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Regulation (EU) No 1303/2013 of the European Parliament and of the CouncilShow full title

Regulation (EU) No 1303/2013 of the European Parliament and of the Councilof 17 December 2013laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006

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Regulation (EU) No 1303/2013 of the European Parliament and of the Council, TITLE VII is up to date with all changes known to be in force on or before 06 November 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations. Help about Changes to Legislation

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TITLE VIIU.K. FINANCIAL SUPPORT FROM THE ESI FUNDS

CHAPTER I U.K. Support from the ESI Funds

F1Article 60U.K.Determination of co-financing rates

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Article 61U.K.Operations generating net revenue after completion

[F21.This Article shall apply to operations which generate net revenue after their completion. For the purposes of this Article, ‘net revenue’ means cash in-flows directly paid by users for the goods or services provided by the operation, such as charges borne directly by users for the use of infrastructure, sale or rent of land or buildings, or payments for services less any operating costs and replacement costs of short-life equipment incurred during the corresponding period. Operating cost-savings generated by the operation, with the exception of cost-savings resulting from the implementation of energy efficiency measures, shall be treated as net revenue unless they are offset by an equal reduction in operating subsidies.]

Where not all the investment cost is eligible for co-financing, the net revenue shall be allocated pro rata to the eligible and non-eligible parts of the investment cost.

2.The eligible expenditure of the operation to be co-financed from [F3support for rural development] shall be reduced in advance taking into account the potential of the operation to generate net revenue over a specific reference period that covers both implementation of the operation and the period after its completion.

3.The potential net revenue of the operation shall be determined in advance by one of the following methods chosen by the managing authority for a sector, subsector or type of operation:

(a)application of a flat rate net revenue percentage for the sector or subsector applicable to the operation as defined in Annex V or in any of the delegated acts referred to in the second, third and fourth subparagraphs;

[F4(aa)application of a flat rate net revenue percentage established by a [F5relevant authority] for a sector or subsector not covered by point (a). Before the application of the flat rate the responsible audit authority shall verify that the flat rate has been established according to a fair, equitable and verifiable method based on historical data or objective criteria;]

(b)calculation of the discounted net revenue of the operation, taking into account the reference period appropriate to the sector or subsector applicable to the operation, the profitability normally expected of the category of investment concerned, the application of the polluter-pays principle and, if appropriate, considerations of equity linked to the relative prosperity of the [F5relevant authority] or region concerned.

The [F6appropriate authority may make regulations] in duly justified cases to amend Annex V by adjusting the flat rates established therein taking into account historical data, the potential for cost recovery and the polluter-pays principle where applicable.

F7...

In addition, the [F8appropriate authority may make regulations] in duly justified cases with regard to adding sectors or subsectors, including subsectors for sectors in Annex V, falling under the thematic objectives defined in the first paragraph of Article 9 and [F9funded by support for rural development].

Where the method referred to in point (a) of the first subparagraph is applied, all the net revenue generated during implementation and after completion of the operation shall be considered to be taken into account by the application of the flat rate and shall therefore not be deducted subsequently from the eligible expenditure of the operation.

When a flat rate for a new sector or subsector has been established by [F10legislation in accordance with the fourth subparagraph], a managing authority may choose to apply the method set out in point (a) of the first subparagraph for new operations in relation to the sector or subsector concerned.

The [F11appropriate authority may make regulations], laying down the method referred to in point (b) of the first subparagraph. Where that method is applied, the net revenue generated during implementation of the operation, resulting from sources of revenue not taken into account in determining the potential net revenue of the operation, shall be deducted from the eligible expenditure of the operation, no later than in the final payment claim submitted by the beneficiary.

F124.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F25.As an alternative to the application of the methods laid down in paragraph 3 of this Article, the maximum co-financing rate referred to in Article 60(1) may, at the request of a [F5relevant authority], be decreased for a priority or measure under which all supported operations could apply a uniform flat rate in accordance with point (a) of the first subparagraph of paragraph 3 of this Article. The decrease shall be not less than the amount calculated by multiplying the maximum [F13core contribution] applicable under the Fund-specific rules by the relevant flat rate referred to in that point.]

