CASE COMMENTARY · PROVINCIAL COURTFraud against European research funds: when the limitation period under Article 306 starts to run
DECISION
Judgment of 9 September 2026
COURT
Provincial Court of Pontevedra, Second Section
IDENTIFICATION
Fraud against the budgets of the European Union, Article 306 of the Spanish Criminal Code
OUTCOME
Conviction of the administrator of the coordinating entity
A research consortium of eight entities from four countries, funded under the European Union’s Seventh Framework Programme, has ended in a criminal conviction for fraud against Union budgets. Beyond the interest of the facts, the ruling of the Second Section of the Provincial Court of Pontevedra settles a point of considerable practical importance: when the limitation period starts to run in grant frauds involving long-running performance.
The answer conditions the very viability of the prosecution. If time ran from the moment the funds were received, a large proportion of frauds detected by later audit would go unpunished, because European audits are carried out years after payment. The Court rejects that argument and places the starting point later.
The facts and the figures
- The FOFIND project, funded under the EU Seventh Framework Programme
- A consortium including the CSIC, the Povisa Hospital and the University of Vigo, together with entities from Germany, Poland and Sweden
- The coordinating entity received 1,245,605.10 euros from the European Research Executive Agency between 2012 and 2015
- It forwarded only 218,434.69 euros to the other participants
- It declared its own expenditure of 320,417.78 euros
- The audit concluded that 706,752.63 euros were neither applied to their purpose nor justified
The outcome and its consequences
- Two years of imprisonment for the administrator of the coordinating company
- A fine of 750,000 euros
- Loss of the right to obtain public subsidies for four years
- Compensation to the European Union of 706,752.63 euros
- The conviction falls on the natural person, not on the company
- An appeal lies to the Civil and Criminal Chamber of the High Court of Justice of Galicia
THE DOCTRINEWhat the court holds
The offence under Article 306 of the Criminal Code
The provision punishes anyone who, by act or omission, defrauds the general budgets of the European Union or others administered by it, above the statutory threshold, whether by evading the payment of sums due, by applying the funds obtained to a purpose other than that for which they were intended, or by obtaining them through falsifying the conditions required for their award. The form applied here is the second: the funds were lawfully received but were not applied to their purpose.
The problem of the starting point
The defence argued that time should run from receipt of the funds, in 2012 or at the latest in 2015. On that basis the period would have expired before the complaint was filed. The Court rejects that approach on a structural argument: in the misapplication form, the offence is not completed on receipt of the money, which is lawful, but on the definitive failure to comply with the obligation to apply it to its purpose and to distribute it among the consortium partners.
Final determination of the sum as the decisive milestone
Applying that criterion, and relying on the doctrine of Supreme Court judgment 156/2021, the court places the starting point in 2018, when the European Executive Agency definitively determined the sum owed following the audit. Since the complaint was filed in March 2022, the period had not expired. The practical consequence is far-reaching: in multiannual grant frauds, the limitation clock does not start until the awarding administration closes its settlement.
The liability of the natural person
One point that press coverage has tended to blur deserves emphasis. The conviction does not fall on the coordinating company as a legal person, but on the natural person who administered it and directed the project. Corporate criminal liability under Article 31 bis requires its own route of attribution and does not follow automatically from the conduct of the administrator.
THE FIRM’S READINGWhat it means in practice
For the defence in grant frauds. A limitation plea remains useful, but it must be built on the specific statutory form. Where the charge is fraudulent obtaining by falsifying conditions, the starting point may be the award itself. Where the charge is misapplication, the debate must be about when the breach became definitive, which does not necessarily coincide with administrative closure.
For consortium coordinators. Distributing funds among partners is not a purely contractual matter. Where the call for proposals imposes on the coordinator an obligation to transfer determined sums to the other participants, withholding them may amount to misapplication. Documentary traceability of every transfer and every declared item of expenditure is at once an administrative requirement and a criminal defence.
On the evidence. The decisive evidence in these proceedings is accounting and documentary expert evidence: audit reports of the awarding agency, expenditure vouchers, bank statements and correspondence with partners. A party expert report contesting the methodology of the audit report, and not merely its result, is the most effective way to reduce the defrauded sum and, with it, the sentence.
FREQUENTLY ASKED QUESTIONSFrequently asked questions
What does Article 306 of the Spanish Criminal Code punish?
It punishes fraud against the budgets of the European Union or those administered by it, above the statutory threshold, in three forms: evading payment of sums due, applying the funds obtained to a purpose other than the intended one, or obtaining them by falsifying the conditions of award.
When does the limitation period begin in a grant fraud?
According to this ruling, in the misapplication form time does not start on receipt of the funds but on the definitive breach of the obligation. The Court places that moment when the awarding agency definitively determined the sum owed.
Is the company or its administrator liable?
Here the conviction fell on the natural person who administered the coordinating entity. Corporate criminal liability requires its own route of attribution under Article 31 bis of the Criminal Code and does not follow automatically from the administrator’s conduct.
What penalties were imposed?
Two years of imprisonment, a fine of 750,000 euros, loss of the right to obtain public subsidies for four years and compensation to the European Union of 706,752.63 euros. The judgment may be appealed to the High Court of Justice of Galicia.
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Commentary prepared by the SCJE team from public sources on the decision. Its content is summarised for informational purposes, without full reproduction. It does not constitute individual legal advice. Source consulted: Tirant lo Blanch, actualidad jurídica; press release of the Spanish General Council of the Judiciary and specialised legal news.
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