established using a fair, equitable and verifiable calculation method in 
accordance with Article 53(3)(a) CPR. It used the programme's historical data from measures 
financing  similar  interventions  (in  terms  of  types  of  eligible  costs  and  activities)  from  2014-
2020, complemented with statistical data from the Slovenian and Hungarian statistical offices. 
The latter served as an estimate of the average total gross salaries as of August 2021 and 
thus as a basis for the estimation of staff costs. 

The above types of costs typically incurred in such projects were grouped into four types of 
costs, for which different steps were taken to calculate the total unit cost per participant: 

(1) The calculation of preparation costs is based on the assumption that two people (from two 
partners) have two full-day meetings (a total of four working days of average salary) and that 
the preparation also involves some administrative costs (i.e. 15% of staff costs according to 
Article 54(b) CPR) and short distance travel in the cross-border region.  

(2)  Translation  costs  have  been  calculated  by  multiplying  the  average  hourly  rate  for 
interpretation by four hours as a minimum event duration. The total calculation includes two 
events of at least four hours, i.e. twice the event specific translation lump sum. 

(3) Participation costs refer to the categories of moderation, venue and catering. To obtain total 
participation  costs,  a  unit  cost  per  participant  was  calculated  and  then  multiplied  by  the 
assumed number of participants in cooperation projects.  

As  cooperation  projects  can  include  different  types  of  events  such  as  workshops,  training 
sessions or conferences, average and median costs per participant were calculated for each 
type of event:  

𝑼𝒏𝒊𝒕 𝒄𝒐𝒔𝒕 𝒑𝒆𝒓 𝒑𝒂𝒓𝒕𝒊𝒄𝒊𝒑𝒂𝒏𝒕/𝒅𝒂𝒚 =

∑𝒏𝒐.𝟏𝒅𝒂𝒚 𝒆𝒗𝒆𝒏𝒕𝒔 𝒕𝒚𝒑𝒆 𝒙∗(𝒎𝒆𝒂𝒏 𝒕𝒚𝒑𝒆 𝒙+ ∅ 𝒕𝒚𝒑𝒆 𝒙)/𝟐

𝒕𝒐𝒕𝒂𝒍 𝒏𝒐 𝒐𝒇 𝟏𝒅𝒂𝒚 𝒆𝒗𝒆𝒏𝒕𝒔

The total cost of participation was calculated on the basis of two events with 25 participants 
each: 

𝑻𝒐𝒕𝒂𝒍 𝒑𝒂𝒓𝒕𝒊𝒄𝒊𝒑𝒂𝒕𝒊𝒐𝒏 𝒄𝒐𝒔𝒕𝒔

= 𝒖𝒏𝒊𝒕 𝒄𝒐𝒔𝒕 𝒑𝒆𝒓 𝒑𝒂𝒓𝒕𝒊𝒄𝒊𝒑𝒂𝒏𝒕 𝒑𝒆𝒓 𝒅𝒂𝒚 ∗ 𝟐𝟓 𝒑𝒂𝒓𝒕𝒊𝒄𝒊𝒑𝒂𝒏𝒕𝒔 ∗ 𝟐 𝒆𝒗𝒆𝒏𝒕𝒔 

(4) Other costs include the remaining cost categories, in particular staff, administration, travel 
and accommodation. On the basis of a review of actual cost structures of projects from the 
previous programming period (i.e. historical data) and other experience in organising events 
(expert knowledge), it has been assumed that these costs account for approximately 40% of 
the total project budget. Consequently, the total project budget size was calculated in relation 
to the sum of the first three cost categories: 

𝑻𝒐𝒕𝒂𝒍 𝒑𝒓𝒐𝒋𝒆𝒄𝒕 𝒃𝒖𝒅𝒈𝒆𝒕 = (𝒑𝒓𝒆𝒑𝒂𝒓𝒂𝒕𝒊𝒐𝒏 𝒄𝒐𝒔𝒕𝒔 + 𝒕𝒓𝒂𝒏𝒔𝒍𝒂𝒕𝒊𝒐𝒏 𝒄𝒐𝒔𝒕𝒔 +
𝒕𝒐𝒕𝒂𝒍 𝒑𝒂𝒓𝒕𝒊𝒄𝒊𝒑𝒂𝒕𝒊𝒐𝒏 𝒄𝒐𝒔𝒕𝒔)/𝟎. 𝟔  

Specifically, for these other costs it was assumed that  

• 

• 

each  partner  needs  about  ten  full-time  working  days  to  prepare  and  implement  the 
event; 
a proportion of 15% of staff costs is required to cover administration costs; 

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• 

travel costs of around EUR 100 per partner to attend the event in the programme area 
(based on historical data).  

To obtain the unit cost per participant per day, the total project budget was then divided by the 
assumed number of events (i.e. two) and the number of participants in each event (i.e. 25).  

