2005R1698 — EN — 01.01.2010 — 004.001

This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents

Amended by:





Corrected by:









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COUNCIL REGULATION (EC) No 1698/2005

of 20 September 2005

on support for rural development by the European Agricultural Fund for Rural Development (EAFRD)







THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Articles 36, 37 and 299(2) thereof, Having regard to the proposal from the Commission, Having regard to the opinion of the European Parliament ( 1 ), Whereas: (1) A rural development policy should accompany and complement the market and income support policies of the common agricultural policy and thus contribute to the achievement of that policy’s objectives as laid down in the Treaty. Rural development policy should also take into account the general objectives for economic and social cohesion policy set out in the Treaty and contribute to their achievement, while integrating other major policy priorities as spelled out in the conclusions of the Lisbon and Göteborg European Councils for competitiveness and sustainable development. (2) According to the Treaty, in working out the common agricultural policy and the special methods for its application, account is to be taken of the particular nature of agricultural activity which results from the social structure of agriculture and from structural and natural disparities between the various rural areas. (3) The reform of the common agricultural policy in June 2003 and April 2004 introduced major changes likely to have a significant impact on the economy across the whole rural territory of the Community in terms of agricultural production patterns, land management methods, employment and the wider social and economic conditions in the various rural areas. (4) Action by the Community should be complementary to that carried out by the Member States or seek to contribute to it. The partnership should be strengthened through arrangements for the participation of various types of partners with full regard to the institutional competences of the Member States. The partners concerned should be involved in the preparation, monitoring and evaluation of programming. (5) Since the objective of this Regulation, namely rural development, cannot be achieved sufficiently by the Member States given the links between it and the other instruments of the common agricultural policy, the extent of the disparities between the various rural areas and the limits on the financial resources of the Member States in an enlarged Union, and can therefore be better achieved at Community level through the multiannual guarantee of Community finance and by concentrating it on its priorities, the Community may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective. (6) The activities of the European Agricultural Fund for Rural Development (hereinafter the EAFRD) and the operations to which it contributes must be consistent and compatible with the other Community policies and comply with all Community legislation. (7) In its action in favour of rural development, the Community takes care to eliminate inequalities and to promote equality between men and women and non-discrimination, in accordance with the Treaty. (8) To focus the strategic content of rural development policy in line with the Community’s priorities and hereby favour its transparency, the Council should adopt strategic guidelines on a proposal from the Commission. (9) On the basis of the strategic guidelines, each Member State should prepare its rural development national strategy plan constituting the reference framework for the preparation of the rural development programmes. Member States and the Commission should report on the monitoring of the national and Community strategy. (10) The programming of rural development should comply with Community and national priorities and complement the other Community policies, in particular the agricultural market policy, cohesion policy and common fisheries policy. (11) To ensure the sustainable development of rural areas it is necessary to focus on a limited number of core objectives at Community level relating to agricultural and forestry competitiveness, land management and environment, quality of life and diversification of activities in those areas, taking into account the diversity of situations, ranging from remote rural areas suffering from depopulation and decline to peri-urban rural areas under increasing pressure from urban centres. (12) There is a need to establish general rules for programming and revising rural development programming, while ensuring an appropriate balance between the axes of the rural development programmes corresponding to those core objectives. The duration of the programmes should be of seven years. (13) To achieve the objective of improving the competitiveness of the agricultural and forestry sectors it is important to build clear development strategies aimed at enhancing and adapting human potential, physical potential and the quality of agricultural production. (14) With regard to human potential, a set of measures on training, information and diffusion of knowledge, setting up of young farmers, early retirement of farmers and farm workers, use by farmers and forest holders of advisory services and on the setting up of farm management, farm relief and farm advisory services as well as forestry advisory services should be made available. (15) As regards training, information and diffusion of knowledge, the evolution and specialisation of agriculture and forestry require an appropriate level of technical and economic training, including expertise in new information technologies, as well as adequate awareness in the fields of product quality, results of research and sustainable management of natural resources, including cross-compliance requirements and the application of production practices compatible with the maintenance and enhancement of the landscape and the protection of the environment. It is therefore necessary to broaden the scope of training, information and diffusion of knowledge activities to all adult persons dealing with agricultural, food and forestry matters. These activities cover issues under both the agricultural and forestry competitiveness and the land management and environment objectives. (16) The granting of specific benefits to young farmers may facilitate both their initial establishment and the structural adjustment of their holdings after their initial setting up. The setting-up measure should be made conditional on the establishment of a business plan as an instrument to ensure over time the development of the activities of the new agricultural holding. (17) Early retirement from farming should target a significant structural change of the transferred holdings through the measure for the setting-up of young farmers according to the requirements of that measure, or by transferring the holding with a view to increasing its size, also taking into account the experience acquired in the implementation of previous Community schemes in this field. (18) The use by farmers and forest holders of management and advisory services should allow them to improve the sustainable management of their holdings. At least, the use of farm advisory services, as provided for in 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 ( 2 ), should help farmers to assess the performance of their agricultural holding and identify necessary improvements with regard to the statutory management requirements set out in that Regulation and to Community standards relating to occupational safety. (19) The setting up of farm management, farm relief and farm advisory services for farmers and of forestry advisory services for forest holders should help them to adapt, improve and facilitate management and improve the overall performance of their holdings by further enhancing the human potential operating in the agricultural and forestry sectors. (20) With regard to physical potential, a set of measures on the modernisation of agricultural holdings, improvement of the economic value of forests, adding value to agricultural and forestry products, promoting the development of new products, processes and technologies in the agriculture and food sector and in the forestry sector, improvement and development of agricultural and forestry infrastructure, restoring agricultural production potential damaged by natural disasters and introduction of appropriate prevention measures should be made available. (21) The purpose of Community farm investment aid is to modernise agricultural holdings to improve their economic performance through better use of the production factors including the introduction of new technologies and innovation, targeting quality, organic products and on/off-farm diversification, including non-food sectors and energy crops, as well as improving the environmental, occupational safety, hygiene and animal welfare status of agricultural holdings, while simplifying the conditions for investment aid as compared with those laid down in Council Regulation (EC) No 1257/1999 of 17 May 1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) ( 3 ). (22) Private forests play an important role in economic activity in rural areas and, therefore, Community aid is important for improving and broadening their economic value, for increasing diversification of production and enhancing market opportunities, in sectors such as that for renewable energy, while maintaining the sustainable management and the multifunctional role of forests. (23) Improvements in the processing and marketing of primary agricultural and forestry products should be encouraged by means of support for investments aimed at improving efficiency in the processing and marketing sector, promoting the processing of agricultural and forestry production for renewable energy, introducing new technologies and innovation, opening new market opportunities for agricultural and forestry products, putting emphasis on quality, improving environmental protection, occupational safety, hygiene and animal welfare, as appropriate, by targeting, as a general rule, micro, small and medium-sized enterprises and other enterprises under a certain size, which are better placed to add value to local products, while simplifying the conditions for investment aid as compared with those laid down in Regulation (EC) No 1257/1999. (24) In a context of increased competition it is important to ensure that the agriculture and food sector and the forestry sector can take advantage of market opportunities through widespread innovative approaches in developing new products, processes and technologies. For this purpose cooperation between farmers, the food and the raw materials processing industry and other parties should be encouraged. (25) Agricultural infrastructure and restorative and preventive measures against natural disasters should contribute to the agricultural and forestry competitiveness axis. (26) With regard to the quality of agricultural production and products, a set of measures on meeting standards by farmers based on Community legislation, encouraging participation of farmers in food quality schemes and supporting producer groups for information and promotion activities should be made available. (27) The aim of the measure on meeting standards is to promote a more rapid implementation by farmers of demanding standards based on Community legislation concerning the environment, public health, animal and plant health, animal welfare and occupational safety and the respect of those standards by farmers. These standards may impose new obligations on farmers and consequently support should be provided to help cover partly the additional costs or income foregone arising from these obligations. (28) The aim of the measure providing support for farmers participating in Community or national food quality schemes is to provide consumers with assurances on the quality of the product or the production process used as a result of their participation in such schemes, to achieve added value for agricultural primary products and enhance market opportunities. Since participation in such schemes may give rise to additional costs and obligations which are not fully rewarded by the marketplace, farmers should be encouraged to participate in such schemes. (29) There is a need to improve consumers’ awareness of the existence and specifications of products produced under the aforementioned quality schemes. Support should be provided to producer groups to inform consumers and promote products provided under quality schemes supported by Member States within their rural development programmes. (30) There is a need to ensure the smooth transition of a set of individual measures introduced through the 2003 Act of Accession, namely the measure on semi-subsistence farming and the measure on producer groups. (31) Support for specific methods of land management should contribute to sustainable development by encouraging farmers and forest holders in particular to employ methods of land use compatible with the need to preserve the natural environment and landscape and protect and improve natural resources. It should contribute to the implementation of the 6th Community Environment Action Programme and the Presidency conclusions regarding the Sustainable Development Strategy. Key issues to be addressed include biodiversity, Natura 2000 site management, the protection of water and soil, climate change mitigation including the reduction of greenhouse gas emissions, the reduction of ammonia emissions and the sustainable use of pesticides. (32) Forestry is an integral part of rural development and support for sustainable land use should encompass the sustainable management of forests and their multifunctional role. Forests create multiple benefits: they provide raw material for renewable and environmentally friendly products and play an important role in economic welfare, biological diversity, the global carbon cycle, water balance, erosion control and the prevention of natural hazards, as well as providing social and recreational services. Forestry measures should be adopted in the light of undertakings given by the Community and the Member States at international