Article 162(5) of the Financial Regulation[1] states that as soon as the European Court of Auditors (the Court) has transmitted its annual report, the Commission shall inform the Member States concerned immediately of the details of that report which relate to management of the funds for which they are responsible. Member States should reply within sixty days and the Commission then transmits a summary of the replies to the Court, the European Parliament and the Council before 28 February of the following year.

Following publication of the Court's annual report for the budgetary year 2013, the Commission duly informed Member States of details of the report. This information was presented in the form of a letter and three annexes to be completed by each Member State, as well as the accompanying gudielines on the preparation and presentation of replies to the questionnaires. Annex I was a questionnaire on the paragraphs referring to the individual Member States; annex II was a questionnaire on audit findings which refer to each Member State and annex III was a questionnaire on topical findings related to shared management for DAS 2013.

This Staff Working Document (SWD), which comprises the Member States' replies to Annex I and Annex III , accompanies the report from the Commission "Member States' replies to the European Court of auditors' 2013 annual report"[2].

CONTENT- please, use hyperlinks for quick navigation through the document

ANNEX I || ANNEX III ||

CHAPTER 1 – The statement of assurance and supporting information CHAPTER 2 – Revenue CHAPTER 3 – Agriculture: market and direct support CHAPTER 4 – Rural development, environment, fisheries and health CHAPTER 5 – Regional policy, transport and energy CHAPTER 6 – Employment and social affiars CHAPTER 7 – External relations, aid and enlargement CHAPTER 8 – Research and other internal policies CHAPTER 9 – Administrative and related expenditure CHAPTER 10 – Getting results from EU Budget || AUSTRIA BELGIUM BULGARIA CROATIA CYPRUS CZECH REPUBLIC DENMARK ESTONIA FINLAND FRANCE GERMANY || GREECE HUNGARY IRELAND ITALY LATVIA LITHUANIA LUXEMBOURG MALTA NETHERLANDS POLAND PORTUGAL || ROMANIA SLOVAKIA SLOVENIA SPAIN SWEDEN UK

ANNEX I. Paragraphs in the 2013 Annual Report and for each of the 2013 findings made by the Court referring to each particular country

Paragraph || Observation in the 2013 Annual Report || Member State reply

CHAPTER 1 – The Statement of Assurance and supporting information

Graph1.1 || 2013 total general government expenditure of the European Union MS and EU spenging in 2013 || Austria: action taken: YES, action completed: ? The statement of expenditure for Austria pursuant to the expenditure of the European Commission is to be registered. No additional remarks. Czech republic: action taken: , action completed: , Completion date: Irrelevant – there is no error involved. Denmark: action taken:, action completed: , Completion date: It is believed that this diagram indicates the actual circumstances, and it would therefore not be relevant to comment on whether or not measures have been implemented. France: mesure prise: OUI, action achevée: OUI Hungary: action taken: NO, action completed: , Completion date: The finding refers to facts that do not call for action. Latvia: action taken:, action completed: , Completion date: Although the data in the graph are not indicated in exact figures, after comparing the 2013 general government expenditure (in EUR million) of other Member States as reflected in the graph in accordance with the Eurostat data, we would like to note that Latvia’s section in the graph is reflected correctly.

CHAPTER 2 – Revenue

2.2 || Specific characteristics of revenue || Austria: action taken: NO, action completed:? ; The statement regarding the reduced rate of call of VAT is correct. No additional remarks. Germany: action taken: NO, action completed: , Completion date: See Annex III, Part B

2.4 || || Germany: action taken: NO, action completed: , Completion date: See Annex III, Part B

Table 2.2 || Member State's specific GNI/GNP reservations as at 31.12.2013 || Austria: action taken: NO, action completed: ? ; The statement in Table 2.2 is correct. 2009 is the earliest year for which Austria can provide information on the specific outstanding reservation for public medical institutions (see comments under 2.8.). Bulgaria: action taken: YES, action completed: YES, Completion date:22/09/2014 National Statistical Institute (NSI): On the basis of Eurostat methodology and verification missions and their findings with follow-up recommendations and reservations on the data to be developed and implemented by September 2014, the NSI developed and implemented the official reservations on the data. The reservations and recommendations from the findings which were implemented refer to: Additional adjustments for illegal activities: drugs and prostitution; FISIM; PIM method; Review of the stratification method for calculating imputed rent in the part concerning the calculation of intermediate consumption for repairs by owners; Property income to and from the Rest of the World; Coverage of originals, literature and entertainment works, music works and originals; Implementation of the valuation methodology for own-produced software; Implementation of the valuation methodology for own-produced software for government, NPIs and financial undertakings; Valuation of natural forest growth; In-kind revenue in urban transport, Bulgarian National Railways (BDZ), etc. Under Article 2(2) of Council Regulation (EC, Euratom) No 1287/2003 of 15 July 2003 on the harmonisation of gross national income at market prices, before 22 September each year, Member States must provide the Commission (Eurostat), in the context of national accounting procedures, with figures for GNI and its components, and a report on the quality of GNI data. The questionnaire sent in September 2014 contains information concerning GNI figures for the period 2002–2013. In addition to the most recent data available, the questionnaire contains information about data submitted by Member States in the previous year. The GNI questionnaire is accompanied by the corresponding GNI quality report, as an integral part of it, where Member States are required to provide information about any changes in the sources and methods used to compile national accounts data, changes in estimate revision policies, and an explanation. In the Questionnaire and GNI Quality Report forwarded in September 2014, the NSI submitted information about all reservations and recommendations issued. A Commission mission is scheduled for January 2015 to validate and accept all reservations and recommendations issued. Czech republic: action taken: YES, action completed: YES, Completion date: Reservation 1 (housing services) was resolved as part of the extraordinary revision of national accounts as at 30 September 2014. The implementation of new data (from the population and housing census) and clarification of calculation methods were sent to Eurostat in the quality report (GNI Quality Report). We have yet to receive a response from the European Commission. Reservation 2 (gratuities) was resolved as part of the extraordinary revision of national accounts as at 30 September 2011. The European Commission lifted this reservation in spring this year. Denmark: action taken: YES, action completed: NO, Completion date:12/12/2014 It should be noted that the year in column 5 should be 31.12.2013 and not 21.12.2010. Estonia:action taken: YES, action completed: NO, Completion date Finland:action taken: YES, action completed: NO, Completion date: According to the reservation relating to Finland, the estimate of output from renovations within construction activity needs to be based on more recent benchmark data (from 2002 to 2010). The sets adjusted in this way are to be published and sent to Eurostat. In addition, Statistics Finland has been working on making improvements to the statistical base to be used for calculating renovation work when producing the accounts for future years too. Finland and the Commission are working together on lifting the reservation. Germany: action taken: YES, action completed: YES, Completion date:22/09/2014 Greece:action taken: YES, action completed: NO, Completion date: In collaboration with Eurostat. Throughout 2014, ELSTAT has implemented a comprehensive work and action plan in order to eliminate reservations. During that plan, ELSTAT worked hard to resolve issues pertinent to the reservations, and submitted the information and documentation requested by Eurostat in September 2014. Moreover, ELSTAT has been cooperating with Eurostat on addressing the reservations. In 2014, Eurostat visited ELSTAT twice (in July and November) and supervised the work of ELSTAT to eliminate reservations. Furthermore, Eurostat is going through the process of examining the evidence and the submitted documentation and ELSTAT is awaiting the conclusion of the examination and the elimination of reservations. Observation 2: Throughout 2014, ELSTAT has implemented a comprehensive work and action plan in order to eliminate reservations. During the implementation of this plan, ELSTAT submitted the data and documentation requested by Eurostat. Moreover, ELSTAT has been cooperating with Eurostat on addressing the reservations. In 2014, Eurostat visited ELSTAT twice (in July and November) and supervised the work of ELSTAT to eliminate reservations. Eurostat is going through the process of examining the evidence and the submitted documentation and ELSTAT is awaiting the conclusion of the examination and the elimination of reservations. Hungary: action taken: YES, action completed: NO, Completion date: On 22 September 2014, the Hungarian Central Statistical Office forwarded its report including its actions; the document is currently being assessed by Eurostat. France: mesure prise: OUI, action achevée: OUI, Date d’achèvement: 22/09/2014 Les données RNB notifiées en septembre 2014 tiennent compte des réserves spécifiques en suspens au 31/12/2013 (estimations modifiées en conséquence lorsque cela était pertinent). Ces révisions seront discutées lors d’une visite de la Commission (Eurostat) en mars 2015. Ireland: action taken: YES, action completed: YES, Completion date: 08/08/2013 Ireland has no outstanding reservations Italy:action taken: YES, action completed: NO, Completion date: The specific reservations were acted upon by 22 September 2014, the date the GNI questionnaire was sent to Eurostat. We cannot consider the measure to be completed since Eurostat has not yet lifted the reservation. Any revocation will be effected with a formal act after the specific documentation sent by ISTAT along with the GNI questionnaire has been checked (Quality report and Documentation on selected GNI reservations for Italy). Latvia: action taken:, action completed: , Completion date: Latvia’s Gross National Income (GNI) survey questionnaire of 2014 includes the results of the work on the GNI special reservations (impact on the GNI’s amount). The GNI quality report provides a short explanation about the work on the reservations; however, detailed methodology explanations still need to be prepared for the Eurostat and an opinion needs to be obtained stating that the given reservation may be closed. Therefore, it is difficult to predict when each of the reservations may be fully withdrawn. Lithuania:action taken: YES, action completed: NO, Completion date: Reservation 1 was lifted on 23 April 2014; as for reservation 2, all information has been supplied to the European Commission, and its evaluation is pending. Luxembourg: action taken: YES, action completed: NO, Completion date: en attente d’une réponse positive de la part de la Commission en 2012, le STATEC a transmis à Eurostat un rapport traitant les deux réserves spécifiques pour le Luxembourg qui sont liées au même sujet. La Commission a dans sa lettre Ares(2013)2830371 du 5 août 2013 informé le STATEC de la levée de la première réserve. Suite à une demande officielle du Statec de prise de position sur la deuxième réserve à la Commission, celle-ci a dans une lettre de M. François Lequiller en date du 20 janvier 2014 (ESTAT/FLJW/hh D(2014) 84465) demandé des clarifications supplémentaires sur la deuxième partie du sujet qui concerne le travail pour compte propre dans la construction de logements par les ménages. Le STATEC a envoyé un rapport supplémentaire à Eurostat en septembre 2014 (attaché au rapport de qualité de la notification 4ème ressource RNB). Actuellement le STATEC est en attente d’une réponse de la part de la Commission et s’apprête à voir levée la réserve en question. Malta:action taken: YES, action completed: NO, Completion date:february 2015 Six reservations were closed on 22/09/2014. The next inspection will take place in February 2015, at which time the seventh reservation will be closed.22/09/2014 Poland: action taken: YES, action completed: YES, Completion date:22/09/2014 Descriptions with corrected data were submitted in the GNI quality report in September 2014. Corrected data on GDP and GNI related to an EU contribution according to ESA 95 were submitted in the GNI Questionnaire 2014. Romania:action taken: YES, action completed: NO, Completion date: Not applicable (INS, UCRBUE) Slovakia: action taken: YES, action completed: YES, Completion date: 22/09/2014 The Statistical Office of the Slovak Republic sent Eurostat an explanation of the reservations on 15 July 2014, and again – as part of the completed GNI questionnaire and GNI Quality Report – on 19 September 2014. Eurostat is currently authenticating the explanation. Slovenia: action taken: YES, action completed: YES, Completion date:19/09/2014 Reply of the Statistical Office of the Republic of Slovenia: Work relating to corrections of Gross National Income (GNI) data in respect of reservations was completed and the results sent to Eurostat on 19 September 2014 in the context of the regular GNI questionnaire. Spain: action taken: YES, action completed: YES, Completion date: 22/09/2014 Spain sent the Commission (Eurostat) the changes in GNI estimates required as a consequence of specific notified reservations on 22 September 2014 (followed by an updated version on 8 October 2014), accompanied by the corresponding methodological report. The Commission has not yet issued a report on the outcome of its assessment of the changes introduced in GNI estimates. Sweden: action taken:, action completed: , Completion date: Sweden is taking no action on this comment. UK: action taken: YES, action completed: NO, Completion date: ONS: At the end of 2012, the UK had ten outstanding reservations, two of which were lifted in July 2013 (and a further two in August 2014). A further reservation was placed in September 2013. The UK continues to cooperate and engage with the Commission to address the outstanding reservations.

