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Article 176 of the Treaty on the Functioning of the European Union (TFEU) provides that the European Regional Development Fund (ERDF) is intended to help to redress the main regional imbalances in the Union. Pursuant to that Article and to the second and third paragraphs of Article 174 TFEU, the ERDF is to contribute to reducing disparities between the levels of development of the various regions and the backwardness of the least-favoured regions, among which particular attention is to be paid to certain categories of regions, including a specific reference to cross-border regions.

Regulation 2021/1060 of the European Parliament and of the Council ( 4 ) sets out provisions common to the ERDF and certain other funds and ERDFCFR of the European Parliament and of the Council ( 5 ) sets out provisions concerning the specific objectives and the scope of the ERDF support. It is also necessary to adopt specific provisions concerning the European territorial cooperation goal (Interreg) where one or more Member States and their regions and, where relevant, partner countries and third countries cooperate across borders with regard to effective programming, including provisions on technical assistance, monitoring, evaluation, communication, eligibility, management and control and financial management.

The promotion of Interreg is a major priority of Union cohesion policy. Support for small and medium-sized enterprises for costs incurred in European territorial cooperation (ETC) projects is already block-exempted pursuant to Commission Regulation 2014/651 ( 6 ) and special provisions in relation to regional aid for investments by undertakings of all sizes are also included in the regional aid section of that Regulation and in the Commission Guidelines on regional State aid for 2014-2020. Taking into account the 30 years’ experience gained, and given the low financial value of projects and the unlikely negative impact on trade and competition, on the one hand, and the high added value brought by the existing programmes to territorial cohesion in Europe, on the other, the scope of the State aid rules with regard to public financing of ETC projects is expected to be further clarified through future amendment of Regulation 2014/651, thereby largely exempting the public financing of Interreg projects from the obligation of prior notification and greatly facilitating the implementation of those projects.

In order to support the harmonious development of the Union’s territory at different levels, the ERDF should support cross-border cooperation, transnational cooperation, interregional cooperation and outermost regions’ cooperation under Interreg goal. In the process, the principles of partnership and multi-level governance should be taken into account, while ensuring that the scale of partnership for a programme remains effective.

Reflecting the importance of tackling climate change in line with the Union’s commitments to implement the Paris Agreement adopted under the United Nations Framework Convention on Climate Change and to achieve the United Nations Sustainable Development Goals, the Funds will contribute to mainstream climate actions and to the achievement of an overall target of 30 % of Union budget expenditure supporting climate objectives. In that context the Funds should support activities that respect the climate and environmental standards and that would do no significant harm to environmental objectives within the meaning of Article 17 of EFFSIR of the European Parliament and of the Council ( 7 ) .

The cross-border cooperation strand should aim to tackle common challenges identified jointly in the border regions, and to exploit the untapped growth potential in border areas as evidenced in the Commission communication of 20 September 2017 entitled ‘Boosting Growth and Cohesion in EU Border Regions’ (‘Border Regions Communication’). As a result, the programme areas for cross-border cooperation should be identified as those regions and areas on the border or separated by a maximum of 150 km of sea where cross-border interaction may effectively take place or in which functional areas can be identified, without prejudice to potential adjustments needed to ensure the coherence and continuity of cooperation programme areas.

The cross-border cooperation strand should also involve cooperation between one or more Member States or their regions, and one or more countries or regions, or other territories outside the Union. Covering internal and external cross-border cooperation under this Regulation should result in a major simplification and streamlining of applicable provisions for the programme authorities in Member States and for the partner authorities and beneficiaries outside the Union compared to the 2014-2020 programming period.

The transnational cooperation strand should aim to strengthen cooperation by means of actions conducive to integrated territorial development linked to the Union’s priorities, in full respect of subsidiarity. Transnational cooperation should cover larger territories on the mainland of the Union and around sea basins with maximum flexibility to ensure the coherence and continuity of cooperation programmes, including previous external maritime cross-border cooperation within a larger maritime cooperation framework, in particular by defining the territory covered, the specific objectives for such cooperation, the requirements for a project partnership and the possibility to set up sub-programmes and specific steering committees.

