# Commission Regulation (EU) No 702/2014Show full title

Commission Regulation (EU) No 702/2014 of 25 June 2014 declaring certain categories of aid in the agricultural and forestry            sectors and in rural areas compatible with the internal market in application of Articles 107 and 108 of the Treaty on the            Functioning of the European Union         

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# Commission Regulation (EU) No 702/2014                     

# of 25 June 2014

# declaring certain categories of aid in the agricultural and forestry sectors and in rural areas compatible with the internal                        market in application of Articles 107 and 108 of the Treaty on the Functioning of the European Union                     

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 108(4) thereof,

Having regard to Council Regulation (EC) No 994/98 of 7 May 1998 on the application of Articles 107 and 108 of the Treaty                           on the Functioning of the European Union to certain categories of horizontal State aid(1) and in particular Article 1(1)(a) and (b) thereof,                        

Having published a draft of this Regulation in accordance with Article 6 and Article 8(2) of Regulation (EC) No 994/98,

Having consulted the Advisory Committee on State Aid,

Whereas:

(1)State funding meeting the criteria laid down in Article 107(1) of the Treaty constitutes State aid and requires notification                              to the Commission by virtue of Article 108(3) thereof. However, pursuant to Article 109 of the Treaty, the Council may determine                              categories of aid that are exempted from that notification requirement. In accordance with Article 108(4) of the Treaty the                              Commission may adopt regulations relating to those categories of aid. Regulation (EC) No 994/98 empowers the Commission to                              declare, in accordance with Article 109 of the Treaty, that certain categories of aid may be exempted from the notification                              requirement of Article 108(3) of the Treaty. On the basis of that Regulation, the Commission adopted Commission Regulation                              (EC) No 1857/2006(2) which applies until 30 June 2014.

(2)On 22 July 2013 Regulation (EC) No 994/98 was amended by Regulation (EU) No 733/2013(3) to empower the Commission to extend the block exemption to new categories of aid in respect of which clear compatibility                              conditions can be defined. Such new categories of aid in the agricultural and forestry sectors should include: aid in favour                              of heritage conservation, aid in favour of making good the damage caused by natural disasters and aid in favour of forestry                              which can, under certain conditions, be exempted from the notification requirement of Article 108(3) of the Treaty.

(3)Article 42 of the Treaty provides that the rules on competition apply to the production of and trade in agricultural products                              only to the extent determined by the European Parliament and the Council. Article 211(1) of Regulation (EU) No 1308/2013 of                              the European Parliament and the Council(4) provides that State aid rules apply to aid for the production of and trade in agricultural products, subject to specific                              derogations. Article 211(2) of Regulation (EU) No 1308/2013 provides that State aid rules do not apply to payments made by                              Member States for measures provided for in that Regulation which are partly or wholly financed by the Union and for measures                              included in Articles 213 to 218 of that Regulation. Moreover, State aid rules do not apply to payments made by Member States                              pursuant to Regulation (EU) No 1305/2013 of the European Parliament and of the Council(5) nor to additional national financing, within the scope of Article 42 of the Treaty. Such payments intended to provide additional                              national financing within the scope of Article 42 of the Treaty, have to comply with the criteria of Regulation (EU) No 1305/2013                              in order to be approved by the Commission as part of the rural development programme of a given Member State. Nevertheless,                              State aid rules apply, both to the part co-financed under the European Agricultural Fund for Rural Development (EAFRD) and                              to additional national financing for measures falling outside the scope of Article 42 of the Treaty.

(4)As the economic effects of aid do not change depending on whether or not it is partly financed by the Union, or whether it                              is financed by a Member State alone, there should be consistency and coherence between the Commission's policy in respect                              of the control of State aid, and the support which is granted under the Union's own common agricultural and rural development                              policy.

(5)The scope of this Regulation should therefore be aligned with that of Regulation (EU) No 1305/2013, in particular as regards                              aid in favour of the forestry sector and aid in favour of micro and small and medium-sized enterprises (SMEs) active in rural                              areas. This Regulation should apply to aid measures in favour of forestry and in favour of SMEs active in the rural areas                              which fall outside the scope of Article 42 of the Treaty which are covered by Regulation (EU) No 1305/2013 only and insofar                              as those measures are included in the rural development programmes and are co-financed by the EAFRD. On the other hand, this                              Regulation should not apply to aid to undertakings in rural areas for activities falling outside the scope of Article 42 of                              the Treaty or to the forestry sector where there is no direct link to the rural development programmes and no co-financing                              from the EAFRD. However, aid for knowledge transfer and information actions in the forestry sector and aid for advisory services                              in the forestry sector should be possible to be granted outside the rural development programmes wholly financed by the Member                              States, provided that they comply with the respective compatibility conditions laid down in this Regulation.

(6)A simplified procedure should be made available for Member States when they are required to obtain State aid clearance for                              both the co-financed part and the additional financing of their national rural development programmes, in accordance with                              Article 81(1) of Regulation (EU) No 1305/2013. In that respect such aid should be exempted from the notification requirement                              of Article 108(3) of the Treaty provided that it complies with the respective compatibility conditions laid down in this Regulation.

(7)With the Communication of 8 May 2012 from the Commission to the European Parliament, the Council, the European Economic and                              Social Committee and the Committee on the Regions — EU State Aid Modernisation (SAM)(6), the Commission launched a wider review of the State aid rules. The main objectives of this modernisation are: (i) to achieve                              sustainable, smart and inclusive growth in a competitive internal market, while contributing to Member State efforts towards                              a more efficient use of public finances; (ii) to focus Commission *ex ante* scrutiny on cases with the biggest impact on the internal market, while strengthening Member State cooperation in State aid                              enforcement; and (iii) to streamline the rules and provide for faster, better informed and more robust decisions based on                              a clear economic rationale, a common approach and clear obligations.

(8)This Regulation should allow for a better prioritisation of State aid enforcement activities, and greater simplification and                              should enhance transparency, effective evaluation and the control of compliance with the State aid rules at national and Union                              levels, while preserving the institutional competences of the Commission and the Member States. In accordance with the principle                              of proportionality this Regulation does not go beyond what is necessary in order to achieve those objectives.

(9)The Commission has applied Articles 107 and 108 of the Treaty to SMEs active in the production, processing and marketing of                              agricultural products in numerous cases, in particular in the framework of Regulation (EC) No 1857/2006, Commission Regulation                              (EC) No 800/2008(7) and the Community Guidelines on State aid in the agriculture and forestry sector 2007 to 2013(8). It has thus gained considerable experience in this field. The Commission's experience has allowed it, on the one hand, to                              better define the conditions under which certain categories of aid can be considered compatible with the internal market and                              to extend the scope of block exemptions and, on the other hand, made clear the necessity to strengthen transparency as well                              as monitoring and allow for a proper evaluation of large schemes in light of their effect on competition in the internal market.

(10)The general conditions for the application of this Regulation should be defined on the basis of a set of common principles                              that ensure that the aid serves a purpose of common interest, has a clear incentive effect, is appropriate and proportionate,                              is granted in full transparency and subject to a control mechanism and regular evaluation, and does not adversely affect trading                              conditions to extent that is contrary to the common interest.

(11)Aid that fulfils all the conditions laid down in this Regulation, both general and specific to the relevant categories of                              aid, should be exempted from the notification requirement laid down in Article 108(3) of the Treaty. With a view to ensuring                              efficient supervision and simplifying administration, but without weakening Commission monitoring, exempted aid (aid schemes                              and individual aids) should contain an express reference to this Regulation.

(12)State aid within the meaning of Article 107(1) of the Treaty not covered by this Regulation remains subject to the notification                              requirement of Article 108(3) of the Treaty. This Regulation is without prejudice to the possibility for Member States to                              notify aid the objectives of which correspond to objectives covered by this Regulation.

(13)In view of the greater potential impact of large schemes on trade and competition, aid schemes with an average annual State                              aid budget exceeding a threshold based on an absolute value should in principle be subject to State aid evaluation. The evaluation                              should aim at verifying whether the assumptions and conditions underlying the compatibility of the scheme have been achieved,                              as well as the effectiveness of the aid measure in the light of its general and specific objectives and should provide indications                              on the impact of the scheme on competition and trade. In order to ensure equal treatment, State aid evaluation should be carried                              out on the basis of an evaluation plan approved by the Commission. While such plan should normally be drawn up at the moment                              of the design of the scheme and approved in time for the scheme to enter into force, this may not be possible in all cases.                              Therefore, in order not to delay their entry into force, this Regulation will apply to such schemes for a maximum period of                              six months. The Commission may decide to extend this period, upon approval of the evaluation plan. To this end, the evaluation                              plan should be notified to the Commission within 20 working days following the entry into force of the scheme. The Commission                              can also exceptionally decide that an evaluation is not necessary given the specificities of the case. The Commission should                              receive from the Member State the necessary information to be able to carry out the assessment of the evaluation plan and                              request additional information without undue delay allowing the Member State to complete the missing elements for the Commission                              to take a decision. In view of the novelty of this process, the Commission will provide, in a separate document, a detailed                              guidance on the procedure applicable during the 6 months period for the approval of the evaluation plan and the relevant templates                              through which the evaluation plans will have to be submitted. Alterations of schemes subject to evaluation, other than modifications                              which cannot affect the compatibility of the aid scheme under this Regulation or cannot significantly affect the content of                              the approved evaluation plan, should be assessed taking account of the outcome of such evaluation and should be excluded from                              the scope of this Regulation. The alterations such as purely formal modifications, administrative modifications or alterations                              carried out within the framework of the EU co-financed measures should not, in principle, be considered as significantly affecting                              the content of the approved evaluation plan.

(14)This Regulation should not apply to aid contingent upon the use of domestic over imported products or aid to export-related                              activities. In particular, it should not apply to aid financing the establishment and operation of a distribution network                              in another Member State or third country. Aid towards the cost of participating in trade fairs or of studies or consultancy                              services needed for the launch of a new or existing product on a new market in another Member State or third country should                              not normally constitute aid to export-related activities.

(15)The Commission should ensure that authorised aid does not adversely affect trading conditions to an extent that is contrary                              to the general interest. Therefore, aid in favour of a beneficiary which is subject to an outstanding recovery order following                              a previous Commission decision declaring an aid illegal and incompatible with the internal market should be excluded from                              the scope of this Regulation with the exception of aid to make good the damage caused by certain natural disasters.

(16)Aid granted to undertakings in difficulty should be excluded from the scope of this Regulation, since such aid should be assessed                              under the Guidelines on State aid for rescuing and restructuring firms in difficulty(9) or their successor Guidelines in order to avoid their circumvention, with the exception, under certain conditions, of aid                              granted to compensate for damages caused by natural disasters, by an adverse climatic event which can be assimilated to a                              natural disaster, by animal disease or plants pest and aid for the restoration of damage to forests from fires, natural disasters,                              adverse climatic events, pests, diseases, catastrophic events and climate change related events, as stipulated by this Regulation.                              In addition, for reasons of public health protection and having in mind the emergency situation no distinction should be made,                              under certain conditions, as to the economic situation of an undertaking for aid for the costs of the eradication of animal                              diseases and for aid for the destruction and removal of fallen stock. In order to provide legal certainty, it is appropriate                              to establish clear criteria that do not require an assessment of all the particularities of the situation of an undertaking                              to determine whether an undertaking is considered to be in difficulty for the purposes of this Regulation.

(17)If a State aid or the conditions attached to it, including its financing method when it forms an integral part of it, entail                              a non-severable violation of Union legislation, the aid may not be declared compatible with the internal market. This Regulation                              should therefore not apply to aid which entails a non-severable violation of Union legislation.

(18)State aid enforcement is highly dependent on the cooperation of Member States. Therefore, Member States should take all necessary                              measures to ensure compliance with this Regulation, including compliance of individual aid granted under block-exempted schemes.

(19)Due to the high risk of adversely affecting trading conditions, large amounts of aid granted either individually or cumulatively                              should be assessed by the Commission upon notification. Thresholds by maximum aid amount should therefore be set for certain                              categories of investment aid falling within the scope of this Regulation at a level which takes into account the category                              of aid concerned and its likely effect on trading conditions. Any aid granted above those thresholds should remain subject                              to the notification requirement of Article 108(3) of the Treaty. The thresholds laid down in this Regulation should not be                              circumvented by the artificial splitting up of aid schemes or aid projects, for example into several aid schemes or projects                              with similar characteristics, objectives or beneficiaries. Other categories of aid, to the extent that the compatibility conditions                              and the maximum aid intensities or the maximum aid amounts laid down in this Regulation are respected, should not be considered                              as having a high risk of adversely affecting trading conditions.

(20)For the purpose of transparency, equal treatment and effective monitoring, this Regulation should apply only to aid in respect                              of which it is possible to calculate precisely the gross grant equivalent *ex ante* without the need to undertake a risk assessment (‘transparent aid’).

(21)For certain specific aid instruments, such as loans, guarantees, tax measures and, in particular, repayable advances, this                              Regulation should define the conditions under which they can be considered transparent. Aid comprised in guarantees should                              be considered as transparent if the gross grant equivalent has been calculated on the basis of safe-harbour premiums laid                              down for the respective type of undertaking. For instance, for SMEs the Commission Notice on the application of Articles 87                              and 88 of the EC Treaty to State aid in the form of guarantees(10) indicates levels of annual premium above which a State guarantee would be deemed not to constitute aid. It should also be                              considered transparent if before the implementation of the measure, the methodology used to calculate the aid intensity of                              the state guarantee has been notified to and approved by the Commission in line with the Commission Notice on the application                              of Articles 87 and 88 of the EC Treaty to State aid in the form of guarantees. For the purpose of this Regulation, aid comprised                              in risk finance measures and capital injections should not be considered as transparent aid.

(22)Aid which would otherwise fall within the scope of this Regulation but is not transparent should always be notified to the                              Commission. Notification of non-transparent aid should be assessed by the Commission in particular in the light of the criteria                              set out in the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to                              2020(11) or the other relevant frameworks, guidelines, communications and notices.

(23)In order to ensure that the aid is necessary and acts as an incentive to further develop activities or projects, this Regulation                              should not apply to aid for activities or projects in which the beneficiary would in any case engage even in the absence of                              the aid. No aid should be granted retroactively in respect of activities or projects which have already been undertaken by                              the beneficiary. Aid should only be exempted from the notification requirement of Article 108(3) of the Treaty in accordance                              with this Regulation where the activity or the work on the aided project starts after the beneficiary has submitted a written                              application for the aid.

(24)As regards any ad hoc aid covered by this Regulation granted to a beneficiary which is a large enterprise, the Member State                              should, in addition to the conditions on the incentive effect applicable to SMEs, also ensure that the beneficiary has analysed,                              in an internal document, the viability of the aided project or activity with aid and without aid. The Member State should                              verify that this internal document confirms a material increase in the scope of the project or activity, a material increase                              in the total amount spent by the beneficiary on the aided project or activity or a material increase in the speed of completion                              of the project or activity concerned. It should also be possible to establish the incentive effect on the basis of the fact                              that the investment project or the activity would not have been carried out as such in the rural area concerned in the absence                              of the aid.

(25)Automatic aid schemes in the form of tax advantages should continue to be subject to a specific condition concerning the incentive                              effect, in the light of the fact that the aid resulting from such aid schemes is granted within the framework of different                              procedures than other categories of aid. That specific condition means that those aid schemes should have been adopted before                              the activity or the work on the aided project/activity started. However, this condition should not apply in the case of fiscal                              successor schemes provided the activity was already covered by the previous fiscal schemes in the form of tax advantages.                              For the assessment of the incentive effect of such aid schemes, the crucial moment is the moment when the tax measure was                              set out for the first time in the original scheme, which is then replaced by the successor scheme.

(26)As regards aid for land consolidation, promotion measures in form of publications aimed at raising awareness of agricultural                              products among the wider public, aid to compensate for losses caused by adverse climatic event which can be assimilated to                              a natural disaster, aid to compensate for the costs of the eradication of animal diseases and plant pests and for losses caused                              by those animal diseases or plant pests, aid to cover the costs of the removal and destruction of fallen stock, aid for research                              and development, aid to make good the damage caused by natural disaster and aid for investments in favour of conservation                              of cultural and natural heritage on the agricultural holding the existence of an incentive effect should not be required or                              should be deemed to be present if the specific conditions set out for those categories of aid in this Regulation are fulfilled.

(27)With a view to ensuring that aid is proportionate and limited to the amount necessary, the maximum aid amounts should, whenever                              possible, be expressed in terms of aid intensities in relation to a set of eligible costs. Where the maximum aid intensity                              cannot be set, because the eligible costs cannot be identified or in order to provide simpler instruments for small amounts,                              maximum aid amounts defined in nominal terms should be set out in order to ensure proportionality of the aid. The aid intensity                              and the maximum aid amounts should be fixed, in the light of the Commission's experience, at a level that minimises distortions                              of competition in the aided sector while appropriately addressing the objective of facilitating the development of the economic                              activities of the beneficiaries in the agricultural sector, the rural areas, or the forestry sector. In the interests of coherence                              with Union-financed rural development measures, the ceilings should be harmonised with those set out in Regulation (EU) No                              1305/2013 insofar as this is in line with the State aid principles.

(28)For the calculation of the aid intensity, only eligible costs should be included. The Regulation should not exempt aid which                              exceeds the relevant aid intensity as a result of including ineligible costs. The identification of the eligible costs should                              be supported by clear, specific and contemporary documentary evidence. All figures used should be taken before any deduction                              of tax or other charges. Aid payable in several instalments should be discounted to its value on the date of granting the                              aid. The eligible costs should also be discounted to their value on the date of granting the aid. The interest rate to be                              used for discounting purposes and for calculating the amount of aid in the case of aid which does not take the form of a grant                              should be respectively the discount rate and the reference rate applicable on the date of granting the aid, as laid down in                              the Communication from the Commission on the revision of the method for setting the reference and discount rates(12). Where aid is granted in a form other than a grant, the aid amount should be expressed in gross grant equivalent. Where aid                              is granted by means of tax advantages, aid tranches should be discounted on the basis of the discount rates applicable on                              the various dates when the tax advantages become effective. The use of aid in the form of repayable advances should be promoted,                              since such risk-sharing instruments are conducive to a strengthened incentive effect of the aid. It is therefore appropriate                              to establish that where aid is granted in the form of repayable advances the applicable aid intensities laid down in this                              Regulation may be increased.

(29)In the case of tax advantages on future taxes, the applicable discount rate and the exact amount of the aid tranches may not                              be known in advance. In such a case, Member States should set in advance a cap on the discounted value of the aid respecting                              the applicable aid intensity. Subsequently, when the amount of the aid tranche at a given date becomes known, discounting                              can take place on the basis of the discount rate applicable at that time. The discounted value of each aid tranche should                              be deducted from the overall amount of the cap (‘capped amount’).

(30)To determine whether the individual notification thresholds and the maximum aid intensities or the maximum aid amounts laid                              down in this Regulation are respected, the total amount of the State aid for the aided activity or project should be taken                              into account. Moreover, this Regulation should specify the circumstances under which different categories of aid may be cumulated.                              Aid exempted from notification by this Regulation and any other compatible aid exempted under other Regulation or approved                              by the Commission may be cumulated as long as those measures concern different identifiable eligible costs. Where different                              sources of aid are related to the same — partly or fully overlapping — identifiable eligible costs, cumulation should be allowed                              up to the highest aid intensity or aid amount applicable to that aid under this Regulation. This Regulation should also set                              out special rules for cumulation of aid with and without identifiable eligible costs, and for cumulation with *de minimis* aid. *De minimis* aid is often not granted for or attributable to specific identifiable eligible costs. In such a case it should be possible                              to freely cumulate *de minimis* aid with State aid exempted under this Regulation. Where, however, *de minimis* aid is granted for the same identifiable eligible costs as State aid exempted under this Regulation, cumulation should only                              be allowed up to the maximum aid intensity as set out in Chapter III of this Regulation.

(31)Union funding centrally managed by the institutions, agencies, joint undertakings or other bodies of the Union, that is not                              directly or indirectly under the control of Member States, does not constitute State aid. Where such Union funding is combined                              with State aid, only the latter should be considered for determining whether notification thresholds and maximum aid intensities                              or maximum aid amounts are respected, provided the total amount of public funding granted in relation to the same eligible                              costs does not exceed the most favourable funding rate laid down in the applicable rules of Union law.

(32)Given that State aid within the meaning of Article 107(1) of the Treaty is, in principle, prohibited, it is important that                              for all parties to be able to check whether an aid is granted in compliance with the applicable rules. Transparency of State                              aid is, therefore, essential for the correct application of Treaty rules and leads to better compliance, greater accountability,                              peer review and ultimately more effective public spending. To ensure transparency, Member States should be required to establish                              comprehensive State aid websites, at regional or national level, setting out summary information about each aid measure exempted                              under this Regulation That obligation should be a condition for the compatibility of the individual aid with the internal                              market. Following the standard practice regarding publication of information in Directive 2013/37/EU of the European Parliament                              and of the Council(13), a standard format should be used which allows the information to be searched, downloaded and easily published on the internet.                              The links to the State aid websites of all the Member States should be published on the Commission's website. In accordance                              with Article 3(2) of Regulation (EC) No 994/98, as amended by Regulation (EU) No 733/2013, summary information on each aid                              measure exempted under this Regulation should be published on the website of the Commission.

(33)As regards the publication of information on individual aid awards it is appropriate to set thresholds above which that publication                              may be considered proportionate taking into account the importance of the aid. Based on the assessment of investment aid schemes                              in the primary agricultural sector with the highest annual expenditure reported in the framework of the Annual Report exercise                              2013 which can be considered to be more distortive than the other categories of aid the Commission has established an average                              aid amount per beneficiary of EUR 59 596. In order to limit the administrative burden on Member States, it is therefore appropriate                              to set the threshold for publication of information on individual aid awards to primary agricultural producers at the level                              of EUR 60 000. Taking into account that the processing of agricultural products and the marketing of agricultural products                              is similar to that of industrial products, it is appropriate to align the threshold for the publication of information on                              individual aid awards to beneficiaries in those sub-sectors, as well as in the forestry sector and for activities falling                              outside the scope of Article 42 of the Treaty, to that set in Commission Regulation (EU) No 651/2014(14).

(34)To ensure effective monitoring, it is appropriate in accordance with Article 3(2) of Regulation (EC) No 994/98, to establish                              a standard format in which Member States should provide the Commission with summary information whenever, in accordance with                              this Regulation, an aid scheme is implemented or an individual aid is granted outside any aid scheme. Moreover, it is appropriate                              in accordance with Article 5 of Commission Regulation (EC) No 794/2004(15) and Article 3(4) of Regulation (EC) No 994/98 to establish rules concerning annual reporting on aid exempted from the notification                              requirement of Article 108(3) of the Treaty in accordance with the conditions laid down in this Regulation, including specific                              requirements for certain categories of aid, to be submitted to the Commission by Member States.

(35)In view of the wide availability of the necessary technology, the summary information and the annual report should be in computerised                              format and transmitted to the Commission via the Commission electronic systems.

(36)Moreover, it is appropriate in accordance with Article 3(3) of Regulation (EC) No 994/98 to establish rules concerning the                              records that Member States should keep regarding the aid exempted from the notification requirement of Article 108(3) of the                              Treaty by this Regulation, in the light of the limitation period established by Article 15 of Council Regulation (EC) No 659/1999(16).