Replicability of this programme specific SCO by Interreg IPA programmes 

Considering  that  people-to-people  actions  are  a  typical  activity  of  small-scale  Interreg 
projects  and  that  trainings,  workshops  and  conferences  are  a  typical  output  of  these 
activities, the approach used in the 2021-2027 Interreg Slovenia-Hungary Programme 
could also be adopted by Interreg IPA programmes funding such types of projects (and 
outputs).  This  approach  would  require  the  possibility  of  identifying  standard  types  of 
small-scale  projects  for  which  specific  SCOs  can  be  developed.  In  turn,  such  a 
categorisation of small-scale projects is a means to focus on those types of small-scale 
projects that are considered most important by the programme authorities to contribute 
to the intervention logic of the programme.  

In  the  case  of  significant  cost  differences  between  neighbouring  countries,  unit  costs 
could be calculated separately for each partner country.  

The use of such SCOs is beneficial in terms  of  the  reducing  administrative costs and 
burden  (for  the  programme  and  beneficiaries)  associated  with  the  implementation  of 
small-scale projects, reducing errors and thus increasing the time available for controllers 
to  carry  out  on-the-spot  checks.  As  the  use  of  SCOs  is  compulsory  for  small-scale 
projects under EUR 200,000, the comparison with other SCO options for such projects 
is particularly interesting (see box on benefits and challenges below).  

In terms of data requirements to determine the unit cost, the programme should have 
certified historical data on the costs of similar projects, including all activities typical for 
the  preparation  and  organisation  of  such  events.  This  is  best  done  at  the  level  of 
individual invoices and only certified and complete datasets should be considered. It is 
also essential to exclude unreliable data. If not available in the own programme, these 
data may be collected from other (close and comparable) Interreg IPA programmes, if 
their  data  and  events  sufficiently  reflect  the  situation  in  the  own  programme  area. 
Coverage of several years is advantageous, also to assess the potential need to adjust 
the calculated unit costs over time. 

In  terms  of  the  resources  required,  the  work  to  develop  such  an  SCO  should,  as  a 
guideline, involve two Joint Secretariat officers (and/or external experts) to cover the data 
sources from both sides of the border. To support an accurate and logical calculation, 
other JS officers should be involved in exchanges and controls. When implementing the 
SCO under Article 94 CPR, the SCO is to be established in the cooperation programme 
and assessed and confirmed by the AA. The development of the methodology will take 
approximately 12 months, most of which will be spent on collecting historical data and 
structuring it by type of event. This calculation includes the parallel development of SCOs 
for different types of small-scale projects.  

Table 20 – Benefits and challenges of the development of unit costs to cover all 
costs for small-scale cooperation costs 

Benefits 

•  The unit cost significantly reduces the administrative costs associated with 
verifications, reimbursement times and the number of errors, and allows 
time  to  be  freed  up  for  on-the-spot  checks,  which  in  turn  helps  to  avoid 
possible perverse incentives. 

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• 

It reduces the administrative burden on beneficiaries more than any other 
combination  of  reimbursements  by  focusing  on  the  delivery  of  outputs. 
Beneficiaries  only  have  to  provide  very  limited  evidence  of  the  project 
implementation (i.e. the events), without having to submit a large number 
of supporting documents on costs and contracts. 

•  Greater  transparency  and  predictability  of  project  costs,  which  helps 
beneficiaries  to  plan  their  cooperation  events  in  line  with  the  available 
budget per participant, thus reducing the administrative burden. 

•  Beneficiaries will only have to deal with one unit cost compared to applying 

several SCOs in a small-scale project,.  

•  The first step is to identify typical project types based on historical data and 
types  of  SCOs,  data  needs  and 

the  appropriate 

identify 

then 
methodologies. 

Challenges 

•  Adequate historical data must be structured and reviewed. Only certified 
and complete datasets at individual invoice level should be included, and 
these should cover several years to contribute to a robust database.  

•  For 

implementation  as  upper-level  SCO,  early 

involvement  and 

coordination with the AA is recommended.  

Source: Service provider, 2024 

4.6.2. 

Lump sum for small-scale projects 

Lump  sum  (CPR  2021/1060,  Article  53(1)(c))  to  cover  small-scale  mutual  trust 
building activities 

As  mentioned  above,  lump  sums  can  be  used  whenever  it  is  easy  to  pre-define  the 
deliverable or output as a single unit. This is the case for public events such as concerts, 
markets or fairs, where the offer of the event is more important than the exact number of 
participants.  

Similarly  to  the  previous  unit  cost,  this  programme  specific  SCO  aims  to  reduce  the 
administrative  costs  (for  the  programme)  and  the  burden  (for  the  beneficiaries)  of 
financial reporting and verification for small-scale projects, while fulfilling the regulatory 
requirement  to  use  SCOs  for  projects  under  EUR  200,000  (Art.  53(2),  EU  Reg. 
2021/1060  CPR).  The  use  of  a  lump  sum  for  small-scale  trust-building  activities  also 
facilitates the implementation of different types of public events.  