level, and be based on Member States’ national or sub-national forest programmes or equivalent instruments, which should take into account the commitments made in the Ministerial Conferences on the Protection of Forests in Europe. Forestry measures should contribute to the implementation of the Community Forestry Strategy. This support should avoid distorting competition and should be market-neutral. (33) Natural handicap payments in mountain areas and payments in other areas with handicaps should contribute, through continued use of agricultural land, to maintaining the countryside, as well as to maintaining and promoting sustainable farming systems. Objective parameters for fixing the level of payments should be laid down in order to ensure the efficiency of this support scheme and ensure that its objectives are achieved. Certain provisions of Regulation (EC) No 1257/1999 concerning support for less favoured areas should remain in force for a period of time. (34) Support should continue to be granted to farmers to help address specific disadvantages in the areas concerned resulting from the implementation of Council Directive 79/409/EEC of 2 April 1979 on the conservation of wild birds ( 4 ) and Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora ( 5 ) in order to contribute to the effective management of Natura 2000 sites, while support should also be made available to farmers to help address disadvantages in river basin areas resulting from the implementation of Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a framework for the Community action in the field of the water policy ( 6 ). (35) Agri-environmental payments should continue to play a prominent role in supporting the sustainable development of rural areas and in responding to society’s increasing demand for environmental services. They should further encourage farmers and other land managers to serve society as a whole by introducing or continuing to apply agricultural production methods compatible with the protection and improvement of the environment, the landscape and its features, natural resources, the soil and genetic diversity. In this context the conservation of genetic resources in agriculture should be given specific attention. In accordance with the polluter-pays principle these payments should cover only those commitments going beyond the relevant mandatory standards. (36) Farmers should continue to be encouraged to adopt high standards of animal welfare by providing for support for farmers who undertake to adopt standards of animal husbandry which go beyond the relevant mandatory standards. (37) Support should be granted for non-remunerative investments where they are necessary to achieve the commitments undertaken under agri-environmental schemes or other agri-environmental objectives, or where they enhance on-farm the public amenity value of Natura 2000 areas and other areas of high natural value. (38) In order to contribute to the protection of the environment, the prevention of natural hazards and fires, as well as to mitigate climate change, forest resources should be extended and improved by first afforestation of agricultural land and other than agricultural land. Any first afforestation should be adapted to local conditions and compatible with the environment and enhance biodiversity. (39) Agri-forestry systems have a high ecological and social value by combining extensive agriculture and forestry systems, aimed at the production of high-quality wood and other forest products. Their establishment should be supported. (40) Given the importance of forests for the successful implementation of Directives 79/409/EEC and 92/43/EEC, specific support should be granted to forest holders to help address specific problems resulting from their implementation. (41) Forest-environment payments should be introduced for voluntary commitments to enhance biodiversity, preserve high-value forest ecosystems and reinforce the protective value of forests with respect to soil erosion, maintenance of water resources and water quality and to natural hazards. (42) Support should be granted for restoring forestry potential in forests damaged by natural disasters and fire and introducing preventive actions. Preventive actions against fires should cover areas classified by Member States as high or medium fire risk according to their forest protection plans. (43) Support should be granted to forest holders for non-remunerative investments where they are necessary to achieve the forest-environment commitments or other environmental objectives, or in forests to enhance the public amenity value of the areas concerned. (44) In order to ensure the targeted and efficient use of land management support under this Regulation, Member States should designate areas for intervention under certain measures of this axis. Mountain areas and other areas with handicaps should be designated on the basis of objective common criteria. Therefore, Council Directives and Decisions adopting lists of less favoured areas or amending such lists in accordance with Article 21(2) and (3) of Council Regulation (EC) No 950/97 of 20 May 1997 on improving the efficiency of agricultural structures ( 7 ) should be repealed with effect at a later date. Natura 2000 areas are designated in accordance with Directives 79/409/EEC and 92/43/EEC. Member States should designate areas suitable for afforestation for environmental reasons, such as protection against erosion, prevention of natural hazards or extension of forest resources contributing to climate change mitigation, and forest areas with a medium to high forest fire risk. (45) A penalty system should be set up where beneficiaries receiving payments under certain land management measures do not meet the mandatory requirements provided for in Regulation (EC) No 1782/2003 on all of their holding, taking into account the severity, extent, permanence and repetition of non-compliance. (46) There is a need to accompany changes in rural areas by helping them to diversify farming activities towards non-agricultural activities and develop non-agricultural sectors, promote employment, improve basic services, including local access to Information and Communication Technologies (ICTs) and carry out investments making rural areas more attractive in order to reverse trends towards economic and social decline and depopulation of the countryside. An effort to enhance the human potential in this respect is also necessary. (47) Support should be granted for other measures relating to the broader rural economy. The list of measures should be defined on the basis of experience of the Leader initiative and having regard to the multi-sectoral needs for endogenous rural development. (48) The implementation of local development strategies can reinforce territorial coherence and synergies between measures intended for the broader rural economy and population. Therefore, measures relating to the broader rural economy should be preferably implemented through local development strategies. (49) There is a need to clearly define the principles of coherence and complementarity of the axis for the improvement of the quality of life in rural areas and the diversification of the rural economy with other Community financial instruments, and particularly with those of cohesion policy. (50) The Leader initiative, after having experienced three programming periods, has reached a level of maturity enabling rural areas to implement the Leader approach more widely in mainstream rural development programming. Provision should therefore be made to transfer the basic principles of the Leader approach to the programmes building a specific axis in them, and provide a definition of the local action groups and measures to be supported, including partnership capacity, implementation of local strategies, cooperation, networking and acquisition of skills. (51) Given the importance of the Leader approach, a substantial share of the contribution of the EAFRD should be earmarked for this axis. (52) The EAFRD is to support through technical assistance actions relating to the implementation of the programmes. As part of the technical assistance referred to in Article 5 of Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy ( 8 ), a network for rural development should be set up at Community level. (53) Provisions on the allocation of the available resources should be introduced. These resources should be consistent with the financial perspective for the period 2007 to 2013. The overall amount for rural development should be allocated annually. Significant concentration on the regions eligible under the Convergence Objective should be allowed. (54) Provision should be made for the Council to determine the amount for Community support to rural development under this Regulation for the period from 1 January 2007 to 31 December 2013, its annual breakdown and the minimum amount to be concentrated in regions eligible under the Convergence Objective in accordance with the financial perspective for the period 2007 to 2013 and the Interinstitutional Agreement on budgetary discipline and improvement of the budgetary procedure for the same period. (55) The annual appropriations allocated to a Member State for the Convergence Objective under the Funds for the part coming from the EAGGF Guidance Section, the Structural Funds, the Cohesion Fund (hereinafter the CF) and the Financial Instrument for Fisheries Guidance ( 9 )(hereinafter the FIFG) should be limited to a ceiling fixed with regard to its capacity for absorption. (56) For the indicative breakdown of commitment appropriations available to the Member States criteria should be established according to an objective and transparent method. (57) Over and above these amounts the Member States should take account of the amounts pursuant to Article 12(2) of Regulation (EC) No 1290/2005. (58) The appropriations available under the Funds should be indexed on a flat-rate basis for programming. (59) The rate of the EAFRD contribution to rural development programming should be set in relation to public expenditure in the Member States, taking account of the importance of the priority given to land management and environment, the situation in the regions eligible under the Convergence Objective and the priority given to the Leader approach. (60) In order to mitigate the specific constraints and structural problems in farming and forestry activities and in adding value to agricultural and forestry products as a result of remoteness, insularity or distant location and of the dependency of the rural economy on a limited number of agricultural products, and to promote a robust rural development policy, specific provisions for certain rural development measures, as well as appropriate co-financing rates from the EAFRD should apply in the outermost regions referred to in the Treaty and the islands covered by Council Regulation (EEC) No 2019/93 of 19 July 1993 introducing specific measures for the smaller Aegean islands concerning certain agricultural products ( 10 ). (61) In accordance with the principle of subsidiarity and subject to exceptions, there should be national rules on the eligibility of expenditure. (62) To ensure the effectiveness, fairness and sustainable impact of the assistance from the EAFRD, there should be provisions guaranteeing that investment-related operations are durable and avoiding this fund being used to introduce unfair competition. (63) Decentralised implementation of the actions under the EAFRD should be accompanied by guarantees relating in particular to the quality of implementation, the results, sound financial management and control. (64) Member States should take measures to guarantee sound functioning of management and control systems. To this end, it is necessary to establish the general principles and the basic functions which any management and control system should ensure. It is therefore necessary to maintain the designation of a single Managing Authority and to specify its responsibilities. (65) Each rural development programme should be subject to appropriate monitoring, by a Monitoring Committee, on the basis of a common monitoring and evaluation framework established and implemented in partnership with the Member States, to effectively meet the specific needs of rural development. (66) The effectiveness and the impact of actions under the EAFRD also depend on improved evaluation on the basis of the common monitoring and evaluation framework. In particular, the programmes should be evaluated for their preparation, implementation and completion. (67) To enable the partnership to function effectively and promote Community action, information on it should be publicised as widely as possible. The authorities managing the programmes have a responsibility in this respect. (68) Rural development as defined in this Regulation should be eligible for Member State support without Community co-financing. In view of the economic impact of such aid and in order to ensure consistency with measures eligible for Community support and to simplify procedures, specific State aid rules should be established, also taking into account the experience from the implementation of Regulation (EC) No 1257/1999. Moreover, Member States should be authorised to grant State aid, intended to provide additional financing for rural development for which Community support is granted, under a notification procedure in accordance with the provisions of this Regulation as part of programming. (69) There is a need to adopt rules to facilitate the transition from the existing support scheme to the new rural development support scheme. (70) The new support scheme provided for in this Regulation replaces the existing support scheme. Therefore, Regulation (EC) No 1257/1999 should be repealed from 1 January 2007 with the exception of certain provisions concerning less favoured areas which should be repealed at a later date. (71) The measures necessary for the implementation of this Regulation should be adopted in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission ( 11 ). (72) The European Economic and Social Committee has delivered an opinion ( 12 ). (73) The Committee of the Regions has delivered an opinion ( 13 ), Whereas: HAS ADOPTED THIS REGULATION:







TITLE I

OBJECTIVES AND GENERAL RULES ON ASSISTANCE







CHAPTER I

SCOPE AND DEFINITIONS

Article 1

Scope

This Regulation:

1) lays down the general rules governing Community support for rural development, financed by the EAFRD, established by Regulation (EC) No 1290/2005;

2) defines the Objectives to which rural development policy is to contribute;

3) defines the strategic context for rural development policy, including the method for fixing the Community strategic guidelines for rural development policy (hereinafter the Community strategic guidelines) and the national strategy plans;

4) defines the priorities and measures for rural development;

5) lays down rules on partnership, programming, evaluation, financial management, monitoring and control on the basis of responsibilities shared between the Member States and the Commission.

Article 2

Definitions

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

(a) ‘programming’: the process of organisation, decision-taking and financing in several stages intended to implement, on a multiannual basis, the joint action by the Community and the Member States to achieve the priority goals of the EAFRD;

(b) ‘region’: territorial unit corresponding to level 1 or 2 of the Nomenclature of territorial units for statistics (NUTS level 1 and 2) within the meaning of Regulation (EC) No 1059/2003 of the European Parliament and of the Council of 26 May 2003 on the establishment of a common classification of territorial units for statistics (NUTS) ( 14 );

(c) ‘axis’: a coherent group of measures with specific goals resulting directly from their implementation and contributing to one or more of the objectives set out in Article 4;

(d) ‘measure’: a set of operations contributing to the implementation of an axis as referred to in Article 4(2);

(e) ‘operation’: a project, contract or arrangement, or other action selected according to criteria laid down for the rural development programme concerned and implemented by one or more beneficiaries allowing achievement of the objectives set out in Article 4;

(f) ‘common monitoring and evaluation framework’: a general approach developed by the Commission and the Member States defining a limited number of common indicators relating to the baseline situation and the financial execution, outputs, results and impacts of the programmes;

(g) ‘local development strategy’: a coherent set of operations to meet local objectives and needs implemented in partnership at the appropriate level;

(h) ‘beneficiary’: an operator, body or firm, whether public or private, responsible for implementing operations or receiving support;

(i) ‘public expenditure’: any public contribution to the financing of operations whose origin is the budget of the State, of regional and local authorities, of the European Communities and any similar expenditure. Any contribution to the financing of operations whose origin is the budget of public law bodies or associations of one or more regional or local authorities or public law bodies within the meaning of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts ( 15 ) shall be regarded as public contribution;

(j) ‘Convergence Objective’: the objective of the action for the least developed Member States and regions according to the Community legislation governing the European Regional Development Fund (hereinafter the ERDF), the European Social Fund (hereinafter the ESF) and the CF for the period from 1 January 2007 to 31 December 2013.







CHAPTER II

MISSIONS AND OBJECTIVES

Article 3

Missions

The EAFRD shall contribute to the promotion of sustainable rural development throughout the Community in a complementary manner to the market and income support policies of the common agricultural policy, to cohesion policy and to the common fisheries policy.

Article 4

Objectives

1. Support for rural development shall contribute to achieving the following objectives:

(a) improving the competitiveness of agriculture and forestry by supporting restructuring, development and innovation;

(b) improving the environment and the countryside by supporting land management;

(c) improving the quality of life in rural areas and encouraging diversification of economic activity.

2. The objectives set out in paragraph 1 shall be implemented by means of the four axes defined in Title IV.







CHAPTER III

PRINCIPLES OF ASSISTANCE

Article 5

Complementarity, consistency and conformity

1. The EAFRD shall complement national, regional and local actions contributing to the Community’s priorities.

2. The Commission and the Member States shall ensure that the assistance from the EAFRD and the Member States is consistent with the activities, policies and priorities of the Community. The assistance of the EAFRD shall be consistent with the objectives of Economic and Social Cohesion and those of the Community support instrument for fisheries in particular.

3. This consistency shall be provided by the Community strategic guidelines referred to in Article 9, the national strategy plan referred to in Article 11, the rural development programmes referred to in Article 15 and the Commission report referred to in Article 14.

4. In accordance with their respective responsibilities, the Commission and the Member States shall ensure the coordination between the assistance from the different Funds, the ERDF, the ESF, the CF, the Community support instrument for fisheries, and the interventions of the European Investment Bank (hereinafter the EIB), and of other Community financial instruments.

5. There shall also be consistency with the measures financed by the European Agricultural Guarantee Fund.

6. No support under this Regulation shall be granted to schemes eligible for support under common market organisations, subject to any exceptions yet to be defined, in accordance with the procedure referred to in Article 90(2).

7. The Member States shall ensure that the operations financed by the EAFRD are in conformity with the Treaty and any acts adopted under it.

Article 6

Partnership

1. EAFRD assistance shall be implemented through close consultations (hereinafter partnership) between the Commission and the Member State and with the authorities and bodies designated by the Member State under national rules and practices, including:

(a) the competent regional, local authorities and other public authorities;

(b) the economic and social partners;

(c) any other appropriate body representing civil society, non-governmental organisations, including environmental organisations, and bodies responsible for promoting equality between men and women.

1. The Member State shall designate the most representative partners at national, regional and local level and in the economic, social, environmental or other sphere (hereinafter partners). It shall create the conditions for a broad and effective involvement of all appropriate bodies, in accordance with national rules and practices, taking into account the need to promote equality between men and women and sustainable development through integration of environmental protection and improvement requirements.

2. The partnership shall be conducted with due regard to the respective institutional, legal and financial responsibilities of each category of partner as defined under paragraph 1.

3. The partnership shall be involved in the preparation and monitoring of the national strategy plan and in the preparation, implementation, monitoring and evaluation of the rural development programmes. Member States shall involve all appropriate partners at the various programming stages, due regard being had to the time limit set for each step.

Article 7

Subsidiarity

Member States shall be responsible for implementing the rural development programmes at the appropriate territorial level, according to their own institutional arrangements, in accordance with this Regulation.

Article 8

Equality between men and women and non-discrimination

Member States and the Commission shall promote equality between men and women and shall ensure that any discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation is prevented during the various stages of programme implementation.

This includes the stages of design, implementation, monitoring and evaluation.







TITLE II

THE STRATEGIC APPROACH TO RURAL DEVELOPMENT







CHAPTER I

THE COMMUNITY STRATEGIC GUIDELINES

Article 9

Content and adoption

1. The Council shall adopt Community strategic guidelines for rural development policy for the programming period from 1 January 2007 to 31 December 2013 in the light of the policy priorities set at Community level.

1. These strategic guidelines shall set at Community level the strategic priorities for rural development for the programming period with a view to implementing each of the axes laid down in this Regulation.

2. By 20 February 2006, a decision on the Community strategic guidelines shall be adopted according to the procedure laid down in Article 37 of the Treaty. The decision shall be published in the Official Journal of the European Union.

Article 10

Review

With a view to taking account of major changes in the Community priorities in particular, the Community strategic guidelines may be subject to review.







CHAPTER II

NATIONAL STRATEGY PLANS

Article 11

Content

1. Each Member State shall submit a national strategy plan indicating the priorities of the action of the EAFRD and of the Member State concerned taking into account the Community strategic guidelines, their specific objectives, the contribution from the EAFRD and the other financial resources.

2. The national strategy plan shall ensure that Community aid for rural development is consistent with the Community strategic guidelines and that Community, national and regional priorities all coordinate. The national strategy plan shall be a reference tool for preparing EAFRD programming. It shall be implemented through the rural development programmes.