Based on the experience with cross-border and transnational cooperation during the 2014-2020 programming period in outermost regions, where the combination of both strands within a single programme per cooperation area has not brought about sufficient simplification for programme authorities and beneficiaries, a specific outermost regions’ strand should be established in order to enable outermost regions to cooperate with their neighbouring countries and territories in the most effective and simple way. Under that strand, calls for proposals could be launched for combined funding under the ERDF, the Neighbourhood, Development and International Cooperation Instrument (NDICI) established by NDICIGE of the European Parliament and of the Council ( 8 ) and the Overseas Association Decision (OAD) established by Council Decision 2013/755/EU ( 9 ) , through management modes to be agreed upon between participating Member States and regions and third countries.

Based on the experience with the interregional cooperation programmes under Interreg, the interregional cooperation strand should focus on boosting the effectiveness of cohesion policy through four specific programmes: a programme to enable the exchange of experiences, innovative approaches and capacity building focusing on policy objectives and the Interreg-specific objective ‘a better cooperation governance’, in relation to the identification, dissemination and transfer of good practices into regional development policies including Investment for jobs and growth goal programmes; a programme dedicated to the exchange of experiences and capacity building in relation to the identification, transfer and capitalisation of good practices on integrated and sustainable urban development, taking into account the linkages between urban and rural areas including support to actions developed in the framework of Article 11 of ERDFCFR, complementing and being coordinated with the initiative outlined in Article 12 thereof; a programme for the exchange of experiences, innovative approaches and capacity building with a view to harmonising and simplifying the implementation of Interreg programmes, to harmonising and simplifying cooperation actions referred in point (d) (vi) of Article 22(3) of Regulation 2021/1060, and supporting the setting-up, functioning and use of European groupings of territorial cooperation (‘EGTCs’) already set up or to be set up pursuant to EGTC of the European Parliament and of the Council ( 10 ) as well as macro-regional strategies; and a programme to improve the analysis of development trends. The four programmes under the interregional cooperation strand should cover the whole Union and should also be open for the participation of third countries.

Common objective criteria for designating eligible regions and areas should be established. To that end, the identification of eligible regions and areas at Union level should be based on the common system of classification of the regions established by NUTS of the European Parliament and of the Council ( 11 ) .

It is necessary to continue supporting or, as appropriate, to establish cooperation in all its dimensions with the Union’s neighbouring third countries, as such cooperation is an important regional development policy tool and should benefit the regions of the Member States which border third countries. To that effect, the ERDF and the external financing instruments of the Union, the Instrument for Pre-Accession Assistance (IPA III) established by a Regulation of the European Parliament and of the Council establishing the Instrument for Pre-accession Assistance (IPA III) (the ‘IPA III Regulation’), NDICI and OAD should support programmes under cross-border cooperation, transnational cooperation, interregional cooperation and outermost regions’ cooperation. The support from the ERDF and from the external financing instruments of the Union should be based on reciprocity and proportionality. However, for IPA III funds allocated to cross-border cooperation (‘IPA III-CBC’) and NDICI funds allocated to cross-border cooperation for the neighbourhood geographic area (‘NDICI-CBC’), the ERDF support should be complemented by at least equivalent amounts under IPA III-CBC and NDICI-CBC, subject to a maximum amount set out in the respective legal act.

IPA III assistance is to mainly focus on assisting the IPA III beneficiaries to strengthen democratic institutions and the rule of law, reform the judiciary and public administration, respect fundamental rights and promote gender equality, tolerance, social inclusion and non-discrimination as well as regional and local development. IPA III assistance is to continue to support the efforts of the IPA III beneficiaries to advance regional, macro-regional and cross-border cooperation as well as territorial development, including through the implementation of Union macro-regional strategies. In addition, IPA III assistance is to address security, migration and border management, ensuring access to international protection, sharing relevant information, enhancing border control and pursuing common efforts in the fight against irregular migration and migrant smuggling.

