Concept and Legal Basis of the European Regional Development Fund (ERDF)
Der European Regional Development Fund (ERDF) is one of the most important funding instruments of the European Union in the area of regional and cohesion policy. The aim of the ERDF is to strengthen economic and social cohesion within the Union by offsetting regional development disparities. The ERDF was established by Council Regulation (EEC) No 724/75 of 18 March 1975 and has since been a key funding tool within the EU’s financial framework.
Legal Basis of the ERDF
Primary Legal Anchoring
The legal foundation for the ERDF is primarily found in the Treaty on the Functioning of the European Union (TFEU), in particular Articles 174 to 178 TFEU. These set out the principles of cohesion policy, to which the ERDF contributes. The objective is to promote economic, social, and territorial cohesion and to reduce disparities in development between the regions.
Secondary Legal Implementation
The specific design and administration of the ERDF are governed by EU regulations. For the period 2021-2027, the following regulations are particularly applicable:
- Regulation (EU) 2021/1058 of the European Parliament and of the Council of 24 June 2021 on the ERDF and the Cohesion Fund (ERDF/CF Regulation).
- Regulation (EU) 2021/1060 (General Common Provisions Regulation) with joint rules for the European Structural and Investment Funds (ESI Funds).
These regulations govern the objectives, scope of application, priorities, eligible actions, as well as the management and monitoring of the funds.
Objectives and Funding Areas of the ERDF
Main Objectives
The ERDF focuses on the following priority objectives:
- Strengthening competitiveness and innovation in regional economies.
- Promotion of sustainable urban and regional development, in particular through support for small and medium-sized enterprises (SMEs), research and development, digitization, and the transition to a low-carbon economy.
- Support for disadvantaged regions and social integration, to promote development in underdeveloped areas.
Thematic Concentration
According to the guidelines of the European Commission, ERDF funding is focused on so-called “policy objectives” (PO), including:
- PO 1: A smarter Europe through innovative and smart economic transformation;
- PO 2: A greener, low-carbon Europe;
- PO 3: A more connected Europe;
- PO 4: A more social Europe;
- PO 5: A Europe closer to the citizens.
Eligible Measures
The ERDF particularly supports investments in infrastructure, research and innovation, the digitization of the economy, climate protection, and the safeguarding of natural resources. Both public and private projects can be eligible, as long as they align with regional development objectives.
Structures and Procedures of ERDF Funding
Administrative Structures
The implementation of ERDF funding takes place under shared management between the European Commission and the Member States. Key elements include:
- Operational Programmes: Member States or regions draw up operational programmes, which are approved by the EU Commission.
- Managing Authorities: For each programme, a managing authority is designated, responsible for the selection, steering, and control of the initiatives.
- Certifying Authorities and Audit Authorities: They ensure the proper execution, accounting, and control of the funds spent.
Funding Procedures and Selection Criteria
The selection and approval of ERDF-funded projects are based on set selection criteria, taking into account economic, ecological, social and sustainability considerations. Projects must contribute to the objectives of the operational programmes and are assessed within a transparent selection procedure.
The ERDF regulations also require programme authorities to carry out annual reporting and comprehensive monitoring of results and fund utilization.
Legal Obligations and Control of the Use of Funds
Provisions for Compliance with Law and Regularity
Recipients of ERDF funds are obliged to comply with EU legal requirements and national regulations. This includes in particular:
- Procurement Regulations (EU internal market directives and national procurement law)
- Observance of the principles of economy and efficiency
- Avoidance of double or excessive funding
Anti-corruption and anti-fraud mechanisms
The rules of the ERDF prescribe the establishment of effective control mechanisms to prevent fraud, corruption, and misuse (so-called ‘irregularities’). The European Anti-Fraud Office (OLAF) may initiate investigations and conduct audits. In addition, there are national auditing bodies.
Recovery and Sanctions
In case of violations of the procurement or usage regulations, the entire or part of the ERDF funds can be reclaimed. Sanction mechanisms and audit criteria are regulated in the relevant regulations; legal proceedings may be brought before the Court of Justice of the European Union.
Overview of the Development and Current Challenges
Development History
Since its establishment in 1975, the ERDF has been continuously developed and its priorities and objectives adapted to address the economic, social, and now also climate policy challenges facing Europe. In the current programming period (2021-2027), special emphasis is placed on digitization, climate protection, and social inclusion.
National Implementation in Germany
In Germany, implementation of the ERDF takes place through a total of 16 regional programmes and one federal programme, tailored to the specific needs of the federal states. The funding measures are governed by federal state framework guidelines, which are based on EU requirements and umbrella regulations.
