Special  Report Has the Commission 
effectively managed the 
integration of coupled 
support into the single 
payment scheme?EN 2014  NO 08
EUROPEAN
COURT
OF AUDITORS

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Luxembourg:  Publications  Office  of the European  Union,  2014
ISBN  978-92-872-0212-3
doi: 10.2865/50192
© European  Union,  2014
Reproduction  is authorised  provided  the source  is acknowledged.
Printed  in Luxembourg
EN 2014  NO 08
Special  Report Has the Commission 
effectively managed the 
integration of coupled 
support into the single 
payment scheme?
(pursuant to Article 287(4), second subparagraph, TFEU )
02
 Contents
Paragraph
 Abbreviations
 Glossary
I–IX  Executive summary
1–17  Introduction
1–4 Background
5–13  The single payment scheme after the ‘health check’ of the common agricultural policy in 2008
5–8 The integration of coupled support into the SPS
9–12  National ceilings and national reserves
13 Payment entitlements after 2014
14 –17  The roles of the Commission and Member States in the implementation of SPS expenditure
14–15  The Commission’s responsibility for ensuring that SPS expenditure complies with EU rules and principles
16 –17  Member States had significant discretion in establishing criteria for the distribution of available support in 
line with policy objectives
18–21  Audit scope, objectives and approach
22–59  Observations
22–34  Weaknesses in the Commission’s supervision and in Member States’ implementation adversely 
affected consistent application of the principles adopted under the 2008 CAP health check
23–24  The Commission has not adopted implementing provisions and not properly assessed the Member States’ 
criteria for the distribution of available amounts …
25–31  ... in this context some criteria defined by Member States did not always comply with EU legislation or 
principles
32–34  Furthermore, side‑effects of the integration of coupled support into the SPS were not treated consistently
03 Contents
35–44  The applicable rules were sometimes implemented incorrectly by Member States
36–37  The Commission did not clearly set out the conditions under which farmers could have access to payment 
entitlements from the national reserve …
38–39  … and in some cases Member States allocated payment entitlements without a legal basis in EU 
legislation …
40 … or calculated unit values of payment entitlements according to non ‑transparent criteria
41–42  Unclear procedures at the Commission level for monitoring compliance with SPS ceilings ...
43–44  … and instance of non‑compliance with the applicable ceilings resulting in an overstatement of the values 
of payment entitlements
45–59  Weaknesses in supervision and control affected the calculation of payment entitlements and 
subsequent SPS payments
47–49  The authorities of the Member States visited had for the most part correctly used the farmers’ reference 
data, but several errors that occurred were systematic
50–56  Member States’ control systems were of varying quality and did not detect all calculation errors
57–59  Reduced effectiveness of the Commission’s conformity clearance
60–71  Conclusions and recommendations
 Annex I — Amounts integrated into the SPS from 2010 to 2012
 Annex II —  Situation of payment entitlements as notified by Member States as at 15.9.2013 
pursuant to Article 51(3)(a) of Regulation (EC) No 1120/2009 (application year 2012)
 Reply  of the Commission
04
 Abbreviations
CAP : common agricultural policy
EAGF : European Agricultural Guarantee Fund
EAFRD : European Agricultural Fund for Rural Development
ha: hectare
IACS : Integrated Administration and Control System
MS: Member State
SPS : single payment scheme
TFEU : Treaty on the Functioning of the European Union
05
 Glossary
Clearance of accounts procedure : Two‑stage procedure by which the Commission ensures the compliance of 
expenditure with the applicable financial and sector ‑specific regulations. The two stages consist of an annual 
financial decision and multiannual conformity decisions. While the financial decisions concern the annual accounts 
and internal control system of each accredited paying agency (certification of the Member State paying agencies’ 
accounts and annual review of the fulfilment of the accreditation criteria), the conformity clearance decisions have 
the objective of ensuring that Member States apply the EU legal framework and that expenditure that infringes 
these rules in one or several financial years is excluded from EU financing.
Decoupling : Process of separation of direct aid payments from the actual agricultural production.
Health check : 2008 review of the 2003 CAP reform. Adoption of Commission proposals for further decoupling of 
direct payments, higher transfers of expenditure to rural development measures, modifications to the intervention 
system, increase of milk quotas and other sector ‑specific measures.
Modulation : Mandatory  reduction of all annual direct payments above 5 000 euro introduced by the 2003 reform 
to finance rural development measures.
National reserve : Each Member State operates a national reserve that incorporates the difference between the 
respective national SPS ceiling and the total value of all allocated payment entitlements. The national reserve must 
be primarily used to grant payment entitlements to farmers in special situations. Member States may also use these 
funds to allocate payment entitlements to farmers who commence an agricultural activity or who are located in 
areas subject to restructuring or development programmes.
Payment entitlement : Entitlement giving a farmer the right to the payment of the amount of SPS aid fixed therein 
if declared together with one hectare of eligible agricultural land.
Principle of non‑discrimination : The principle of non‑discrimination is laid down in Article 40 of the Treaty on the 
Functioning of the European Union and requires that comparable situations should not be treated differently and 
different situations should not be treated alike unless this treatment is objectively justified. Different treatment of 
farmers therefore has to be objectively justified.
Principle of proportionality : The principle of proportionality is a general principle of EU law and requires that 
measures adopted by Community institutions should not exceed the limits of what is appropriate and necessary in 
order to attain the objectives legitimately pursued by the legislation in question.
2003 reform : CAP reform (‘mid‑term review’) which aimed to reduce price support and compensate for this 
reduction by direct income aid continuing a process that had begun in 1992 (MacSharry reform), and was confirmed 
in 1999 (‘Agenda 2000’ reform). The 2003 reform introduced the decoupling of direct payments to farmers and 
linked support to respecting land and animal management standards on each farm (cross‑compliance) while 
reinforcing rural development assistance. 
06
 Executive  
summary
I
The single payment scheme (SPS) is financially the 
most important direct support scheme financed by 
the EU budget for agriculture. It was a key feature of 
the 2003 reform of the common agricultural policy 
(CAP). The SPS replaced most of the former direct 
payments coupled to land cultivated or number of 
animals. The SPS is independent (‘decoupled’) from 
actual agricultural production and farmers must have 
payment entitlements and eligible land in order to 
receive SPS aid.
II
In 2008 the Council decided in the framework of the 
‘health check’ of the common agricultural policy (CAP) 
to integrate into the SPS, as from 2010 and until 2012, 
coupled support payments for those sectors which 
were at that time still excluded from the SPS or which 
Member States had decided to decouple only partially. 
Member States integrated into the SPS an amount of 
4,2 billion  euro that had previously been available for 
support.
III
The integration of coupled support into the SPS gave 
Member States considerable discretion as regards 
the criteria for distributing the available amounts 
among farmers. However, the Commission retains final 
responsibility for the consistent implementation of the 
EU budget and compliance with the general principles 
of EU legislation in the agricultural sector.IV
As from 2015, the SPS will be replaced by a new basic 
payment scheme which takes up some key elements 
of the SPS. Member States will have the option to take 
into account the value of SPS payment entitlements 
for payments under the new scheme until the financial 
year 2021.
V
The Court audited whether the Commission effect ‑
ively managed the integration of coupled support 
into the SPS. More specifically, the Court examined 
whether the Commission adequately supervised and 
verified the calculation of payment entitlements in the 
Member States, whether Member States’ legislation 
complied with the conditions and principles set out in 
EU legislation and whether the competent authorities 
had put up effective checks ensuring correct calcula ‑
tion and allocation of payment entitlements.
VI
The Court concludes that the Commission’s manage ‑
ment of the integration of coupled support into the 
SPS was only partially effective.
VII
The Court found that the Commission did not ensure 
that the criteria applied for the distribution of the 
available amounts were always consistent with EU 
principles, notably those of non‑discrimination of 
farmers and proportionality. In this context, the inte ‑
gration of coupled support into the SPS was imple ‑
mented in an inconsistent manner and farmers in 
some sectors realised windfall benefits. Furthermore, 
there were weaknesses in the way the Commission 
monitored the respect of applicable ceilings, checked 
Member States’ compliance with the applicable EU 
legislation and enforced the correction of errors.
Executive summary 07
VIII
Although Member States had for the most part cor ‑
rectly used the reference data of farmers, the Court 
found significant weaknesses in the correct applica ‑
tion of the calculation rules, the respect of ceilings and 
the use of the national reserve. The framework set up 
by the Commission also did not clarify in a sufficient 
manner which checks Member States have to carry out 
to ensure the correct calculation of payment entitle ‑
ments and Member State control systems varied in 
quality. This resulted in sometimes incorrectly calcu ‑
lated values of payment entitlements and subsequent 
undue payments of SPS aid to farmers.
IX
The Court recommends that the Commission:
(a) in order to ensure a consistent implementation of 
CAP measures in a common market for the future 
new direct payment schemes, establishes at the 
appropriate level clear guidelines and requires 
Member States to demonstrate that the criteria 
adopted are objective and non‑discriminatory, 
thereby avoiding market or competition distortion;
(b) effectively supervises compliance with applicable 
ceilings and takes a more comprehensive ap ‑
proach for conformity clearance inspections which 
pays attention to the specific risks associated with 
an entitlement‑based support scheme and accel ‑
erates follow ‑up of cases of non‑conformity;
(c) enforces the correction of payment entitlements 
whose values have not been calculated in accord ‑
ance with the applicable rules and recovery of 
unduly allocated payment entitlements and undue 
SPS payments, notably systematic errors;
(d) provides for the adoption of clear procedures by 
paying agencies to include effective checks on the 
reliability of the data underlying the calculations 
and on the accuracy of payment entitlements al ‑
located by Member States.
08
 Introduction
Background
01 
The decoupling of direct support 
for farmers from production and the 
introduction of the SPS were essential 
elements in the process of reforming 
the CAP in 2003. The main objective of 
the SPS was to shift policy orientation 
from market support to decoupled in ‑
come support to farmers, thus enhanc ‑
ing farmers’ market orientation and 
avoiding market distortion.
02 
The SPS is based on the allocation 
of payment entitlements to each 
farmer. The SPS is financially the CAP’s 
most important support scheme. It is 
entirely financed from the European 
Agricultural Guarantee Fund (EAGF). In 
the 2013 budget, payments for the SPS 
accounted for 70 % of EAGF expend ‑
iture and 54 % of the entire EU budget 
for agriculture and rural development.
03 
Between 2005 and 2007, 17 Member 
States introduced the SPS1, replacing 
most of the direct payment schemes 
coupled to areas cultivated or number 
of animals.04 
However, Member States were allowed 
to keep a certain percentage of the aid 
coupled to agricultural production or 
not to include certain types of direct 
payment into the SPS2. Also, in some 
agricultural sectors, direct payments 
were still excluded from the SPS3.
The single payment 
scheme after the ‘health 
check’ of the common 
agricultural policy in 2008
The integration of coupled 
support into the SPS
05 
In 2008 the Commission and the 
Council undertook a review of the CAP , 
known as the ‘health check’4. For the 
coupled support which was still ex ‑
cluded from the SPS or where Member 
States had decided to leave it fully or 
partially coupled to production, the 
Council followed the Commission’s 
proposal to further decouple it by the 
year 2012. Member States were how ‑
ever authorised to keep premiums for 
suckler cows, sheep and goats coupled 
to production5.1 Belgium, Denmark, Germany, 
Ireland, Greece, Spain, France, 
Italy, Luxembourg, Malta, 
Netherlands, Austria, Portugal, 
Slovenia, Finland, Sweden and 
United Kingdom. Ten other 
Member States which joined 
the EU in 2004 and 2007 
decided to introduce 
a transitional decoupled area 
related scheme  – single area 
payment scheme – which 
is not based on payment 
entitlements.
2 All Member States, except 
those that joined the EU 
in 2004 and 2007, had to 
introduce the SPS and 
Member States could decide 
on the decoupling level by 
maintaining some coupled 
payments either at full level 
or only partially. These were, 
for example, area payments 
for arable crops, premiums 
for bovine, ovine and caprine 
animals and aid for hops, 
which Member States could 
only partially decouple or 
not decouple at all. The EU’s 
outermost regions and aid for 
the production of seeds could 
also be excluded.
3 These were, for example, 
the specific quality premium 
for durum wheat, payments 
for protein crops, rice, nuts, 
energy crops, starch potatoes 
and potato starch, cotton, 
sugar, grain legumes aid and 
the premium for dried fodder.