With regard to NDICI assistance, the Union should develop a special relationship with neighbouring countries, aiming to establish an area of prosperity and good neighbourliness, founded on the values of the Union and characterised by close and peaceful relations based on cooperation. This Regulation should therefore support internal and external aspects of relevant macro-regional strategies. Those initiatives are strategically important and offer meaningful political frameworks for deepening relations with and among partner countries, based on the principles of mutual accountability, shared ownership and responsibility.

It is important to continue observing the role of the European External Action Service as established in Council Decision 2010/427/EU ( 12 ) and that of the Commission in the preparation of the strategic programming and of Interreg programmes supported by the ERDF and the NDICI.

In view of the specific situation of outermost regions of the Union, it is necessary to adopt measures concerning the improvement of conditions under which those regions are able to have access to structural funds. Consequently, certain provisions of this Regulation should be adapted to the specificities of the outermost regions of the Union in order to simplify and foster their cooperation with overseas countries and territories (‘OCTs’) and third countries, while taking into account the Commission communication of 24 October 2017 entitled ‘A stronger and renewed strategic partnership with the EU’s outermost regions’. It should be possible for that cooperation to be carried out in close partnership with regional integration and cooperation organisations.

This Regulation should lay down the possibility of the OCTs to participate in Interreg programmes. The specificities and challenges of the OCTs should be taken into consideration in order to facilitate their effective access and participation.

It is necessary to set out the resources allocated to each of the different strands of Interreg, including each Member State’s share of the global amounts for cross-border cooperation, transnational cooperation, outermost regions’ cooperation and the potential available to Member States concerning flexibility between those strands.

For the most efficient use of the support from the ERDF and the external financing instruments of the Union, a mechanism should be set up to organise the return of such support in cases where external cooperation programmes cannot be adopted or have to be discontinued, including with third countries which do not receive support from any financing instrument of the Union. That mechanism should seek to achieve optimal functioning of the programmes and the maximum possible coordination between those instruments.

The ERDF should contribute, under Interreg, to the specific objectives under the cohesion policy objectives. However, the list of the specific objectives under the different policy objectives should be adapted to the specific needs of Interreg in order to allow for ESF-type interventions, according to points (a) to (l) of Article 4(1) of ESF+ of the European Parliament and of the Council ( 13 ) through joint actions under Interreg programmes.

Within the context of the unique and specific circumstances on the island of Ireland, and with a view to supporting North-South cooperation under the Good Friday Agreement, a PEACE PLUS cross-border programme is to continue and build on the work of previous programmes between the border counties of Ireland and Northern Ireland. Taking into account its practical importance, it is necessary to ensure that, where that programme is acting in support of peace and reconciliation, the ERDF should also contribute to promoting social, economic and regional stability and cooperation in the regions concerned, in particular through actions that promote cohesion between communities. Given the specificities of that programme, it should be managed in an integrated manner with the United Kingdom contribution being integrated into that programme as external assigned revenue. Furthermore, certain rules on the selection of operations in this Regulation should not apply to that programme in relation to operations in support of peace and reconciliation.

This Regulation should add two Interreg-specific objectives: an objective to support strengthening institutional capacity, enhancing legal and administrative cooperation, in particular where linked to implementation of the Border Regions Communication, intensify cooperation between citizens and institutions and the development and coordination of macro-regional and sea-basin strategies, build up mutual trust, in particular by encouraging people-to-people actions; and a second objective to address cooperation issues on safety, security, border crossing management and migration.

The major part of the Union support should be concentrated on a limited number of policy objectives in order to maximise the impact of Interreg. Synergies and complementarities between the strands of Interreg should be strengthened.

