Simplified Cost Options (SCOs) are an innovative way of reimbursing grants and repayable assistance under the European Structural and Investment (ESI) Funds. Instead of reimbursing ‘real costs’, SCOs allow reimbursing expenditure according to predefined methods based on process, outputs or results. SCOs can take the form of flat rate financing, standard scales of unit costs, and lump sums.

The main advantage of the use of simplified costs is that the tracing of every euro of co-financed expenditure to individual supporting documents is no longer required.

The use of simplified cost options entails advantages such as:

• they significantly reduce the administrative burden for both managing authorities and beneficiaries;
• allow administrations to shift the focus from collecting and verifying financial documents to achieving policy objectives, i.e. concentrating on achieving concrete outputs and results instead of verification and control of actually-incurred costs;
• they simplify the audit trail, thereby reducing the risk of errors - for three years in a row the European Court of Auditors has not found any error on transactions using SCOs, which means less interruptions and suspensions and faster reimbursement of expenditure;
• thanks to the simplification of the management process, the use of simplified cost options can facilitate access of small beneficiaries to the ESI Funds.

Another way of focusing on results is by using a Joint Action Plan (JAP). A JAP enables Member States to implement parts of one or more operational programmes using a results-orientated approach towards a pre-defined goal. Find out more about why, when, and how to use JAPs here.

The rules for using SCOs are laid down in the following articles:

• Art. 67 – 68 of Regulation (EU) No 1303/2013 (Common Provisions Regulation - CPR)
• Art. 14 of Regulation (EU) No 1304/2013 (European Social Fund Regulation)

The below document provides technical guidance on the three types of simplified costs applicable to the ESI Funds for the 2014-2020 programming period (in accordance with Article 67-68 of CPR):

Guidance documents on Simplified Cost Options (SCOs)

In order to facilitate the exchange of practices and views among Member States and to promote simplification in the management of the ESF across the EU, the Commission set up a transnational network of practitioners open to all Member States. Created in 2015, the network has successfully engaged ESF stakeholders (managing authorities and audit authorities) from 25 Member States so far and meets on a regular basis to discuss a wide range of topics related to simplification.

More information on the activities of the Thematic Network on Simplification, including all the publications, presentations and minutes of the meetings, can be found under the “related info” section.

Useful documents (see documents on the right-side of this page):

• The Thematic Network in a nutshell

(main features, activities and goals of the network)

• Mapping of ESF SCO practices

(examples of SCOs developed and implemented under the ESF by different Member States)

• Case reports on SCO practices

(31 in-depth examples of SCOs implemented in some Member States)

Given the importance of SCOs for operations funded under the the European Social Fund (ESF) and the Youth Employment Initiative (YEI), additional rules have been introduced in Article 14 of the ESF Regulation.

For further information on the use of SCOs under the ESF, please consult the dedicated page here.

For a detailed breakdown of all the SCOs adopted in the Commission Delegated Act, see here.