Box 2.1 || || Poland: action taken: NO, action completed: NO, Completion date: Extreme understating of the customs value of sensitive goods (e.g. fabrics, textiles, footwear) from Asian countries could be prevented by introducing reference prices (fair prices) of the above mentioned goods in all EU countries. While OLAF and some EU countries are taking action in this regard, the Commission could consider intensifying and promoting such solutions in all EU countries. A reference price is an indicator based on which a risk analysis can be performed before the goods are released for free circulation in order to check if additional actions are required in the case concerned. Verification and control activities carried out after the goods have been released for free circulation as part of international cooperation under Council Regulation (EC) No 515/97 (to which the Commission refers in the reply on p. 62 of the ECA report) are usually insufficient to recover import duties from entities operating for a short period of time, set up basically for fraudulent purposes . Notwithstanding the above, it should be noted that Poland cannot be held responsible for the irregularity described in Box 2.1. The irregularity was caused by the fact that fabrics of extremely low value were released for free circulation in the Netherlands. The fact that the goods were transported from Germany to the Netherlands and then sent as an intra-Community supply to their final destination in Poland should not form the basis for an assessment of the functioning of Polish administration.

Box 2.2 || Exchange of information relating to discrepancies detected at an importer in one Member State which also concerned other MS || Belgium: action taken: YES, action completed: YES, Completion date: Belgian National Bank: The 3 specific reservations were dealt with in connection with the one-off revision of the national accounts in 2014 (published on 30/09/2014). An explanation of the impact on GNI (from 2002 onwards) of the revised method for the items subject to the reservation was given to Eurostat in the GNI questionnaire of 22 September 2014. Further bilateral talks on this matter will follow in February 2015 following the GNI visit. France: mesure prise: NON, action achevée: NON, Date d’achèvement: Malgré les recherches engagées par les services administratifs des douanes françaises, il n'a pas été possible d'identifier, d'une part, si le dossier est bien passé par le BCRE (bureau de la communication et des relations extérieures de la DNRED : direction nationale du renseignement et des enquêtes douanières) sur la base de la coopération administrative R 515/97 et d'autre part, les suites données à cette saisine allemande sur une fausse déclaration d'espèce. Les informations minimales requises pour retrouver le cas cité par la CCE sont les suivantes : le nom de la société, les marchandises concernées (nature des produits) et la date de la saisine (février 2013 via quelle administration ?). Il est à noter que les autorités françaises s'étonnent que la première mention de ce cas, sans relation avec un rapport de mission de contrôle sur les ressources propres traditionnelles effectuée en France, soit effectuée à l'occasion de la publication et diffusion du rapport de la CCE sans qu'il ne leur ait par ailleurs jamais été autrement communiqué. Germany: action taken: NO, action completed: , Completion date: See Annex III, Part B Netherlands:action taken: YES, action completed: NO, Completion date: Part a) of comment 6 contains general findings. Part b) focuses more specifically on checks on importers, and the Netherlands is mentioned by name in the example in part b) ii) Box 2.1. The following background information can be supplied in relation to the first segment of text in Box 2.1: Those requests for payment issued in connection with the Chinese textiles declared for import with an extremely low value that were not contested were immediately followed by recovery measures. In the first instance, the requests for payment addressed to companies based in other Member States were usually issued via the Customs Information Centre (DIC). In a number of cases it was also decided to send the requests. It was already apparent at this stage that a large number of companies no longer existed, had been deleted from the registers, had gone bankrupt, were no longer based at the known address, etc. Despite this, in all such cases where the debtors were based abroad, a request for mutual assistance in recovering the debt was sent to the foreign authorities. However, the information received from abroad often showed that the companies no longer existed and that there were no possibilities for recovery there. Obviously, recovery therefore proved impossible. Another attempt was then made at national level to obtain information about the companies or directors involved. The amounts over EUR 50 000 that have been entered in the B account will ultimately be submitted to the Commission in a report pursuant to Article 17(2) of Regulation 1150/2000. A start has now been made on this. In the second segment of text in Box 2.1 the Court of Auditors simply stated a hypothesis. The DAS-2013 inspection carried out at Dutch Customs produced no evidence to support this hypothesis. Part b) iv) on the implementation rate still mentions the Netherlands in connection with what the Court of Auditors regards as an excessively low implementation rate for the 2012 inspection plans. In its reply to the Court of Auditors on 12 May 2014 (ref. DLK-2014/011), the Netherlands responded to this finding and indicated that we did not agree with the definition used by the Court. In its letter of 09-12-2014, DG Budget indicated in relation to this section that it accepted the Netherlands' explanation and considered PF-1318 closed. DG Budget did, however, urge the Dutch authorities to increase its efforts to implement the inspection programmes on time, and it will continue to monitor this in future inspections. Romania:action taken: YES, action completed: NO, Completion date: As far as the necessity to exchange information with other Member States relating to imports/importers is concerned, in order to ensure that nothing is omitted from the process of selecting for subsequent customs control, for situations where this has not been carried out, Romania will take into consideration the recommendations of the ECA. UK: action taken: YES, action completed: NO, Completion date: HMRC: Enquiries into this issue are ongoing.

