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I Acts whose publication is obligatory

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            COMMISSION REGULATION (EC) No 795/2004

of 21 april 2004         

laying down detailed rules for the implementation of the single payment scheme provided for in Council Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers and amending Regulations (EEC) No 2019/93, (EC) No 1452/2001, (EC) No 1453/2001, (EC) No 1454/2001, (EC) N 1868/94, (EC) No 1251/1999, (EC) No 1254/1999, (EC) No 1673/2000, (EEC) No 2358/71 and (EC) No 2529/2001 (1), and in particular the second subparagraph of Article 40(5), Articles 42(4) and (9), 46(3), 52(2), 54(5), 145(c) and (d) and 155 thereof,

Whereas:

HAS ADOPTED THIS REGULATION:

CHAPTER 1

SCOPE AND GENERAL PROVISIONS

Article 1

Subject matter and scope

This Regulation lays down detailed rules for the implementation of the single payment scheme provided for in Title III of Regulation (EC) No 1782/2003.

Article 2

Definitions

For the purposes of Title III of Regulation (EC) No 1782/2003 and of this Regulation, the following definitions shall apply:

Article 3

Calculation of the unit value of payment entitlements

1.   Payment entitlements shall be calculated up to three decimals and rounded up or down to the nearest second decimal. If the calculation gives a result which is exactly half-way, the sum shall be rounded up to the nearest second decimal.

2.   Where the size of a parcel, which is declared in accordance with Article 44(3) of Regulation (EC) No 1782/2003, or which is transferred with an entitlement in accordance with Article 46(2) of that Regulation, amounts to a fraction of an hectare, the entitlement concerned shall be declared or transferred with the land at a value calculated to the extent of the same fraction. The remaining part of the entitlement shall remain at the disposal of the farmer at a value calculated correspondingly.

CHAPTER 2

NATIONAL RESERVE

Section 1

Establishment of the national reserve

Article 4

Reductions

1.   The reduction provided for in Article 42(1) of Regulation (EC) No 1782/2003 shall apply to all reference amounts after any possible reduction under Article 41(2) of that Regulation and, where applicable, after any possible reduction under Article 65(1) and the second subparagraph of Article 70(2) of that Regulation.

2.   In case of application of the reduction referred to in Article 42 (7) of Regulation (EC) No 1782/2003, the unit value of all payment entitlements which have been established at the date of application of the linear reduction shall be reduced proportionately.

Article 5

Dairy premiums and additional payments

1.   The percentage of reduction fixed by the Member States in accordance with Article 42(1) of Regulation (EC) No 1782/2003 shall apply in 2007 to the amounts resulting from dairy premiums and additional payments to be included in the single payment scheme.

2.   Where a Member State makes use of the option, provided for in the first subparagraph of Article 62 of Regulation (EC) No 1782/2003, to include in full the amounts resulting from dairy premiums and additional payments in the single payment scheme, it shall apply the percentage of reduction referred to in paragraph 1 of this Article in the year in which it makes use of that option. In the following years, the Member State concerned shall apply the reduction within the limit of the increase of the amounts provided for in Articles 95 (2) and 96 (2) of Regulation (EC) No 1782/2003.

3.   Where a Member State makes use of the option, provided for in the first subparagraph of Article 62 of Regulation (EC) No 1782/2003, to include in part the amounts resulting from dairy premiums and additional payments in the single payment scheme, it shall apply the percentage of reduction referred to in paragraph 1 of this Article to the corresponding amounts included in the single payment scheme in the year in which it makes use of that option, taking into account the increase of the amounts provided for in Article 95 (2) and 96 (2) of Regulation (EC) No 1782/2003.

Section 2

Establishment of payment entitlements from the national reserve

Article 6

Establishment of payment entitlements

1.   Where a Member State makes use of the options provided for in Article 42(3) and (5) of Regulation (EC) No 1782/2003, farmers may receive, in accordance with the conditions laid down in this Section and in accordance with the objective criteria laid down by the Member State concerned, payment entitlements from the national reserve.

2.   When a farmer who does not own any payment entitlement applies for payment entitlements from the national reserve, he may receive a number of payment entitlements not higher than the number of hectares he holds (owned or leased) at that time.

3.   When a farmer who owns payment entitlements applies for payment entitlements from the national reserve, he may receive a number of payment entitlements not higher than the number of hectares he holds for which he does not own any payment entitlement.

The unit value of each payment entitlement he already owns may be increased within the limit of the regional average referred to in paragraph 4.

Article 42 (8) of Regulation (EC) No 1782/2003 shall apply to payment entitlements whose unit value has been increased by more than 20 % in accordance with the second subparagraph of this paragraph.

4.   The regional average shall be established by Member States at the appropriate territorial level in accordance with objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortion. It shall be established at a date to be fixed by the Member States. It may be reviewed annually. It shall be based on the value of the payment entitlements allocated to the farmers in the region concerned. It shall not be differentiated per sector of production.

5.   The value of each payment entitlement received in accordance with paragraph 2 or 3, except second subparagraph of paragraph 3, shall be calculated by dividing a reference amount, established by the Member State, in accordance with objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortion, by a number of hectares not higher than the number of hectares referred to in paragraph 2.

Article 7

Application of Article 42(5) of Regulation (EC) No 1782/2003 in case of fewer hectares than payment entitlements

1.   Where a Member State makes use of the option provided for in Article 42(5) of Regulation (EC) No 1782/2003, it may in particular allocate, upon request, in accordance with this Article, payment entitlements to farmers, in the areas concerned, who declare fewer hectares than the number corresponding to payment entitlements they would be or would have been allocated in accordance with Article 43 of that Regulation.

In that case, the farmer shall give up to the national reserve all the payment entitlement he owns or should have been allocated, except set-aside entitlements and payment entitlements subject to special conditions referred to in Article 49 of Regulation (EC) No 1782/2003.

2.   The number of payment entitlements allocated from the national reserve shall be equal to the number of hectares the farmer declares.

3.   The five years period provided for in Article 42 (8) of Regulation (EC) No 1782/2003 shall apply or, where the case may be, restart to apply to all the payment entitlements allocated.

4.   The unit value of the payment entitlements allocated from the national reserve shall be calculated by dividing the farmer’s reference amount by the number of hectares he declares reduced by a number of hectares equal to the number of set-aside entitlements he owns. The regional average provided for in Article 6 (4) shall not apply.

5.   Paragraphs 1, 2, 3 and 4 shall not apply to a farmer who declares less than 50 % of the total number of hectares, within the meaning of Article 43(1) and (2) of Regulation (EC) No 1782/2003, which he held (leased and owned) in the reference period.

6.   Paragraph 1, 2, 3 and 4 shall not apply to a farmer who declares fewer hectares than the number corresponding to payment entitlements he would be or have been allocated in accordance with Article 43 of Regulation (EC) No 1782/2003 due to the fact that he transferred those hectares by sale or lease.

7.   The farmer concerned shall declare all the hectares he holds at the time of the request.

Section 3

Replenishment of the national reserve

Article 8

Unused payment entitlements

1.   Without prejudice to Article 34 (3) of Regulation (EC) No 1782/2003, unused payment entitlements shall revert to the national reserve on the day following the last day for modifying the application under the single payment scheme in the calendar year in which the period referred to in the second subparagraph of Article 42(8) or in Article 45(1) of Regulation (EC) No 1782/2003 expires.

For the purposes of this Article, ‘unused payment entitlement’ shall mean that no payment has been granted for that entitlement during the period referred to in the first subparagraph. Payment entitlements for which an application is made and accompanying an area determined within the meaning of Article 2 point (22) of Regulation (EC) No 795/2004 shall be deemed as being used.

2.   Set-aside entitlements and payment entitlements accompanied by the authorisation provided for in Article 60 of Regulation (EC) No 1782/2003 when reverting to the national reserve shall loose the accompanying obligation or authorisation.

Article 9

Retention on sales of payment entitlements

1.   Where a Member State makes use of the option provided for in Article 46(3) of Regulation (EC) No 1782/2003, the Member State may decide that it shall revert to the national reserve:

In case of sale of payment entitlements with or without land to a farmer commencing an agricultural activity and in case of actual or anticipated inheritance of payment entitlements no retention shall apply.

2.   When fixing the percentages referred to in paragraph 1, a Member State may differentiate the percentage within one of the cases referred to in paragraph 1 a) to e) in accordance with objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortion.

Article 10

Windfall profit clause

1.   In cases referred to in Article 42(9) of Regulation (EC) No 1782/2003, the following shall revert to the national reserve:

2.   The payment entitlements to be established for the seller or the lessor shall be calculated in accordance with Article 43 of Regulation (EC) No 1782/2003 on the basis of the remaining reference amount and hectares.

3.   Paragraph 1 shall not apply in cases where, within one year but not later than 30 april 2004 from the sale or the lease, the seller or the lessor bought or rented for six or more years another holding or part of it. In that case, the seller or the lessor shall keep a number of payment entitlements at least equal to the number of payment entitlements that the farmer may use on the new holding pursuant to Article 44 of Regulation (EC) No 1782/2003.

4.   Paragraph 1 shall not apply in cases where the farmer proves, to the satisfaction of the Member State, that the price of sale or lease corresponds to the value of the holding or, in case of partial transfer of part of the holding without payment entitlements.

SECTION 4

REGIONAL ADMINISTRATION

Article 11

Regional reserves

1.   Member States may administer the national reserve at regional level.

In that case, Member States may allocate, in full or in part, the amounts available at national level in accordance with Articles 4, 5, 8, 9 and 10.

2.   The amounts allocated to each regional level may be considered available for allocation within the region concerned only, except in cases referred to in Article 42(4) of Regulation (EC) No 1782/2003 or, according to the Member State’s choice, in case of application of Article 42(3) of that Regulation.

CHAPTER 3

ALLOCATION OF PAYMENT ENTITLEMENTS

Section 1

Initial allocation of payment entitlements

Article 12

Applications

1.   Starting from the calendar year preceding the first year of application of the single payment scheme Member States may proceed to the identification of the eligible farmers referred to in Article 33 of Regulation (EC) No 1782/2003, to the provisional establishment of the amounts and the number of hectares referred to respectively in Article 34(1) (a) and (b) of that Regulation and to a preliminary verification of the conditions referred to in paragraph 5 of this Article.

2.   For the provisional establishment of payment entitlements, Member States may send the application form referred to in Article 34(1) of Regulation (EC) No 1782/2003, by a date to be fixed by the Member States but not later than 15 April of the first year of application of the single payment scheme, to the farmers referred to in Article 33(1) (a) of that Regulation or, where the case may be, to the farmers identified in accordance with paragraph 1 of this Article. In this case and by the same date, farmers other than those referred to in Article 33(1) (a) of Regulation (EC) No 1782/2003 shall make an application to establish their payment entitlements.

3.   Where a Member State does not make use of the option provided for in paragraph 2, the Member State shall send the application form referred to in Article 34(1) of Regulation (EC) No 1782/2003 by a date to be fixed by the Member State but not later than one month before the last date for lodging an application under the single payment scheme.

4.   The definitive establishment of payment entitlements to be allocated in the first year of application of the single payment scheme shall be subject to the application under the single payment scheme in accordance with Article 34(3) of Regulation (EC) No 1782/2003.

No transfer of payment entitlements shall be possible before the definitive establishment.

5.   The applicant shall prove to the satisfaction of the Member State that, at the date of application for the payment entitlements, he is a farmer within the meaning of Article 2(a) of Regulation (EC) No 1782/2003.

6.   A Member State may decide to set up a minimum size per holding for which the establishment of payment entitlements may be requested. However, the minimum size shall not be higher than 0,3 ha.

No minimum size shall be set up for the establishment of the payment entitlements subject to special conditions referred to in Articles 47 to 50 of Regulation (EC) No 1782/2003.

7.   A Member State may decide that the application for the definitive establishment of payment entitlements referred to in paragraph 4 may be lodged at the same time as the application for payment under the single payment scheme.

Section 2

Allocation of payment entitlements outside the national reserve

Article 13

Inheritance and anticipated inheritance

1.   In cases referred to in Article 33(1)(b) of Regulation (EC) No 1782/2003, the farmer who has received the holding or part of the holding shall claim, in his name, the payment entitlements to be calculated for the holding or part of the holding received.

The number and value of the payment entitlements shall be established on the basis of the reference amount and number of hectares relating to the production units inherited.

2.   In cases of revocable anticipated inheritance, the access to the single payment scheme shall be given only once to the designated inheritant by the date for lodging an application for the payment under the single payment scheme.

Succession under a contract lease or inheritance or anticipated inheritance from a farmer who is a natural person and who was a lessee of a holding or part of it, in the reference period, which would give right to payment entitlements, shall be treated as the inheritance of a holding.

3.   In cases where a farmer referred to in paragraph 1 is already entitled to payment entitlements, the number and value of his payment entitlements shall be established on the basis of, respectively, the sum of the reference amounts and the sum of the number of hectares relating to his original holding and the inherited production units.

4.   In cases where a farmer referred to in paragraph 1 meets the condition for applying two or more of Articles 19 to 23 of this Regulation or Articles 37 (2), 40, 42(3) or 42(5) of Regulation (EC) No 1782/2003, he shall receive a number of payment entitlements not higher than the highest number between the hectares he inherited and those he declares in the first year of application of the single payment scheme and whose value shall be the highest value he may obtain by applying separately each of the Articles for which he meets the conditions.

5.   For the purposes of Article 33(1)(b) of Regulation (CE) No 1782/2003 and of this Regulation, the definition in the national legislation for ‘inheritance’ and ‘anticipated inheritance’ shall be used.

Article 14

Changes in legal status or denomination

1.   For the purposes of Article 33(2) of Regulation (EC) No 1782/2003, in cases of changes of legal status or denomination, the farmer shall have access to the single payment scheme under the same conditions as the farmer originally managing the holding within the limit of the payment entitlements to be allocated for the original holding under the following conditions:

2.   Where the cases referred to in Article 33(2) of Regulation (EC) No 1782/2003 occur in the period between1 January and the date for lodging an application in the first year of application of the single payment scheme, paragraph 1 of this Article shall apply.

Article 15

Mergers and scissions

1.   For the purposes of the first subparagraph of Article 33(3) of Regulation (EC) No 1782/2003, ‘merger’ shall mean the merger of two or more separate farmers within the meaning of Article 2 (a) of Regulation (EC) No 1782/2003 into one new farmer within the meaning of Article 2 (a) of Regulation (EC) No 1782/2003 controlled in terms of management, benefits and financial risks by the farmers originally managing the holdings or one of them.

The number and value of the payment entitlements shall be established on the basis of the reference amount and number of hectares relating to the original holdings.