4 Council Regulation (EC) 
No 73/2009 of 19 January 2009 
establishing common rules 
for direct support schemes 
for farmers under the 
common agricultural policy 
and establishing certain 
support schemes for farmers, 
amending Regulations 
(EC) No 1290/2005, (EC) 
No 247/2006, (EC) No 378/2007 
and repealing Regulation 
(EC) No 1782/2003 (OJ L 30, 
31.1.2009, p. 16).
5 In addition, coupled support 
for cotton was maintained. 
Member States could also 
maintain coupled support in 
the EU’s outermost regions.
09 Introduction
06 
In the same year, the Council adopted 
the reform of the common market 
organisation in wine6. Member States 
could transfer EU funds from national 
support programmes in the wine sec ‑
tor and provide payment entitlements 
to vine growers. In addition, Member 
States could allocate payment entitle ‑
ments in relation to the areas for which 
farmers had received EU support for 
grubbing up their vineyards.07 
With their integration into the SPS 
between 2010 and 2012, coupled 
payments mostly ceased to exist. 
Member States could therefore dis ‑
tribute among farmers, in the form of 
payment entitlements, an additional 
amount of 4,2 billion euro that had 
formerly been available for the cou ‑
pled support or had been transferred 
from the wine sector7. A breakdown of 
the available amounts per scheme is 
displayed in Figure 18.6 Council Regulation (EC) 
No 479/2008 of 29 April 2008 
on the common organisation 
of the market in wine, 
amending Regulations 
(EC) No 1493/1999, (EC) 
No 1782/2003, (EC) 
No 1290/2005, (EC) No 3/2008 
and repealing Regulations 
(EEC) No 2392/86 and (EC) 
No 1493/1999 (OJ L 148, 
6.6.2008, p. 1).
7 The overall net increase 
of the SPS in this period 
amounts to 3,5 billion euro, 
because Member States could 
use a part of the available 
amounts at a later stage 
for the financing of specific 
support pursuant to Article 68 
of Regulation (EC) No 73/2009.
8 A more detailed overview can 
be found in Annex I .Amounts available for integration into the SPS by scheme  
2010–12 (in million euro)
0 200 400 600 8001 0001 2001 4001 6001 8001 527
180237
209
180
156
152241291
1 081Arable crops area payments
Former Article 69 of Reg. (EC) No 1782/2003
Sheep and goat premiums 
Slaughter premium bovine adults 
Suckler cow premium
Rice
Transfer from wine support programmes and 
grubbing up of vines
Potato starch
Fruit and vegetables — tomatoes
Other schemesFigure  1
08 
The available amounts are divided 
between Member States as shown in 
Figure 2 .
10 Introduction
National ceilings and 
national reserves
09 
Like all direct payments, SPS expend ‑
iture is limited to an annual budgetary 
ceiling per Member State. The ceilings 
should ensure that the total level of 
payment entitlements does not exceed 
current budgetary constraints9.
10 
Under the arrangements for the 
integration of coupled support into 
the SPS, Member States may allocate 
payment entitlements to farmers or 
increase the value of existing payment 
entitlements while respecting the 
sector ‑specific ceilings. The total value 
of all payment entitlements allocated 
to farmers in a given Member State 
must not exceed the national budget ‑
ary ceiling for the SPS.11 
Each payment entitlement, when 
declared together with a hectare of 
eligible agricultural land, gives the 
holder the right to the amount of SPS 
aid stated in that entitlement. This 
is called ‘activation’. For almost all 
Member States that have introduced 
the SPS, more than 95 % of the value 
of payment entitlements allocated to 
farmers gives rise to the payment of 
SPS aid.Distribution of support available for integration by Member State 2010–12
Spain 30 %France 42 % 
Italy 12 %Other MS 8 %
Netherlands 4 %
Greece 4 %Figure  2
9 The budgetary ceilings apply 
to calendar year n when 
farmers have to submit their 
annual single applications for 
payment of support. Support 
payments are charged to 
the budget of the following 
financial year n + 1 . The 
amounts eventually paid to 
farmers are, however, lower 
than the budgetary ceiling, 
as not all farmers necessarily 
claim support on all their 
payment entitlements. 
Moreover, notably until 2012, 
annual payments above 
5 000 euro were subject 
to a reduction (known as 
‘modulation’) to finance rural 
development measures. 
Aid payments may also be 
reduced by administrative 
sanctions.
11 Introduction
12 
Member States must operate a na ‑
tional reserve that corresponds to the 
difference between the respective na ‑
tional SPS ceilings and the total value 
of all allocated payment entitlements. 
The national reserve must be primarily 
used to grant payment entitlements to 
farmers in special situations10. Mem ‑
ber States may also use these funds 
to allocate payment entitlements to 
farmers who commence an agricultural 
activity or who are located in areas 
subject to restructuring or develop ‑
ment programmes.
Payment entitlements 
after 2014
13 
The SPS remains in force until the end 
of 2014. As from application year 2015 
it will be replaced by a new basic pay ‑
ment scheme which will also be based 
on payment entitlements11. The value 
of these payment entitlements will, in 
principle, be based on national or re ‑
gional flat rates per hectare. However, 
Member States will have the option 
to take into account the value of SPS 
payment entitlements until the end of 
2018 by gradually adjusting them to 
the regional average (convergence). 
Thus the calculation of SPS payment 
entitlements may have an effect on 
future payments to farmers until the 
financial year 2021.The roles of the 
Commission and Member 
States in the 
implementation of SPS 
expenditure
The Commission’s 
responsibility for ensuring 
that SPS expenditure 
complies with EU rules and 
principles
14 
According to the EU financial regula ‑
tion, the Commission implements the 
expenditure from the EAGF under 
a system of shared management with 
the Member States12. This means that 
the general rules for the calculation 
of the values of the payment entitle ‑
ments and the payment of SPS aid are 
set out in EU regulations13, but Mem ‑
ber States must take all the legislative, 
regulatory, administrative or other 
steps needed to protect the EU’s finan ‑
cial interests.
15 
While the Commission has the final 
responsibility for the implementa ‑
tion of the budget and is account ‑
able for the legality of payments and 
the sound financial management of 
expenditure, the Member States are 
responsible for the calculation of the 
payment entitlements and the subse ‑
quent payment of SPS aid to farmers 
by accredited paying agencies. Accord ‑
ing to the regulatory arrangements 
on financing expenditure under the 
EAGF, the Commission must monitor 
the Member States’ application of the 
EAGF ‑financed measures and ensure 
compliance with the applicable EU 
regulations and principles14. The break ‑
down of responsibilities for integra ‑
tion of coupled support into the SPS is 
illustrated in Figure 3 .10 See paragraph  36.
11 European Parliament 
and Council Regulation 
(EU) No 1307/2013 of 
17 December 2013 
establishing rules for direct 
payments to farmers under 
support schemes within the 
framework of the common 
agricultural policy and 
repealing Council Regulation 
(EC) No 637/2008 and Council 
Regulation (EC) No 73/2009 
(OJ L 347, 20.12.2013, p. 608).
12 Article 53b and Title I of 
Part Two of Council Regulation 
(EC, Euratom) No 1605/2002 of 
25 June 2002 on the financial 
regulation applicable to 
the general budget of the 
European Communities 
(OJ L 248, 16.9.2002, p. 1). The 
same applies also under the 
new financial regulation which 
entered into force as from 
1 January  2013 (Regulation 
(EU, Euratom) No 966/2012 of 
the European Parliament and 
the Council of 25 October 2012 
on the financial rules 
applicable to the general 
budget of the Union and 
repealing Council Regulation 
(EC, Euratom) No 1605/2002 
(OJ L 298, 26.10.2012, p. 1)).
13 Regulation (EC) No 73/2009 
and Commission Regulation 
(EC) No 1120/2009 of 
29 October 2009 laying 
down detailed rules for the 
implementation of the single 
payment scheme provided 
for in Title III of Council 
Regulation (EC) No 73/2009 
establishing common rules 
for direct support schemes for 
farmers under the common 
agricultural policy and 
establishing certain support 
schemes for farmers (OJ L 316, 
2.12.2009, p. 1).
14 Council Regulation (EC) 
No 1290/2005 of 21 June 2005 
on the financing of the 
common agricultural policy 
(OJ L 209, 11.8.2005, p. 1).
12 Introduction Figure 3Responsibilities for integration of coupled support into the SPS under Regulation 
(EC) No 73/2009
Adopt implemen ting
regula tions and super vise
Member Sta tesCarr y out c onformit y audits
(Regula tion EC ) No 1290/2005)Retrie ve
hist oric al
reference da ta1 
Paying
Agencies
Member
StatesCommission
Deﬁne crit eria
for alloc ation
and c alculation
of PE2Pay SPS aid
follo wing
activation of PE2Calc ulate and
alloc ate PE2
Integra tion of c oupled suppor t
(Regula tion (EC ) No 73/2009)
1 Historical model only. The regional model takes into account the regional average.
2 PE — payment entitlements.
13 Introduction
Member States had 
significant discretion in 
establishing criteria for the 
distribution of available 
support in line with policy 
objectives
16 
With the introduction of the SPS in 
2005 Member States could choose to 
calculate the payment entitlements 
either on the basis of the coupled 
support which farmers had received 
in a specific reference period (known 
as the ‘historical model’) or on the 
basis of regional flat rates per hectare 
(the ‘regional model’). There were 
also mixed forms which combined 
elements of both models (‘hybrid 
models’).17 
According to the principles which the 
Council adopted for the integration 
of coupled support into the SPS in the 
2008 health check, Member States had 
significant discretion as regards the 
distribution of the available amounts 
across farmers15. Thus they could 
decide, for the agricultural sectors 
concerned, to calculate a reference 
amount on the basis of objective and 
non‑discriminatory criteria, taking into 
account, in particular, the support that 
those farmers had received, directly 
or indirectly, under the relevant sup ‑
port schemes in a specific reference 
period16. Alternatively, Member States 
could establish types of agricultural 
activities performed by farmers  during 
one or more years in a reference 
 period and distribute the support on 
the basis of this type of activity17.15 Articles 63 to 67 of Regulation 
(EC) No 73/2009.
16 Articles 64 and 65 of 
Regulation (EC) No 73/2009.
17 Article 63(2)(a) of Regulation 
(EC) No 73/2009. In this case 
Member States had to ensure 
that the farmers having 
benefited from the coupled 
support in the past received 
at least 75 % of the average 
annual support they had 
received under all the direct 
payments during the relevant 
reference period. Member 
States that introduced 
a regional form of the SPS 
could also use all or part 
of the available support to 
increase the value of payment 
entitlements for all farmers in 
the region by a supplementary 
uniform amount per payment 
entitlement.
14
 Audit scope, objectives and 
approach
18 
In view of the significant amounts 
included under the SPS after the 2008 
CAP health check and the specific 
risks associated with the calculation 
of the reference amounts for each 
farmer, notably in the Member States 
which had opted for the historical SPS 
model, the Court decided to carry out 
a compliance audit on the calcula ‑
tion of payment entitlements in the 
years 2010 to 2012.
19 
The Court asked the following main 
audit question: has the Commission 
effectively managed the integration 
of coupled support into the SPS? 
The audit addressed the following 
sub‑questions.
(a) Did the Commission adequately 
supervise and verify the calcula ‑
tion of payment entitlements?
(b) Did Member States’ legislation 
comply with the conditions and 
principles set out in EU legislation 
and did the competent authorities 
calculate and allocate the farmers’ 
payment entitlements correctly?
(c) Did the competent authorities 
in the Member States effectively 
check that the calculation and al ‑
location of payment entitlements 
was correct?20 
The audit was conducted at the Com ‑
mission and in Greece, Spain, France, 
Italy and the Netherlands. These 
Member States account for 92 % of 
the amounts integrated into the SPS 
between 2010 and 2012. All of those 
Member States had implemented the 
historical SPS model in 2005 or 2006.
21 
The audit approach consisted of an 
assessment of the Commission’s role 
in supervising the calculation and al ‑
location of payment entitlements, in 
particular in the context of the integra ‑
tion of coupled support into the SPS 
adopted in the 2008 health check. The 
Court’s work also included a review 
of the national implementing acts, an 
analysis of management and control 
systems and compliance tests, on 
a documentary basis, on a sample of 
377 files for beneficiaries who had re ‑
ceived an increase in the value of their 
payment entitlements or who had 
received new payment entitlements 
between 2010 and 2012.
