EU funds 27 September 2026 8 min read

What non-refundable funding is: co-financing, advance of up to 40%, reimbursement and obligations

An EU grant does not have to be repaid if you comply with the contract, but it is usually paid only after you have spent the money. For companies, the advance is at most 30% of the eligible value, or 40% with a guarantee, and the investment must be kept for up to 5 years.

Todos & Company editorial team · EU funding consultancy since 2006

What non-refundable funding is: co-financing, advance of up to 40%, reimbursement and obligations

Non-refundable funding (a grant) is a sum of public money that a company or town hall does not have to repay, provided it makes the investment exactly as promised in the contract and keeps it for the required period. It is not free money received on signing. The beneficiary puts in part of the money (the co-financing), usually pays first and is reimbursed after verification, and after the project has obligations that last up to 5 years.

The guide explains the common rules for the 2021–2027 cohesion funds (ERDF, ESF+, the Cohesion Fund, JTF), that is, the regional programmes, PoCIDIF, PEO, PTJ and the others. AFIR, PNRR and programmes managed directly by the European Commission have their own rules, which you will find in the guide for each call.

In brief

Definition: public support for the eligible costs of a project, which is not repaid if the conditions of the funding contract are met.
Legal acts: Regulation (EU) 2021/1060, OUG no. 133/2021 on the financial management of EU funds 2021–2027, HG no. 873/2022 on the eligibility of expenditure.
Forms of grant: reimbursement of costs actually incurred, unit costs, lump sums, flat rates or a combination of these (Article 53 of Regulation 2021/1060).
Advance (pre-financing) for private beneficiaries: at most 30% of the eligible value of the contract. For state aid or de minimis aid it can reach 40% of the value of the aid, with a guarantee (Article 18 of OUG 133/2021).
Payment deadline: the managing authority must pay within 80 days of the submission of the payment claim, if it has funds available. The deadline can be suspended when the documents are incomplete.
Eligibility period: costs paid by 31 December 2029.
Sustainability: 5 years from the final payment for productive and infrastructure investments. The state may reduce the period to 3 years for SMEs.

What the grant covers and what you pay

The grant is calculated only from eligible costs, that is, those permitted by the call guide. HG 873/2022 states that a cost must meet all of these conditions: it has an invoice or another document of equivalent probative value, it has proof of payment and of the reality of the expense, it complies with the programme and the funding contract, it is reasonable and necessary, and it is recorded in the accounts.

The difference up to the total value of the project is paid by the beneficiary. OUG 133/2021 calls this part private co-financing: any contribution by the beneficiary to eligible costs. In addition, the beneficiary also pays all ineligible costs.

Calculation example. A micro-enterprise's project has a total value of 600,000 lei, of which 500,000 lei is eligible. The aid intensity in the guide is 70%.

Grant: 500,000 × 70% = 350,000 lei;
Own co-financing of the eligible amount: 150,000 lei;
Ineligible costs: 100,000 lei;
Total own funds required: 250,000 lei, plus the VAT that is not covered and the interest on any loan.

The intensity (for example 50%, 70% or 100%) is not fixed by law for all programmes. It is set by the call guide and the applicable state aid rules.

How the money reaches you: reimbursement, payment claim and advance

The basic form is reimbursement of costs actually incurred. OUG 133/2021 provides for three types of claim:

Reimbursement claim: you request the money for eligible costs that you have already paid;
Payment claim: you submit invoices received but not yet paid, and the authority transfers the sums needed to pay them;
Pre-financing claim: you request an advance for the costs needed for the project to start.

For private beneficiaries, pre-financing is at most 30% of the eligible value of the contract. Where the project is state aid or de minimis aid, it can reach 40% of the value of the aid. In that case a guarantee is required, issued by a bank, a non-bank financial institution or an insurer. The advance must be justified quickly: within 90 calendar days of receiving it, you submit a reimbursement claim for at least 50% of the sum received.

The example continued. For aid of 350,000 lei, the maximum advance with a guarantee is 140,000 lei. Within 90 days you must justify at least 70,000 lei of costs. If the supplier delivers the equipment only in the fifth month, the advance can create more problems than it solves.

Regulation 2021/1060 also provides for unit costs, lump sums and flat rates. Here you no longer justify each invoice. You receive the money for results or quantities agreed in advance. Indirect costs can be covered by a flat rate of up to 7% of eligible direct costs or up to 15% of direct staff costs. For projects of up to €200,000 that are not state aid, simplified forms are, as a rule, mandatory.