2.   For the purposes of the second subparagraph of Article 33(3) of Regulation (EC) No 1782/2003, ‘scission’ shall mean the scission of one farmer within the meaning of Article 2 (a) of Regulation (EC) No 1782/2003 into at least two new separate farmerswithin the meaning of Article 2 (a) of Regulation (EC) No 1782/2003 of which at least one remains controlled, in terms of management, benefits and financial risks, by at least one of the legal or natural persons originally managing the holding or the scission of one farmer within the meaning of Article 2 (a) of Regulation (EC) No 1782/2003 into at least one new separate farmer within the meaning of Article 2 (a) of Regulation (EC) No 1782/2003 the other one remaining controlled, in terms of management, benefits and financial risks, by the farmer originally managing the holding.

The number and value of the payment entitlements shall be established on the basis of the reference amount and number of hectares relating to the transferred production units of the original holding.

3.   Where the cases referred to in the first or second subparagraph of Article 33(3) of Regulation (EC) No 1782/2003 occur in the period between 1 January and the date for lodging an application in the first year of application of the single payment scheme, paragraph 1 or 2 of this Article shall apply respectively.

Article 16

Hardship cases

1.   In cases referred to in Article 40(5) of Regulation (EC) No 1782/2003, where the agri-environmental commitments referred to in that Article expire after the last date for lodging an application for payment under the single payment scheme in its first year of application, the Member State shall establish, in the first year of application of the single payment scheme, reference amounts for each farmer concerned in accordance with Article 40 (1), (2), (3) or (5) second subparagraph of that Regulation, provided that any double payment under those agri-environmental commitments is excluded.

Amounts of less than EUR 10 per payment entitlement or less than a total amount of EUR 100 per farmer shall not be considered a double payment.

Where the Member State concerned may not modify the amounts to be paid under those agri-environmental commitments, the farmer concerned may:

2.   In the case referred to in the second subparagraph of Article 40(5) of Regulation (EC) No 1782/2003, the farmer shall receive payment entitlements calculated by dividing a reference amount, established by the Member State, in accordance with objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortion, by a number of hectares not higher than the number of hectares he declares in the first year of application of the single payment scheme.

Article 17

Private contract clause in case of sale

1.   Where a sales contract concluded or modified by the last date for lodging an application under the single payment scheme in its first year of application at the latest stipulates that all the holding or part of the holding is sold, in full or in part, together with the payment entitlements to be established in accordance with Article 43 of Regulation (EC) No 1782/2003, in respect of the hectares of the holding or part of the holding transferred, the sales contract shall be considered as a transfer of the payment entitlements with land within the meaning of Article 46 of that Regulation subject to the conditions provided for in paragraph 2, 3 and 4 of this Article.

2.   Articles 42(9) and 46(3) of Regulation (EC) No 1782/2003 shall apply, where the case may be, to the payment entitlements to be calculated on the basis of the production units and hectares which were the object of the contract.

3.   The seller shall apply for the establishment of the payment entitlements in accordance with Article 12, adding to his application a copy of the sales contract and indicating the production units and the number of hectares for which he intends to transfer the payment entitlements.

A Member State may allow the buyer to apply on behalf of the seller and with the explicit authorisation of the seller for the establishment of the payment entitlements in accordance with Article 12. In this case the Member State shall verify that the seller fulfils the eligibility criteria provided for in Article 33 of Regulation (EC) No 1782/2003 and in particular the condition referred to in Article 12 (5) of this Regulation.

4.   The buyer shall apply for payment under the single payment scheme in accordance with Article 12, adding to his application a copy of the sales contract.

5.   A Member State may require that the applications of the buyer and of the seller are lodged together or that the second application contains a reference to the first one.

Section 3

Allocation of payment entitlements within the national reserve

Article 18

General provisions for farmers in a special situation

1.   For the purposes of Article 42 (4) of Regulation (EC) No 1782/2003, ‘farmers in a special situation’ shall mean the farmers referred to in Articles 19 to 23 of this Regulation.

2.   In cases where a farmer in a special situation meets the condition for applying two or more of Articles 19 to 23 of this Regulation or Articles 37 (2), 40, 42(3) or 42(5) of Regulation (EC) No 1782/2003, he shall receive a number of payment entitlements not higher than the number of hectares he declares in the first year of application of the single payment scheme and whose value shall be the highest value he may obtain by applying separately each of the Articles for which he meets the conditions.

3.   Article 6 shall not apply to farmers in a special situation, except the third subparagraph of Article 6(3).

4.   In cases where the lease referred to in Articles 20 and 22 or the programs referred to in Article 23 expire after the last date for lodging an application under the single payment scheme in its first year of application, the farmer concerned may apply for the establishment of his payment entitlements, after the expiry of the lease or program, by a date to be fixed by the Member States but not later than the latest date for application under the single payment scheme in the following year.

5.   Where, in accordance with their national law or well-established usual practice, the definition of long term lease also includes lease for five years, Member States may decide to apply Articles 20, 21 and 22 to those lease.

Article 19

Dairy farmers

For the purpose of establishing the reference amount of a dairy farmer finding himself in a situation referred to in Article 40 of Regulation (EC) No 1782/2003 who leases, because of that situation, his individual reference quantity or part of it according to Article 16 of Regulation (EC) No 1788/2003 during the twelve-month period ending on 31 March of the first year of application of the single payment scheme to the dairy premiums and additional payments, that individual reference quantity shall be deemed to be available on the holding of that farmer for that calendar year.

Article 20

Transfer of leased land

1.   A farmer who received, by transfer free of charge or by lease for six or more years or by way of actual or anticipated inheritance, a holding or part of a holding, that was leased to a third person during the reference period, from a farmer who retired or died before the date for lodging an application under the single payment scheme in its first year of application, shall receive payment entitlements calculated by dividing a reference amount, established by the Member State, in accordance with objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortion, by a number of hectares not higher than the number of hectares of the holding or part of the holding he received.

2.   Farmers referred to in paragraph 1 shall be any person who may receive the holding or part or the holding referred to in paragraph 1, by way of actual or anticipated inheritance.

Article 21

Investments

1.   A farmer who made investments in production capacity or purchased land in accordance with the conditions laid down in paragraphs 2 to 6, by29 September 2003 at the latest, shall receive payment entitlements calculated by dividing a reference amount, established by the Member State, in accordance with objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortion, by a number of hectares not higher than the number of hectares he purchased.

2.   Investments shall be provided for in a plan or programme whose implementation has already started by 29 September 2003 at the latest. The plan or programme shall be communicated by the farmer to the competent authority of the Member State.

Where no written plan or programs exists, Member Stats may take account of other objective proof of the investment.

3.   The increase in the production capacity shall concern only those sectors for which a direct payment listed in Annex VI to Regulation (EC) No 1782/2003 would have been granted in the reference period taking into account the application of the options provided for in Articles 66 to 70 of that Regulation.

The purchase of land shall only concern the purchase of eligible land within the meaning of Article 44 (2) of Regulation (EC) No 1782/2003.

In any case, the part of the increase in production capacity and/or the purchase of land for which the farmer is already entitled to be allocated payment entitlements and/or reference amounts for the reference period shall not be taken into account for the application of this Article.

4.   Long term lease of six and more years started by 29 September 2003 at the latest shall be considered as a purchase of land for the application of paragraph 1.

5.   Where a farmer already owns payment entitlements, in case of purchase or long term lease, the number of payment entitlements shall be calculated on the basis of the hectares purchased or rented and, in case of other investments, the total value of the existing payment entitlements may be increased within the limit of the reference amount referred to in paragraph 1.

6.   Where a farmer has no hectares or does not own any payment entitlements, the number of payment entitlements shall be calculated by dividing the reference amount referred to in paragraph 1 by a unit value that shall not be higher than EUR 5 000.

The value of each payment entitlement shall be that unit value.

The payment entitlements shall be subject to the conditions referred to in Article 49 of Regulation (EC) No 1782/2003. The 50 % of the agricultural activity referred to in paragraph 2 of that Article shall be established by the Member State in accordance with objective criteria.

Article 22

Lease and purchase of leased land

1.   A farmer who leased, between the end of the reference period and 29 September 2003 at the latest, for six or more years a holding or part of it whose lease conditions may not be adjusted shall receive payment entitlements calculated by dividing a reference amount, established by the Member State, in accordance with objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortion, by a number of hectares not higher than the number of hectares he leased.

2.   Paragraph 1 shall apply to a farmer who bought, in the reference period or before, or by 29 September 2003 at the latest, a holding or part of it whose land was under a lease during the reference period, with the intention to commence or expand his agricultural activity within one year after the expiry of the lease.

Article 23

Reconversion of production

1.   A farmer who participated, in the reference period and by 29 September 2003 at the latest, in national programs of reorientation of production for which a direct payment under the single payment scheme could have been granted, such as, in particular, programs of conversion of production, shall receive payment entitlements calculated by dividing a reference amount, established by the Member State, in accordance with objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortion, by a number of hectares not higher than the number of hectares he declares in the first year of application of the single payment scheme.

2.   Paragraph 1 shall apply to a farmer who converted during the reference period and by 29 September 2003 at the latest, his milk production into any other production of a sector referred to in Annex VI of Regulation (EC) No 1782/2003.

CHAPTER 4

SPECIFIC PROVISIONS

Section 1

Declaration and transfer of payment entitlements

Article 24

Declaration and use of payment entitlements

1.   Payment entitlements may only be declared for payment, once per year, by the farmer who holds them at the latest date for lodging an application under the single payment scheme

2.   Member States shall fix the beginning of the 10 month period referred to in Article 44(3) of Regulation (EC) No 1782/2003 for each individual farmer at a single date within a period to be fixed between 1st September of the calendar year preceding the year of lodging an application under the single payment scheme and 30 April of the following calendar year or leave it at the farmer’s choice within the fixed period.

Article 25

Transfers of payment entitlements

1.   Payment entitlements may be transferred at any time of the year.

2.   The transferor shall inform the competent authority of the Member State of the transfer within a period to be established by the Member State

3.   A Member State may require that the transferor shall communicate the transfer to the competent authority of the Member State where the transfer will operate, within a time period to be established by that Member State but not earlier than six weeks before the transfer shall take place and taking into account the last date for lodging an application under the single payment scheme. The transfer shall take place six weeks after the day of communication unless the competent authority objects to the transfer and notifies the transferor thereof within that period. The competent authority may only object to a transfer where the latter is not in accordance with provisions of Regulation (EC) No 1782/2003 and of this Regulation.

Article 26

Regional limitation

1.   Where a Member State makes use of the option provided for in the third subparagraph of Article 46 (1) of Regulation (EC) No 1782/2003, Member States shall define the region at the appropriate territorial level in accordance with objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortion.

2.   The Member State shall define the region referred to in paragraph 1 at the latest one month before the date of beginning of the 10 month period referred to in Article 44(3) of Regulation (EC) No 1782/2003.

A farmer, whose holding is situated in the region concerned, may not transfer or use outside that region his payment entitlements corresponding to the number of hectares which he declares in the first year of application of the option provided for in the third subparagraph of Article 46(1) of Regulation (EC) No 1782/2003.

A farmer, whose holding is partly situated in the region concerned, may not transfer or use outside that region his payment entitlements corresponding to the number of hectares, situated in that region, which he declares in the first year of application of the option.

3.   The limitation to the transfer of payment entitlements referred to in the third subparagraph of Article 46 (1) of Regulation (EC) No 1782/2003 shall not apply in case of actual or anticipated inheritance of payment entitlements without an equivalent number of eligible hectares.

4.   A Member State may decide to apply the limitation to the transfer of payment entitlements referred to in the third subparagraph of Article 46 (1) of Regulation (EC) No 1782/2003 only to set-aside payment entitlements.

Article 27

Private contract clause in case of lease

1.   Subject to paragraphs 2 and 3, a clause in a lease contract providing for the transfer of a number of entitlements not higher than the number of hectares leased shall be considered as a lease of the payment entitlements with land within the meaning of Article 46 of Regulation (EC) No 1782/2003, in cases where:

2.   The lessor shall apply for the establishment of the payment entitlements in accordance with Article 12, adding to the application a copy of the lease contract and indicating the number of hectares for which he intends to lease the payment entitlements. Where the case may be, Article 42(9) of Regulation (EC) No 1782/2003 shall apply.

3.   The lessee shall apply for payment under the single payment scheme in accordance with Article 12, adding to the application a copy of the lease contract.

4.   A Member State may require that the applications of the lessee and of the lessor are lodged together or that the second application contains a reference to the first one.

Section 2

Other specific provisions

Article 28

Forage area

For the purposes of Article 43(2) (b) of Regulation (EC) No 1782/2003, a Member State may decide to use the forage area declared by the farmer in the area aid application for 2004 or in the year preceding the first year of application of the single payment scheme unless the farmer proves, at the satisfaction of the competent authority, that his forage area in the reference period was lower.

Article 29

Production of hemp

For the purposes of Article 52 of Regulation (EC) No 1782/2003, the payment of the entitlements for areas on hemp shall be subject to the use of seed of the varieties listed in Annex II to Regulation (EC) No 795/2004 in the version applicable for the year in respect of which the payment is granted. In the case of hemp grown for fibre, the seed shall be certified in accordance with Council Directive 2002/57/EC (4) and in particular Article 12 thereof.

Article 30

Entitlements subject to special conditions

1.   For the purposes of calculating the agricultural activity expressed in livestock units (LU) referred to in Article 49(2) of Regulation (EC) No 1782/2003, the conversion table provided for in Article 131(2) (a) of that Regulation shall apply to the number of animals for which a direct payment referred to in Annex VI of that Regulation was granted in the reference period.

2.   Male and female bovine animals of less than six months shall be converted in LU by using the coefficient 0,2.

3.   In order to check that the minimum agricultural activity expressed in livestock units in accordance with paragraph 1 is respected, Member States shall determine the number of animals in accordance with one of the following methods:

4.   The minimum agricultural activity requirement shall be deemed to be respected when the number of LUs reaches 50 % during a period or at certain dates to be determined by the Member States. All the animals sold or slaughtered during the calendar year concerned shall be taken into account.

5.   Member States shall take the measures necessary to apply Article 29 of Regulation (EC) No 1782/2003 in the case of producers who, by means of abnormally low numbers of LUs during part of the year, artificially create the conditions required to respect the minimum agricultural activity.

Article 31

Dairy premium and additional payments

1.   Where a Member State makes use of the option provided for in the first paragraph of Article 62 of Regulation (EC) No 1782/2003 in 2005 or, in case of application of Article 71 of Regulation (EC) No 1782/2003, in the first year of application of the single payment scheme:

2.   Where a Member State makes use of the option provided for in the first subparagraph of Article 62 of Regulation (EC) No 1782/2003 in 2006, Article 50 of that Regulation shall apply.

CHAPTER 5

SET-ASIDE

Article 32

Conditions for set aside

1.   Areas set aside must so remain for a period commencing on 15 January at the latest and ending on 31 August at the earliest. However, Member States shall lay down the conditions under which producers may be authorised to sow seed from 15 July for harvesting in the following year and the conditions to be met for grazing to be authorised from 15 July or, in case of exceptional climatic condition, from 15 of June in Member States where transhumance is practised traditionally.

