
Article 1 
This Decision lays down rules on the participation of the Union in the second Research and Development Programme jointly undertaken by several Member States aimed at supporting research and development performing small and medium-sized enterprises (‘Eurostars-2’) and the conditions for its participation.
Article 2 
For the purpose of this Decision the following definitions apply:

((1)) ‘SME’ means a micro-, small- and medium-sized enterprises, as defined in Recommendation 2003/361/EC;
((2)) ‘research and development performing SME’ means an SME which meets at least one of the following conditions:

((a)) reinvests at least 10 % of its turnover to research and development activities;
((b)) dedicates at least 10 % of its full-time equivalents to research and development activities;
((c)) has at least five full-time equivalents (for SME with no more than 100 full-time equivalents) for research and development activities; or
((d)) has 10 full-time equivalents (for SME with over 100 full-time equivalents) for research and development activities.
Article 3 
Eurostars-2 shall pursue the following objectives:

((1)) promote research activities that comply with the following conditions:

((a)) the activities are carried out by transnational collaboration of research- and development performing SMEs among themselves or including other actors of the innovation chain (e.g. universities, research organisations);
((b)) results of activities are expected to be introduced into the market within two years of the completion of an activity;
((2)) increase the accessibility, efficiency and efficacy of public funding for SMEs in Europe by aligning, harmonising and synchronising the national funding mechanisms of Participating States;
((3)) promote and increase the participation of SMEs without previous experience in transnational research.
Article 4 

1. The Union shall participate in Eurostars-2 jointly undertaken by Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey and the United Kingdom, (the "Participating States"), in accordance with the conditions laid down in this Decision.
2. Any Member State other than those listed in paragraph 1 and any other country associated to Horizon 2020 may participate in Eurostars-2 provided it fulfils the condition laid down in point (c) of Article 6(1) of this Decision. If it fulfils the condition laid down in point (c) of Article 6(1), it shall be regarded as a Participating State for the purposes of this Decision.
3. Any Eureka Member or country associated to Eureka that is not a Member State or a country associated to Horizon 2020 may become a Eurostars-2 partner country provided it fulfils the condition set out in point (c) of Article 6(1). Those Eureka Members or countries associated to Eureka that fulfil the condition laid down in point (c) of Article 6(1), shall be regarded as partner countries for the purposes of this Decision. Legal entities from those partner countries shall not be eligible for the Union’s financial contribution under Eurostars-2.
Article 5 

1. The Union financial contribution, including EFTA appropriations, to Eurostars-2 shall be up to EUR 287 000 000. The Union’s financial contribution shall be paid from the appropriations in the general budget of the Union allocated to the relevant parts of the Specific Programme, implementing Horizon 2020, established by Decision 2013/743/EU, in accordance with point (c)(vi) of Article 58(1), and Articles 60 and 61 of Regulation (EU, Euratom) No 966/2012, and in particular from appropriations under the heading "Innovation in SMEs" under Part II.
2. Without exceeding the amount laid down in paragraph 1, the Union’s contribution shall be at least one third of the contributions of the Participating States referred to in point (a) of Article 7(1). It shall cover operational costs, including the costs of the evaluation of proposals, and administrative costs. Where during the lifetime of Eurostars-2 the rate of the Union’s contribution needs to be adapted, the Union’s contribution may go up to a maximum of half of the contributions of the Participating States referred to in point (a) of Article 7(1).
3. An amount not exceeding 4 % of the Union’s financial contribution referred to in paragraph 1 may be used to contribute to the administrative costs of Eurostars-2. Participating States shall cover the national administrative costs necessary for the implementation of Eurostars-2.
Article 6 

