Invitation to submit comments on the draft Commission Regulation on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises active in the production, processing and marketing of agricultural products
Date: 2003-08-15
Institutions: European Commission
Subjects: State aid, agricultural production, aid to agriculture, marketing, processing industry, small and medium-sized enterprises

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INVITATION TO SUBMIT COMMENTS ON THE DRAFT COMMISSION REGULATION ON THE
APPLICATION OF ARTICLES 87 AND 88 OF THE EC TREATY TO STATE AID TO SMALL AND
PROCESSING AND
MEDIUM-SIZED ENTERPRISES ACTIVE

IN THE

PRODUCTION,
MARKETING OF AGRICULTURAL PRODUCTS

(2003/C 194/02)

Interested parties may submit their comments within one month of the date of publication of this draft
Regulation to:

European Commission
Directorate General for Agriculture
Unit H.2
Office Loi 130 05/126
B-1049 Brussels
Fax (32-2) 296 76 72
E-mail: Agri-State-Aids@cec.eu.int

Draft Commission Regulation on the application of Articles 87 and 88 of the EC Treaty to State
aid to small and medium-sized enterprises active in the production, processing and marketing of
agricultural products

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 994/98 of 7 May
1998 on the application of Articles 92 and 93 of the Treaty
establishing the European Community to certain categories of
horizontal State aid (1), and in particular Article 1(1)(a)(i)
thereof,

Having published a draft of this Regulation (2),

Having consulted the Advisory Committee on State Aid,

Whereas:

(1) Regulation (EC) No 994/98 empowers the Commission to
declare, in accordance with Article 87 of the Treaty, that,
under certain conditions, aid to small and medium-sized
enterprises is compatible with the common market and
not subject
to the notification requirement of Article
88(3) of the Treaty.

(2) Commission Regulation (EC) No 70/2001 of 12 January
2001 on the application of Articles 87 and 88 of the EC
Treaty to State aid to small and medium-sized enter-
prises (3) does not apply to activities
linked to the
production, processing or marketing of products listed
in Annex I to the Treaty.

(3) The Commission has applied Articles 87 and 88 of the
Treaty to small and medium-sized enterprises active in the
production, processing and marketing of agricultural

(1) OJ L 142, 14.5.1998, p. 1.
(2) OJ C . . .
(3) OJ L 10, 13.1.2001, p. 33.

In the light of

it
supervision and

products in numerous decisions and has also stated its
policy, most recently in the Community guidelines for
state aid in the agriculture sector (4)
(hereafter referred
to as the Agriculture Guidelines).
the
Commission's considerable experience in applying those
Articles to small and medium-sized enterprises active in
the production, processing and marketing of agricultural
is appropriate, with a view to ensuring
products,
administration
efficient
simplifying
the
that
without weakening Commission monitoring,
Commission should make use of the powers conferred
by Regulation (EC) No 994/98 also for
small and
in the production,
medium-sized enterprises
processing
agricultural products,
insofar as Article 89 of the Treaty has been declared
applicable to such products. Due to the specificities of
the agricultural sector, a Regulation covering only small
and medium-sized enterprises active in this sector is
justified.

and marketing of

active

(4) This Regulation is without prejudice to the possibility for
Member States to notify aid to small and medium-sized
enterprises active in the production, processing and
marketing of agricultural products. Such notifications
will be assessed by the Commission on the basis of the
Agriculture Guidelines, and in the light of this Regulation.
Notifications pending on the date of entry into force of
this Regulation should be assessed first in the light of this
Regulation and,
if the conditions it lays down are not
fulfilled, then on the basis of the Agriculture Guidelines.
It is appropriate to lay down transitional provisions for
aid which was granted before the entry into force of this
Regulation and was not notified in breach of the obli-
gation in Article 88(3) of the Treaty.

(4) OJ C 28, 1.2. 2000, p. 2 (Corrected version OJ C 232, 12.8.2000,

p. 19).

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(5) Over the coming years, agriculture will have to adapt to
new realities and further changes in terms of market
evolution, market policy and trade rules, consumer
demand and preferences and the enlargement of
the
Community. These changes will affect not only agri-
cultural markets but also local economies in rural areas
in general. Rural development policy should aim at
restoring and enhancing the competitiveness of
rural
areas and, therefore, contribute to the maintenance and
creation of employment in those areas.

(6) Small and medium-sized enterprises play a decisive role in
job creation and, more generally, act as a factor of social
stability and economic drive. However, their development
may be limited by market imperfections. They often have
difficulties in obtaining capital or credit, given the risk-shy
nature of certain financial markets and the limited guar-
antees that
they may be able to offer. Their limited
resources may also restrict their access to information,
potential
notably
markets. Having regard to those considerations,
the
purpose of the aid exempted by this Regulation should
be to facilitate the development of the economic activities
of small and medium-sized enterprises, provided that such
aid does not adversely affect trading conditions to an
extent contrary to the common interest. These devel-
opments should be encouraged and supported by simplifi-
cation of the existing rules, as far as they apply to small
and medium-sized enterprises.

new technology

regarding

and

(7) The production, processing and marketing of agricultural
products in the Community is largely dominated by small
and medium-sized enterprises.

for rural development

(8) Council Regulation (EC) No 1257/1999 of 17 May 1999
on support
from the European
Agricultural Guidance and Guarantee Fund (EAGGF) and
amending and repealing certain Regulations (1) has already
introduced specific State aid rules for certain rural devel-
opment measures
support
without any Community financing.

receiving Member

State

(9) This Regulation should exempt any aid that meets all the
requirements it lays down, and any aid scheme, provided
that any aid that could be granted under such scheme
meets all the relevant requirements of this Regulation.

administration

supervision and
With a view to ensuring efficient
simplifying
weakening
Commission monitoring, aid schemes and individual
grants outside
should contain an
express reference to this Regulation.

any aid scheme

without

(10) Aid granted towards costs linked to advertising as defined
by the Community guidelines for State aid for advertising
of products listed in Annex I to the EC Treaty and of
certain non-Annex I products (2)
should be excluded
from the scope of this Regulation and continue to be
covered only by those guidelines.

(11) In view of the need to strike the appropriate balance
between minimising distortions of competition in the
aided sector and the objectives of
it
individual grants which exceed a
should not exempt
fixed maximum amount, whether or not made under an
aid scheme exempted by this Regulation.

this Regulation,

(12) This Regulation should not exempt export aid or aid
contingent upon the use of domestic over
imported
incompatible with the
products. Such aid may be
Community's international obligations under the World
Trade Organisation (WTO) Agreement on Subsidies and
Countervailing Measures and the WTO Agreement on
Agriculture. Aid towards the costs of participation in
trade fairs or of studies or consultancy services needed
for the launch of a new or existing product on a new
market should not normally constitute export aid.

to facilitate

(13) In order to eliminate differences that might give rise to
coordination
competition,
distortions of
between different Community and national
initiatives
concerning small and medium-sized enterprises and for
reasons of administrative clarity and legal certainty, the
definition of ‘small and medium-sized enterprises’ used in
this Regulation should be that laid down in Regulation
(EC) No 70/2001.

(14) In

practice

established

accordance with

the
Commission, and with a view to ensuring that aid is
proportionate and limited to the amount necessary,
thresholds should normally be expressed in terms of aid
intensities in relation to a set of eligible costs, rather than
in terms of maximum aid amounts.

of

(1) OJ L 160, 26.6.1999, p. 80.

