How to budget personnel costs for Horizon Europe

The short answer

Horizon Europe pays for staff as actual costs: a daily rate for each person, multiplied by the day-equivalents they work on the action. The daily rate is the person's annual personnel costs divided by 215, and no one can be declared for more than 215 day-equivalents a year across all their EU grants. Indirect costs are then added as a flat 25 percent of your eligible direct costs, with subcontracting left out of the base.

So each person's line in your budget is their annual personnel costs spread over 215 days, times the days you expect them to work on the project. The person-months in Part B of your proposal describe the same effort, and the application form asks that the two agree.

UK researchers can take part on the same terms as researchers from other associated countries, including leading consortia, for calls from the 2024 Work Programmes onwards, under the association the European Commission and the UK Government agreed in September 2023.

What counts as personnel costs

Under the Model Grant Agreement, costs for employees are eligible as personnel costs if the person works for you under an employment contract (or equivalent appointing act) and is assigned to the action. They are limited to salaries, social security contributions, taxes and other costs linked to the remuneration, where these arise from national law or the employment contract, and they are calculated on the costs actually incurred.

The Annotated Grant Agreement (AGA) spells out what that means for each person:

• Include fixed salary, fixed complements the person is unconditionally entitled to, and mandatory employer and employee social security contributions
• Include bonuses only if they are paid on objective conditions set out at least in your internal rules, and paid consistently, not just on EU grants
• Leave out any part of the remuneration that was not an actual cost to you, such as salary reimbursed by a social security scheme during long sick leave or maternity leave
• Leave out bonuses that depend on money remaining in a project's budget
• Only staff assigned to the action count, through internal written instructions, an organisation chart or another documented management decision
• Staff from a temporary work agency are not personnel costs; they can be charged as subcontracting or as other goods, works and services if they meet those conditions

The daily rate

The Model Grant Agreement sets the formula. Personnel costs are the daily rate for the person multiplied by the number of day-equivalents worked on the action, rounded up or down to the nearest half-day, and the daily rate is the annual personnel costs for the person divided by 215.

The AGA explains how that is applied in practice. You calculate one daily rate per person for each reporting period:

• Daily rate: the actual personnel costs for the months within the reporting period, divided by the maximum declarable day-equivalents
• Maximum declarable day-equivalents: 215 ÷ 12, times the number of months the person is employed in the reporting period, times their working time factor (1 for full time, 0.5 for half time), rounded to the nearest half day
• For all personnel cost calculations a month counts as 30 days, so a part month is a fraction of 30
• If the working time factor changes during the period, for example part time to full time, the maximum is worked out separately before and after the change and added together
• Where the grant agreement allows it, as the Horizon Europe one does, time on parental leave may be deducted from the 215. Other absences, including long-term sick leave, may not

Two things follow, as arithmetic rather than rules. A part-timer's daily rate is not halved, because their costs and their share of 215 are both scaled by the working time factor. And the rate in your proposal is an estimate: when you report, it is recalculated from the personnel costs actually recorded in your accounts for that reporting period. The AGA also lets you do the calculation separately for each calendar year within a reporting period, provided you do it consistently.

The 215-day ceiling

The total number of day-equivalents declared in EU grants for a person for a year cannot be higher than 215, minus any time spent on parental leave. The AGA applies this per calendar year, across every EU grant the person works on, to avoid double funding of personnel costs. For a part-timer it is pro rata: 215 times the working time factor, so 107.5 for someone on a 50 percent contract.

The ceiling belongs to the person, not to the grant. A postdoc on two EU grants at once has one 215 to share between them, so each budget can be right on its own and the two together still be undeliverable.

Person-months and the budget

The application form asks for effort in person-months, not days. In Part B, section 3.1, each work package description gives the number of person-months for personnel, and table 3.1f, the summary of staff effort, gives the person-months for each work package and each participant over the whole duration of the work, with each work-package leader's figure in bold. The form asks you to make sure this section matches the costs in the budget table and the person-months in the work package descriptions.

The personnel figure also sets a threshold: table 3.1h asks you to justify equipment purchase costs for any participant where they exceed 15 percent of that participant's personnel costs in the budget table.

As arithmetic, not a rule: the AGA's own ceiling formula allows 215 ÷ 12, about 17.9, day-equivalents a month for a full-time person. A full-time person-month at their daily rate therefore costs one twelfth of their annual personnel costs, which is a sound way to cost a person-month in a proposal. Turning a share of someone's time into person-months in the first place is covered in our guide to person-months.

If your staff record time in hours, the AGA has you convert the hours worked into day-equivalents, and gives three options for the length of a day-equivalent, the simplest being 8 hours. Keeping those records is a separate subject, covered in UniTimesheet's guide to Horizon Europe timesheets.

Once the grant is signed, the budget breakdown can be adjusted by transfers between participants and budget categories without an amendment, as long as this does not imply a substantive or important change to the description of the action.

Indirect costs at 25 percent

Indirect costs are reimbursed at a flat rate of 25 percent of the eligible direct costs, excluding volunteers costs, subcontracting costs, financial support to third parties and exempted specific cost categories. For Horizon Europe the AGA exempts every specific cost category except D.7, ERC additional costs. The amount is a fixed flat rate, not a claim for your actual overheads.

Because the flat rate covers overheads, personnel costs cannot include any indirect costs. If your institution's own staff rates have overheads built in, they come out before the rate is used in the budget; the Model Grant Agreement says the same of every direct cost category.

