Description
In business, revenue or turnover is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover. Some companies receive revenue from interest, royalties, or other fees.
REVENUE-GENERATING PROJECTS Guidelines for Project Partners
ESTONIA - LATVIA PROGRAMME 2007-2013 CCI No 2007 CB 163 PO 050
Cross-border Co-operation Programme under European Territorial Co-operation Objective
May 2012
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
1. Table of contents
1. Table of contents ................................................................................................................................. 2 2. Abbreviations and definitions ............................................................................................................. 3 3. Introduction ......................................................................................................................................... 5 3.1. What is revenue?.......................................................................................................................... 5 3.2. Can there be any other types of cash in-flows? ........................................................................... 5 3.3. Treatment of revenue – legal basis .............................................................................................. 6 3.4. Project partners subject to the rules on de minimis aid .............................................................. 7 3.5. Other principles to take into account when implementing revenue-generating projects .......... 8 4. How to manage projects with total costs not exceeding EUR 1 000 000?........................................ 10 4.1. Project application phase ........................................................................................................... 11 4.2. Project implementation phase ................................................................................................... 11 4.3. Period after project implementation ......................................................................................... 12 5. Revenue-generating projects with total costs over EUR 1 000 000 .................................................. 13 5.1. Project application phase ........................................................................................................... 14 5.2. Project implementation phase ................................................................................................... 15 5.3. Period after project implementation ......................................................................................... 15 6. Projects, generating net revenue that cannot be estimated in advance .......................................... 17 6.1. Project preparation and application phase ................................................................................ 18 6.2. Project implementation phase ................................................................................................... 18 6.3. Period after project implementation ......................................................................................... 18 7. Repayment ........................................................................................................................................ 20 8. Funding gap method ......................................................................................................................... 21 8.1. Calculation of the funding gap ................................................................................................... 22
2
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
2. Abbreviations and definitions
AA Audit Authority; verifies the correctness of the controls carried out on the projects. Located at the Internal Audit Department of the Estonian Ministry of the Interior. Unplanned net revenue that is generated during the project implementation phase of after the end of a project. It exceeds the forecasted amount of revenue, as it was estimated in the cost-benefit analysis. Certifying Authority; is responsible for paying out subsidies to the projects, as well as carrying out repayment and recovery procedures in certain cases of generation of net revenue. The tasks of CA are carried out by the Estonian Ministry of the Interior, Finance Department. The end of a project in the context of the current document is in consistency with Chapter 8.1. Start and End Date of the Project of the Programme Manual1. End of a project is the end of implementation phase of a project, meaning the period eligible for carrying out project activities and incurring expenses. After finalisation of the project, a final report has to be submitted to the JTS. This report provides information about outputs, results and impacts of the project, and general feedback from the project to the Programme management authorities. A form of the final report is published on the Programme’s website. First Level Control; carries out controls and gives confirmations on partner report level. In Estonia the FLC is carried out by the Estonian Ministry of the Interior and in Latvia by State Regional Development Agency. The basis for the calculation of EU grant in revenue-generating projects, stipulating that the eligible expenditure cannot exceed the current value of the investment cost less the current value of the net revenue from the investment over a specific reference period appropriate to the category of investment concerned. Form for submitting information about revenue generation to the Joint Technical Secretariat; the Excel file is annexed to the Guidelines as a separate document. Joint Technical Secretariat; the most important contact point for project applicants and partners during preparation and implementation of the projects. The JTS is hosted by Enterprise Estonia, located in Tartu and supported by an information point in Riga located at the State Regional Development Agency. Lead partner; each project has to appoint a LP, who has full financial and legal responsibility for the project, including implementation, reporting and coordinating activities. LP submits all the documents necessary for implementation of the project, except partner reports that are submitted to the FLC by each project partner separately. Managing Authority; responsible for efficiency and correctness of management and implementation of the Programme. The tasks of MA are carried out by the Regional Development Department of the Estonian Ministry of the Interior.
Additional net revenue CA
End of a project
Final report
FLC
Funding gap method
Information about revenue generation JTS
LP
MA
11
Link to the web-page: http://www.estlat.eu/files/programmemanual_2011_01_19_75664.pdf
3
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
MC
Operating costs
Partner report
Programme Programme Authorities Progress report
Among other obligations the MA signs Subsidy Contracts and amendments to the Subsidy Contracts. Monitoring Committee; composed of representatives from both Estonia and Latvia, is responsible for selecting projects for funding, monitoring their implementation, making substantial changes to the Programme documents etc. Operating costs are the costs to take into account when calculating the funding cap. They include running costs (day-to-day costs to labour, raw materials, electricity etc) and maintenance expenses (the costs of keeping equipment and plant in satisfactory condition to achieve a specific quality of service). When calculating funding cap, also costs for the replacement of project short-life equipment are included. Each project partner (including LP) has to submit a partner report with expenditure and activity description (including all supporting bookkeeping documents) to Estonian or Latvian FLC within 10 working days after the end of each milestone. Based on this report a FLC confirmation is issued for each project partner’s expenditure during the milestone. Estonia – Latvia Programme 2007-2013. Programme institutions, dealing with different aspects of programme implementation, including MA, JTS, CA, AA and FLC. LP submits the progress report of the whole project to the JTS with supporting documents – partner reports, FLC confirmations of partner reports and additional materials, e.g. examples of project outputs.
4
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
3. Introduction
This guideline is targeted to the project partners and potential beneficiaries of the Estonia - Latvia Programme 2007-2013. It is aimed at helping project partners and potential beneficiaries to understand, how to handle different situations related to revenue generation during different phases of the project implementation from project preparation phase to the period after the end of a project.
3.1. What is revenue?
The definition of revenue is as follows: Revenues are cash in-flows directly paid by users for the goods and/or services provided by the project. Cash in-flow refers to all financial contributions paid to the project excluding ERDF and national co-financing. Revenue-generating project is any operation involving an investment in infrastructure, the use of which is subject to charges borne directly by users, and any operation involving the sale or rent of land or buildings or the provision of services and/or goods against payment. Net revenue generating projects are projects whose revenues exceed the operating costs of the project. Also, it is important to understand that only net revenue received from the project activities proportionally reduces the total eligible costs and ERDF co-financing. How to calculate net revenue is described in chapter 8. Funding gap method on page 21. Also, how to implement revenue-generating projects in different phases of project implementation is described in the following chapters of the document.
3.2. Can there be any other types of cash in-flows?
In addition to revenues there are other types of cash in-flows. These cash in-flows are not directly paid by users for the goods and/or services provided by the project and are not treated the same way as revenue. Other cash in-flows may be private and public contributions and/or financial gains that do not stem from tariffs, tolls, fees, rents or any other form of charge directly borne by the users. Some examples of other types of cash in-flows: ? Government contributions towards construction and/or operating costs; ? Contribution of public bodies and/or private donors to construction and/or operating costs. Other cash in-flows are not regarded as revenues. They must not be included in the determination of the funding gap (see chapter 8. Funding gap method on page 21), although they may be considered in the cost-benefit analysis of the national capital profitability. Differences in the type of cash in-flow and how they are related to the provisions for applying rules on revenue generation can be schematically described as follows:
5
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
Cash in-flows
Revenue: cash in-flows directly paid by users
Other cash in-flows
Revenue: Charges borne directly by users for the use of infrastructure, sale or rent of land and buildings, or payments for services Regulation (EC) No 1083/2006 Article 55 is applied. Funding gap method for calculating the financial profitability of the investment is applied
Private and public contribution and/or financial gains that do not stem from tariffs, tolls, fees, rents or any other form of charge directly borne by the users
Regulation (EC) No 1083/2006 Article 55 is not applicable. Funding gap method is not applied.
3.3. Treatment of revenue – legal basis
Additional information about the treatment of revenues can be found in the following EU Regulations: 1. Council Regulation (EC) No 1083/2006 of 11 July 20062 Article 55 – treatment of revenues. Revenue-generating project is: ? Any operation involving an investment in infrastructure, the use of which is subject to charges borne directly by users; or ? Any operation involving the sale or rent of land or buildings; or ? Any other provision of services against payment. 2. Regulation (EU) No 539/2010 of the European Parliament and of the Council of 16 June 20103 specifies that the provisions of Article 55 of the Council Regulation (EC) No 1083/2006 apply on net revenue; 3. Council Regulation (EC) No 1341/20084 Article 1 specifies that the provisions shall apply to operations which are co-financed by the ERDF and the total cost of which exceeds EUR 1 000 000. Article 2 of the same Regulation stipulates that the provisions shall apply from 1 August 2006 to all operations receiving assistance from the Structural Funds during the 2007-2013 programming period.