15
 Observations
Weaknesses in the 
Commission’s supervision 
and in Member States’ 
implementation adversely 
affected consistent 
application of the 
principles adopted under 
the 2008 CAP health 
check
22 
On the basis of its analyses described 
above, the Court found that, due to 
a lack of supervision by the Commis ‑
sion, Member States had integrated 
coupled support into the SPS and cal ‑
culated payment entitlements in a way 
which did not always comply with the 
general principles of EU legislation, as 
is further explained below.
The Commission has not 
adopted implementing 
provisions and not properly 
assessed the Member States’ 
criteria for the distribution of 
available amounts …
23 
As pointed out above, Member States 
had significant discretion in establish ‑
ing the criteria for the distribution of 
the amounts of coupled support that 
were available for integration into the 
SPS, but the criteria had to be object ‑
ive and non‑discriminatory and had to 
take, in particular, account of the sup ‑
port which farmers had directly or in ‑
directly received in one or more years 
of the reference period. These were 
as a rule the years from 2005 to 2008. 
For schemes which had already been 
decoupled in 2005 but which the 
Member State had opted to leave 
partially coupled, similar principles 
applied. Here, the support had to be 
proportional to what farmers received 
in the original reference periods18, but 
Member States could also decide to 
choose a more recent representative 
period.24 
In spite of the obligation set out in 
Regulation (EC) No 73/2009, to adopt 
detailed rules19, the Commission did 
not lay down any implementing rules 
for integration of coupled support into 
the SPS, apart from some technical 
provisions regarding fruit and vegeta ‑
bles and the wine sector20. The Com ‑
mission also did not request Member 
States to report on in detail and justify 
the criteria which they had adopted. 
Consequently, it did not carry out 
an ex ante  assessment as to whether 
Member States adopted an overall 
consistent approach and distributed 
the available support in accordance 
with EU principles.
… in this context some 
criteria defined by Member 
States did not always comply 
with EU legislation or 
principles
25 
The Court found that the Member 
States visited had, as a rule, adopted 
criteria which either took into account 
the amounts of direct support which 
the farmers had received in one or 
more of the reference years or the 
number of eligible hectares or animals 
subsidised. For aid schemes such as 
the aid for processing dried fodder 
or aid for potato starch where in the 
past support had been paid to the 
processors, farmers received a refer ‑
ence amount on the basis of their 
deliveries of raw material or quantities 
covered by a delivery contract with the 
manufacturer.18 Usually the years from 
2000 to 2002.
19 Article 142(d) of Regulation 
(EC) No 73/2009.
20 Regulation (EC) No 1120/2009.
16 Observations
Percentage increase in value of payment entitlements in excess of the level of coupled 
payments received in the reference period in Spain
Scheme integrated into the SPS Excess value of payment entitlements
Specific quality premium for durum wheat 12,2  %
Durum wheat supplementary payment 18,1  %
Aid for olive groves 1,4 %
Sheep and goat premium 7, 6 %
Sheep and goat supplementary premium 4,4 %
Protein crop premium 31,5  %
Seed aid 76,8  %Table 126 
EU legislation requires the reference 
periods be representative. However, 
Member States could not always justify 
why they had chosen a specific period 
as being ‘representative’ and made in ‑
consistent interpretations of the princi ‑
ples to be applied for the integration 
of the coupled support into the SPS. 
This sometimes resulted in different 
treatment of farmers in comparable 
situations.
27 
Accordingly, in Italy and Greece the 
national authorities applied a prudent 
approach by calculating payment en ‑
titlements based on the amount which 
farmers in the sectors concerned had 
received in direct payments during the 
reference period. In Spain however, the authorities decided to multiply the 
coupled support which each farmer 
had annually received in the reference 
period by a coefficient in order to use 
the available support to the full. In 
some sectors these revised amounts, 
however, significantly exceeded what 
farmers had received in the reference 
period. As a result, farmers in those 
sectors were granted payment entitle ‑
ments whose total value amounted 
to 32,6 million euro more than what 
they had annually received in coupled 
payments in the reference period. The 
Court estimates that by this, farmers in 
the sectors concerned realise globally 
a windfall benefit of approximately 
29 million euro in SPS payments 
per year. The excess of the value of 
the payment entitlements over the 
amounts received in the reference 
period is illustrated in Table 1 .
17 Observations Figure 4Integration of the specific quality premium for durum wheat
01050
40
30
20
Level of c oupled suppor t in the r eference periodValue of SPS pa ymen t entitlemen ts Available amoun tsSpain Italy Greecemillion eur o28 
The Dutch authorities had a similar 
approach as the authorities in Spain. 
They decided to distribute all the sup ‑
port available on the basis of hectares 
farmed or animals slaughtered in the 
reference period rather than on the 
 basis of the amounts of aid farmers 
had actually received, thus creating 
a risk of windfall benefit. However, 
this had little or no impact, as, in the 
sectors concerned, applications for 
aid in the reference period had usually 
exceeded the available budget. Only 
in the seed sector did beneficiaries 
receive payment entitlements whose 
value exceeded the coupled payments 
in the reference period by 46 %.29 
The different treatment of farmers in 
comparable situations which followed 
in some sectors from the inconsistent 
approaches taken is shown in Figure 4  
for the  specific quality premium for 
durum wheat.
18 Observations
Examples of discriminatory treatment of farmers
Unlike in other Member States visited by the Court, in Greece the authorities reduced the reference amounts 
for farmers in the sectors of rice, durum wheat, protein crops and nuts by 5 %. They explained this reduc ‑
tion as being the application of the ‘modulation’ whereby all direct payments in the reference period 
(2007 and 2008) had been reduced in order to finance expenditure for rural development measures21. How ‑
ever, as the modulation procedure had been applied to all direct payments and had affected only amounts 
exceeding 5 000 euro per year, the value of the payment entitlements was lower than the contributions that 
many farmers had actually received in coupled support in the reference period. As the SPS aid which the 
authorities had paid out since 2010 was also subject to reductions for modulation, the farmers affected by the 
integration of coupled support received less support overall and were discriminated against as compared with 
those who were not.
In Italy the authorities calculated the payment entitlements for beneficiaries of the quality premium for  durum 
wheat, the crop ‑specific payment for rice and the aid for nuts on the basis of the coupled support which 
they had actually received before modulation. There were however farmers whose payments in the refer ‑
ence period had been subject to reductions and exclusions, because the national authorities had determined 
that they had planted smaller areas with these crops than they had declared. By using as a basis the amount 
actually paid rather than the amount corresponding to the area determined, the Italian authorities perman ‑
ently reduced the farmers’ reference amounts and therefore their SPS payments. In doing so the authorities 
punished the affected beneficiaries more than once for the same infringement and farmers suffered financial 
consequences that were disproportionate to the aims of the penalty initially imposed on them.
21 See Title II Chapter 2 of Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes 
under the common agricultural policy and establishing certain support schemes for farmers and amending Regulations (EEC) No 2019/93, (EC) 
No 1452/2001, (EC) No 1453/2001, (EC) No 1454/2001, (EC) No 1868/94, (EC) No 1251/1999, (EC) No 1254/1999, (EC) No 1673/2000, (EEC) No 2358/71 
and (EC) No 2529/2001 (OJ L 270, 21.10.2003, p. 1).Box 130 
While, for most schemes integrated, 
Italy had chosen the average annual 
coupled payments of the years from 
2005 to 2008, Greece, Spain and the 
Netherlands choose shorter periods 
of between 2 and 3 years or, for the 
integration of the sheep and goat 
premium in Spain, only 1 year. The 
Court noted in the latter case that 
this had allowed the authorities to 
concentrate the available amounts on 
a smaller population of farmers. France 
decided for the schemes integrated in 
2010 that the individual reference year 
should be the year of the period from 
2005 to 2008 during which the farmer 
had received the highest amount of 
coupled support.31 
Member States were also sometimes 
found to have distributed the available 
amounts in breach of the principles of 
non‑discrimination and proportional ‑
ity (see Box 1 ).
19 Observations
Furthermore, side‑effects of 
the integration of coupled 
support into the SPS were 
not treated consistently
32 
Under the legislation in force22, 
Member States had the option not to 
increase the value of payment entitle ‑
ments or not to allocate payment 
entitlements in cases where farmers 
had sold or transferred their holding or 
premium rights or where a lease had 
expired for all or a part of it before the 
farmers concerned were made aware 
of the decoupling and of the relevant 
conditions and thus the increase or the 
allocation would have led to a windfall 
profit for the farmer in question.
33 
Of the Member States visited only 
France had as a general rule used 
this mechanism but clawed back all 
reference amounts corresponding to 
reductions of activities in terms of area 
farmed or eligible animals slaughtered 
after the reference period. However, 
this also went beyond the scope of the 
cases of sale, transfer or the expiry of 
lease mentioned in the EU legislation.
34 
Italy had not applied the windfall 
profit clause, so that farmers having 
substantially reduced the number of 
hectares farmed between the refer ‑
ence period and the year when the 
support was integrated into the SPS 
could concentrate the support on 
very small areas. In one case audited 
by the Court, this procedure had led 
to a situation where a farmer who 
had cultivated in the reference period 
around 70 ha with rice, and thus re ‑
ceived 30 425 euro in coupled support, 
needed only 0,41 ha of eligible land to 
be entitled to the same amount of SPS 
aid.The applicable rules were 
sometimes implemented 
incorrectly by the 
Member States
35 
The Court’s audit found that, due to 
a lack of supervision by the Commis ‑
sion, Member States had integrated 
coupled support into the SPS in a way 
which did not always comply with 
EU legislation, as is further explained 
below.
The Commission did not 
clearly set out the conditions 
under which farmers could 
have access to payment 
entitlements from the 
national reserve …
36 
Farmers in certain special situations 
to be defined by the Commission are 
entitled to receive payment entitle ‑
ments from the national reserve. In its 
implementing provisions, the Com ‑
mission included, for example, cases 
where farmers made investments in 
a sector which would have entitled 
them to a higher level of coupled 
support if the sector had not been 
decoupled. However, contrary to the 
rules in force before the health check23, 
the Commission neglected to define 
what was meant by an ‘investment’. As 
a consequence, cases occurred where 
it was either doubtful whether farm ‑
ers had actually made an investment 
or whether they would actually have 
benefited from a specific higher level 
of coupled support if the sectors con ‑
cerned had not been integrated into 
the SPS (see Box 2 ):22 Article 41(6) of Regulation (EC) 
No 73/2009.
23 Article 21 of Commission 
Regulation (EC) No 795/2004 
of 21 April 2004 laying 
down detailed rules for the 
implementation of the single 
payment scheme provided 
for in Council Regulation (EC) 
No 1782/2003 establishing 
common rules for direct 
support schemes under the 
common agricultural policy 
and establishing certain 
support schemes for farmers 
(OJ L 141, 30.4.2004, p. 1).
20 Observations
Examples of payment entitlements granted for investment
In France the national authorities allocated payment entitlements for ‘investment’ to slaughter ‑premium 
beneficiaries who had slaughtered more cattle in 2009 than in the reference period. The authorities did not, 
however, know if these farmers had actually invested in production capacities, bought animals for breeding or 
simply reduced their farming activities by slaughtering their animals (destocking). The rates per animal estab ‑
lished by the national authorities were also significantly higher than the coupled support received per animal 
by farmers who had not invested. 
Also, the Court found cases in France where the authorities had granted payment entitlements for investment 
in land, although the applicants had undergone only a simple change in their legal status.Box 2
37 
In Greece farmers received payment 
entitlements from the national reserve 
on the grounds of investments where 
in 2010 they happened to cultivate 
more areas of a crop in a sector 
integrated into the SPS than in 2008, 
the last year of the reference period. 
However, land cultivation in 2010, as in 
2008, was a mere annual production 
decision based on market demand 
and was not necessarily associated 
with an actual investment in produc ‑
tive capacity such as the acquisition of 
additional land. The Commission also 
failed to establish a maximum amount 
per hectare for the value of payment 
entitlements from the national reserve. 
