Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012

• (a) the value of the contract is below the thresholds referred to in Article 175(1);

• (b) on the basis of a risk analysis for the cases referred to in points (c), (e), (f)(i), (f)(iii) and (h) of the second subparagraph of point 11.1 of Annex I;

• (c) on the basis of a risk analysis when reopening competition within a framework contract;

• (d) for procedures in the field of external actions having a value of less than or equal to EUR 20 000 .

Article 169

Contacts during the procurement procedure

Article 170

Award decision and information to candidates or tenderers

For the award of specific contracts under a framework contract with reopening of competition, the contracting authority shall inform the tenderers of the result of the evaluation.

• (a) the name of the tenderer, or tenderers in the case of a framework contract, to whom the contract is awarded and, except in the case of a specific contract under a framework contract with reopening of competition, the characteristics and relative advantages of the successful tender, the price paid or contract value, whichever is appropriate;

• (b) the progress of negotiation and dialogue with tenderers.

However, the contracting authority may decide to withhold certain information where its release would impede law enforcement, would be contrary to the public interest or would prejudice the legitimate commercial interests of economic operators or might distort fair competition between them.

Article 171

Cancellation of the procurement procedure

The contracting authority may, before the contract is signed, cancel the procurement procedure without the candidates or tenderers being entitled to claim any compensation.

The decision shall be justified and brought to the attention of the candidates or tenderers as soon as possible.

Article 172

Performance and modifications of the contract

• (a) for additional works, supplies or services by the original contractor that have become necessary and that were not included in the initial procurement, where the following conditions are fulfilled:
• (i) a change of contractor cannot be made for technical reasons linked to interchangeability or interoperability requirements with existing equipment, services or installations;
• (ii) a change of contractor would cause substantial duplication of costs for the contracting authority;
• (iii) any increase in price, including the net cumulative value of successive modifications, does not exceed 50 % of the initial contract value;

• (b) where all of the following conditions are fulfilled:
• (i) the need for modification has been brought about by circumstances which a diligent contracting authority could not foresee;
• (ii) any increase in price does not exceed 50 % of the initial contract value;

• (c) where the value of the modification is below the following thresholds:
• (i) the thresholds referred to in Article 175(1), and in point 38 of Annex I in the field of external actions, applicable at the time of the modification; and
• (ii) 10 % of the initial contract value for public service and supply contracts and works or services concession contracts and 15 % of the initial contract value for public works contracts;

• (d) where both of the following conditions are fulfilled:
• (i) the minimum requirements of the initial procurement procedure are not altered;
• (ii) any ensuing modification of value complies with the conditions set out in point (c) of this subparagraph, unless such modification of value results from the strict application of the procurement documents or contractual provisions.

The initial contract value shall not take into account price revisions.

The net cumulative value of several successive modifications under point (c) of the first subparagraph shall not exceed any threshold referred to therein.

The contracting authority shall apply the ex post publicity measures set out in Article 163.

Article 173

Performance guarantees and retention money guarantees

It shall be fully released after final acceptance of the works, supplies or complex services, within a period subject to the time limits set out in Article 116(1) and to be specified in the contract. It may be released partially or fully upon provisional acceptance of the works, supplies or complex services.

The contracting authority shall determine the amount of the retention money guarantee which shall be proportionate to the risks identified in relation to the performance of the contract, taking into account its subject matter and the usual commercial terms applicable in the sector concerned.

A retention money guarantee shall not be used in a contract where a performance guarantee has been requested and not released.

CHAPTER 2 Provisions applicable to contracts awarded by Union institutions on their own account

Article 174

The contracting authority

Union institutions deemed to be contracting authorities in accordance with the first subparagraph shall, in accordance with Article 60, delegate the necessary powers for the exercise of the function of the contracting authority.

Article 175

Thresholds applicable and standstill period

Article 176

Rules on access to procurement

Article 177

Procurement rules of the World Trade Organisation

Where the plurilateral Agreement on Government Procurement concluded within the World Trade Organisation applies, the procurement procedure shall also be open to economic operators established in the states which have ratified that agreement, under the conditions laid down therein.

CHAPTER 3 Provisions applicable for procurement in the field of external actions

Article 178

External action procurement

Subject to the exceptions and conditions specified in Annex I, the contracting authority shall not sign the contract or framework contract with the successful tenderer until a standstill period has elapsed. The standstill period shall have a duration of 10 days when using electronic means of communication and 15 days when using other means.

