Do I still need to track actual costs on a lump sum grant?

No. Once your work package's lump sum share is fixed in the grant agreement, that amount gets paid when the work is accepted — regardless of what it actually cost you. You keep technical proof such as deliverables and reports, but the Commission does not ask for timesheets, payslips, invoices, or any document showing what you actually spent, and it runs no financial audit on the grant.

What happens if a work package isn't finished when a reporting period ends?

Nothing is lost outright. The coordinator declares it 'not completed,' and its lump sum share is paid once you complete it in a later reporting period. At the very end of the project, a work package that still can't be finished — for technical reasons or force majeure — can be paid partially, in line with the accepted degree of completion.

What is Lump Sum Funding (Horizon Europe)?

Lump sum funding is a Horizon Europe payment model that replaces reimbursement of actual costs with a fixed, pre-agreed amount per work package, released once the European Commission accepts that the work package's activities are complete. It removes reporting of actual costs, timesheets and financial audits entirely — the Commission checks that the work was done, not what it cost. Half of the 2026-2027 Horizon Europe work programme's call budget will be delivered this way, concentrated on topics intended to result in grants below €10 million.

How the payment mechanic works

A lump sum share is fixed per work package, either set by the call itself ("Type 1") or proposed by the applicant and checked for realism during evaluation ("Type 2"), backed by a detailed Excel budget table estimating costs per beneficiary and work package. Once it lands in the grant agreement, that figure is the maximum payable for the package — a "no negotiation" principle means it isn't revisited later even if real costs run higher. Payment then follows a normal Horizon Europe rhythm: pre-financing up front, interim payments releasing each work package's share once your coordinator declares it "completed" and the Commission accepts it at the end of a reporting period, and a final balance payment that can still pay out partially completed packages pro rata to their accepted degree of completion.

What changes day to day for a startup

The practical shift is in what you keep on file. You no longer need timesheets, payslips, invoices, or any document proving what the work actually cost — the financial statement for every beneficiary is generated automatically from which work packages were accepted. What you do need is proof the work happened: deliverables, technical reports, prototypes, lab records. The Commission runs no financial audit on a lump sum grant; ex-post checks look only at technical delivery and non-financial obligations such as IP, ethics and dissemination. Inside a work package you can spend the fixed sum however the work requires — that internal split is invisible to Brussels — though moving budget between work packages needs a formal amendment once any of them is already declared complete.

Why it's the default now, not the exception

Horizon Europe's 2026-2027 work programme puts real weight behind this: 50% of its call budget will be delivered as lump sums, concentrated on topics designed to result in grants below €10 million — squarely the range most startup-scale projects fall into. The same work programme explicitly builds "newcomer-friendly" topics aimed at drawing in SMEs, start-ups and scale-ups. A first-time founder applying to a Horizon Europe topic from this cycle should expect a fixed lump sum, not a cost-reimbursement budget, as the starting assumption — and should check the topic text early for whether the sum is preset or left for the applicant to justify. Like all non-dilutive funding, it still has to be earned, through a well-scoped work plan rather than receipts. VIRA tracks which open calls use lump sum terms alongside live ESA and EU tenders.

Official source: Lump Sum Funding: What do I need to know? (European Commission guidance); Horizon Europe Work Programme 2026-2027 — General Introduction.

Written by Tymofiy Badikov, founder of VIRA.space (Virtual Innovation Research Assistant) — operated by Space Tech Gateway Sp. z o.o., Kraków Technology Park. VIRA tracks live European space funding calls and checks your eligibility free: see live tenders.