Applicants who have applied for non-reimbursable European funds under the Operational Programme Competitiveness 4.1.1 and 4.1.1 Bis are increasingly facing difficulties in obtaining reimbursement for expenses incurred within these procedures. The Ministry of Investments and European Projects, acting as the Managing Authority for the Operational Programme Competitiveness 2014–2020, has ceased approving for reimbursement a significant number of expenses that were initially deemed eligible under the financing contracts concluded with beneficiaries.
A concrete example is that of our client, S. R. SRL, a company operating in the services sector, providing various professional training and skills development/on-the-job training courses for its collaborators.
In the present case, our client S. R. SRL accessed European funds through Operational Programme Competitiveness 4.1.1 for the acquisition of office equipment, as well as for the purchase of two electric vehicles, in accordance with the financing application submitted. It should be noted that, from the very moment of applying for these European funds, our client clearly specified the equipment necessary for its activity, including the reasons for which such equipment was required, with particular emphasis on the electric vehicles, which represented the largest portion of the requested expenses and were necessary for carrying out the main activity and achieving the objective of the operation.
Subsequently, the financing contract between the authority and our client S. R. SRL was signed, and the financing application was approved in full, including the acquisition of electric vehicles, which were considered eligible expenses. However, at the time the reimbursement request was submitted for the amounts corresponding to the expenses related to the purchased electric vehicles, it was rejected, on the grounds that the vehicles were classified as non-eligible expenses.
This decision of the authority was challenged by means of a prior administrative complaint, which was rejected. Currently, an administrative litigation action has been filed against the Ministry of Investments and European Projects and is pending before the competent courts.
Article 10 of Government Decision No. 399 of 27 May 2015 on the eligibility rules for expenses incurred within operations financed through the European Regional Development Fund, the European Social Fund, and the Cohesion Fund 2014–2020 provides as follows:
(1) Expenses for the acquisition of vehicles or other means of transport, including those acquired under the modality provided for in Article 9, are eligible if they meet one of the following conditions:
a) they are indispensable to the activities provided for in Article 59 of Regulation (EU) No. 1303/2013 or to the management of the operation;
b) the vehicles or means of transport, including those intended for public passenger transport, are indispensable and are exclusively intended to achieve the objective of the operation, and their technical characteristics are appropriate in relation to the activities of the operation.
The same provisions are also reflected in the Applicant’s Guide (Specific Conditions for Accessing Funds), which forms the basis for applying for this project.
According to this legal basis, one of the situations in which the acquisition of vehicles is permitted through the obtained funds is where the vehicle is used exclusively for the company’s activity, is indispensable thereto, and its technical characteristics are appropriate in relation to the activities of the operation. In the present case, although these conditions were met, the reimbursement request was rejected, and the expenses were classified as non-eligible.
Furthermore, the Applicant’s Guide also provides under Article 2.3(b), Expense classification, that basic investment expenses include:
– Expenses for the acquisition of motor vehicles necessary for production/service activities, transport and distribution, with the exception of vehicles related to administrative activities or not connected to the object of the financing application.
Thus, according to the Applicant’s Guide, vehicles cannot be acquired if they are intended for the administrative activity of the company or if they are not related to the object of the financing application.
In our case, the two purchased vehicles are absolutely necessary for the activity carried out by the claimant company. Specifically, our client S. R. SRL operates under CAEN code 8559 – Other forms of education not elsewhere classified, through which it provides professional training courses, as previously indicated. The vehicles are strictly necessary to achieve the objective of the operation, as they are used by the employees of S. R. SRL to travel to the headquarters/work locations of beneficiaries in order to provide the contracted services, and not for administrative purposes.
It should be noted that there is no legal provision restricting the eligibility of means of transport to CAEN codes specific to transport activities, provided that they are used in connection with the object of the financing application and not for administrative purposes. A contrary interpretation would imply that only applicants strictly operating in the transport sector could obtain such funds, which would represent an erroneous interpretation of the legal provisions, as the legislation does not condition such expenses on a specific field of activity.
