COMMISSION REGULATION (EU) 2022/2472

of 14 December 2022

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

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

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

Having regard to Council Regulation (EU) 2015/1588 of 13 July 2015 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to certain categories of horizontal State aid (1), and in particular Article 1(1), points (a) and (b) thereof,

Having published a draft of this Regulation in accordance with Article 6 and Article 8(2) of Regulation (EU) 2015/1588,

After consulting the Advisory Committee on State Aid,

Whereas:

(1) State funding meeting the criteria laid down in Article 107(1) of the Treaty constitutes State aid and requires notification to the Commission by virtue of Article 108(3) thereof. However, pursuant to Article 109 of the Treaty, the Council may determine categories of aid that are exempted from that notification requirement. In accordance with Article 108(4) of the Treaty, the Commission may adopt regulations relating to those categories of aid. Regulation (EU) 2015/1588 empowers the Commission to declare, in accordance with Article 109 of the Treaty, that certain categories of aid may be exempted from the notification requirement of Article 108(3) of the Treaty. On the basis of that Regulation, the Commission adopted Commission Regulation (EU) No 702/2014 (2) declaring certain categories of aid in the agricultural and forestry sectors and in rural areas compatible with the internal market in application of Articles 107 and 108 of the Treaty on the Functioning of the European Union which applies until 31 December 2022.

(2) Article 42 of the Treaty provides that the rules on competition apply to the production of and trade in agricultural products only to the extent determined by the European Parliament and the Council. Article 211 of Regulation (EU) No 1308/2013 of the European Parliament and the Council (3) provides that State aid rules apply to aid for the production of and trade in agricultural products, subject to specific derogations. Article 211(2) of Regulation (EU) No 1308/2013 provides that State aid rules do not apply to payments made by Member States for measures provided for in that Regulation which are partly or wholly financed by the Union and for measures included in Articles 213 to 218 of that Regulation. Moreover, pursuant to Article 145 of Regulation (EU) 2021/2115 of the European Parliament and of the Council (4), State aid rules do not apply to payments made by Member States in accordance with that Regulation nor to additional national financing, within the scope of Article 42 of the Treaty. Such payments intended to provide additional national financing within the scope of Article 42 of the Treaty, have to comply with the criteria of Regulation (EU) 2021/2115 in order to be approved by the Commission as part of the CAP Strategic Plan of a given Member State. Nevertheless, State aid rules apply, both to the part co-financed under the European Agricultural Fund for Rural Development (‘EAFRD’) and to additional national financing for measures falling outside the scope of Article 42 of the Treaty.

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

(4) The scope of this Regulation should therefore be aligned with that of Regulation (EU) 2021/2115 as regards measures co-financed by the EAFRD.

(5) This Regulation should allow for a greater simplification, and should enhance transparency, effective evaluation and the control of compliance with the State aid rules at national and Union levels, while preserving the institutional competences of the Commission and the Member States.

(6) The Commission has on numerous occasions applied Articles 107 and 108 of the Treaty to the agricultural and forestry sectors, in accordance with the conditions laid down in the 2014 Guidelines (5). It has thus gained considerable experience in those fields on aid measures that are still subject to Member States’ obligation to notify aid to the Commission. The Commission’s experience has enabled it to better define the conditions under which certain categories of aid can be considered compatible with the internal market and to extend the scope of block exemptions, while still ensuring the transparency and proportionality of aid.

(7) The general conditions for the application of this Regulation should be based on a set of common principles ensuring that the aid has a clear incentive effect, is appropriate and proportionate, is granted in full transparency and subject to a control mechanism and regular evaluation, and does not adversely affect competition and trading conditions.

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

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

(10) In view of the greater potential impact of large schemes on trade and competition, aid schemes with a budget exceeding a certain threshold in any given year or in total based on an absolute value should in principle be subject to State aid evaluation. The evaluation should aim at verifying whether the assumptions and conditions underlying the compatibility of the scheme have been achieved, as well as the effectiveness of the aid measure in the light of its general and specific objectives and should provide indications on the impact of the scheme on competition and trade. To ensure equal treatment, State aid evaluation should be carried out on the basis of an evaluation plan approved by the Commission. While such plans should normally be drawn up at the moment of the design of the scheme and approved in time for the scheme to enter into force, this may not be possible in all cases.

(11) Therefore, in order not to delay their entry into force, this Regulation should apply to such schemes for an initial maximum period of six months. The Commission may decide to extend that period, upon approval of the evaluation plan.

(12) To this end, the evaluation plan should be notified to the Commission within 20 working days following the entry into force of the scheme. The Commission can also exceptionally decide that an evaluation is not necessary given the specificities of the case. The Commission should receive from the Member State the necessary information to be able to carry out the assessment of the evaluation plan and request additional information without undue delay allowing the Member State to complete the missing elements for the Commission to take a decision.

(13) With the exception of changes which do not affect the compatibility of the aid scheme under this Regulation or do not significantly affect the content of the approved evaluation plan, alternations to schemes subject to evaluation should be assessed taking account of the outcome of such evaluation and should be excluded from the scope of this Regulation. Alterations such as purely formal modifications, administrative modifications or alterations carried out within the framework of the Union co-financed measures should not, in principle, be considered as significantly affecting the content of the approved evaluation plan.

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

(15) The Commission should ensure that authorised aid does not adversely affect trading conditions to an extent that is contrary to the general interest. Therefore, aid in favour of a beneficiary which is subject to an outstanding recovery order following a previous Commission decision declaring an aid illegal and incompatible with the internal market should be excluded from the scope of this Regulation. However, it is important to act rapidly in the context of compensation aid in risk and crisis situations, such as aid to make good the damage caused by natural disasters or plant pests and aid for the costs of prevention, control and eradication of animal diseases. Therefore, the exclusion from aid should not apply in such situations. Moreover, given the nature of such schemes where individual beneficiaries are not identifiable, it should neither apply to aid of a limited amount for small and medium-sized enterprises (‘SMEs’) participating in community-led local development (‘CLLD’) or European Innovation Partnership for agricultural productivity and sustainability (‘EIP’) Operational Group projects.

(16) Aid granted to undertakings in difficulty should, as a general rule, be excluded from the scope of this Regulation since such aid should be assessed under the Guidelines on State aid for rescuing and restructuring firms in difficulty (6). However, it is necessary to establish certain exceptions from this rule. Firstly, this Regulation should apply to undertakings in difficulty in cases of aid to SMEs participating in or benefitting from CLLD projects or EIP Operational Group projects, where individual beneficiaries of such schemes can hardly be identified. Secondly, it should apply to such undertakings in cases where public health protection is at stake, i.e. in cases of aid for the costs of the eradication of animal diseases and of aid for the destruction and removal of fallen stock. Thirdly, in view of Article 107(2), point (b), of the Treaty, this Regulation should also apply to undertakings in difficulty in cases where aid is paid to make good the damage caused by natural disasters. The same should apply in cases where the reason why an undertaking falls into difficulty is due to damage caused by events outside the control of the concerned undertaking, namely adverse climatic events that can be assimilated to a natural disaster, by animal diseases or plant pests, by protected animals, by forest fires, catastrophic events in forests and climate change related events in forests.

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

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

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

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

(21) With regard to certain specific aid instruments, such as loans, guarantees, tax measures and, in particular, repayable advances, this Regulation should define the conditions under which they can be considered transparent. Aid comprised in guarantees should be considered as transparent if the gross grant equivalent has been calculated on the basis of safe-harbour premiums laid down for the respective type of undertaking. It should also be considered transparent if before the implementation of the measure, the methodology used to calculate the aid intensity of the state guarantee has been notified to and approved by the Commission in accordance with the Notice Guarantees (7). For the purpose of this Regulation, aid comprised in risk finance measures and capital injections should not be considered as transparent aid.

(22) Aid which would otherwise fall within the scope of this Regulation but is not transparent should always be notified to the Commission. Notification of non-transparent aid should be assessed by the Commission in particular in the light of the criteria set out in the 2023 Guidelines (8) or the other relevant frameworks, guidelines, communications and notices.

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

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

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

(26) Regarding Natura 2000 (9) areas for agriculture, the aim is to ensure environmental performance and efficiency of undertakings active in the agricultural sector. The aid per hectare should comply with Union legislation and with the national laws of the Member States concerned on environmental protection, the achievement of agri-environmental-climate objectives, including biodiversity conservation status of species and habitats as well as enhancing the public amenity value of Natura 2000 areas.