6.Where it is objectively not possible to determine the revenue in advance based on any of the methods set out in paragraphs 3 or 5, the net revenue generated within three years of the completion of an operation, or by the deadline for the submission of documents for programme closure fixed in the Fund-specific rules, whichever is the earlier, shall be deducted from the expenditure declared to the [F14relevant authority].

7.Paragraphs 1 to 6 shall not apply to:

F15(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)operations whose total eligible cost before application of paragraphs 1 to 6 does not exceed EUR 1 000 000;

(c)repayable assistance subject to an obligation for full repayment and prizes;

(d)technical assistance;

(e)support to or from financial instruments;

(f)operations for which public support takes the form of lump sums or standard scale unit costs;

(g)operations implemented under a joint action plan;

[F2(h)operations for which amounts or rates of support are defined in Annex II to [F16Regulation (EU) No 1305/2013] or in the EMFF Regulation.]

Notwithstanding point (b) of the first subparagraph of this paragraph, where a [F5relevant authority] applies paragraph 5, it may include in the relevant priority or measure operations whose total eligible cost before application of paragraphs 1 to 6 does not exceed EUR 1 000 000.

F178.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

CHAPTER II U.K. Special rules on support from the ESI Funds to PPPs

Article 62U.K.PPPs

[F18Support for rural development] may be used to support PPP operations. Such PPP operations shall comply with applicable law, in particular concerning F19... public procurement.

Textual Amendments

Article 63U.K.Beneficiary under PPP operations

1.In relation to a PPP operation, and by way of derogation from point (10) of Article 2, a beneficiary may be either:

(a)the public law body initiating the operation; or

(b)a body governed by private law of [F20a relevant authority] (the "private partner") selected or to be selected for the implementation of the operation.

2.The public law body initiating the PPP operation may propose that the private partner, to be selected after approval of the operation, be the beneficiary for the purposes of support from [F21support for rural development]. In that event, the approval decision shall be conditional on the managing authority satisfying itself that the selected private partner fulfils and assumes all the corresponding obligations of a beneficiary under this Regulation.

3.The private partner selected to implement the operation may be replaced as beneficiary during implementation where this is required under the terms and conditions of the PPP or the financing agreement between the private partner and the financial institution co-financing the operation. In that event the replacement private partner or public law body shall become the beneficiary provided that the managing authority satisfies itself that the replacement partner fulfils and assumes all the corresponding obligations of a beneficiary under this Regulation.

4.The [F22appropriate authority may make regulations] laying down additional rules on the replacement of a beneficiary and on the related responsibilities.

5.The replacement of a beneficiary shall not be considered a change in ownership within the meaning of point (b) of Article 71(1) if that replacement satisfies the applicable conditions set out in paragraph 3 of this Article and in [F23regulations made] pursuant to paragraph 4 of this Article.

Textual Amendments

Article 64U.K.Support for PPP operations

[X11.In the case of a PPP operation where the beneficiary is a public law body, expenditure under a PPP operation which has been incurred and paid by the private partner may, by way of derogation from Article 65(2), be considered as incurred and paid by a beneficiary and [F24eligible for support for rural development] provided that the following conditions are met:]

(a)the beneficiary has entered into a PPP agreement with a private partner;

(b)the managing authority has verified that the expenditure declared by the beneficiary has been paid by the private partner and that the operation complies with applicable F25... national law, the programme and the conditions for support of the operation.

[X12.Payments to beneficiaries made in respect of expenditure F26... in accordance with paragraph 1 shall be paid into an escrow account set up for that purpose in the name of the beneficiary.]

3.The funds paid into the escrow account referred to in paragraph 2 shall be used for payments in accordance with the PPP agreement, including any payments to be made in the event of termination of the PPP agreement.

