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1. Grants shall not exceed an overall ceiling expressed in terms of an absolute value (maximum grant amount) which shall be established on the basis of:

(a) the overall amount of financing not linked to costs in the case referred to in Article 125(1), first subparagraph, point (a);

(b) estimated eligible costs, where possible, in the case referred to in Article 125(1), first subparagraph, point (b);

(c) the overall amount of the estimated eligible costs clearly defined in advance in the form of lump sums, unit costs or flat rates as referred to in Article 125(1), first subparagraph, points (c), (d) and (e). Without prejudice to the basic act, grants may in addition be expressed as a percentage of the estimated eligible costs, where the grant takes the form specified in the first subparagraph, point (b), or as a percentage of the lump sums, unit costs or flat rate financing referred to in the first subparagraph, point (c). Where the grant takes the form specified in the first subparagraph, point (b), of this paragraph and where, due to specificities of an action, the grant can only be expressed in terms of an absolute value, the verification of the eligible costs shall be done in accordance with Article 158(4) and, where applicable, Article 158(6).

2. Without prejudice to the maximum co-financing rate specified in the basic act:

(a) the grant shall not exceed the eligible costs;

(b) where the grant takes the form specified in paragraph 1, first subparagraph, point (b), and where the estimated eligible costs include costs for volunteers’ work referred to in Article 184(8), the grant shall not exceed the estimated eligible costs other than the costs for volunteers’ work.

3. Eligible costs actually incurred by the beneficiary, as referred to in Article 125(1), first subparagraph, point (b), shall meet all of the following criteria:

(a) they are incurred during the duration of the action or of the work programme, with the exception of costs relating to final reports and audit certificates;

(b) they are indicated in the estimated overall budget of the action or work programme;

(c) they are necessary for the implementation of the action or of the work programme which is the subject of the grant;

(d) they are identifiable and verifiable, in particular being recorded in the accounting records of the beneficiary and determined according to the applicable accounting standards of the country where the beneficiary is established and according to the usual cost accounting practices of the beneficiary;

(e) they comply with the requirements of applicable tax and social legislation;

(f) they are reasonable, justified, and comply with the principle of sound financial management, in particular regarding economy and efficiency.

4. Calls for proposals shall specify the categories of costs considered as eligible for Union funding. Unless provided otherwise in the basic act and in addition to paragraph 3 of this Article, the following categories of costs shall be eligible where the authorising officer responsible has declared them as such under the call for proposals:

(a) costs relating to a pre-financing guarantee lodged by the beneficiary, where that guarantee is required by the authorising officer responsible pursuant to Article 156(1);

(b) costs relating to certificates on the financial statements and operational verification reports, where such certificates or reports are required by the authorising officer responsible;

(c) VAT, where it is not recoverable under the applicable national VAT legislation and is paid by a beneficiary other than a non-taxable person within the meaning of Article 13(1), first subparagraph, of Council Directive 2006/112/EC ;

(d) depreciation costs, provided they are actually incurred by the beneficiary;

(e) salary costs of the personnel of national administrations to the extent that they relate to the cost of activities which the relevant public authority would not carry out if the project concerned were not undertaken. For the purposes of the second subparagraph, point (c):

(a) VAT shall be considered as not recoverable if according to national law it is attributable to any of the following activities:

(i) exempt activities without right of deduction;

(ii) activities which fall outside the scope of VAT;

(iii) activities, as referred to in point (i) or (ii), in respect of which VAT is not deductible but refunded by means of specific refund schemes or compensation funds not referred to in Directive 2006/112/EC, even if that scheme or fund is established by national VAT legislation;

(b) VAT relating to the activities listed in Article 13(2) of Directive 2006/112/EC shall be regarded as paid by a beneficiary other than a non-taxable person within the meaning of Article 13(1), first subparagraph, of that Directive, regardless of whether those activities are regarded by the Member State concerned as activities engaged in by bodies governed by public law acting as public authorities.