(27) As regards aid for land consolidation, aid for information actions to make information available to an undefined number of beneficiaries in agricultural and forestry sectors, promotion measures in the form of publications aimed at raising awareness of agricultural products among the wider public, aid to make good the damage caused by adverse climatic event which can be assimilated to a natural disaster and other adverse climatic events, aid to compensate for the costs of the prevention, control and eradication of animal diseases and plant pests and for losses caused by those animal diseases or plant pests, aid to cover the costs of the removal and destruction of fallen stock, aid to make good the damage caused by protected animals, aid for disadvantages related to Natura 2000, aid for research, development and innovation, aid to make good the damage caused by natural disasters and aid for investments in favour of conservation of cultural and natural heritage on the agricultural holding and in forests, aid for the restoration of damage of forests, aid for the participation of farmers in quality schemes for cotton and foodstuffs and aid for undertakings participating in or benefitting from CLLD projects and EIP Operational Groups projects, the existence of an incentive effect should not be required or should be deemed to be present if the specific conditions set out for those categories of aid in this Regulation are fulfilled.

(28) With a view to ensuring that aid is proportionate and limited to the amount necessary, the maximum aid amounts should, whenever possible, be expressed in terms of aid intensities in relation to a set of eligible costs. Where the maximum aid intensity cannot be set, because the eligible costs cannot be identified or in order to provide simpler instruments for small amounts, maximum aid amounts defined in nominal terms should be set out in order to ensure proportionality of the aid. The aid intensity and the maximum aid amounts should be fixed, at a level that minimises distortions of competition in the aided sector while appropriately addressing the objective of facilitating the development of the economic activities of the beneficiaries in the agricultural sector, the rural areas, or the forestry sector. In the interests of coherence with Union-financed rural development interventions, the ceilings should be harmonised with those set out in Regulation (EU) 2021/2115 insofar as this is in accordance with the State aid principles resulting from the application of Article 107(3), point (c), of the Treaty.

(29) For the calculation of the aid intensity, only eligible costs should be included. This Regulation should not exempt aid which exceeds the relevant aid intensity as a result of including ineligible costs. The identification of the eligible costs should be supported by clear, specific and contemporary documentary evidence. The calculation should be based on amounts before any deduction of tax or other charges. Aid payable in several instalments should be discounted to its value on the date of granting the aid. The eligible costs should also be discounted to their value on the date of granting the aid. The interest rate to be used for discounting purposes and for calculating the amount of aid in the case of aid which does not take the form of a grant should be, respectively, the discount rate and the reference rate applicable on the date of granting the aid, as laid down in the Communication from the Commission on the revision of the method for setting the reference and discount rates (10). Where aid is granted in a form other than a grant, the aid amount should be expressed as gross grant equivalent. Where aid is granted by means of tax advantages, aid tranches should be discounted on the basis of the discount rates applicable on the various dates when the tax advantages become effective. The use of aid in the form of repayable advances should be promoted, since such risk-sharing instruments are conducive to a strengthened incentive effect of the aid. It is therefore appropriate to establish that where aid is granted in the form of repayable advances the applicable aid intensities laid down in this Regulation may be increased.

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

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

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

(33) State aid within the meaning of Article 107(1) of the Treaty is, in principle, prohibited. However under, Article 107(2) and (3) of the Treaty the Commission shall, or may respectively, allow under certain conditions Member States to grant State aid. It is therefore important that for all parties to be able to check whether an aid is granted in compliance with the applicable rules. Transparency of State aid is, therefore, essential for the correct application of Treaty rules and leads to better compliance, greater accountability, peer review and ultimately more effective public spending. To ensure transparency, Member States should be required to establish comprehensive State aid websites, at regional or national level, setting out summary information about each aid measure exempted under this Regulation. That obligation should be a condition for the compatibility of the individual aid with the internal market. Following the standard practice regarding publication of information in Directive (EU) 2019/1024 of the European Parliament and of the Council (11), a standard format should be used which allows the information to be searched, downloaded and easily published on the internet. The links to the State aid websites of all the Member States should be published on the Commission’s website. In accordance with Article 3(2) of Regulation (EU) 2015/1588, summary information on each aid measure exempted under this Regulation should be published on the website of the Commission.

(34) As regards the publication of information on individual aid awards it is appropriate to set thresholds above which that publication may be considered proportionate taking into account the importance of the aid. The Commission’s experience shows that for the period 2014-2019, with a publication threshold set at EUR 60 000 for primary agricultural production, around 30 % of the aids granted were subject to publication. Therefore, in order to increase the effectiveness of transparency requirements, and since the average amount of investment aid for primary production granted for the period 2014-2019 is estimated at around EUR 17 000, it is appropriate to lower the publication threshold to EUR 10 000 for primary agricultural production.

(35) To ensure effective monitoring, it is appropriate in accordance with Article 3(2) of Regulation (EU) 2015/1588, to establish a standard format in which Member States should provide the Commission with summary information whenever, in accordance with this Regulation, an aid scheme is implemented or an individual aid is granted outside any aid scheme. Moreover, it is appropriate in accordance with Article 5 of Commission Regulation (EC) No 794/2004 (12) and Article 3(4) of Regulation (EU) 2015/1588 to establish rules concerning annual reporting on aid exempted from the notification requirement of Article 108(3) of the Treaty in accordance with the conditions laid down in this Regulation, including specific requirements for certain categories of aid, to be submitted to the Commission by Member States.

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

(37) Given the limitation period for the recovery of aid established by Article 17 of Regulation (EU) 2015/1589, it is appropriate in accordance with Article 3(3) of Regulation (EU) 2015/1588 to establish rules concerning the records that Member States should keep regarding the aid exempted from the notification requirement of Article 108(3) of the Treaty by this Regulation.

(38) To reinforce the effectiveness of compatibility conditions set out in this Regulation, it should be possible for the Commission to withdraw the benefit of the block exemption for the future aid measures in the event of failure to comply with these requirements. The Commission should be able to restrict the withdrawal of the benefit of the block exemption to certain types of aid, certain beneficiaries or aid measures adopted by certain authorities, where non-compliance with this Regulation affects only a limited group of measures or certain authorities. Such a targeted withdrawal should provide a proportionate remedy directly linked to the identified non-compliance with this Regulation. Where an aid is not notified and does not fulfil all the conditions to be exempted from notification, it constitutes an unlawful aid, which the Commission will examine in the framework of the relevant procedure as set out in Regulation (EU) 2015/1589 for non-notified aid. In case of failure to fulfil the requirements of Chapter II, the withdrawal of the benefit of the block exemption in respect of the future aid measures does not affect the fact that the past measures complying with this Regulation were block exempted.

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

(40) To eliminate differences that might give rise to distortions of competition and to facilitate coordination between different Union and national initiatives concerning SMEs as well as for reasons of administrative clarity and legal certainty, the definition of SME used for the purpose of this Regulation should be based on the definitions laid down in Commission Recommendation 2003/361/EC (13).

(41) To ensure coherence with the Common Agricultural Policy and to simplify the rules based on the Commission’s experience of the application of the 2014 Guidelines, it is appropriate to exempt, various categories of aid in favour of undertakings active in the agricultural and forestry sectors from the notification requirement of Article 108(3) of the Treaty, without prejudice to the application of any substantive rules in force.

(42) It is also appropriate to consider that the agriculture and forestry sectors are specifically exposed to adverse climatic events, animal diseases, plant pests and damages caused by protected animals. Experience shows that these sectors are more vulnerable to such events and that farmers and foresters suffer considerable damage from these events. Aid measures to make good such damages are therefore considered to be a suitable tool to help undertakings recover from such damages and remain in business. In that way, they ensure the development of economic activities and the fulfilment of environmental functions of ecosystems in the agriculture and forestry.

(43) In the agricultural sector, exemptions should apply to aid for SMEs for investments in the production, processing and marketing of agricultural products, land consolidation, relocation of farm buildings, business start-ups, young farmers and small farms, producer groups, quality schemes, knowledge transfer and information actions, advisory services, promotion activities, farm replacement services as well as risk and crisis management related to adverse climatic events, animal diseases, plant pests, damage caused by protected animals, aid for payment of insurance premiums, for financial contributions to mutual funds, for conservation of genetic resources, for animal welfare and for cooperation. The exemptions should also apply to undertakings of all sizes for aid for environmental protection in agriculture, aid for investments in favour of conservation of cultural and natural heritage located on agricultural holdings and in forests, aid to make good the damage caused by natural disasters in the agricultural sector as well as aid for research, development and innovation in the agricultural and forestry sectors and aid in favour of forestry.

