The implementation of projects under the EU’s 7th Research Framework Programme relies on the principle of co-financing. This means that the EU only contributes up to a certain percentage of the total project costs.
In some cases e.g. the European Research Council (ERC) or the Coordination and Support Actions 100% of the direct project costs will be reimbursed, however the indirect costs in these projects are only covered by a flat-rate.
Accordingly, the project partners have to co-finance the project by their own means and resources. They are, however, not obliged to declare their own resources in detail neither in the proposal nor in the reporting.
The amount of the EC contribution (i.e. the funding rate) depends on the type of project, the type of activities to be carried out as well as the legal form of the respective institution.
In some cases, a maximum EC contribution is defined in the call text or stated in the corresponding work programme. Exceeding this threshold in the proposal may entail its exclusion from the evaluation.
The financial modalities of an EU project, i.e. the maximum EU funding, are settled in a Grant Agreement, that the European Commission concludes with the project consortium. The distribution of the money and further payment modalities remain the responsibility of the consortium, being defined in the consortium agreement.
According to the Grant Agreement, the Commission transfers the EC contribution to the coordinator, who forwards it to the project partners. The distribution of the EC funding within the consortium is subject to negotiations between the project partners.