2.   Member States shall apply suitable measures compatible with the specific situation of areas set aside in order to ensure they are maintained in good agricultural and environmental condition and that the environment is protected.

Such measures may involve green cover. In that case, the measures shall ensure that the green cover cannot be used for seed production and that it cannot be used for agricultural purposes before 31 August or, before 15 January thereafter, to produce crops for marketing.

3.   Paragraph 2 shall not apply to areas set aside or afforested pursuant to Articles 22, 23, 24 and 31 of Council Regulation (EC) No 1257/1999 (7) and counting for the purposes of compulsory set-aside, where the measures referred to in paragraph 2 prove to be incompatible with the environmental or afforestation requirements laid down in those Articles.

Article 33

Exchange of eligible land for set-aside

For the purpose of applying Article 54(5) of Regulation (EC) No 1782/2003, Member States may derogate from the first sub paragraph of paragraph 2 of that Article only under the following situations and conditions:

In these cases, Member States shall take action to prevent any significant increase in the total area eligible to set aside entitlements. This may in particular involve deeming previously eligible areas ineligible as an offsetting measure. Areas newly declared eligible by the Member States must not exceed the area newly declared ineligible by more than 5 %. The Member States may provide for a system for the prior notification and approval of such exchanges.

Article 34

Organic production

1.   The exemption from set-aside provided for in Article 55 (a) of Regulation (EC) No 1782/2003 shall apply for a number of hectares not higher than the number of set-aside entitlements which a farmer received in the first year of application of the single payment scheme.

2.   In case of transfer of set-aside entitlements with land, paragraph 1 shall not apply under the condition that Article 55 (a) of Regulation (EC) No 1782/2003 is respected.

CHAPTRE 6

REGIONAL AND OPTIONAL IMPLEMENTATION

Section 1

Regional implementation

Article 35

General provisions

Where a Member State makes use of the options provided for in Articles 58(1) and 59(1) of Regulation (EC) No 1782/2003, save as otherwise provided for in this Section, the other provisions of this Regulation shall apply.

Article 36

Calculation of the regional ceiling

1.   Where a Member State makes use of the option provided for in Articles 58(1) and 59(1) of Regulation (EC) No 1782/2003, in case of farmers whose holdings are partly situated in the region concerned, and without prejudice to Article 58 (3) of that Regulation, the regional ceiling shall be calculated on the basis of the reference amount corresponding to the production units which gave right to direct payments in the reference period situated in the region concerned, or in accordance with objective criteria established by the Member State.

2.   In the case referred to in paragraph 1, the individual reference amount referred to in Article 59 (3) second subparagraph of Regulation (EC) No 1782/2003 shall be that which corresponds to the production units which gave right to direct payments in the reference period situated in the region concerned or established according to objective criteria established by the Member State.

3.   Article 26 (2) shall apply mutatis mutandis.

Article 37

Establishment of the national reserve

Where a Member State makes use of the option provided for in Articles 58 and 59 of Regulation (EC) No 1782/2003, for the purpose of establishing the national reserve, the reduction referred to in Article 42(1) of that Regulation shall be applied to the ceiling referred to in Annex VIII of that Regulation and, where the case may be, adjusted before the definitive establishment of the payment entitlements as referred to in Article 38 (3) of this Regulation.

Article 38

Initial allocation of payment entitlements

1.   For the purposes of Article 59 (2) and (3) of Regulation (EC) No 1782/2003, Member States shall establish the number of eligible hectares referred to in those paragraphs including the grassland by using the number of hectares declared for the establishment of the payment entitlements in the first year of application of the single payment scheme.

2.   By way of derogation from paragraph 1, Member States may establish the number of eligible hectares referred to in Article 59 (2) and (3) of Regulation (EC) No 1782/2003 including the grassland by using the number of hectares declared in the area aid declarations for 2004 or for the year preceding the first year of application of the single payment scheme. In cases where the number of eligible hectares declared by farmers in the first year of application of the single payment scheme is lower than the number of eligible hectares established in accordance with the first subparagraph, a Member State may reallocate, in part or in full, the amounts corresponding to the hectares which have not been declared as a supplement to each payment entitlement allocated in the first year of application of the single payment scheme. The supplement shall be calculated by dividing the amount concerned by the number of payment entitlements allocated.

3.   The value and number of the payment entitlements allocated on the basis of the farmers’ declarations for the establishment of the payment entitlements in the first year of application of the single payment scheme shall be provisional. The definitive value and number shall be established, by 31 December of the first year of application of the single payment scheme at the latest, after the checks made pursuant to Commission Regulation (EC) No 795/2004 are carried out.

Article 39

Initial allocation of set-aside entitlements

1.   For the purposes of Article 63(2) 3rd subparagraph of Regulation (EC) No 1782/2003, Member States shall establish the set-aside rate by using the data available related to the land concerned.

2.   The number of hectares corresponding to the set-aside entitlements allocated in the first year of application of the single payment scheme shall not vary by a margin of more than 5 % of the average number of hectares set aside in the reference period.

Where the margin referred to in the first subparagraph is exceeded, the number of hectares shall be adjusted by 1 August of the first year of application of the single payment scheme at the latest. However, the set-aside obligation related to the new set-aside payment entitlements shall apply to the farmer concerned only starting from the following year.

Article 40

Application of Article 42(5) of Regulation (EC) No 1782/2003 in case of fewer hectares than payment entitlements

Where a Member State makes use of the option provided for in Article 59 of Regulation (EC) No 1782/2003, and it decides to apply Article 7 of this Regulation, for the purpose of the allocation of payment entitlements in accordance with that Article 7, the number of payment entitlements to which an authorization as referred to in Article 60 of Regulation (EC) No 1782/2003 is linked shall be equal to the initial number of payment entitlements with the authorisation and, where the case may be, no higher than the number of payment entitlements allocated.

Article 41

Establishment and transfer of payment entitlements with authorisation

1.   Where a Member State makes use of the option provided for in Article 59(1) of Regulation (EC) No 1782/2003, the authorisations established according to Article 60 of that Regulation shall be linked to each individual payment entitlement to be allocated to the farmer concerned.

2.   In case the number of authorisation is lower that the number of payment entitlements, the authorisation shall be linked to the payment entitlements starting from those with the highest unit value. In case of transfer of the payment entitlements, the authorisation shall follow the payment entitlement to which it is linked.

3.   A Member State may authorize, on farmer’s request, the transfer of an authorization linked to a set-aside entitlement to a payment entitlement.

Article 42

Dairy premium and additional payments

1.   Where a Member State making use of the option provided for in Article 59(1) of Regulation (EC) No 1782/2003 decides to make use of the option provided for in the first subparagraph of Article 62 of that Regulation in 2005 or, in case of application of Article 71 of Regulation (EC) No 1782/2003, in the first year of application of the single payment scheme, Articles 59 (2) and (3) of that Regulation shall apply respectively.

2.   Where a farmer has no hectares, he shall receive payment entitlements subject to special conditions calculated in accordance with Article 48 of Regulation (EC) No 1782/2003

3.   Where a Member State making use of the option provided for in Article 59(1) of Regulation (EC) No 1782/2003 decides to make use of the option provided for in the first paragraph of Article 62 in 2006 or 2007, Articles 48, 49 and 50 of that Regulation shall apply mutatis mutandis.

Article 43

Set-aside

1.   Where a Member State makes use of the option provided for in Article 59(1) of Regulation (EC) No 1782/2003, it shall establish and communicate to farmers the set-aside rate referred to in the third subparagraph of Article 63(2) of that Regulation by 1 August of the year preceding the first year of application of the single payment scheme.

2.   In case of farmers whose holding is partly situated in the region concerned by the application of Article 59 of Regulation (EC) No 1782/2003, the set aside rate shall apply to the farmer’s eligible land, referred to in Article 63 (2) second subparagraph of that Regulation, situated in the region concerned.

Article 44

Retention on sale of payment entitlements

Where a Member State making use of the option provided for in Article 59(1) of Regulation (EC) No 1782/2003 decides to make use of the option provided for in Article 46(3) of that Regulation, the percentages of reduction provided for in Article 9 of this Regulation shall apply after deduction from the value of the payment entitlements of a franchise equal to the regional unit value calculated in accordance with Article 59 (2) or (3) of Regulation (EC) No 1782/2003.

Article 45

Windfall profit clause

Where a Member State making use of the option provided for in Article 59(1) of Regulation (EC) No 1782/2003 decides to make use of the option provided for in Article 42(9) of that Regulation, the percentages of reduction provided for in Article 10 of this Regulation shall apply to the value of each payment entitlement and/or to the equivalent amount expressed in number of payment entitlements to be allocated.

Article 46

Private contract clause

Where a Member State makes use of the option provided for in Article 59(1) of Regulation (EC) No 1782/2003, for the purposes of Article 17 of this Regulation, the reference amount calculated for the production units which have been transferred shall be taken into account for the establishment of the value of all the payment entitlements of the buyer.

Article 27 shall not apply.

Section 2

Optional implementation

Article 47

Overrun of the ceilings

Where the sum of the amounts to be paid under each of the schemes provided for in Articles 66 to 69 exceeds the ceiling fixed in accordance with Article 64(2) of Regulation (EC) No 1782/2003, the amount to be paid shall be reduced proportionately in the year concerned.

Article 48

Implementation of Article 69 of Regulation (EC) No 1782/2003

1.   The additional payment provided for Article 69 of Regulation (EC) No 1782/2003 shall be granted, without prejudice to Article 37(3) of Regulation (EC) No 1257/1999 and its implementing rules, under the conditions provided for in paragraphs 2 to 6 of this Article.

2.   The payment shall be made only to farmers within the meaning of Article 2(a) of Regulation (EC) No 1782/2003, irrespective whether they have applied or not to the single payment scheme or they hold payment entitlements.

3.   ‘In the sector or sectors concerned by the retention’ shall mean that the payment may be claimed, in principle, by all the farmers producing, at the time for lodging an application for the additional payment and under the conditions provided for by this Article, the products covered by the sector or sectors referred to in Annex VI to Regulation (EC) No 1782/2003.

4.   In case the payment covers types of farming or quality and marketing measures for which no specific production is identified or the production is not directly covered by a sector, payment may be provided for under the condition that the retention is done in all the sectors referred to in Annex VI to Regulation (EC) No 1782/2003 and only the farmers belonging to any of the sectors referred to in that Annex shall participate to the scheme.

5.   In case of application of Article 69 of Regulation (EC) No 1782/2003 at regional level, the retention shall be calculated on the basis of the component of the payments of the sectors concerned in the region concerned.

Member States shall define the region at the appropriate territorial level in accordance with objective criteria and in such a way as to ensure equal treatment between farmers and to avoid market and competition distortion.

6.   Member States concerned shall communicate the details of the payment they intend to grant and, in particular, the eligibility conditions and the sectors concerned by 1 August of the year preceding the first year of application of the single payment scheme at the latest.

Any change to the communication referred to in the first subparagraph shall be done by 1 August of a given year at the latest and shall apply to the following year. It shall be immediately communicated to the Commission accompanied by the objective criteria justifying such changes. However, a Member State may not modify the sectors concerned nor the percentage of retention.

CHAPTER 7

COMMUNICATIONS

Article 49

Regionalisation

Where a Member State makes use of the option provided for in Article 59(1) of Regulation (EC) No 1782/2003, it shall communicate to the Commission, by 1 August of the year preceding the first year of application of the single payment scheme at the latest, the justification and objective criteria on the basis of which the decision of applying that option has been taken and, where necessary, justification of the application of that Article only in a given region, or justification of the partial division provided for in paragraph 3 of that Article.

Article 50

Payments data

1.   Member States shall communicate, by electronic means, to the Commission each year:

2.   In case of regional implementation of the single payment scheme as provided for in Article 58 of Regulation (EC) No 1782/2003, Member States shall communicate the information referred to in paragraph 1 (a) and (b) for each of the regions concerned, and, by 1 August of the first year of application of the single payment scheme at the latest, the corresponding part of the ceiling established in accordance with Article 58 (3) of Regulation (EC) No 1782/2003.

For the first year of application of the single payment scheme, the information referred to in paragraph 1 (a) shall be based on the provisional payment entitlements. The same information based on the definitive payment entitlements shall be communicated by 1st March of the following year.

Chapter 8

Final provisions

Article 51

Entry into force

This Regulation shall enter into force on the seventh day following that of its publication in the Official Journal of the European Union.

It shall apply from1 January 2005 except Article 12 (1) and (2) which shall apply from 1st January 2004.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 21 april 2004            

For the Commission

Franz FISCHLER            

Member of the Commission

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(1)OJ L 270, 21.10.2003, p. 1. Regulation as amended by Regulation (EC) No 21/2004 (OJ L 5, 9.1.2004, p. 8).

(2)OJ L 141, 30.4.2004, p.1.

(3)OJ L 38, 12.2.2000, p.1.

(4)OJ L 193, 20.7.2002, p. 74.

(5)OJ L 355, 5.12.1992, p. 32.

(6)OJ L 204, 11.8.2000, p. 1.

(7)OJ L 160, 26.6.1999, p. 80.

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            COMMISSION REGULATION (EC) No 796/2004

of 21 april 2004         

laying down detailed rules for the implementation of cross-compliance, modulation and the integrated administration and control system provided for in of Council Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers and amending Regulations (EEC) No 2019/93, (EC) No 1452/2001, (EC) No 1453/2001, (EC) No 1454/2001, (EC) 1868/94, (EC) No 1251/1999, (EC) No 1254/1999, (EC) No 1673/2000, (EEC) No 2358/71 and (EC) No 2529/2001 (1), and in particular Articles 7(1), 10(3), 24(2), 34(2), 52(2), 145(b), (c), (d), (g), (j), (k), (l), (m), (n), (p), thereof,

Whereas:

HAS ADOPTED THIS REGULATION:

PART I

SCOPE AND GENERAL PROVISIONS

Article 1

Scope

This Regulation lays down the detailed rules for the implementation of cross-compliance, modulation and the integrated administration and control system (hereinafter ‘the integrated system’) established by Title II of Regulation (EC) No 1782/2003. It shall be without prejudice to specific provisions laid down in the Regulations covering the individual aid schemes.

Article 2

Definitions

For the purposes of this Regulation, the following definitions shall apply:

Article 3

Maintenance of land under permanent pasture at Member State level

1.   Without prejudice to the exceptions provided for in the third subparagraph of Article 5(2) of Regulation (EC) No 1782/2003, the Member States shall, pursuant to the first paragraph thereof, ensure the maintenance of the ratio of the land under permanent pasture in relation to the total agricultural area as defined in Article 2 point (a) of Regulation (EC) No 796/2004 That obligation shall apply at national or regional level.

However, where the amount of land under permanent pasture in absolute terms established in accordance with paragraph 4, point (a) is maintained, the obligation set out in the first subparagraph of Article 5(2) of Regulation (EC) No 1782/2003 shall be considered as being complied with.

