Personnel costs are usually the largest budget line in EU-funded projects. But not all salaries and payments are automatically eligible. Misunderstanding the rules can lead to budget cuts, ineligible costs, or audit findings. This article explains what ‘’eligible remuneration’ means in EU grants and how to apply the main rules correctly.

Eligible remuneration

In EU Grants, eligible remuneration refers to the actual salary and related employment costs paid to staff who work on the project. They must comply with the general eligibility conditions and paid in accordance with national law, the collective labour agreement and the employment contract. The eligible remuneration includes the fixed salary and fixed complements like family allowance, contributions to medical insurance, and complementary pension plan contributions. Under certain conditions it may also include variable complements, such as bonuses or in-kind benefits. A key principle regarding eligibility of a cost is to ensure that it is consistently applied across the organisation.

Non-eligible cost

The EU strictly excludes costs that are not clearly linked to actual work or usual business practices. Certain elements that may form part of remuneration are considered ineligible, such as dividends or bonuses that are linked solely to EU-funded projects.
In addition, excessive or artificial salary increases introduced specifically for the project should be avoided.

How to calculate Personnel cost?

Most EU programmes follow a similar calculation methodology based on the actual cost incurred for each employee and the number of hours or days worked on the project. In Horizon Europe, the reporting period defines the time frame used for this calculation. This approach ensures that only the actual share of an employee’s salary is charged to the project. Reliable time records are therefore essential. These should include signed timesheets, clear task descriptions, and regular approval by project supervisors.

In case of audit

Without a reliable time-recording system, auditors often reject personnel costs in their entirety. The most frequent issues identified in EU project audits include missing or incomplete timesheets, salary increases applied solely to EU projects, inconsistent treatment of bonuses, and charging management staff without clearly defined project roles. These shortcomings can easily lead to financial corrections. To ensure that remuneration remains eligible under EU grants, it is essential to maintain accurate time records and clearly link all work performed to the project.

In conclusion, eligible remuneration is not about maximising salaries, but about supporting actual, reasonable, and well-documented costs that are genuinely linked to project activities. When handled correctly, personnel costs are secure; when handled poorly, they are often the first area targeted by auditors for reductions.