1. The Union’s financial contribution shall be conditional upon the following:
(a) the demonstration by the Participating States that they have set up Eurostars-2 in accordance with the objectives laid down in Article 3;
(b) the designation by the Participating States or organisations designated by Participating States, of the ESE, as the structure responsible for implementing Eurostars-2 and for receiving, allocating and monitoring the Union’s financial contribution;
(c) the commitment by each Participating State to contribute to the financing of Eurostars-2;
(d) the demonstration by ESE of its capacity to implement Eurostars-2, including receiving, allocating and monitoring the Union’s financial contribution, in the framework of indirect management of the Union budget in accordance with Articles 58, 60 and 61 of Regulation (EU, Euratom) No 966/2012; and
(e) the establishment of a governance model for Eurostars-2 in accordance with Annex II.
2. During the implementation of Eurostars-2, the Union’s financial contribution shall also be conditional upon:
(a) the implementation by the ESE of Eurostars-2’s objectives set out in Article 3 and activities set out in Annex I, in accordance with the rules for participation and dissemination referred to in Article 8;
(b) the maintenance of an appropriate and efficient governance model in accordance with Annex II;
(c) compliance by ESE with the reporting requirements set out in Article 60(5) of Regulation (EU, Euratom) No 966/2012;
(d) the effective payment by the Participating States of the financial contribution to all participants in Eurostars-2 projects selected for funding following the calls for proposals launched under Eurostars-2, fulfilling the commitments referred to in point (c) of paragraph 1 of this Article;
(e) allocation of the funding from the national budgets for Eurostars-2 projects and the Union’s financial contribution in accordance with the ranking lists of the projects; and
(f) the demonstration of clear progress in the scientific, managerial and financial cooperation by the establishment of minimum operational performance targets and milestones for the implementation of Eurostars-2.
Article 7 

1. Contribution from the Participating States shall consist of the following financial contributions:
(a) co-financing of the selected Eurostars-2 projects through relevant national forms of funding, mainly through grants. The Commission may use the established grant equivalence rules for the valuation of the contributions from the Participating States in forms other than grants;
(b) financial contribution to the administrative costs of Eurostars-2 not covered by the Union contribution as set out in Article 5(3).
2. Each Participating State shall designate a National Funding Body (NFB) to administer financial support to the national participants in Eurostars-2 in accordance with Article 8.
Article 8 

1. For the purposes of Regulation (EU) No 1290/2013, the ESE shall be considered to be a funding body.
2. By way of derogation from Article 15(9) of Regulation (EU) No 1290/2013, the NFBs, under the coordination of the ESE, shall verify the financial capacity of all applicants for funding under Eurostars-2.
3. By way of derogation from Article 18(2) of Regulation (EU) No 1290/2013, grant agreements with beneficiaries of indirect actions under Eurostars-2 shall be signed by the NFBs concerned.
4. By way of derogation from Article 23(1), (5), (6) and (7) and Articles 28 to 34 of Regulation (EU) No 1290/2013, the funding rules of the participating national programmes shall apply to Eurostars-2 grants administered by the NFBs.
Article 9 

1. Eurostars-2 shall be implemented on the basis of annual work plans.
2. Eurostars-2 shall provide financial support mainly in the form of grants to participants following calls for proposals.
Article 10 

1. Subject to a positive ex-ante assessment of the ESE in accordance with Article 61(1) of Regulation (EU, Euratom) No 966/2012, the Commission, on behalf of the Union, shall conclude a delegation agreement and annual transfer of funds agreements with the ESE.
2. The delegation agreement referred to in paragraph 1 shall be concluded in accordance with Article 58(3) and Articles 60 and 61 of Regulation (EU, Euratom) No 966/2012, and in accordance with Article 40 of Delegated Regulation (EU) No 1268/2012. It shall also set out the following:
(a) the requirements for the ESE regarding the performance indicators set out in Annex II to Decision 2013/743/EU;
(b) the requirements for the ESE’s contribution to the monitoring referred to in Annex III to Decision 2013/743/EU;
(c) specific performance indicators for the functioning of the ESE in respect of Eurostars-2;
(d) requirements for the ESE regarding the provision of information on administrative costs and of detailed figures concerning the implementation of Eurostars-2;
(e) arrangements regarding the provision of data necessary to ensure that the Commission is able to meet its dissemination and reporting obligations;
(f) an obligation for the ESE to sign bilateral agreements with the NFBs before any transfers of the Union’s financial contribution take place, such bilateral agreements laying down the minimum operational performance targets and milestones for the implementation of Eurostars-2;
(g) provisions for the publication of calls for proposals by Eurostars-2, in particular on the single portal for participants, as well as through other Horizon 2020 electronic means of dissemination managed by the Commission.
Article 11 

1. If Eurostars-2 is not implemented or is implemented inadequately, partially or late, the Commission may terminate, proportionately reduce, or suspend the Union’s financial contribution in line with the actual implementation of Eurostars-2.
2. If the Participating States do not contribute, contribute partially or late to the financing of Eurostars-2, the Commission may terminate, proportionately reduce, or suspend the Union’s financial contribution, taking into account the amount of funding allocated by the Participating States to implement Eurostars-2.
Article 12 