Article 163 , points (a) and (b) of Article 164(1) and the second subparagraph of this paragraph shall only apply as from:

• (a) EUR 300 000 for service and supply contracts;

• (b) EUR 5 000 000 for works contracts.

• (a) procurement where the Commission does not award contracts on its own account;

• (b) procurement by persons or entities implementing Union funds pursuant to point (c) of the first subparagraph of Article 62(1) where provided for in the contribution or financing agreements referred to in Article 154.

Article 179

Rules on access to procurement in the field of external actions

TITLE VIII GRANTS

CHAPTER 1 Scope and form of grants

Article 180

Scope and form of grants

• (a) an action intended to help achieve a Union policy objective (‘action grants’);

• (b) the functioning of a body which has an objective forming part of, and supporting, a Union policy (‘operating grants’).

Operating grants shall take the form of a financial contribution to the work programme of the body referred to in point (b) of the first subparagraph.

Where the grant takes the form of financing not linked to costs pursuant to point (a) of the first subparagraph of Article 125(1):

• (a) the provisions related to eligibility and verification of costs laid down in this Title, in particular Articles 182, 184 and 185, Article 186(2), (3) and (4), Article 190, Articles 191(3) and 203(4), shall not apply;

• (b) as regards Article 181, only the procedure and the requirements referred to in paragraphs 2 and 3 of that Article, points (a) and (d) of the first subparagraph and the second subparagraph of paragraph 4, and paragraph 5, of that Article shall apply.

Article 181

Lump sums, unit costs and flat-rate financing

• (a) justification concerning the appropriateness of such forms of financing with regard to the nature of the supported actions or work programmes, as well as to the risks of irregularities and fraud and costs of control;

• (b) identification of the costs or categories of costs covered by lump sums, unit costs or flat-rate financing, which shall be considered eligible in accordance with points (c), (e) and (f) of Article 186(3) and Article 186(4), and which shall exclude ineligible costs under the applicable Union rules;

• (c) description of the methods for determining lump sums, unit costs or flat-rate financing. Those methods shall be based on one of the following:
• (i) statistical data, similar objective means or an expert judgement provided by internally available experts or procured in accordance with the applicable rules; or
• (ii) beneficiary-by-beneficiary approach, by reference to certified or auditable historical data of the beneficiary or to its usual cost accounting practices;

• (d) where possible, the essential conditions triggering the payment, including, where applicable, the achievement of outputs and/or results;

• (e) where lump sums, unit costs and flat rates are not output based and/or result based, a justification on why an output based and/or result based approach is not possible or appropriate.

The methods referred to in point (c) of the first subparagraph shall ensure:

• (a) the respect for the principle of sound financial management, in particular the appropriateness of the respective amounts with regard to the required outputs and/or results taking into account foreseeable revenue to be generated by the actions or work programmes;

• (b) reasonable compliance with the principles of co-financing and no double funding.

The authorisation decision may cover the use of lump sums, unit costs or flat rates applicable to more than one specific funding programme where the nature of the activities or of the expenditure allow for a common approach. In such cases, the authorising decision may be adopted by the following:

• (a) the authorising officers responsible where all activities concerned fall under their responsibility;

• (b) the Commission where this is appropriate in view of the nature of the activities or of the expenditure or in view of the number of authorising officers concerned.

Article 182

Single lump sums

Article 183

Checks and controls on beneficiaries related to lump sums, unit costs and flat rates

The amounts of lump sums, unit costs or flat-rate financing determined ex ante by application of the method authorised by the authorising officer responsible or the Commission in accordance with Article 181 shall not be challenged by ex post controls. This is without prejudice to the right of the authorising officer responsible to check that the conditions triggering the payment as referred to in the first subparagraph of this paragraph are fulfilled, and to reduce the grant in accordance with Article 131(4) where those conditions are not fulfilled or in the event of irregularity, fraud or a breach of other obligations. Where lump sums, unit costs or flat rates are established on the basis of the usual cost accounting practices of the beneficiary Article 185(2) shall apply.

Article 184

Periodic assessment of lump sums, unit costs or flat-rates

The method for determining lump sums, unit costs or flat rates, the underlying data and the resulting amounts, as well as the adequateness of those amounts with regard to the output and/or results delivered, shall be assessed periodically and, where appropriate, adjusted in accordance with Article 181. The frequency and scope of assessments shall depend on the evolution and the nature of the costs, in particular taking into account substantial changes in market prices and other relevant circumstances.