This lead to situations which are not in 
line with the principle of equal treat ‑
ment. As an example, the Court found 
that, in France, farmers in the bovine 
and ovine sectors could receive pay ‑
ment entitlements from the national 
reserve worth up to 9 010 euro per 
hectare, even though for farmers who 
benefited from the integration of 
 coupled support into the SPS in the 
same sectors outside the national re ‑
serve, EU legislation limits the value of 
a payment entitlement to 5 000 euro 
per hectare.
21 Observations
Allocation or increase of value of payment entitlements without legal basis
In France the authorities allocated payment entitlements to farmers who had no payment entitlements or 
increased the value of payment entitlements that were significantly under the regional average value. They 
justified this in terms of a general risk of the abandonment of farming. However, under the EU legal provisions 
in force, this is only possible in areas subject to restructuring and/or development programmes. The French 
authorities had, however, neither drawn up a specific programme nor identified areas where the risk of aban ‑
donment of farming was considered likely. They could also not provide evidence that the increase of the value 
of those payment entitlements was an effective instrument for avoiding land abandonment, or that farmers 
suffered specific disadvantages for which they needed compensation.
Under another measure, the French authorities allocated payment entitlements amounting to 2  million  euro 
to certain veal farmers on the ground that the specific sector had suffered a decline while they also specific ‑
ally supported newcomers to this sector. This measure had the objective of buffering cyclical effects in a spe ‑
cific agricultural sector but was not related to a specific restructuring or developing programme.Box 3… and in some cases Member 
States allocated payment 
entitlements without a legal 
basis in EU legislation …
38 
Member States may also allocate pay ‑
ment entitlements from the national 
reserve to farmers who are starting 
an agricultural activity and farmers in 
areas subject to public intervention or 
to restructuring and/or development 
programmes.
39 
In the present audit the Court found 
measures adopted by Member States 
which either had no legal basis in EU 
legislation or were in breach of the 
respective EU legal provisions (see 
Box 3 ).… or calculated unit values 
of payment entitlements 
according to non ‑transparent 
criteria
40 
For certain categories of farmers Italy, 
France and Greece had defined a fixed 
unit value per hectare of the payment 
entitlements from the national reserve. 
However, in France and Greece the cri ‑
teria for the calculation of the amounts 
fixed per hectare were rather arbitrary, 
while in Italy there was no audit trail 
allowing for verification of the correct ‑
ness of the calculations.
22 Observations
Unclear procedures at 
the Commission level for 
monitoring compliance with 
SPS ceilings …
41 
Under the rules in force, the Com ‑
mission establishes the applicable 
national budgetary ceiling for the 
SPS annually, taking into account the 
various options which Member States 
have chosen for granting coupled pay ‑
ments or specific support. This ceiling 
is the maximum value of all payment 
entitlements allocated to farmers in 
a Member State and the amount of the 
national reserve.
42 
Member States must inform the Com ‑
mission regularly of the total value of 
existing SPS payment entitlements 
in the given year, whether activated 
or not, the number of hectares re ‑
quired for activation and the amounts 
remaining in the national reserve. The 
Court noted that Member States did 
not always submit this information on 
time and that the Commission had not 
introduced a fully effective system for 
verifying whether the Member States 
complied with the applicable SPS ceil ‑
ings24. The Commission has also not 
clarified for what purpose it ultimately 
uses the information provided by 
Member States.… and instance of 
non‑compliance with the 
applicable ceilings resulting 
in an overstatement of 
the values of payment 
entitlements
43 
EU legislation determines that the total 
value of payment entitlements allo ‑
cated to farmers must not exceed the 
national budgetary ceiling applicable 
for the SPS. Likewise, for each sector 
integrated into the SPS, Member States 
could not distribute among farmers in 
the sectors concerned more than was 
annually available in the sector ‑specif ‑
ic component of the national ceiling25.
44 
Contrary to EU legislation26, the French 
authorities had not reduced the value 
of all payment entitlements in order to 
finance the specific support for farm ‑
ers under Article 68 of Regulation (EC) 
No 73/200927. Consequently, the value 
of all payment entitlements in France 
was overstated by 4,61 % which cor ‑
responds to 357,3 million euro. 74 mil ‑
lion euro of this amount concerned 
the support integrated into the SPS in 
2010. By the time of the Court’s audit 
in the spring 2013, the French author ‑
ities had still not corrected the value of 
the payment entitlements.24 See paragraph  44.
25 See Annex XII of Regulation 
(EC) No 73/2009.
26 Article 69(6)(b) of Regulation 
(EC) No 73/2009. Member 
States had the option to 
generate the necessary funds 
by making a linear reduction 
in the value of the payment 
entitlements allocated to 
farmers. In such cases the 
Commission reduced the 
national budgetary ceilings for 
the SPS accordingly.
27 For application year 2010 the 
French authorities reduced 
all SPS payments by flat 
rates of 3,92 %, for 2011 by 
3,4 % and for 2012 by 3,31 %. 
See also annual report 
concerning the financial 
year 2011, paragraph 3.12 and 
annual report concerning 
the financial year 2012, 
paragraph 3.13.
23 Observations
Weaknesses in 
supervision and control 
affected the calculation of 
payment entitlements 
and subsequent SPS 
payments
45 
The correct calculation of payment en ‑
titlements is essential for the legality 
of the subsequent SPS payments. An 
error in the calculation of the value of 
a payment entitlement results as a rule 
in an incorrect payment of SPS aid in 
subsequent financial years and for the 
entire duration of the SPS, unless the 
 error is corrected.
46 
EU legislation requires Member States 
to set up a system for the identifica ‑
tion and registration of payment 
entitlements that allows for the veri ‑
fication of those entitlements and for 
cross‑checks with the aid applications 
and the identification system for agri ‑
cultural parcels. This database is a cor ‑
nerstone of the integrated administra ‑
tion and control system (IACS) under 
which Member States are required to 
manage all direct payments.The authorities of the 
Member States visited had 
for the most part correctly 
used the farmers’ reference 
data, but several errors that 
occurred were systematic
47 
The Member States which had decided 
to integrate the amounts available 
for coupled support into the SPS on 
the basis of the support received by 
farmers in the reference period had to 
retrieve for each scheme and for each 
farmer the individual reference data. 
These data came either from the pay ‑
ing agencies’ own databases or from 
the databases of bodies to which the 
administration of the former schemes 
had been delegated.
48 
The Court found that the national 
authorities had for the most part cor ‑
rectly used farmers’ reference data. 
Never  theless, the audit identified 
several systematic errors in Italy, where 
 coupled payments in the nuts sector 
had been partly incorrectly calculated 
in the reference period. Furthermore, 
the national authorities also did not 
comply with the calculation rules, 
which require that the amounts inte ‑
grated into the SPS must be distrib ‑
uted across all payment entitlements 
held by a given farmer28. This affected 
around 86 000 farmers and payment 
entitlements of a value of 107,9 mil ‑
lion euro. In Spain areas set for the es ‑
tablishment of payment entitlements 
in the citrus sector did not match the 
reference areas in the farmers’ files or 
the authorities did not have updated 
information on areas planted with 
citrus trees in the reference period.28 Article 64(2) of Regulation (EC) 
No 73/2009.
24 Observations
49 
For the most part, the national au ‑
thorities also adhered to the specific 
ceilings for the sectors integrated into 
the SPS between 2010 and 2012. How ‑
ever, in Spain the authorities exceeded 
the ceiling for the integration of the 
tomato sector by 1,3 million euro. In 
Greece the amounts retained in 2006 
for the additional payment for specific 
types of farming29 did not match the 
amounts authorised by the Commis ‑
sion in the bovine, sheep and goat 
and the olive oil sectors. As a result, 
the amounts integrated in 2010 
exceeded the amounts available by 
2,6 million  euro.
Member States’ control 
systems were of varying 
quality and did not detect all 
calculation errors
50 
Under EU legislation, Member States 
should only authorise EAGF expend ‑
iture after sufficient checks have been 
made to verify that it complies with EU 
rules30.
51 
The Court assessed the specific checks 
which Member States visited had intro ‑
duced for the correct calculation of 
payment entitlements. Although these 
Member States had accumulated con ‑
siderable experience with the manage ‑
ment of payment entitlements since 
their introduction, the quality of the 
checks which the national authorities 
carried out on the reliability of refer ‑
ence data and the correctness of the 
calculation of payment entitlements 
varied significantly. This is partly due 
to a lack of clear guidance from the 
Commission.52 
In the Netherlands the Court identified 
only minor weaknesses in the checks 
on transfers of reference data be ‑
tween farmers and in the application 
of the specific calculation rules for the 
number of payment entitlements to be 
allocated to certain farmers.
53 
In France the national authorities had 
clearly set out the procedures for the 
calculation of payment entitlements 
in their national instructions but there 
was no comprehensive verification 
approach among the administrative 
bodies involved and the Court found 
individual errors at the local level.
54 
In Greece the national authorities used 
unreliable data from the vineyard 
re gister to calculate payment entitle ‑
ments for farmers in the wine sec ‑
tor and farmers could have received 
payment entitlements for land that 
was not concerned by the measure. 
The Greek authorities also granted 
payment entitlements to new farmers, 
although they had no assurance that 
the applicants had not carried out an 
agricultural activity in their own name 
and at their own risk in the 5 years pre ‑
ceding the start of the new agricultural 
activity as required by EU legislation.29 Article 69 of Regulation (EC) 
No 1782/2003.
30 This is among the criteria for 
the accreditation of paying 
agencies. See Annex I of 
Commission Regulation (EC) 
No 885/2006 of 21 June 2006 
laying down detailed rules 
for the application of Council 
Regulation (EC) No 1290/2005 
as regards the accreditation 
of paying agencies and other 
bodies and the clearance 
of the accounts of the EAGF 
and of the EAFRD (OJ L 171, 
23.6.2006, p. 90).
25 Observations
55 
In Italy the calculation of payment 
entitlements was not performed by 
paying agencies themselves but by 
a central coordination body which out ‑
sourced the work to a service provider. 
Due to a lack of supervision several 
systematic errors in the calculation of 
the payment entitlements went unde ‑
tected and reference amounts could 
be allocated to beneficiaries who were 
not entitled to them, because they 
had not been farmers in the sectors 
concerned. There were significant 
weaknesses in the checks for access to 
the national reserve from which, since 
2010, the authorities had allocated 
payment entitlements for a value of 
78,5 million euro to new farmers. The 
Court, however, found cases where 
farmers had created legal entities 
(companies) under their control that 
received payment entitlements from 
the national reserve as ‘new farmers ’, 
although they were ineligible. The 
Court also identified a high number 
of new farmers over the age of 65 (the 
normal retirement age in Italy), but 
the authorities failed to check whether 
such applicants had actually started 
an independent agricultural activity 
or whether the conditions had been 
 created artificially.56 
In Spain the national authorities also 
outsourced the calculation of the ref ‑
erence amounts to a service provider. 
They could not provide evidence that 
they had properly supervised the work 
and reperformed the calculations. 
The Spanish authorities also did not 
effectively check farmers who claimed 
that their level of support in the refer ‑
ence period had been affected by force 
majeure  and accepted claims without 
legal basis or committed calculation 
errors.
Reduced effectiveness of the 
Commission’s conformity 
clearance
57 
Under the system of shared manage ‑
ment, the Commission reimburses 
on a monthly basis the SPS aid which 
Member States granted to farmers. The 
Commission ensures the compliance of 
SPS expenditure with the applicable fi ‑
nancial and sector ‑specific regulations 
through a two‑stage procedure called 
the clearance of accounts procedure.
26 Observations
58 
The Commission had inspected 
Member States in order to review 
the conformity of the calculation of 
payment entitlements. It highlighted 
several potential infringements 
against EU legislation and informed 
the national authorities. Neverthe ‑
less, financially important schemes 
that were integrated in Spain and Italy 
have so far not been covered and, in 
France, several significant shortcom ‑
ings highlighted by the Court were not 
discovered. Also, the Commission had 
not carried out an exhaustive review 
of the consistency of the criteria which 
Member States had established for the 
distribution of the available amounts 
and the conformity of Member States’ 
implementing regulations with the EU 
legal framework and principles.59 
The Court observed delays in the 
clearance of accounts procedure on 
several occasions31. With regard to the 
audits of payment entitlements which 
the Commission has carried out since 
the entry into force of Regulation (EC) 
No 73/2009, the time limits imposed by 
the regulations were adhered to. Nev ‑
ertheless, the Commission has not yet 
finalised a conformity clearance deci ‑
sion, even though in the case of audits 
in France and Italy more than 2 years 
have elapsed since the inspections 
took place in 2011. At the time of the 
Court’s audit in September 2013, the 
Commission presented no evidence 
as to the extent to which the national 
authorities had adjusted incorrectly 
calculated payment entitlements. 