(44) Exemptions should apply to aid for forestry and certain non-agricultural activities in rural areas that are co-financed as rural development interventions under the EAFRD as well as to aid for knowledge transfer and information actions, research, development and innovation, including through the use of EU Space-based data and services and land consolidation.

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

(46) To ensure the appropriate balance between minimising distortions of competition and promoting energy and resource efficiency, in case of investments in agricultural holdings linked to primary agricultural production, aid should be granted only for investment linked to the production on farm-level of biofuels or energy from renewable sources and only where that production does not exceed the average annual consumption of fuel or energy of the farm. In such cases, aid to biofuels should only be covered in so far as it is granted for sustainable biofuels in accordance with Directive (EU) 2018/2001 of the European Parliament and of the Council (14).

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

(48) Regulation (EU) 2015/1588 enables the Commission, to declare by means of regulations, certain categories of aid compatible with the internal market when the Commission has sufficient experience to define general compatibility criteria. Given the experience gained during the 2014 to 2021 period in the assessment of compatibility of numerous State aids in light of the 2014 Guidelines, the Commission may now make use of its powers to exempt from the notification requirement State aid for basic services and infrastructure in rural areas co-financed by the EAFRD, for cooperation, for measures to prevent and make good the damage caused by protected animals, for conservation of genetic resources in agriculture, for animal welfare commitments, for compensating disadvantages related to Natura 2000 areas, for agri-environmental-climate commitments as well as for organic farming.

(49) Moreover, as regards the forestry sector, the Commission may, based on its experience under the 2014 Guidelines, exempt from the notification requirement measures that are financed exclusively from national funds without prejudice to the application of any substantive rules in force.

(50) In the 2014 to 2020 period and in application of the 2014 Guidelines, the Commission approved 52 aid schemes regarding compensation for damages caused by protected animals to the agricultural sector. Damages caused by protected animals require urgent action by the granting authorities to restore the means of production and the economic activity as rapidly as possible so that the undertakings concerned may remain in business and in that way to ensure the development of economic activities. The Commission’s experience shows that this aid does not typically give rise to any significant distortion of competition in the internal market given its compensatory nature and the existence of clear criteria for compatibility with the internal market. It is therefore appropriate to exempt this aid from the State aid notification requirement.

(51) Aid to make good the damages caused by protected animals should be available to SMEs active in the primary agricultural production. The conditions to exempt aid to make good the damages caused by protected animals should follow the already established practice for other compensatory aids such as aids compensating for the loss of animals or plants destroyed on the basis of the market value, paying for the veterinary or labour costs and compensating the material damage to the farm equipment, machinery and farm buildings and stocks.

(52) In the 2014 to 2020 period and in application of the 2014 Guidelines, the Commission approved four aid schemes for conservation of genetic resources in agriculture. The Commission’s experience shows that this aid does not typically give rise to any significant distortion of competition in the internal market, while at the same time contributing to the public policy objective of biodiversity conservation. It is therefore appropriate to exempt this aid from the State aid notification requirement.

(53) Aid towards specific sustainable farming practices, such as animal welfare, agri-environmental-climate and organic farming commitments bears only limited risk of competition distortion. In order to better respond to the societal demands on high-quality food produced in a sustainable way, it should be possible for the Commission to exempt such aid measures from the State aid notification requirement.

(54) At the same time, it is appropriate for such measures to set maximum amounts of aid per unit, based on the case experience gained under the 2014 Guidelines. Around 64 % of all measures with agri-environmental-climate commitments (which represent the highest share of measures with voluntary commitments) notified in the July 2014 to March 2020 period exceeded the maximum amounts per hectare and were thus subject to a detailed analysis to determine whether they were justified. The current inflation and rise in input prices, this trend is likely to continue. The maximum amounts per unit set under the 2014 Guidelines are therefore considered appropriate thresholds to block-exempt measures involving voluntary commitments in favour of the environment, the climate or animal welfare.

(55) In the 2014 to 2020 period, and in application of the 2014 Guidelines, the Commission approved 21 aid schemes for animal welfare commitments under the 2014 Guidelines. The Commission’s experience shows that this aid does not typically give rise to any significant distortion of competition in the internal market given its compensatory nature and the existence of clear criteria for compatibility with the internal market. It is therefore appropriate to exempt this aid from the State aid notification requirement.

(56) The Commission has applied Articles 107 and 108 of the Treaty to aid for disadvantages related to Natura 2000 areas in the agricultural sector, to aid for agri-environmental-climate commitments and to aid for organic farming in the framework of the 2014 Guidelines. In the period from 2014 to 2020, the Commission approved 10 aid schemes linked to Natura 2000 areas in agriculture, 65 aid schemes for agri-environmental-climate commitments and 5 aid schemes for organic farming. The Commission’s experience shows that these aids, in particular below certain thresholds, do not typically give rise to any significant distortion of competition, while at the same time contributing to achieving the public policy objective of environmental protection. It is therefore appropriate that the Commission should make use of the powers conferred on it by Regulation (EU) 2015/1588, as regards aid for disadvantages related to Natura 2000 in the agricultural sector, aid for agri-environmental-climate commitments and to aid for organic farming.

(57) The exemption of aid for disadvantages related to Natura 2000 in the agricultural sector, aid for agri-environmental-climate commitments and aid for organic farming should apply only to undertakings active in the primary agricultural production sector.

(58) Projects funded by the European Innovation Partnership for agricultural productivity and sustainability (EIP) lead to innovation in the farming sector and in rural areas. State aid granted to undertakings participating in EIP Operational Group projects covered by Article 127 of Regulation (EU) 2021/2115 has a minor impact on competition, in particular, in view of the positive role the aid plays for sharing knowledge, especially for local and agricultural communities, the collective nature of the aid, and its relatively small scale. The nature of these projects is integrated. These projects are usually multi-actor and multi-sector, which can lead to certain difficulties for their classification under State aid rules. Given the local nature of individual EIP Operational Group projects, selected on the basis of a multi-annual local development strategy determined and implemented by public-private partnership and their orientation to community, social, environmental and climate interest, this Regulation should address certain difficulties faced by EIP Operational Group projects to facilitate their compliance with State aid rules.

(59) Given the limited effect on trade and competition of small amounts of aid granted to undertakings benefitting, directly or indirectly, from EIP Operational Group projects, simple rules for cases where the aggregate amount of aid per project does not exceed a certain ceiling should be laid down.

(60) The Commission has applied Articles 107 and 108 of the Treaty to undertakings active in the forestry sector in numerous decisions, in particular in the framework of the 2014 Guidelines. In the period from 2014 to 2020, the Commission approved more than 200 aid schemes in favour of the forestry sector in accordance with those Guidelines. According to the Commission’s experience, forestry aid measures have not created any significant distortion of competition in the internal market given the existence of clear compatibility criteria. In the light of that experience, and for the sake of simplification and procedural economy, it should therefore be possible to exempt aid measures in favour of the forestry sector from the notification obligation irrespective of whether they are co-financed by the EAFRD. It is therefore appropriate that the Commission should make use of the powers conferred on it by Regulation (EU) 2015/1588 for aid for afforestation and creation of the woodland; aid for agroforestry systems; aid for the prevention and restoration of the damage to forests from forest fire, natural disasters, adverse climatic events which can be assimilated to a natural disaster, other adverse climatic events, plant pests and catastrophic events; aid for investments improving the resilience and environmental value of forest ecosystems; aid for area-specific disadvantages resulting from certain mandatory requirements as defined in Article 3 of Council Directive 92/43/EEC and in Article 3 of Directive 2009/147/EC of the European Parliament and of the Council (15); aid for forest-environmental-climate services and forest conservation; aid investments in infrastructure related to the development, modernisation or adaptation of the forestry sector; aid for investments in forestry technologies and in processing, in mobilising and in marketing of forestry products; aid for conservation of genetic resources in forestry, start-up aid for producer groups and organisations in the forestry sector, aid for forestry land consolidation and aid for cooperation in the forestry sector.

(61) To incentivise grouped initiatives in the forestry sector, the Commission has applied Articles 107 and 108 of the Treaty to aid in favour of start-up aid for producer groups and organisations in the forestry sector. In the period from 2014 to 2020, the Commission approved such aid in five cases. In the agricultural sector, such aid was already exempted from notification under Regulation (EU) No 702/2014. It is therefore appropriate to exempt start-up aid for producer groups and organisations in the forestry sector from the State aid notification requirement.