3. Each national strategy plan shall include:

(a) an evaluation of the economic, social and environmental situation and the potential for development;

(b) the strategy chosen for joint action by the Community and the Member State concerned, showing the consistency of the choices made with the Community strategic guidelines;

(c) the thematic and territorial priorities for rural development under each axis, including the main quantified objectives and the appropriate monitoring and evaluation indicators;

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(d) a list of the rural development programmes implementing the national strategy plan, an indicative EAFRD allocation for each programme, including the amounts provided for in Article 12(2) of Regulation (EC) No 1290/2005, and a separate indication of the amounts provided for in Article 69(5a) of this Regulation;

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(e) the means to ensure coordination with the other common agricultural policy instruments, the ERDF, the ESF, the CF, the Community support instrument for fisheries and the EIB;

(f) if appropriate, the budget for achieving the Convergence Objective;

(g) a description of the arrangements and the indication of the amount earmarked for establishing the national rural network referred to in Articles 66(3) and 68.

Article 12

Preparation

1. Each Member State shall prepare a national strategy plan after the Community strategic guidelines are adopted.

1. This plan shall be prepared in accordance with the Member States’ institutional arrangements, following close collaboration with the partners referred to in Article 6. It shall be drawn up in close collaboration with the Commission and shall cover the period from 1 January 2007 to 31 December 2013.

2. Each Member State shall send the Commission its national strategy plan before submitting its rural development programmes.

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Article 12a

Revision

1. Member States shall revise, in accordance with the procedure referred to in Article 12(1), their national strategy plans following the review of the Community strategic guidelines as referred to in Article 10.

2. The revised national strategy plan referred to in paragraph 1 shall be sent to the Commission no later than 15 July 2009.

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CHAPTER III

STRATEGIC MONITORING

Article 13

Summary reports by Member States

1. For the first time in 2010 and no later than 1 October each second year, each Member State shall submit to the Commission a summary report setting out the progress made in implementing its national strategy plan and objectives and its contribution to the achievement of the Community strategic guidelines. The last summary report shall be submitted no later than 1 October 2014.

2. The report shall summarise the previous years’ annual progress reports referred to in Article 82 and shall describe in particular:

(a) the achievements and results of the rural development programmes relative to the indicators set out in the national strategy plan;

(b) the results of the ongoing evaluation activities for each programme.

3. By way of derogation from paragraph 1, for single programmes as referred to in Article 15(2) Member States may include in the annual progress reports referred to in Article 82 the elements provided for in paragraph 2 of this Article within the time limit set in Article 82.

Article 14

Commission report

1. For the first time in 2011 and at the start of each second year, the Commission shall present a report summarising the main developments, trends and challenges relating to the implementation of the national strategy plans and the Community strategic guidelines. The last Commission report shall be presented at the start of 2015.

1. This report shall be based on the Commission’s analysis and appraisal of the Member States’ summary reports referred to in Article 13 and any other available information. It shall indicate the measures taken or to be taken by the Member States and Commission in order to provide an appropriate follow-up to the report’s conclusions.

2. The Commission report shall be sent to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions.







TITLE III

PROGRAMMING







CHAPTER I

PROGRAMMING CONTENT

Article 15

Rural development programmes

1. The EAFRD shall act in the Member States through rural development programmes. These programmes implement a rural development strategy through a set of measures grouped together in accordance with the axes defined in Title IV, for the achievement of which aid from the EAFRD will be sought.

1. Each rural development programme shall cover a period between 1 January 2007 and 31 December 2013.

2. A Member State may submit either a single programme for its entire territory or a set of regional programmes.

3. Member States with regional programmes may also submit for approval a national framework containing common elements for these programmes.

Article 16

Content of programmes

Each rural development programme shall include:

(a) an analysis of the situation in terms of strengths and weaknesses, the strategy chosen to meet them and the ex ante evaluation referred to in Article 85;

(b) a justification of the priorities chosen having regard to the Community strategic guidelines and the national strategy plan, as well as the expected impact according to the ex ante evaluation;

(c) information on the axes and measures proposed for each axis and their description, including the specific verifiable objectives and indicators referred to in Article 81 that allow the programme’s progress, efficiency and effectiveness to be measured;

(d) a financing plan, comprising two tables: — a table setting out, in accordance with Article 69(4) and (5), the total EAFRD contribution planned for each year. When applicable, this financing plan shall indicate separately within the total EAFRD contribution the appropriations provided for the regions eligible under the Convergence Objective. The planned annual EAFRD contribution shall be compatible with the Financial Perspectives; — a table setting out for the entire programming period the total Community contribution planned and the matching national public funding for each axis, the EAFRD contribution rate for each axis and the amount earmarked for technical assistance. When applicable, this table shall also indicate separately the planned EAFRD contribution for the regions eligible under the Convergence Objective and the matching national public funding;

(e) for information, an indicative breakdown of the initial amounts by measure in terms of public and private expenditure;

(f) where applicable, a table on additional national financing per axis in accordance with Article 89;

(g) the elements needed for the appraisal under competition rules and, when applicable, the list of aid schemes authorised under Articles 87, 88 and 89 of the Treaty to be used for the implementation of the programmes;

(h) information on the complementarity with the measures financed by the other common agricultural policy instruments, through cohesion policy as well as by the Community support instrument for fisheries;

(i) programme implementing arrangements, including: (i) the designation by the Member State of all the authorities provided for in Article 74(2) and for information a summary description of the management and control structure; (ii) a description of the monitoring and evaluation systems, as well as the composition of the Monitoring Committee; (iii) the provisions to ensure that the programme is publicised;

(j) the designation of the partners referred to in Article 6 and the results of the consultations of the partners.

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Article 16a

Specific operations related to certain priorities

1. By 31 December 2009, Member States shall provide in their rural development programmes, in accordance with their specific needs, for types of operations having the following priorities as described in the Community strategic guidelines and specified further in the national strategy plans:

(a) climate change;

(b) renewable energies;

(c) water management;

(d) biodiversity;

(e) measures accompanying restructuring of the dairy sector;

(f) innovation linked to the priorities mentioned in points (a) to (d);

(g) broadband Internet infrastructure in rural areas.

The types of operations to be linked to the priorities referred to in points (a) to (f) of the first subparagraph shall be aimed at achieving effects such as the potential effects specified in Annex II. An indicative list of such types of operations and their potential effects is set out in Annex II. A list of types of operations linked to the priority referred to in point (g) of the first subparagraph is set out in Annex III.

The revised rural development programmes related to the operations referred to in this paragraph shall be submitted to the Commission no later than 15 July 2009.

2. From 1 January 2009, for types of operations referred to in points (a) to (f) of paragraph 1, the aid intensity rates fixed in Annex I may be increased by 10 percentage points.

3. By 31 December 2009, each rural development programme shall also include:

(a) the list of types of operations and the information referred to in Article 16(c) on the specific types of operations referred to in paragraph 1 of this Article;

(b) a table setting out, for the period from 1 January 2009 to 31 December 2013, by measure the Community contribution for types of operations referred to in points (a) to (f) of paragraph 1 and by measure the Community contribution for types of operations referred to in paragraph 1(g).

▼B

Article 17

Balance between objectives

1. The Community financial contribution to each of the three objectives referred to in Article 4 shall cover at least 10 % of the EAFRD total contribution to the programme for axis 1 and 3 referred to in Sections 1 and 3 respectively of Chapter I of Title IV and at least 25 % of the EAFRD total contribution to the programme for axis 2 referred to in Section 2 of Chapter I of Title IV. For the programmes of the French overseas departments, the minimum Community financial contribution for axis 2 shall be 10 %.

2. 5 % at least of the EAFRD total contribution to the programme shall be reserved for axis 4 referred to in Section 4 of Chapter I of Title IV. This amount contributes to the percentages laid down in paragraph 1. For the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, the minimum Community financial contribution for axis 4 of 5 % may be phased in over the programming period in such a way that on average at least 2,5 % of the EAFRD total contribution is reserved for axis 4.

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For Bulgaria and Romania, an average of at least 2,5 % of the EAFRD total contribution for axis 4 shall be ærespected during the period 2010 to 2013. Any contribution from the EAFRD for that axis during the period 2007 to 2009 shall be taken into account for the calculation of that percentage.

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3. The amounts equal to those resulting from the application of the compulsory modulation under Article 69(5a) together with, as from 2011, the amounts generated under Article 136 of Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers ( 16 ) and the amount referred to in Article 69(2a) of this Regulation shall not be taken into account in the EAFRD total contribution from which the minimum Community financial contribution per axis is calculated as provided for in paragraphs 1 and 2 of this Article.

▼B







CHAPTER II

PREPARATION, APPROVAL AND REVIEW

Article 18

Preparation and approval

1. Rural development programmes shall be established by a Member State following close cooperation with the partners referred to in Article 6.

2. Member States shall submit to the Commission a proposal for each rural development programme, containing the information mentioned in Article 16.

3. The Commission shall assess the proposed programmes on the basis of their consistency with the Community strategic guidelines, the national strategy plan and this Regulation.

3. Where the Commission considers that a rural development programme is not consistent with the Community strategic guidelines, the national strategy plan or this Regulation, it shall request the Member State to revise the proposed programme accordingly.

4. Each rural development programme shall be approved in accordance with the procedure referred to in Article 90(2).

Article 19

Review

1. The rural development programmes shall be re-examined and, if appropriate, adapted for the remainder of the period by the Member State following Monitoring Committee approval. The revisions shall take into account the outcome of evaluations and the Commission’s reports, particularly with a view to strengthening or adapting the way in which the Community priorities are taken into account.