Article 185

Usual cost accounting practices of the beneficiary

Article 186

Eligible costs

• (a) the overall amount of financing not linked to costs in the case referred to in point (a) of the first subparagraph of Article 125(1);

• (b) estimated eligible costs, where possible, in the case referred to in point (b) of the first subparagraph of Article 125(1);

• (c) the overall amount of the estimated eligible costs clearly defined in advance in the form of lump sums, unit costs or flat rates as referred to in points (c), (d) and (e) of the first subparagraph of Article 125(1).

Without prejudice to the basic act, grants may in addition be expressed as a percentage of the estimated eligible costs, where the grant takes the form specified in point (b) of the first subparagraph, or as a percentage of the lump sums, unit costs or flat rate financing referred to in point (c) of the first subparagraph.

Where the grant takes the form specified in point (b) of the first subparagraph of this paragraph and where, due to specificities of an action, the grant can only be expressed in terms of an absolute value, the verification of the eligible costs shall be done in accordance with Article 155(4) and, where applicable, Article 155(5).

• (a) the grant shall not exceed the eligible costs;

• (b) where the grant takes the form specified in point (b) of the first subparagraph of paragraph 1 and where the estimated eligible costs include costs for volunteers’ work referred to in Article 181(8), the grant shall not exceed the estimated eligible costs other than the costs for volunteers’ work.

• (a) they are incurred during the duration of the action or of the work programme, with the exception of costs relating to final reports and audit certificates;

• (b) they are indicated in the estimated overall budget of the action or work programme;

• (c) they are necessary for the implementation of the action or of the work programme which is the subject of the grant;

• (d) they are identifiable and verifiable, in particular being recorded in the accounting records of the beneficiary and determined according to the applicable accounting standards of the country where the beneficiary is established and according to the usual cost accounting practices of the beneficiary;

• (e) they comply with the requirements of applicable tax and social legislation;

• (f) they are reasonable, justified, and comply with the principle of sound financial management, in particular regarding economy and efficiency.

Unless provided otherwise in the basic act and in addition to paragraph 3 of this Article, the following categories of costs shall be eligible where the authorising officer responsible has declared them as such under the call for proposals:

• (a) costs relating to a pre-financing guarantee lodged by the beneficiary, where that guarantee is required by the authorising officer responsible pursuant to Article 152(1);

• (b) costs relating to certificates on the financial statements and operational verification reports, where such certificates or reports are required by the authorising officer responsible;

• (c) VAT, where it is not recoverable under the applicable national VAT legislation and is paid by a beneficiary other than a non-taxable person within the meaning of the first subparagraph of Article 13(1) of Council Directive 2006/112/EC (²⁵);

• (d) depreciation costs, provided they are actually incurred by the beneficiary;

• (e) salary costs of the personnel of national administrations to the extent that they relate to the cost of activities which the relevant public authority would not carry out if the project concerned were not undertaken.

For the purposes of point (c) of the second subparagraph:

• (a) VAT shall be considered as not recoverable if according to national law it is attributable to any of the following activities:
• (i) exempt activities without right of deduction;
• (ii) activities which fall outside the scope of VAT;
• (iii) activities, as referred to in point (i) or (ii), in respect of which VAT is not deductible but refunded by means of specific refund schemes or compensation funds not referred to in Directive 2006/112/EC, even if that scheme or fund is established by national VAT legislation;

• (b) VAT relating to the activities listed in Article 13(2) of Directive 2006/112/EC shall be regarded as paid by a beneficiary other than a non-taxable person within the meaning of the first subparagraph of Article 13(1) of that Directive, regardless of whether those activities are regarded by the Member State concerned as activities engaged in by bodies governed by public law acting as public authorities.

Article 187

Affiliated entities and sole beneficiary

• (a) entities forming the sole beneficiary in accordance with paragraph 2;

• (b) entities that satisfy the eligibility criteria and that do not fall within one of the situations referred to in Articles 136(1) and 141(1) and that have a link with the beneficiary, in particular a legal or capital link, which is neither limited to the action nor established for the sole purpose of its implementation.

Section 2 of Chapter 2 of Title V shall apply also to affiliated entities.

• (a) the entities concerned are identified in the grant agreement;

• (b) the entities concerned abide by the rules applicable to the beneficiary under the grant agreement with regard to:
• (i) eligibility of costs or conditions triggering the payment;
• (ii) rights of checks and audits by the Commission, OLAF and the Court of Auditors.