(37)To reinforce the effectiveness of compatibility conditions set out in this Regulation, it should be possible for the Commission                              to withdraw the benefit of the block exemption for the future aid measures in the event of failure to comply with these requirements.                              The Commission should be able to restrict the withdrawal of the benefit of the block exemption to certain types of aid, certain                              beneficiaries or aid measures adopted by certain authorities, where non-compliance with this Regulation affects only a limited                              group of measures or certain authorities. Such a targeted withdrawal should provide a proportionate remedy directly linked                              to the identified non-compliance with this Regulation. In case of failure to meet compatibility conditions set out in Chapters                              I and III, aid granted is not covered by this Regulation and, as a consequence, constitutes unlawful aid, which the Commission                              will examine in the framework of the relevant procedure as set out in Regulation No (EC) No 659/1999. In case of failure to                              fulfil the requirements of Chapter II, the withdrawal of the benefit of the block exemption in respect of the future aid measures                              does not affect the fact that the past measures complying with this Regulation were block exempted.

(38)Having regard to Article 107(3)(c) of the Treaty, aid should not have the sole effect of continuously or periodically reducing                              the operating costs which the beneficiary would normally have to bear, and should be proportionate to the handicaps that have                              to be overcome in order to secure the socioeconomic benefits deemed to be in the Union interest. Unilateral State aid which                              simply seeks to improve the financial situation of producers but which in no way contributes to the development of the sector,                              and in particular aid which is granted solely on the basis of price, quantity, unit of production or unit of means of production                              should be considered to constitute operating aid which is incompatible with the internal market. Furthermore, if granted in                              the agricultural sector, such aid is also likely to interfere with the mechanisms of the common organisations of the markets.                              It is therefore appropriate to limit the scope of this Regulation to certain types of aid.

(39)SMEs play a decisive role in job creation and, more generally, act as a factor of social stability and drive the economy.                              However, their development may be limited by market failures, leading to SMEs suffering from typical handicaps. SMEs often                              have difficulty in obtaining capital or loans, given the risk-averse nature of certain financial markets and the limited collateral                              that they may be able to offer. Their limited resources may also restrict their access to information, notably as regards                              new technology and potential markets. To facilitate the development of the economic activities of SMEs, this Regulation should                              therefore exempt certain categories of aid in favour of SMEs from the notification requirement of Article 108(3) of the Treaty.

(40)To eliminate differences that might give rise to distortions of competition and to facilitate coordination between different                              Union and national initiatives concerning SMEs as well as for reasons of administrative clarity and legal certainty, the definition                              of SME used for the purpose of this Regulation should be based on the definitions laid down in Commission Recommendation 2003/361/EC(17).

(41)To ensure coherence with the rural development policy and to achieve simplification of the rules based on the experience already                              gained by the Commission in the light of the application of Regulation (EU) No 1857/2006 and Regulation (EU) No 800/2008,                              it is appropriate to exempt from the notification requirement of Article 108(3) of the Treaty, different categories of aid                              in favour of SMEs active in primary agricultural production, the processing of agricultural products and the marketing of                              agricultural products.

(42)Those categories of aid should in particular encompass investment aid such as investments in tangible assets or intangible                              assets or for the relocation of farm buildings, aid for business start-ups and business opportunities such as aid for young                              farmers and small farms, aid for producer groups, as well as aid for participation in quality schemes, aid to facilitate business                              development, such as aid for knowledge transfer and information actions, aid for advisory services, aid for promotion activities,                              aid for farm replacement services, risk and crisis management aid such as aid to compensate for losses caused by adverse climatic                              events which can be assimilated to a natural disaster, aid for the costs of the prevention and eradication of animal diseases                              and plant pests and aid for insurance premiums, as well as aid for the livestock sector pursuing common public objectives                              such as the preservation of the genetic quality and the protection of animal and public health. That aid should be especially                              aimed at enhancing the competitiveness and the viability of the whole agricultural sector.

(43)Moreover, aids granted in favour of SMEs active in rural areas should also be exempted from the notification requirement of                              Article 108(3) of the Treaty under this Regulation. In this regard, and in order to ensure coherence between rural development                              measures co-financed under the EAFRD and measures financed from additional national resources the rules laid down in this                              Regulation should be consistent as far as possible with the rules laid down in Regulation (EU) No 1305/2013 and in the delegated                              and implementing acts adopted pursuant to that Regulation.

(44)Other categories of aid such as aid for research and development in the agricultural and forestry sectors, aid to make good                              the damage caused by natural disaster in the agricultural sector, aid for investments in favour of the conservation of cultural                              and natural heritage located on agricultural holdings and aid in favour of forestry granted to both, SMEs and large enterprises                              should be exempted from the notification requirement of Article 108(3) of the Treaty. In particular, as regard aid in favour                              of forestry and in order to ensure coherence between rural development measures co-financed under the EAFRD and measures financed                              from additional national resources or measures financed purely through State aid, the rules laid down in this Regulation should                              be consistent as far as possible with the rules laid down in Regulation (EU) No 1305/2013 and in the delegated and implementing                              acts.

(45)Aid granted to SMEs active in the primary agricultural production, in the processing of agricultural products and in the marketing                              of agricultural products, aid for research and development, aid in favour of the forestry sector or aid in favour of SMEs                              in the rural areas for activities falling outside the scope of Article 42 of the Treaty may also be exempted from the notification                              requirements of Article 108(3) of the Treaty in accordance with the conditions laid down in Regulation (EU) No 651/2014. Where                              Member States deem it more appropriate, they may alternatively choose to grant aid falling under the above mentioned categories                              in accordance with the conditions laid down in Regulation (EU) No 651/2014. In particular, Member State may choose to grant                              to SMEs active in the primary agricultural production regional operating aid to compensate additional costs other than transport                              costs in outermost regions, aid for consultancy in favour of SMEs risk finance aid, aid for research and development, innovation                              aid for SMEs, environmental aid, training aid and aid for disadvantaged workers in accordance with the conditions laid down                              in Regulation (EU) No 651/2014. In that context and in order to clarify the relation between the scope of application of this                              Regulation and Regulation (EU) No 651/2014, it should be noted that the objectives, the categories of aid and the aid conditions                              laid down in the two Regulations are different although they may target the same type of beneficiaries.

(46)To improve the economic and environmental performance and efficiency of the SMEs active in the agricultural sector and to                              provide the infrastructure needed for the development of agriculture and to support non-remunerative investments necessary                              to achieve environmental aims, aid should be provided for investments in tangible or intangible assets contributing to those                              objectives. Those investments should comply with Union legislation and with the national laws of the Member States concerned                              on the environmental protection. Furthermore, for investments requiring an environmental impact assessment under Directive                              2011/92/EU of the European Parliament and of the Council(18) the aid should be subject to the condition that such assessment shall have been carried out and the development consent should                              have been granted for the investment project concerned, before the date of granting the individual aid.

(47)Because of the risk of distortions of competition resulting from targeted investment aid in the sector of primary agricultural                              production, investment aid exempted from the notification requirement of Article 108(3) of the Treaty under this Regulation                              should not be limited to a specific agricultural product. This condition should not prevent a Member State from excluding                              certain agricultural products from the scope of a particular aid, notably where no normal market outlets can be found. Moreover,                              aid to certain types of investment should per se not qualify for exemption from the notification requirement of Article 108(3)                              of the Treaty under this Regulation.

(48)To ensure the appropriate balance between minimising distortions of competition and promoting energy and resource efficiency,                              in case of investments on agricultural holdings linked to primary agricultural production this Regulation should provide that                              aid should be granted only for investment linked to the production on farm-level of biofuels or energy from renewable sources                              and only where that production does not exceed the average annual consumption of fuel or energy of the farm. In such case                              aid to biofuels should only be covered in so far as it is granted for sustainable biofuels in line with the Directive 2009/28/EC                              of the European Parliament and the Council(19).

(49)In order to incentivise the shift towards the production of more advanced forms of biofuels, as foreseen by the horizontal                              environmental and energy State aid rules, aid for food based biofuels should be excluded from this Regulation in case of aid                              for investments in connection with the processing of agricultural products.

(50)To encourage and to facilitate the initial establishment of young farmers and the development of small farms which are potentially                              economically viable, it is appropriate to exempt from the notification requirement of Article 108(3) of the Treaty start-up                              aid. In order to ensure the viability of the newly established agricultural activities, the aid should be made conditional                              on the submission of a business plan. The start-up aid should cover only the initial period of the existence of a business                              and not become operating aid.

(51)To help the agricultural sector to face the challenges posed by increased competition and consolidation of downstream markets                              in relation to the marketing of the agricultural products, including in local markets, the setting up of producer groups and                              organisations should be encouraged. It is therefore appropriate to exempt from the notification requirement of Article 108(3)                              of the Treaty start up aid to producer groups and organisations. Only producer groups and organisations that qualify as SMEs                              should benefit from the aid. In order to ensure that the producer group and organisation becomes a viable entity, a business                              plan should be submitted to the competent authority as a condition for the official recognition of a producer group by Member                              States. To avoid providing operating aid and maintain the incentive effect, the maximum aid duration should be limited to                              five years.

(52)To enhance market opportunities and to achieve added value for the agricultural products concerned it is appropriate to encourage                              SMEs to participate in Union or national quality schemes and therefore aid for participation in quality schemes should be                              exempted from the notification requirement of Article 108(3) of the Treaty. Given that it is at the moment of entering such                              quality schemes and in the early years of their participation that additional costs and obligations imposed on the SMEs as                              a result of their participation are not fully remunerated by the market, the direct aid to the beneficiary should be limited                              to new participation and cover a period of not more than five years. In addition, aid in the form of subsidised services should                              be granted towards the costs for compulsory control measures in relation to the quality schemes or towards the costs for market                              research activities or for preparation of application for recognition of Union quality scheme.

(53)To enhance competitiveness and resource efficiency and to improve the environmental performance, the sustainable management                              and overall performance of the SMEs it is appropriate to exempt from the notification requirement of Article 108(3) of the                              Treaty aid for knowledge transfer, information actions and farm advisory services as well as promotion measures.

(54)Good risk and crisis management is a key tool for a sustainable and competitive agricultural sector. Primary agricultural                              production is exposed to particular natural, climatic and health risks and crises. Therefore, risk and crisis management aid                              and the aid for the livestock sector should be limited to SMEs active in primary agricultural production. State aid for making                              good losses caused by adverse climatic events that can be assimilated to natural disasters, aid for combating animal diseases                              and plant pests and aid for paying insurance premiums should be limited to helping beneficiaries facing particular difficulties                              despite having undertaken reasonable efforts to minimise such risks. State aid should not have as its effect to entice beneficiaries                              into taking unnecessary risks. SMEs active in primary agricultural production should themselves bear the consequences of imprudent                              choices of production methods or products.

(55)The Commission has applied Articles 107 and 108 of the Treaty to aid in favour of the conservation of natural and cultural                              heritage in numerous cases, in particular in the framework of the Community Guidelines for State aid in the agriculture and                              forestry sector 2007 to 2013 and Regulation (EC) No 1857/2006. In the period from 2007 to 2013, investment aid for the conservation                              of traditional landscapes and buildings in favour of SMEs has been exempted from the notification requirement under Regulation                              (EC) No 1857/2006, while investment aid for the conservation of traditional landscapes and buildings in favour of large enterprise                              has been subject to the notification requirement and approved by the Commission in accordance with the Community Guidelines                              for State aid in the agriculture and forestry sector 2007 to 2013. During that period the Commission has assessed more than                              87 investment aids concerning the conservation of traditional landscapes and buildings located on agricultural holdings. Heritage                              conservation projects, even carried out by large enterprises, do not typically give rise to any significant distortion of                              competition. It is therefore appropriate that the Commission should make use of the powers conferred on it by Regulation (EC)                              No 994/98, as regards aids in favour of the conservation of natural and cultural heritage.

(56)For aid in favour of the conservation of cultural and natural heritage to be exempted from the notification requirement under                              this Regulation, it should be granted for investments in tangible assets or capital works aimed at the conservation of the                              cultural or natural heritage. The cultural or natural heritage should be located on the agricultural holding of the beneficiary                              and should be officially recognised as such by the competent public authority in the Member State. Given the notification                              threshold for this aid of EUR 500 000 per investment project provided for by this Regulation which is considered a small scale                              infrastructure under the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas                              2014 to 2020, it is appropriate, under this Regulation, to set the aid intensity at up to 100 % of the eligible costs.

(57)Emergency situations caused by natural disasters require urgent action by the granting authorities. It is therefore important                              to ensure a swift implementation of the envisaged aid. The Commission has applied Articles 107 and 108 of the Treaty in a                              considerable number of decisions concerning compensation for damage caused to the agricultural sector by natural disasters.                              The Community Guidelines for State aid in the agriculture and forestry sector 2007 to 2013 already covered the possibility                              to authorise aid schemes to compensate for damages caused by natural disasters. In the period from 2007 to 2012 and in application                              of the Community Guidelines on State aid in the agriculture and forestry sector 2007 to 2013, the Commission approved more                              than 25 aids regarding compensation for damages caused by natural disasters to the agricultural sector. The Commission's experience                              has shown that such measures need to be implemented swiftly in order to be effective. Accordingly, it is necessary to simplify                              the notification procedure for such aids. Moreover, they do not give raise to a significant distortion of competition in the                              internal market due to their compensatory nature and the existence of clear criteria for compatibility with the internal market.                              It is therefore appropriate that the Commission should also make use of the powers conferred on it by Regulation (EC) No 994/98                              as regards aids for compensation for damage caused by natural disasters in the agricultural sector.

(58)Aid to make good damage caused by natural disasters should therefore be available to undertakings in the whole agricultural                              sector and be granted to both SMEs and large enterprises. The conditions to exempt aid to make good damage caused by natural                              disasters follow the already established practice and relate to the formal recognition by the Member States' authorities of                              the character of the event as a natural disaster, to the existence of a direct causal link between the natural disaster and                              the damage suffered by the beneficiary and should ensure that overcompensation is avoided. In particular, Member States should                              avoid overcompensation as a result of the combination of such aid with other compensations received by the beneficiaries including                              payments received under an insurance scheme.

(59)Aid for research and development can contribute to sustainable economic growth and strengthen competitiveness. Based on the                              Commission's experience in applying the Community Guidelines for State aid in the agriculture and forestry sector 2007 to                              2013, the Community Framework for State aid for research and development and innovation(20) and Regulation (EC) No 800/2008 to aid for research and development in the agricultural and forestry sectors, it is appropriate                              to exempt from the notification requirement of Article 108(3) of the Treaty aid for research and development which fulfils                              the conditions laid down in this Regulation. Since the promotion of research and development is an important objective in                              the common interest, this Regulation should require that the research project is of interest of all undertakings active in                              a particular agricultural or forestry sector or sub-sector. The information on the research project and the results of it                              should be made publicly available on internet. Moreover, the results of the research should be available to interested undertakings                              at no costs.

(60)Forestry is an integral part of rural development. The Commission has applied Articles 107 and 108 of the Treaty to undertakings                              active in the forestry sector in numerous decisions, in particular in the framework of the Community Guidelines on State aid                              in the agriculture and forestry sector 2007 to 2013. In the period from 2007 to 2012 the Commission approved 140 aids in favour                              of the forestry sector in accordance with those Guidelines. In the light of the considerable experience gained by the Commission                              in the context of applying those Guidelines to undertakings active in the forestry sector, it is appropriate, with a view                              to simplifying procedures but at the same time ensuring efficient supervision and Commission monitoring, that the Commission                              should also make use of the powers conferred on it by Regulation (EC) No 994/98 as regards aid in favour of the forestry sector.                              According to the Commission's experience aid granted in the forestry sector for measures that are part of the rural development                              programmes and which is either co-financed by the EAFRD or granted as an additional national financing to such co-financed                              measures does not significantly distort competition in the internal market. Moreover, aid for knowledge transfer in the forestry                              sector and aid for advisory services in the forestry sector do not significantly distort competition in the internal market                              even though they are granted outside the rural development programmes. Clear conditions for the compatibility of such measures                              with the internal market should be defined in this Regulation. Those conditions should be consistent as far as possible with                              the rules laid down in Regulation (EU) No 1305/2013 and in the delegated and implementing acts adopted pursuant to that Regulation.

(61)Those categories of aid should, in particular, encompass aid for afforestation and the creation of woodland, aid for agroforestry                              systems, aid for the prevention and restoration of forests damaged by fire, natural disasters, adverse climatic events, plant                              pests or catastrophic events, aid for investments improving the resilience and environmental value of forest ecosystems, aid                              for disadvantages related to Natura 2000 forest areas as defined in Article 3 of Council Directive 92/43/EEC(21) and in Article 3 of Directive 2009/147/EC of the European Parliament and of the Council(22), aid for forest-environmental and climate services and for forest conservation, aid for knowledge transfer and information                              actions, aid for advisory services, aid for infrastructure investments and aid for investments in forestry technologies and                              in the processing mobilising and marketing of forestry products. The aid to the forestry sector should avoid distorting competition                              and be market neutral.

(62)In order to ensure coherence with Regulation (EU) No 1305/2013 and to achieve simplification of the rules to obtain State                              aid clearance for the co-financed part and the additional financing of the national rural development programmes, the aid                              in favour of the forestry sector exempted from the notification requirement of Article 108(3) of the Treaty under this Regulation                              should be identical to the underlying rural development measures and the exempted aid should only be granted pursuant to and                              in conformity with the rural development programme of the Member State concerned. However, the aid intensities and the eligible                              costs should also be in line with the general Union State aid principles and the State aid rules applicable to the agricultural                              sector. Therefore, costs such as working capital that is ancillary to, and linked to new investment should not be eligible                              for aid under this Regulation. In line with the respective rural development programmes as approved by the Commission, the                              investment operations included in the forestry measures could also encompass one-off forestry treatments needed to prepare                              the investment where the objective of the relevant rural development provision so permits. It should be possible for aid for                              knowledge transfer, aid for advisory services and aid for forestry land consolidation to be granted irrespective of whether                              such aid is integrated in the national rural development programme.

(63)Economic diversification and the creation of new economic activities are essential for the development and competitiveness                              of rural areas and in particular for the SMEs which are the backbone of the Union rural economy. Regulation (EU) No 1305/2013                              provides for measures to support non-agricultural business development in rural areas aimed at employment promotion, the setting                              up of quality jobs in rural areas, the maintenance of already existing jobs, a reduction of seasonality fluctuations in employment,                              development of non-agricultural sectors outside agriculture and food processing while fostering at the same time business                              integration and local inter-sectoral links.

(64)To ensure coherence with Regulation (EU) No 1305/2013 and to achieve simplification of the rules to obtain State aid clearance                              for the co-financed part and the additional national financing of the rural development programmes, this Regulation should                              exempt from the notification requirement of Article 108(3) of the Treaty different categories of aid in favour of SMEs active                              in rural areas. Those categories of aid should, in particular, encompass aid for investments concerning the processing of                              agricultural products into non-agricultural products or the production of cotton, aid for business start-ups for non-agricultural                              activities, aid for advisory services, aid for knowledge transfer and information actions and aid for the new participation                              of farmers in quality schemes for cotton and foodstuff and promotion measures in favour of foodstuffs. The aid to be exempted                              from the notification requirement of Article 108(3) of the Treaty under this Regulation should be identical to the underlying                              rural development measures and the exempted aid should only be granted pursuant to and in conformity with the rural development                              programme of the Member State concerned. However, the aid intensities and the eligible costs should also be in line with the                              general Union State aid principles and the horizontal State aid rules. Therefore, costs such as working capital that is ancillary                              to, and linked to new investment should not be eligible for aid under this Regulation.

(65)As regards aid for investments concerning the processing of agricultural products into non-agricultural products, it should                              be specified that investments linked to the production of biofuel or energy from renewable sources should not be eligible                              for aid under this Regulation. In principle, the horizontal environmental and energy State aid rules should apply to such                              investments.

(66)In the case of several categories of aid such as: (a) aid towards the costs of market research activities, product conception                              and design and for the preparation of applications for recognition of quality schemes; (b) aid towards the costs for compulsory                              control measures in relation to the quality schemes; (c) aid for knowledge transfer and information actions; (d) aid for advisory                              services; (e) aid for farm replacements services; (f) aid for promotion measures; (g) aid to compensate for the costs of the                              prevention and eradication of animal diseases and plant pests and (h) aid for the livestock sector the aid is granted to the                              final aid beneficiaries indirectly, in kind, by means of subsidised services. In such cases the aid should be paid to the                              provider of the service or activity in question. When selecting the provider due regard should be given to the respective                              applicable public procurement rules and to the principles of transparency, openness and non- discrimination in the selection                              procedure.

(67)In the light of the Commission's experience in this area, it is in principle necessary to periodically revise State aid policy.                              That is why the period of application of this Regulation should be limited. It is therefore appropriate to lay down transitional                              provisions, including the rules on an adjustment period at the end of validity of this Regulation for exempted aid schemes.                              Such rules should give Member States time to adapt to the possibly new regime,

HAS ADOPTED THIS REGULATION:

## CHAPTER IU.K.**COMMON PROVISIONS**

### Article 1U.K.Scope

1.This Regulation shall apply to the following categories of aid:                  

(a)aid in favour of micro, small and medium sized enterprises (SMEs):                  

active in the agricultural sector, namely primary agricultural production, the processing of agricultural products and the                              marketing of agricultural products, with the exception of Articles 14, 15, 16, 18 and 23 and Articles 25 to 28 which shall                              only apply to SMEs active in the primary agricultural production;                           

for activities falling outside the scope of Article 42 of the Treaty insofar as such aid is granted in accordance with Regulation                              (EU) No 1305/2013 and is either co-financed by the European Agricultural Fund for Rural Development (EAFRD) or granted as                              additional national financing for such co-financed measures.                           

(b)aid for investments for the conservation of cultural and natural heritage located on agricultural holdings;                  

(c)aid in favour of making good the damage caused by natural disasters in the agricultural sector;                  

(d)aid for research and development in the agricultural and forestry sectors;                  

(e)aid in favour of forestry.                  

2.Where Member States deem it appropriate, they may choose to grant aid referred to in paragraphs 1(a), 1(d) and 1(e) of this                        Article under the conditions and in compliance with Regulation (EU) No 651/2014.                  

3.This Regulation shall not apply to aid in favour of:                  

(a)the forestry sector which is not co-financed by the EAFRD or granted as additional national financing for such co-financed                        measures, with the exception of Articles 31, 38, 39 and 43;                  

(b)SMEs for activities falling outside the scope of Article 42 of the Treaty which is not co-financed by the EAFRD or granted                        as additional national financing for such co-financed measure.                  

4.This Regulation shall not apply to:                  

(a)aid schemes provided for in Articles 17, 32 and 33, Article 34(5)(a) to (c), and Articles 35, 40, 41, and 44 of this Regulation,                        if the average annual State aid budget exceeds EUR 150 million, from six months after their entry into force. The Commission                        may decide that this Regulation shall continue to apply for a longer period to any of these aid schemes after having assessed                        the relevant evaluation plan notified by the Member State to the Commission, within 20 working days from the scheme's entry                        into force;                  

(b)any alterations of schemes referred to in paragraph 4(a) of this Article, other than modifications which cannot affect the                        compatibility of the aid scheme under this Regulation or cannot significantly affect the content of the approved evaluation                        plan;                  

(c)aid to export-related activities towards third countries or Member States, namely aid directly linked to the quantities exported,                        to the establishment and operation of a distribution network or to other current costs linked to export activity;                  

(d)aid contingent upon the use of domestic over imported goods.                  

