Eligible costs

A cost may be charged to the project only if it satisfies every condition at once: it was actually incurred by the beneficiary, during the action's duration, was necessary for the work, is identifiable and verifiable, is recorded in the beneficiary's accounts, and follows the beneficiary's usual accounting practice. Failing any one of these makes it ineligible, however reasonable it looks.

Certain costs are excluded outright: deductible VAT, interest owed, exchange-rate losses, provisions for future losses or debts, costs already reimbursed from another EU grant, and expenditure that is excessive or reckless. Deductible VAT is the one that catches organisations that can reclaim it and budget the gross figure anyway.

"Actually incurred" excludes commitments. A purchase order signed in month 34 for equipment delivered after the project ends is not an eligible cost, and neither is an invoice dated inside the period for work performed outside it. Timing is checked against delivery, not against paperwork.

"Usual accounting practice" is the condition auditors lean on hardest. A beneficiary that calculates personnel costs one way for its own accounts and another way for the EU project will lose the difference, even where the EU method would have been permissible had it been used consistently.

The practical defence is boring and effective: charge the project the way you charge everything else, document the link between each cost and the work, and keep the evidence for five years after the final payment. Audits arrive years later and ask for the paper, not the explanation.