Proposal

Costing your proposal

Overview

There can be considerable variances between funders and between calls in relation to the format of budget templates, which costs are eligible and the rates of overheads that apply. For any particular call, it is always important to check the relevant call guidelines in relation to preparation and submission of budgets. However, there are certain common budget elements which apply to many calls, and some general guidance on proposal costing is included below. Contact aidan.mcelwaine@ucd.ie if you have any queries on preparation of research proposal budgets.

Depending on the funding call, staff costs may include additional permanent staff time, or newly recruited staff.

Fixed Term Workers Act (FTWA)

Where additional staff are being included this must be line with the FTWA.  Your local HR Partner will be able to confirm the status of the individual in mind
When costing salary please refer to the following:

Individuals are typically "incremented" on the scale on the anniversary of their appointment date.
Annual inflation may also be allowed. Please refer to individual funding agencies programme call details.
Employer contributions should be included where appropriate

  • Employer PRSI 10.85%
  • Employer Pension 20%

Scholarships (Stipend & Fees)

Where scholarships are included on a proposal, fees should be in accordance with the current student fee policy available from Graduate Studies Office .  Stipends should be costed according to the funding agency guidelines.

When costing proposals, indirect costs, also known as overheads, should be included.

UCD Policy

The UCD guideline is to seek an overhead contribution of at least 30% for lab-based and 25% for desk-based research. For "Consultancy" agreements however, this is raised to 35%. The UCD Overhead policy is available at this link

Award TypeDetailsOverhead rate
H2020 Awards  Overheads are allowed at 25% of direct costs excluding subcontracting.  Awards are funded at 100% for Higher Education Institutions. 25%
Marie Curie  There are a number of variants of Marie Curie awards, with varying overhead contributions awarded (please see individual calls for further details).  Various
State Bodies State bodies (i.e. SFI, HRB, Enterprise Ireland) typically provide a 30% overhead contribution on awards. 30%
Industry Consultancy Agreements 35%

Please ensure that you are familiar with UCD's policy on procurement when including equipment in your proposal.  See UCD's procurement website: www.ucd.ie/procure

Items of equipment amd computers with an individual value equal to or greater than €5,000 are capitalised and captured on our Equipment Register.

Equipment is depreciated over 5 years (20% p.a.).  Computers are depreciated over 3 years (33.33% p.a.)
Cost of equipment is reimbursed based on the depreciation of the asset.  The actual time the equipment is used on the project is used to calculate depreciation. 
A = C x D/U x T
Where A is the amount to be reimbursed
C is the cost of the equipment not including VAT
D is the length of time in months that the equipment was used on the project
U is the useful life of the equipment in months
T is the percentage of time the equipment was in use for the project

Some awards require that the university also provides a contribution towards the project. This may take the form of permanent staff time, use of equipment, etc.

Some funding bodies will, in addition to a cash contribution, also provide an in-kind contribution towards a project e.g. staff time, equipment, materials, etc. The value of any in-kind contributions must also be recorded on a separate grant registration form. VAT will also apply and a VAT invoice(s) will have to be issued to the sponsor.

OVERVIEW OF VAT AND HOW IT APPLIES TO RESEARCH AWARDS

The potential for VAT must be considered at the outset when costing a proposal.  Failure to do so may result in delays in setting up the account.  Guidelines on what makes an account liable to VAT are outlined below.

Main Principles

Whilst the Revenue Commissioners do not set out in detail those factors that make an award liable to VAT, there are however three main principles that govern most contracts. 

  • There must be a direct link between the payment received from the sponsor or agency and the goods or services supplied in return (i.e. performance).
  • There must be a legal relationship between the recipient and the supplier.  The existence of a contract as opposed to a Letter of Agreement would indicate this.
  • The service must be consumed by an identifiable customer(s).