Costs incurred by such entities may be accepted as eligible costs actually incurred or may be covered by lump sums, unit costs and flat-rate financing.

CHAPTER 2 Principles

Article 188

General principles applicable to grants

Grants shall be subject to the principles of:

• (a) equal treatment;

• (b) transparency;

• (c) co-financing;

• (d) non-cumulative award and no double financing;

• (e) non-retroactivity;

• (f) no-profit.

Article 189

Transparency

• (a) the number of applicants in the preceding financial year;

• (b) the number and percentage of successful applications per call for proposals;

• (c) the average duration of the procedure from the date of closure of the call for proposals to the award of a grant;

• (d) the number and amount of grants for which an ex post publication did not take place in the preceding financial year in accordance with Article 38(4).

• (e) any grant awarded to financial institutions, including the EIB or the EIF in accordance with point (g) of the first paragraph of Article 195.

Article 190

Co-financing

Co-financing may be provided in the form of the beneficiary’s own resources, income generated by the action or work programme or financial or in-kind contributions from third parties.

Other in-kind contributions from third parties shall be presented separately from the contributions to the eligible costs in the estimated budget. Their approximate value shall be indicated in the estimated budget and shall not be subject to subsequent changes.

Article 191

Principle of non-cumulative award and prohibition of double funding

A beneficiary may be awarded only one operating grant from the budget per financial year.

An action may be financed jointly from separate budget lines by different authorising officers responsible.

• (a) study, research, training or education support paid to natural persons;

• (b) direct support paid to natural persons most in need, such as unemployed persons and refugees.

Article 192

No-profit principle

In the case of an operating grant, amounts dedicated to the building up of reserves shall not be taken into account for verifying compliance with the no-profit principle.

• (a) actions the objective of which is the reinforcement of the financial capacity of a beneficiary, or actions which generate income to ensure their continuity after the period of Union financing provided for in the grant agreement;

• (b) study, research, training or education support paid to natural persons or other direct support paid to natural persons most in need, such as unemployed persons and refugees;

• (c) actions implemented by non-profit organisations;

• (d) grants in the form referred to in point (a) of the first subparagraph of Article 125(1);

• (e) low value grants.

Article 193

Principle of non-retroactivity

In such cases, costs incurred prior to the date of submission of the grant application shall not be eligible, except:

• (a) in duly justified exceptional cases as provided for in the basic act; or

• (b) in the event of extreme urgency for measures referred to in point (a) or (b) of the first paragraph of Article 195 whereby an early intervention by the Union would be of major importance.

In the case referred to in point (b) of the second subparagraph, the costs incurred by a beneficiary before the date of submission of the application shall be eligible for Union financing under the following conditions:

• (a) the reasons for such derogation have been properly substantiated by the authorising officer responsible;

• (b) the grant agreement explicitly sets the eligibility date earlier than the date for submission of applications.

The authorising officer by delegation shall report on each of the cases referred to in this paragraph under the heading ‘Derogations from the principle of non-retroactivity pursuant to Article 193 of the Financial Regulation’ in the annual activity report referred to in Article 74(9).

CHAPTER 3 Grant award procedure and grant agreement

Article 194

Content and publication of calls for proposals

• (a) the objectives pursued;

• (b) the eligibility, exclusion, selection and award criteria and the relevant supporting documents;

• (c) the arrangements for Union financing, specifying all types of Union contributions, in particular the forms of grant;

• (d) the arrangements and final date for the submission of proposals;

• (e) the planned date by which all applicants are to be informed of the outcome of the evaluation of their application and the indicative date for the signature of grant agreements.

• (a) for informing all applicants of the outcome of the evaluation of their application, a maximum of six months from the final date for submission of complete proposals;

• (b) for signing grant agreements with applicants, a maximum of three months from the date of informing applicants that they have been successful.

Those periods may be adjusted in order to take into account any time needed to comply with specific procedures that may be required by the basic act in accordance with Regulation (EU) No 182/2011 and may be exceeded in exceptional, duly justified cases, in particular for complex actions, where there is a large number of proposals or delays attributable to the applicants.

The authorising officer by delegation shall report in his or her annual activity report on the average time taken to inform applicants and to sign grant agreements. In the event of the periods referred to in the first subparagraph being exceeded, the authorising officer by delegation shall give reasons and, where not duly justified in accordance with the second subparagraph, shall propose remedial action.