5.With the exception of Article 30, this Regulation shall not apply to:                  

(a)aid schemes which do not explicitly exclude the payment of individual aid in favour of an undertaking which is subject to                        an outstanding recovery order following a previous Commission Decision declaring an aid illegal and incompatible with the                        internal market;                  

(b)ad hoc aid in favour of an undertaking which is subject to an outstanding recovery order following a previous Commission Decision                        declaring an aid illegal and incompatible with the internal market.                  

6.This Regulation shall not apply to aid to undertakings in difficulty with the exception of:                  

(a)aid to make good the damage caused by natural disasters in accordance with Article 30, aid for the costs of the eradication                        of animal diseases in accordance with Article 26(8) and aid for removal and destruction of fallen stock in accordance with                        Article 27(1)(c), (d) and (e);                  

(b)aid for the following events provided that the undertaking became an undertaking in difficulty due to losses or damages caused                        by the event in question:                  

to compensate for losses caused by an adverse climatic event which can be assimilated to a natural disaster in accordance                              with Article 25;                           

aid for the costs of the eradication of plant pests and for making good the damage caused by animal diseases and plant pests                              in accordance with Article 26(8) and (9);                           

aid for the restoration of damage to forests from fires, natural disasters, adverse climatic events which can be assimilated                              to a natural disaster, other adverse climatic events, plant pests, catastrophic events and climate change related events in                              accordance with Article 34(5)(d).                           

7.This Regulation shall not apply to aids which entail, by themselves, by the conditions attached to them or by their financing                        method a non-severable violation of Union law, in particular to:                  

(a)aid where the grant of aid is subject to the obligation for the beneficiary to have its headquarters in the relevant Member                        State or to be predominantly established in that Member State;                  

(b)aid where the grant of aid is subject to the obligation for the beneficiary to use nationally produced goods or national services;                  

(c)aid restricting the possibility for the beneficiaries to exploit the research, development and innovation results in other                        Member States.                  

### Article 2U.K.Definitions

For the purpose of this Regulation the following definitions shall apply:

‘aid’ means any measure fulfilling all the criteria laid down in Article 107(1) of the Treaty;

‘SME’ or ‘micro, small and medium-sized enterprises’ means undertakings fulfilling the criteria laid down in Annex I;

‘agricultural sector’ means all undertakings active in primary agricultural production, processing and marketing of agricultural                              products;                           

‘agricultural product’ means the products listed in Annex I to the Treaty, except the fishery and aquaculture products listed                              in Annex I to Regulation (EU) No 1379/2013 of the European Parliament and of the Council(23);                           

‘primary agricultural production’ means the production of products of the soil and of stock farming, listed in Annex I to                              the Treaty, without performing any further operation changing the nature of such products;                           

‘processing of agricultural products’ means any operation on an agricultural product resulting in a product which is also                              an agricultural product, except on-farm activities necessary for preparing an animal or plant product for first sale;                           

‘marketing of agricultural products’ means holding or display with a view to sale, offering for sale, delivery or any other                              manner of placing on the market, except the first sale by a primary producer to resellers or processors and any activity preparing                              a product for such first sale; a sale by a primary producer to final consumers is considered as marketing of agricultural                              products if it takes place in separate premises reserved for that purpose;                           

‘agricultural holding’ means a unit comprising of land, premises and facilities used for primary agricultural production;

‘natural disasters’ means earthquakes, avalanches, landslides and floods, tornadoes, hurricanes, volcanic eruptions and wild                              fires of natural origin;                           

‘aid scheme’ means any act on the basis of which, without further implementing measures being required, individual aid awards                              may be made to undertakings defined within the act in a general and abstract manner and any act on the basis of which aid                              which is not linked to a specific project may be granted to one or several undertakings for an indefinite period of time and                              for an indefinite amount;                           

‘evaluation plan’ means a document containing at least the following minimum elements: the objectives of the aid scheme to                              be evaluated; the evaluation questions; the result indicators; the envisaged methodology to conduct the evaluation; the data                              collection requirements; the proposed timing of the evaluation, including the date of submission of the final evaluation report;                              the description of the independent body conducting the evaluation or the criteria that will be used for its selection and                              the modalities for ensuring the publicity of the evaluation;                           

‘individual aid’ means:

ad hoc aid; and

awards of aid to individual beneficiaries on the basis of an aid scheme;

‘ad hoc aid’ means aid not granted on the basis of an aid scheme;

‘undertaking in difficulty’ means an undertaking in respect of which at least one of the following circumstances occurs:

in the case of a limited liability company (other than an SME that has been in existence for less than three years), where                                       more than half of its subscribed share capital has disappeared as a result of accumulated losses. This is the case when deduction                                       of accumulated losses from reserves (and all other elements generally considered as part of the own funds of the company)                                       leads to a negative cumulative amount that exceeds half of the subscribed share capital. For the purposes of this provision,                                       ‘limited liability company’ refers in particular to the types of company mentioned in Annex I of Directive 2013/34/EU of the                                       European Parliament and of the Council(24) and ‘share capital’ includes, where relevant, any share premium;                                    

in the case of a company where at least some members have unlimited liability for the debt of the company (other than an SME                                       that has been in existence for less than three), where more than half of its capital as shown in the company accounts has                                       disappeared as a result of accumulated losses. For the purposes of this provision, ‘a company where at least some members                                       have unlimited liability for the debt of the company’ refers in particular to the types of company mentioned in Annex II to                                       Directive 2013/34/EU;                                    

where the undertaking is subject to collective insolvency proceedings or fulfils the criteria under its domestic law for being                                       placed in collective insolvency proceedings at the request of its creditors;                                    

where the undertaking has received rescue aid and has not yet reimbursed the loan or terminated the guarantee, or has received                                       restructuring aid and is still subject to a restructuring plan;                                    

in the case of an undertaking that is not an SME, where, for the past two years:

the undertaking's book debt to equity ratio has been greater than 7,5 and

the undertaking's EBITDA interest coverage ratio has been below 1,0;

‘fallen stock’ means animals which have been killed by euthanasia with or without a definite diagnosis or which have died,                              including stillborn and unborn animals, on a farm or on any premises or during transport, but which have not been slaughtered                              for human consumption;                           

‘adverse climatic event which can be assimilated to a natural disaster’ means unfavourable weather conditions such as frost,                              storms and hail, ice, heavy or persistent rain or severe drought which destroy more than 30 % of the average of the production                              calculated on the basis of:                           

the preceding three-year period; or

a three-year average based on the preceding five-year period, excluding the highest and the lowest entry;

‘other adverse climatic events’ means unfavourable weather conditions which do not meet the conditions of Article 2(16) of                              this Regulation;                           

‘plant pest’ means harmful organisms as defined in Article 2(1)(e) of Council Directive 2000/29/EC(25);                           

‘catastrophic event’ means an unforeseen event of biotic or abiotic nature caused by human action that leads to important                              disturbances of forest structures, eventually causing important economic damage to the forest sectors;                           

‘gross grant equivalent’ means the amount of the aid if it had been provided in the form of a grant to the beneficiary, before                              any deduction of tax or other charges;                           

‘tangible assets’ means assets consisting of land, buildings and plant, machinery and equipment;

‘intangible assets’ means assets that do not have a physical or financial embodiment such as patents, licences, know-how or                              other intellectual property;                           

‘agroforestry systems’ means land use systems where trees are grown in combination with agriculture on the same land;

‘repayable advance’ means a loan for a project which is paid in one or more instalments and the conditions for the reimbursement                              of which depend on the outcome of the project;                           

‘start of works on the project or activity’ means the earlier of either the start of the activities or the construction works                              relating to the investment, or the first legally binding commitment to order equipment or employ services or any other commitment                              that makes the project or activity irreversible; buying land and preparatory works such as obtaining permits and conducting                              feasibility studies are not considered start of works or activity;                           

‘large enterprises’ means undertakings not fulfilling the criteria laid down in Annex I;

‘fiscal successor scheme’ means a scheme in the form of tax advantages which constitutes an amended version of a previously                              existing scheme in the form of tax advantages and which replaces it;                           

‘aid intensity’ means the gross aid amount expressed as a percentage of the eligible costs, before any deduction of tax or                              other charge;                           

‘date of granting the aid’ means the date when the legal right to receive the aid is conferred on the beneficiary under the                              applicable national legal regime;                           

‘Union standard’ means mandatory standard laid down in Union legislation setting the level which individual undertakings must                              achieve, in particular as regards the environment, hygiene and animal welfare; however, standards or targets set at Union                              level which are binding for Member States but not for individual undertakings are not deemed to be Union standards;                           

‘rural development programme’ means rural development programme as provided for in Article 6(1) of Regulation (EU) No 1305/2013;

‘non-productive investment’ means investment which does not lead to a significant increase in the value or profitability of                              the holding;                           

‘investments to comply with an Union standard’ means investments made to comply with an Union standard after the expiry of                              the transitional period provided for in Union legislation;                           

‘young farmer’ means a person who is no more than 40 years of age on the date of submitting the aid application, possesses                              adequate occupational skills and competences and is setting up for the first time in an agricultural holding as a head of                              that holding;                           

‘outermost regions’ means the regions referred to in the first paragraph of Article 349 of the Treaty;

‘smaller Aegean islands’ means the smaller islands referred to in Article 1(2) of Regulation (EU) No 229/2013 of the European                              Parliament and of the Council(26) ;                            

‘less developed regions’ means regions where the gross domestic product (GDP) per capita is less than 75 % of average GDP                              of the EU-27;                           

‘EU-25’ means the 25 Member States of the Union who were Member States of the Union in May 2005;

‘EU-27’ means the 27 Member States of the Union who were Member States of the Union in January 2007;

‘capital works’ means works, undertaken by the farmer personally or by the farmer's workers, that create an asset;

‘food based biofuel’ means a biofuel produced from cereal and other starch rich crops, sugars and oil crops as defined in                              the Commission's Proposal for a Directive of the European Parliament and of the Council amending Directive 98/70/EC relating                              to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable                              sources(27);                           

‘active farmer’ means an active farmer within the meaning of Article 9 of Regulation (EU) No 1307/2013(28) of the European Parliament and of the Council;                           

‘producer group and organisation’ means a group or organisation set up for the purpose of:

adapting the production and output of producers who are members of such producer groups or organisations to market requirements;                                       or                                    

jointly placing goods on the market, including the preparation for sale, centralisation of sales and supply to bulk buyers;                                       or                                    

establishing common rules on production information, with particular regard to harvesting and availability; or

other activities that may be carried out by producer groups or organisations, such as the development of business and marketing                                       skills and the organisation and facilitation of innovation processes;                                    

‘fixed costs arising from participation in quality scheme’ means the costs incurred for entering a supported quality scheme                              and the annual contribution for participating in that quality scheme, including, where necessary, expenditure on checks required                              to verify compliance with the specifications of the quality scheme;                           

‘advice’ means complete advice given in the framework of one and the same contract;

‘member of a farm household’ means a natural or legal person or a group of natural or legal persons, whatever legal status                              is granted to the group and its members by national law, with the exception of farm workers;                           

‘Transmissible Spongiform Encephalopathy (TSE) and Bovine Spongiform Encephalopathy (BSE) test costs’ means all costs, including                              those for test kits and for the taking, transporting, testing, storing and destruction of samples necessary for sampling and                              laboratory testing in accordance with Chapter C of Annex X to Regulation (EC) No 999/2001 of the European Parliament and of                              the Council(29);                           

‘herd book’ means any book, register, file or data medium:

which is maintained by a breeders' organisation or association officially recognised by a Member State in which the breeders'                                       organisation or association was constituted; and                                    

in which pure-bred breeding animals of a given breed are entered or registered with mention of their ancestors;

‘protected animal’ means any animal protected either by Union or by national legislation;

‘research and knowledge-dissemination organisation’ means an entity (such as universities or research institutes, technology                              transfer agencies, innovation intermediaries, research-oriented physical or virtual collaborative entities), irrespective                              of its legal status (organised under public or private law) or way of financing, whose primary goal is to independently conduct                              fundamental research, industrial research or experimental development, or to widely disseminate the results of such activities                              by way of teaching, publication or knowledge transfer. Where such entity also pursues economic activities the financing, the                              costs and the revenues of those economic activities must be accounted for separately. Undertakings that can exert influence                              upon such an entity, in the quality of, for example, shareholders or members, may not enjoy a preferential access to its research                              capacities or to the results generated by it;                           

‘arm's length’ means that the conditions of the transaction between the contracting parties do not differ from those which                              would be stipulated between independent undertakings and contain no element of collusion. Any transaction that results from                              an open, transparent and unconditional procedure is considered as meeting the arm's length principle;                           

‘fast growing trees’ means a short rotation forest, where the minimum time before felling is set to be not less than 8 years                              and the maximum time before felling is set not to exceed 20 years;                           

‘trees for short rotation coppicing’ means tree species of CN code 06 02 9041 to be defined by Member States that consist                              of woody, perennial crops, the rootstock or stools of which remain in the ground after harvesting, with new shoots emerging                              in the following season and with a maximum harvest cycle to be determined by the Member States;                           

‘transaction cost’ means an additional cost linked to fulfilling a commitment, but not directly attributable to its implementation                              or not included in the costs or income foregone that are compensated directly; and which can be calculated on a standard cost                              basis;                           

‘other land manager’ means an undertaking which manages land other than undertaking active in the agricultural sector;

‘processing of agricultural products into non-agricultural products’ means any operation on an agricultural product resulting                              in a product which is not covered by Annex I to the Treaty;                           

‘“a” areas’ means those areas designated in an approved regional aid map for the period from 1 July 2014 to 31 December 2020                              in application of the provisions of Article 107(3)(a) of the Treaty;                           

‘“c” areas’ means those areas designated in an approved regional aid map for the period 1 July 2014 to 31 December 2020 in                              application of the provisions of Article 107(3)(c) of the Treaty;                           

‘sparsely populated areas’ means areas accepted by the Commission as such in the individual decisions on regional aid maps                              for the period from 1 July 2014 to 31 December 2020;                           

‘NUTS 3 area’ means a region specified at level 3 of a common classification of territorial units for statistics in accordance                              with Regulation (EC) No 1059/2003 of the European Parliament and of the Council(30);                           

‘non-predefined “c” areas’ means areas that a Member State at its own discretion designates as ‘c’ areas provided that the                              Member State demonstrates that such areas fulfil certain socioeconomic criteria and that those areas are designated in an                              approved regional aid map for the period 1 July 2014 to 31 December 2020 in application of the provisions of Article 107(3)(c)                              of the Treaty;                           

‘former “a” areas’ means those areas designated as ‘a’ areas in an approved regional map for the period from 1 January 2011                              to 30 June 2014;                           

‘foodstuffs’ means foodstuffs which are not agricultural products and which are listed in Annex I to Regulation (EU) No 1151/2012                              of the European Parliament and of the Council(31).                           

### Article 3U.K.Conditions for exemption

Aid schemes, individual aid granted under aid schemes and ad hoc aid shall be compatible with the internal market within the                     meaning of Article 107(2) or (3) of the Treaty and shall be exempted from the notification requirement of Article 108(3) of                     the Treaty provided that such aid fulfils all the conditions laid down in Chapter I of this Regulation, as well as the specific                     conditions for the relevant category of aid laid down in Chapter III of this Regulation.                  

### Article 4U.K.Notification thresholds

1.This Regulation shall not apply to any individual aid, the gross grant equivalent of which exceeds the following thresholds:                  

(a)aid for investments in tangible assets or intangible assets on agricultural holdings linked to primary agricultural production                        as referred to in Article 14: EUR 500 000 per undertaking per investment project;                  

(b)aid for investments concerning the relocation of a farm building resulting in the modernisation of facilities or in an increase                        in production capacity as referred to in Article 16(4): EUR 500 000 per undertaking per investment project;                  

(c)aid for investments in connection with the processing of agricultural products and the marketing of agricultural products                        as referred to in Article 17: EUR 7,5 million per undertaking per investment project;                  

(d)aid for investments in favour of the conservation of cultural and natural heritage located on the agricultural holding as                        referred to in Article 29: EUR 500 000 per undertaking per investment project;                  

(e)aid for research and development in the agricultural and forestry sectors as referred to in Article 31: EUR 7,5 million per                        project;                  

(f)aid for afforestation and the creation of woodland as referred to in Article 32: EUR 7,5 million per establishment project;                  

(g)aid for agroforestry systems as referred to Article 33: EUR 7,5 million per agroforestry system establishment project;                  

(h)aid for investments improving the resilience and environmental value of forest ecosystems as referred to in Article 35: EUR                        7,5 million per investment project;                  

(i)aid for investments in infrastructure related to the development, modernisation or adaptation of the forestry sector as referred                        to in Article 40: EUR 7,5 million per investment project;                  

(j)aid for investments in forestry technologies and in the processing, mobilising and marketing of forestry products as referred                        to in Article 41: EUR 7,5 million per investment project;                  

(k)aid for investments concerning the processing of agricultural products into non-agricultural products or the production of                        cotton as referred to in Article 44: EUR 7,5 million per investment project.                  

2.The thresholds set out in paragraph 1 shall not be circumvented by the artificial splitting up of the aid schemes or aid projects.                  

### Article 5U.K.Transparency of aid

1.This Regulation shall apply only to aid in respect of which it is possible to calculate precisely the gross grant equivalent                        *ex ante* without need to undertake a risk assessment (‘transparent aid’).                  

2.The following categories of aid shall be considered to be transparent aid:                  

(a)aid comprised in grants and interest rate subsidies;                  

(b)aid comprised in loans, where the gross grant equivalent has been calculated on the basis of the reference rate prevailing                        at the time of the grant;                  

(c)aid comprised in guarantees:                  

where the gross grant equivalent has been calculated on the basis of safe-harbour premiums laid down in a Commission Notice;                              or                           

where before the implementation of the aid, the methodology to calculate the gross grant equivalent of the guarantee has been                              accepted on the basis of the Commission Notice on the application of Articles 87 and 88 of the EC Treaty to State aid in the                              form of guarantees, or any successor notice, following notification of that methodology to the Commission under any regulation                              adopted by the Commission in the State aid area applicable at the time, and the approved methodology explicitly addresses                              the type of guarantee and the type of underlying transaction at stake in the context of the application of this Regulation;                           

(d)aid in the form of tax advantages, where the measure provides for a cap ensuring that the applicable threshold is not exceeded;                  

(e)aid in the form of repayable advances, if the total nominal amount of the repayable advance does not exceed the thresholds                        applicable under this Regulation or if, before implementation of the measure, the methodology to calculate the gross grant                        equivalent of the repayable advance has been accepted following its notification to the Commission.                  

3.For the purpose of this Regulation, the following categories of aid shall not be considered to be transparent aid:                  

(a)aid comprised in capital injections;                  

(b)aid comprised in risk finance measures.                  

### Article 6U.K.Incentive effect

1.This Regulation shall apply only to aid which has an incentive effect.                  

2.Aid shall be considered to have an incentive effect if the beneficiary has submitted a written application for the aid to                        the Member State concerned before work on the project or activity has started. The application for the aid shall contain at                        least the following information:                  

(a)undertaking's name and size;                  

(b)description of the project or the activity, including its start and end dates;                  

(c)location of the project or the activity;                  

(d)list of eligible costs;                  

(e)type (grant, loan, guarantee, repayable advance or other) and amount of public funding needed for the project/activity.                  

3.Ad hoc aid granted to large enterprises shall be considered to have an incentive effect if, in addition to ensuring that the                        condition laid down in paragraph 2 is fulfilled, the Member State has verified, before granting the ad hoc aid concerned,                        that documentation prepared by the beneficiary establishes that the aid will result in one or more of the following:                  

(a)a material increase in the scope of the project or activity due to the aid;                  

(b)a material increase in the total amount spent by the beneficiary on the project or activity due to the aid;                  

(c)a material increase in the speed of completion of the project or activity concerned;                  

(d)in the case of investment ad hoc aid, that the project or activity would not have been carried out as such in the rural area                        concerned or would not have been sufficiently profitable for the beneficiary in the rural area concerned in the absence of                        the aid.                  

4.By way of derogation from paragraphs 2 and 3, measures in the form of tax advantages shall be deemed to have an incentive                        effect if the following conditions are fulfilled:                  

(a)the measure establishes a right to aid in accordance with objective criteria and without further exercise of discretion by                        the Member State; and                  

(b)the measure has been adopted and in force before work on the aided project or activity has started, except in in the case                        of fiscal successor schemes where the activity was already covered by the previous schemes in the form of tax advantages.                  

5.By way of derogation of paragraphs 2, 3 and 4 the following categories of aid are not required to have or shall be deemed                        to have an incentive effect:                  

(a)aid schemes for land consolidation where the conditions laid down in Article 15 or Article 43 are fulfilled and where:                  

the aid scheme establishes a right to aid in accordance with objective criteria and without further exercise of discretion                              by the Member State; and                           

the aid scheme has been adopted and in force before eligible costs under Article 15 or Article 43 are incurred by the beneficiary;

(b)aid for promotion measures in the form of publications aimed at raising awareness of agricultural products among the wider                        public where the conditions laid down in Article 24(2)(b) are fulfilled;                  

(c)aid to compensate for losses caused by adverse climatic event which can be assimilated to a natural disaster where the conditions                        laid down in Article 25 are fulfilled;                  

(d)aid to compensate for the costs of the eradication of animal diseases and plant pests and for losses caused by those animal                        diseases or plant pests where the conditions laid down in Article 26(9) and (10) are fulfilled;                  

(e)aid to cover the costs of the removal and destruction of fallen stock where the conditions laid down in Article 27(1)(c),                        (d) and (e) are fulfilled;                  

(f)aid for investments in favour of the conservation of cultural and natural heritage located on agricultural holdings in accordance                        with Article 29;                  

(g)aid to make good the damage caused by natural disasters where the conditions laid down in Article 30 are fulfilled;                  

(h)aid for research and development in the agricultural and forestry sectors where the conditions laid down in Article 31 are                        fulfilled;                  

(i)aid for the restoration of damage to forests from fires, natural disasters, adverse climatic events, plant pests, animal diseases,                        catastrophic events and climate change related events in accordance with Article 34(5)(d) where the conditions laid down in                        Article 34 are fulfilled.                  

### Article 7U.K.Aid intensity and eligible costs

1.For the purposes of calculating the aid intensity and the eligible costs, all figures used shall be taken before any deduction                        of tax or other charge. The eligible costs shall be supported by documentary evidence which shall be clear, specific and contemporary.                  

2.Value added tax (VAT) shall not be eligible for aid, except where it is non-recoverable under national VAT legislation.                  

3.Where aid is granted in a form other than a grant, the aid amount shall be the gross grant equivalent of the aid.                  

4.Aid payable in several instalments shall be discounted to its value on the date of granting the aid. The eligible costs shall                        be discounted to their value on the date of granting the aid. The interest rate to be used for discounting purposes shall                        be the discount rate applicable on the date of granting the aid.                  

5.Where aid is granted by means of tax advantages, the discounting of aid tranches shall take place on the basis of the discount                        rates applicable at the various times the tax advantage takes effect.                  