Typical costs incurred in such cooperation projects are 

•  preparation of the project application including its coordination; 

•  staff; 

•  administration;  

• 

• 

travel and accommodation; 

translation and interpretation; 

•  venue and equipment, including rooms (if relevant); 

•  moderation of the event. 

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The  calculation  of  the  total  project  lump  sum  is  based  on  several  assumptions  and 
calculations  of  the  different  types  of  underlying  costs.  The  methodology  uses  a 
combination  of  different  calculations  and,  inter  alia,  off-the-shelf  SCOs  to  define  the 
programme  specific  lump  sum  covering  all  costs  of  small-scale  mutual  trust  building 
projects.  The  box  below  illustrates  a  specific  example  from  the  Interreg  Slovenia-
Hungary Programme.  

Programme: Interreg Slovenia-Hungary 

Type of SCO: lump sum to cover all costs of people-to-people actions in "mutual trust building 
projects" (CPR Art. 53(1)(b)) 

Methodological approach and data used 

This  SCO  has  been  developed  back-to-back  with  the  unit  costs  described  in  the 
previous sub-section, as well as with the third SCO for small-scale projects (lump sum 
for  exchange  activities).  Consequently,  the  differences  lie  in  the  details  of  the 
calculation rather than in the main data sources and methodology. 

The unit cost has been established using a fair, equitable and verifiable calculation method in 
accordance with Article 53(3)(a) CPR. It used the programme's historical data from measures 
financing  similar  interventions  (in  terms  of  types  of  eligible  costs  and  activities)  from  2014-
2020, complemented by statistical data from the Slovenian and Hungarian statistical offices. 
The latter served as an estimate of the average total gross salaries as of August 2021 and 
thus as a basis for the estimation of staff costs. 

The above types of costs typically incurred in such projects have been grouped into three types 
of costs, for which different steps have been taken to calculate the total unit cost per participant: 

(1) The calculation of preparation costs is based on the same assumption as for small-scale 
cooperation projects (see previous box). I.e. two people (from two partners) have two full-day 
meetings, which implies some administrative costs and short distance travelling in the cross-
border region.  

(2) Based on the calculation of unit costs per participant per day, a lump sum for event costs 
was calculated. The unit cost per participant per day was obtained by analysing the historical 
event  costs  of  all  the  different  types  of  one-day  events  that  took  place  in  the  previous 
programming period. Consequently, the same calculation of mean and average  values was 
made as described above:  

𝑼𝒏𝒊𝒕 𝒄𝒐𝒔𝒕 𝒑𝒆𝒓 𝒑𝒂𝒓𝒕𝒊𝒄𝒊𝒑𝒂𝒏𝒕/𝒅𝒂𝒚 =

∑𝒏𝒐.𝟏𝒅𝒂𝒚 𝒆𝒗𝒆𝒏𝒕𝒔 𝒕𝒚𝒑𝒆 𝒙∗(𝒎𝒆𝒂𝒏 𝒕𝒚𝒑𝒆 𝒙+ ∅ 𝒕𝒚𝒑𝒆 𝒙)/𝟐

𝒕𝒐𝒕𝒂𝒍 𝒏𝒐 𝒐𝒇 𝟏𝒅𝒂𝒚 𝒆𝒗𝒆𝒏𝒕𝒔

The  lump  sum  for  event  costs  has  been  calculated  on  the  assumption  that  200  people  will 
attend the event:  

𝑬𝒗𝒆𝒏𝒕 𝒄𝒐𝒔𝒕𝒔 𝒍𝒖𝒎𝒑 𝒔𝒖𝒎 = 𝒖𝒏𝒊𝒕 𝒄𝒐𝒔𝒕 𝒑𝒆𝒓 𝒑𝒂𝒓𝒕𝒊𝒄𝒊𝒑𝒂𝒏𝒕 𝒑𝒆𝒓 𝒅𝒂𝒚 ∗ 𝟐𝟎𝟎 𝒑𝒂𝒓𝒕𝒊𝒄𝒊𝒑𝒂𝒏𝒕𝒔  

As each project must organise at least two open events, i.e. one per participating country, this 
lump sum for event costs has been included twice in the calculation of the total lump sum. 

(3) Other costs include the remaining cost categories, in particular staff, administration, travel 
and  accommodation,  translation  and  external  expert  costs.  On  the  basis  of  a  review  of  the 
actual cost structures of projects from the previous programming period and other experience 
in organising events  (expert knowledge), it  has been  assumed that these costs account for 
approximately 40% of the total project budget for this type of project. Consequently, the total 
project budget was calculated in relation to the first two cost categories: 

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𝑻𝒐𝒕𝒂𝒍 𝒑𝒓𝒐𝒋𝒆𝒄𝒕 𝒃𝒖𝒅𝒈𝒆𝒕 = (𝒑𝒓𝒆𝒑𝒂𝒓𝒂𝒕𝒊𝒐𝒏 𝒄𝒐𝒔𝒕𝒔 + 𝒆𝒗𝒆𝒏𝒕 𝒄𝒐𝒔𝒕𝒔 ∗ 𝟐)/𝟎. 𝟔 

Specifically, the following assumptions were made for these other costs 

• 
• 

• 
• 

translation costs for a four-hour event; 
each  partner  needs  about  ten  full-time  working  days  to  prepare  and  implement  the 
event; 
a proportion of 15% of staff costs to cover administration costs; 
other costs of different categories, depending on the specific project, such as travel 
and external services (e.g. event providers, suppliers, photographers, security, etc.).  