Payments on irregularly calculated SPS 
entitlements are however repeated 
every year unless the payment entitle ‑
ments are adjusted.31 See paragraph 71 of Special 
Report No 7/2010 ‘Audit on 
the clearance of accounts 
procedure’, and paragraph 82 
of Special Report No 5/2011 
‘Single payment scheme 
(SPS): issues to be addressed 
to improve its sound financial 
management’ ( http://eca.
europa.eu ).
27
 Conclusions  and  
recommendations
60 
The integration of coupled support 
which the Council adopted in the 2008 
CAP health check gave Member States 
considerable discretion as regards the 
criteria for distributing the amounts 
available for coupled support among 
farmers. However, the Commission 
retains overall responsibility for the 
consistent implementation of the EU 
budget under the system of shared 
management and compliance with the 
general principles of EU legislation in 
the agricultural sector.
61 
The Court concludes that the Commis ‑
sion’s management of the integration 
of coupled support into the SPS was 
only partially effective.
62 
The audit showed that the Commis ‑
sion did not adequately supervise the 
calculation of payment entitlements. 
More specifically, the Commission 
has not duly adopted detailed imple ‑
menting provisions in order to clarify 
the framework set by the Council. 
The Commission therefore could not 
ensure that the criteria established 
by the Member States were always 
consistent with EU principles, notably 
those of equal treatment of farmers 
and proportionality. It has also not 
assessed whether the criteria adopted 
by Member States potentially affected 
market conditions. Furthermore, 
Member State criteria did not always 
follow the principle of sound financial 
management and side effects were not 
treated consistently. As a consequence, 
the integration of coupled support 
into the SPS was implemented in an 
inconsistent manner and farmers in 
some sectors realised windfall benefits 
(see paragraphs 22 to 34).63 
The Commission also did not clearly 
enough set out the situations in which 
farmers had access to the national 
reserve (see paragraphs 35 to 37)
64 
The new rules governing direct pay ‑
ments to farmers after 2014 again 
grant significant discretion to Member 
States and entrust the Commission 
with the responsibility for adoption 
of delegated acts or implementing 
acts in relation to eligibility of farmers, 
access to direct support and value of 
payment entitlements.
Recommendation 1
In order to ensure the consistent 
implementation of CAP measures in 
a common market for the future new 
direct payment schemes, the Commis ‑
sion should establish at the appropri ‑
ate level clear guidelines and require 
Member States to demonstrate that 
the criteria adopted are objective and 
non‑discriminatory, thereby avoiding 
market or competition distortion.
28 Conclusions and recommendations
65 
The Commission had not introduced 
an effective system for verifying 
whether the Member States complied 
with the applicable SPS ceilings (see 
paragraphs 41 and 42).
66 
There were weaknesses in the way 
the Commission conducted conform ‑
ity inspections in Member States. The 
follow‑up for cases of non‑compliance 
found in the conformity clearance pro ‑
cedure is slow and as yet incomplete. 
Incorrectly calculated payment entitle ‑
ments identified during Commission 
inspections had not been corrected 
at the time of the Court’s audit. This 
reduces the effectiveness of the Com ‑
mission’s conformity clearance (see 
paragraphs 57 to 59).
Recommendation 2
The Commission’s procedures should 
ensure the effective supervision of 
compliance with applicable ceilings. 
Conformity clearance inspections 
should take a more comprehensive 
approach which pays attention to 
the specific risks associated with an 
entitlements ‑based support scheme 
and the procedures for following up 
cases of non‑conformity should be 
accelerated.67 
Member States’ national legislation 
was not always in line with EU legisla ‑
tion and principles, and the national 
authorities sometimes allocated pay ‑
ment entitlements without a sufficient 
legal basis in EU legislation (see para ‑
graphs 38 to 40).
68 
The Court also found that while for the 
most part the Member State author ‑
ities correctly used the farmers’ refer ‑
ence data, the competent authorities 
had not always correctly calculated 
and allocated the farmers’ payment 
entitlements and had sometimes not 
respected applicable ceilings (see 
paragraphs 43 to 49).
69 
The payment entitlements allocated 
remain valid for the duration of the 
SPS and incur annual SPS expenditure, 
unless they are recalculated. There ‑
fore incorrect payment entitlements 
will continue to lead to incorrect 
payments. As from 2015 the SPS will 
be replaced by a new basic payment 
scheme, which will again be based on 
payment entitlements, but Member 
States may choose to pay, up to 2021, 
a part of the future aid on the basis of 
the current level of SPS aid.
29 Conclusions and recommendations
Recommendation 3
The Commission should ensure com ‑
pliance of national legislation with the 
conditions and principles in EU legisla ‑
tion and that Member States correct 
payment entitlements whose values 
have not been calculated in accord ‑
ance with the applicable rules, not ‑
ably in the case of systematic errors. 
Payment entitlements that have been 
unduly allocated and undue SPS pay ‑
ments arising from such entitlements 
should be recovered.
70 
The competent authorities in the 
Member States did not always ef ‑
fectively check that the calculation 
and allocation of payment entitle ‑
ments was correct. This was due to the 
varying quality of the control systems 
and weaknesses in the reliability of 
reference data. This meant that the 
competent authorities in the Member 
States could not always ensure that 
errors in the calculation of payment 
entitlements were detected (see para ‑
graphs 50 to 56).71 
The new support system which enters 
into force in 2015 will involve the cal ‑
culation of new payment entitlements, 
which must be based on individual 
data on beneficiaries and areas.
Recommendation 4
The Commission should ensure that 
paying agencies adopt clear proced ‑
ures to include effective checks on the 
reliability of the data underlying the 
calculations and on the accuracy of 
payment entitlements.
This report was adopted by Chamber I, headed by Mrs Rasa BUDBERGYTĖ, 
Member of the Court of Auditors, in Luxembourg at its meeting of 9 April 2014.
For the Court  of Auditors
Vítor  Manuel  da SILVA  CALDEIRA
President

30
 Annexes Annex  IAmounts integrated into the SPS from 2010 to 2012
Member 
StateSPS 
startModel Support scheme or sector integratedYear of 
integrationAmounts available 
(thousand euro)
Belgium 2005 historicalSlaughter premium for calves 2012 6 384
Aid for flax and hemp grown for fibre (Regulation (EC) No 1234/2007) 2012 2 954
Seeds 2010 1 397
Protein crop premium 2012 84
Area payment for nuts 2010 12
 Sub‑total 10 831
Denmark 2005dynamic 
hybrid moving 
to nearly full 
regional modelSpecial male bovine premium 2012 33 085
Potato starch premium and aid for starch potato growers 2012 14 899
Aid for processing dried fodder (Regulation (EC) No 1234/2007) 2012 2 779
Sheep and goat premiums 2012 855
Protein crop premium 2010 843
Aid for flax and hemp grown for fibre (Regulation (EC) No 1234/2007) 2012 3
  Sub‑total 52 464
Germany 2005dynamic hybrid 
moving to full 
regional modelPotato starch premium and aid for starch potato growers 2012 64 800
Aid for processing dried fodder (Regulation (EC) No 1234/2007) 2012 8 475
Protein crop premium 2012 7 231
Raw tobacco (Annex VII.I of Regulation (EC) No 1782/2003) 2010 3 548
Hops payments 2010 2 277
Aid for flax and hemp grown for fibre (Regulation (EC) No 1234/2007) 2012 244
Area payment for nuts 2012 181
Grubbing-up scheme in the wine sector (2009/10) 2011 13
Grubbing-up scheme in the wine sector (2010/11) 2012 13
Grubbing-up scheme in the wine sector (2008/09) 2010 4
 Sub‑total 86 786
Ireland 2005 historicalProtein crop premium 2012 216
Aid for processing dried fodder (Regulation (EC) No 1234/2007) 2012 132
 Sub‑total 348
31 Annexes
Member 
StateSPS 
startModel Support scheme or sector integratedYear of 
integrationAmounts available 
(thousand euro)
Greece 2006 historicalPayments under former Article 69 of Regulation (EC) No 1782/2003 2010 101 460
Durum wheat specific quality premium 2010 20 301
Fruit and vegetables — others 2010 17 920
Transfer from wine support programmes 2010 13 000
Crop specific payment for rice 2010 11 407
Fruit and vegetables — tomatoes 2011 10 720
Area payment for nuts 2010 4 963
Transfer from wine support programmes 2011 3 000
Seeds 2010 1 400
Aid for processing dried fodder (Regulation (EC) No 1234/2007) 2012 1 238
Grubbing-up scheme in the wine sector (2008/09) 2010 293
Protein crop premium 2010 242
Grubbing-up scheme in the wine sector (2009/10) 2011 210
Grubbing-up scheme in the wine sector (2010/11) 2012 191
 Sub‑total 186  345
Spain 2006 historicalArable crops area payments 2010 372 670
Sheep and goat premiums 2010 239 294
Transfer from wine support programmes 2010 123 242
Aid for olive groves 2010 103 140
Fruit and vegetables — others 2010 93 733
Area payment for nuts 2012 68 610
Crop specific payment for rice 2012 49 993
Slaughter premium bovine adults 2012 47 175
Aid for processing dried fodder (Regulation (EC) No 1234/2007) 2012 43 725
Durum wheat suppl. payment 2010 42 025
Fruit and vegetables — tomatoes 2011 28 117
Durum wheat specific quality premium 2010 22 372
Raw tobacco (Annex VII.I of Regulation (EC) No 1782/2003) 2010 11 767
Protein crop premium 2012 10 905
Grubbing-up scheme in the wine sector (2008/09) 2010 10 395
Seeds 2012 10 347
Grubbing-up scheme in the wine sector (2010/11) 2012 6 067
Grubbing-up scheme in the wine sector (2009/10) 2011 5 987
Slaughter premium calves 2012 560
Potato starch premium and aid for starch potato growers 2012 172
Aid for flax and hemp grown for fibre (Regulation (EC) No 1234/2007) 2012 138
 Sub‑total 1 290 434Annex  I
32 Annexes
Member 
StateSPS 
startModel Support scheme or sector integratedYear of 
integrationAmounts available 
(thousand euro)
France 2006 historicalArable crops area payments 2010 1 154 046
Suckler cow premium 2010 208 794
Slaughter premium bovine adults 2010 101 248
Sheep premiums 2010 86 027
Slaughter premium calves 2010 79 472
Aid for processing dried fodder (Regulation (EC) No 1234/2007) 2012 35 752
Potato starch premium and aid for starch potato growers 2012 23 502
Protein crop premium 2012 17 635
Durum wheat suppl. payment 2010 14 820
Aid for flax and hemp grown for fibre (Regulation (EC) No 1234/2007) 2012 13 592
Fruit and vegetables — others 2011 10 127
Durum wheat specific quality premium 2010 8 320
Raw tobacco (Annex VII.I of Regulation (EC) No 1782/2003) 2010 8 036
Crop specific payment for rice 2012 7 844
Fruit and vegetables — tomatoes 2012 4 017
Grubbing-up scheme in the wine sector (2008/09) 2010 2 374
Seeds 2012 2 310
Grubbing-up scheme in the wine sector (2009/10) 2011 2 130
Area payment for nuts 2012 2 089
Grubbing-up scheme in the wine sector (2010/11) 2012 1 754
Hops payments 2010 98
 Sub‑total 1 783  987
Italy 2005 historicalPayments under former Article 69 of Regulation (EC) No 1782/2003 2010 189 931
Crop specific payment for rice 2012 99 473
Fruit and vegetables — tomatoes 2011 91 984
Durum wheat specific quality premium 2010 42 457
Aid for processing dried fodder (Regulation (EC) No 1234/2007) 2012 22 605
Raw tobacco (Annex VII.I of Regulation (EC) No 1782/2003) 2010 22 016
Area payment for nuts 2012 15 710
Seeds 2012 13 321
Fruit and vegetables — others 2011 8 850
Protein crop premium 2012 5 009
Grubbing-up scheme in the wine sector (2008/09) 2010 3 698
Grubbing-up scheme in the wine sector (2009/10) 2011 3 489
Grubbing-up scheme in the wine sector (2010/11) 2012 2 774
Aid for flax and hemp grown for fibre (Regulation (EC) No 1234/2007) 2012 50
  Sub‑total 521  367Annex  I
33 Annexes
Member 
StateSPS 
startModel Support scheme or sector integratedYear of 
integrationAmounts available 
(thousand euro)
Luxembourg 2005 static hybridTransfer from wine support programmes 2011 110