Provisions on the preparation, approval and amendment of Interreg programmes as well as on territorial development, on the selection of operations, on monitoring and evaluation, on the programme authorities, on audit of operations, and on transparency and communication should be adapted to the specificities of Interreg programmes compared to the provisions set out in Regulation 2021/1060. Those specific provisions should be kept simple and clear in order to avoid gold-plating and additional administrative burdens for Member States and beneficiaries.

The provisions on the criteria for operations to be considered as genuinely joint and cooperative, on the partnership within an Interreg operation and on the obligations of the lead partner as set out during the 2014-2020 programming period should be continued. Interreg partners should cooperate in development and implementation as well as in staffing or financing, or both, and under outermost regions’ cooperation, in two out of four of these cooperation dimensions, as it should be simpler to combine support from the ERDF and external financing instruments from the Union both on the level of programmes and operations.

Under cross-border cooperation programmes, people-to-people and small-scale projects are important and successful instruments, with high European added value, for eliminating border and cross border obstacles, fostering contacts between people locally and, bringing border regions and their citizens closer together. So far they have been supported via small-project funds or similar instruments, although they have never been covered by specific provisions, making it necessary to clarify the rules governing those funds. In order to maintain the added value and advantages of people-to-people and small-scale projects, also with regard to local and regional development, and to simplify the management of the financing of small projects by the final recipients who are often not used to applying for Union funds, the use of simplified cost options and of lump sums should be made obligatory below a certain threshold.

Due to the involvement of more than one Member State, and the resulting higher administrative costs, including for regional points of contact also known as ‘antennae’, which are important points of contact for those proposing and implementing projects, and therefore function as a direct line to the joint secretariats or the relevant authorities, but in particular in respect of controls and translation, the ceiling for technical assistance expenditure should be higher than that under the Investment for jobs and growth goal. In order to offset the higher administrative costs, Member States should be encouraged to reduce the administrative burden with regard to the implementation of joint projects wherever possible. In addition, Interreg programmes with limited Union support or external cross-border Interreg programmes should receive a certain minimum amount for technical assistance to ensure sufficient funding for effective technical assistance activities, including for regional branch offices of joint secretariats and contact points set up to be closer to potential beneficiaries and partners.

Pursuant to paragraphs 22 and 23 of the Interinstitutional Agreement of 13 April 2016 on Better Law-Making ( 14 ) , this Regulation should be evaluated on the basis of information collected in accordance with specific monitoring requirements, while avoiding an administrative burden, in particular on Member States, and overregulation. Those requirements, where appropriate, should include measurable indicators as a basis for evaluating the effects of the funding on the ground.

Based on the experience gained during the 2014-2020 programming period, the system introducing a clear hierarchy of rules on eligibility of expenditure should be continued while maintaining the principle of rules on eligibility of expenditure to be established at Union level and for an Interreg programme as a whole to avoid any possible contradictions or inconsistencies between different regulations and between Union and national law. Additional rules adopted by one Member State which would only apply to the beneficiaries in that Member State should be limited to the strict minimum. In particular, Commission Delegated Regulation 2014/481 ( 15 ) , adopted for the 2014-2020 programming period, should be integrated into this Regulation.

Member States should be encouraged to assign the functions of the managing authority to an EGTC or to make such a grouping, like other cross-border legal bodies, responsible for managing a sub-programme, an integrated territorial investment or one or more small project funds, or to act as sole partner. In that context, a cross-border legal body, including euroregions, should be established and have legal personality pursuant to the law of one of the participating countries, and the participation of regional and local authorities from all participating countries should be granted.

In order to continue the payment chain established for the 2014-2020 programming period, namely, from the Commission to the lead partner via the certifying authority, that payment chain should be continued under the accounting function. The Union support should be paid to the lead partner, unless this would result in double fees for conversion into euro and back into another currency or vice versa between the lead partner and the other partners. If not otherwise specified, the lead partner should ensure that the other partners receive the total amount of the contribution from the respective Union fund in full and within the timeframe agreed by all partners and following the same procedure applied in respect of the lead partner.

