Case T‑88/17

Kingdom of Spain

v

European Commission

(EAFRD — Last execution year of 2007-2013 programming period — Clearance of accounts of Member States’ paying agencies — Decision declaring a certain amount non-reusable in the rural development programme of the Autonomous Community of Extremadura — Calculation method — Article 69(5b) of Regulation (EC) No 1698/2005 — Legitimate expectations)

Summary — Judgment of the General Court (Eighth Chamber), 5 July 2018

Agriculture — EAFRD financing — Support for rural development — Eligibility of operations and expenses — Under-implementation of amounts in operations connected with the priorities to be targeted by the Member States in the light of the credits provided for as additional funds — Obligation to reimburse the balance to the EU budget — Calculation method — Taking into account of the amounts in a revised financing plan of the Member State concerned, annexed to a Commission decision approving a revision of the rural development programme before its closure — Not included

Agriculture — EAFRD financing — Support for rural development — Eligibility of operations and expenses — Under-implementation of amounts in operations connected with the priorities to be targeted by the Member States in the light of the credits provided for as additional funds — Obligation to reimburse the balance to the EU budget — Distinction from the automatic decommitment procedure of an unspent budgetary commitment

Agriculture — EAFRD financing — Support for rural development — Eligibility of operations and expenses — Under-implementation of amounts in operations connected with the priorities to be targeted by the Member States in the light of the credits provided for as additional funds — Obligation to reimburse the balance to the EU budget — Conditions under which applicable — Purpose

Under paragraph 5b of Article 69 of Regulation No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD), where the actual amount of EU contribution spent on operations related to the priorities defined in Article 16a(1)(a) to (f) of Regulation No 1698/2005 is lower than the total of the amounts referred to in paragraph 5a of Article 69 of that regulation, the Member State is to reimburse the difference to the EU budget up to the amount by which the total allocations available for operations other than those related to those priorities have been exceeded. Thus, Article 69(5b) of Regulation No 1698/2005 assumes that two premises are found to apply, namely that the amounts provided for the implementation of operations related to the priorities have been under-implemented and that the total allocations available for other operations have been exceeded. In that regard, an under-implementation of the additional funds provided for those priorities is not, therefore, unlawful as long as the allocations available for operations other than those planned for those priorities are not exceeded. It is only where the amounts spent exceed the allocations available for other operations that a reimbursement to the EU budget is necessary. The amounts resulting from the total allocations available for operations other than those related to the priorities defined in Article 16a(1)(a) to (f) of Regulation No 1698/2005 being exceeded cannot be accepted as expenditure by way of unused additional funds, given that they have not funded the types of operations related to those new challenges for which Regulation No 1698/2005 expressly makes provision. Consequently, the purpose of Article 69(5b) of that regulation is to avoid the additional funds being used for other operations than those related to the priorities defined in Article 16a(1)(a) to (f) of the regulation. (see paras 64, 72-74)

A distinction should be made between, on one hand, the automatic decommitment procedure of a budgetary commitment not spent during the year in question and, on the other, the procedure to be followed by the Commission in accordance with Article 69(5b) of Regulation No 1698/2005 in the clearance of the accounts for the last year with a view to the closure of the programme. On one hand, it is clear from recital 22 of Regulation No 1290/2005 on the financing of the common agricultural policy that the automatic decommitment rule was established to help speed up the implementation of programmes and contribute to sound financial management. Accordingly, the Commission is empowered, under Article 29 of that regulation, automatically to decommit any portion of a budget commitment for a rural development programme that has not been used for the purpose of prefinancing or making intermediate payments or for which no correct declaration of expenditure has been presented by 31 December of the second year following that of the budget commitment. On the other hand, under Article 69(5b) of Regulation No 1698/2005, a reimbursement to the EU budget is necessary in the context of the verification, on closure of the programme, of compliance with the exclusive use obligation in respect of funds reserved for a specific type of operations, when paying agencies have already paid out the funds to beneficiaries. Consequently, whilst those two procedures result in the exclusion of an amount of EU funding, it should be observed that, under the automatic decommitment procedure, the portion of the budget commitment is automatically reduced at point ‘n+2’ because it has not been spent, whereas, in the context of the calculation carried out pursuant to Article 69(5b) of Regulation No 1698/2005, the Member State must reimburse to the EU budget a certain amount calculated on the basis of the expenditure actually incurred as at the last eligibility date of expenditure. (see paras 79-82)

It cannot validly be claimed that, for the purposes of the calculation provided for in Article 69(5b) of Regulation No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD), it is necessary to take into account the amounts appearing in a Commission decision approving the revision of the rural development programme in question, which refers to an annex containing a revised financing plan, submitted by the national authorities, which provides, following an automatic decommitment, for a reduction of both the additional funds and the other funds available by way of the EAFRD’s planned financial contribution. Article 29(7) of Regulation No 1290/2005 on the financing of the common agricultural policy, which provides that, in the event of automatic decommitment, the ‘EAFRD contribution to the … programme’ shall be reduced for the year in question, does not distinguish between the sources of funding. The amounts at issue were indeed approved by the Commission in its decision, which decision constitutes a financing decision and, once notified to the Member State concerned, a legal commitment. However, assuming that the second paragraph of Article 23 of Regulation No 1290/2005 also applies to Commission decisions approving the revision of a rural development programme following an automatic decommitment, given that the calculation provided for in Article 69(5b) of Regulation No 1698/2005 is carried out on closure of the programme, the Commission could not anticipate, when it approved the revised financing plan following the automatic decommitment procedure, the amount of the expenditure which was actually going to be incurred by beneficiary in the implementation of that programme. In addition, the approval by the Commission of a revised financing plan which provides for the splitting of resources following an automatic decommitment for a rural development programme does not confer on that document greater legal value than that of a regulation. (see paras 88-92)