WRITTEN QUESTION E-1529/02

by Jorge Hernández Mollar (PPE-DE) to the Commission

(3 June 2002)

Subject: Action on preventing rural depopulation

In order to prevent rural depopulation the first, and most fundamental issue is to guarantee professional farmers sufficient income so that they can concentrate on farming without the financial worries and hardships which force them to move away from farming and to seek instead a more stable and more comfortable lifestyle.

One of the main reasons for the slow growth of farming incomes is the system of subdividing farms, which means that their size and dimensions become less attractive for future generations in that the income they provide is minimal.

Does the Commission share the view that due to its important role in the CAP, it should encourage the necessary investigations to be carried out in order to reach an agreement at Community level over suitable monetary and hereditary instruments which would avoid subdividing farms and the resultant barely profitable and fragmented farming units, one of the principal reasons for which farmers move away from rural areas?

Answer given by Mr Fischler on behalf of the Commission

(10 July 2002)

The Commission is aware that the subdivision of farms can lead to a reduction of size and dimension, making farming less attractive for future generations, and recognises the need for appropriate action in order to avoid the fragmentation of farming structures.

The Honourable Member refers i.a. to suitable monetary and hereditary instruments (los oportunos instrumentos fiscales, y sucesorios) at Community level.

With regard to the taxation issue, and in particular the question how inheritance and gift taxes are levied when an enterprise, in any sector, is transferred from one generation to another, there is no harmonisation at Community level, as the Honourable Member implies. The taxation of transfers of enterprises is essentially a matter falling within the competence of Member States. When exercising this competence, Member States must, however, comply with rules of the EC Treaty. Since any decision on tax matters at Community level requires unanimity among the Member States, co-ordination of tax rules within the Community has proven difficult, and particularly so in the field of direct taxation.

Nevertheless, the transfer of small and medium-sized enterprises (SMEs) is an area of particular interest to the Commission.

In 1994, the Commission adopted a formal Recommendation (94/1069/EC), addressed to Member States, concerning the transfer of SMEs(1).

Since the Commission issued the Recommendation, several Member States have adopted measures to improve the legislative and fiscal environment to facilitate the transfers of SMEs. In a Communication of 1998(2) on the Transfer of small and medium-sized enterprises the Commission summed up the measures that had so far been taken by the Member States. This subject has been addressed further in a project under the Multiannual programme for enterprise and entrepreneurship, and in particular for SMEs (2001-2005)(3). The results of this project will be published shortly at http://europa.eu.int/comm/enterprise/entrepreneurship/support_measures/transfer_business/index.htm.

Finally, it should be mentioned that there are a range of Community instruments designed to help improve the competitiveness and viability of farming structures within the second pillar of the common agricultural policy, rural development. Here, the diversification of farm household income is an important objective. It is the Commission's view that a substantially reinforced second pillar would make an important contribution to the development of rural areas and territorial cohesion.

(1) OJ L 385, 31.12.1994.

(2) OJ C 93, 28.3.1998.

(3) Council Decision 2000/819/EC of 20 December 2000, OJ L 333, 29.12.2000.