6.Where aid is granted in the form of repayable advances which, in the absence of an accepted methodology to calculate their                        gross grant equivalent, are expressed as a percentage of the eligible costs and the measure provides that in the case of a                        successful outcome of the project, as defined on the basis of reasonable and prudent hypothesis, the advances shall be repaid                        with an interest rate at least equal to the discount rate applicable on the date of granting the aid, the maximum aid intensities                        laid down in Chapter III may be increased by 10 percentage points.                  

### Article 8U.K.Cumulation

1.In determining whether the notification thresholds provided for in Article 4 and the maximum aid intensities and maximum aid                        amounts laid down in Chapter III are respected, the total amount of State aid for the aided activity or project or undertaking                        shall be taken into account.                  

2.Where Union funding centrally managed by the institutions, agencies, joint undertakings or other bodies of the Union that                        is not directly or indirectly under the control of the Member State is combined with State aid, only the latter shall be considered                        for determining whether notification thresholds and maximum aid intensities and ceilings are respected, provided that the                        total amount of public funding granted in relation to the same eligible costs does not exceed the most favourable funding                        rates laid down in the applicable rules of Union law.                  

3.Aid with identifiable eligible costs, exempted from the notification requirement of Article 108(3) of the Treaty under this                        Regulation, may be cumulated with:                  

(a)any other State aid, as long as those measures concern different identifiable eligible costs;                  

(b)any other State aid, in relation to the same eligible costs, partly or fully overlapping, only if such cumulation does not                        result in exceeding the highest aid intensity or aid amount applicable to this aid under this Regulation.                  

4.Aid without identifiable eligible costs exempted under Articles 18 and 45 of this Regulation may be cumulated with any other                        State aid with identifiable eligible costs.                  

Aid without identifiable eligible costs may be cumulated with other State aid without identifiable eligible costs, up to the                     highest relevant total financing threshold fixed in the specific circumstances of each case by this or another block exemption                     regulation or decision adopted by the Commission.                  

5.State aid exempted under Sections 1, 2 and 3 of Chapter III of this Regulation shall not be cumulated with payments referred                        to in Articles 81(2) and 82 of Regulation (EU) No 1305/2013 in respect of the same eligible costs if such cumulation would                        result in an aid intensity or aid amount exceeding those laid down in this Regulation.                  

6.State aid exempted under this Regulation shall not be cumulated with any *de minimis* aid in respect of the same eligible costs if such cumulation would result in an aid intensity or aid amount exceeding those                        laid down in Chapter III.                  

7.Aid for investments aimed at the restoration of agricultural production potential as referred to in Article 14(3)(e) shall                        not be cumulated with aid for compensation for material damage referred to in Articles 25, 26 and 30 of this Regulation.                  

8.Start-up aid for producer groups and organisations in the agricultural sector as referred to in Article 19 of this Regulation                        shall not be cumulated with aid for setting-up of producers groups and organisations in the agricultural sector as referred                        to in Article 27 of Regulation (EU) No 1305/2013.                  

Start-up aid for young farmers and start-up aid for the development of small farms as referred to in Article 18 of this Regulation                     shall not be cumulated with business start-up aid for young farmers or the development of small farms as referred to in Article                     19(1)(a)(i) and (iii) of Regulation (EU) No 1305/20013 if such cumulation would result in an aid amount exceeding those laid                     down in this Regulation.                  

### Article 9U.K.Publication and information

1.At the latest 10 working days before the date of entry into force of an aid scheme exempted from the notification requirement                        of Article 108(3) of the Treaty under this Regulation, or the granting of ad hoc aid exempted under this Regulation, Member                        States shall transmit to the Commission, via the Commission's web notification application in accordance with Article 3 of                        Regulation (EC) No 794/2004, a summary information regarding such aid in the standardised format set out in Annex II to this                        Regulation.                  

Within 10 working days of receipt of that summary information, the Commission shall send to the Member State a notice of receipt                     with an identification number of the aid.                  

2.The Member State concerned shall ensure the publication on a comprehensive State aid website at national or regional level,                        of:                  

(a)the summary information referred to in paragraph 1 or a link to it;                  

(b)the full text of each aid referred to in paragraph 1, including its amendments, or a link providing access to the full text;                  

(c)the information referred to in Annex III to this Regulation on each individual aid award exceeding the following:                  

EUR 60 000 for beneficiaries active in the primary agricultural production;

EUR 500 000 for beneficiaries active in the sectors of the processing of agricultural products, the marketing of agricultural                              products, the forestry sector or activities falling outside the scope of Article 42 of the Treaty.                           

3.For aid schemes in the form of tax advantages, that conditions shall be considered fulfilled if Member States publish the                        required information on individual aid amounts in the following ranges in EUR million:                  

(a)0,06-0,5 only for primary agricultural production;                  

(b)0,5-1;                  

(c)1 to 2;                  

(d)2 to 5;                  

(e)5 to 10;                  

(f)10 to 30; and                  

(g)30 and more.                  

4.The information referred to in paragraph 2(c) above shall be organised and accessible in a standardised manner, as described                        in Annex III and shall allow for effective search and download functions. The information referred to in paragraph 2 shall                        be published within six months from the date the aid was granted or, for aid in the form of tax advantage, within one year                        from the date the tax declaration is due, and shall be available for at least 10 years from the date of granting the aid.                  

5.The full text of the aid scheme or of the ad hoc aid referred to in paragraph 1 shall include, in particular, an explicit                        reference to this Regulation, by citing its title and publication reference in the *Official Journal of the European Union* and to the specific provisions of Chapter III concerned by that act, or where applicable, to the national law which ensures                        that the relevant provisions of this Regulation are complied with. It shall be accompanied by its implementing provisions                        and its amendments.                  

6.The Commission shall publish on its website:                  

(a)the summary information referred to in paragraph 1;                  

(b)the links to the State aid websites of all Member States referred to in paragraph 2.                  

7.Member States shall comply with the provisions of paragraphs 2, 3 and 4 within two years from the date of entry into force                        of this Regulation at the latest.                  

### Article 10U.K.Avoidance of double publication

If the individual aid award falls within the scope of Regulation (EU) No 1305/2013 and is either co-financed by the EAFRD                     or granted as additional national financing for such co-financed measures, the Member State may choose not to publish it on                     the State aid website referred to in Article 9(2) of this Regulation, provided that the individual aid award has already been                     published in accordance with Articles 111, 112 and 113 of Regulation (EU) No 1306/2013 of the European Parliament and the                     Council(32). In that case, the Member State shall make a reference to the website referred to in Article 111 of Regulation (EU) No 1306/2013                     on the State aid website referred to Article 9(2) of this Regulation.                  

## CHAPTER IIU.K.**PROCEDURAL REQUIREMENTS**

### Article 11U.K.Withdrawal of the benefit of the block exemption

Where the Member State grants aid allegedly exempted from the notification requirement of Article 108(3) of the Treaty under                     this Regulation without fulfilling the conditions set out in Chapters I to III, the Commission may, after having provided                     the Member State concerned with the possibility to make its views known, adopt a decision stating that all or some of the                     future aid measures adopted by the Member State concerned which would otherwise fulfil the requirements of this Regulation,                     are to be notified to the Commission in accordance with Article 108(3) of the Treaty. The aids to be notified may be limited                     to certain types of aids, to aid granted in favour of certain beneficiaries or to aid adopted by certain authorities of the                     Member State concerned.                  

### Article 12U.K.Reporting

1.Member States shall transmit to the Commission in electronic form an annual report, as referred to in Chapter III of Regulation                        (EC) No 794/2004, on the application of this Regulation in respect of each whole year or each part of the year during which                        this Regulation applies.                  

2.The annual report shall contain also the information concerning the following:                  

(a)animal diseases or plant pest as referred to in Article 26;                  

(b)meteorological information on the type, timing, relative magnitude and location of climatic events which can be assimilated                        to a natural disaster as referred to in Article 25 or natural disasters in the agricultural sector as referred to in Article                        30.                  

### Article 13U.K.Monitoring

Member States shall maintain detailed records with the information and supporting documentation necessary to establish that                     all the conditions laid down in this Regulation are fulfilled. Such records shall be kept for 10 years from the date on which                     the ad hoc aid was granted or the last aid was granted under an aid scheme. The Member State concerned shall provide the Commission,                     within a period of 20 working days or such longer period as may be fixed in the request, with all the information and supporting                     documentation which the Commission considers necessary to monitor the application of this Regulation.                  

## CHAPTER IIIU.K.**CATEGORIES OF AID**

### *SECTION 1*U.K.***Aid in favour of SMEs active in primary agricultural production, the processing of agricultural products and the marketing                              of agricultural products***

#### Article 14U.K.Aid for investments in tangible assets or intangible assets on agricultural holdings linked to primary agricultural production

1.Aid for investments in tangible assets or intangible assets on agricultural holdings linked to the primary agricultural production                        shall be compatible with the internal market within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from                        the notification requirement of Article 108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 14 of                        this Article and in Chapter I.                  

2.The investment may be carried out by one or more beneficiaries or concern a tangible asset or intangible asset used by one                        or more beneficiaries.                  

3.The investment shall pursue at least one of the following objectives:                  

(a)the improvement of the overall performance and sustainability of the agricultural holding, in particular through a reduction                        of production costs or the improvement and re-deployment of production;                  

(b)the improvement of the natural environment, hygiene conditions or animal welfare standards, provided that the investment concerned                        goes beyond Union standards in force;                  

(c)the creation and improvement of infrastructure related to the development, adaptation and modernisation of agriculture, including                        access to farm land, land consolidation and improvement, the supply and saving of energy and water;                  

(d)the achievement of agri-environmental-climate objectives, including the biodiversity conservation status of species and habitat                        as well as enhancing the public amenity value of a Natura 2000 area or other high nature value systems, defined in the national                        or regional rural development programmes of Member States, as long as investments are non-productive;                  

(e)the restoration of production potential damaged by natural disasters, adverse climatic events which can be assimilated to                        natural disasters, animal diseases and plant pests and the prevention of damages caused by those events.                  

4.The investment may be linked to the production at farm-level of biofuels or of energy from renewable sources, provided that                        such production does not exceed the average annual consumption of fuels or energy of the given farm.                  

Where the investment is made for the production of biofuels, the production capacity of the production facilities shall be                     no more than the equivalent to the annual average transport fuel consumption of the agricultural holding and the produced                     biofuel shall not be sold on the market.                  

Where the investment is made for the production of thermal energy and electricity from renewable sources on agricultural holdings,                     the production facilities shall serve only the beneficiary's own energy needs and their production capacity shall be no more                     than the equivalent to the combined average annual energy consumption of thermal energy and electricity on the agricultural                     holding, including the farm household. The selling of electricity into the grid shall only be allowed as far as the annual                     self-consumption limit is respected.                  

Where the investment is carried out by more beneficiaries with the purpose to serve their own biofuel and energy needs, the                     annual average consumption shall be accumulated to the amount equivalent to the average annual consumption of all beneficiaries.                  

The investments in renewable energy infrastructure that consume or produce energy shall comply with minimum standards for                     energy efficiency, where such standards exist at national level.                  

Investments in installations, the primary purpose of which is electricity production from biomass, shall not be eligible for                     aid unless a minimum percentage of heat energy, to be determined by the Member States, is utilised.                  

Member States shall establish thresholds for the maximum proportions of cereals and other starch rich crops, sugars and oil                     crops used for bioenergy production, including biofuels, for different types of installations. Aid to bioenergy investment                     projects shall be limited to bioenergy meeting the applicable sustainability criteria laid down in Union legislation, including                     in Article 17(2) to (6) of Directive 2009/28/EC.                  

5.The investment shall be in conformity with Union legislation and with the national laws of the Member State concerned on environmental                        protection. For investment requiring an environmental impact assessment under Directive 2011/92/EU the aid shall be subject                        to the condition that such assessment shall have been carried out and the development consent shall have been granted for                        the investment project concerned before the date of granting the individual aid.                  

6.The aid shall cover the following eligible costs:                  

(a)the costs for the construction, acquisition, including leasing, or improvement of immovable property, with land only being                        eligible to an extent not exceeding 10 % of the total eligible costs of the operation concerned;                  

(b)the purchase or lease purchase of machinery and equipment up to the market value of the asset;                  

(c)the general costs linked to the expenditure referred to in points (a) and (b), such as architect, engineer and consultation                        fees, fees relating to advice on environmental and economic sustainability, including feasibility studies; feasibility studies                        shall remain eligible expenditure even where, based on their results, no expenditure under points (a) and (b) is incurred;                  

(d)the acquisition or development of computer software and the acquisition of patents, licences, copyrights and trademarks;                  

(e)expenses for non-productive investments linked to the objectives referred to in paragraph 3(d);                  

(f)in the case of irrigation, the costs for investments that fulfil the following conditions:                  

a river basin management plan, as required by Article 13 of Directive 2000/60/EC of the European Parliament and of the Council(33), must have been notified to the Commission for the entire area in which the investment is to take place, as well as in any                              other areas whose environment may be affected by the investment. The measures taking effect under the river basin management                              plan in accordance with Article 11 of that Directive and of relevance to the agricultural sector must be specified in the                              relevant programme of measures. Water metering enabling measurement of water use at the level of the supported investment                              must be in place or must be put in place as part of the investment;                           

the investment must lead to a reduction of previous water use of at least 25 %;

However, as regards point (f) investments affecting bodies of ground- or surface water whose status has been identified as                     less than good in the relevant river basin management plan for reasons related to water quantity as well as investments resulting                     in a net increase of the irrigated area affecting a given body of ground- or surface water shall not be eligible for aid under                     this Article.                  

The conditions of point (f) (i) and (ii) above shall not apply to an investment in an existing installation which affects                     only energy efficiency or to an investment in the creation of a reservoir or to an investment in the use of recycled water                     which does not affect a body of ground- or surface water;                  

(g)in the case of investments aimed at the restoration of agricultural production potential damaged by natural disasters, adverse                        climatic events which can be assimilated to natural disasters, animal diseases or plant pests the eligible costs may include                        the costs incurred for restoring the agricultural production potential up to the level it was at before the occurrence of                        those events;                  

(h)in the case of investments aimed at the prevention of damages caused by natural disasters, adverse climatic events which can                        be assimilated to natural disasters, animal diseases or plant pests, the eligible costs may include the costs of specific                        preventive actions.                  

7.Costs, other than those referred to in paragraph 6(a) und (b) connected with leasing contracts, such as lessor's margin, interest                        refinancing costs, overheads and insurance charges shall not be considered to be eligible costs.                  

Working capital shall not be considered to be an eligible cost.

8.From 1 January 2017, in the case of irrigation, aid shall be paid only by Member States which ensure, in respect of the river                        basin district in which the investment takes place, a contribution of the different water uses to the recovery of the costs                        of water services by the agricultural sector consistent with Article 9(1) first indent of Directive 2000/60/EC having regard                        where appropriate, to the social, environmental and economic effects of the recovery as well as the geographic and climatic                        conditions of the region or regions affected.                  

9.Aid shall not be granted in respect of the following:                  

(a)the purchase of production rights, payment entitlements and annual plants;                  

(b)the planting of annual plants;                  

(c)drainage works;                  

(d)investments to comply with Union standards, with exception of aid granted to young farmers within 24 months from the date                        of their setting-up;                  

(e)the purchase of animals, with exception of aid granted for investments pursuant to paragraph 3(e).                  

10.The aid shall not be limited to specific agricultural products and must therefore be available either to all sectors of the                        primary agricultural production or to the whole plant production sector or to the whole animal production sector. However,                        Member States may exclude certain products because of overcapacity in the internal market or a lack of market outlets.                  

11.The aid referred to in paragraph 1 shall not be granted in contravention of any prohibition or restriction laid down in Regulation                        (EU) No 1308/2013, even where such prohibitions and restrictions only refer to the Union support provided for in that regulation.                  

12.The aid intensity shall be limited to:                  

(a)75 % of the amount of the eligible costs in outermost regions;                  

(b)75 % of the amount of the eligible costs in the smaller Aegean islands;                  

(c)50 % of the amount of the eligible costs in less developed regions and in all regions whose GDP per capita for the period                        from 1 January 2007 to 31 December 2013 was less than 75 % of the average of the EU-25 for the reference period but whose                        GDP per capita is above 75 % of the GDP average of the EU-27;                  

(d)40 % of the amount of the eligible costs in other regions.                  

13.The rates provided for in paragraph 12 may be increased by 20 percentage points, provided that the maximum aid intensity does                        not exceed 90 % for:                  

(a)young farmers, or farmers who have set up during the five years preceding the date of application for aid;                  

(b)collective investments, such as storage facilities which are used by a group of farmers or facilities to prepare the agricultural                        products before marketing, and integrated projects covering several measures provided for in Regulation (EU) No 1305/2013,                        including those linked to a merger of producer organisations;                  

(c)investments in areas facing natural and other specific constraints;                  

(d)operations supported in the framework of the European Innovation Partnership (EIP), such as an investment in a new stable,                        allowing the testing of a new practice of animal housing, which has been developed in an operational group composed of farmers,                        scientists, and animal welfare non-governmental organisation;                  

(e)investments for the improvement of the natural environment, hygiene conditions or animal welfare standards, as referred to                        in paragraph 3(b); in this case the increased rate as provided for in this paragraph shall only apply to the additional costs                        necessary to obtain a level exceeding the Union standards in force and not leading to an increase in production capacity.                  

14.As regards non-productive investments referred to in paragraph 3(d) and investments for the restoration of production potential                        referred to in paragraph 3(e), the maximum aid intensity shall not exceed 100 %.                  

For investments in relation to preventive measures, referred to in paragraph 3(e), the maximum aid intensity shall not exceed                     80 %. However, it may be increased to up to 100 % if the investment is carried out collectively by more than one beneficiary.                  

#### Article 15U.K.Aid for agricultural land consolidation

Aid for agricultural land consolidation shall be compatible with the internal market within the meaning of Article 107(3)(c)                     of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils the conditions                     laid down in Chapter I and is granted towards and limited to the legal and administrative costs, including survey costs, up                     to 100 % of the real costs incurred.                  

#### Article 16U.K.Aid for investments concerning the relocation of farm buildings

1.Aid for investments concerning the relocation of farm buildings shall be compatible with the internal market within the meaning                        of Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where                        it fulfils the conditions laid down in paragraphs 2 to 5 of this Article and in Chapter I.                  

2.The relocation of the farm building shall pursue an objective of public interest.                  

The public interest invoked to justify the granting of aid under this Article shall be specified in the relevant provisions                     of the Member State concerned.                  

3.Where the relocation of a farm building consists of the dismantling, removal and re-building of existing facilities the aid                        intensity shall be limited to 100 % of the real costs incurred for such activities.                  

4.Where, in addition to the dismantling, removal and re-building of existing facilities as referred to in paragraph 3, the relocation                        results in a modernisation of these facilities or in an increase in production capacity the aid intensities for investments                        referred to in Article 14(12) and (13) shall apply in respect to the costs relating to the modernisation of the facilities                        or the increase in the production capacity.                  

For the purpose of this paragraph, the pure replacement of an existing building or facilities by a new up-to-date building                     or facilities without fundamentally changing the production or the technology involved shall not be considered to be related                     to the modernisation.                  

5.The maximum aid intensity may reach up to 100 % of the eligible costs where the relocation concerns activities close to rural                        settlements, with a view to improving the quality of life or increasing the environmental performance of the rural settlement.                  

#### Article 17U.K.Aid for investments in connection with the processing of agricultural products and the marketing of agricultural products

1.Aid for investments in tangible assets or intangible assets in connection with the processing of agricultural products and                        the marketing of agricultural products shall be compatible with the internal market within the meaning of Article 107(3)(c)                        of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils the conditions                        laid down in paragraphs 2 to 10 of this Article and in Chapter I.                  

2.The investment shall concern the processing of agricultural products or the marketing of agricultural products.                  

3.Investments in connection with the production of food based biofuels shall not be eligible for aid under this Article.                  

4.The investment shall be in conformity with Union legislation and with the national laws of the Member State concerned on environmental                        protection. For investment requiring an environmental impact assessment under Directive 2011/92/EU the aid shall be subject                        to the condition that such assessment shall have been carried out and the development consent shall have been granted for                        the investment project concerned before the date of granting the individual aid.                  

5.The aid shall cover the following eligible costs:                  

(a)the construction, acquisition, including leasing, or improvement of immovable property, with land only being eligible to an                        extent not exceeding 10 % of total eligible costs of the operation concerned;                  

(b)the purchase or lease purchase of machinery and equipment up to the market value of the asset;                  

(c)general costs linked to expenditure referred to in points (a) and (b), such as architect, engineer and consultation fees,                        fees relating to advice on environmental and economic sustainability, including feasibility studies; feasibility studies shall                        remain eligible expenditure even where, based on their results, no expenditure under in points (a) and (b) is incurred;                  

(d)acquisition or development of computer software and acquisitions of patents, licenses, copyrights, trademarks.                  

6.Costs, other than those referred to in paragraph 5(a) and (b), connected with leasing contracts, such as lessor's margin,                        interest refinancing costs, overheads and insurance charges shall not be considered to be eligible costs.                  

Working capital shall not be considered to be an eligible cost.

7.Aid shall not be granted in respect of investments to comply with Union standards in force.                  

8.Aid shall not be granted in contravention of any prohibition or restriction laid down in Regulation (EU) No 1308/2013, even                        where such prohibitions and restrictions only refer to Union support provided for in that Regulation.                  

9.The aid intensity shall not exceed:                  

(a)75 % of the amount of the eligible costs in outermost regions;                  

(b)75 % of the amount of the eligible costs in the smaller Aegean islands;                  

(c)50 % of the amount of the eligible costs in less developed regions and in all regions whose GDP per capita for the 2007-2013                        period was less than 75 % of the average of the EU-25 for the reference period but whose GDP per capita is above 75 % of the                        GDP average of the EU-27;                  

(d)40 % of the amount of the eligible costs in other regions.                  

10.The rates referred to in paragraph 9 may be increased by 20 percentage points, provided that the maximum aid intensity does                        not exceed 90 % for operations:                  

(a)linked to a merger of producer organisations; or                  

(b)supported in the framework of the EIP.                  

#### Article 18U.K.Start-up aid for young farmers and the development of small farms

1.Start-up aid for young farmers and start-up aid for the development of small farms shall be compatible with the internal market                        within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article 108(3)                        thereof where it fulfils the conditions laid down in paragraphs 2 to 7 of this Article and in Chapter I.                  

2.The aid shall be granted to young farmers as defined in Article 2(34) of this Regulation or to small farms as defined by Member                        States.                  

The definition of small farms by the Member States shall be the one included and approved by the Commission in the respective                     rural development programmes.                  

Member States shall define upper and lower thresholds for access to start-up aid for young farmers and the development of                     small farms in terms of the production potential of the agricultural holding, measured in standard output, as defined in Article                     5 of Commission Regulation (EC) No 1242/2008(34), or an equivalent. The lower threshold for access to start-up aid for young farmers shall be higher than the upper threshold                     for access to aid for the development of small farms.                  

Aid shall be limited to micro and small enterprises.