2. The Commission shall adopt a decision on requests to revise rural development programmes after the submission of such a request by a Member State in accordance with the procedure referred to in Article 90(2). Changes requiring approval by Commission decision shall be defined in accordance with the procedure referred to in Article 90(2).







TITLE IV

RURAL DEVELOPMENT SUPPORT







CHAPTER I

AXES







SECTION 1

Axis 1

Improving the competitiveness of the agricultural and forestry sector

Article 20

Measures

Support targeting the competitiveness of the agricultural and forestry sector shall concern:

(a) measures aimed at promoting knowledge and improving human potential through: (i) vocational training and information actions, including diffusion of scientific knowledge and innovative practises, for persons engaged in the agricultural, food and forestry sectors; (ii) setting up of young farmers; (iii) early retirement of farmers and farm workers; (iv) use of advisory services by farmers and forest holders; (v) setting up of farm management, farm relief and farm advisory services, as well as of forestry advisory services;

(b) measures aimed at restructuring and developing physical potential and promoting innovation through: (i) modernisation of agricultural holdings; (ii) improving the economic value of forests; (iii) adding value to agricultural and forestry products; (iv) cooperation for development of new products, processes and technologies in the agriculture and food sector and in the forestry sector; (v) improving and developing infrastructure related to the development and adaptation of agriculture and forestry; (vi) restoring agricultural production potential damaged by natural disasters and introducing appropriate prevention actions;

(c) measures aimed at improving the quality of agricultural production and products by: (i) helping farmers to adapt to demanding standards based on Community legislation; (ii) supporting farmers who participate in food quality schemes; (iii) supporting producer groups for information and promotion activities for products under food quality schemes;

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(d) transitional measures concerning: (i) supporting semi-subsistence agricultural holdings undergoing restructuring (for Bulgaria, the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Romania, Slovenia and Slovakia); (ii) supporting the setting up of producer groups (for Bulgaria, the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Romania, Slovenia and Slovakia); (iii) supporting agricultural holdings undergoing restructuring, including diversification to activities outside agriculture, due to a reform of a common market organisation;

▼B







SUBSECTION 1

Conditions for measures aimed at promoting knowledge and improving human potential

Article 21

Vocational training and information actions

Support provided for in Article 20(a)(i) shall not include courses of instruction or training which form part of normal programmes or systems of agricultural and forestry education at secondary or higher levels.

Article 22

Setting up of young farmers

1. Support provided for in Article 20(a)(ii), shall be granted to persons who:

(a) are less than 40 years of age and are setting up for the first time on an agricultural holding as head of the holding;

(b) possess adequate occupational skills and competence;

(c) submit a business plan for the development of their farming activities.

2. The support shall be granted up to the maximum amount laid down in the ►M5 Annex I ◄

Article 23

Early retirement

1. Support provided for in Article 20(a)(iii), shall be granted:

(a) to farmers who decide to stop their agricultural activity for the purpose of transferring the holdings to other farmers;

(b) to farm workers who decide to stop all farm work definitively upon the transfer of the holding.

2. The transferor shall:

(a) be not less than 55 years old but not yet of normal retirement age at the time of transfer or not more than 10 years younger than the normal retirement age in the Member State concerned at the time of the transfer;

(b) stop all commercial farming activity definitively;

(c) have practised farming for the 10 years preceding transfer.

3. The transferee shall:

(a) succeed the transferor by setting up as provided for in Article 22; or

(b) be a farmer of less than 50 years old or a private law body and take over the agricultural holding released by the transferor to increase the size of the agricultural holding.

4. The farm worker shall:

(a) be not less than 55 years old but not yet of normal retirement age or not more than 10 years younger than the normal retirement age in the Member State concerned;

(b) have devoted at least half of his working time to farm work, during the preceding five years, as a family helper or farm worker;

(c) have worked on the transferor’s agricultural holding for at least the equivalent of two years full-time during the four-year period preceding the early retirement of the transferor;

(d) belong to a social security scheme.

5. The total duration of early retirement support shall not exceed 15 years for the transferor and for the farm worker. It shall not go beyond the 70th birthday of the transferor and the normal retirement age of the farm worker.

5. Where, in the case of a transferor, a retirement pension is paid by the Member State, early retirement support shall be granted as a supplement taking into account the amount of the national retirement pension.

6. The maximum eligible amount of support is laid down in the ►M5 Annex I ◄ .

Article 24

Use of advisory services

1. Support provided for in Article 20(a)(iv) shall be granted in order to help farmers and forest holders to meet costs arising from the use of advisory services for the improvement of the overall performance of their holding.

1. As a minimum the advisory service to farmers shall cover:

(a) the statutory management requirements and the good agricultural and environmental conditions provided for in Articles 4 and 5 of and in Annexes III and IV to Regulation (EC) No 1782/2003;

(b) occupational safety standards based on Community legislation.

2. Support for the use of advisory services shall be limited to the maxima laid down in the ►M5 Annex I ◄ .

Article 25

Setting up of management, relief and advisory services

Support provided for in Article 20(a)(v) shall be granted in order to cover costs arising from the setting up of farm management, farm relief and farm advisory services as well as forestry advisory services and shall be degressive over a maximum period of five years from setting up.







SUBSECTION 2

Conditions for measures aimed at restructuring and developing physical potential and promoting innovation

Article 26

Modernisation of agricultural holdings

1. Support provided for in Article 20(b)(i), shall be granted for tangible and/or intangible investments which:

(a) improve the overall performance of the agricultural holding; and

(b) respect the Community standards applicable to the investment concerned.

1. Where investments are made in order to comply with Community standards, support may be granted only to those which are made in order to comply with newly introduced Community standards. In that case, a period of grace, not exceeding 36 months from the date on which the standard becomes mandatory for the agricultural holding, may be provided to meet that standard.

1. In the case of young farmers receiving support provided for in Article 20(a)(ii), support may be granted for investments to comply with existing Community standards, when identified in the business plan referred to in Article 22(1)(c). The period of grace within which the standard needs to be met, may not exceed 36 months from the date of setting up.

2. Support shall be limited to the maximum rate laid down in the ►M5 Annex I ◄ .

Article 27

Improvement of the economic value of forests

1. Investment support provided for in Article 20(b)(ii) shall be granted for forests owned by private owners or their associations or by municipalities or their associations. This limitation does not apply to the tropical or subtropical forests and to the wooded areas of the territories of the Azores, Madeira, the Canary Islands, the smaller Aegean Islands within the meaning of Regulation (EEC) No 2019/93 and the French overseas departments.

2. Investments shall be based on forest management plans for forest holdings above a certain size to be defined by the Member States in their programmes.

3. Support shall be limited to the maximum rate laid down in the ►M5 Annex I ◄ .

Article 28

Adding value to agricultural and forestry products

1. Support provided for in Article 20(b)(iii), shall be granted for tangible and/or intangible investments which:

(a) improve the overall performance of the enterprise;

(b) concern: — the processing and/or marketing of products covered by Annex I to the Treaty, except fishery products, and of forestry products; and/or — the development of new products, processes and technologies linked to products covered by Annex I to the Treaty, except fishery products, and to forestry products; and

(c) respect the Community standards applicable to the investment concerned. Where investments are made in order to comply with Community standards, support may be granted only to those which are made by micro-enterprises, as referred in paragraph 2, in order to comply with a newly introduced Community standard. In that case a period of grace, not exceeding 36 months from the date on which the standard becomes mandatory for the enterprise, may be provided to meet the standard.

2. Support shall be limited to the maximum rate laid down in the ►M5 Annex I ◄ .

3. Support under paragraph 1 at its maximum rate shall be limited to micro, small and medium- sized enterprises within the meaning of Commission Recommendation 2003/361/EC ( 17 ). For the territories of the Azores, Madeira, the Canary Islands, the smaller Aegean Islands within the meaning of Regulation (EEC) No 2019/93 and the French overseas departments, no size limits apply for the maximum rate. For enterprises that are not covered by Article 2(1) of that recommendation with less than 750 employees or with a turn over of less than EUR 200 million the maximum aid intensity is halved. In the case of forestry, support shall be limited to micro-enterprises.

3. Support shall not be granted to enterprises in difficulty within the meaning of the Community guidelines on State aid for rescuing and restructuring firms in difficulty ( 18 ).

Article 29

Cooperation for development of new products, processes and technologies in the agriculture and food sector and in the forestry sector

1. Support provided for in Article 20(b)(iv) shall be granted to promote the cooperation between primary producers in agriculture and forestry, the processing industry and/or third parties.

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The cooperation shall involve at least two actors of which at least one is either a primary producer or belongs to the processing industry.

▼B

2. Support shall contribute to cover costs incurred for the cooperation.

Article 30

Infrastructure related to the development and adaptation of agriculture and forestry

Support provided for in Article 20(b)(v), may cover notably operations related to access to farm and forest land, land consolidation and improvement, energy supply and water management.







SUBSECTION 3

Conditions for measures aiming to improve the quality of agricultural production and products

Article 31

Meeting standards based on Community legislation

1. Support provided for in Article 20(c)(i) shall contribute partly to costs incurred and income foregone caused to farmers who have to apply standards in the fields of the environmental protection, public health, animal and plant health, animal welfare and occupational safety.