(62) Economic diversification and the creation of new economic, including circular bioeconomy activities are essential for the development and competitiveness of rural areas and for the SMEs which are the backbone of the Union rural economy. Regulation (EU) 2021/2115 provides for measures to support non-agricultural business development in rural areas aimed at employment promotion, the setting up of quality jobs in rural areas, the maintenance of already existing jobs, a reduction of seasonality fluctuations in employment, development of non-agricultural sectors outside agriculture and food processing while fostering at the same time business integration and local inter-sectoral links.

(63) To ensure coherence with Regulation (EU) 2021/2115 and to achieve simplification of the rules to obtain State aid clearance for the co-financed part and the additional national financing of the CAP Strategic Plan, the notification requirement should not apply to various categories of aid in favour of SMEs active in rural areas, encompassing aid for basic services and infrastructures, for business start-ups, for cooperation, new participation of farmers in quality schemes for cotton and foodstuff and information and promotion measures in favour of foodstuffs covered by a quality scheme. Such aid measures should be identical to the underlying rural development interventions and the exempted aid should only be granted pursuant to and in conformity with the CAP Strategic Plan of the Member State concerned.

(64) The Commission has applied Articles 107 and 108 of the Treaty to aid in favour of basic services and infrastructure in rural areas and for cooperation in rural areas in numerous cases, in particular in the framework of the 2014 Guidelines. In the period from 2014 to 2020, the Commission has approved 27 aid schemes relating to basic services and infrastructure in rural areas and 28 aid schemes relating to cooperation in rural areas. In the Commission’s experience, aid measures in favour of rural areas have not had any significant distortion of competition in the internal market, given the existence of clear compatibility criteria, and given that the aid has contributed to economic diversification and the creation of new economic activities. It is therefore appropriate to exempt aids in favour of basic services and infrastructure in rural areas and aid for cooperation in rural areas from the State aid notification requirement.

(65) However, aid in favour of basic services and infrastructure in rural areas and aid for cooperation in rural areas should be exempted from the notification requirement only if it forms part of a CAP Strategic Plan validated by the Commission in the framework of Regulation (EU) 2021/2115.

(66) State aid granted to SMEs participating in community-led local development (‘CLLD’) projects, referred to in Article 31 of Regulation (EU) 2021/1060 of the European Parliament and of the Council (16) and designated as ‘LEADER’ under Regulation (EU) 2021/2115, has little impact on competition, in particular, in view of the positive role the aid plays for sharing knowledge, especially for local and agricultural communities, as well as the often collective nature of the aid, and its relatively small scale. The nature of these projects is integrated, multi-actor and multi-sector, which can lead to certain difficulties for their classification under State aid law. Given the local nature of individual CLLD projects, selected on the basis of a multi-annual local development strategy determined and implemented by public-private partnership and their orientation to community, social, environmental and climate interest, this Regulation should address certain difficulties faced by CLLD projects in order to facilitate their compliance with State aid rules. Municipalities, by their very nature, fall outside the scope of the SME definition (public shareholding). However, municipalities often play a vital role in the organisation and realisation of CLLD projects. Where a CLLD project is carried out in favour of one of the objectives set out in Article 1 of Regulation (EU) 2015/1588, it should therefore be possible to block-exempt also aid to municipalities in the context of such project.

(67) Given the limited effect on trade and competition of small amounts of aid granted to SMEs benefitting, directly or indirectly from CLLD projects, simple rules for cases where the aggregate amount of aid per project does not exceed a certain ceiling should be laid down. This should also apply to municipalities benefiting directly or indirectly from CLLD projects, which pursue one of the objectives set out in Article 1 of Regulation (EU) 2015/1588.

(68) In the case of several categories of aid, such as research, knowledge transfer and information including through EU Space-based data and services, advisory services, farm replacement services, promotion and prevention and eradication of animal diseases and plant pests, the aid is granted to the final aid beneficiaries indirectly, in kind, in the form of subsidized services. In such cases, the exempted aid should be paid to the provider of the service or activity in question.

(69) In accordance with Article 4(1) of Regulation (EU) 2015/1588, it is necessary to periodically revise State aid policy. That is why the period of application of this Regulation should be limited. It is therefore appropriate to lay down transitional provisions, including the rules on an adjustment period at the end of validity of this Regulation for exempted aid schemes. Such rules should give Member States time to adapt to the new regime,

HAS ADOPTED THIS REGULATION:

TABLE OF CONTENTS

CHAPTER I COMMON PROVISIONS 12

CHAPTER II PROCEDURAL REQUIREMENTS 24

CHAPTER III CATEGORIES OF AID 25

Section 1 Aid in favour of SMEs active in primary agricultural production, the processing of agricultural products and the marketing of agricultural products 25

Section 2 Aid for environmental protection in agriculture 46

Section 3 Aid for investments in favour of conservation of cultural and natural heritage 49

Section 4 Aid to make good the damage caused by natural disasters in the agricultural sector 49

Section 5 Aid for research development and innovation 50

Section 6 Aid in favour of forestry 52

Section 7 Aid in Favour of SMEs in Rural Areas 64

CHAPTER IV TRANSITIONAL AND FINAL PROVISIONS 70

CHAPTER I

Common provisions

Article 1 Scope 1. This Regulation shall apply to the following categories of aid: (a) aid in favour of micro, small and medium sized enterprises (SMEs): (i) active in the agricultural sector, namely primary agricultural production, the processing of agricultural products and the marketing of agricultural products, with the exception of Articles 14, 15, 16, 18, 23 and 25 to 31, which shall only apply to SMEs active in primary agricultural production; (ii) active in non-agricultural activities in rural areas falling outside the scope of Article 42 of the Treaty, insofar as such aid is granted in accordance with Regulation (EU) 2021/2115 and is either co-financed by the European Agricultural Fund for Rural Development (‘EAFRD’) or granted as additional national financing for such co-financed measures. By derogation, this Regulation shall apply to aid to municipalities benefiting directly or indirectly from CLLD projects, pursuant to Articles 60 and 61 of this Regulation; (b) aid for environmental protection in agriculture as referred to in Articles 33, 34 and 35, which shall only apply to undertakings active in primary agricultural production; (c) aid for investments for the conservation of cultural and natural heritage located on agricultural holdings and in forests; (d) aid in favour of making good the damage caused by natural disasters in the agricultural sector; (e) aid for research, development and innovation in the agricultural and forestry sectors; (f) aid in favour of forestry. 2. Where Member States deem it appropriate, they may choose to grant aid referred to in paragraph 1, points (a), (e) and (f), in compliance with Commission Regulation (EU) No 651/2014 (17). 3. This Regulation shall not apply to: (a) aid schemes referred to in Articles 14, 17, 41 to 44 and 46, aid schemes referred to in Articles 49 and 50, if they fulfil the conditions of Article 12, from six months after their entry into force. However, the Commission may decide that this Regulation shall continue to apply to an aid scheme for longer than six months, after having assessed the relevant evaluation plan notified by the Member State to the Commission. When submitting the evaluation plans, Member States shall also submit all the information necessary for the Commission to carry out an assessment of the evaluation plans and to take a decision; (b) any alterations of schemes referred to in point (a) other than modifications which do not affect the compatibility of the aid scheme under this Regulation or do not significantly affect the content of the approved evaluation plan; (c) aid to export-related activities towards third countries or Member States, namely aid directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current costs linked to export activity; (d) aid contingent upon the use of domestic over imported goods. 4. This Regulation shall not apply to: (a) aid schemes which do not explicitly exclude the payment of individual aid in favour of an undertaking which is subject to an outstanding recovery order following a previous Commission decision declaring an aid granted by the same Member State illegal and incompatible with the internal market, with the exception of: (i) aid schemes to make good the damage caused by natural disasters in accordance with Article 37; (ii) aid schemes for community-led local development (‘CLLD’) or European Innovation Partnership for agricultural productivity and sustainability (‘EIP’) Operational Group projects in accordance with Articles 40 and 61; (b) ad hoc aid to an undertaking referred to in point (a). 5. This Regulation shall not apply to aid to undertakings in difficulty with the exception of aid granted: (a) for information actions in the agricultural and forestry sectors in accordance with Articles 21 and 47; (b) for promotion measures in the form of publications aimed at raising awareness of agricultural products among the wider public in accordance with Article 24(2), point (b); (c) to compensate for the costs of the prevention, control and eradication of animal diseases and plant pests in accordance with Article 26(8) and (9); (d) to cover the costs of the removal and destruction of fallen stock in accordance with Article 27(2), points (c), (d) and (e); (e) for disadvantages related to Natura areas 2000 in accordance with Article 33; (f) to make good the damage caused by natural disasters in accordance with Article 37; (g) for undertakings participating in or benefitting from CLLD projects and EIP Operational Group projects, in accordance with Articles 40 and 61; (h) in the following cases, provided that the undertaking became an undertaking in difficulty due to losses or damages caused by the event in question: (i) to make good the damage caused by an adverse climatic event which can be assimilated to a natural disaster in accordance with Article 25; (ii) to make good the damage caused by animal diseases and plant pests in accordance with Article 26(9) and Article 26(10); (iii) to make good the damage caused by protected animals in accordance with Article 29; (iv) for the restoration of damage to forests in accordance with Article 43(2), point (d). 6. This Regulation shall not apply to aid which entails, by itself, by the conditions attached to it or by its financing method, a non-severable violation of Union law, in particular: (a) aid where the grant of aid is subject to the obligation for the beneficiary to use nationally produced goods or national services; (b) aid restricting the possibility for the beneficiaries to exploit the research, development and innovation results in other Member States. 7. This Regulation shall not apply to aid in favour of agricultural products within the meaning of Annex 1 to the WTO Agreement on Agriculture (18), which constitutes an export subsidy as defined by that Agreement. Likewise, it shall not apply to aid in favour of such products, which constitutes export financing support provided by a government or any public body within the scope of the WTO Ministerial Decision on Export Competition of 19 December 2015 (19), if it does not comply with the relevant requirements of paragraph 15 of that Decision on maximum repayment term and self-financing.

