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.27 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