1. These standards must be newly introduced in national legislation implementing Community law and impose new obligations or restrictions to farming practice which have a significant impact on typical farm operating costs and concern a significant number of farmers.

2. The support shall be granted as a flat-rate, temporary and degressive aid on an annual basis, for a maximum duration of five years from the date the standard becomes mandatory in accordance with Community legislation. Support shall be limited to the maximum amount laid down in the ►M5 Annex I ◄ .

Article 32

Participation of farmers in food quality schemes

1. Support provided for in Article 20(c)(ii) shall:

(a) cover agricultural products only intended for human consumption;

(b) be for Community food quality schemes, or for those recognised by the Member States which comply with precise criteria to be defined in accordance with the procedure referred to in Article 90(2); schemes whose sole purpose is to provide a higher level of control of respect of obligatory standards under Community or national law shall not be eligible for support;

(c) be granted as an annual incentive payment whose level shall be determined according to the level of the fixed costs arising from participation in supported schemes, for a maximum duration of five years.

2. Support shall be limited to the maximum amount laid down in the ►M5 Annex I ◄ .

Article 33

Information and promotion activities

Support provided for in Article 20(c)(iii) shall concern products covered by the support of the quality schemes referred to in Article 32. Support shall be limited to the maximum rate laid down in the ►M5 Annex I ◄ .







Subsection 4

Conditions for transitional measures

Article 34

Semi-subsistence farming

1. Support provided for in Article 20(d)(i) to agricultural holdings which produce primarily for their own consumption and also market a proportion of their output (semi-subsistence agricultural holdings) shall be granted to farmers who submit a business plan.

2. Progress in respect of the business plan referred to in paragraph 1 shall be assessed after three years.

3. The support shall be paid in the form of a flat-rate aid up to the maximum amount specified in the ►M5 Annex I ◄ and for a maximum of five years.

4. The support shall be granted in respect of applications approved by 31 December 2013.

Article 35

Producer groups

1. Support provided for in Article 20(d)(ii) shall be granted in order to facilitate the setting up and administrative operation of producer groups for the purposes of:

(a) adapting the production and output of producers who are members of such groups to market requirements;

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

(c) establishing common rules on production information, with particular regard to harvesting and availability.

2. The support shall be granted as a flat-rate aid in annual instalments for the first five years following the date on which the producer group was recognised. It shall be calculated on the basis of the group’s annual marketed production, up to the ceilings set in the ►M5 Annex I ◄ .

3. The support shall be granted to producer groups which are officially recognised by the Member State’s competent authority by 31 December 2013.

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Article 35a

Holdings undergoing restructuring due to a reform of a common market organisation

1. Support provided for in Article 20(d)(iii) for agricultural holdings which undergo restructuring, including diversification outside agricultural activities, due to a reform of a common market organisation shall be granted to farmers whose direct payments are reduced as of 2010 by more than 25 % compared to 2009 in accordance with Regulation (EC) No 1782/2003 and who submit a business plan.

2. Progress in respect of the business plan referred to in paragraph 1 shall be assessed after twelve months.

3. The support shall be paid in the form of a degressive flat-rate aid and only in the years 2011, 2012 and 2013. The support shall be limited to the maximum amount laid down in Annex I and, in any event, shall not exceed 50 % of the reduction of direct payments compared to 2009 in accordance with Regulation (EC) No 1782/2003.

▼B







SECTION 2

Axis 2

Improving the environment and the countryside

Article 36

Measures

Support under this section shall concern:

(a) measures targeting the sustainable use of agricultural land through: (i) natural handicap payments to farmers in mountain areas; (ii) payments to farmers in areas with handicaps, other than mountain areas; (iii) Natura 2000 payments and payments linked to Directive 2000/60/EC; (iv) agri-environment payments; (v) animal welfare payments; (vi) support for non-productive investments;

(b) measures targeting the sustainable use of forestry land through: (i) first afforestation of agricultural land; (ii) first establishment of agroforestry systems on agricultural land; (iii) first afforestation of non-agricultural land; (iv) Natura 2000 payments; (v) forest-environment payments; (vi) restoring forestry potential and introducing prevention actions; (vii) support for non-productive investments.







Subsection 1

Conditions for measures targeting the sustainable use of agricultural land

Article 37

Natural handicap payments in mountain areas and payments in other areas with handicaps

1. Payments provided for in Article 36(a)(i) and (ii) shall be granted annually per hectare of utilised agricultural area (hereinafter UAA) within the meaning of Commission Decision 2000/115/EC of 24 November 1999 relating to the definitions of the characteristics, the list of agricultural products, the exceptions to the definitions and the regions and districts regarding the surveys on the structure of agricultural holdings ( 19 ).

1. Payments should compensate for farmers’ additional costs and income forgone related to the handicap for agricultural production in the area concerned.

2. Payments shall be granted to farmers who undertake to pursue their farming activity in areas designated pursuant to Article 50(2) and (3) for at least five years from the first payment.

3. Payments shall be fixed between the minimum and maximum amount laid down in the ►M5 Annex I ◄ .

3. Payments higher than the maximum amount may be granted in duly justified cases provided that the average amount of all these payments granted at the Member State level concerned does not exceed this maximum amount.

4. Payments shall be degressive above a threshold level of area per holding, to be defined in the programme.

Article 38

Natura 2000 payments and payments linked to Directive 2000/60/EC

1. Support provided for in Article 36(a)(iii), shall be granted annually and per hectare of UAA to farmers in order to compensate for costs incurred and income foregone resulting from disadvantages in the areas concerned related to the implementation of Directives 79/409/EEC, 92/43/EEC and 2000/60/EC.

2. Support shall be limited to the maximum amount laid down in the ►M5 Annex I ◄ . For payments linked to Directive 2000/60/EC, detailed rules, including the maximum amount of support, shall be fixed in accordance with the procedure referred to in Article 90(2).

Article 39

Agri-environment payments

1. Member States shall make available support provided for in Article 36(a)(iv) throughout their territories, in accordance with their specific needs.

2. Agri-environment payments shall be granted to farmers who make on a voluntary basis agri-environmental commitments. Where duly justified to achieve environmental objectives, agri-environment payments may be granted to other land managers.

3. Agri-environment payments cover only those commitments going beyond the relevant mandatory standards established pursuant to Articles 4 and 5 of and Annexes III and IV to Regulation (EC) No 1782/2003 as well as minimum requirements for fertiliser and plant protection product use and other relevant mandatory requirements established by national legislation and identified in the programme.

3. These commitments shall be undertaken as a general rule for a period between five and seven years. Where necessary and justified, a longer period shall be determined according to the procedure referred to in Article 90(2) for particular types of commitments.

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Member States may put an end to such commitments, without obligation for the beneficiary concerned to reimburse support already received, provided that:

(a) support under Regulation (EC) No 73/2009 is newly made available in the framework of which rules are applied which produce global agri-environmental effects equivalent to those of the agri-environmental measure which is closed;

(b) such support is not financially less favourable for the beneficiary concerned;

(c) the beneficiary concerned is informed of this possibility at the time he undertakes his commitments.

▼B

4. The payments shall be granted annually and shall cover additional costs and income foregone resulting from the commitment made. Where necessary, they may cover also transaction cost.

4. Where appropriate, the beneficiaries may be selected on the basis of calls for tender, applying criteria of economic and environmental efficiency.

4. Support shall be limited to the maximum amount laid down in the ►M5 Annex I ◄ .

5. Support may be provided for the conservation of genetic resources in agriculture for operations not covered by the provisions under paragraphs 1 to 4.

Article 40

Animal welfare payments

1. Animal welfare payments provided for in Article 36(a)(v) shall be granted to farmers who make on a voluntary basis animal welfare commitments.

2. Animal welfare payments cover only those commitments going beyond the relevant mandatory standards established pursuant to Article 4 of and Annex III to Regulation (EC) No 1782/2003 and other relevant mandatory requirements established by national legislation and identified in the programme.

2. These commitments shall be undertaken as a general rule for a period between five and seven years. Where necessary and justified, a longer period shall be determined according to the procedure referred to in Article 90(2) for particular types of commitments.

3. The payments shall be granted annually and shall cover additional costs and income foregone resulting from the commitment made. Where necessary, they may cover also transaction cost.

3. Support shall be limited to the maximum amount laid down in the ►M5 Annex I ◄ .

Article 41

Non-productive investments

Support provided in Article 36(a)(vi) shall be granted for:

(a) investments linked to the achievement of commitments undertaken pursuant to the measure provided for in Article 36(a)(iv) or other agri-environmental objectives;

(b) on-farm investments which enhance the public amenity value of a Natura 2000 area or other high nature value areas to be defined in the programme.







Subsection 2

Conditions for measures targeting the sustainable use of forestry land

Article 42

General conditions

1. Support under this subsection shall be granted only for forests and wooded areas owned by private owners or by their associations or by municipalities or their associations. This limitation does not apply to the tropical or subtropical forests and to the wooded areas of the territories of the Azores, Madeira, the Canary Islands, the smaller Aegean Islands within the meaning of Regulation (EEC) No 2019/93 and the French overseas departments.