Table 2.3 || TOR open points as at 31.12.2013 || Austria: action taken: YES, action completed: YES; Outstanding points were dealt with using the following measures:Letter of 18 March 2014, Bmf-010313/0340-IV/6/2014 [from Federal Ministry of Finance], Letter of 13 May 2014, Bmf-010313/0482-IV/6/2014 [from Federal Ministry of Finance], in the context of own resources, checks undertaken from 17 to 21 November 2014 Bulgaria: action taken: YES, action completed: YES, Completion date:22/09/2014 Customs Agency (AM): The replies are provided based on the Commission findings in the following audit reports from TOR audits conducted in Bulgaria: 26-12-1; 26-13-1; 26-14-1. Appropriate action has been taken as a result of the findings in the said reports and described in opinions submitted to the Commission as follows: Re Report 26-12-1 – Ref. No of the Customs Agency: 54/167/16.12.2013. Re Report 26-13-1 – Ref. No of the Customs Agency: 0401/308/25.11.2013 and 0404/308/13/29.05.2014. Re Report 26-14-1 – Ref. No of the Customs Agency: 91/2/19.11.2014. Czech republic: action taken: YES, action completed: NO, Completion date: 30.11.2014 General Directorate of Customs Response to Report 13-25-1 (Findings 3.1; 3.2) Denmark: action taken: YES, action completed: NO, Completion date:12/12/2014 As at 31 December 2013, 19 open points are recorded in six control reports regarding the following customs circumstances. (The Court of Auditors states that three points were received in 2013; the correct number is five.) Control Report 01.01.2009 concerning controls relating to own resources relating to shipping and TIR The two open points are awaiting both a decision on two cases by the Court of Justice of the European Union and the full utilisation of the risk module relating to NCTS implemented on 1 January 2015. Control Report 01.01.2010 on Control strategy There is one open point still outstanding in connection with this. The Commission has asked the Danish authorities to reach a decision in connection with the recommendations and implement the changes relating to the way in which the physical and document controls are conducted. Control Report 01.01.2011 concerning controls for own resources relating to the Local Clearance Procedures (Imports). Three points left open as at 31 December 2013 in this Control Report, one of which was closed in 2014. The two points relate to inadequate information in the announcements in connection with local clearance procedures and weaknesses in the risk management, also in connection with local clearance procedures. Control Report 02.01.2011 concerning controls for own resources relating to customs drawback, remission and the non-charging of customs Four points were left open as at 31 December 2013 in this Control Report, of which two were subsequently closed in 2014. The two remaining points relate to: • Determination of the population of customs drawbacks and customs remissions and effects on financial reporting; • Non-compliance with the regulatory procedure for remissions and drawbacks. Control Report 01.01.2012 concerning controls for own resources relating to Anti-dumping measures The four points of the Control Report remain open. The Commission has requested the introduction of new IT procedures in connection with the recording of entries covered by the registration schemes. Additionally, the Commission has asked for clarification of the legal interpretation in connection with bookkeeping, information concerning the use of risk information in the risk analysis and confirmation of the introduction of internal control standards. Control Report 01.01.2013 concerning controls for own resources – Examination of the reliability of the A- and B accounts for 2012. The report was issued on 20 February 2014. This report contains five points, relating to: • Lack of assessment of responsibility for amounts written off; • Errors in connection with updating of the B-accounts; • TOR settlements that have taken place too late; • Authority errors that have led to exemption; • Various problems in the case of reimbursement. Five points remain outstanding as at 4 December 2014, regarding which the Danish Tax and Customs Administration (SKAT) is awaiting a response from the Commission. Denmark is involved in an ongoing dialogue with the Commission regarding the implementation of solutions for the remaining outstanding open points for all the Control Reports. Estonia:action taken: YES, action completed: NO, Completion date Finland: action taken:, action completed: , Completion date: The Commission and Finland will continue to work together on resolving the outstanding points. France: mesure prise: OUI, action achevée: NON, Date d’achèvement: Comme indiqué par la Commission au point n° 2.19 du rapport de la CCE, certains points complexes peuvent nécessiter un traitement de long terme et ne peuvent donc être clos rapidement. Les autorités françaises tiennent à signaler qu'à la date du 9 décembre 2014, un grand nombre de points anciens sont en instance auprès des services de la Commission (réponses FR transmises dans le courant de l'année 2014). Par ailleurs d'autres points sont désormais clos, tandis que certains autres sont sur le point de l'être, dont les plus anciens (réponse aux derniers points de 2003 en cours, envoi aux services de la Commission avant la fin de l'année 2014). Germany:action taken: YES, action completed: NO, Completion date: Germany and the EU Commission have worked intensively in the past year to resolve open points. Thanks to this intensive work, almost half of the open points were able to be concluded. This work is being done continuously. Greece: action taken:, action completed: , Completion date: There is correspondence between the Greek authorities and the services of the European Commission as regards the monitoring of points still open from the audit reports of the European Commission. Ireland: action taken: YES, action completed: NO, Completion date: No exact date for completion of all open points available. Ireland is actively working with Commission services to address TOR points opened with this Administration. It is expected that a number of these points will have been closed by the end of 2014. Into 2015, we envisage that further progress will be achieved in closing more of them. Italy:action taken: YES, action completed: NO, Completion date: While we agree with the points made by the Commission, it should be noted that measures have been adopted in relation to each observation, most of which have already been completed. Latvia: action taken: YES, action completed: YES, Completion date:21/11/2014 Lithuania:action taken: YES, action completed: NO, Completion date: The observation (paragraph 3.1) given in the European Commission’s Report No 12-20-1 of 25 January 2013 on the traditional own resources verification conducted in Lithuania on 22-26 October 2012 has been taken into account (European Commission’s Letter No BUDG/B/3KV D(2014) of 5 November 2014). Other observations being handled: – paragraphs 3.2 and 3.3 of the European Commission’s Report No 12-20-1 of 25 January 2013 (European Commission’s Letter No BUDG/B/3/KV D(2014) of 5 November 2014); – paragraphs 3.1 and 3.2 of the European Commission’s Report No 11-20-1 of 9 January 2012 (European Commission’s Letter No BUDG/B/03/KV (2014) of 2 October 2014). Luxembourg: action taken: YES, action completed: NO, Completion date: en attente d’une réponse positive de la part de la Commission une réponse au dernier point restant du rapport 13-8-1 de 2013 a été envoyée le 10.12.2014 à la Commission par voie officielle. Les quatre autres points sont clos entretemps. Malta:action taken: YES, action completed: NO, Completion date: Any other comments: The points identified during the TOR audit in 2011 have all been closed. Two points (3.1 and 3.3) from the TOR audit in 2013 remain open. The necessary action on the electronic system is expected to be completed in 2016. However, there is as yet no fixed completion date. Netherlands: action taken:PARTLY , action completed: PARTLY, Completion date: The areas of discussion still pending on 31-12-2013 have been/will be finalised in bilateral talks between the European Commission and the Netherlands. Poland:action taken: YES, action completed: NO, Completion date: After a control carried out between 12 and 16 November 2012 for the purposes of the statement of assurance for the financial year 2012 (DAS 2012) concerning traditional own resources, the ECA made 8 preliminary findings, which were presented in the letter from the ECA to the Supreme Audit Office (Najwyższa Izba Kontroli) of 6 February 2013 (case No PF-5410). These preliminary findings as well as the replies of the Polish authorities and a letter from the ECA containing an analysis of letters from the Polish authorities were submitted to the DG BUDG, which, by letter of 3 November 2014 No BUDG/B/3/KV/D(2014), informed that the Commission services regarded four preliminary finding sheets (No 2101, 2104, 2105 and 2107) as closed. The remaining four preliminary finding sheets (No 2102, 2103, 2106 and 2108) are still open. A three-month deadline was set for the Polish authorities to provide replies. Efforts are being made to provide replies to the Commission. Portugal: action taken: YES, action completed: YES, Completion date: It should be noted that with regard to the results of the national questionnaire requested by the Commission on the amounts recorded in B Accounts more than five years ago which are suitable for sending to the Commission, in accordance with Article 17(3) of Regulation No 1150/2000, a number of situations have been identified and those exceeding €50 000 have been communicated to the Commission via WOMIS. Romania:action taken: YES, action completed: NO, Completion date: We hereby confirm the 13 points for which further action was required on 31 December 2013. By the date of completion of the questionnaire the following had already been closed: - two points relating to Report 11-27-1 according to letter COM 3744341/11.11.2014; - two points relating to Report 12-27-1 according to letter COM 1058765/4.04.2014. Slovakia:action taken: YES, action completed: NO, Completion date:2015 In connection with Commission Report 13-23-1 on an own resources inspection held in Slovakia from 16 to 20 September 2013, and further to the Slovak authorities’ observations in response to the report, delivered to the Commission’s services on 6 March 2014, point 3.1 (‘Delays in initiating recovery procedures and in declaring sums irrecoverable’) remains open. Specifically, paragraphs b), c) and d) of point 3.1 remain open. Paragraph b) Delegated representatives called on the Slovak authorities to change national legislation so that it complied with Articles 7 and The Financial Directorate of the Slovak Republic prepared a draft to amend this legislation, which will be forwarded to the Ministry of Finance in 2014. Paragraph c) Delegated representatives invited the Slovak authorities to conduct a national investigation into the open B account cases to identify those amounts which should be declared irrecoverable. 49 cases were identified, of which: - 12 were paid - 8 were declared irrecoverable - enforcement procedure is pending in 29 cases, which are likely to be declared irrecoverable Paragraph d) The Slovak authorities were requested, upon completing the investigation referred to in paragraph c), to conduct another national investigation into B-account amounts declared or deemed to be irrecoverable, in relation to which recovery had started late because of appeals. Delegated representatives called on the Slovak authorities to consider making the relevant amounts available if, in their opinion, the late initiation of recovery proceedings had had implications for the recoverability thereof. Six cases were identified in relation to this point. The following circumstances came to light after a re examination on 3 November 2014: - In one case, the claim was paid on 20 February 2014. - In one case, the company was declared bankrupt and the claim was registered with the bankruptcy trustee. There is reason to believe that this claim will be settled after the bankruptcy proceedings have been concluded. The amount in question is EUR 17.49. - In one case, an appeal is pending. - Three cases were declared irrecoverable. The open cases are being addressed and are expected to be closed in 2015. Slovenia: action taken: YES, action completed: YES, Completion date: 10/7/2013 Reply of the Ministry of Finance: Slovenia has no open questions in relation to traditional own resources. Spain: action taken:, action completed: , Completion date: The European Commission (DG Budget) monitors open points arising during checks on traditional own resources in conjunction with the Member State involved. Sweden: action taken:, action completed: , Completion date: Sweden is taking no action on this comment. UK: action taken: YES, action completed: NO, Completion date: Action ongoing HMRC: Action is ongoing as the issues result from findings in EU inspection reports that have been discussed and/or resolved in exchanges of letters. Of the 24 open points at 31/12/2013, 6 have since been closed and confirmation of closure is awaited for 3 more. No new points have been issued in 2014 as there was only one EU inspection in late October 2014 and the associated report will not be issued until early 2015.