(2) OJ C 252, 12.9.2001, p. 5.

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(15) In order to determine whether or not aid is compatible
with the common market pursuant to this Regulation, it is
necessary to take into consideration the aid intensity and
thus the aid amount expressed as a grant equivalent. The
the grant equivalent of aid payable in
calculation of
instalments and aid in the form of a soft loan
several
requires the use of market
interest rates prevailing at
the time of grant. With a view to a uniform, transparent,
and simple application of the State aid rules, the market
this Regulation should be
rates for
deemed to be the reference rates, provided that,
in the
case of a soft loan, the loan is backed by normal security
and does not involve abnormal risks. The reference rates
should be those which are periodically fixed by the
criteria and
Commission on the basis of objective
published in the Official
the European Union
and on the Internet.

the purposes of

Journal of

(16) In

practice

established

accordance with

the
Commission for the evaluation of State aid in the agri-
cultural sector, no differentiation between small enter-
prises and medium-sized enterprises is necessary. For
certain types of aid,
the establishment of maximum
amounts of aid which a beneficiary may receive is appro-
priate.

of

(17) Aid ceilings

fixed,

in the

balance

light of

should be

the
Commission's experience, at a level that strikes the appro-
priate
of
between minimising
competition in the aided sector and the objective of facili-
tating the development of the economic activities of small
and medium-sized enterprises in the agriculture sector. In
the interests of coherence with Community-financed
support measures,
the ceilings should be harmonised
with those fixed in the Agriculture Guidelines and in
Regulation (EC) No 1257/1999.

distortions

restrictions on production or

(18) It is appropriate to establish further conditions that should
be fulfilled by any aid scheme or individual aid exempted
by this Regulation. Companies receiving investment aid
should have to comply with the criteria concerning
viability and respect of minimum standards provided for
in Articles 5 and 26(1) of Regulation (EC) No 1257/1999.
Any
limitations of
Community support under the common market organi-
sations should be taken into account. Having regard to
Article 87(3)(c) of the Treaty, aid should not normally
have the sole effect of continuously or periodically
reducing the operating costs which the beneficiary
be
to
would
proportionate
to be
overcome in order to secure the socioeconomic benefits
deemed to be in the Community interest. Unilateral State
aid measures which simply seek to improve the financial
situation of producers but which in no way contribute to

to the handicaps

that have

normally

should

bear,

have

and

the sector, and in particular aids
the development of
which are granted solely on the basis of price, quantity,
unit of production or unit of the means of production are
considered to constitute operating aids which are incom-
patible with the common market. Furthermore, such aids
are also likely to interfere with the mechanisms of the
common organisations of
is therefore
appropriate to limit
this Regulation to
certain types of aid.

the scope of

the markets.

It

(19) This Regulation should exempt

regardless

enterprises

aid to small
of

and
location.
medium-sized
Investment and job creation can contribute to the
economic development of less favoured regions and of
Objective 1 regions
in the Community. Small and
medium-sized enterprises in those regions suffer from
both the structural disadvantage of the location and the
difficulties deriving from their size. It is therefore appro-
priate that small and medium-sized enterprises in less
favoured and Objective 1 regions should benefit
from
higher ceilings.

(20) Investments for the processing and marketing of agri-
cultural products undertaken at farm level, not entailing
an increase in capacity and having total eligible expenses
below the limit set under Article 7 of Regulation (EC) No
1257/1999, should be examined according to the rules
established for investments for the production of agri-
cultural products. On-farm investments for processing
and marketing of agricultural products entailing an
increase in production capacity, and/or having total
eligible expenses above the limit set under Article 7 of
Regulation (EC) No 1257/1999, should be examined
according to the rules established for investments for
the processing and marketing of agricultural products.

(21) Where aid is granted to adapt

to newly introduced
standards at Community level, Member States should
not be in a position to lengthen the adaptation period
for farmers by delaying implementation of such rules.
Therefore, the date from which new legislation can no
longer be considered new should be clearly set out.

(22) Services offered at subsidised rates are often offered to
farmers by companies which cannot be freely chosen by
the farmer. In order to avoid aid being granted to the
providers of the service, and not to the farmer, and in
order to ensure that the farmer gets the best service at a
competitive price, it should normally be ensured that such
chosen and remunerated
providers of
according to market principles. However,
for certain
services, notably controls, and due to the nature of the
service or the legal basis for the provision of the service,
there may be only one provider.

services

are

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financing. However,

(23) Certain Council Regulations in the field of agriculture
provide for specific authorisations for the payment of
aid by Member States, often in combination with or in
addition to Community
those
provisions usually do not provide for an exemption
from the duty to notify under Article 88 of the Treaty,
in so far as such aid fulfils the conditions of Article 87(1)
of
the Treaty. Since the conditions for such aids are
clearly specified in those Regulations, and/or there is a
duty to communicate such measures to the Commission
under the special provisions of
those Regulations, no
further and separate notification under Article 88(3) of
the Treaty is necessary in order to allow for an assessment
of these measures by the Commission. For reasons of legal
should be
certainty, a reference to those provisions
included in this Regulation, and therefore notification of
those measures under Article 88 of the Treaty should not
be necessary, in so far as it can be ascertained in advance
exclusively granted to small and
such aid is
that
medium-sized enterprises.

(24) In order to ensure that the aid is necessary and acts as an
incentive to develop certain activities,
this Regulation
should not exempt aid for activities in which the bene-
ficiary would already engage under market conditions
alone. No aid should be granted retroactively in respect
of activities which have already been undertaken by the
beneficiary.

such as

this Regulation is

impossible for the Commission to perform its monitoring
task under Article 88(1) of the Treaty and, in particular,
to assess whether the cumulative economic effect of the
aids exempted under
to
adversely affect trading conditions to an extent contrary
to the common interest. The need to evaluate the cumu-
lative effect of State aid is particularly high where the
same beneficiary may receive aid granted by several
sources, as is increasingly the case in the field of agri-
the
culture.
Commission to suspend the application of this Regulation
for the Member State concerned, or for part of it. For the
sake of legal certainty aid already granted on the basis of
this Regulation should continue to be exempt. Once the
reporting obligations have been fully complied with, this
Regulation should again apply for the Member State
concerned.

be possible

therefore

should

for

It

(28) Having regard to the Commission's experience in this
area, and in particular the frequency with which it is
generally necessary to revise State aid policy, it is appro-
priate to limit the period of application of this Regulation.
Should this Regulation expire without being extended, aid
schemes already exempted by this Regulation should
continue to be exempt for six months,

HAS ADOPTED THIS REGULATION:

(25) This Regulation should not exempt aid cumulated with
other State aid,
including aid granted by national,
regional or local authorities, with public support granted
within the framework of Regulation (EC) No 1257/1999
in relation to the same
or with Community assistance,
eligible
the
thresholds fixed in this Regulation.

costs, when such cumulation exceeds

CHAPTER 1

SCOPE, DEFINITIONS AND CONDITIONS

Article 1

Scope

(26) In order to ensure transparency and effective monitoring,
in accordance with Article 3 of Regulation (EC) No
994/98, it is appropriate to establish a standard format
in which Member States should provide the Commission
with summary information whenever, in pursuance of this
Regulation, an aid scheme is implemented or an indi-
vidual aid outside such schemes is granted, with a view
to publication in the Official Journal of the European Union.
For the same reasons, it is appropriate to establish rules
concerning the records that Member States should keep
regarding the aid exempted by this Regulation. For the
purposes of the annual report to be submitted to the
Commission by Member States, it is appropriate for the
Commission to establish its specific requirements. In view
of the wide availability of the necessary technology, the
summary information and the annual report should be in
computerised form.