1. This restriction shall not apply to the support provided for in Article 36(b)(i), (iii), (vi) and (vii).

2. Measures proposed under this subsection in areas classified as high or medium forest fire risk within the framework of the Community action on protection of forests against fires shall conform to the forest protection plans established by the Member States for those areas.

Article 43

First afforestation of agricultural land

1. Support provided for in Article 36(b)(i), shall cover only one or more of the following:

(a) establishment costs;

(b) an annual premium per hectare afforested to contribute to covering maintenance costs for a maximum of five years,

(c) an annual premium per hectare to contribute to covering loss of income resulting from afforestation for a maximum of 15 years for farmers or associations thereof who worked the land before its afforestation or for any other natural person or private law body.

2. Support for the afforestation of agricultural land owned by public authorities shall cover only the cost of establishment. If the agricultural land to be afforested is rented by a natural person or private law body, the annual premiums referred to in paragraph 1 may be granted.

3. Support for the afforestation of agricultural land shall not be granted:

(a) for farmers benefiting from early retirement support;

(b) for the planting of Christmas trees.

3. In the case of fast-growing species for short-term cultivation, support for afforestation shall be granted for establishment costs only.

4. Support to farmers or other natural persons and private law bodies shall be limited to the maxima laid down in the ►M5 Annex I ◄ .

Article 44

First establishment of agroforestry systems on agricultural land

1. Support provided for in Article 36(b)(ii), shall be granted to farmers to create agroforestry systems combining extensive agriculture and forestry systems. Support shall cover the establishment costs.

2. Agroforestry systems refer to land use systems in which trees are grown in combination with agriculture on the same land.

3. Christmas trees and fast-growing species for short-term cultivation shall be excluded from support.

4. Support shall be limited to the maximum rate laid down in the ►M5 Annex I ◄ .

Article 45

First afforestation of non-agricultural land

1. Support provided for in Article 36(b)(iii) for afforestation of land not eligible under Article 36(b)(i) shall cover the establishment costs. In the case of abandoned farmland, support shall also cover the annual premium as referred to in Article 43(1)(b).

2. Support shall not be granted for the planting of Christmas trees.

3. When support covering establishment costs is granted to natural persons or private law bodies, it shall be limited to the maximum rate laid down in the ►M5 Annex I ◄ .

Article 46

Natura 2000 payments

Support provided for in Article 36(b)(iv), shall be granted annually and per hectare of forest to private forest owners or associations thereof in order to compensate for costs incurred and income foregone resulting from the restrictions on the use of forests and other wooded land due to the implementation of Directives 79/409/EEC and 92/43/EEC in the area concerned. Support shall be fixed between the minimum and maximum amounts laid down in the ►M5 Annex I ◄ .

Article 47

Forest-environment payments

1. Forest-environment payments provided for in Article 36(b)(v), shall be granted per hectare of forest to beneficiaries who make forest-environmental commitments on a voluntary basis. These payments shall cover only those commitments going beyond the relevant mandatory requirements.

1. These commitments shall be undertaken as a general rule for a period between five and seven years. Where necessary and justified, a longer period shall be determined in accordance with the procedure referred to in Article 90(2) for particular types of commitments.

2. The payments shall cover additional costs and income foregone resulting from the commitment made. Support shall be fixed between the minimum and maximum amounts laid down in the ►M5 Annex I ◄ .

Article 48

Restoring forestry potential and introducing prevention actions

1. Support provided for in Article 36(b)(vi), shall be granted for restoring forestry potential in forests damaged by natural disasters and fire and for introducing appropriate prevention actions.

2. Preventive actions against fires shall concern forests classified by the Member States as high or medium forest fire risk according to their forest protection plans.

Article 49

Non-productive investments

Support provided in Article 36(b)(vii), shall be granted for investments in forests:

(a) linked to the achievement of commitments undertaken pursuant to the measure provided for in Article 36(b)(v), or other environmental objectives;

(b) which enhance the public amenity value of forest and wooded land of the area concerned.







Subsection 3

Designation of areas

Article 50

Eligible areas

1. Member States shall designate the areas eligible for payments provided for in Article 36(a)(i), (ii) and (iii) as well as in Article 36(b)(i), (iii), (iv) and (vi), taking into account paragraphs 2 to 5 of this Article.

2. In order to be eligible for payments provided for in Article 36(a)(i) mountain areas shall be characterised by a considerable limitation of the possibilities for using the land and an appreciable increase in the cost of working it due to:

(a) the existence, because of altitude, of very difficult climatic conditions, the effect of which is substantially to shorten the growing season;

(b) at a lower altitude, the presence over the greater part of the area in question of slopes too steep for the use of machinery or requiring the use of very expensive special equipment, or a combination of these two factors, where the handicap resulting from each taken separately is less acute but the combination of the two gives rise to an equivalent handicap.

2. Areas north of the 62nd parallel and certain adjacent areas shall be regarded as mountain areas.

3. In order to be eligible for payments provided for in Article 36(a)(ii), areas other than mountain areas referred to in paragraph 2 of this Article must be:

(a) affected by significant natural handicaps, notably a low soil productivity or poor climate conditions and where maintaining extensive farming activity is important for the management of the land; or

(b) affected by specific handicaps, and where land management should be continued in order to conserve or improve the environment, maintain the countryside and preserve the tourist potential of the area or in order to protect the coastline.

3. As concerns areas affected by specific handicaps referred to in point (b), they shall comprise farming areas which are homogeneous from the point of view of natural production conditions and their total extent shall not exceed 10 % of the area of the Member State concerned.

4. In the programmes, the Member States, according to specific provisions to be defined in accordance with the procedure referred to in Article 90(2), shall:

— confirm the existing delimitation pursuant to paragraphs 2 and 3(b) or amend it, or

— delimitate the areas referred to in paragraph 3(a).

5. Natura 2000 agricultural areas designated pursuant to Directives 79/409/EEC and 92/43/EEC and agricultural areas included in river basin management plans according to Directive 2000/60/EC shall be eligible for payments provided for in Article 36(a)(iii).

6. Areas apt for afforestation for environmental reasons such as protection against erosion or extension of forest resources contributing to climate change mitigation, shall be eligible for payments provided for in Article 36(b)(i) and (iii).

7. Natura 2000 forest areas designated pursuant to Directives 79/409/EEC and 92/43/EEC, shall be eligible for payments provided for in Article 36(b)(iv).

8. Forest areas with a medium to high forest fire risk shall be eligible for payments provided for in Article 36(b)(vi) relating to prevention actions against fires.







Subsection 4

Respect of standards

▼M5

Article 50a

Main requirements

1. A beneficiary receiving payments under Article 36(a)(i) to (v) and Article 36(b)(i), (iv) and (v) shall respect, on the whole holding, the statutory management requirements and the good agricultural and environmental condition provided for in Articles 5 and 6 of, and in Annexes II and III to, Regulation (EC) No 73/2009.

The obligation to comply with the statutory management requirements and the good agricultural and environmental condition referred to in the first subparagraph shall not apply to non-agricultural activities on a holding and non-agricultural areas for which no support in accordance with Articles 36(b)(i), (iv) and (v) of this Regulation is claimed.

2. The competent national authority shall provide the beneficiary, inter alia by the use of electronic means, with the list of statutory management requirements and the good agricultural and environmental condition to be respected.

▼B

Article 51

Reduction or exclusion from payments

▼M5

1. Where the statutory management requirements or good agricultural and environmental condition are not complied with at any time in a given calendar year (hereinafter referred to as ‘the calendar year concerned’), and the non-compliance in question is the result of an act or omission directly attributable to the beneficiary who submitted the payment claim under Article 36(a)(i) to (v) and Article 36(b)(i), (iv) and (v) in the calendar year concerned, the total amount of these payments granted or to be granted to that beneficiary related to the calendar year concerned shall be reduced or excluded in accordance with detailed rules referred to in paragraph 4.

The reduction or exclusion referred to in the first subparagraph shall also apply where the minimum requirements for fertiliser and plant protection product use referred to in Article 39(3) are not complied with at any time of the calendar year concerned and the non-compliance in question is the result of an act or omission directly attributable to the beneficiary who submitted the payment claim under Article 36(a)(iv).

The first and second subparagraphs shall also apply where the non-compliance in question is the result of an act or omission directly attributable to the person to whom or from whom the land was transferred.

For the purpose of this paragraph, ‘transfer’ shall mean any type of transaction whereby the land ceases to be at the disposal of the transferor.

By way of derogation from the third subparagraph, where the person to whom the act or omission is directly attributable has submitted a payment claim in the calendar year concerned, the reduction or exclusion shall be applied to the total amounts of payments granted or to be granted to that person.

2. The reduction or exclusion of payments referred to in paragraph 1 of this Article shall not apply to standards for which a period of grace has been granted in accordance with Article 26(1) during the period of grace.

Notwithstanding paragraph 1 and in accordance with the conditions laid down in the detailed rules referred to in paragraph 4, Member States may decide not to apply a reduction or exclusion amounting to EUR 100 or less per beneficiary and per calendar year.

Where a Member State decides to make use of the option provided for in the second subparagraph, in the following year the competent authority shall take the actions required to ensure that the beneficiary remedies the finding of non-compliance concerned. The finding and the obligation to take remedial action shall be notified to the beneficiary.