2
Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 3 Regulation (EU) No 539/2010 of the European Parliament and of the Council of 16 June 2010 amending Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund as regards simplification of certain requirements and as regards certain provisions relating to financial management 4 Council Regulation (EC) No 1341/2008 of 18 December 2008 amending Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund, in respect of certain revenue-generating projects
6
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
3.4. Project partners subject to the rules on de minimis aid
Private enterprises can participate in the Programme under Priorities 1 and 2 in conformity with de minimis rules. Where a partner of a revenue-generating project is subject to the rules on de minimis aid, the partner is not regarded as subject to the rules of implementation of revenue-generating projects. Project partner, who is funded by the Programme according to de minimis rules, is not obliged to apply the revenue generation rules: ? ? ? ? These project partners or potential applicants are not obliged to report on any revenue or net revenue during the project preparation period; These project partners do not have to report any revenue or net revenue during the project implementation period; They are not obliged to report on any revenue or net revenue during the project closure; These project partners do not have to report on any net revenue that will be generated up to 5 years after project completion.
Implementation and co-financing of projects or project partners, subject to the rules on de minimis aid, is stipulated in the Programme Manual5. The ceilings of grants are in accordance with the abovementioned regulations and described in the Manual in chapter 8.8 State Aid. In case you have doubts about the application of de minimis aid to your projects or any additional questions related to the issue, please turn for consultation to the JTS. Additional information about supporting projects with de minimis aid can be also found from the following EU Regulations: 1. Commission Regulation (EC) No 1998/2006 of 15 December 2006 6 – aid granted to undertakings in all sectors, with certain exceptions that are more specifically described in the Regulation, including: ? Fishery and aquaculture sectors; ? Primary production of agricultural products; ? Processing and marketing of agricultural products; ? Aid to export-related activities towards third countries or Member States; ? Aid contingent upon the use of domestic over imported goods; ? Undertakings active in the coal sector; ? Aid for the acquisition of road freight transport vehicles; ? Aid granted to undertakings in difficulty. 2. Commission Regulation (EC) No 1535/2007 of 20 December 20077 – aid granted to undertakings in the agricultural production sector;
5 6
Link to the web-page: http://www.estlat.eu/files/programmemanual_2011_01_19_75664.pdf COMMISSION REGULATION (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid
7
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
3. Commission Regulation (EC) No 875/2007 of 24 July 2007 8– aid granted to undertakings in the fisheries sector.
3.5. Other principles to take into account when implementing revenuegenerating projects
Other specific cases of revenue generation are as follows: ? ? When project does not generate revenue, the rules for revenue generation do not apply. Project revenues do not fully cover the operating costs. If the project generates revenue based on a financial analysis, but no net revenue, project eligible costs will not be deducted. When a project generates unplanned revenue, but no net revenue, then project eligible costs will not be deducted. Also, this includes cases where a project generates revenue, for example from a single event where this revenue does not exceed the co-financing amount of the respective project partner.
?
The use of revenue (NB! Not the use of net revenue!) earned by a project: ? ? The use of revenue will be solely decided by the respective project partner(s); Revenue can be used for co-financing the same project that has earned the revenue.
7
Commission Regulation (EC) No 1535/2007 of 20 December 2007 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the sector of agricultural production 8 Commission Regulation (EC) No 875/2007 of 24 July 2007 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the fisheries sector and amending Regulation (EC) No 1860/2004
8
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
Revenue generating projects
Project application
Revenue generating project
Project type
Project partner, who is subject to the rules of de minimis aid
Project with total costs not exceeding 1 million euro
Project with total costs exceeding 1 million euro
Project that does not generate revenue
Net revenue can be objectively estimated in advance
Net revenue cannot be objectively estimated in advance
Net revenue can be objectively estimated in advance
Net revenue cannot be objectively estimated in advance
Project application
Partners are not obliged to report any revenue or net revenue generated during that period
Net revenue will be deducted from the project budget with the positive financing decision
Project partners are not obliged to submit a cost-benefit analysis
Net revenue will be deducted from the project budget after the project has received positive financing decision Partners are obliged to report on any net revenue generated. Additional net revenue will be deducted
Project partners are not obliged to submit a cost-benefit analysis
Partners are not obliged to report any revenue or net revenue generated during that period
Partners are obliged to report on any net revenue generated. Additional net revenue will be deducted
End of a project and in 2014
Project implementation
Partners are obliged to report on any net revenue generated, which will be deducted
Partners are obliged to report on any net revenue generated, which will be deducted
Partners are not obliged to report on any net revenue to be generated after project closure
Submission of updated calculations about the generation of net revenue after project closure
5 years after the end of a project
Partners are not obliged to report on any net revenue generated 5 years after project completion
Partners are obliged to report generated net revenue until the Programme closure
9
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
4. How to manage projects with total costs not exceeding EUR 1 000 000?
The following chapter describes the preparation and implementation of revenue-generating projects with total costs not exceeding EUR 1 000 000, which are foreseen to generate net revenue and that net revenue can be estimated in advance. How to implement revenue-generating projects with total costs not exceeding EUR 1 000 000, where it is not possible to estimate revenue generation in advance, is described in chapter 6. Projects, generating net revenue that cannot be estimated in advance on page 17. In accordance with Council Regulation (EC) No 1341/2008 Article 1, projects with total costs not exceeding EUR 1 000 000 are not considered to be revenue-generating. However, in order to ensure sound financial management, treatment of revenue-generating projects, as stipulated in Article 55 of Council Regulation (EC) No 1083/2006 and Operational Programme of the Estonia - Latvia Programme 2007-2013, is applied to projects with total costs not exceeding EUR 1 000 000 in a simplified manner. Obligation of the project partners in Necessary documents case of revenue generation Project preparation and To add simplified calculation of net Project Application Form to application phase revenue and proportionally reduced be submitted to the JTS by project budget to the Project the LP. Application Form. Insert all the information regarding Information about revenue revenue generation to the Information generation form to be about revenue generation form. submitted to the JTS together with the Project Application Form by the LP. In case of positive decision by the MC, Subsidy Contract will be sent to the LP by the MA. Project implementation Partners are obliged to report on any net Partner report by all project phase revenue generated. partners, progress report by LP. Additional net revenue will be deducted On partner level: FLC from the eligible expenditure. confirmation to partner report. On project level: progress report including FLC confirmations to all partner reports. 10 Project phase
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
In case the project generates Information about revenue cumulatively additional net revenue over generation form to be 10% of its estimated total amount of submitted to the JTS. expenditure, it shall be reported by the LP. Amended Project Application Form to be submitted to the JTS by the LP. Amendment to Subsidy Contract to be concluded with the MA; will be sent to the LP by the MA. Project closure, in 2014 There will be no obligations to report and the period covering about the generation of net revenue 5 years after the end of a after the end of a project. project. In case a project generates additional net revenue that cumulatively exceeds 10% of estimated amount of total expenditure, the net revenue amount will be respectively deducted from its total budget.
4.1. Project application phase
Where a project with total costs not exceeding EUR 1 000 000 plans to generate net revenue and it can be estimated in advance, the applicant has to indicate in the Project Application Form Annex VI “Additional relevant information”: ? ? ? Total budget of the project activities; Foreseen net revenue that will be generated during the project implementation phase; Proportionally reduced project budget, where the foreseen net revenue has been deducted from the total cost of project activities.
The rest of the fields in the Project Application Form must be filled in, taking into account the proportionally reduced budget. Also, the form of Information about revenue generation must be submitted to the JTS together with the Project Application Form. The level of detail of the analysis of revenue generation depends on the complexity of the object, event, etc, the calculation is needed for. In case of positive financing decision, the MC approves the project with proportionally reduced budget.
4.2. Project implementation phase
Where a project partner of a project with total costs not exceeding EUR 1 000 000 has generated net revenue during the project implementation phase, the generated net revenue must be reported to the Programme Authorities in the partner report and in the progress report of the respective period.