The AGA's own example is a public university with €100,000 of personnel costs, €20,000 of subcontracting and €10,000 of consumables. Its indirect costs are 25 percent of €110,000, which is €27,500, and its total eligible costs are €157,500.

Other ways to cost staff

The standard calculation above covers most university staff. Three options change it, and each applies only where your grant agreement provides for it, so check its Data Sheet.

Average personnel costs

If your organisation consistently calculates average rates for its staff as part of its cost accounting, it can use them for the daily rate. The averages must be built from the actual personnel costs in your accounts, with ineligible costs and anything charged in another budget category, such as overheads, removed, and the practice must be applied consistently whoever funds the work. Averages for technical staff and actual costs for researchers is acceptable; averages for externally funded projects only is not. An average hourly rate converts to a daily rate by multiplying by 8, or by your standard annual productive hours for a full-time employee (or 90 percent of standard annual workable hours, whichever is higher) divided by 215.

Horizon Europe personnel unit cost

A separate option granted only on request. Your organisation applies through the Funding and Tenders Portal, supported by an audit certificate, and the daily rate is its total staff costs in the last closed financial year, divided by its annual work units, divided by 215, subject to a maximum per country. Once approved it must be used for all your personnel costs in all Horizon Europe actions, including the personnel lines of a lump-sum proposal's detailed budget, and the 215-day ceiling then applies even to someone who works on only one EU grant in the year. You may revert to actual costs once, and cannot then request the unit cost again for the rest of the 2021 to 2027 period.

Project-based remuneration

This applies only if your institution pays staff more when, and because, they work on projects, through a bonus or a higher-paid contract. You calculate an action daily rate from the person's actual costs for work on the action, compare it with the national project daily rate, which is what you would pay the same person for work on a nationally funded project under national law, a collective agreement or your written internal rules, and use the lower of the two. Staff whose pay does not rise when they work on projects stay on the standard calculation, even where their contract was signed specifically for the action.

Lump-sum calls

Some topics are funded by lump sum, and the application form carries an extra declaration for them. For a lump-sum grant with a detailed budget table, you confirm that the detailed budget was established in accordance with your usual cost accounting practices and in compliance with the basic eligibility conditions for EU actual cost grants, with a reference to Article 6 of the AGA, and that it excludes costs that are ineligible under the programme.

So the personnel lines of a lump-sum budget rest on the same rules: annual personnel costs over 215, times the day-equivalents you plan. If your organisation has an approved personnel unit cost, the AGA says to use it for those lines too.

A worked example

Three people on a 36-month project at one university. The figures are illustrative, invented so that the daily rates come out round; your finance office will have the real annual personnel costs, including employer contributions.

The postdoc is at the full 215 day-equivalents a year and the research assistant at 107.5, the pro-rata ceiling for a half-time contract, so neither can be put on another EU grant in those years. The person-months column is what goes into table 3.1f, split across the work packages each person works on.

Adding the indirect costs

The same illustrative project, with some consumables and one subcontract added, to show what the 25 percent is calculated on:

Common mistakes

• Dividing annual personnel costs by your institution's own count of working days instead of 215
• Leaving the working time factor out of a part-timer's daily rate, which halves it
• One person budgeted above 215 day-equivalents a year across all their EU grants, or above the pro-rata figure on a part-time contract
• Staff rates with overheads built in, so indirect costs are charged twice
• Applying the 25 percent flat rate to subcontracting
• Counting bonuses that are paid only when a project has money left
• Charging agency staff as personnel costs
• Person-months in Part B that do not match the personnel costs in the budget table

Where AllocBoard fits

The daily rate and the flat rate are arithmetic your finance office will run. What goes wrong first is the effort underneath them: how many person-months each person is down for, on every grant they hold, month by month. That is what AllocBoard keeps true:

• Allocations are recorded in person-months, per person, per project and per month, including partial allocations such as 0.5 PM
• Each person's allocations are summed across every project, and anyone over 100 percent in a month is highlighted
• Staff roles carry grade-based pay scales, which AllocBoard uses to calculate salary costs across projects
• Work packages carry person-month budgets, with effort distributed by equal split, proportionally or month by month
• Named reporting periods such as RP1 and RP2 track budgets and allocations across the phases of a project
• Pre-award plans cost the bid with placeholder roles, salary estimates and work packages, and carry over to the live project when the grant is awarded

Sources

This guide summarises the European Commission's own grant documents. It is not financial or audit advice: your grant agreement and its Data Sheet, the call conditions and your research office have the final word.

• European Commission, EU Grants AGA, Annotated Grant Agreement, version 2.0, 1 April 2025: Article 6.2.A.1 employees (pages 49 to 60), Article 6.2.A.6 HE personnel unit cost (pages 71 to 73), Article 6.2.E indirect costs (pages 136 to 137) and Article 20 record-keeping (page 210)

• European Commission, Horizon Europe and Euratom Model Grant Agreement, version 1.2, 1 June 2026: Article 5.5 budget flexibility, Article 6.1 and Article 6.2.A personnel costs (pages 22 to 26) and Article 6.2.E indirect costs (page 34)

• European Commission, Horizon Europe application form, RIA and IA, version 5.1, 22 January 2026: Part A declarations for lump-sum grants, and Part B section 3.1 with tables 3.1f and 3.1h (Part B pages 13, 14 and 19)

• UK Government and European Commission, joint statement on the UK's association to Horizon Europe and Copernicus (7 September 2023)