In summary, the comparison between the above unit costs for small-scale cooperation 
projects and the lump sum for small-scale mutual trust-building projects shows that they 
are largely based on the same type of data, but with a reversed calculation logic: Instead 
of calculating the cost per participant from an overall budget, the lump sum starts from 
an  average  cost  per  participant  and  then  calculates  the  overall  budget.  The  rationale 
behind these two logics lies in the purpose and countability of deliverables: 

• 

• 

In  the  case  of  unit  costs  for  cooperation  projects,  the  exact  number  of 
participants  counts,  as  the  activities  aim  to  strengthen  cooperation  between 
institutions or other target groups in the cross-border region.  

In the case of the lump sum for mutual trust-building events open to the public, 
the exact number of participants is not decisive. The main objective is to develop 
events where citizens or groups of citizens come together, meet and exchange. 
This is not linked to specific institutional cooperation.  

Replicability of this programme specific SCO by Interreg IPA programmes 

As  mentioned  above,  people-to-people  actions  are  a  typical  activity  of  small-scale 
Interreg  projects.  Training,  workshops  and  conferences  are  a  typical  output  of  these 
activities.  Therefore,  the  approach  used  by  the  2021-2027  Interreg  Slovenia-Hungary 
Programme could also be adopted by Interreg IPA programmes funding such types of 
projects (and outputs). The approach can only be applied if the programme can identify 
standard types of small-scale projects for which specific SCOs can be developed. In turn, 
such a categorisation of small-scale projects is a means to focus on those types of small-
scale  projects  that  are  considered  most  important  by  the  programme  authorities  to 
contribute to the intervention logic of the programme. 

Where  there  are  significant  differences  in  costs  between  neighbouring  countries, 
programmes  can  decide  whether  to  calculate  an  average  lump  sum  and  leave  the 
distribution to the project partners, or to calculate separate lump sums for each side of 
the border.  

Similarly to the unit costs mentioned above, the use of such an SCO is beneficial in terms 
of  reducing  administrative  costs  and  burden  (for  the  programme  and  beneficiaries) 
associated  with  the  implementation  of  small-scale  projects,  reducing  errors  and  thus 
increasing the time available for controllers to carry out on-the-spot checks. As the use 
of SCOs is compulsory for small-scale projects under EUR 200,000, the comparison with 
other SCO options for such projects is particularly interesting (see the box on benefits 
and challenges at the end of sub-section 4.6.1).  

With  regard  to  the  data  requirements  for  determining  the  lump  sum,  the  programme 
should  have  certified  historical  data  at  the  level  of  individual  invoices  on  the  costs  of 
similar projects, including all activities typical for the preparation and organisation of such 

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events. It is also essential to exclude unreliable and incomplete data as well as outliers. 
If not available in the own programme, these data can be collected from other (nearby 
and comparable) Interreg IPA programmes, if their data and events sufficiently reflect 
the situation in the own programme area. Coverage of several years is advantageous to 
also assess the potential need to adjust the calculated lump sum over time. 

The development of such an SCO should require, as an indication, two Joint Secretariat 
officers (and/or external experts) to cover the data sources from the different sides of the 
border.  To  support  an  accurate  and  logical  calculation,  other  JS  officers  should  be 
involved in exchanges and controls. When implementing the SCO under Article 94 CPR, 
the SCO is to be established in the cooperation programme and assessed and confirmed 
by the AA. The development of the methodology will take approximately 12 months, most 
of which will be spent on collecting historical data and structuring it by type of event. This 
calculation includes the parallel development of SCOs for different types of small-scale 
projects.  

Table 21 – Benefits and challenges of the development of lump sums to cover 
project closure costs 

Benefits 

Challenges 

Source: Service provider, 2024 

The benefits and challenges are the same as for the SCO 
unit costs for small-scale projects. 

4.6.3. 

Choosing the most appropriate SCOs for small-scale 
projects 

An  SCO  covering  all  types  of  costs  of  small-scale  projects  always  requires  the 
development of a programme specific SCO.  Therefore, the following figure shows the 
corresponding  access  points  for  programme  specific  SCOs  covering  all  small-scale 
project  costs  compared  to  approaches  where  small-scale  projects  are  reimbursed 
through cost-specific SCOs. 