11
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
All running projects with total cost below EUR 1 000 000, which have not previously reported their generated net revenue, are asked to fill net revenue related fields in the following partner and progress reports, if any net revenue is or has been generated. Additional net revenue, generated during the project implementation phase, which has not been deducted during the project application phase, is to be deducted from the project’s eligible expenditure. The maximum amount to be deducted will be based on the relevant co-financing rate applied for the project concerned and shall not in total exceed the ERDF contribution received by the respective project partner in question. Additional net revenue will be deducted on partner level from the eligible expenditure with the FLC confirmation to partner report. On project level the LP must make sure that additional net revenue has been deducted from the reported costs according to the eligibility rules in the progress report. JTS and CA control that generated net revenue has been deducted in accordance with the eligibility rules. Where a project partner has generated additional net revenue that exceeds the forecasted amount and has not fulfilled its obligation to report net revenue, it is possible for the project partners to report it with the next partner and progress report. In case revenue generation will be noticed by any of the Programme Authorities or by auditors, and project partner has not fulfilled its obligations regarding reporting on the revenue generation, it will be regarded as an irregularity. Decision of recovery will be formalised by the Certifying Authority. In case the project generates cumulatively additional net revenue in the amount exceeding 10% of its estimated total amount of expenditure, the total budget of the project will be amended accordingly and the net revenue amount will be deducted from the total budget of the project. LP has to submit an amended project Application Form, accompanied with the updated Information about revenue generation form to the JTS, followed by an amendment to Subsidy Contract, which will be concluded with the MA.
4.3. Period after project implementation
Partners of the revenue-generating projects with total costs not exceeding EUR 1 000 000 are not obliged to report on any net revenue to be generated after project closure as well as during the 5year period after the end of a project. The obligation to report on net revenue ends with the end of the implementation phase of the project.
12
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
5. Revenue-generating projects with total costs over EUR 1 000 000
The following chapter describes the preparation and implementation of revenue-generating projects with total costs over EUR 1 000 000, which are foreseen to generate net revenue and that net revenue can be estimated in advance. How to implement revenue-generating projects with total costs over EUR 1 000 000, where it is not possible to estimate revenue generation in advance, is described in chapter 6. Projects, generating net revenue that cannot be estimated in advance on page 17. Generating net revenue must be taken into account during project implementation and 5 years after the end of a project. Following the funding gap method, only the cash in-flows directly paid by users have to be taken into account in determining the gap. Other cash in-flows, both public and private contributions that do not stem from charges to the users of the service, are not taken into account. Obligation of the project partners in case of Necessary documents revenue generation Project preparation LP adds information about the generation of Project Application Form to and application net revenue to Project Application Form. be submitted to the JTS. phase After approval with total budget by the MC, LP Information about revenue submits Information about revenue generation form to be generation form. Information submitted with submitted to the JTS. the document must be based on the results of the expertise, organized by the JTS, regarding estimation of revenue generation. LP deducts the budget according to the results Project Application Form to of the expertise and makes necessary be submitted to the JTS by amendments to the Project Application Form. the LP, accompanied by the Information about revenue generation form. Subsidy Contract will be sent to the LP by the MA. Partners are obliged to report on any net Partner report, progress revenue generated. report Additional net revenue will be reported by On partner level: FLC project partners and deducted from the confirmation to partner eligible expenditure. report. On project level: progress report including FLC confirmations to all partner reports. 13 Project phase
Project implementation phase
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
In case project generates any additional net Information about revenue revenue in the amount exceeding 10% of its generation form to be estimated total eligible expenditure, it will be submitted to the JTS. reported by the LP with updated Information about revenue generation form. In case a project generates additional net revenue in the amount exceeding 10% of its estimated total eligible expenditure, net revenue amount will be deducted from the total budget and the project will be amended accordingly with amended Subsidy Contract. LP submits updated calculations about the generation of net revenue during the 5-year period after project closure in Information about revenue generation form. Project Application Form with reduced project budget to be submitted to the JTS. Amendment to Subsidy Contract will be sent to the LP by the MA. Updated Information about revenue generation form to be submitted to the JTS together with the last progress report. LP reports any additional net revenue earned Information about revenue after the project completion and additional generation form to be calculation about net revenue generation in submitted to the JTS. Information about revenue generation form.
Project closure
1 December 2014
Partners are obliged to make a repayment in Application for making case of additional net revenue. repayment to be submitted to the JTS by the LP. 5 years after the Partners are obliged to report on additionally Information about revenue end of a project generated net revenue in Information about generation form to be revenue generation form. submitted to the JTS by the LP. Partners are obliged to make a repayment in Application for making case of additional net revenue. repayment to be submitted to the JTS by the LP.
5.1. Project application phase
Where it is possible to estimate revenue generation objectively in advance during the project application phase, the LP submits the Project Application Form, including an indication about possible revenue generation by the project in Annex VI “Additional relevant information”. No detailed estimations are necessary during initial project submission. In case of positive financing decision, the MC approves the project with the total budget. After receiving positive financing decision, where a project generates net revenue, the funding gap has to be estimated. The expertise will be carried out by the JTS. 14
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
Taking into account the results of the respective cost-benefit analysis, which will be organized by the JTS, the applicant has to submit the following documents to the JTS for signing Subsidy Contract: 1. Updated Project Application Form: ? Total budget of the project activities; ? Foreseen net revenue that will be generated during the project implementation phase and up to 5 years after project completion; ? Proportionally reduced project budget, where the foreseen net revenue has been deducted from the total cost of project activities. 2. Information about revenue generation form. The level of detail of the analysis depends on the complexity of the object, event, etc. the calculation is needed for. If the project generates revenue based on a financial analysis, but no net revenue, project eligible costs will not be deducted. If project generates net revenue, the project eligible costs will be deducted proportionally in the amount of generated net revenue, following the co-financing rates of the project. Expected net revenue is deducted from the relevant partner’s budget before signing the Subsidy Contract. Where not all the project costs are eligible for ERDF support, the net revenue must be allocated pro rata to the eligible and non-eligible parts of the costs. In order to determine discounted eligible expenditure that is to be taken into consideration, the discounted investment costs must be compared to discounted net revenue.
5.2. Project implementation phase
The partners of the projects with total cost over EUR 1 000 000 need to report net revenue in partner reports and progress reports. Additional net revenue that exceeds the forecasted amount will be deducted from the project’s eligible expenditure. Where the amount of additional net revenue exceeds 10% of the estimated total eligible expenditure of the project, net revenue amount will be deducted from the total budget of the project. Where a project partner has generated additional net revenue that exceeds the forecasted amount and has not fulfilled its obligation to report net revenue, it is possible for the project partners to report it with the next partner and progress report. In case the generation of net revenue will be noticed by any of the Programme Authorities or by auditors, and project partner has not fulfilled its obligations regarding reporting on the revenue generation, it will be regarded as an irregularity. Decision of recovery will be formalised by the CA.
5.3. Period after project implementation
All projects that have generated net revenue during the project application phase and/or the generation of net revenue is foreseen for the period up to 5 years after project completion, are obliged to: 15
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
?
? ?
submit an updated calculation about net revenue generation for the 5-year period after the end of a project with the last progress report of the project in the Information about revenue generation form by the LP; report any additional net revenue earned after the project completion in the Information about revenue generation form by the LP. The deadline for reporting is December 1, 2014; submit additional calculation about net revenue generation for the 5-year period after the end of a project in the Information about revenue generation form by the LP not later than December 1, 2014.
The JTS will ask the LPs of the finished projects to provide information about net revenue generation with the respective form during the project completion and in 2014. If this is deemed necessary, the analysis should be arranged by the same body, who arranged the first analysis. Generated net revenue that was not foreseen in the initial financial analysis will be proportionally deducted from the last payment to the LP or earlier, if possible. In case of additional net revenue after project completion it will be paid back by the respective project partner, taking into account the co-financing rate applied for the project concerned. The LP is responsible for submitting an application for making repayment to the JTS, as described in chapter 7. Repayment on page 20. The cumulative amount of deductions or repayments will not exceed the total ERDF contribution received by the project partner, who has generated net revenue. NB! As an exception the deadline for reporting for strategic projects is not December 1, 2015, but July 1, 2015.