(27) Failure by a Member State to comply with the reporting
obligations established in this Regulation may make it

1.
This Regulation shall apply to aid granted to small and
medium-sized enterprises active in the production, processing
or marketing of agricultural products.

2.

This Regulation shall not apply to:

(a) aid granted towards costs linked to advertising as defined
by the Community guidelines for State aid for advertising
of products listed in Annex I to the EC Treaty and of
certain non-Annex I products;

(b) aid granted to processing of Annex I agricultural products

into non-Annex I products.

3.
This Regulation shall not apply to aid for individual
investments with eligible expenses in excess of EUR 12.5
million, or where the actual amount of aid exceeds EUR 6
million. Such aid shall be
specifically notified to the
Commission in accordance with Article 88(3) of the Treaty.

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Without prejudice to Article 16(a) this Regulation shall

4.
not apply to:

(a) aid to export-related activities, namely aid directly linked to
the quantities exported, to the establishment and operation
of a distribution network or to other current expenditure
linked to the export activity;

(b) aid contingent upon the use of domestic over imported

goods.

Article 2

Definitions

For the purpose of this Regulation:

compulsory standards; this clearly higher quality may
relate to the product or to the production process, and
must be verified by independent, external control; or

(b) a product which meets the quality standards set out in
Community legislation for specific quality products;

7.

‘adverse climatic events which can be asimilated to natural
disasters’ means weather conditions such as frost, hail, ice,
rain or drought which destroy 20 % of normal production
in less-favoured areas and 30 % in other areas;

8.

‘less favoured areas’ means areas as defined by Member
States on the basis of Article 17 of Regulation (EC) No
1257/1999;

1.

‘aid’ means any measure fulfilling all the criteria laid down
in Article 87(1) of the Treaty;

9.

‘objective 1 regions’ means regions referred to in Article 3
of Council Regulation (EC) No 1260/1999 (3);

2.

‘agricultural product’ means:

10.

(a) the products listed in Annex I of the Treaty, except
fishery and acquaculture products covered by Council
Regulation (EC) No 104/2000 (1);

(b) products falling under CN codes 4502, 4503 and 4504

(cork products);

(c) products intended to imitate or substitute milk and
referred to in Article 3(2) of

milk products, as
Council Regulation (EEC) No 1898/87 (2);

3.

4.

5.

‘processing of an agricultural product’ means an operation
on an agricultural product where the product resulting
from the operation is also an agricultural product;

‘small and medium-sized enterprises’ (‘SME’) means enter-
prises as defined in Annex I
to Regulation (EC) No
70/2001;

‘gross aid intensity’ means the aid amount expressed as a
percentage of the project's eligible costs. All figures used
shall be taken before any deduction for direct taxation.
Where aid is awarded in a form other than a grant, the
aid amount shall be the grant equivalent of the aid. Aid
payable in several
instalments shall be discounted to its
value at the moment of granting. The interest rate to be
used for discounting purposes and for calculating the aid
amount in a soft loan shall be the reference rate applicable
at the time of grant;

6.

‘quality product’ means:

(a) a product which is of clearly higher quality, with
than required by
least one criterion,

respect

to at

hygiene

regarding the
‘newly introduced minimum standards
environment,
animal welfare’ means
and
standards to be made compulsory vis-à-vis operators not
more than two years before the investment is actually
legislation which does not
undertaken,
provide for any transitional period, or standards which
will become compulsory after the investment is actually
undertaken, on the basis of transitional periods provided
for in legislation introducing such standards;

in the case of

11.

‘young farmers’ means producers of agricultural products
as defined in Article 8 of Regulation (EC) No 1257/1999;

12.

‘producer group’ means a group which is set up for the
purpose of jointly adapting, within the objectives of the
common market organisations, the production and output
in particular by
of its members to market requirements,
concentrating supply;

13.

‘producer association’ means an association which consists
of recognised producer groups and pursues the same
objectives on a larger scale.

Article 3

Conditions for exemption

this Regulation,

the conditions of

Subject to Article 20, individual aid outside any scheme,
1.
fulfilling all
shall be
compatible with the common market within the meaning of
Article 87(3)(c) of the Treaty and shall be exempt from the
notification requirement of Article 88(3) of the Treaty provided
that it contains an express reference to this Regulation, by
citing its title and publication reference in the Official Journal
of the European Union.

(1) OJ L 17, 21.1.2000, p. 22.
(2) OJ L 182 3.7.1987, p. 36.

(3) OJ L 161, 26.6.1999, p. 1.

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Subject

to Article 20, aid schemes fulfilling all

the
2.
conditions set out in this Regulation shall be compatible with
the common market within the meaning of Article 87(3)(c) of
the Treaty and shall be
from the notification
requirement of Article 88(3) of the Treaty provided that:

exempt

must not apply in the case of investments which result in an
increase in production capacity.

The investment must pursue one or more of

3.
following objectives:

the

(a) any aid that could be awarded under such scheme fulfils all

the conditions set out in this Regulation;

(a) reduction of production costs;

(b) the scheme contains an express reference to this Regu-
lation, by citing its title and publication reference in the
Official Journal of the European Union.

(b) improvement and re-deployment of production;

(c)

improvement in quality;

3.
Aid granted under the schemes referred to in paragraph 2
shall be compatible with the common market within the
meaning of Article 87(3)(c) of
the Treaty and shall be
exempt from the notification requirement of Article 88(3) of
the Treaty provided that the aid granted directly fulfils all the
conditions of this Regulation.

CHAPTER 2

CATEGORIES OF AID

Article 4

Investment in agricultural holdings

1.
Aid for investments in agricultural holdings within the
Community for the production, processing and marketing of
agricultural products, shall be compatible with the common
market within the meaning of Article 87(3)(c) of the Treaty
from the notification requirement of
and shall be exempt
Article 88(3) of the Treaty if it fulfils the conditions set out
in paragraphs 2 to 9.

2.

The gross aid intensity must not exceed:

(a) 50 % of eligible investments in less favoured areas;

(b) 40 % of eligible investments in other regions.

In the case of investments made by young farmers within five
years of setting up, the maximum aid rate shall be increased to
60 % in less-favoured areas, and 50 % in other regions.

result

environment,

in extra costs

improvement of

relating to the
Where investments
the
the
protection and
improvement of hygiene conditions of
livestock enterprises
or the welfare of farm animals, the maximum aid rates of
50 % and 40 % referred to in points (a) and (b) of the first
subparagraph may be increased by 25 and 20 percentage
points, respectively. This increase may only be granted for
investments which go beyond the minimum Community
requirements in force, or for investments made to comply
with newly introduced minimum standards. The increase
must be limited to the extra eligible costs necessary and

(d) preservation and improvement of the natural environment,

hygiene conditions and animal welfare standards;

(e) promotion of the diversification of farm activities.

4.

