Indirect costs are costs that arise in connection with implementing a project but cannot be directly and unambiguously assigned to a specific project activity. Typically these are rent and utilities for office space, cleaning, telecommunications services, office supplies, postage, bookkeeping, wages of the organisation's administrative and management staff, or account maintenance fees. The counterpart is direct costs, which relate immediately to the activity – wages of specialist personnel, purchased technology, or expert services. In projects financed from EU funds, indirect costs in the 2021–2027 period are reported almost exclusively at a flat rate, most often up to 7% of direct eligible expenditure or up to 15% of direct staff costs, which removes the need to document them with invoices. The recipient thus does not have to laboriously apportion utilities to the project, but at the same time the flat rate represents a ceiling – if the actual overhead costs are higher, the difference is covered from its own resources. Correctly distinguishing between direct and indirect costs is essential already when drawing up the application budget.
See also: Flat rate, Project budget.