3.Where the aid is granted to a young farmer who is setting up a holding in the form of a legal person, the young farmer shall                        exercise effective and long-term control over the legal person in terms of decisions related to management, benefits and financial                        risks. Where several natural persons, including persons who are not young farmers, participate in the capital or management                        of the legal person, the young farmer shall be capable of exercising such effective and long-term control either solely or                        jointly together with other persons. Where a legal person is solely or jointly controlled by another legal person, those requirements                        shall apply to any natural person having control over that other legal person.                  

4.The aid shall be conditional on the submission of a business plan to the competent authority of the Member State concerned,                        the implementation of which shall start within nine months from the date of the adoption of the decision granting the aid.                  

The business plan shall describe at least the following:

(a)in the case of start-up aid to young farmers:                  

the initial situation of the agricultural holding;

milestones and targets for the development of the activities of the agricultural holding;

details of the actions, including those related to environmental sustainability and resource efficiency, required for the                              development of the activities of the agricultural holding, such as investments, training, advice;                           

(b)in the case of start-up aid for the development of small farms:                  

the initial situation of the agricultural holding;

details of actions, including those related to environmental sustainability and resource efficiency, that could support the                              achievement of economic viability, such as investments, training, cooperation.                           

5.For young farmers the business plan referred to in paragraph 4(a) of this Article shall provide that the beneficiary is required                        to fall within the definition of active farmer provided for in Article 2(42) within 18 months from the date of setting up.                        However, where the beneficiary does not possess adequate occupational skills and competences to fall within that definition,                        the beneficiary shall be entitled to receive aid, provided that the beneficiary makes a commitment to acquire those occupational                        skills and competences within 36 months from the date of the adoption of the decision granting the aid. That commitment must                        be included in the business plan.                  

6.Aid shall be provided or paid in at least two tranches or instalments over a maximum period of five years.                  

For young farmers, the last aid tranche or instalment of the aid shall be conditional upon the correct implementation of the                     business plan referred to in paragraph 4(a).                  

7.The aid amount per young farmer shall be based on the socioeconomic situation of the Member State concerned and shall be limited                        to EUR 70 000.                  

The aid amount per small farm shall be limited to EUR 15 000.

#### Article 19U.K.Start-up aid for producer groups and organisations in the agricultural sector

1.Start-up aid for producer groups and organisations shall be compatible with the internal market within the meaning of Article                        107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils                        the conditions laid down in paragraphs 2 to 9 of this Article and in Chapter I.                  

2.Only producer groups or organisations that have been officially recognised by the competent authority of the Member State                        concerned on the basis of a submission of a business plan shall be eligible for aid.                  

3.The aid shall be granted subject to the obligation of the Member State concerned to verify that the objectives of the business                        plan referred to in paragraph 2 have been reached within a period of five years from the date of the official recognition                        of the producer group or organisation.                  

4.The agreements, decisions and concerted practices concluded in the framework of the producer group or organisation shall comply                        with the competition rules as they apply by virtue of Articles 206 to 210 of Regulation (EU) No 1308/2013.                  

5.Aid shall not be granted to:                  

(a)production organisations, entities or bodies such as companies or cooperatives, the objective of which is the management of                        one or more agricultural holdings and which are therefore in effect single producers;                  

(b)agricultural associations, which undertake tasks such as mutual support and farm relief and farm management services, in the                        members' holdings without being involved in the joint adaptation of supply to the market;                  

(c)producer groups, organisations or associations the objectives of which are incompatible with Article 152(1)(c) and (3) and                        Article 156 of Regulation (EU) No 1308/2013.                  

6.The aid shall cover the following eligible costs: the costs of the rental of suitable premises, the acquisition of office                        equipment, including computer hardware and software, administrative staff costs, overheads and legal and administrative fees.                  

Where premises are purchased, the eligible costs for premises shall be limited to rental costs at market rates.

7.The aid shall be paid as a flat rate aid in annual instalments for the first five years from the date on which the producer                        group or organisation was officially recognised by the competent authority on the basis of the business plan referred to in                        paragraph 2.                  

Member States shall only pay the last instalment after having verified the correct implementation of that business plan.

The aid shall be degressive.

8.The aid intensity shall be limited to 100 % of the eligible costs.                  

9.The aid amount shall be limited to EUR 500 000.                  

#### Article 20U.K.Aid for the participation of producers of agricultural products in quality schemes

1.The following categories of aid to producers of agricultural products shall be compatible with the internal market within                        the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof:                  

(a)aid for new participation in quality schemes where it fulfils the conditions laid down in paragraphs 2 to and 6 of this Article                        and in Chapter I;                  

(b)aid towards the costs for compulsory control measures in relation to the quality schemes undertaken pursuant to Union or national                        legislation by or on behalf of the competent authority, where it fulfils the conditions laid down in paragraphs 2, 4, 6, 7                        and 8 of this Article and in Chapter I;                  

(c)aid towards the costs of market research activities, product conception and design and for preparation of applications for                        the recognition of quality schemes where it fulfils the conditions laid down in paragraphs 2, 6, 7 and 8 of this Article and                        in Chapter I.                  

2.The aid referred to in paragraph 1 shall be granted in respect to the following quality schemes:                  

(a)quality schemes established under the following Regulations and provisions:                  

Part II, Title II, Chapter I, Section 2 of Regulation (EU) No 1308/2013 as concerns wine;

Regulation (EU) No 1151/2012;

Council Regulation (EC) No 834/2007(35);                           

Regulation (EC) No 110/2008 of the European Parliament and of the Council(36);                           

Regulation (EU) No 251/2014 of the European Parliament and of the Council(37);                           

(b)quality schemes, including farm certification schemes, for agricultural products recognised by the Member States as complying                        with the following criteria:                  

the specificity of the final product produced under such quality schemes must be derived from a clear obligations to guarantee:
                -  specific product characteristics, or 
                -  specific farming or production methods, or 
                -  the quality of the final product that goes significantly beyond the commercial commodity standards as regards public, animal                                    or plant health, animal welfare or environmental protection;                                  

the quality scheme must be open to all producers;

the quality scheme must involve binding final product specifications and compliance with those specifications must be verified                              by public authorities or by an independent inspection body;                           

the quality scheme must be transparent and assure complete traceability of agricultural products;

(c)voluntary agricultural product certification schemes recognised by the Member State concerned as meeting the requirements                        laid down in the Commission Communication — EU best practice guidelines for voluntary certification schemes for agricultural                        products and foodstuffs(38).                  

3.The aid referred to in paragraph 1(a) shall be granted to producers of agricultural products in the form of an annual incentive                        payment, the level of which shall be determined according to the level of the fixed costs arising from participation in the                        quality schemes.                  

4.The aid referred to in paragraph 1(a) and (b) shall not be granted towards the cost of controls undertaken by the beneficiary                        itself, or where Union legislation provides that the cost of controls is to be met by producers of agricultural products and                        groups thereof, without specifying the actual level of charges.                  

5.The aid referred to in paragraph 1(a) shall be granted for a maximum period of five years and shall be limited to EUR 3 000                        per beneficiary per year.                  

6.The aid shall be accessible to all those eligible undertakings in the area concerned, based on objectively defined conditions.                  

7.The aid referred to in paragraph 1(b) and (c) shall not involve direct payments to the beneficiaries.                  

The aid referred to in paragraph 1(b) and (c) shall be paid to the body responsible for control measures, the research provider                     or the consultancy provider.                  

8.The aid referred to in paragraph 1(b) and (c) shall be limited to 100 % of the real costs incurred.                  

#### Article 21U.K.Aid for knowledge transfer and information actions

1.Aid for knowledge transfer and information actions shall be compatible with the internal market within the meaning of Article                        107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils                        the conditions laid down in paragraphs 2 to 8 of this Article and in Chapter I.                  

2.Aid shall cover vocational training and skills acquisition actions, including training courses, workshops and coaching, demonstration                        activities and information actions.                  

Aid may also cover short-term farm management exchange and farm visits.

Aid to demonstration activities may cover relevant investment costs.

3.The aid shall cover the following eligible costs:                  

(a)the costs of organising the vocational training, skills acquisition actions, including training courses, workshops and coaching,                        demonstration activities or information actions;                  

(b)the costs for travel, accommodation and per diem expenses of the participants;                  

(c)the cost of the provision of replacement services during the absence of the participants;                  

(d)in the case of demonstration projects in relation to investments:                  

the construction, acquisition, including leasing, or improvement of immovable property, with land only being eligible to an                              extent not exceeding 10 % of total eligible costs of the operation concerned;                           

the purchase or lease purchase of machinery and equipment up to the market value of the asset;

general costs linked to expenditure referred to in points (i) and (ii), such as architect, engineer and consultation fees,                              fees relating to advice on environmental and economic sustainability, including feasibility studies; feasibility studies shall                              remain eligible expenditure even where, based on their results, no expenditure under in points (i) and (ii) is incurred;                           

the acquisition or development of computer software and the acquisitions of patents, licences, copyrights and trademarks.

4.The costs referred to in paragraph 3(d) shall only be eligible to the extent used for the demonstration project and for the                        duration period of the demonstration project.                  

Only the depreciation costs corresponding to the life of the demonstration project, as calculated on the basis of generally                     accepted accounting principles, shall be considered as eligible.                  

5.Aid referred to in paragraph 3(a) and (c) shall not involve direct payments to the beneficiaries.                  

The aid referred to in paragraph 3(a) and (c) shall be paid to the provider of the knowledge transfer and information actions.

6.Bodies providing knowledge transfer and information actions shall have the appropriate capacities in the form of staff qualifications                        and regular training to carry out those tasks.                  

The provision of the activities referred to in paragraph 2 may be undertaken by producer groups or other organisations, regardless                     of their size.                  

7.The aid shall be accessible to all those eligible undertakings in the area concerned, based on objectively defined conditions.                  

Where the provision of the activities referred to in paragraph 2 is undertaken by producer groups and organisations, membership                     of such groups or organisations shall not be a condition for access to those activities.                  

Any contribution of non-members towards the administrative costs of the producer group or organisation concerned shall be                     limited to the costs of providing the activities referred to in paragraph 2.                  

8.The aid intensity shall be limited to 100 % of the eligible costs.                  

In the case of demonstration projects referred to in paragraph 3(d) the maximum aid amount shall be limited to EUR 100 000                     over 3 fiscal years.                  

#### Article 22U.K.Aid for advisory services

1.Aid for advisory services shall be compatible with the internal market within the meaning of Article 107(3)(c) of the Treaty                        and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils the conditions laid down                        in paragraphs 2 to 8 of this Article and in Chapter I.                  

2.The aid shall be designed to help undertakings active in the agricultural sector and young farmers benefit from the use of                        advisory services for the improvement of the economic and environmental performance as well as the climate friendliness and                        resilience of their undertaking or investment.                  

3.The advice shall be linked to at least one Union priority for rural development in accordance with Article 5 of Regulation                        (EU) No 1305/2013 and shall cover as a minimum one of the following elements:                  

(a)obligations deriving from the statutory management requirements or standards for good agricultural and environmental conditions                        provided for in Chapter I of Title VI of Regulation (EU) No 1306/2013;                  

(b)where applicable, the agricultural practices beneficial for the climate and the environment laid down in Chapter 3 of Title                        III of Regulation (EU) No 1307/2013 and the maintenance of the agricultural area referred to in Article 4(1)(c) of that Regulation;                  

(c)measures aiming at modernisation, competitiveness building, sectoral integration, innovation, market orientation as well as                        the promotion of entrepreneurship;                  

(d)requirements as defined by Member States for implementing Article 11(3) of Directive 2000/60/EC of the European Parliament                        and of the Council;                  

(e)requirements as defined by Member States for implementing Article 55 of Regulation (EC) No 1107/2009 of the European Parliament                        and of the Council(39), and in particular the compliance with the general principles of integrated pest management as referred to in Article 14                        of Directive 2009/128/EC of the European Parliament and of the Council(40);                  

(f)where relevant, occupational safety standards or safety standards linked to the farm;                  

(g)specific advice for farmers setting up for the first time, including advice on economic and environmental sustainability.                  

4.Advice may also cover issues, other than those referred to in paragraph 3 of this Article, related to climate change mitigation                        and adaptation, biodiversity and protection of water as laid down in Annex I to Regulation (EU) No 1307/2013 or linked to                        the economic and environmental performance of the agricultural holding including competitiveness aspects. This may include                        advice for the development of short supply chains, organic farming and health aspects of animal husbandry.                  

5.The aid shall not involve direct payments to the beneficiaries. The aid shall be paid to the advisory service provider.                  

6.The bodies selected to provide the advisory service shall have the appropriate resources in the form of regularly trained                        and qualified staff and advisory experience and reliability with respect to the fields they advise in.                  

The provision of advisory service may be undertaken by producer groups or other organisations, regardless of their size.

When providing advice, the provider of the advisory service shall respect the non-disclosure obligations referred to in Article                     13(2) of Regulation (EU) No 1306/2013.                  

7.The aid shall be accessible to all those eligible undertakings in the area concerned, based on objectively defined conditions.                  

Where the provision of advisory services is undertaken by producer groups and organisations, membership of such groups or                     organisations shall not be a condition for access to the service.                  

Any contribution of non-members towards the administrative costs of the group or organisation concerned shall be limited to                     the costs of providing the advisory service.                  

8.The amount of aid shall be limited to EUR 1 500 per advice.                  

#### Article 23U.K.Aid for farm replacement services

1.Aid for farm replacement services shall be compatible with the internal market within the meaning of Article 107(3)(c) of                        the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils the conditions                        laid down in paragraphs 2 to 5 of this Article and in Chapter I.                  

2.The aid shall cover the real costs incurred for the replacement of a farmer, a natural person who is a member of the farm                        household, or a farm worker, during their absence from work due to illness, including illness of their child, holidays, maternity                        and parental leave or in case of death.                  

3.The total duration of the replacement shall be limited to 3 months per year per beneficiary, with the exception of replacement                        for maternity and parental leave which shall be limited to 6 months in each case.                  

4.The aid shall not involve direct payments to the beneficiaries.                  

The aid shall be paid to the provider of the farm replacement service.

The provision of farm replacement services may be undertaken by producer groups and organisations, regardless of their size.                     In such case, membership of such groups or organisations shall not be a condition for access to the service.                  

5.The aid intensity shall be limited to 100 % of the real costs incurred.                  

#### Article 24U.K.Aid for promotion measures in favour of agricultural products

1.Aid for promotion measures in favour of agricultural products shall be compatible with the internal market within the meaning                        of Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where                        it fulfils the conditions laid down in paragraphs 2 to 8 of this Article and in Chapter I.                  

2.The aid shall cover the costs for:                  

(a)the organisation of and participation in competitions, trade fairs and exhibitions;                  

(b)publications aimed at raising awareness of agricultural products among the wider public.                  

3.The publications referred to in paragraph 2(b) shall not refer to any particular undertaking, brand name or origin.                  

However that restriction shall not apply to reference to the origin of agricultural products covered by:

(a)quality schemes as referred to in Article 20(2)(a), provided that the reference corresponds exactly to that protected by the                        Union;                  

(b)quality schemes as referred to in Article 20(2)(b) and (c), provided that the reference is secondary in the message.                  

4.The aid shall cover the following eligible costs for the organisation of and participation in competitions, trade fairs and                        exhibitions referred to in paragraph 2(a):                  

(a)participation fees;                  

(b)travel costs and costs for the transportation of animals;                  

(c)costs of publications and websites announcing the event;                  

(d)the rent of exhibition premises and stands and costs of their installation and dismantling;                  

(e)symbolic prizes up to a value of EUR 1 000 per prize and per winner of a competition.                  

5.The aid shall cover the following eligible cost for publications aimed at raising awareness of agricultural products among                        the wider public referred to in paragraph 2(b):                  

(a)costs of publications in print- and electronic media, websites, and spots in electronic media, on radio or television, aimed                        at presenting factual information on beneficiaries from a given region or producing a given agricultural product, provided                        that the information is neutral and that all beneficiaries concerned have equal opportunities to be represented in the publication;                  

(b)costs for the dissemination of scientific knowledge and factual information on:                  

quality schemes as referred to in Article 20(2) open to agricultural products from other Member States and third countries;

generic agricultural products and their nutritional benefits and suggested uses for them.

6.The aid shall be granted:                  

(a)in kind; or                  

(b)on the basis of the reimbursement of the real costs incurred by the beneficiary.                  

Where the aid is granted in kind the aid shall not include direct payments to the beneficiaries but shall be paid to the provider                     of the promotion measures.                  

The provision of promotion measures may be undertaken by producer groups or other organisations, regardless of their size.

The aid for symbolic prizes referred to in paragraph 4(e) shall only be paid to the provider of the promotion measures if                     the prize has been actually awarded and upon presentation of a proof of the award.                  

7.Aid for promotion measures shall be accessible to all eligible undertakings in the area concerned, based on objectively defined                        conditions.                  

Where the promotion measure is undertaken by producer groups and organisations, participation shall not be subject to membership                     of these groups or organisations and any contribution in terms of administration fees for the group or organisation shall                     be limited to the cost of providing the promotion measures.                  

8.The aid intensity shall be limited to 100 % of the eligible costs.                  

#### Article 25U.K.Aid to compensate for damage caused by adverse climatic event which can be assimilated to a natural disaster

1.Aid to compensate SMEs active in the primary agricultural production for damage caused by an adverse climatic event which                        can be assimilated to a natural disaster shall be compatible with the internal market within the meaning of Article 107(3)(c)                        of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils the conditions                        laid down in paragraphs 2 to 10 of this Article and in Chapter I.                  

2.Aid granted under this Article shall be subject to the following conditions:                  

(a)the competent authority of the Member State has formally recognised the character of the event as an adverse climatic event                        which can be assimilated to a natural disaster; and                  

(b)there is a direct causal link between the adverse climatic event which can be assimilated to a natural disaster and the damage                        suffered by the undertaking.                  

3.The aid shall be paid directly to the undertaking concerned or to a producer group or organisation of which that undertaking                        is a member.                  

Where the aid is paid to a producer group or organisation, the amount of aid shall not exceed the amount of aid to which that                     undertaking is eligible.                  

4.Aid schemes shall be established within three years from the date of the occurrence of the adverse climatic event which can                        be assimilated to a natural disaster.                  

The aid shall be paid out within four years from that date.

5.The eligible costs shall be the damage incurred as a direct consequence of the adverse climatic event which can be assimilated                        to a natural disaster, as assessed either by a public authority, by an independent expert recognised by the granting authority                        or by an insurance undertaking.                  

That damage shall include the following:

(a)the loss of income from the full or partial destruction of the agricultural production and the means of production as referred                        to in paragraph 6;                  

(b)the material damage as referred to in paragraph 7.                  

6.The loss of income shall be calculated by subtracting:                  

(a)the result of multiplying the quantity of the agricultural products produced in the year of the adverse climatic event which                        can be assimilated to a natural disaster, or each following year affected by the full or partial destruction of the means                        of production, by the average selling price obtained during that year;                  

from

(b)the result of multiplying the average annual quantity of agricultural products produced in the three-year period preceding                        the adverse climatic event which can be assimilated to a natural disaster, or a three-year average based on the five-year                        period preceding the adverse climatic event which can be assimilated to a natural disaster, excluding the highest and lowest                        entry by the average selling price obtained.                  

That reduction may be calculated either at annual farm production level or at crop or livestock level.

That amount may be increased by other costs incurred by the beneficiary due to the adverse climatic event which can be assimilated                     to a natural disaster.                  

That amount shall be reduced by any costs not incurred because of the adverse climatic event which can be assimilated to a                     natural disaster.                  

Indexes may be used in order to calculate the agricultural production of the beneficiary provided that the calculation method                     used permits the determination of the real loss of the beneficiary in the given year.                  

7.The material damage to assets such as farm buildings, equipment and machinery, stocks and means of production caused by the                        adverse climatic event which can be assimilated to a natural disaster shall be calculated on the basis of the repair cost                        or economic value of the affected asset before the adverse climatic event that can be assimilated to a natural disaster.                  

It shall not exceed the repair cost or the decrease in fair market value caused by the disaster, namely the difference between                     the asset's value immediately before and immediately after the adverse climatic event which can be assimilated to a natural                     disaster.                  

Where the reduction of the beneficiary's income referred to in paragraph 6 is calculated on the basis of crop or livestock                     level, only the material damage related to that crop or livestock shall be taken into account.                  

8.The calculation of the damage incurred due to the adverse climatic event which can be assimilated to a natural disaster shall                        be made at the level of the individual beneficiary.                  

9.Aid granted under this Article shall be reduced by 50 % unless it is granted to beneficiaries who have taken out insurance                        covering at least 50 % of their average annual production or production-related income and the statistically most frequent                        climatic risks in the Member State or region concerned for which insurance coverage is provided.                  

10.The aid and any other payments received to compensate for the losses, including payments under other national or Union measures                        or insurance policies for the damage receiving aid, shall be limited to 80 % of the eligible costs.                  

The aid intensity may be increased to 90 % in areas facing natural constraints.

#### Article 26U.K.Aid for the costs of the prevention, control and eradication of animal diseases and plant pests and aid to make good the damage                        caused by animal diseases or plant pests

1.Aid to SMEs active in primary agricultural production for the costs of the prevention, control and eradication of animal diseases                        or plant pests and aid to compensate such undertakings for losses caused by those animal diseases or plant pests shall be                        compatible with the internal market within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the notification                        requirement of Article 108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 13 of this Article and                        in Chapter I.                  

2.Aid shall only be paid:                  

(a)in relation to animal diseases or plant pests for which Union or national rules exist, whether laid down by law, regulation                        or administrative action; and                  

(b)as part of:                  

a public programme at Union, national or regional level for the prevention, control or eradication of the animal disease or                              the plant pest concerned; or                           

emergency measure imposed by competent authority; or

measures to eradicate or contain a plant pest implemented in accordance with Council Directive 2000/29/EC.

The programme and measures referred to in point (b) shall contain a description of the prevention, control or eradication                     measures concerned.                  

3.The aid shall not relate to measures in respect of which Union legislation provides that the cost of such measures is to be                        borne by the beneficiary, unless the cost of such measures is entirely offset by compulsory charges on the beneficiaries.                  

4.As regards animal diseases, the aid shall only be granted in respect of animal diseases referred to in the list of animal                        diseases established by the World Organisation for Animal Health or the animal diseases and zoonoses listed in Annexes I and                        II to Regulation (EU) No YYY/2014 of the European Parliament and of the Council(41).                  

5.Aid shall be paid directly to the undertaking concerned or to a producer group or organisation of which that undertaking is                        a member.                  

Where the aid is paid to a producer group or organisation, the amount of aid shall not exceed the amount of aid to which that                     undertaking is eligible.                  

6.Aid schemes shall be introduced within three years from the date of the occurrence of the cost or loss caused by the animal                        disease or plant pest.                  

Aid shall be paid out within four years from that date.

7.In the case of prevention measures, the aid shall cover the following eligible costs:                  

(a)health checks;                  

(b)analyses, including in-vitro diagnostics;                  

(c)tests and other screening measures, including TSE and BSE tests;                  

(d)the purchase, storage, administration and distribution of vaccines, medicines, substances for the treatment of animals and                        plant protection products;                  

(e)the preventive slaughtering or culling of animals or the destruction of animal products and plants and the cleaning and disinfection                        of the holding and equipment.                  