▼B

3. By way of derogation from paragraph 1, for beneficiaries in Member States applying the single area payment scheme as provided for in Article 143b of Regulation (EC) No 1782/2003, the mandatory requirements to be respected are those provided for in Article 5 of and Annex IV to that Regulation.

▼M4

The derogation provided for in the first subparagraph shall apply until 31 December 2008. As from 1 January 2009 a farmer receiving payments under the single area payment scheme shall respect the statutory management requirements referred to in Annex III to Regulation (EC) No 1782/2003 according to the following timetable:

(a) requirements referred to in point A of Annex III shall apply from 1 January 2009;

(b) requirements referred to in point B of Annex III shall apply from 1 January 2011;

(c) requirements referred to in point C of Annex III shall apply from ►M5 1 January 2013 ◄ .

However, for Bulgaria and Romania, the application of Articles 3, 4, 6, 7 and 9 of Regulation (EC) No 1782/2003 shall be optional until 31 December 2011 insofar as those provisions relate to statutory management requirements. As from 1 January 2012 a farmer receiving payments under the single area payment scheme shall respect the statutory management requirements referred to in Annex III to Regulation (EC) No 1782/2003 according to the following timetable:

(a) requirements referred to in point A of Annex III shall apply from 1 January 2012;

(b) requirements referred to in point B of Annex III shall apply from 1 January 2014;

(c) requirements referred to in point C of Annex III shall apply from ►M5 1 January 2016 ◄ .

The new Member States may also apply the option provided for in the second subparagraph where they decide to terminate the application of the single area payment scheme before the end of the period of application provided for in Article 143b(9) of Regulation (EC) No 1782/2003.

▼M5

4. Detailed rules for the reductions and exclusions shall be laid down in accordance with the procedure referred to in Article 90(2). In this context account shall be taken of the severity, extent, permanence and repetition of non-compliance found as well as of the following criteria:

(a) In the case of negligence, the percentage of reduction shall not exceed 5 % and, in the case of repeated non-compliance, 15 %. In duly justified cases, Member States may decide that no reduction shall be applied where, given its severity, extent and permanence, a case of non-compliance is to be considered as minor. However, cases of non-compliance which constitute a direct risk to public or animal health shall not be considered as minor. Unless the beneficiary has taken immediate remedial action putting an end to the non-compliance found, the competent authority shall take the actions required that may, where appropriate, be limited to an administrative control, to ensure that the beneficiary remedies the finding of non-compliance concerned. The finding of minor non-compliance and the obligation to take remedial action shall be notified to the beneficiary.

(b) In case of intentional non-compliance, the percentage of reduction shall not in principle be less than 20 % and may go as far as total exclusion from one or several aid schemes and apply for one or more calendar years.

(c) In any case, the total amount of reductions and exclusions for one calendar year shall not be more than the total amount referred to in Article 51(1).

▼B

5. Paragraphs 1 to 4 shall not apply to Article 39(5).







SECTION 3

Axis 3

The quality of life in rural areas and diversification of the rural economy

Article 52

Measures

Support under this section shall involve:

(a) measures to diversify the rural economy, comprising: (i) diversification into non-agricultural activities, (ii) support for the creation and development of micro-enterprises with a view to promoting entrepreneurship and developing the economic fabric, (iii) encouragement of tourism activities;

(b) measures to improve the quality of life in the rural areas, comprising: (i) basic services for the economy and rural population, (ii) village renewal and development, (iii) conservation and upgrading of the rural heritage;

(c) a training and information measure for economic actors operating in the fields covered by axis 3;

(d) a skills-acquisition and animation measure with a view to preparing and implementing a local development strategy.







Subsection 1

Conditions governing the measures to diversify the rural economy

Article 53

Diversification into non-agricultural activities

The aid beneficiary referred to in Article 52(a)(i) shall be a member of the farm household.

Article 54

Support for business creation and development

The support provided for in Article 52(a)(ii) shall relate only to micro-enterprises as defined in the Commission Recommendation 2003/361/EC.

Article 55

Encouragement of tourism activities

The support referred to in Article 52(a)(iii) shall cover the following:

(a) small-scale infrastructure such as information centres and the signposting of tourist sites;

(b) recreational infrastructure such as that offering access to natural areas, and small-capacity accommodation;

(c) the development and/or marketing of tourism services relating to rural tourism.







Subsection 2

Conditions governing the measures to improve the quality of life in rural areas

Article 56

Basic services for the economy and rural population

The support referred to in Article 52(b)(i) shall cover the setting up of basic services, including cultural and leisure activities, concerning a village or group of villages, and related small-scale infrastructure. ►M6 The limitation in size for infrastructure shall not apply to the operations referred to in point (g) of Article 16a(1). ◄

Article 57

Conservation and upgrading of the rural heritage

The support referred to in Article 52(b)(iii) shall cover:

(a) the drawing-up of protection and management plans relating to Natura 2000 sites and other places of high natural value, environmental awareness actions and investments associated with maintenance, restoration and upgrading of the natural heritage and with the development of high natural value sites;

(b) studies and investments associated with maintenance, restoration and upgrading of the cultural heritage such as the cultural features of villages and the rural landscape.







Subsection 3

Training, skills acquisition and animation

Article 58

Training and information

Support under Article 52(c), shall not include courses of instruction or training which form part of normal education programmes or systems at secondary or higher levels.

Article 59

Skills acquisition, animation and implementation

The support referred to in Article 52(d) shall cover:

(a) studies of the area concerned;

(b) measures to provide information about the area and the local development strategy;

(c) the training of staff involved in the preparation and implementation of a local development strategy;

(d) promotional events and the training of leaders;

(e) implementation by public-private partnerships other than those defined by Article 62(1)(b) of the local development strategy encompassing one or more of the measures under Article 52(a), (b) and (c).







Subsection 4

Implementation of the axis

Article 60

Demarcation

Where a measure falling within this section targets operations eligible also under another Community support instrument, including the Structural Funds and the Community support instrument for fisheries, the Member State shall set in each programme the demarcation criteria for the operations supported by the EAFRD and those supported by the other Community support instrument.







SECTION 4

Axis 4

Leader

Article 61

Definition of the Leader approach

The Leader approach shall comprise at least the following elements:

(a) area-based local development strategies intended for well-identified subregional rural territories;

(b) local public-private partnerships (hereinafter local action groups);

(c) bottom-up approach with a decision-making power for local action groups concerning the elaboration and implementation of local development strategies;

(d) multi-sectoral design and implementation of the strategy based on the interaction between actors and projects of different sectors of the local economy;

(e) implementation of innovative approaches;

(f) implementation of cooperation projects;

(g) networking of local partnerships.

Article 62

Local action groups

1. A partnered local development approach shall be implemented by the local action groups satisfying the following conditions:

(a) they must propose an integrated local development strategy based at least on the elements set out in Article 61(a) to (d) and (g) and be responsible for its implementation;

(b) they must consist of either a group already qualified for the Leader II ( 20 ) or Leader+ ( 21 ) initiatives, or according to the Leader approach, or be a new group representing partners from the various locally based socioeconomic sectors in the territory concerned. At the decision-making level the economic and social partners, as well as other representatives of the civil society, such as farmers, rural women, young people and their associations, must make up at least 50 % of the local partnership;

(c) they must show an ability to define and implement a development strategy for the area.

2. The Managing Authority shall ensure that the local action groups either select an administrative and financial lead actor able to administer public funds and ensure the satisfactory operation of the partnership, or come together in a legally constituted common structure the constitution of which guarantees the satisfactory operation of the partnership and the ability to administer public funds.

3. The area covered by the strategy shall be coherent and offer sufficient critical mass in terms of human, financial and economic resources to support a viable development strategy.

4. The local action groups shall choose the projects to be financed under the strategy. They may also select cooperation projects.

Article 63

Measures

The support granted under the Leader axis shall be for:

(a) implementing local development strategies as referred to in Article 62(1)(a), with a view to achieving the objectives of one or more of the three other axes defined in Sections 1, 2 and 3;

(b) implementing cooperation projects involving the objectives selected under point (a);

(c) running the local action group, acquiring skills and animating the territory as referred to in Article 59.

Article 64

Implementing local strategies

If the operations under the local strategy correspond to the measures defined in this Regulation for the other axes, the relevant conditions shall apply in accordance with Sections 1, 2 and 3.

Article 65

Cooperation

1. The support referred to in Article 63(b) shall be granted to inter-territorial or transnational cooperation projects.

1. ‘Inter-territorial cooperation’ means cooperation within a Member State. ‘Transnational cooperation’ means cooperation between territories in several Member States and with territories in third countries.

2. Only expenditure relating to the territories within the Community shall be eligible for support.

3. Article 64 shall also apply to cooperation projects.







CHAPTER II

TECHNICAL ASSISTANCE

Article 66

Funding technical assistance

1. In accordance with Article 5 of Regulation (EC) No 1290/2005, the EAFRD may use up to 0,25 % of its annual allocation to finance the preparatory, monitoring, administrative support, evaluation and control measures, at the Commission’s initiative and/or on its behalf. These actions shall be carried out in accordance with Article 53(2) of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general