16
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
6. Projects, generating net revenue that cannot be estimated in advance
This chapter describes the preparation and implementation of projects that generate net revenue that cannot be estimated in advance, regardless of the amount of total costs of the project. Project phase Obligation of the project partners in case of revenue generation Necessary documents
Project preparation and application phase Project implementation All project partners are obliged to report Partner phase on any net revenue generated. report
report,
progress
Net revenue will be deducted from the On partner level: FLC eligible expenditure. confirmation to partner report. On project level: progress report including FLC confirmations to all partner reports. In case a project generates additional net revenue that cumulatively exceeds 10% of estimated amount of total expenditure, the net revenue amount will be respectively deducted from its total budget. Project end December 1, 2014 and Partners are obliged to make a repayment in case of additional net revenue. When it turns out to be LP submits the updated Application Form possible to objectively and the results of the cost-benefit estimate revenue analysis according to funding gap generation method in the form “Information about revenue generation”. Amended Project Application Form to be submitted to the JTS by the LP. Amendment to Subsidy Contract to be concluded with the MA; will be sent to the LP by the MA. Application for making repayment to be submitted to the JTS. Updated Project Application Form and Information about revenue generation form to be submitted to the JTS.
The estimated amount of generated net Amended Project Application revenue will be deducted from the total Form to be submitted to the budget of the project respectively. JTS; amended Subsidy Contract to be concluded with the MA. 5 years after the end of Partners of the projects with total costs Application for making a project over 1 000 000 are obliged to make a repayment to be submitted 17
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
repayment in case of additional net to the JTS. revenue. 5 years after the end of There will be no obligations to report a project about the generation of net revenue for partners of the projects with total costs under 1 000 000 after the end of a project.
6.1. Project preparation and application phase
In case it is not possible to estimate net revenue generation in advance, the project is not obliged to: ? ? include to the Project Application Form information about foreseen net revenue that will be generated during the project implementation phase; submit the form of Information about revenue generation to the JTS together with the Project Application Form.
6.2. Project implementation phase
If net revenue cannot be objectively estimated in advance during the project application phase, generation of net revenue must be reported in partner and progress reports of the respective project periods during the project implementation phase and for five years after the project completion. All project partners are obliged to keep the accounting of net revenue generated. If net revenue cannot be objectively estimated in advance during the project application phase, but the project generates net revenue, it is possible for the project partners to report it with the next partner and progress report. Net revenue will be deducted from the project’s eligible expenditure. Where the amount of net revenue exceeds 10% of the estimated total eligible expenditure of the project, net revenue amount will be deducted from the total budget of the project. When it will become possible to estimate the generation of net revenue objectively in advance during the project implementation phase, it is strongly suggested to carry out the cost-benefit analysis, to estimate the funding gap and reduce the project budget of the respective project partner(s) accordingly.
6.3. Period after project implementation
All projects with total costs under EUR 1 000 000 that generate net revenue that cannot be estimated in advance during the project application phase are not obliged to report on any net revenue to be generated after the end of a project as well as during the 5-year period after project completion. The obligation to report on net revenue ends with the end of the project. All projects with total costs over EUR 1 000 000 that generate net revenue that cannot be estimated in advance during the project application phase and/or during the period up to 5 years after project completion, are obliged to report any net revenue earned after the project completion. The deadline for reporting is December 1, 2014. Please follow the repayment procedure, as described in chapter 7. Repayment on page 20.
18
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
NB! As an exception the deadline for reporting for strategic projects is not December 1, 2015, but July 1, 2015. The JTS will ask the LPs of the finished projects with total costs over EUR 1 000 000 to provide information about net revenue generation during the project completion and in 2014. In case such a project has generated net revenue after project completion, project partner who has earned net revenue shall pay it back. To start the repayment procedure, the LP shall submit an application for making repayment to the JTS. The CA will make recovery decision. The maximum amount to be deducted will be based on the relevant co-financing rate applied for the respective project partner concerned and shall not in total exceed the ERDF contribution received by the project partner in question. In case revenue generation during the project implementation phase or after the end of a project will be noticed by any of the Programme Authorities or by auditors and project partner has not fulfilled its obligations regarding reporting on the revenue generation, it will be regarded as irregularity.
19
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
7. Repayment
Where a project has generated net revenue that exceeds the forecasted amount, it is possible for the project partners to make a repayment after the end of the project. Only projects with total costs exceeding EUR 1 000 000 are obliged to report on net revenue generation after project has ended. Documents necessary for repayment are as follows: 1. LP submits an application for making repayment to be submitted to the JTS, signed also by the respective project partner who has earned the net revenue, including the following information: ? ? ? ? Number of the project; Sum of the ineligible ERDF support repayment; Justification; Deadline for making repayment is at least 5 work days.
2. Decision for making repayment, either by the Head of the MA or by the assignee of the Head of the MA. Receiver of the repayment: Receiver: Ministry of Finance Receiving Bank: SEB 10220034796011 SWIFT: EEUHEE2X IBAN : EE891010220034796011 Reference number: 2500079306 Explanation: “Repayment of project number:....”, When the project will not make repayment in time, the CA will make a decision of recovery. In case net revenue generation, which has not been previously reported, will be noticed by any of the Programme Authorities or by auditors, it will be regarded as irregularity. In case of irregularity, decision of recovery will be formalised by the CA.
20
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
8. Funding gap method
Funding gap method is the method to be used for carrying out cost-benefit analysis of a project to determine the ERDF grant. All the cost-benefit analyses are organized by the JTS, unless a project proposes to carry the analysis out itself. In Estonia - Latvia Programme the appropriate period for cost-benefit analysis to cover is 15 years from the beginning of project implementation – the life-cycle of the project. As regards ETC type of programmes, one project can be implemented in several places and by several project partners who carry out activities that differ from each other. The amount of investments and the results of economic activity can be different. Therefore, the cost benefit analysis has to be prepared separately for each project partner. The funding gap is the difference between the current value of project investment costs and discounted net revenue. While calculating budget for project activities, net revenue that can be estimated in advance will proportionally reduce the total eligible costs and ERDF co-financing. This applies to all projects funded by the Programme, regardless of the amount of total costs of the project. Eligible expenditure of net revenue-generating projects shall not exceed the current value of the investment cost less the current value of the net revenue from the investment over a specific reference period for appropriate to the category of investment concerned: ? Investments in infrastructure; or ? Other projects where it is possible to objectively estimate the revenue and net revenue in advance. The funding-cap expresses the part of the project investment costs which cannot be financed by the project partners themselves; and that therefore needs to be financed from the contributions of the Programme. The funding gap approach applies to all operations which generate net revenue through charges borne directly by users. This applies regardless of the way the net revenue will be managed. 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. Funding gap approach does not apply to the following cases: ? Projects that do not generate revenue (funding gap rate equals 100%); ? Projects that do not generate net revenue. These are projects whose revenues do not fully cover the operating costs (funding gap rate equals 100%) – as the revenues do not fully cover the operating costs, there will be no net revenue and these projects are not considered to be revenue-generating projects; ? Projects subject to the rules of de minimis aid, as the rules that apply to revenue-generating projects do not apply to projects subject to the rules of de minimis aid.
21
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
8.1. Calculation of the funding gap
Calculation of the funding gap consists of three key steps in order to determine the EU grant: 1st STEP. Calculation of the funding gap Max DEE = DIC – DNR = FG Where: DEE is discounted eligible expenditure; FG is the funding gap; DIC is discounted investment cost; DNR is discounted net revenue.
2nd STEP. Calculation of the discounted eligible expenditure DEE = FG*P Where: DEE is discounted eligible expenditure; P is percentage consistent with the ratio of discounted eligible cost over discounted investment cost.
3rd STEP. Calculation of the contribution from the Funds DGEU = DEE*CREU Where: CREU is the EU co-funding rate; DGEU is the discounted contribution from the Funds.
Incremental net revenue is the difference between the revenue and the operating costs of two project scenarios – “with the project” and “without the project”. As only the net revenue from the investment needs to be considered; only the incremental net revenue is taken into account while calculating the funding gap. The calculations should include running costs (e.g. labour, raw materials, and electricity), maintenance expenses and costs for the replacement of project short-life equipment. Financing costs (e.g. interest paid) and depreciation should be excluded. When VAT is recoverable, the costs and revenues should be based on figures excluding VAT. The pro rata allocation of net revenue to eligible costs is carried out by multiplying the funding gap times the ratio of the discounted eligible costs over discounted investment costs. The resulting amount, the discounted eligible expenditure, multiplied by the co-funding rate identifies the discounted contribution from the Funds from which the related undiscounted value can be derived. For example, if only 80% of the discounted investment cost is eligible, which means that 20% of the discounted investment costs are not eligible, then 20% of the discounted net revenue must also not be considered in the funding-gap. This means that both the discounted net revenue and investment costs should be multiplied by 80%.
22
doc_859612073.pdf
In business, revenue or turnover is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover. Some companies receive revenue from interest, royalties, or other fees.
