In addition to any other costs that do not fulfil the eligibility conditions, the following costs are never to be considered eligible:
- Debt and debt service charges;
- Provisions for losses or debt;
- Expenditure financed by other sources;
- Purchases of land or buildings, unless otherwise specified in the Agreement;
- Exchange losses;
- Contributions in kind.
Contributions in Kind
In-kind contribution are those contributions such as, volunteers, goods, equipment received for free.
At this regard, please remember that the cost of staff assigned to the Action is not a contribution in kind and may be considered as cofinancing in the Budget when paid for by the International Organisation or the Sub-delegatees and that the running costs of equipment donated, may be considered eligible if they are mentioned in the Section 10.5 of the Single Form and if they are directly linked to the implementation of the Action.
As a general rule, the UN agency should apply for VAT exemption.
The VAT status both at HQ and at field level, should be indicated upfront in the section 10.7 of the Single Form and actualised in the final financial report.
In case the VAT exemption was requested but eventually denied by the concerned authorities, this should be mentioned in the report.
The evidence does not have to be included with the Final Report, but must be available in case of verification. In some cases, a copy of the applicable legislation may also be accepted as a proof of lack of VAT-exemption. In case there is no reply from the relevant authorities, the letter from the UN Agency or its legal council requesting the VAT exemption can be considered as a proof that VAT exemption was requested.
When a UN Agency receives a VAT reimbursement of costs after the receipt of the final payment and where VAT has been paid by DG ECHO, it is necessary to reimburse these to DG ECHO. The UN Agency should contact ECHO/C3 in such cases, which will issue a recovery order.
References & useful links