Horizon Europe Pillar 2: Eligible Research Costs Explained

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Horizon Europe Pillar 2: Eligible Research Costs Explained

If you are joining a Horizon Europe Pillar 2 project, your budget matters as much as your research idea. Many Canadian organizations get tripped up by what costs are actually eligible and how they must be documented. Horizon Europe has clear cost rules, and understanding them early can save you from rejected claims or reduced funding.

Horizon Europe Pillar 2 focuses on large, collaborative research and innovation projects that tackle global challenges like health, climate, energy, transport, and emerging technologies. Canada is formally associated with Pillar 2, which means eligible Canadian organizations can receive direct funding when participating in approved international consortia.


Eligible Research Costs Under Horizon Europe Pillar 2

Horizon Europe uses a cost‑reimbursement model. This means you are reimbursed for eligible costs you actually incur during the project, not given a lump sum upfront. Costs must be directly linked to the project, reasonable, and properly recorded.

Personnel costs

These are often the largest budget item.

Eligible personnel costs include:

  • Salaries and wages for employees working on the project
  • Mandatory employer contributions (CPP, EI, benefits)
  • Costs calculated based on actual hours worked on the project

Staff must be formally employed by your organization, and time spent on the project must be supported by time‑tracking records.

Subcontracting costs

Subcontracting is allowed when specific tasks cannot be performed by the project partners themselves.

Eligible subcontracting costs:

  • Specialized research or testing services
  • Technical studies or analyses
  • External evaluations required by the project

Subcontractors must be selected using best‑value or competitive processes, and their work must be clearly described in the project agreement.

Equipment and infrastructure

You can claim costs related to equipment used for the research project.

Typically eligible:

  • Depreciation of equipment used during the project period
  • Access fees for shared research infrastructure
  • Leasing costs tied directly to project activities

Only the portion of equipment use that relates to the Horizon Europe project can be claimed.

Travel and subsistence

Travel is eligible when it is necessary for project delivery.

Examples include:

  • Travel to consortium meetings
  • Fieldwork and data collection trips
  • Conferences required under the project work plan

Costs must follow your organization’s normal travel policies and be supported by receipts.

Other direct costs

These are project‑specific expenses that do not fall into other categories.

Common examples:

  • Research materials and consumables
  • Software licences needed for the project
  • Dissemination and communication activities
  • Open access publication fees

The key test is whether the cost is directly required to deliver the approved project.

Indirect costs (overhead)

Horizon Europe applies a flat‑rate model for indirect costs rather than detailed tracking.

Indirect costs generally cover:

  • Utilities and office expenses
  • Administrative and financial support
  • IT and facility costs not billed directly

The flat‑rate approach simplifies reporting, but indirect costs must still relate to eligible direct project activities.

Tools like GrantHub’s eligibility matcher can help you quickly confirm whether Horizon Europe and similar international programs fit your organization type and research focus.


Common Mistakes to Avoid

  • Claiming ineligible internal costs
    General business development or commercial marketing costs are not eligible unless explicitly part of the approved project work plan.

  • Poor time tracking for staff
    Missing or inconsistent time records are a common reason for cost reductions during audits.

  • Overusing subcontractors
    Core research tasks should be performed by consortium partners, not external contractors.

  • Assuming Canadian rules apply
    Horizon Europe follows EU cost rules, even for Canadian participants. Provincial or federal Canadian grant norms do not always align.


Frequently Asked Questions

Q: Can Canadian businesses receive Horizon Europe Pillar 2 funding directly?
Yes. Canadian organizations can receive direct funding when they are part of an approved international consortium under Pillar 2.

Q: Are profit‑making SMEs eligible for cost reimbursement?
Yes. Small and medium‑sized enterprises, including for‑profit companies, are eligible participants under Horizon Europe Pillar 2.

Q: Is Horizon Europe funding taxable in Canada?
Horizon Europe funding is generally considered government assistance. Tax treatment depends on your situation, so professional advice is recommended.

Q: Can Horizon Europe funding be stacked with Canadian grants?
In some cases, yes. Stacking is allowed if total public funding does not exceed eligible project costs and all program rules are respected.

Q: Is there a maximum funding amount per project?
There is no fixed cap. Funding levels depend on the specific call, project scope, and approved budget.

GrantHub tracks hundreds of active grant programs across Canada and international opportunities like Horizon Europe — checking which ones align with your business profile can save weeks of research.


Next Steps

Eligible research costs are only one piece of a successful Horizon Europe Pillar 2 application. You also need the right consortium, call topic, and compliance setup. GrantHub helps Canadian organizations identify compatible funding programs, understand eligibility rules, and plan how international funding can fit alongside domestic support.

See also:

  • Repayable vs Non-Repayable Business Funding in Canada: Program Examples Explained
  • How to stack grants and loans without violating funding rules
  • How Venture Capital Funding Works in Canada

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