4.The [F27appropriate authority may make regulations] laying down the minimum requirements to be included in PPP agreements which are necessary for the application of the derogation laid down in paragraph 1 of this Article, including provisions related to termination of the PPP agreement and for the purpose of ensuring an adequate audit trail.

Editorial Information

Textual Amendments

CHAPTER III U.K. Eligibility of expenditure and durability

Article 65U.K.Eligibility

1.The eligibility of expenditure shall be determined on the basis of national rules, except where specific rules are laid down in, or on the basis of, this Regulation or the Fund-specific rules.

2.Expenditure shall be eligible for a contribution from [F28support for rural development] if it has been incurred by a beneficiary and paid between the date of submission of the programme to the Commission or from 1 January 2014, whichever is earlier, and 31 December 2023. In addition, expenditure shall only be eligible for [F29support for rural development] if the relevant aid is actually paid by the paying agency between 1 January 2014 and 31 December 2023.

F303.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.In the case of costs reimbursed pursuant to points (b) and (c) of the first subparagraph of Article 67(1), the actions constituting the basis for reimbursement shall be carried out between 1 January 2014 and 31 December 2023.

F315.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.Operations shall not be selected for support by [F32support for rural development] where they have been physically completed or fully implemented before the application for funding under the programme is submitted by the beneficiary to the managing authority, irrespective of whether all related payments have been made by the beneficiary.

F337.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.This paragraph shall apply to operations which generate net revenue during their implementation and to which paragraphs 1 to 6 of Article 61 do not apply.

The eligible expenditure of the operation [F34receiving support for rural development] shall be reduced by the net revenue not taken into account at the time of approval of the operation directly generated only during its implementation, not later than at the final payment claim submitted by the beneficiary. Where not all the costs are eligible for co-financing, the net revenue shall be allocated pro rata to the eligible and non-eligible parts of the cost.

This paragraph shall not apply to:

(a)technical assistance;

(b)financial instruments;

(c)repayable assistance subject to an obligation for full repayment;

(d)prizes;

F35(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(f)operations for which public support takes the form of lump sums or standard scale unit costs provided that the net revenue has been taken into account ex ante;

(g)operations implemented under a joint action plan provided that the net revenue has been taken into account ex ante;

[F2(h)operations for which amounts or rates of support are defined in Annex II to [F36Regulation (EU) No 1305/2013] or in the EMFF Regulation with the exception of those operations for which reference is made to this paragraph in the EMFF Regulation; or]

[F2(i)operations for which the total eligible cost does not exceed EUR 100 000.]

For the purposes of this Article and Article 61, any payment received by the beneficiary arising from contractual penalties as a result of a breach of contract between the beneficiary and a third party or third parties or that has occurred as a result of the withdrawal of an offer by a third party chosen under public procurement rules (the 'deposit') shall not be considered as revenue and shall not be deducted from the eligible expenditure of the operation.

9.Expenditure that becomes eligible as a result of an amendment to a programme shall only be eligible from the date of submission to the [F37relevant authority] of the request for amendment F38....

The Fund-specific rules for the EMFF may derogate from the first subparagraph.

10.By way of derogation from paragraph 9, specific provisions on the starting date of eligibility may be established in [F39Regulation (EU) No 1305/2013].

[F40By way of derogation from paragraph 9, expenditure for operations for fostering crisis response capacities in the context of the COVID-19 outbreak shall be eligible as of 1 February 2020.]

[F4111.An operation may receive support for rural development or from one or more programmes and from CMO support or direct payment support or support under other retained direct EU legislation, provided that the expenditure declared is not declared more than once.]

Textual Amendments

Article 66U.K.Forms of support

[F42Support for rural development may be provided] in the form of grants, prizes, repayable assistance and financial instruments, or a combination thereof.