Table 2.4 || VAT reservations as at 31.12 2013 || Austria: action taken: YES, action completed: NO; From an Austrian point of view, the five reservations on 31 December 2013 can be confirmed. Based on the audit of December 2013, the current state of affairs at the end of 2014 cannot be clearly ascertained. The period of time following a VAT own resources check is characterised by an intensive bilateral exchange and the most recently valid figure for the sustainable reservations will only be set in the compiled routine inspection report which is expected to be complete at the start of 2015. Belgium: action taken: YES, action completed: NO, Completion date: Federal Department of Finance: Following the Commission's inspection visit from 17 to 21 March 2014, the outstanding reservations and proposed solutions were examined. In the inspection report resulting from this visit it was confirmed that the reservations relating to the liberal professions and the pro rata for financial institutions (used to calculate the WAR) have been lifted. The outstanding reservations concern the compensation relating to the calculation of the basis for the compensation for the restriction on deduction introduced by Article 45(2) of the VAT Code and the reservation relating to catering services on ships, trains and aircraft during the part of a transport of passengers effected in the Community. A proposal was submitted to the Commission for the compensation for the restriction on the right of deduction. However, some sets of figures still have to be produced. As regards the reservation relating to catering services on ships, trains and aircraft during the part of a transport of passengers effected in the Community, the issue of the application of the European and national rules was thoroughly re-examined in Belgium. The results of this analysis were sent to the Commission services with a request for the existing reservation regarding this matter to be reconsidered. Bulgaria:action taken: YES, action completed: NO, Completion date: National Revenue Agency (NAP): New estimates have been submitted or are being calculated taking into account the recommendations of the Commission auditors on six of the reservations. In addition, legislative amendments are being prepared in connection with EU VAT regulations in following up on the remaining reservation. With the upcoming audit mission of the Commission scheduled for February 2015, we hope to see most of the reservations withdrawn. Cyprus: action taken:, action completed: , Completion date: There were no reservations pending at 31 December 2013. Therefore no action was taken to lift reservations. Please note that the four reservations previously pending were lifted after an inspection concerning the VAT own resources bases for the years 2008-2010, carried out in 2012 by a team of auditors from the European Commission’s Budget DG. The letter from the Commission to the Permanent Representative of Cyprus to the EU on the final version of the summary document, ref. 3627179, dated 3 December 2013, is relevant here as it refers to the results of the EC inspection. Czech republic: action taken: YES, action completed: YES, Completion date: 2013 Denmark: action taken: YES, action completed: NO, Completion date:12/12/2014 Five reservations are recorded relating to Danish VAT compensation as at 31 December 2013. 1. One reservation relates to the correction for public radio and TV. The negative compensation is based on the annual report from the Danish Broadcasting Corporation (DR) and VAT information supplied by SKAT. The Commission has requested an explanation for the difference in input/output ratio between DR (31 %) and TV2 (73 %) in 2010, and an explanation for the fall in the input/output percentage for DR between 2009 (50 %) and 2010 (31 %). 2. One reservation relates to the operation of long-distance coaches in Denmark. A number of foreign long-distance coaches operating in Denmark do not have sales offices in Denmark and are therefore not included in Danish transport statistics. 3) One reservation relates to a disagreement concerning VAT exemption for charitable organisations. The Commission is of the opinion that VAT exemptions in Denmark are too broad. No Treaty infringement case has yet been initiated. 4) One reservation relates to the exemption for the repair and maintenance of aircraft, which was ruled as being unlawful in connection with the Cimber Air judgement in connection with domestic flights (EU judgement C-382). The corrections were addressed in connection with the control visit in 2012; however, there remains one question that has not been clarified regarding determination of the repair and maintenance of aircraft undertaken by aviation schools and clubs, which was not resolved in connection with the control visit in 2012. 5) One reservation relates to the exemption for restaurant services provided onboard transport services (ferries operating international trips between EU countries). There has been an element of doubt concerning the interpretation of the applicable VAT rules in this area. Furthermore, there is uncertainty as regards how such calculations should be performed. All VAT reservations determined as at 31 December 2013 have been addressed in connection with the Commission’s control visit to Denmark in September 2014. It is considered that the Commission and Denmark have made considerable progress in relation to a common understanding of how these VAT reservations should be addressed. The results of this work in connection with the control visit will be presented in the final Control Report. It is anticipated that this Report will be submitted by the Commission in April/May 2015. Estonia:action taken: YES, action completed: NO, Completion date Finland: action taken: YES, action completed: YES, Completion date:9/12/2014 According to the final version of the summary of the audit report dated 20 December 2013, in the end there were six reservations outstanding at that time (seven before the audit; 5 made, 6 lifted). France: mesure prise: OUI, action achevée: NON, Date d’achèvement: Le rapport d’inspection des relevés 2011 et 2012, transmis le 17 décembre 2013, a fait état de la levée de cinq réserves (calcul du TMP, fourniture d’eau, infractions relatives aux bateaux, à l’électricité, aux soins à domicile) et du maintien de deux autres réserves (infractions relative aux chevaux de courses et au transport de biens entre la France continentale et la Corse). Une nouvelle réserve sur l’offre composite avait ensuite été émise. Germany:action taken: YES, action completed: NO, Completion date: The work withdrawing the various reservations is ongoing. Greece: action taken:, action completed: , Completion date: Please note that there are 5 (five) reservations (not 6 (six) as referred to in the above table), because 4 (four) reservations have been eliminated. This is also noted in the Commission’s consolidated report in accordance with Article 6 of Regulation No 1026/1999 as regards the results and observations arising from the Commission’s audit in Greece (4-8 February 2013) of the statements on the VAT resources base for the years 2009, 2010 and 2011. Hungary: action taken: YES, action completed: YES, Completion date: 14/11/2013 At the 14 November 2013 meeting of ACOR VAT, the Commission presented the audit documentation on its audit visit in Hungary between 26 and 30 March 2012 in connection with the report on the VAT base, which was adopted at the meeting. Since on the basis of the Hungarian Observation, each of the four earlier reservations were lifted in the audit report, as at 31 December 2013, the Commission had 0 reservations concerning the reports on the Hungarian VAT base. Ireland: action taken: , action completed: , Completion date: We have been working closely with the European Commission, the Central Statistics Office and colleagues in other sections of the Revenue Commissioners of Ireland. Our aim is to respond to the Commission regarding outstanding reservations in the new year and we are hopeful that these reservations will then be lifted. Italy: action taken: NO, action completed: , Completion date: With respect to VAT-based own resources, the measures adopted by the Italian authorities take the form of a series of documents and spreadsheets containing proposals for the lifting of any reservations outstanding. Following the inspection carried out by the European Commission from 23 to 27 April 2012, 4 new reservations were placed, making a total of 12 reservations (8 before the inspection) at the end of 2012. Taking into account the observations made by the Italian authorities (sent by email on 8 January 2013), in the final summary reporting the results of the inspection (Ref. Ares (2013)3778489 of 20/12/2013) the Commission lifted 6 reservations and entered 2 new ones making a balance of 8 reservations at the end of 2013. From 6 to 10 October 2014 the new inspection visit for years 2011-2013 took place, after which the problems concerning the lifting of the outstanding reservations were addressed. As for the outstanding reservation from 1999 relating to revenue and VAT refunds, an audit opened at the Commission’s request by the Italian Court of Auditors is currently under way to verify the accounting entries to which the reservations apply, as a preparatory measure to resolving said reservation. The results of the audit by the Italian Court of Auditors will be sent to the Commission as soon as they are available. Latvia: action taken: , action completed: , Completion date: On the basis of the European Commission’s information request in the framework of the EU PILOT case No 6103/14/TAXU on exemption from the value added tax (VAT) of residential building management services, the Ministry of Finance has informed the European Commission that it will, by 31 December 2017, table amendments to the Law on Value Added Tax by excluding Subparagraph b of Article 52(1)(25) from the Law, which stipulates that VAT is not applicable to the residential building management services corresponding to the payments included in the management contract. Latvia compensates for the above contradiction between the legal provisions of the EU legislative act and Latvia’s national legislative act by calculating a compensation for the VAT resources base in relation to the residential building maintenance and management services to which VAT does not apply. Lithuania: action taken: YES, action completed: YES, Completion date:03/12/2013 Lifting of the reservations was officially confirmed on 3 December 2013 in the European Commission’s final summary document on the 2008, 2009 and 2010 VAT base, which underlies own resources. Luxembourg: action taken: YES- en ce qui concerne 3 des réserves action completed YES en ce qui concerne 1 réserve NO en ce qui concerne 2 des réserves Completion date: 1er trimestre 2015 Malta: action taken: YES, action completed: YES, Completion date: February 2014 Malta's four outstanding reservations at the end of 2013 were lifted following the control visit to Malta between 3 and 7 February 2014. Accordingly, Malta currently has no outstanding VAT reservations. Poland:action taken: YES, action completed: NO, Completion date: Due to the fact that the reservations concerned can be placed by Member States or the Commission with regard to the calculation method or data used to calculate the basis for the EU VAT-based own resource and that problems identified in the reservations are solved and the reservations are subsequently lifted on an ongoing basis as a result of close cooperation between Member States’ administration authorities and the Commission, Poland considers that Table 2.4 should contain the following information for Poland: Member State || Reservations outstanding at 31.12.2012 || Reservations placed in 2013 || Reservations lifted in 2013 || Reservations outstanding at 31.12.2013 || Earliest year to which reservations apply

Poland || 9 || 1* || 6 || 4 || 2004

*In addition, the Polish authorities placed a new reservation concerning an excessively broad scope of VAT exemption for postal services.

The Central Statistical Office (Główny Urząd Statystyczny) is involved in one reservation. In 2013, the method and data were verified in a report submitted to the European Union in order to lift the reservation. They are pending approval by the European Union.

Romania:action taken: YES, action completed: NO, Completion date: According to the COM Report drawn up as a result of the inspection conducted in March 2013 (ref. Ares 2891188/16.08.2013), the number of outstanding reservations is only 6, two of which are new reservations, while the other 4 remained from the previous inspection. This situation was valid also on 31 December 2013, and considering that the draft Conclusion of the COM was sent on 10 April 2014, the figures in the column entitled “Reservations outstanding at 31.12.2012” should be changed (“6” instead of “8”). Later, according to the draft Conclusion of the COM, only one reservation out of the 6 remained, as 5 of them were resolved

Slovakia:action taken: YES, action completed: NO, Completion date:

The European Commission had no reservations against Slovakia as at 1 January 2013 (nor had any been raised during 2013).

Slovenia: action taken: YES, action completed: YES, Completion date:12/03/2010

Reply of the Ministry of Finance: Since the inspection in 2010, Slovenia has had no reservations in the field of VAT.

Spain: action taken: YES, action completed:, Completion date:30/07/2014

In Table 2.4 of Annex I, the European Court of Auditors set out two reservations relating to VAT in Spain that were in place at 31 December 2013. Both are derived from two separate infringement procedures open against Spanish legislation due to infringement of Community law with regard to:

a) the special VAT scheme for travel agents. Reservation established by the European Commission in 2003. Following a judgement by the European Court of Justice dated 26 September 2013, the Spanish authorities have already included the necessary adjustment in the 2013 VAT base and will include the adjustments for 2003-2012 once the Commission accepts the calculations that have already been submitted. An amendment is planned in the Spanish VAT Act from 1 January 2015, as provided in the EU Court of Justice judgement of 26 September 2013.

b) VAT exemption for services provided by public notaries on certain financial transactions. Reservation established by the European Commission in 2008. Spain included the calculation of compensation for the years affected by the reservation in a document containing observations sent to the Commission on 8 July 2013 in response to the Commission’s audit report. This compensation has also been included in the 2013 VAT base calculation. This means that once the Commission checks and approves this calculation and legal certainty is obtained, the reservation may be lifted. It is envisaged that the Spanish VAT Act will abolish this exemption from 1 January 2015.