8.In the case of control and eradication measures, the aid shall cover the following eligible costs:                  

(a)tests and other screening measures in case of animal diseases, including TSE and BSE tests;                  

(b)the purchase, storage, administration and distribution of vaccines, medicines, substances for the treatment of animals and                        plant protection products;                  

(c)the slaughter or culling and destruction of animals and the destruction of products linked to them, or destruction of plants,                        including those that die or are destroyed as a result of vaccinations or other measures ordered by the competent authorities                        and the cleaning and disinfection of the holding and equipment.                  

9.In the case of aid to make good the damage caused by animal diseases or plant pests, compensation shall be calculated only                        in relation to:                  

(a)the market value of the animals slaughtered or culled or that have died or the products, linked to them, or the plants destroyed:                  

as a result of the animal disease or the plant pest;

as part of a public programme or measure as referred to in paragraph 2(b).

That market value shall be established on the basis of the value of the animals, products and plants immediately before any                     suspicion of the animal disease or plant pest arose or was confirmed.                  

(b)the loss of income due to quarantine obligations, difficulties in restocking or replanting and obligatory crop-rotation imposed                        as part of a public programme or measure as referred to in paragraph 2(b).                  

That amount shall be reduced by any costs not directly incurred due to the animal disease or plant pest which would otherwise                     have been incurred by the beneficiary.                  

10.The aid to make good the damage caused by animal diseases or plant pests shall be limited to costs and damage caused by animal                        diseases and plant pests for which the competent authority:                  

(a)has formally recognised an outbreak, in the case of an animal disease; or                  

(b)has formally acknowledged their presence, in the case of plants pests.                  

11.Aid in relation to the eligible costs referred to in paragraph 7 and 8 shall be granted in kind and shall be paid to the provider                        of the prevention and eradication measures.                  

By way of derogation from the first subparagraph of this paragraph, aid in relation to the eligible costs referred to in the                     following paragraphs may be granted directly to the beneficiary on the basis of reimbursement of the real costs incurred by                     the beneficiary:                  

(a)paragraphs 7(d) and 8(b) in the case of animal diseases or plant pests; and                  

(b)paragraphs 7(e) and 8(c) in the case of plant pests and for the cleaning and disinfection of the holding and equipment.                  

12.No individual aid shall be granted where it is established that the animal disease or the infestation with the plant pest                        was caused deliberately or by the negligence of the beneficiary.                  

13.The aid and any other payments received by the beneficiary, including payments under other national or Union measures or insurance                        policies for the same eligible costs as referred to in paragraphs 7, 8 and 9 shall be limited to 100 % of the eligible costs.                  

#### Article 27U.K.Aids to the livestock sector and aid for fallen stock

1.The following aid to livestock breeders shall be compatible with the internal market within the meaning of Article 107(3)(c)                        of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils the conditions                        laid down in paragraphs 2 and 3 of this Article and in Chapter I:                  

(a)aid at a rate of up to 100 % of the administrative costs of the establishment and maintenance of herd books;                  

(b)aid at a rate of up to 70 % of the costs of tests performed by or on behalf of third parties, to determine the genetic quality                        or yield of livestock, with the exception of controls undertaken by the owner of the livestock and routine controls of milk                        quality;                  

(c)aid at a rate of up to 100 % of the costs of the removal of fallen stock, and 75 % of the costs of the destruction of such                        fallen stock, or aid up to an equivalent aid intensity towards the costs of premiums paid by farmers for insurance covering                        the costs of the removal and destruction of fallen stock;                  

(d)aid at a rate of up to 100 % of the costs of the removal and destruction of fallen stock where the aid is financed through                        fees or through compulsory contributions destined for the financing of the destruction of such fallen stock, provided that                        such fees or contributions are limited to and directly imposed on the meat sector;                  

(e)aid at a rate of 100 % for the costs of the removal and destruction of fallen stock where there is an obligation to perform                        TSE tests on the fallen stock concerned or in case of an outbreak of an animal disease referred to in Article 26(4).                  

2.The aid referred to in paragraph 1(c), (d) and (e) shall be conditional on the existence of a consistent monitoring programme                        which ensures the safe disposal of all fallen stock in the Member State.                  

The aid towards the costs of premiums paid by farmers for insurance covering the costs of the removal and destruction of fallen                     stock referred to in paragraph 1(c) of this Article shall comply with the conditions laid down in Article 28(2).                  

3.The aid shall be provided in kind and shall not involve direct payments to the beneficiaries.                  

In order to facilitate the administration of the aid referred to in paragraph 1(c), (d) and (e) the aid may be paid to economic                     operators or bodies that:                  

(a)are active downstream from the undertakings active in the livestock sector; and                  

(b)provide services linked to the removal and destruction of fallen stock.                  

#### Article 28U.K.Aid for the payment of insurance premiums

1.Aid granted to SMEs active in primary agricultural production for the payment of insurance premiums shall be compatible with                        the internal market within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement                        of Article 108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 6 of this Article and in Chapter I.                  

2.The aid shall not:                  

(a)constitute a barrier to the operation of the internal market for insurance services;                  

(b)be limited to insurance provided by a single insurance company or group of companies;                  

(c)be made subject to the condition that the insurance contract be taken out with a company established in the Member State concerned.                  

3.The insurance shall be intended to cover losses caused by any of the following:                  

(a)natural disasters;                  

(b)an adverse climatic event which can be assimilated to a natural disaster and other adverse climatic events;                  

(c)animal diseases or plant pest;                  

(d)protected animals.                  

4.The insurance shall:                  

(a)compensate only the cost of making good the losses referred to in paragraph 3;                  

(b)not require or specify the type or quantity of future agricultural production.                  

5.Member States may limit the amount of the insurance premium that is eligible for aid by applying appropriate ceilings.                  

6.The aid intensity shall be limited to 65 % of the costs of the insurance premium.                  

### *SECTION 2*U.K.***Aid for investments in favour of conservation of cultural and natural heritage located on agricultural holdings***

#### Article 29U.K.Aid for investments in favour of the conservation of cultural and natural heritage located on agricultural holdings

1.Aid for investments aimed at the conservation of cultural and natural heritage located on the agricultural holding shall be                        compatible with the internal market within the meaning of Article 107(3) of the Treaty and shall be exempted from the notification                        requirement of Article 108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 6 of this Article and in                        Chapter I.                  

2.The investment shall comply with Union legislation and with the national laws of the Member State concerned.                  

3.The aid shall be granted for cultural and natural heritage in form of natural landscapes and buildings which is formally recognised                        as cultural or natural heritage by the competent public authorities of the Member State concerned.                  

4.The aid shall cover the following eligible costs intended for the conservation of cultural and natural heritage:                  

(a)investment costs in tangible assets;                  

(b)capital works.                  

5.The aid intensity shall be limited to 100 % of the eligible costs.                  

6.Aid for capital works shall be limited to EUR 10 000 per year.                  

### *SECTION 3*U.K.***Aid to make good the damage caused by natural disasters in the agricultural sector***

#### Article 30U.K.Aid to make good the damage caused by natural disasters in the agricultural sector

1.Aid schemes to make good the damage caused by natural disasters shall be compatible with the internal market within the meaning                        of Article 107(2)(b) of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where                        it fulfils the conditions laid down in paragraphs 2 to 8 of this Article and in Chapter I.                  

2.Aid granted under this Article shall be subject to the following conditions:                  

(a)the competent authority of the Member State has formally recognised the character of the event as a natural disaster; and                  

(b)there is a direct causal link between the natural disaster and the damage suffered by the undertaking.                  

3.Aid shall be paid directly to the undertaking concerned or to a producer group or organisation of which that undertaking is                        a member.                  

Where the aid is paid to a producer group or organisation, the amount of aid shall not exceed the amount of aid to which that                     undertaking is eligible.                  

4.Aid schemes related to a specific natural disaster shall be established within three years from the date of the occurrence                        of the natural disaster.                  

The aid shall be paid out within four years from that date.

5.The eligible costs shall be the damage incurred as a direct consequence of the natural disaster, as assessed either by a public                        authority, by an independent expert recognised by the granting authority or by an insurance undertaking.                  

That damage may include the following:

(a)material damage to assets, such as buildings, equipment, machinery, stocks and means of production;                  

(b)loss of income resulting from the full or partial destruction of the agricultural production and the means of agricultural                        production.                  

The damage shall be calculated at the level of the individual beneficiary.

6.The calculation of the material damage shall be based on the repair cost or economic value of the affected asset before the                        disaster. It shall not exceed the repair cost or the decrease in fair market value caused by the disaster, namely the difference                        between the property's value immediately before and immediately after the disaster.                  

7.The loss of income shall be calculated by subtracting:                  

(a)the result of multiplying the quantity of the agricultural products produced in the year of the natural disaster, or in each                        following year affected by the full or partial destruction of the means of production, by the average selling price obtained                        during that year,                  

from

(b)the result of multiplying the average annual quantity of agricultural products produced in the three-year period preceding                        the natural disaster or a three year average based on the five-year period preceding the natural disaster, excluding the highest                        and lowest entry by the average selling price obtained.                  

That amount may be increased by other costs incurred by the beneficiary due to the adverse climatic event which can be assimilated                     to a natural disaster.                  

That amount shall be reduced by any costs not incurred because of the natural disaster.

Indexes may be used in order to calculate the annual agricultural production of the beneficiary provided that the calculation                     method used permits the determination of the real loss of the beneficiary in the given year.                  

8.The aid and any other payments received to compensate the damage, including payments under insurance policies, shall be limited                        to 100 % of the eligible costs.                  

### *SECTION 4*U.K.***Aid for research and development in the agricultural and forestry sectors***

#### Article 31U.K.Aid for research and development in the agricultural and forestry sectors

1.Aid for research and development in the agricultural and forestry sectors shall be compatible with the internal market within                        the meaning of Article 107(3) of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof                        where it fulfils the conditions laid down in paragraphs 2 to 7 of this Article and in Chapter I.                  

2.The aided project shall be of interest to all undertakings active in the particular agricultural or forestry sector or sub-sector                        concerned.                  

3.Prior to the date of the start of the aided project the following information shall be published on the internet:                  

(a)that the aided project is to be carried out;                  

(b)the goals of the aided project;                  

(c)an approximate date for the publication of the results expected from the aided project;                  

(d)the place of publication of the results expected from the aided project on the internet;                  

(e)a reference that the results of the aided project are available to all undertakings active in the particular agricultural                        and forestry sector or sub-sector concerned at no cost.                  

4.The results of the aided project shall be made available on internet from the end date of the aided project or the date, on                        which any information concerning those results is given to members of any particular organisation, whatever comes first. The                        results shall remain available on internet for a period of at least 5 years starting from the end date of the aided project.                  

5.Aid shall be granted directly to the research and knowledge-dissemination organisation.                  

The aid shall not involve payments to undertakings active in the agricultural sector based on the price of the agricultural                     products.                  

6.The eligible costs shall be the following:                  

(a)personnel costs related to researchers, technicians and other supporting staff to the extent employed on the project;                  

(b)costs of instruments and equipment to the extent and for the period used for the project. Where such instruments and equipment                        are not used for their full life for the project, only the depreciation costs corresponding to the life of the project, as                        calculated on the basis of generally accepted accounting principles are considered as eligible;                  

(c)costs of buildings and land, to the extent and for the duration period used for the project. With regard to buildings, only                        the depreciation costs corresponding to the life of the project, as calculated on the basis of generally accepted accounting                        principles, are considered as eligible. For land, costs of commercial transfer or actually incurred capital costs are eligible;                  

(d)costs of contractual research, knowledge and patents bought or licensed from outside sources at arm's length conditions, as                        well as costs of consultancy and equivalent services used exclusively for the project;                  

(e)additional overheads and other operating expenses, including costs of materials, supplies and similar products, incurred directly                        as a result of the project.                  

7.The aid intensity shall be limited to 100 % of the eligible costs.                  

### *SECTION 5*U.K.***Aid in favour of forestry***

#### Article 32U.K.Aid for afforestation and the creation of woodland

1.Aid for afforestation and the creation of woodland granted to public and private land holders and their associations shall                        be compatible with the internal market within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the                        notification requirement of Article 108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 16 of this                        Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The legal basis for the aid shall specify that the aid shall not be put into effect before the approval of the relevant rural                        development programme by the Commission.                  

4.In the case of afforestation of State-owned land, aid shall only be granted if the body managing such land is a private body                        or a municipality.                  

5.Limitations on ownership of forests, referred to in paragraph 4 shall not apply to the tropical or subtropical forests and                        to the wooded areas of the territories of the Azores, Madeira, the Canary islands, the smaller Aegean islands and the French                        overseas departments.                  

6.Aid shall be granted for afforestation and the creation of woodland on agricultural land and on non-agricultural land.                  

7.The aid for afforestation and the creation of woodland shall cover the costs of establishment and an annual premium per hectare.                  

The aid for afforestation and the creation of woodland may cover investment operations.

Aid for afforestation of land owned by public authorities or for fast growing trees shall cover only the costs of establishment.

8.Aid for afforestation and the creation of woodland related to investment operations shall cover the following eligible costs:                  

(a)the construction, acquisition, including leasing, or improvement of immovable property, with land only being eligible to an                        extent not exceeding 10 % of the total eligible costs of the operation concerned;                  

(b)the purchase or lease purchase of machinery and equipment up to the market value of the asset;                  

(c)general costs linked to the expenditure referred to in points (a) and (b), such as architect, engineer and consultation fees,                        fees relating to advice on environmental and economic sustainability, including feasibility studies; feasibility studies shall                        remain eligible expenditure even where, based on their results, no expenditure under in points (a) and (b) is being incurred;                  

(d)the acquisition or development of computer software and the acquisitions of patents, licences, copyrights, trademarks;                  

(e)the costs of establishing forest management plans or equivalent instrument.                  

Working capital shall not be considered to be an eligible cost.

9.The investment operations shall be in conformity with Union legislation and with national laws of the Member State concerned                        on environmental protection. For investment operations requiring an environmental impact assessment under Directive 2011/92/EU                        the aid shall be subject to the condition that such assessment shall have been carried out and the development consent shall                        have been granted for the investment project concerned before the date of granting the individual aid.                  

10.The following costs of establishment may be eligible:                  

(a)the costs of the plantation and propagation material;                  

(b)the plantation costs and the costs directly linked to the plantation;                  

(c)the cost for other related operations such as storing and treatments of seedlings with the necessary prevention and protection                        materials;                  

(d)the costs for replanting necessary during the first year of afforestation.                  

11.The annual premium per hectare shall cover the costs for the agricultural income foregone and for maintenance, including early                        and late cleansings, and shall be paid for a maximum period of 12 years from the date of granting the aid.                  

12.Aid shall not be granted for planting the following trees:                  

(a)trees for short rotation coppicing;                  

(b)Christmas trees; or                  

(c)fast growing trees for energy production.                  

13.The species planted shall be adapted to the environmental and climatic conditions of the area and comply with minimum environmental                        requirements.                  

14.In areas where afforestation is difficult due to severe pedo-climatic conditions aid may be provided for planting perennial                        woody species such as shrubs or bushes suitable to the local conditions.                  

15.For beneficiaries above a certain size, to be determined by the Member States in the rural development programmes, the aid                        shall be conditional on the presentation of the relevant information from a forest management plan or equivalent instrument                        in line with sustainable forest management as defined by the Second Ministerial Conference on the Protection of Forests in                        Europe of 1993.                  

16.The aid intensity shall be limited to 100 % of the eligible costs.                  

#### Article 33U.K.Aid for agroforestry systems

1.Aid for agroforestry systems granted to private land holders, municipalities and their associations shall be compatible with                        the internal market within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement                        of Article 108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 11 of this Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The legal basis for the aid shall specify that the aid shall not be put into effect before the approval of the relevant rural                        development programme by the Commission.                  

4.The aid for agroforestry systems shall cover the costs of establishment and an annual premium per hectare.                  

The aid for agroforestry systems may cover investment operations.

5.The aid for agroforestry systems related to investment operations shall cover the following eligible costs:                  

(a)the construction, acquisition, including leasing, or improvement of immovable property, with land only being eligible to an                        extent not exceeding 10 % of the total eligible costs of the operation concerned;                  

(b)the purchase or lease purchase of machinery and equipment up to the market value of the asset;                  

(c)general costs linked to the expenditure referred to in points (a) and (b), such as architect, engineer and consultation fees,                        fees relating to advice on environmental and economic sustainability, including feasibility studies; feasibility studies shall                        remain eligible expenditure even where, based on their results, no expenditure under in points (a) and (b) is being incurred;                  

(d)the acquisition or development of computer software and the acquisitions of patents, licences, copyrights, trademarks;                  

(e)the costs of establishing forest management plans or equivalent instrument.                  

Working capital shall not be considered to be an eligible cost.

6.The investment operations shall be in conformity with Union legislation and with national laws of the Member State concerned                        on environmental protection. For investment operations requiring an environmental impact assessment under Directive 2011/92/EU                        the aid shall be subject to the condition that such assessment shall have been carried out and the development consent shall                        have been granted for the investment project concerned before the date of granting the individual aid.                  

7.The following costs for establishment may be eligible:                  

(a)the costs for the establishment of the agroforestry system by planting trees, including the costs of the plantation material,                        the plantation, the storing and the treatments of seedlings with the necessary prevention and protection materials;                  

(b)the costs for the establishment of the agroforestry system by converting existing forests or other wooded land, including                        the costs for felling trees, thinning and pruning and protection against grazing animals;                  

(c)other costs directly linked to the establishment of an agroforestry system such as costs for feasibility studies, establishment                        plan, soil examination, soil preparation and protection;                  

(d)the costs of silvopastoral, namely, grazing system watering and protective facilities;                  

(e)the costs of the necessary treatment connected to the establishment of an agroforestry system, including watering and cutting;                  

(f)the costs for replanting during the first year after the establishment of an agroforestry system.                  

8.The annual premium per hectare shall cover the costs of maintenance of the agroforestry system, and shall be paid for a maximum                        period of five years from the date of granting the aid.                  

The eligible costs of maintenance may relate to the established tree belts, the weeding, pruning and thinning and protective                     actions and investments such as fences or individual protection tubes.                  

9.Member States shall determine the maximum number of trees to be planted per hectare, taking account of the following:                  

(a)local pedo-climatic and environmental conditions;                  

(b)forestry species; and                  

(c)the need to ensure sustainable agricultural use of the land.                  

10.For beneficiaries above a certain size, to be determined by the Member States, the aid shall be conditional on the presentation                        of the relevant information from a forest management plan or equivalent instrument in line with sustainable forest management                        as defined by the Second Ministerial Conference on the Protection of Forests in Europe of 1993.                  

11.The maximum aid intensity shall be limited to:                  

(a)80 % of the eligible costs for investment operations and of the establishment costs referred to in paragraphs 5 and 7; and                  

(b)100 % of the annual premium referred to in paragraph 8.                  

#### Article 34U.K.Aid for the prevention and restoration of damage to forests from forest fire, natural disasters, adverse climatic events which                        can be assimilated to a natural disaster, other adverse climatic events, plant pests and catastrophic events

1.Aid for the prevention and restoration of damage to forests from forest fire, natural disasters, adverse climatic events,                        which can be assimilated to a natural disaster, other adverse climatic events, plant pests and catastrophic events and climate                        change events pursuant to Article 24 of Regulation (EU) No 1305/2013 granted to private and public forest holders, and other                        private law and public bodies and their associations shall be compatible with the internal market within the meaning of Article                        107(2)(b) or, as the case may be, Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement                        of Article 108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 12 of this Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The legal basis for the aid shall specify that the aid shall not be put into effect before the approval of the relevant rural                        development programme by the Commission.                  

4.Only forest areas which are classified as a medium to high forest fire risk according to the forest protection plan established                        by the Member State concerned shall be eligible for aid for prevention of fire.                  

5.The aid shall cover the following eligible costs:                  

(a)the establishment of protective infrastructure;                  

(b)local, small scale prevention activities against fire, or other natural hazards, including the use of grazing animals;                  

(c)establishing and improving forest fire, pest and diseases monitoring facilities and communication equipment;                  

(d)restoring forest potential damaged from fires, natural disasters, adverse climatic events, which can be assimilated to a natural                        disaster, other adverse climatic events, plant pests, catastrophic events and climate change related events.                  

6.The aid may cover maintenance costs in the case of firebreaks.                  

7.The aid shall not be granted for agricultural related activities in areas covered by agri-environmental commitments.                  

8.In the case of the restoration of forest potential referred to in paragraph 5(d) the aid shall be subject to the formal recognition                        by the competent authorities of the Member State concerned that:                  

(a)the fire, natural disaster, adverse climatic event which can be assimilated to a natural disaster, other adverse climatic                        event, plant pest, catastrophic event or climate change related event has occurred; and                  

(b)the event referred to in in point (a) of this paragraph, including measures adopted in accordance with Directive 2000/29/EC                        to eradicate or contain a plant pest, has caused the destruction of at least 20 % of the relevant forest potential.                  

9.In the case of aid for prevention of damage to a forest from plant pests, the risk of occurrence of the plant pest shall be                        supported by scientific evidence and acknowledged by a scientific public organisation.                  

The list of species of harmful organisms which may cause a plant pest shall be provided for in the rural development programme                     of the Member State concerned.                  

10.The aided activities or projects shall be consistent with the forest protection plan established by the Member State.                  

For beneficiaries above a certain size, to be determined by the Member States, the aid shall be conditional on the presentation                     of the relevant information from a forest management plan or equivalent instrument in line with sustainable forest management                     as defined by the Second Ministerial Conference on the Protection of Forests in Europe of 1993, detailing the preventive objectives.                  

Costs other than those referred to in paragraph 5 related to the particularities of the forestry sector may be considered                     to be eligible costs.                  

11.Aid shall not be granted for loss of income resulting from fire, natural disasters, adverse climatic events, which can be                        assimilated to a natural disaster, other adverse climatic events, plant pests and catastrophic events.                  

12.The aid intensity shall be limited to 100 % of the eligible costs.                  

Aid granted for the eligible costs as referred to in paragraph 5(d) and any other payments received by the beneficiary, including                     payments under other national or Union measures or insurance policies for the same eligible costs shall be limited to 100                     % of the eligible costs.                  

#### Article 35U.K.Aid for investments improving the resilience and environmental value of forest ecosystems

1.Aid for investments improving the resilience and environmental value of forest ecosystems granted to natural persons, private                        and public forest holders, private law and public bodies and their associations shall be compatible with the internal market                        within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article 108(3)                        thereof where it fulfils the conditions laid down in paragraphs 2 to 8 of this Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The legal basis for the aid shall specify that the aid shall not be put into effect before the approval of the relevant rural                        development programme by the Commission.                  

4.Investments shall be aimed at the achievement of commitments for environmental aims, for provision of ecosystem services or                        enhancement of the public amenity value of forest and wooded land in the area concerned or the improvement of the climate                        change mitigation potential of ecosystems, without excluding economic benefits in the long term.                  

5.The investment shall be in conformity with Union legislation and with national laws of the Member State concerned on environmental                        protection. For investment requiring an environmental impact assessment under Directive 2011/92/EU the aid shall be subject                        to the condition that such assessment shall have been carried out and the development consent shall have been granted for                        the investment project concerned before the date of granting the individual aid.                  