The eligible expenses may include:

(a) the construction, acquisition or improvement of immovable

property;

including

(b) the purchase or lease-purchase of new machinery and
equipment,
software up to the
computer
market value of the asset; other costs connected with a
leasing contract (tax,
interest refinancing
lessor's margin,
costs, overheads,
insurance charges, etc) are not eligible
expenditure;

(c) general costs, such as architects, engineers and consultation
the acquisition of patents and
the expenditure referred to in

feasibility studies,

fees,
licences, up to 12 % of
points (a) and (b).

By way of derogation from point (b) of the first subparagraph,
the purchase of second-hand equipment may be regarded as
eligible expenditure in duly substantiated cases when the
following conditions are met:

(a) a declaration by the seller of the equipment confirms its
exact origin and that the equipment has not already been
the subject of national or Community assistance;

the equipment represents a particular
(b) the purchase of
advantage for
is made
necessary by exceptional circumstances (for example, no
new equipment
threatening
available on time,
proper execution of the project);

the programme or project, or

thus

(c) reduction of

the costs involved, and therefore of

the
amount of aid, as compared with the costs of the same
equipment purchased new, while maintaining a good cost-
benefit ratio;

(d) the

second-hand equipment

the
technical and/or technological characteristics necessary for
the requirements of the project.

acquired must have

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Aid may only be granted to viable agricultural holdings
5.
which comply with the criteria set out in Article 5 of Regu-
lation (EC) No 1257/1999.

(a) the manufacture and marketing of products which imitate

or substitute for milk and milk products;

Aid may be granted in order to enable the beneficiary to reach
newly
the
environment, hygiene and animal welfare.

introduced minimum standards

regarding

Assessment of compliance with the criteria of Article 5 of
Regulation (EC) No 1257/1999 must be made at enterprise
level by a public body or an independent third party, which
is qualified to undertake such assessment. The rules setting up
the aid scheme or the decision awarding individual aid outside
such a scheme must specify how such assessment is to be
made.

in relation to the products concerned,

6.
Sufficient evidence must be produced that normal market
outlets for the products concerned can be found. This must be
assessed at the appropriate level determined by the Member
the types of
State,
investments, and existing and expected capacities. Assessment
of normal market outlets must be made by a public body or a
third party, which are independent from the beneficiary of the
aid and qualified to undertake such assessment. The rules
setting up the aid scheme must specify how such assessment
is to be made.

(b) processing and marketing activities in the sugar sector.

Article 5

Conservation of traditional landscapes and buildings

Aid for

traditional

conservation of

landscapes and
1.
shall be compatible with the common market
buildings
within the meaning of Article 87(3)(c) of
the Treaty and
shall be exempt from the notification requirement of Article
88(3) of
in
paragraphs 2 and 3.

fulfils the conditions set out

the Treaty if

it

Aid may be granted up to 100 % of

2.
the real costs
incurred as regards investments or capital works intended for
the conservation of non-productive heritage features located on
agricultural holdings,
such as archaeological or historical
features. These costs may include reasonable compensation
for
the work undertaken by the farmer himself, or his
workers, up to a limit of EUR 10 000 a year.

7.
The aid must not be granted in contravention of any
prohibitions or restrictions laid down in Council Regulations
establishing common organisations of the market, even where
such prohibitions and restrictions only refer to Community
support.

3.
Aid may be granted up to 60 %, or 75 % in less favoured
areas, of the real costs incurred as regards investments or
capital works
the conservation of heritage
features of productive assets on farms, such as farm buildings,
provided that the investment does not entail any increase in
the production capacity of the farm.

intended for

8.
The aid must not be limited to specific agricultural
products and must not be granted in respect of the following:

(a)

investment having as their objective or effect
increased
production capacity, where the capacity increase on a
farm amounts to more than 20 %,
to be measured in
for animal production and cultivated
livestock units
surface for plant production;

Where there is an increase in production capacity, the aid rates
for investment established in Article 4(2) shall apply as regards
eligible expenses resulting from undertaking the relevant work
using normal contemporary materials. Additional aid may be
granted at a rate of up to 100 % to cover the extra costs
incurred by using traditional materials necessary to maintain
the heritage features of the building.

(b) the purchase of production rights, animals, land other than
land for construction purposes, plants or the planting of
plants;

Article 6

Relocation of farm buildings in the public interest

(c) simple replacement investments.

9.
The maximum expenses eligible for support must not
exceed the limit for total investment eligible for support set
by the Member State in accordance with Article 7 of Regu-
lation (EC) No 1257/1999. Aid schemes must state this limit.

Aid for

farm buildings

the relocation of

1.
shall be
compatible with the common market within the meaning of
Article 87(3)(c) of the Treaty and shall be exempt from the
notification requirement of Article 88(3) of the Treaty if it is in
the public interest and fulfils
in
paragraphs 2, 3 and 4.

the conditions

set out

10.

The aid must not be granted in respect of the following:

The public interest invoked to justify the granting of aid under
this Article shall be specified in the relevant provisions of the
Member State.

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Aid may be granted up to 100 % of the actual costs
2.
incurred where a relocation in the public interest simply
consists of
removal and re-erection of
existing facilities.

the dismantling,

3. Where the relocation in the public interest results in the
farmer benefiting from more modern facilities, the farmer must
contribute at least 60 %, or 50 % in less favoured areas, of the
increase in the value of the facilities concerned after relocation.
If the beneficiary is a young farmer, this contribution shall be
at least 55 % or 45 % respectively.

4. Where the relocation in the public interest results in an
increase in production capacity,
the contribution from the
beneficiary must be at least equal to 60 %, or 50 % in less
favoured areas, of the expenses relating to this increase.
If
the beneficiary is a young farmer, this contribution shall be
at least 55 % or 45 %.

Article 7

Investment in processing and marketing

1.
Aid for investment in the processing and marketing of
agricultural products shall be compatible with the common
market within the meaning of Article 87(3)(c) of the Treaty
and shall be exempt
from the notification requirement of
Article 88(3) of the Treaty if it fulfils the conditions set out
in paragraphs 2 to 7.

2.

The gross aid intensity must not exceed:

(a) 50 % of eligible investments in Objective 1 regions;

(b) 40 % of eligible investments in other regions.

3.

The eligible expenses may include:

(a) the construction, acquisition or improvement of immovable

property;

including computer

(b) the purchase or lease-purchase of new machinery and
software up to the
equipment,
market value of the asset; other costs connected with a
leasing contract (tax,
interest refinancing
lessor's margin,
costs, overheads,
insurance charges, etc) are not eligible
expenditure;

(c) general costs, such as architects, engineers and consultation
the acquisition of patents and
the expenditure referred to in

feasibility studies,

fees,
licences, up to 12 % of
points (a) and (b).

By way of derogation from point (b) of the first subparagraph,
the purchase of second-hand equipment may be regarded as

eligible expenditure in duly substantiated cases when the
following conditions are met:

(a) a declaration by the seller of the equipment confirms its
exact origin and that the equipment has not already been
the subject of national or Community assistance;

the equipment represents a particular
(b) the purchase of
advantage for
is made
necessary by exceptional circumstances (for example, no
new equipment
threatening
available on time,
proper execution of the project);

the programme or project, or

thus

(c) reduction of

the costs involved, and therefore of

the
amount of aid, as compared with the costs of the same
equipment purchased new, while maintaining a good cost-
benefit ratio;

(d) the

second-hand equipment

the
technical and/or technological characteristics necessary for
the requirements of the project.

acquired must have

4.
Aid may only be granted to enterprises which can be
demonstrated to comply with the criteria set out in Article
26(1) of Regulation (EC) No 1257/1999.

