The budget is where most good grant applications lose their points. The idea is strong, the activities make sense — but the budget contains a cost that is not eligible, the co-financing is unproven, or VAT sits on the wrong line. The evaluator does not think the application is bad; they simply cannot fund it in full.
What makes a cost eligible?
An eligible cost is one the funder allows the project to cover. The wording differs from scheme to scheme, but the core conditions repeat almost everywhere:
- Link to the project. The cost is necessary to carry out the activities and reach the result.
- Eligibility period. The cost was incurred and paid within the period the funder set. A purchase made before it starts is usually yours to carry.
- Evidence. The cost is documented — invoice, contract, payment order, acceptance note.
- Reasonableness. The price matches the market and the choice is justified.
- Compliance. Procurement rules, state aid limits and the scheme's own requirements are met.
Typical cost groups
| Cost group | What belongs here | What to watch |
|---|---|---|
| Personnel | Salaries and taxes for project work | Timesheets; justification for part-time allocation |
| Bought-in services | Expertise, training, development, design | Quotations and a documented choice |
| Materials and equipment | Supplies, software, devices | Whether depreciation is required or purchase allowed |
| Travel and events | Transport, accommodation, venue hire | Often capped by a rate or a percentage |
| Indirect costs | Office, communications, administration | Frequently a flat rate on direct costs |
The usual ineligible items are fines and late-payment interest, loan interest, costs incurred earlier, entertainment, and double funding — claiming the same cost from two funders.
Co-financing: where the money actually comes from
The grant covers part of the project; the rest has to come from you. The required share depends on the scheme and the applicant, but the more important question is a different one: where does that money come from, and when.
- Cash contribution — own funds, a loan or a partner's money. It has to be evidenced already at application stage.
- In-kind contribution — your own staff's time or use of assets, where the scheme allows it. Needs a documented calculation method.
- Partner contribution — agreed in a partnership agreement, not in a conversation.
VAT — settle it immediately
VAT is eligible only if the applicant cannot reclaim it. If you are VAT-registered and deduct input VAT, it is not a cost to you — and it must not appear in the budget as a supported cost. Getting that single line wrong can mean a five-figure difference at the end of the project.
The rule: decide the VAT treatment before building the budget, not afterwards. The whole budget must be either with VAT or without it — never mixed.
Cash flow: grants usually arrive afterwards
Most grants are paid out after the cost has been incurred and the report approved. That means financing the project yourself for a while. Before submitting, answer two questions: how much cash must be available at the tightest moment, and what happens if a payment is delayed by a month?
This is where tracking the budget by cost lines becomes essential — not for the report, but for solvency.
A budget that passes evaluation
- Every cost line links to an activity. A cost with no activity behind it is a question mark for the evaluator.
- The calculation is visible. Not "training €6,000", but "training 2 days × 8 h × €375/h".
- Prices are justified. A quotation, a price list or a comparable earlier purchase.
- The budget matches the work plan in time. A cost cannot arise before the activity that causes it.
- No contingency where it is not allowed. Many schemes forbid or cap an unforeseen-costs line.
How Projektiassistent helps
Projektiassistent builds the project plan and the budget from the same input, so activities, schedule and cost lines stay connected — change an activity and the cost changes with it. The cost line structure, the VAT treatment and the free balance stay visible throughout the project, not only when the final report is due. Start here: writing a grant application.
Summary
An eligible cost must be linked to the project, inside the period, evidenced and compliant. Co-financing must be covered and provable at application stage. VAT treatment has to be decided before the budget is built. And cash flow has to be thought through before the project starts — not when the first invoice falls due.
If you want a budget tied to activities and traceable in reporting, start here: projekt2.projektiassistent.ee.