In the case of repayable assistance, the support repaid to the body that provided it, or to another competent authority F43..., shall be kept in a separate account or separated with accounting codes and reused for the same purpose or in accordance with the objectives of the programme.

Textual Amendments

Article 67U.K.Forms of grants and repayable assistance

1.Grants and repayable assistance may take any of the following forms:

(a)reimbursement of eligible costs actually incurred and paid, together with, where applicable, contributions in kind and depreciation;

(b)standard scales of unit costs;

[F2(c)lump sums;]

(d)flat-rate financing, determined by the application of a percentage to one or more defined categories of costs[F2;]

[F4(e)financing which is not linked to costs of the relevant operations but is based on the fulfilment of conditions related to the realisation of progress in implementation or the achievement of objectives of programmes as set out in [F44legislation made under] paragraph 5a.]

Fund-specific rules may limit the forms of grants or repayable assistance applicable to certain operations.

[F4For the form of financing referred to in point (e) of the first subparagraph, the audit shall exclusively aim at verifying that the conditions for reimbursement have been fulfilled.]

2.By way of derogation from paragraph 1, additional forms of grants and methods of calculation may be established in the EMFF Regulation.

[F42a.F45...

Where flat-rate financing is used, the categories of costs to which the flat rate is applied may be reimbursed in accordance with point (a) of the first subparagraph of paragraph 1.

For operations [F46receiving support for rural development], where the flat rate referred to in Article 68b(1) is used, the allowances and the salaries paid to participants may be reimbursed in accordance with point (a) of the first subparagraph of paragraph 1 of this Article.

F45...]

3.The options referred to in paragraph 1 may be combined only where each option covers different categories of costs or where they are used for different projects forming a part of an operation or for successive phases of an operation.

[F24.Where an operation or a project forming a part of an operation is implemented exclusively through the public procurement of works, goods or services, only points (a) and (e) of the first subparagraph of paragraph 1 shall apply. Where the public procurement within an operation or project forming part of an operation is limited to certain categories of costs, all the options referred to in paragraph 1 may be applied for the whole operation or project forming a part of an operation.]

5.The amounts referred to in points (b), (c) and (d) of the first subparagraph of paragraph 1 shall be established in one of the following ways:

[F2(a)a fair, equitable and verifiable calculation method based on any of the following:

(i)

statistical data, other objective information or an expert judgement;

(ii)

the verified historical data of individual beneficiaries;

(iii)

the application of the usual cost accounting practices of individual beneficiaries;]

[F4(aa)a draft budget established on a case-by-case basis and agreed ex ante by the managing authority, or in the case of [F47support for rural development] the authority responsible for the selection of operations, where the public support does not exceed EUR 100 000;]

F48(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)in accordance with the rules for application of corresponding scales of unit costs, lump sums and flat rates applied under schemes for grants funded entirely by [F49the relevant authority] for a similar type of operation and beneficiary;

(d)rates established by this Regulation or the Fund-specific rules;

(e)specific methods for determining amounts established in accordance with the Fund-specific rules.

[F45a.The [F50appropriate authority may make regulations] supplementing this Regulation with regard to the definition of the standard scales of unit costs or the flat-rate financing referred to in points (b) and (d) of the first subparagraph of paragraph 1 of this Article, the related methods referred to in point (a) of paragraph 5 of this Article and the form of support referred to in point (e) of the first subparagraph of paragraph 1 of this Article, by specifying detailed modalities concerning the financing conditions and their application.]

6.The document setting out the conditions for support for each operation shall set out the method to be applied for determining the costs of the operation and the conditions for payment of the grant.

Textual Amendments

[F2Article 68U.K. Flat-rate financing for indirect costs concerning grants and repayable assistance

Where the implementation of an operation gives rise to indirect costs, they may be calculated at a flat rate in one of the following ways:

(a)

a flat rate of up to 25 % of eligible direct costs, provided that the rate is calculated on the basis of a fair, equitable and verifiable calculation method or a method applied under schemes for grants funded entirely by the [F51relevant authority] for a similar type of operation and beneficiary;

(b)

a flat rate of up to 15 % of eligible direct staff costs without there being a requirement for the [F51relevant authority] to perform a calculation to determine the applicable rate;

(c)

a flat rate applied to eligible direct costs based on existing methods and corresponding rates, applicable in F52... policies for a similar type of operation and beneficiary.