VAT, interest and land: what is not covered by the grant

Article 64 of Regulation 2021/1060 excludes a few costs from funding:

Interest on loans is not eligible, so you pay a bridging loan in full yourself;
Land is eligible only up to 10% of total eligible costs (15% for abandoned or industrial sites);
VAT is eligible only by exception. For projects under €5,000,000 (including VAT), the Regulation allows VAT to be eligible, and HG 873/2022 adds the condition that it must not also be financed from other public funds. Above this threshold, it is eligible only if it cannot be recovered under the law. The specific treatment for VAT payers is set out in the guide for each call.

Obligations after the project is completed

The final payment does not end your obligations. Under Article 65 of Regulation 2021/1060, for infrastructure or productive investments the money is recovered if, within 5 years of the final payment, one of the following situations arises:

the productive activity ceases or is relocated outside the development region that received the support;
the ownership of an infrastructure item changes, and the change gives an undue advantage to a company or a public body;
a substantial modification occurs that affects the nature, objectives or conditions of the project and undermines its original objectives.

For investments and jobs created by SMEs, the state may reduce the period to 3 years. Many Romanian schemes for SMEs use these 3 years. Recovery is proportionate to the period during which the rules were not complied with. The rules do not apply if the activity ceases through a bankruptcy without fraud.

There is also a visibility obligation: a plaque or poster with the EU emblem and a description on the company's website. Failure to comply, if not remedied, can lead to the cancellation of up to 3% of the support (Article 50). Project documents must be kept for audit.

Grant or loan: the real difference

Repayment: a loan is always repaid, with interest. A grant is repaid only if you breach the conditions, for example ineligible costs, procurement irregularities or a lack of sustainability.
Timing of the money: a loan gives you the money at the start. A grant usually comes after the expenditure, within 80 days of the claim at most, and the deadline can be suspended.
Freedom of use: with a loan you pay for whatever you want. A grant covers only what is written in the contract, and changes must be approved.
Selection: a loan depends on creditworthiness. A grant is obtained through a competition, on a points system, and the project must not already be physically completed or fully implemented before the application is submitted (Article 63(6)).

What this means for your business

Our recommendation is to build the cash flow first and only then the project budget. Most of the stalled projects we see were not rejected at evaluation. They stalled at implementation, because the company did not have the money for co-financing, VAT and the waiting periods between claims.

Obtain a comfort letter or a bridging loan from the bank in good time. Evaluators often check the source of the co-financing.
Do not buy anything for the project before checking the incentive effect rule in the guide. With state aid, works started too early can make the expense ineligible.
Request an advance only if you can justify half of it within 90 days and can pay for the guarantee.
Do not plan to sell the company, move its registered office to another region or change its activity during the sustainability period.

If you do not yet know which programme you are eligible for, start with the eligibility check.

Frequently asked questions

Do I have to pay the money back if I receive a grant?

No, as long as you comply with the funding contract. The money is recovered, in full or in part, for costs declared ineligible, irregularities or breaches of the durability obligations. For example, if you close down the funded activity during the 3–5 year period after the final payment, the recovery is proportional to the remaining period.

Do I receive the grant when I sign the contract?

As a rule, no. The grant is paid through reimbursement or payment requests, after you submit your invoices. Private beneficiaries can request an advance of up to 30% of the eligible value. For state aid or de minimis aid, the advance can reach 40% of the aid value, with a guarantee.

How long does it take to receive the money?

Regulation 2021/1060 requires the managing authority to pay within 80 days of the submission of the payment request, if it has funds available. The deadline is suspended if the documents do not allow the amount to be verified, so a complete file shortens the wait.

Can I use a bank loan for co-financing?

Yes. Co-financing can come from your own resources or from a loan, unless the call's guide prohibits it. However, loan interest is not an eligible cost and you bear it in full.

Is VAT reimbursed from the grant?

Only under the conditions of Article 64 of Regulation 2021/1060 and HG 873/2022. Below a total value of €5 million, the VAT on eligible costs may be eligible if it is not financed from other public funds. Above the threshold, it is eligible only if it cannot be recovered. The call's guide explains how this applies to VAT-registered companies.

Official sources

Information checked on 27 September 2026. Conditions may be amended by the managing authority — check the guide in force before submitting.