Protein crop premium 2010 21
Transfer from wine support programmes 2010 18
Area payment for nuts 2010 12
Transfer from wine support programmes 2012 -8
 Sub‑total 153
Malta 2007 regionalTransfer from wine support programmes 2011 78
Transfer from wine support programmes 2010 11
Transfer from wine support programmes 2012 -6
 Sub‑total 83
Netherlands 2006 historicalSlaughter premium bovine adults 2010 62 200
Slaughter premium calves 2010 40 300
Potato starch premium and aid for starch potato growers 2012 38 269
Aid for processing dried fodder (Regulation (EC) No 1234/2007) 2012 5 202
Aid for flax and hemp grown for fibre (Regulation (EC) No 1234/2007) 2012 1 111
Seeds 2012 726
Protein crop premium 2010 67
Area payment for nuts 2010 12
 Sub‑total 147  887
Austria 2005 historicalSlaughter premium — bovine adults 2010 17 348
Slaughter premium — calves 2010 5 085
Potato starch premium and aid for starch potato growers 2012 4 224
Protein crop premium 2010 2 051
Durum wheat specific quality premium 2010 280
Grubbing-up scheme in the wine sector (2009/10) 2011 69
Aid for processing dried fodder (Regulation (EC) No 1234/2007) 2012 64
Grubbing-up scheme in the wine sector (2008/09) 2010 58
Grubbing-up scheme in the wine sector (2010/11) 2012 55
Hops payments 2010 27
Aid for flax and hemp grown for fibre (Regulation (EC) No 1234/2007) 2012 20
Area payment for nuts 2011 12
 Sub‑total 29 293Annex  I
34 Annexes
Member 
StateSPS 
startModel Support scheme or sector integratedYear of 
integrationAmounts available 
(thousand euro)
Portugal 2005 historicalFruit and vegetables — tomatoes 2012 16 667
Crop specific payment for rice 2012 11 193
Slaughter premium — bovine adults 2012 8 657
Area payment for nuts 2012 4 987
Slaughter premium — calves 2012 946
Grubbing-up scheme in the wine sector (2008/09) 2010 312
Seeds 2012 272
Protein crop premium 2012 214
Grubbing-up scheme in the wine sector (2009/10) 2011 180
Grubbing-up scheme in the wine sector (2010/11) 2012 97
Durum wheat specific quality premium 2010 80
Aid for processing dried fodder (Regulation (EC) No 1234/2007) 2012 69
  Sub‑total 43 674
Slovenia 2007 regionalSpecial beef premium 2012 10 077
Sheep and goat premiums 2010 697
Hops payments 2010 149
Protein crop premium 2012 81
Area payment for nuts 2012 33
Grubbing-up scheme in the wine sector (2010/11) 2012 21
Grubbing-up scheme in the wine sector (2009/10) 2011 12
Grubbing-up scheme in the wine sector (2008/09) 2010 5
 Sub‑total 11 075
Finland 2006dynamic hybrid 
moving to full 
regional modelSpecial male bovine premium 2010 24 420
Potato starch premium and aid for starch potato growers 2012 4 710
Seeds 2012 1 150
Protein crop premium 2011 303
Aid for processing dried fodder (Regulation (EC) No 1234/2007) 2012 10
Aid for flax and hemp grown for fibre (Regulation (EC) No 1234/2007) 2012 5
 Sub‑total 30 598Annex  I
35 Annexes
Member 
StateSPS 
startModel Support scheme or sector integratedYear of 
integrationAmounts available 
(thousand euro)
Sweden 2005 static hybrid Special beef premium 2012 37 446
Potato starch premium and aid for starch potato growers 2012 5 497
Protein crop premium 2010 2 147
Aid for processing dried fodder (Regulation (EC) No 1234/2007) 2012 180
 Sub‑total 45 270
United 
Kingdom2005historical 
in Scotland 
and Wales; 
static hybrid 
in Northern 
Ireland; 
dynamic hybrid 
moving to full 
regional model 
in EnglandProtein crop premium 2012 9 991
Aid for processing dried fodder (Regulation (EC) No 1234/2007) 2012 1 478
Protein crop premium 2010 509
Aid for flax and hemp grown for fibre (Regulation (EC) No 1234/2007) 2012 83
Transfer from wine support programmes 2011 57
Area payment for nuts 2012 12
Transfer from wine support programmes 2010 6
Transfer from wine support programmes 2012 -4
 Sub‑total 12 132
Total 4 252  727Annex  I
36 Annexes
Situation of payment entitlements as notified by Member States as at 15.9.2013 
pursuant to Article 51(3)(a) of Regulation (EC) No 1120/2009 (application year 2012)
(in euro)
Member StateTotal value of payment 
entitlements allocatedBudgetary ceiling1
Belgium 517 711  630 517 901 000
Denmark 1 009 708 019 1 035 927 000
Germany 5 825 933 206 5 852 938 000
Ireland 1 335 255 223 1 339 769 000
Greece 2 147 583 749 2 225 227 000
Spain 4 901 216 444 4 913 824 000
France 7 814 161 875 7 586 247 000
Italy 3 965 484 068 4 202 085 000
Luxembourg 37 338 679 37 671 000
Malta 5 069 270 5 137 000
Netherlands 881 670 732 891 551 000
Austria 677 190  906 679 111  000
Portugal 473 199 375 476 907 000
Slovenia 127 053  724 129 221 000
Finland 521 941 024 523 455 000
Sweden 757 824 892 767 437 000
United Kingdom23 958 242 000
1  Annex V of Commission Implementing Regulation (EU) No 564/2012 of 27 June 2012 
establishing budgetary ceilings for 2012 applicable to certain direct support schemes 
provided for in Council Regulation (EC) No 73/2009 (OJ L 168 28.6.2012, p. 26). 
2 The information from the MS has not yet been obtained by the Commission.Annex II
37
Common reply to paragraphs VI and VII
The integration of coupled support into the SPS 
was implemented under the shared management of 
the Commission and the Member States. Moreover, 
Regulation (EC) No 73/2009 provided modalities 
with a certain level of discretion to the Member 
States. 
As long as the different modalities of implementa ‑
tion respect the framework of the rules laid down 
in Regulation (EC) No 73/2009, the Member States 
may choose different implementation modalities, 
reflecting the variety of situations and character ‑
istics in the European Union. Besides, it is settled 
case ‑law that the Member States, when adopting 
measures to implement EU legislation, must exer ‑
cise their discretion in compliance with the general 
principles of EU law and fundamental rights (see 
e.g. case C ‑313/99 Mulligan , paragraphs 35 and 36).
It should further be noted that windfall benefits in 
individual cases are not necessarily in breach of the 
general principles of EU law.
Where weaknesses in the implementation of the 
EU regulations by the Member States are observed, 
these are followed under the clearance of accounts 
procedure.
VIII
Under the shared management, the Member States 
shall adopt legislative, regulatory and administra ‑
tive provisions to ensure effective protection of the 
EU’s financial interests and in particular to set up an 
efficient control and management system within 
the framework of the Integrated Administration and 
Control System (IACS). 
The EU regulations provide clear rules on the estab ‑
lishment of payment entitlements and their value, 
and it is for the Member States to apply the EU 
regulations correctly. Executive summary
III
Under the shared management overall responsibil ‑
ity is also with the Member States, who shall check 
the compliance of operations financed by the EAGF 
(cf. Article 9 of Regulation (EC) No 1290/2005). The 
Commission retains responsibility for controlling 
and auditing the consistent implementation of 
the EU budget and compliance with the general 
principles of EU legislation in the agricultural sec ‑
tor. In addition, according to Article 317(1) TFEU, 
the budget is implemented by the Commission in 
co operation with the Member States. 
Considering the discretion provided to the Mem ‑
ber States in Regulation (EC) No 73/2009 and the 
different options available to the Member States to 
adjust implementation to their national particular ‑
ities, it was not deemed appropriate, in that legal 
framework and in view of the policy objectives to 
be achieved, for the Commission to impose more 
uniform implementation across the Member States.
However, in the context of the CAP reform and the 
direct payments system which will apply from 2015, 
the Commission is going to increase its monitoring 
capacity to enhance its supervision over the imple ‑
mentation of the relevant EU regulations before the 
start of the clearance of accounts procedures.
IV
For the purposes of establishing the initial unit 
value of the new entitlements, the Member States 
have an option to take into account the value of 
entitlements held by a farmer in 2014. However, 
considering convergence of the value of entitle ‑
ments, these will not carry the same value until 
claim year 2020. Moreover, the introduction of the 
new schemes is reflected in the basic payment 
scheme ceiling that will be available for payment 
entitlements, which will be in general lower than 
the current single payment scheme ceiling.Reply  of the  
Commission
Reply of the Commission 38
IX (b)
The Commission is already using tools to ensure 
effective supervision of compliance with applicable 
ceilings. In particular, the transmission of informa ‑
tion by the MS regarding the use of the ceilings 
is digitalised. Where errors are detected in the 
transmission from MS, the notification concerned is 
rejected or the MS is contacted for further clarifica ‑
tion. One of the controls performed is whether the 
sum of the value of entitlements and the amount in 
the reserves is within the SPS ceiling.
The Commission has also foreseen to address these 
issues with the conformity clearance procedure 
under the CAP reform. 
Also, from 2014, resources within the Commission 
will be especially dedicated to supporting Member 
States, in particular as regards the implementation 
of the IACS in the context of the reform.
The Commission is currently engaged in streamlin ‑
ing the conformity clearance procedure with a view 
to reducing its duration to 2 years in standard 
cases. Firstly, the new CAP horizontal regulation 
(Regulation (EU) No 1306/2013) describes precisely 
the nature, scope and sequence of the successive 
steps, as well as the different types of financial 
corrections. Secondly, provisions in the delegated 
act (method and criteria for calculating the finan ‑
cial correction) and implementing acts (details of 
the conformity procedure, with deadlines for each 
step of the procedure) are intended to further 
streamline the legal framework and limit the risk of 
unnecessary delays. Thirdly, on that stronger basis, 
the Commission will intensify its monitoring of the 
progress of the conformity procedures to ensure 
strict respect of the deadlines.Considering the level of discretion provided to the 
Member States in Regulation (EC) No 73/2009, the 
Commission provided guidance upon Member 
States’ requests for clarifications on the correct 
implementation of the regulations. Besides, in the 
framework of the rules laid down in Regulation (EC) 
No 73/2009, the Member States may choose differ ‑
ent implementation, reflecting the variety of situ ‑
ations and characteristics in the European Union. 
Nevertheless, undue payments and payment 
entitlements are to be recovered as provided for in 
Article 80 and 81 of Regulation (EC) No 1122/2009. 
Similar provisions are considered for the CAP reform 
implementing rules.
IX (a)
The Commission has already taken action in this 
respect. In the context of the legitimate policy 
choices entrusted to Member States by the legisla ‑
tor in order to pursue the policy objectives of the 
reform, the Commission has proposed in the imple ‑
menting rules applicable from 2015 more detailed 
notification requirements on those choices. For 
example, the decisions made regarding the allo ‑
cation of payment entitlements, or the decisions 
taken in the framework of the voluntary coupled 
support, would have to be notified and justified. 
The Commission has also proposed more detailed 
rules on the use of the national or regional reserves, 
providing that allocations related to the increase 
of the unit value of payment entitlements shall be 
made in accordance with objective criteria and in 
such a way as to ensure equal treatment between 
farmers and to avoid market and competition 
distortion.
Besides, according to Article 30(10) of Regulation 
(EU) No 1307/2013 an increase of the value of pay ‑
ment entitlements for a farmer may not exceed the 
national or regional unit value of entitlements.
Reply of the Commission 39
IX (d)
From 2014 the Commission is strengthening its 
monitoring capacity and is dedicating resources to 
supporting Member States.