The [F53appropriate authority may make regulations] to supplement the provisions on the flat rate and the related methods referred to in point (c) of the first subparagraph of this paragraph.]

Textual Amendments

[F4Article 68aU.K. Staff costs concerning grants and repayable assistance

1.Direct staff costs of an operation may be calculated at a flat rate of up to 20 % of the direct costs other than the staff costs of that operation. [F54The relevant authority] shall not be required to perform a calculation to determine the applicable rate provided that the direct costs of the operation do not include public works contracts which exceed in value the threshold set out in point (a) of Article 4 of Directive 2014/24/EU.

2.For the purposes of determining staff costs, an hourly rate may be calculated 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.

3.When applying the hourly rate calculated in accordance with paragraph 2, the total number of hours declared per person for a given year shall not exceed the number of hours used for the calculations of that hourly rate.

F55...

4.Where annual gross employment costs are not available, they may be derived from the available documented gross employment costs or from the contract for employment, duly adjusted for a 12-month period.

5.Staff costs related to individuals who work on part-time assignment on the operation may be calculated as a fixed percentage of the gross employment costs, in line with a fixed percentage of time worked on the operation per month, with no obligation to establish a separate working time registration system. The employer shall issue a document for employees setting out that fixed percentage.

Textual Amendments

Article 68bU.K. Flat-rate financing for costs other than staff costs

1.A flat rate of up to 40 % of eligible direct staff costs may be used in order to cover the remaining eligible costs of an operation without a requirement for the [F56relevant authority] to execute any calculation to determine the applicable rate.

For operations [F57receiving support for rural development] salaries and allowances paid to participants shall be considered additional eligible costs not included in the flat rate.

2.The flat rate referred to in paragraph 1 shall not be applied to staff costs calculated on the basis of a flat rate.]

Textual Amendments

Article 69U.K.Specific eligibility rules for grants and repayable assistance

1.Contributions in kind in the form of provision of works, goods, services, land and real estate for which no cash payment supported by invoices, or documents of equivalent probative value, has been made, may be eligible on condition that the eligibility rules of [F58support for rural development] and the programme so provide and that all the following criteria are fulfilled:

(a)the public support paid to the operation which includes contributions in kind does not exceed the total eligible expenditure, excluding contributions in kind, at the end of the operation;

(b)the value attributed to contributions in kind does not exceed the costs generally accepted on the market in question;

(c)the value and the delivery of the contribution can be independently assessed and verified;

(d)in the case of provision of land or real estate, a cash payment, for the purposes of a lease agreement of a nominal amount per annum not exceeding [F59one pound], may be made;

(e)in the case of contributions in kind in the form of unpaid work, the value of that work is determined by taking into account the verified time spent and the rate of remuneration for equivalent work.

The value of the land or real estate referred to in point (d) of the first subparagraph of this paragraph shall be certified by an independent qualified expert or duly authorised official body and shall not exceed the limit laid down in point (b) of paragraph 3.

2.Depreciation costs may be considered as eligible where the following conditions are fulfilled:

(a)the eligibility rules of the programme allow for it;

(b)the amount of the expenditure is duly justified by supporting documents having equivalent probative value to invoices for eligible costs where reimbursed in the form referred to in point (a) of the first subparagraph of Article 67(1);

(c)the costs relate exclusively to the period of support for the operation;

(d)public grants have not contributed towards the acquisition of the depreciated assets.

