Eligible vs Ineligible Costs
Official Definition & Legal Scope
Eligible costs are directly linked to the subsidized activity, necessary for execution, and incurred within the approved timeframe. Ineligible costs are disallowed and must be absorbed by the entity.
- •Ley 38/2003 General de Subvenciones (Artículo 31: Gastos subvencionables)
- •Real Decreto 887/2006 (Artículo 83)
Statutory rules under Article 31 LGS
Eligible expenses must be undeniably connected to the activity, incurred within the execution period, and paid prior to closeout deadlines.
Financial fees, recoverable indirect taxes (such as deductible VAT), and debt interest are statutory ineligible expenses.
Direct costs vs indirect overheads
Direct costs cover allocated project staff, supplies, and external subcontracting fully dedicated to the project.
Indirect overheads (office rent, utilities, general admin) are allocated via fixed percentage rates (5%-10%) or objective cost keys.
Frequent accounting errors
Charging VAT when the entity engages in commercial taxable activities with input tax deduction rights.
Settling supplier invoices outside the approved execution or closeout windows.
How FundingQuarry audits your budget matrix
FundingQuarry parses line-item budgets and categorizes every expense against allowable thresholds defined in regulatory terms.
Key Regulatory Takeaways
- Only necessary, paid, and timely incurred expenses are eligible.
- VAT is eligible only when non-recoverable by the non-profit entity.
- Procurement above statutory thresholds requires 3 competitive vendor quotes (Art. 31.3 LGS).
Want to verify that 100% of your planned project expenses qualify as eligible?
Related Glossary Terms
Official References & Sources
- Ley 38/2003 General de Subvenciones (Artículo 31)
Frequently Asked Questions
When is VAT eligible under public funding rules?
VAT is eligible only when actually incurred by the non-profit and completely non-recoverable through tax returns.
What is the 3-quote procurement rule under Article 31.3 LGS?
Whenever procurement exceeds minor contract thresholds (15,000 € for services/supplies), at least 3 distinct vendor quotes must be sought prior to engagement.
Can salaries of existing staff be charged to the grant?
Yes, provided the staff member is directly assigned to the project and charged strictly for hours spent during project execution.
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