Article 2 Definitions For the purpose of this Regulation the following definitions shall apply: (1) ‘ad hoc aid’ means aid not granted on the basis of an aid scheme; (2) ‘adverse climatic event which can be assimilated to a natural disaster’ means unfavourable weather conditions such as frost, storms and hail, ice, heavy or persistent rain or severe drought which destroy, in the case of agriculture, more than 30 % of the average production calculated on the basis of the preceding three-year or four-year period or a three-year average based on the preceding five- or eight-year period, excluding the highest and the lowest entry; in the case of forestry, more than 20 % of the forestry potential; (3) ‘advice’ means complete advice given in the framework of one and the same contract; (4) ‘agricultural activity’ means an activity as determined by a Member State in its CAP Strategic Plan in accordance with Article 4(2) of Regulation (EU) 2021/2115; (5) ‘agricultural area’ means any area as determined by a Member State in its CAP Strategic Plan in accordance with Article 4(3) of Regulation (EU) 2021/2115; (6) ‘agricultural holding’ means a unit comprising of land, premises and facilities used for primary agricultural production; (7) ‘agricultural product’ means the products listed in Annex I to the Treaty, except the fishery and aquaculture products listed in Annex I to Regulation (EU) No 1379/2013 of the European Parliament and of the Council (20); (8) ‘agricultural sector’ means all undertakings active in primary agricultural production, processing and marketing of agricultural products; (9) ‘agroforestry systems’ means land use systems where trees are grown in combination with agriculture on the same land; (10) ‘aid’ means any measure fulfilling all the criteria laid down in Article 107(1) of the Treaty; (11) ‘aid granted in the framework of a CAP Strategic Plan’ means support granted in accordance with Regulation (EU) 2021/2115 either as aid co-financed by the EAFRD or as additional national financing to such co-financed aid; (12) ‘aid intensity’ means the gross aid amount expressed as a percentage of the eligible costs, before any deduction of tax or other charge; (13) ‘aid scheme’ means any act on the basis of which, without further implementing measures being required, individual aid awards may be made to undertakings defined within the act in a general and abstract manner and any act on the basis of which aid which is not linked to a specific project may be granted to one or several undertakings for an indefinite period of time and for an indefinite amount; (14) ‘arm’s length’ means that the conditions of the transaction between the contracting parties do not differ from those which would be stipulated between independent undertakings and contain no element of collusion. Any transaction that results from an open, transparent and unconditional procedure is considered as meeting the arm’s length principle; (15) ‘biosecurity measures’ means management and physical measures designed to reduce the risk of introduction, development and spread of diseases to, from and within the following: (a) an animal population; (b) an establishment, zone, compartment, means of transport or any other facilities, premises or location; (16) ‘breeding book’ means book as provided for in Article 2, point (12), of Regulation (EU) 2016/1012 of the European Parliament and of the Council (21); (17) ‘CAP Strategic Plan’ means CAP Strategic Plan as referred to in Article 1(1), point (c), of Regulation (EU) 2021/2115; (18) ‘capitalised works’ means works, undertaken by a farmer personally or by the farmer’s workers on the farm, that create an asset; (19) ‘carbon farming schemes’ means aid schemes related to land management practices resulting in the increase of carbon storage in living biomass, dead organic matter and soils by enhancing carbon capture and/or reducing the release of carbon to the atmosphere; (20) ‘catastrophic event’ means an unforeseen event of biotic or abiotic nature caused by human action that leads to important disturbances of forest structures, eventually causing important economic damage to the forest sectors; (21) ‘date of granting the aid’ means the date when the legal right to receive the aid is conferred on the beneficiary under the applicable national legal regime; (22) ‘control and eradication measures’ means measures regarding animal diseases for which a competent authority of the Member State has formally recognised an outbreak, or regarding plant pests or invasive alien species for which a competent authority has formally acknowledged their presence; (23) ‘evaluation plan’ means a document covering one or more aid schemes and containing at least the following aspects: the objectives to be evaluated, the evaluation questions, the result indicators, the envisaged method to conduct the evaluation, the data collection requirements, the proposed timing of the evaluation including the date of submission of the interim and of the final evaluation reports, the description of the independent body that will carry out the evaluation or the criteria that will be used for its selection and the modalities for making the evaluation publicly available; (24) ‘fallen stock’ means animals which have been killed by euthanasia with or without a definite diagnosis or which have died, including stillborn and unborn animals, on a farm or on any premises or during transport, but which have not been slaughtered for human consumption; (25) ‘fast growing trees’ means a short rotation forest, where the minimum time before felling is set to be not less than 8 years and the maximum time before felling is set not to exceed 20 years; (26) ‘fiscal successor scheme’ means a scheme in the form of tax advantages which constitutes an amended version of a previously existing scheme in the form of tax advantages and which replaces it; (27) ‘fixed costs arising from participation in quality scheme’ means the costs incurred for entering a supported quality scheme and the annual contribution for participating in that quality scheme, including, where necessary, expenditure on checks required to verify compliance with the specifications of the quality scheme; (28) ‘food based biofuel’ means a biofuel produced from food and feed crops, as defined in Directive (EU) 2018/2001; (29) ‘foodstuffs’ means foodstuffs which are not agricultural products and which are listed in Annex I to Regulation (EU) No 1151/2012 of the European Parliament and of the Council (22); (30) ‘gross grant equivalent’ means the amount of the aid if it had been provided in the form of a grant to the beneficiary, before any deduction of tax or other charges; (31) ‘individual aid’ means: (a) ad hoc aid; (b) awards of aid to individual beneficiaries on the basis of an aid scheme; (32) ‘intangible assets’ means assets that do not have a physical or financial embodiment such as patents, licences, know-how or other intellectual property; (33) ‘investments to comply with a Union standard’ means investments made to comply with a Union standard after the expiry of the transitional period provided for in Union legislation; (34) ‘large enterprises’ means undertakings not fulfilling the criteria laid down in Annex I; (35) ‘marketing of agricultural products’ means holding or displaying with a view to sale, offering for sale, delivery or any other manner of placing on the market, except the first sale by a farmer to resellers or processors and any activity preparing a product for such first sale; a sale by a farmer to final consumers is considered as marketing of agricultural products if it takes place in separate premises or facilities reserved for that purpose; (36) ‘mutual funds’ means a scheme accredited by a Member State in accordance with its national law for affiliated farmers to insure themselves, whereby compensation payments are made to affiliated farmers who experience economic losses; (37) ‘Natura 2000 areas’ means special agriculture or forest areas as referred to in Article 3 of Directive 92/43/EEC and in Article 3 of Directive 2009/147/EC; (38) ‘natural disasters’ means earthquakes, avalanches, landslides and floods, tornadoes, hurricanes, volcanic eruptions and wild fires of natural origin; (39) ‘non-productive investment’ means investment which does not lead to a significant increase in the value or profitability of the holding; (40) ‘operations prior to industrial processing’ means felling, dismembering, stripping, cutting up, storage, protective treatment and drying of wood and all other working operations prior to the industrial sawing of wood at a sawing mill; as well as sawmilling where the maximum processing capacity is 20,000 m3 roundwood input for sawmilling per year; (41) ‘other adverse climatic events’ means unfavourable weather conditions which do not fall within the definition of adverse climatic event which can be assimilated to a natural disaster; (42) ‘outermost regions’ means the regions referred to in Article 349, first paragraph, of the Treaty; (43) ‘plant pest’ means: any species, strain or biotype of plant, animal or pathogenic agent injurious to plants or plant products; (44) ‘primary agricultural production’ means the production of products of the soil and of stock farming, listed in Annex I to the Treaty, without performing any further operation changing the nature of such products; (45) ‘processing of agricultural products’ means any operation on an agricultural product resulting in a product which is also an agricultural product, except on-farm activities necessary for preparing an animal or plant product for first sale; (46) ‘producer group or organisation’ means a group or organisation set up for the purpose of one of the following: (a) adapting the production and output of producers who are members of such producer groups or organisations to market requirements; (b) jointly placing goods on the market, including the 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; (d) other activities that may be carried out by producer groups or organisations, such as the development of business and marketing skills, the organisation and facilitation of innovation processes, joint management of the members’ land, the use of environmentally sound cultivation practices and production techniques, sound animal welfare practices and techniques; (47) ‘protected animal’ means any animal protected either by Union or by national legislation, including animal species for which national legislation provides for specific rules to preserve the population; (48) ‘regional aid maps’ means the list of areas designated by a Member State in line with the conditions laid down in the Guidelines on regional State aid (23) and approved by the Commission; (49) ‘repayable advance’ means a loan for a project which is paid in one or more instalments and the conditions for the reimbursement of which depend on the outcome of the project; (50) ‘research and knowledge-dissemination organisation’ means an entity, irrespective of its legal status or way of financing, whose primary goal is to independently conduct fundamental research, industrial research or experimental development, or to widely disseminate the results of such activities by way of teaching, publication or knowledge transfer; (51) ‘smaller Aegean islands’ means the smaller islands referred to in Article 1(2) of Regulation (EU) No 229/2013 of the European Parliament and of the Council (24); (52) ‘SME’ or ‘micro, small and medium-sized enterprises’ means undertakings fulfilling the criteria laid down in Annex I; (53) ‘start of works on the project or activity’ means the earlier of either the start of the activities or the construction works relating to the investment, or the first legally binding commitment to order equipment or employ services or any other commitment that makes the project or activity irreversible; buying land and preparatory works such as obtaining permits and conducting feasibility studies are not considered start of works or activity; (54) ‘subsidised services’ means a form of aid, where the aid is granted to the final beneficiary indirectly, in kind, and is paid to the provider of the service or activity in question; (55) ‘tangible assets’ means assets consisting of land, buildings and plant, machinery and equipment; (56) ‘transaction cost’ means an additional cost linked to fulfilling a commitment, but not directly attributable to its implementation or not included in the costs or income foregone that are compensated directly; and which can be calculated on a standard cost basis; (57) ‘Transmissible Spongiform Encephalopathy (‘TSE’) and Bovine Spongiform Encephalopathy (‘BSE’) test costs’ means all costs, including those for test kits and for the taking, transporting, testing, storing and destruction of samples necessary for sampling and laboratory testing in accordance with Chapter C of Annex X to Regulation (EC) No 999/2001 of the European Parliament and of the Council (25); (58) ‘trees for short rotation coppicing’ means tree species of CN code 06 02 9041 to be defined by Member States that consist of woody, perennial crops, the rootstock or stools of which remain in the ground after harvesting, with new shoots emerging in the following season and with a maximum harvest cycle to be determined by the Member States; (59) ‘undertaking in difficulty’ means an undertaking fulfilling the criteria laid down in Article 2, point (18), of Regulation (EU) No 651/2014; (60) ‘Union standard’ means mandatory standard laid down in Union legislation setting the level which individual undertakings must achieve, in particular as regards the environment, hygiene and animal welfare; however, standards or targets set at Union level which are binding for Member States but not for individual undertakings are not deemed to be Union standards; (61) ‘young farmer’ means a farmer as determined by a Member State in its CAP Strategic Plan in accordance with Article 4(6) of Regulation (EU) 2021/2115.