3.The following costs shall not be eligible for a contribution from [F60support for rural development]F61...:

(a)interest on debt, except in relation to grants given in the form of an interest rate subsidy or guarantee fee subsidy;

(b)the purchase of land not built on and land built on in the amount exceeding 10 % of the total eligible expenditure for the operation concerned. For derelict sites and for those formerly in industrial use which comprise buildings, that limit shall be increased to 15 %. In exceptional and duly justified cases, the limit may be raised above the respective aforementioned percentages for operations concerning environmental conservation;

(c)value added tax except where it is non-recoverable under national VAT legislation.

Textual Amendments

[F2Article 70U.K. Eligibility of operations depending on location

1.Subject to the derogations referred to in paragraph 2 and the Fund-specific rules, operations supported by [F62support for rural development] shall be located in the programme area.

Operations concerning the provision of services to citizens or businesses which cover the whole territory of a [F63relevant authority] shall be considered as being located in all programme areas within a [F64constituent nation]. In such cases, expenditure shall be allocated to the concerned programme areas on a pro-rata basis, based on objective criteria.

The second subparagraph of this paragraph does not apply to the national programme referred to in Article 6(2) of Regulation (EU) No 1305/2013 or to the specific programme for the establishment and the operation of the national rural network referred to in Article 54(1) of that Regulation.

2.The managing authority may accept that an operation is implemented outside the programme area F65... provided that all the following conditions are satisfied:

(a)the operation is for the benefit of the programme area;

(b)[F66the total amount allocated under the programme to operations located outside the programme area does not exceed 15% of the support for rural development at the level of the priority at the time of the adoption of the programme;]

(c)the monitoring committee has given its agreement to the operation or types of operations concerned;

(d)the obligations of the authorities for the programme in relation to management, control and audit concerning the operation are fulfilled by the authorities responsible for the programme under which that operation is supported or they enter into agreements with authorities in the area in which the operation is implemented.

Where operations F67... are implemented outside the programme area in accordance with this paragraph and have benefits both outside and within the programme area, such expenditure shall be allocated to those areas on a pro rata basis based on objective criteria.

F68...

3.For operations concerning technical assistance or information, communication and visibility measures and promotional activities, and for operations concerning the thematic objective referred to in point (1) of the first paragraph of Article 9, expenditure may be incurred outside [F69the constituent nations] provided that the expenditure is necessary for the satisfactory implementation of the operation.

F704.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ]

Textual Amendments

Article 71U.K.Durability of operations

1.An operation comprising investment in infrastructure or productive investment shall repay the contribution from [F71support for rural development] if within five years of the final payment to the beneficiary F72... it is subject to any of the following:

(a)a cessation or relocation of a productive activity outside the programme area;

(b)a change in ownership of an item of infrastructure which gives to a firm or a public body an undue advantage;

(c)a substantial change affecting its nature, objectives or implementation conditions which would result in undermining its original objectives.

Sums unduly paid in respect of the operation shall be recovered by the [F73relevant authority] in proportion to the period for which the requirements have not been fulfilled.

[F74The relevant authority] may reduce the time limit set out in the first subparagraph to three years in cases concerning the maintenance of investments or jobs created by SMEs.

2.An operation comprising investment in infrastructure or productive investment shall repay the contribution from [F71support for rural development] if within 10 years of the final payment to the beneficiary the productive activity is subject to relocation outside [F75the United Kingdom and its territorial sea], except where the beneficiary is an SME. F76...

F773.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F24.Paragraphs 1, 2 and 3 of this Article shall not apply to contributions to or by financial instruments or for lease purchase under point (b) of Article 45(2) of Regulation (EU) No 1305/2013 nor to any operation which undergoes cessation of a productive activity due to a non-fraudulent bankruptcy.]

F785.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F76Words in Art. 71(2) omitted (31.12.2020 immediately after IP completion day) by virtue of The State Aid (Revocations and Amendments) (EU Exit) Regulations 2020 (S.I. 2020/1470), reg. 1(3), Sch. 1 para. 7(8)(b) (with Sch. 3)

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