JUDGMENT OF THE COURT (Sixth Chamber)
6 October 2021 (*)
(Reference for a preliminary ruling – Common agricultural policy – European Agricultural Fund for Rural Development (EAFRD) funding – National Rural Development Programme 2014-2020 – Regulation (EU) No 1305/2013 – Article 19(1)(a) – Business start-up aid for young farmers – Aid for the development of small farms – Cumulation of aid – Possibility to refuse the cumulation)
In Case C‑119/20,
REQUEST for a preliminary ruling under Article 267 TFEU from the Augstākā tiesa (Senāts) (Supreme Court, Latvia), made by decision of 24 February 2020, received at the Court on 28 February 2020, in the proceedings
Līga Šenfelde
v
Lauku atbalsta dienests,
THE COURT (Sixth Chamber),
composed of L. Bay Larsen (Rapporteur), President of the Chamber, C. Toader and N. Jääskinen, Judges,
Advocate General: J. Kokott,
Registrar: A. Calot Escobar,
having regard to the written procedure,
after considering the observations submitted on behalf of:
–        L. Šenfelde, by herself,
–        the Latvian Government, by K. Pommere, V. Soņeca, L. Juškeviča and E. Bārdiņš initially, then by K. Pommere and E. Bārdiņš, acting as Agents,
–        the European Commission, by M. Kaduczak and A. Sauka, acting as Agents,
after hearing the Opinion of the Advocate General at the sitting on 3 June 2021,
gives the following
Judgment
1        This request for a preliminary ruling concerns the interpretation of Article 19(1)(a) of Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005 (OJ 2013 L 347, p. 487 and Corrigendum OJ 2016 L 130, p. 1).
2        The request has been made in proceedings between Ms Līga Šenfelde, the owner of a farm, and the Lauku atbalsta dienests (Rural Support Service, Latvia), concerning the decision to refuse to allow her to cumulate two types of farm and business aid.
Legal context
European Union law
Regulation No 1305/2013
3        Recitals 3, 7 and 17 of Regulation No 1305/2013 are worded as follows:
‘(3)      Since the objective of this Regulation, namely rural development, cannot be sufficiently achieved by the Member States … but can … be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity …
…
(7)      … Each Member State should prepare either a national rural development programme for its entire territory or a set of regional programmes or both a national programme and a set of regional programmes. Each programme should identify a strategy for meeting targets in relation to the Union priorities for rural development and a selection of measures. Programming should comply with Union priorities for rural development, whilst at the same time adapting to national contexts and complementing the other Union policies, in particular the agricultural market policy, the cohesion policy and the common fisheries policy. Member States which opt for preparing a set of regional programmes should also be able to prepare a national framework, without a separate budgetary allocation, in order to facilitate co-ordination among the regions in addressing nation-wide challenges.
…
(17)      … The development of small farms, which are potentially economically viable should also be encouraged. In order to ensure the viability of new economic activities supported under that measure, support should be made conditional on the submission of a business plan …’
4        Article 2(1)(n) of that regulation defines a ‘young farmer’ as a person who is no more than 40 years of age at the moment of submitting the application, possesses adequate occupational skills and competence and is setting up for the first time in an agricultural holding as head of that holding.
5        Under the heading ‘Union priorities for rural development’, subparagraph 2(a) of the first paragraph of Article 5 of that regulation provides:
‘The achievement of the objectives of rural development, which contribute to the Europe 2020 strategy for smart, sustainable and inclusive growth, shall be pursued through the following six Union priorities for rural development …:
…
(2)      enhancing farm viability and competitiveness of all types of agriculture in all regions … with a focus on the following areas:
(a)      improving the economic performance of all farms and facilitating farm restructuring and modernisation, notably with a view to increasing market participation and orientation …’
6        Article 6(1) of Regulation No 1305/2013 provides:
‘The [European Agricultural Fund for Rural Development (EAFRD)] shall act in the Member States through rural development programmes. Those programmes shall implement a strategy to meet the Union priorities for rural development through a set of measures as defined in Title III. Support from the EAFRD shall be sought for the achievement of the objectives of rural development pursued through Union priorities.’
7        Under Article 13 of that regulation:
‘Each rural development measure shall be programmed to contribute specifically to the achievement of one or more Union priorities for rural development. An indicative list of measures of particular relevance to the Union priorities is set out in Annex VI.’
8        Entitled ‘Farm and business development’, Article 19 of that regulation provides:
‘1.      Support under this measure shall cover:
(a)      business start-up aid for:
(i)      young farmers;
…
(iii)      the development of small farms;
…
2.      Support under point (a)(i) of paragraph 1 shall be granted to young farmers.
…
Support under point (a)(iii) of paragraph 1 shall be granted to small farms as defined by Member States.