In any case, all projects subject to Article 53(2) CPR  (i.e. small-scale projects 
with  total  costs  not  exceeding  EUR  200,000)  must  be  fully  reimbursed  by 
SCOs and may only use real costs if they apply flat rate financing. In this 
case, real costs are eligible for the cost categories, on which flat rate financing is 
based.  

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Figure 17: Flowchart guiding the reasoning behind the choice of the most appropriate SCO to reimburse small-scale projects 

Source: Service provider, 2024 

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5.  Conclusions and recommendations  

The analysis of individual SCO practices in the 2021-2027 Interreg IPA programmes and 
their  cross-analysis  allows  further  conclusions  beyond  those  highlighted  above  for 
individual  cost  categories.  Some  of  the  following  conclusions  are  also  based  on  the 
analysis  of  individual  SCO  practices  not  presented  in  this  report,  but  in  separate 
documents. 

Before going into more detail on individual conclusions and recommendations, it is worth 
noting the main target groups of this report: 

•  The analysis may be best suited to inspire other cooperation programmes, not 
least  future  Interreg  IPA  programmes  currently  under  the  IPA-IPA  regime.  For 
these programmes, and for further implementation of SCOs in currently existing 
Interreg  IPA  programmes,  the  individual  experience  and  the  cross-cutting 
analysis may be most inspiring.  

•  Other  authorities  in  the  candidate  countries  may  also  find  inspiration. 
However,  as  a  note  of  caution,  they  are  not  advised  to  apply  the  findings  to 
mainstream  programmes.  For  them,  the  inspiration  is  more  limited  to  the 
understanding of how SCOs can be used, what methodologies are available and 
what  needs  to  be  considered  more  generally.  Due  to  the  different  nature  of 
activities and outputs in cooperation and mainstream programmes, the individual 
practices are usually not appropriate for mainstream programmes. 

The  analysis  of  different  types  of  SCOs  and  for  different  cost  categories  has  already 
highlighted the individual benefits of using SCOs. In general, the use of SCOs affects 
the working routines of the programmes. In particular, for programme specific SCOs, 
it  implies  an  up-front  workload,  while  reducing  the  workload  during  programme 
implementation.  This  increase  in  efficiency  presupposes,  that  the  resources  freed  up 
during  implementation  can  be  effectively  used  for  on-the-spot  checks  to  confirm  the 
correct  application  of  the  SCOs,  i.e.  without  the  need  for  undue  corrections  and 
adjustments.  

The use of SCOs always implies an approximation of real costs. The aim is to achieve 
the  best  possible  approximation.  However,  this  also  means  that  over-  and  under-
compensation are inherent in the system. But they should be balanced overall between 
cost categories, projects, beneficiaries etc. In other words, SCOs are an important and 
appropriate  means  of  achieving  simplification,  even  if  they  take  time  to  prepare.  In 
addition  to  these  general  benefits  and  the  specific  benefits  mentioned  above,  SCOs 
contribute to other positive effects: 

•  SCOs  help  reduce  errors  and  miscalculations.  Through  automated 
calculations, e.g. of flat rates, lump sums or the multiplier for a unit cost, the risks 
of miscalculated budgets are minimised. This is an appropriate means of helping 
programmes  to  achieve  an  overall  error  rate  of  less  than  2%  to  apply  the 
enhanced proportionality arrangements (Article 84, CPR).  

•  SCOs can also help project beneficiaries to better plan their project budget in 
relation to real costs already at the application stage, since the budget available 

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for a given output can be fixed (in the case of a lump sum) or the use of a unit 
cost for staff can simplify the calculation of expected staff costs.  

•  Beneficiaries may also benefit from reduced administrative burden, as SCOs 
typically reduce documentation requirements. This has two other positive effects 
for  beneficiaries.  Firstly,  they  can  redirect  working  time  previously  spent  on 
administration  towards  content,  cooperation  and  outputs.  Secondly,  easier 
to  speed  up 
approval  and  control  of 
reimbursements to beneficiaries. 

financial  reports  usually  helps 

•  Finally,  SCOs  could  potentially  contribute  to  reducing  the  need  for  budget 
corrections. Although this cannot yet be finally assessed, there are at least some 
tentative  indications  to  this  effect.  For  example,  the  payment  of  lump  sums  is 
conditional on the implementation of the activity covered by the lump sum. As a 
result,  reimbursement  is  directly  linked  to  achievements,  without  the  need  for 
adjustments or recalculation of outputs (e.g. number of events).  

•  This  in  turn  is  a  means  of  improving  the  quality  of  the  monitoring  system. 
Programmes  can  more  easily  consider  linking  SCOs,  payments  and  output 
indicators. For example, using the number of events as an output indicator and 
linking a lump sum to the delivery of an event allows to directly link financial and 
output indicators.  

Over time, and not least because of inflation, both unit costs and lump sums usually need 
adjustment. This may be necessary both within a programming period and, in particular, 
when moving from one programming period to the next. This raises the question of how 
to proceed in future programming periods when SCOs are to be used continuously and 
historical data at the level of beneficiaries is no longer available due to the previous use 
of  SCOs.  This  raises  the  question  of  the  extent  to  which  indexation  is  an  appropriate 
means of adjusting SCOs or whether a new calculation is needed. 

