Direct comparison
Lump Sum vs Actual-Cost Grants: Horizon Europe
Compare Horizon Europe lump sum vs actual-cost grants: payment triggers, reporting/audit burden, budget flexibility, and which model fits your call.
Side-by-side comparison
| Dimension | Lump sum | Actual cost |
|---|---|---|
| Payment basis | Fixed amount per work package, agreed at signature | Reimbursement of eligible costs actually incurred |
| Payment trigger | Commission accepts the work package as properly implemented | Costs declared and found eligible in a periodic financial report |
| Indirect costs | Built into the fixed per-work-package sum at proposal stage | Flat 25% of eligible direct costs, charged on top |
| Financial reporting | None — no cost declarations required | Full financial statements each reporting period |
| Cost records (timesheets, invoices) | Not required for lump-sum-funded work | Required and must be retained for audit |
| Audit / review type | Ex-post technical review of work implementation (up to 5 years post-payment) | Financial/cost audits, plus technical reviews |
| Budget flexibility | Reallocating the fixed per-work-package sum requires consortium agreement and can require a formal amendment | Spend can generally shift between cost categories without amendment if the work is still delivered |
| Risk if costs exceed the estimate | Beneficiary absorbs the shortfall — payment does not increase | Absorbed up to the grant’s reimbursement ceiling; excess still unrecovered |
| Benefit if costs come in under the estimate | Beneficiary keeps the difference | No equivalent — only actual costs are reimbursed |
| Who chooses the model | Fixed by the call topic in the Work Programme, not the applicant | Fixed by the call topic in the Work Programme, not the applicant |
| Adoption trend (Horizon Europe) | Expanding since its pilot phase; reported at roughly half of calls by the 2026-2027 Work Programme | Remains the default outside topics explicitly designated lump sum |
Common questions
FAQ
Can a consortium choose lump sum funding if it prefers less administrative burden?+
No. The funding model is fixed by the specific call topic in the Horizon Europe Work Programme and stated in that topic’s conditions on the EU Funding & Tenders Portal before a proposal is written — applicants cannot opt into or out of either model for a given call.
Does lump sum funding mean there is no oversight at all?+
No. Lump sum removes cost reporting and financial audit, but the Commission still verifies the work through in-depth ex-post technical reviews, which can occur up to five years after final payment and may include checking supporting documentation, interviews, or site visits.
Is the 25% indirect-cost rate different between the two models?+
The flat 25% indirect-cost rate on eligible direct costs is a Horizon Europe-wide convention; under lump sum funding it is built into the fixed per-work-package amount agreed at signature rather than calculated and reimbursed separately after the fact.
What happens if a beneficiary cannot complete a lump-sum work package as planned?+
Because payment is tied to the Commission accepting proper implementation of the agreed work, a partial or failed delivery can affect payment for that work package and may require a Grant Agreement amendment if the underlying scope needs to change — it is not simply forgiven the way an unspent actual-cost budget line would be.