VAT triggers 

History has shown that Revenue look deeper into the transaction and the following can be viewed as triggers that result in VAT liability arising on contracts;

VAT TriggersDetails
INTELLECTUAL PROPERTY (IP) Will the sponsor obtain any element of the IP arising out of the research?  Ownership of IP, even partial ownership can make the award subject to VAT. If IP remains solely with UCD then there should be no VAT liability, subject to no other issues making it VATable.
PUBLICATION OF RESULTS  If the sponsor has:
  • First right to publish, or a veto or control over publication rights / publication of results, then the award is likely to be subject to VAT.
  • If UCD has full publishing rights then, the results of the research must be made available to the public at large within 6 months of reporting, thus avoiding any VAT liability.  Failure to do so can raise the potential for a VAT liability.
CONSULTANCY Is the contract provided on a consultancy basis, i.e. is there exclusive advice provided to the sponsor.  If there is, then the award is "vatable".
CONTROL Does the sponsor have any control or veto over the research findings?  If YES, then a VAT liability arises.
OPTIONS If the sponsor has any priority, option or exclusivity regarding the research results, a VAT liability arises.
REWARD Does the sponsor receive any goods or services in return for payment, either monetary or in kind? If YES, then Vat would apply.

When VAT Applies

If a contract is liable to VAT, UCD must invoice the sponsor for the relevant amount of VAT. If an account is deemed liable to VAT, the sponsor is required to pay the VAT to UCD on foot of invoice.  The sponsor can reclaim the VAT in their bi-monthly returns. If VAT is subsequently paid on any costs incurred on a "vatable" project (e.g. consumables), UCD can reclaim this from Revenue. The monies are then re-allocated back to the project account. If an account is not liable to VAT, any VAT incurred on project expenditure cannot be reclaimed.

Costing your project

Contracts that are liable to VAT:

Identify and calculate the direct costs exclusive of VAT.  The costs that typically attract VAT are equipment and consumables.  Once all the direct costs are calculated, then calculate the indirect costs.  This will be different for different awards and contracts. The relevant rate of VAT is then applied to the total of the direct and indirect costs.

Example:
Note: The rate of indirect costs & VAT will be assessed for each individual contract.

ItemCost
Direct Costs
Salaries 100,000
Employer PRSI 10,750
Employer Pension 20,000
Scholarships and Fees 24,000
Equipment (exclusive of VAT) 10,000
Consumables and materials (exclusive of VAT) 5,000
External assistance 10,000
Total Direct Costs 179,750
Indirect Costs at appropriate (30% in example) 53,925
Total Direct & Indirect Costs 233,675
VAT at appropriate rate (23% in example) 53,745
Grand Total 287,420

Contracts not liable to VAT:

Where the contract is not liable to VAT then the full cost, inclusive of VAT should be used for equipment, materials, consumables and external assistance.  This is then added to the other direct costs (Salaries, Stipend, etc.).

VAT rates 

VAT RateApplicable to:
0% EU businesses (Self Assess), Business/Persons outside the EU
Exempt Various, e.g. SFI, EI, etc.  Non taxable research.
23%  Irish Companies

Note:  Where a contract is subject to at 0%, VAT is not paid by the sponsor, however UCD can still reclaim the VAT from Revenue.  The budget is received from the sponsor (exclusive of any VAT amounts – i.e. 0%) and posted to the project account.  Materials, consumables etc are paid to suppliers, inclusive of VAT at 23%.  The value of the VAT at 23% is reclaimed by UCD from Revenue and remitted back to the project account.  In May 2017, Revenue published an updated version of their tax guide “VAT – Research Services carried out by Third Level Educational Bodies”, which contains some useful information. Available at this link

Please ensure when costing your proposal that, where applicable, all relevant costs are INCLUSIVE of VAT at the appropriate rate. The following costing models can be used to assist in the calculation of your budget for your H2020 proposals. The model should be downloaded and completed locally (see instructions sheet in model). The completed model can then be forwarded to the pre-award research accountant for review.

This costing tool is to be used for budget preparation for all Horizon 2020 Collaborative Projects.
No expert knowledge of Excel is required. The instruction tab in each workbook provides guidelines.

H2020 Proposals H2020 Budget Calculator  
Salary Scales IUA Salary Scales (Revised January 2018)  
Permanent Staff-time Calculator Permanent Staff-Time Calculator