Financial Management in Interreg Projects
Managing EU grants effectively requires a clear understanding of which costs qualify for reimbursement. For organisations participating in Interreg programmes, financial management is governed by a defined set of eligible cost categories under Regulation (EU) No 2021/1059. Getting this right from the outset can determine whether expenditure is approved or rejected during verification.
Eligible Cost Categories
Based on Regulation (EU) No 2021/1059, the different cost categories applicable in the programme are specifically defined for Interreg Europe participants.[2] These categories structure how project budgets are prepared and how expenditure is reported throughout the project lifecycle.[2]
One specific category — infrastructure and works — is only permitted for pilot actions within Interreg projects.[2] This restriction is important for partners planning physical investments, as costs outside pilot actions in this category would not be eligible.[2]
For Interreg Central Europe, all eligible direct costs of a beneficiary other than staff costs — covering cost categories 2 through 6 — can be reimbursed on the basis of a flat rate.[4] This flat-rate mechanism simplifies administration for project partners by reducing the documentation burden on certain expenditure lines.[4]
Sound Financial Principles
Principles of sound financial management and cost-efficiency should be applied across all infrastructure and works expenditure.[3] These principles align with broader ERDF requirements and are not simply administrative formalities — they form the basis on which certifying authorities assess whether claimed costs represent genuine value.
Budget Changes During the Project
A common question from project partners concerns whether budgets can be modified once a project is underway. Interreg Europe's help centre directly addresses this, covering the question of whether budget changes are permitted during the project's lifetime.[2] Understanding the conditions under which changes are permissible is critical to avoiding non-eligible expenditure.[2]
Verification of Expenditure
Each partner's expenses must be verified, and the programme provides country-specific information to guide this process.[2] For local authorities, questions around whether they need budget under external expertise to certify their expenses are among the most frequently raised financial management queries.[2] The programme also confirms that costs for verification of expenditure related to the final progress report can be reported.[2]
Eligibility Timeframes
Costs are only eligible within defined timeframes, and both Interreg Europe and Interreg Central Europe address the question of from and until when expenses are eligible as a core part of their guidance.[2][7] Partners must ensure that expenditure falls within the approved project period to avoid disallowance during audits.[7]
Pilot Actions and Budget Placement
For projects that include pilot actions, there is specific guidance on where to include related costs in the budget.[2] Infrastructure and works costs, for example, are only admissible within this distinct activity type, making correct budget categorisation essential before submitting financial reports.[2]
Co-financing and Partner Contributions
Interreg projects also require partners to understand co-financing arrangements. The programme guidance covers which type of organisation can receive Interreg funding, as well as where partner contributions appear in the project budget.[7] For Norwegian partners, a specific co-financing rate applies that differs from EU member state arrangements.[7]
What to Watch
Financial management compliance is a key requirement across the 2021–2027 programming period for Interreg partnerships. Interreg brings together organisations from across Europe and beyond to tackle shared challenges and create lasting connections.[1] With data from the State of Interreg 2025 now available, programme authorities are increasingly focused on financial absorption rates and audit-readiness across the network.[1] Partners should regularly consult programme-specific manuals and the Interreg Europe help centre to stay aligned with any evolving guidance on eligible cost categories and verification procedures.[2]