Issue in Question
UKRO has received several queries relating to the eligibility of PhD fees and bursaries/fellowships/scholarships or stipends for students working on projects funded by Horizon Europe and Horizon 2020.
Both, can be charged to Horizon 2020 and Horizon Europe grants, although the fees themselves need to be claimed in a very specific way.
Though in the UK national context PhD students are generally not considered employees, for the purposes of EU research and innovation projects, the expenditure related to PhD students working on Horizon grants (based on actual costs) falls under the ‘Personnel costs’ category. Therefore, the same Horizon rules as for employees apply to PhD students when calculating their daily rates and when reporting their costs to the Granting Authority (e.g. rules regarding keeping time records, etc.).
In addition to this, the tuition fee charged can be either that for home students or for international students. The fee charged to the project will need to correspond to the rates officially published by the beneficiary institution on it website and recorded in its accounts (i.e. there needs to be an auditable money trail for the transfers).
Clarification
Horizon Europe Collaborative Projects (RIA, IA, CSA) and European Research Council Grants
PhD tuition fees, which are considered as a foregone cost to the institution, and bursaries can be charged as an eligible personnel cost under Article 6.2.A.2 of the Horizon Europe Model Grant Agreement (MGA). The Annotated MGA for Horizon Europe states the following under “Specific cases (costs for natural persons with direct contract and seconded personnel (A.2, A.3))”:
“Fellowships, scholarships, stipends, internship or similar agreements (not
employees) — Costs for persons (e.g. students, PhDs and other researchers) under
fellowships, scholarships, stipends, internship or similar agreements, through which they work for the beneficiary on the action (without having an employment contract) can be accepted, if the agreement is work-oriented (as opposed to training-oriented: i.e. not aimed at helping the student to acquire professional skills).
Such cost can be charged to the action as personnel costs, if they fulfill the conditions set out in Article 6.1 and 6.2.A.2, and in particular:
- the assignment of tasks and the remuneration complies with the applicable national
law (e.g. on taxes, labour and social security) - the recipients of fellowships, scholarships and stipends have the necessary
qualifications to carry out the tasks allocated to them under the action.
PhD agreements are considered work-oriented. However, time for training, if any, may NOT be charged to the action.”
…
Cost for exemptions from academic fees (HE) — The fees (or the fee exemption) are
eligible as personnel cost, if the student’s contract includes the amount of waived fees as part of their remuneration. The other conditions set out in Article 6 have to be fulfilled as well (e.g. the full remuneration, included the value of the waived fees, must be recorded in the university’s accounts).”
To be eligible, the PhD student must be exempt from paying the said fees themselves, and the waived fee amount must be stipulated in the student’s contract. The full stipend payment, including the waived fee, must also be clearly recorded in the universities’ accounts for audit purposes and the fee amount itself needs to correspond to the rates published on the institution’s website (a record of this needs to be kept for future audits).
This means that the fellowships/scholarships/stipends and the waived fees are incorporated into the salary of the student and can be charged to the grant provided that this remuneration complies with the national law on taxes and social security payments.
Furthermore, the PhD agreement must be considered work-oriented, and time for training (if any) may not be charged to the project, as it is not considered relevant to reach the objectives of the project.
The hourly rate for the PhD student must be calculated in accordance with the method stated in the grant agreement for the calculation of personnel costs for employees as detailed in Article 6.2 A.1 of the Horizon Europe MGA. In terms of record keeping, the same evidence as for employees must be kept by PhD students (i.e. monthly declaration of days worked on the project).
Please note that UKRO sought further clarification on this subject from the Commission who confirmed that (as long as the other eligibility conditions are met) it is also possible for the beneficiary to pay the PhD student an ‘enhanced’ stipend – so that they can cover the fees themselves – rather than waive the fees. In this case, the waived fees would not be charged to the grant, but the full value of the increased PhD stipend would.
If you intend to charge the costs in this way, we strongly suggest that you contact the Research Enquiry Service with this question and keep their answer for your records to avoid potential issues with auditors as this interpretation of the rules somewhat deviates from the official guidance included in the Annotated MGA.
Horizon 2020 Collaborative Projects (RIA, IA, CSA) and European Research Council Grants
Similar articles and annotations as above are included in the Horizon 2020 MGA and the Horizon 2020 Annotated MGA.
Audit requirements
Detailed information on audit requirements for these costs under Horizon 2020 can be found in the H2020 Indicative Audit Programme.
UKRO Focus Group: Including PhD students on EU-funded projects
Some time ago, UKRO organised a meeting of its Legal & Finance Focus Group to gather feedback from subscribers on how they charge the costs of PhD students on Horizon 2020 projects. A useful summary of this meeting, which includes a few best practices from UK universities, is available in the ‘Related content’ section.
Marie Skłodowska-Curie Actions (MSCA) under Horizon Europe and Horizon 2020
PhD students recruited as part of a MSCA Doctoral Network (DN), Innovative Training Network (ITN) or COFUND Doctoral Programme must not be asked to pay tuition fees for their research training and/or PhD programme with their own funds or from the researcher unit costs that they receive, as stated in the MSCA Horizon Europe MGA and under Section 3 of the Horizon 2020 MGA.
Seconded staff members involved in a MSCA Staff Exchange (SE) or Research Innovation Staff Exchange (RISE) project must also not be asked to pay tuition fees for their research and innovation training with their own funds or from the staff member unit cost.
The associated costs can be recovered through the institutional unit costs including the ‘Research, Training, and Networking’ costs (RTN) and the ‘Management and Indirect’ costs. Institutions can also choose to waive the fees or offer a reduced fee rate.