2.   For the purpose of applying the second subparagraph of Article 5(2) of Regulation (EC) No 1782/2003, the Member States shall ensure that the ratio referred to in paragraph 1 shall not decrease to the detriment of land under permanent pasture by more than 10 % relatively to the ratio of reference for 2003.

3.   The ratio referred to in paragraph 1 shall be established each year on the basis of the areas declared by the farmers for the year concerned.

4.   The ratio of reference for 2003 referred to in paragraph 2 shall be established as follows:

Article 4

Maintenance of land under permanent pasture at individual level

1.   Where it is established that the ratio referred to in Article 3(1) of this Regulation is decreasing the Member State concerned shall, at national or regional level, provide for the obligation of farmers applying for aid under any of the direct payment schemes listed in Annex I of Regulation (EC) No 1782/2003 not to convert land under permanent pasture without prior authorisation.

2.   Where it is established that the obligation referred to in Article 3(2) of this Regulation cannot be ensured, the Member State concerned shall, further to the measures to be taken in accordance with paragraph 1, provide, at national or regional level, for the obligation of farmers applying for aid under any of the direct payment schemes listed in Annex I of Regulation (EC) No 1782/2003 to re-convert land into land under permanent pasture for those farmers who have land at their disposal which was converted from land under permanent pasture into land for other uses.

This obligation shall, in 2005, apply with regard to land converted into land for other uses since the date provided for the submission of the area aid applications for 2003. As of 2006, this obligation shall apply with regard to land thus converted since the start of the 12-months period preceding the last date at which the single applications had to be submitted at the latest in accordance with Article 11 in the Member State concerned.

In such case, farmers shall re-convert a percentage of that area into land under permanent pasture or establish such an amount of area as land under permanent pasture. That percentage shall be calculated on the basis of the amount of area thus converted by the farmer and the amount of area needed to re-establish the balance.

However, where such land was subject to a transfer after it had been converted into land for other uses, this obligation shall only apply if the transfer took place after the entry into force of this Regulation.

By way of derogation from Article 2, point 2, areas re-converted or established as land under permanent pasture shall, as of the first day of the re-conversion or establishment be considered as ‘permanent pasture’.

3.   However, the obligation for farmers set out in paragraphs 1 and 2 shall not apply where farmers created land under permanent pasture in the framework of programmes in accordance with Council Regulations (EEC) No 2078/92 of 30 June 1992 on agricultural production methods compatible with the requirements of the protection of the environment and the maintenance of the countryside (13) and (EC) No 1257/1999 of 17 May 1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) and amending and repealing certain Regulations (14) and Council Regulation (EC) No 1017/94 of 26 April 1994 concerning the conversion of land currently under arable crops to extensive livestock farming in Portugal (15).

PART II

THE INTEGRATED ADMINISTRATION AND CONTROL SYSTEM

TITLE I

GENERAL

Article 5

Identification of farmers

Without prejudice to Article 22(3) of Regulation (EC) No 1782/2003, the single system to record the identity of each farmer provided for by Article 18(1)(f) of that Regulation shall guarantee a unique identification with regard to all aid applications submitted by the same farmer.

Article 6

Identification of agricultural parcels

1.   The identification system for agricultural parcels referred to in Article 20 of Regulation (EC) No 1782/2003 shall operate at reference parcel level such as cadastral parcel, or production block which shall ensure unique identification of each reference parcel.

Member States shall, moreover, ensure that agricultural parcels are reliably identified and shall in particular require the single application to be furnished with particulars or accompanied by documents specified by the competent authority that enable each agricultural parcel to be located and measured. The GIS shall operate on the basis of a national geodetic system.

2.   The Member State shall ensure that with regard to at least 75 % of the reference parcels being subject to an aid application, at least 90 % of the respective area is eligible pursuant to the single payment scheme. The assessment shall be made on an annual basis using appropriate statistical methods.

3.   In respect of the area payment for nuts provided for in Chapter 4 of Title IV of Regulation (EC) No 1782/2003, the Member States for which the national guaranteed area fixed in Article 84(3) of that Regulation is more than 1 500 ha, shall introduce, as from 1 January 2006, an additional layer of GIS information relating to the number of trees per parcel, their type, their positioning and the calculation of the orchard’s surface.

Article 7

Identification and registration of payment entitlements

1.   The system for the identification and registration of payment entitlements provided for in Article 21 of Regulation (EC) No 1782/2003 shall be an electronic register at Member State level and shall, in particular with regard to the cross-checks provided for in Article 24 of this Regulation, ensure effective traceability of the payment entitlements, in particular as regards the following elements:

2.   Member States in which there is more than one Paying Agency, may decide to operate the electronic register at Paying Agency level. In that case, the Member State concerned shall ensure that the different registers are compatible with each other.

Article 8

General principles in respect of agricultural parcels

1.   A parcel that contains trees shall be considered an agricultural parcel for the purposes of the area-related aid schemes provided that agricultural activities referred to in Article 51 of Regulation (EC) No 1782/2003 or, where applicable, the production envisaged can be carried out in a similar way as on parcels without trees in the same area.

2.   With regard to forage area:

Article 9

Control system as regards cross-compliance

Member States shall establish a system guaranteeing an effective control on the respect of cross-compliance. That system shall, in accordance with Chapter III of Title III of this Regulation, in particular provide for:

Member States may, moreover, provide for a procedure according to which the farmer indicates to the Paying Agency the elements necessary to identify the requirements and standards applicable to him.

Article 10

Payment of aid

1.   Without prejudice to the time period provided for in Article 28 (2) of Regulation (EC) No 1782/2003 or any rules providing for the payment of advances in accordance with paragraph 3 of that Article, direct payments falling within the scope of this Regulation shall not be made before the checks with regard to eligibility criteria, to be carried out by the Member State pursuant to this Regulation, have been finalised.

2.   With regard to checks of cross-compliance specified in chapter III of Title III of the present Regulation where such checks cannot be finalised before payment, any undue payments shall be recovered according to Article 73 of the this Regulation.

TITLE II

AID APPLICATIONS

CHAPTER I

THE SINGLE APPLICATION

Article 11

Date of submission of the single application

1.   A farmer applying for aid under any of the area-related aid schemes may only submit one single application per year.

A farmer who does not apply for aid under any of the area-related aid schemes but applies for aid under another aid scheme listed in Annex I of Regulation (EC) No 1782/2003, shall submit a single application form if he has agricultural area as defined in Article 2, point (a) of Regulation (EC) No 796/2004 at his disposal in which he shall list these areas in accordance with Article 14. However, Member States may exempt farmers from this obligation where the information concerned is made available to the competent authorities in the framework of other administration and control systems that guarantee compatibility with the integrated system in accordance with Article 26 of Regulation (EC) No 1782/2003.

2.   The single application shall be submitted by a date to be fixed by the Member States which shall not be later than 15 May. Finland and Sweden may, however, fix a later date which shall not be later than 15 June.

In accordance with the procedure referred to in Article 144 (2) of Regulation (EC) No 1782/2003, it may be allowed to postpone the dates referred to in the first subparagraph of this paragraph in certain zones where exceptional climatic conditions render the normal dates inapplicable.

When fixing that date, Member States shall take into account the period required for all relevant data to be available for the proper administrative and financial management of the aid and shall ensure that effective controls may be scheduled, in particular considering the date to be fixed in accordance with Article 44 (3) of Regulation (EC) No 1782/2003.

3.   Where more than one Paying Agency is responsible with regard to the same farmer for the management of aid schemes subjected to the submission of a single application, the Member State concerned shall take the appropriate measures to ensure that the information requested in this Article is being made available to all Paying Agencies involved.

Article 12

Contents of the single application

1.   The single application shall contain all information necessary to establish eligibility for the aid, in particular:

2.   For the purpose of the identification of the payment entitlements referred to in paragraph 1(c), the pre-printed forms distributed to the farmer in accordance with Article 22 (2) of Regulation (EC) No 1782/2003 shall mention the identification of the payment entitlements in accordance with the identification and registration system provided for in Article 7 broken down by set-aside entitlements and other entitlements.

When submitting the application-form, the farmer shall correct the pre-printed form if any amendments, in particular transfers of payment entitlements in accordance with Article 46 of Regulation (EC) No 1782/2003, have occurred.

The farmer shall declare separately the area supporting set-aside entitlements and the area supporting other entitlements. In accordance with Article 54 (6) of Regulation (EC) No 1782/2003, the farmer shall claim his set-aside entitlements before any other entitlements. Consequently, the farmer shall declare the area for set-aside corresponding to his number of set-aside entitlements provided he has a sufficient amount of eligible area at his disposal. In case the amount of eligible area is less than the number of set-aside entitlements, the farmer may claim the number of set-aside entitlements corresponding to the amount of area at his disposal.

3.   For the purpose of the identification of all agricultural parcels on the holding referred to in paragraph 1(d), the pre-printed forms distributed to the farmer in accordance with Article 22(2) of Regulation (EC) No 1782/2003 shall mention the maximum eligible area per reference parcel for the purposes of the single payment scheme. Moreover, the graphical material supplied to the farmer in accordance with that same provision shall indicate the boundaries of the reference parcels and their unique identification and the farmer shall indicate the location of each agricultural parcel. When submitting the application-form, the farmer shall, moreover, correct the pre-printed form if any amendments have occurred.

Article 13

Specific requirements pertaining to the single application

1.   In the case where an application for aid for arable crops area payments in accordance with Chapter 10 of Title IV of Regulation (EC) No 1782/2003 contains a declaration of the cultivation of flax and hemp grown for fibre pursuant to Article 106 of that Regulation, the official labels used on the packaging of the seeds in accordance with Council Directive 2002/57/EC (16), and in particular Article 12 thereof, shall be submitted or, in the case of flax grown for fibre, any other documents recognised as equivalent by the Member State concerned, including the certification provided for in Article 19 of that Directive.

Where sowing takes place after the deadline for submitting the single application, those labels or documents shall be submitted by 30 June at the latest.

Where labels for seed of hemp grown for fibre also have to be submitted to other national authorities, Member States may provide for those labels to be returned to the farmer once they have been submitted.

In the case of hemp grown for fibre, all information required for the identification of the parcels sown in hemp for each variety of hemp sown shall be provided.

In that case and in the case where a farmer intends to produce hemp in accordance with Article 52 of Regulation (EC) No 1782/2003, the single application shall contain:

2.   In the case of set-aside land used in accordance with Article 55(b) of Regulation (EC) No 1782/2003 or the first indent of Article 107(3) of that Regulation, the single application shall contain the necessary proof required under the applicable sectoral rules.

3.   In the case of an application for aid for the specific quality premium for durum wheat provided for in Chapter I of Title IV of Regulation (EC) No 1782/2003 and for the durum wheat supplement and special aid provided for in Article 105 of that Regulation, the single application shall contain a proof, pursuant to the rules to be established by the Member State, that the minimum quantity of certified seeds for durum wheat has been used.

4.   In the case of an application for the crop specific payment for rice provided for in Chapter 3 of Title IV of Regulation (EC) No 1782/2003, the single application shall contain a specification of the variety of rice sown and an identification of the respective parcels.

5.   In the case of an application for an area payment for nuts provided for in Chapter 4 ot Title IV of Regulation (EC) No 1782/2003, the single application shall contain the number of trees, their positioning and their type.

6.   In the case of an application for energy crops provided for in Chapter 5 of Title IV of Regulation (EC) No 1782/2003, the single application shall contain a copy of the contract the applicant has concluded with a first processor pursuant to Article 35 of Regulation (EC) No 2237/2003.

7.   In the case of an application for aid for starch potato provided for in Chapter 6 of Title IV of Regulation (EC) No 1782/2003, the single application shall contain a copy of the cultivation contract; however, Member States may provide that that copy may be submitted by a later date which shall not be later than30 June.

8.   In the case of an application for seed aid provided for in Chapter 9 of Title IV of Regulation (EC) No 1782/2003, the single application shall contain:

Article 14

General rules pertaining to the single application and declarations in relation to particular uses of area

1.   Uses of area referred to in Articles 5(2) and 51 of Regulation (EC) No 1782/2003 and those listed in Annex V to that Regulation, as well as areas used for the production of flax grown for fibre where those areas do not have to be declared in accordance with Article 13 of this Regulation, shall be declared under a separate heading in the single application form.

Uses of area neither for the purposes of the aid schemes provided for in Titles III and IV of Regulation (EC) No 1782/2003 nor listed in Annex V to that Regulation shall be declared under one or more ‘other uses’ headings.

Member States may provide that the first and second subparagraphs shall not apply where the information concerned is made available to the competent authorities in the framework of other administration and control systems that guarantee compatibility with the integrated system in accordance with Article 26 of Regulation (EC) No 1782/2003.

2.   For the first year of application of the single payment scheme the Member States may derogate from the provisions of Articles 12 and 13 if the payment entitlements are not yet definitively established at the latest date fixed for the submission of the single application.

3.   Member States may decide that all applications for aid under Title IV of Regulation (EC) No 1782/2003 shall be covered by the single application. In that case, Chapters II and III of this Title shall apply mutatis mutandis in respect of the particular requirements established in view of the application for aid under those schemes.

4.   Each Member State shall determine the minimum size of agricultural parcels in respect of which an application may be made. However, the minimum size may not exceed 0,3 ha.

Article 15

Amendments to the single applications

1.   After the expiry of the time limit for the submission of the single application, individual agricultural parcels, as the case may be, accompanied by the corresponding payment entitlements, not yet declared in the single application for the purposes of any of the area-related aid schemes, may be added in the single application provided that the requirements under the aid schemes concerned are respected.

Changes regarding the use or aid scheme in respect of individual agricultural parcels already declared in the single application may be made under the same conditions.

Where the amendments referred to in the first and second subparagraphs have a bearing on any supporting documents or contracts to be submitted, the related amendments to such documents or contracts shall also be allowed.

2.   Without prejudice to the dates fixed by Finland or Sweden for the submission of the single application in accordance with the first subparagraph of Article 11(2), amendments in accordance with paragraph 1 of this Article shall be notified to the competent authority in writing by 31 May, in the case of Finland and Sweden by 15 June, of the calendar year concerned at the latest.

3.   Where the competent authority has already informed the farmer of irregularities in the single application or where it has given notice to the farmer of its intention to carry out an on-the-spot check and where that on-the-spot check reveals irregularities, amendments in accordance with paragraphs 1 shall not be authorised in respect of the agricultural parcels affected by the irregularities.

CHAPTER II

LIVESTOCK AID APPLICATIONS

Article 16

Requirements pertaining to livestock aid applications

1.   A livestock aid application shall contain all information necessary to establish eligibility for the aid, and in particular:

If the animal is moved to another location during the retention period the farmer shall inform the competent authority in writing in advance.

2.   Member States shall guarantee every animal keeper the right to obtain from the competent authority without constraint, at reasonable intervals and without excessive delay, information on the data relating to him and his animals kept in the computerised database for bovine animals. When submitting his aid application, the farmer shall declare that that data is correct and complete or he shall rectify incorrect data or add missing data.