Therefore, the decision of the contracting authority to consider these expenses as non-eligible is fundamentally incorrect and unlawful, given that the legal provisions allow the acquisition of vehicles when the aforementioned conditions are met. The authority attempts to classify these expenses as administrative, which is entirely erroneous, as the necessity of acquiring the vehicles was clearly demonstrated in the financing application, which was approved by the authority through the signing of the financing contract.
Reversing a decision and reclassifying project expenses from eligible to non-eligible seriously infringes the rights of applicants and creates uncertainty among those accessing such funds. Such an approach risks even the viability of the project and the financing as a whole, given that in such cases the majority of the proposed expenses are represented by the acquisition of electric vehicles. If such expenses can become non-eligible solely at the discretionary will of the authority, applicants cannot have any certainty at the time of obtaining financing that these amounts will not be refused for payment or requested to be reimbursed after having been received.
Finally, we would like to point out that through this conduct, the authority has also violated principles enshrined at European level and applicable at national level, namely the principle of equal opportunities and equal treatment, the principle of proportionality, and the principle of foreseeability.
Equal opportunities and equal treatment represent an essential aspect of EU legislation and play a significant role in the decision-making process. The European Union has committed itself to developing measures aimed at guaranteeing equal opportunities and treatment for citizens, whether natural or legal persons. This approach applies across all areas of economic, social, cultural, and family life. The EU also promotes the integration and observance of this principle by all Member States in order to strengthen citizens’ rights.
The principle of proportionality is defined under Article 2(1)(n) of Government Emergency Ordinance No. 66 of 29 June 2011 on the prevention, identification, and sanctioning of irregularities in obtaining and using European funds and/or related national public funds, as follows: “any administrative measure adopted must be appropriate, necessary, and proportionate to the pursued objective, both in terms of the resources engaged in identifying irregularities and in establishing budgetary claims resulting from irregularities, taking into account the nature and frequency of the identified irregularities and their financial impact on the relevant project/programme.”
This principle is also reflected in the case law of the High Court of Cassation and Justice, which held that “proportionality is a flexible principle of law, and administrative courts may invoke it to sanction an excess of power. Similarly, executive authorities apply the principle of proportionality when issuing an administrative act, their essential objective being to avoid any restriction of citizens’ rights and the imposition of burdensome obligations. An appropriate means of achieving this objective is the principle of proportionality. Any breach of this principle may be reviewed and sanctioned by the courts.” (Decision No. 604 of 7 February 2023, rendered by the Administrative and Fiscal Litigation Section of the High Court of Cassation and Justice).
The principle of foreseeability is found primarily in the case law of the European Court of Human Rights. In its judgments, the Court refers to the Venice Commission’s Report on the Rule of Law of 25–26 March 2011 (Albu and Others v. Romania, 10 May 2012, §16), according to which, for the principle of legal certainty—essential to maintaining confidence in the legal system and the rule of law—laws must be easily accessible and applied in a predictable and consistent manner. Contradictory decisions of the highest courts in a state undermine this principle, hence the need for mechanisms that eliminate inconsistencies and ensure coherence in case law.
Although the presentation of qualitative requirements varies from case to case, an analysis of a large number of cases shows that the European Court of Human Rights emphasizes two requirements related to legislative technique (accessibility and precision/foreseeability) and one ideological requirement (compatibility of national law with the principle of the rule of law). In the cases of Huvig v. France, 24 April 1990, §26, and Kruslin v. France, 24 April 1990, §27, the formulation appeared for the first time that the qualitative requirements are accessibility, foreseeability, and compatibility with the rule of law. In some cases, precision and foreseeability are closely linked to the principle of the rule of law, from which they derive (Von Hannover v. Germany, 24 June 2004, §73).
In conclusion, the contracting authority’s refusal to approve payment requests on the grounds that the requested amounts do not constitute eligible expenses under the legal provisions represents an unjustified and abusive refusal that must be sanctioned by the courts, as it also violates principles enshrined at European level. It is essential for applicants dissatisfied with public authorities’ decisions to challenge them within the statutory deadlines before the issuing authority, and subsequently, in the event of rejection or failure to resolve the complaint, to address the competent courts.
If you wish to obtain further information regarding the reimbursement of eligible expenses or other aspects related to the procedure for applying for European funds, our specialists are at your disposal.
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