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

Article 4 Notification thresholds 1. This Regulation shall not apply to any individual aid, the gross grant equivalent of which exceeds the following thresholds: (a) aid for investments in agricultural holdings linked to primary agricultural production as referred to in Article 14: EUR 600 000 per undertaking per investment project; (b) aid for investments concerning the relocation of a farm building resulting in the modernisation of facilities or in an increase in production capacity as referred to in Article 16(4): EUR 600 000 per undertaking per investment project; (c) aid for investments in connection with the processing of agricultural products and the marketing of agricultural products as referred to in Article 17: EUR 7,5 million per undertaking per investment project; (d) aid for animal welfare commitments, as referred to in Article 31: EUR 500 per livestock unit per year; (e) aid for disadvantages related to Natura 2000 areas as referred to in Article 33: EUR 500 per hectare per year in the initial period of maximum five years and EUR 200 per hectare per year thereafter; (f) aid for agri-environmental-climate commitments as referred to in Article 34: EUR 600 per hectare per year for annual crops, EUR 900 per hectare per year for specialised perennial crops and EUR 450 per hectare per year for other land uses; (g) aid for organic farming as referred to in Article 35: EUR 600 per hectare per year for annual crops, EUR 900 per hectare per year for specialised perennial crops and EUR 450 per hectare per year for other land uses; (h) aid for investments in favour of the conservation of cultural and natural heritage located on agricultural holdings or in forests as referred to in Article 36: EUR 600 000 per undertaking per investment project; (i) aid for research and development in the agricultural and forestry sectors as referred to in Article 38: EUR 7,5 million per project; (j) aid for costs incurred by undertakings participating in EIP Operational Group projects as referred to in Article 39: EUR 2 million per undertaking, per project; (k) limited amounts of aid to undertakings benefitting from EIP Operational Group projects as referred to in Article 40: EUR 500 000 per EIP Operational Group project; (l) aid for afforestation and the creation of woodland as referred to in Article 41: EUR 7,5 million per establishment project; (m) aid for agroforestry systems as referred to in Article 42: EUR 7,5 million per agroforestry system establishment project; (n) aid for investments improving the resilience and environmental value of forest ecosystems as referred to in Article 44: EUR 7,5 million per investment project; (o) aid for area-specific disadvantages resulting from certain mandatory requirements as referred to in Article 45: EUR 500 per hectare per year in the initial period not exceeding five years and EUR 200 per hectare per year thereafter; (p) aid for forest-environmental-climate services and forest conservation as referred to in Article 46: EUR 200 per hectare per year, with exception of aid referred to in Article 46, paragraph 8; (q) aid for advisory services in the forestry sector as referred to in Article 48: EUR 200 000 per undertaking and per year; (r) aid for investments in infrastructure related to the development, modernisation or adaptation of the forestry sector as referred to in Article 49: EUR 7,5 million per investment project; (s) aid for investments in forestry technologies and in processing, in mobilising and in marketing of forestry products as referred to in Article 50: EUR 7,5 million per investment project; (t) aid for investments for basic services and infrastructure in rural areas as referred to in Article 55: EUR 10 million per investment project; (u) aid for costs incurred by SMEs participating in CLLD projects, designated as LEADER local development under EAFRD referred to in Article 60: EUR 2 million per undertaking, per project; (v) limited amount of aid to SMEs benefitting from CLLD projects as referred to in Article 61: EUR 200 000 per CLLD project. 2. The thresholds set out in paragraph 1 shall not be circumvented by the artificial splitting up of the aid schemes or aid projects.

Article 5 Transparency of aid 1. This Regulation shall apply only to transparent aid. 2. Aid shall be considered to be transparent if it is possible to calculate precisely the gross grant equivalent ex ante without need to undertake a risk assessment. 3. For the purpose of this Regulation, the following forms of aid shall be considered to be transparent aid: (a) aid comprised in grants, interest rate subsidies and subsidised services; (b) aid comprised in loans, where the gross grant equivalent has been calculated on the basis of the reference rate prevailing at the time of the grant; (c) aid comprised in guarantees where one of the following applies: (i) the gross grant equivalent has been calculated on the basis of safe-harbour premiums laid down in a Commission notice; (ii) before the implementation of the aid, the methodology to calculate the gross grant equivalent of the guarantee has been accepted on the basis of the Notice on Guarantees, following notification of that methodology to the Commission under any State aid regulation adopted by the Commission applicable at the time, and the approved methodology explicitly addresses the type of guarantee and the type of underlying transaction at stake in the context of the application of this Regulation; (d) aid in the form of tax advantages, where the measure provides for a cap ensuring that the applicable threshold is not exceeded; (e) aid in the form of repayable advances, if the total nominal amount of the repayable advance does not exceed the thresholds applicable under this Regulation or if, before implementation of the measure, the methodology to calculate the gross grant equivalent of the repayable advance has been accepted following its notification to the Commission; (f) aid in the form of the sale or the lease of tangible assets below market rates where the value is established either by an independent expert evaluation prior to the transaction or by reference to a publicly available, regularly updated and generally accepted benchmark. 4. For the purpose of this Regulation, the following forms of aid shall not be considered to be transparent aid: (a) aid comprised in capital injections; (b) aid comprised in risk finance measures.