3.   Member States may decide that some of the information referred to in paragraph 1 need not be included in the aid application, where it has already been communicated to the competent authority.

Member States may in particular introduce procedures by which data contained in the computerised database for bovine animals may be used for the purposes of the aid application, provided that the computerised database for bovine animals offers the level of assurance and implementation necessary for the proper management of the aid schemes involved. Such procedures may consist of a system according to which a farmer may apply for aid in respect of all animals which, at a date to be determined by the Member State, qualify for aid on the basis of the data contained in the computerised database for bovine animals. In that case, Member States shall take the necessary measures to guarantee that:

4.   Member States may provide that some of the information referred to in paragraph 1 can or shall be forwarded via a body or bodies approved by them. However, the farmer shall remain responsible for the data transmitted.

CHAPTER III

AID APPLICATION FOR THE DAIRY PREMIUM AND THE ADDITIONAL PAYMENTS

Article 17

Requirements pertaining to aid applications for the dairy premium and additional payments

Each milk producer applying for the dairy premium and additional payments provided for in Chapter 7 of Title IV of Regulation (EC) No 1782/2003 shall submit an aid application containing all information necessary to establish eligibility for the aid, and in particular:

The aid application shall be submitted by a date to be determined by the Member States which shall not be later than 15 May and, in the case of Finland and Sweden, 15 June.

CHAPTER IV

COMMON PROVISIONS

Article 18

Simplification of procedures

1.   Without prejudice to any specific provisions of this Regulation and of Regulation (EC) No 1782/2003, Member States may permit or require that any kind of communications under this Regulation both from the farmer to the authorities and vice versa be made by electronic means. In that case, appropriate measures shall be taken to ensure in particular that:

2.   With regard to the submission of aid applications, Member States may, under the conditions provided in paragraph 1(a) to (e), provide for simplified procedures where data is already available to the authorities, in particular where the situation has not changed since the latest submission of an aid application under the aid scheme concerned.

Article 19

Adjustments of obvious errors

Without prejudice to Articles 11 to 18, an aid application may be adjusted at any time after its submission, in cases of obvious errors recognised by the competent authority.

Article 20

Derogation from the final date for the submission of aid applications, supporting documents, contracts and declarations

By way of derogation from Article 5(1) of Council Regulation (EEC, Euratom) No 1182/71 (17), where the latest date for the submission of an aid application or any supporting documents, contracts or declarations under this Title is a public holiday, a Saturday or a Sunday, it shall be deemed to fall on the first following working day.

Article 21

Late submission

1.   Except in cases of force majeure and exceptional circumstances as referred to in Article 72, the submission of an aid application pursuant to this Regulation after the relevant time limit shall lead to a 1 % reduction per working day in the amounts to which the farmer would have been entitled if the application had been lodged within the time limit.

Without prejudice to any particular measures to be taken by the Member States with regard to the need for the submission of any supporting documents in due time to allow effective controls to be scheduled and carried out, the first subparagraph shall also apply with regard to documents, contracts or declarations to be submitted to the competent authority in accordance with Articles 12 and 13 where such documents, contracts or declarations are constitutive for the eligibility for the aid in question. In that case, the reduction shall be applied on the amount payable for the aid concerned.

If the delay amounts to more than 25 calendar days the application shall be considered inadmissible.

2.   The submission of an amendment to a single application after the latest date as provided for in Article 15(2) shall lead to a 1 % reduction per working day in the amounts relating to the actual use of the agricultural parcels concerned.

Amendments to a single application shall only be admissible until the latest date for a late submission of a single application as specified in the third subparagraph of paragraph 1. However, where that date is earlier than, or the same as, the latest date provided for in Article 15(2), amendments to a single application shall be considered inadmissible after the date provided for in Article 14(2).

3.   As regards forage areas, where the single application is submitted late, the resulting reduction shall be in addition to any other reduction applicable to late submissions of applications for aid referred to in Articles 131 et 132 of Regulation (EC) No 1782/2003.

Article 22

Withdrawal of aid applications

1.   An aid application may be totally or partially withdrawn at any time in writing.

In the case where a Member State makes use of the possibilities provided for in the second subparagraph of Article 16(3), that Member State may provide that the notifications to the computerised database for bovine animals of an animal that has left the holding may substitute a withdrawal in writing.

However, where the competent authority has already informed the farmer of irregularities in the aid application or where the competent authority has given notice to the farmer of its intention to carry out an on-the-spot check and where that on-the-spot check reveals irregularities, withdrawals shall not be authorised in respect of the parts of the aid application affected by the irregularities.

2.   Withdrawals in accordance with paragraph 1 shall put the claimant into the position he was in before he submitted the aid application or part of the aid application in question.

TITLE III

CONTROLS

CHAPTER I

COMMON RULES

Article 23

General principles

1.   Administrative and on-the-spot checks provided for in this Regulation shall be made in such a way as to ensure effective verification of compliance with the terms under which aids are granted and of the requirements and standards relevant for cross-compliance.

2.   The applications for aid concerned shall be rejected if the farmer or his representative prevents an on-the-spot check from being carried out.

CHAPTER II

CONTROLS WITH REGARD TO ELIGIBILITY CRITERIA

Section I

Administrative checks

Article 24

Cross-checks

1.   The administrative checks referred to in Article 23 of Regulation (EC) No 1782/2003 shall permit the detection of irregularities, in particular the automated detection using computerised means, including cross-checks:

2.   Indications of irregularities resulting from cross-checks shall be followed-up by any other appropriate administrative procedure, and where necessary, by an on-the-spot check.

Section II

on-the-spot checks

Sub-section I

Common provisions

Article 25

General principles

1.   On-the-spot checks shall be unannounced. However, provided that the purpose of the control is not jeopardised, advance notice may be given, strictly limited to the minimum time period necessary. Such notice shall, except in duly justified cases, not exceed 48 hours.

2.   Where appropriate, on-the-spot checks provided for in this Regulation and any other checks provided for in Community rules shall be carried out at the same time.

Article 26

Control rate

1.   The total number of on-the-spot checks carried out each year shall cover at least 5 % of all farmers submitting a single application.

Subject to the third subparagraph, in the following cases the Member States shall draw additional control samples of at least:

Where the control sample drawn under the first subparagraph already contains applicants for the aids referred to in points (a) to (c) of the second subparagraph, those applicants may be counted towards the control rates stipulated therein.

2.   The total number of on-the-spot checks carried out each year shall, moreover, cover at least:

3.   Should on-the-spot checks reveal significant irregularities in the context of a given aid scheme or in a region or part of a region, the competent authority shall appropriately increase the number of on-the-spot checks during the current year and shall appropriately increase the percentage of farmers to be checked on-the-spot in the following year.

4.   Where it is provided that particular elements of an on-the-spot check may be carried out on the basis of a sample, that sample shall guarantee a reliable and representative level of control. Member States shall establish the criteria for the selection of the sample. If the checks on that sample reveal irregularities, the extent and scope of the sample shall be extended appropriately.

Article 27

Selection of the control sample

1.   Farmers subjected to on-the-spot checks shall be selected by the competent authority on the basis of a risk analysis and an element of representativeness of the aid applications submitted. The effectiveness of risk analysis parameters used in previous years shall be assessed on an annual basis.

To provide the element of representativeness, the Member States shall select randomly between 20 % and 25 % of the minimum number of farmers to be subjected to on-the-spot checks as provided for in Article 26(1) and (2).

2.   The risk analysis shall take account of:

3.   The competent authority shall keep records of the reasons for the selection of each farmer for an on-the-spot check. The inspector carrying out the on-the-spot check shall be informed accordingly prior to the commencement of the on-the-spot check.

Article 28

Control report

1.   Every on-the-spot check under this Section shall be the subject of a control report which makes it possible to review the details of the checks carried out. The report shall indicate in particular:

2.   The farmer shall be given the opportunity to sign the report to attest his presence at the check and to add observations. Where irregularities are found the farmer shall receive a copy of the control report.

Where the on-the-spot check is carried out by means of remote sensing in accordance with Article 32, the Member States may decide not to give the farmer or his representative the opportunity to sign the control report if no irregularities are revealed during the check by remote-sensing. If irregularities are revealed as a consequence of such checks the opportunity to sign the report shall be given before the competent authority draws its conclusions from the findings with regard to any resulting reductions or exclusions.

Sub-section II

on-the-spot checks of the Single applications with regard to area-related aid schemes

Article 29

Elements of the on-the-spot checks

On-the-spot checks shall cover all the agricultural parcels for which aid is requested under aid schemes listed in Annex I to Regulation (EC) No 1782/2003, except those related to applications for seed aid in accordance with Article 99 of that Regulation. However, the actual inspection in the field as part of an on-the-spot check may be limited to a sample of at least half of the agricultural parcels for which applications have been submitted.

Article 30

Determination of areas

1.   Agricultural parcel areas shall be determined by any appropriate means defined by the competent authority which ensure measurement of a precision at least equivalent to that required for official measurements under the national rules. A measurement tolerance may be defined by the competent authority that shall not exceed either 5 % of the agricultural parcel area or a buffer of 1,5 m applied to the perimeter of the agricultural parcel. However, the maximum tolerance with regard to each agricultural parcel shall not, in absolute terms, exceed 1,0 ha.

2.   The total area of an agricultural parcel may be taken into account provided that it is fully utilized in accordance with the customary standards of the Member State or region concerned. In other cases the area actually utilized shall be taken into account.

In respect of the regions where certain features, in particular hedges, ditches and walls, are traditionally part of good agriculture cropping or utilisation practices, the Member States may decide that the corresponding area is to be considered part of the fully utilised area on condition that it does not exceed a total width to be determined by the Member States. That width must correspond to a traditional width in the region in question and shall not exceed 2 metres.

Member States may, after prior notification to the Commission, allow a width greater than 2 metres if the arable crop areas concerned were taken into account for the fixing of the yields of the regions concerned.

3.   Further to paragraph 2, in the case of parcels being declared for the purposes of the single payment scheme, any features referred to in the acts listed in Annex III to Regulation (EC) No 1782/2003 or which may form part of the good agricultural and environmental condition as referred to in Article 5 and Annex IV of that Regulation shall form part of the total area of an agricultural parcel.

4.   The eligibility of agricultural parcels shall be verified by any appropriate means. To that end, additional proof shall be requested where necessary.

Article 31

Elements of the on-the-spot checks related to applications for seed aid

On-the-spot checks related to applications for seed aid in accordance with Article 99 of Regulation (EC) No 1782/2003 shall cover in particular:

Article 32

Remote sensing

1.   Member States may make use of remote sensing with regard to the sample referred to in Article 26(1) instead of applying the traditional means of on-the-spot checking under the conditions set out in this Article. Articles 23, 25, 26, 27 and 28, the first sentence of Article 29 and Article 30 shall apply where appropriate.

2.   The zones to be checked by means of remote sensing shall be selected on the basis of a risk analysis or at random.

In the case of selection on the basis of a risk analysis the Member States shall take account of appropriate risk factors, and in particular:

3.   On-the-spot checks by remote sensing shall cover either:

Applications selected randomly in accordance with Article the second subparagraph of Article 27(1) may be checked by remote sensing.

4.   Once a farmer has been selected for an on-the-spot check in accordance with paragraph 3, at least 80 % of the area for which he requests aid under aid schemes established in Titles III and IV of Regulation (EC) No 1782/2003 shall be subject to on-the-spot check by remote sensing.

5.   Where a Member State applies the possibility to carry out on-the-spot checks by remote sensing, it shall:

6.   The additional checks referred to in Article 26(3) shall be carried out by means of traditional on-the-spot checks if it is no longer possible to carry them out by means of remote sensing within the current year.

Article 33

Verification of the tetrahydrocannabinol content in hemp growth

1.   The system to be used by the Member States in accordance with Article 52(1) of Regulation (EC) No 1782/2003 in order to determine the tetrahydrocannabinol (hereinafter referred to as ‘THC’) content of the crops grown shall be as set out in Annex I to this Regulation.

2.   Member States shall send the Commission, by 15 November of the marketing year in question at the latest, a report on the THC content findings. The report shall indicate, for each variety:

3.   Where the checks show, for a significant number of samples of a given variety, THC contents exceeding that laid down in Article 52(1) of Regulation (EC) No 1782/2003, it may be decided, without prejudice to any other measures the Commission might take and in accordance with the procedure referred to in Article 144(2) of that Regulation, to use procedure B as provided for in Annex I to this Regulation for the variety concerned in the course of the following calendar year.

4.   Varieties of hemp grown for fibre eligible for direct payments are listed in Annex II. Requests by a Member State to include a variety of hemp in that Annex shall be accompanied by a report giving the findings of analyses carried out in accordance with procedure B provided for in Annex I and a description of the variety in question.

Sub-section III

On-the-spot checks of livestock aid applications

Article 34

Timing of on-the-spot checks

1.   For aid schemes other than those provided for in Articles 123(6) and 130 of Regulation (EC) No 1782/2003, at least 60 % of the minimum rate of on-the-spot checks provided for in the last sentence of Article 26(2)(b) of this Regulation shall be conducted throughout the retention period of the aid scheme concerned. The remaining percentage of on-the-spot checks shall be conducted throughout the retention period of at least one of those aid schemes.

However, where a Member State makes use of the possibilities provided for in Article 68 of Regulation (EC) No 1782/2003, the minimum rate of on-the-spot checks provided for in the last sentence of Article 26(2)(b) shall be fully conducted throughout the retention period of the aid scheme concerned.

2.   At least 50 % of the minimum rate of on-the-spot checks provided for in Article 26(2)(c) shall be conducted throughout the retention period. However, the minimum rate of on-the-spot checks shall be fully conducted throughout the retention period in Member States where the system established by Regulation (EC) No 21/2004 as concerns ovines and caprines, in particular in relation to the identification of animals and the proper keeping of registers, is not fully implemented and applied.

Article 35

Elements of the on-the-spot checks

1.   On-the-spot checks shall cover all livestock for which aid applications have been submitted under the aid schemes to be checked and, in the case of checks of the bovine aid schemes, also the unclaimed bovine animals.

2.   On-the-spot checks shall include in particular:

Article 36

Control measures as regards on-the-spot checks in slaughterhouses

1.   As regards the special beef premium provided for in Article 123(6) of Regulation (EC) No 1782/2003 and the slaughter premium provided for in Article 130 of that Regulation and in cases where a Member State makes use of the possibilities provided for in Article 68 of that Regulation, on-the-spot checks shall be carried out in the slaughterhouses. In that case, Member States shall carry out on-the-spot checks either:

The on-the-spot checks in slaughterhouses shall comprise a posteriori scrutiny of documents, a comparison with the entries in the computerised database for bovine animals and checks of summaries relating to the slaughter certificates or information in place thereof, which were sent to other Member States in accordance with Article Article 35(3) of Regulation (EC) No 2342/1999.