For  the  next  programming  period,  this  question  may  be  most  relevant  for  project 
preparation  and  closure  costs  in  the  context  of  Interreg  IPA  programmes,  as  many 
programmes  use  lump  sums  for  one  or  both  of  these  types  of  costs.  A  review  of  the 
programmes shows that the lump sums for these costs are very heterogeneous, i.e. they 
vary by several hundred percentage points. Some of this heterogeneity may be justified 
by  different  programme  structures  etc.,  but  some  differences  are  likely  to  be 
questionable. Better justification may therefore be needed to achieve fair, equitable and 
verifiable lump sums in the future. Indexation could exacerbate any injustices that may 
already exist. 

This may become even more important if programmes wish to update the existing SCO 
for future programmes. In other words, potentially existing discrepancies may be further 
increased.  If  programmes  wish  to  implement  SCOs  not  only  at  the  lower  level  for 
reimbursement  to  their  beneficiaries,  but  also  at  the  upper  level  for  reimbursement 
between the European Commission and the programme, the assessment needs to be 
even more robust. Several approaches could be considered to overcome the lack of 
historical data: 

•  Cooperation  between  programmes  may  help  to  achieve  a  more  consistent 
approach when developing these SCOs across Interreg IPA programmes. 

•  The Croatian MA carried out a market analysis which could be used as a good 
example of how to overcome the lack of historical data. At the same time, this 
approach ensures an up-to-date consideration of costs at the time of the analysis. 

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•  European  guidance,  e.g.  from  Interact,  could  help  programmes  to  identify  an 
to 
thereby 

initiate  a  structured  approach 

appropriate  methodology  and 
conducting market analysis.  

•  The European Commission could reduce the risks of inappropriate unit costs for 
programmes by developing a standard hourly rate (by country) as an off-the-shelf 
option. 

However, in other cases, Interreg IPA programmes may lack their own historical data to 
develop SCOs. For instance, this may be due to a lack of relevant project activities in the 
previous  programming  period.  Sometimes  programmes  copy  and  paste  SCOs  from 
neighbouring  programmes.  While  this  may  not  be  a  problem  for  off-the-shelf  SCOs, 
programmes  are  not  advised  doing  this  for  programme  specific  SCOs.  Instead, 
programmes  may  copy  the  methodology  or  be  inspired  by  the  methodological 
approach of other programmes. In addition to the above solutions to overcome the lack 
of  own  historical  data  for  SCOs  covering  project  preparation  and  closure  costs,  other 
data sources and possibilities should be considered: 

•  Programmes  should  explore  the  use  of  other  information  at  EU-level.  For 
example, the information provided by delegated acts or union schemes provides 
robust cost estimates. So far, this source of information has rarely been used. 
Even  if  not  all  relevant  rates  are  available  for  candidate  countries,  the  use  of 
these schemes for Member States reduces the calculation effort. On this basis, 
programmes can then adjust the values for candidate countries using statistical 
data.  

•  Market  analysis  and/or  statistical  data  can  be  used  to  overcome  a  lack  of 
historical data. The specific source will depend on the cost categories for which 
an SCO is to be developed.  

The aim of introducing SCOs is to achieve simplification without jeopardising legitimate 
expenditure  and  reimbursement  procedures.  To  achieve  simplification  effectively,  it  is 
necessary to (a) minimise distortions due to inadequate approximation and (b) avoid too 
much flexibility and possible misunderstandings in the application of SCOs: 

• 

Inadequate approximation may occur when off-the-shelf flat rates are applied 
which  do  not  adequately  reflect  the  cost  structures  of  the  projects.  Such 
structures  may  affect  all  or  part  of  the  beneficiaries.  Examples  may  include 
differences in costs or cost structures between beneficiaries in different countries. 
An example is the application of the off-the-shelf flat rate for travel costs based 
on staff costs. Due to lower salaries in candidate countries compared to Member 
States,  the  maximum  off-the-shelf  flat  rate  for  the  travel  costs  may  not  be 
sufficient to reimburse travel costs of beneficiaries from candidate countries. This 
means that programmes are well advised to critically reflect on the cost structure 
of  their  projects  and  beneficiaries  before  applying  off-the-shelf  SCOs.  If  they 
conclude that the off-the-shelf flat rates do not sufficiently reflect the beneficiaries' 
project  cost  structures,  programmes  are  better  off  developing  programme 
specific  SCOs  (including  programme  specific  flat  rates)  rather  than  offering 
inadequate flat rates. 