Aid may be granted in order to enable the beneficiary to reach
newly
the
environment, hygiene and animal welfare.

introduced minimum standards

regarding

Assessment of compliance with the criteria set out in Article
26(1) of Regulation (EC) No 1257/199 must be made at
enterprise level by a public body or an independent
third
party which is qualified to undertake such assessment. The
rules setting up the aid scheme must specify how such
assessment is to be made.

in relation to the products concerned,

5.
Sufficient evidence must be produced that normal market
outlets for the products concerned can be found. This must be
assessed at the appropriate level determined by the Member
State,
the types of
investments, and existing and expected capacities. Assessment
of normal market outlets must be made by a public body or a
third party, which are independent from the beneficiary of the
aid and qualified to undertake such assessment. The rules
setting up the aid scheme must specify how such assessment
is to be made.

6.
The aid must not be granted in contravention of any
prohibitions or restrictions laid down in Council Regulations
establishing common organisations of the market, even where
such prohibitions and restrictions only refer to Community
support.

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The aid must not be limited to specific agricultural
7.
products, but must however not be granted in respect of the
following:

(a) producer groups or producer associations involved in the

production of agricultural products; and/or

(a) the manufacture and marketing of products which imitate

or substitute for milk and milk products;

(b) associations of producers responsible for the supervision of
the use of denominations of origin or quality marks in
conformity with Community law.

(b) processing and marketing activities in the sugar sector.

Article 8

Aid for setting up of young farmers

Aid for the setting up of young farmers shall be compatible
with the common market within the meaning of Article
87(3)(c) of the Treaty and shall be exempt from the notification
requirement of Article 88(3) of the Treaty under the following
conditions:

(a) the criteria set out in Articles 7 and 8 of Regulation (EC)

No 1257/1999 must be fulfilled;

(b) the combined support granted under Regulation (EC) No
1257/1999 and in the form of State aids under this Article
must not exceed the maximum limits provided for in
Article 8(2) of that Regulation.

Article 9

Aid for early retirement

Aid for early retirement of farmers shall be compatible with the
common market within the meaning of Article 87(3)(c) of the
Treaty and shall be exempt from the notification requirement
of Article 88(3) of the Treaty under the following conditions:

(a) the criteria set out in Articles 10, 11 and 12 of Regulation

(EC) No 1257/1999 must be fulfilled;

(b) the cessation of commercial
permanent and definitive.

farming activities must be

Article 10

Aid for producer groups

Start-up aid for the constitution of producer groups or
1.
producer associations shall be compatible with the common
market within the meaning of Article 87(3)(c) of the Treaty
and shall be exempt
from the notification requirement of
Article 88(3) of the Treaty if it fulfils the conditions set out
in paragraphs 2 to 9.

The internal rules of the producer group or association must
provide an obligation on members to market production in
accordance with the rules on supply and placing on the
market drawn up by the group or association. Those rules
may permit a proportion of the production to be marketed
directly by the producer. They must
require producers
joining the group or association to remain members for at
least three years and to give at least 12 months notice of
withdrawal. In addition they must provide common rules on
production, in particular relating to product quality, or use of
organic practices, common rules for placing goods on the
market and rules on product
information, with particular
regard to harvesting and availability. However, producers
must remain responsible for managing their holdings. The
agreements concluded in the framework of
the producer
group or association must comply fully with all relevant
in particular Articles 81 and
provisions of competition law,
82 of the Treaty.

the

acquisition of office

The eligible expenses may include the rental of suitable
3.
premises,
including
computer hardware and software, administrative staff costs,
overheads and legal and administrative fees. If premises are
purchased, the eligible expenses for premises shall be limited
to rental costs at market rates.

equipment,

Aid must be temporary and degressive and must not
4.
exceed 100 % of eligible costs incurred in the first year. The
aid level must be reduced by at least 20 percentage points for
each year of operation, so that in the fifth year the amount of
aid is limited to 20 % of actual eligible expenditure occurred in
that year.

The aid must not be paid in respect of costs incurred
5.
after the fifth year, or paid following the seventh year after
recognition of
the producer organisation. This is without
prejudice to grant aid towards eligible expenses limited to
and resulting from a year-on-year increase in turnover of a
is due to the
beneficiary by at
accession of new members and/or
the coverage of new
products.

least 30 % where this

The following shall be eligible for the aid referred to in
2.
paragraph 1, provided that
they are entitled to financial
assistance under the legislation of the Member State concerned:

6.
The aid must not be granted to production organisations
such as companies or cooperatives, the objective of which is
the management of one or more agricultural holdings and
which are therefore in effect single producers.

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The aid must not be granted to other agricultural
7.
associations, which undertake tasks at the level of agricultural
production, such as mutual support and farm relief and farm
management services, in the members' holdings without being
involved in the joint adaptation of supply to the market.

The aid must not constitute a barrier to the operation of
4.
the internal market for insurance services. The aid must not be
limited to insurance provided by a single insurance company
or group of companies, or be made subject to the condition
the insurance contract be taken out with a company
that
established in the Member State concerned.

8.
The total amount of aid granted to a producer group or
association under this Article must not exceed EUR 100 000.

9.
The aid must not be granted to producer groups or
associations the objectives of which are incompatible with a
Council Regulation setting up a common market organisation.

Article 11

Aid towards the payment of insurance premiums

Aid for insurance premiums for enterprises involved in
1.
the primary production of agricultural products
shall be
compatible with the common market within the meaning of
Article 87(3)(c) of the Treaty and shall be exempt from the
notification requirement of Article 88(3) of the Treaty if it
fulfils the conditions set out in paragraphs 2, 3 and 4.

2.

The gross aid intensity must not exceed:

(a) 80 % of the cost of insurance premiums where the policy
specifies that it provides cover only against losses caused by
adverse climatic events which can be assimilated to natural
disasters;

(b) 50 % of the cost of insurance premiums where the policy
specifies that it provides cover against losses referred to in
point (a) and in addition against:

(i) other losses caused by climatic events; and/or

(ii) losses caused by animal or plant diseases.

Losses caused by adverse climatic events which can be
assimilated to natural disasters must be determined on the
basis of the gross production of the relevant crop in the year
in question compared with the gross annual production in a
normal year. Gross production must be calculated by reference
to the average gross production in the previous three years,
excluding any year in which compensation was payable as a
result of other adverse weather conditions.
In the case of
damage to the means of production, the effects of which are
loss for the first
felt over several years, the percentage real
in
harvest
comparison with a normal year, determined in accordance
with the principles set out in this subparagraph, must exceed
10 % and the percentage real loss multiplied by the number of
years in which production is lost must exceed 20 % in the
less-favoured areas and 30 % in other areas.

following the occurrence of

the adverse event

Article 12

Aid for land reparcelling

1.
Aid to enterprises involved in the production of agri-
shall be compatible with the common
cultural products
market within the meaning of Article 87(3)(c) of the Treaty
from the notification requirement of
and shall be exempt
Article 88(3) of
is granted towards and
limited to the legal and administrative costs, including survey
costs, of land reparcelling, up to 100 % of actual costs incurred.

the Treaty if

it

Paragraph 1 shall not apply to aid for investments,

2.
including aid for land purchase.