Article 195

Exceptions to calls for proposals

Grants may be awarded without a call for proposals only in the following cases:

• (a) for the purposes of humanitarian aid, emergency support operations, civil protection operations or crisis management aid;

• (b) in other exceptional and duly substantiated emergencies;

• (c) to bodies with a de jure or de facto monopoly or to bodies designated by Member States, under their responsibility, where those Member States are in a de jure or de facto monopoly situation;

• (d) to bodies identified by a basic act, within the meaning of Article 58, as beneficiaries or to bodies designated by Member States, under their responsibility, where those Member States are identified by a basic act as beneficiaries;

• (e) in the case of research and technological development, to bodies identified in the work programme referred to in Article 110, where the basic act expressly provides for that possibility, and on condition that the project does not fall under the scope of a call for proposals;

• (f) for activities with specific characteristics that require a particular type of body on account of its technical competence, its high degree of specialisation or its administrative powers, on condition that the activities concerned do not fall within the scope of a call for proposals;

• (g) to the EIB or the EIF for actions of technical assistance. In such cases, points (a) to (d) of Article 196(1) shall not apply.

Where the particular type of body referred to in point (f) of the first paragraph is a Member State, the grant may also be awarded without a call for proposals to the body designated by the Member State, under its responsibility, for the purpose of implementing the action.

The cases referred to in points (c) and (f) of the first paragraph shall be duly substantiated in the award decision.

Article 196

Content of grant applications

• (a) information on the legal status of the applicant;

• (b) a declaration on the applicant’s honour in accordance with Article 137(1) and on compliance with the eligibility and selection criteria;

• (c) information necessary to demonstrate the applicant’s financial and operational capacity to carry out the proposed action or work programme and, if decided by the authorising officer responsible on the basis of a risk assessment, supporting documents confirming that information, such as the profit and loss account and the balance sheet for up to the three last financial years for which the accounts were closed; Such information and supporting documents shall not be requested from applicants to which the verification of the financial or operational capacity does not apply in accordance with Article 198(5) or (6). In addition, supporting documents shall not be requested for low value grants;

• (d) where the application concerns a grant for an action for which the amount exceeds EUR 750 000 or an operating grant which exceeds EUR 100 000 , an audit report produced by an approved external auditor, where it is available, and always in cases where a statutory audit is required by Union or national law, certifying the accounts for up to the last three available financial years. In all other cases, the applicant shall provide a self-declaration signed by its authorised representative certifying the validity of its accounts for up to the last three available financial years; The first subparagraph shall apply only to the first application made by a beneficiary to an authorising officer responsible in any one financial year. In the case of agreements between the Commission and a number of beneficiaries, the thresholds set in the first subparagraph shall apply to each beneficiary. In the case of partnerships referred to in Article 130(4), the audit report referred to in the first subparagraph of this point, covering the last two financial years available, must be produced before signature of the financial framework partnership agreement. The authorising officer responsible may, depending on a risk assessment, waive the obligation referred to in the first subparagraph for education and training establishments and, in the case of agreements with a number of beneficiaries, beneficiaries who have accepted joint and several liabilities or who do not bear any financial responsibility. The first subparagraph shall not apply to persons and entities eligible under indirect management to the extent that they comply with the conditions specified in point (c) of the first subparagraph of Article 62(1) and in Article 154;

• (e) a description of the action or work programme and an estimated budget, which:
• (i) shall have revenue and expenditure in balance; and
• (ii) shall indicate the estimated eligible costs of the action or work programme. Points (i) and (ii) shall not apply to multi-donor actions. By way of derogation from point (i), in duly justified cases, the estimated budget may include provisions for contingencies or possible variations in exchange rates;

• (f) indication of the sources and amounts of Union funding received or applied for in respect of the same action or part of the action or for the functioning of the applicant during the same financial year as well as any other funding received or applied for the same action.

Article 197

Eligibility criteria

• (a) legal persons;

• (b) natural persons, in so far as this is required by the nature or characteristics of the action or the objective pursued by the applicant;

• (c) entities which do not have legal personality under the applicable national law, provided that their representatives have the capacity to undertake legal obligations on behalf of the entities and that the entities offer guarantees for the protection of the financial interests of the Union equivalent to those offered by legal persons. In particular the applicant shall have a financial and operational capacity equivalent to that of a legal person. The representatives of the applicant shall prove that those conditions are satisfied.