Nevertheless, it is worth noting that that the cal ‑
culation of payment entitlements is based on data 
derived from the identification and registration sys ‑
tem of payment entitlements referred to in Article 7 
of Regulation (EC) No 1122/2009. Such a provision 
is to be provided also for the payment entitlements 
system applicable from 2015.
Member States have to ensure that requirements 
set out in the chosen information systems meet the 
security standards referred to in Annex I to Regula ‑
tion (EC) No 885/2006. These standards require the 
establishment of special controls to safeguard the 
confidentiality, reliability and integrity of data.
In addition, the Commission specified in the new 
guidelines for the certification bodies that their 
checks should include an assessment of the ‘Pro ‑
cedures in place to ensure the correct attribution 
of entitlements’. Moreover, the next version of the 
guidelines will contain an explicit reference to the 
accuracy of the calculation.IX (c)
In the context of the CAP reform and the direct 
payments system applicable from 2015, the Com ‑
mission has dedicated specific resources to increase 
its monitoring capacity to enhance its supervision 
over the implementation of the relevant EU regula ‑
tions before the start of the clearance of accounts 
procedures.
Cases of incorrectly calculated payment entitle ‑
ments are already being followed up. 
Undue payments and payment entitlements are 
recovered as provided in Articles 80 and 81 of 
Regulation (EC) No 1122/2009. Similar provisions are 
being discussed in the framework of the elabora ‑
tion of the CAP reform implementing rules.
In addition, under Article 54(2) of Regulation (EU)
No 1306/2013, 50 % of any amount not recovered by 
the Member State from the final beneficiaries at the 
expiry of a 4 ‑year delay (8 years in case of judicial 
proceedings) from the recovery request are charged 
to the Member State concerned, which is a strong 
incentive to complete the recovery procedure in 
a timely manner (the so ‑called 50/50 rule, which has  
existed since 2007).
Under Article 54(5) of the same regulation, the 
Commission has the possibility, in the context of 
the conformity clearance procedure, to exclude 
from Union financing certain amounts if the Mem ‑
ber State has not been diligent in the recovery 
procedure.
It is important to note that the recovery of an undue 
payment could be affected by delays due in par ‑
ticular to the Member States’ limited enforcement 
procedures. In addition, when beneficiaries lodge 
an appeal, an enforcement action is initiated, some ‑
times involving legal action. Consequently, it could 
be difficult for the Commission to demonstrate 
that the Member State in question has not taken 
the adequate measure ensuring the recovery of the 
undue amount. In cases dealt with under Article 258 
TFEU, the burden of proof would be particularly dif ‑
ficult when national cases are pending.
Reply of the Commission 40
17
The level of discretion provided to Member States 
as regards modalities of decoupling is justified by 
the diversity of national and regional specificities 
and by the necessity to facilitate the way forward 
towards decoupling.
Observations
22
Regulation (EC) No 73/2009 provided a certain level 
of discretion to Member States and such discretion 
was provided to facilitate the way forward towards 
decoupling.
As long as the different modalities of implementa ‑
tion respect the framework of the rules laid down 
in Regulation (EC) No 73/2009, Member States 
may choose different implementation modalities, 
reflecting the variety of situations and character ‑
istics in the European Union. Besides, it is settled 
case ‑law that Member States, when adopting 
measures to implement EU legislation, must exer ‑
cise their discretion in compliance with the general 
principles of EU law and fundamental rights (see 
e.g. case C ‑313/99 Mulligan , paragraphs 35 and 36).
24
The Commission considers that Articles 63 to 65 of 
Regulation (EC) No 73/2009 provided a common 
framework for the implementation of the measure 
which contained a sufficient level of detail, there ‑
fore it was not deemed necessary to adopt further 
detailed rules in the Commission’s implementing 
regulation. The Member States were deemed to 
be in a better position, in line with the subsidiarity 
principle, to judge the relevant implementation 
modalities according to their specificities, in the 
framework of the rules existing in the basic act 
adopted by the legislator (Council). Introduction
13
In 2015, payment entitlements will be allocated and 
their value will be set either as a national or regional 
flat rate or as a converging value towards a national 
or regional flat rate. For the convergence towards 
a flat rate, historical reference (e.g. the value of 
the entitlements held by a farmer in 2014) will be 
taken into account, but considering convergence 
of the value of entitlements, it cannot be regarded 
as  carrying over the same value. Due to the con ‑
vergence, the value of the entitlements for some 
farmers will gradually decrease, but for some others 
it will increase to reach convergence objectives 
towards a national or regional flat ‑rate payment. 
Moreover, the introduction of the new schemes is 
reflected in the basic payment scheme’s ceiling that 
will be available for payment entitlements, which 
will be in general lower than the current single pay ‑
ment scheme’s ceiling. 
Moreover, undue payments and payment entitle ‑
ments would also have to be recovered under the 
future basic payment scheme. 
14
It is in line with the principle of shared management 
that certain discretion is left to the Member States.
15
The Commission considers that for the integra ‑
tion of coupled support the overall responsibility 
is shared between the Commission and Member 
States. The respective responsibilities of Member 
States and the Commission are clearly laid down 
by the legislator in Regulation (EU) No 73/2009 and 
further applicable EU legislation. This reflects the 
principle of shared management, where it is for 
Member States to implement the relevant rules, 
while the Commission retains responsibility for con ‑
trolling and auditing the consistent implementation 
of EU legislation.
Reply of the Commission 41
Article 64(1) and Article 65 of Regulation (EC) 
No 73/2009 did not oblige Member States to limit 
the respective amounts at individual level. Further ‑
more, the list of criteria in Article 64(1) of Regulation 
(EC) No 73/2009 which is to be taken into account is 
not exhaustive (see the words ‘in particular’), in line 
with the discretion of Member States. As long as the 
different modalities of implementation respect the 
framework of the rules, Member States may choose 
different implementation modalities, reflecting 
the variety of situations and characteristics in the 
European Union.
28
See reply to paragraph 27.
30
This is in compliance with the provisions of Art ‑
icle 64 of Regulation (EC) 73/2009.
See also reply to paragraph 27. 
31
A difference in treatment between farmers is not 
as such discriminatory, but may be justified on the 
basis of objective criteria in line with the policy 
objectives pursued by the legislation. In addition, 
discrimination issues are from the outset prevented 
from arising where farmers are not in comparable 
situations.
See also replies to paragraphs 22 and 26. 
Box 1  
See reply to paragraph 31.The level of discretion provided to the Member 
States as regards modalities of decoupling is justi ‑
fied by the diversity of national and regional spe ‑
cificities and by the necessity to facilitate the way 
forward towards decoupling. 
There is no formal approval required from the 
Commission on the choices made under Articles 63 
to 67 of Regulation (EC) No 73/2009. Member States 
are responsible for the implementation of the 
regulation. 
However, in accordance with Article 140 of Regula ‑
tion (EC) No 73/2009, Member States shall inform 
the Commission in detail of the measures taken to 
implement this regulation. In 2010, the Commission 
used this legislative tool and sent a questionnaire to 
Member States on the implementation of the given 
regulation. 
See also reply to paragraph 22. 
26
Where weaknesses in the implementation of the 
regulations by Member States are observed, these 
are followed under the clearance of accounts 
procedure.
See also reply to 22.
27
Article 64(1) of Regulation (EC) No 73/2009 provides 
that the relevant amounts shall be distributed by 
the Member States amongst farmers in the sectors 
concerned in accordance with objective and non ‑
discriminatory criteria, taking account, in particular, 
of support that those farmers received, directly or 
indirectly, under the relevant support schemes dur ‑
ing one or more years in the period 2005 to 2008. 
Article 65 of Regulation (EC) No 73/2009 provides 
that the relevant amounts shall be distributed by 
Member States amongst the farmers in the sec ‑
tors concerned in proportion to the support that 
those farmers received under the relevant support 
schemes during the relevant reference periods. 
Spain allocated reference amounts up to the ceiling 
available as laid down in Annex XII of Regulation 
(EC) No 73/2009.
Reply of the Commission 42
However, where weaknesses in the implementation 
of the regulations by Member States are observed, 
these are followed up by DG Agriculture and Rural 
Development. Where such weaknesses give rise to 
undue payments this may be followed under the 
clearance of accounts procedure.
Box 2  
As regards investments in animals the regulatory 
provisions do not require proof of the investment.
37
As regards a limit on the maximum value of entitle ‑
ments, in the context of the health check discus ‑
sions, it was deemed necessary to give Member 
States more flexibility, in line with the subsidiarity 
principle, as regards the establishment of payment 
entitlements from the reserve, in particular for the 
allocation of entitlements to farmers in a special 
situation. It should be noted that in the context 
of the health check, with the further decoupling, 
the limitation to the national/regional average had 
not the same relevance compared to the previous 
period, as the national reserve was used in particu ‑
lar in the first years of implementation of the SPS.
Regulation (EU) No 1307/2013 from 2015 provides 
for a new system of direct payments and for value 
of payment entitlements to converge towards 
a national or regional flat rate, in this context it is 
provided that the maximum value of the payment 
entitlements allocated from the national reserve is 
limited to the national/regional average. 
See also reply to paragraph 36.
39
Where weaknesses in the implementation of the 
regulations by Member States are observed that 
give rise to undue payments, these are followed 
under the clearance of accounts procedure. Common reply to paragraphs 32–34 
As the Court also rightly points out, Article 41(6) of 
Regulation (EC) No 73/2009 is optional and it was 
for Member States to judge whether it is appropri ‑
ate to apply it or not. 
Where weaknesses in the implementation of the 
regulations by Member States are observed, these 
are followed under the clearance of accounts 
procedure.
See also reply to paragraph 27.
35
See replies to paragraphs 22 and 26.
36
As regards the absence of a definition of ‘invest ‑
ment’ in the European implementing regulation, it 
should be noted that, in case the European legisla ‑
tion does not specify the definition, the context 
of the provision and the objective of the relevant 
legislation need to be taken into account, given 
the need for a uniform application of European 
Union law and the principle of equality (see e.g. 
case 327/82 Ekro , paragraph 11). Furthermore, when 
adopting measures to implement EU legislation, 
Member States must exercise their discretion in 
compliance with the general principles of EU law 
and fundamental rights (see e.g. case C ‑313/99 Mul -
ligan , paragraphs 35 and 36). 
As regards the detailed operation of the national 
reserve, flexibility was given to the Member States, 
in line with the subsidiarity principle, as they are 
best placed to decide the relevant implementation 
options in the frame of the rules laid down in Sec ‑
tion 2 of Chapter 2 of Regulation (EC) No 1120/2009. 
In this context, the Member States are to ensure 
equal treatment between farmers and that market 
and competition distortion is avoided when operat ‑
ing the national reserve.
Reply of the Commission 43
44
Where weaknesses in the implementation of the 
regulations by the Member States are observed that 
give rise to undue payments, these are followed 
under the clearance of accounts procedure (enquiry 
NAC/2012/010/FR and NAC/2014/001/FR).
In that context the Commission maintains the view 
that the values of entitlements were overstated, 
which eventually led to undue payments and a risk 
to the fund corresponding to 0,69 % for 2010.
The corrective measures to be taken (recalculation 
of the values of entitlements) are included in the 
action plan for France. The French authorities have 
notified that the correction of values of entitle ‑
ments will be in place for claim year 2014. 
See also reply to paragraph 42.
Common reply to paragraphs 
48 and 49
The Italian authorities confirmed that they have 
taken into account the entitlements initially owned 
by farmers when proceeding to the allocation of the 
decoupled amounts. This concerned a population 
of 86 000 farmers out of 500 000 farmers concerned 
by decoupling over the 3 years 2010–12.
The total amount allocated to that specific popula ‑
tion of farmers over the 3 years is 107,9 million euro. 
The amount per farmer is not in question, it is 
the split of the amount over entitlements that is. 
However, the number of entitlements that were not 
taken into account is unknown. 
Where weaknesses in the implementation of the 
regulations by Member States are observed that 
give rise to undue payment, these are followed 
under the clearance of accounts procedure.Box 3  
This is followed up in the clearance procedure 
(enquiry NAC/2011/201/FR).
40
See reply to paragraph 37.