REVENUE-GENERATING PROJECTS Guidelines for Project Partners
ESTONIA - LATVIA PROGRAMME 2007-2013 CCI No 2007 CB 163 PO 050
Cross-border Co-operation Programme under European Territorial Co-operation Objective
May 2012
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
1. Table of contents
1. Table of contents ................................................................................................................................. 2 2. Abbreviations and definitions ............................................................................................................. 3 3. Introduction ......................................................................................................................................... 5 3.1. What is revenue?.......................................................................................................................... 5 3.2. Can there be any other types of cash in-flows? ........................................................................... 5 3.3. Treatment of revenue – legal basis .............................................................................................. 6 3.4. Project partners subject to the rules on de minimis aid .............................................................. 7 3.5. Other principles to take into account when implementing revenue-generating projects .......... 8 4. How to manage projects with total costs not exceeding EUR 1 000 000?........................................ 10 4.1. Project application phase ........................................................................................................... 11 4.2. Project implementation phase ................................................................................................... 11 4.3. Period after project implementation ......................................................................................... 12 5. Revenue-generating projects with total costs over EUR 1 000 000 .................................................. 13 5.1. Project application phase ........................................................................................................... 14 5.2. Project implementation phase ................................................................................................... 15 5.3. Period after project implementation ......................................................................................... 15 6. Projects, generating net revenue that cannot be estimated in advance .......................................... 17 6.1. Project preparation and application phase ................................................................................ 18 6.2. Project implementation phase ................................................................................................... 18 6.3. Period after project implementation ......................................................................................... 18 7. Repayment ........................................................................................................................................ 20 8. Funding gap method ......................................................................................................................... 21 8.1. Calculation of the funding gap ................................................................................................... 22
2
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
2. Abbreviations and definitions
AA Audit Authority; verifies the correctness of the controls carried out on the projects. Located at the Internal Audit Department of the Estonian Ministry of the Interior. Unplanned net revenue that is generated during the project implementation phase of after the end of a project. It exceeds the forecasted amount of revenue, as it was estimated in the cost-benefit analysis. Certifying Authority; is responsible for paying out subsidies to the projects, as well as carrying out repayment and recovery procedures in certain cases of generation of net revenue. The tasks of CA are carried out by the Estonian Ministry of the Interior, Finance Department. The end of a project in the context of the current document is in consistency with Chapter 8.1. Start and End Date of the Project of the Programme Manual1. End of a project is the end of implementation phase of a project, meaning the period eligible for carrying out project activities and incurring expenses. After finalisation of the project, a final report has to be submitted to the JTS. This report provides information about outputs, results and impacts of the project, and general feedback from the project to the Programme management authorities. A form of the final report is published on the Programme’s website. First Level Control; carries out controls and gives confirmations on partner report level. In Estonia the FLC is carried out by the Estonian Ministry of the Interior and in Latvia by State Regional Development Agency. The basis for the calculation of EU grant in revenue-generating projects, stipulating that the eligible expenditure cannot exceed the current value of the investment cost less the current value of the net revenue from the investment over a specific reference period appropriate to the category of investment concerned. Form for submitting information about revenue generation to the Joint Technical Secretariat; the Excel file is annexed to the Guidelines as a separate document. Joint Technical Secretariat; the most important contact point for project applicants and partners during preparation and implementation of the projects. The JTS is hosted by Enterprise Estonia, located in Tartu and supported by an information point in Riga located at the State Regional Development Agency. Lead partner; each project has to appoint a LP, who has full financial and legal responsibility for the project, including implementation, reporting and coordinating activities. LP submits all the documents necessary for implementation of the project, except partner reports that are submitted to the FLC by each project partner separately. Managing Authority; responsible for efficiency and correctness of management and implementation of the Programme. The tasks of MA are carried out by the Regional Development Department of the Estonian Ministry of the Interior.
Additional net revenue CA
End of a project
Final report
FLC
Funding gap method
Information about revenue generation JTS
LP
MA
11
Link to the web-page: http://www.estlat.eu/files/programmemanual_2011_01_19_75664.pdf
3
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
MC
Operating costs
Partner report
Programme Programme Authorities Progress report
Among other obligations the MA signs Subsidy Contracts and amendments to the Subsidy Contracts. Monitoring Committee; composed of representatives from both Estonia and Latvia, is responsible for selecting projects for funding, monitoring their implementation, making substantial changes to the Programme documents etc. Operating costs are the costs to take into account when calculating the funding cap. They include running costs (day-to-day costs to labour, raw materials, electricity etc) and maintenance expenses (the costs of keeping equipment and plant in satisfactory condition to achieve a specific quality of service). When calculating funding cap, also costs for the replacement of project short-life equipment are included. Each project partner (including LP) has to submit a partner report with expenditure and activity description (including all supporting bookkeeping documents) to Estonian or Latvian FLC within 10 working days after the end of each milestone. Based on this report a FLC confirmation is issued for each project partner’s expenditure during the milestone. Estonia – Latvia Programme 2007-2013. Programme institutions, dealing with different aspects of programme implementation, including MA, JTS, CA, AA and FLC. LP submits the progress report of the whole project to the JTS with supporting documents – partner reports, FLC confirmations of partner reports and additional materials, e.g. examples of project outputs.
4
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
3. Introduction
This guideline is targeted to the project partners and potential beneficiaries of the Estonia - Latvia Programme 2007-2013. It is aimed at helping project partners and potential beneficiaries to understand, how to handle different situations related to revenue generation during different phases of the project implementation from project preparation phase to the period after the end of a project.
3.1. What is revenue?
The definition of revenue is as follows: Revenues are cash in-flows directly paid by users for the goods and/or services provided by the project. Cash in-flow refers to all financial contributions paid to the project excluding ERDF and national co-financing. Revenue-generating project is any operation involving an investment in infrastructure, the use of which is subject to charges borne directly by users, and any operation involving the sale or rent of land or buildings or the provision of services and/or goods against payment. Net revenue generating projects are projects whose revenues exceed the operating costs of the project. Also, it is important to understand that only net revenue received from the project activities proportionally reduces the total eligible costs and ERDF co-financing. How to calculate net revenue is described in chapter 8. Funding gap method on page 21. Also, how to implement revenue-generating projects in different phases of project implementation is described in the following chapters of the document.
3.2. Can there be any other types of cash in-flows?
In addition to revenues there are other types of cash in-flows. These cash in-flows are not directly paid by users for the goods and/or services provided by the project and are not treated the same way as revenue. Other cash in-flows may be private and public contributions and/or financial gains that do not stem from tariffs, tolls, fees, rents or any other form of charge directly borne by the users. Some examples of other types of cash in-flows: ? Government contributions towards construction and/or operating costs; ? Contribution of public bodies and/or private donors to construction and/or operating costs. Other cash in-flows are not regarded as revenues. They must not be included in the determination of the funding gap (see chapter 8. Funding gap method on page 21), although they may be considered in the cost-benefit analysis of the national capital profitability. Differences in the type of cash in-flow and how they are related to the provisions for applying rules on revenue generation can be schematically described as follows:
5
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
Cash in-flows
Revenue: cash in-flows directly paid by users
Other cash in-flows
Revenue: Charges borne directly by users for the use of infrastructure, sale or rent of land and buildings, or payments for services Regulation (EC) No 1083/2006 Article 55 is applied. Funding gap method for calculating the financial profitability of the investment is applied
Private and public contribution and/or financial gains that do not stem from tariffs, tolls, fees, rents or any other form of charge directly borne by the users
Regulation (EC) No 1083/2006 Article 55 is not applicable. Funding gap method is not applied.
3.3. Treatment of revenue – legal basis
Additional information about the treatment of revenues can be found in the following EU Regulations: 1. Council Regulation (EC) No 1083/2006 of 11 July 20062 Article 55 – treatment of revenues. Revenue-generating project is: ? Any operation involving an investment in infrastructure, the use of which is subject to charges borne directly by users; or ? Any operation involving the sale or rent of land or buildings; or ? Any other provision of services against payment. 2. Regulation (EU) No 539/2010 of the European Parliament and of the Council of 16 June 20103 specifies that the provisions of Article 55 of the Council Regulation (EC) No 1083/2006 apply on net revenue; 3. Council Regulation (EC) No 1341/20084 Article 1 specifies that the provisions shall apply to operations which are co-financed by the ERDF and the total cost of which exceeds EUR 1 000 000. Article 2 of the same Regulation stipulates that the provisions shall apply from 1 August 2006 to all operations receiving assistance from the Structural Funds during the 2007-2013 programming period.
