What is it?
Simplified Cost Options (SCOs) are an innovative way of reimbursing grants and repayable assistance under the Cohesion Policy Funds. Instead of reimbursing ‘real costs’, SCOs allow the reimbursement of expenditures 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.
Why is it useful?
SCOs allow the tracing of co-financed expenditures without the need to provide individual supporting documents.
As such, simplified cost options:
- 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);
- simplify the audit trail, thereby reducing the risk of errors and resulting in fewer interruptions/suspensions – and faster reimbursement of expenditures. The European Court of Auditors has not found any errors on transactions using SCOs;
- Through this simplified management process, the use of SCOs can facilitate access to ESI Funds for small beneficiaries.
How to do it?
For the 2021-2027 programming period, the rules for using SCOs are laid down in Articles 51-56 and 94 of the Common Provisions Regulation (CPR).
The Guidance document on Simplified Cost Options (SCOs) provides technical guidance on the three types of simplified costs applicable to ESI Funds for the 2014-2020 programming period – including how to develop and use them. The principles set out in this document remain valid for the use of SCOs in the 2021-2027 programming period.
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 has built a transnational network of practitioners that is open to all Member States. More information on the activities of this network – including its publications, presentations and meeting minutes – can be found via the transnational platform webpage.
Given their important role, Member States have several options when deciding to make use of SCOs:
- Using their Member State-specific SCOs in an autonomous way under Art 53 CPR;
- Submitting their specific SCO proposals to the Commission under Art 94 CPR. for prior Commission approval;
Making use of EU-level SCOs already approved by the Commission via a Commission Delegated Regulation - see section on EU-level SCOs.
In addition to the above-mentioned advantages of SCOs, using Member State-specific SCOs and/or EU-level SCOs approved by the Commission under Article 94:
- reduces the scope of control and audits to the activity/output/result achieved, as well as conditions fulfilled;
- allows Member States to continue to use their own accounting practices to support operations on the ground. These SCOs are different from the ‘classical’ simplified costs under Article 53 of the CPR. They are used by the Commission for reimbursement of expenditure to Member States, who may apply different arrangements with their beneficiaries;
- allows the Commission to develop off-the-shelf, EU-level unit costs. These costs can be applied by any Member State without having to submit a separate calculation method.
- Most importantly, using SCOs approved under art. 94 CPR provides legal certainty on the methodology used to calculate the SCO.
In addition to SCOs and Financing not Linked to Costs (FNLC) schemes proposed by Member States (which are based on their own data and approved by the Commission under art. 94-95 CPR), the Commission may also adopt a set of SCOs and FNLC values that can be directly applied.
Currently, EU-level SCOs and FNLC values cover the following areas:
- Education - unit costs for participation in an academic year of formal education (from early childhood education to tertiary level, including formal vocational education).
- Training for the unemployed - unit costs for participants who successfully complete a non-formal training course.
- Employment-related counselling services - unit costs for staff of the Public Employment Service or other public/private bodies providing employment-related counselling services (hourly, monthly and annual amounts).
- Training for employed persons - unit costs for training provided in-house or by an external company (hourly amounts per participant).
- Community social services – unit costs for the provision of in-home care services (i.e. services delivered at the home of the care receiver) and community-based day care services
- Crises and emergency services – FNLC values for the provision of services to victims of domestic violence and persons experiencing homelessness
Different amounts have been established per Member State for each area. They can be used for both the ESF+ and similar operations under the Just Transition Fund.
SCOs 1 to 4 also include separate amounts which may be used as incentives to address extra efforts required for Third Country Nationals and refugees to help them achieve the expected results.
More details on SCOs and FNLC 5 and 6 (including the type of activities covered, audit trail, etc. may be found in the study ‘Simplified cost options’ and ‘Financing not linked to costs’ in the area of social inclusion and youth. More details on SCOs 2 to 4 may be found in the study 'Developing ‘Off-the-Shelf’ Simplified Cost Options (SCOs) under Article 14.1 of the European Social Fund (ESF) regulation'.
For an overview of the EU-level SCOs which were in force under the 2014-20 programming period, please consult the dedicated page or the Commission Delegated Regulation (EU) 2021/702.
SCOs and Financing not Linked to Costs for ALMA
The Commission has already adopted EU-level SCOs and financing not linked to costs amounts for ESF+ operations promoting the implementation of the active inclusion ALMA (Aim, Learn, Master, Achieve) initiative with the goal of empowering disadvantaged young persons aged 18 to 29 to find a job, apprenticeship or re-start education and thus re-integrate into society.
Different amounts have been established per Member State.
More information can be found in the study ‘Simplified cost options’ and ‘Financing not linked to costs’ in the area of social inclusion and youth
Below are the applicable Commission Delegated Regulations
- EU-level SCOs and financing not linked to costs amounts in the areas of education, training, and social inclusion: Commission Delegated Regulation (EU) 2023/1676 (entry into force on 21/09/2023)
- EU-level SCOs and financing not linked to costs amounts for ALMA operations: Commission Delegated Regulation (EU) 2022/2175 (it entered into force on 28/11/2022)
Member States seeking to propose the adoption of a SCO under Article 94 CPR should submit all relevant data to the Commission through their ESF+ programme and propose a methodology for the definition of SCOs which takes into account the Member State's specific needs. The Commission will then assess the data and methodology, and may then approve the proposed SCOs when adopting the programme (or programme amendment).
Managing Authorities wanting to propose new SCOs for their ESF+ programme can contact their country desk officer in DG EMPL to discuss all the relevant steps.
Click on the map to see country-by-country information relating to all SCOs adopted by the European Commission under Article 94 CPR
The map provides a snapshot of the latest situation in every country – including which countries are using SCOs adopted by the Commission in the daily management of their programmes and projects.
To review the list of Member-State specific SCOs adopted by the Commission under the ESF in the period 2014-2020, please consult the dedicated page.
Q&A on SCOs related to the 2021-2027 programming period
2nd Q&A on SCOs related to the 2021-2027 programming period
- Examples of SCOs developed and implemented under the ESF by Member States during the 2014-20 period
- 31 in-depth examples of SCOs implemented in selected Member States during the 2014-20 period
Result-based approaches: selected case reports of ESF-funded practices
This paper presents eight case reports on result-based approaches implemented by ESF managing authorities in Belgium-Flanders, Finland, France, Latvia, Lithuania, Malta, Portugal and Slovakia.
Recommendation paper on financing not linked to costs
This paper aims to support ESF+ authorities and stakeholders in designing FNLC schemes.
The aim of this document is to support European Social Fund (ESF) authorities in assessing the legality, regularity and eligibility of Simplified Cost Options (SCOs) before implementation.
Simplified Cost Options – A practitioners’ manual
This manual aims to support European Social Fund (ESF) authorities and stakeholders in designing and implementing Simplified Cost Options (SCOs).
The study assesses which types of off-the-shelf solutions would help to simplify the management of the ESF+ in the following two areas:
- ALMA - sustainable integration of young disadvantaged people through transnational mobility schemes
- community social services.