…
4.      Support under point (a) of paragraph 1 shall be conditional on the submission of a business plan. Implementation of the business plan must start within nine months from the date of the decision granting the aid.
For young farmers receiving support under point (a)(i) of paragraph 1, the business plan shall provide that the young farmer complies with Article 9 of Regulation (EU) No 1307/2013, regarding active farmers within 18 months from the date of setting up.
Member States shall define upper and lower thresholds for allowing agricultural holdings access to support under points (a)(i) and (a)(iii) of paragraph 1. The lower threshold for support under point (a)(i) of paragraph 1 shall be higher than the upper threshold for support under point (a)(iii) of paragraph 1. Support shall be limited to holdings coming under the definition of micro- and small enterprises.
5.      Support under point (a) of paragraph 1 shall be paid in at least two instalments over a period of maximum five years. Instalments may be degressive. The payment of the last instalment, under points (a)(i) and (a)(ii) of paragraph 1 shall be conditional upon the correct implementation of the business plan.
6.      The maximum amount of support under point (a) of paragraph 1 is laid down in Annex II. Member States shall define the amount of support under points (a)(i) and (a)(ii) of paragraph 1 also taking into account the socio-economic situation of the programme area.
…’
Commission Implementing Regulation (EU) No 808/2014
9        Annex I to Commission Implementing Regulation (EU) No 808/2014 of 17 July 2014 laying down rules for the application of Regulation No 1305/2013 (OJ 2014 L 227, p. 18), contains Part 5, relating to measures and sub-measure codes. That part provides, in respect of Article 19 of Regulation No 1305/2013, under Code 6, for the measure entitled ‘Farm and business development’. The sub-measures for programming purposes corresponding to that measure include, under Code 6.1, ‘Business start-up aid for young farmers’ and, under Code 6.3, ‘Business start-up aid for the development of small farms’.
Delegated Regulation (EU) 807/2014
10      Under Article 5(2) of Commission Delegated Regulation (EU) No 807/2014 of 11 March 2014 supplementing Regulation (EU) No 1305/2013 of the European Parliament and of the Council on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and introducing transitional provisions (OJ 2014 L 227, p. 1), the Member States must define the thresholds referred to in the third subparagraph of Article 19(4) of Regulation No 1305/2013 in terms of production potential of the agricultural holding, measured in standard output, as defined in Article 5 of Commission Regulation (EC) No 1242/2008 of 8 December 2008 establishing a Community typology for agricultural holdings (OJ 2008 L 335, p. 3), or an equivalent.
European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to 2020
11      According to paragraph 99 of the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to 2020 (OJ 2014 C 204, p. 1), ‘aid may be granted concurrently under several schemes or cumulated with ad hoc aid, provided that the total amount of State aid for an activity or project does not exceed the aid ceilings laid down in these Guidelines’.
12      Paragraph 184 of those guidelines provides that ‘the maximum aid must be limited to EUR 70 000 per young farmer and EUR 15 000 per small farm. Member States must define the amount of aid for young farmers also taking into account the socio-economic situation of the area concerned’.
Latvian law
13      Article 1 of Regulation No 292 of the Council of Ministers of 9 June 2015 on the procedure for granting national and European Union aid under the sub-measure ‘Business start-up aid for the development of small farms’ within the measure ‘Farm and business development’ (Latvijas Vēstnesis, 2015, No 126) provides:
‘This Regulation governs the procedure for granting national and European Union aid under the sub-measure “Granting of business start-up aid in the development of small farms”, which comes under the measure “Farm and business development in the form of a single payment”.’
14      Article 20 of that regulation provides:
‘Within a programming period an aid applicant may receive the support referred to in the present provisions only once.’
The dispute in the main proceedings and the questions referred for a preliminary ruling
15      On 5 October 2015, the applicant in the main proceedings, the owner of an agricultural holding, applied, as part of an initial project, for the grant of business start-up aid for the development of small farms.
16      By decision of 15 January 2016, the Rural Support Service granted that application.
17      On 27 July 2016, the applicant took over the farm previously run by her parents.
18      On 23 August 2016, as part of a second project, she lodged an application for business start-up funding intended for young farmers, while continuing the activities subsidised by the first grant.
19      That second application was refused on 8 November 2016 by the Rural Support Service, on the basis of Article 19(4) of Regulation No 1305/2013.