42
Member States have to submit their notifications 
by electronic means via official channels (in the 
past either to the functional mailbox or AMIS, from 
September 2012 (regarding claim year 2012) to the 
ISAMM). Where the Member States do not respect 
the notification deadline, the Commission sends 
reminders requesting that they submit missing 
information. Also, in the framework of the meet ‑
ings of the Management Committee for direct 
payments, Member States are reminded about the 
notification requirements. Moreover, where errors 
are detected in the transmission from Member 
States, the concerned notification is rejected or the 
Member State is contacted for further clarification. 
One of the checks performed is whether the sum 
of the value of entitlements and the amount in the 
reserves is within the SPS ceiling.
Based on the monthly payment declarations, the 
Commission verifies whether the expenditure 
declared by the Member States exceeds the finan ‑
cial ceilings as laid down in the legislation. Where 
this is the case, a reduction is applied in conformity 
with the procedure laid down by Article 17 of Coun ‑
cil Regulation (EC) No 1290/2005. Detailed proced ‑
ures are also in place to ensure a correct follow ‑up 
of all financial ceilings laid down in the legislation, 
ensuring the expenditure reimbursed by the EAGF 
always respects these ceilings. 
Regulation (EU) No 1306/2013 provides under Art ‑
icle 42 a deterrent for late submission of the control 
statistics. On this basis, from 2014, the Commission 
may suspend part of the monthly or interim pay ‑
ments in respect of which the relevant statistical 
information has not been sent in time.
Reply of the Commission 44
Conclusions and recommendations
Common reply to paragraphs 60 and 61
Under the shared management overall responsibil ‑
ity is also with the Member States, who shall check 
the compliance of operations financed by the EAGF 
(cf. Article 9 of Regulation (EC) No 1290/2005). The 
Commission retains responsibility for controlling 
and auditing the consistent implementation of 
the EU budget and compliance with the general 
principles of EU legislation in the agricultural sec ‑
tor. In addition, according to Article 317(1) TFEU, 
the budget is implemented by the Commission in 
co operation with the Member States.
Considering the discretion provided to the Mem ‑
ber States in Regulation (EC) No 73/2009 and the 
different options available to the Member States to 
adjust implementation to their national particulari ‑
ties, it was not deemed appropriate, in that legal 
framework and in view of the policy objectives to 
be achieved, for the Commission to impose more 
uniform implementation across the Member States.
However, in the context of the CAP reform and 
direct payments system which will apply from 2015, 
the Commission is going to increase its monitoring 
capacity to enhance its supervision over the imple ‑
mentation of the relevant EU regulations before the 
start of the clearance of accounts procedures.
The integration of coupled support into the SPS was 
under the shared management of the Commission 
and the Member States. 
62
See reply to paragraphs 22 and 60.
Regulation (EC) No 73/2009 provided a certain level 
of discretion to the Member States. 51
The Commission considers that the EU regulations 
provide clear rules on the establishment of pay ‑
ment entitlements and their value and it is for Mem ‑
ber States to apply the EU regulations correctly. 
Considering the level of discretion provided to the 
Member States in Regulation (EC) No 73/2009, the 
Commission provided guidance upon Member 
States’ requests for clarifications on the correct 
implementation of the regulations.
Common reply to paragraphs 54–56
Where weaknesses in the implementation of the 
regulations by Member States are observed that 
give rise to undue payment, these are followed 
under the clearance of accounts procedure.
58
The Commission notes that the Court refers primar ‑
ily to weaknesses observed in the integration of 
coupled support measures into the SPS. With refer ‑
ence to the CAP reform this element will no longer 
be present.
Following a reorganisation, from 2014 the Com ‑
mission is strengthening its monitoring capacity to 
enhance its supervision over the implementation of 
the relevant EU regulations before the start of the 
clearance of accounts procedures.
59
The Commission is currently engaged in streamlin ‑
ing the conformity clearance procedure with a view 
to reducing its duration to 2 years in standard 
cases. Firstly, the new CAP horizontal regulation 
(Regulation (EU) No 1306/2013) describes precisely 
the nature, scope and sequence of the successive 
steps, as well as the different types of financial 
corrections. Secondly, provisions in the delegated 
act (method and criteria for calculating the finan ‑
cial correction) and implementing acts (details of 
the conformity procedure, with deadlines for each 
step of the procedure) are intended to further 
streamline the legal framework and limit the risk of 
unnecessary delays. Thirdly, on that stronger basis, 
the Commission will intensify its monitoring of the 
progress of the conformity procedures to ensure 
strict respect of the deadlines.
Reply of the Commission 45
Recommendation 1
The recommendation is accepted. 
The Commission has already taken action in this 
respect. In the context of the legitimate policy 
choices entrusted to Member States by the legisla ‑
tors to pursue the policy objectives of the reform, 
the Commission has proposed in the implementing 
rules that will apply from 2015 more detailed notifi ‑
cation requirements on those choices. For example, 
the decisions made regarding the allocation of 
payment entitlements or the decisions taken in the 
framework of the voluntary coupled support would 
have to be notified and justified. 
The Commission has also proposed more detailed 
rules on the use of the national or regional reserves, 
providing that allocations related to the increase 
of the unit value of payment entitlements shall be 
made in accordance with objective criteria and in 
such a way as to ensure equal treatment between 
farmers and to avoid market and competition 
distortion.
Besides, according to Article 30(10) of Regulation 
(EU) No 1307/2013, an increase of the value of pay ‑
ment entitlements for a farmer may not exceed the 
national or regional unit value of entitlements.
65
In the context of the CAP reform and direct pay ‑
ments system which will apply from 2015, the Com ‑
mission is going to increase its monitoring capacity 
to enhance its supervision over the implementation 
of the relevant EU regulations before the start of 
the clearance of accounts procedures.
See also reply to paragraph 42.
66
The review of the conformity clearance procedure 
under the new CAP addresses specifically the 
length of the procedure. As long as the different modalities of implementa ‑
tion respect the framework of the rules laid down 
in Regulation (EC) No 73/2009, the Member States 
may choose different implementation modalities, 
reflecting the variety of situations and character ‑
istics in the European Union. Besides, it is settled 
case ‑law that the Member States, when adopting 
measures to implement EU legislation, must exer ‑
cise their discretion in compliance with the general 
principles of EU law and fundamental rights (see 
e.g. case C ‑313/99 Mulligan , paragraphs 35 and 36).
It should further be noted that windfall benefits in 
individual cases are not necessarily in breach of the 
general principles of EU law.
Where weaknesses in the implementation of the 
EU regulations by the Member States are observed, 
these are followed under the clearance of accounts 
procedure. 
63
For the CAP reform and the direct payments system 
which will apply from 2015, the Commission has 
proposed more detailed rules on the allocation of 
entitlements from the national reserve regarding 
both the number and the value of entitlements to 
be allocated. 
See also reply to paragraph 60.
64
See reply to paragraph 63.
Reply of the Commission 46
68
Where weaknesses in the implementation of the EU 
regulations by Member States are observed, they 
are followed up by the Commission. Where such 
weaknesses are considered to give rise to undue 
payments this may be followed under the clearance 
of accounts procedure.
69
See reply to paragraph 13.
Recommendation 3
The recommendation is accepted. 
In the context of the CAP reform and direct pay ‑
ments system applicable from 2015, the policy 
choices entrusted to Member States by the legisla ‑
tors will be accompanied by strengthened obliga ‑
tions in the implementing rules in terms of justifica ‑
tion and notifications of such choices. 
Also, the Commission has dedicated specific 
resources to increase its monitoring capacity to 
enhance its supervision over the implementation of 
the relevant EU regulations before the start of the 
clearance of accounts procedures.
Cases of incorrectly calculated payment entitle ‑
ments are already being followed up. 
Undue payments and payment entitlements are 
recovered as provided for in Articles 80 and 81 of 
Regulation (EC) No 1122/2009. Similar provisions are 
being discussed in the framework of the elabora ‑
tion of the CAP reform implementing rules.
In addition, under Article 54(2) of Regulation 
No 1306/2013, 50 % of any amount not recovered by 
the Member State from the final beneficiaries at the 
expiry of a 4 ‑year delay (8 years in case of judicial 
proceedings) from the recovery request are charged 
to the Member State concerned, which is a strong 
incentive to complete the recovery procedure in 
a timely manner (the so ‑called 50/50 rule, which has  
existed since 2007). Recommendation 2
The recommendation is accepted. 
The Commission is already using tools to ensure 
effective supervision of compliance with applicable 
ceilings. In particular, the transmission of informa ‑
tion by the Member State regarding the use of the 
ceilings is digitalised. Where errors are detected in 
the transmission from Member States, the notifica ‑
tion concerned is rejected or the Member State 
is contacted for further clarification. One of the 
controls performed is whether the sum of the value 
of entitlements and the amount in the reserves is 
within the SPS ceiling.
The Commission will further address these issues in 
the conformity clearance procedure under the CAP 
reform. 
Also, from 2014, resources within the Commission 
will be especially dedicated to supporting the Mem ‑
ber States, in particular as regards the implementa ‑
tion of the IACS in the context of the reform.
The Commission is currently engaged in streamlin ‑
ing the conformity clearance procedure with a view 
to reducing its duration to 2 years in standard 
cases. Firstly, the new CAP horizontal regulation 
(Regulation (EU) No 1306/2013) describes precisely 
the nature, scope and sequence of the successive 
steps, as well as the different types of financial 
corrections. Secondly, provisions in the delegated 
act (method and criteria for calculating the finan ‑
cial correction) and implementing acts (details of 
the conformity procedure, with deadlines for each 
step of the procedure) are intended to further 
streamline the legal framework and limit the risk of 
unnecessary delays. Thirdly, on that stronger basis, 
the Commission will intensify its monitoring of the 
progress of the conformity procedures to ensure 
strict respect of the deadlines.
67
See reply to paragraph 65.
Reply of the Commission 47
The Member States have to ensure that require ‑
ments set out in the chosen information systems 
meet the security standards referred to in Annex 
I to Regulation (EC) No 885/2006. These standards 
require the establishment of special controls to 
safeguard the confidentiality, reliability and integ ‑
rity of data.
In addition, the Commission specified in the new 
guidelines for the certification bodies that their 
checks should include an assessment of the ‘Pro ‑
cedures in place to ensure the correct attribution 
of entitlements’. Moreover, the next version of the 
guidelines will contain an explicit reference to the 
accuracy of the calculation.Under Article 54(5) of the same regulation, the 
Commission has the possibility, in the context of 
the conformity clearance procedure, to exclude 
from Union financing certain amounts if the Mem ‑
ber State has not been diligent in the recovery 
procedure.
It is important to note that the recovery of an undue 
payment could be affected by delays due in par ‑
ticular to the Member States’ limited enforcement 
procedures. In addition, when beneficiaries lodge 
an appeal, an enforcement action is initiated, some ‑
times involving legal action. Consequently, it could 
be difficult for the Commission to demonstrate that 
the Member State in question has not taken ade ‑
quate measures to ensure the recovery of the undue 
amount. In cases dealt with under Article 258 TFEU, 
the burden of proof would be particularly difficult 
when national cases are pending.
70
Where the incorrect entitlements give rise to undue 
payments, financial corrections may apply.
See also reply to paragraphs 51 and 60.
Recommendation 4
The recommendation is accepted. 
From 2014 the Commission is strengthening its 
monitoring capacity and is dedicating resources to 
support the Member States.
Nevertheless, it is worth noting that the calculation 
of payment entitlements is based on data derived 
from the identification and registration system of 
payment entitlements referred to in Article 7 of 
Regulation (EC) No 1122/2009. Such a provision is 
to be provided also for the payment entitlements 
system applying from 2015.

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QJ‑AB‑14‑008‑EN‑C ISSN  1831 ‑0834
The single payment scheme (SPS) is financially the most important direct 
support scheme financed by the EU budget for agriculture. It provides for 
the decoupling of aid for farmers from production. 
Following the ‘health check ’ of the common agricultural policy (CAP) in 
2008, most of the amounts that had been formerly available for coupled 
support were integrated into the SPS.
The Court observed that the Commission’s management of the 
integration of coupled support into the SPS was only partially effective. 
With a view to the new EU farm support system that will be introduced in 
2015, the Court recommends that the Commission ensures a consistent 
implementation of CAP measures in the Member States and better 
enforces compliance with applicable rules and ceilings. Member States’ 
paying agencies should adopt clear procedures to include effective 
checks on the reliability of the data underlying the calculations and on 
the accuracy of payment entitlements.
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