Article 198

Selection criteria

If no supporting documents were requested in the call for proposals and if the authorising officer responsible has reasonable grounds to question the financial or operational capacity of an applicant, he or she shall request the applicant to provide any appropriate documents.

In the case of partnerships the verification shall be performed in accordance with Article 130(6).

• (a) natural persons in receipt of education support;

• (b) natural persons most in need, such as unemployed persons and refugees, and in receipt of direct support;

• (c) public bodies, including Member State organisations;

• (d) international organisations;

• (e) persons or entities applying for interest rate rebates and guarantee fee subsidies where the objective of those rebates and subsidies is to reinforce the financial capacity of a beneficiary or to generate an income.

Article 199

Award criteria

The award criteria shall be such as to make it possible to:

• (a) assess the quality of the proposals submitted in the light of the objectives and priorities set and of the expected results;

• (b) award grants to the actions or to the work programmes which maximise the overall effectiveness of the Union funding;

• (c) evaluate the grant applications.

Article 200

Evaluation procedure

The applicants whose proposals are rejected at any stage shall be informed in accordance with paragraph 7.

The same documents and information shall not be required more than once during the same procedure.

Where necessary that record shall rank the proposals examined, provide recommendations on the maximum amount to award and possible non-substantial adjustments to the grant application.

The record shall be kept for future reference.

• (a) the subject and the overall amount of the decision;

• (b) the names of the successful applicants, the title of the actions, the amounts accepted and the reasons for that choice, including where it is inconsistent with the opinion of the evaluation committee;

• (c) the names of any applicants rejected and the reasons for that rejection.

• (a) decide not to apply paragraphs 2 and 4 of this Article and Article 150;

• (b) merge the content of the evaluation report and the award decision into a single document and sign it.

Article 201

Grant agreement

• (a) the subject;

• (b) the beneficiary;

• (c) the duration, namely:
• (i) the date of its entry into force;
• (ii) the starting date and the duration of the action or the financial year of the funding;

• (d) a description of the action or, for an operating grant, of the work programme together with a description of the results expected;

• (e) the maximum amount of Union funding expressed in euro, the estimated budget of the action or work programme and the form of the grant;

• (f) the rules regarding reporting and payments and the procurement rules provided for in Article 205;

• (g) the acceptance by the beneficiary of the obligations referred to in Article 129;

• (h) provisions governing the visibility of the Union financial support, except in duly justified cases where public display is not possible or appropriate;

• (i) the applicable law which shall be Union law, complemented, where necessary, by national law as specified in the grant agreement. Derogation may be made in the grant agreements concluded with international organisations;

• (j) the competent court or arbitration tribunal to hear disputes.

CHAPTER 4 Implementation of grants

Article 202

Amount of the grant and extension of audit findings

The authorising officer responsible may, in addition, reduce the grants, reject ineligible costs and recover amounts unduly paid in respect of all the grants affected by the systemic or recurrent irregularities, fraud or breach of obligations referred to in the first subparagraph that may be subject to audits, checks and investigations in accordance with the grant agreements affected.

Article 203

Supporting documents for payment requests

The certificate shall be produced by an approved external auditor or, in the case of public bodies, by a competent and independent public officer.

The certificate shall certify, in accordance with a methodology approved by the authorising officer responsible and on the basis of agreed-upon procedures compliant with international standards, that the costs declared by the beneficiary in the financial statements on which the payment request is based are real, accurately recorded and eligible in accordance with the grant agreement. In specific and duly justified cases, the authorising officer responsible may request the certificate in the form of an opinion or other format in accordance with international standards.

Article 204

Financial support to third parties

Where implementation of an action or a work programme requires the provision of financial support to third parties, the beneficiary may provide such financial support if the conditions for such provision are defined in the grant agreement between the beneficiary and the Commission, with no margin for discretion by the beneficiary.

No margin for discretion shall be considered to exist if the grant agreement specifies the following:

• (a) the maximum amount of financial support that can be paid to a third party which shall not exceed EUR 60 000 and the criteria for determining the exact amount;

• (b) the different types of activities that may receive such financial support, on the basis of a fixed list;

• (c) the definition of the persons or categories of persons which may receive such financial support and the criteria for providing it.

The threshold referred to in point (a) of the second paragraph may be exceeded where achieving the objectives of the actions would otherwise be impossible or overly difficult.