6.The aid shall cover the following eligible costs:                  

(a)the construction, acquisition, including leasing, or improvement of immovable property, with land only being eligible to an                        extent not exceeding 10 % of the total eligible costs of the operation concerned;                  

(b)the purchase or lease purchase of machinery and equipment up to the market value of the asset;                  

(c)general costs linked to expenditure referred to in points (a) and (b), such as architect, engineer and consultation fees,                        fees relating to advice on environmental and economic sustainability, including feasibility studies; feasibility studies shall                        remain eligible expenditure even where, based on their results, no expenditure under points (a) and (b) is incurred;                  

(d)the acquisition or development of computer software and the acquisitions of patents, licenses, copyrights and trademarks;                  

(e)the costs of establishing forest management plans or equivalent instrument.                  

7.Costs other than those referred to in paragraph 6(a) and (b) connected with leasing contracts, such as lessor's margin, interest                        refinancing costs, overheads and insurance charges shall not be considered to be eligible costs.                  

Working capital shall not be considered to be an eligible cost.

8.The aid intensity shall be limited to 100 % of the eligible costs.                  

#### Article 36U.K.Aid for disadvantages related to Natura 2000 forest areas

1.Aid for disadvantages related to Natura 2000 forest areas as defined in Article 3 of Directive 92/43/EEC and in Article 3                        Directive 2009/147/EC granted to private forest holders and associations of private forest holders shall be compatible with                        the internal market within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement                        of Article 108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 6 of this Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The legal basis for the aid shall specify that the aid shall not be put into effect before the approval of the relevant rural                        development programme by the Commission.                  

4.The aid shall be granted annually and per hectare of forest in order to compensate beneficiaries for additional costs and                        income foregone resulting from disadvantages in the forest areas referred to in paragraph 5 of this Article, related to the                        implementation of Directive 92/43/EEC and Directive 2009/147/EC.                  

5.The following forest areas shall be eligible for aid:                  

(a)Natura 2000 forest areas in accordance with Article 3 of Directive 92/43/EEC and Article 3 of Directive 2009/147/EC;                  

(b)features of the landscape which contribute to the implementation of Article 10 of Directive 92/43/EEC; those areas shall not                        exceed 5 % of the areas included in Natura 2000 network covered by the territorial scope of the rural development programme                        concerned.                  

6.The aid shall be limited to the maximum amount of EUR 500 per hectare per year in the initial period not exceeding five years                        and to EUR 200 per hectare per year afterwards.                  

Those amounts may be increased in exceptional cases taking into account specific circumstances to be justified in the rural                     development programmes.                  

Member States shall deduct from the aid the necessary amount in order to exclude double funding of the practices referred                     to in Article 29 of Regulation (EU) No 1307/2013.                  

#### Article 37U.K.Aid for forest-environmental and climate services and forest conservation

1.Aid for forest-environmental and climate services and for forest conservation granted to public or private forest holders,                        private law or public bodies and their associations shall be compatible with the internal market within the meaning of Article                        107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils                        the conditions laid down in paragraphs 2 to 9 of this Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The legal basis for the aid shall specify that the aid shall not be put into effect before the approval of the relevant rural                        development programme by the Commission.                  

4.In the case of forest-environmental and climate services and forest conservation of State-owned land, aid shall only be granted                        if the body managing such land is a private body or a municipality.                  

5.For forest holdings above a certain threshold to be determined by Member States, aid shall be conditional on the presentation                        of the relevant information from of a forest management plan or equivalent instrument in line with sustainable forest management                        as defined by the Second Ministerial Conference on the Protection of Forests in Europe of 1993.                  

6.The aid shall be granted per hectare of forest land.                  

7.Aid shall cover only commitments which go beyond the mandatory requirements established by national forestry act or other                        relevant national or Union legislation. The mandatory national requirements shall be clearly identified.                  

Commitments shall be undertaken for a period of between five and seven years. However, where necessary and duly justified,                     Member States may determine a longer period for particular types of commitments.                  

8.The aid shall compensate beneficiaries for all or part of the additional costs and income foregone resulting from undertaking                        the commitments referred to in paragraph 7.                  

Where necessary the aid may cover transaction costs up to a value of 20 % of the aid.

In duly justified cases for operations concerning environmental conservation, the aid for commitments to renounce commercial                     use of trees and forests may be granted as a flat rate or as an one-off payment per unit calculated on the basis of additional                     costs and income foregone.                  

9.The aid shall be limited to the maximum amount of EUR 200 per hectare per year.                  

That maximum amount may be increased in exceptional cases taking into account specific circumstances to be justified in the                     rural development programmes.                  

#### Article 38U.K.Aid for knowledge transfer and information actions in the forestry sector

1.Aid for knowledge transfer and information actions granted in favour of undertakings active in the forestry sector shall be                        compatible with the internal market within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the notification                        requirement of Article 108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 6 of this Article and in                        Chapter I.                  

2.The aid shall cover vocational training and skills acquisition actions, including training courses, workshops and coaching,                        demonstration activities and information actions.                  

Aid may also cover short-term forest management exchanges and forest visits.

Aid to demonstration activities may cover relevant investment costs.

3.The aid shall cover the following eligible costs:                  

(a)the costs of organising and delivering the knowledge transfer or information action;                  

(b)in the case of demonstration projects related to investments:                  

the construction, acquisition, including leasing, or improvement of immovable property, with land only being eligible to an                              extent not exceeding 10 % of total eligible costs of the operation concerned;                           

the purchase or lease purchase of machinery and equipment up to the market value of the asset;

general costs linked to expenditure referred to in points (i) and (ii), such as architect, engineer and consultation fees,                              fees relating to advice on environmental and economic sustainability, including feasibility studies; feasibility studies shall                              remain eligible expenditure even where, based on their results, no expenditure under in points (i) and (ii) is incurred;                           

acquisition or development of computer software and acquisitions of patents, licenses, copyrights and trademarks;

(c)the costs for travel, accommodation and per diem expenses of the participants.                  

4.The aid referred to in paragraph 3(a) and (b) shall not involve direct payments to the beneficiaries. The aid shall be paid                        to the knowledge transfer and information actions provider.                  

5.Bodies providing knowledge transfer and information actions shall have the appropriate capacities in the form of staff qualifications                        and regular training to carry out such tasks.                  

6.The aid intensity shall be limited to 100 % of the eligible costs.                  

#### Article 39U.K.Aid for advisory services in the forestry sector

1.Aid for advisory services granted in favour of forest holders and other land managers shall be compatible with the internal                        market within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article                        108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 7 of this Article and in Chapter I.                  

2.Aid shall be granted to help forest holders and other land managers benefit from the use of advisory services for the improvement                        of the economic and environmental performance and climate friendliness and resilience of their holdings, enterprise or investment.                  

3.The advice shall cover as a minimum issues related to the implementation of Directives 92/43/EEC, Directive 2000/60/EC and                        Directive 2009/147/EC.                  

The advice may also cover issues linked to the economic and environmental performance of forestry holdings.

4.The aid shall not involve direct payments to the beneficiaries. The aid shall be paid to the provider of the advisory services.                  

The provider of advisory service shall have the appropriate resources in the form of regularly trained and qualified staff                     and advisory experience and reliability with respect to the fields they advise in.                  

5.When providing advice, the provider of advisory services shall respect the non-disclosure obligations referred to in Article                        13(2) of Regulation (EU) No 1306/2013.                  

6.Where justified and appropriate, the advice may be partly provided in group, while taking into account the situation of the                        individual beneficiaries of the advisory services.                  

7.The aid shall be limited to EUR 1 500 per advice.                  

#### Article 40U.K.Aid for investments in infrastructure related to the development, modernisation or adaptation of the forestry sector

1.Aid for investments in infrastructure related to the development, modernisation or adaptation of the forestry sector granted                        to undertakings active in the forest sector shall be compatible with the internal market within the meaning of Article 107(3)(c)                        of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils the conditions                        laid down in paragraphs 2 to 9 of this Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The legal basis for the aid shall specify that the aid shall not be put into effect before the approval of the relevant rural                        development programme by the Commission.                  

4.The investment shall be in conformity with Union legislation and with national laws of the Member State concerned on environmental                        protection. For investment requiring an environmental impact assessment under Directive 2011/92/EU the aid shall be subject                        to the condition that such assessment shall have been carried out and the development consent shall have been granted for                        the investment project concerned before the date of granting the individual aid.                  

5.The aid shall cover investments in tangible assets and intangible assets which concern infrastructure related to the development,                        modernisation or adaptation of forests, including the following:                  

(a)access to forest land;                  

(b)land consolidation and improvement;                  

(c)supply of energy and water.                  

6.The aid shall cover the following eligible costs:                  

(a)the construction, acquisition, including leasing, or improvement of immovable property, with land only being eligible to an                        extent not exceeding 10 % of the total eligible costs of the operation concerned;                  

(b)the purchase or lease purchase of machinery and equipment up to the market value of the asset;                  

(c)general costs linked to the expenditure referred to in points (a) and (b), such as architect, engineer and consultation fees,                        fees relating to advice on environmental and economic sustainability, including feasibility studies; feasibility studies shall                        remain eligible expenditure even where, based on their results, no expenditure under points (a) and (b) is incurred;                  

(d)acquisition or development of computer software and acquisitions of patents, licenses, copyrights and trademarks;                  

(e)the costs of establishing forest management plans and their equivalent instruments.                  

7.Costs other than those referred to in paragraph 6(a) and (b) connected with leasing contracts, such as lessor's margin, interest                        refinancing costs, overheads and insurance charges shall not be considered to be eligible costs.                  

Working capital shall not be considered to be an eligible cost.

8.In the case of non-productive investments, investments aimed exclusively at improving the environmental value of forests and                        investments for forest roads, which are open to the public free of charge and which serve the multifunctional aspects of forest                        the aid intensity shall be limited to 100 % of the eligible costs.                  

9.In the case of investments, which improve the short or long term economic potential of forests, the aid intensity shall be                        limited to the following rates:                  

(a)75 % of the amount of the eligible costs for investment in outermost regions;                  

(b)75 % of the amount of the eligible costs for investment in the smaller Aegean islands;                  

(c)50 % of the amount of the eligible costs for investment in less developed regions and in all regions whose GDP per capita                        for the period from 1 January 2007 to 31 December 2013 period was less than 75 % of the average of the EU-25 for the reference                        period but whose GDP per capita is above 75 % of the GDP average of the EU-27;                  

(d)40 % of the amount of the eligible costs for investment in other regions.                  

#### Article 41U.K.Aid for investments in forestry technologies and in processing, mobilising and marketing of forestry products

1.Aid for investments in forestry technologies and in the processing, mobilising and marketing of forestry products granted                        to private forest holders, municipalities and their associations and to SMEs shall be compatible with the internal market                        within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article 108(3)                        thereof where it fulfils the conditions laid down in paragraphs 2 to 11 of this Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The legal basis for the aid shall specify that the aid shall not be put into effect before the approval of the relevant rural                        development programme by the Commission.                  

4.The investment shall be in conformity with Union legislation and with national laws of the Member State concerned on environmental                        protection. For investment requiring an environmental impact assessment under Directive 2011/92/EU the aid shall be subject                        to the condition that such assessment shall have been carried out and the development consent shall have been granted for                        the investment project concerned before the date of granting the individual aid.                  

5.In the territories of the Azores, Madeira, the Canary islands, the smaller Aegean islands and the French overseas departments                        aid may also be granted to undertakings that are not SMEs.                  

6.The aid shall cover the following eligible costs:                  

(a)the construction, acquisition, including leasing, or improvement of immovable property, with land only being eligible to an                        extent not exceeding 10 % of the total eligible costs of the operation concerned;                  

(b)the purchase or lease purchase of machinery and equipment up to the market value of the asset;                  

(c)general costs linked to the expenditure referred to in points (a) and (b), such as architect, engineer and consultation fees,                        fees relating to advice on environmental and economic sustainability, including feasibility studies; feasibility studies shall                        remain eligible expenditure even where, based on their results, no expenditure under points (a) and (b) is incurred;                  

(d)acquisition or development of computer software and acquisitions of patents, licenses, copyrights and trademarks;                  

(e)the costs of establishing forest management plans and their equivalent.                  

7.Costs other than those referred to in paragraph 6(a) and (b) connected with leasing contracts, such as lessor's margin, interest                        refinancing costs, overheads and insurance charges shall not be considered to be eligible costs.                  

Working capital shall not be considered to be an eligible cost.

8.Investments related to the improvement of the economic value of forests shall be justified in relation to expected improvements                        to forests on one or more holdings and may include investments for soil and resource friendly harvesting machinery and practices.                  

9.Investments related to the use of wood as a raw material or energy source shall be limited to all working operations prior                        to industrial processing.                  

The investments in renewable energy infrastructure that consume or produce energy shall comply with minimum standards for                     energy efficiency for, where such standards exist at national level.                  

Investments in installations, the primary purpose of which is electricity production from biomass, shall not be eligible for                     aid unless a minimum percentage of heat energy, to be determined by the Member States, is utilised.                  

Aid to bioenergy investment projects shall be limited to bioenergy meeting the applicable sustainability criteria laid down                     in Union legislation, including in Article 17(2) to (6) of Directive 2009/28/EC.                  

10.For forest holdings above a certain threshold to be determined by Member States, aid shall be conditional on the presentation                        of the relevant information from of a forest management plan or equivalent instrument in line with sustainable forest management                        as defined by the Second Ministerial Conference on the Protection of Forests in Europe of 1993.                  

11.The aid intensity shall be limited to the following rates:                  

(a)75 % of the amount of the eligible costs for investment in outermost regions;                  

(b)75 % of the amount of the eligible costs for investment in the smaller Aegean islands;                  

(c)50 % of the amount of the eligible costs for investment in less developed regions and in all regions whose GDP per capita                        for the period from 1 January 2007 to 31 December 2013 period was less than 75 % of the average of the EU-25 for the reference                        period but whose GDP per capita is above 75 % of the GDP average of the EU-27;                  

(d)40 % of the amount of the eligible costs for investment in other regions.                  

#### Article 42U.K.Conservation of genetic resources in forestry

1.Aid for the conservation of genetic resources in forestry, linked to forest-environmental and climate services and forest                        conservation, granted to public or private entities shall be compatible with the internal market within the meaning of Article                        107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils                        the conditions laid down in paragraphs 2 to 6 of this Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The legal basis for the aid shall specify that the aid shall not be put into effect before the approval of the relevant rural                        development programme by the Commission.                  

4.For the purposes of this Article the following definitions shall apply:                  

(a)‘in situ conservation’ means the conservation of genetic material in ecosystems and natural habitats and the maintenance and                        recovery of viable population of species in their natural surroundings;                  

(b)‘on-forest holding conservation’ means in situ conservation and development at forest holding level;                  

(c)‘ex situ conservation’ means the conservation of genetic material for forestry outside their natural habitat;                  

(d)‘ex situ collection’ means a collection of genetic material for forestry maintained outside their natural habitat.                  

5.The aid shall cover the costs for the following operations:                  

(a)targeted actions: actions promoting the in situ and ex situ conservation, characterisation, collection and utilisation of                        genetic resources in forestry, including web-based inventories of genetic resources currently conserved in situ, including                        on-forest holding conservation, and of ex situ collections and databases;                  

(b)concerted actions: actions promoting the exchange of information for the conservation, characterisation, collection and utilisation                        of genetic resources in Union forestry, among competent organisations in the Member States;                  

(c)accompanying actions: information, dissemination and advisory actions involving non-governmental organisations and other relevant                        stakeholders, training courses and preparation of technical reports.                  

6.The aid shall be limited to 100 % of the eligible costs.                  

#### Article 43U.K.Aid for forestry land consolidation

Aid for forestry land consolidation shall be compatible with the internal market within the meaning of Article 107(3)(c) of                     the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils the conditions                     laid down in Chapter I and it is granted:                  

to private forestry holders that are SMEs; and

towards and limited to the legal and administrative costs, including survey costs; and

up to 100 % of the real costs incurred.

### *SECTION 6*U.K.***Aids in favour of SMEs in Rural Areas co-financed by the EAFRD or granted as additional national financing to such co-financed                              measures***

#### Article 44U.K.Aid for investments concerning the processing of agricultural products into non-agricultural products or the production of                        cotton

1.Aid for investments concerning the processing of agricultural products into non-agricultural products or the production of                        cotton, including the activities of ginning, granted to SMEs, shall be compatible with the internal market within the meaning                        of Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where                        it fulfils the conditions laid down in paragraphs 2 to 10 of this Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The legal basis for the aid shall specify that the aid shall not be put into effect before the approval of the relevant rural                        development programme by the Commission.                  

4.Investment linked to the production of biofuel or energy from renewable sources shall not be eligible for aid under this Article.                  

5.The investment shall be in conformity with Union legislation and with national laws of the Member State concerned on environmental                        protection. For investment requiring an environmental impact assessment under Directive 2011/92/EU the aid shall be subject                        to the condition that such assessment shall have been carried out and the development consent shall have been granted for                        the investment project concerned before the date of granting the individual aid.                  

6.The aid shall cover investments in tangible and intangible assets.                  

7.The aid shall cover the following eligible costs:                  

(a)the construction, acquisition, including leasing, or improvement of immovable property, with land only being eligible to an                        extent not exceeding 10 % of the total eligible costs of the operation concerned;                  

(b)the purchase or lease purchase of machinery and equipment up to the market value of the asset;                  

(c)general costs linked to expenditure referred to in points (a) and (b), such as architect, engineer and consultation fees,                        fees relating to advice on environmental and economic sustainability, including feasibility studies; feasibility studies shall                        remain eligible expenditure even where, based on their results, no expenditure under points (a) and (b) is incurred;                  

(d)acquisition or development of computer software and acquisitions of patents, licenses, copyrights and trademarks.                  

8.Costs, other than those referred to in paragraph 7(a) and (b), connected with leasing contracts, such as lessor's margin,                        interest refinancing costs, overheads and insurance charges shall not be considered to be eligible costs.                  

Working capital shall not be considered to be an eligible cost.

9.The aid intensity shall be limited to the following rates:                  

(a)in the outermost regions:                  

80 % of the amount of the eligible costs for investment in regions whose GDP per capita is below or equal to 45 % of the EU-27                              average;                           

65 % of the amount of the eligible costs for investment in regions whose GDP per capita is between or equal to 45 % and 60                              % of the EU-27 average;                           

55 % of the amount of the eligible costs for investment in regions with a GDP per capita between or equal to 60 % and 75 %                              of the EU-27 average;                           

45 % of the amount of the eligible costs for investment in other outermost regions;

(b)in less developed regions:                  

60 % of the amount of the eligible costs for investment in regions whose GDP per capita is below or equal to 45 % of the EU-27                              average;                           

45 % of the amount of the eligible costs for investment in regions whose GDP per capita is between or equal to 45 % and 60                              % of the EU-27 average;                           

35 % of the amount of the eligible costs for investment in regions with a GDP per capita above 60 % of the EU-27 average;

(c)in ‘c’ areas:                  

25 % of the amount of the eligible costs for investment in sparsely populated areas and in NUTS 3 regions or parts of NUTS                              3 regions that share a land border with a country outside the European Economic Area or the European Free Trade Association;                           

20 % of the amount of the eligible costs for investment in non-predefined ‘c’ areas;

in the former ‘a’ areas the aid intensities may be increased by up to 5 percentage points during the period from 1 July 2014                              to 31 December 2017;                           

where a ‘c’ area is adjacent to an ‘a’ area, the maximum aid intensity allowed in the NUTS 3 areas or parts of NUTS 3 areas                              within that ‘c’ area which are adjacent to the ‘a’ area may be increased as necessary so that the difference in aid intensity                              between both areas does not exceed 15 percentage points;                           

(d)10 % of the amount of the eligible costs for investment in all other regions.                  

10.The maximum aid intensities provided for in paragraph 9 may be increased by up to 10 percentage points for micro and small                        enterprises.                  

#### Article 45U.K.Business start-up aid for non-agricultural activities in rural areas

1.Business start-up aid for non-agricultural activities in rural areas granted to SMEs shall be compatible with the internal                        market within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article                        108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 9 of this Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The legal basis for the aid shall specify that the aid shall not be put into effect before the approval of the relevant rural                        development programme by the Commission.                  

4.Aid shall be granted to the following categories of beneficiaries:                  

(a)farmers or members of a farm household in rural areas diversifying into non-agricultural activities;                  

(b)micro and small enterprises in rural areas; and                  

(c)natural persons in rural areas.                  

5.Where the member of a farm household referred to in paragraph 4(a) is a legal person or a group of legal persons it must exercise                        an agricultural activity on the farm at the time of the submission of the application for the aid.                  

6.The aid shall be conditional on the submission of a business plan to the competent authority of the Member State concerned.                        The implementation of that business plan shall start within nine months from the date of the decision granting the aid.                  

The business plan shall describe the following:

(a)the initial economic situation of the beneficiary;                  

(b)milestones and targets for the development of the new activities of the beneficiary;                  

(c)details of the actions required for the development of the activities of the beneficiary, such as details of investments,                        training, advice.                  

7.The aid shall be paid in at least two instalments over a maximum period of five years.                  

The instalments may be degressive.

The payment of the last instalment shall be conditional upon the correct implementation of the business plan referred to in                     paragraph 6.                  

8.Member States shall define the amount of aid taking into account the socioeconomic situation of the area covered by the rural                        development programme.                  

9.The aid shall be limited to EUR 70 000 per beneficiary.                  

#### Article 46U.K.Aid for advisory services for SMEs in rural areas

1.Aid for advisory services for SMEs in rural areas shall be compatible with the internal market within the meaning of Article                        107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils                        the conditions laid down in paragraphs 2 to 9 of this Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The aid shall be granted to help SMEs in rural areas benefit from the use of advisory services for the improvement of the                        economic and environmental performance, climate friendliness and resilience of their enterprise and investment.                  

4.The advice may cover issues linked to the economic and environmental performance of the beneficiary.                  

5.The aid shall not involve direct payment to the beneficiaries. The aid shall be paid to the provider of advisory services.                  

6.The provider of the advisory services shall have the appropriate resources in the form of regularly trained and qualified                        staff and advisory experience and reliability in the fields they advise in.                  

7.When providing advice, the providers of advisory services shall respect the non-disclosure obligations referred to in Article                        13(2) of Regulation (EU) No 1306/2013.                  

8.Where appropriate, advice may be partly provided in groups, while taking into account the situations of the individual user                        of the advisory services.                  

9.The amount of aid shall be limited to EUR 1 500 per advice.                  

#### Article 47U.K.Aid for knowledge transfer and information actions in favour of SMEs in rural areas

1.Aid for knowledge transfer and information actions in favour of SMEs in rural areas shall be compatible with the internal                        market within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the notification requirement of Article                        108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 7 of this Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The aid shall cover vocational training and skills acquisition actions, including training courses, workshops and coaching,                        demonstration activities and information actions.                  

Aid to demonstration activities may cover relevant investment costs

4.The aid shall cover the following eligible costs:                  

(a)the costs of organising and delivering the knowledge transfer or information action;                  

(b)in case of demonstration projects related to investments:                  

the construction, acquisition, including leasing, or improvement of immovable property, with land only being eligible to an                              extent not exceeding 10 % of total eligible costs of the operation concerned;                           

the purchase or lease purchase of machinery and equipment up to the market value of the asset;

general costs linked to expenditure referred to in points (i) and (ii), such as architect, engineer and consultation fees,                              fees relating to advice on environmental and economic sustainability, including feasibility studies; feasibility studies shall                              remain eligible expenditure even where, based on their results, no expenditure under points (i) and (ii) is incurred;                           

acquisition or development of computer software and acquisitions of patents, licenses, copyright and, trademarks;

(c)costs for travel, accommodation and per diem expenses of participants.                  