20      That service took the view that, under the same measure, an applicant may receive either aid for the development small farms or aid for young farmers. It was also of the opinion that applying first for aid for the development of small farms and then claiming aid for young farmers was not allowed under the national legislation, since such an application does not satisfy the condition of first establishment or a farm takeover with regard to aid for young farmers.
21      The applicant in the main proceedings challenged that refusal before the Rural Support Service. By decision of 6 January 2017, that body confirmed that refusal, thereby reiterating the prohibition on cumulation of different types of aid provided for in that regulation.
22      The court actions brought subsequently by the applicant against that refusal were dismissed by the administratīvā rajona tiesa (District Administrative Court, Latvia) and the Administratīvā apgabaltiesa (Regional Administrative Court, Latvia) respectively.
23      Those courts took the view, in particular, that it was clear from the objectives set out in the projects of the applicant in the main proceedings that the second project aimed to realise the objective of the first. Granting two types of aid for the same objective infringes the single payment rule and cannot be regarded as a proportionate use of the funds. Moreover, a farmer no longer falls within the definition of ‘young farmer’ after he or she receives the small farm development aid provided for in Article 19(1)(a)(iii) of Regulation No 1305/2013.
24      On 23 November 2017, the applicant in the main proceedings brought an appeal on a point of law before the Augstākā tiesa (Senāts) (Supreme Court, Latvia), claiming, inter alia, that the provisions of Regulation No 1305/2013 had been misinterpreted.
25      In that regard, she submits that the two types of aid are governed by separate provisions and that the rule that aid may not be received more than once under that regulation applies to each sub-measure individually and not to their cumulation.
26      The referring court is therefore uncertain as to the legality of national legislation prohibiting payment of the aid referred to in Article 19(1)(a)(i) of Regulation No 1305/2013 to a farmer who has already received aid under Article 19(1)(a)(iii).
27      In those circumstances, the Augstākā tiesa (Senāts) (Supreme Court) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘Must Article 19(1)(a) of Regulation No 1305/2013, in conjunction with other provisions of the aforementioned regulation and the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to 2020, be interpreted as meaning that:
(1)      a farmer loses his or her “young farmer” status solely by virtue of having received small farm development aid, as provided for in Article 19(1)(a)(iii) of the Regulation, two years previously;
(2)      those provisions authorise Member States to enact legislation to the effect that a farmer is not to be paid the aid provided for in Article 19(1)(a)(i) of the Regulation if he or she has already been granted the aid provided for in Article 19(1)(a)(iii);
(3)      a Member State has the power to refuse to cumulate aid for a farmer in the case where the cumulation sequence laid down in the rural development programme agreed with the European Commission has not been complied with?’
Consideration of the questions referred
The first question
28      By its first question, the referring court asks, in essence, whether Article 19(1) of Regulation No 1305/2013 must be interpreted as precluding a farmer who has received business start-up aid for the development of small farms, provided for in point (a)(iii) of that provision, from cumulating that aid with start-up aid for young farmers, provided for in point (a)(i) thereof.
29      As is apparent from Article 19(1)(a) of that regulation, aid under the measure ‘Farm and business development’ covers three types of business start-up aid, including aid for young farmers and for the development of small farms.
30      Annex I to Implementing Regulation No 808/2014 sets out, in Part 5 relating to measures and sub-measures codes, the code corresponding to aid under the measure ‘Farm and business development’ provided for in Article 19 of Regulation No 1305/2013 and the codes corresponding respectively to the sub-measures ‘Business start-up aid for young farmers’ and ‘business start-up aid for the development of small farms’, which are at issue in the main proceedings.
31      Article 19(2) of Regulation No 1305/2013 provides that support under paragraph 1(a)(i) of that article is to be granted to young farmers and that support under paragraph 1(a)(iii) thereof is to be granted to small farms as defined by the Member States.
32      Although the latter provision thus leaves it to the Member States to define the concept of ‘small farms’, Article 2(1)(n) of Regulation No 1305/2013 defines a ‘young farmer’, within the meaning of that regulation, as ‘a person who is no more than 40 years of age at the moment of submitting the application, possesses adequate occupational skills and competence and is setting up for the first time in an agricultural holding as head of that holding’.
33      Although the wording of Article 19(1)(a) of that regulation refers in particular to the granting of the two types of aid at issue in the main proceedings, it should be noted that it does not establish an order for granting those types of aid, nor does it expressly exclude them being granted cumulatively.
34      The first subparagraph of Article 19(4) of Regulation No 1305/2013 provides that the grant of the support referred to in paragraph 1(a) of that article, which covers both types of aid at issue in the main proceedings, is subject to the implementation of a business plan and lays down the conditions for the implementation of that plan.