Sweden: action taken:, action completed: , Completion date:

Sweden is taking no action on this comment.

UK: action taken: YES, action completed: NO, Completion date:

HMRC: Action is ongoing. Of the 5 outstanding UK reservations at 31/12/2013, we are awaiting imminent formal notification from the Commission that one can be lifted and expect the other 4 to be lifted during the next Commission control visit in September 2015.

2.10 || || Greece:action taken: YES, action completed: NO, Completion date: In September 2013, ELSTAT failed to forward data for the years 2008 and 2009, because the necessary data quality controls provided for in the European Statistics Code of Practice had not been performed. ELSTAT worked intensively to perform these controls, it completed the task, and, in August 2014, forwarded Eurostat the data for 2008 and 2009. Please note that the data for 2008 and 2009 and the relevant documentation sent in August 2014 are based on research results and not preliminary assessments, since the final research information was available and the required quality controls had been performed. In November 2014, a Eurostat mission visited ELSTAT and checked the evidence for 2008 and 2009 thoroughly, as well as the documentation forwarded. The Eurostat conclusion/evaluation and the elimination of the reservation are anticipated

EC reply to 2.10 || || Greece:action taken: YES, action completed: NO, Completion date: ELSTAT cooperates with Eurostat on the implementation of actions to continuously improve drawing up the annual and quarterly national accounts. These actions are included in the Joint Overall Statistical Greek Action Plan (JOSGAP) drawn up in 2010 by the Commission and the Greek authorities. Pillar B of the Action Plan includes a number of actions for strengthening National Accounts. The implementation of these actions is included in the ELSTAT annual and three year work plan. The actions include the implementation of upgrading programmes for annual national accounts, the upgrading of regional and quarterly national accounts and the improvement of sectoral accounts. To achieve this goal, experts have made numerous visits to provide technical support on issues related to annual and quarterly national accounts. Another important factor that contributes to the improvement of production quality is the constant support and training of the ELSTAT human resources responsible for drawing up the national accounts.

2.11 || || Greece:action taken: YES, action completed: NO, Completion date: ELSTAT took the initiative not to forward GNI/GNP data for the years 2008 and 2009 to the Commission (Eurostat) in September 2013, because of problems in the quality assessment referred to in point 2.10. Subsequently, according to its timetable, ELSTAT implemented the required controls, prepared the results, and continues to act continuously to improve annual and quarterly national accounts, as well as the implementation of European regulations. These actions for improvement are detailed in the ELSTAT annual and three-year improvement plans. In September 2014, as a result of this work and as part of the implementation of the new European system of national and regional accounts ESA 2010 (Regulation (EU) No 549/2013), ELSTAT forwarded Eurostat, in accordance with ESA 2010, a long chronological series on the GNP and its components, without discontinuities, for the period 1995-2013, as well as seasonally adjusted quarterly data on GNP and its components (Q1 1995-Q3 2014), in accordance with ESA 2010.

2.17 || || Netherlands: Footnote 28 refers in this context to errors in the treatment of amounts written off in relation to the A and B accounts for the period 1/2005 – 4/2012.In a letter of 20 August 2012 the Dutch authorities informed the Commission of an omission in the own resources made available for this period, involving a net sum of €12 277 698.14 (after deduction of 25% collection costs). This error was the result of a release by the Customs Collection System (DOI) in 2005 which led to changes in the procedure for processing irrecoverable claims that had been entered in the B account. From that date onwards the processing was incorrect. The procedure was changed in May 2012, with the result that this error no longer occurs. In its letter of 09-12-2014, DG Budget indicated in relation to this section that it considered the matter closed. Action taken: Yes Action completed: Yes Completion date: May 2012 Other comments: see explanation above. The Dutch authorities are currently making a large number of changes to IT systems such as the debtors' ledger and the underlying accounts. The aim is to eliminate manual interventions in the systems, or at least limit them to an absolute minimum. However, this is a highly complicated process, so it is not possible to make all the changes immediately and simultaneously. Action taken: Yes Action completed: Partly Completion date: not yet known Other comments: see explanation above. In its letter of 09-12-2014, DG Budget indicated in relation to this section that on the basis of these preliminary findings it considered the matter closed. The follow-up will be included in investigation 14-9-2 in December 2014.

2.18 || || Greece:action taken: YES, action completed: NO, Completion date:31/12/2014 The Greek authorities have drawn up an action plan to address the described shortcoming (see document No. D19D5002992ΕX2014/3-2-2014 of the Directorate of Customs Procedures).

EC reply to 2.18 || || Greece:action taken: YES, action completed: NO, Completion date:31/12/2014 The Greek authorities have drawn up an action plan to address the described shortcoming (see document No. D19D5002992ΕX2014/3-2-2014 of the Directorate of Customs Procedures).

2.29 recommendation 2 || || Greece:action taken: YES, action completed: NO, Completion date: ELSTAT is trying to address the shortcomings and improve the processes and infrastructure for the production of national accounts through an action plan of technical assistance aiming to strengthen national accounts. ELSTAT is cooperating with Eurostat on the implementation of these actions, which fall under JOSGAP and are also reflected in ELSAT’s annual and medium-term plans. A significant factor for the effective implementation of these actions is the strengthening of the Directorate of National Accounts.

2.4 || || Romania: action taken: NO, action completed: NO, Completion date: Point 2.4(b), where Romania is mentioned, includes only a listing of the systems that were verified during the audit.

2.8 || || Austria: action taken: YES, action completed: NO The declarations in Point 2.8 are not entirely accurate. It is more likely that what is meant is the GNI reservation relating to the country's own public medical institutions. However, this was not proven, in connection with a dialogue visit in the context of the procedure, to be an excessive deficit, rather it was the result of a discussion process in conjunction with the additional information on "Public Companies", i.e. those entities which are not classified in the 'State' sector but are nevertheless in a state's sphere of influence, which was first available from the end of December 2012. This detailed information made it clear that the "market producer" status can no longer be deemed sustainable for some companies. Since it was not possible, in the short space of time available, to re-classify these companies, on 20 September 2013 the European Commission declared a specific reservation with regard to Austria. Statistik Austria delivered comprehensive additional information to the European Commission along with the GNI notification in September 2014. We therefore hope that the reservation will soon be lifted. Romania:action taken: YES, action completed: NO, Completion date: Not applicable (INS, UCRBUE)

CHAPTER 3 – Agriculture: market and direct support

3.3 || || Czech republic: action taken: , action completed: , Completion date: Irrelevant – there is no error involved. Hungary: action taken: NO, action completed: , Completion date: The finding refers to facts that do not call for action. Slovakia: action taken: NO, action completed: YES, Completion date: Issues in determining the reduction coefficient are common to the SAPS and SPS. Applicable legislation (Commission Regulation No 1122/2009) prevents net national ceilings from being exceeded. Slovakia has consistently met this requirement. Romania: action taken: YES, action completed: YES, Completion date: 15/10/2013

3.6 || Audit scope and approach || Czech republic: action taken: , action completed: , Completion date: Irrelevant – there is no error involved. Denmark: action taken: YES, action completed:, Completion date:12/12/2014 Measures have been implemented with respect to the errors highlighted by the Court of Auditors for Agriculture: Market and direct support. Finland: action taken:, action completed: , Completion date: Detailed replies in Annex 2 France: mesure prise: OUI, action achevée: NON, Date d’achèvement: L’ASP sous la supervision du Ministère met en œuvre les éléments du Plan d’action Feaga pour les éléments qui le concernent et qui répondent aux constats de l’audit système fait au titre de l’année 2013. Hungary: action taken: NO, action completed: , Completion date: The finding refers to facts that do not call for action. Ireland: action taken: NO, action completed: NO, Completion date: No action required in relation to this point. This is just the scope of the Audit and a listing of the MS who were subject to same. Italy: action taken: YES, action completed: , Completion date: Our replies to the European Court of Auditors regarding the results for the activities of the Paying Agencies are set out in the attached notes (see Annex II below). Poland:action taken: YES, action completed: NO, Completion date: The remedial action plan, which was submitted by the Polish authorities to the Commission on 14 November 2014, was followed (as far as the mechanism for awarding financial aid to groups of fruit and vegetable producers granted preliminary recognition is concerned). Romania: action taken: YES, action completed: YES, Completion date: 15/10/2013 Slovakia: action taken: YES, action completed: YES, Completion date On-the-spot checks were conducted at the applicants concerned in 2013. Payments were revised by means of cross-compliance reductions in those cases where rules had been infringed. The infringements identified were settled financially with the Commission in the financial statements in January 2014. UK: action taken: , action completed: , Completion date: This is a reference confirming the ECA carried out an audit in the UK