2
Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 3 Regulation (EU) No 539/2010 of the European Parliament and of the Council of 16 June 2010 amending Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund as regards simplification of certain requirements and as regards certain provisions relating to financial management 4 Council Regulation (EC) No 1341/2008 of 18 December 2008 amending Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund, in respect of certain revenue-generating projects
6
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
3.4. Project partners subject to the rules on de minimis aid
Private enterprises can participate in the Programme under Priorities 1 and 2 in conformity with de minimis rules. Where a partner of a revenue-generating project is subject to the rules on de minimis aid, the partner is not regarded as subject to the rules of implementation of revenue-generating projects. Project partner, who is funded by the Programme according to de minimis rules, is not obliged to apply the revenue generation rules: ? ? ? ? These project partners or potential applicants are not obliged to report on any revenue or net revenue during the project preparation period; These project partners do not have to report any revenue or net revenue during the project implementation period; They are not obliged to report on any revenue or net revenue during the project closure; These project partners do not have to report on any net revenue that will be generated up to 5 years after project completion.
Implementation and co-financing of projects or project partners, subject to the rules on de minimis aid, is stipulated in the Programme Manual5. The ceilings of grants are in accordance with the abovementioned regulations and described in the Manual in chapter 8.8 State Aid. In case you have doubts about the application of de minimis aid to your projects or any additional questions related to the issue, please turn for consultation to the JTS. Additional information about supporting projects with de minimis aid can be also found from the following EU Regulations: 1. Commission Regulation (EC) No 1998/2006 of 15 December 2006 6 – aid granted to undertakings in all sectors, with certain exceptions that are more specifically described in the Regulation, including: ? Fishery and aquaculture sectors; ? Primary production of agricultural products; ? Processing and marketing of agricultural products; ? Aid to export-related activities towards third countries or Member States; ? Aid contingent upon the use of domestic over imported goods; ? Undertakings active in the coal sector; ? Aid for the acquisition of road freight transport vehicles; ? Aid granted to undertakings in difficulty. 2. Commission Regulation (EC) No 1535/2007 of 20 December 20077 – aid granted to undertakings in the agricultural production sector;
5 6
Link to the web-page: http://www.estlat.eu/files/programmemanual_2011_01_19_75664.pdf COMMISSION REGULATION (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid
7
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
3. Commission Regulation (EC) No 875/2007 of 24 July 2007 8– aid granted to undertakings in the fisheries sector.
3.5. Other principles to take into account when implementing revenuegenerating projects
Other specific cases of revenue generation are as follows: ? ? When project does not generate revenue, the rules for revenue generation do not apply. Project revenues do not fully cover the operating costs. If the project generates revenue based on a financial analysis, but no net revenue, project eligible costs will not be deducted. When a project generates unplanned revenue, but no net revenue, then project eligible costs will not be deducted. Also, this includes cases where a project generates revenue, for example from a single event where this revenue does not exceed the co-financing amount of the respective project partner.
?
The use of revenue (NB! Not the use of net revenue!) earned by a project: ? ? The use of revenue will be solely decided by the respective project partner(s); Revenue can be used for co-financing the same project that has earned the revenue.
7
Commission Regulation (EC) No 1535/2007 of 20 December 2007 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the sector of agricultural production 8 Commission Regulation (EC) No 875/2007 of 24 July 2007 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the fisheries sector and amending Regulation (EC) No 1860/2004
8
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
Revenue generating projects
Project application
Revenue generating project
Project type
Project partner, who is subject to the rules of de minimis aid
Project with total costs not exceeding 1 million euro
Project with total costs exceeding 1 million euro
Project that does not generate revenue
Net revenue can be objectively estimated in advance
Net revenue cannot be objectively estimated in advance
Net revenue can be objectively estimated in advance
Net revenue cannot be objectively estimated in advance
Project application
Partners are not obliged to report any revenue or net revenue generated during that period
Net revenue will be deducted from the project budget with the positive financing decision
Project partners are not obliged to submit a cost-benefit analysis
Net revenue will be deducted from the project budget after the project has received positive financing decision Partners are obliged to report on any net revenue generated. Additional net revenue will be deducted
Project partners are not obliged to submit a cost-benefit analysis
Partners are not obliged to report any revenue or net revenue generated during that period
Partners are obliged to report on any net revenue generated. Additional net revenue will be deducted
End of a project and in 2014
Project implementation
Partners are obliged to report on any net revenue generated, which will be deducted
Partners are obliged to report on any net revenue generated, which will be deducted
Partners are not obliged to report on any net revenue to be generated after project closure
Submission of updated calculations about the generation of net revenue after project closure
5 years after the end of a project
Partners are not obliged to report on any net revenue generated 5 years after project completion
Partners are obliged to report generated net revenue until the Programme closure
9
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
4. How to manage projects with total costs not exceeding EUR 1 000 000?
The following chapter describes the preparation and implementation of revenue-generating projects with total costs not exceeding EUR 1 000 000, which are foreseen to generate net revenue and that net revenue can be estimated in advance. How to implement revenue-generating projects with total costs not exceeding EUR 1 000 000, where it is not possible to estimate revenue generation in advance, is described in chapter 6. Projects, generating net revenue that cannot be estimated in advance on page 17. In accordance with Council Regulation (EC) No 1341/2008 Article 1, projects with total costs not exceeding EUR 1 000 000 are not considered to be revenue-generating. However, in order to ensure sound financial management, treatment of revenue-generating projects, as stipulated in Article 55 of Council Regulation (EC) No 1083/2006 and Operational Programme of the Estonia - Latvia Programme 2007-2013, is applied to projects with total costs not exceeding EUR 1 000 000 in a simplified manner. Obligation of the project partners in Necessary documents case of revenue generation Project preparation and To add simplified calculation of net Project Application Form to application phase revenue and proportionally reduced be submitted to the JTS by project budget to the Project the LP. Application Form. Insert all the information regarding Information about revenue revenue generation to the Information generation form to be about revenue generation form. submitted to the JTS together with the Project Application Form by the LP. In case of positive decision by the MC, Subsidy Contract will be sent to the LP by the MA. Project implementation Partners are obliged to report on any net Partner report by all project phase revenue generated. partners, progress report by LP. Additional net revenue will be deducted On partner level: FLC from the eligible expenditure. confirmation to partner report. On project level: progress report including FLC confirmations to all partner reports. 10 Project phase
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
In case the project generates Information about revenue cumulatively additional net revenue over generation form to be 10% of its estimated total amount of submitted to the JTS. expenditure, it shall be reported by the LP. Amended Project Application Form to be submitted to the JTS by the LP. Amendment to Subsidy Contract to be concluded with the MA; will be sent to the LP by the MA. Project closure, in 2014 There will be no obligations to report and the period covering about the generation of net revenue 5 years after the end of a after the end of a project. project. In case a project generates additional net revenue that cumulatively exceeds 10% of estimated amount of total expenditure, the net revenue amount will be respectively deducted from its total budget.
4.1. Project application phase
Where a project with total costs not exceeding EUR 1 000 000 plans to generate net revenue and it can be estimated in advance, the applicant has to indicate in the Project Application Form Annex VI “Additional relevant information”: ? ? ? Total budget of the project activities; Foreseen net revenue that will be generated during the project implementation phase; Proportionally reduced project budget, where the foreseen net revenue has been deducted from the total cost of project activities.
The rest of the fields in the Project Application Form must be filled in, taking into account the proportionally reduced budget. Also, the form of Information about revenue generation must be submitted to the JTS together with the Project Application Form. The level of detail of the analysis of revenue generation depends on the complexity of the object, event, etc, the calculation is needed for. In case of positive financing decision, the MC approves the project with proportionally reduced budget.
4.2. Project implementation phase
Where a project partner of a project with total costs not exceeding EUR 1 000 000 has generated net revenue during the project implementation phase, the generated net revenue must be reported to the Programme Authorities in the partner report and in the progress report of the respective period.