35      In addition, the third subparagraph of Article 19(4) of that regulation provides that Member States are to define upper and lower thresholds for allowing agricultural holdings access to support under paragraph 1(a)(i) and (iii) of that article. It states that the lower threshold for support under paragraph 1(a)(i) must be higher than the upper threshold for support under paragraph 1(a)(iii) and that that support must be limited to holdings coming under the definition of micro and small enterprises.
36      In that regard, it must be recalled, as is clear from Article 19(8) of Regulation No 1305/2013, that the Commission has the power to adopt delegated acts in particular in setting the thresholds referring to in Article 19(4). Article 5(2) of Delegated Regulation No 807/2014 thus states that Member States must define the thresholds referred to in the third subparagraph of Article 19(4) in terms of production potential of the agricultural holding, measured in standard output or an equivalent.
37      It must be held that, first, Article 19(4) of Regulation No 1305/2013 does not explicitly address the issue of cumulation of aid granted under Article 19(1)(a)(i) and (iii) and, secondly, setting thresholds for that aid, such as those referred to in Article 19(4), does not preclude the aid concerned from being cumulated, provided that the maximum amount of aid granted, as referred to in Article 19(6), is complied with.
38      It cannot be ruled out that, after securing business start-up aid for the development of a small farm, its recipient may see his or her production potential increase, as the case may be, as a result of securing the initial aid; accordingly he or she may decide to establish himself or herself as a ‘young farmer’ within the meaning of Article 2(1)(n) of that regulation.
39      Thus, being the recipient of such aid does not preclude someone from claiming ‘young farmer’ status within the meaning of that provision, which sets criteria solely in respect of age, competency and that it be the first time he or she is setting up as head of the holding. It follows that a farmer, such as the applicant in the main proceedings, may be classified as a ‘young farmer’, within the meaning of that provision, even where he or she has already received aid for the development of small farms, as provided for in Article 19(1)(a)(iii) of that regulation.
40      The criterion that it be the first time he or she is setting up in an agricultural holding does not necessarily imply that the farm on which the ‘young farmer’ is setting up is a new holding, as this criterion may also be satisfied where the ‘young farmer’ wishes to continue to develop an old holding.
41      Furthermore, the possibility of cumulating the two types of aid at issue in the main proceedings is supported by the fact that Regulation No 1305/2013 provided for the aid for young farmers to be paid not only once but in instalments, the possibility to make such payments in instalments being expressly provided for in Article 19(5) of that regulation and reflected, moreover, in recital 17 thereof.
42      Furthermore, as the Advocate General observed in point 75 of her Opinion, allowing a young farmer, even after receiving aid for the development of a small farm, still to apply for aid for young farmers, from which the amount received from the first aid is then deducted, also takes account of the reality of the life of young farmers and is consistent both with the objectives of Regulation No 1305/2013 and with the European Union’s priorities in the area of rural development.
43      The need to encourage farmers when setting up to expand and develop their holdings and to modify their initial business plans accordingly contributes to achieving the objective of that regulation, namely rural development, as is reflected in recital 3 of that regulation, and to the need to encourage the development of small farms which can be economically viable, as stated in recital 17 of that regulation.
44      Furthermore, it should be noted that Regulation No 1305/2013 sets out the objectives to which rural development policy is to contribute as well as the corresponding priorities of the European Union, providing for the appropriate measures for implementing that policy. In that context, Article 5 of that regulation cites six priorities for rural development, which include, in paragraph 2 of that article, in particular, enhancing farm viability and competitiveness of all types of agriculture, as well as generational renewal, with particular emphasis on improving the economic performance of all farms and facilitating farm restructuring and modernisation (see, to that effect, judgment of 8 July 2021, Région wallonne (Support for young farmers), C‑830/19, EU:C:2021:552, paragraph 34).
45      The need to encourage farmers when setting up to expand and develop their holdings, as noted in paragraph 43 of the present judgment, also falls under the EU priorities for rural development.
46      In the present case, as is apparent from the order for reference, the applicant in the main proceedings had specifically expressed the wish, in her business plan relating to the aid for young farmers, to continue the project initiated, by developing her farm through increasing its livestock.
47      That being the case, it should be recalled that Article 19(6) of Regulation No 1305/2013 limits the amounts that may be secured as a young farmer under the aid provided for in paragraph 1(a) of that article, by providing for a ‘maximum’ amount of the aid granted in that regard.
48      Paragraph 99 of the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to 2020 provides that aid may be granted concurrently under several aid schemes or cumulated with ad hoc aid, provided that the total amount of State aid for an activity or project does not exceed the aid ceilings laid down in those guidelines.