Future Developments
In response to societal and political challenges, including the “green transformation” and digitization, the content management of the ERDF will continue to be adapted to new tasks in the future. Cohesion policy reforms are regularly initiated by the European Commission and implemented through accompanying legislative procedures at the EU level.
Summary:
The European Regional Development Fund (ERDF) provides a comprehensive legal instrument for balancing and promoting development disparities among EU regions. The legal foundations are derived from primary and secondary EU law, supplemented by national implementing acts. In addition to substantive provisions and objectives, compliance with law, monitoring, and sanctions in the event of misconduct are central to the legal structuring of the ERDF.
Frequently Asked Questions
What requirements must project applications for the ERDF meet to be eligible for funding?
For a project’s eligibility under the European Regional Development Fund (ERDF), strict legal requirements apply, in particular as set out in the ERDF Regulation (Regulation (EU) No 1301/2013), the General Regulation (Regulation (EU) No 1303/2013), as well as the relevant national implementing provisions. A project application must first be substantively aligned with the specific objectives and priority axes of the respective ERDF programme. Furthermore, the applicant must demonstrate that the project provides an additional stimulus for sustainable regional development and does not constitute a pure replacement investment or involve double funding. The application documents must be submitted in proper form and on time, with all relevant documents (e.g. cost and financing plans, sustainability analyses, permits) being complete and capable of being audited. In addition, compliance with European legal provisions, such as EU state aid law (Art. 107 and 108 TFEU), procurement law and environmental impact assessments, must be proven. Projects must have appropriate control and reporting systems in place to ensure compliance with funding requirements.
What legal requirements apply to the awarding of public contracts within an ERDF-funded project?
Public contracting authorities whose projects are co-financed by the ERDF are strictly subject to the relevant national and European public procurement regulations. This includes, in particular, the Act Against Restraints of Competition (GWB), the Procurement Regulation (VgV), the Sector Regulation (SektVO), and for construction works, the Construction Tendering and Contract Regulations (VOB/A). The principle of transparency must be ensured, equal treatment of all bidders guaranteed, and the prohibition of discrimination observed. There is also a duty to document all procedural steps. Flawed procurement procedures can lead to subsequent corrections, withdrawal of funding, or even sanctions. Failure to comply with the applicable thresholds for EU-wide tenders can also be detrimental to funding. Compliance with these requirements is monitored during audits and reviews.
How is the obligation for public disclosure and publicity in the context of ERDF projects legally regulated?
According to the publicity requirements set out in Art. 115 and Annex XII of the General Regulation (EU) No 1303/2013, beneficiaries are obliged to clearly indicate ERDF support in their public communications. This covers all communication measures, site signage, informational materials, as well as websites. Breaches of the prescribed information obligations (e.g., use of ERDF logos, references to co-financing) may result in reduction or recovery of the grant. The implementation of publicity requirements is documented and checked in relevant audits.
Are there legal requirements concerning co-financing and own resources in the ERDF programme?
For approval of an ERDF grant, applicable EU law requires the beneficiary to contribute their own financial resources (own funds) to the planned project (Art. 120 of the General Regulation). The share of co-financing by the ERDF is capped by programme agreements and varies according to priority axis and funding area. Own funds may not originate from other EU funds unless explicitly permitted. The source and availability of co-financing must be demonstrably proven and auditable from the outset. The use of ineligible co-financing sources can result in the recovery of grants.
What reporting obligations apply under ERDF funding?
ERDF beneficiaries are subject to extensive reporting obligations, as set out inter alia in Art. 125 of the General Regulation (EU) No 1303/2013. This includes in particular regular progress reports, explanations of project progress, financial status reports, and subject-specific status reports. All activities, financial transactions, and compliance with funding requirements must be clearly, promptly, and auditable documented. In addition, supporting evidence (e.g., receipts for expenses, contracts, performance certificates) must be attached and kept for at least ten years. The reports form the basis for the release of further funding tranches and for the final expenditure verification.
What audit rights do authorities have in connection with ERDF funding?
In the context of ERDF funding, national and European audit authorities (e.g. European Commission, European Court of Auditors, national audit bodies) have comprehensive access and inspection rights under Art. 72 to 75 of the General Regulation. They may examine all documents, books, receipts, and records relevant to funding and also conduct on-site inspections. Beneficiaries must provide full information upon request, grant access to premises and IT systems, and actively cooperate in the audit process. Violation of audit obligations constitutes a serious breach of the funding guidelines and may lead to recovery of funds and sanctions.