2.   On-the-spot checks in slaughterhouses shall comprise physical checks of slaughtering procedures carried out on the day of the on-the-spot check on the basis of a sample. Where necessary, it shall be checked whether the carcasses presented for weighing are eligible for aid.

Article 37

Control measures as regards the premium granted after export

1.   As regards the slaughter premium granted for bovine animals exported to third countries in accordance with Article 130 of Regulation (EC) No 1782/2003 and where a Member State makes use of the possibilities provided for in Article 68 of Regulation (EC) No 1782/2003, all loading operations shall be subject to on-the-spot checks, which shall be carried out as follows:

2.   The animal passports shall be surrendered to the competent authority in accordance with Article 6(5) of Regulation (EC) No 1760/2000.

3.   The Paying Agency shall scrutinize the aid applications on the basis of the payment files and other available information, paying particular attention to the documents relating to the export and the comments of the competent control authorities and shall check whether the animal passports have been surrendered in accordance with paragraph 2.

Article 38

Special provisions as regards additional payments

As regards the additional payments provided for in Article 133 of Regulation (EC) No 1782/2003, the Member State shall, where appropriate, apply the provisions of this Title. If this is not appropriate because of the structure of the additional payment scheme, Member States shall provide controls ensuring a control level equivalent to that laid down in this Regulation.

Article 39

Special provisions as regards the control report

1.   Where Member States carry out on-the-spot checks pursuant to this Regulation in conjunction with inspections pursuant to Regulation (EC) No 1082/2003 the control report provided for in Article 28 of this Regulation shall be supplemented by reports in accordance with Article 2(5) of Regulation (EC) No 1082/2003.

2.   With regard to the checks in slaughterhouses provided for in Article 36(1), the control report provided for in Article 28 may consist of an indication in the slaughterhouse accounts showing which animals have been subject to the checks.

With regard to the checks provided for in Article 36(2), the report shall include, inter alia, the identification numbers, the carcass weights and the dates of slaughter in relation to all animals slaughtered and checked on the day of the on-the-spot check.

3.   With regard to the checks provided for in Article 37, the control report may consist only of an indication of the animals so checked.

4.   Where on-the-spot checks conducted in accordance with this Regulation reveal cases of non-compliance with the provisions of Title I of Regulation (EC) No 1760/2000, copies of the control report provided for in Article 28 of this Regulation shall be sent without delay to the authorities responsible for the implementation of Regulation (EC) No 1082/2003.

Sub-section IV

On-the-spot checks with regard to aid applications for the dairy premium and additional payments

Article 40

On-the-spot checks with regard to aid applications for the dairy premium and additional payments

On-the-spot checks shall cover the eligibility conditions, in particular on the basis of the farmers accounting or other registers.

CHAPTER III

CONTROLS RELATING TO CROSS-COMPLIANCE

Section I

Common provisions

Article 41

General principles and definitions

For the purposes of this Chapter, the following general principles and definitions shall apply:

Article 42

Competent control authority

1.   The specialised control bodies shall bear the responsibility to carry out the controls on the respect of the requirements and standards in question.

The Paying Agencies shall bear the responsibility for the fixing of reductions or exclusions in individual cases in accordance with Chapter II of Title IV of this Regulation.

2.   By way of derogation from paragraph 1, Member States may decide that controls in relation to all or certain requirements, standards, acts, or areas of cross-compliance shall be carried out by the Paying Agency provided that the Member State guarantees that the effectiveness of the controls is at least equal to the one achieved in the case where the controls are carried out by a specialised control body.

Section II

Administrative checks

Article 43

Administrative checks

Depending on the requirements, standards acts or areas of cross-compliance in question, Member States may decide to carry out administrative checks, in particular those already provided for under the control systems applicable to the respective requirement, standard, act or area of cross-compliance.

Section III

On-the-spot checks

Article 44

Minimum control rate

1.   The competent control authority shall, with regard to the requirements or standards for which it is responsible, carry out checks on at least 1 % of all farmers submitting aid applications under support schemes established in Titles III and IV of Regulation (EC) No 1782/2003 and for which the competent control authority in question is responsible.

Where the legislation applicable to the act and standards already fix minimum control rates, that rate shall insofar be applied instead of the minimum rate mentioned in the first subparagraph.

2.   Should on-the-spot checks reveal a significant degree of non-compliance with a given area of cross-compliance, the number of on-the-spot checks to be carried out in the following control period shall be increased.

Article 45

Selection of the control sample

1.   Without prejudice to checks carried out as a follow-up of non-compliances brought to the attention of the competent control authority in any other way, the selection of farms to be checked in accordance with Article 44 shall be based, where applicable, on a risk analysis according to the applicable legislation, or on a risk analysis appropriate to the requirements or standards. That risk analysis may be based on the level of an individual farm or on the level of categories of farms or geographical zones or, in the case of point (b) of the second subparagraph of paragraph 3 of this Article, on the level of undertakings.

2.   The competent control authority shall, with regard to the requirements or standards for which it is responsible, select the farmers to be checked in accordance with Article 44 by selecting the sample from the sample of farmers which were already selected pursuant to Articles 26 and 27 and to whom the relevant requirements or standards apply.

3.   By way of derogation from paragraph 2, the competent control authority may, withregard to the requirements or standards for which it is responsible, select a control sample of 1 % of all farmers submitting aid applications under support schemes established in Titles III and IV of Regulation (EC) No 1782/2003 and who are under the obligation to respect at least one of the requirements or standards.

In that case:

4.   The competent control authority may decide to proceed by a combination of the procedures set out in paragraphs 2 and 3 in the case where such a combination increases the effectiveness of the control system.

Article 46

Determination of the compliance with the requirements and standards

1.   Where applicable, the respect of the requirements and standards shall be determined by the use of means as stipulated in the legislation applicable to the requirement or standard in question.

2.   In other cases and where appropriate, the determination shall be carried out by the use of any appropriate means defined by the competent control authority which ensure precision at least equivalent to that required for official determinations under the national rules.

3.   Where appropriate, the on-the-spot checks may be conducted by the application of remote-sensing techniques.

Article 47

Elements of the on-the-spot checks

1.   In performing the checks on the sample provided for in Article 44, the competent control authority shall ensure that all farmers thus selected are checked with regard to their compliance with the requirements and standards for which it is responsible.

2.   The checks referred to in paragraph 1 shall, as a general rule, be carried out as part of one control visit and shall consist of a verification of the requirements and standards the compliance with which may be checked at the time of that visit, aiming to detect any possible non-compliance with those requirements and standards and, in addition, to identify cases to be submitted for further checks.

Article 48

Control report

1.   Every on-the-spot check under this Chapter, regardless whether the farmer in question was selected for the on-the-spot check in accordance with Article 45 or as a follow-up of non-compliances brought to the attention of the competent control authority in any other way, shall be the subject of a control report to be established by the competent control authority.

The report shall be divided into the following parts:

2.   The farmer shall be informed of any non-compliances found.

3.   Without prejudice to any particular provisions contained in the legislation applicable to the requirements and standards, the control report shall be finalised within one month of the on-the-spot check. However, that period may be extended to three months under duly justified circumstances, in particular if chemical or physical analysis so require.

Where the competent control authority is not the Paying Agency, the report shall be sent to the Paying Agency within a month of its finalisation.

TITLE IV

BASIS FOR THE CALCULATION OF THE AID, REDUCTIONS AND EXCLUSIONS

CHAPTER I

FINDINGS IN RELATION TO ELIGIBILITY CRITERIA

Section I

single payment scheme and other area-related aid schemes

Article 49

General principles

1.   For the purposes of this Section, the following crop groups shall be distinguished as appropriate:

By way of derogation from point (b), for the purposes of point (a), the average of the values of different payment entitlements in relation to the respective area declared shall be taken into account.

2.   Where the area determined for the purposes of the single payment scheme is lower than the area declared, the following shall apply to determine which of the payment entitlements have to be returned to the national reserve in accordance with Article 45(1) and the second subparagraph of Article 42(8) of Regulation (EC) No 1782/2003:

For the purposes of this paragraph, set-aside entitlements and other payment entitlements shall be treated separately.

3.   Where the same area serves as the basis for an aid application under more than one area-related aid scheme, that area shall be taken into account separately for each of those aid schemes.

Article 50

Basis of calculation in respect of areas declared

1.   In the case of applications for aid under area-related aid schemes, except for starch potato and seed as provided for in Chapters 6 and 9 respectively of Title IV of Regulation (EC) No 1782/2003, if the area of a crop group determined is found to be greater than that declared in the aid application, the area declared shall be used for calculation of the aid.

2.   Without prejudice to any reductions or exclusions to be applied following the actual determination of area in accordance with Articles 51 and 53, with regard to an application for aid under the single payment scheme, if there is a discrepancy between the payment entitlements declared and the area declared, the calculation of the payment shall be based on the lower size.

3.   Without prejudice to reductions and exclusions in accordance with Articles 51 and 53, in the case of applications for aid under area-related aid schemes, except for starch potato and seed as provided for in Chapters 6 and 9 respectively of Title IV of Regulation (EC) No 1782/2003, if the area declared in a single application exceeds the area determined for that crop group, the aid shall be calculated on the basis of the area determined for that crop group.

4.   Without prejudice to reductions and exclusions in accordance with Articles 51 and 53, with regard to applications for aid under the single payment scheme the following shall apply in respect of set-aside entitlements for the purpose of the definition of ‘area determined’ in Article 2 point (22):

5.   With regard to areas declared for the special quality premium for durum wheat in accordance with Article 72 of Regulation (EC) No 1782/2003 and for the durum wheat supplement and special aid in accordance with Article 105 of that Regulation and in case a difference is established between the minimum quantity of certified seeds fixed by the Member State and the quantity effectively used, the area shall be determined by dividing the total quantity of certified seeds for which proof of use was given by the farmer, by the minimum quantity of certified seeds per hectare fixed by the Member State in the production zone concerned.

6.   The calculation of the maximum eligible area for the payments to farmers applying for the arable crop area payment in accordance with Chapter 10 of Title IV of Regulation (EC) No 1782/2003 shall be made on the basis of the area of set-aside land determined and on a pro rata basis for each crop concerned. However, payments to arable crop producers shall, in relation to the area of set-aside land determined, be reduced to the level corresponding to the area which would be needed to produce 92 tonnes of cereal, in accordance with Article 107(7) of Regulation (EC) No 1782/2003.

7.   If a farmer has been unable to comply with his obligations as a result of force majeure or exceptional circumstances as referred to in Article 72, he shall retain his right to aid in respect of the area eligible at the time when the case of force majeure or the exceptional circumstance occurred.

Article 51

Reductions and exclusions in cases of overdeclaration

1.   If, in respect of a crop group, the area declared for the purposes of any area-related aid schemes, except those for starch potato and seed in accordance with Articles 93 and 99 respectively of Regulation (EC) No 1782/2003, exceeds the area determined in accordance with Article 50(3) to (5) of this Regulation, the aid shall be calculated on the basis of the area determined reduced by twice the difference found if that difference is more than either 3 % or two hectares, but no more than 20 % of the area determined.

If the difference is more than 20 % of the area determined, no area-linked aid shall be granted for the crop group concerned.

2.   If, in respect of the overall area determined covered by the single application, except for starch potato and seed in accordance with Articles 93 and 99 respectively of Regulation (EC) No 1782/2003, the area declared exceeds the area determined in accordance with Article 50(3) to (5) of this Regulation by more than 30 %, the aid to which the farmer would have been entitled pursuant to Article 50(3) to (5) of this Regulation shall be refused for the calendar year in question under those aid schemes.

If the difference is more than 50 %, the farmer shall be excluded once again from receiving aid up to an amount equal to the amount which corresponds to the difference between the area declared and the area determined in accordance with Article 50(3) to (5). That amount shall be off-set against aid payments under any of the aid schemes referred to in Titles III and IV of Regulation (EC) No 1782/2003 to which the farmer is entitled in the context of applications he lodges in the course of the three calendar years following the calendar year of the finding. If the amount cannot be fully off-set against those aid payments, the outstanding balance shall be cancelled.

3.   For the purposes of this Article, where a farmer applying for aid for energy crops in accordance with Article 88 of Regulation (EC) No 1782/2003 or declaring parcels as set-aside in accordance with Article 55 point (b) or Article 107(3) first indent of that Regulation fails to deliver the requisite quantity of any given raw material, he shall be deemed to have failed to fulfil his obligation as regards parcels intended for energy purposes or set-aside, respectively, in respect of an area calculated by multiplying the area of land cultivated and used by him for the production of the raw materials by the percentage shortfall in deliveries of that raw material.

Article 52

Reductions with regard to applications for aid for starch potato and seed

1.   If it is found that the area actually cultivated is more than 10 % lower than the area declared for the payment of aid for starch potato as provided for in Chapter 6 of Regulation (EC) No 1782/2003, the aid to be paid shall be reduced by twice the difference found.

2.   If it is found that the area actually cultivated is more than 10 % higher than the area declared for the payment of seed aid as provided for in Chapter 9 of Regulation (EC) No 1782/2003, the aid to be paid shall be reduced by twice the difference found.

3.   Where it is found that the irregularities referred to in paragraphs 1 and 2 result from intention of the farmer, the total amount of aid referred to in paragraphs 1 and 2 shall be refused.

In that case, the farmer shall be excluded once again from receiving aid equal to that amount. That amount shall be off-set against aid payments under any of the aid schemes referred to in Titles III and IV of Regulation (EC) No 1782/2003 to which the farmer is entitled in the context of applications he lodges in the course of the three calendar years following the calendar year of the finding. If the amount cannot be fully off-set against those aid payments, the outstanding balance shall be cancelled.

Article 53

Intentional overdeclaration

Where differences between the area declared and the area determined in accordance with Article 50(3), (4)(b) and (5) result from irregularities committed intentionally, the aid to which the farmer would have been entitled pursuant to Article 50(3), (4)(b) and (5) shall not be granted for the calendar year in question under the aid scheme concerned.

Moreover, where that difference is more than 20 % of the area determined, the farmer shall be excluded once again from receiving aid up to an amount equal to the amount which corresponds to the difference between the area declared and the area determined in accordance with Article 50(3), (4)(b) and (5). That amount shall be off-set against aid payments under any of the aid schemes referred to in Titles III and IV of Regulation (EC) No 1782/2003 to which the farmer is entitled in the context of applications he lodges in the course of the three calendar years following the calendar year of the finding. If the amount cannot be fully off-set against those aid payments, the outstanding balance shall be cancelled.

Article 54

Reductions and exclusions concerning seed aid applications

1.   Where it is found that seed subject to an aid application was not actually marketed within the meaning of Article 31 point (b)(iii) for sowing by the farmer, the aid to be paid for the species concerned, after application of any reductions to be applied in accordance with Article 52, shall be reduced by 50 % if the quantity not marketed amounts to more than 2 % but no more than 5 % of the quantity covered by the aid application. If the quantity not marketed exceeds 5 %, no seed aid shall be granted for the marketing year concerned.