•  Off-the-shelf  flat  rates  in  the  CPR  or  the  Interreg  Regulation  are  usually 
formulated as "up to" percentages. This implies that programmes can use any 
percentage up to this rate without having to develop a calculation methodology 
and demonstrating the fairness and equitability of the rate chosen. However, the 

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use  of  a  flexible  rate  within  the  off-the-shelf  ceiling  cannot  be  considered  a 
simplification. On the contrary, it means shifting the decision on the appropriate 
rate from the programme authorities to the beneficiaries. This flexibility could lead 
to  situations  where  the  same  type  of  beneficiary  in  the  same  country  receives 
different  compensation  due  to  different  flat  rates  chosen.  As  a  consequence, 
fairness and equitability may be questioned in such cases. Instead, it should be 
the  responsibility  of  the  programme  authorities  to  define  the  different  rates  for 
different types of beneficiaries, projects, countries, etc. where a single flat rate 
does not adequately reflect cost structures. Beneficiaries may be consulted to 
help  programme  authorities  make  informed  decision,  but  they  should  not 
bear the burden of decision-making.  

However, to simplify control procedures, programmes are advised to avoid too 
many different rates, but to keep differentiation as simple and limited as possible, 
i.e. to allow for justifiable over- and/or undercompensation. 

•  Too  many  alternatives  for  setting  up  budgets  do  not  lead  to  simplification. 
Again,  it  shifts  decision-making  from  programme  authorities  to  beneficiaries. 
Where different types of projects or roles of partners within projects require the 
use  of  different  SCOs  or  combinations  thereof,  programmes  should  provide 
guidance and help applicants to best assess the suitable budget structure. This 
may include guidance on suitable budget structures for one or the other option. 
In addition, such guidance should be thoroughly tested to effectively contribute 
to transparency and clarity for beneficiaries.  

•  To  maximise  the  benefits  of  SCOs,  programmes  may  offer  a  combination  of 
different SCOs for an operation. This combination should be clear, unambiguous 
and transparent in the allocation of the relevant cost categories to the SCOs.  

•  Direct cost categories include all types of costs other than indirect costs, i.e. 
administrative and office costs. Sometimes programmes use the off-the-shelf flat 
rate for direct staff costs of up to 20% of the direct costs other than direct staff 
costs in accordance with Article 39(3)(c), Interreg Regulation, without including 
all other direct costs. By clearly specifying the cost categories on which the flat 
rate calculation is based, programmes support correct application. However, they 
often exclude travel and accommodation costs from the calculation  base. This 
means that the basis for calculating eligible direct staff costs is reduced, which 
may be to the detriment of beneficiaries or lead to some misunderstanding of the 
distinction between direct and indirect cost categories.  

In  the  current  programming  period  2021-2027,  the  use  of  small-scale  projects,  i.e. 
projects  with  a  maximum  volume  of  eligible  costs  of  EUR  200,000,  in  Interreg  IPA 
programmes seems to be limited. Examples of programmes implementing such projects 
are the South Adriatic, Romania-Serbia or Hungary Serbia programmes. However, this 
form of cooperation is common in other Interreg programmes. It may therefore become 
more important in future Interreg IPA programmes. To take this potential into account, 
the specificities of the SCOs for these projects are considered below.  

Article 53(2) CPR limits the use of real costs for small-scale projects, i.e. projects with a 
maximum  volume  of  eligible  costs  of  EUR  200,000,  to  exceptional  cases.  Apart  from 
State aid relevant investments, parts of small-scale projects may only be reimbursed on 
the basis of real costs if they serve as a calculation basis for flat rate financing. However, 
to  reduce 
for  beneficiaries  of  small-scale  projects, 
programmes are advised to avoid any real costs for these projects. The study's analysis 
suggests at least three main types of alternative approaches (see Figure 18 below 

the  administrative  burden 

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for  an  illustration),  all  of  which  are  suitable  for  avoiding  any  real  costs  in  small-scale 
projects:  

  Combining the off-the-shelf flat rate for all costs other than staff costs with a 
unit cost for staff costs. The use of the flat rate of up to 40% of the eligible direct 
staff costs to calculate all other eligible costs of an operation (Article 56(1), CPR) 
allows either to calculate the direct staff costs on the basis of real costs or, preferably 
to use another SCO to calculate staff costs. This means that all small-scale projects 
are subject to two SCOs. The SCO for staff costs can be determined by 

using  the  off-the-shelf  "1,720  hour  method"  (Article  55(2)(a),  CPR)  to 
establish hourly rates; 

using the off-the-shelf calculation of hourly rates based on the most recent 
monthly gross employment costs and corresponding working hours; 

developing a programme specific unit cost to approximate the hourly rate(s), 
thus allowing programmes to adapt to different staff cost levels according to 
country and/or seniority. 

  Combining  different  lump  sums  and/or  unit  costs  defined  for  all  types  of 
outputs  produced  by  small-scale  projects.  The  South  Adriatic  Programme 
provides  an  example  of  such  an  approach,  where  different  SCOs  are  applied  for 
different  types  of  outputs.  For  example,  if  a  small-scale  project  organised  a 
workshop and two B2B meetings, for which different lump sums were calculated, the 
project would be reimbursed once for the workshop lump sum and twice for the B2B 
meetings lump sum.  