49      In that regard, paragraph 184 of those guidelines states that while the Member States are required to define the amount of aid for young farmers also taking into account the socio-economic situation of the area concerned, the maximum aid must be limited to EUR 70 000 per young farmer and EUR 15 000 per small farm.
50      Therefore, as the Advocate General observed in point 82 of her Opinion, and as has been stated in paragraph 37 of the present judgment, the amount received by way of business start-up aid for the development of small farms must be deducted from the amount to be received as part of start-up aid for a young farmer, such that the aid ceiling per young farmer, laid down in Article 19(6) and Annex II to Regulation No 1305/2013, is not exceeded.
51      In the light of the foregoing, the answer to the first question is that Article 19(1) of Regulation No 1305/2013 must be interpreted as not precluding a farmer who has received business start-up aid for the development of small farms, provided for in point (a)(iii) of that provision, from cumulating that aid with business start-up aid for young farmers, provided for in point (a)(i) of that provision, in so far as the maximum amount of aid granted, as referred to in Article 19(6), is complied with.
The second and third questions
52      By its second and third questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 19(1) of Regulation No 1305/2013 must be interpreted as precluding national legislation under which the granting of business start-up aid for the development of small farms, provided for in point (a)(iii) of that provision, prevents the recipient from securing business start-up aid for young farmers, as is provided for in point (a)(i) thereof.
53      The questions raised by the referring court in connection with those issues relate more specifically to the discretion enjoyed by the Member States as regards the establishment of a system for granting those two types of business start-up aid.
54      In that regard, it should be recalled that the Member States implement Regulation No 1305/2013 through their rural development support programmes. As is apparent from Article 6 of that regulation, and as is reflected in recital 7 thereof, the EAFRD acts in those States through those programmes.
55      Each Member State must therefore establish a national rural development programme covering all its territory, a series of regional programmes or both a national programme and a series of regional programmes, which implement a strategy to meet the European Union’s priorities for rural development.
56      It follows that Regulation No 1305/2013 allows the Member States a margin of discretion as to the arrangements for implementing the aid for which it provides.
57      As is apparent from Article 1 of that regulation, it lays down rules on programming, networking, management, monitoring and evaluation on the basis of ‘responsibilities shared between the Member States and the Commission’ as well as rules to ensure coordination of the EAFRD with other EU instruments.
58      The discretion enjoyed by the Member States in that context may concern, inter alia, the criteria for selecting projects, in order to ensure that financial resources for rural development are used in the best possible manner and to target measures under rural development programmes in accordance with the EU priorities for rural development, and with a view to ensuring the equal treatment of applicants.
59      That discretion may also concern putting national rural development programmes in place and the implementation of the limitations in that regulation, in particular as regards the size of eligible holdings, as referred to in the third subparagraph of Article 19(2) of that regulation, or the amount of the aid, as is apparent from paragraph 6 of that article.
60      Furthermore, under Article 13 of Regulation No 1305/2013, each rural development measure is to be programmed to contribute specifically to the achievement of one or more EU priorities for rural development. It should be noted that, as stated in the wording of that article, the list of measures, set out in Annex VI to that regulation and of particular relevance to the EU priorities, is merely indicative.
61      It follows that, as the Commission maintained in its written observations, the Member States may, in principle, choose what to include in their rural development programmes or not. Thus, they have the option to lay down restrictions on the granting of the business start-up aid referred to in Article 19(1)(a) of that regulation, by prohibiting payment of the aid referred to in Article 19(1)(a)(i) of that regulation to a farmer who has already received the aid provided for in point (a)(iii) of that provision.
62      In the light of the foregoing considerations, the answer to the second and third questions is that Article 19(1) of Regulation No 1305/2013 must be interpreted as not precluding national legislation under which the granting of business start-up aid for the development of small farms, provided for in point (a)(iii) of that provision, prevents the recipient from securing business start-up aid for young farmers, as is provided for in point (a)(i) thereof.
Costs
63      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Sixth Chamber) hereby rules:
1.      Article 19(1) of Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005 must be interpreted as not precluding a farmer who has received business start-up aid for the development of small farms, provided for in point (a)(iii) of that provision, from cumulating that aid with business start-up aid for young farmers, provided for in point (a)(i) of that provision, in so far as the maximum amount of aid granted, as referred to in Article 19(6), is complied with.
2.      Article 19(1) of Regulation No 1305/2013 must be interpreted as not precluding national legislation under which the granting of business start-up aid for the development of small farms, provided for in point (a)(iii) of that provision, prevents the recipient from securing business start-up aid for young farmers, as provided for in point (a)(i) thereof.
[Signatures]
*      Language of the case: Latvian.