11
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
All running projects with total cost below EUR 1 000 000, which have not previously reported their generated net revenue, are asked to fill net revenue related fields in the following partner and progress reports, if any net revenue is or has been generated. Additional net revenue, generated during the project implementation phase, which has not been deducted during the project application phase, is to be deducted from the project’s eligible expenditure. The maximum amount to be deducted will be based on the relevant co-financing rate applied for the project concerned and shall not in total exceed the ERDF contribution received by the respective project partner in question. Additional net revenue will be deducted on partner level from the eligible expenditure with the FLC confirmation to partner report. On project level the LP must make sure that additional net revenue has been deducted from the reported costs according to the eligibility rules in the progress report. JTS and CA control that generated net revenue has been deducted in accordance with the eligibility rules. Where a project partner has generated additional net revenue that exceeds the forecasted amount and has not fulfilled its obligation to report net revenue, it is possible for the project partners to report it with the next partner and progress report. In case revenue generation will be noticed by any of the Programme Authorities or by auditors, and project partner has not fulfilled its obligations regarding reporting on the revenue generation, it will be regarded as an irregularity. Decision of recovery will be formalised by the Certifying Authority. In case the project generates cumulatively additional net revenue in the amount exceeding 10% of its estimated total amount of expenditure, the total budget of the project will be amended accordingly and the net revenue amount will be deducted from the total budget of the project. LP has to submit an amended project Application Form, accompanied with the updated Information about revenue generation form to the JTS, followed by an amendment to Subsidy Contract, which will be concluded with the MA.
4.3. Period after project implementation
Partners of the revenue-generating projects with total costs not exceeding EUR 1 000 000 are not obliged to report on any net revenue to be generated after project closure as well as during the 5year period after the end of a project. The obligation to report on net revenue ends with the end of the implementation phase of the project.
12
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
5. Revenue-generating projects with total costs over EUR 1 000 000
The following chapter describes the preparation and implementation of revenue-generating projects with total costs over EUR 1 000 000, which are foreseen to generate net revenue and that net revenue can be estimated in advance. How to implement revenue-generating projects with total costs over EUR 1 000 000, where it is not possible to estimate revenue generation in advance, is described in chapter 6. Projects, generating net revenue that cannot be estimated in advance on page 17. Generating net revenue must be taken into account during project implementation and 5 years after the end of a project. Following the funding gap method, only the cash in-flows directly paid by users have to be taken into account in determining the gap. Other cash in-flows, both public and private contributions that do not stem from charges to the users of the service, are not taken into account. Obligation of the project partners in case of Necessary documents revenue generation Project preparation LP adds information about the generation of Project Application Form to and application net revenue to Project Application Form. be submitted to the JTS. phase After approval with total budget by the MC, LP Information about revenue submits Information about revenue generation form to be generation form. Information submitted with submitted to the JTS. the document must be based on the results of the expertise, organized by the JTS, regarding estimation of revenue generation. LP deducts the budget according to the results Project Application Form to of the expertise and makes necessary be submitted to the JTS by amendments to the Project Application Form. the LP, accompanied by the Information about revenue generation form. Subsidy Contract will be sent to the LP by the MA. Partners are obliged to report on any net Partner report, progress revenue generated. report Additional net revenue will be reported by On partner level: FLC project partners and deducted from the confirmation to partner eligible expenditure. report. On project level: progress report including FLC confirmations to all partner reports. 13 Project phase
Project implementation phase
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
In case project generates any additional net Information about revenue revenue in the amount exceeding 10% of its generation form to be estimated total eligible expenditure, it will be submitted to the JTS. reported by the LP with updated Information about revenue generation form. In case a project generates additional net revenue in the amount exceeding 10% of its estimated total eligible expenditure, net revenue amount will be deducted from the total budget and the project will be amended accordingly with amended Subsidy Contract. LP submits updated calculations about the generation of net revenue during the 5-year period after project closure in Information about revenue generation form. Project Application Form with reduced project budget to be submitted to the JTS. Amendment to Subsidy Contract will be sent to the LP by the MA. Updated Information about revenue generation form to be submitted to the JTS together with the last progress report. LP reports any additional net revenue earned Information about revenue after the project completion and additional generation form to be calculation about net revenue generation in submitted to the JTS. Information about revenue generation form.
Project closure
1 December 2014
Partners are obliged to make a repayment in Application for making case of additional net revenue. repayment to be submitted to the JTS by the LP. 5 years after the Partners are obliged to report on additionally Information about revenue end of a project generated net revenue in Information about generation form to be revenue generation form. submitted to the JTS by the LP. Partners are obliged to make a repayment in Application for making case of additional net revenue. repayment to be submitted to the JTS by the LP.
5.1. Project application phase
Where it is possible to estimate revenue generation objectively in advance during the project application phase, the LP submits the Project Application Form, including an indication about possible revenue generation by the project in Annex VI “Additional relevant information”. No detailed estimations are necessary during initial project submission. In case of positive financing decision, the MC approves the project with the total budget. After receiving positive financing decision, where a project generates net revenue, the funding gap has to be estimated. The expertise will be carried out by the JTS. 14
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
Taking into account the results of the respective cost-benefit analysis, which will be organized by the JTS, the applicant has to submit the following documents to the JTS for signing Subsidy Contract: 1. Updated Project Application Form: ? Total budget of the project activities; ? Foreseen net revenue that will be generated during the project implementation phase and up to 5 years after project completion; ? Proportionally reduced project budget, where the foreseen net revenue has been deducted from the total cost of project activities. 2. Information about revenue generation form. The level of detail of the analysis depends on the complexity of the object, event, etc. the calculation is needed for. If the project generates revenue based on a financial analysis, but no net revenue, project eligible costs will not be deducted. If project generates net revenue, the project eligible costs will be deducted proportionally in the amount of generated net revenue, following the co-financing rates of the project. Expected net revenue is deducted from the relevant partner’s budget before signing the Subsidy Contract. Where not all the project costs are eligible for ERDF support, the net revenue must be allocated pro rata to the eligible and non-eligible parts of the costs. In order to determine discounted eligible expenditure that is to be taken into consideration, the discounted investment costs must be compared to discounted net revenue.
5.2. Project implementation phase
The partners of the projects with total cost over EUR 1 000 000 need to report net revenue in partner reports and progress reports. Additional net revenue that exceeds the forecasted amount will be deducted from the project’s eligible expenditure. Where the amount of additional net revenue exceeds 10% of the estimated total eligible expenditure of the project, net revenue amount will be deducted from the total budget of the project. Where a project partner has generated additional net revenue that exceeds the forecasted amount and has not fulfilled its obligation to report net revenue, it is possible for the project partners to report it with the next partner and progress report. In case the generation of net revenue will be noticed by any of the Programme Authorities or by auditors, and project partner has not fulfilled its obligations regarding reporting on the revenue generation, it will be regarded as an irregularity. Decision of recovery will be formalised by the CA.
5.3. Period after project implementation
All projects that have generated net revenue during the project application phase and/or the generation of net revenue is foreseen for the period up to 5 years after project completion, are obliged to: 15
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
?
? ?
submit an updated calculation about net revenue generation for the 5-year period after the end of a project with the last progress report of the project in the Information about revenue generation form by the LP; report any additional net revenue earned after the project completion in the Information about revenue generation form by the LP. The deadline for reporting is December 1, 2014; submit additional calculation about net revenue generation for the 5-year period after the end of a project in the Information about revenue generation form by the LP not later than December 1, 2014.
The JTS will ask the LPs of the finished projects to provide information about net revenue generation with the respective form during the project completion and in 2014. If this is deemed necessary, the analysis should be arranged by the same body, who arranged the first analysis. Generated net revenue that was not foreseen in the initial financial analysis will be proportionally deducted from the last payment to the LP or earlier, if possible. In case of additional net revenue after project completion it will be paid back by the respective project partner, taking into account the co-financing rate applied for the project concerned. The LP is responsible for submitting an application for making repayment to the JTS, as described in chapter 7. Repayment on page 20. The cumulative amount of deductions or repayments will not exceed the total ERDF contribution received by the project partner, who has generated net revenue. NB! As an exception the deadline for reporting for strategic projects is not December 1, 2015, but July 1, 2015.
16
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
6. Projects, generating net revenue that cannot be estimated in advance
This chapter describes the preparation and implementation of projects that generate net revenue that cannot be estimated in advance, regardless of the amount of total costs of the project. Project phase Obligation of the project partners in case of revenue generation Necessary documents
Project preparation and application phase Project implementation All project partners are obliged to report Partner phase on any net revenue generated. report
report,
progress
Net revenue will be deducted from the On partner level: FLC eligible expenditure. confirmation to partner report. On project level: progress report including FLC confirmations to all partner reports. In case a project generates additional net revenue that cumulatively exceeds 10% of estimated amount of total expenditure, the net revenue amount will be respectively deducted from its total budget. Project end December 1, 2014 and Partners are obliged to make a repayment in case of additional net revenue. When it turns out to be LP submits the updated Application Form possible to objectively and the results of the cost-benefit estimate revenue analysis according to funding gap generation method in the form “Information about revenue generation”. Amended Project Application Form to be submitted to the JTS by the LP. Amendment to Subsidy Contract to be concluded with the MA; will be sent to the LP by the MA. Application for making repayment to be submitted to the JTS. Updated Project Application Form and Information about revenue generation form to be submitted to the JTS.