Article 13

Aid to encourage the production and marketing of quality
agricultural products

Aid to encourage the production and marketing of
1.
quality agricultural products shall be compatible with the
common market within the meaning of Article 87(3)(c) of
from the notification
the Treaty and shall be
is granted
it
requirement of Article 88(3) of the Treaty if
towards the eligible costs listed in paragraph 2 and fulfils the
conditions set out in paragraphs 3 to 7.

exempt

2.
Aid may be granted to cover the costs of the following
activities, in so far as they are related to the development of
quality agricultural products:

(a) up to 100 % of the costs of market research activities,
product conception and design, including aid granted for
the preparation of applications for recognition of denomi-
nations of origin or certificates of specific character in
accordance with the relevant Community regulations;

(b) up to 100 % of the costs of the introduction of quality
assurance schemes such as ISO 9000 or 14000 series,
systems based on hazard analysis and critical control
points (HACCP),
traceability systems, systems to assure
respect of authenticity and marketing norms or environ-
mental audit systems;

The aid must be granted for the cost of

3.
insurance
premiums which include cover for losses caused by adverse
climatic events which can be assimilated to natural disasters.

(c) up to 100 % of the costs of training personnel to apply

schemes and systems as referred to in point (b);

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(d) up to 100 % of

levied by
recognised certifying bodies for the initial certification of
quality assurance and similar systems;

the costs of

the charges

(e) up to 100 % of the costs of compulsory control measures
undertaken pursuant to Community or national legislation
by or on behalf of
the competent authorities, unless
Community legislation requires enterprises to bear such
costs;

(f)

temporary and degressive aid towards the costs of control
measures undertaken during the first six years following the
establishment of the control system to ensure the auth-
enticity of denominations of origin, or certificate of
specific character in the framework of Council Regulations
(EEC) No 2081/92 (1) and (EEC) No 2082/92 (2); degres-
sivity must be at least 10 percentage points per year;

(g) up to 100 % of actual costs incurred for controls of organic
production methods conducted within the framework of
Council Regulation (EEC) No 2092/91 (3).

The

aid must be granted in respect of

controls
3.
undertaken by or on behalf of
third parties, such as the
competent regulatory authorities, or bodies acting on their
behalf, or independent organisms responsible for the control
and supervision of the use of denominations of origin, organic
labels, or quality labels, provided these denominations and
labels are in conformity with Community legislation.

The aid must not be granted towards the cost of controls
4.
undertaken by the farmer or manufacturer himself, or where
Community legislation provides that the cost of control is to be
met by producers, without specifying the actual
level of
charges.

5.
The total amount of public support granted under
paragraph 2 must not exceed EUR 100 000 per beneficiary
over any three-year period. For the purpose of calculating
the amount of aid, the beneficiary is considered to be the
person receiving the services listed in that paragraph.

6.
The aid must be accessible to all those eligible in the area
concerned, based on objectively defined conditions. Where the
provision of services listed in paragraph 2 is undertaken by
producer groups or other agricultural mutual support organi-
sations, membership of such groups or organisations must not
be a condition for access to the service. Any contribution of
non-members towards the administrative costs of the group or
organisation concerned must be limited to the proportional
costs of providing the service.

(1) OJ L 208, 24.7.1992, p. 1.
(2) OJ L 208, 24.7.1992, p. 9.
(3) OJ L 198, 22.7.1991, p. 1.

7. Where the choice of the provider of a service listed in
paragraph 2 is not freely left to the beneficiary of the service,
and unless there is only one possible provider due to the
nature of the service or the legal basis for the provision of
that service, such provider must be chosen and remunerated
according to market principles, in a non-discriminatory way,
where necessary using tendering procedures which are in
accordance with Community law, and in any event using a
degree of advertising sufficient to enable the services market
to be opened up to competition and the impartiality of
procurement rules to be reviewed.

Article 14

Provision of technical support in the agricultural sector

1.
Aid shall be compatible with the common market within
the meaning of Article 87(3)(c) of the Treaty and shall be
exempt from the notification requirement of Article 88(3) of
the Treaty if it is granted towards the eligible costs of the
technical support activities listed in paragraph 2 and fulfils
the conditions set out in paragraphs 3, 4 and 5.

2.

Aid may be granted to cover the following eligible costs:

(a) concerning education and training of

farmers and farm

workers:

(i) costs of organising the training programme;

(ii) travel and subsistence expenses of participants;

(iii) cost of the provision of replacement services during

the absence of the farmer or the farm worker;

(b) concerning farm replacement services, the actual costs of
the replacement of a farmer, the farmer's partner, or a farm
worker, during illness and holidays;

(c) concerning consultancy services, the fees for services which
do not constitute a continuous or periodic activity nor
relate to the enterprise's usual operating expenditure,
such as routine tax consultancy services,
legal
services, or advertising;

regular

(d) concerning the organisation of
competitions, exhibitions and fairs:

and participation in

(i) participation fees;

(ii) travel costs;

(iii) costs of publications;

(iv) the rent of exhibition premises.

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The total amount of public support granted under
3.
paragraph 2 must not exceed EUR 100 000 per beneficiary
over any three-year period, or 50 % of
the eligible costs,
whichever
the purpose of calculating the
amount of aid, the beneficiary is considered to be the person
receiving the technical support.

is greater. For

technical support

The aid must be accessible to all those eligible in the area
4.
concerned, based on objectively defined conditions. Where the
provision of
is undertaken by producer
groups or other agricultural mutual support organisations,
membership of such groups or organisations must not be a
to the service. Any contribution of
condition for access
non-members towards the administrative costs of the group
or organisation concerned must be limited to the costs of
providing the service.

5. Where the choice of the provider of technical support is
not freely left to the beneficiary of the service, such provider
must be chosen and remunerated according to market prin-
in a non-discriminatory way, where necessary using
ciples,
tendering
accordance with
are
Community law, and in any event using a degree of advertising
sufficient to enable the services market to be opened up to
competition and the impartiality of procurement rules to be
reviewed.

procedures which

in

Article 15

Support for the livestock sector

The following aid to enterprises active in the livestock sector
shall be compatible with the common market within the
meaning of Article 87(3)(c) of
the Treaty and shall be
exempt from the notification requirement of Article 88(3) of
the Treaty:

(a) aid at a rate of up to 100 % to cover the administrative
costs directly linked to the establishment and maintenance
of herd books;

(b) aid at a rate of up to 70 % of the costs of tests performed
by or on behalf of third parties, to determine the genetic
quality or yield of livestock, with the exception of controls
undertaken by the owner of
the livestock and routine
controls of milk quality;

(c) aid at a rate of up to 40 % of the eligible costs listed in
Article 4 for investments in animal reproduction centres
and for
innovative
farm level of
techniques or practices, with the
animal
exception of
introduction or
costs
performance of artificial insemination.

the introduction at
breeding

to the

relating

Article 16

Aid provided for in certain Council Regulations

The following aid to small and medium-sized enterprises shall
be compatible with the common market within the meaning of
Article 87(3)(c) of the Treaty and shall be exempt from the
notification requirement of Article 88(3) of the Treaty:

(a) Member State contributions fulfilling all the conditions laid
down in Council Regulation (EC) No 2702/1999 of 14
December 1999 on measures to provide information on,
and to promote, agricultural products in third countries (1),
in particular Article 9(3) thereof;