Box 3.1 || Example of payments for overstated eligible land || Austria: action taken: YES, action completed: NO; Completion date: It is hoped that ongoing improvements and new regulations from 2015 will lead to a sustainable method of eliminating weaknesses. France: mesure prise: OUI, action achevée: NON, Date d’achèvement: dans le cadre de son plan d’action, les autorités françaises ont entrepris des travaux de traitement des éléments de végétation non admissibles pour la campagne 2014. Ces travaux se poursuivront dans le cadre de la campagne 2015 pour prendre en compte les nouveaux critères d’admissibilité des surfaces mis en place par la nouvelle PAC. Germany: action taken:, action completed: , Completion date: See reply for this purpose in Annex II Ireland: action taken: YES, action completed: , Completion date: It should be noted that before and during this audit the Irish Authorities were acutely aware of its land eligibility and other LPIS issues (covered later) with ongoing discussions with the Commission Audit Services following their Clearance audit in April 2012. The Irish Authorities acknowledged the findings of the ECA auditors on this matter and advised that they were acquiring new ortho-photography (Bing) which would have sufficient resolution clarity to allow the identification and exclusion of ineligible features. Subsequent to the audit and a bilateral with the Commission Audit Services in July 2013 the Irish Authorities undertook a complete review of the 900,000 parcels on the LPIS database. Notwithstanding this work, the Commission Audit Service has proposed a correction of €181 million. The Irish Authorities have strongly refuted this finding and the matter will be the subject of conciliation hearings in December 2014. In advance of said hearings the Irish Authorities are maintaining ongoing communications with the Commission Audit Services in relation to the proposed disallowance. Italy: action taken: YES, action completed: , Completion date: Our replies to the European Court of Auditors regarding the results for the activities of the Paying Agencies are set out in the attached notes (see Annex II below). Poland: action taken: YES, action completed: YES, Completion date: 28/04/2014 The identified error is not a systemic error (cf. the findings related to transaction 13P1147 PF5911). LPIS data were modified on the basis of data from an on-the-spot check carried out during an ECA mission. Romania: action taken: YES, action completed: YES, Completion date: By means of the measures taken regarding the update of LPIS based on new images, and the update following the on-the-spot checks, and the update based on the notifications of the farmers, APIA will ensure that the areas of reference are eligible for payment. Spain:action taken: YES, action completed: NO, Completion date: 31/12/2015 The plan entitled 'Measures for Improving LPIS Update' started in 2011, includes 14 measures that have been validated by the European Commission as a whole, with the exception of Measure No 14. The purpose of this measure is to establish an automatic Eligibility Coefficient for pastureland in accordance with the Commission's interpretation of Article 34 of Regulation (EC) No 1122/2009. Spain included this coefficient, known as CAP-2013, in the LPIS in 2013 and applied it in farmers' single applications from this claim year. The Commission nevertheless considered that CAP-2013 has not sufficiently reduced the maximum eligible area for the types 'grazed woodland' and 'grazed shrubland' under the relevant regulatory provisions. In this regard, Spain began the work of implementing and validating the new revised Eligibility Coefficient (CAP-2015), which will be incorporated in the LPIS prior to the allocation of basic payment entitlements (BPEs) at the end of 2015. The new automatic CAP-2015 methodology uses LIDAR (Laser Imaging Detection and Ranging) aerial images. These are obtained using state-of-the-art laser techniques based on differential reflection by vegetation layers of different heights, making it possible to quantify penetrability or accessibility to vegetation by livestock. The initial methodology for implementing the new CAP-2015 has already been submitted to the Commission services and the final version will be submitted before 31 December 2014. Quality control will be performed throughout 2015 in order to validate the new CAP-2015 with a view to applying it before 31 December 2015. Sweden: action taken:, action completed: , Completion date: Sweden is taking no action on this comment. UK: action taken: YES, action completed: YES, Completion date:see comment bellow UKCB: The reference to the UK and other Member States relates to problems identified by the Commission in 2006/07. The section also states that the situation has been remedied in most Member States, which includes the UK.

|| ||

Box 3.3 || Example of cross-compliance errors || Czech republic: action taken: , action completed: , Completion date: The assessment of the notification requirement was changed starting with applications received in 2014. Late reports sent in the year an application is submitted are assessed, during an on-the-spot check, as an infringement in terms of their Scope, Severity, Repeatability and Permanence. Denmark: action taken: YES, action completed: YES, Completion date:15/09/2014 France: mesure prise: NON, action achevée: NON, Date d’achèvement: Il a été constaté par la Cour que l’organisme payeur n’utilise pas les informations portées à sa connaissance via la base de données « animaux » et donc de ne pas sanctionner les retards de notification, ce qui constitue une violation de l’article 70 paragraphe 4, règlement (CE) n°1122/2009 de la commission et peut donner lieu à des paiements indus aux agriculteurs. Or, la vérification du respect des délais de notifications est effectuée lors des contrôles sur place selon la procédure décrite dans le guide des contrôles à partir des données figurant en BDNI. Ainsi, le délai de notifications est vérifié sur tous les mouvements de l’exploitation effectués depuis le 1er janvier au jour du contrôle. Ce contrôle peut relever une anomalie qui peut être remise en conformité le cas échéant ou donner lieu à l’application d’une pénalité au titre de la conditionnalité. Par conséquent, l’affirmation « La cour a constaté que l’organisme payeur n’utilise pas les informations portées à sa connaissance via la base de données « animaux » ce qui constitue une violation de l’article 70 paragraphe 4, règlement (CE) n°1122/2009 de la commission et peut donner lieu à des paiements indus aux agriculteurs » est contestée. Germany: action taken:, action completed: , Completion date: See reply for this purpose in Annex II Hungary: action taken: YES, action completed: NO, Completion date:01/01/2015 On the basis of the observations and suggestions put forth during audits by the European Court of Auditors and the European Commission, Hungary has started a review of the current evaluation arrangements with regard to the non-compliance in question (delayed reporting to the database); further rating categories are being introduced. Ireland: action taken: YES, action completed: YES, Completion date: Action listed on individual case in ANNEX II Poland: action taken: NO, action completed:YES , Completion date: Pursuant to Article 31a(1) of the Act of 26 January 2007 on payments under direct support systems (Journal of Laws (Dziennik Ustaw) 2012, item 1164, as amended) in conjunction with Article 31a of the Act of 7 March 2007 on the support for the development of rural areas using resources of the European Agricultural Fund for Rural Development (official codification, Journal of Laws 2013, item 173), a district veterinary officer competent for the place of residence or registered office of the farmer, as a control authority as referred to in Article 48(1) of Commission Regulation (EC) No 1122/2009, is competent to carry out administrative controls and on-the-spot checks of compliance with the requirements specified in Annex II to Council Regulation (EC) No 73/2009. Pursuant to paragraph 1(1)(1) in conjunction with paragraph 2(1) of the Regulation of the Minister for Agriculture and Rural Development of 14 March 2011 on requirements to be controlled by competent district veterinary officers and on types of such control (Journal of Laws No 57, item 295), compliance with cross compliance requirements for identification and registration of animals and, therefore, compliance with the requirement to respect the deadline for notifying animal-related events can only be checked during on the spot checks. In accordance with Information Note 2011/5 of 31 March 2011 (Ref. No (2011)48675), information on errors generated by the Animal Identification and Registration System does not constitute a determined non compliance within the meaning of Article 70(4) of Regulation (EC) No 1122/2009 as non-compliances must be determined during an on-the-spot check of compliance by the farmer with a legal requirement as a whole, not only on the basis of signals from the database. Article 23 of Council Regulation (EC) No 73/2009 provides that payments awarded to farmers must be reduced or excluded if cross-compliance requirements are infringed at any time in the calendar year concerned. Thus, if during an on-the-spot check it is found that cross-compliance requirements were not complied with in the calendar year concerned, the non-compliances are taken into account when determining the due payment and form the basis for determining a reduction for cross-compliance in the year concerned. Romania:action taken: YES, action completed: NO, Completion date:30/01/2015 The recommendation is in the process of implementation. APIA is waiting for the control report from the specialised control body in order to import it into the IACS and use for the calculation of sanctions. Slovakia: action taken: YES, action completed: YES, Completion date: 1/2014 On-the-spot checks were conducted at the applicants concerned in 2013. Payments were revised by means of cross-compliance reductions in those cases where rules had been infringed. The infringements identified were settled financially with the Commission in the financial statements in January 2014.

3.10 || Regularity of transactions || Austria: action taken: YES, action completed: YES, Completion date: 15 October 2013 In order to improve LPIS administration, additional on-site inspections were carried out in 2012 and a new quality control system was introduced to strengthen the internal inspection system. This control system came into effect at the end of 2012 - furthermore, ongoing measures have also been allowed for. Italy: action taken: YES, action completed: , Completion date: As part of the DAS for 2014, the European Court of Auditors is conducting a further audit (mission from 21 to 25 July and from 6 to 10 October 2014) at the paying agency in Lombardy Region. This regards the follow-up to the audit focusing on the reliability of the management and control procedures in respect of the Single Payment Scheme (SPS) and the Integrated Administration and Control System (IACS) in Italy – OPR Lombardy, conducted under DAS 2011 (PF-4604). Spain:action taken: YES, action completed: NO, Completion date: CASTILE-LA MANCHA: From 2013, in Castile-La Mancha, permanent pastureland that cannot be fully exploited due to the presence of non-productive elements such as rocky areas, ponds and other non-vegetated areas such as steep slopes has been allocated a coefficient in the Land Parcel Information System (LPIS) that reflects the eligibility percentage (CAP - pasture eligibility coefficient) at LPIS reference parcel level. Within this reference parcel the maximum area eligible for direct aid schemes is therefore the reference parcel area multiplied by this coefficient. From 2015, with the aim of guaranteeing the proper allocation of basic payment entitlements under the new Basic Payment scheme, this pasture eligibility coefficient has nevertheless been improved by introducing a new factor that considers vegetation quality in terms of the penetrability of pastureland. The 2015 CAP will be subject to numerous actions, including quality control. Because pastureland is subject to constant changes, this application will never be considered permanent and will be subject to new studies and on-the-spot checks. EXTREMADURA: From 2013, in Extremadura, permanent pastureland that cannot be fully exploited due to the presence of non-productive elements such as rocky areas, ponds and other non-vegetated areas such as steep slopes has been allocated a coefficient in the Land Parcel Information System (LPIS) that reflects the eligibility percentage (CAP - pasture eligibility coefficient) at LPIS reference parcel level. Within this reference parcel the maximum area eligible for direct aid schemes is therefore the reference parcel area multiplied by this coefficient. In 2014, Extremadura improved application of the CAP [pasture eligibility coefficient] by discounting the 2013 elements and also excluding as ineligible impenetrable areas of dense shrubbery identified by spectral image classification through remote sensing. From 2015, with the aim of guaranteeing the proper allocation of basic payment entitlements under the new Basic Payment scheme, this pasture eligibility coefficient has nevertheless been improved by introducing a LIDAR-based methodology that considers the penetrability of pastureland. This methodology is the same as that applied at national level. The 2015 CAP will be subject to numerous actions, including quality control. Because pastureland is subject to constant changes, this application will never be considered permanent and will be subject to new studies and on-the-spot checks. GALICIA At the beginning of 2013, a permanent pasture eligibility coefficient (CAP) was included in the LPIS related to the presence of non-productive areas and steep slopes. Furthermore, from this year, farmers in the Autonomous Community of Galicia had to declare another coefficient depending on the level of vegetation use. During 2015, the existing coefficients will also be complemented by a new automatic CAP factor obtained using LIDAR information, which will estimate the eligibility of vegetation based on its height and penetrability. UK: action taken: YES, action completed: NO, Completion date: UKCB: The UK Authorities are aware of the specific concerns raised in the 2012 Annual Report in respect of the accuracy of the LPIS. These matters are being addressed and proactive action has been taken to update the LPIS using a variety of sources, including customer notifications, on the ground inspection findings, ortho-imagery and Ordnance Survey mapping data.