Article 205

Implementation contracts

Those special rules shall be based on rules contained in this Regulation and shall be proportionate to the value of the public contracts concerned, the relative size of the Union contribution in relation to the total cost of the action and the risk. Such special rules shall be included in the grant agreement.

TITLE IX PRIZES

Article 206

General rules

Contests for prizes with a unit value of EUR 1 000 000 or more may only be published where those prizes are mentioned in the financing decision referred to in Article 110 and after information on such prizes has been submitted to the European Parliament and to the Council.

Article 207

Rules of contest, award and publication

• (a) specify the eligibility criteria;

• (b) specify the arrangements and the final date for the registration of applicants, if required, and for the submission of applications;

• (c) specify the exclusion criteria as set out in Articles 136 and the grounds for rejection set out in Article 141;

• (d) provide for the sole liability of the applicant in the event of a claim relating to the activities carried out in the framework of the contest;

• (e) provide for acceptance by the winners of the obligations referred to in Article 129 and of the publicity obligations as specified in the rules of the contest;

• (f) specify the award criteria, which shall be such as to make possible to assess the quality of the applications with regard to the objectives pursued and the expected results and to determine objectively whether applications are successful;

• (g) specify the amount of the prize or prizes;

• (h) specify the arrangements for the payment of prizes to the winners after their award.

For the purposes of point (a) of the first subparagraph, beneficiaries shall be eligible, unless stated otherwise in the rules of contest.

Article 194 (3) shall apply *mutatis mutandis* to the publication of contests.

Article 200 (4) and (6) shall apply *mutatis mutandis* to the award decision.

The decision to award the prize shall be notified to the winning applicant and shall serve as the legal commitment.

When requested by the European Parliament and by the Council following the publication, the Commission shall forward them a report on:

• (a) the number of applicants in the past year;

• (b) the number of applicants and the percentage of successful applications per contest;

• (c) a list of the experts having taken part in evaluation committees in the past year, together with a reference to the procedure for their selection.

TITLE X FINANCIAL INSTRUMENTS, BUDGETARY GUARANTEES AND FINANCIAL ASSISTANCE

CHAPTER 1 Common provisions

Article 208

Scope and implementation

The Commission shall remain responsible for ensuring that the implementation framework for financial instruments complies with the principle of sound financial management and supports the attainment of defined and time-bound policy objectives, measurable in terms of outputs and/or results. The Commission shall be accountable for the implementation of financial instruments without prejudice to the entrusted entities’ legal and contractual responsibility in accordance with the applicable law and Article 129.

Where third countries contribute to financial instruments or budgetary guarantees pursuant to paragraph 2, the basic act may allow for the designation of eligible implementing entities or counterparts from the countries concerned.

The Court of Auditors shall be the external auditor responsible for the projects and programmes supported by a financial instrument, a budgetary guarantee or a financial assistance.

Article 209

Principles and conditions applicable to financial instruments and budgetary guarantees

• (a) address market failures or sub-optimal investment situations and provide support, in a proportionate manner, only to final recipients that are deemed economically viable according to internationally accepted standards at the time of the Union financial support;

• (b) achieve additionality by preventing the replacement of potential support and investment from other public or private sources;

• (c) not distort competition in the internal market and be consistent with State aid rules;

• (d) achieve a leverage and a multiplier effect, with a target range of values based on an ex ante evaluation for the corresponding financial instrument or budgetary guarantee, by mobilising a global investment exceeding the size of the Union contribution or guarantee, including, where appropriate, the maximisation of private investment;

• (e) be implemented in a way to ensure that there is a common interest of the implementing entities or counterparts involved in the implementation in achieving the policy objectives defined in the relevant basic act, with provisions on for example co-investment, risk sharing requirements or financial incentives, while preventing a conflict of interests with other activities of the entities or counterparts;

• (f) provide for remuneration of the Union that is consistent with the sharing of risk among financial participants and the policy objectives of the financial instrument or budgetary guarantee;

• (g) where remuneration of the implementing entities or the counterparts involved in the implementation is due, provide that such remuneration is performance-based and comprises:
• (i) administrative fees to remunerate the entity or counterpart for the work carried out in the implementation of a financial instrument or budgetary guarantee, which shall, to the extent possible, be based on the operations carried out or the amounts disbursed; and
• (ii) where appropriate, policy related incentives to promote the achievement of the policy objectives or incentivise the financial performance of the financial instrument or budgetary guarantee. Exceptional expenses may be reimbursed in duly justified cases;