(b) Member State contributions fulfilling all the conditions laid
down in Council Regulation (EC) No 2826/2000 of 19
December 2000 on information and promotion actions
for agricultural products on the internal market (2),
in
particular Article 9(2), (3) and (4) thereof;

(c) aid granted by Member States fulfilling all the conditions
laid down in Regulation (EC) No 999/2001 of
the
European Parliament and of the Council of 22 May 2001
laying down rules for the prevention, control and eradi-
cation of
spongiform encepha-
certain transmissible
lopathies (3), in particular Article 13(4) thereof;

(d) aid granted by Member States fulfilling all the conditions
laid down in Council Regulation (EC) No 1255/1999 of 17
May 1999 on the common market organisation of the
market in milk and milk products (4), in particular Article
14(2) thereof;

(e) aid granted by Member States fulfilling all the conditions
laid down in Council Regulation (EC) No 1254/1999 of 17
May 1999 on the common organisation of the market in
beef and veal (5), in particular Articles 6(5) and 14 thereof;

(f) aid granted by Member States in accordance with Articles 3
and 4 of Commission Regulation (EC) No 2777/2000 of 18
December 2000 adopting exceptional support measures for
the beef market (6).

CHAPTER 3

COMMON AND FINAL PROVISIONS

Article 17

Steps preceding grant of aid

1.
In order to qualify for exemption under this Regulation,
aid under an aid scheme shall only be granted in respect of
activities undertaken or services received after the aid scheme
has been set up and published in accordance with this Regu-
lation.

(1) OJ L 327, 21.12.1999, p. 7.
(2) OJ L 328, 23.12.2000, p. 2.
(3) OJ L 147, 31.5.2001, p. 1.
(4) OJ L 160, 26.6.1999, p. 48.
(5) OJ L 160, 26.6.1999, p. 21.
(6) OJ L 321, 19.12.2000, p. 47.

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If the aid scheme creates an automatic right to receive the aid,
requiring no further action at administrative level, the aid itself
may only be granted after the aid scheme has been set up and
published in accordance with this Regulation.

The Member State may only grant the new aid after having
checked that this will not raise the total amount of aid granted
under any of these Articles above the total amount of aid
received during the relevant period to a level above the
ceiling set out in the respective Article.

If the aid scheme requires an application to be submitted to the
competent authority concerned,
the aid itself may only be
granted after the following conditions have been fulfilled:

(a) the aid scheme must have been set up and published in

accordance with this Regulation;

(b) an application for

the aid must have been properly

submitted to the competent authority concerned;

(c) the application must have been accepted by the competent
authority concerned in a manner which obliges
that
authority to grant the aid, clearly indicating the amount
of aid to be granted; such acceptance by the competent
authority may only be made if the budget available for
the aid or aid scheme is not exhausted.

2.
In order to qualify for exemption under this Regulation,
individual aid outside any aid scheme shall only be granted in
respect of activities undertaken or services received after the
criteria in points (b) and (c) of the third subparagraph of
paragraph 1 have been satisfied.

Article 18

Cumulation

The aid ceilings fixed in Articles 4 to 15 shall apply
1.
regardless of whether the support for the aided project or
activity is financed entirely from State resources or is partly
financed by the Community.

2.
Aid exempted by this Regulation shall not be cumulated
with any other State aid within the meaning of Article 87(1) of
the Treaty, or financial contributions provided by Member
second
States or by
subparagraph of Article 51(1) of Regulation (EC) No
1257/1999,
if such
cumulation would result
in an aid intensity exceeding the
maximum laid down in this Regulation.

in relation to the same eligible costs,

the Community covered by

the

Article 19

Transparency and monitoring

On implementation of an aid scheme, or grant of indi-
1.
vidual aid outside any scheme, exempted by this Regulation,
Member States shall, within 20 working days, forward to the
Commission, with a view to its publication in the Official
Journal of the European Union, a summary of the information
regarding such aid scheme or individual aid in the form laid
down in Annex I. This shall be provided in computerised form.

2. Member States shall maintain detailed records regarding
the aid schemes exempted by this Regulation, the individual aid
granted under those schemes, and the individual aid exempted
by this Regulation that is granted outside any existing aid
scheme. Such records shall contain all information necessary
to establish that the conditions for exemption, as laid down in
this Regulation, are fulfilled,
including information on the
status of the company as an SME. Member States shall keep
a record regarding an individual aid for 10 years from the date
on which it was granted and, regarding an aid scheme, for 10
years from the date on which the last
individual aid was
granted under such scheme. On written request, the Member
State concerned shall provide the Commission, within a period
of 20 working days or such longer period as may be fixed in
the request, with all the information which the Commission
considers necessary to assess whether the conditions of this
Regulation have been complied with.

3. Where a Member State has set up a central register of aid
separately granted under Articles 8, 10, 13 or 14 respectively,
containing complete information on all such aid granted by
any authority within that Member State, the requirement of
the first subparagraph of Article 18(3) no longer applies
from the moment the register covers a period of three years.

3. Where a Member State grants aid covered by any of
Articles 8, 10, 13 or 14 of this Regulation to an enterprise,
it shall inform the enterprise that such aid is granted under the
respective Article of this Regulation. The Member State shall
obtain from the enterprise concerned full
information about
other similar aid received. For aid covered by Articles 13 and
14, the information shall be given about similar aid received
during the previous three years.

4. Member States shall compile a report on the application
of this Regulation in respect of each whole or part calendar
year during which this Regulation applies,
in the form laid
down in Annex II, in computerised form. This report may be
integrated into the annual report to be submitted by Member
States pursuant to Article 21(1) of Council Regulation (EC) No
659/1999 (1), and shall be submitted by 30 June of the year
following the calendar year covered by the report.

(1) OJ L 83, 27.3.1999, p. 1.

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As soon as an aid scheme enters into force, or an indi-
5.
vidual aid is granted outside an aid scheme exempted by this
Regulation, Member States shall publish on the internet the full
text of such aid scheme, or the criteria and conditions under
the
which such individual aid is granted. The address of
web-sites shall be communicated to the Commission together
with the summary of
the information regarding the aid
required pursuant to paragraph 1. It shall also be contained
in the annual report submitted pursuant to paragraph 4.

Article 20

Suspension of application

referred to in that paragraph,

1. Where a Member State fails to submit all
information
required in the annual report referred to in Article 19(4), or
does not do so for all geographical areas within that Member
State, by the date
the
Commission may, insofar as is proportionate to the degree of
non-compliance, suspend the application of all or part of this
Regulation for that Member State, by means of a decision
addressed to that Member State. Before adopting such a
decision,
the Commission shall give the Member State the
possibility to be heard.

the information required in the annual

If
is only
incomplete with regard to one or more geographical areas
within the Member State, the suspension shall only apply to
those areas.

report

The decision shall be published in the Official Journal of the
European Union. It shall specify the date from which application
of this Regulation is to be suspended. That date shall not be
earlier than 90 calendar days after publication of the decision.

The suspension of the application of this Regulation shall

2.
in no case affect:

(a)

individual aid, where the decision to grant the aid was
notified to the beneficiary before the date specified in the
Commission decision suspending the application of this
Regulation;

(b) individual aid granted on the basis of a scheme exempted
by this Regulation which was adopted before the date of
publication of
the Commission decision suspending
application of the Regulation, even if the individual aid is
paid after the date specified in the Commission decision.