2.   Where it is found that aid has been claimed for seed not officially certified or harvested within the Member State in question during the calendar year in which the marketing year for which the aid has been set begins, no aid shall be granted for that marketing year nor for the following one.

Article 55

Calculation of forage area for premiums referred to in Article 131 of Regulation (EC) No 1782/2003

1.   Articles 50(1), 50(3), 51(1) and 53 shall apply to the calculation of the forage area for the granting of the aids referred to in Article 131 of Regulation (EC) No 1782/2003.

2.   Where a difference of more than 50 % is found between the area declared and the area determined in accordance with Article 50(3), the farmer shall, in the framework of aid applications he lodges in the course of the three calendar years following the calendar year of the finding, be excluded once again in respect of a forage area equal to the difference between the area declared and the area determined. If the area to be excluded cannot be fully off-set within that period, the outstanding balance shall be cancelled.

3.   Reductions and exclusions in accordance with paragraphs 1 and 2 shall only apply if the area declared resulted, or would have resulted, in a higher payment.

Article 56

Calculation of forage area for the extensification payment in accordance with Article 132 of Regulation (EC) No 1782/2003

1.   Extensification payments provided for in Article 132 of Regulation (EC) No 1782/2003 may not be granted for a greater number of animals than that for which the premiums referred to in Article 131 of that Regulation may be paid after application of Article 55 of this Regulation.

2.   Without prejudice to paragraph 1, the forage area concerned shall be determined in accordance with Article 50.

If the ceiling of the stocking density factor is not exceeded in relation to the area thus determined the area determined shall be the basis for the calculation of the extensification payment.

If the ceiling is exceeded, the total amount of aid to which the farmer is entitled following aid applications under aid schemes referred to in Article 131 of Regulation (EC) No 1782/2003 submitted during the calendar year in question, shall be reduced by 50 % of the amount the farmer has, or would otherwise have, received as extensification payment.

3.   Where the difference between the area declared and the area determined results from irregularities committed intentionally and where the ceiling of the stocking density factor is exceeded in relation to the area determined, the total amount of aid referred to in paragraph 2 shall be refused. In that case, the second subparagraph of Article 53 shall apply accordingly.

Section II

Livestock premia

Article 57

Basis of calculation

1.   Where an individual limit or individual ceiling is applicable, the number of animals shown in the aid applications shall be reduced to the limit or ceiling set for the farmer concerned.

2.   In no case may aid be granted for a number of animals greater than that shown in the aid application.

3.   Without prejudice to Article 59 and 60, if the number of animals declared in an aid application exceeds that determined as a result of administrative or on-the-spot checks, the aid shall be calculated on the basis of the animals determined.

However, if a farmer has been unable to comply with his retention obligation as a result of force majeure or exceptional circumstances as referred to in Article 72, he shall retain his right to aid in respect of the number of animals eligible at the time when the case of force majeure or the exceptional circumstance occurred.

4.   Where cases of irregularities with regard to the system for the identification and registration for bovine animals are found, the following shall apply:

Article 19 shall apply in relation to entries in, and notifications to, the system for the identification and registration of bovine animals.

Article 58

Replacement

1.   Bovine animals present on the holding shall only be regarded as determined if they are identified in the aid application. However, suckler cows or heifers in respect of which aid is claimed in accordance with Article 125 or Article 129 of Regulation (EC) No 1782/2003 and dairy cows in respect of which aid is claimed in accordance with Article 132(4) of that Regulation may be replaced during the retention period within the limits provided for in those Articles without the loss of the right to the payment of the aid applied for.

2.   Replacements pursuant to paragraph 1 shall occur within 20 days following the event necessitating the replacement and shall be entered in the register not later than three days after the day of replacement. The competent authority to which the aid application was submitted shall be informed within seven days after the replacement.

However, in the case a Member State makes use of the possibilities provided for in the second subparagraph of Article 16(3), that Member State may provide that the notifications to the computerised database for bovine animals of an animal having left the holding and another animal having arrived on the holding within the time limits provided for in the first subparagraph may substitute that information to be sent to the competent authority.

3.   Where a farmer applies for aid in respect of both ewes and goats and where there is no difference in the level of aid paid, a ewe may be replaced by a goat and a goat by a ewe. Ewes and goats in respect of which aid is claimed in accordance with Article 113 of Regulation (EC) No 1782/2003 may be replaced during the retention period within the limits provided for in that Article without the loss of the right to the payment of the aid applied for.

4.   Replacements pursuant to paragraph 3 shall occur within 10 days following the event necessitating the replacement and shall be entered in the register not later than three days after the day of replacement. The competent authority to which the application was submitted shall be informed within five working days after the replacement.

Article 59

Reductions and exclusions in respect of bovine animals claimed for aid

1.   Where, in respect of an application for aid under the bovine aid schemes, a difference is found between the number of animals declared and that determined in accordance with Article 57(3), the total amount of aid to which the farmer is entitled under those schemes for the premium period concerned shall be reduced by the percentage to be established in accordance with paragraph 3 of this Article, if no more than three animals are found with irregularities.

2.   If more than three animals are found with irregularities the total amount of aid to which the farmer is entitled under the schemes referred to in paragraph 1 for the premium period concerned shall be reduced by:

If the percentage established in accordance with paragraph 3 is more than 20 %, the aid to which the farmer would have been entitled pursuant to Article 57(3) shall be refused under those schemes for the premium period concerned.

If the percentage established in accordance with paragraph 3 of this Article is more than 50 %, the farmer shall, moreover, be excluded once again from receiving aid up to an amount corresponding to the difference between the number of animals declared and the number of animals determined in accordance with Article 57(3). That amount shall be off-set against aid payments under the bovine aid schemes to which the farmer is entitled in the context of applications he lodges in the course of the three calendar years following the calendar year of the finding. If the amount cannot be fully off-set against those aid payments, the outstanding balance shall be cancelled.

3.   In order to establish the percentages referred to in paragraphs 1 and 2, the bovine animals claimed under all bovine aid schemes during the premium period concerned and found with irregularities shall be divided by all bovine animals determined for the premium period concerned.

4.   Where differences between the number of animals declared and that determined in accordance with Article 57(3) result from irregularities committed intentionally the aid to which the farmer would have been entitled pursuant to Article 57(3) shall be refused under the bovine aid scheme or schemes concerned for the premium period in question.

Where the difference established in accordance with paragraph 3 of this Article is more than 20 %, the farmer shall be excluded once again from receiving aid up to an amount corresponding to the difference between the number of animals declared and the number of animals determined in accordance with Article 57(3). That amount shall be off-set against aid payments under the bovine aid schemes to which the farmer is entitled in the context of applications he lodges in the course of the three calendar years following the calendar year of the finding. If the amount cannot be fully off-set against those aid payments, the outstanding balance shall be cancelled.

Article 60

Reductions and exclusions in respect of ovine or caprine animals claimed for aid

1.   Where, in respect of applications for aid under the ovine/caprine aid scheme, a difference is found in accordance with Article 57(3), Article 59(2), (3) and (4) shall apply mutatis mutandis as from the first animal in respect of which irregularities are found.

2.   If it is established that a sheep producer marketing sheep's milk and sheep's milk products failed to declare on his premium application that he was doing so, the amount of the aid to which he is entitled shall be reduced to the premium payable to sheep producers marketing sheep's milk and sheep's milk products less the difference between that amount and the full amount of the ewe premium.

3.   Where, in respect of applications for the supplementary premium, it is determined that less than 50 % of the area of the holding used for agriculture is located in areas referred to in Article 114(1) of Regulation (EC) No 1782/2003, the supplementary premium shall not be paid and the ewe and goat premium shall be reduced by an amount equivalent to 50 % of the supplementary premium.

4.   Where it is determined that the percentage of the area of the holding used for agriculture located in areas listed in Annex I to Regulation (EC) No 2550/2001 is below 50 %, the goat premium shall not be paid.

5.   Where it is established that a producer practising transhumance who submits an application for the supplementary premium has not grazed 90 % of his animals for at least 90 days in an area referred to in Article 114(2)(b) of Regulation (EC) No 1782/2003, the supplementary premium shall not be paid and the ewe or goat premium shall be reduced by an amount equivalent to 50 % of the supplementary premium.

6.   Where it is found that the irregularity referred to in paragraphs 2, 3, 4 or 5 results from intentional non-compliance, the total amount of aid referred to in those paragraphs shall be refused.

In that case, the farmer shall be excluded once again from receiving aid equal to that amount. That amount shall be off-set against aid payments under the ovine/caprine aid scheme to which the farmer is entitled in the context of applications he lodges in the course of the three calendar years following the calendar year of the finding.

7.   In respect of farmers maintaining both ewes and goats entitled to the same level of premium, where an on-the-spot check reveals a difference in the composition of the flock in terms of numbers of animals per species, the animals shall be regarded as being of the same group.

Article 61

Natural circumstances

The reductions and exclusions provided for in Articles 59 and 60 shall not apply in cases where, owing to the impact of natural circumstances on the herd or flock, the farmer cannot meet his commitment to keep the animals in respect of which aid is claimed throughout the retention period, provided that he has informed the competent authority in writing within ten working days of finding any reduction in the number of animals.

Without prejudice to the actual circumstances to be taken into account in individual cases, the competent authorities may recognise, in particular, the following cases of natural circumstances of the herd or flock:

Article 62

False certificates and declarations issued by slaughterhouses

As regards the declarations or certificates issued by slaughterhouses in connection with the slaughter premium provided for in Article 35 of Regulation (EC) No 2342/1999, if it is found that the slaughterhouse gave a false certification or declaration as a result of serious negligence or intentionally, the Member State concerned shall apply appropriate national sanctions. Where such irregularities are found a second time, the slaughterhouse involved shall be excluded for a period of at least one year from the right to make declarations or to issue certificates valid for premium purposes.

Article 63

Findings in relation to additional payments

As regards the additional payments provided for in Article 133 of Regulation (EC) No 1782/2003, Member States shall provide for reductions and exclusions which shall, in substance, be equivalent to those provided for in this Title.

Section I

Dairy premium and additional payments

Article 64

Dairy premium and additional payments

With regard to findings established in relation to aid applications for the dairy premium and additional payments, Articles 50, 51(1) and 53 shall apply to the extent that ‘area’ is read as ‘individual reference quantity’ and ‘area determined’ as ‘individual reference quantity determined’.

Where, in the case referred to in Article 30 of Regulation 2237/2003, the person concerned does not take up production by the deadline for the application, the individual reference quantity determined shall be deemed to be zero. In that case, the aid application of the person concerned for the year in question shall be refused. An amount equal to the amount covered by the refused application shall be off-set against aid payments under any of the aid schemes established in Titles III and IV of Regulation (EC) No 1782/2003 to which the person is entitled in the context of applications he lodges in the course of the calendar year following the calendar year of the finding.

CHAPTER II

FINDINGS IN RELATION TO CROSS-COMPLIANCE

Article 65

General principles and definition

1.   For the purposes of this Chapter, the provisions of Article 41 shall apply.

2.   For the purposes of applying Article 6(1) of Regulation (EC) No 1782/2003, an action or omission shall be directly attributable to the individual farmer who committed the non-compliance himself and who, at the time of the determination of the non-compliance in question, is in charge of the holding, the area, the production unit or the animal concerned. Where the holding, the area, the production unit or the animal concerned was transferred to a farmer after the non-compliance had started to occur, the transferee shall equally be held liable in case he maintained the non-compliance, provided he could have reasonably detected and terminated that non-compliance.

3.   Where more than one Paying Agency is responsible in the context of the management of the different direct payment schemes as defined in Article 2(d) of Regulation (EC) No 1782/2003, the Member States shall take the appropriate measures to ensure an appropriate application of the provisions under this Chapter, in particular that one rate of reduction is applied to the entirety of direct payments applied for by the farmer.

4.   Non-compliances shall be deemed to be ‘determined’ if they are established as a consequence of any kind of checks carried out in accordance with this Regulation or after having been brought to the attention of the competent control authority in whatever other way.

Article 66

Application of reductions in the case of negligence

1.   Without prejudice to Article 71, where a non-compliance determined results from the negligence of the farmer, a reduction shall be applied on the overall amount of direct payments, as defined in Article 2(d) of Regulation (EC) No 1782/2003, that has been, or has to be, granted to the farmer concerned following aid applications he has submitted or will still submit in the course of the calendar year of the finding. That reduction shall, as a general rule, be 3 % of that overall amount.

However, the Paying Agency may, on the basis of the assessment provided by the competent control authority in the control report in accordance with Article 48(1)(c), decide either to reduce that percentage to 1 % or to increase it to 5 % of that overall amount or, in the cases referred to in the second subparagraph of Article 48(1)(c), not to impose any reductions at all.

2.   Where more than one case of non-compliance with regard to various acts or standards of the same area of cross-compliance have been determined, those cases shall, for the purposes of the fixing of the reduction in accordance with paragraph 1, be considered as one non-compliance.

3.   Where more than one non-compliance with regard to different areas of cross-compliance have been determined, the procedure for the fixing of the reduction as set out in paragraph 1 shall be applied individually to any non-compliance. The resulting percentages of reductions shall be added. The maximum reduction shall, however, not exceed 5 % of the overall amount referred to in paragraph 1.

4.   Without prejudice to cases of intentional non-compliance in accordance with Article 67, where repeated non-compliances have been determined, the percentage fixed in accordance with paragraph 1 with regard to the first non-compliance shall, in respect of the first repetition, be multiplied by the factor three. For this purpose, the Paying Agency shall, in the case where that percentage was fixed in accordance with paragraph 2 determine the percentage that would have been applied to the first non-compliance with the requirement or standard concerned.

In the case of further repetitions the multiplication factor three shall be applied each time to the result of the reduction fixed in respect of the previous repeated non-compliance. The maximum reduction shall, however, not exceed 15 % of the overall amount referred to in paragraph 1.

Once the maximum percentage of 15 % has been reached, the competent authority shall inform the farmer concerned that if the same non-compliance is determined again, it shall be considered that he has acted intentionally within the meaning of Article 67. Where a further non-compliance is being determined thereafter, the percentage of reduction to be applied shall be fixed by multiplying the result of the previous multiplication, where applicable, before the limitation to 15 % as provided for in the last sentence of the second subparagraph has been applied, by the factor three.

Article 67

Application of reductions and exclusions in cases of intentional non-compliance

1.   Without prejudice to Article 71, where the non-compliance determined has been committed intentionally by the farmer, the reduction to be applied to the overall amount referred to in the first subparagraph of Article 66(1) shall, as a general rule, be 20 % of that overall amount.

However, the Paying Agency may, on the basis of the assessment provided by the competent control authority in the control report in accordance with Article 48(1)(c), decide to reduce that percentage to no less than 15 % or, where appropriate, to increase that percentage to up to 100 % of that overall amount.

2.   Where the intentional non-compliance relates to a particular aid scheme, the farmer shall be excluded from that aid scheme for the calendar year in question.