The estimated amount of generated net Amended Project Application revenue will be deducted from the total Form to be submitted to the budget of the project respectively. JTS; amended Subsidy Contract to be concluded with the MA. 5 years after the end of Partners of the projects with total costs Application for making a project over 1 000 000 are obliged to make a repayment to be submitted 17
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
repayment in case of additional net to the JTS. revenue. 5 years after the end of There will be no obligations to report a project about the generation of net revenue for partners of the projects with total costs under 1 000 000 after the end of a project.
6.1. Project preparation and application phase
In case it is not possible to estimate net revenue generation in advance, the project is not obliged to: ? ? include to the Project Application Form information about foreseen net revenue that will be generated during the project implementation phase; submit the form of Information about revenue generation to the JTS together with the Project Application Form.
6.2. Project implementation phase
If net revenue cannot be objectively estimated in advance during the project application phase, generation of net revenue must be reported in partner and progress reports of the respective project periods during the project implementation phase and for five years after the project completion. All project partners are obliged to keep the accounting of net revenue generated. If net revenue cannot be objectively estimated in advance during the project application phase, but the project generates net revenue, it is possible for the project partners to report it with the next partner and progress report. Net revenue will be deducted from the project’s eligible expenditure. Where the amount of net revenue exceeds 10% of the estimated total eligible expenditure of the project, net revenue amount will be deducted from the total budget of the project. When it will become possible to estimate the generation of net revenue objectively in advance during the project implementation phase, it is strongly suggested to carry out the cost-benefit analysis, to estimate the funding gap and reduce the project budget of the respective project partner(s) accordingly.
6.3. Period after project implementation
All projects with total costs under EUR 1 000 000 that generate net revenue that cannot be estimated in advance during the project application phase are not obliged to report on any net revenue to be generated after the end of a project as well as during the 5-year period after project completion. The obligation to report on net revenue ends with the end of the project. All projects with total costs over EUR 1 000 000 that generate net revenue that cannot be estimated in advance during the project application phase and/or during the period up to 5 years after project completion, are obliged to report any net revenue earned after the project completion. The deadline for reporting is December 1, 2014. Please follow the repayment procedure, as described in chapter 7. Repayment on page 20.
18
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
NB! As an exception the deadline for reporting for strategic projects is not December 1, 2015, but July 1, 2015. The JTS will ask the LPs of the finished projects with total costs over EUR 1 000 000 to provide information about net revenue generation during the project completion and in 2014. In case such a project has generated net revenue after project completion, project partner who has earned net revenue shall pay it back. To start the repayment procedure, the LP shall submit an application for making repayment to the JTS. The CA will make recovery decision. The maximum amount to be deducted will be based on the relevant co-financing rate applied for the respective project partner concerned and shall not in total exceed the ERDF contribution received by the project partner in question. In case revenue generation during the project implementation phase or after the end of a project will be noticed by any of the Programme Authorities or by auditors and project partner has not fulfilled its obligations regarding reporting on the revenue generation, it will be regarded as irregularity.
19
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
7. Repayment
Where a project has generated net revenue that exceeds the forecasted amount, it is possible for the project partners to make a repayment after the end of the project. Only projects with total costs exceeding EUR 1 000 000 are obliged to report on net revenue generation after project has ended. Documents necessary for repayment are as follows: 1. LP submits an application for making repayment to be submitted to the JTS, signed also by the respective project partner who has earned the net revenue, including the following information: ? ? ? ? Number of the project; Sum of the ineligible ERDF support repayment; Justification; Deadline for making repayment is at least 5 work days.
2. Decision for making repayment, either by the Head of the MA or by the assignee of the Head of the MA. Receiver of the repayment: Receiver: Ministry of Finance Receiving Bank: SEB 10220034796011 SWIFT: EEUHEE2X IBAN : EE891010220034796011 Reference number: 2500079306 Explanation: “Repayment of project number:....”, When the project will not make repayment in time, the CA will make a decision of recovery. In case net revenue generation, which has not been previously reported, will be noticed by any of the Programme Authorities or by auditors, it will be regarded as irregularity. In case of irregularity, decision of recovery will be formalised by the CA.
20
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
8. Funding gap method
Funding gap method is the method to be used for carrying out cost-benefit analysis of a project to determine the ERDF grant. All the cost-benefit analyses are organized by the JTS, unless a project proposes to carry the analysis out itself. In Estonia - Latvia Programme the appropriate period for cost-benefit analysis to cover is 15 years from the beginning of project implementation – the life-cycle of the project. As regards ETC type of programmes, one project can be implemented in several places and by several project partners who carry out activities that differ from each other. The amount of investments and the results of economic activity can be different. Therefore, the cost benefit analysis has to be prepared separately for each project partner. The funding gap is the difference between the current value of project investment costs and discounted net revenue. While calculating budget for project activities, net revenue that can be estimated in advance will proportionally reduce the total eligible costs and ERDF co-financing. This applies to all projects funded by the Programme, regardless of the amount of total costs of the project. Eligible expenditure of net revenue-generating projects shall not exceed the current value of the investment cost less the current value of the net revenue from the investment over a specific reference period for appropriate to the category of investment concerned: ? Investments in infrastructure; or ? Other projects where it is possible to objectively estimate the revenue and net revenue in advance. The funding-cap expresses the part of the project investment costs which cannot be financed by the project partners themselves; and that therefore needs to be financed from the contributions of the Programme. The funding gap approach applies to all operations which generate net revenue through charges borne directly by users. This applies regardless of the way the net revenue will be managed. 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. Funding gap approach does not apply to the following cases: ? Projects that do not generate revenue (funding gap rate equals 100%); ? Projects that do not generate net revenue. These are projects whose revenues do not fully cover the operating costs (funding gap rate equals 100%) – as the revenues do not fully cover the operating costs, there will be no net revenue and these projects are not considered to be revenue-generating projects; ? Projects subject to the rules of de minimis aid, as the rules that apply to revenue-generating projects do not apply to projects subject to the rules of de minimis aid.
21
May 2012
ESTONIA - LATVIA PROGRAMME 2007 - 2013 REVENUE-GENERATING PROJECTS. GUIDELINES FOR PROJECT PARTNERS
8.1. Calculation of the funding gap
Calculation of the funding gap consists of three key steps in order to determine the EU grant: 1st STEP. Calculation of the funding gap Max DEE = DIC – DNR = FG Where: DEE is discounted eligible expenditure; FG is the funding gap; DIC is discounted investment cost; DNR is discounted net revenue.
2nd STEP. Calculation of the discounted eligible expenditure DEE = FG*P Where: DEE is discounted eligible expenditure; P is percentage consistent with the ratio of discounted eligible cost over discounted investment cost.
3rd STEP. Calculation of the contribution from the Funds DGEU = DEE*CREU Where: CREU is the EU co-funding rate; DGEU is the discounted contribution from the Funds.
Incremental net revenue is the difference between the revenue and the operating costs of two project scenarios – “with the project” and “without the project”. As only the net revenue from the investment needs to be considered; only the incremental net revenue is taken into account while calculating the funding gap. The calculations should include running costs (e.g. labour, raw materials, and electricity), maintenance expenses and costs for the replacement of project short-life equipment. Financing costs (e.g. interest paid) and depreciation should be excluded. When VAT is recoverable, the costs and revenues should be based on figures excluding VAT. The pro rata allocation of net revenue to eligible costs is carried out by multiplying the funding gap times the ratio of the discounted eligible costs over discounted investment costs. The resulting amount, the discounted eligible expenditure, multiplied by the co-funding rate identifies the discounted contribution from the Funds from which the related undiscounted value can be derived. For example, if only 80% of the discounted investment cost is eligible, which means that 20% of the discounted investment costs are not eligible, then 20% of the discounted net revenue must also not be considered in the funding-gap. This means that both the discounted net revenue and investment costs should be multiplied by 80%.
22
doc_859612073.pdf