3. Where a Member State subsequently complies with the
the
reporting obligations
the
Commission shall without delay lift
application of
this Regulation, by means of a decision
addressed to that Member State and published in the Official
Journal of the European Union.

contained in Article 19 (4),
the suspension of

the Member State

complies with regard to certain
If
geographical areas for which the application was suspended,
the suspension shall be lifted without delay with respect to
those geographical areas.

The Commission decision lifting suspension of application of
this Regulation shall be applicable from the day following that
of its publication in the Official Journal of the European Union.

in response to a decision pursuant

If the Commission considers that the information provided by
a Member State,
to
paragraph 1, does not comply with the reporting obligations
contained in Article 19(4) for the whole or part of its territory,
inform the Member State to that effect within 20
it shall
the information by a
following receipt of
working days
decision indicating which information is still missing.

Article 21

Entry into force and applicability

1.
This Regulation shall enter into force on the 20th day
following that of its publication in the Official Journal of the
European Union.

It shall apply until 31 December 2006.

Notifications pending at the time of entry into force of
2.
this Regulation shall be assessed in accordance with its
provisions. Where the conditions of this Regulation are not
fulfilled, the Commission shall examine such pending notifi-
cations under the Community guidelines for State aid in the
agriculture sector.

Individual aid and aid schemes implemented before the date of
entry into force of this Regulation and aid granted under those
schemes in the absence of a Commission authorisation and in
breach of the notification requirement of Article 88(3) of the
Treaty shall be compatible with the common market within the
meaning of Article 87(3)(c) of the Treaty and shall be exempt if
they fulfil the conditions laid down in Article 3 of this Regu-
lation, except the requirement in paragraph 1 and paragraph
2(b) of that Article that express reference be made to this
Regulation. Any aid which does not fulfil those conditions
shall be assessed by the Commission in accordance with the
relevant frameworks, guidelines, communications and notices.

3.
Aid schemes exempted under this Regulation shall remain
exempt during an adjustment period of six months following
the date provided for in the second subparagraph of paragraph
1.

This Regulation shall be binding in its entirety and directly
applicable in all Member States.

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Official Journal of the European Union

15.8.2003

FORM OF SUMMARY INFORMATION TO BE PROVIDED WHENEVER AN AID SCHEME EXEMPTED BY
THIS REGULATION IS IMPLEMENTED AND WHENEVER AN INDIVIDUAL AID EXEMPTED BY THIS REGU-
LATION IS GRANTED OUTSIDE ANY AID SCHEME

ANNEX I

Summary information on State aid granted in conformity with Commission Regulation (EC) (. . .)

Summary information to be filled in

Explanatory remarks

Member State

Region (Indicate the name of the region if the aid is granted by a subcentral authority)

Title of Aid scheme or name of company receiving an individual aid (Indicate the name of the aid scheme or in
case of individual aid, the name of the beneficiary.)

Legal basis (Indicate the precise national legal reference for the aid scheme or for the individual aid.)

Annual expenditure planned under the scheme or overall amount of individual aid granted to the company
(Amounts are to be given in euros or, if applicable, national currency. In case of an aid scheme, indicate the annual
overall amount of the budget appropriation(s) or the estimated tax loss per year for all aid instruments contained in the
scheme. In case of an individual aid award: indicate the overall aid amount/tax loss. If appropriate, indicate also for how
many years the aid will be paid in instalments or over how many years tax losses will be incurred. For guarantees in
both cases, indicate the (maximum) amount of loans guaranteed.)

Maximum aid intensity (Indicate the maximum aid intensity or the maximum aid amount per eligible item.)

Date of implementation (Indicate the date from which aid may be granted under the scheme or when the individual
aid is granted.)

Duration of scheme or individual aid award (Indicate the date (year and month) until which aid may be granted
under the scheme or in case of an individual aid and if appropriate the expected date (year and month) of the last
instalment to be paid.)

Objective of aid (It is understood that the primary objective is aid to SME. Indicate the further (secondary) objectives
pursued. Indicate which one of (Articles(s) 4 to 16) is used and contains the eligible costs covered by the scheme or
individual aid.

Sector(s) concerned (Indicate whether the scheme applies to production and/or processing and/or marketing. Indicate
the subsectors by mentioning the type of animal production (e.g. pig/poultry) or type of plant production (e.g. apple/
tomato) concerned.

Name and address of the granting authority

Web-Address (Indicate the internet address where the full text of the scheme or the criteria and conditions under which
individual aid is granted outside of an aid scheme can be found).

Other information

15.8.2003

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Official Journal of the European Union

C 194/17

FORM OF THE PERIODIC REPORT TO BE PROVIDED TO THE COMMISSION

ANNEX II

Annual reporting format on aid schemes exempted under a group exemption regulation adopted pursuant to
Article 1 of Council Regulation (EC) No 994/98

Member States are required to use the format below for their reporting obligations to the Commission under group
exemption regulations adopted on the basis of Council Regulation (EC) No 994/98.

The reports shall be provided in computerised form.

Information required for all aid schemes exempted under group exemption regulations adopted pursuant to Article 1 of
Council Regulation (EC) No 994/98.

1. Title of aid scheme

2. Commission exemption regulation applicable

3. Expenditure

(Separate figures have to be provided for each aid instrument within a scheme or individual aid (e.g. grant, soft loans,
etc.) The figures have to be expressed in euros or, if applicable, national currency. In the case of tax expenditure, annual
tax losses have to be reported. If precise figures are not available, such losses may be estimated.

These expenditure figures should be provided on the following basis.

For the year under review indicate separately for each aid instrument within the scheme (e.g. grant, soft loan, guarantee,
etc.):

amounts committed, (estimated) tax losses or other revenue forgone, data on guarantees, etc. for new assisted

3.1.
projects. In the case of guarantee schemes, the total amount of new guarantees handed out should be provided;

3.2.
actual payments, (estimated) tax losses or other revenue forgone, data on guarantees, etc. for new and current
projects. In the case of guarantee schemes, the following should be provided: total amount of outstanding guarantees,
premium income, recoveries, indemnities paid out, operating result of the scheme under the year under review;

3.3.

number of assisted projects and/or enterprises;

3.4.

(Leave blank)

3.5.

estimated overall amount of:

— investment aided;

— expenditure for conservation of traditional landscapes and buildings aided,

— expenditure for relocation of farm buildings in the public interest aided,

— aid granted for investment in processing and marketing,

— aid granted for setting up of young farmers,

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Official Journal of the European Union

15.8.2003

— aid granted for early retirement,

— expenditure of producer groups aided,

— expenditure for insurance premiums aided,

— expenditure for land reparcelling aided,

— expenditure for the production and marketing of quality agricultural products aided,

— expenditure for technical support aided;

regional breakdown of amounts under points 3.1. either by regions defined at NUTS (1) level 2 or below or by
3.6.
Article 87 (3)(a) regions, Article 87(3)(c) regions and non-assisted regions, or by less favoured areas and other areas;

sectoral breakdown of amounts under 3.1. by beneficiaries' sectors of activity (if more than one sector is covered,

3.7.
indicate the share of each):

— production and/or processing and/or marketing,

— type of animal product,

— type of plant product,

4.

Other information and remarks.

(1) NUTS is the nomenclature of territorial units for statistical purposes in the Community.