1. ESE shall ensure that ex-post audits of expenditure on indirect actions are carried out by the respective NFBs in accordance with Article 29 of Regulation (EU) No 1291/2013.
2. The Commission may decide to carry out itself the audits referred to in paragraph 1. In such cases, it shall do so in accordance with the applicable rules, in particular the provisions of Regulations (EU, Euratom) No 966/2012, (EU) No 1290/2013 and (EU) No 1291/2013.
Article 13 

1. The Commission shall take appropriate measures ensuring that, when actions financed under this Decision are implemented, the financial interests of the Union are protected by the application of preventive measures against fraud, corruption and any other illegal activities, by effective checks and, if irregularities are detected, by the recovery of the amounts wrongly paid and, where appropriate, by effective, proportionate and dissuasive administrative and financial penalties.
2. The ESE shall grant Commission staff and other persons authorised by it, as well as the Court of Auditors, access to its sites and premises and to all the information, including information in electronic format, needed in order to conduct their audits.
3. The European Anti-Fraud Office (OLAF) may carry out investigations, including on-the-spot checks and inspections, in accordance with the provisions and procedures laid down in Council Regulation (Euratom, EC) No 2185/96 and Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union in connection with an agreement or decision or a contract funded under this Decision.
4. Contracts, grant agreements and grant decisions resulting from the implementation of this Decision shall contain provisions expressly empowering the Commission, the Court of Auditors, OLAF and the ESE to conduct such audits and investigations, in accordance with their respective competences.
5. In implementing Eurostars-2, the Participating States shall take the legislative, regulatory, administrative or other measures necessary to protect the Union’s financial interests, in particular to ensure full recovery of any amounts due to the Union in accordance with Regulation (EU, Euratom) No 966/2012 and Delegated Regulation (EU) No 1268/2012.
Article 14 

1. At the request of the Commission, the ESE shall send any information necessary for the preparation of the reports referred to in Article 15.
2. The Participating States shall submit to the Commission, through the ESE, any information requested by the European Parliament, the Council or the Court of Auditors concerning the financial management of Eurostars-2.
3. The Commission shall include the information referred to in paragraph 2 of this Article in the reports referred to in Article 15.
Article 15 

1. By 30 June 2017, the Commission shall carry out, in close cooperation with the Participating States and with the assistance of independent experts, an interim evaluation of Eurostars-2. The Commission shall prepare a report on that evaluation which includes the conclusions of the evaluation and observations by the Commission. The Commission shall send that report to the European Parliament and to the Council by 31 December 2017. The result of the interim evaluation of Eurostars-2 shall be taken into account in the interim evaluation of Horizon 2020.
2. At the end of the Union’s participation in Eurostars-2, but no later than 31 December 2022, the Commission shall conduct a final evaluation of Eurostars-2. The Commission shall prepare a report on that evaluation which is to include results of that evaluation. The Commission shall send that report to the European Parliament and to the Council.
Article 16 
This Decision shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
Article 17 
This Decision is addressed to the Member States.
Done at Brussels, 15 May 2014.
For the European Parliament
The President
M. SCHULZ
For the Council
The President
D. KOURKOULAS
ANNEX I

1. The ESE shall organise continuously open calls for proposals, with cut-off dates for the award of financial support to indirect actions.

2. Applicants shall submit project proposals to the ESE as a single entry point.

3. After the closure of a call for proposals, a central eligibility check shall be carried out by the ESE on the basis of the eligibility criteria set out in the annual work plan. No different or further eligibility criteria may be added by the Participating States.

4. The NFBs, under the coordination of the ESE, shall verify the financial capacity of the participants according to common, clear and transparent rules.

5. Eligible proposals shall be evaluated centrally and ranked by a group of external independent experts in accordance with the criteria set out in Article 15(1) of Regulation (EU) No 1290/2013, on the basis of transparent procedures.

6. The ESE shall provide an evaluation review procedure in accordance with Article 16 of Regulation (EU) No 1290/2013.

7. The ranking list, approved as a whole by the Eurostars-2 high-level group referred to in Annex II, shall be binding for the allocation of funding from the national budgets for Eurostars-2 projects.