5.The aid shall not involve direct payments to the beneficiaries.                  

That aid shall be paid to the provider of the knowledge transfer and information actions.

Bodies providing knowledge transfer and information actions shall have the appropriate capacities in the form of staff qualifications                     and regular training to carry out those tasks.                  

6.The aid shall be accessible to all those eligible undertakings active in the rural area concerned, based on objectively defined                        conditions.                  

7.The aid intensity shall be limited to the following rates:                  

(a)60 % of the eligible costs in the case of medium-sized enterprises;                  

(b)70 % of the eligible costs in the case of micro and small enterprises.                  

#### Article 48U.K.Aid for new participation of active farmers in quality schemes for cotton and foodstuffs

1.Aid for new participation of active farmers and groups thereof that are SMEs in quality schemes for cotton and foodstuffs                        shall be compatible with the internal market within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from                        the notification requirement of Article 108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 7 of this                        Article and in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The legal basis for the aid shall specify that the aid shall not be put into effect before the approval of the relevant rural                        development programme by the Commission.                  

4.Aid shall be granted for new participation in one of the following types of quality schemes:                  

(a)quality schemes for cotton and foodstuffs established under Regulation (EU) No 1151/2012;                  

(b)quality schemes for cotton and foodstuffs, including certification schemes, recognised by the Member States as complying with                        the following criteria:                  

the specificity of the final product produced under such quality schemes is derived from clear obligations to guarantee:
                -  specific product characteristics, 
                -  specific farming or production methods, or 
                -  a quality of the final product that goes significantly beyond the commercial commodity standards as regards public, animal                                    or plant health, animal welfare or environmental protection;                                  

the scheme is open to all producers;

the scheme involves binding final product specifications and compliance with those specifications is verified by public authorities                              or by an independent inspection body;                           

the scheme is transparent and assures complete traceability of agricultural products;

(c)voluntary foodstuff certification schemes recognised by the Member State concerned as meeting the requirements laid down in                        the Commission Communication — EU best practice guidelines for voluntary certification schemes for agricultural products and                        foodstuffs.                  

5.The aid shall be granted in the form of an annual incentive payment, the level of which shall be determined according to the                        level of the fixed costs arising from participation in quality schemes.                  

6.The aid shall be granted for a maximum period of five years.                  

7.The aid shall be limited to EUR 3 000 per beneficiary per year.                  

#### Article 49U.K.Aid for information and promotion activities concerning cotton and foodstuffs covered by a quality scheme

1.Aid for information and promotion activities concerning cotton and foodstuffs covered by a quality scheme shall be compatible                        with the internal market within the meaning of Article 107(3)(c) of the Treaty and shall be exempted from the notification                        requirement of Article 108(3) thereof where it fulfils the conditions laid down in paragraphs 2 to 11 of this Article and                        in Chapter I.                  

2.The aid shall:                  

(a)be granted in the framework of a rural development programme in accordance with Regulation (EU) No 1305/2013 and the delegated                        and implementing acts adopted by the Commission pursuant to that Regulation either:                  

as aid co-financed by the EAFRD; or

as additional national financing to the aid referred to in point (i);

and

(b)be identical to the underlying rural development measure provided for in the rural development programme referred to in point                        (a).                  

3.The legal basis for the aid shall specify that the aid shall not be put into effect before the approval of the relevant rural                        development programme by the Commission.                  

4.The aid shall be granted to groups of producers implementing the information and promotion activities.                  

5.Only information and promotion activities that are implemented in the internal market shall be eligible for aid                  

6.The aid shall be granted for information and promotion activities concerning cotton and foodstuffs which are covered by a                        quality scheme and for which aid is granted in accordance with Article 48 of this Regulation.                  

7.The aid shall cover the costs for actions having the following characteristics:                  

(a)be designed to induce consumers to buy the foodstuffs or the cotton covered by a quality scheme as referred to in Article                        48(4) of this Regulation;                  

(b)draw attention to specific features or advantages of the foodstuff or the cotton, notably to the quality, specific production                        method, high animal welfare standards and respect for the environment linked to the quality scheme concerned.                  

8.The actions referred to in paragraph 6 of this article shall not incite consumers to buy a foodstuff or cotton due to their                        particular origin, except for those covered by the quality schemes set out in Title II of Regulation (EU) No 1151/2012.                  

9.The origin of the foodstuff or cotton may be indicated, provided that the mention of the origin is subordinate to the main                        message.                  

10.Information and promotion activities related to particular undertakings or of commercial brands shall not be eligible for                        aid.                  

11.The aid intensity shall be limited to 70 % of the eligible costs.                  

## CHAPTER IVU.K.**TRANSITIONAL AND FINAL PROVISIONS**

### Article 50U.K.Repeal

1.Regulation (EC) No 1857/2006 shall be repealed.                  

2.By way of derogation from paragraph 1 of this Article, Regulation (EC) No 1857/2006 shall continue to apply until 31 December                        2015 to aid granted in connection with Council Regulation (EC) No 1698/2005(42) and its implementing rules.                  

### Article 51U.K.Transitional provisions

1.This Regulation shall apply to individual aid granted before the date of entry into force of this Regulation, if that individual                        aid fulfils all the conditions laid down in this Regulation, with the exception of Articles 9 and 10.                  

2.Any aid not exempted from the notification requirement of Article 108(3) of the Treaty by virtue of this Regulation or other                        regulations adopted pursuant to Article 1 of Regulation (EC) No 994/98 previously in force shall be assessed by the Commission                        in accordance with the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas                        2014 to 2020 and the other relevant frameworks, guidelines, communications and notices.                  

3.Any individual aid granted before 1 January 2015 by virtue of any regulation adopted pursuant to Article 1 of Regulation (EC)                        No 994/98 in force at the time of granting the aid shall be compatible with the internal market and exempted from the notification                        requirement of Article 108(3) of the Treaty.                  

4.At the end of the period of validity of this Regulation, any aid schemes exempted under this Regulation shall remain exempted                        during an adjustment period of six months.                  

By way of derogation from the first subparagraph, at the end of the period of validity of this Regulation aid schemes falling                     within the scope of Regulation (EU) No 1305/2013 and either co-financed by EAFRD or granted as additional national financing                     for such co-financed measures shall remain exempted for the duration of the programming period in accordance with Regulation                     (EU) No 1305/2013 and its implementing rules.                  

### Article 52U.K.Entry into force and applicability

This Regulation shall enter into force on 1 July 2014.

It shall apply until 31 December 2020.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 25 June 2014.

*For the Commission*                            

*The President*                            

José Manuel Barroso                            

## ANNEX IU.K.DEFINITION OF MICRO, SMALL AND MEDIUM-SIZED ENTERPRISES

### Article 1U.K.Enterprise

An enterprise is considered to be any entity engaged in an economic activity, irrespective of its legal form. This includes,                     in particular, self-employed persons and family businesses engaged in craft or other activities, and partnerships or associations                     regularly engaged in an economic activity.                  

### Article 2U.K.Staff headcount and financial ceilings determining enterprise categories

1.The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons                        and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43                        million.                  

2.Within the SME category, a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual                        turnover and/or annual balance sheet total does not exceed EUR 10 million.                  

3.Within the SME category, a microenterprise is defined as an enterprise which employs fewer than 10 persons and whose annual                        turnover and/or annual balance sheet total does not exceed EUR 2 million.                  

### Article 3U.K.Types of enterprise taken into consideration in calculating staff numbers and financial amounts

1.An ‘autonomous enterprise’ is any enterprise which is not classified as a partner enterprise within the meaning of paragraph                        2 or as a linked enterprise within the meaning of paragraph 3.                  

2.‘Partner enterprises’ are all enterprises which are not classified as linked enterprises within the meaning of paragraph 3                        and between which there is the following relationship: an enterprise (upstream enterprise) holds, either solely or jointly                        with one or more linked enterprises within the meaning of paragraph 3, 25 % or more of the capital or voting rights of another                        enterprise (downstream enterprise).                  

However, an enterprise may be ranked as autonomous, and thus as not having any partner enterprises, even if this 25 % threshold                     is reached or exceeded by the following investors, provided that those investors are not linked, within the meaning of paragraph 3,                     either individually or jointly to the enterprise in question:                  

(a)public investment corporations, venture capital companies, individuals or groups of individuals with a regular venture capital                        investment activity who invest equity capital in unquoted businesses (‘business angels’), provided the total investment of                        those business angels in the same enterprise is less than EUR 1 250 000;                  

(b)universities or non-profit research centres;                  

(c)institutional investors, including regional development funds;                  

(d)autonomous local authorities with an annual budget of less than EUR 10 million and fewer than 5000 inhabitants.                  

3.‘Linked enterprises’ are enterprises which have any of the following relationships with each other:                  

(a)an enterprise has a majority of the shareholders' or members' voting rights in another enterprise;                  

(b)an enterprise has the right to appoint or remove a majority of the members of the administrative, management or supervisory                        body of another enterprise;                  

(c)an enterprise has the right to exercise a dominant influence over another enterprise pursuant to a contract entered into with                        that enterprise or to a provision in its memorandum or articles of association;                  

(d)an enterprise, which is a shareholder in or member of another enterprise, controls alone, pursuant to an agreement with other                        shareholders in or members of that enterprise, a majority of shareholders' or members' voting rights in that enterprise.                  

There is a presumption that no dominant influence exists if the investors listed in the second subparagraph of paragraph 2                     are not involving themselves directly or indirectly in the management of the enterprise in question, without prejudice to                     their rights as stakeholders.                  

Enterprises having any of the relationships described in the first subparagraph through one or more other enterprises, or                     any one of the investors mentioned in paragraph 2, are also considered to be linked.                  

Enterprises which have one or other of such relationships through a natural person or group of natural persons acting jointly                     are also considered linked enterprises if they engage in their activity or in part of their activity in the same relevant                     market or in adjacent markets.                  

An ‘adjacent market’ is considered to be the market for a product or service situated directly upstream or downstream of the                     relevant market.                  

4.Except in the cases set out in paragraph 2, second subparagraph, an enterprise cannot be considered an SME if 25 % or more                        of the capital or voting rights are directly or indirectly controlled, jointly or individually, by one or more public bodies.                  

5.Enterprises may make a declaration of status as an autonomous enterprise, partner enterprise or linked enterprise, including                        the data regarding the ceilings set out in Article 2. The declaration may be made even if the capital is spread in such a                        way that it is not possible to determine exactly by whom it is held, in which case the enterprise may declare in good faith                        that it can legitimately presume that it is not owned as to 25 % or more by one enterprise or jointly by enterprises linked                        to one another. Such declarations are made without prejudice to the checks and investigations provided for by national or                        Union rules.                  

### Article 4U.K.Data used for the staff headcount and the financial amounts and reference period

1.The data to apply to the headcount of staff and the financial amounts are those relating to the latest approved accounting                        period and calculated on an annual basis. They are taken into account from the date of closure of the accounts. The amount                        selected for the turnover is calculated excluding value added tax (VAT) and other indirect taxes.                  

2.Where, at the date of closure of the accounts, an enterprise finds that, on an annual basis, it has exceeded or fallen below                        the headcount or financial ceilings stated in Article 2, this will not result in the loss or acquisition of the status of                        medium-sized, small or microenterprise unless those ceilings are exceeded over two consecutive accounting periods.                  

3.In the case of newly established enterprises whose accounts have not yet been approved, the data to apply is to be derived                        from a bona fide estimate made in the course of the financial year.                  

### Article 5U.K.Staff headcount

The headcount corresponds to the number of annual work units (AWU), i.e. the number of persons who worked full-time within                     the enterprise in question or on its behalf during the entire reference year under consideration. The work of persons who                     have not worked the full year, the work of those who have worked part-time, regardless of duration, and the work of seasonal                     workers are counted as fractions of AWU. The staff consists of:                  

employees;

persons working for the enterprise being subordinated to it and deemed to be employees under national law;

owner-managers;

partners engaging in a regular activity in the enterprise and benefiting from financial advantages from the enterprise.

Apprentices or students engaged in vocational training with an apprenticeship or vocational training contract are not included                     as staff. The duration of maternity or parental leaves is not counted.                  

### Article 6U.K.Establishing the data of an enterprise

1.In the case of an autonomous enterprise, the data, including the number of staff, are determined exclusively on the basis                        of the accounts of that enterprise.                  

2.The data, including the headcount, of an enterprise having partner enterprises or linked enterprises are determined on the                        basis of the accounts and other data of the enterprise or, where they exist, the consolidated accounts of the enterprise,                        or the consolidated accounts in which the enterprise is included through consolidation.                  

To the data referred to in the first subparagraph are added the data of any partner enterprise of the enterprise in question                     situated immediately upstream or downstream from it. Aggregation is proportional to the percentage interest in the capital                     or voting rights (whichever is greater). In the case of cross-holdings, the greater percentage applies.                  

To the data referred to in the first and second subparagraph is added 100 % of the data of any enterprise, which is linked                     directly or indirectly to the enterprise in question, where the data were not already included through consolidation in the                     accounts.                  

3.For the application of paragraph 2, the data of the partner enterprises of the enterprise in question are derived from their                        accounts and their other data, consolidated if they exist. To these is added 100 % of the data of enterprises which are linked                        to these partner enterprises, unless their accounts data are already included through consolidation.                  

For the application of the same paragraph 2, the data of the enterprises which are linked to the enterprise in question are                     to be derived from their accounts and their other data, consolidated if they exist. To these is added, pro rata, the data                     of any possible partner enterprise of that linked enterprise, situated immediately upstream or downstream from it, unless                     it has already been included in the consolidated accounts with a percentage at least proportional to the percentage identified                     under the second subparagraph of paragraph 2.                  

4.Where in the consolidated accounts no staff data appear for a given enterprise, staff figures are calculated by aggregating                        proportionally the data from its partner enterprises and by adding the data from the enterprises to which the enterprise in                        question is linked.                  

## ANNEX IIU.K.INFORMATION REGARDING STATE AID EXEMPTED UNDER THIS REGULATIONas provided for in Article 9(1)(Text with EEA relevance(43))

## PART IU.K.

## PART IIU.K.**Please indicate under which provision of this Regulation the aid is implemented**

## ANNEX IIIU.K.Provisions for the publication of information as laid down in Article 9(2)

Member States shall organise their comprehensive State aid websites, on which the information provided for in Article 9(2)                     shall be published, in such a way as to allow easy access to that information. Information shall be published in a spreadsheet                     data format, which allows data to be searched, extracted and easily published on the Internet, such as CSV or XML format.                     Access to the State aid website shall be allowed to any interested party without restrictions. No prior user registration                     shall be required to access the State aid website.                  

The following information on individual aid award as laid down in Article 9(2)(c) shall be published:

Reference of the identification number of the aid(44);                           

Name of the beneficiary;

Type of enterprise (SME/large) at the date of granting the aid;

Region in which the beneficiary is located, at NUTS level II(45);                           

Sector of activity at NACE group level(46);                           

Aid element, expressed as full amount in national currency(47);                           

Aid instrument(48) (Grant/Interest rate subsidy, Loan/Repayable advances/Reimbursable grant, Guarantee, Tax advantage or tax exemption, Risk                              finance, Other (please specify));                           

Date of granting the aid;

Objective of the aid(49);                           

Granting authority;

1

OJ L 142, 14.5.1998, p. 1.                           

2

Commission Regulation (EC) No 1857/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to State                              aid to small and medium-sized enterprises active in the production of agricultural products and amending Regulation (EC) No                              70/2001 (OJ L 358, 16.12.2006, p. 3), as amended by Commission Regulation (EU) No 1114/2013 of 7 November 2013 amending Regulation (EC) No 1857/2006 as regards                              its period of application (OJ L 298, 8.11.2013, p. 34).                           

3

Council Regulation (EU) No 733/2013 of 22 July 2013 amending Regulation (EC) No 994/98 on the application of Articles 92 and                              93 of the Treaty establishing the European Community to certain categories of horizontal State aid (OJ L 204, 31.7.2013, p. 11).                           

4

Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation                              of the markets in agricultural products and repealing Council Regulation (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001                              and (EC) No 1234/2007 (OJ L 347, 20.12.2013, p. 671).                           

5

Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development                              by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005 (OJ L 347, 20.12.2013, p. 487).                           

6

COM(2012) 209 final.

7

Commission Regulation (EC) No 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market                              in application of Articles 87 and 88 of the Treaty (General block exemption Regulation) (OJ L 214, 9.8.2008, p. 3).                           

8

OJ C 319, 27.12.2006, p. 1.                           

9

OJ C 244, 1.10.2004, p. 2.                           

10

OJ C 155, 20.6.2008, p. 10.                           

11

OJ C 204, 1.7.2014, p. 1.                           

12

OJ C 14, 19.1.2008, p. 6.                           

13

Directive 2013/37/EU of the European Parliament and of the Council of 26 June 2013 amending Directive 2003/98/EC on the re-use                              of public sector information (OJ L 175, 27.6.2013, p. 1).                           

14

Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market                              in application of Articles 107 and 108 of the Treaty (OJ L 187, 26.6.2014, p. 1).                           

15

Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed                              rules for the application of Article 93 of the EC Treaty (OJ L 140, 30.4.2004, p. 1).                           

16

Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty (OJ L 83, 27.3.1999, p. 1).                           

17

Commission Recommendation 2003/361/EC concerning the definition of micro, small and medium-sized enterprises (OJ L 124, 20.5.2003, p. 36).                           

18

Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011 on the assessment of the effects of                              certain public and private projects on the environment (OJ L 26, 28.1.2012, p. 1).                           

19

Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy                              from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (OJ L 140, 5.6.2009, p. 16).                           

20

OJ C 323, 30.12.2006, p. 1.                           

21

Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ L 206, 22.7.1992, p. 7).                           

22

Directive 2009/147/EC of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds                              (OJ L 20, 26.1.2010, p. 7).                           

23

Regulation (EU) No 1379/2013 of the European Parliament and of the Council on the common organisation of the markets in fishery                              and aquaculture products, amending Council Regulations (EC) No 1184/2006 and (EC) No 1224/2009 and repealing Council Regulation                              (EC) No 104/2000 (OJ L 354, 28.12.2013, p. 1).                           

24

Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated                              financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament                              and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).                           

25

Council Directive 2000/29/EC of 8 May 2000 on protective measures against the introduction into the Community of organisms                              harmful to plants or plant products and against their spread within the Community (OJ L 169, 10.7.2000, p. 1).                           

26

Regulation (EU) No 229/2013 of the European Parliament and of the Council of 13 March 2013 laying down specific measures for                              agriculture in favour of the smaller Aegean islands and repealing Council Regulation (EC) No 1405/2006 (OJ L 78, 20.3.2013, p. 41).                           

27

COM(2012) 595, 17.10.2012.

28

Regulation (EU) No 1307/2013 of the European Parliament and of the Council of 17 December 2013 establishing rules for direct                              payments to farmers under support schemes within the framework of the common agricultural policy and repealing Council Regulation                              (EC) No 637/2008 and Council Regulation (EC) No 73/2009 (OJ L 347, 20.12.2013, p. 608).                           

29

Regulation (EC) No 999/2001 of the European Parliament and of the Council of 22 May 2001 laying down rules for the prevention,                              control and eradication of certain transmissible spongiform encephalopathies (OJ L 147, 31.5.2001, p. 1).                           

30

Regulation (EC) No 1059/2003 of the European Parliament and of the Council of 26 May 2003 on the establishment of a common                              classification of territorial units for statistics (NUTS) (OJ L 154, 21.6.2003, p. 1).                           

31

Regulation (EU) No 1151/2012 of the European Parliament and of the Council of 21 November 2012 on quality schemes for agricultural                              products and foodstuffs (OJ L 343, 14.12.2012, p. 1).                           

32

Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management                              and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No                              2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008 (OJ L 347, 20.12.2013, p. 549).                           

33

Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a framework for Community                              action in the field of water policy (OJ L 327, 22.12.2000, p. 1).                           

34

Commission Regulation (EC) No 1242/2008 of 8 December 2008 establishing a Community typology for agricultural holdings (OJ L 335, 13.12.2008, p. 3).                           

35

Council Regulation (EC) No 834/2007 of 28 June 2007 on organic production and labelling of organic products and repealing                              Regulation (EEC) No 2092/91 (OJ L 189, 20.7.2007, p. 1).                           

36

Regulation (EC) No 110/2008 of the European Parliament and of the Council of 15 January 2008 on the definition, description,                              presentation, labelling and the protection of geographical indications of spirit drinks and repealing Council Regulation (EEC)                              No 1576/89 (OJ L 39, 13.2.2008, p. 16).                           

37

Regulation (EU) No 251/2014 of the European Parliament and of the Council of 26 February 2014 on the definition, description,                              presentation, labelling and the protection of geographical indications of aromatised wine products and repealing Council Regulation                              (EEC) No 1601/91 (OJ L 84, 20.3.2014, p. 14).                           

38

OJ C 341, 16.12.2010, p. 5.                           

39

Regulation (EC) No 1107/2009 of the European Parliament and of the Council of 21 October 2009 concerning the placing of plant                              protection products on the market and repealing Council Directives 79/117/EEC and 91/414/EEC (OJ L 309, 24.11.2009, p. 1).                           

40

Directive 2009/128/EC of the European Parliament and of the Council of 21 October 2009 establishing a framework for Community                              action to achieve the sustainable use of pesticides (OJ L 309, 24.11.2009, p. 71).                           

41

Regulation (EU) No 652/2014 of the European Parliament and of the Council of 15 May 2014 laying down provisions for the management                              of expenditure relating to the food chain, animal health and animal welfare, and relating to plant health and plant reproductive                              material, amending Council Directives 98/56/EC, 2000/29/EC and 2008/90/EC, Regulations (EC) No 178/2002, (EC) No 882/2004                              and (EC) No 396/2005 of the European Parliament and of the Council, Directive 2009/128/EC of the European Parliament and of                              the Council and Regulation (EC) No 1107/2009 of the European Parliament and of the Council and repealing Council Decisions                              66/399/EEC, 76/894/EEC and 2009/470/EC (OJ L 189, 27.6.2014, p. 1).                           

42

Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund                              for Rural Development (EAFRD) (OJ L 277, 21.10.2005, p. 1).                           

43

Applicable only to aid concerning the forestry sector and products not listed in Annex I to the Treaty.

44

As provided by the Commission under the procedure as referred to in Article 9(1) of this Regulation.

45

NUTS - Nomenclature of Territorial Units for Statistics. Typically, the region shall be specified at level 2.

46

Council Regulation (EEC) No 3037/90 of 9 October 1990 on the statistical classification of economic activities in the European                              Community (OJ No L 293, 24.10.1990, p. 1) as amended by Commission Regulation (EEC) No 761/93 of 24 March 1993 (OJ No L 83, 3.4.1993, p. 1, and corrigendum (OJ No L 159, 11.7.1995, p. 31).                           

47

Gross grant equivalent

48

If the aid is granted through multiple aid instruments, the aid amount shall be provided by an aid instrument

49

If the aid has multiple objectives, the aid amount shall be provided by an objective.