The calculation of such output related SCOs implies that the lump sum or unit cost 
calculation includes all cost categories relevant for the corresponding output, e.g. to 
calculate the necessary staff costs, travel costs, indirect costs, etc. 

  Develop a programme specific SCO for each main type of small-scale project 
in  the  programme.  This  approach  has  been  applied  by  the  Slovenia-Hungary 
Interreg Programme 2021-2027. The programme identified a total of three types of 
small-scale projects, with different characteristics and objectives. In this case, each 
small-scale project is reimbursed through a single SCO. In turn, each SCO includes 
all types of cost categories considered relevant for achieving the objectives of the 
corresponding project type. This SCO can be calculated as a unit cost or as a lump 
sum. 

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Figure 18: Illustration of SCO combinations in small-scale projects for the three 
alternatives 

 Source: Service provider, 2024 

Many programmes tend to use off-the-shelf SCOs rather than programme specific SCOs. 
There  are  several  reasons  for  this,  ranging  from  lack  of  capacity  to  uncertainty.  To 
overcome these limitations, there may be a need for (a) more off-the-shelf options, taking 
into  account  the  specificities  of  e.g.  IPA  countries,  and  (b)  more  capacity  building  to 
overcome uncertainty and support the use of tailor-made solutions.  

While this study has shed light on the experience of SCOs in Interreg IPA programmes, 
further  cooperation  and  analysis  may  be  needed  to  improve  cooperation  between 
authorities  and  to  further  benefit  from  the  experience.  This  could  include  targeted 
cooperation events between Interreg and Interreg IPA authorities, including authorities 
from IPA countries, and studies on SCOs in IPA countries. Similar assessments may be 
needed  for  other  comparable  contexts,  such  as  the  NEXT  programmes.  Not  least  to 
overcome  potential  inconsistencies  in  calculation  and  reimbursement  mechanisms 
between EU programmes and national rules, authorities are advised to involve national 
stakeholders and authorities already in the design of SCOs. This may include an ex-ante 
analysis  of  the  national  regulatory  system  to  identify  potential  challenges  and 
inconsistencies.  Experience  from  Interreg  programmes  implemented  at  internal  EU 
borders  also  illustrates  the  benefits  of  early  reflection  and  exchange  between  the 
cooperation programme and the audit authorities.  

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In conclusion, the analysis of SCOs in Interreg IPA programmes for 2021-2027 reveals 
some key findings on their benefits. With its practical guidance on different types of SCOs 
and cost categories, this report is also a contribution to the debate on cohesion policy 
after 2027. It addresses several access points for simplification as called for in Issues 
paper 8 (Group of high-level specialists on the future of Cohesion Policy, 2023) and the 
report by Enrico Letta (2024) and is also in line with the political guidelines for the next 
European Commission 2024-2029 (von der Leyen, 2024). 

freeing  up  resources 

for  on-the-spot  checks.  However, 

The  study  confirms  that  SCOs  offer  significant  potential  to  simplify  administrative 
processes, reduce errors and increase efficiency, in particular by automating calculations 
and 
their  successful 
implementation  requires  careful  consideration  of  cost  structures,  as  inadequate 
approximations and excessive flexibility can undermine fairness and effectiveness. While 
off-the-shelf  SCOs  are  often  preferred,  programme  specific  solutions  may  be  more 
appropriate  in  certain  contexts.  One  example  is  small-scale  projects.  Finally,  there  is 
potential  to  optimise  the  use  of  SCOs  through  more  tailored  capacity  building, 
cooperation between authorities and early involvement of national stakeholders to  not 
only  take  advantage  of  established  SCOs,  but  to  develop  and  implement  them  in  an 
effective and efficient way. 

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Bibliography 

The analysis is mainly based on various documents from the programmes analysed in 
the  course  of  this  study.  These  include  published  manuals  as  well  as  internal 
documentation that was provided by the programmes. Other references used are listed 
below: 

COM(2018) 375 final. (2018). Proposal for a regulation of the European Parliament and 
of  the  Council  lay  laying  down  common  provisions  on  the  European  Regional 
Development Fund, the European Social Fund Plus, the Cohesion Fund, and the 
European Maritime and Fisheries Fund and financial rules for those and for the 
Asylum  and  Migration  Fund,  the  Internal  Security  Fund  and  the  Border 
Management and Visa Instrument. 

European  Commission.  (2023).  COMMISSION  DECISION  of  26.7.2023  amending 
Commission  Decision  C(2021)35  authorising  the  use  of  unit  costs  for  travel, 
accommodation  and  subsistence  costs  under  an  action  or  work  programme 
under  the  2021-2027  multi-annual  financial  framework.  C(2023)4928  final. 
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European Commission. (2022).  Commission  implementation  decision of 5.12.2022 on 
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(accessed 

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14 

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