New European Commission guidance note on management costs and fees for financial instruments implemented according to Article 38(4)(b)

Published on 10 December 2015

Financial instruments are a form of support whose success hinges on the performance of bodies implementing them. One of the decisive parameters to align the interests of the managing authorities and the bodies implementing financial instruments is the remuneration paid to the latter in the form of performance-based management costs and fees.

In 2007-2013 management costs and fees paid to bodies implementing financial instruments were calculated on the basis of the amounts contributed to the instruments and were, in many cases, decoupled from their performance (e.g. from the disbursements to final recipients). The legislation also set rather high limits for management costs and fees considered as eligible expenditure.

Article 42(1)(d), (2), (5) and (6) CPR provide for a new approach to eligible management costs and fees, introducing a requirement for their performance orientation and a new calculation method of thresholds as further stipulated in Articles 12, 13 and 14 CDR. The new guidance note explains the novelties and contains an example for the calculation of thresholds.