EU funds

What it means

EU funds are money from European funds awarded through a call and a grant agreement. In the books they are treated as a grant.

The contribution covers only eligible costs defined in the call and usually only part of them; the rest is the applicant’s co-financing. The project budget is therefore a commitment, not an estimate.

EU funds are often taken to include financial instruments funded from EU money, such as subsidised loans or guarantees. Those are not non-repayable grants: a loan is repaid and sits in the books as a liability, not as revenue. Before preparing an application it is worth knowing which kind of support is on offer, because the whole financing of the project depends on it.

How it works in practice

In practice it means running the project separately, following procurement rules even on small purchases, keeping documents longer than usual and expecting an on-site check.

The money generally arrives in arrears, after a payment claim. The company has to bridge the gap from its own funds or a loan and plan for it in cash flow.

After the project ends comes the sustainability period, during which the company must keep the result in place and file monitoring reports. Assets bought with the grant are not sold or leased out without the provider’s consent, and in the books they are depreciated in step with releasing the grant into income, so the grant does not inflate profit in the year it is received.

What to watch out for

Corrections hurt most: even a formal procurement error can cut the grant by tens of percent retrospectively. That is why the project is prepared with someone who knows the call’s rules rather than by instinct.

Double funding is a separate risk: the same cost may not be paid from two sources or claimed twice. A cost covered by the grant, for example, cannot also go into the super-deduction for research and development. If an inspection finds this, the company repays part of the grant and pays the extra tax as well, usually with interest and a penalty.