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6.3.10. No-profit rule

Grants may not have the purpose or effect of producing a profit within the framework of the action or the work programme, with the exception of some specific cases (see below) as provided for in the Special Conditions of the standard grant contract.

Profit is defined as a surplus of the receipts over the eligible costs approved by the contracting authority when the request for payment of the balance is made.

The receipts to be taken into account are the consolidated receipts on the date on which the request for payment of the balance is made by the coordinator that fall within one of the two following categories:

(i) income generated by the action, unless otherwise specified in the Special Conditions of the contract;

(ii) financial contributions specifically assigned by other donors to the financing of the same eligible costs financed by the grant. Any financial contribution that may be used by the beneficiary(ies) to cover costs other than those eligible under a contract or that are not due to the donor where unused at the end of the action are not to be considered as a receipt to be taken into account for the purpose of verifying whether the grant produces a profit for the beneficiary(ies).

In case of an operating grant, amounts dedicated to the building up of reserves shall not be considered as a receipt.

When grants or parts of grants are based on simplified cost options, these amounts should be established in such a way as to exclude profit a priori. If this is the case, the amounts of unit costs, lump sums and/or flat-rates established in the contract shall not be challenged by ex post controls, i.e. through comparison with the actual costs they cover. (see section 6.2.1.; and Annex E3a2 Guidelines-Checklist for simplified cost options)

In case a profit is made, the contracting authority has the right to reduce the final amount of the grant by the percentage of the profit corresponding to the final Union contribution to the eligible costs approved.

The no-profit rule does not apply to:

  1. actions whose objective is to consolidate the financial capacity of a beneficiary. Where applicable, this must be specified in Article 7 of the Special Conditions

  2. actions which generate an income to ensure their continuity beyond the end of the contract. Where applicable, this must be specified in Article 7 of the Special Conditions

  3. other direct support paid to natural persons in most need, such as unemployed persons and refugees. Where applicable, this must be specified in Article 7 of the Special Conditions

  4. study, research or training scholarships paid to natural persons

  5. low value grants (i.e. grants of EUR 60.000 or less)



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