3.15 || Regularity of transactions || France: mesure prise: OUI, action achevée: OUI, Date d’achèvement: Les autorités françaises ont redéfini le calcul des valeurs des droits à paiement en respectant les termes de l'article 40. Les paiements au titre de la campagne 2014 ont effectués sur la base des valeurs des droits recalculés.

Box 3.1 || Examples of payments for overstated eligible land || Portugal: action taken: YES, action completed: YES, Completion date:01/2013 PT implemented an Action Plan to review the Land Parcel Identification System (LPIS), so as to revise the respective land use and correct the parcel limits.

Box 3.2 || || Italy: action taken: YES, action completed: , Completion date: Our replies to the European Court of Auditors regarding the results for the activities of the Paying Agencies are set out in the attached notes (see Annex II below).

Box 3.3 || || Italy: action taken: YES, action completed: , Completion date: Our replies to the European Court of Auditors regarding the results for the activities of the Paying Agencies are set out in the attached notes (see Annex II below).

Box 3.4 || Examples of inaccuracies in LPIS databases || France: mesure prise: OUI, action achevée: NON, Date d’achèvement: Dans le cadre de son plan d’action, les autorités françaises ont entrepris des travaux de traitement des éléments de végétation non admissibles pour la campagne 2014. Ces travaux se poursuivront dans le cadre de la campagne 2015 pour prendre en compte les nouveaux critères d’admissibilité des surfaces mis en place par la nouvelle PAC. Ireland: action taken: YES, action completed: YES, Completion date: Subsequent to the audit and a bilateral with the Commission Audit Services in July 2013 the Irish Authorities undertook a complete review of the 900,000 parcels on the LPIS database. Notwithstanding this work, the Commission Audit Service has proposed a correction of €181 million. The Irish Authorities have strongly refuted this finding and the matter will be the subject of conciliation hearings in December 2014. In advance of said hearings the Irish Authorities are maintaining ongoing communications with the Commission Audit Services in relation to the proposed disallowance.

Box 3.5 || Exemples of deficiencies in administrative control procedures || France: mesure prise: OUI, action achevée: OUI, Date d’achèvement: Les autorités françaises ont redéfini le calcul des valeurs des droits à paiement en respectant les termes de l'article 40. Les paiements au titre de la campagne 2014 ont effectués sur la base des valeurs des droits recalculés. Italy: action taken: YES, action completed: , Completion date: Our replies to the European Court of Auditors regarding the results for the activities of the Paying Agencies are set out in the attached notes (see Annex II below).

3.22 || Examination of selected control systems || France: mesure prise: NON, action achevée: NON, Date d’achèvement: Les autorités françaises n’ont pas d’observations particulières et retiennent que la Cour juge le système de contrôle sur place comme satisfaisant. Germany: action taken:, action completed: , Completion date: See reply for this purpose in Annex II Ireland: action taken: YES, action completed: YES, Completion date: Action listed on individual case in ANNEX II

3.24 || Examination of selected control systems || Ireland: action taken: YES, action completed: YES, Completion date: The figures quoted in this report cannot be reconciled with known statistics available and would appear to be too high. Notwithstanding this Ireland has fully reviewed and revised its Debt Management system in light of these findings.

3.25 || || Italy: action taken: YES, action completed: , Completion date: Our replies to the European Court of Auditors regarding the results for the activities of the Paying Agencies are set out in the attached notes (see Annex II below).

3.32 || || Italy: action taken: , action completed: , Completion date: The Italian authorities have taken the points raised by the European Court of Auditors into account, as follows: · The MUS confidence level has increased from 85 % to 95 %; · The absolute independence of the commission, composed of senior officials from government departments with specific experience in cartography, remote sensing and administrative controls, has been confirmed; · Even considering the administrative errors found by the officials of the European Court of Auditors, the final rate of error remains well below the 2 % limit: - rate of error calculated by the commission: 0.49 %; - rate of error recalculated taking into account the errors found by the EU Court of Auditors: 0.79 %. In conclusion, the statistical error rate is below 2 % (0.79 %) and as such, according to the IACS rules and the European Commission guidelines, complies with the provisions of Art. 31(a) of Regulation (EC) No. 1122/2009. Lastly, it should be noted that the European Commission, in the conclusions of audit no. CEB/2012/197/IT notified through note no. Ares(2014)4128041 of 28/11/2014, considered that the recommendations had been correctly applied.

3.37 || || Poland:action taken: YES, action completed: NO, Completion date: 31/05/2015 The remedial action plan, which was submitted by the Polish authorities to the Commission on 14 November 2014, was followed (as far as the mechanism for awarding financial aid to groups of fruit and vegetable producers granted preliminary recognition is concerned)

3.38 || || Poland:action taken: YES, action completed: NO, Completion date: 31/05/2015 The plan was developed and submitted to the Commission on 14 November 2014 and will be implemented until the end of May 2015. Procedures used when verifying if groups of fruit and vegetable producers have been correctly granted preliminary recognition and awarded financial aid are to be made more specific. As part of the implementation of the above-mentioned plan, on-the-spot checks of such entities and on-the-spot checks to verify if such entities have implemented the recognition plan, in particular in the context of EU aid awarded, are also to be intensified and made more specific. Furthermore, as part of the implementation of recommendations concerning the remedial action plan, Poland will repeat checks to verify if specific groups of entities have been correctly granted preliminary recognition. Depending on the findings of these checks, further actions will be taken to enhance supervision of public spending, with a special focus on EU funds.

EC reply to 3.38 || || Poland:action taken: YES, action completed: NO, Completion date: 31/05/2015 The remedial action plan, which was submitted by the Polish authorities to the Commission on 14 November 2014, was followed (as far as the mechanism for awarding financial aid to groups of fruit and vegetable producers granted preliminary recognition is concerned).

3.43 || || Spain: action taken: YES, action completed: YES, Completion date:31/10/2014 The Asturias Paying Agency considered it advisable to issue a reservation because when the Statement of Assurance for 2013 was issued, it became aware of possible irregularities committed by beneficiaries following aid payment, which had been identified by the Certification Body. Because the Certification Body considered them serious enough to be referred to the Attorney General of Asturias, and the affected amount could not be quantified at the time of issuing the Statement of Assurance, the Director of the Paying Agency decided that the matter was sufficiently important to issue a reservation even though there were no serious weaknesses in the control systems. At the same time, an action plan was drawn up that included preventive measures, reinforcement of controls and a review of all files that could have been affected by the irregularity. The current situation is as follows:  The Attorney General issued an Order dated 18 February 2014 concluding that no fraud had been committed and that examination of the administrative files should continue in order to determine whether or not irregularities were present.  The Paying Agency finished reviewing all the affected files on 30 October 2014. At the date on which this response was issued, the Certification Body is reviewing the work done. It is therefore expected that the error will have been calculated before the end of the year.  All the preventive and control reinforcement measures included in the action plan have been implemented.

Annex 3.1 || Result of transaction testing for agriculture || France: mesure prise: OUI, action achevée: NON, Date d’achèvement: À la suite de l’augmentation du taux d’erreurs constaté par la Cour des comptes européenne (CCE) sur les aides directes du FEAGA (fonds européen agricole de garantie) et aux différents audits de la Commission européenne, les autorités françaises se sont engagées à mettre en œuvre un plan d’action, dit « plan d’action FEAGA », validé par les services de la Commission en novembre 2013. Celui-ci comporte trois volets principaux : - la révision des modalités de calcul des droits à paiement unique (DPU) ; - la révision de la grille de sanctions relatives à la conditionnalité ; - la mise en conformité du registre parcellaire graphique (RPG), support de déclaration des parcelles mis à la disposition des agriculteurs. La mise en œuvre des deux premiers volets a été achevée dans son ensemble début 2014 . Le dernier volet (mise en conformité du RPG) est en cours de finalisation et sera effectif pour la campagne 2015

Annex 3.2 || || Germany: action taken:, action completed: , Completion date: See reply for this purpose in Annex II Ireland: action taken: YES, action completed: YES, Completion date: This is the overall scoring matrix. The action listed for the other observations also refers.

Box 3.4 || Examples of inaccuracies in LPIS databases || Ireland: action taken: YES, action completed: NO, Completion date: final determination of correction still outstanding pending outcome of Conciliation Hearing Subsequent to the audit and a bilateral with the Commission Audit Services in July 2013 the Irish Authorities undertook a complete review of the 900,000 parcels on the LPIS database. Notwithstanding this work, the Commission Audit Service has proposed a correction of €181 million. The Irish Authorities have strongly refuted this finding and the matter will be the subject of conciliation hearings in December 2014. In advance of said hearings the Irish Authorities are maintaining ongoing communications with the Commission Audit Services in relation to the proposed disallowance.

Recommendation 3 || || France: mesure prise: OUI, action achevée: NON, Date d’achèvement: Les autorités françaises renvoient à la mise en œuvre du Plan d’action FEAGA susmentionné.

EC reply to 3.45 || || Spain:action taken: YES, action completed: NO, Completion date:31/12/2015 Spain will allocate a new revised eligibility coefficient, CAP-2015, for pastureland covered by the LPIS in order to guarantee that basic payment entitlements are correctly allocated during 2015. This coefficient is made up of two factors that quantify the presence of non-productive elements without vegetation and the slope of the land, which were already included in the CAP implemented in 2013. These are now joined by a third factor that assesses vegetation with regard to its accessibility or penetrability by livestock. LIDAR (Laser Imaging Detection and Ranging) aerial images are used to estimate the penetrability factor. These are obtained using state-of-the-art laser techniques based on differential reflection by vegetation layers of different heights, making it possible to quantify penetrability or accessibility to vegetation by livestock. Implementation of CAP-2015 forms part of the 'Specific Action Plan regarding the eligibility of pastureland', which has already been submitted to the Commission services. The final version of the plan will be submitted before 31 December 2014. Quality control will be performed throughout 2015 in order to validate the new CAP-2015 with a view to ensuring it is fully operational by 31 December 2015.