Article 6 Incentive effect 1. This Regulation shall apply only to aid which has an incentive effect. 2. Aid shall be considered to have an incentive effect if the beneficiary has submitted a written application for the aid to the Member State concerned before work on the project or activity has started. The application for the aid shall contain at least the following information: (a) undertaking’s name and size; (b) description of the project or the activity, including its start and end dates; (c) location of the project or the activity; (d) list of eligible costs; (e) type (grant, loan, guarantee, repayable advance or other) and amount of public funding needed for the project/activity. 3. Ad hoc aid granted to large enterprises shall be considered to have an incentive effect if, in addition to ensuring that the condition laid down in paragraph 2 is fulfilled, the Member State has verified, before granting the ad hoc aid concerned, that documentation prepared by the beneficiary establishes that the aid will result in one or more of the following: (a) a material increase in the scope of the project or activity due to the aid; (b) a material increase in the total amount spent by the beneficiary on the project or activity due to the aid; (c) a material increase in the speed of completion of the project or activity concerned; (d) in the case of investment ad hoc aid, that the project or activity would not have been carried out as such in the rural area concerned or would not have been sufficiently profitable for the beneficiary in the rural area concerned in the absence of the aid. These requirements do not apply to municipalities that are autonomous local authorities with an annual budget of less than EUR 10 million and fewer than 5 000 inhabitants. 4. By way of derogation from paragraphs 2 and 3, measures in the form of tax advantages shall be deemed to have an incentive effect if both of the following conditions are fulfilled: (a) the measure establishes a right to aid in accordance with objective criteria and without further exercise of discretion by the Member State; (b) the measure has been adopted and is in force before work on the aided project or activity has started, except in the case of fiscal successor schemes where the activity was already covered by the previous schemes in the form of tax advantages. 5. Moreover by way of derogation from paragraphs 2, 3 and 4 the following categories of aid are not required to have or shall be deemed to have an incentive effect: (a) aid schemes for land consolidation where the conditions laid down in Article 15 or Article 53 are fulfilled and where: (i) the aid scheme establishes a right to aid in accordance with objective criteria and without further exercise of discretion by the Member State; and (ii) the aid scheme has been adopted and is in force before eligible costs under Article 15 or Article 53 are incurred by the beneficiary; (b) aid for information actions in the agricultural sector in compliance with Articles 21 and 22, which consists of making available the information to an undefined number of beneficiaries; (c) aid for promotion measures in the form of publications aimed at raising awareness of agricultural products among the wider public where the conditions laid down in Article 24(2), point (b), are fulfilled; (d) aid to compensate for losses caused by adverse climatic event which can be assimilated to a natural disaster where the conditions laid down in Article 25 are fulfilled; (e) aid to compensate for the costs of the prevention, control and eradication of animal diseases and plant pests and for losses caused by those animal diseases or plant pests where the conditions laid down in Article 26 are fulfilled; (f) aid to cover the costs of the removal and destruction of fallen stock where the conditions laid down in Article 27(2), points (c), (d), (e) and (f), are fulfilled; (g) aid to make good the damage caused by protected animals where the conditions laid down in Article 29 are fulfilled; (h) aid for disadvantages related to Natura 2000 areas as referred to in Article 33; (i) aid for investments in favour of the conservation of cultural and natural heritage located on agricultural holdings or in forests where the conditions laid down in Article 36 are fulfilled; (j) aid to make good the damage caused by natural disasters in the agricultural sector where the conditions laid down in Article 37 are fulfilled; (k) aid for research, development and innovation in the agricultural and forestry sectors where the conditions laid down in Article 38 are fulfilled; (l) aid for the restoration of damage to forests in accordance with Article 43(2), point (d), where the conditions laid down in Article 43 are fulfilled; (m) aid for information actions in the forestry sector in compliance with Articles 47 and 48, which consists of making available the information to an undefined number of beneficiaries; (n) aid for conservation of genetic resources in forestry where the conditions laid down in Article 51 are fulfilled; (o) aid for the participation of farmers in quality schemes for cotton and foodstuffs where the conditions laid down in Article 58 are fulfilled; (p) aid for undertakings participating in or benefitting from CLLD projects and EIP Operational Group projects, if the relevant conditions in Articles 39, 40, 60 and 61 are fulfilled.

Article 7 Aid intensity and eligible costs 1. For the purposes of calculating the aid intensity and the eligible costs, all figures used shall be taken before any deduction of tax or other charge. The eligible costs shall be supported by documentary evidence which shall be clear, specific and contemporary. The amounts of eligible costs may be calculated in accordance with the simplified cost options set out in Regulation (EU) 2021/1060 and Regulation (EU) 2021/2115, provided that the operation is at least partly financed through the EAFRD and that the category of costs is eligible according to the relevant exemption provision. 2. Aid amounts for the measures or types of operations referred to in Articles 31, 33, 34, 35, 41, 45 and 46 may be fixed on the basis of standard assumptions of additional costs and income foregone. In such cases, Member States shall ensure that the calculations and the corresponding aid contain only elements that are verifiable, are based on figures established by appropriate expertise, indicate clearly the source of the figures used, are differentiated to take account of regional or local site conditions and actual land use, where applicable and do not contain elements linked to investment costs. 3. Value added tax (VAT) shall not be eligible for aid, except where it is not recoverable under national VAT legislation. 4. Where aid is granted in a form other than a grant, the aid amount shall be the gross grant equivalent of the aid. 5. Aid payable in the future, including aid payable in several instalments, shall be discounted to its value at the moment it is granted. The eligible costs shall be discounted to their value on the date of granting the aid. The interest rate to be used for discounting purposes shall be the discount rate applicable on the date of granting the aid. 6. Where aid is granted by means of tax advantages, the discounting of aid tranches shall take place on the basis of the discount rates applicable at the various times the tax advantage takes effect. 7. Where aid is granted in the form of repayable advances which, in the absence of an accepted methodology to calculate their gross grant equivalent, are expressed as a percentage of the eligible costs and where the measure provides that in the case of a successful outcome of the project, as defined on the basis of reasonable and prudent hypothesis, the advances shall be repaid with an interest rate at least equal to the discount rate applicable on the date of granting the aid, the maximum aid intensities laid down in Chapter III may be increased by 10 percentage points.

Article 8 Cumulation 1. In determining whether the notification thresholds provided for in Article 4 and the maximum aid intensities and maximum aid amounts laid down in Chapter III are respected, the total amount of State aid for the aided activity or project or undertaking shall be taken into account. 2. Where Union funding is centrally managed by the institutions, agencies, joint undertakings or other bodies of the Union that is not directly or indirectly under the control of the Member State is combined with State aid, only the latter shall be considered for determining whether notification thresholds and maximum aid intensities and ceilings are respected, provided that the total amount of public funding granted in relation to the same eligible costs does not exceed the most favourable funding rates laid down in the applicable rules of Union law. 3. Aid with identifiable eligible costs, exempted from the notification requirement of Article 108(3) of the Treaty under this Regulation, may be cumulated with: (a) any other State aid, as long as those measures concern different identifiable eligible costs; (b) any other State aid, in relation to the same eligible costs, partly or fully overlapping, only if such cumulation does not result in exceeding the highest aid intensity or aid amount applicable to this aid under this Regulation. 4. Aid without identifiable eligible costs exempted under Articles 18, 19, 40 and 61 may be cumulated with any other State aid with identifiable eligible costs. Aid without identifiable eligible costs may be cumulated with other State aid without identifiable eligible costs, up to the highest relevant total financing threshold fixed in the specific circumstances of each case by this or another block exemption regulation or decision adopted by the Commission. 5. State aid exempted under Sections 1, 2 and 3 of Chapter III of this Regulation shall not be cumulated with payments referred to in Article 145(2) and Article 146 of Regulation (EU) 2021/2115 in respect of the same eligible costs if such cumulation would result in an aid intensity or aid amount exceeding those laid down in this Regulation. 6. State aid granted under Articles 31, 34 and 35 shall not be cumulated with payments referred to in Article 31 of Regulation (EU) 2021/2115 in respect of the same eligible costs if such cumulation would result in an aid intensity or aid amount exceeding those laid down in this Regulation. 7. State aid exempted under this Regulation shall not be cumulated with any de minimis aid in respect of the same eligible costs if such cumulation would result in an aid intensity or aid amount exceeding those laid down in Chapter III. 8. Aid for investments aimed at the restoration of agricultural production potential as referred to in Article 14(3), point (d), shall not be cumulated with aid for compensation for material damage as referred to in Articles 25, 26, 28 and 37. 9. Start-up aid for producer groups and organisations in the agricultural sector as referred to in Article 19 of this Regulation shall not be cumulated with aid for the setting-up of producers groups and organisations in the agricultural sector as referred to in Article 77 of Regulation (EU) 2021/2115. 10. Start-up aid for young farmers and start-up aid for agricultural activities as referred to in Article 18 of this Regulation shall not be cumulated with the support for the installation of young farmers or for rural business start-up as referred to in Article 75 of Regulation (EU) 2021/2115 if such cumulation would result in an aid amount exceeding those laid down in this Regulation.

Article 9 Publication and information 1. The Member State concerned shall ensure the publication in the Commission’s transparency award module (26) or on a comprehensive State aid website at national or regional level of: (a) the summary information referred to in Article 11 or a link to it; (b) the full text of each aid referred to in Article 11, including any amendments, or a link providing access to the full text; (c) the information referred to in Annex III on each individual aid award exceeding the following: (i) EUR 10 000 for beneficiaries active in the primary agricultural production sector; (ii) EUR 100 000 for beneficiaries active in the sector of the processing of agricultural products, the marketing of agricultural products, the forestry sector or for activities falling outside the scope of Article 42 of the Treaty. 2. For aid schemes in the form of tax advantages, the conditions set out in paragraph 1 shall be considered fulfilled if Member States publish the required information on individual aid amounts in the following ranges in EUR million: (a) 0,01- 0,1 only for primary agricultural production; (b) 0,1- 0,5; (c) 0,5-1; (d) 1 to 2; (e) 2 to 5; (f) 5 to 10; (g) 10 to 30; (h) 30 and more. 3. The information referred to in paragraph 1 shall be organised and accessible in a standardized manner, as set out in Annex III and shall allow for effective search and download functions. The information referred to in paragraph 1, point (c), shall be published within six months from the date the aid was granted or, for aid in the form of tax advantages, within one year from the date the tax declaration is due, and shall be available for at least 10 years from the date of granting the aid. 4. The full text of the aid scheme or of the ad hoc aid referred to in paragraph 1 shall include, in particular, an explicit reference to this Regulation, by citing its title and publication reference in the Official Journal of the European Union and to the specific provisions of Chapter III concerned by that act, or where applicable, to the national law which ensures that the relevant provisions of this Regulation are complied with. The aid scheme or the ad hoc aid shall be accompanied by its implementing provisions and its amendments. 5. The publication obligations laid down in paragraph 1 shall not apply to aid granted to EIP Operational Group projects and CLLD projects under Articles 39, 40, 60 and 61. 6. The Commission shall publish on its website: (a) the summary information referred to in paragraph 1; (b) the links to the State aid websites of all Member States referred to in paragraph 1.

CHAPTER II

Procedural requirements

Article 10 Withdrawal of the benefit of the block exemption Where a Member State grants aid that does not fulfil the conditions set out in Chapters I, II and III of this Regulation, the Commission may, after having provided the Member State concerned with the possibility to make its views known, adopt a decision stating that all or some of the future aid measures adopted by the Member State concerned which would otherwise fulfil the requirements of this Regulation, are to be notified to the Commission in accordance with Article 108(3) of the Treaty. The aid to be notified may be limited to certain types, to aid granted in favour of certain beneficiaries or to aid adopted by certain authorities of the Member State concerned.

Article 11 Reporting 1. Member States shall transmit to the Commission, via the Commission’s electronic notification system, the summary information about each aid measure exempted under this Regulation in the standardised format laid down in Annex II, together with a link providing access to the full text of the aid measure, including any amendments, within 20 working days following its entry into force. 2. Member States shall transmit to the Commission in electronic form an annual report, as referred to in Chapter III of Regulation (EC) No 794/2004, on the application of this Regulation in respect of each whole year or each part of the year during which this Regulation applies. 3. The annual report shall also contain information concerning the following: (a) animal diseases or plant pest as referred to in Article 26; (b) meteorological information on the type, timing, relative magnitude and location of climatic events which can be assimilated to a natural disaster as referred to in Article 25 or natural disasters in the agricultural sector as referred to in Article 37; 4. Paragraph 1 of this Article shall not apply in respect of aid granted to EIP Operational Group projects and to community-led local development (‘CLLD’) projects as referred to in Articles 40 and 61.

Article 12 Evaluation 1. Aid schemes referred to in Article 1(3) shall be subject to an ex post evaluation if they have a State aid budget or accounted expenditures over EUR 150 million in any given year or EUR 750 million over their total duration, that is the combined duration of the scheme and any predecessor scheme covering a similar objective and geographical area, starting from 1 January 2023. Given the objectives of the evaluation, and to avoid putting a disproportionate burden on Member States, ex post evaluations shall only be required for aid schemes the total duration of which exceeds three years, starting from 1 January 2023. 2. The ex post evaluation requirement may be waived for aid schemes that are an immediate successor of a scheme covering a similar objective and geographical area that has been subject to an evaluation, delivered a final evaluation report in compliance with the evaluation plan approved by the Commission and has not generated any negative findings. Where the final evaluation report of a scheme is not in compliance with the approved evaluation plan, that scheme shall be suspended with immediate effect. Any successor of such suspended scheme shall not enjoy the benefit of the block exemption. 3. The aim of the evaluation shall be to verify whether the assumptions and conditions underlying the compatibility of the scheme have been achieved, in particular the necessity and the effectiveness of the aid measure in the light of its general and specific objectives. The evaluation shall also assess the impact of the scheme on competition and trade. 4. For aid schemes subject to the evaluation requirement pursuant to paragraph 1, Member States shall notify a draft evaluation plan as follows: (a) within 20 working days from the scheme’s entry into force, if the State aid budget of the scheme exceeds EUR 150 million in any given year or EUR 750 million over its total duration; (b) within 30 working days following a significant change that increases the budget of the scheme to over EUR 150 million in any given year or EUR 750 million over the total duration of the scheme; (c) within 30 working days following the recording in official accounts of expenditure under the scheme in excess of EUR 150 million in any year. 5. The draft evaluation plan shall be in accordance with the common methodology for State aid evaluation adopted by the Commission. Member States shall publish the evaluation plan approved by the Commission. 6. The ex post evaluation shall be carried out by an expert independent from the aid granting authority on the basis of the evaluation plan. Each evaluation shall include at least one interim and one final evaluation report. Member States shall publish both reports. 7. The final evaluation report shall be submitted to the Commission at the latest nine months before the expiry of the exempted scheme. That period may be reduced for schemes triggering the evaluation requirement in their last two years of implementation. The precise scope and arrangements for each evaluation shall be set out in the decision approving the evaluation plan. The notification of any subsequent aid measure with a similar objective shall describe how the results of the evaluation have been taken into account.

Article 13 Monitoring Member States shall maintain detailed records with the information and supporting documentation necessary to establish that all the conditions laid down in this Regulation are fulfilled. Such records shall be kept for 10 years from the date on which the ad hoc aid was granted or the last aid was granted under an aid scheme. The Member State concerned shall provide the Commission, within a period of 20 working days or such longer period as may be fixed in the request, with all the information and supporting documentation, which the Commission considers necessary to monitor the application of this Regulation.

CHAPTER III

Categories of aid

Section 1

Aid in favour of SMEs active in primary agricultural production, the processing of agricultural products and the marketing of agricultural products

Article 14 Aid for investments in agricultural holdings linked to primary agricultural production 1. Aid for investments in agricultural holdings linked to primary agricultural production shall be compatible with the internal market within the meaning of Article 107(3), point (c), of the Treaty and shall be exempted from the notification requirement of Article 108(3) thereof where it fulfils the conditions laid down in this Article and in Chapter I of this Regulation. 2. The investment may be carried out by one or more beneficiaries or concern a tangible asset or intangible asset used by one or more beneficiaries. 3. The investment shall pursue at least one of the following objectives: (a) improvement of the overall performance and sustainability of the agricultural holding, in particular through a reduc