8. Once the ranking list is approved, each Participating State shall finance its national participants in those projects selected for funding through the designated NFB, making all possible efforts to ensure that the top-50 ranked projects and at least 50 % to 75 % of the projects above thresholds are funded. The financial contribution to the participants shall be calculated according to the funding rules of the national programme of the relevant Eurostars-2 Participating State. The Union’s financial contribution shall be transferred by the ESE to the NFBs provided that the NFBs have paid their financial contribution to the projects.

9. All eligible participants in projects selected centrally shall be funded. The granting of financial support by the NFBs to project participants selected centrally shall be subject to the principles of equal treatment, transparency and co-funding.

10. The ESE shall be responsible for evaluating proposals, informing NFBs, coordinating the synchronisation process, monitoring projects through project reporting and audits carried out by NFBs, and reporting to the Commission ensuring a short time-to-grant. It shall also take appropriate measures to encourage recognition of the Union’s contribution to Eurostars-2, both to the programme itself and to individual projects. It shall promote appropriate visibility for the Union’s contribution through the use of the Horizon 2020 logo in all published material, including printed and electronic publications, related to Eurostars-2.

11. ESE shall conclude Eurostars-2 bilateral agreements with the NFBs of Participating States. Those Eurostars-2 bilateral agreements shall set out the responsibilities of the contracting parties in accordance with the Eurostars-2 rules, objectives and implementation modalities. The Eurostars-2 bilateral agreements shall include the rules governing the transfer of the Union’s contribution and the minimum operational targets and national progressive milestones for further integration and synchronisation of national programmes, including a shorter time-to-grant in accordance with Regulation (EU, Euratom) No 966/2012 and Regulation (EU) No 1290/2013. Those targets and milestones shall be agreed by the Eurostars-2 high-level group in consultation with the Commission. The signature of the Eurostars-2 bilateral agreement and compliance with the operational targets and milestones shall be a pre-condition for NFBs to receive the Union’s contribution.

12. The ESE may conclude Eurostars-2 bilateral agreements with the NFBs of partner countries. Those Eurostars-2 bilateral agreements shall set out the responsibilities of the contracting parties in accordance with the Eurostars-2 rules, objectives and implementation modalities, specify the conditions under which partnership with Eurostars-2 shall take place, and include the minimum operational targets, including a short time-to-grant.

13. Networking activities and exchange of best practices shall also be organised amongst the Participating States in order to promote stronger integration at scientific, managerial and financial level.

14. Other activities shall also include brokerage, programme promotion and networking activities with other stakeholders (investors, research and innovation providers, intermediaries) mainly to widen participation from beneficiaries in all Participating States and to involve SMEs with no prior experience in transnational research projects.

ANNEX II
1. 
The Head of the ESE, as the legal representative of the ESE, shall be in charge of implementing Eurostars-2 by:


((a)) preparing the annual budget for the calls, central organisation of joint calls for proposals and reception of the proposals as single entry point; the central organisation of the eligibility and evaluation of proposals, according to common eligibility and evaluation criteria, central organisation of the ranking and selection of proposals for funding, and project monitoring and follow-up; the receipt, allocation and monitoring of the Union contribution;
((b)) collecting the necessary information from the NFBs for the transfer the Union contribution;
((c)) promoting Eurostars-2;
((d)) reporting to the Eurostars-2 high-level group and the Commission on the Eurostars-2 programme;
((e)) informing the Eureka network about the activities of Eurostars-2;
((f)) signing the delegation agreement with the Commission, the bilateral agreements with the NFBs and the contracts with the experts assessing Eurostars-2 applications;
((g)) adopting the Eurostars-2 annual work plan following the prior agreement of the Eurostars-2 high-level group and of the Commission.

2. 

((a)) supervising the implementation of Eurostars-2;
((b)) appointing the members of the Eurostars-2 Advisory Group (‘EAG’);
((c)) approving the annual work plan;
((d)) approving the ranking list of Eurostars-2 projects to be funded and taking the award decision.

The Union, represented by the Commission, shall have the status of observer in the Eurostars-2 high-level group. The Commission shall be invited to participate at the meetings, shall receive all meeting documents and may take part in the discussion.

Any partner country shall have the right to send representatives to meetings of the Eurostars-2 high-level group as observers.

3. 
The EAG shall advise the ESE and the Eurostars-2 high-level group on the arrangements for the implementation of Eurostars-2.

4. The NFB shall be in charge of the administration of financial support to the national participants.