In cases of extreme extent, severity or permanence or where repeated intentional non-compliances have been determined, the farmer shall, moreover, be excluded from the aid scheme concerned in the following calendar year.

CHAPTER III

COMMON PROVISIONS

Article 68

Exceptions from the application of reductions and exclusions

1.   The reductions and exclusions provided for in Chapter I shall not apply where the farmer submitted factually correct information or where he can show otherwise that he is not at fault.

2.   The reductions and exclusions provided for in Chapter I shall not apply with regard to the parts of the aid application as to which the farmer informs the competent authority in writing that the aid application is incorrect or has become incorrect since it was lodged, provided that the farmer has not been informed of the competent authority's intention to carry out an on-the-spot check and that the authority has not already informed the farmer of any irregularity in the application.

The information given by the farmer as referred to in the first subparagraph shall have the effect that the aid application is adjusted to the actual situation.

Article 69

Amendments and adjustments of entries in the computerised database for bovine animals

In respect of claimed bovine animals, Article 68 shall apply from the time the aid application is submitted to errors and omissions in relation to entries in the computerised database for bovine animals.

As regards unclaimed bovine animals, the same shall apply in respect of reductions and exclusions to be applied in accordance with chapter II of this Title.

TITLE V

GENERAL PROVISIONS

Article 70

Minimum payments

Member States may decide not to grant any aid if the amount per aid application does not exceed EUR 100.

Article 71

Accumulation of reductions

1.   Where a case of non-compliance also constitutes an irregularity, therefore being relevant in view of the application of reductions or exclusions in accordance with both Chapter I and with Chapter II of Title IV:

2.   Where applicable after application of paragraph 1, where various reductions have to be applied as a consequence of modulation, non-compliances and irregularities, the competent authority shall calculate the reductions as follows:

3.   Subject to Article 6 of Council Regulation (EC) No 2988/95 (21), the reductions and exclusions under this Regulation shall be without prejudice to additional sanctions pursuant to other provisions under Community or national law.

Article 72

Force majeure and exceptional circumstances

Cases of force majeure and of exceptional circumstances within the meaning of Article 40(4) of Regulation (EC) No 1782/2003 with relevant evidence to the satisfaction of the competent authority shall be notified in writing to the authority within ten working days of the date on which the farmer is in a position to do so.

Article 73

Recovery of undue payments

1.   If undue payment is made, the farmer shall repay the amount in question plus interest calculated in accordance with paragraph 3.

2.   Member States may decide that recovery of an undue payment is to be made by deduction of the corresponding amount from any advances or payments under aid schemes referred to in Titles III and IV of Regulation (EC) No 1782/2003 made to the farmer concerned following the date of the decision to recover. However, the farmer may repay the amount without waiting for the deduction.

3.   Interest shall be calculated for the period elapsing between the notification of the repayment obligation to the farmer and either repayment or deduction.

The rate of interest applicable shall be calculated in accordance with national law but shall not be lower than the interest rate applicable for the recovery of amounts under national provisions.

4.   The repayment obligation referred to in paragraph 1 shall not apply if the payment was made by error of the competent authority or of another authority and if the error could not reasonably have been detected by the farmer.

However, where the error relates to factual elements relevant for the calculation of the payment concerned, the first subparagraph shall only apply if the decision to recover was not communicated within 12 months of the payment.

5.   The repayment obligation referred to in paragraph 1 shall not apply if the period which elapsed between the date of the payment of the aid and that of the first notification to the beneficiary by the competent authority concerning the undue nature of the payment concerned is more than ten years.

However, the period referred to in the first subparagraph shall be limited to four years if the beneficiary acted in good faith.

6.   Amounts to be recovered as a consequence of the application of reductions and exclusions pursuant to Article 21 and Title IV shall, in all cases, be subject to a prescription period of four years.

7.   Paragraphs 4 and 5 shall not apply in the case of advances.

8.   Member States may decide not to recover amounts of EUR 100 or less, not including interest, per farmer and per premium period, provided that their national law provides for non-recovery in such cases.

Where amounts relating to interest have to be recovered independently from amounts unduly paid, the Member States may, under the same conditions, decide not to recover amounts relating to interest of EUR 50 or less.

Article 74

Transfer of holdings

1.   For the purposes of this Article:

2.   Where a holding is transferred in its entirety from one farmer to another farmer after an aid application has been lodged and before all the conditions for granting the aid have been fulfilled, no aid shall be granted to the transferor in respect of the transferred holding.

3.   The aid applied for by the transferor shall be granted to the transferee where:

4.   Once the transferee informs the competent authority and requests payment of the aid in accordance with paragraph 3(a):

5.   Where an aid application is lodged after the actions necessary for the granting of the aid have been performed and a holding is transferred in its entirety from one farmer to another farmer after those actions have started but before all the conditions for granting the aid have been fulfilled, the aid may be granted to the transferee provided the conditions in paragraph 3(a) and (b) are fulfilled. In that case, paragraph 4(b) shall apply.

6.   Member States may decide, where appropriate, to grant the aid to the transferor. In that event:

7.   Where a holding is transferred in its entirety from one farmer to another farmer during the period referred to in Article 44(3) of Regulation (EC) No 1782/2003, the transferee may use the parcels concerned for the purposes of submitting an application for payment under the single payment scheme.

Article 75

Additional measures and mutual assistance between Member States

1.   Member States shall take all [further] measures required for the proper application of the integrated system and shall give one another the mutual assistance needed for the purposes of checks required pursuant to this Regulation. In that respect, Member States may, where this Regulation does not provide for appropriate reductions and exclusions, provide appropriate national sanctions against producers or other marketing participants, such as slaughterhouses or associations involved in the procedure for granting aid, in order to ensure the compliance with control requirements such as the current herd register of the holding or the respect of notification obligations.

2.   Member States shall assist one another to ensure effective controls, and to ensure the check on the authenticity of documents submitted and/or the accuracy of the data exchanged.

Article 76

Notifications

1.   Member States shall send the Commission by 31 March each year at the latest, for the single payment and other area-related aid schemes, and by 31 August each year at the latest, for animal premiums, a report covering the previous calendar year and, in particular, relating to the following points:

At the same time as the communication referred to in the first subparagraph in respect of animal premiums are sent to the Commission, Member States shall notify the total number of beneficiaries who received aids under aid schemes falling within the scope of the integrated system.

2.   Member States shall, moreover, send to the Commission by 31 October each year at the latest a communication about the proportion of the land under permanent pasture in relation to the total agricultural land as referred to in Article 3(1). By 31 October 2005 at the latest, Member States shall, moreover, send to the Commission a communication about that proportion in the reference year 2003 referred to in Article 3(2).

3.   In exceptional duly justified situations, Member States may, in agreement with the Commission, derogate from the dates provided for in the paragraphs 1 and 2.

4.   The computerised data established as a part of the integrated system shall be used to support the information specified in the framework of sectoral rules which the Member States are obliged to send to the Commission.

PART III

MODULATION

Article 77

Basis for the calculation of the reduction

The amount of reduction in accordance with Article 10 of Regulation (EC) No 1782/2003 shall be calculated on the basis of the amounts of direct payments to which farmers are entitled before any reductions or exclusions are applied under this Regulation or, in the case of aid schemes listed in Annex I to Regulation (EC) No 1782/2003 but not falling under Titles III or IV of that Regulation, under the specific legislation applicable thereto.

Article 78

Allocation key

The allocation key for the remaining amounts referred to in the first subparagraph of Article 10(3) of Regulation (EC) No 1782/2003 shall be compiled by taking the Member States shares in agricultural area and agricultural employment with a weight of 65 % and 35 %, respectively.

Each Member State»s share in area and employment shall be adjusted in function of its relative Gross Domestic Product (GDP) per capita expressed in purchasing power standard, using one third of the difference of the average of the Member States to which modulation applies.

For that purpose, the following underlying data, based on the data available from Eurostat in August 2003, shall be used:

Article 79

Additional amount of aid

1.   For the purposes of determining whether the threshold of EUR 5 000 referred to in Article 12 of Regulation (EC) No 1782/2003 has been reached, the total amount of direct payments that would have to be granted before the application of any reductions under this Regulation or, in the case of aid schemes listed in Annex I to Regulation (EC) No 1782/2003 but not falling under Titles III or IV of that Regulation, under the specific legislation applicable thereto, shall be taken into account.

However, where a farmer is excluded from receiving any direct payments as a consequence of irregularities or non-compliances, no additional amounts of aid shall be granted.

2.   By 31 October at the latest, the Member States shall communicate to the Commission the total amount of the additional aid which has been granted for the preceding year.

PART IV

TRANSITIONAL AND FINAL PROVISIONS

Article 80

Repeal

1.   Regulation (EC) No 2419/2001 is repealed. However, it shall continue to apply in respect of aid applications relating to marketing years or premium periods which start before 1 January 2005.

In cases where reductions to be applied by way of off-setting in accordance with the second subparagraph of Article 32(2), the second subparagraph of Article 33, Article 34(2), the last sentence of Article 35(3), the third subparagraph of Article 38(2), the second subparagraph of Article 38(4) and Article 40(1) and (6) of Regulation (EC) No 2419/2001 could not yet fully be off-set before the date of application of this Regulation, the outstanding balance shall be off-set against payments under any of the aid schemes falling under this Regulation, provided the time limits for the off-setting stipulated in those provisions have not yet expired.

2.   References to Regulation (EC) No 2419/2001 shall be construed as references to this Regulation and shall be read in accordance with the correlation table in Annex III.

Article 81

Entry into force

This Regulation shall enter into force on the seventh day following that of its publication in the Official Journal of the European Union.

It shall apply to aid applications relating to marketing years or premium periods starting as of 1 January 2005.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 21 april 2004            

For the Commission

Franz FISCHLER            

Member of the Commission

----

(1)OJ L 270, 21.10.2003, p. 1. Regulation as amended by Regulation (EC) No 21/2004 (OJ L 5, 9.1.2004, p. 8).

(2)OJ L 327, 12.12.2001, p. 11. Regulation as last amended by Regulation (EC) No 118/2004 (OJ L 17, 24.1.2004, p. 7).

(3)OJ L 204, 11.8.2000, p. 1. Regulation as last amended by the Act concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded - Annex II: List referred to in Article 20 of the Act of Accession - 6. Agriculture - B. Veterinary and phytosanitary legislation - I. Veterinary legislation (OJ L 236, 23.9.2003, p. 381.

(4)OJ L 156, 25.6.2003, p. 9.

(5)OJ L 160, 26.6.1999, p. 103

(6)OJ L 204, 11.8.2000, p. 1.

(7)OJ L 355, 5.12.1992, p. 32.

(8)OJ L 5, 9.1.2004, p. 8.

(9)OJ L 281, 4.11.1999, p. 30. Regulation as last amended by Regulation (EC) No 1473/2003 (OJ L 211, 21.8.2003, p. 12.

(10)OJ L 341, 22.12.2001, p. 105. Regulation as last amended by Regulation (EC) No 2307/2003 (OJ L 342, 30.12.2003, p. 11).

(11)OJ L 160, 26.6.1999, p. 103

(12)OJ L 160, 26.6.1999, p. 1

(13)OJ L 215, 30/7/1992, p. 85

(14)OJ L 160, 26/06/1999, p. 80

(15)OJ L 112, 3.5.1994, p. 2.

(16)OJ L 193, 20.7.2002, p. 74.

(17)OJ L 124, 8.6.1971, p. 1.

(18)OJ L 177, 4.8.1972, p. 1.

(19)OJ L 160, 26;-.6.1999, p. 80. Regulation as last amended by Regulation (EC) No 1783/2003 (OJ L 270, 21.10.2003, p. 70).

(20)OJ L 74, 15.3.2002, p. 1. Regulation as last amended by Regulation (EC) No 963/20003 (OJ L 138, 5.6.2003, p. 32).

(21)OJ L 312, 23.12.1995, p. 1.

(22)OJ L 56, 2.3.1988, p. 1.

(23)OJ L 77, 14.3.1998, p. 3.

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ANNEX I

COMMUNITY METHOD FOR THE QUANTITATIVE DETERMINATION OF Δ9-TETRAHYDROCANNABINOL CONTENT IN HEMP VARIETIES

1.   Scope and area of application

This method seeks to determine the Δ9-tetrahydrocannabinol (hereinafter referred to as ‘THC’) content of varieties of hemp (Cannabis sativa L.) As appropriate, the method involves applying procedure A or B herein described.

The method is based on the quantitative determination of Δ9-THC by gas chromatography (GC) after extraction with a suitable solvent.

1.1.   Procedure A

Procedure A shall be used for checks on production as provided for in Article 52(1) of Regulation (EC) No 1782/2003 and Article 26(2)(a) of this Regulation.

1.2.   Procedure B

Procedure B shall be used in cases as referred to in Article 52(2) of Regulation (EC) No 1782/2003 and Article 33(4) of this Regulation.

2.   Sampling

2.1.   Samples

2.2.   Sample size

Procedure A: the sample shall comprise parts of 50 plants per field.

Procedure B: the sample shall comprise parts of 200 plants per field.

Each sample shall be placed in a fabric or paper bag, without crushing it, and be sent to the laboratory for analysis.

The Member State may provide for a second sample to be collected for counteranalysis, if required, to be kept either by the producer or by the body responsible for the analysis.

2.3.   Drying and storage of the sample

Drying of the samples shall begin as soon as possible and, in any case, within 48 hours using any method below 70 oC. Samples should be dried to a constant weight and to a moisture content of between 8 % and 13 %.

After drying, the samples shall be stored without crushing them at below 25 oC in a dark place.

3.   Determination of THC content

3.1.   Preparation of the test sample

Stems and seeds over 2 mm in size shall be removed from the dried samples.

The dried samples shall be grinded to obtain a semi-fine powder (passing through a 1 mm mesh sieve).

The powder may be stored for 10 weeks at below 25 oC in a dark, dry place.

3.2.   Reagents and extraction solution

Reagents

Extraction solution

3.3.   Extraction of Δ9-THC

100 mg of the powdered test sample shall be weighed, be placed in a centrifuge tube and 5 ml of extraction solution shall be added containing the internal standard.

Place in an ultrasound bath and leave for 20 minutes. Centrifuge for five minutes at 3000 r.p.m. and then remove the supernatant THC solution. Inject the solution into the chromatograph and carry out a quantitative analysis.

3.4.   Gas chromatography

4.   Results

The findings shall be expressed to two decimal places in grams of Δ9-THC per 100 grams of analytical sample dried to constant weight. A tolerance of 0.03 g per 100 g shall apply.

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ANNEX II

VARIETIES OF HEMP GROWN FOR FIBRE ELIGIBLE FOR DIRECT PAYMENTS

a.   Hemp grown for fibre

b.   Hemp grown for fibre authorised in the 2004/2005 marketing year

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(1)  only in Hungary

(2)  only in Hungary

(3)  only in Poland

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ANNEX III

CORRELATION TABLE

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