Annex 3.2 || || Poland:action taken: YES, action completed: NO, Completion date: 31/05/2015

CHAPTER 4 – Rural development, environment, fisheries and health

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4.5 || Audit scope and approach || Austria: action taken: YES, action completed: NO, Completion date: Czech republic: action taken: , action completed: , Completion date: Irrelevant – there is no error involved. Denmark: action taken: YES, action completed:, Completion date:12/12/2014 Measures have been implemented with respect to the errors highlighted by the Court of Auditors for Rural development, environment, fisheries and health. Finland: action taken:, action completed: , Completion date: Detailed replies in Annex 2 France: mesure prise: OUI, action achevée: NON, Date d’achèvement: Afin de réduire le taux d’erreur dans le domaine du Feader, les autorités françaises ont mis en œuvre un Plan d’action qui fait l’objet d’un suivi par les services de la Commission. Les mesures correctives proposées par les autorités françaises sont quasiment toutes mises en œuvre et sont de nature à faire diminuer le taux d’erreur pour les années de paiement restant sur la programmation 2007-2013. Germany: action taken:, action completed: , Completion date: See reply for this purpose in Annex II Hungary: action taken: NO, action completed: , Completion date: The finding refers to facts that do not call for action. Italy: action taken: YES, action completed: , Completion date: Our replies to the European Court of Auditors regarding the results for the activities of the Paying Agencies are set out in the attached notes (see Annex II below). Romania: action taken: YES, action completed: YES, Completion date: 15/10/2013 APIA permanently takes into consideration the updates in the national legislation and the applicable work procedures for the cross-compliance system. Furthermore, in cases of weaknesses reported by the internal or external auditors, APIA takes all necessary measures to overcome them, by cooperating closely with all national regulatory, control and/or supervisory authorities. A relevant example here is the National Sanitary Veterinary and Food Safety Authority (Autoritatea Națională Sanitar-Veterinară și pentru Siguranța Animalelor (ANSVSA) with whom APIA has concluded cooperation agreements. Slovenia: action taken: , action completed: , Completion date: Reply of the Ministry of Agriculture, Forestry and Food (MKGP): The MKGP has no comments regarding the methodological approach of the ECA in the selection of audited transactions.£ Spain: action taken: YES, action completed: YES, Completion date: VALENCIA:Action taken: Yes, Action completed: Yes, Completion date: 01/01/2014 The procedure manuals and control plans have been reviewed. CASTILE-LEON: Action taken: Yes; Action completed: Yes,Completion date: 15/10/2014 In letter ARES/482661, relating to visit XC/2013/005, the Commission acknowledged that the Paying Agency had adopted corrective measures and had resolved all the incidents detected since 2013, except for incidents No 8 (animal identification and registration), No 11 (application of penalties due to repeated infringements) and No 12 (application of penalties due to intentionality) that were corrected during 2014.

Box 4.1 || Example of eligibility error: non-compliance with agri-environment commitments || Hungary: action taken: YES, action completed: YES, Completion date:14/05/2009 Sanctions are set out in Annex 23 of the applicable Decree No 61/2009 of 14 May 2009 of the Minister for Agriculture and Rural Development. Compliance with the regulation is monitored through on-the-spot checks by the Agricultural and Rural Development Agency (ARDA). On the first occasion, the portion of the aid for the area concerned during the year in question is withdrawn by the ARDA, whereas on the second occasion, the area concerned is excluded for the entire duration of the aid scheme and the aid amount already paid must be refunded with interest. Italy: action taken: YES, action completed: , Completion date: Our replies to the European Court of Auditors regarding the results for the activities of the Paying Agencies are set out in the attached notes (see Annex II below). Netherlands: action taken: YES, action completed: YES, Completion date: The Dutch authorities would point out that the findings relate to management year 2014 and will also be included in that year's evaluation. Poland: action taken: YES, action completed: YES, Completion date: : 20/03/2014 Cf. the replies concerning 13.P.NR2.1521-04 and 13.P.NR2.1516-04. Romania: action taken: YES, action completed: YES, Completion date: 30/05/2014 APIA notified the competent control authorities in order to conduct a check. Following the check that was carried out, both the farmer and the biogas production company have been penalised.

EC reply to Box 4.1 || || Hungary: action taken: NO, action completed: , Completion date: Please see our comment in the previous section. As conformity clearance procedures are still in progress, the relevant consultations are being carried out between the Hungarian authorities and the Commission. Finland: action taken:, action completed: , Completion date: Detailed replies in Annex 2 Netherlands: action taken: YES, action completed: YES, Completion date:01/01/2014 The Dutch authorities received a proposal for a financial correction following a compliance audit of agri-environmental support (in March 2012). The mediation body is due to hold a hearing on 15 January 2015. Poland: action taken: YES, action completed: YES, Completion date: 20/03/2014 Cf. the replies concerning 13.P.NR2.1524-04 and 13.P.NR2.1516-04. Romania: action taken: YES, action completed: YES, Completion date:30/10/2014 APIA notified the competent control authorities in order to conduct a check. Following the check that was carried out, the farmer has been penalised, and the recovery of the undue payments has been carried out.

Box 4.2 || Example of eligibility error: ineligible beneficiary || Austria: action taken: YES, action completed: NO, Completion date: Routine notification and training of those involved necessary Bulgaria: action taken: YES, action completed: YES, Completion date:04/04/2014 State Fund Agriculture (DFZ): The Bulgarian authorities took action to ensure improved and more detailed documenting of checks performed to determine the type of enterprise under Measure 312. As of April 2014, the checklists include a special checklist entitled ‘CL: Enterprise Size’ which will document the performed check in detail. Denmark: action taken:, action completed: , Completion date:12/12/2014 The Court withdrew the criticisms raised regarding ineligible beneficiaries in a letter dated 17 July 2014. France: mesure prise: OUI, action achevée: NON, Date d’achèvement: cf. réponse ci-dessus à l'observation n°2 Germany: action taken:, action completed: , Completion date: See reply for this purpose in Annex II Italy: action taken: YES, action completed: , Completion date: Our replies to the European Court of Auditors regarding the results for the activities of the Paying Agencies are set out in the attached notes (see Annex II below). Latvia: action taken: YES, action completed: YES, Completion date:07/02/2014 Latvia is not mentioned in the correct context. In its findings, the European Court of Auditors has not found any ineligible payment beneficiary, but has found insufficient management checks with insufficient records of controls and check results. However, the Paying Authority has revised and supplemented the management procedures by envisaging stricter requirements for the documenting of checks. Netherlands: action taken: NO, action completed: , Completion date: The Dutch authorities do not agree with this part of the Court of Auditors' findings. The Dutch authorities informed the Court of Auditors that the LNV-regeling subsidiëring landinrichting (Land use subsidy scheme) was repealed in 2007 and the central government's land use powers were transferred to the Provinces in that year. The Dutch authorities maintain that the Land Use Act does apply to this project on 31 December 2006, the date on which it was repealed. Portugal: action taken: , action completed: , Completion date: Other observations: The national authorities laid down suitable procedures to check compliance with this beneficiary eligibility condition: - Definition of the requirement in the implementation regulation (Article 5 of Implementing Order (Portaria) No 289-A/2008) - Requirement to describe the size of the company when completing the application, with a clear indication that the information is for purposes of calculating size in accordance with Article 5 of Commission Recommendation 2003/361/EC. To this end, information is requested on ‘shareholders in promoter’s capital’ and ‘main holdings of promoter in the capital of other entities’. - Requirement to complete a document when the company is not an SME – ‘declaration on type of semi-large company’ where the beneficiary is required to provide a full description of its size, in accordance with the requirements set out in Commission recommendation 2003/361/EC. ECA auditors were able to confirm during the audit that the abovementioned verification procedures were complied with. Romania: action taken: YES, action completed: YES, Completion date: 25/02/2013 Observation No 5 – Reply of AFIR: Modification of AFIR procedures as of 25 February 2013 with the view to strengthening the controls concerning the verification of the SME status of the companies. The verification of whether the eligibility requirements were observed is carried out through the check of the applicant and of the shareholders/associates thereof via the online service called RECOM of the National Trade Registry Office, according to the User manual for using RECOM online available on the website of the National Trade Registry Office. Spain: action taken:, action completed: , Completion date: In response to the section on Andalusia, which refers to the Court's findings that the eligibility criteria in measure 227 (direct actions) are not compliant because forestry investments are not eligible due to not being located on forest land, the managing body argued inter-alia, that the Breeding Centre, which is located in a publicly-owned parcel belonging to the Andalusia Regional Government, listed in the Rural Land Assets Registry of the Municipality of Seville (Cadastral reference: 41900A008000340000IM), performs numerous functions related to nature conservation, restoration of rural areas, reforestation, conservation of endangered species, conservation of plant germplasm banks, etc; and that RDP-A does not exclude investments outside forest areas in the strict sense, this measure can be used for investments in 'other environmental objectives' involving heterogeneous actions that are well defined in the measure as rural biodiversity or public environmental aims. (RDP A Page 379 V.8)

EC reply to Box 4.2 || || Portugal: action taken:YES , action completed: , Completion date: As a complement to the comments above, the beneficiary was considered ineligible and as such, sums unduly paid were the subject of a fund recovery process, which has already reached final judgement and is at the payment stage.

Box 4.3 || Example of eligibility error: non-respect of procurement rules || Bulgaria: action taken: YES, action completed: YES, Completion date:12/09/2014 DFZ: In 2014 the State Fund Agriculture Paying Agency (DFZ PA) modified its approach to evaluating public procurement, taking into consideration the remarks made by the Commission auditors. Currently, the procedure for carrying out ex ante checks and ex post control in tender procedures has been updated in line with the amended national legislation. In addition, meetings have been initiated with representatives of the Bulgarian National Audit Office, the Public Procurement Agency (AOP), the Public Financial Inspection Agency (ADFI), and the Audit of EU Funds Executive Agency (IA OSES). The purpose of the meetings was to arrive at a common position on the implementation of the Public Procurement Act (ZOP) in th