Pursuant to Article 63(9) of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council ( 16 ) (the ‘Financial Regulation’) sector-specific rules are to take account of the needs of Interreg programmes in particular as regards the audit function. The provisions on the annual audit opinion, the annual control report and the audits of operations should therefore be simplified and adapted to those programmes involving more than one Member State.

A clear chain of financial liability in respect of recovery for irregularities should be established from sole or other partners via the lead partner and the managing authority to the Commission. Provision should be made for liability of Member States, third countries, partner countries or OCTs, where obtaining recovery from the sole or other or lead partner is not successful, meaning that the Member State reimburses the managing authority. Consequently, under Interreg programmes there is no scope for irrecoverable amounts at the level of beneficiaries. It is, however, necessary to clarify the rules, should a Member State, third country, partner country or OCT not reimburse the managing authority. The obligations of the lead partner for recovery should also be clarified.

In order to apply a mostly common set of rules both in the participating Member States and third countries, partner countries or OCTs, this Regulation should also apply to the participation of third countries, partner countries or OCTs, unless specific rules are set out in a specific chapter of this Regulation. Interreg programme authorities may be mirrored by comparable authorities in third countries, partner countries or OCTs. The starting point for the eligibility of expenditure should be linked to the signature of the financing agreement by the relevant third country, partner country or OCT. Procurement for beneficiaries in the third country, partner country or OCT should follow the rules for external procurement provided for in the Financial Regulation. The procedures for the conclusion of financing agreements with each of the third countries, partner countries or OCTs as well as of the agreements between the managing authority and each third country, partner country or OCT with regard to the support from an external financing instrument of the Union or in the case of transfer of an additional contribution from a third country, partner country or OCT to the Interreg programme other than national co-financing should be set out.

Although Interreg programmes with the participation of third countries, partner countries or OCTs should be implemented under shared management, it should be possible for outermost regions’ cooperation to be implemented under indirect management. Specific rules should be set out on how to implement those programmes as a whole or partially under indirect management.

Based on the experience gained during the 2014-2020 programming period with large infrastructure projects within cross-border cooperation programmes under the European Neighbourhood Instrument established by ENIR of the European Parliament and of the Council ( 17 ) , the procedures should be simplified. However, the Commission should retain certain rights concerning the selection of such projects.

In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission to adopt and amend the lists of Interreg programme areas to receive support and the list of the global amount of the Union support for each Interreg programme. Implementing powers should also be conferred on the Commission to adopt the multi-annual strategy documents for Interreg programmes supported by an external financing instrument of the Union. Those powers should be exercised in accordance with Regulation 2011/182 of the European Parliament and of the Council ( 18 ) . Although those acts are of a general nature, the advisory procedure should be used given that they only implement the provisions in a technical way. Where applicable, the multi-annual strategy documents for Interreg programmes supported by an external financial instrument should also respect the procedure set out in the IPA III Regulation and NDICIGE.

In order to ensure uniform conditions for the approval Interreg programmes and of amendments thereto, implementing powers should be conferred on the Commission. Where applicable, external cross-border Interreg programmes should respect committee procedures established under the IPA III Regulation and NDICIGE with regard to the first approval decision of those programmes.

In order to supplement or amend certain non-essential elements of this Regulation, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of amending the Annex. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

In view of the adoption of this Regulation after the start of the programming period, and taking into account the need to implement Interreg in a coordinated and harmonised manner, and in order to allow for its prompt implementation, it should enter into force on the day following that of its publication in the Official Journal of the European Union .

Since the objective of this Regulation, namely to foster cooperation between Member States and between Member States and third countries, partner countries or OCTs cannot be sufficiently achieved by the Member States but can rather, by reason of the scale or effects of the action, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective,