Percentage-based compensation (flat-rate cost option)

When percentage-based compensation, i.e. the flat-rate cost option, is used, part of the costs arising from a project is compensated using percentage-based compensation based on a flat rate. 

The proportion of percentage-based compensation is calculated from eligible salary costs or a project’s all direct eligible costs, depending on the flat-rate option applicable to the project. 

The option simplifies the processing of project costs, as the beneficiary does not need to itemise the costs compensated based on a flat rate in the payment application or present accounting extracts or documents regarding them in the payment application or during verifications or audits. 

The sections below describe the flat-rate options used during the 2021–2027 programme period in more detail. 

Percentage-based compensation in projects funded based on the act on funding provided for EU cohesion policy projects (“the funding act”, 757/2021)
 
Flat rate 40% (ERDF, ESF+, JTF) 

This is the primary flat-rate option used in development projects. In this option, all costs arising from a development project except for the project employees’ salary costs are compensated at a rate of 40% from acceptable salary costs. Salary costs are compensated in accordance with the unit cost option for salary costs or the standard social insurance contribution option. 

This flat-rate option is only intended for development projects. If a single ERDF or JTF project also includes an investment project, a separate project application must be submitted for it in the EURA 2021 system. The 1.5% flat-rate option described below applies to investment projects. For more information about combinations of development and investment projects, contact the funding authority. 

Flat rate 7% (ERDF, ESF+, JTF)

The 7% flat-rate option is used in projects to which the 40% option does not apply. These include projects that have no salary costs for project employees and projects in which costs arising from purchased services account for at least 30% of the project employees’ salary costs, or travel expenses account for at least 20% of the project employees’ salary costs. 

Salary costs are compensated in accordance with the unit cost option for salary costs or the standard social insurance contribution option. Purchased services included in the implementation of the project content, travel expenses arising from trips of more than 15 kilometres and other direct costs in accordance with section 9 (ERDF and JTF) or section 11 (ESF+ and JTF) of the eligibility decree are compensated in accordance with actual costs, or with regard to travel expenses, in accordance with the unit cost option. The 7% compensation is calculated from all the eligible direct costs mentioned above. 

If a single ERDF or JTF project also includes investments, the 1.5% flat-rate option described below will apply to it. A development project funded using the 7% flat-rate option and an investment project funded using the 1.5% flat-rate option can be applied for and managed in the EURA 2021 system as a single project. For more information about combinations of development and investment projects, contact the funding authority. 

Flat rate 1.5% (ERDF, JTF)

This flat-rate option applies to investment projects. Section 10, subsection 2 of the eligibility decree presents an exhaustive list of costs that can be compensated as a project’s direct investment costs. They include costs arising from the purchase and leasing of machinery and equipment included in the implementation of the project content, and other tangible and intangible investments. 

Direct investment costs are compensated based on actual and paid eligible costs, and the costs will be verified from accounting documents. The 1.5% compensation is calculated from all eligible direct costs, and it is used to compensate all other project costs. 

Flat rate 7% for projects that provide material aid for the most deprived (ESF+)

In projects that provide material aid for the most deprived funded by the Finnish Food Authority, costs arising from the purchase of food and basic commodities can be compensated as direct costs, apart from any second-hand goods acquired. In addition, costs arising from the transport of these purchases for the distribution to the most deprived can be compensated. Costs other than those listed above are compensated at a flat rate of 7% of acceptable direct costs.  Costs eligible for percentage-based compensation include at least administrative, transport, storage and manufacturing costs. 

Guidance and advice are also provided in projects that provide material aid for the most deprived. This type of aid is referred to as an associated activity. Associated activities increase the target group’s awareness of their opportunities to use various services and forms of support, including social services and healthcare, employment and training services, and various activities of associations. The costs arising for a project from associated activities are covered by percentage-based compensation, which is 7% of acceptable direct costs. 

Percentage-based compensation in projects funded based on the act on state subsidies for the development of business activities in 2021–2028 (“the business support act”, 758/2021) 

Flat rate 7% for business development aid (ERDF, JTF)

In projects that include development activities, direct costs eligible for compensation include salary costs, costs arising from the use of external services or specialists, costs arising from participation in an exhibition or trade fair promoting internationalisation, costs of raw materials and semi-finished products associated with product development, and costs from travel abroad, including costs from parts of travel in Finland. 

Direct costs are compensated based on actual and paid eligible costs. These costs are verified from accounting documents. The 7% compensation is calculated from all eligible direct costs, and it is used to compensate all other project costs. 

Flat rate 1.5% for business development aid (ERDF, JTF) 

In investment projects, direct costs eligible for compensation include salary costs related to construction, earthwork costs, building costs, costs arising from the acquisition and leasing of machinery and equipment, and intangible investment costs. 

Direct investment costs are compensated based on actual and paid eligible costs, and the costs will be verified from accounting documents. The 1.5% compensation is calculated from all eligible direct costs, and it is used to compensate all other project costs. 

Flat rate 40% and flat rate 7% for aid for developing the operating environment (ERDF, JTF) 

The 40% flat-rate option can only be used in projects for the development of the operating environment that include development activities. In this option, all costs arising from a development project except for the project employees’ salary costs are compensated by an amount equalling 40% of acceptable salary costs. 

If the costs arising from the use of external services and specialists account for at least 30% of the project employees’ acceptable salary costs, or if a project includes investments in addition to development activities, direct costs eligible for compensation include acceptable salary costs and costs arising from the use of external services and specialists. In this case, other project costs will be compensated at a flat rate of 7% calculated from all eligible direct costs. 

Flat rate 1.5% for aid for developing the operating environment (ERDF, JTF) 

In investment projects, direct costs eligible for compensation include salary costs related to construction, building costs, costs arising from the acquisition and leasing of machinery and equipment, and intangible investment costs. 

Direct investment costs are compensated based on actual and paid eligible costs, and the costs will be verified from accounting documents. The 1.5% compensation is calculated from all eligible direct costs, and it is used to compensate for all other project costs.